UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31,
2009
Commission
File
Number
|
|
Exact
name of registrants as specified in their
charters,
address of principal executive offices and
registrants'
telephone number
|
|
IRS
Employer
Identification
Number
|
|
|
|
|
|
1-8841
|
|
FPL
GROUP, INC.
|
|
59-2449419
|
2-27612
|
|
FLORIDA
POWER & LIGHT COMPANY
700
Universe Boulevard
Juno
Beach, Florida 33408
(561)
694-4000
|
|
59-0247775
|
State or other
jurisdiction of incorporation or organization:
Florida
|
Name
of exchange
on
which registered
|
Securities
registered pursuant to Section 12(b) of the Act:
|
|
FPL
Group, Inc.:
|
Common
Stock, $0.01 Par Value
|
New
York Stock Exchange
|
|
|
Florida Power
& Light Company:
None
|
|
Indicate
by check mark if the registrants are well-known seasoned issuers, as defined in
Rule 405 of the Securities Act of 1933.
FPL
Group, Inc. Yes
þ
No
¨
Florida
Power & Light Company Yes
þ
No
¨
|
Indicate
by check mark if the registrants are not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
FPL
Group, Inc. Yes
¨
No
þ
Florida
Power & Light Company Yes
¨
No
þ
|
Indicate
by check mark whether the registrants (1) have filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) have been subject to such filing requirements for
the past 90 days.
FPL
Group, Inc. Yes
þ
No
¨
Florida
Power & Light Company Yes
þ
No
¨
|
Indicate
by check mark whether the registrants have submitted electronically and posted
on their corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrants were required to
submit and post such files).
FPL
Group, Inc. Yes
þ
No
¨
Florida
Power & Light Company Yes
¨
No
¨
|
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
þ
Indicate
by check mark whether the registrants are a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer,"
"accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Securities Exchange Act of 1934.
FPL
Group, Inc.
|
Large
Accelerated Filer
þ
|
Accelerated
Filer
¨
|
Non-Accelerated
Filer
¨
|
Smaller
Reporting Company
¨
|
Florida Power & Light
Company
|
Large
Accelerated Filer
¨
|
Accelerated
Filer
¨
|
Non-Accelerated Filer
þ
|
Smaller Reporting Company
¨
|
Indicate
by check mark whether the registrants are shell companies (as defined in Rule
12b-2 of the Securities Exchange Act of 1934). Yes
¨
No
þ
Aggregate
market value of the voting and non-voting common equity of FPL Group, Inc. held
by non-affiliates as of June 30, 2009 (based on the closing market price on the
Composite Tape on June 30, 2009) was $23,304,012,377.
There
was no voting or non-voting common equity of Florida Power & Light Company
held by non-affiliates as of June 30, 2009.
The
number of shares outstanding of FPL Group, Inc. common stock, as of the latest
practicable date: Common Stock, $0.01 par value, outstanding at January 31,
2010: 413,689,884 shares.
As of
January 31, 2010, there were issued and outstanding 1,000 shares of Florida
Power & Light Company common stock, without par value, all of which were
held, beneficially and of record, by FPL Group, Inc.
DOCUMENTS
INCORPORATED BY REFERENCE
Portions
of FPL Group, Inc.'s Proxy Statement for the 2010 Annual Meeting of Shareholders
are incorporated by reference in Part III hereof.
¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾¾
This
combined Form 10-K represents separate filings by FPL Group, Inc. and Florida
Power & Light Company. Information contained herein relating to
an individual registrant is filed by that registrant on its own
behalf. Florida Power & Light Company makes no representations as
to the information relating to FPL Group, Inc.'s other operations.
Florida
Power & Light Company meets the conditions set forth in General Instruction
I.(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced
disclosure format.
DEFINITIONS
Acronyms
and defined terms used in the text include the following:
Term
|
|
Meaning
|
AFUDC
|
|
allowance
for funds used during construction
|
AFUDC
- equity
|
|
equity
component of allowance for funds used during
construction
|
BART
|
|
Best
Available Retrofit Technology
|
capacity
clause
|
|
capacity
cost recovery clause, as established by the FPSC
|
charter
|
|
restated
articles of incorporation, as amended, of FPL Group or FPL, as the case
may be
|
CO
2
|
|
carbon
dioxide
|
conservation
clause
|
|
energy
conservation cost recovery clause, as established by the
FPSC
|
DOE
|
|
U.S.
Department of Energy
|
Duane
Arnold
|
|
Duane
Arnold Energy Center
|
EMF
|
|
electric
and magnetic field(s)
|
EMT
|
|
Energy
Marketing & Trading, a division of FPL
|
environmental
clause
|
|
environmental
compliance cost recovery clause, as established by the
FPSC
|
EPA
|
|
U.S.
Environmental Protection Agency
|
ERCOT
|
|
Electric
Reliability Council of Texas
|
Exchange
Act
|
|
Securities
Exchange Act of 1934, as amended
|
FDEP
|
|
Florida
Department of Environmental Protection
|
FERC
|
|
Federal
Energy Regulatory Commission
|
FGT
|
|
Florida
Gas Transmission Company
|
FMPA
|
|
Florida
Municipal Power Agency
|
FPL
|
|
Florida
Power & Light Company
|
FPL
FiberNet
|
|
FPL
FiberNet, LLC
|
FPL
Group
|
|
FPL
Group, Inc.
|
FPL
Group Capital
|
|
FPL
Group Capital Inc
|
FPSC
|
|
Florida
Public Service Commission
|
fuel
clause
|
|
fuel
and purchased power cost recovery clause, as established by the
FPSC
|
GHG
|
|
greenhouse
gas(es)
|
Gulfstream
|
|
Gulfstream
Natural Gas System, L.L.C.
|
Holding
Company Act
|
|
Public
Utility Holding Company Act of 2005
|
IRS
|
|
Internal
Revenue Service
|
ITCs
|
|
investment
tax credits
|
kv
|
|
kilovolt(s)
|
kw
|
|
kilowatt
|
kwh
|
|
kilowatt-hour(s)
|
LIBOR
|
|
London
InterBank Offered Rate
|
LTIP
|
|
FPL
Group, Inc. Amended and Restated Long Term Incentive
Plan
|
Management's
Discussion
|
|
Item
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
|
MISO
|
|
Midwest
Independent Transmission System Operator, Inc.
|
mortgage
|
|
mortgage
and deed of trust dated as of January 1, 1944, from FPL to Deutsche Bank
Trust Company Americas, as supplemented and amended
|
mw
|
|
megawatt(s)
|
NEPOOL
|
|
New
England Power Pool
|
NERC
|
|
North
American Electric Reliability Corporation
|
NextEra
Energy Resources
|
|
NextEra
Energy Resources, LLC, formerly known as FPL Energy,
LLC
|
Note
___
|
|
note
___ to consolidated financial statements
|
NOx
|
|
nitrogen
oxide
|
NRC
|
|
U.S.
Nuclear Regulatory Commission
|
Nuclear
Waste Policy Act
|
|
Nuclear
Waste Policy Act of 1982, as amended
|
O&M
expenses
|
|
other
operations and maintenance expenses in the consolidated statements of
income
|
PJM
|
|
PJM
Interconnection, L.L.C.
|
PMI
|
|
NextEra
Energy Power Marketing, LLC
|
Point
Beach
|
|
Point
Beach Nuclear Power Plant
|
PTCs
|
|
production
tax credits
|
PURPA
|
|
Public
Utility Regulatory Policies Act of 1978, as amended
|
qualifying
facilities
|
|
non-utility
power production facilities meeting the requirements of a qualifying
facility under the PURPA
|
Recovery
Act
|
|
American
Recovery and Reinvestment Act of 2009
|
regulatory
ROE
|
|
return
on common equity as determined for regulatory purposes
|
RFP
|
|
request
for proposal
|
ROE
|
|
return
on common equity
|
Seabrook
|
|
Seabrook
Station
|
SEC
|
|
U.S.
Securities and Exchange Commission
|
SEGS
|
|
Solar
Electric Generating System
|
SO
2
|
|
sulfur
dioxide
|
VIE
|
|
variable
interest entity
|
WCEC
|
|
FPL's
West County Energy Center in western Palm Beach County,
Florida
|
FPL
Group, FPL, FPL Group Capital and NextEra Energy Resources each has subsidiaries
and affiliates with names that may include FPL, NextEra Energy Resources,
NextEra Energy, FPL Energy, FPLE and similar references. For
convenience and simplicity, in this report the terms FPL Group, FPL, FPL Group
Capital and NextEra Energy Resources are sometimes used as abbreviated
references to specific subsidiaries, affiliates or groups of subsidiaries or
affiliates. The precise meaning depends on the context.
TABLE
OF CONTENTS
|
Page
No.
|
|
|
Definitions
|
2
|
Forward-Looking
Statements
|
3
|
|
PART
I
|
|
|
|
|
Item
1.
|
Business
|
4
|
Item
1A.
|
Risk
Factors
|
20
|
Item
1B.
|
Unresolved
Staff Comments
|
24
|
Item
2.
|
Properties
|
25
|
Item
3.
|
Legal
Proceedings
|
28
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
28
|
|
PART
II
|
|
|
|
|
Item
5.
|
Market
for Registrants' Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
28
|
Item
6.
|
Selected
Financial Data
|
29
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
30
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
52
|
Item
8.
|
Financial
Statements and Supplementary Data
|
53
|
Item
9.
|
Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
|
104
|
Item
9A.
|
Controls
and Procedures
|
104
|
Item
9B.
|
Other
Information
|
104
|
|
PART
III
|
|
|
|
|
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
104
|
Item
11.
|
Executive
Compensation
|
104
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
105
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
105
|
Item
14.
|
Principal
Accounting Fees and Services
|
105
|
|
PART
IV
|
|
|
|
|
Item
15.
|
Exhibits,
Financial Statement Schedules
|
107
|
|
|
|
Signatures
|
|
115
|
FORWARD-LOOKING
STATEMENTS
This
report includes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that
express, or involve discussions as to, expectations, beliefs, plans, objectives,
assumptions, future events or performance, climate change strategy or growth
strategies (often, but not always, through the use of words or phrases such as
will, will likely result, are expected to, will continue, is anticipated, aim,
believe, could, should, would, estimated, may, plan, potential, projection,
target, outlook, predict and intend or words of similar meaning) are not
statements of historical facts and may be
forward-looking. Forward-looking statements involve estimates,
assumptions and uncertainties. Accordingly, any such statements are
qualified in their entirety by reference to, and are accompanied by, important
factors included in Part I, Item 1A. Risk Factors (in addition to any
assumptions and other factors referred to specifically in connection with such
forward-looking statements) that could have a significant impact on FPL Group's
and/or FPL's operations and financial results, and could cause FPL Group's
and/or FPL's actual results to differ materially from those contained or implied
in forward-looking statements made by or on behalf of FPL Group and/or FPL in
this combined Form 10-K, in presentations, on their respective websites, in
response to questions or otherwise.
Any
forward-looking statement speaks only as of the date on which such statement is
made, and FPL Group and FPL undertake no obligation to update any
forward-looking statement to reflect events or circumstances, including
unanticipated events, after the date on which such statement is made, unless
otherwise required by law. New factors emerge from time to time and
it is not possible for management to predict all of such factors, nor can it
assess the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained or implied in any forward-looking
statement.
PART
I
Item
1. Business
FPL
GROUP
FPL
Group was incorporated in 1984 under the laws of Florida. FPL Group
has two principal operating subsidiaries, FPL and NextEra Energy
Resources. FPL is a rate-regulated utility engaged primarily in the
generation, transmission, distribution and sale of electric energy in
Florida. NextEra Energy Resources is FPL Group's competitive energy
subsidiary which produces the majority of its electricity from clean and
renewable fuels. FPL Group Capital, a wholly-owned subsidiary of FPL
Group, holds the capital stock of, or has equity interests in, FPL Group's
operating subsidiaries, other than FPL, and provides funding for those
subsidiaries, including NextEra Energy Resources. At
December 31, 2009, FPL Group and its subsidiaries employed approximately
15,400 people. For a discussion of FPL's and NextEra Energy
Resources' businesses, see FPL Operations and NextEra Energy Resources
Operations. For financial information regarding FPL Group's business
segments, see Note 15.
Website Access to
SEC Filings.
FPL Group and FPL make their SEC filings,
including the annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and any amendments to those reports, available free
of charge on FPL Group's internet website, www.fplgroup.com, as soon as
reasonably practicable after they are electronically filed with or furnished to
the SEC. Information on FPL Group's website (or any of its
subsidiaries' websites) is not incorporated by reference in this combined annual
report on Form 10-K. The SEC maintains an internet website at
www.sec.gov that contains reports, proxy and other information about FPL Group
and FPL filed electronically with the SEC.
FPL
OPERATIONS
General.
FPL
was incorporated under the laws of Florida in 1925 and is a wholly-owned
subsidiary of FPL Group. FPL supplies electric service to a
population of more than 8.7 million throughout most of the east and lower west
coasts of Florida. During 2009, FPL served approximately 4.5 million
customer accounts. The percentage of FPL's operating revenues by
customer class was as follows:
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
|
56
|
%
|
|
|
53
|
%
|
|
|
54
|
%
|
Commercial
|
|
|
41
|
|
|
|
40
|
|
|
|
39
|
|
Industrial
|
|
|
3
|
|
|
|
3
|
|
|
|
3
|
|
Wholesale
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
Other,
including deferred or recovered retail clause revenues, the net change in
retail unbilled revenues, transmission sales and customer-related
fees
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
3
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
100
|
%
|
Over the
last ten years, FPL's average annual customer growth has been
1.8%. However, beginning in 2007, FPL has experienced a slowdown in
retail customer growth and a decline in non-weather related usage per retail
customer. Retail customer growth in 2008 was 0.3%. FPL's
average number of retail customers declined slightly during the first three
quarters of 2009 and remained essentially unchanged during the fourth quarter of
2009; the decline for the full year was 0.2%. FPL believes that the
economic slowdown, the downturn in the housing market and the credit crisis that
have affected the country and the state of Florida have contributed to the
slowdown in customer growth and to the decline in non-weather related usage per
retail customer. In December 2009, the unemployment rate in Florida
was 11.8%. Beginning in 2007, FPL experienced an increase in inactive
accounts (accounts with installed meters without corresponding customer names)
and in low-usage customers (customers using less than 200 kwh per month), which
have contributed to the decline in retail customer growth and non-weather
related usage per retail customer. In 2009, inactive accounts and
low-usage customers continued to increase much of the year but declined slightly
in the fourth quarter. FPL is unable to predict whether or when
growth in customers and non-weather related customer usage might return to
previous trends.
Regulation.
FPL's
retail operations provided approximately 99% of FPL's 2009 operating
revenues. Retail operations are regulated by the FPSC, which has
jurisdiction over retail rates, service territory, issuances of securities,
planning, siting and construction of facilities and other
matters. FPL is also subject to regulation by the FERC with respect
to certain aspects of its operations, including, but not limited to, the
acquisition and disposition of facilities, interchange and transmission services
and wholesale purchases and sales of electric energy. The NERC
established mandatory reliability standards in 2007 to ensure the reliability of
the U.S. electric transmission and generation system and to prevent major system
blackouts. Violations for non-compliance are subject to penalties of
up to $1 million per day per violation. In addition, FPL's nuclear
power plants are subject to the jurisdiction of the NRC. NRC
regulations govern the granting of licenses for the construction, operation and
retirement of nuclear power plants and subject these plants to continuing review
and regulation.
Retail
Ratemaking.
The underlying concept of utility ratemaking is to
set rates at a level that allows the utility the opportunity to collect from
customers total revenues (revenue requirements) equal to its cost of providing
service, including a reasonable rate of return on invested
capital. To accomplish this, the FPSC uses various ratemaking
mechanisms, including, among other things, base rates and cost recovery
clauses.
Base Rates
- In general, the
basic costs of providing electric service, other than fuel and certain other
costs, are recovered through base rates, which are designed to recover the costs
of constructing, operating and maintaining the utility system. These
basic costs include O&M expenses, depreciation and taxes, as well as a
return on FPL's investment in assets used and useful in providing electric
service (rate base). At the time base rates are determined, the
allowed rate of return on rate base approximates FPL's estimated
weighted-average cost of capital, which includes its costs for outstanding debt
and, typically, an allowed ROE. The FPSC monitors FPL's actual
regulatory ROE through a surveillance report that is filed monthly by FPL with
the FPSC. The FPSC does not provide assurance that an allowed ROE
will be achieved. Base rates are determined in rate proceedings or
through negotiated settlements, which occur at irregular intervals at the
initiative of FPL, the FPSC, the State of Florida Office of Public Counsel or a
substantially affected party. Base rates remain in effect until new
base rates are approved by the FPSC.
In March
2009, FPL filed a petition with the FPSC requesting, among other things, a
permanent base rate increase of approximately $1 billion in 2010 and an
additional $250 million in 2011, which included additions to the storm and
property insurance reserve. The requested increases were based on a
proposed regulatory ROE of 12.5% and excluded amounts associated with the
proposed extension of a Generation Base Rate Adjustment (GBRA) mechanism, which
allowed for automatic adjustments in retail base rates when approved power
plants achieved commercial operation, and certain proposed cost recovery clause
adjustments.
In
January 2010, the FPSC orally ruled with respect to FPL's March 2009 petition
(January 2010 rate ruling) and indicated that the ruling would be reflected in a
final written order to be issued in February 2010 (final order). The
January 2010 rate ruling indicated that new retail base rates would be
established for FPL effective March 1, 2010, would increase retail base
rates by approximately $75 million on an annualized basis, would establish a
regulatory ROE of 10.0% with a range of plus or minus 100 basis points and would
shift certain costs from retail base rates to the capacity
clause. The January 2010 rate ruling also indicated that depreciation
expense would be reduced over the next four years. See Management's
Discussion - Results of Operations - FPL. The January 2010 rate
ruling also indicated, among other things, that any additional base rate
increase for 2011, the continuation of the GBRA mechanism and any additions to
the storm and property insurance reserve would be denied. As of the
date of this report, the final order remains pending. Upon issuance
of the final order, parties have the right to file motions with the FPSC for
reconsideration of some or all of the final order, or to appeal some or all of
the final order to the Florida Supreme Court. In response to
inquiries regarding potential inconsistencies in calculations underlying the
January 2010 rate ruling, staff for the FPSC has indicated it would address any
matters raised by the parties before the final order following the filing of any
motions for reconsideration. FPL cannot predict the specific
treatment of any particular issue in the final order.
FPL is
evaluating the impact of the January 2010 rate ruling on its financial position,
including its credit quality and ability to attract capital over the long term
(see Management's Discussion - Liquidity and Capital Resources). FPL
has suspended activities on the following projects representing approximately
$10 billion of investment over the next five years until the financial impact of
the final order, along with other factors, such as load-growth estimates, fuel
cost forecasts, demand side management and environmental incentives, can be
reviewed (see Capital Expenditures below):
·
|
development
of two additional nuclear units at FPL's Turkey Point site beyond what is
required to receive an NRC license for each unit (see Nuclear Operations
below);
|
·
|
modernization
of FPL's Cape Canaveral and Riviera power plants (see Fossil Operations
below);
|
·
|
reevaluation
of options related to a proposed 300-mile underground natural gas pipeline
in Florida; and
|
·
|
other
infrastructure projects.
|
FPL is
also evaluating its options with respect to future regulatory actions regarding
the January 2010 rate ruling and, when it is issued, the final order, as well as
assessing the cost structure of its ongoing operations and reviewing other
planned capital expenditures for appropriate reductions.
Under a
rate agreement approved in 2005 (2005 rate agreement), retail base rates did not
increase except to allow recovery, under the GBRA mechanism, of the revenue
requirements of FPL's three power plants that achieved commercial operation
during the term of the 2005 rate agreement. Retail base rates
increased when Turkey Point Unit No. 5 was placed in service in 2007 and when
WCEC Units Nos. 1 and 2 were placed in service in 2009. During
the term of the 2005 rate agreement, FPL did not have an authorized regulatory
ROE for the purpose of addressing earnings levels; however, for all other
regulatory purposes, FPL had an ROE of 11.75%. Under the terms of the
2005 rate agreement, FPL's electric property depreciation rates were based upon
the comprehensive depreciation studies it filed with the FPSC in March 2005;
however, FPL reduced depreciation on its plant in service by $125 million each
year, as allowed by the 2005 rate agreement. The 2005 rate agreement
also provided for a revenue sharing mechanism, whereby revenues from retail base
operations in excess of certain thresholds would be shared with
customers. During the term of the 2005 rate agreement, FPL's revenues
did not exceed the thresholds.
Cost Recovery Clauses
- Cost
recovery clauses, which are designed to permit full recovery of certain costs
and provide a return on certain assets allowed to be recovered through the
various clauses, include substantially all fuel, purchased power and interchange
expenses, conservation and certain environmental-related expenses, certain
revenue taxes and franchise fees. Beginning in 2009, pre-construction
costs and carrying charges on construction costs for new nuclear capacity and
costs incurred for FPL's three solar generating facilities, one of which was
placed into service in 2009 and two of which are under construction, are also
recovered through cost recovery clauses. These costs are recovered
through levelized monthly charges per kwh or kw, depending on the customer's
rate class, pursuant to the FPSC's cost recovery clauses. These cost
recovery clause charges are calculated at least annually based on estimated
costs and estimated customer usage for the following year, plus or minus a
true-up adjustment to reflect the variance of actual costs and usage from the
estimates used in setting the adjustment charges for prior
periods. An adjustment to the levelized charges may be approved
during the course of a year to reflect a projected variance based on actual
costs and usage.
In 2009,
fuel clause recoveries were approximately $5.9 billion. FPL uses a
risk management fuel procurement program which was approved by the FPSC at the
program's inception. The FPSC reviews the program activities and
results for prudence on an annual basis as part of its annual review of fuel
costs. The program is intended to manage fuel price volatility by
locking in fuel prices for a portion of FPL's fuel requirements. See
Energy Marketing and Trading below, Management's Discussion - Results of
Operations - FPL, Note 1 - Regulation and Note 3. Pursuant
to an FPSC order, FPL was required to refund in the form of a one-time credit to
retail customers' bills the 2009 year-end estimated fuel overrecovery; in
January 2010, approximately $403 million was refunded to retail
customers. At December 31, 2009, approximately $356 million of
retail fuel revenues were overrecovered. The difference between the
refund and the December 31, 2009 overrecovery will be collected from retail
customers in a subsequent period.
Capacity
payments to other utilities and generating companies for purchased power are
recovered from customers through the capacity clause and base
rates. Beginning in March 2010, such payments will be recovered
entirely through the capacity clause. In accordance with the FPSC's
nuclear cost recovery rule, FPL also recovers pre-construction costs and
carrying charges (equal to a pretax AFUDC rate) on construction costs for new
nuclear capacity through the capacity clause. Once the new capacity
goes into service, it is expected that construction costs will be recovered
through base rate increases. See Nuclear Operations
below. In 2009, capacity clause recoveries were approximately $772
million.
Costs
associated with implementing energy conservation programs are recovered from
customers through the conservation clause. In 2009, conservation
clause recoveries were approximately $198 million. Certain costs of
complying with federal, state and local environmental regulations enacted after
April 1993 and costs associated with FPL's three solar facilities are recovered
through the environmental clause. In 2009, environmental clause
recoveries were approximately $91 million. See Environmental and
Solar Operations below.
Other Recovery Mechanisms
-
FPL maintains a funded storm and property insurance reserve. Four
hurricanes in 2005 and three hurricanes in 2004 caused major damage in parts of
FPL's service territory. Storm restoration costs incurred by FPL
during 2005 and 2004 exceeded the amount in the storm and property insurance
reserve, resulting in a storm reserve deficiency. In 2007, FPL formed
a wholly-owned bankruptcy remote special purpose subsidiary for the purpose of
issuing storm-recovery bonds, pursuant to the securitization provisions of the
Florida Statutes and an FPSC financing order. In May 2007, the FPL
subsidiary issued $652 million aggregate principal amount of senior secured
bonds (storm-recovery bonds), primarily for the after-tax equivalent of the
total of FPL's unrecovered balance of the 2004 storm restoration costs, the 2005
storm restoration costs and approximately $200 million to reestablish FPL's
storm and property insurance reserve. The storm-recovery bonds,
including interest and bond issuance costs, are being repaid through a surcharge
to retail customers. Prior to the issuance of these storm-recovery
bonds, FPL had been recovering the 2004 storm restoration costs from retail
customers through a storm damage surcharge. See Management's
Discussion - Results of Operations - FPL and Note 9 - FPL.
The FPSC
has the authority to disallow recovery of costs that it considers excessive or
imprudently incurred. Such costs may include, among others, fuel and
O&M expenses, the cost of replacing power lost when fossil and nuclear units
are unavailable, storm restoration costs and costs associated with the
construction or acquisition of new facilities.
Competition.
FPL
currently holds 176 franchise agreements to provide electric service in various
municipalities and counties in Florida with varying expiration dates through
2040. Of the 176 franchise agreements, 10 expire in 2010, 9 expire in
2011 and 157 expire during the period 2012 through 2040. Negotiations
are ongoing to renew franchises with upcoming expirations. FPL also
provides service to 13 other municipalities and to 22 unincorporated areas
within its service area without franchise agreements. FPL considers
its franchises to be adequate for the conduct of its business.
FPL
currently faces competition from other suppliers of electrical energy to
wholesale customers and from alternative energy sources and self-generation for
other customer groups, primarily industrial customers. The FERC has
jurisdiction over potential changes that could affect competition in wholesale
transactions. In 2009, operating revenues from wholesale and
industrial customers combined represented approximately 4% of FPL's total
operating revenues. Various states, other than Florida, have enacted
legislation or have state commissions that have issued orders designed to allow
retail customers to choose their electricity supplier. Management
believes it is unlikely there will be any state actions to restructure the
retail electric industry in Florida in the near future. If the basis
of regulation for some or all of FPL's business changes from cost-based
regulation, existing regulatory assets and liabilities would be written off
unless regulators specify an alternative means of recovery or
refund. Further, other aspects of the business, such as generation
assets and long-term power purchase commitments, would need to be reviewed to
assess their recoverability in a changed regulatory environment. See
Management's Discussion - Critical Accounting Policies and Estimates -
Regulatory Accounting.
The FPSC
promotes cost competitiveness in the building of new steam generating capacity
by requiring investor-owned electric utilities, such as FPL, to issue an RFP
except when the FPSC determines that an exception from the RFP process is in the
public interest. The RFP process allows independent power producers
and others to bid to supply the new generating capacity. If a bidder
has the most cost-effective alternative, meets other criteria such as financial
viability and demonstrates adequate expertise and experience in building and/or
operating generating capacity of the type proposed, the investor-owned electric
utility would seek to negotiate a power purchase agreement with the selected
bidder and request that the FPSC approve the terms of the power purchase
agreement and, if appropriate, provide the required authorization for the
construction of the bidder's generating capacity. In 2007, the FPSC
eliminated the requirement for utilities to issue an RFP for new nuclear power
plants sited after June 2006. See Nuclear Operations below regarding
the approval by the FPSC for two additional nuclear units.
Environmental.
FPL
is subject to environmental laws and regulations and is affected by some of the
emerging issues included in the Environmental Matters section. FPL
expects to seek recovery through the environmental clause for compliance costs
associated with any new environmental laws and regulations.
During
2009, FPL spent approximately $214 million on capital additions to comply with
existing environmental laws and regulations. FPL's capital
expenditures to comply with existing environmental laws and regulations are
estimated to be $424 million for 2010 through 2012, including approximately $236
million in 2010, and are included in estimated planned capital expenditures set
forth in Capital Expenditures below.
System Capability
and Load.
At December 31, 2009, FPL's resources for
serving load consisted of 26,682 mw, of which 24,530 mw were from FPL-owned
facilities (see Item 2 - Generating Facilities) and 2,152 mw were available
through purchased power contracts (see Note 14 -
Contracts). FPL's projected reserve margin for the summer of 2010 is
approximately 22%. This reserve margin is expected to be achieved
through the combination of output from FPL's active generating units (excluding
solar which is considered non-firm), purchased power contracts and the
capability to reduce peak demand through the implementation of demand side
management programs, including load management, which was estimated to be
capable of reducing demand by 1,801 mw at December 31, 2009, and energy
efficiency and conservation programs. In December 2009, the FPSC
issued an order that will require Florida utilities, including FPL, to meet
higher demand side management goals for both demand and energy beginning in
2010, and to file plans to meet these goals by March 30,
2010. FPL and the other Florida utilities have filed motions for
reconsideration of the FPSC order. Occasionally, unusually cold
temperatures during the winter months result in significant increases in
electricity usage for short periods of time. However, customer usage
and operating revenues are typically higher during the summer months, largely
due to the prevalent use of air conditioning in FPL's service
territory. During 2009, the highest peak load FPL served was
22,351 mw. The highest peak load FPL has served to date was
24,346 mw, which occurred on January 11, 2010. FPL had adequate
resources available at the time of this peak to meet customer
demand. See Fossil Operations, Nuclear Operations and Solar
Operations below regarding generation projects currently under
construction.
Fuel
Mix.
FPL's generating plants use a variety of
fuels. The diverse fuel options, along with purchased power, are
intended to enable FPL to shift between sources of generation to achieve a more
economical fuel mix. See Fossil Operations and Nuclear Operations
below, and Item 2 - Generating Facilities.
FPL's
2009 fuel mix based on kwh produced was as follows:
Fuel
Source
|
|
Percentage
of
kwh
Produced
|
|
|
|
|
Natural
gas
|
|
56
|
%
|
Nuclear
|
|
21
|
%
|
Purchased
power
|
|
13
|
%
|
Coal
|
|
6
|
%
|
Oil
|
|
4
|
%
|
Fossil
Operations.
FPL owns and operates 81 units that use fossil
fuels such as natural gas and/or oil, and has a joint-ownership interest in
three coal units. FPL's fossil units are out of service from time to
time for routine maintenance or on standby during periods of reduced electricity
demand. FPL is currently constructing a natural gas-fired
combined-cycle unit of approximately 1,220 mw at its WCEC, which is expected to
be placed in service by mid-2011. In 2008, the FPSC approved FPL's
plan to modernize its Cape Canaveral and Riviera power plants to high-efficiency
natural gas-fired units. Each modernized plant is expected to provide
approximately 1,200 mw of capacity and be placed in service by 2013 and 2014,
respectively. However, FPL has suspended activities on the
modernization of the two power plants. See Retail Ratemaking above
and Capital Expenditures below.
FPL has
four firm transportation contracts in place with FGT, two firm transportation
contracts with Gulfstream and one firm transportation contract with Southeast
Supply Header, LLC, that together are expected to satisfy substantially all of
the anticipated needs for natural gas transportation at its existing
units. The four existing FGT contracts expire between 2021 and 2025,
while both Gulfstream contracts expire in 2032. The Southeast Supply
Header contract expires in 2020. To the extent desirable, FPL can
also purchase interruptible natural gas transportation service from FGT and
Gulfstream based on pipeline availability. FPL has several short- and
medium-term natural gas supply contracts to provide a portion of FPL's
anticipated needs for natural gas. The remainder of FPL's natural gas
requirements is purchased in the spot market. FPL has a long-term
agreement for the storage of natural gas that expires in 2013. In
addition, FPL has entered into several long-term agreements for storage capacity
and transportation of natural gas from facilities that have not yet started
construction, or if started, have not yet completed
construction. These agreements range from 15 to 25 years in length
and contain firm commitments by FPL totaling up to approximately $175 million
annually or $4.3 billion over the terms of the agreements. These firm
commitments are contingent upon the occurrence of certain events, including
completion of construction of the facilities in 2011. See
Note 14 - Contracts. FPL's oil requirements are obtained under
short- and medium-term contracts and in the spot market.
FPL has,
through its joint ownership interest in St. Johns River Power Park (SJRPP) Units
Nos. 1 and 2, a coal supply and transportation contract for all of the 2010 fuel
needs and a portion of the 2011 fuel needs for those units. All of
the transportation requirements and a portion of the coal supply needs for
Scherer Unit No. 4 are covered by a series of annual and long-term
contracts. FPL's remaining fuel requirements for these units will be
obtained in the spot market. See
Note 14 - Contracts.
Nuclear
Operations.
FPL owns, or has undivided interests in, and
operates four nuclear units, two at Turkey Point and two at St. Lucie, with a
total net generating capability of 2,939 mw. The nuclear units are
periodically removed from service to accommodate normal refueling and
maintenance outages, repairs and certain other
modifications. Scheduled nuclear refueling outages typically require
the unit to be removed from service for approximately 30 days. This
duration is longer for expanded scope outages. The following table
summarizes certain information related to FPL's nuclear units:
Facility
|
|
Unit
|
|
Net
Capability
(mw)
|
|
Operating
License
Expiration
Dates
|
|
Next
Scheduled
Refueling
Outage
|
|
|
|
|
|
|
|
|
|
St.
Lucie
|
|
1
|
|
839
|
|
2036
|
|
April
2010
|
St.
Lucie
|
|
2
|
|
714
|
|
2043
|
|
January
2011
|
Turkey
Point
|
|
3
|
|
693
|
|
2032
|
|
September
2010
|
Turkey
Point
|
|
4
|
|
693
|
|
2033
|
|
March
2011
|
FPL is
in the process of adding approximately 400 mw of baseload capacity at its
existing nuclear units at St. Lucie and Turkey Point, which additional capacity
is projected to be placed in service by the end of 2012. The
construction costs relating to the 400 mw of baseload capacity yet to be
incurred as of December 31, 2009 are included in the estimated planned
capital expenditures set forth in Capital Expenditures below. As part
of the conditions of certification by the state of Florida for this project, FPL
is required to implement a monitoring plan on the Turkey Point cooling canals
due to concerns over potential saltwater intrusion beyond FPL's
property. Monitoring under the plan includes collection of data for
two years prior to and two years after the date the additional capacity is
placed in service in order to establish a baseline and assess various
environmental impacts of the cooling canals on surrounding areas. The
potential results of the monitoring plan are uncertain and the financial and
operational impacts on FPL, if any, cannot be determined at this
time. In 2008, the FPSC approved FPL's need petition for two
additional nuclear units at its Turkey Point site with projected in-service
dates between 2018 and 2020. The two units combined are expected to
add approximately 2,200 mw of baseload capacity. Additional approvals
from other regulatory agencies will be required later in the development
process. However, FPL has suspended development activities on the two
new nuclear units at its Turkey Point site beyond what is required to receive a
license for each unit from the NRC. See Retail Ratemaking above and
Capital Expenditures below.
FPL
leases nuclear fuel for all four of its nuclear units. See
Note 1 - Nuclear Fuel. FPL Group and FPL consolidate the lessor
entity, a VIE. See Note 9 - FPL. The contracts for the
supply, conversion, enrichment and fabrication of FPL's nuclear fuel have
expiration dates ranging from March 2010 through 2022. Under the
Nuclear Waste Policy Act, the DOE is responsible for the development of a
repository for the disposal of spent nuclear fuel and high-level radioactive
waste. As required by the Nuclear Waste Policy Act, FPL is a party to
contracts with the DOE to provide for disposal of spent nuclear fuel from its
Turkey Point and St. Lucie nuclear units. The DOE was required to
construct permanent disposal facilities and take title to and provide
transportation and disposal for spent nuclear fuel by January 31, 1998 for
a specified fee based on current generation from nuclear power
plants. Through December 31, 2009, FPL has paid approximately
$629 million in such fees to the U.S. Government's nuclear waste
fund. The DOE did not meet its statutory obligation for disposal of
spent nuclear fuel under the Nuclear Waste Policy Act. In 2009, FPL
and certain nuclear plant joint owners signed a settlement agreement (spent fuel
settlement agreement) with the U.S. Government agreeing to dismiss with
prejudice lawsuits filed against the U.S. Government seeking damages caused by
the DOE's failure to dispose of spent nuclear fuel from FPL's nuclear
plants. The spent fuel settlement agreement permits FPL to make
annual filings to recover certain spent fuel storage costs incurred by FPL which
will be payable by the U.S. Government on an annual basis. Through
December 31, 2009, FPL has collected approximately $82 million of the
amount due from the U.S. Government pursuant to the spent fuel settlement
agreement and has paid approximately $5 million to the joint owners of St. Lucie
Unit No. 2. An additional payment from the U.S. Government of
approximately $18 million relating to costs incurred in 2008 is
pending. FPL plans to file a claim for spent fuel storage costs
incurred during 2009 by April 2010. FPL will continue to pay fees to
the U.S. Government's nuclear waste fund. The DOE filed a license
application for a permanent disposal facility for spent nuclear fuel with the
NRC in 2008, and a licensing proceeding is ongoing before the
NRC. However, it is uncertain when a permanent disposal facility will
be constructed and when it would be ready to begin receiving spent nuclear fuel
shipments.
FPL uses
both on-site storage pools and dry storage casks to store spent nuclear fuel
generated by St. Lucie Units Nos. 1 and 2, which should allow FPL to
store all spent nuclear fuel at this facility through license
expiration. FPL currently stores all spent nuclear fuel generated by
Turkey Point Units Nos. 3 and 4 in on-site storage pools. These
spent nuclear fuel storage pools do not have sufficient storage capacity for the
life of the respective units. Beginning in 2011, FPL plans to begin
using dry storage casks to store spent nuclear fuel generated by the Turkey
Point facility, which should allow FPL to store all spent nuclear fuel at this
facility through license expiration.
The
NRC's regulations require FPL to submit a plan for decontamination and
decommissioning five years before the projected end of plant
operation. FPL's current plans, under the operating licenses, provide
for prompt dismantlement of Turkey Point Units Nos. 3 and 4 with
decommissioning activities commencing in 2032 and 2033,
respectively. Current plans provide for St. Lucie Unit No. 1 to
be mothballed beginning in 2036 with decommissioning activities to be integrated
with the prompt dismantlement of St. Lucie Unit No. 2 at the end of its
useful life in 2043. See estimated decommissioning cost data in
Note 1 - Decommissioning of Nuclear Plants, Dismantlement of
Plants and Other Accrued Asset Removal Costs - FPL.
Solar
Operations.
In 2009, FPL
placed into service its first utility-scale solar generating facility, a 25 mw
photovoltaic (PV) facility in DeSoto County, Florida. FPL is
currently constructing a 75 mw solar thermal facility in Martin County, Florida
and a 10 mw solar PV facility in Brevard County, Florida, which are expected to
be placed into service by the end of 2010. The construction costs of
the Martin County and Brevard County solar generating facilities yet to be
incurred as of December 31, 2009 are included in estimated planned capital
expenditures set forth in Capital Expenditures below.
Energy Marketing and
Trading.
EMT buys and sells wholesale energy commodities, such
as natural gas, oil and electricity. EMT procures natural gas and oil
for FPL's use in power generation and sells excess natural gas, oil and
electricity. EMT also uses derivative instruments, such as swaps,
options and forwards, to manage the commodity price risk inherent in the
purchase and sale of fuel and electricity. Substantially all of the
results of EMT's activities are passed through to customers in the fuel or
capacity clauses. See Retail Ratemaking above, Management's
Discussion - Results of Operations - FPL and Energy Marketing and Trading and
Market Risk Sensitivity and Note 3.
Capital
Expenditures.
Capital expenditures at FPL include, among other
things, the cost for construction or acquisition of additional facilities and
equipment to meet customer demand, as well as capital improvements to and
maintenance of existing facilities. Planned capital expenditures that
are conditional on obtaining regulatory approvals are not included in the table
below until such approvals are received.
FPL's
actual capital expenditures for 2007 through 2009 and estimated planned capital
expenditures for 2010 through 2014 as of December 31, 2009 were as
follows:
|
Actual
|
|
Planned
(a)
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Total
|
|
(millions)
|
Generation:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
(c)
(d)
|
$
|
396
|
|
$
|
880
|
|
$
|
1,203
|
|
$
|
1,120
|
|
$
|
985
|
|
$
|
305
|
|
$
|
5
|
|
$
|
-
|
|
$
|
2,415
|
Existing
|
|
586
|
|
|
601
|
|
|
651
|
|
|
530
|
|
|
490
|
|
|
390
|
|
|
320
|
|
|
330
|
|
|
2,060
|
Transmission
and distribution
|
|
875
|
|
|
737
|
|
|
600
|
|
|
440
|
|
|
460
|
|
|
480
|
|
|
480
|
|
|
480
|
|
|
2,340
|
Nuclear
fuel
|
|
194
|
|
|
130
|
|
|
178
|
|
|
105
|
|
|
200
|
|
|
175
|
|
|
250
|
|
|
205
|
|
|
935
|
General
and other
|
|
77
|
|
|
101
|
|
|
135
|
|
|
260
|
|
|
270
|
|
|
270
|
|
|
260
|
|
|
130
|
|
|
1,190
|
Total
|
$
|
2,128
|
|
$
|
2,449
|
|
$
|
2,767
|
|
$
|
2,455
|
|
$
|
2,405
|
|
$
|
1,620
|
|
$
|
1,315
|
|
$
|
1,145
|
|
$
|
8,940
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Excludes
capital expenditures of approximately $685 million in 2010, $1,310 million
in 2011, $2,505 million in 2012, $2,605 million in 2013 and $1,805 million
in 2014 for the following: (1) construction costs for the two additional
nuclear units at FPL's Turkey Point site beyond what is required to
receive an NRC license for each unit, (2) modernization of the Cape
Canaveral and Riviera power plants and (3) other infrastructure
projects. See Retail Ratemaking above.
|
(b)
|
Includes
AFUDC of approximately $36 million, $50 million, $74 million, $47 million,
$27 million and $4 million in 2007 to 2012,
respectively.
|
(c)
|
Includes
land, generating structures, transmission interconnection and integration
and licensing.
|
(d)
|
Includes
pre-construction costs and carrying charges (equal to a pretax AFUDC rate)
on construction costs recoverable through the capacity clause of
approximately $50 million, $41 million, $147 million, $390 million and $37
million in 2008 to 2012,
respectively.
|
These
estimates are subject to continuing review and adjustment and actual capital
expenditures may vary significantly from these estimates. See
Management's Discussion - Liquidity and Capital Resources - Contractual
Obligations and Estimated Planned Capital Expenditures and Note 14 -
Commitments.
Electric and
Magnetic Fields.
EMF are present around electrical facilities,
including, but not limited to, appliances, power lines and building
wiring. Since the 1970s, there has been public, scientific and
regulatory attention given to the question of whether EMF causes or contributes
to adverse health effects. U.S. and international scientific
organizations have evaluated the EMF research. Their reviews have
generally concluded that while some epidemiology studies report an association
with childhood leukemia, controlled laboratory studies do not support that
association and the scientific studies overall have not demonstrated that EMF
cause or contribute to any type of cancer or other disease.
The FDEP established EMF standards for
electricity facilities in 1989 and FPL facilities comply with these
standards. Future changes in the FDEP regulations could require
additional capital expenditures by FPL for such things as increasing the width
of right of ways or relocating or reconfiguring transmission
facilities. It is not presently known whether any such expenditures
will be required. Currently, there are no such changes proposed to
the FDEP regulations
.
Employees.
FPL
had approximately 10,500 employees at December 31,
2009. Approximately 31% of the employees are represented by the
International Brotherhood of Electrical Workers (IBEW) under a collective
bargaining agreement with FPL that expires October 31, 2011.
NEXTERA
ENERGY RESOURCES OPERATIONS
General.
NextEra
Energy Resources, a wholly-owned subsidiary of FPL Group Capital, was formed in
1998 to aggregate FPL Group's existing competitive energy
businesses. It is a limited liability company organized under the
laws of Delaware. Through its subsidiaries, NextEra Energy Resources
currently owns, develops, constructs, manages and operates primarily domestic
electric-generating facilities in wholesale energy markets. NextEra
Energy Resources also provides full energy and capacity requirements services
primarily to distribution utilities in certain markets and owns a retail
electric provider based in Texas. NextEra Energy Resources also
engages in power and gas marketing and trading activities.
At
December 31, 2009, NextEra Energy Resources managed or participated in the
management of approximately 97% of its projects, which represented approximately
99% of the net generating capacity in which NextEra Energy Resources has an
ownership interest. NextEra Energy Resources had ownership interests
in operating independent power projects with a net generating capability
totaling 18,148 mw (see Item 2 - Generating
Facilities). Generation capacity spans various regions and is
produced using a variety of fuel sources, thereby reducing overall volatility
related to varying market conditions and seasonality on a portfolio
basis. At December 31, 2009, the percentage of capacity by
geographic region was:
Geographic
Region
|
|
Percentage
of Generation Capacity
|
ERCOT
|
|
29
|
%
|
Northeast
|
|
28
|
%
|
Midwest
|
|
21
|
%
|
West
|
|
15
|
%
|
Other
South
|
|
7
|
%
|
At
December 31, 2009, fuel sources for these projects were as
follows:
Fuel
Source
|
|
Percentage
of Generation Capacity
|
Wind
|
|
41
|
%
|
Natural
Gas
|
|
37
|
%
|
Nuclear
|
|
14
|
%
|
Oil
|
|
5
|
%
|
Hydro
|
|
2
|
%
|
Solar
and other
|
|
1
|
%
|
NextEra
Energy Resources' strategy is, among other things, to continue to maintain its
leadership position in wind, accelerate growth in solar development, continue to
expand its transmission capability, grow its supply-related and non-asset based
businesses, and to develop its natural gas infrastructure
business. NextEra Energy Resources' supply-related business includes
full energy and capacity requirements services and retail operations, and the
non-asset based business includes power and gas marketing and trading
operations. NextEra Energy Resources seeks to expand its portfolio
primarily through wind and solar development and acquisitions where economic
prospects are attractive. In 2009, NextEra Energy Resources added
approximately 1,170 mw of wind generation to its portfolio and expects to add
approximately 1,000 mw of new wind generation in 2010 and 1,000 mw to 1,500 mw
in each of 2011 and 2012. In addition to wind expansion, NextEra
Energy Resources is considering several solar development opportunities in the
U.S., as well as in Europe. The wind and solar expansions are subject
to, among other things, continued public policy support, support for the
construction and availability of sufficient transmission facilities and
capacity, continued market demand, supply chain expansion and access to capital
at reasonable cost and on reasonable terms. NextEra Energy Resources
is evaluating additional natural gas infrastructure opportunities in the U.S.
and will continue to explore additional projects as opportunities become
available.
NextEra
Energy Resources' actual capital expenditures and investments for 2007 through
2009 and estimated planned capital expenditures for 2010 through 2014 as of
December 31, 2009 were as follows:
|
Actual
|
|
Planned
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Total
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind
(a)
|
$
|
1,795
|
|
$
|
2,255
|
|
$
|
2,625
|
|
$
|
1,895
|
|
$
|
15
|
|
$
|
15
|
|
$
|
10
|
|
$
|
5
|
|
$
|
1,940
|
Nuclear
(b)
|
|
1,120
|
|
|
335
|
|
|
455
|
|
|
560
|
|
|
325
|
|
|
315
|
|
|
255
|
|
|
235
|
|
|
1,690
|
Natural
gas
|
|
120
|
|
|
115
|
|
|
120
|
|
|
75
|
|
|
75
|
|
|
70
|
|
|
50
|
|
|
20
|
|
|
290
|
Solar
|
|
10
|
|
|
20
|
|
|
40
|
|
|
195
|
|
|
440
|
|
|
485
|
|
|
95
|
|
|
-
|
|
|
1,215
|
Other
|
|
30
|
|
|
80
|
|
|
110
|
|
|
65
|
|
|
60
|
|
|
45
|
|
|
45
|
|
|
50
|
|
|
265
|
Total
|
$
|
3,075
|
|
$
|
2,805
|
|
$
|
3,350
|
|
$
|
2,790
|
|
$
|
915
|
|
$
|
930
|
|
$
|
455
|
|
$
|
310
|
|
$
|
5,400
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
capital expenditures for new wind projects that have been identified and
related transmission. NextEra Energy Resources expects to add
new wind generation of approximately 1,000 mw in 2010 and 1,000 mw to
1,500 mw in each of 2011 and 2012, subject to, among other things,
continued public policy support, support for the construction and
availability of sufficient transmission facilities and capacity, continued
market demand, supply chain expansion and access to capital at reasonable
cost and on reasonable terms. The cost of the planned wind
additions for 2011 and 2012 is estimated to be approximately $2.2 billion
to $3.3 billion in each year, which is not included in the table
above.
|
(b)
|
Includes
nuclear fuel.
|
These
estimates are subject to continuing review and adjustment and actual capital
expenditures may vary significantly from these estimates. See
Management's Discussion - Liquidity and Capital Resources - Contractual
Obligations and Estimated Planned Capital Expenditures and Note 14 -
Commitments.
Portfolio by
Category.
NextEra Energy
Resources' generating assets are categorized as follows:
Wind Assets
- At
December 31, 2009, NextEra Energy Resources had ownership interests in wind
plants with a combined capacity of approximately 7,544 mw (net ownership), of
which approximately 75% have long-term contracts with utilities and power
marketers, predominantly under fixed-price agreements with expiration dates
ranging from 2011 to 2034. The expected output of the remaining 25%
is substantially hedged through 2011 and partially hedged through 2016 against
changes in commodity prices. NextEra Energy Resources operates
substantially all of these wind facilities. Approximately 92% of
NextEra Energy Resources' net ownership in wind facilities has received exempt
wholesale generator status as defined under the Holding Company
Act. Essentially all of the remaining facilities have qualifying
facility status under PURPA. NextEra Energy Resources' wind
facilities are located in 17 states and Canada. NextEra Energy
Resources expects to add approximately 1,000 mw of new wind generation in
2010.
Contracted Assets
- At
December 31, 2009, NextEra Energy Resources had 3,533 mw of non-wind
contracted assets. The contracted category includes all projects,
other than wind, with contracts for substantially all of their
output. Essentially all of these contracted assets were under power
sales contracts with utilities, with contract expiration dates ranging from 2011
to 2033 and have firm fuel and transportation agreements with expiration dates
ranging from December 2010 to 2022. See
Note 14 - Contracts. Approximately 1,825 mw of this
capacity is natural gas-fired generation. The remaining 1,708 mw uses
a variety of fuels and technologies such as nuclear, oil, solar, coal and
petroleum coke. As of December 31, 2009, approximately 93% of
NextEra Energy Resources' contracted generating capacity is from power plants
that have received exempt wholesale generator status under the Holding Company
Act, while the remaining 7% has qualifying facility status under
PURPA.
Merchant Assets
- At
December 31, 2009, NextEra Energy Resources' portfolio of merchant assets
includes 7,071 mw of owned nuclear, natural gas, oil and hydro generation, of
which 3,772 mw is located in the Northeast region, 2,792 mw in the ERCOT region
and 507 mw in the West region. The merchant assets include 1,017 mw
of peak generating facilities. Merchant assets are plants that do not
have long-term power sales agreements to sell their output and therefore require
active marketing and hedging. Approximately 75% (based on net mw
capability) of the natural gas fueled merchant assets have natural gas supply
agreements or a combination of natural gas supply and transportation agreements
to provide for on-peak natural gas requirements. In mid-2010, two
natural gas fired plants, located in California and Pennsylvania, with a
combined net generating capacity of approximately 1,250 mw, will move to the
contracted assets category when their respective long-term power sales
agreements become effective. See Note 14 -
Contracts. Derivative instruments (primarily swaps, options, futures
and forwards) are used to lock in pricing and manage the commodity price risk
inherent in power sales and fuel purchases. Managing market risk
through these instruments introduces other types of risk, primarily counterparty
and operational risks. See Energy Marketing and Trading
below.
Nuclear
Operations.
NextEra Energy Resources wholly owns, or has
undivided interests in, three nuclear power plants with a total net generating
capability of 2,552 mw. NextEra Energy Resources is responsible for
all plant operations and the ultimate decommissioning of the plants, the cost of
which is shared on a pro-rata basis by the joint owners for the jointly owned
plants. See estimated decommissioning cost data in
Note 1 - Decommissioning of Nuclear Plants, Dismantlement of
Plants and Other Accrued Asset Removal Costs - NextEra Energy
Resources. The nuclear units are periodically removed from service to
accommodate normal refueling and maintenance outages, repairs and certain other
modifications. The following table summarizes certain information
related to NextEra Energy Resources' nuclear units:
Facility
|
|
Location
|
|
Net
Capability
(mw)
|
|
Portfolio
Category
|
|
Operating
License Expiration Dates
|
|
Next
Scheduled
Refueling
Outage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seabrook
|
|
New
Hampshire
|
|
|
1,098
|
|
|
Merchant
|
|
|
2030
|
(a)
|
|
April
2011
|
Duane
Arnold
|
|
Iowa
|
|
|
431
|
|
|
Contracted
(b)
|
|
|
2014
|
(c)
|
|
October
2010
|
Point
Beach Unit No. 1
|
|
Wisconsin
|
|
|
509
|
|
|
Contracted
(d)
|
|
|
2030
|
|
|
March
2010
|
Point
Beach Unit No. 2
|
|
Wisconsin
|
|
|
514
|
|
|
Contracted
(d)
|
|
|
2033
|
|
|
March
2011
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
NextEra
Energy Resources intends to seek approval from the NRC to renew Seabrook's
operating license for an additional 20 years.
|
(b)
|
NextEra
Energy Resources sells substantially all of its share of the output of
Duane Arnold under a long-term contract expiring in
2014.
|
(c)
|
In
2008, NextEra Energy Resources filed an application with the NRC to renew
Duane Arnold's operating license for an additional 20
years.
|
(d)
|
NextEra
Energy Resources sells 100% of the output of Point Beach Units Nos. 1 and
2 under a long-term contract through the current license
terms.
|
NextEra
Energy Resources is in the process of adding approximately 80 mw of capacity at
each of its existing nuclear units at Point Beach during the scheduled refueling
outages in the fall of 2011 for Unit No. 1 and the spring of 2011 for Unit
No. 2. The construction costs relating to the capacity additions
yet to be incurred as of December 31, 2009 are included in estimated
planned capital expenditures set forth in Capital Expenditures
above. See Note 14 - Commitments.
NextEra
Energy Resources' nuclear facilities have several contracts for the supply,
conversion, enrichment and fabrication of nuclear fuel with expiration dates
ranging from March 2010 to 2022. See Note 14 -
Contracts. Under the Nuclear Waste Policy Act, the DOE is responsible
for the development of a repository for the disposal of spent nuclear fuel and
high-level radioactive waste. As required by the Nuclear Waste Policy
Act, subsidiaries of NextEra Energy Resources are parties to contracts with the
DOE to provide for disposal of spent nuclear fuel from its Seabrook, Duane
Arnold and Point Beach nuclear units. The DOE was required to
construct permanent disposal facilities and take title to and provide
transportation and disposal for spent nuclear fuel by January 31, 1998 for
a specified fee based on current generation from nuclear power
plants. The total cumulative amount of such fees paid to the U.S.
Government's nuclear waste fund for Seabrook, Duane Arnold and Point Beach,
including amounts paid by all joint owners, since the start of the plants'
operations through December 31, 2009, is approximately $514 million, of
which NextEra Energy Resources has paid approximately $83 million since the date
of the plants' acquisition. The DOE did not meet its statutory
obligation for disposal of spent nuclear fuel under the Nuclear Waste Policy
Act. In 2009, certain subsidiaries of NextEra Energy Resources and
certain nuclear plant joint owners signed the spent fuel settlement agreement
with the U.S. Government agreeing to dismiss with prejudice lawsuits filed
against the U.S. Government seeking damages caused by the DOE's failure to
dispose of spent nuclear fuel from the Seabrook, Duane Arnold and Point Beach
nuclear plants. The spent fuel settlement agreement permits NextEra
Energy Resources to make annual filings to recover certain spent fuel storage
costs incurred by NextEra Energy Resources which will be payable by the U.S.
Government on an annual basis. Through December 31, 2009,
NextEra Energy Resources has collected approximately $42 million of the amount
due from the U.S. Government pursuant to the spent fuel settlement agreement and
has paid approximately $18 million to the joint owners of Duane Arnold and
Seabrook. An additional payment from the U.S. Government of
approximately $12 million relating to costs incurred in 2008 is
pending. NextEra Energy Resources plans to file a claim for spent
fuel storage costs incurred during 2009 by April 2010. NextEra Energy
Resources will continue to pay fees to the U.S. Government's nuclear waste
fund. The DOE filed a license application for a permanent disposal
facility for spent nuclear fuel with the NRC in 2008, and a licensing proceeding
is ongoing before the NRC. However, it is uncertain when a permanent
disposal facility will be constructed and when it would be ready to begin
receiving spent nuclear fuel shipments. All of NextEra Energy
Resources' nuclear facilities use both on-site storage pools and dry storage
casks to store spent nuclear fuel generated by these facilities, which should
allow NextEra Energy Resources to store spent nuclear fuel at these facilities
through license expiration.
Energy Marketing and
Trading.
PMI, a subsidiary of NextEra Energy Resources, buys
and sells wholesale energy commodities, such as natural gas, oil and
electricity. Its primary role is to manage the commodity risk of
NextEra Energy Resources' portfolio. PMI sells the output from
NextEra Energy Resources' plants that has not been sold under long-term
contracts. PMI procures natural gas and oil for NextEra Energy
Resources' use in power generation, as well as substantially all of the
electricity needs for NextEra Energy Resources' retail operations conducted
primarily in Texas, which at December 31, 2009 served approximately 1,010
mw of peak load to approximately 148,000 customers. PMI uses
derivative instruments such as swaps, options, futures and forwards to manage
the risk associated with fluctuating commodity prices and to optimize the value
of NextEra Energy Resources' power generation assets. PMI also
provides full energy and capacity requirements services primarily to
distribution utilities in certain markets and engages in power and gas marketing
and trading activities to take advantage of expected future favorable price
movements. Full energy and capacity requirements services include
load-following services, which require the supplier of energy to vary the
quantity delivered based on the load demand needs of the customer, as well as
various ancillary services. At December 31, 2009, PMI provided
full energy and capacity requirements services totaling approximately 5,000 mw
of peak load in the NEPOOL, PJM, ERCOT and MISO markets. The results
of PMI's activities are included in NextEra Energy Resources' operating
results. See Management's Discussion - Energy Marketing and Trading
and Market Risk Sensitivity, Note 1 - Energy Trading and
Note 3.
Regulation.
At
December 31, 2009, NextEra Energy Resources had ownership interests in
operating independent power projects that have received exempt wholesale
generator status as defined under the Holding Company Act, which represent
approximately 95% of NextEra Energy Resources' net generating
capacity. Exempt wholesale generators own or operate a facility
exclusively to sell electricity to wholesale customers. They are
barred from selling electricity directly to retail customers. NextEra
Energy Resources' exempt wholesale generators produce electricity from wind,
hydropower, fossil fuels and nuclear facilities. Essentially all of
the remaining 5% of NextEra Energy Resources' net generating capacity has
qualifying facility status under PURPA. NextEra Energy Resources'
qualifying facilities generate electricity from wind, solar, fossil fuels or
waste coal. Qualifying facility status exempts the projects from,
among other things, many of the provisions of the Federal Power Act, as well as
state laws and regulations relating to rates and financial or organizational
regulation of electric utilities. While projects with qualifying
facility and/or exempt wholesale generator status are exempt from various
restrictions, each project must still comply with other federal, state and local
laws, including, but not limited to, those regarding siting, construction,
operation, licensing, pollution abatement and other environmental
laws.
Each of
the markets in which NextEra Energy Resources operates is subject to regulation
and specific rules. NextEra Energy Resources continues to evaluate
regional market redesigns of existing operating rules for the integration of
renewable energy resources and for the purchase and sale of energy
commodities. ERCOT is scheduled to implement a locational marginal
price (LMP) market design (a market-pricing approach used to manage the
efficient use of the transmission system when congestion occurs on the
electricity grid) in late 2010. The final ERCOT market design has not
yet been determined, therefore, NextEra Energy Resources is currently unable to
determine the effects, if any, on its business resulting from implementation of
the final market design. In the second quarter of 2009, California
implemented a LMP market design, which did not have a material effect on NextEra
Energy Resources' business. Additionally, certain NextEra Energy
Resources facilities are subject to the NERC’s mandatory reliability standards,
and its nuclear facilities are subject to the jurisdiction of the
NRC.
Competition.
Competitive
wholesale markets in the United States continue to evolve and vary among and
within geographic regions. Revenues from electricity sales in these
markets vary based on the prices obtainable for energy, capacity and other
ancillary services. Some of the factors affecting success in these
markets include the ability to operate generating assets efficiently and
reliably, the price and supply of fuel, transmission constraints, wind, solar
and hydro resources (weather conditions), competition from regulated utilities
and new sources of generation, effective risk management, demand growth,
environmental requirements and exposure to legal and regulatory
changes.
Expanded
competition in a frequently changing regulatory environment presents both
opportunities and risks for NextEra Energy Resources. Opportunities
exist for the selective acquisition of generation assets and for the
construction and operation of efficient plants that can sell power in
competitive markets. NextEra Energy Resources seeks to reduce its
market risk by having a diversified portfolio by fuel type and location, as well
as by contracting for the future sale of a significant amount of the electricity
output of its plants.
Environmental.
NextEra
Energy Resources is subject to environmental laws and regulations and is
affected by some of the emerging issues included in the Environmental Matters
section.
During
2009, NextEra Energy Resources spent approximately $4 million on capital
additions to comply with existing environmental laws and
regulations. NextEra Energy Resources' capital expenditures to comply
with existing environmental laws and regulations are estimated to be $14 million
for 2010 through 2012, including approximately $6 million in 2010, and are
included in estimated planned capital expenditures set forth in General
above.
Employees.
NextEra
Energy Resources and its subsidiaries had approximately 4,570 employees at
December 31, 2009. Subsidiaries of NextEra Energy Resources have
collective bargaining agreements with various unions which are summarized in the
table below.
Union
|
|
Location
|
|
Contract
Expiration
Date
|
|
%
of NextEra Energy
Resources
Employees
Covered
|
|
|
|
|
|
|
|
|
|
|
IBEW
|
|
Wisconsin
|
|
August
2010 - August 2012
(a)
|
|
|
10
|
%
|
|
Utility
Workers Union of America
|
|
New
Hampshire
|
|
December
2013
|
|
|
5
|
|
|
IBEW
|
|
Iowa
|
|
May
2012
|
|
|
4
|
|
|
IBEW
|
|
Maine
|
|
February
2013
|
|
|
2
|
|
|
Security
Police and Fire Professionals of America
|
|
Iowa
|
|
July
2012
|
|
|
2
|
|
|
IBEW
|
|
California
|
|
March
2012
|
|
|
-
|
(b)
|
|
Total
|
|
|
|
|
|
|
23
|
%
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Various
employees at Point Beach are represented by the IBEW under four separate
contracts with different expiration dates.
|
(b)
|
Employees
constitute less than 1% of NextEra Energy Resources'
employees.
|
OTHER
FPL GROUP OPERATIONS
FPL
Group's Corporate and Other segment represents other business activities,
primarily FPL FiberNet and Lone Star Transmission, that are not separately
reportable. See Note 15.
FPL
FiberNet.
FPL FiberNet, a wholly-owned subsidiary of FPL Group
Capital, was formed in 2000 to enhance the value of FPL Group's fiber-optic
network assets that were originally built to support FPL
operations. Accordingly, in 2000, FPL's existing fiber-optic lines
were transferred to FPL FiberNet. FPL FiberNet is a limited liability
company organized under the laws of Delaware. FPL FiberNet leases
wholesale fiber-optic network capacity and dark fiber to FPL and other
customers, primarily telephone, wireless carriers, internet and other
telecommunications companies. FPL FiberNet's primary business focus
is the Florida metropolitan (metro) market. Metro networks cover
Miami, Fort Lauderdale, West Palm Beach, Tampa, St. Petersburg, Orlando and
Jacksonville. FPL FiberNet also has a long-haul network within
Florida that leases bandwidth at wholesale rates. At
December 31, 2009, FPL FiberNet's network consisted of approximately 2,950
route miles, which interconnect major cities throughout Florida.
At
December 31, 2009, FPL Group's investment in FPL FiberNet totaled
approximately $164 million. FPL FiberNet invested approximately $54
million during 2009 and plans to invest a total of approximately $110 million
over the next five years primarily to meet customers' specific requirements
under contract.
Lone Star
Transmission.
In 2008, the Public Utility Commission of Texas
(PUCT) approved a $4.9 billion transmission grid improvement program that would
add approximately 2,300 miles of 345 kv lines to deliver wind power from the
Competitive Renewable Energy Zones (CREZ) in west Texas and the Texas panhandle
to the Dallas/Fort Worth area and other population centers in
Texas. In May 2009, Lone Star Transmission, LLC (Lone Star), an
indirect wholly-owned subsidiary of FPL Group Capital, was, under the PUCT's
Transmission Service Provider (TSP) Order, allocated $565 million
in transmission projects by the PUCT under the CREZ
program. Lone Star's CREZ project would include constructing and
operating 250 miles of 345 kv transmission lines in Texas. Lone Star
intends to file a certificate of convenience and need (CCN) with the PUCT by
mid-2010, which will begin the process of both establishing Lone Star as a
regulated transmission provider in Texas and obtaining approval to begin
construction of Lone Star's CREZ project. An order from the PUCT
regarding Lone Star's CCN application is expected later in 2010. In
January 2010, the TSP order was reversed and remanded back to the PUCT to
consider certain issues raised in an appeal of the TSP order. The
Lone Star CREZ transmission project is subject to, among other things, issuance
of the revised TSP order, receipt, and possible petition for reconsideration and
appeal, of all applicable ERCOT and PUCT approvals. Once all required
approvals are obtained, Lone Star expects to commence construction on its CREZ
transmission project. Due to the contingencies discussed above, the
estimated costs associated with this project are not included in the capital
expenditures table in Note 14 - Commitments.
ENVIRONMENTAL
MATTERS
Federal,
state and local environmental laws and regulations cover air and water quality,
land use, power plant and transmission line siting, EMF from power lines and
substations, oil discharge from transformers, lead paint, asbestos, noise and
aesthetics, solid waste, natural resources, wildlife mortality and other
environmental matters. Compliance with these laws and regulations
increases the cost of electric service by requiring, among other things, changes
in the design and operation of existing facilities and changes or delays in the
location, design, construction and operation of new
facilities. Environmental laws and regulations are subject to
change. The following is a discussion of emerging federal and state
initiatives and rules that could potentially affect FPL Group and its
subsidiaries, including FPL and NextEra Energy Resources.
Climate Change
- The U.S.
Congress and certain states and regions are considering several legislative and
regulatory proposals that would establish new regulatory requirements and
reduction targets for GHG emissions. In June 2009, the U.S. House of
Representatives passed the American Clean Energy and Security Act of 2009
(ACESA) to encourage the development of clean energy sources and reduce GHG
emissions. ACESA would establish, among other things, provisions for
federal renewable energy standards for electric suppliers and a national cap and
trade program to reduce GHG emissions. The U.S. Senate is considering
similar proposals. It is not clear whether and when this or similar legislation
may be enacted. The economic and operational impact of this or any
similar legislation on FPL Group and FPL depends on a variety of factors,
including, but not limited to, the allowed emissions, whether the permitted
emissions will be allocated or auctioned, the cost to reduce emissions or buy
allowances in the marketplace, and the availability of offsets and mitigating
factors to moderate the costs of compliance. If and until legislation
is enacted and implementing regulations are adopted, the economic and
operational impact (either positive or negative) on FPL Group and FPL cannot be
determined but could be material.
Meanwhile,
the EPA is implementing regulatory action under the Clean Air Act to address
climate change. In April 2009, the EPA released a proposed
endangerment finding under Section 202(a) of the Clean Air Act that the current
and projected concentrations of GHG in the atmosphere threaten the public health
and welfare of current and future generations, and issued a final finding in
December 2009. The final finding noted that, among other things,
climate change is expected to result in an increase in electricity production,
especially supply for peak demand, a potentially adverse impact on hydropower
resources as well as the potential risk of serious adverse effects on energy
infrastructure from extreme weather events. In September 2009, the
EPA and the U.S. Department of Transportation issued a proposed rule under the
Clean Air Act to regulate GHG emissions from light duty vehicles. The
EPA's proposed rule is expected to be finalized in March 2010, which will then
trigger certain permitting requirements under the Clean Air Act for any new or
modified stationary sources of GHG, including power plants, that exceed certain
GHG emissions levels. Also, in September 2009, the EPA released a
proposed rule under the Clean Air Act to tailor requirements for GHG emissions
which would increase applicability thresholds for major sources from 100 or 250
tons per year (tpy) to 25,000 tpy. New facilities emitting 25,000 tpy
or more of GHG and modifications to existing facilities resulting in an increase
of GHG emissions in the range of 10,000 - 25,000 tpy or more will have to meet
additional requirements. In September 2009, the EPA issued a final
rule for mandatory reporting of GHG emissions from facilities with emissions of
25,000 tpy or more, which includes all of FPL's and NextEra Energy Resources'
fossil plants. Affected facilities must begin collecting data in
January 2010 and the first emissions report is due on March 31, 2011 for
the 2010 period.
Based on
current reference data available from government sources, FPL Group is among the
lowest emitters, among electric generators, of GHG in the United States measured
by its rate of emissions expressed as pounds of CO
2
per
megawatt-hour (mwh) of generation. However, the legislative and
regulatory proposals have differing methods of implementation and the impact on
FPL's and NextEra Energy Resources' generating units and/or the financial impact
(either positive or negative) to FPL Group and FPL could be material, depending
on the eventual structure of any legislation enacted or specific implementation
rules adopted.
In
anticipation of the potential for further imposition of GHG emission limits on
the electric industry in the future, FPL Group has taken a leadership role in
the debate of climate change regulation and is involved in several climate
change initiatives, including, but not limited to, the following:
·
|
voluntary
reporting of its GHG emissions and climate change strategy through the
Carbon Disclosure Project (an investor-led initiative to identify climate
change impacts on publicly-traded
companies);
|
·
|
participation
in the U.S. Climate Action Partnership (an alliance made up of a diverse
group of U.S.-based businesses and environmental organizations, which in
January 2009 issued the Blueprint for Legislative Action, a set of
legislative principles and recommendations to address global climate
change and the reduction of GHG
emissions);
|
·
|
participation
in the Clinton Global Initiative (an organization which seeks to foster
shared commitment by individuals, businesses and governments to confront
major world issues and achieve real
change);
|
·
|
participated
in the EPA's Climate Leaders Program to reduce GHG intensity in the United
States 18% by 2012, including reporting of emissions data
annually. During 2008, FPL Group met its commitment to achieve
a 2008 target emissions rate reduction of 18% below a 2001 baseline
emission rate measured in pounds per
mwh;
|
·
|
supporting
Edison Electric Institute's climate change framework, which supports the
concept of mandatory legislation capping carbon emissions economy wide and
recommends, among other things, an 80% reduction of carbon emissions from
current levels by 2050;
|
·
|
participation
in various groups, including working with the Governor of Florida on the
Governor's Action Team on Energy and Climate Change, the FDEP, the Florida
Energy and Climate Commission and the FPSC in addressing executive orders
issued in 2007 by the Governor of Florida (see below for additional
information); and
|
·
|
focusing
on customer energy efficiency and conservation through programs such as
Energy Smart Florida and EarthEra Renewable Energy
Trust.
|
In 2007,
the Governor of Florida issued three executive orders aimed at reducing Florida
GHG emissions and improving Florida's energy efficiency. The orders
state, among other things, that Florida utilities will be required to reduce
emissions to 2000 levels by 2017; to 1990 levels by 2025; and to 20% of 1990
levels by 2050, and that the FPSC should begin the process of adopting a
renewable portfolio standard that would require utilities to produce at least
20% of their energy from renewable sources, with an emphasis on wind and solar
energy. The FPSC submitted a draft rule in January 2009 which was not
adopted by the legislature. The FDEP is currently evaluating various
options regarding GHG emissions reductions. Any rule issued by FDEP
or FPSC would require approval by the legislature. The impact of any
future legislation on FPL and FPL Group cannot be determined at this
time.
NextEra
Energy Resources' plants operate in many states and regions that have developed
or are in the process of developing legislation to reduce GHG emissions,
including, but not limited to, the following:
·
|
Renewable
portfolio standards (RPS), currently in place in 31 states, require
electricity providers in the state to meet a certain percentage of their
retail sales with energy from renewable sources. These
standards vary by state, but the majority include requirements to meet 10%
to 25% of the electricity providers' retail sales with energy from
renewable sources by 2025.
|
·
|
The
Regional Greenhouse Gas Initiative (RGGI) is a GHG reduction initiative
whereby ten Northeast and Mid-Atlantic member states have established a
cap and trade program for covered electric generating units in
Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York,
Vermont, Maryland, Massachusetts and Rhode Island. RGGI members
have agreed to stabilize power plant CO
2
emissions at 2009 levels through the end of 2014 and to further reduce the
sector's emissions another 10% by the end of 2018. The RGGI GHG
reduction requirements will affect 12 NextEra Energy Resources' fossil
electric generating units, requiring those electric generating units to
reduce emissions or to acquire CO
2
allowances for emissions of CO
2
beginning in 2009. All RGGI states have enacted legislation and
regulations. Based on NextEra Energy Resources' clean
generating portfolio in the RGGI marketplace, NextEra Energy Resources
experienced a positive impact on earnings in 2009 and expects that the
requirements will have a positive overall impact on NextEra Energy
Resources' earnings in 2010.
|
·
|
The
Western Climate Initiative is a GHG reduction initiative with a goal of
reducing CO
2
emissions by 15% below 2005 levels by 2020 for participants (Arizona,
California, Oregon, Montana, New Mexico, Washington and Utah, as well as
British Columbia, Manitoba, Ontario and Quebec,
Canada).
|
·
|
California
Greenhouse Gas Regulation - California has enacted legislation to reduce
GHG emissions in the state to 1990 emissions levels by
2020. Pursuant to the legislation, the California Air Resources
Board (CARB) must implement multi-sector GHG reduction measures by January
1, 2012. The CARB has released a proposed GHG program which
includes a cap and trade program and administrative fee on GHG emissions
sources but excludes certain details. The CARB anticipates
supplementing its proposal in the spring of 2010 and finalizing it in
November 2010.
|
·
|
The
Midwestern Greenhouse Gas Reduction Accord (MGGRA) is an initiative to
reduce GHG emissions through the establishment of targets for GHG
reductions and the development of a cap and trade
program. Participants in MGGRA are Illinois, Iowa, Kansas,
Michigan, Minnesota, Wisconsin and Manitoba, Canada. MGGRA has
proposed a multi-sector program that, if implemented, will initially be
focused on the electricity generation and imports, industrial combustion
and industrial processes sectors. Currently, NextEra Energy
Resources does not have any fossil-fired generation in the MGGRA
region.
|
Except
as discussed above regarding RPS and the RGGI, the final requirements to be
enacted in connection with these initiatives are uncertain and the financial and
operational impacts on FPL Group cannot be determined at this
time. However, NextEra Energy Resources' portfolio in these regions
is heavily weighted toward non-CO
2
emitting
and low CO
2
emitting generation sources (wind, hydro, solar, nuclear and natural
gas).
Clean Air Act Mercury/Nickel
Rule
- During 2005, the EPA determined that new data indicated that
nickel emissions from oil-fired units and mercury emissions from coal-fired
units should not be regulated under Section 112 of the Clean Air Act, which sets
Maximum Achievable Control Technology standards (MACT), and as a result the EPA
published a final rule delisting nickel and mercury from the requirements of
regulation under Section 112. In lieu of regulation under Section
112, the EPA issued a final rule (Clean Air Mercury Rule) to regulate mercury
emissions from coal-fired electric utility steam generating units under Section
111 of the Clean Air Act. The mercury and nickel delisting rule, as
well as the Clean Air Mercury Rule, were challenged by various states and
environmental groups. In 2008, the U.S. Court of Appeals for the
District of Columbia (DC Circuit) vacated both the EPA's mercury and nickel
delisting rule and the Clean Air Mercury Rule, requiring the EPA to proceed with
rulemaking under Section 112. In November 2009, the EPA issued a
final information collection request (ICR) for hazardous air pollutants for coal
and oil-fired electric generating units which requires extensive fuel and
emissions stack testing from oil and gas facilities throughout the U.S. which
must be completed by August 2010. The ICR lists certain FPL oil-fired
units, Scherer Unit No. 4, SJRPP Units Nos. 1 and 2, certain
coal-fired units from which FPL purchases power and three of NextEra Energy
Resources' oil-fired units in Maine for stack testing. Depending upon
the final outcome of the EPA's rulemaking, it is possible that these units may
be required to add additional pollution control equipment.
Clean Air Interstate Rule
(CAIR)
- In 2005, the EPA published a final rule that requires SO
2
and NOx
emissions reductions from electric generating units in 28 states, where the
emissions from electric generating units are deemed to be transported to
downwind states, allegedly resulting in fine particulate (PM 2.5) and ozone
non-attainment areas. In July 2008, the DC Circuit issued an opinion
vacating the CAIR and remanded the rule to the EPA for further
rulemaking. In September 2008, the EPA and three other parties
petitioned for rehearing of that order. In December 2008, the DC
Circuit remanded the CAIR back to the EPA for further rulemaking without
vacating the rule. Because the DC Circuit chose not to vacate the
rule, FPL Group and FPL were required to begin complying with the current
version of the CAIR on January 1, 2009 and must continue to comply until
the EPA rewrites the rule; a proposed rule is expected to be published in
mid-2010. The impact of complying with the current version of the
CAIR has not had, and is not expected to have, a material effect on the
financial statements of FPL Group and FPL.
FPL
Group and others have urged the EPA to move forward with separate rulemaking
that removes the NOx fuel adjustment factors deemed unlawful by the
court. FPL Group contends that the NOx fuel adjustment factors are
used to unfairly skew the allocation of emission allowances to states with
relatively higher emissions.
Clean Air Visibility Rule
-
In 2005, the EPA issued the Clean Air Visibility Rule to address regional haze
in areas which include certain national park and wilderness areas through the
installation of BART for electric generating units. BART eligible
units include those built between 1962 and 1977 that have the potential to emit
more than 250 tons of visibility-impairing pollution per year. The
rule requires states to complete BART determinations and allows for a five-year
period to implement pollution controls. The impact of the final BART
requirements of the Clean Air Visibility Rule on FPL's Turkey Point Fossil Units
Nos. 1 and 2 and on one of NextEra Energy Resources' units located in Maine
are not expected to be material to the financial statements of FPL Group or
FPL.
In 2007,
the FDEP began the process to expand the number of units covered under the
"Reasonable Further Progress" provision of the Clean Air Visibility Rule in an
effort to reduce emissions of SO
2
in areas
which include certain national park and wilderness areas. The
provision requires that control measures be in place by 2017. Eight
of FPL's generating facilities are affected under the Reasonable Further
Progress provision (Manatee Units Nos. 1 and 2, Port Everglades Units
Nos. 3 and 4, Turkey Point Fossil Units Nos. 1 and 2 and SJRPP Units
Nos. 1 and 2). While the final requirements of the Reasonable Further
Progress provision are uncertain, it is possible that these units may be
required to switch fuels, install additional emission controls or make
adjustments to existing controls to meet the provision's emissions
requirements.
Clean Water Act Section
316(b)
- In 2004, the EPA issued a rule under Section 316(b) of the Clean
Water Act to address the location, design, construction and capacity of intake
structures at existing power plants with once-through cooling water
systems. The rule would have required FPL Group to demonstrate that
it had met or would meet new impingement mortality (the loss of organisms
against screens and other exclusion devices) and/or entrainment (the loss of
organisms by passing through the cooling water system) reductions by complying
with one of several alternatives, including the use of technology and/or
operational measures. In 2007, the U.S. Court of Appeals for the
Second Circuit ruled on a challenge to the rule by a number of environmental
groups and six northeastern states. In its ruling, the court
eliminated several of the compliance alternatives, including the use of a
"cost-benefit test" and restoration measures, from consideration and remanded
the rule to the EPA for further rulemaking. As a result of the 2007
court decision, the EPA has suspended its rule under Section 316(b) of the Clean
Water Act and directed its jurisdictions to address Section 316(b) compliance
based on best professional judgment when issuing and renewing
permits. In April 2009, the U.S. Supreme Court ruled that the use of
a cost-benefit test is an acceptable alternative under Section 316(b) of the
Clean Water Act for determining the best technology available for minimizing
adverse environmental impacts from the use of large cooling water intake
systems. The EPA is working on new rulemaking which is expected to be
published in the second quarter of 2010. Depending upon the final
outcome of the litigation, additional rulemaking by the EPA could impact eight
of FPL's generating facilities (Cape Canaveral, Cutler, Fort Myers, Lauderdale,
Port Everglades, Sanford, Riviera and St. Lucie) and three NextEra Energy
Resources plants (Seabrook, Point Beach and an oil-fired plant in
Maine).
Revisions to the National Ambient
Air Quality Standards for Ozone
- In 2008, the EPA issued a final rule
establishing a new standard for ground-level ozone at 75 parts per billion
(ppb). After reconsideration, in January 2010, the EPA issued a
proposed revision to the national ambient air quality standards for ground-level
ozone by revising the 2008 primary standard to a more restrictive primary
standard of between 60 ppb and 70 ppb. It is anticipated that the EPA
will issue a final rule by August 2010 which will require states to (i) identify
areas which will be designated as non-attainment for ground-level ozone within
120 days of the final rule, (ii) develop plans to meet the attainment standard
by 2013 and (iii) begin meeting the attainment standard between 2014 and 2031
based on non-attainment severity. Generating facilities located in
areas designated as non-attainment may be required to add additional pollution
control equipment. A review of recent ozone monitoring data indicates
that some or all of FPL's generating facilities may be located in or affected by
non-attainment areas, or areas projected to be in non-attainment depending on
the primary standard adopted.
EXECUTIVE OFFICERS OF FPL GROUP
(a)
Name
|
|
Age
|
|
Position
|
|
Effective
Date
|
Christopher
A. Bennett
|
|
51
|
|
Executive
Vice President & Chief Strategy, Policy & Business Process
Improvement Officer of FPL Group
|
|
February
15, 2008
(b)
|
Paul
I. Cutler
|
|
50
|
|
Treasurer
of FPL Group
Treasurer
of FPL
Assistant
Secretary of FPL Group and FPL
|
|
February
19, 2003
February
18, 2003
December
10, 1997
|
F.
Mitchell Davidson
|
|
47
|
|
Chief
Executive Officer of NextEra Energy Resources
President
of NextEra Energy Resources
|
|
July
29, 2008
December
15, 2006
|
K.
Michael Davis
|
|
63
|
|
Controller
and Chief Accounting Officer of FPL Group
Vice
President, Accounting and Chief Accounting Officer of FPL
|
|
May
13, 1991
July
1, 1991
|
Moray
P. Dewhurst
|
|
54
|
|
Vice
Chairman and Chief of Staff of FPL Group
|
|
August
17, 2009
|
Chris
N. Froggatt
|
|
52
|
|
Vice
President of FPL Group
|
|
October
19, 2009
|
Lewis
Hay, III
|
|
54
|
|
Chief
Executive Officer of FPL Group
Chairman
of FPL Group and FPL
|
|
June
11, 2001
January
1, 2002
|
Joseph
T. Kelliher
|
|
49
|
|
Executive
Vice President, Federal Regulatory Affairs of FPL Group
|
|
May
18, 2009
|
Robert
L. McGrath
|
|
56
|
|
Executive
Vice President, Engineering, Construction & Corporate Services of FPL
Group and FPL
|
|
February
21, 2005
(b)
|
Manoochehr
K. Nazar
|
|
55
|
|
Executive
Vice President, Nuclear Division and Chief Nuclear Officer of FPL
Group
Executive
Vice President, Nuclear Division and Chief Nuclear Officer of
FPL
|
|
January
1, 2010
January
15, 2010
|
Armando
J. Olivera
|
|
60
|
|
Chief
Executive Officer of FPL
President
of FPL
|
|
July
17, 2008
June
24, 2003
|
Armando
Pimentel, Jr.
|
|
47
|
|
Chief
Financial Officer of FPL Group and FPL
Executive
Vice President, Finance of FPL Group and FPL
|
|
May
3, 2008
February
15, 2008
(b)
|
James
W. Poppell, Sr.
|
|
59
|
|
Executive
Vice President, Human Resources of FPL Group and FPL
Assistant
Secretary of FPL Group and FPL
|
|
December
12, 2008
January
28, 2005
|
James
L. Robo
|
|
47
|
|
President
and Chief Operating Officer of FPL Group
|
|
December
15, 2006
|
Antonio
Rodriguez
|
|
67
|
|
Executive
Vice President, Power Generation Division of FPL Group
Executive
Vice President, Power Generation Division of FPL
|
|
January
1, 2007
(b)
July
1, 1999
(b)
|
Charles
E. Sieving
|
|
37
|
|
Executive
Vice President and General Counsel of FPL Group
Executive
Vice President and General Counsel of FPL
|
|
December
1, 2008
January
1, 2009
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Information
is as of February 25, 2010. Executive officers are elected
annually by, and serve at the pleasure of, their respective boards of
directors. Except as noted below, each officer has held his
present position for five years or more and his employment history is
continuous. Mr. Bennett was vice president, business strategy
& policy of FPL Group from July 2007 to February 15,
2008. Prior to that, Mr. Bennett was vice president of Dean
& Company, a management consulting and investment firm. Mr.
Davidson was senior vice president of business management of NextEra
Energy Resources from March 2005 to December 2006. Prior to
that, he was vice president of business management of NextEra Energy
Resources. Mr. Davis was also controller of FPL from July 1991
to September 2007. Mr. Dewhurst was vice president, finance and
chief financial officer of FPL Group and senior vice president, finance
and chief financial officer of FPL from July 2001 to May
2008. Mr. Froggatt was the vice president and treasurer of
Pinnacle West Capital Corporation, a public utility holding company, and
its major subsidiary, Arizona Public Service Company (APS), a regulated
utility, from December 2008 to October 2009. Prior to that, he
was vice president, controller and chief accounting officer of
APS. Mr. Hay was also chief executive officer of FPL from
January 2002 to July 2008. Mr. Hay was president of FPL Group
from June 2001 to December 2006. Mr. Kelliher was chairman of
the FERC from July 2005 to January 2009. Prior to that, he was
a commissioner at the FERC. Mr. Nazar was the chief nuclear
officer of FPL Group from January 2009 to December 2009. He was
senior vice president and chief nuclear officer of FPL from November 2007
to January 2009. Prior to that, Mr. Nazar was senior vice
president & chief nuclear officer of American Electric Power Company,
Inc., a public utility holding company. Mr. Pimentel was a
partner of Deloitte & Touche LLP, an independent registered public
accounting firm, from June 1998 to February 2008. Mr. Poppell
was vice president, human resources of FPL from November 2006 to December
2008. He was director, employee relations of FPL from January
2005 to November 2006. Mr. Robo was president of NextEra Energy
Resources from July 2002 to December 2006. He was also vice
president, corporate development and strategy of FPL Group from March 2002
to December 2006. Mr. Sieving was executive vice president,
general counsel and secretary of PAETEC Holding Corp., a communications
services and solutions provider, from February 2007 to November 2008 and
was primarily responsible for all legal and regulatory
matters. Prior to that, Mr. Sieving was a partner in the
corporate, securities and finance practice group of Hogan & Hartson
LLP, an international law firm, with which he had been associated since
October 1998.
|
(b)
|
FPL
Group title changed from vice president to executive vice president
effective May 23, 2008. Where applicable, FPL title changed
from senior vice president to executive vice president effective July 17,
2008.
|
Item
1A. Risk Factors
Risks
Relating to FPL Group's and FPL's Business
FPL
Group and FPL are subject to complex laws and regulations and to changes in laws
and regulations as well as changing governmental policies and regulatory
actions. FPL holds franchise agreements with local municipalities and
counties, and must renegotiate expiring agreements. These factors may
have a negative impact on the business and results of operations of FPL Group
and FPL.
·
|
FPL
Group and FPL are subject to complex laws and regulations, and to changes
in laws or regulations, with respect to, among other things, allowed rates
of return, industry and rate structure, operation of nuclear power
facilities, construction and operation of generation facilities,
construction and operation of transmission and distribution facilities,
acquisition, disposal, depreciation and amortization of assets and
facilities, recovery of fuel, purchased power and environmental costs,
decommissioning costs, ROE and equity ratio limits, transmission
reliability and present or prospective wholesale and retail
competition. This substantial and complex framework exposes FPL
Group and FPL to increased compliance costs and potentially significant
monetary penalties for non-compliance. The FPSC has the
authority to disallow recovery by FPL of any and all costs that it
considers excessive or imprudently incurred. The regulatory
process generally restricts FPL's ability to grow earnings and does not
provide any assurance as to achievement of earnings
levels.
|
·
|
FPL
Group and FPL also are subject to extensive federal, state and local
environmental statutes, rules and regulations, as well as the effect of
changes in or additions to applicable statutes, rules and regulations that
relate to, or in the future may relate to, for example, air quality, water
quality, climate change, GHG emissions, CO
2
emissions, radioactive emissions, waste management, marine and wildlife
mortality, natural resources, health, safety and renewable portfolio
standards that could, among other things, restrict or limit the output of
certain facilities or the use of certain fuels required for the production
of electricity and/or require additional pollution control equipment and
otherwise increase costs. There are significant capital,
operating and other costs associated with compliance with these
environmental statutes, rules and regulations, and those costs could be
even more significant in the future. Violations of certain of
these statutes, rules and regulations could expose FPL Group and FPL to
third-party disputes and potentially significant monetary penalties for
non-compliance.
|
·
|
FPL
Group and FPL operate in a changing market environment influenced by
various legislative and regulatory initiatives regarding regulation,
deregulation or restructuring of the energy industry, including, for
example, deregulation or restructuring of the production and sale of
electricity, as well as increased focus on renewable and clean energy
sources and reduction of CO
2
emissions and other GHG emissions. FPL Group and its
subsidiaries will need to adapt to these changes and may face increasing
costs and competitive pressure in doing
so.
|
·
|
FPL
Group's and FPL's results of operations could be affected by FPL's ability
to negotiate or renegotiate franchise agreements with municipalities and
counties in Florida.
|
The
operation and maintenance of power generation, transmission and distribution
facilities involve significant risks that could adversely affect the results of
operations and financial condition of FPL Group and FPL.
·
|
The
operation and maintenance of power generation, transmission and
distribution facilities involve many risks, including, for example, start
up risks, breakdown or failure of equipment, transmission and distribution
lines or pipelines and the availability of replacement equipment, the
inability to properly manage or mitigate known equipment defects
throughout FPL Group's and FPL's generation fleets and transmission and
distribution systems, use of new or unproven technology, the dependence on
a specific fuel source, failures in the supply or transportation of fuel,
the impact of unusual or adverse weather conditions (including natural
disasters such as hurricanes, floods and droughts), and performance below
expected or contracted levels of output or efficiency. This
could result in lost revenues and/or increased expenses, including, for
example, lost revenues due to prolonged outages and increased expenses due
to monetary penalties or fines, replacement equipment costs or an
obligation to purchase or generate replacement power at potentially higher
prices to meet contractual obligations. Insurance, warranties
or performance guarantees may not cover any or all of the lost revenues or
increased expenses. Breakdown or failure of an operating
facility of NextEra Energy Resources may, for example, prevent the
facility from performing under applicable power sales agreements which, in
certain situations, could result in termination of the agreement or
subject NextEra Energy Resources to incurring a liability for liquidated
damages.
|
The
operation and maintenance of nuclear facilities involves inherent risks,
including environmental, health, regulatory, terrorism and financial risks, that
could result in fines or the closure of nuclear units owned by FPL or NextEra
Energy Resources, and which may present potential exposures in excess of
insurance coverage.
·
|
FPL
and NextEra Energy Resources own, or hold undivided interests in, nuclear
generation facilities in four states. These nuclear facilities
are subject to environmental, health and financial risks such as on-site
storage of spent nuclear fuel, the ability to dispose of spent nuclear
fuel, the ability to maintain adequate reserves for decommissioning,
potential liabilities arising out of the operation of these facilities,
and the threat of a possible terrorist attack. Although FPL and
NextEra Energy Resources maintain decommissioning funds and external
insurance coverage to minimize the financial exposure to these risks, it
is possible that the cost of decommissioning the facilities could exceed
the amount available in the decommissioning funds, and that liability and
property damages could exceed the amount of insurance
coverage.
|
·
|
The
NRC has broad authority to impose licensing and safety-related
requirements for the construction and operation and maintenance of nuclear
generation facilities. In the event of non-compliance, the NRC
has the authority to impose fines or shut down a unit, or both, depending
upon its assessment of the severity of the situation, until compliance is
achieved. NRC orders or new regulations related to increased
security measures and any future safety requirements promulgated by the
NRC could require FPL and NextEra Energy Resources to incur substantial
operating and capital expenditures at their nuclear plants. In
addition, if a serious nuclear incident were to occur at an FPL or NextEra
Energy Resources plant, it could result in substantial costs. A
major incident at a nuclear facility anywhere in the world could cause the
NRC to limit or prohibit the operation or licensing of any domestic
nuclear unit.
|
·
|
In
addition, potential terrorist threats and increased public scrutiny of
utilities could result in increased nuclear licensing or compliance costs
which are difficult or impossible to
predict.
|
The
construction of, and capital improvements to, power generation and transmission
facilities involve substantial risks. Should construction or capital
improvement efforts be unsuccessful or delayed, the results of operations and
financial condition of FPL Group and FPL could be adversely
affected.
·
|
The
ability of FPL Group and FPL to complete construction of, and capital
improvement projects for, their power generation and transmission
facilities on schedule and within budget are contingent upon many
variables that could delay completion, increase costs or otherwise
adversely affect operational and financial results, including, for
example, limitations related to transmission interconnection issues,
escalating costs for materials and labor and environmental compliance,
delays with respect to permits and other approvals, and disputes involving
third parties, and are subject to substantial risks. Should any
such efforts be unsuccessful or delayed, FPL Group and FPL could be
subject to additional costs, termination payments under committed
contracts, loss of tax credits and/or the write-off of their investment in
the project or improvement.
|
The
use of derivative contracts by FPL Group and FPL in the normal course of
business could result in financial losses or the payment of margin cash
collateral that could adversely impact the results of operations or cash flows
of FPL Group and FPL.
·
|
FPL
Group and FPL use derivative instruments, such as swaps, options, futures
and forwards, some of which are traded in the over-the-counter markets or
on exchanges, to manage their commodity and financial market risks, and
for FPL Group to engage in trading and marketing
activities. FPL Group could recognize financial losses as a
result of volatility in the market values of these derivative instruments,
or if a counterparty fails to perform or make payments under these
derivative instruments and could suffer a reduction in operating cash
flows as a result of the requirement to post margin cash
collateral. In the absence of actively quoted market prices and
pricing information from external sources, the valuation of these
derivative instruments involves management's judgment or use of
estimates. As a result, changes in the underlying assumptions
or use of alternative valuation methods could affect the reported fair
value of these derivative instruments. In addition, FPL's use
of such instruments could be subject to prudence challenges and, if found
imprudent, cost recovery could be disallowed by the
FPSC.
|
·
|
FPL
Group provides full energy and capacity requirement services, which
include load-following services and various ancillary services, primarily
to distribution utilities to satisfy all or a portion of such utilities'
power supply obligations to their customers. The supply costs
for these transactions may be affected by a number of factors, including
by events that may occur after FPL Group has committed to supply power,
such as weather conditions, fluctuating prices for energy and ancillary
services, and the ability of the distribution utilities’ customers to
elect to receive service from competing suppliers. If the
supply costs are not favorable, FPL Group’s operating costs could increase
and result in the possibility of reduced earnings or incurring
losses.
|
·
|
FPL
Group and FPL have hedging procedures and associated risk management tools
that may not work as planned. Risk management tools and metrics
such as daily value at risk, earnings at risk, stop loss limits and
liquidity guidelines are based on historical price
movements. If price movements significantly or persistently
deviate from historical behavior, the risk management tools may not
protect against significant losses. As a result of these and
other factors, FPL Group and FPL cannot predict with precision the impact
that risk management decisions may have on financial
results.
|
FPL
Group's competitive energy business is subject to risks, many of which are
beyond the control of FPL Group, including, but not limited to, the efficient
development and operation of generating assets, the successful and timely
completion of project restructuring activities, the price and supply of fuel and
equipment, transmission constraints, competition from other generators,
including those using new sources of generation, excess generation capacity and
demand for power, that may reduce revenues, increase costs or otherwise
adversely impact the results of operations and financial condition of FPL
Group.
·
|
There
are various risks associated with FPL Group's competitive energy
business. In addition to risks discussed elsewhere, risk
factors specifically affecting NextEra Energy Resources' success in
competitive wholesale markets include, for example, the ability to
efficiently develop and operate generating assets, the successful and
timely completion of project restructuring activities, maintenance of the
qualifying facility status of certain projects, the price and supply of
fuel (including transportation) and equipment, transmission constraints,
the ability to utilize PTCs or qualify for convertible ITCs, competition
from other and new sources of generation, excess generation capacity and
shifting demand for power. There can be significant volatility
in market prices for fuel, electricity and renewable and other energy
commodities, and there are other financial, counterparty and market risks
that are beyond the control of NextEra Energy
Resources. NextEra Energy Resources' inability or failure to
effectively hedge its assets or positions against changes in commodity
prices, interest rates, counterparty credit risk or other risk measures
could significantly impair FPL Group's future financial
results. A portion of NextEra Energy Resources' power
generation facilities operate wholly or partially without long-term power
purchase agreements. As a result, power from these facilities
is sold on the spot market or on a short-term contractual basis, which may
increase the volatility of FPL Group's financial results. In
addition, NextEra Energy Resources' business depends upon power
transmission and natural gas transportation facilities owned and operated
by others; if transmission or transportation is disrupted or capacity is
inadequate or unavailable, NextEra Energy Resources' ability to sell and
deliver its wholesale power or natural gas may be
limited.
|
FPL
Group's ability to successfully identify, complete and integrate acquisitions is
subject to significant risks, including, but not limited to, the effect of
increased competition for acquisitions resulting from the consolidation of the
power industry.
·
|
FPL
Group is likely to encounter significant competition for acquisition
opportunities that may become available as a result of the consolidation
of the power industry in general. In addition, FPL Group may be
unable to identify attractive acquisition opportunities at favorable
prices and to complete and integrate them successfully and in a timely
manner.
|
FPL
Group and FPL participate in markets that are often subject to uncertain
economic conditions, which makes it difficult to estimate growth, future income
and expenditures.
·
|
FPL
Group and FPL participate in markets that are susceptible to uncertain
economic conditions, which complicate estimates of revenue
growth. Because components of budgeting and forecasting are
dependent upon estimates of revenue growth in the markets FPL Group and
FPL serve, the uncertainty makes estimates of future income and
expenditures more difficult. As a result, FPL Group and FPL may
make significant investments and expenditures but never realize the
anticipated benefits, which could adversely affect results of
operations. The future direction of the overall economy also
may have a significant effect on the overall performance and financial
condition of FPL Group and FPL.
|
Changes
in the number of customer accounts and customer usage in FPL's service area
affect FPL Group's and FPL's results of operations.
·
|
FPL
Group's and FPL's results of operations are affected by the change in the
number of customer accounts in FPL's service area and customer
usage. Changes in the number of customer accounts can be
affected by growth or decline in population. Changes in the
number of customer accounts and customer usage can be affected by economic
factors in Florida and elsewhere, including, for example, job and income
growth or decline, housing starts and new home prices. Changes
in the number of customer accounts and customer usage directly influence
the demand for electricity and the need, or lack of need, for additional
power generation and power delivery facilities at
FPL.
|
Weather
affects FPL Group's and FPL's results of operations, as can the impact of severe
weather. Weather conditions directly influence the demand for
electricity and natural gas, affect the price of energy commodities, and can
affect the production of electricity at power generating
facilities.
·
|
FPL
Group's and FPL's results of operations are affected by changes in the
weather. Weather conditions directly influence the demand for
electricity and natural gas, affect the price of energy commodities, and
can affect the production of electricity at power generating facilities,
including, but not limited to, wind, solar and hydro-powered
facilities. FPL Group's and FPL's results of operations can be
affected by the impact of severe weather which can be destructive, causing
outages and/or property damage, may affect fuel supply, and could require
additional costs to be incurred. At FPL, recovery of these
costs is subject to FPSC
approval.
|
FPL
Group and FPL rely on access to capital and credit markets as significant
sources of liquidity for capital requirements not satisfied by operating cash
flows. Adverse capital and credit market conditions may adversely
affect FPL Group's and FPL's ability to meet liquidity needs, access capital and
operate and grow their businesses, and increase the cost of
capital. Disruptions, uncertainty or volatility in the financial
markets can also adversely impact the results of operations and financial
condition of FPL Group and FPL, as well as exert downward pressure on the market
price of FPL Group's common stock.
·
|
Having
access to the credit and capital markets, at a reasonable cost, is
necessary for FPL Group and FPL to fund their operations, including their
capital requirements. Those markets have provided FPL Group and FPL with
the liquidity to operate and grow their businesses that is not otherwise
provided from operating cash flows. Disruptions, uncertainty or
volatility in those markets can increase FPL Group's and FPL's cost of
capital. If FPL Group and FPL are unable to access the credit
and capital markets on terms that are reasonable, they may have to delay
raising capital, issue shorter-term securities and/or bear an unfavorable
cost of capital, which, in turn, could adversely impact their ability to
grow their businesses, decrease earnings, significantly reduce financial
flexibility and/or limit FPL Group's ability to sustain its current common
stock dividend level.
|
·
|
The
market price and trading volume of FPL Group's common stock could be
subject to significant fluctuations due to, among other things, general
stock market conditions and changes in market sentiment regarding FPL
Group and its subsidiaries' operations, business, growth prospects and
financing strategies.
|
FPL
Group's, FPL Group Capital's and FPL's inability to maintain their current
credit ratings may adversely affect FPL Group's and FPL's liquidity, limit the
ability of FPL Group and FPL to grow their businesses, and would likely increase
interest costs. In addition, FPL Group's, FPL Group Capital's or
FPL's credit providers' inability to maintain their current credit ratings, or
to fund their credit commitments, may adversely affect FPL Group's and FPL's
liquidity.
·
|
The
inability of FPL Group, FPL Group Capital and FPL to maintain their
current credit ratings could affect their ability to raise capital or
obtain credit on favorable terms, which, in turn, could impact FPL Group's
and FPL's ability to grow their businesses, service indebtedness or repay
borrowings, and would likely increase their interest
costs. Some of the factors that can affect credit ratings are
cash flows, liquidity, the amount of debt as a component of total
capitalization, and political, legislative and regulatory
actions. FPL Group, FPL Group Capital or FPL cannot assure that
their current credit ratings will remain in effect for any given period of
time or that one or more of its ratings will not be lowered or withdrawn
entirely by a rating agency.
|
·
|
The
inability of FPL Group's, FPL Group Capital's and FPL's credit providers
to maintain credit ratings acceptable under various agreements, or to fund
their credit commitments, could require FPL Group, FPL Group Capital or
FPL to, among other things, renegotiate requirements in agreements, find
an alternative credit provider with acceptable credit ratings to meet the
requirement, or post cash
collateral.
|
FPL
Group may be unable to meet its ongoing and future financial obligations and to
pay dividends on its common stock if its subsidiaries are unable to pay upstream
dividends or repay funds to FPL Group.
·
|
FPL
Group is a holding company and, as such, has no material operations of its
own. Substantially all of FPL Group's consolidated assets are
held by subsidiaries. FPL Group’s ability to meet its financial
obligations and to pay dividends on its common stock is primarily
dependent on the subsidiaries’ net income and cash flows, which are
subject to the risks of their respective businesses, and their ability to
pay upstream dividends or to repay funds to FPL Group. The
subsidiaries have financial obligations, including payment of debt
service, which they must satisfy before they can fund FPL
Group. FPL Group’s subsidiaries are separate legal entities and
have no obligation to provide FPL Group with funds for its payment
obligations. In addition, the dividend-paying ability of some
of the subsidiaries is limited by contractual restrictions which are
contained in outstanding financing agreements and which may be included in
future financing agreements.
|
Changes
in tax laws, as well as judgments and estimates used in the determination of
tax-related asset and liability amounts, could adversely affect FPL Group's and
FPL's results of operations, financial condition and liquidity.
·
|
FPL
Group's and FPL's provision for income taxes and reporting of tax-related
assets and liabilities requires significant judgments and the use of
estimates. Amounts of tax-related assets and liabilities
involve judgments and estimates of the timing and probability of
recognition of income, deductions and tax credits, including estimates for
potential adverse outcomes regarding tax positions that have been taken
and the ability to utilize tax benefit carryforwards, such as net
operating loss and tax credit carryforwards. Actual income
taxes could vary significantly from estimated amounts due to the future
impacts of, among other things, changes in tax laws, regulations and
interpretations, financial condition and results of operations of FPL
Group and its subsidiaries, including FPL, as well as the resolution of
audit issues raised by taxing authorities. Ultimate resolution
of income tax matters may result in material adjustments to tax-related
assets and liabilities which could impact, either positively or
negatively, FPL Group's and FPL's results of operations, financial
condition and liquidity.
|
FPL
Group and FPL are subject to credit and performance risk from third parties
under supply and service contracts.
·
|
FPL
Group and FPL rely on contracts with vendors for the supply of equipment,
materials, fuel and other goods and services required for the construction
and operation of, and for capital improvements to, their facilities, as
well as for business operations. If vendors fail to fulfill their
contractual obligations, FPL Group and FPL may need to make arrangements
with other suppliers, which could result in higher costs, untimely
completion of power generation facilities and other projects, and/or a
disruption to their operations.
|
FPL
Group and FPL are subject to costs and other potentially adverse effects of
legal and regulatory proceedings as well as regulatory compliance and changes in
or additions to applicable tax laws, rates or policies, rates of inflation,
accounting standards, securities laws, corporate governance requirements and
labor and employment laws.
·
|
FPL
Group and FPL are subject to costs and other potentially adverse effects
of legal and regulatory proceedings, settlements, investigations and
claims, as well as regulatory compliance and the effect of new, or changes
in, tax laws, rates or policies, rates of inflation, accounting standards
and interpretations, securities laws, corporate governance requirements
and labor and employment laws.
|
·
|
FPL
and NextEra Energy Resources, as owners and operators of transmission
systems and/or critical assets within various regions throughout the
United States, are subject to mandatory reliability standards established
by the NERC. Non-compliance with these mandatory reliability
standards could result in sanctions, including substantial monetary
penalties.
|
Threats
of terrorism and catastrophic events that could result from terrorism, cyber
attacks, or individuals and/or groups attempting to disrupt FPL Group's and
FPL's business may impact the operations of FPL Group and FPL in unpredictable
ways and could adversely affect FPL Group’s and FPL’s results of operations,
financial condition and liquidity.
·
|
FPL
Group and FPL are subject to direct and indirect effects of terrorist
threats and activities, as well as cyber attacks and disruptive activities
of individuals and/or groups. Infrastructure facilities and
systems, such as generation, transmission and distribution facilities and
information systems, have been identified as potential
targets. The effects of these threats and activities could
affect FPL Group's and FPL's ability to generate, purchase or transmit
power, could cause delays in FPL Group's and FPL's development and
construction of new generating facilities, could result in a significant
slowdown in growth or a decline in the U.S. economy, could delay an
economic recovery in the United States, and could increase the cost and
adequacy of security and insurance, which could adversely affect FPL
Group’s and FPL’s results of operations, financial condition and
liquidity. In addition, these types of events could disrupt FPL
Group’s or FPL’s operations, require significant management attention and
resources, and could adversely affect FPL Group's and FPL's reputation
among customers and the public.
|
The
ability of FPL Group and FPL to obtain insurance and the terms of any available
insurance coverage could be adversely affected by international, national, state
or local events and company-specific events, as well as the financial condition
of insurers.
·
|
FPL
Group's and FPL's ability to obtain insurance, and the cost of and
coverage provided by such insurance, could be adversely affected by
international, national, state or local events as well as company-specific
events, as well as the financial condition of
insurers.
|
FPL
Group and FPL are subject to employee workforce factors that could adversely
affect the businesses and financial condition of FPL Group and FPL.
·
|
FPL
Group and FPL are subject to employee workforce factors, including, for
example, loss or retirement of key executives, availability of qualified
personnel, inflationary pressures on payroll and benefits costs and
collective bargaining agreements with union employees and work stoppage
that could adversely affect the businesses and financial condition of FPL
Group and FPL.
|
The
risks described herein are not the only risks facing FPL Group and
FPL. Additional risks and uncertainties also may materially adversely
affect FPL Group's or FPL's business, financial condition and/or future
operating results.
Item
1B. Unresolved Staff Comments
None
Item
2. Properties
FPL
Group and its subsidiaries maintain properties which are adequate for their
operations. At December 31, 2009, the electric generating,
transmission, distribution and general facilities of FPL represented
approximately 46%, 13%, 37% and 4%, respectively, of FPL's gross investment in
electric utility plant in service.
Generating
Facilities
.
At
December 31, 2009, FPL Group had the following generating
facilities:
FPL
Facilities
|
|
Location
|
|
No.
of
Units
|
|
Fuel
|
|
Net Capability
(mw)
(a)
|
Nuclear
|
|
|
|
|
|
|
|
|
|
|
|
St.
Lucie
|
|
Hutchinson
Island, FL
|
|
2
|
|
|
Nuclear
|
|
|
1,553
|
(b)
|
Turkey
Point
|
|
Florida
City, FL
|
|
2
|
|
|
Nuclear
|
|
|
1,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steam
turbines
|
|
|
|
|
|
|
|
|
|
|
|
Cape
Canaveral
|
|
Cocoa,
FL
|
|
2
|
|
|
Oil/Gas
|
|
|
792
|
(c)
|
Cutler
|
|
Miami,
FL
|
|
2
|
|
|
Gas
|
|
|
205
|
|
Manatee
|
|
Parrish,
FL
|
|
2
|
|
|
Oil/Gas
|
|
|
1,624
|
|
Martin
|
|
Indiantown,
FL
|
|
2
|
|
|
Oil/Gas
|
|
|
1,652
|
|
Port
Everglades
|
|
Port
Everglades, FL
|
|
4
|
|
|
Oil/Gas
|
|
|
1,205
|
|
Riviera
|
|
Riviera
Beach, FL
|
|
2
|
|
|
Oil/Gas
|
|
|
565
|
(c)
|
St.
Johns River Power Park
|
|
Jacksonville,
FL
|
|
2
|
|
|
Coal/Petroleum
Coke
|
|
|
254
|
(d)
|
Sanford
|
|
Lake
Monroe, FL
|
|
1
|
|
|
Oil/Gas
|
|
|
138
|
|
Scherer
|
|
Monroe
County, GA
|
|
1
|
|
|
Coal
|
|
|
646
|
(e)
|
Turkey
Point
|
|
Florida
City, FL
|
|
2
|
|
|
Oil/Gas
|
|
|
788
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined-cycle
|
|
|
|
|
|
|
|
|
|
|
|
Fort
Myers
|
|
Fort
Myers, FL
|
|
1
|
|
|
Gas
|
|
|
1,440
|
|
Lauderdale
|
|
Dania,
FL
|
|
2
|
|
|
Gas/Oil
|
|
|
884
|
|
Manatee
|
|
Parrish,
FL
|
|
1
|
|
|
Gas
|
|
|
1,111
|
|
Martin
|
|
Indiantown,
FL
|
|
1
|
|
|
Gas/Oil
|
|
|
1,105
|
|
Martin
|
|
Indiantown,
FL
|
|
2
|
|
|
Gas
|
|
|
938
|
|
Putnam
|
|
Palatka,
FL
|
|
2
|
|
|
Gas/Oil
|
|
|
498
|
|
Sanford
|
|
Lake
Monroe, FL
|
|
2
|
|
|
Gas
|
|
|
1,912
|
|
Turkey
Point
|
|
Florida
City, FL
|
|
1
|
|
|
Gas/Oil
|
|
|
1,148
|
|
West
County
|
|
West
Palm Beach, FL
|
|
2
|
|
|
Gas/Oil
|
|
|
2,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Simple-cycle
combustion turbines
|
|
|
|
|
|
|
|
|
|
|
|
Fort
Myers
|
|
Fort
Myers, FL
|
|
2
|
|
|
Gas/Oil
|
|
|
315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas
turbines
|
|
|
|
|
|
|
|
|
|
|
|
Fort
Myers
|
|
Fort
Myers, FL
|
|
12
|
|
|
Oil
|
|
|
648
|
|
Lauderdale
|
|
Dania,
FL
|
|
24
|
|
|
Oil/Gas
|
|
|
840
|
|
Port
Everglades
|
|
Port
Everglades, FL
|
|
12
|
|
|
Oil/Gas
|
|
|
420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Solar
|
|
|
|
|
|
|
|
|
|
|
|
DeSoto
|
|
Arcadia,
FL
|
|
1
|
|
|
Solar
|
|
|
25
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
24,530
|
(f)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
FPL's net ownership interest in plant capacity.
|
(b)
|
Excludes
Orlando Utilities Commission's and the FMPA's combined share of
approximately 15% of St. Lucie Unit No. 2.
|
(c)
|
See
Item 1 - FPL Operations - Fossil Operations.
|
(d)
|
Represents
FPL's 20% ownership interest in each of SJRPP Units Nos. 1 and 2,
which are jointly owned with JEA.
|
(e)
|
Represents
FPL's approximately 76% ownership of Scherer Unit No. 4, which is
jointly owned with JEA.
|
(f)
|
Substantially
all of FPL's properties are subject to the lien of FPL's
mortgage.
|
NextEra
Energy Resources Facilities
|
|
Location
|
|
Geographic
Region
|
|
No.
of
Units
|
|
Fuel
|
|
Net
Capability
(mw)
(a)
|
Wind
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashtabula
Wind
(b)
|
|
Barnes
County, ND
|
|
Midwest
|
|
99
|
|
Wind
|
|
|
148
|
|
Ashtabula
Wind II
|
|
Griggs
& Steele Counties, ND
|
|
Midwest
|
|
80
|
|
Wind
|
|
|
120
|
|
Butler
Ridge Wind
|
|
Dodge
County, WI
|
|
Midwest
|
|
36
|
|
Wind
|
|
|
54
|
|
Cabazon
(b)
|
|
Riverside
County, CA
|
|
West
|
|
53
|
|
Wind
|
|
|
40
|
|
Callahan
Divide
(b)
|
|
Taylor
County, TX
|
|
ERCOT
|
|
76
|
|
Wind
|
|
|
114
|
|
Capricorn
Ridge
|
|
Sterling
& Coke Counties, TX
|
|
ERCOT
|
|
208
|
|
Wind
|
|
|
364
|
|
Capricorn
Ridge Expansion
|
|
Sterling
& Coke Counties, TX
|
|
ERCOT
|
|
199
|
|
Wind
|
|
|
298
|
|
Cerro
Gordo
(b)
|
|
Cerro
Gordo County, IA
|
|
Midwest
|
|
55
|
|
Wind
|
|
|
41
|
|
Crystal
Lake I
(b)
|
|
Hancock
County, IA
|
|
Midwest
|
|
100
|
|
Wind
|
|
|
150
|
|
Crystal
Lake II
|
|
Winnebago
County, IA
|
|
Midwest
|
|
80
|
|
Wind
|
|
|
200
|
|
Crystal
Lake III
|
|
Winnebago
County, IA
|
|
Midwest
|
|
44
|
|
Wind
|
|
|
66
|
|
Delaware
Mountain
|
|
Culberson
County, TX
|
|
ERCOT
|
|
38
|
|
Wind
|
|
|
28
|
|
Diablo
Wind
(b)
|
|
Alameda
County, CA
|
|
West
|
|
31
|
|
Wind
|
|
|
21
|
|
Elk
City Wind
|
|
Roger
Mills & Beckham Counties, OK
|
|
Other
South
|
|
43
|
|
Wind
|
|
|
99
|
|
Endeavor
Wind
|
|
Osceola
County, IA
|
|
Midwest
|
|
40
|
|
Wind
|
|
|
100
|
|
Endeavor
Wind II
|
|
Osceola
County, IA
|
|
Midwest
|
|
20
|
|
Wind
|
|
|
50
|
|
Gray
County
|
|
Gray
County, KS
|
|
Other
South
|
|
170
|
|
Wind
|
|
|
112
|
|
Green
Mountain
(b)
|
|
Somerset
County, PA
|
|
Northeast
|
|
8
|
|
Wind
|
|
|
10
|
|
Green
Power
|
|
Riverside
County, CA
|
|
West
|
|
22
|
|
Wind
|
|
|
17
|
|
Green
Ridge Power
(b)
|
|
Alameda
& Contra Costa Counties, CA
|
|
West
|
|
1,463
|
|
Wind
|
|
|
159
|
|
Hancock
County
(b)
|
|
Hancock
County, IA
|
|
Midwest
|
|
148
|
|
Wind
|
|
|
98
|
|
High
Winds
(b)
|
|
Solano
County, CA
|
|
West
|
|
90
|
|
Wind
|
|
|
162
|
|
Horse
Hollow Wind
(b)
|
|
Taylor
County, TX
|
|
ERCOT
|
|
142
|
|
Wind
|
|
|
213
|
|
Horse
Hollow Wind II
(b)
|
|
Taylor
& Nolan Counties, TX
|
|
ERCOT
|
|
130
|
|
Wind
|
|
|
299
|
|
Horse
Hollow Wind III
(b)
|
|
Nolan
County, TX
|
|
ERCOT
|
|
149
|
|
Wind
|
|
|
224
|
|
Indian
Mesa
|
|
Pecos
County, TX
|
|
ERCOT
|
|
125
|
|
Wind
|
|
|
83
|
|
King
Mountain
(b)
|
|
Upton
County, TX
|
|
ERCOT
|
|
214
|
|
Wind
|
|
|
278
|
|
Lake
Benton II
(b)
|
|
Pipestone
County, MN
|
|
Midwest
|
|
137
|
|
Wind
|
|
|
103
|
|
Langdon
Wind
(b)
|
|
Cavalier
County, ND
|
|
Midwest
|
|
79
|
|
Wind
|
|
|
118
|
|
Langdon
Wind II
(b)
|
|
Cavalier
County, ND
|
|
Midwest
|
|
27
|
|
Wind
|
|
|
41
|
|
Lee
/ Dekalb Wind
|
|
Lee
& DeKalb Counties, IL
|
|
Midwest
|
|
145
|
|
Wind
|
|
|
217
|
|
Logan
Wind
(c)
|
|
Logan
County, CO
|
|
West
|
|
134
|
|
Wind
|
|
|
201
|
|
Majestic
Wind
|
|
Carson
County, TX
|
|
ERCOT
|
|
53
|
|
Wind
|
|
|
80
|
|
Meyersdale
(b)
|
|
Somerset
County, PA
|
|
Northeast
|
|
20
|
|
Wind
|
|
|
30
|
|
Mill
Run
(b)
|
|
Fayette
County, PA
|
|
Northeast
|
|
10
|
|
Wind
|
|
|
15
|
|
Montfort
(b)
|
|
Iowa
County, WI
|
|
Midwest
|
|
20
|
|
Wind
|
|
|
30
|
|
Mount
Copper
(b)
|
|
Murdochville,
Quebec, Canada
|
|
Midwest
|
|
30
|
|
Wind
|
|
|
54
|
|
Mountaineer
(b)
|
|
Preston
& Tucker Counties, WV
|
|
Northeast
|
|
44
|
|
Wind
|
|
|
66
|
|
Mower
County Wind
(c)
|
|
Mower
County, MN
|
|
Midwest
|
|
43
|
|
Wind
|
|
|
99
|
|
New
Mexico Wind
(b)
|
|
Quay
& Debaca Counties, NM
|
|
West
|
|
136
|
|
Wind
|
|
|
204
|
|
North
Dakota Wind
(b)
|
|
LaMoure
County, ND
|
|
Midwest
|
|
41
|
|
Wind
|
|
|
62
|
|
Northern
Colorado
|
|
Logan
County, CO
|
|
West
|
|
81
|
|
Wind
|
|
|
174
|
|
Oklahoma
/ Sooner Wind
(b)
|
|
Harper
& Woodward Counties, OK
|
|
Other
South
|
|
68
|
|
Wind
|
|
|
102
|
|
Oliver
County Wind I
(c)
|
|
Oliver
County, ND
|
|
Midwest
|
|
22
|
|
Wind
|
|
|
51
|
|
Oliver
County Wind II
(c)
|
|
Oliver
County, ND
|
|
Midwest
|
|
32
|
|
Wind
|
|
|
48
|
|
Peetz
Table Wind
(c)
|
|
Logan
County, CO
|
|
West
|
|
133
|
|
Wind
|
|
|
199
|
|
Pubnico
Point
(b)
|
|
Yarmouth,
Nova Scotia, Canada
|
|
Midwest
|
|
17
|
|
Wind
|
|
|
31
|
|
Red
Canyon Wind Energy
(b)
|
|
Borden,
Garza & Scurry Counties, TX
|
|
ERCOT
|
|
56
|
|
Wind
|
|
|
84
|
|
Sky
River
(b)
|
|
Kern
County, CA
|
|
West
|
|
342
|
|
Wind
|
|
|
77
|
|
Somerset
Wind Power
(b)
|
|
Somerset
County, PA
|
|
Northeast
|
|
6
|
|
Wind
|
|
|
9
|
|
South
Dakota Wind
(b)
|
|
Hyde
County, SD
|
|
Midwest
|
|
27
|
|
Wind
|
|
|
41
|
|
Southwest
Mesa
(b)
|
|
Upton
& Crockett Counties, TX
|
|
ERCOT
|
|
106
|
|
Wind
|
|
|
74
|
|
Stateline
(b)
|
|
Umatilla
County, OR and Walla Walla County, WA
|
|
West
|
|
454
|
|
Wind
|
|
|
300
|
|
Story
County Wind
(b)
|
|
Story
County, IA
|
|
Midwest
|
|
100
|
|
Wind
|
|
|
150
|
|
Story
County Wind II
|
|
Story
& Hardin Counties, IA
|
|
Midwest
|
|
100
|
|
Wind
|
|
|
150
|
|
Vansycle
(b)
|
|
Umatilla
County, OR
|
|
West
|
|
38
|
|
Wind
|
|
|
25
|
|
Vansycle
II
|
|
Umatilla
County, OR
|
|
West
|
|
43
|
|
Wind
|
|
|
99
|
|
Victory
Garden
(b)
|
|
Kern
County, CA
|
|
West
|
|
96
|
|
Wind
|
|
|
22
|
|
Waymart
(b)
|
|
Wayne
County, PA
|
|
Northeast
|
|
43
|
|
Wind
|
|
|
65
|
|
Weatherford
Wind
(b)
|
|
Custer
& Washita Counties, OK
|
|
Other
South
|
|
98
|
|
Wind
|
|
|
147
|
|
Wessington
Springs Wind
|
|
Jerauld
County, SD
|
|
Midwest
|
|
34
|
|
Wind
|
|
|
51
|
|
Wilton
Wind
(b)
|
|
Burleigh
County, ND
|
|
Midwest
|
|
33
|
|
Wind
|
|
|
49
|
|
Wilton
Wind II
|
|
Burleigh
County, ND
|
|
Midwest
|
|
33
|
|
Wind
|
|
|
50
|
|
Windpower
Partners 1991-92
|
|
Alameda
& Contra Costa Counties, CA
|
|
West
|
|
279
|
|
Wind
|
|
|
28
|
|
Windpower
Partners 1992
|
|
Alameda
& Contra Costa Counties, CA
|
|
West
|
|
300
|
|
Wind
|
|
|
30
|
|
Windpower
Partners 1993
|
|
Riverside
County, CA
|
|
West
|
|
115
|
|
Wind
|
|
|
41
|
|
Windpower
Partners 1993
|
|
Lincoln
County, MN
|
|
Midwest
|
|
73
|
|
Wind
|
|
|
26
|
|
Windpower
Partners 1994
|
|
Culberson
County, TX
|
|
ERCOT
|
|
107
|
|
Wind
|
|
|
39
|
|
Wolf
Ridge Wind
|
|
Cooke
County, TX
|
|
ERCOT
|
|
75
|
|
Wind
|
|
|
112
|
|
Woodward
Mountain
|
|
Upton
& Pecos Counties, TX
|
|
ERCOT
|
|
242
|
|
Wind
|
|
|
160
|
|
Wyoming
Wind
(b)
|
|
Uinta
County, WY
|
|
West
|
|
80
|
|
Wind
|
|
|
144
|
|
Investments
in joint ventures
(d)
|
|
Various
|
|
West
|
|
969
|
|
Wind
|
|
|
98
|
|
Total
Wind
|
|
|
|
|
|
|
|
|
|
|
7,544
|
|
NextEra
Energy Resources Facilities
|
|
Location
|
|
Geographic
Region
|
|
No.
of
Units
|
|
Fuel
|
|
Net
Capability
(mw)
(a)
|
Contracted
|
|
|
|
|
|
|
|
|
|
|
|
|
Bayswater
(b)
|
|
Far
Rockaway, NY
|
|
Northeast
|
|
2
|
|
Gas
|
|
|
56
|
|
Calhoun
(b)
|
|
Eastaboga,
AL
|
|
Other
South
|
|
4
|
|
Gas/Oil
|
|
|
668
|
|
Cherokee
(b)
|
|
Gaffney,
SC
|
|
Other
South
|
|
2
|
|
Gas
|
|
|
98
|
|
Doswell
(b)
|
|
Ashland,
VA
|
|
Northeast
|
|
6
|
|
Gas/Oil
|
|
|
708
|
|
Duane
Arnold
|
|
Palo,
IA
|
|
Midwest
|
|
1
|
|
Nuclear
|
|
|
431
|
(e)
|
Jamaica
Bay
(b)
|
|
Far
Rockaway, NY
|
|
Northeast
|
|
2
|
|
Gas/Oil
|
|
|
54
|
|
Point
Beach
|
|
Two
Rivers, WI
|
|
Midwest
|
|
2
|
|
Nuclear
|
|
|
1,023
|
|
Port
of Stockton
|
|
Stockton,
CA
|
|
West
|
|
1
|
|
Coal/
Petroleum Coke
|
|
|
44
|
|
Investments
in joint ventures:
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGS
III-IX
(b)
|
|
Kramer
Junction & Harper Lake, CA
|
|
West
|
|
7
|
|
Solar
|
|
|
148
|
|
Other
|
|
Various
|
|
Northeast
|
|
7
|
|
(f)
|
|
|
303
|
|
Total
Contracted
|
|
|
|
|
|
|
|
|
|
|
3,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merchant
|
|
|
|
|
|
|
|
|
|
|
|
|
Blythe
Energy
|
|
Blythe,
CA
|
|
West
|
|
3
|
|
Gas
|
|
|
507
|
|
Doswell
- Expansion
(b)
|
|
Ashland,
VA
|
|
Northeast
|
|
1
|
|
Gas/Oil
|
|
|
171
|
|
Forney
|
|
Forney,
TX
|
|
ERCOT
|
|
8
|
|
Gas
|
|
|
1,792
|
|
Lamar
Power Partners
|
|
Paris,
TX
|
|
ERCOT
|
|
6
|
|
Gas
|
|
|
1,000
|
|
Maine
- Cape, Wyman
|
|
Various
- ME
|
|
Northeast
|
|
6
|
|
Oil
|
|
|
796
|
(g)
|
Maine
(b)
|
|
Various
- ME
|
|
Northeast
|
|
81
|
|
Hydro
|
|
|
359
|
|
Marcus
Hook 50
|
|
Marcus
Hook, PA
|
|
Northeast
|
|
1
|
|
Gas
|
|
|
50
|
|
Marcus
Hook 750
(b)
|
|
Marcus
Hook, PA
|
|
Northeast
|
|
4
|
|
Gas
|
|
|
744
|
|
RISEP
|
|
Johnston,
RI
|
|
Northeast
|
|
3
|
|
Gas
|
|
|
550
|
|
Seabrook
|
|
Seabrook,
NH
|
|
Northeast
|
|
1
|
|
Nuclear
|
|
|
1,098
|
(h)
|
Investment
in joint venture
|
|
Frackville,
PA
|
|
Northeast
|
|
1
|
|
Waste
coal
|
|
|
4
|
|
Total
Merchant
|
|
|
|
|
|
|
|
|
|
|
7,071
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
18,148
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
NextEra Energy Resources' net ownership interest in plant
capacity.
|
(b)
|
These
generating facilities are encumbered by liens against their assets
securing various financings.
|
(c)
|
NextEra
Energy Resources owns these wind facilities together with third-party
investors with differential membership interests. See
Note 10 - Sale of Differential Membership
Interests.
|
(d)
|
Represents
plants with no more than 50% ownership using wind
technology. Certain facilities, totaling 57 mw, are encumbered
by liens against their assets securing a financing.
|
(e)
|
Excludes
Central Iowa Power Cooperative and Cornbelt Power Cooperative's combined
share of 30%.
|
(f)
|
Represents
plants with no more than 50% ownership using fuels and technologies such
as natural gas and waste coal. Certain facilities, totaling 295
mw, are encumbered by liens against their assets securing
financings.
|
(g)
|
Excludes
six other energy-related partners' combined share of
16%.
|
(h)
|
Excludes
Massachusetts Municipal Wholesale Electric Company's, Taunton Municipal
Lighting Plant's and Hudson Light & Power Department's combined share
of 11.77%.
|
Transmission and
Distribution.
At December 31, 2009, FPL owned and
operated the following electric transmission and distribution
lines:
Nominal
Voltage
|
|
Overhead
Lines
Pole
Miles
|
|
Trench
and Submarine
Cables
Miles
|
|
|
|
|
|
|
|
|
|
|
500
|
kv
|
|
|
1,106
|
(a)
|
|
|
-
|
|
230
|
kv
|
|
|
3,039
|
|
|
|
25
|
|
138
|
kv
|
|
|
1,574
|
|
|
|
54
|
|
115
|
kv
|
|
|
749
|
|
|
|
1
|
|
69
|
kv
|
|
|
162
|
|
|
|
16
|
|
Less
than 69 kv
|
|
|
41,848
|
|
|
|
25,074
|
|
Total
|
|
|
48,478
|
|
|
|
25,170
|
|
¾¾¾¾¾¾¾¾¾¾
(a) Includes
approximately 75 miles owned jointly with
JEA.
|
In
addition, at December 31, 2009, FPL owned and operated 586 substations, one
of which is jointly owned. See Note 8.
Character of
Ownership.
Substantially all of FPL's properties are subject
to the lien of FPL's mortgage, which secures most debt securities issued by
FPL. The majority of FPL's properties are held in fee and are free
from other encumbrances, subject to minor exceptions, none of which is of such a
nature as to substantially impair the usefulness to FPL of such
properties. Some of FPL's electric lines are located on land not
owned in fee but are covered by necessary consents of governmental authorities
or rights obtained from owners of private property. The majority of
NextEra Energy Resources' generating facilities are held in fee and a number of
those facilities are encumbered by liens against their assets securing various
financings. Additionally, the majority of NextEra Energy Resources'
wind turbines and some fossil plants are located on land leased from owners of
private property. See Generating Facilities and Note 1 -
Electric Plant, Depreciation and Amortization.
Item
3. Legal Proceedings
FPL
Group and FPL are parties to various legal and regulatory proceedings in the
ordinary course of their respective businesses. For information
regarding legal proceedings that could have a material effect on FPL Group or
FPL, see Note 14 - Legal Proceedings. Such descriptions are
incorporated herein by reference.
Item
4. Submission of Matters to a Vote of Security Holders
None
PART
II
Item
5. Market for Registrants' Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
Common Stock
Data.
All of FPL's common stock is owned by FPL
Group. FPL Group's common stock is traded on the New York Stock
Exchange under the symbol "FPL." The high and low sales prices for
the common stock of FPL Group as reported in the consolidated transaction
reporting system of the New York Stock Exchange and the cash dividends per share
declared for each quarter during the past two years are as follows:
|
|
2009
|
|
2008
|
Quarter
|
|
High
|
|
|
Low
|
|
|
Cash
Dividends
|
|
High
|
|
|
Low
|
|
|
Cash
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
$
|
53.99
|
|
|
$
|
41.48
|
|
|
$
|
0.4725
|
|
|
$
|
73.75
|
|
|
$
|
57.21
|
|
|
$
|
0.445
|
|
Second
|
|
$
|
59.00
|
|
|
$
|
49.70
|
|
|
$
|
0.4725
|
|
|
$
|
68.98
|
|
|
$
|
62.75
|
|
|
$
|
0.445
|
|
Third
|
|
$
|
60.61
|
|
|
$
|
53.13
|
|
|
$
|
0.4725
|
|
|
$
|
68.76
|
|
|
$
|
49.74
|
|
|
$
|
0.445
|
|
Fourth
|
|
$
|
56.57
|
|
|
$
|
48.55
|
|
|
$
|
0.4725
|
|
|
$
|
51.87
|
|
|
$
|
33.81
|
|
|
$
|
0.445
|
|
The
amount and timing of dividends payable on FPL Group's common stock are within
the sole discretion of FPL Group's Board of Directors. The Board of
Directors reviews the dividend rate at least annually (generally in February) to
determine its appropriateness in light of FPL Group's financial position and
results of operations, legislative and regulatory developments affecting the
electric utility industry in general and FPL in particular, competitive
conditions and any other factors the board deems relevant. The
ability of FPL Group to pay dividends on its common stock is dependent upon,
among other things, dividends paid to it by its subsidiaries. There
are no restrictions in effect that currently limit FPL's ability to pay
dividends to FPL Group. In February 2010, FPL Group announced that it
would increase its quarterly dividend on its common stock from $0.4725 to $0.50
per share. See Management's Discussion - Liquidity and Capital
Resources - Covenants with respect to dividend restrictions and Note 11 -
Common Stock Dividend Restrictions regarding dividends paid by FPL to FPL
Group.
As of
the close of business on January 31, 2010, there were 27,994 holders of
record of FPL Group's common stock.
Recent Sales of
Unregistered Equity Securities.
As set forth below,
during the quarter ended December 31, 2009, FPL Group issued shares of its
common stock, par value $0.01 per share, upon the exercise of warrants issued by
Gexa Corp. (Gexa) and assumed by FPL Group upon its acquisition of Gexa in
2005. FPL Group relied on the exemption from registration under the
Securities Act of 1933, as amended (Securities Act), afforded by Section 4(2) of
the Securities Act as a transaction not involving a public offering of common
stock.
Date
|
|
Holder
|
|
Exercise
Price
Per
Share
|
|
Number
of
Shares
Issued
|
|
|
|
|
|
|
|
10/15/09
|
|
Individual
holder
|
|
$35.79
|
|
54
|
(a)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Number
of shares issued in a cashless exercise of 168 warrants under the terms of
the warrant agreement.
|
Issuer Purchases of
Equity Securities.
Information
regarding purchases made by FPL Group of its common stock is as
follows:
Period
|
|
Total
Number
of
Shares
Purchased
(a)
|
|
Average
Price
Paid
Per
Share
(a)
|
|
Total
Number of
Shares
Purchased as Part of a
Publicly
Announced Program
|
|
Maximum
Number of
Shares
that May Yet be
Purchased
Under the Program
(b)
|
|
|
|
|
|
|
|
|
|
10/1/09
- 10/31/09
|
|
|
3,656
|
|
|
|
$
|
53.45
|
|
|
|
-
|
|
|
20,000,000
|
11/1/09
- 11/30/09
|
|
|
3,916
|
|
|
|
$
|
51.14
|
|
|
|
-
|
|
|
20,000,000
|
12/1/09
- 12/31/09
|
|
|
3,188
|
|
|
|
$
|
52.82
|
|
|
|
-
|
|
|
20,000,000
|
Total
|
|
|
10,760
|
|
|
|
$
|
52.42
|
|
|
|
-
|
|
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
shares of common stock withheld from employees to pay certain withholding
taxes upon the vesting of stock awards granted to such employees under the
LTIP.
|
(b)
|
In
February 2005, FPL Group's Board of Directors authorized a common stock
repurchase plan of up to 20 million shares of common stock over an
unspecified period, which authorization was ratified and confirmed by the
Board of Directors in December
2005.
|
Item
6. Selected Financial Data
|
Years
Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
SELECTED
DATA OF FPL GROUP (millions, except per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
|
15,643
|
|
$
|
16,410
|
|
$
|
15,263
|
|
$
|
15,710
|
|
$
|
11,846
|
|
Net
income
|
$
|
1,615
|
(a)
|
$
|
1,639
|
(a)
|
$
|
1,312
|
(a)
|
$
|
1,281
|
(b)
|
$
|
901
|
(c)
|
Earnings
per share of common stock - basic
|
$
|
3.99
|
(a)
|
$
|
4.10
|
(a)
|
$
|
3.30
|
(a)
|
$
|
3.25
|
(b)
|
$
|
2.37
|
(c)
|
Earnings
per share of common stock - assuming dilution
|
$
|
3.97
|
(a)
|
$
|
4.07
|
(a)
|
$
|
3.27
|
(a)
|
$
|
3.23
|
(b)
|
$
|
2.34
|
(c)
|
Dividends
paid per share of common stock
|
$
|
1.89
|
|
$
|
1.78
|
|
$
|
1.64
|
|
$
|
1.50
|
|
$
|
1.42
|
|
Total
assets
|
$
|
48,458
|
|
$
|
44,821
|
|
$
|
40,123
|
|
$
|
35,822
|
|
$
|
32,599
|
|
Long-term
debt, excluding current maturities
|
$
|
16,300
|
|
$
|
13,833
|
|
$
|
11,280
|
|
$
|
9,591
|
|
$
|
8,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
DATA OF FPL (millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
|
11,491
|
|
$
|
11,649
|
|
$
|
11,622
|
|
$
|
11,988
|
|
$
|
9,528
|
|
Net
income available to FPL Group
|
$
|
831
|
|
$
|
789
|
|
$
|
836
|
|
$
|
802
|
|
$
|
748
|
|
Total
assets
|
$
|
26,812
|
|
$
|
26,175
|
|
$
|
24,044
|
|
$
|
22,970
|
|
$
|
22,347
|
|
Long-term
debt, excluding current maturities
|
$
|
5,794
|
|
$
|
5,311
|
|
$
|
4,976
|
|
$
|
4,214
|
|
$
|
3,271
|
|
Energy
sales (kwh)
|
|
105,414
|
|
|
105,406
|
|
|
108,636
|
|
|
107,513
|
|
|
105,648
|
|
Energy
sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
51.2
|
%
|
|
50.5
|
%
|
|
50.8
|
%
|
|
50.8
|
%
|
|
51.4
|
%
|
Commercial
|
|
42.7
|
|
|
43.2
|
|
|
42.3
|
|
|
41.4
|
|
|
41.1
|
|
Industrial
|
|
3.1
|
|
|
3.4
|
|
|
3.5
|
|
|
3.8
|
|
|
3.7
|
|
Interchange
power sales
|
|
1.4
|
|
|
1.6
|
|
|
1.8
|
|
|
2.1
|
|
|
2.0
|
|
Other
(d)
|
|
1.6
|
|
|
1.3
|
|
|
1.6
|
|
|
1.9
|
|
|
1.8
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Approximate
60-minute peak load (mw):
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summer
season
|
|
22,351
|
|
|
21,060
|
|
|
21,962
|
|
|
21,819
|
|
|
22,361
|
|
Winter
season
|
|
24,346
|
|
|
20,031
|
|
|
18,055
|
|
|
17,260
|
|
|
19,683
|
|
Average
number of customer accounts (thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
3,984
|
|
|
3,992
|
|
|
3,981
|
|
|
3,906
|
|
|
3,828
|
|
Commercial
|
|
501
|
|
|
501
|
|
|
493
|
|
|
479
|
|
|
470
|
|
Industrial
|
|
10
|
|
|
13
|
|
|
19
|
|
|
21
|
|
|
20
|
|
Other
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
Total
|
|
4,499
|
|
|
4,510
|
|
|
4,497
|
|
|
4,410
|
|
|
4,322
|
|
Average
price billed to customers (cents per kwh)
|
|
11.19
|
|
|
10.96
|
|
|
10.63
|
|
|
11.14
|
|
|
8.88
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
net unrealized mark-to-market gains or losses associated with
non-qualifying hedges and other than temporary impairment
losses.
|
(b)
|
Includes
expenses related to a terminated merger, net unrealized mark-to-market
gains associated with non-qualifying hedges, impairment charges and an
Indonesian project gain.
|
(c)
|
Includes
net unrealized mark-to-market losses associated with non-qualifying
hedges.
|
(d)
|
Includes
the net change in unbilled sales.
|
(e)
|
Winter
season includes November and December of the current year and January to
March of the following year (for 2009, through February 25,
2010).
|
Item
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This
discussion should be read in conjunction with the Notes to Consolidated
Financial Statements contained herein. In the discussion of Results
of Operations below, all comparisons are with the corresponding items in the
prior year.
Overview
FPL
Group is one of the nation's largest providers of electricity-related
services. It has two principal operating subsidiaries, FPL and
NextEra Energy Resources. FPL serves more than 8.7 million people
throughout most of the east and lower west coasts of Florida. NextEra
Energy Resources, FPL Group's competitive energy subsidiary, produces
electricity primarily using wind, natural gas and nuclear
resources. Together, FPL's and NextEra Energy Resources' generating
assets represented approximately 42,700 mw of capacity at December 31,
2009. See Item 2 - Generating Facilities. Another of
FPL Group's operating subsidiaries, FPL FiberNet, provides fiber-optic services
to FPL, telecommunications companies and other customers throughout
Florida.
FPL
obtains its operating revenues primarily from the sale of electricity to retail
customers at rates established by the FPSC through base rates and cost recovery
clause mechanisms. In March 2009, FPL filed a petition with the FPSC
requesting, among other things, a permanent base rate increase of approximately
$1 billion in 2010 and an additional $250 million in 2011, which included
additions to the storm and property insurance reserve. The requested
increases were based on a proposed regulatory ROE of 12.5% and excluded amounts
associated with a proposed extension of the GBRA mechanism, which allowed for
automatic adjustments in retail base rates when approved power plants achieved
commercial operation, and certain proposed cost recovery clause
adjustments.
In
connection with the FPSC's January 2010 rate ruling with respect to FPL's March
2009 petition, the FPSC indicated that the ruling would be reflected in a final
written order to be issued in February 2010 (final order). The
January 2010 rate ruling indicated that new retail base rates would be
established for FPL effective March 1, 2010, would increase retail base
rates by approximately $75 million on an annualized basis, would establish a
regulatory ROE of 10.0% with a range of plus or minus 100 basis points and would
shift certain costs from retail base rates to the capacity
clause. The January 2010 rate ruling also indicated that depreciation
expense would be reduced over the next four years. See Note 1 -
Electric Plant, Depreciation and Amortization. The January 2010 rate
ruling also indicated, among other things, that any additional base rate
increase for 2011, the continuation of the GBRA mechanism and any additions to
the storm and property insurance reserve would be denied. As of the
date of this report, the final order remains pending. Upon issuance
of the final order, parties have the right to file motions with the FPSC for
reconsideration of some or all of the final order, or to appeal some or all of
the final order to the Florida Supreme Court. In response to
inquiries regarding potential inconsistencies in calculations underlying the
January 2010 rate ruling, staff for the FPSC has indicated it would address any
matters raised by the parties before the final order following the filing of any
motions for reconsideration. FPL cannot predict the specific
treatment of any particular issue in the final order.
FPL is
evaluating the impact of the January 2010 rate ruling on its financial position,
including its credit quality and ability to attract capital over the long
term. See Liquidity and Capital Resources. FPL has
suspended activities on the following projects representing approximately $10
billion of investment over the next five years until the financial impact of the
final order, along with other factors, such as load-growth estimates, fuel cost
forecasts, demand side management and environmental incentives, can be reviewed
(see Item I - FPL Operations - Capital Expenditures):
·
|
development
of two additional nuclear units at FPL's Turkey Point site beyond what is
required to receive an NRC license for each unit. See Item I -
FPL Operations - Nuclear Operations;
|
·
|
modernization
of FPL's Cape Canaveral and Riviera power plants. See Item I -
FPL Operations - Fossil Operations;
|
·
|
reevaluation
of options related to a proposed 300-mile underground natural gas pipeline
in Florida; and
|
·
|
other
infrastructure projects.
|
FPL is
also evaluating its options with respect to future regulatory actions regarding
the January 2010 rate ruling and, when it is issued, the final order, as well as
assessing the cost structure of its ongoing operations and reviewing other
planned capital expenditures for appropriate reductions.
Over the
last ten years, FPL's average annual customer growth has been
1.8%. However, beginning in 2007, FPL has experienced a slowdown in
retail customer growth and a decline in non-weather related usage per retail
customer. Retail customer growth in 2008 was 0.3%. FPL's
average number of retail customers declined slightly during the first three
quarters of 2009 and remained essentially unchanged during the fourth quarter of
2009; the decline for the full year was 0.2%. FPL believes that the
economic slowdown, the downturn in the housing market and the credit crisis that
have affected the country and the state of Florida have contributed to the
slowdown in customer growth and to the decline in non-weather related usage per
retail customer. In December 2009, the unemployment rate in Florida
was 11.8%. Beginning in 2007, FPL experienced an increase in inactive
accounts (accounts with installed meters without corresponding customer names)
and in low-usage customers (customers using less than 200 kwh per month), which
have contributed to the decline in retail customer growth and non-weather
related usage per retail customer. In 2009, inactive accounts and
low-usage customers continued to increase much of the year but declined slightly
in the fourth quarter. FPL is unable to predict whether or when
growth in customers and non-weather related customer usage might return to
previous trends.
NextEra
Energy Resources is in the competitive energy business with the majority of its
operating revenues derived from wholesale electricity sales. NextEra
Energy Resources' strategy is, among other things, to continue to maintain its
leadership position in wind, accelerate growth in solar development, continue to
expand its transmission capability, grow its supply-related and non-asset based
businesses, and to develop its natural gas infrastructure
business. NextEra Energy Resources' supply-related business includes
full energy and capacity requirements services and retail operations, and the
non-asset based business includes power and gas marketing and trading
operations. NextEra Energy Resources seeks to expand its portfolio
primarily through wind and solar development and acquisitions where economic
prospects are attractive. The Recovery Act includes, among other
things, provisions that allow companies building wind facilities the option to
choose among three investment cost recovery mechanisms: (i) PTCs which were
extended for wind facilities through 2012, (ii) ITCs of 30% of the cost for
qualifying wind facilities placed in service prior to 2013, or (iii) an election
to receive a cash grant of 30% of the cost of qualifying wind facilities placed
in service in 2009 or 2010, or if construction began prior to December 31,
2010 and the wind facility is placed in service prior to 2013. An
election to receive a cash grant of 30%, in lieu of the 30% investment tax
credit allowable under present law, also applies to the cost of qualifying solar
facilities placed in service in either 2009 or 2010, or if construction began
prior to December 31, 2010 and the solar facility is placed in service
prior to 2017. In 2009, NextEra Energy Resources added approximately
1,170 mw of wind generation to its portfolio, of which 985 mw were constructed
and 185 mw were from three operating wind projects purchased in the fourth
quarter of 2009. NextEra Energy Resources expects to add
approximately 1,000 mw of new wind generation in 2010 and 1,000 mw to 1,500 mw
in each of 2011 and 2012. In addition to wind expansion, NextEra
Energy Resources is considering several solar development opportunities in the
U.S., as well as in Europe. The wind and solar expansions are subject
to, among other things, continued public policy support, support for the
construction and availability of sufficient transmission facilities and
capacity, continued market demand, supply chain expansion and access to capital
at reasonable cost and on reasonable terms.
NextEra
Energy Resources' market is diversified by region as well as by fuel
source. See Item 2 - Generating Facilities. NextEra Energy
Resources sells a large percentage of its expected output to hedge against price
volatility. Consequently, if NextEra Energy Resources' plants do not
perform as expected, NextEra Energy Resources could be required to purchase
power at potentially higher market prices to meet its contractual
obligations. NextEra Energy Resources' energy marketing and trading
business is focused primarily on managing commodity price risk and extracting
maximum value from its assets.
The U.S.
Congress, the EPA and certain states and regions are considering several
legislative and regulatory proposals that would establish new regulatory
requirements and reduction targets for GHG emissions. The economic
and operational impact of these or any similar legislation and/or regulation on
FPL Group and FPL depends on a variety of factors, including, but not limited
to, the allowed emissions, whether the permitted emissions will be allocated or
auctioned, the cost to reduce emissions or buy allowances in the marketplace and
the availability of offsets and mitigating factors to moderate the costs of
compliance. If and until legislation is enacted and implementing
regulations are adopted, the economic and operational impact (either positive or
negative) on FPL Group and FPL cannot be determined but could be
material. In the case of FPL, increased costs associated with
compliance with new environmental regulations are generally recoverable from
customers, while the recovery of such increased costs for NextEra Energy
Resources would depend on market prices for electricity. See
Item 1 - Environmental Matters.
Results
of Operations
FPL
Group and NextEra Energy Resources segregate into two categories unrealized
mark-to-market gains and losses on energy derivative transactions which are used
to manage commodity price risk. The first category, referred to as
trading activities, represents the net unrealized effect of actively traded
positions entered into to take advantage of market price movements and to
optimize the value of generation assets and related contracts. The
second category, referred to as non-qualifying hedges, represents the net
unrealized effect of derivative transactions entered into as economic hedges but
which do not qualify for hedge accounting and the ineffective portion of
transactions accounted for as cash flow hedges. In January 2010, FPL
Group discontinued hedge accounting for its cash flow hedges related to energy
contract derivative instruments, which could result in increased volatility in
the non-qualifying hedge category. At FPL, substantially all changes
in the fair value of energy derivative transactions are deferred as a regulatory
asset or liability until the contracts are settled, and, upon settlement, any
gains or losses are passed through the fuel clause or the capacity
clause.
FPL
Group's management uses earnings excluding certain items (adjusted earnings)
internally for financial planning, for analysis of performance, for reporting of
results to the Board of Directors and as inputs in determining whether
performance targets are met for performance-based compensation under FPL Group's
employee incentive compensation plans. FPL Group also uses adjusted
earnings when communicating its earnings outlook to
investors. Adjusted earnings exclude the unrealized mark-to-market
effect of non-qualifying hedges and other than temporary impairment (OTTI)
losses on securities held in NextEra Energy Resources' nuclear decommissioning
funds, net of the reversal of previously recognized OTTI losses on securities
sold and losses on securities where price recovery was deemed unlikely
(collectively, OTTI reversals). FPL Group's management believes
adjusted earnings provide a more meaningful representation of the company's
fundamental earnings power. Although the excluded amounts are
properly included in the determination of net income in accordance with
generally accepted accounting principles, management believes that the amount
and/or nature of such items make period to period comparisons of operations
difficult and potentially confusing. Adjusted earnings do not
represent a substitute for net income, as prepared in accordance with generally
accepted accounting principles.
Summary
- Presented below is
a summary of net income (loss) by reportable segment (see
Note 15):
|
Years
Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
FPL
|
|
$
|
831
|
|
|
$
|
789
|
|
|
$
|
836
|
|
NextEra
Energy Resources
|
|
|
849
|
|
|
|
915
|
|
|
|
540
|
|
Corporate
and Other
|
|
|
(65
|
)
|
|
|
(65
|
)
|
|
|
(64
|
)
|
FPL
Group Consolidated
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
The
increase in FPL's 2009 results reflects retail base rate increases pursuant to
the GBRA mechanism under the 2005 rate agreement to reflect the placements in
service of WCEC Units Nos. 1 and 2, higher AFUDC on the WCEC units, a 0.3%
increase in usage per retail customer reflecting favorable weather conditions
partly offset by other factors, and higher cost recovery clause results partly
offset by higher O&M and depreciation and amortization
expenses. FPL's 2008 results reflect lower retail customer usage,
higher depreciation and interest expenses and provisions taken in 2008 for
regulatory matters, partly offset by a retail base rate increase associated with
Turkey Point Unit No. 5 commencing commercial operation in 2007, lower
O&M expenses and higher other revenues and AFUDC - equity.
NextEra
Energy Resources’ 2009 results reflect increased earnings from new investments
and from full energy and capacity requirements services and trading, partly
offset by lower earnings from the existing portfolio, reflecting the negative
impacts of weather, and higher expenses to support the growth in the
business. NextEra Energy Resources’ 2008 results reflect additional
earnings from the existing portfolio, from new investments and from full energy
and capacity requirements services and trading, partially offset by higher
expenses to support the growth in the business. In addition, FPL
Group's and NextEra Energy Resources’ net income for 2009 and 2007 reflects net
unrealized after-tax losses from non-qualifying hedges of approximately $20
million and $86 million, respectively, while 2008 net income reflects net
unrealized after-tax gains from such hedges of $170 million. The
change in unrealized mark-to-market activity is primarily attributable to
changes in forward power and natural gas prices, as well as the reversal of
previously recognized unrealized mark-to-market gains or losses as the
underlying transactions were realized. As a general rule, a gain
(loss) in the non-qualifying hedge category is offset by decreases (increases)
in the fair value of related physical asset positions in the portfolio or
contracts, which are not marked to market under generally accepted accounting
principles. In 2009, 2008 and 2007, NextEra Energy Resources recorded
$36 million, $82 million and $6 million, respectively, of after-tax OTTI losses
on securities held in its nuclear decommissioning funds. In 2009 and
2008, NextEra Energy Resources had approximately $23 million and $6 million,
respectively, of after-tax OTTI reversals; there were no such OTTI reversals in
2007.
As a
result of the spent fuel settlement agreement (see Item I - FPL Operations -
Nuclear Operations and Item I - NextEra Energy Resources - Nuclear Operations),
FPL Group reduced its property, plant and equipment balances by $107 million
($83 million for FPL) and operating expenses by $15 million ($12 million for
FPL) and increased FPL Group’s operating revenues by $9 million. The
spent fuel settlement agreement increased FPL Group's 2009 net income by
approximately $16 million ($9 million for FPL). The spent fuel
settlement agreement permits FPL and NextEra Energy Resources to make annual
filings to recover certain spent fuel storage costs incurred by FPL and NextEra
Energy Resources which will be payable by the U.S. Government on an annual
basis. The amount received from the U.S. Government related to
property, plant and equipment is included in cash flows from investing
activities on FPL Group's and FPL's consolidated statements of cash
flows. Additional payments from the U.S. Government are
pending. FPL and NextEra Energy Resources will continue to pay fees
to the U.S. Government's nuclear waste fund.
Results
for Corporate and Other in 2009 reflect higher interest income and realized and
unrealized gains on investments offset by lower consolidating income tax
adjustments and higher interest expense. Results for Corporate and
Other in 2008 reflect higher interest expense offset by additional consolidating
income tax adjustments.
FPL
Group's effective income tax rate for all periods presented reflects PTCs for
wind projects at NextEra Energy Resources and deferred tax benefits associated
with grants (convertible ITCs) under the Recovery Act. PTCs and
deferred tax benefits associated with convertible ITCs can significantly affect
FPL Group's effective income tax rate depending on the amount of pretax
income. PTCs can be significantly affected by wind
generation. See Note 1 - Income Taxes, Note 6 and
Note 10 - Sale of Differential Membership Interests.
FPL
- FPL's net income for
2009, 2008 and 2007 was $831 million, $789 million and $836 million,
respectively, an increase in 2009 of $42 million and a decrease in 2008 of $47
million. The increase in FPL's 2009 results reflects retail base rate
increases associated with WCEC Units Nos. 1 and 2, higher AFUDC on the WCEC
units, a 0.3% increase in usage per retail customer reflecting favorable weather
conditions partly offset by other factors, and higher cost recovery clause
results partly offset by higher O&M and depreciation and amortization
expenses. FPL's 2008 results reflect lower retail customer usage,
higher depreciation and interest expenses and provisions taken in 2008 for
regulatory matters, partly offset by a retail base rate increase associated with
Turkey Point Unit No. 5 commencing commercial operation in 2007, lower O&M
expenses and higher other revenues and AFUDC - equity.
See
Overview for a discussion of the FPSC's January 2010 rate
ruling. Under the 2005 rate agreement, retail base rates did not
increase during the term of the agreement except to allow recovery under the
GBRA mechanism of the revenue requirements of FPL's three power plants that
achieved commercial operation during the term of the 2005 rate
agreement. Retail base rates increased approximately $115 million on
an annualized basis when Turkey Point Unit No. 5 was placed in service in
2007. Retail base rates increased approximately $265 million on an
annualized basis when WCEC Units Nos. 1 and 2 were placed in service in
2009. These units are expected to realize significant fuel savings
from the time the units were placed in service. During the term of
the 2005 rate agreement, FPL did not have an authorized regulatory ROE for the
purpose of addressing earnings levels, FPL reduced depreciation on its plant in
service by $125 million each year and FPL's revenues did not exceed the
thresholds established under the 2005 rate agreement's revenue sharing
mechanism. See Note 1 - Revenues and Rates for information on
FPL's regulatory ROE.
FPL's
operating revenues consisted of the following:
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
base
|
|
$
|
3,828
|
|
|
$
|
3,738
|
|
|
$
|
3,796
|
|
Fuel
cost recovery
|
|
|
5,982
|
|
|
|
6,202
|
|
|
|
6,162
|
|
Net
deferral of retail fuel revenues
|
|
|
(356
|
)
|
|
|
-
|
|
|
|
-
|
|
Other
cost recovery clauses and pass-through costs, net of any
deferrals
|
|
|
1,840
|
|
|
|
1,505
|
|
|
|
1,490
|
|
Other,
primarily pole attachment rentals, transmission and wholesale sales and
customer-related fees
|
|
|
197
|
|
|
|
204
|
|
|
|
174
|
|
Total
|
|
$
|
11,491
|
|
|
$
|
11,649
|
|
|
$
|
11,622
|
|
For the
year ended December 31, 2009, a 0.2% decrease in the average number of
customer accounts reduced retail base revenues by approximately $8 million while
a 0.3% increase in usage per retail customer, reflecting favorable weather
conditions partly offset by other factors, increased retail base revenues by
approximately $30 million. Customer usage in 2009 reflects one less
day of sales in 2009, as 2008 was a leap year. Base rate increases
resulting from WCEC Units Nos. 1 and 2 commencing commercial operation in
2009 increased retail base revenues by approximately $68 million. See
Overview for a discussion of FPL's customer growth, non-weather related usage
and the January 2010 rate ruling.
For the
year ended December 31, 2008, a 0.3% increase in the average number of
customer accounts increased retail base revenues by approximately $9 million
while a 2.7% decrease in usage per retail customer, reflecting weather
conditions and other factors, decreased retail base revenues by approximately
$95 million. Partly offsetting the usage decrease was an extra day of
sales in 2008, as it was a leap year. In addition, a base rate
increase resulting from Turkey Point Unit No. 5 commencing commercial
operation in 2007 increased retail base revenues by approximately $28
million.
The
increase in revenues from other cost recovery clauses and pass-through costs in
2009 is primarily due to additional revenues associated with the FPSC's nuclear
cost recovery rule and higher conservation and environmental clause
revenues. The FPSC's nuclear cost recovery rule provides for the
recovery of prudently incurred pre-construction costs and carrying charges
(equal to a pretax AFUDC rate) on construction costs for new nuclear capacity
through levelized charges under the capacity clause. In 2009, FPL
began recovering pre-construction costs associated with the development of two
additional units at the Turkey Point site and carrying charges (equal to a
pretax AFUDC rate) on construction costs associated with the addition of
approximately 400 mw of baseload capacity at its existing nuclear
units. The same rule provides for the recovery of construction costs,
once the new capacity goes into service, through a base rate
increase. See Overview for a discussion of activities related to the
development of two additional units at the Turkey Point site.
Revenues
from fuel and other cost recovery clauses and pass-through costs, such as
franchise fees, revenue taxes and storm-related surcharges, are largely a pass
through of costs. Such revenues also include a return allowed to be
recovered through the cost recovery clauses on certain assets, primarily solar,
environmental and nuclear capacity additions. In 2009, 2008 and 2007,
cost recovery clauses contributed $41 million, $25 million and $23 million,
respectively, to FPL's net income. The increase in 2009 cost recovery
clause results is primarily due to a return related to additional solar,
environmental and nuclear capacity expenditures, partly offset by lower interest
earned on fuel clause underrecoveries. The increase in 2008 cost
recovery clause results is primarily due to a return related to environmental
expenditures and higher interest earned on fuel clause underrecoveries, partly
offset by the absence of interest earned on FPL's unrecovered balance of the
storm reserve deficiency, which balance was collected upon the issuance of the
storm-recovery bonds in 2007. In 2010, it is expected that cost
recovery clauses will contribute higher earnings for FPL as a result of
additional solar, environmental and nuclear capacity
expenditures. Underrecovery or overrecovery of such cost recovery
clause and pass-through costs can significantly affect FPL Group's and FPL's
operating cash flows. Fluctuations in fuel cost recovery revenues are
primarily driven by changes in fuel and energy charges which are included in
fuel, purchased power and interchange expense in the consolidated statements of
income, as well as by changes in energy sales. Fluctuations in
revenues from other cost recovery clauses and pass-through costs are primarily
driven by changes in storm-related surcharges, capacity charges, franchise fee
costs, the impact of changes in O&M and depreciation expenses on the
underlying cost recovery clause, investment in solar and environmental projects,
investment in nuclear capacity until such capacity goes into service,
pre-construction costs associated with the development of two additional units
at the Turkey Point site and changes in energy sales. Capacity
charges and franchise fee costs are included in fuel, purchased power and
interchange and taxes other than income taxes and other, respectively, in the
consolidated statements of income.
FPL uses
a risk management fuel procurement program which was approved by the FPSC at the
program's inception. The FPSC reviews the program activities and
results for prudence on an annual basis as part of its annual review of fuel
costs. The program is intended to manage fuel price volatility by
locking in fuel prices for a portion of FPL's fuel requirements. The
current regulatory asset for the change in fair value of derivative instruments
used in the fuel procurement program amounted to approximately $68 million and
$1,109 million at December 31, 2009 and 2008, respectively. The
decrease in fuel revenues in 2009 reflects approximately $210 million related to
a lower average fuel factor and $10 million attributable to lower energy
sales. The increase in fuel revenues in 2008 reflects approximately
$230 million related to a higher average fuel factor, partly offset by $190
million attributable to lower energy sales. Pursuant to an FPSC
order, FPL was required to refund in the form of a one-time credit to retail
customers' bills the 2009 year-end estimated fuel overrecovery; in January 2010,
approximately $403 million was refunded to retail customers. At
December 31, 2009, approximately $356 million of retail fuel revenues were
overrecovered. The difference between the refund and the
December 31, 2009 overrecovery will be collected from retail customers in a
subsequent period. The increase from December 31, 2008 to
December 31, 2009 in deferred clause and franchise revenues and the
decrease in deferred clause and franchise expenses (current and noncurrent,
collectively) on FPL Group's and FPL's consolidated balance sheets totaled
approximately $624 million and positively affected FPL Group's and FPL's cash
flows from operating activities for the year ended December 31,
2009.
The
major components of FPL's fuel, purchased power and interchange expense are as
follows:
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
and energy charges during the period
|
|
$
|
5,425
|
|
|
$
|
6,289
|
|
|
$
|
6,259
|
|
Net
collection of previously deferred retail fuel costs
|
|
|
256
|
|
|
|
-
|
|
|
|
-
|
|
Net
deferral of retail fuel costs
|
|
|
-
|
|
|
|
(55
|
)
|
|
|
(56
|
)
|
Other,
primarily capacity charges, net of any capacity deferral
|
|
|
539
|
|
|
|
515
|
|
|
|
523
|
|
Total
|
|
$
|
6,220
|
|
|
$
|
6,749
|
|
|
$
|
6,726
|
|
The
decrease in fuel and energy charges in 2009 was due to lower fuel and energy
prices. The increase in fuel and energy charges in 2008 reflects
higher fuel and energy prices of approximately $224 million, partly offset by
approximately $194 million attributable to lower energy sales.
FPL's
O&M expenses increased $58 million in 2009 reflecting higher insurance and
employee benefit costs of approximately $51 million and $44 million,
respectively, partly offset by lower distribution, nuclear and fossil generation
costs of $26 million, $18 million and $10 million, respectively. The
increase in insurance costs is primarily due to the absence of a refund
associated with an environmental insurance policy termination, which occurred in
2008, as well as higher nuclear insurance costs. The increase in
employee benefit costs is primarily due to higher medical costs, a lower pension
credit and other costs driven by market conditions. The decrease in
distribution costs reflects deferred projects and productivity
improvements. The decline in nuclear generation costs reflects a
reimbursement of prior years’ costs related to the spent fuel settlement
agreement and lower costs related to 2008 plant improvement initiatives partly
offset by higher refueling and maintenance outage costs. The decline
in fossil generation costs is primarily due to lower overhaul costs, partly
offset by additional costs related to WCEC Units Nos. 1 and 2. Other
changes in O&M expenses were primarily driven by pass-through costs which
did not significantly affect net income. Management expects O&M
expenses, excluding pass-through O&M costs, in 2010 to exceed the 2009 level
primarily due to higher nuclear and fossil generation, transmission and
distribution costs, as well as higher employee benefit and nuclear insurance
costs and the absence of the reimbursement of prior years’ costs related to the
spent fuel settlement agreement. Beginning in 2009, FPL records, as
other receivables in the consolidated balance sheets, operating costs expected
to be reimbursed under the spent fuel settlement agreement.
FPL's
O&M expenses decreased $16 million in 2008 reflecting lower insurance,
employee benefit and distribution costs of approximately $47 million, $11
million and $10 million, respectively. These decreases were partly
offset by higher nuclear generation, fossil generation, transmission and
customer service costs of approximately $21 million, $4 million, $3 million and
$20 million, respectively, as well as a reserve for regulatory
matters. The decline in insurance costs was primarily due to the
termination by mutual agreement of an environmental insurance
policy. The decline in employee benefit costs reflects a higher
pension credit as well as lower benefits due to declining market conditions,
partly offset by higher medical costs. The decline in distribution
costs reflects cost reduction efforts and efficiencies as well as reduced work
load due to the decline in customer growth, partly offset by severance costs
incurred in 2008. The increase in nuclear generation costs reflects
plant improvement initiatives to ensure long-term reliable
operations. The fossil generation increase reflects costs associated
with plant maintenance, while the transmission increase reflects additional
improvement activities. The customer service cost increase is
primarily due to higher uncollectible accounts. Other changes in
O&M expenses were primarily driven by pass-through costs which did not
significantly affect net income.
Depreciation
and amortization expense in 2009 increased $237 million reflecting the
amortization of approximately $203 million of pre-construction costs associated
with FPL's planned nuclear units recovered under the nuclear cost recovery rule,
higher depreciation on transmission and distribution facilities (collectively,
approximately $21 million) and depreciation of $17 million on WCEC Units
Nos. 1 and 2, which were placed in service in 2009. Depreciation
and amortization expense in 2008 increased $14 million, reflecting higher
depreciation on transmission and distribution facilities (collectively,
approximately $20 million) and higher depreciation on fossil generation assets
of $10 million, primarily Turkey Point Unit No. 5 which was placed in
service in 2007. In addition, depreciation on nuclear assets was
higher by approximately $4 million primarily due to the steam generator and
reactor vessel head replacements at St. Lucie Unit No. 2. These
increases were partially offset by lower depreciation and amortization expense
of $11 million primarily due to the absence of amortization of software and
other property that has been fully amortized. Other changes in
depreciation and amortization expense were primarily driven by pass-through
costs, other than costs associated with the nuclear cost recovery rule, which
did not significantly affect net income. In 2010, FPL will begin
amortizing over four years approximately $895 million of a depreciation reserve
surplus as required by the January 2010 rate ruling. The $125 million
reduction in annual depreciation and amortization expense that FPL has been
recording since 2002 as permitted by the FPSC will cease in
2010. Also, depreciation and amortization expense in 2010 is expected
to be affected by a reduction in nuclear cost recovery rule amortization
primarily as a result of the timing of expenditures. See Note 1
- Electric Plant, Depreciation and Amortization.
Taxes
other than income taxes and other increased $24 million and $40 million in 2009
and 2008, respectively, primarily due to changes in franchise fees and revenue
taxes, which are pass-through costs, and higher property taxes ($14 million and
$15 million, respectively), reflecting growth in plant in service
balances. The increase in franchise fees in 2008 was primarily driven
by higher average franchise rates.
Interest
expense for 2009 reflects a decline in average interest rates of approximately
29 basis points, partly offset by higher average debt
balances. Interest expense for 2008 reflects higher average debt
balances, partly offset by a decline in average interest rates of approximately
34 basis points. Interest expense on storm-recovery bonds, as well as
certain other interest expense (collectively, clause interest), are essentially
pass-through amounts and do not significantly affect net income, as the clause
interest is recovered either under cost recovery clause mechanisms or through a
storm-recovery bond surcharge. Clause interest for 2009, 2008 and
2007 amounted to approximately $45 million, $44 million and $32 million,
respectively. For both 2009 and 2008, interest expense was reduced by
higher allowance for borrowed funds used during construction (see AFUDC -
equity explanation below).
The
increase in AFUDC - equity for 2009 and 2008 is primarily attributable to
additional AFUDC - equity on three natural gas-fired combined-cycle units of
approximately 1,220 mw each at WCEC, partly offset, in 2008, by the absence of
AFUDC - equity on Turkey Point Unit No. 5 and the steam generator and
reactor vessel head replacement projects at St. Lucie Unit
No. 2.
Interest
income declined in 2009 primarily due to lower average investment balances and
lower interest rates. The decline in 2008 reflects the cessation of
interest on FPL's unrecovered balance of the storm reserve deficiency, which
balance was collected upon the issuance of the storm-recovery bonds in 2007,
partly offset by higher interest income earned on higher average investment
balances.
FPL
currently faces competition from other suppliers of electrical energy to
wholesale customers and from alternative energy sources and self-generation for
other customer groups, primarily industrial customers. The FERC has
jurisdiction over potential changes that could affect competition in wholesale
transactions. In 2009, operating revenues from wholesale and
industrial customers combined represented approximately 4% of FPL's total
operating revenues. Various states, other than Florida, have enacted
legislation or have state commissions that have issued orders designed to allow
retail customers to choose their electricity supplier. Management
believes it is unlikely there will be any state actions to restructure the
retail electric industry in Florida in the near future. If the basis
of regulation for some or all of FPL's business changes from cost-based
regulation, existing regulatory assets and liabilities would be written off
unless regulators specify an alternative means of recovery or
refund. Further, other aspects of the business, such as generation
assets and long-term power purchase commitments, would need to be reviewed to
assess their recoverability in a changed regulatory environment. See
Critical Accounting Policies and Estimates - Regulatory Accounting.
FPL is
currently constructing a natural gas-fired combined-cycle unit of approximately
1,220 mw at its WCEC, which is expected to be placed in service by
mid-2011. In addition, FPL is in the process of adding approximately
400 mw of baseload capacity at its existing nuclear units at St. Lucie and
Turkey Point, which additional capacity is projected to be placed in service by
the end of 2012.
NextEra Energy Resources
-
NextEra Energy Resources’ net income for 2009, 2008 and 2007 was $849 million,
$915 million and $540 million, respectively, a decrease in 2009 of $66 million
and an increase in 2008 of $375 million. The primary drivers, on an
after-tax basis, of these changes were as follows:
|
|
Increase
(Decrease)
From
Prior Period
|
|
|
|
Years
Ended
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
New
investments
(a)
|
|
$
|
176
|
|
|
$
|
155
|
|
Existing
assets
(a)
|
|
|
(171
|
)
|
|
|
48
|
|
Full
energy and capacity requirements services and trading
|
|
|
78
|
|
|
|
6
|
|
Asset
sales
|
|
|
6
|
|
|
|
5
|
|
Interest
expense, differential membership costs and other
|
|
|
(28
|
)
|
|
|
(25
|
)
|
Change
in unrealized mark-to-market non-qualifying hedge activity
(b)
|
|
|
(190
|
)
|
|
|
256
|
|
Change
in OTTI losses on securities held in nuclear decommissioning funds, net of
OTTI reversals
|
|
|
63
|
|
|
|
(70
|
)
|
Net
income increase (decrease)
|
|
$
|
(66
|
)
|
|
$
|
375
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
PTCs and ITCs on wind projects and ITCs on solar projects and, for new
investments, deferred tax benefits associated with convertible ITCs (see
Note 1 - Electric Plant, Depreciation and Amortization, Note 1 -
Income Taxes and Note 6) but does not include allocation of interest
expense or corporate general and administrative
expenses. Results from new projects are included in new
investments during the first twelve months of operation. A
project's results are included in existing assets beginning with the
thirteenth month of operation.
|
(b)
|
For
discussion of derivative instruments, see Note 3 and
Overview.
|
The
increase in NextEra Energy Resources’ 2009 results from new investments reflects
the addition of over 2,490 mw of wind generation during or after
2008. In addition, results from new investments for the year ended
December 31, 2009 include approximately $87 million of deferred tax
benefits associated with convertible ITCs. The increase in NextEra
Energy Resources’ 2008 results from new investments reflects the addition of
over 3,200 mw of wind and nuclear generation during or after 2007.
In 2009,
results from NextEra Energy Resources' existing asset portfolio decreased
approximately $110 million primarily due to unfavorable results in the ERCOT and
NEPOOL regions due primarily to unfavorable market conditions, lower results of
$75 million associated with existing wind projects primarily due to a lower wind
resource across the portfolio and lower results of $36 million from the
contracted portfolio, partially offset by higher results ($42 million) from
NextEra Energy Resources’ retail energy provider due to favorable residential
margins, a state tax benefit related to a change in state tax law on certain
wind projects and favorable results at Seabrook primarily due to higher
prices. A planned and unplanned outage at Seabrook in the fourth
quarter of 2009 was substantially offset by planned and unplanned outages in
2008. In 2008, results from NextEra Energy Resources’ existing asset
portfolio increased approximately $76 million due to favorable results in the
NEPOOL, ERCOT and PJM regions reflecting favorable market conditions, favorable
hydro resource and favorable hedge pricing partially offset by the impact of
planned and unplanned outages at the Seabrook nuclear facility. In
addition, the existing wind portfolio experienced a favorable wind
resource. These factors were partially offset by lower results of
approximately $14 million from NextEra Energy Resources' retail energy provider
primarily due to unfavorable commodity margins. Results in 2008 in
PJM benefited from a new FERC-approved forward capacity market that began in
June 2007.
NextEra
Energy Resources’ 2009 and 2008 financial results benefited from increased gains
from its full energy and capacity requirements services and trading
activities. Full energy and capacity requirements services include
load-following services, which require the supplier of energy to vary the
quantity delivered based on the load demand needs of the customer, as well as
various ancillary services.
Asset
sales in 2009 represent the sale of wind development rights, the sale of a 50 mw
wind project and the sale of an interest in a waste-to-energy project, which
contained an option for the buyer to sell the project back to NextEra Energy
Resources. An additional after-tax gain of approximately $11 million
on the waste-to-energy project has been recorded in 2010 when the buyer's option
expired. Asset sales in 2008 reflect a gain on the sale of
development rights on a natural gas project.
In both
2009 and 2008, interest expense, differential membership costs and other
reflects increased costs due to growth of the business partially offset in 2008
by certain state income tax benefits. In 2009, an approximately $18
million income tax benefit from a reduction of previously deferred income taxes
resulting from an additional equity investment in Canadian operations was offset
by other income tax expenses in 2009 and the absence of other income tax
benefits recorded in the prior year.
In 2009
and 2007, NextEra Energy Resources recorded net unrealized after-tax losses from
non-qualifying hedges of approximately $20 million and $86 million,
respectively. In 2008, NextEra Energy Resources recorded net
unrealized mark-to-market after-tax gains from non-qualifying hedges of
approximately $170 million. The change in unrealized mark-to-market
activity is primarily attributable to changes in forward power and natural gas
prices, as well as the reversal of previously recognized unrealized
mark-to-market gains or losses as the underlying transactions were
realized. In 2009, 2008 and 2007, NextEra Energy Resources recorded
$36 million, $82 million and $6 million, respectively, of after-tax OTTI losses
on securities held in its nuclear decommissioning funds. In 2009 and
2008, NextEra Energy Resources had approximately $23 million and $6 million,
respectively, of after-tax OTTI reversals; there were no such OTTI reversals in
2007.
Operating
revenues for the year ended December 31, 2009 decreased $573 million
primarily due to losses of $88 million on unrealized mark-to-market
non-qualifying hedge activity in 2009 compared to gains on such hedges of $232
million in 2008. Excluding this mark-to-market activity, revenues
were affected by unfavorable market conditions in the NEPOOL, ERCOT and PJM
regions and an unfavorable wind resource, partly offset by higher operating
revenues at PMI and NextEra Energy Resources' retail energy provider
(collectively, approximately $384 million) and project additions ($131
million). Operating revenues for the year ended December 31,
2008 increased $1,096 million primarily due to gains of $232 million on
unrealized mark-to-market non-qualifying hedge activity in 2008 compared to
losses on such hedges of $342 million in 2007. Excluding this
mark-to-market activity, revenues benefited from project additions, favorable
market conditions in the NEPOOL, ERCOT and PJM regions, and favorable wind and
hydro resources (collectively, $587 million) partially offset by nuclear planned
and unplanned outages of approximately $65 million.
Operating
expenses for the year ended December 31, 2009 decreased $291 million
primarily due to lower fuel costs of approximately $390 million partially offset
by project additions of $94 million and higher corporate general and
administrative expenses of $12 million to support the growth in the
business. In addition, operating expenses reflect $60 million of
unrealized mark-to-market gains from non-qualifying hedges compared to $53
million of such gains in 2008. Operating expenses for the year ended
December 31, 2008 increased $522 million, reflecting $53 million of
unrealized mark-to-market gains from non-qualifying hedges compared to $198
million of gains on such hedges in 2007. Excluding these
mark-to-market changes, which are reflected in fuel, purchased power and
interchange expense in FPL Group's consolidated statements of income, operating
expenses increased primarily due to project additions, higher fuel costs and
higher corporate general and administrative expenses to support the growth in
the business.
Equity
in earnings of equity method investees in 2009 decreased $41 million due to
unfavorable market conditions and the absence of certain favorable contractual
provisions which benefited the prior periods at a project in the PJM
region. Equity in earnings of equity method investees in 2008
increased $25 million due to improved market conditions in the PJM
region.
NextEra
Energy Resources' interest expense for the year ended December 31, 2009
increased $43 million due to increased borrowings to support the growth of the
business, partially offset by a decrease in interest rates of approximately 37
basis points. NextEra Energy Resources’ interest expense for the year
ended December 31, 2008 decreased $1 million. Gains on disposal
of assets - net in FPL Group's consolidated statements of income for
2009 reflect $56 million of gains on sales of securities held in NextEra Energy
Resources' nuclear decommissioning funds and in 2008 reflect an approximately
$10 million gain on the sale of development rights related to a natural gas
project and $8 million of gains on sales of securities held in nuclear
decommissioning funds.
PTCs
from NextEra Energy Resources’ wind projects are reflected in NextEra Energy
Resources’ earnings. PTCs are recognized as wind energy is generated
and sold based on a per kwh rate prescribed in applicable federal and state
statutes, and amounted to approximately $255 million, $262 million and $219
million for the years ended December 31, 2009, 2008 and 2007,
respectively. In addition, FPL Group's effective income tax rate for
year ended December 31, 2009 was affected by deferred tax benefits associated
with convertible ITCs of $88 million. See
Note 6.
NextEra
Energy Resources expects its future portfolio capacity growth to come primarily
from wind and solar development and from asset acquisitions. NextEra
Energy Resources added approximately 1,170 mw of wind generation in 2009, of
which 985 mw were constructed and 185 mw were from three operating wind projects
purchased in the fourth quarter of 2009. NextEra Energy Resources
expects to add approximately 1,000 mw of new wind generation in 2010 and 1,000
mw to 1,500 mw in each of 2011 and 2012. In addition, NextEra Energy
Resources intends to pursue opportunities for new solar generating
facilities. The wind and solar expansions are subject to, among other
things, continued public policy support, support for the construction and
availability of sufficient transmission facilities and capacity, continued
market demand, supply chain expansion and access to capital at reasonable cost
and on reasonable terms. Currently, in the United States, 31 states
have RPS requiring electricity providers in the state to meet a certain
percentage of their retail sales with energy from renewable
sources. These standards vary by state, but the majority include
requirements to meet 10% to 25% of the electricity providers' retail sales with
energy from renewable sources by 2025. NextEra Energy Resources
believes that these standards will create incremental demand for renewable
energy in the future.
Competitive
wholesale markets in the United States continue to evolve and vary among and
within geographic regions. Revenues from electricity sales in these
markets vary based on the prices obtainable for energy, capacity and other
ancillary services. Some of the factors affecting success in these
markets include the ability to operate generating assets efficiently and
reliably, the price and supply of fuel, transmission constraints, wind, solar
and hydro resources (weather conditions), competition from regulated utilities
and new sources of generation, effective risk management, demand growth,
environmental requirements and exposure to legal and regulatory
changes.
Expanded
competition in a frequently changing regulatory environment presents both
opportunities and risks for NextEra Energy Resources. Opportunities
exist for the selective acquisition of generation assets and for the
construction and operation of efficient plants that can sell power in
competitive markets. NextEra Energy Resources seeks to reduce its
market risk by having a diversified portfolio by fuel type and location, as well
as by contracting for the future sale of a significant amount of the electricity
output of its plants. The combination of new wind and solar projects
and asset acquisitions are expected to be the key drivers supporting NextEra
Energy Resources’ growth over the next few years.
NextEra
Energy Resources’ earnings are subject to variability due to, among other
things, operational performance, commodity price exposure, counterparty
performance, weather conditions and project restructuring
activities. NextEra Energy Resources’ exposure to commodity price
risk is reduced by the degree of contract coverage obtained for 2010 and
2011. Therefore, if NextEra Energy Resources’ plants do not perform
as expected, NextEra Energy Resources could be required to purchase power at
potentially higher market prices to meet its contractual
obligations. In addition to the effect of temperature, which is
reflected in commodity prices and demand, changes in weather affect production
levels of the wind portfolio as well as the hydro units in Maine and the solar
units in California. In managing its exposure to commodity prices,
NextEra Energy Resources is dependent upon its counterparties to perform under
their contractual obligations. NextEra Energy Resources actively
manages the trade-off between market risk and credit risk, as well as exposure
with individual counterparties as a function of their
creditworthiness. As of December 31, 2009, substantially all of
NextEra Energy Resources’ 2010 contracted revenues are with investment grade
counterparties.
Corporate and Other
-
Corporate and Other is primarily comprised of interest expense, the operating
results of FPL FiberNet and other business activities as well as corporate
interest income and expenses. Corporate and Other allocates interest
expense to NextEra Energy Resources based on a deemed capital structure at
NextEra Energy Resources of 50% debt for operating projects and 100% debt for
projects under construction. For these purposes, the deferred credit
associated with differential membership interests sold by a NextEra Energy
Resources subsidiary in December 2007 is included with debt. Each
subsidiary's income taxes are calculated based on the "separate return method,"
except that tax benefits that could not be used on a separate return basis, but
are used on the consolidated tax return, are recorded by the subsidiary that
generated the tax benefits. Any remaining consolidated income tax
benefits or expenses are recorded at Corporate and Other. The major
components of Corporate and Other's results, on an after-tax basis, are as
follows:
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net of allocations to NextEra Energy Resources
|
|
$
|
(109
|
)
|
|
$
|
(103
|
)
|
|
$
|
(90
|
)
|
Interest
income
|
|
|
34
|
|
|
|
22
|
|
|
|
22
|
|
Federal
and state income tax benefits
|
|
|
-
|
|
|
|
18
|
|
|
|
3
|
|
Other
|
|
|
10
|
|
|
|
(2
|
)
|
|
|
1
|
|
Net
loss
|
|
$
|
(65
|
)
|
|
$
|
(65
|
)
|
|
$
|
(64
|
)
|
The
increase in interest expense in 2009 and 2008 reflects additional debt
outstanding, partly offset by a higher allocation of interest costs to NextEra
Energy Resources and lower average interest rates of approximately 66 basis
points and 91 basis points, respectively. The increase in interest
income in 2009 is primarily due to earnings on an energy-related loan made to a
third party by an FPL Group Capital subsidiary. Interest income in
2008 reflects lower interest rates on temporary investments offset by additional
earnings on energy-related loans made to third parties by FPL Group Capital
subsidiaries. The federal and state income tax benefits reflect
consolidating income tax adjustments. Other includes all other
corporate income and expenses, as well as other business
activities. The increase in other primarily reflects realized and
unrealized gains on investments which are reflected in other - net in the
consolidated statements of income.
Liquidity
and Capital Resources
FPL
Group and its subsidiaries, including FPL, require funds to support and grow
their businesses. These funds are used for working capital, capital
expenditures, investments in or acquisitions of assets and businesses, to pay
maturing debt obligations and, from time to time, to redeem or repurchase
outstanding debt or equity securities. It is anticipated that these
requirements will be satisfied through a combination of internally generated
funds, borrowings, and the issuance, from time to time, of debt and equity
securities, consistent with FPL Group's and FPL's objective of maintaining, on a
long-term basis, a capital structure that will support a strong investment grade
credit rating. FPL Group, FPL and FPL Group Capital access the credit
and capital markets as significant sources of liquidity for capital requirements
that are not satisfied by operating cash flows. The inability of FPL
Group, FPL and FPL Group Capital to maintain their current credit ratings could
affect their ability to raise short- and long-term capital, their cost of
capital and the execution of their respective financing strategies, and could
require the posting of additional collateral under certain
agreements. In January 2010, Moody's Investors Service, Inc.
(Moody's), Standard & Poor's Ratings Services (S&P) and Fitch Ratings
(Fitch) placed FPL Group, FPL Group Capital and FPL on negative credit watch
with the possibility of a credit ratings downgrade. The rating
agencies indicated their review for potential downgrade of the ratings is
prompted by, among other things, the heightened risk to investors caused by a
decline in the regulatory environment for investor-owned utilities operating in
Florida and continued challenging economic conditions throughout
Florida. FPL Group and FPL are unable to predict whether or when a
credit ratings downgrade may occur. See Credit Ratings
below.
The
global and domestic credit and capital markets experienced unprecedented levels
of volatility and disruption in the recent past. This significantly
affected the cost and available sources of liquidity in the financial
markets. FPL and FPL Group Capital have continued to have access to
commercial paper and short- and long-term credit and capital
markets. If capital and credit market conditions change, this could
alter spending plans at FPL and NextEra Energy Resources.
Available Liquidity
- At
December 31, 2009, FPL Group's total net available liquidity was
approximately $4.4 billion, of which FPL's portion was approximately $2.0
billion. The components of each company's net available liquidity at
December 31, 2009 were as follows:
|
|
|
|
|
|
|
|
|
|
|
Maturity
Date
|
|
|
FPL
|
|
|
FPL
Group
Capital
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
|
|
FPL
Group
Capital
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
revolving lines of credit
(a)
|
|
$
|
2,473
|
|
|
$
|
3,917
|
|
|
$
|
6,390
|
|
|
(b)
|
|
(b)
|
Less
letters of credit
|
|
|
(3
|
)
|
|
|
(492
|
)
|
|
|
(495
|
)
|
|
|
|
|
|
|
|
2,470
|
|
|
|
3,425
|
|
|
|
5,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revolving
term loan facility
|
|
|
250
|
|
|
|
-
|
|
|
|
250
|
|
|
|
2011
|
|
|
Less
borrowings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
250
|
|
|
|
-
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
2,720
|
|
|
|
3,425
|
|
|
|
6,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
83
|
|
|
|
155
|
|
|
|
238
|
|
|
|
|
|
|
Less
commercial paper
|
|
|
(818
|
)
|
|
|
(1,202
|
)
|
|
|
(2,020
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
available liquidity
|
|
$
|
1,985
|
|
|
$
|
2,378
|
|
|
$
|
4,363
|
|
|
|
|
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Provide
for the issuance of letters of credit up to $6,390 million ($2,473 million
for FPL) and are available to support FPL's and FPL Group Capital's
commercial paper programs and short-term borrowings and to provide
additional liquidity in the event of a loss to the companies' or their
subsidiaries' operating facilities (including, in the case of FPL, a
transmission and distribution property loss), as well as for general
corporate purposes. FPL's bank revolving lines of credit are
also available to support the purchase of $633 million of pollution
control, solid waste disposal and industrial development revenue bonds
(tax exempt bonds) in the event they are tendered by individual bond
holders and not remarketed prior to maturity.
|
(b)
|
$17
million of FPL's and $40 million of FPL Group Capital's bank revolving
lines of credit expire in 2012. The remaining portion of bank
revolving lines of credit for FPL and FPL Group Capital expire in
2013.
|
As of
February 25, 2010, 37 banks participate in FPL's and FPL Group Capital's credit
facilities and FPL's revolving term loan facility, with no one bank providing
more than 8% of the combined credit facilities and FPL's revolving term loan
facility. In order for FPL Group Capital to borrow under the terms of
its credit facility, FPL Group (which guarantees the payment of FPL Group
Capital's credit facility pursuant to a 1998 guarantee agreement) is required to
maintain a ratio of funded debt to total capitalization that does not exceed a
stated ratio. The FPL Group Capital credit facility also contains
default and related acceleration provisions relating to, among other things,
failure of FPL Group to maintain a ratio of funded debt to total capitalization
at or below the specified ratio. Similarly, in order for FPL to
borrow under the terms of its credit facility and revolving term loan facility,
FPL is required to maintain a ratio of funded debt to total capitalization that
does not exceed a stated ratio. The FPL credit facility and revolving
term loan facility also contain default and related acceleration provisions
relating to, among other things, failure of FPL to maintain a ratio of funded
debt to total capitalization at or below the specified ratio. At
December 31, 2009, each of FPL Group and FPL was in compliance with its required
ratio.
In
January 2009, FPL Group entered into an agreement under which FPL Group may
offer and sell, from time to time, FPL Group common stock having a gross sales
price of up to $400 million. During 2009, FPL Group received gross
proceeds through the sale and issuance of common stock under this agreement of
approximately $160 million consisting of 2,890,000 shares at an average price of
$55.53 per share.
At
December 31, 2009, FPL had the capacity to absorb up to approximately $198
million in future prudently incurred storm restoration costs without seeking
recovery through a rate adjustment from the FPSC. Also, an indirect
wholly-owned subsidiary of NextEra Energy Resources has established an $80
million letter of credit facility which expires in 2017 and serves as security
for certain obligations under commodity hedge agreements entered into by the
subsidiary.
Letters of Credit, Surety Bonds and
Guarantees
- FPL Group and FPL obtain letters of credit and surety bonds,
and issue guarantees to facilitate commercial transactions with third parties
and financings. At December 31, 2009, FPL Group had
approximately $751 million of standby letters of credit ($14 million for FPL),
approximately $95 million of surety bonds ($55 million for FPL) and
approximately $8.9 billion notional amount of guarantees ($648 million for FPL),
of which approximately $6.6 billion ($24 million for FPL) letters of credit and
guarantees have expirations within the next five years. An aggregate
of approximately $495 million ($3 million for FPL) of the standby letters of
credit at December 31, 2009 were issued under FPL's and FPL Group Capital's
credit facilities. See Available Liquidity above. Letters
of credit, surety bonds and guarantees support, among other things, the buying
and selling of wholesale energy commodities, debt and related reserves, capital
expenditures for wind development, nuclear activities, the commercial paper
program of FPL's consolidated VIE from which it leases nuclear fuel and other
contractual agreements. Each of FPL Group and FPL believe it is
unlikely that it would incur any liabilities associated with these letters of
credit, surety bonds and guarantees. Accordingly, at
December 31, 2009, FPL Group and FPL did not have any liabilities recorded
for these letters of credit, surety bonds and guarantees. In
addition, FPL Group has guaranteed certain payment obligations of FPL Group
Capital, including most of its debt and all of its debentures and commercial
paper issuances, as well as most of its payment guarantees, and FPL Group
Capital has guaranteed certain debt and other obligations of NextEra Energy
Resources and its subsidiaries. See
Note 14 - Commitments. Due to fluctuations in the
value of investments held in the nuclear decommissioning fund for Duane Arnold,
the balance in that fund is at certain times below the NRC minimum funding
requirement and could require posting of additional amounts to meet that
requirement. As required by the NRC, in November 2009, NextEra Energy
Resources submitted its proposed plan to the NRC for providing financial
assurance for decommissioning funding for Duane Arnold, including the proposed
elimination of the existing $93 million parent company guaranty for
decommissioning. The ultimate amount of the guarantee for NextEra
Energy Resources' decommissioning obligations for Duane Arnold, if any, could
vary depending on the market performance of the investments held in the nuclear
decommissioning fund and on the NRC's position on NextEra Energy Resources'
proposed plan.
Shelf Registration
- In
August 2009, FPL Group, FPL Group Capital, FPL and certain affiliated trusts
filed a shelf registration statement with the SEC for an unspecified amount of
securities. The amount of securities issuable by the companies is
established from time to time by their respective boards of
directors. As of February 25, 2010, securities that may be issued
under the registration statement, which became effective upon filing, include,
depending on the registrant, senior debt securities, subordinated debt
securities, junior subordinated debentures, first mortgage bonds, preferred
trust securities, common stock, preferred stock, stock purchase contracts, stock
purchase units, warrants and guarantees related to certain of those
securities. As of February 25, 2010, FPL Group and FPL Group Capital
had approximately $1.7 billion (issuable by either or both of them up to such
aggregate amount) of board-authorized available capacity, and FPL had $0.5
billion of board-authorized available capacity.
Credit Ratings
- At February
25, 2010, Moody's, S&P and Fitch had assigned the following credit ratings
to FPL Group, FPL and FPL Group Capital:
|
Moody's
(a)
|
|
S&P
(a)
|
|
Fitch
(a)
|
FPL
Group:
(b)
|
|
|
|
|
|
Corporate
credit rating
|
A2
|
|
A
|
|
A
|
|
|
|
|
|
|
FPL:
(b)
|
|
|
|
|
|
Corporate
credit rating
|
A1
|
|
A
|
|
A
|
First
mortgage bonds
|
Aa2
|
|
A
|
|
AA-
|
Pollution
control, solid waste disposal and industrial development revenue
bonds
|
VMIG-1
|
|
A
|
|
A+
|
Commercial
paper
|
P-1
|
|
A-1
|
|
F1
|
|
|
|
|
|
|
FPL
Group Capital:
(b)
|
|
|
|
|
|
Corporate
credit rating
|
A2
|
|
A
|
|
A
|
Debentures
|
A2
|
|
A-
|
|
A
|
Junior
subordinated debentures
|
A3
|
|
BBB+
|
|
BBB+
|
Commercial
paper
|
P-1
|
|
A-1
|
|
F1
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
A
security rating is not a recommendation to buy, sell or hold securities
and should be evaluated independently of any other rating. The
rating is subject to revision or withdrawal at any time by the assigning
rating organization.
|
(b)
|
In
January 2010, FPL Group, FPL and FPL Group Capital were placed on a
negative credit watch with the possibility of a credit ratings downgrade
by each of Moody's, S&P and
Fitch.
|
FPL
Group and its subsidiaries, including FPL, have no credit rating downgrade
triggers that would accelerate the maturity dates of outstanding
debt. A change in ratings is not an event of default under applicable
debt instruments, and while there are conditions to drawing on the credit
facilities maintained by FPL and FPL Group Capital, the maintenance of a
specific minimum credit rating is not a condition to drawing on those credit
facilities. Commitment fees and interest rates on loans under the
credit facilities' agreements are tied to credit ratings. A ratings
downgrade also could reduce the accessibility and increase the cost of
commercial paper and other short-term debt issuances and additional or
replacement credit facilities. In addition, a ratings downgrade could
result in the requirement that FPL Group subsidiaries, including FPL, post
collateral under certain agreements, including those related to fuel
procurement, power sales and purchases, nuclear decommissioning funding,
debt-related reserves and trading activities. If FPL's credit rating
was downgraded by one or two levels, it would not be required to post additional
collateral under these agreements. If FPL Group Capital's credit
rating was downgraded to BBB+/Baa1, which is a one level downgrade for S&P
and a two level downgrade for Moody's and Fitch, FPL Group Capital would be
required to post additional collateral of approximately $150
million. FPL's and FPL Group Capital's bank revolving lines of credit
are available to support the potential requirements discussed
above. See Available Liquidity above.
Cash Flow
- The changes in
cash and cash equivalents are summarized as follows:
|
FPL
Group
|
|
FPL
|
|
|
Years
Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2009
|
|
2008
|
|
2007
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by operating activities
|
|
$
|
4,463
|
|
|
$
|
3,403
|
|
|
$
|
3,593
|
|
|
$
|
2,871
|
|
|
$
|
2,180
|
|
|
$
|
2,163
|
|
Net
cash used in investing activities
|
|
|
(5,935
|
)
|
|
|
(5,808
|
)
|
|
|
(4,578
|
)
|
|
|
(2,726
|
)
|
|
|
(2,427
|
)
|
|
|
(2,214
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
1,175
|
|
|
|
2,650
|
|
|
|
655
|
|
|
|
(182
|
)
|
|
|
304
|
|
|
|
50
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
$
|
(297
|
)
|
|
$
|
245
|
|
|
$
|
(330
|
)
|
|
$
|
(37
|
)
|
|
$
|
57
|
|
|
$
|
(1
|
)
|
FPL
Group's cash and cash equivalents decreased for the year ended December 31,
2009 reflecting capital investments by FPL and NextEra Energy Resources, the
payment of common stock dividends to FPL Group shareholders and margin cash
collateral provided to NextEra Energy Resources'
counterparties. These outflows were partially offset by cash
generated by operating activities, net issuances of both long- and short-term
debt and the issuance of common stock.
FPL
Group's cash flows from operating activities for the year ended
December 31, 2009 reflect cash generated by net income and the overrecovery
of fuel costs by FPL in 2009, as well as the recovery of prior period
deferrals. These inflows were partially offset by margin cash
collateral provided to NextEra Energy Resources' counterparties as a result of
changing energy prices.
FPL
Group's cash flows from investing activities for the year ended
December 31, 2009 reflect capital investments, including nuclear fuel
purchases, of approximately $2.7 billion by FPL to expand and enhance its
electric system and generating facilities to continue to provide reliable
service to meet the power needs of present and future customers and investments
in independent power projects of approximately $3.2 billion by NextEra Energy
Resources. FPL Group's cash flows from investing activities also
include the cash grants under the Recovery Act, the receipt of funds from the
spent fuel settlement agreement, the purchase and sale of restricted securities
held in the special use funds, including the reinvestment of fund earnings and
new contributions by NextEra Energy Resources, as well as other investment
activity, primarily at FPL Group Capital. In 2010, FPL Group expects
to receive approximately $417 million ($44 million at FPL) in cash grants under
the Recovery Act for energy projects placed in service in 2009.
During
the year ended December 31, 2009, FPL Group generated proceeds from
financing activities, net of related issuance costs, of approximately $3.6
billion, including a net increase in short-term debt of $154 million (comprised
of $109 million and $45 million at FPL Group Capital and FPL, respectively),
$198 million in proceeds from the issuance of common stock, primarily under FPL
Group's continuous offering agreement (see Available Liquidity above), and the
following long-term debt issuances and borrowings:
Date
Issued
|
|
Company
|
|
Debt
Issued
|
|
Interest
Rate
|
|
Principal
Amount
|
|
Maturity
Date(s)
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
2009
|
|
NextEra
Energy Resources subsidiary
|
|
Canadian
dollar denominated limited-recourse senior secured term
loan
|
|
Variable
|
|
$
|
76
|
|
2023
(a)
|
January
2009
|
|
FPL
Group Capital
|
|
Term
loan
|
|
Variable
|
|
|
72
|
|
2011
|
March
2009
|
|
FPL
Group Capital
|
|
Debentures
|
|
6.00%
|
|
|
500
|
|
2019
|
March
2009
|
|
FPL
|
|
First
mortgage bonds
|
|
5.96%
|
|
|
500
|
|
2039
|
March
2009
|
|
FPL
Group Capital
|
|
Junior
subordinated debentures
|
|
8.75%
|
|
|
375
|
|
2069
|
March
2009
|
|
NextEra
Energy Resources subsidiary
|
|
Limited-recourse
senior secured notes
|
|
Variable
|
|
|
22
|
|
2016
(b)
|
May
2009
|
|
NextEra
Energy Resources subsidiary
|
|
Limited-recourse
senior secured term loan
|
|
Variable
|
|
|
343
|
|
2017
(b)
|
May
2009
|
|
FPL
Group Capital
|
|
Debentures
related to FPL Group's equity units
|
|
3.60%
|
|
|
350
|
|
2014
|
June
2009
|
|
FPL
Group Capital
|
|
Japanese
yen denominated term loan
|
|
Variable
|
|
|
146
|
|
2011
|
June
2009
|
|
FPL
Group Capital
|
|
Term
loan
|
|
Variable
|
|
|
50
|
|
2011
|
October
2009
|
|
FPL
Group Capital subsidiary
|
|
Senior
secured bonds
|
|
7.500%
|
|
|
500
|
|
2030
(b)(c)
|
November
2009
|
|
FPL
Group Capital
|
|
Debentures
|
|
Variable
|
|
|
200
|
|
2012
|
December
2009
|
|
NextEra
Energy Resources subsidiary
|
|
Limited-recourse
senior secured term loan
|
|
Variable
|
|
|
130
|
|
2019
(b)
|
|
|
|
|
|
|
|
|
$
|
3,264
|
|
|
¾¾¾¾¾¾¾¾¾¾¾
(a)
|
Proceeds
from this loan were used to repay a portion of the NextEra Energy
Resources subsidiary's Canadian dollar denominated variable rate term loan
maturing in 2011. In March 2009, the remaining balance of the
term loan maturing in 2011 was paid off.
|
(b)
|
Partially
amortizing with a balloon payment at maturity.
|
(c)
|
Collateralized
by a third-party note receivable held by a wholly-owned subsidiary of FPL
Group Capital.
|
During
the year ended December 31, 2009, FPL Group paid approximately $2.4 billion
in connection with financing activities, including $725 million for FPL Group
Capital debt maturities, $225 million for maturing FPL first mortgage bonds,
approximately $441 million of NextEra Energy Resources' debt payments including
principal prepayment on a term loan and principal payments, approximately $205
million of FPL Group Capital debt payments including principal prepayment on a
term loan and repurchase of junior subordinated debentures, approximately $38
million principal payment on storm-recovery bonds and $766 million for the
payment of dividends on FPL Group's common stock. In February 2010,
FPL issued $500 million principal amount of 5.69% first mortgage bonds maturing
2040.
In 2008,
FPL entered into a reclaimed water agreement with Palm Beach County (PBC) to
provide FPL's WCEC with reclaimed water beginning in January
2011. Under the reclaimed water agreement, FPL is to construct a
reclaimed water system, including modifications to an existing treatment plant
and a water pipeline, that PBC will legally own and operate. The
reclaimed water agreement also requires PBC to issue bonds for the purpose of
paying the costs associated with the construction of the reclaimed water
system. In July 2009, PBC issued approximately $68 million principal
amount of bonds. For financial reporting purposes, FPL is considered
the owner of the reclaimed water system and FPL and FPL Group are recording
electric utility plant in service and other property as costs are incurred and
long-term debt as costs are eligible for reimbursement by PBC to
FPL. See Note 12.
During
the year ended December 31, 2009, indirect wholly-owned subsidiaries of
NextEra Energy Resources and FPL Group Capital entered into interest rate swap
agreements. See Energy Marketing and Trading and Market Risk
Sensitivity - Market Risk Sensitivity.
FPL
Group's cash and cash equivalents increased for the year ended December 31,
2008, reflecting cash generated by operating activities and net issuances of
both long- and short-term debt. These inflows were partially offset
by capital investments by FPL and NextEra Energy Resources, the payment of
common stock dividends to FPL Group shareholders and the funding of a $500
million loan.
FPL
Group's cash and cash equivalents decreased for the year ended December 31,
2007, reflecting capital investments by FPL and NextEra Energy Resources, the
payment of common stock dividends to FPL Group shareholders and an increase in
customer receivables. These outflows were partially offset by cash
generated by operating activities, net issuances of both long- and short-term
debt, the sale of independent power investments, the return of margin cash
collateral from counterparties and a distribution relating to an Indonesian
project.
Contractual Obligations and
Estimated Planned Capital Expenditures
- FPL Group's and FPL's
commitments at December 31, 2009 were as follows:
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Thereafter
|
|
Total
|
|
(millions)
|
Long-term
debt, including interest:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
|
$
|
335
|
|
$
|
339
|
|
$
|
341
|
|
$
|
732
|
|
$
|
323
|
|
|
$
|
10,314
|
(b)
|
$
|
12,384
|
NextEra
Energy Resources
|
|
601
|
|
|
593
|
|
|
622
|
|
|
648
|
|
|
455
|
|
|
|
3,487
|
|
|
6,406
|
Corporate
and Other
|
|
557
|
|
|
2,202
|
|
|
517
|
|
|
565
|
|
|
637
|
|
|
|
12,962
|
|
|
17,440
|
Purchase
obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
(c)
|
|
5,510
|
|
|
4,555
|
|
|
2,690
|
|
|
2,310
|
|
|
2,115
|
|
|
|
7,085
|
|
|
24,265
|
NextEra
Energy Resources
(d)
|
|
1,710
|
|
|
220
|
|
|
225
|
|
|
80
|
|
|
60
|
|
|
|
795
|
|
|
3,090
|
Asset
retirement activities:
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
(f)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
11,797
|
|
|
11,797
|
NextEra
Energy Resources
(g)
|
|
-
|
|
|
-
|
|
|
2
|
|
|
-
|
|
|
-
|
|
|
|
7,343
|
|
|
7,345
|
Other
Commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NextEra
Energy Resources
(h)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
68
|
|
|
70
|
|
|
|
210
|
|
|
348
|
Total
|
$
|
8,713
|
|
$
|
7,909
|
|
$
|
4,397
|
|
$
|
4,403
|
|
$
|
3,660
|
|
|
$
|
53,993
|
|
$
|
83,075
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
principal, interest and interest rate swaps. Variable rate
interest was computed using December 31, 2009
rates.
|
(b)
|
Includes
$633 million of tax exempt bonds that permit individual bond holders to
tender the bonds for purchase at any time prior to maturity. In the
event bonds are tendered for purchase, they would be remarketed by a
designated remarketing agent in accordance with the related
indenture. If the remarketing is unsuccessful, FPL would be required
to purchase the tax exempt bonds. As of December 31, 2009,
all tax exempt bonds tendered for purchase have been successfully
remarketed. FPL's bank revolving lines of credit are available
to support the purchase of tax exempt bonds.
|
(c)
|
Represents
required capacity and minimum payments under long-term purchased power and
fuel contracts, the majority of which are recoverable through various cost
recovery clauses (see Note 14 - Contracts), and projected capital
expenditures through 2014. See Note 14 -
Commitments.
|
(d)
|
Represents
firm commitments primarily in connection with the purchase of wind
turbines and towers, solar project components and related construction
activities, natural gas transportation, purchase and storage, firm
transmission service and nuclear fuel. See Note 14 -
Commitments and Contracts.
|
(e)
|
Represents
expected cash payments adjusted for inflation for estimated costs to
perform asset retirement activities.
|
(f)
|
At
December 31, 2009, FPL had approximately $2,285 million in restricted
funds for the payment of future expenditures to decommission FPL's nuclear
units, which are included in FPL Group's and FPL's special use
funds.
|
(g)
|
At
December 31, 2009, NextEra Energy Resources' 88.23% portion of
Seabrook's and 70% portion of Duane Arnold's and its Point Beach's
restricted funds for the payment of future expenditures to decommission
its nuclear units totaled approximately $982 million and are included in
FPL Group's special use funds.
|
(h)
|
Represents
estimated cash distributions related to certain membership
interests. See Note 10 - Sale of Differential Membership
Interests.
|
Covenants
- FPL Group's
charter does not limit the dividends that may be paid on its common
stock. As a practical matter, the ability of FPL Group to pay
dividends on its common stock is dependent upon, among other things, dividends
paid to it by its subsidiaries. During the first quarter of 2009, FPL
Group increased the quarterly dividend on its common stock from $0.445 to
$0.4725 per share. In February 2010, FPL Group announced that it
would increase the quarterly dividend on its common stock from $0.4725 to $0.50
per share. FPL pays dividends to FPL Group in a manner consistent
with FPL's long-term targeted capital structure. The mortgage
securing FPL's first mortgage bonds contains provisions which, under certain
conditions, restrict the payment of dividends to FPL Group and the issuance of
additional first mortgage bonds. In light of FPL's current financial
condition and level of earnings, management does not expect that planned
financing activities or dividends would be affected by these
limitations.
Under
the mortgage, in some cases, the amount of retained earnings that FPL can use to
pay cash dividends on its common stock is restricted. The restricted
amount may change based on factors set out in the mortgage. Other
than this restriction on the payment of common stock dividends, the mortgage
does not restrict FPL's use of retained earnings. As of
December 31, 2009, no retained earnings were restricted by these provisions
of the mortgage.
FPL may
issue first mortgage bonds under its mortgage subject to its meeting an adjusted
net earnings test set forth in the mortgage, which generally requires adjusted
net earnings to be at least twice the annual interest requirements on, or at
least 10% of the aggregate principal amount of, FPL's first mortgage bonds
including those to be issued and any other non-junior FPL
indebtedness. As of December 31, 2009, after giving effect to
the February 2010 issuance of the $500 million 5.69% first mortgage bonds
maturing in 2040, coverage for the 12 months ended December 31, 2009 would
have been approximately 6.2 times the annual interest requirements and
approximately 3.6 times the aggregate principal requirements. New
first mortgage bonds are also limited to an amount equal to the sum of 60% of
unfunded property additions after adjustments to offset property retirements,
the amount of retired first mortgage bonds or qualified lien bonds and the
amount of cash on deposit with the mortgage trustee. As of
December 31, 2009, after giving effect to the February 2010 issuance of the
$500 million 5.69% first mortgage bonds maturing in 2040, FPL could have issued
in excess of $7.4 billion of additional first mortgage bonds based on the
unfunded property additions and in excess of $5.8 billion based on retired first
mortgage bonds. As of December 31, 2009, no cash was deposited
with the mortgage trustee for these purposes.
In
September 2006, FPL Group and FPL Group Capital executed a Replacement Capital
Covenant (September 2006 RCC) in connection with FPL Group Capital's offering of
$350 million principal amount of Series A Enhanced Junior Subordinated
Debentures due 2066 and $350 million principal amount of Series B Enhanced
Junior Subordinated Debentures due 2066 (collectively, Series A and Series B
junior subordinated debentures). The September 2006 RCC is for the
benefit of persons that buy, hold or sell a specified series of long-term
indebtedness (covered debt) of FPL Group Capital (other than the Series A and
Series B junior subordinated debentures) or, in certain cases, of FPL
Group. FPL Group Capital Trust I's 5 7/8% Preferred Trust Securities
have been initially designated as the covered debt under the September 2006
RCC. The September 2006 RCC provides that FPL Group Capital may
redeem, and FPL Group or FPL Group Capital may purchase, any Series A and Series
B junior subordinated debentures on or before October 1, 2036, only to the
extent that the redemption or purchase price does not exceed a specified amount
of proceeds from the sale of qualifying securities, subject to certain
limitations described in the September 2006 RCC. Qualifying
securities are securities that have equity-like characteristics that are the
same as, or more equity-like than, the Series A and Series B junior subordinated
debentures at the time of redemption or purchase, which are sold within 180 days
prior to the date of the redemption or repurchase of the Series A and Series B
junior subordinated debentures.
In June
2007, FPL Group and FPL Group Capital executed a Replacement Capital Covenant
(June 2007 RCC) in connection with FPL Group Capital's offering of $400 million
principal amount of its Series C Junior Subordinated Debentures due 2067 (Series
C junior subordinated debentures). The June 2007 RCC is for the
benefit of persons that buy, hold or sell a specified series of covered debt of
FPL Group Capital (other than the Series C junior subordinated debentures) or,
in certain cases, of FPL Group. FPL Group Capital Trust I's 5 7/8% Preferred
Trust Securities have been initially designated as the covered debt under the
June 2007 RCC. The June 2007 RCC provides that FPL Group Capital may
redeem or purchase, or satisfy, discharge or defease (collectively, defease),
and FPL Group and any majority-owned subsidiary of FPL Group or FPL Group
Capital may purchase, any Series C junior subordinated debentures on or before
June 15, 2037, only to the extent that the principal amount defeased or the
applicable redemption or purchase price does not exceed a specified amount
raised from the issuance, during the 180 days prior to the date of that
redemption, purchase or defeasance, of qualifying securities that have
equity-like characteristics that are the same as, or more equity-like than, the
applicable characteristics of the Series C junior subordinated debentures at the
time of redemption, purchase or defeasance, subject to certain limitations
described in the June 2007 RCC.
In
September 2007, FPL Group and FPL Group Capital executed a Replacement Capital
Covenant (September 2007 RCC) in connection with FPL Group Capital's offering of
$250 million principal amount of its Series D Junior Subordinated Debentures due
2067 and $350 million principal amount of Series E Junior Subordinated
Debentures due 2067 (collectively, Series D and Series E junior subordinated
debentures). The September 2007 RCC is for the benefit of persons
that buy, hold or sell a specified series of covered debt of FPL Group Capital
(other than the Series D and Series E junior subordinated debentures) or, in
certain cases, of FPL Group. FPL Group Capital Trust I's 5 7/8% Preferred Trust
Securities have been initially designated as the covered debt under the
September 2007 RCC. The September 2007 RCC provides that FPL Group
Capital may redeem, purchase, or defease, and FPL Group and any majority-owned
subsidiary of FPL Group or FPL Group Capital may purchase, any Series D and
Series E junior subordinated debentures on or before September 1, 2037, only to
the extent that the principal amount defeased or the applicable redemption or
purchase price does not exceed a specified amount raised from the issuance,
during the 180 days prior to the date of that redemption, purchase or
defeasance, of qualifying securities that have equity-like characteristics that
are the same as, or more equity-like than, the applicable characteristics of the
Series D and Series E junior subordinated debentures at the time of redemption,
purchase or defeasance, subject to certain limitations described in the
September 2007 RCC.
In March
2009, FPL Group and FPL Group Capital executed a Replacement Capital Covenant
(March 2009 RCC) in connection with FPL Group Capital's offering of $375 million
principal amount of its Series F Junior Subordinated Debentures due
2069. The March 2009 RCC is for the benefit of persons that buy, hold
or sell a specified series of covered debt of FPL Group Capital (other than the
Series F junior subordinated debentures) or, in certain cases, of FPL Group. FPL
Group Capital Trust I's 5 7/8% Preferred Trust Securities have been initially
designated as the covered debt under the March 2009 RCC. The March
2009 RCC provides that FPL Group Capital may redeem, purchase, or defease, and
FPL Group and any majority-owned subsidiary of FPL Group or FPL Group Capital
may purchase, any Series F junior subordinated debentures on or before
March 1, 2039, only to the extent that the principal amount defeased or the
applicable redemption or purchase price does not exceed a specified amount
raised from the issuance, during the 180 days prior to the date of that
redemption, purchase or defeasance, of qualifying securities that have
equity-like characteristics that are the same as, or more equity-like than, the
applicable characteristics of the Series F junior subordinated debentures at the
time of redemption, purchase or defeasance, subject to certain limitations
described in the March 2009 RCC.
New
Accounting Rules and Interpretations
Variable Interest Entities
-
In 2009, new accounting guidance was issued which modifies the consolidation
model in previous guidance and expands the required disclosures related to
VIEs. The new accounting guidance became effective on January 1,
2010. FPL Group and FPL are currently evaluating the impact of the
new accounting guidance.
Critical
Accounting Policies and Estimates
FPL
Group's and FPL's significant accounting policies are described in Note 1 to the
consolidated financial statements, which were prepared in accordance with
accounting principles generally accepted in the United
States. Critical accounting policies are those that FPL Group and FPL
believe are both most important to the portrayal of their financial condition
and results of operations, and require complex, subjective judgments, often as a
result of the need to make estimates and assumptions about the effect of matters
that are inherently uncertain. Judgments and uncertainties affecting
the application of those policies may result in materially different amounts
being reported under different conditions or using different
assumptions.
FPL
Group and FPL consider the following policies to be the most critical in
understanding the judgments that are involved in preparing their consolidated
financial statements:
Accounting for Derivatives and
Hedging Activities
- FPL Group and FPL use derivative instruments
(primarily swaps, options, futures and forwards) to manage the commodity price
risk inherent in the purchase and sale of fuel and electricity, as well as
interest rate and foreign currency exchange rate risk associated with long-term
debt. In addition, FPL Group, through NextEra Energy Resources, uses
derivatives to optimize the value of power generation assets. NextEra
Energy Resources provides full energy and capacity requirements services
primarily to distribution utilities, which include load-following services and
various ancillary services, in certain markets and engages in power and gas
marketing and trading activities to take advantage of expected future favorable
price movements. Accounting pronouncements, which require the use of
fair value accounting if certain conditions are met, apply not only to
traditional financial derivative instruments, but to any contract having the
accounting characteristics of a derivative.
Derivative
instruments, when required to be marked to market, are recorded on the balance
sheet at fair value. Fair values for some of the longer-term
contracts where liquid markets are not available are based on internally
developed models based on the forward prices for electricity and
fuel. Forward prices represent the price at which a buyer or seller
could contract today to purchase or sell a commodity at a future
date. In general, the models estimate the fair value of a contract by
calculating the present value of the difference between the contract price and
the forward prices. The near term forward market for electricity is
generally liquid and therefore the prices in the early years of the forward
curves reflect observable market quotes. However, in the later years,
the market is much less liquid and forward price curves must be developed using
factors including the forward prices for the commodities used as fuel to
generate electricity, the expected system heat rate (which measures the
efficiency of power plants in converting fuel to electricity) in the region
where the purchase or sale takes place, and a fundamental forecast of expected
spot prices based on modeled supply and demand in the region. The
assumptions in these models are critical since any changes therein could have a
significant impact on the fair value of the contract. Substantially
all changes in the fair value of derivatives held by FPL are deferred as a
regulatory asset or liability until the contracts are settled. Upon
settlement, any gains or losses will be passed through the fuel or capacity
clauses. In FPL Group's non-rate regulated operations, predominantly
NextEra Energy Resources, changes in derivative fair values are recognized in
current earnings, unless the criteria for hedge accounting are met and the
company elects to account for the derivative as a hedge. For those
transactions accounted for as cash flow hedges, much of the effects of changes
in fair value are reflected in other comprehensive income (OCI), a component of
common shareholders' equity, rather than being recognized in current
earnings. For those transactions accounted for as fair value hedges,
the effects of changes in fair value are reflected in current earnings offset by
changes in the fair value of the item being hedged.
Much of
the existing accounting guidance related to derivatives focuses on when certain
contracts for the purchase and sale of power and certain fuel supply contracts
can be excluded from derivative accounting rules, however the guidance does not
address all contract issues. As a result, significant judgment must
be used in applying derivatives accounting guidance to contracts. In
the event changes in interpretation occur, it is possible that contracts that
currently are excluded from derivatives accounting rules would have to be
recorded on the balance sheet at fair value, with changes in the fair value
recorded in the statement of income.
Certain
economic hedging transactions at NextEra Energy Resources do not meet the
requirements for hedge accounting treatment. Changes in the fair
value of those transactions are marked to market and reported in the statement
of income, often resulting in earnings volatility. These changes in
fair value are captured in the non-qualifying hedge category in computing
adjusted earnings. This could be significant to NextEra Energy
Resources' results because often the economic offset to the positions which are
required to be marked to market (such as the physical assets from which power is
generated) are not marked to market. As a consequence, net income
reflects only the movement in one part of economically linked
transactions. Because of this, FPL Group's management views results
expressed excluding the unrealized mark-to-market impact of the non-qualifying
hedges as a meaningful measure of current period performance. For
additional information regarding derivative instruments, see Note 3 and
also see Energy Marketing and Trading and Market Risk
Sensitivity.
Accounting for Pensions and Other
Postretirement Benefits
-
FPL Group sponsors a
qualified noncontributory defined benefit pension plan for substantially all
employees of FPL Group and its subsidiaries. FPL Group also has a
supplemental executive retirement plan (SERP) which includes a non-qualified
supplemental defined benefit pension component that provides benefits to a
select group of management and highly compensated employees. The
impact of the SERP component is included within the pension plan as discussed
below. In addition to pension benefits, FPL Group sponsors a
contributory postretirement plan for health care and life insurance benefits
(other benefits plan) for retirees of FPL Group and its subsidiaries meeting
certain eligibility requirements. The qualified pension plan has a
fully funded trust dedicated to providing the benefits under the
plan. The other benefits plan has a partially funded trust dedicated
to providing benefits related to life insurance. FPL Group allocates
net periodic benefit income or cost associated with the pension and other
benefits plans to its subsidiaries annually using specific
criteria.
Effective
December 31, 2006, FPL Group adopted new recognition and disclosure
provisions regarding benefit plans which require recognition of the funded
status of benefit plans in the balance sheet, with changes in the funded status
recognized in comprehensive income within shareholders' equity in the year in
which the changes occur. In addition, effective December 31,
2008, the new provisions required FPL Group to measure plan assets and benefit
obligations as of the fiscal year-end. Prior to 2008, FPL Group used
a measurement date of September 30. In lieu of remeasuring plan
assets and obligations as of January 1, 2008, FPL Group elected to calculate the
net periodic benefit (income) cost for the fifteen-month period from
September 30, 2007 to December 31, 2008 using the September 30,
2007 measurement date. Upon adoption of the measurement date
provisions, FPL Group recorded an adjustment to increase 2008 beginning retained
earnings by approximately $13 million representing three-fifteenths of net
periodic benefit (income) cost for the fifteen-month period from
September 30, 2007 to December 31, 2008. Included in the adjustment to
retained earnings is approximately $1 million related to the reduction in
accumulated other comprehensive income (AOCI) and approximately $3 million
related to the reduction in net regulatory liabilities.
Since
FPL Group is the plan sponsor, and its subsidiaries do not have separate rights
to the plan assets or direct obligations to their employees, the results of
implementing the new accounting provisions are reflected at FPL Group and not
allocated to the subsidiaries. The portion of previously unrecognized
actuarial gains and losses, prior service costs or credits and transition
obligations related to the recognition provision that were estimated to be
allocable to FPL as net periodic benefit (income) cost in future periods and
that otherwise would have been recorded in AOCI were classified as regulatory
assets and liabilities at FPL Group in accordance with regulatory
treatment. In addition, adjustments to AOCI as a result of
implementing the measurement date provisions that were estimated to be allocable
to FPL were recorded as an adjustment to the previously established regulatory
assets and liabilities.
FPL
Group's income from its pension plan, net of the cost of the other benefits
plan, was approximately $75 million, $86 million and $69 million for the years
ended December 31, 2009, 2008 and 2007, respectively. The
corresponding amounts allocated to FPL were $50 million, $60 million and $51
million, respectively. Pension income and the cost of the other
benefits plan are included in O&M expenses, and are calculated using a
number of actuarial assumptions. Those assumptions include an
expected long-term rate of return on qualified plan assets of 7.75% for all
years for the pension plan and 8.00% for all years for the other benefits plan,
assumed increases in salary of 4.00% for all years, and weighted-average
discount rates of 6.90%, 6.25% and 5.85% for the pension plan and 6.90%, 6.35%
and 5.90% for the other benefits plan for the years ended December 31,
2009, 2008 and 2007, respectively. Based on current health care costs
(as related to other benefits), the projected 2010 trend assumption used to
measure the expected cost of health care benefits covered by the plans for those
under age 65 is 8.00% for medical and 8.50% for prescription drug benefits and
for those age 65 and over is 7.50% for medical and 8.00% for prescription drug
benefits. These rates are assumed to decrease over the next 9 years
for medical benefits and 11 years for prescription drug benefits to the ultimate
trend rate of 5.50% and remain at that level thereafter. The ultimate
trend rate is assumed to be reached in 2018 for medical benefits and 2020 for
prescription drug benefits. In developing these assumptions, FPL
Group evaluated input from its actuaries, as well as information available in
the marketplace. For the expected long-term rate of return on fund
assets, FPL Group considered 10-year and 20-year historical median returns for a
portfolio with an equity/bond asset mix similar to its funds, as well as its
funds' historical compounded returns. FPL Group also considered input
from its actuaries and consultants, as well as information available in the
marketplace. FPL Group believes that 7.75% and 8.00% are reasonable
long-term rates of return on its pension plan and other benefits plan assets,
respectively. FPL Group will continue to evaluate all of its
actuarial assumptions, including its expected rate of return, at least annually,
and will adjust them as necessary.
FPL
Group bases its determination of pension and other benefits plan expense or
income on a market-related valuation of assets, which reduces year-to-year
volatility. This market-related valuation recognizes investment gains
or losses over a five-year period following the year in which they
occur. Investment gains or losses for this purpose are the difference
between the expected return calculated using the market-related value of assets
and the actual return realized on those assets. Since the
market-related value of assets recognizes gains or losses over a five-year
period, the future value of assets will be affected as previously deferred gains
or losses are recognized. Such gains and losses together with other
differences between actual results and the estimates used in the actuarial
valuations are deferred and recognized in determining pension and other benefits
plan expense and income only to the extent they exceed 10% of the greater of
projected benefit obligations or the market-related value of
assets.
The
following table illustrates the effect on net periodic benefit income of
changing the critical actuarial assumptions discussed above, while holding all
other assumptions constant:
|
|
|
Decrease
in 2009
Net
Periodic Benefit Income
|
|
Change
in
Assumption
|
|
FPL
Group
|
|
FPL
|
|
|
|
(millions)
|
|
|
|
|
|
|
Expected
long-term rate of return
|
(0.5
|
)
|
%
|
|
$
|
16
|
|
|
$
|
11
|
|
Discount
rate
|
(0.5
|
)
|
%
|
|
$
|
3
|
|
|
$
|
2
|
|
Salary
increase
|
0.5
|
|
%
|
|
$
|
2
|
|
|
$
|
1
|
|
Health
care cost trend rate
(a)
|
1.0
|
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Assumed
health care cost trend rates can have a significant effect on the amounts
reported for postretirement plans providing health care
benefits. However, this effect is somewhat mitigated by the
retiree cost sharing structure incorporated in FPL Group's other benefits
plan.
|
The fair
value of plan assets has increased from $2.5 billion at December 31, 2008
to $3.0 billion at December 31, 2009 for the pension plan and increased
from $29 million at December 31, 2008 to $32 million at December 31,
2009 for the other benefits plan. Management believes that, based on
the actuarial assumptions and the well funded status of the pension plan, FPL
Group will not be required to make any cash contributions to the qualified
pension plan in the near future. In December 2009, $29 million was
transferred from the qualified pension plan as reimbursement for eligible
retiree medical expenses paid by FPL Group during the year pursuant to the
provisions of the Internal Revenue Code. FPL Group anticipates paying
approximately $29 million for eligible retiree medical expenses on behalf of the
other benefits plan during 2010 with substantially all of that amount being
reimbursed through a transfer of assets from the qualified pension
plan. See Note 2.
Carrying Value of Long-Lived Assets
-
FPL Group
evaluates on an ongoing basis the recoverability of its assets for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An
impairment loss is required to be recognized if the carrying value of the asset
exceeds the undiscounted future net cash flows associated with that
asset. The impairment loss to be recognized is the amount by which
the carrying value of the long-lived asset exceeds the asset's fair
value. In most instances, the fair value is determined by discounting
estimated future cash flows using an appropriate interest rate.
The
amount of future net cash flows, the timing of the cash flows and the
determination of an appropriate interest rate all involve estimates and
judgments about future events. In particular, the aggregate amount of
cash flows determines whether an impairment exists, and the timing of the cash
flows is critical in determining fair value. Because each assessment
is based on the facts and circumstances associated with each long-lived asset,
the effects of changes in assumptions cannot be generalized.
Nuclear Decommissioning and Fossil
Dismantlement
- FPL Group and FPL each account for asset retirement
obligations and conditional asset retirement obligations (collectively, AROs)
under accounting guidance that requires a liability for the fair value of an ARO
be recognized in the period in which it is incurred if it can be reasonably
estimated, with the offsetting associated asset retirement costs capitalized as
part of the carrying amount of the long-lived assets. See Note 1
- Asset Retirement Obligations, Note 1 - Decommissioning of Nuclear Plants,
Dismantlement of Plants and Other Accrued Asset Removal Costs and
Note 13.
For
ratemaking purposes, FPL accrues and funds for nuclear plant decommissioning
costs over the expected service life of each unit based on studies that are
filed with the FPSC at least every five years. The most recent
studies, filed in 2005, indicate that FPL's portion of the future cost of
decommissioning its four nuclear units, including spent fuel storage, is
approximately $10.9 billion, or $2.4 billion in 2009 dollars. The
studies reflect, among other things, the 20-year license extensions of FPL's
nuclear units. At December 31, 2009, $2,597 million was accrued
for nuclear decommissioning, of which $1,807 million was recorded as an ARO, $50
million was recorded as a capitalized net asset related to the ARO, $644 million
was recorded as a regulatory liability and $196 million was included in accrued
asset removal costs (a regulatory liability) on the consolidated balance
sheets.
FPL
accrues the cost of dismantling its fossil plants over the expected service life
of each unit based on studies filed with the FPSC. Unlike nuclear
decommissioning, fossil dismantlement costs are not funded. The most
recent studies, which became effective January 1, 2010, indicated that
FPL's portion of the ultimate cost to dismantle its fossil units is $894
million, or $467 million expressed in 2009 dollars. The majority of
the dismantlement costs are not considered AROs. At December 31,
2009, $364 million was accrued for fossil dismantlement costs, of which $23
million was recorded as an ARO, $5 million was recorded as a capitalized net
asset related to the ARO, $28 million was recorded as a regulatory liability and
$318 million was included in accrued asset removal costs (a regulatory
liability) on the consolidated balance sheets.
NextEra
Energy Resources records a liability for the present value of its expected
decommissioning costs which is determined using various internal and external
data. NextEra Energy Resources' portion of the ultimate cost of
decommissioning its nuclear plants, including costs associated with spent fuel
storage, is estimated to be approximately $6.6 billion, or $1.6 billion
expressed in 2009 dollars. The liability is being accreted using the
interest method through the date decommissioning activities are expected to be
complete. At December 31, 2009, the ARO for nuclear
decommissioning of NextEra Energy Resources' nuclear plants totaled
approximately $518 million.
The
calculation of the future cost of retiring long-lived assets, including nuclear
decommissioning and fossil dismantlement costs, involves estimating the amount
and timing of future expenditures and making judgments concerning whether or not
such costs are considered a legal obligation. Estimating the amount
and timing of future expenditures includes, among other things, making
projections of when assets will be retired and how costs will escalate with
inflation. In addition, FPL Group and FPL also make interest rate and
rate of return projections on their investments in determining recommended
funding requirements for nuclear decommissioning costs. Periodically,
FPL Group and FPL will be required to update these estimates and projections
which can affect the annual expense amounts recognized, the liabilities recorded
and the annual funding requirements for nuclear decommissioning
costs. For example, an increase of 0.25% in the assumed escalation
rates would increase FPL Group's and FPL's ARO as of December 31, 2009 by
$235 million and $183 million, respectively.
Regulatory Accounting
-
Accounting guidance
allows regulators to create assets and impose liabilities that would not be
recorded by non-rate regulated entities. Regulatory assets and
liabilities represent probable future revenues that will be recovered from or
refunded to customers through the ratemaking process. If FPL were no
longer subject to cost-based rate regulation, the existing regulatory assets and
liabilities would be written off unless regulators specify an alternative means
of recovery or refund. In addition, the FPSC has the authority to
disallow recovery of costs that it considers excessive or imprudently
incurred. Such costs may include, among others, fuel and O&M
expenses, the cost of replacing power lost when fossil and nuclear units are
unavailable, storm restoration costs and costs associated with the construction
or acquisition of new facilities. The continued applicability of
regulatory accounting is assessed at each reporting period.
FPL
Group's and FPL's regulatory assets and liabilities are as follows:
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Regulatory
assets:
|
|
(millions)
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
clause and franchise expenses
|
|
$
|
69
|
|
|
$
|
248
|
|
|
$
|
69
|
|
|
$
|
248
|
|
Securitized
storm-recovery costs
|
|
$
|
69
|
|
|
$
|
64
|
|
|
$
|
69
|
|
|
$
|
64
|
|
Derivatives
|
|
$
|
68
|
|
|
$
|
1,109
|
|
|
$
|
68
|
|
|
$
|
1,109
|
|
Pension
|
|
$
|
-
|
|
|
$
|
19
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securitized
storm-recovery costs
|
|
$
|
644
|
|
|
$
|
697
|
|
|
$
|
644
|
|
|
$
|
697
|
|
Deferred
clause expenses
|
|
$
|
-
|
|
|
$
|
79
|
|
|
$
|
-
|
|
|
$
|
79
|
|
Pension
|
|
$
|
-
|
|
|
$
|
100
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Unamortized
loss on reacquired debt
|
|
$
|
29
|
|
|
$
|
32
|
|
|
$
|
29
|
|
|
$
|
32
|
|
Other
|
|
$
|
236
|
|
|
$
|
138
|
|
|
$
|
185
|
|
|
$
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
clause and franchise revenues
|
|
$
|
377
|
|
|
$
|
11
|
|
|
$
|
377
|
|
|
$
|
11
|
|
Pension
|
|
$
|
2
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
asset removal costs
|
|
$
|
2,251
|
|
|
$
|
2,142
|
|
|
$
|
2,251
|
|
|
$
|
2,142
|
|
Asset
retirement obligation regulatory expense difference
|
|
$
|
671
|
|
|
$
|
520
|
|
|
$
|
671
|
|
|
$
|
520
|
|
Pension
|
|
$
|
16
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other
|
|
$
|
244
|
|
|
$
|
218
|
|
|
$
|
244
|
|
|
$
|
218
|
|
See Note
1 for a discussion of FPL Group's and FPL's other significant accounting
policies.
Energy
Marketing and Trading and Market Risk Sensitivity
Energy Marketing and Trading
- Certain of FPL Group's subsidiaries, including FPL and NextEra Energy
Resources, use derivative instruments (primarily swaps, options, futures and
forwards) to manage the commodity price risk inherent in the purchase and sale
of fuel and electricity. In addition, FPL Group, through NextEra
Energy Resources, uses derivatives to optimize the value of power generation
assets. NextEra Energy Resources provides full energy and capacity
requirements services primarily to distribution utilities, which include
load-following services and various ancillary services, in certain markets and
engages in power and gas marketing and trading activities to take advantage of
expected future favorable price movements.
Derivative
instruments, when required to be marked to market, are recorded on FPL Group's
and FPL's consolidated balance sheets as either an asset or liability measured
at fair value. At FPL, substantially all changes in fair value are
deferred as a regulatory asset or liability until the contracts are settled,
and, upon settlement, any gains or losses are passed through the fuel clause or
the capacity clause. For FPL Group's non-rate regulated operations,
predominantly NextEra Energy Resources, essentially all changes in the
derivatives' fair value for power purchases and sales and trading activities are
recognized on a net basis in operating revenues; fuel purchases and sales are
recognized on a net basis in fuel, purchased power and interchange expense; and
the equity method investees' related activity is recognized in equity in
earnings of equity method investees in FPL Group's consolidated statements of
income unless hedge accounting is applied. See
Note 3.
The
changes in the fair value of FPL Group's consolidated subsidiaries' energy
contract derivative instruments were as follows:
|
|
|
|
|
Hedges
on Owned Assets
|
|
|
|
|
|
|
Trading
|
|
|
Non-
Qualifying
|
|
|
OCI
|
|
|
FPL
Cost
Recovery
Clauses
|
|
|
FPL
Group
Total
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of contracts outstanding at December 31, 2007
|
|
$
|
2
|
|
|
$
|
(138
|
)
|
|
$
|
(109
|
)
|
|
$
|
(119
|
)
|
|
$
|
(364
|
)
|
Reclassification
to realized at settlement of contracts
|
|
|
20
|
|
|
|
(30
|
)
|
|
|
147
|
|
|
|
(658
|
)
|
|
|
(521
|
)
|
Effective
portion of changes in fair value recorded in OCI
|
|
|
-
|
|
|
|
-
|
|
|
|
76
|
|
|
|
-
|
|
|
|
76
|
|
Ineffective
portion of changes in fair value recorded in earnings
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
|
-
|
|
|
|
25
|
|
Changes
in fair value excluding reclassification to realized
|
|
|
34
|
|
|
|
286
|
|
|
|
-
|
|
|
|
(331
|
)
|
|
|
(11
|
)
|
Fair
value of contracts outstanding at December 31, 2008
|
|
|
56
|
|
|
|
143
|
|
|
|
114
|
|
|
|
(1,108
|
)
|
|
|
(795
|
)
|
Reclassification
to realized at settlement of contracts
|
|
|
(160
|
)
|
|
|
(208
|
)
|
|
|
(180
|
)
|
|
|
1,734
|
|
|
|
1,186
|
|
Effective
portion of changes in fair value recorded in OCI
|
|
|
-
|
|
|
|
-
|
|
|
|
197
|
|
|
|
-
|
|
|
|
197
|
|
Ineffective
portion of changes in fair value recorded in earnings
|
|
|
-
|
|
|
|
28
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28
|
|
Changes
in fair value excluding reclassification to realized
|
|
|
143
|
|
|
|
163
|
|
|
|
-
|
|
|
|
(690
|
)
|
|
|
(384
|
)
|
Fair
value of contracts outstanding at December 31, 2009
|
|
|
39
|
|
|
|
126
|
|
|
|
131
|
|
|
|
(64
|
)
|
|
|
232
|
|
Net
option premium payments (receipts)
|
|
|
(5
|
)
|
|
|
16
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11
|
|
Net
margin cash collateral paid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70
|
|
Total
mark-to-market energy contract net assets (liabilities) at
December 31, 2009
|
|
$
|
34
|
|
|
$
|
142
|
|
|
$
|
131
|
|
|
$
|
(64
|
)
|
|
$
|
313
|
|
FPL
Group's total mark-to-market energy contract net assets (liabilities) at
December 31, 2009 shown above are included in the consolidated balance
sheets as follows:
|
December 31,
2009
|
|
(millions)
|
|
|
Current
derivative assets
|
|
$
|
357
|
|
Noncurrent
other assets
|
|
|
264
|
|
Current
derivative liabilities
|
|
|
(170
|
)
|
Noncurrent
derivative liabilities
|
|
|
(138
|
)
|
FPL
Group's total mark-to-market energy contract net
liabilities
|
|
$
|
313
|
|
The
sources of fair value estimates and maturity of energy contract derivative
instruments at December 31, 2009 were as follows:
|
Maturity
|
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
Thereafter
|
|
Total
|
|
|
(millions)
|
|
Trading:
|
|
|
Quoted
prices in active markets for identical assets
|
$
|
(152
|
)
|
$
|
(6
|
)
|
$
|
(22
|
)
|
$
|
(17
|
)
|
$
|
-
|
|
$
|
-
|
|
$
|
(197
|
)
|
Significant
other observable inputs
|
|
(24
|
)
|
|
(33
|
)
|
|
(11
|
)
|
|
11
|
|
|
-
|
|
|
-
|
|
|
(57
|
)
|
Significant
unobservable inputs
|
|
179
|
|
|
68
|
|
|
38
|
|
|
4
|
|
|
(1
|
)
|
|
-
|
|
|
288
|
|
Total
|
|
3
|
|
|
29
|
|
|
5
|
|
|
(2
|
)
|
|
(1
|
)
|
|
-
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Assets - Non-Qualifying:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
prices in active markets for identical assets
|
|
33
|
|
|
(11
|
)
|
|
(7
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
15
|
|
Significant
other observable inputs
|
|
30
|
|
|
23
|
|
|
30
|
|
|
(4
|
)
|
|
(8
|
)
|
|
(8
|
)
|
|
63
|
|
Significant
unobservable inputs
|
|
25
|
|
|
21
|
|
|
6
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
64
|
|
Total
|
|
88
|
|
|
33
|
|
|
29
|
|
|
-
|
|
|
(4
|
)
|
|
(4
|
)
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Assets - OCI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
prices in active markets for identical assets
|
|
24
|
|
|
24
|
|
|
11
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
59
|
|
Significant
other observable inputs
|
|
70
|
|
|
7
|
|
|
(5
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
72
|
|
Significant
unobservable inputs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Total
|
|
94
|
|
|
31
|
|
|
6
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Owned
Assets - FPL Cost Recovery Clauses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted
prices in active markets for identical assets
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Significant
other observable inputs
|
|
(75
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(75
|
)
|
Significant
unobservable inputs
|
|
7
|
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11
|
|
Total
|
|
(68
|
)
|
|
4
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(64
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
sources of fair value
|
$
|
117
|
|
$
|
97
|
|
$
|
40
|
|
$
|
(2
|
)
|
$
|
(5
|
)
|
$
|
(4
|
)
|
$
|
243
|
|
Market Risk Sensitivity
-
Financial instruments and positions affecting the financial statements of FPL
Group and FPL described below are held primarily for purposes other than
trading. Market risk is measured as the potential loss in fair value
resulting from hypothetical reasonably possible changes in commodity prices,
interest rates, equity prices or currency exchange rates over the next
year. In 2008, FPL Group Capital entered into a cross currency basis
swap to hedge against currency movements with respect to both interest and
principal payments on a loan and, in June 2009, FPL Group Capital entered into a
cross currency swap to hedge against currency and interest rate movements with
respect to both interest and principal payments on a loan. At
December 31, 2009 and 2008, the fair value of these cross currency swaps
was not material. Management has established risk management policies
to monitor and manage market risks. With respect to commodities, FPL
Group's Exposure Management Committee (EMC), which is comprised of certain
members of senior management, is responsible for the overall approval of market
risk management policies and the delegation of approval and authorization
levels. The EMC receives periodic updates on market positions and
related exposures, credit exposures and overall risk management
activities.
FPL
Group and its subsidiaries are also exposed to credit risk through their energy
marketing and trading operations. Credit risk is the risk that a
financial loss will be incurred if a counterparty to a transaction does not
fulfill its financial obligation. FPL Group manages counterparty
credit risk for its subsidiaries with energy marketing and trading operations
through established policies, including counterparty credit limits, and in some
cases credit enhancements, such as cash prepayments, letters of credit, cash and
other collateral and guarantees. Credit risk is also managed through
the use of master netting agreements. FPL Group's credit department
monitors current and forward credit exposure to counterparties and their
affiliates, both on an individual and an aggregate basis.
Commodity
price risk - FPL Group uses a value-at-risk (VaR) model to measure market risk
in its trading and mark-to-market portfolios. The VaR is the
estimated nominal loss of market value based on a one-day holding period at a
95% confidence level using historical simulation methodology. As of
December 31, 2009 and 2008, the VaR figures are as follows:
|
Trading
|
|
Non-Qualifying
Hedges
and
Hedges in OCI and
FPL
Cost Recovery Clauses
(a)
|
|
Total
|
|
FPL
|
|
NextEra
Energy
Resources
|
|
FPL
Group
|
|
FPL
|
|
NextEra
Energy
Resources
|
|
FPL
Group
|
|
FPL
|
|
NextEra
Energy
Resources
|
|
FPL
Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2008
|
$
|
-
|
|
$
|
5
|
|
|
$
|
5
|
|
$
|
86
|
|
$
|
54
|
|
|
$
|
31
|
|
$
|
86
|
|
$
|
58
|
|
|
$
|
30
|
December 31,
2009
|
$
|
-
|
|
$
|
2
|
|
|
$
|
2
|
|
$
|
61
|
|
$
|
51
|
|
|
$
|
25
|
|
$
|
61
|
|
$
|
51
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
for the period ended December 31, 2009
|
$
|
-
|
|
$
|
5
|
|
|
$
|
5
|
|
$
|
56
|
|
$
|
42
|
|
|
$
|
24
|
|
$
|
56
|
|
$
|
45
|
|
|
$
|
24
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Non-qualifying
hedges are employed to reduce the market risk exposure to physical assets
or contracts which are not marked to market. The VaR figures
for the non-qualifying hedges and hedges in OCI and FPL cost recovery
clauses category do not represent the economic exposure to commodity price
movements.
|
Interest
rate risk - FPL Group and FPL are exposed to risk resulting from changes in
interest rates as a result of their respective issuances of debt, investments in
special use funds and other investments. FPL Group and FPL manage
their respective interest rate exposure by monitoring current interest rates,
entering into interest rate swaps and adjusting their variable rate debt in
relation to total capitalization.
The
following are estimates of the fair value of FPL Group's and FPL's financial
instruments:
|
December 31,
2009
|
|
December 31,
2008
|
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
FPL
Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
income securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
use funds
|
$
|
1,685
|
|
$
|
1,685
|
(a)
|
$
|
1,867
|
|
$
|
1,867
|
(a)
|
Other
investments
|
$
|
104
|
|
$
|
104
|
(a)
|
$
|
105
|
|
$
|
105
|
(a)
|
Long-term
debt, including current maturities
|
$
|
16,869
|
|
$
|
17,256
|
(b)
|
$
|
15,221
|
|
$
|
15,152
|
(b)
|
Interest
rate swaps - net unrealized losses
|
$
|
(17
|
)
|
$
|
(17
|
)
(c)
|
$
|
(78
|
)
|
$
|
(78
|
)
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
income securities - special use funds
|
$
|
1,384
|
|
$
|
1,384
|
(a)
|
$
|
1,510
|
|
$
|
1,510
|
(a)
|
Long-term
debt, including current maturities
|
$
|
5,836
|
|
$
|
6,055
|
(b)
|
$
|
5,574
|
|
$
|
5,652
|
(b)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Based
on quoted market prices for these or similar issues.
|
(b)
|
Based
on market prices provided by external sources.
|
(c)
|
Based
on market prices modeled
internally.
|
The
special use funds of FPL Group and FPL consist of restricted funds set aside to
cover the cost of storm damage for FPL and for the decommissioning of FPL
Group's and FPL's nuclear power plants. A portion of these funds is
invested in fixed income debt securities carried at their market
value. At FPL, adjustments to market value result in a corresponding
adjustment to the related liability accounts based on current regulatory
treatment. The market value adjustments of FPL Group's non-rate
regulated operations result in a corresponding adjustment to OCI, except for
impairments deemed to be other than temporary which are reported in current
period earnings. Because the funds set aside by FPL for storm damage
could be needed at any time, the related investments are generally more liquid
and, therefore, are less sensitive to changes in interest rates. The
nuclear decommissioning funds, in contrast, are generally invested in
longer-term securities, as decommissioning activities are not scheduled to begin
until at least 2014 (2032 at FPL).
FPL
Group and its subsidiaries use a combination of fixed rate and variable rate
debt to manage interest rate exposure. Interest rate swaps are used
to mitigate and adjust interest rate exposure when deemed appropriate based upon
market conditions or when required by financing agreements. At
December 31, 2009, the estimated fair value for FPL Group's interest rate
swaps was as follows:
Notional
Amount
|
|
Effective
Date
|
|
Maturity
Date
|
|
Rate
Paid
|
|
Rate
Received
|
|
Estimated
Fair
Value
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Fair
value hedge - FPL Group Capital:
|
|
|
|
|
|
|
|
|
|
|
|
$
|
300
|
|
|
June
2008
|
|
September
2011
|
|
Variable
|
(a)
|
5.625
|
%
|
|
|
$
|
14
|
|
Cash
flow hedges - NextEra Energy Resources:
|
|
|
|
|
|
|
|
|
|
|
$
|
52
|
|
|
December
2003
|
|
December
2017
|
|
4.245
|
%
|
Variable
|
(b)
|
|
|
|
(2
|
)
|
$
|
17
|
|
|
April
2004
|
|
December
2017
|
|
3.845
|
%
|
Variable
|
(b)
|
|
|
|
(1
|
)
|
$
|
169
|
|
|
December
2005
|
|
November
2019
|
|
4.905
|
%
|
Variable
|
(b)
|
|
|
|
(12
|
)
|
$
|
430
|
|
|
January
2007
|
|
January
2022
|
|
5.390
|
%
|
Variable
|
(c)
|
|
|
|
(38
|
)
|
$
|
121
|
|
|
January
2008
|
|
September
2011
|
|
3.2050
|
%
|
Variable
|
(b)
|
|
|
|
(4
|
)
|
$
|
348
|
|
|
January
2009
|
|
December
2016
|
|
2.680
|
%
|
Variable
|
(b)
|
|
|
|
8
|
|
$
|
124
|
|
|
January
2009
(d)
|
|
December
2023
|
|
3.725
|
%
|
Variable
|
(b)
|
|
|
|
4
|
|
$
|
85
|
|
|
January
2009
|
|
December
2023
|
|
2.578
|
%
|
Variable
|
(e)
|
|
|
|
6
|
|
$
|
20
|
|
|
March
2009
|
|
December
2016
|
|
2.655
|
%
|
Variable
|
(b)
|
|
|
|
-
|
|
$
|
7
|
|
|
March
2009
(d)
|
|
December
2023
|
|
3.960
|
%
|
Variable
|
(b)
|
|
|
|
-
|
|
$
|
333
|
|
|
May
2009
|
|
May
2017
|
|
3.015
|
%
|
Variable
|
(b)
|
|
|
|
4
|
|
$
|
106
|
|
|
May
2009
(d)
|
|
May
2024
|
|
4.663
|
%
|
Variable
|
(b)
|
|
|
|
2
|
|
$
|
128
|
|
|
December
2009
|
|
December
2019
|
|
3.830
|
%
|
Variable
|
(b)
|
|
|
|
2
|
|
$
|
52
|
|
|
December
2009
(d)
|
|
September
2021
|
|
5.500
|
%
|
Variable
|
(b)
|
|
|
|
-
|
|
Total
cash flow hedges
|
|
|
|
(31
|
)
|
Total
interest rate swaps
|
|
|
$
|
(17
|
)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Three-month
LIBOR plus 1.18896%.
|
(b)
|
Three-month
LIBOR.
|
(c)
|
Six-month
LIBOR.
|
(d)
|
Exchange
of payments does not begin until December 2016, December 2016, May 2017
and December 2019, respectively.
|
(e)
|
Three-month
Banker's Acceptance Rate.
|
Based
upon a hypothetical 10% decrease in interest rates, which is a reasonable
near-term market change, the net fair value of FPL Group's net liabilities would
increase by approximately $828 million ($325 million for FPL) at
December 31, 2009.
Equity
price risk - Included in the nuclear decommissioning reserve funds of FPL Group
are marketable equity securities carried at their market value of approximately
$1,705 million and $1,080 million ($1,024 million and $648 million for FPL) at
December 31, 2009 and 2008, respectively. A hypothetical 10%
decrease in the prices quoted by stock exchanges, which is a reasonable
near-term market change, would result in a $157 million ($94 million for FPL)
reduction in fair value and corresponding adjustments to the related liability
accounts based on current regulatory treatment for FPL, or adjustments to OCI
for FPL Group's non-rate regulated operations, at December 31,
2009.
Credit
risk - For all derivative and contractual transactions, FPL Group's energy
marketing and trading operations, which includes FPL's energy marketing and
trading division, are exposed to losses in the event of nonperformance by
counterparties to these transactions. Relevant considerations when
assessing FPL Group's energy marketing and trading operations' credit risk
exposure include:
·
|
Operations
are primarily concentrated in the energy
industry.
|
·
|
Trade
receivables and other financial instruments are predominately with energy,
utility and financial services related companies, as well as
municipalities, cooperatives and other trading companies in the United
States.
|
·
|
Overall
credit risk is managed through established credit
policies.
|
·
|
Prospective
and existing customers are reviewed for creditworthiness based upon
established standards, with customers not meeting minimum standards
providing various credit enhancements or secured payment terms, such as
letters of credit or the posting of margin cash
collateral.
|
·
|
The
use of master netting agreements to offset cash and non-cash gains and
losses arising from derivative instruments with the same
counterparty. FPL Group's policy is to have master netting
agreements in place with significant
counterparties.
|
Based on
FPL Group's policies and risk exposures related to credit, FPL Group and FPL do
not anticipate a material adverse effect on their financial positions as a
result of counterparty nonperformance. As of December 31, 2009,
approximately 98% of FPL Group's and 100% of FPL's energy marketing and trading
counterparty credit risk exposure is associated with companies that have
investment grade credit ratings.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk
See
Management's Discussion - Energy Marketing and Trading and Market Risk
Sensitivity - Market Risk Sensitivity.
Item
8. Financial Statements and Supplementary Data
MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
FPL
Group, Inc.'s (FPL Group) and Florida Power & Light Company's (FPL)
management are responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934. The consolidated financial
statements, which in part are based on informed judgments and estimates made by
management, have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis.
To aid
in carrying out this responsibility, we, along with all other members of
management, maintain a system of internal accounting control which is
established after weighing the cost of such controls against the benefits
derived. In the opinion of management, the overall system of internal
accounting control provides reasonable assurance that the assets of FPL Group
and FPL and their subsidiaries are safeguarded and that transactions are
executed in accordance with management's authorization and are properly recorded
for the preparation of financial statements. In addition, management
believes the overall system of internal accounting control provides reasonable
assurance that material errors or irregularities would be prevented or detected
on a timely basis by employees in the normal course of their
duties. Any system of internal accounting control, no matter how well
designed, has inherent limitations, including the possibility that controls can
be circumvented or overridden and misstatements due to error or fraud may occur
and not be detected. Also, because of changes in conditions, internal
control effectiveness may vary over time. Accordingly, even an
effective system of internal control will provide only reasonable assurance with
respect to financial statement preparation and reporting.
The
system of internal accounting control is supported by written policies and
guidelines, the selection and training of qualified employees, an organizational
structure that provides an appropriate division of responsibility and a program
of internal auditing. FPL Group's written policies include a Code of
Business Conduct & Ethics that states management's policy on conflict of
interest and ethical conduct. Compliance with the Code of Business
Conduct & Ethics is confirmed annually by key personnel.
The
Board of Directors pursues its oversight responsibility for financial reporting
and accounting through its Audit Committee. This Committee, which is
comprised entirely of outside directors, meets regularly with management, the
internal auditors and the independent auditors to make inquiries as to the
manner in which the responsibilities of each are being
discharged. The independent auditors and the internal audit staff
have free access to the Committee without management's presence to discuss
auditing, internal accounting control and financial reporting
matters.
Management
assessed the effectiveness of FPL Group's and FPL's internal control over
financial reporting as of December 31, 2009, using the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission in the
Internal Control - Integrated Framework. Based on this assessment,
management believes that FPL Group's and FPL's internal control over financial
reporting was effective as of December 31, 2009.
FPL
Group's and FPL's independent registered public accounting firm, Deloitte &
Touche LLP, is engaged to express an opinion on FPL Group's and FPL's
consolidated financial statements and an opinion on FPL Group's and FPL's
internal control over financial reporting. Their reports are based on
procedures believed by them to provide a reasonable basis to support such
opinions. These reports appear on the following pages.
LEWIS
HAY, III
|
|
ARMANDO
PIMENTEL, JR.
|
Lewis
Hay, III
Chairman
and Chief Executive Officer of FPL Group
and
Chairman of FPL
|
|
Armando
Pimentel, Jr.
Executive
Vice President, Finance and Chief
Financial
Officer of FPL Group and FPL
|
ARMANDO
J. OLIVERA
|
|
K.
MICHAEL DAVIS
|
Armando
J. Olivera
President
and Chief Executive Officer of FPL
|
|
K.
Michael Davis
Controller
and Chief Accounting Officer
of
FPL Group and Vice President,
Accounting
and Chief Accounting Officer of FPL
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Shareholders
FPL
Group, Inc. and Florida Power & Light Company:
We have
audited the internal control over financial reporting of FPL Group, Inc. and
subsidiaries (FPL Group) and Florida Power & Light Company and subsidiaries
(FPL) as of
December 31, 2009,
based on criteria established in
Internal Control — Integrated
Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission. FPL Group's and FPL’s management are responsible for
maintaining effective internal control over financial reporting and for their
assessments of the effectiveness of internal control over financial reporting,
included in the accompanying Management's Report on Internal Control Over
Financial Reporting. Our responsibility is to express an opinion on FPL Group’s
and FPL’s internal control over financial reporting based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material
respects. Our audits included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinion.
A
company's internal control over financial reporting is a process designed by, or
under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial
statements.
Because
of the inherent limitations of internal control over financial reporting,
including the possibility of collusion or improper management override of
controls, material misstatements due to error or fraud may not be prevented or
detected on a timely basis. Also, projections of any evaluation of the
effectiveness of the internal control over financial reporting to future periods
are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
In our
opinion, FPL Group and FPL maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2009, based on
the criteria established in
Internal Control — Integrated
Framework
issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated financial statements as of and
for the year ended December 31, 2009 of FPL Group and FPL and our report
dated February 25, 2010 expressed an unqualified opinion on those financial
statements.
DELOITTE
& TOUCHE LLP
Certified
Public Accountants
Miami,
Florida
February
25, 2010
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Shareholders
FPL
Group, Inc. and Florida Power & Light Company:
We have
audited the accompanying consolidated balance sheets of FPL Group, Inc. and
subsidiaries (FPL Group) and the separate consolidated balance sheets of Florida
Power & Light Company and subsidiaries (FPL) as of December 31, 2009
and 2008, and the related consolidated statements of income, FPL Group’s common
shareholders' equity, FPL’s common shareholder’s equity and cash flows for each
of the three years in the period ended December 31, 2009. These financial
statements are the responsibility of the respective company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our
opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of FPL Group and FPL at December 31, 2009
and 2008, and the respective results of their operations and their cash flows
for each of the three years in the period ended December 31, 2009, in
conformity with accounting principles generally accepted in the United States of
America.
We have
also audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), FPL Group’s and FPL’s internal control over
financial reporting as of December 31, 2009, based on the criteria
established in
Internal
Control—Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 25,
2010 expressed an unqualified opinion on FPL Group’s and FPL’s internal control
over financial reporting.
DELOITTE
& TOUCHE LLP
Certified
Public Accountants
Miami,
Florida
February
25, 2010
FPL
GROUP, INC.
CONSOLIDATED
STATEMENTS OF INCOME
(millions,
except per share amounts)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
|
$
|
15,643
|
|
|
$
|
16,410
|
|
|
$
|
15,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel,
purchased power and interchange
|
|
|
7,405
|
|
|
|
8,412
|
|
|
|
8,192
|
|
Other
operations and maintenance
|
|
|
2,649
|
|
|
|
2,527
|
|
|
|
2,318
|
|
Depreciation
and amortization
|
|
|
1,765
|
|
|
|
1,442
|
|
|
|
1,335
|
|
Taxes
other than income taxes and other
|
|
|
1,230
|
|
|
|
1,204
|
|
|
|
1,135
|
|
Total
operating expenses
|
|
|
13,049
|
|
|
|
13,585
|
|
|
|
12,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
2,594
|
|
|
|
2,825
|
|
|
|
2,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(849
|
)
|
|
|
(813
|
)
|
|
|
(762
|
)
|
Equity
in earnings of equity method investees
|
|
|
52
|
|
|
|
93
|
|
|
|
68
|
|
Allowance
for equity funds used during construction
|
|
|
53
|
|
|
|
35
|
|
|
|
23
|
|
Interest
income
|
|
|
78
|
|
|
|
72
|
|
|
|
89
|
|
Gains
on disposal of assets - net
|
|
|
60
|
|
|
|
18
|
|
|
|
2
|
|
Other
than temporary impairment losses on securities held in nuclear
decommissioning funds
|
|
|
(58
|
)
|
|
|
(148
|
)
|
|
|
(10
|
)
|
Other
- net
|
|
|
12
|
|
|
|
7
|
|
|
|
(13
|
)
|
Total
other deductions - net
|
|
|
(652
|
)
|
|
|
(736
|
)
|
|
|
(603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
1,942
|
|
|
|
2,089
|
|
|
|
1,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
327
|
|
|
|
450
|
|
|
|
368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.99
|
|
|
$
|
4.10
|
|
|
$
|
3.30
|
|
Assuming
dilution
|
|
$
|
3.97
|
|
|
$
|
4.07
|
|
|
$
|
3.27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
per share of common stock
|
|
$
|
1.89
|
|
|
$
|
1.78
|
|
|
$
|
1.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
404.4
|
|
|
|
400.1
|
|
|
|
397.7
|
|
Assuming
dilution
|
|
|
407.2
|
|
|
|
402.7
|
|
|
|
400.6
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FPL
GROUP, INC.
CONSOLIDATED
BALANCE SHEETS
(millions)
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
PROPERTY,
PLANT AND EQUIPMENT
|
|
|
|
|
|
|
Electric
utility plant in service and other property
|
|
$
|
46,330
|
|
|
$
|
41,638
|
|
Nuclear
fuel
|
|
|
1,414
|
|
|
|
1,260
|
|
Construction
work in progress
|
|
|
2,425
|
|
|
|
2,630
|
|
Less
accumulated depreciation and amortization
|
|
|
(14,091
|
)
|
|
|
(13,117
|
)
|
Total
property, plant and equipment - net
|
|
|
36,078
|
|
|
|
32,411
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
238
|
|
|
|
535
|
|
Customer
receivables, net of allowances of $23 and $29,
respectively
|
|
|
1,431
|
|
|
|
1,443
|
|
Other
receivables, net of allowances of $1 and $2, respectively
|
|
|
816
|
|
|
|
264
|
|
Materials,
supplies and fossil fuel inventory
|
|
|
877
|
|
|
|
968
|
|
Regulatory
assets:
|
|
|
|
|
|
|
|
|
Deferred
clause and franchise expenses
|
|
|
69
|
|
|
|
248
|
|
Securitized
storm-recovery costs
|
|
|
69
|
|
|
|
64
|
|
Derivatives
|
|
|
68
|
|
|
|
1,109
|
|
Pension
|
|
|
-
|
|
|
|
19
|
|
Other
|
|
|
3
|
|
|
|
4
|
|
Derivatives
|
|
|
357
|
|
|
|
433
|
|
Other
|
|
|
409
|
|
|
|
305
|
|
Total
current assets
|
|
|
4,337
|
|
|
|
5,392
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Special
use funds
|
|
|
3,390
|
|
|
|
2,947
|
|
Other
investments
|
|
|
935
|
|
|
|
923
|
|
Prepaid
benefit costs
|
|
|
1,184
|
|
|
|
914
|
|
Regulatory
assets:
|
|
|
|
|
|
|
|
|
Securitized
storm-recovery costs
|
|
|
644
|
|
|
|
697
|
|
Deferred
clause expenses
|
|
|
-
|
|
|
|
79
|
|
Pension
|
|
|
-
|
|
|
|
100
|
|
Unamortized
loss on reacquired debt
|
|
|
29
|
|
|
|
32
|
|
Other
|
|
|
236
|
|
|
|
138
|
|
Other
|
|
|
1,625
|
|
|
|
1,188
|
|
Total
other assets
|
|
|
8,043
|
|
|
|
7,018
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
48,458
|
|
|
$
|
44,821
|
|
|
|
|
|
|
|
|
|
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
Common
shareholders' equity
|
|
$
|
12,967
|
|
|
$
|
11,681
|
|
Long-term
debt
|
|
|
16,300
|
|
|
|
13,833
|
|
Total
capitalization
|
|
|
29,267
|
|
|
|
25,514
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Commercial
paper
|
|
|
2,020
|
|
|
|
1,835
|
|
Notes
payable
|
|
|
-
|
|
|
|
30
|
|
Current
maturities of long-term debt
|
|
|
569
|
|
|
|
1,388
|
|
Accounts
payable
|
|
|
992
|
|
|
|
1,062
|
|
Customer
deposits
|
|
|
613
|
|
|
|
575
|
|
Accrued
interest and taxes
|
|
|
466
|
|
|
|
374
|
|
Regulatory
liabilities:
|
|
|
|
|
|
|
|
|
Deferred
clause and franchise revenues
|
|
|
377
|
|
|
|
11
|
|
Pension
|
|
|
2
|
|
|
|
-
|
|
Derivatives
|
|
|
221
|
|
|
|
1,300
|
|
Other
|
|
|
1,189
|
|
|
|
1,114
|
|
Total
current liabilities
|
|
|
6,449
|
|
|
|
7,689
|
|
|
|
|
|
|
|
|
|
|
OTHER
LIABILITIES AND DEFERRED CREDITS
|
|
|
|
|
|
|
|
|
Asset
retirement obligations
|
|
|
2,418
|
|
|
|
2,283
|
|
Accumulated
deferred income taxes
|
|
|
4,860
|
|
|
|
4,231
|
|
Regulatory
liabilities:
|
|
|
|
|
|
|
|
|
Accrued
asset removal costs
|
|
|
2,251
|
|
|
|
2,142
|
|
Asset
retirement obligation regulatory expense difference
|
|
|
671
|
|
|
|
520
|
|
Pension
|
|
|
16
|
|
|
|
-
|
|
Other
|
|
|
244
|
|
|
|
218
|
|
Derivatives
|
|
|
170
|
|
|
|
218
|
|
Other
|
|
|
2,112
|
|
|
|
2,006
|
|
Total
other liabilities and deferred credits
|
|
|
12,742
|
|
|
|
11,618
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
CAPITALIZATION AND LIABILITIES
|
|
$
|
48,458
|
|
|
$
|
44,821
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FPL
GROUP, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(millions)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,765
|
|
|
|
1,442
|
|
|
|
1,335
|
|
Nuclear
fuel amortization
|
|
|
239
|
|
|
|
201
|
|
|
|
144
|
|
Unrealized
(gains) losses on marked to market energy contracts
|
|
|
59
|
|
|
|
(337
|
)
|
|
|
134
|
|
Deferred
income taxes
|
|
|
273
|
|
|
|
569
|
|
|
|
402
|
|
Cost
recovery clauses and franchise fees
|
|
|
624
|
|
|
|
(111
|
)
|
|
|
(75
|
)
|
Change
in prepaid option premiums and derivative settlements
|
|
|
(11
|
)
|
|
|
(12
|
)
|
|
|
159
|
|
Equity
in earnings of equity method investees
|
|
|
(52
|
)
|
|
|
(93
|
)
|
|
|
(68
|
)
|
Distributions
of earnings from equity method investees
|
|
|
69
|
|
|
|
124
|
|
|
|
175
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
receivables
|
|
|
18
|
|
|
|
49
|
|
|
|
(216
|
)
|
Other
receivables
|
|
|
(13
|
)
|
|
|
(26
|
)
|
|
|
(14
|
)
|
Materials,
supplies and fossil fuel inventory
|
|
|
85
|
|
|
|
(106
|
)
|
|
|
(14
|
)
|
Other
current assets
|
|
|
9
|
|
|
|
(31
|
)
|
|
|
(14
|
)
|
Other
assets
|
|
|
(103
|
)
|
|
|
(166
|
)
|
|
|
(100
|
)
|
Accounts
payable
|
|
|
(86
|
)
|
|
|
(120
|
)
|
|
|
63
|
|
Customer
deposits
|
|
|
38
|
|
|
|
37
|
|
|
|
29
|
|
Margin
cash collateral
|
|
|
(110
|
)
|
|
|
49
|
|
|
|
86
|
|
Income
taxes
|
|
|
8
|
|
|
|
(17
|
)
|
|
|
(75
|
)
|
Interest
and other taxes
|
|
|
22
|
|
|
|
30
|
|
|
|
49
|
|
Other
current liabilities
|
|
|
(45
|
)
|
|
|
189
|
|
|
|
113
|
|
Other
liabilities
|
|
|
(5
|
)
|
|
|
(61
|
)
|
|
|
(52
|
)
|
Other
- net
|
|
|
64
|
|
|
|
154
|
|
|
|
220
|
|
Net
cash provided by operating activities
|
|
|
4,463
|
|
|
|
3,403
|
|
|
|
3,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures of FPL
|
|
|
(2,522
|
)
|
|
|
(2,234
|
)
|
|
|
(1,826
|
)
|
Independent
power investments
|
|
|
(3,068
|
)
|
|
|
(2,715
|
)
|
|
|
(2,852
|
)
|
Cash
grants under the American Recovery and Reinvestment Act of
2009
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
Funds
received from the spent fuel settlement agreement
|
|
|
86
|
|
|
|
-
|
|
|
|
-
|
|
Nuclear
fuel purchases
|
|
|
(362
|
)
|
|
|
(247
|
)
|
|
|
(310
|
)
|
Other
capital expenditures
|
|
|
(54
|
)
|
|
|
(40
|
)
|
|
|
(31
|
)
|
Sale
of independent power investments
|
|
|
15
|
|
|
|
25
|
|
|
|
700
|
|
Loan
repayments and capital distributions from equity method
investees
|
|
|
-
|
|
|
|
-
|
|
|
|
11
|
|
Proceeds
from sale of securities in special use funds
|
|
|
4,592
|
|
|
|
2,235
|
|
|
|
2,211
|
|
Purchases
of securities in special use funds
|
|
|
(4,710
|
)
|
|
|
(2,315
|
)
|
|
|
(2,440
|
)
|
Proceeds
from sale of other securities
|
|
|
773
|
|
|
|
28
|
|
|
|
138
|
|
Purchases
of other securities
|
|
|
(782
|
)
|
|
|
(84
|
)
|
|
|
(156
|
)
|
Funding
of loan
|
|
|
-
|
|
|
|
(500
|
)
|
|
|
-
|
|
Other
- net
|
|
|
(3
|
)
|
|
|
39
|
|
|
|
(23
|
)
|
Net
cash used in investing activities
|
|
|
(5,935
|
)
|
|
|
(5,808
|
)
|
|
|
(4,578
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of long-term debt
|
|
|
3,220
|
|
|
|
3,827
|
|
|
|
3,199
|
|
Retirements
of long-term debt
|
|
|
(1,635
|
)
|
|
|
(1,358
|
)
|
|
|
(1,866
|
)
|
Net
change in short-term debt
|
|
|
154
|
|
|
|
848
|
|
|
|
(80
|
)
|
Issuances
of common stock
|
|
|
198
|
|
|
|
41
|
|
|
|
46
|
|
Dividends
on common stock
|
|
|
(766
|
)
|
|
|
(714
|
)
|
|
|
(654
|
)
|
Change
in funds held for storm-recovery bond payments
|
|
|
5
|
|
|
|
-
|
|
|
|
(42
|
)
|
Other
- net
|
|
|
(1
|
)
|
|
|
6
|
|
|
|
52
|
|
Net
cash provided by financing activities
|
|
|
1,175
|
|
|
|
2,650
|
|
|
|
655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(297
|
)
|
|
|
245
|
|
|
|
(330
|
)
|
Cash
and cash equivalents at beginning of year
|
|
|
535
|
|
|
|
290
|
|
|
|
620
|
|
Cash
and cash equivalents at end of year
|
|
$
|
238
|
|
|
$
|
535
|
|
|
$
|
290
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest (net of amount capitalized)
|
|
$
|
805
|
|
|
$
|
764
|
|
|
$
|
686
|
|
Cash
paid for income taxes - net
|
|
$
|
61
|
|
|
$
|
4
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumption
of debt in connection with the purchase of independent power
projects
|
|
$
|
-
|
|
|
$
|
31
|
|
|
$
|
55
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FPL
GROUP, INC.
CONSOLIDATED
STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
(millions)
|
|
Common
Stock
(a)
|
|
Additional
Paid-In
Capital
|
|
Unearned
ESOP
Compensation
|
|
Accumulated
Other
Comprehensive
Income
(Loss)
(b)
|
|
Retained
Earnings
|
|
Common
Shareholders'
Equity
|
|
|
Shares
|
|
Aggregate
Par
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2006
|
|
405
|
|
$
|
4
|
|
$
|
4,680
|
|
|
$
|
(125
|
)
|
|
|
$
|
115
|
|
|
$
|
5,256
|
|
|
$
|
9,930
|
|
Net
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,312
|
|
|
|
|
|
Issuances
of common stock, net of issuance cost of less than $1
|
|
1
|
|
|
-
|
|
|
33
|
|
|
|
3
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Exercise
of stock options and other incentive plan activity
|
|
1
|
|
|
-
|
|
|
59
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Dividends
on common stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(654
|
)
|
|
|
|
|
Earned
compensation under ESOP
|
|
-
|
|
|
-
|
|
|
27
|
|
|
|
8
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Other
comprehensive loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(44
|
)
|
|
|
-
|
|
|
|
|
|
Defined
benefit pension and other benefits plans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
45
|
|
|
|
-
|
|
|
|
|
|
Implementation
of new accounting rules
|
|
-
|
|
|
-
|
|
|
(15
|
)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
31
|
|
|
|
|
|
Balances,
December 31, 2007
|
|
407
|
(c)
|
|
4
|
|
|
4,784
|
|
|
|
(114
|
)
|
|
|
|
116
|
|
|
|
5,945
|
|
|
$
|
10,735
|
|
Net
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,639
|
|
|
|
|
|
Issuances
of common stock, net of issuance cost of less than $1
|
|
1
|
|
|
-
|
|
|
38
|
|
|
|
4
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Exercise
of stock options and other incentive plan activity
|
|
1
|
|
|
-
|
|
|
53
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Dividends
on common stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(714
|
)
|
|
|
|
|
Earned
compensation under ESOP
|
|
-
|
|
|
-
|
|
|
30
|
|
|
|
10
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Other
comprehensive income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
40
|
|
|
|
-
|
|
|
|
|
|
Defined
benefit pension and other benefits plans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(167
|
)
|
|
|
-
|
|
|
|
|
|
Implementation
of new accounting rules
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(2
|
)
|
|
|
15
|
|
|
|
|
|
Balances,
December 31, 2008
|
|
409
|
(c)
|
|
4
|
|
|
4,905
|
|
|
|
(100
|
)
|
|
|
|
(13
|
)
|
|
|
6,885
|
|
|
$
|
11,681
|
|
Net
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
1,615
|
|
|
|
|
|
Issuances
of common stock, net of issuance cost of approximately $2
|
|
4
|
|
|
-
|
|
|
204
|
|
|
|
4
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Exercise
of stock options and other incentive plan activity
|
|
1
|
|
|
-
|
|
|
56
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Dividends
on common stock
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(766
|
)
|
|
|
|
|
Earned
compensation under ESOP
|
|
-
|
|
|
-
|
|
|
30
|
|
|
|
11
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Other
comprehensive income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
165
|
|
|
|
-
|
|
|
|
|
|
Defined
benefit pension and other benefits plans
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
22
|
|
|
|
-
|
|
|
|
|
|
Premium
on publicly-traded equity units known as Corporate Units
|
|
-
|
|
|
-
|
|
|
(47
|
)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Unamortized
issuance costs on publicly-traded equity units known as Corporate
Units
|
|
-
|
|
|
-
|
|
|
(8
|
)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Implementation
of new accounting rules
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
|
|
(5
|
)
|
|
|
5
|
|
|
|
|
|
Balances,
December 31, 2009
|
|
414
|
(c)
|
$
|
4
|
|
$
|
5,140
|
|
|
$
|
(85
|
)
|
|
|
$
|
169
|
|
|
$
|
7,739
|
|
|
$
|
12,967
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
$0.01
par value, authorized - 800,000,000 shares; outstanding shares
413,622,436, 408,915,305 and 407,344,972 at December 31, 2009, 2008
and 2007, respectively.
|
(b)
|
Comprehensive
income, which includes net income and other comprehensive income (loss),
totaled approximately $1,802 million, $1,512 million and $1,313 million
for 2009, 2008 and 2007, respectively.
|
(c)
|
Outstanding
and unallocated shares held by the Employee Stock Ownership Plan (ESOP)
Trust totaled approximately 6 million, 7 million and 8 million at
December 31, 2009, 2008 and 2007, respectively; the original number
of shares purchased and held by the ESOP Trust was approximately 25
million shares.
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FLORIDA
POWER & LIGHT COMPANY
CONSOLIDATED
STATEMENTS OF INCOME
(millions)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
|
$
|
11,491
|
|
|
$
|
11,649
|
|
|
$
|
11,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel,
purchased power and interchange
|
|
|
6,220
|
|
|
|
6,749
|
|
|
|
6,726
|
|
Other
operations and maintenance
|
|
|
1,496
|
|
|
|
1,438
|
|
|
|
1,454
|
|
Depreciation
and amortization
|
|
|
1,097
|
|
|
|
860
|
|
|
|
846
|
|
Taxes
other than income taxes and other
|
|
|
1,097
|
|
|
|
1,073
|
|
|
|
1,033
|
|
Total
operating expenses
|
|
|
9,910
|
|
|
|
10,120
|
|
|
|
10,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
|
|
1,581
|
|
|
|
1,529
|
|
|
|
1,563
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (DEDUCTIONS)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(318
|
)
|
|
|
(334
|
)
|
|
|
(304
|
)
|
Allowance
for equity funds used during construction
|
|
|
53
|
|
|
|
35
|
|
|
|
23
|
|
Interest
income
|
|
|
1
|
|
|
|
11
|
|
|
|
17
|
|
Other
- net
|
|
|
(13
|
)
|
|
|
(9
|
)
|
|
|
(12
|
)
|
Total
other deductions - net
|
|
|
(277
|
)
|
|
|
(297
|
)
|
|
|
(276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
1,304
|
|
|
|
1,232
|
|
|
|
1,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
473
|
|
|
|
443
|
|
|
|
451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
831
|
|
|
$
|
789
|
|
|
$
|
836
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FLORIDA
POWER & LIGHT COMPANY
CONSOLIDATED
BALANCE SHEETS
(millions)
|
|
December
31,
|
|
|
|
2009
|
|
|
2008
|
|
ELECTRIC
UTILITY PLANT
|
|
|
|
|
|
|
Plant
in service
|
|
$
|
28,677
|
|
|
$
|
26,497
|
|
Nuclear
fuel
|
|
|
756
|
|
|
|
613
|
|
Construction
work in progress
|
|
|
1,549
|
|
|
|
1,862
|
|
Less
accumulated depreciation and amortization
|
|
|
(10,578
|
)
|
|
|
(10,189
|
)
|
Electric
utility plant - net
|
|
|
20,404
|
|
|
|
18,783
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
83
|
|
|
|
120
|
|
Customer
receivables, net of allowances of $21 and $19,
respectively
|
|
|
838
|
|
|
|
796
|
|
Other
receivables, net of allowances of $1 and $1, respectively
|
|
|
182
|
|
|
|
143
|
|
Materials,
supplies and fossil fuel inventory
|
|
|
529
|
|
|
|
563
|
|
Regulatory
assets:
|
|
|
|
|
|
|
|
|
Deferred
clause and franchise expenses
|
|
|
69
|
|
|
|
248
|
|
Securitized
storm-recovery costs
|
|
|
69
|
|
|
|
64
|
|
Derivatives
|
|
|
68
|
|
|
|
1,109
|
|
Other
|
|
|
123
|
|
|
|
129
|
|
Total
current assets
|
|
|
1,961
|
|
|
|
3,172
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Special
use funds
|
|
|
2,408
|
|
|
|
2,158
|
|
Prepaid
benefit costs
|
|
|
1,017
|
|
|
|
968
|
|
Regulatory
assets:
|
|
|
|
|
|
|
|
|
Securitized
storm-recovery costs
|
|
|
644
|
|
|
|
697
|
|
Deferred
clause expenses
|
|
|
-
|
|
|
|
79
|
|
Unamortized
loss on reacquired debt
|
|
|
29
|
|
|
|
32
|
|
Other
|
|
|
185
|
|
|
|
133
|
|
Other
|
|
|
164
|
|
|
|
153
|
|
Total
other assets
|
|
|
4,447
|
|
|
|
4,220
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
26,812
|
|
|
$
|
26,175
|
|
|
|
|
|
|
|
|
|
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
Common
shareholder's equity
|
|
$
|
8,436
|
|
|
$
|
8,089
|
|
Long-term
debt
|
|
|
5,794
|
|
|
|
5,311
|
|
Total
capitalization
|
|
|
14,230
|
|
|
|
13,400
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Commercial
paper
|
|
|
818
|
|
|
|
773
|
|
Current
maturities of long-term debt
|
|
|
42
|
|
|
|
263
|
|
Accounts
payable
|
|
|
539
|
|
|
|
645
|
|
Customer
deposits
|
|
|
607
|
|
|
|
570
|
|
Accrued
interest and taxes
|
|
|
303
|
|
|
|
449
|
|
Regulatory
liabilities - deferred clause and franchise revenues
|
|
|
377
|
|
|
|
11
|
|
Derivatives
|
|
|
77
|
|
|
|
1,114
|
|
Other
|
|
|
659
|
|
|
|
598
|
|
Total
current liabilities
|
|
|
3,422
|
|
|
|
4,423
|
|
|
|
|
|
|
|
|
|
|
OTHER
LIABILITIES AND DEFERRED CREDITS
|
|
|
|
|
|
|
|
|
Asset
retirement obligations
|
|
|
1,833
|
|
|
|
1,743
|
|
Accumulated
deferred income taxes
|
|
|
3,509
|
|
|
|
3,105
|
|
Regulatory
liabilities:
|
|
|
|
|
|
|
|
|
Accrued
asset removal costs
|
|
|
2,251
|
|
|
|
2,142
|
|
Asset
retirement obligation regulatory expense difference
|
|
|
671
|
|
|
|
520
|
|
Other
|
|
|
244
|
|
|
|
218
|
|
Other
|
|
|
652
|
|
|
|
624
|
|
Total
other liabilities and deferred credits
|
|
|
9,160
|
|
|
|
8,352
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
CAPITALIZATION AND LIABILITIES
|
|
$
|
26,812
|
|
|
$
|
26,175
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FLORIDA
POWER & LIGHT COMPANY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(millions)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
831
|
|
|
$
|
789
|
|
|
$
|
836
|
|
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,097
|
|
|
|
860
|
|
|
|
846
|
|
Nuclear
fuel amortization
|
|
|
127
|
|
|
|
106
|
|
|
|
83
|
|
Deferred
income taxes
|
|
|
391
|
|
|
|
307
|
|
|
|
346
|
|
Cost
recovery clauses and franchise fees
|
|
|
624
|
|
|
|
(111
|
)
|
|
|
(75
|
)
|
Change
in prepaid option premiums and derivative settlements
|
|
|
(1
|
)
|
|
|
3
|
|
|
|
142
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer
receivables
|
|
|
(42
|
)
|
|
|
11
|
|
|
|
65
|
|
Other
receivables
|
|
|
42
|
|
|
|
(11
|
)
|
|
|
(32
|
)
|
Materials,
supplies and fossil fuel inventory
|
|
|
34
|
|
|
|
20
|
|
|
|
(25
|
)
|
Other
current assets
|
|
|
6
|
|
|
|
(19
|
)
|
|
|
(12
|
)
|
Other
assets
|
|
|
(62
|
)
|
|
|
(96
|
)
|
|
|
(50
|
)
|
Accounts
payable
|
|
|
(91
|
)
|
|
|
(71
|
)
|
|
|
(80
|
)
|
Customer
deposits
|
|
|
37
|
|
|
|
39
|
|
|
|
31
|
|
Margin
cash collateral
|
|
|
6
|
|
|
|
26
|
|
|
|
75
|
|
Income
taxes
|
|
|
(132
|
)
|
|
|
175
|
|
|
|
(138
|
)
|
Interest
and other taxes
|
|
|
10
|
|
|
|
9
|
|
|
|
26
|
|
Other
current liabilities
|
|
|
(33
|
)
|
|
|
138
|
|
|
|
41
|
|
Other
liabilities
|
|
|
10
|
|
|
|
(19
|
)
|
|
|
(2
|
)
|
Other
- net
|
|
|
17
|
|
|
|
24
|
|
|
|
86
|
|
Net
cash provided by operating activities
|
|
|
2,871
|
|
|
|
2,180
|
|
|
|
2,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
|
(2,522
|
)
|
|
|
(2,234
|
)
|
|
|
(1,826
|
)
|
Funds
received from the spent fuel settlement agreement
|
|
|
71
|
|
|
|
-
|
|
|
|
-
|
|
Nuclear
fuel purchases
|
|
|
(195
|
)
|
|
|
(133
|
)
|
|
|
(181
|
)
|
Proceeds
from sale of securities in special use funds
|
|
|
3,270
|
|
|
|
1,454
|
|
|
|
1,978
|
|
Purchases
of securities in special use funds
|
|
|
(3,349
|
)
|
|
|
(1,512
|
)
|
|
|
(2,186
|
)
|
Other
- net
|
|
|
(1
|
)
|
|
|
(2
|
)
|
|
|
1
|
|
Net
cash used in investing activities
|
|
|
(2,726
|
)
|
|
|
(2,427
|
)
|
|
|
(2,214
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of long-term debt
|
|
|
516
|
|
|
|
589
|
|
|
|
1,230
|
|
Retirements
of long-term debt
|
|
|
(263
|
)
|
|
|
(241
|
)
|
|
|
(250
|
)
|
Net
change in short-term debt
|
|
|
45
|
|
|
|
(69
|
)
|
|
|
212
|
|
Capital
contribution from FPL Group
|
|
|
-
|
|
|
|
75
|
|
|
|
-
|
|
Dividends
|
|
|
(485
|
)
|
|
|
(50
|
)
|
|
|
(1,100
|
)
|
Change
in funds held for storm-recovery bond payments
|
|
|
5
|
|
|
|
-
|
|
|
|
(42
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
(182
|
)
|
|
|
304
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
(37
|
)
|
|
|
57
|
|
|
|
(1
|
)
|
Cash
and cash equivalents at beginning of year
|
|
|
120
|
|
|
|
63
|
|
|
|
64
|
|
Cash
and cash equivalents at end of year
|
|
$
|
83
|
|
|
$
|
120
|
|
|
$
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest (net of amount capitalized)
|
|
$
|
305
|
|
|
$
|
320
|
|
|
$
|
267
|
|
Cash
paid (received) for income taxes - net
|
|
$
|
232
|
|
|
$
|
(11
|
)
|
|
$
|
246
|
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FLORIDA
POWER & LIGHT COMPANY
CONSOLIDATED
STATEMENTS OF COMMON SHAREHOLDER'S EQUITY
(a)
(millions)
|
Common
Stock
(b)
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Common
Shareholder's
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2006
|
$
|
1,373
|
|
|
$
|
4,318
|
|
|
$
|
1,848
|
|
|
$
|
7,539
|
|
Net
income
|
|
-
|
|
|
|
-
|
|
|
|
836
|
|
|
|
|
|
Dividends
to FPL Group
|
|
-
|
|
|
|
-
|
|
|
|
(1,100
|
)
|
|
|
|
|
Balances,
December 31, 2007
|
|
1,373
|
|
|
|
4,318
|
|
|
|
1,584
|
|
|
$
|
7,275
|
|
Net
income
|
|
-
|
|
|
|
-
|
|
|
|
789
|
|
|
|
|
|
Capital
contributions from FPL Group
|
|
-
|
|
|
|
75
|
|
|
|
-
|
|
|
|
|
|
Dividends
to FPL Group
|
|
-
|
|
|
|
-
|
|
|
|
(50
|
)
|
|
|
|
|
Balances,
December 31, 2008
|
|
1,373
|
|
|
|
4,393
|
|
|
|
2,323
|
|
|
$
|
8,089
|
|
Net
income
|
|
-
|
|
|
|
-
|
|
|
|
831
|
|
|
|
|
|
Dividends
to FPL Group
|
|
-
|
|
|
|
-
|
|
|
|
(485
|
)
|
|
|
|
|
Other
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
|
|
Balances,
December 31, 2009
|
$
|
1,373
|
|
|
$
|
4,393
|
|
|
$
|
2,670
|
|
|
$
|
8,436
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
FPL's
comprehensive income is the same as reported net
income.
|
(b)
|
Common
stock, no par value, 1,000 shares authorized, issued and
outstanding.
|
The
accompanying Notes to Consolidated Financial Statements are an integral part of
these statements.
FPL
GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Years
Ended December 31, 2009, 2008 and 2007
1. Summary
of Significant Accounting and Reporting Policies
Basis of Presentation
- FPL
Group, Inc.'s (FPL Group) operations are conducted primarily through its
wholly-owned subsidiary Florida Power & Light Company (FPL) and its
wholly-owned indirect subsidiary NextEra Energy Resources, LLC (NextEra Energy
Resources) formerly known as FPL Energy, LLC. FPL, a rate-regulated
public utility, supplies electric service to approximately 4.5 million customer
accounts throughout most of the east and lower west coasts of
Florida. NextEra Energy Resources invests in independent power
projects through both controlled and consolidated entities and non-controlling
ownership interests in joint ventures essentially all of which are accounted for
under the equity method.
The
consolidated financial statements of FPL Group and FPL include the accounts of
their respective majority-owned and controlled subsidiaries. All
significant intercompany balances and transactions have been eliminated in
consolidation. Certain amounts included in prior years' consolidated
financial statements have been reclassified to conform to the current year's
presentation. The preparation of financial statements requires the
use of estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and
liabilities. Actual results could differ from those
estimates.
Regulation
- FPL is subject
to regulation by the Florida Public Service Commission (FPSC) and the Federal
Energy Regulatory Commission (FERC). Its rates are designed to
recover the cost of providing electric service to its customers including a
reasonable rate of return on invested capital. As a result of this
cost-based regulation, FPL follows the accounting guidance that allows
regulators to create assets and impose liabilities that would not be recorded by
non-rate regulated entities. Regulatory assets and liabilities
represent probable future revenues that will be recovered from or refunded to
customers through the ratemaking process.
Cost
recovery clauses, which are designed to permit full recovery of certain costs
and provide a return on certain assets allowed to be recovered through the
various clauses, include substantially all fuel, purchased power and interchange
expenses, conservation and certain environmental-related expenses, certain
revenue taxes and franchise fees. Beginning in 2009, pre-construction
costs and carrying charges on construction costs for new nuclear capacity and
costs incurred for FPL's solar generating facilities are also recovered through
cost recovery clauses. Revenues from cost recovery clauses are
recorded when billed; FPL achieves matching of costs and related revenues by
deferring the net underrecovery or overrecovery. Any underrecovered
costs or overrecovered revenues are collected from or returned to customers in
subsequent periods. Pursuant to an FPSC order, FPL was required to
refund in the form of a one-time credit to retail customers' bills the 2009
year-end estimated fuel overrecovery; in January 2010, approximately $403
million was refunded to retail customers. At December 31, 2009,
approximately $356 million of retail fuel revenues were
overrecovered. The difference between the refund and the
December 31, 2009 overrecovery will be collected from retail customers in a
subsequent period.
If FPL
were no longer subject to cost-based rate regulation, the existing regulatory
assets and liabilities would be written off unless regulators specify an
alternative means of recovery or refund. In addition, the FPSC has
the authority to disallow recovery of costs that it considers excessive or
imprudently incurred. The continued applicability of regulatory
accounting is assessed at each reporting period.
Revenues and Rates
- FPL's
retail and wholesale utility rate schedules are approved by the FPSC and the
FERC, respectively. FPL records unbilled base revenues for the
estimated amount of energy delivered to customers but not yet
billed. Unbilled base revenues are included in customer receivables
and amounted to approximately $121 million and $114 million at December 31,
2009 and 2008, respectively. FPL's operating revenues also include
amounts resulting from cost recovery clauses (see Regulation), franchise fees,
gross receipts taxes and surcharges related to the recovery of storm restoration
costs associated with hurricanes and storm-recovery bonds (see Note 9 -
FPL). Franchise fees and gross receipts taxes are imposed on FPL;
however, the FPSC allows FPL to include in the amounts charged to customers the
amount of the gross receipts tax for all customers and the franchise amount for
those customers located in the jurisdiction that imposes the
fee. Accordingly, franchise fees and gross receipts taxes are
reported gross in operating revenues and taxes other than income taxes and other
on FPL Group's and FPL's consolidated statements of income and were
approximately $791 million, $781 million and $755 million in 2009, 2008 and
2007, respectively. FPL also collects municipal utility taxes which
are reported gross in customer receivables and accounts payable on FPL Group's
and FPL's consolidated balance sheets.
In
January 2010, the FPSC orally ruled with respect to FPL's March 2009 petition
(January 2010 rate ruling) and indicated that the ruling would be reflected in a
final written order to be issued in February 2010 (final order). The
January 2010 rate ruling indicated that new retail base rates would be
established for FPL effective March 1, 2010, would increase retail base rates by
approximately $75 million on an annualized basis, would establish a regulatory
return on common equity (ROE) of 10.0% with a range of plus or minus 100 basis
points and would shift certain costs from retail base rates to the capacity cost
recovery clause (capacity clause). The January 2010 rate ruling also
indicated that depreciation expense would be reduced over the next four
years. See Electric Plant, Depreciation and
Amortization. As of the date of this report, the final order remains
pending. Upon issuance of the final order, parties have the right to
file motions with the FPSC for reconsideration of some or all of the final
order, or to appeal some or all of the final order to the Florida Supreme
Court. In response to inquiries regarding potential inconsistencies
in calculations underlying the January 2010 rate ruling, staff for the FPSC has
indicated it would address any matters raised by the parties before the final
order following the filing of any motions for reconsideration. FPL
cannot predict the specific treatment of any particular issue in the final
order.
FPL is
evaluating the impact of the January 2010 rate ruling on its financial position,
including its credit quality and ability to attract capital over the long
term. FPL has suspended activities on the following projects
representing approximately $10 billion of investment over the next five years
until the financial impact of the final order, along with other factors, such as
load-growth estimates, fuel cost forecasts, demand side management and
environmental incentives, can be reviewed (see Note 14 -
Commitments):
·
|
development
of two additional nuclear units at FPL's Turkey Point site beyond what is
required to receive a U.S. Nuclear Regulatory Commission (NRC) license for
each unit;
|
·
|
modernization
of FPL's Cape Canaveral and Riviera power plants;
|
·
|
reevaluation
of options related to a proposed 300-mile underground natural gas pipeline
in Florida; and
|
·
|
other
infrastructure projects.
|
FPL is
also evaluating its options with respect to future regulatory actions regarding
the January 2010 rate ruling and, when it is issued, the final order, as well as
assessing the cost structure of its ongoing operations and reviewing other
planned capital expenditures for appropriate reductions.
Under a
rate agreement approved in 2005 (2005 rate agreement), retail base rates did not
increase except to allow recovery of the revenue requirements of FPL's three
power plants that achieved commercial operation during the term of the 2005 rate
agreement. Retail base rates increased when Turkey Point Unit No. 5
was placed in service in 2007 and when West County Energy Center (WCEC) Units
Nos. 1 and 2 were placed in service in 2009. During the term of
the 2005 rate agreement, FPL did not have an authorized regulatory ROE for the
purpose of addressing earnings levels; however, for all other regulatory
purposes, FPL had an ROE of 11.75%. Under the terms of the 2005 rate
agreement, FPL's electric property depreciation rates were based upon the
comprehensive depreciation studies it filed with the FPSC in March 2005;
however, FPL reduced depreciation on its plant in service by $125 million each
year, as allowed by the 2005 rate agreement. The 2005 rate agreement
also provided for a revenue sharing mechanism, whereby revenues from retail base
operations in excess of certain thresholds would be shared with
customers. During the term of the 2005 rate agreement, FPL's revenues
did not exceed the thresholds.
NextEra
Energy Resources' revenue is recorded as electricity is delivered, which is when
revenue is earned. NextEra Energy Resources' retail energy business
records unbilled revenues for the estimated amount of energy delivered to
customers but not yet billed. Unbilled revenues are included in
customer receivables and amounted to approximately $47 million and $41 million
at December 31, 2009 and 2008, respectively.
Electric Plant, Depreciation and
Amortization
- The cost of additions to units of property of FPL and
NextEra Energy Resources is added to electric utility plant. In
accordance with regulatory accounting, the cost of FPL's units of utility
property retired, less estimated net salvage value, is charged to accumulated
depreciation. Maintenance and repairs of property as well as
replacements and renewals of items determined to be less than units of utility
property are charged to other operations and maintenance (O&M)
expenses. At December 31, 2009, the electric generating,
transmission, distribution and general facilities of FPL represented
approximately 46%, 13%, 37% and 4%, respectively, of FPL's gross investment in
electric utility plant in service. Substantially all of FPL's
properties are subject to the lien of FPL's mortgage, which secures most debt
securities issued by FPL. A number of NextEra Energy Resources'
generating facilities are encumbered by liens against their assets securing
various financings. The net book value of NextEra Energy Resources'
assets serving as collateral was approximately $6 billion at December 31,
2009. The American Recovery and Reinvestment Act of 2009 provided for
an option to elect a cash grant (convertible ITCs) for certain renewable energy
property (renewable property). Convertible ITCs are recorded as a
reduction in property, plant and equipment on FPL Group's and FPL's consolidated
balance sheets and are amortized as a reduction to depreciation and amortization
expense over the estimated life of the related property. At
December 31, 2009, FPL Group recorded convertible ITCs of approximately
$417 million ($44 million at FPL), which are included in other receivables on
FPL Group’s and FPL’s consolidated balance sheets.
Depreciation
of FPL's electric property is primarily provided on a straight-line average
remaining life basis. FPL includes in depreciation expense a
provision for fossil plant dismantlement, nuclear plant decommissioning (see
Decommissioning of Nuclear Plants, Dismantlement of Plants and Other Accrued
Asset Removal Costs) and amortization of pre-construction costs associated with
planned nuclear units recovered through a cost recovery clause. For
substantially all of FPL's property, depreciation studies are performed and
filed with the FPSC at least every four years. Under the terms of the
2005 rate agreement, FPL's electric property depreciation rates were based upon
the comprehensive depreciation studies it filed with the FPSC in March 2005;
however FPL reduced depreciation by $125 million annually as allowed by the 2005
rate agreement. The weighted annual composite depreciation rate for
FPL's electric plant in service, including capitalized software, but excluding
the effects of decommissioning, dismantlement and the depreciation adjustments
discussed above, was approximately 3.6% for each of the years 2009, 2008 and
2007, respectively. As part of the January 2010 rate ruling, the FPSC
approved new depreciation rates which became effective January 1,
2010. These new rates are expected to decrease depreciation
expense. The January 2010 rate ruling also requires FPL to reduce
depreciation expense over the next four years related to a depreciation reserve
surplus totaling approximately $895 million. NextEra Energy
Resources' electric plants in service less salvage value, if any, are
depreciated primarily using the straight-line method over their estimated useful
lives. NextEra Energy Resources' effective depreciation rates,
excluding decommissioning, were 4.2%, 4.3% and 4.4% for 2009, 2008 and 2007,
respectively.
Nuclear Fuel
- FPL leases
nuclear fuel for all four of its nuclear units. FPL Group and FPL
consolidate the lessor entity, a variable interest entity. See
Note 9 - FPL.
NextEra
Energy Resources' nuclear units have several contracts for the supply,
conversion, enrichment and fabrication of nuclear fuel. See
Note 14 - Contracts. NextEra Energy Resources' nuclear fuel
costs are charged to fuel expense on a unit of production method.
Construction Activity
-
Allowance for funds used during construction (AFUDC) is a non-cash item which
represents the allowed cost of capital, including an ROE, used to finance FPL
construction projects. The portion of AFUDC attributable to borrowed
funds is recorded as a reduction of interest expense and the remainder is
recorded as other income. FPSC rules limit the recording of AFUDC to
projects that cost in excess of 0.5% of a utility's plant in service balance and
require more than one year to complete. FPSC rules allow construction
projects below the 0.5% threshold as a component of rate base. During
2009, 2008 and 2007, AFUDC was capitalized at a rate of 7.41%, 7.65% and 7.42%,
respectively, and amounted to approximately $74 million, $53 million and $36
million, respectively. See Note 14 - Commitments.
FPL's
construction work in progress includes construction materials, progress payments
on major equipment contracts, third-party engineering costs, AFUDC and other
costs directly associated with the construction of various
projects. Upon completion of the projects, these costs are
transferred to electric utility plant in service. At
December 31, 2009, 2008 and 2007, FPL recorded approximately $295 million,
$194 million and $188 million, respectively, of construction-related accruals,
which are included in other current liabilities, and approximately $123 million,
$121 million and $107 million, respectively, of construction-related accounts
payable, which are included in accounts payable on FPL Group's and FPL's
consolidated balance sheets. Capitalized costs associated with
construction activities are charged to O&M expenses when recoverability is
no longer probable. See Regulation above for information on recovery
of costs associated with new nuclear capacity and solar generating
facilities.
NextEra
Energy Resources capitalizes project development costs once it is probable that
such costs will be realized through the ultimate construction of a power plant
or sale of development rights. At December 31, 2009 and 2008,
NextEra Energy Resources' capitalized development costs totaled approximately
$56 million and $40 million, respectively, which are included in other assets on
FPL Group's consolidated balance sheets. These costs include land
rights and other third-party costs directly associated with the development of a
new project. Upon commencement of construction, these costs either
are transferred to construction work in progress or remain in other assets,
depending upon the nature of the cost. Capitalized development costs
are charged to O&M expenses when recoverability is no longer
probable.
NextEra
Energy Resources' construction work in progress includes construction materials,
prepayments on turbine generators and other equipment, third-party engineering
costs, capitalized interest and other costs directly associated with the
construction and development of the project. Interest capitalized on
construction projects amounted to $85 million, $55 million and $39 million
during 2009, 2008 and 2007, respectively. NextEra Energy Resources'
interest expense is based on a deemed capital structure of 50% debt for
operating projects and 100% debt for projects under
construction. Upon commencement of plant operation, costs associated
with construction work in progress are transferred to electric utility plant in
service and other property. At December 31, 2009, 2008 and 2007,
NextEra Energy Resources recorded approximately $175 million, $74 million and
$106 million, respectively, of construction-related accruals, which are included
in other current liabilities, and approximately $90 million, $59 million and
$102 million, respectively, of construction-related accounts payable which are
included in accounts payable on FPL Group's consolidated balance
sheets.
Asset Retirement Obligations
- FPL Group and FPL each account for asset retirement obligations and
conditional asset retirement obligations (collectively, AROs) under accounting
guidance that requires a liability for the fair value of an ARO be recognized in
the period in which it is incurred if it can be reasonably estimated, with the
offsetting associated asset retirement costs capitalized as part of the carrying
amount of the long-lived assets. The asset retirement cost is
subsequently allocated to expense using a systematic and rational method over
the asset’s estimated useful life. Changes in the ARO resulting from
the passage of time are recognized as an increase in the carrying amount of the
liability and as accretion expense, which is included in depreciation and
amortization expense in the consolidated statements of
income. Changes resulting from revisions to the timing or amount of
the original estimate of cash flows are recognized as an increase or a decrease
in the asset retirement cost and ARO. See Note 13.
Decommissioning of Nuclear Plants,
Dismantlement of Plants and Other Accrued Asset Removal Costs
- The
components of FPL Group's and FPL's decommissioning of nuclear plants,
dismantlement of plants and other accrued asset removal costs are as
follows:
|
|
FPL
|
|
|
|
|
|
|
Nuclear
Decommissioning
|
|
Fossil
Dismantlement
|
|
Interim
Removal
Costs
and Other
|
|
NextEra
Energy
Resources
|
|
FPL
Group
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AROs
|
|
$
|
1,807
|
|
$
|
1,713
|
|
$
|
23
|
|
$
|
26
|
|
$
|
3
|
|
$
|
4
|
|
$
|
585
|
|
$
|
540
|
|
$
|
2,418
|
|
$
|
2,283
|
Less
capitalized ARO asset net of accumulated depreciation
|
|
|
50
|
|
|
52
|
|
|
5
|
|
|
8
|
|
|
-
|
|
|
1
|
|
|
-
|
|
|
-
|
|
|
55
|
|
|
61
|
Accrued
asset removal costs
(a)
|
|
|
196
|
|
|
176
|
|
|
318
|
|
|
306
|
|
|
1,737
|
|
|
1,660
|
|
|
-
|
|
|
-
|
|
|
2,251
|
|
|
2,142
|
Asset
retirement obligation regulatory expense difference
(a)
|
|
|
644
|
|
|
495
|
|
|
28
|
|
|
25
|
|
|
(1
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
671
|
|
|
520
|
Accrued
decommissioning, dismantlement and other accrued asset removal
costs
|
|
$
|
2,597
|
(b)
|
$
|
2,332
|
(b)
|
$
|
364
|
(b)
|
$
|
349
|
(b)
|
$
|
1,739
|
(b)
|
$
|
1,663
|
(b)
|
$
|
585
|
|
$
|
540
|
|
$
|
5,285
|
|
$
|
4,884
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Regulatory
liability on FPL Group's and FPL's consolidated balance
sheets.
|
(b)
|
Represents
total amount accrued for ratemaking
purposes.
|
FPL -
For ratemaking purposes, FPL accrues for the cost of end of life retirement and
disposal of its nuclear and fossil plants over the expected service life of each
unit based on nuclear decommissioning and fossil dismantlement studies
periodically filed with the FPSC. In addition, FPL accrues for
interim removal costs over the life of the related assets based on depreciation
studies approved by the FPSC. In 2005, FPL suspended its annual
decommissioning accrual as approved by the FPSC. For financial
reporting purposes, FPL recognizes decommissioning and dismantlement liabilities
in accordance with accounting guidance that requires a liability for the fair
value of an ARO be recognized in the period in which it is
incurred. Any differences between expense recognized for financial
reporting purposes and the amount recoverable through rates are reported as a
regulatory liability in accordance with regulatory accounting. See
Electric Plant, Depreciation and Amortization, Asset Retirement Obligations and
Note 13.
Nuclear
decommissioning studies are performed at least every five years and are
submitted to the FPSC for approval. FPL filed updated nuclear
decommissioning studies with the FPSC in December 2005. These studies
reflect FPL's current plans, under the operating licenses, for prompt
dismantlement of Turkey Point Units Nos. 3 and 4 following the end of plant
operation with decommissioning activities commencing in 2032 and 2033,
respectively, and provide for St. Lucie Unit No. 1 to be mothballed
beginning in 2036 with decommissioning activities to be integrated with the
prompt dismantlement of St. Lucie Unit No. 2 at the end of its useful life
in 2043. These studies also assume that FPL will be storing spent
fuel on site pending removal to a U.S. government facility. The
studies indicate FPL's portion of the ultimate costs of decommissioning its four
nuclear units, including costs associated with spent fuel storage, to be
approximately $10.9 billion. FPL's portion of the ultimate cost of
decommissioning its four units, expressed in 2009 dollars, is estimated by the
studies to aggregate $2.4 billion.
Restricted
funds for the payment of future expenditures to decommission FPL's nuclear units
are included in nuclear decommissioning reserve funds, which are included in
special use funds on FPL Group's and FPL's consolidated balance
sheets. Consistent with regulatory treatment, marketable securities
held in the decommissioning funds are classified as available for sale and are
carried at market value with market adjustments, including any other than
temporary impairment losses, resulting in a corresponding adjustment to the
related regulatory liability accounts. See
Note 5. Contributions to the funds were suspended in
2005. Fund earnings, net of taxes, are reinvested in the
funds. Earnings are recognized as income/loss and an offset is
recorded to reflect a corresponding increase/decrease in the related regulatory
liability accounts. As a result, there is no effect on net
income. During 2009, 2008 and 2007, fund earnings on decommissioning
funds were approximately $81 million, $63 million and $81 million,
respectively. The tax effects of amounts not yet recognized for tax
purposes are included in accumulated deferred income taxes.
Fossil
fuel plant dismantlement studies are performed at least every four years and are
submitted to the FPSC for approval. FPL's latest fossil fuel plant
dismantlement studies became effective January 1, 2010 and resulted in an
increase in the annual expense from $15 million to $19 million. The
studies indicate that FPL's portion of the ultimate cost to dismantle its fossil
units is $894 million, or $467 million expressed in 2009
dollars. During both 2009 and 2008, with respect to costs associated
with fossil dismantlement, FPL recognized approximately $2 million related to
ARO accretion expense and depreciation of the capitalized ARO asset and
approximately $13 million related to the non-legal obligation included in
accrued asset removal costs, which equaled the $15 million accrual approved by
the FPSC for dismantlement expense (included in depreciation and amortization
expense in FPL Group's and FPL's consolidated statements of
income). During 2007, with respect to costs associated with fossil
dismantlement, FPL recognized approximately $2 million related to ARO accretion
expense and depreciation of the capitalized ARO asset, approximately $14 million
related to the non-legal obligation included in accrued asset removal costs and
approximately $1 million credit to adjust the total accrual to the $15 million
approved by the FPSC for dismantlement expense (included in depreciation and
amortization expense in FPL Group's and FPL's consolidated statements of
income).
NextEra
Energy Resources - NextEra Energy Resources records nuclear decommissioning
liabilities for Seabrook Station (Seabrook), Duane Arnold Energy Center (Duane
Arnold) and Point Beach Nuclear Power Plant (Point Beach) in accordance with
accounting guidance that requires a liability for the fair value of an ARO be
recognized in the period in which it is incurred. See
Note 13. At December 31, 2009 and 2008, NextEra Energy
Resources' ARO related to nuclear decommissioning totaled approximately $518
million and $487 million, respectively, and was determined using various
internal and external data. NextEra Energy Resources' portion of the
ultimate cost of decommissioning its nuclear plants, including costs associated
with spent fuel storage, is estimated to be approximately $6.6 billion, or $1.6
billion expressed in 2009 dollars. The liability is being accreted
using the interest method through the date decommissioning activities are
expected to be complete.
Seabrook's
decommissioning funding plan is based on a comprehensive nuclear decommissioning
study filed with the New Hampshire Nuclear Decommissioning Financing Committee
(NDFC) in 2007 and is effective for four years. There are ongoing
minimum decommissioning funding requirements for Duane Arnold and Point Beach
with the NRC, which NextEra Energy Resources either meets or intends to meet in
the form of a guarantee for each plant. NextEra Energy Resources'
portion of Seabrook's, Duane Arnold's and Point Beach's restricted funds for the
payment of future expenditures to decommission these plants is included in
nuclear decommissioning reserve funds, which are included in special use funds
on FPL Group's consolidated balance sheets. Marketable securities
held in the decommissioning funds are classified as available for sale and are
carried at market value. Market adjustments result in a corresponding
adjustment to other comprehensive income (OCI), except for unrealized losses
associated with marketable securities considered to be other than temporary,
including any credit losses, which are recognized as an expense in FPL Group's
consolidated statements of income. Fund earnings are recognized in
income and are reinvested in the funds either on a pretax or after-tax
basis. See Note 5. The tax effects of amounts not yet
recognized for tax purposes are included in accumulated deferred income
taxes.
Major Maintenance Costs
- FPL
uses the accrue-in-advance method for recognizing costs associated with planned
major nuclear maintenance, in accordance with regulatory treatment, and records
the related accrual as a regulatory liability. FPL expenses costs
associated with planned fossil maintenance as incurred. NextEra
Energy Resources uses the deferral method to account for certain planned major
maintenance costs.
FPL's
estimated nuclear maintenance costs for each nuclear unit's next planned outage
are accrued over the period from the end of the last outage to the end of the
next planned outage. Any difference between the estimated and actual
costs is included in O&M expenses when known. The accrued
liability for nuclear maintenance costs at December 31, 2009 and 2008
totaled approximately $47 million and $58 million, respectively, and is included
in regulatory liabilities - other. For the years ended
December 31, 2009, 2008 and 2007, FPL recognized approximately $84 million,
$75 million and $77 million, respectively, in nuclear maintenance costs which
are included in O&M expenses in FPL Group's and FPL's consolidated
statements of income.
NextEra
Energy Resources' major maintenance costs for its nuclear generating units and
combustion turbines are capitalized and amortized on a unit of production method
over the period from the end of the last outage to the beginning of the next
planned outage. NextEra Energy Resources' capitalized major
maintenance costs, net of accumulated amortization, totaled approximately $106
million and $81 million at December 31, 2009 and 2008, respectively, and
are included in other assets. For the years ended December 31,
2009, 2008 and 2007, NextEra Energy Resources recognized approximately $73
million, $57 million and $43 million in major maintenance costs which are
included in O&M expenses in FPL Group's consolidated statements of
income.
Cash Equivalents
- Cash
equivalents consist of short-term, highly liquid investments with original
maturities of three months or less.
Restricted Cash
- At
December 31, 2009 and 2008, FPL Group had approximately $134 million ($33
million for FPL) and $140 million ($40 million for FPL), respectively, of
restricted cash included in other current assets on FPL Group's and FPL's
consolidated balance sheets, essentially all of which is restricted for margin
cash collateral and debt service payments. Where offsetting positions
exist, restricted cash related to margin cash collateral is netted against
derivative instruments. See Note 3.
Allowance for Doubtful
Accounts
- FPL maintains an accumulated provision for uncollectible
customer accounts receivable that is estimated using a percentage, derived from
historical revenue and write-off trends, of the previous five months of
revenue. Additional amounts are included in the provision to address
specific items that are not considered in the calculation described
above. NextEra Energy Resources regularly reviews collectibility of
its receivables and establishes a provision for losses estimated as a percentage
of accounts receivable based on the historical bad debt write-off trends for its
retail energy business and, when necessary, using the specific identification
method for all other receivables.
Inventory
- FPL values
materials, supplies and fossil fuel inventory using a weighted-average cost
method. NextEra Energy Resources' materials, supplies and fossil fuel
inventories are carried at the lower of weighted-average cost or market, unless
evidence indicates that the weighted-average cost (even if in excess of market)
will be recovered with a normal profit upon sale in the ordinary course of
business.
Energy Trading
- FPL Group
provides full energy and capacity requirements services primarily to
distribution utilities, which include load-following services and various
ancillary services, in certain markets and engages in power and gas marketing
and trading activities to optimize the value of electricity and fuel contracts
and generating facilities, as well as to take advantage of expected favorable
commodity price movements. Trading contracts that meet the definition
of a derivative are accounted for at market value and realized gains and losses
from all trading contracts, including those where physical delivery is required,
are recorded net for all periods presented. See
Note 3.
Impairment of Long-Lived
Assets
- FPL Group evaluates on an ongoing basis the recoverability of
its assets for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
Goodwill and Other Intangible
Assets
- FPL Group's goodwill and other intangible assets are as
follows:
|
Weighted
Average
Useful
Lives
|
|
December 31,
|
|
(Years)
|
|
2009
|
|
2008
|
|
|
|
|
(millions)
|
Goodwill:
|
|
|
|
|
|
|
|
|
Merchant
reporting unit
|
|
|
|
$
|
72
|
|
$
|
72
|
Wind
reporting unit
|
|
|
|
|
41
|
|
|
38
|
Total
goodwill
|
|
|
|
$
|
113
|
|
$
|
110
|
|
|
|
|
|
|
|
|
|
Other
intangible assets:
|
|
|
|
|
|
|
|
|
Purchase
power agreements
|
18
|
|
|
$
|
87
|
|
$
|
70
|
Customer
lists
|
8
|
|
|
|
28
|
|
|
28
|
Other,
primarily land and transmission rights, permits and
licenses
|
28
|
|
|
|
216
|
|
|
105
|
Total
|
|
|
|
|
331
|
|
|
203
|
Less
accumulated amortization
|
|
|
|
|
78
|
|
|
65
|
Total
other intangible assets - net
|
|
|
|
$
|
253
|
|
$
|
138
|
NextEra
Energy Resources has recorded goodwill related to various acquisitions which
were accounted for using the purchase method of accounting. NextEra
Energy Resources' other intangible assets are amortized, primarily on a
straight-line basis, over their estimated useful lives. For the years
ended December 31, 2009, 2008 and 2007, amortization expense was
approximately $14 million, $13 million and $12 million, respectively, and is
expected to be approximately $14 million, $13 million, $12 million, $9 million
and $6 million for 2010, 2011, 2012, 2013 and 2014, respectively.
NextEra
Energy Resources' goodwill and other intangible assets are included in other
assets on FPL Group's consolidated balance sheets. Goodwill is
assessed for impairment at least annually by applying a fair value-based
test. Other intangible assets are periodically reviewed when
impairment indicators are present to assess recoverability from future
operations using undiscounted future cash flows.
Stock-Based Compensation
-
FPL Group accounts for stock-based payment transactions based on grant-date fair
value. See Note 11 - Stock-Based Compensation.
Retirement of Long-Term Debt
- Gains and losses that result from differences in FPL's reacquisition cost and
the book value of long-term debt which is retired are deferred and amortized to
interest expense ratably over the remaining life of the original issue, which is
consistent with its treatment in the ratemaking process. FPL Group
Capital Inc (FPL Group Capital) recognizes such differences as other income
(deductions) at time of retirement.
Income Taxes
- Deferred
income taxes are provided on all significant temporary differences between the
financial statement and tax bases of assets and liabilities. In
connection with the tax sharing agreement between FPL Group and its
subsidiaries, the income tax provision at each subsidiary reflects the use of
the "separate return method," except that tax benefits that could not be used on
a separate return basis, but are used on the consolidated tax return, are
recorded by the subsidiary that generated the tax benefits. Any
remaining consolidated income tax benefits or expenses are recorded at the
corporate level. Included in other regulatory assets on FPL Group's
and FPL's consolidated balance sheets is the revenue equivalent of the
difference in accumulated deferred income taxes computed under accounting rules,
as compared to regulatory accounting rules. This amount totaled $137
million and $92 million at December 31, 2009 and 2008, respectively, and is
being amortized in accordance with the regulatory treatment over the estimated
lives of the assets or liabilities for which the deferred tax amount was
initially recognized. Investment tax credits (ITCs) for FPL are
deferred and amortized to income over the approximate lives of the related
property in accordance with the regulatory treatment. At
December 31, 2009 and 2008, deferred ITCs were approximately $8 million and
$16 million, respectively, and are included in other regulatory liabilities on
FPL Group's and FPL's consolidated balance sheets. NextEra Energy
Resources recognizes ITCs as a reduction to income tax expense when the related
energy property is placed into service. Production tax credits (PTCs)
are recognized as wind energy is generated and sold based on a per kwh rate
prescribed in applicable federal and state statutes and are recorded as a
reduction of current income taxes payable, unless limited by tax law in which
instance they are recorded as deferred tax assets. FPL Group and FPL
record a deferred income tax benefit created by the convertible ITCs on the
difference between the financial statement and tax bases of renewable
property. For NextEra Energy Resources, this deferred income tax
benefit is recorded in income tax expense in the year that the renewable
property is placed in service. For FPL, this deferred income tax
benefit is offset by a regulatory liability, which is amortized as a reduction
of depreciation expense over the approximate lives of the related renewable
property in accordance with the regulatory treatment. A valuation
allowance is recorded to reduce the carrying amounts of deferred tax assets
unless it is more likely than not that such assets will be
realized. All tax positions taken by FPL Group in its income tax
returns that are recognized in the financial statements must satisfy a
more-likely-than-not threshold. See Note 6.
Guarantees
- FPL Group's and
FPL's payment guarantees and related contracts provided to unconsolidated
entities entered into after December 31, 2002, for which it or a subsidiary
is the guarantor, are recorded at fair value. See Note 14 -
Commitments.
Variable Interest Entities
(VIEs)
- FPL Group and FPL assess the variable interests they hold to
determine if those entities are VIEs. See Note 9. In 2009,
new accounting guidance was issued which modifies the consolidation model in
previous guidance and expands the required disclosures related to
VIEs. The new accounting guidance became effective on January 1,
2010. FPL Group and FPL are currently evaluating the impact of the
new accounting guidance.
2. Employee
Retirement Benefits
Employee Benefit Plans and Other
Postretirement Plan
- FPL Group sponsors a qualified noncontributory
defined benefit pension plan for substantially all employees of FPL Group and
its subsidiaries. FPL Group allocates net periodic pension benefit
income to its subsidiaries based on the pensionable earnings of the
subsidiaries' employees. FPL Group also has a supplemental executive
retirement plan (SERP), which includes a non-qualified supplemental defined
benefit pension component that provides benefits to a select group of management
and highly compensated employees. FPL Group allocates net periodic
SERP benefit costs to its subsidiaries based upon actuarial calculations by
participant. The impact of this SERP component is included within
pension benefits in the following tables, and was not material to FPL Group's
financial statements for the years ended December 31, 2009, 2008 and
2007. In addition to pension benefits, FPL Group sponsors a
contributory postretirement plan for health care and life insurance benefits
(other benefits) for retirees of FPL Group and its subsidiaries meeting certain
eligibility requirements. FPL Group allocates other benefits net
periodic benefit costs to its subsidiaries based upon the number of eligible
employees at each subsidiary.
Implementation of New Accounting
Provisions Regarding Benefit Plans
- Effective December 31, 2006,
FPL Group adopted new recognition and disclosure provisions regarding benefit
plans which require recognition of the funded status of benefit plans in the
balance sheet, with changes in the funded status recognized in comprehensive
income within shareholders' equity in the year in which the changes
occur. In addition, effective December 31, 2008, the new
provisions required FPL Group to measure plan assets and benefit obligations as
of the fiscal year-end. Prior to 2008, FPL Group used a measurement
date of September 30. In lieu of remeasuring plan assets and
obligations as of January 1, 2008, FPL Group elected to calculate the net
periodic benefit (income) cost for the fifteen-month period from
September 30, 2007 to December 31, 2008 using the September 30,
2007 measurement date. Upon adoption of the measurement date
provisions, FPL Group recorded an adjustment to increase 2008 beginning retained
earnings by approximately $13 million representing three-fifteenths of net
periodic benefit (income) cost for the fifteen-month period from
September 30, 2007 to December 31, 2008. Included in the
adjustment to retained earnings is approximately $1 million related to the
reduction in accumulated other comprehensive income (AOCI) and approximately $3
million related to the reduction in net regulatory
liabilities. Effective December 31, 2009, FPL Group adopted new
accounting disclosure provisions which require expanded disclosure of plan
assets and fair value measurement techniques. See Note
4.
Since
FPL Group is the plan sponsor, and its subsidiaries do not have separate rights
to the plan assets or direct obligations to their employees, the results of
implementing the new accounting provisions are reflected at FPL Group and not
allocated to the subsidiaries. The portion of previously unrecognized
actuarial gains and losses, prior service costs or credits and transition
obligations related to the recognition provision that were estimated to be
allocable to FPL as net periodic benefit (income) cost in future periods and
that otherwise would have been recorded in AOCI were classified as regulatory
assets and liabilities at FPL Group in accordance with regulatory
treatment. In addition, adjustments to AOCI as a result of
implementing the measurement date provisions that were estimated to be allocable
to FPL were recorded as an adjustment to the previously established regulatory
assets and liabilities.
Plan
Assets, Benefit Obligations and Funded Status - The changes in assets and
benefit obligations of the plans and the plans' funded status are as
follows:
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of plan assets at January 1, 2009 and October 1, 2007,
respectively
|
|
$
|
2,503
|
|
|
$
|
3,577
|
|
|
$
|
29
|
|
|
$
|
49
|
|
Actual
return on plan assets
|
|
|
656
|
|
|
|
(873
|
)
|
|
|
5
|
|
|
|
(15
|
)
|
Employer
contributions
(a)
|
|
|
-
|
|
|
|
-
|
|
|
|
29
|
|
|
|
35
|
|
Transfers
(b)
|
|
|
(29
|
)
|
|
|
(54
|
)
|
|
|
-
|
|
|
|
-
|
|
Participant
contributions
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
8
|
|
Benefit
payments
(a)
|
|
|
(102
|
)
|
|
|
(147
|
)
|
|
|
(38
|
)
|
|
|
(48
|
)
|
Fair
value of plan assets at December 31
|
|
$
|
3,028
|
|
|
$
|
2,503
|
|
|
$
|
32
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligation
at January 1, 2009 and October 1, 2007,
respectively
|
|
$
|
1,604
|
|
|
$
|
1,652
|
|
|
$
|
367
|
|
|
$
|
406
|
|
Service
cost
|
|
|
51
|
|
|
|
67
|
|
|
|
5
|
|
|
|
7
|
|
Interest
cost
|
|
|
109
|
|
|
|
127
|
|
|
|
24
|
|
|
|
31
|
|
Participant
contributions
|
|
|
-
|
|
|
|
-
|
|
|
|
7
|
|
|
|
8
|
|
Plan
amendments
(c)
|
|
|
3
|
|
|
|
12
|
|
|
|
(1
|
)
|
|
|
-
|
|
Actuarial
losses (gains) - net
|
|
|
201
|
|
|
|
(107
|
)
|
|
|
66
|
|
|
|
(37
|
)
|
Benefit
payments
|
|
|
(102
|
)
|
|
|
(147
|
)
|
|
|
(38
|
)
|
|
|
(48
|
)
|
Obligation
at December 31
(d)
|
|
$
|
1,866
|
|
|
$
|
1,604
|
|
|
$
|
430
|
|
|
$
|
367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funded
status:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
(accrued) benefit cost at FPL Group at December 31
|
|
$
|
1,162
|
|
|
$
|
899
|
|
|
$
|
(398
|
)
|
|
$
|
(338
|
)
|
Prepaid
(accrued) benefit cost at FPL at December 31
|
|
$
|
1,009
|
|
|
$
|
961
|
|
|
$
|
(282
|
)
|
|
$
|
(286
|
)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Employer
contributions and benefits paid include only those amounts contributed
directly to, or paid directly from, plan assets. FPL's portion
of contributions related to other benefits was $27 million and $32 million
for the 2009 and 2008 plan years presented,
respectively.
|
(b)
|
Primarily
represents amounts that were transferred from the qualified pension plan
as reimbursement for eligible retiree medical expenses paid by FPL Group
pursuant to the provisions of the Internal Revenue Code
(IRC).
|
(c)
|
Primarily
relates to union negotiated credits, IRC transfers and various SERP and
other benefits amendments.
|
(d)
|
FPL
Group's accumulated benefit obligation, which includes no assumption about
future salary levels, for its pension plans at December 31, 2009 and
2008 was $1,804 million and $1,559 million,
respectively.
|
FPL
Group's and FPL's prepaid (accrued) benefit cost shown above are included in the
consolidated balance sheets as follows:
|
|
FPL
Group
|
|
FPL
|
|
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
2008
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid
benefit costs
|
|
$
|
1,184
|
|
|
$
|
914
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,017
|
|
|
$
|
968
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Accrued
benefit cost included in other current liabilities
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(29
|
)
|
|
|
(29
|
)
|
|
|
(2
|
)
|
|
|
(1
|
)
|
|
|
(24
|
)
|
|
|
(24
|
)
|
Accrued
benefit cost included in other liabilities
|
|
|
(20
|
)
|
|
|
(14
|
)
|
|
|
(369
|
)
|
|
|
(309
|
)
|
|
|
(6
|
)
|
|
|
(6
|
)
|
|
|
(258
|
)
|
|
|
(262
|
)
|
Prepaid
(accrued) benefit cost at December 31
|
|
$
|
1,162
|
|
|
$
|
899
|
|
|
$
|
(398
|
)
|
|
$
|
(338
|
)
|
|
$
|
1,009
|
|
|
$
|
961
|
|
|
$
|
(282
|
)
|
|
$
|
(286
|
)
|
FPL
Group's unrecognized amounts included in accumulated other comprehensive income
(loss) yet to be recognized as components of prepaid (accrued) benefit cost are
as follows:
|
|
Pension
Benefits
|
|
Other
Benefits
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
Components
of AOCI:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized
prior service benefit (cost) (net of $2 and $1 tax benefit,
respectively)
|
|
$
|
(3
|
)
|
$
|
(1
|
)
|
$
|
-
|
|
$
|
-
|
|
Unrecognized
transition obligation (net of $1 and $1 tax benefit,
respectively)
|
|
|
-
|
|
|
-
|
|
|
(1
|
)
|
|
(1
|
)
|
Unrecognized
gain (loss) (net of $4 tax expense, $17 tax benefit, $6 tax benefit and
none, respectively)
|
|
|
7
|
|
|
(27
|
)
|
|
(6
|
)
|
|
4
|
|
Total
|
|
$
|
4
|
(a)
|
$
|
(28
|
)
|
|
(7
|
)
(b)
|
$
|
3
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Less
than $1 million of prior service benefits is expected to be reclassified
into earnings within the next 12 months.
|
(b)
|
Less
than $1 million of transition obligations is expected to be reclassified
into earnings within the next 12
months.
|
FPL
Group's unrecognized amounts included in regulatory assets (liabilities) yet to
be recognized as components of net prepaid (accrued) benefit cost are as
follows:
|
Regulatory
Assets (Liabilities)
(Pension)
|
|
Regulatory
Assets
(SERP
and Other)
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrecognized
prior service cost
|
$
|
10
|
|
$
|
6
|
|
$
|
2
|
|
$
|
2
|
|
Unrecognized
transition obligation
|
|
-
|
|
|
-
|
|
|
7
|
|
|
11
|
|
Unrecognized
(gain) loss
|
|
(28
|
)
|
|
113
|
|
|
45
|
|
|
(4
|
)
|
Total
|
$
|
(18
|
)
(a)
|
$
|
119
|
|
$
|
54
|
(b)
|
$
|
9
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Approximately
$2 million of prior service benefits will be reclassified into earnings
within the next 12 months.
|
(b)
|
Approximately
$2 million of transition obligations will be reclassified into earnings
within the next 12 months.
|
The
following table provides the weighted-average assumptions used to determine
benefit obligations for the plans. These rates are used in
determining net periodic benefit cost in the following year.
|
Pension
Benefits
|
|
Other
Benefits
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
Discount
rate
|
5.50%
|
|
6.90%
|
|
5.50%
|
|
6.90%
|
Salary
increase
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
The
projected 2010 trend assumption used to measure the expected cost of health care
benefits covered by the plans for those under age 65 is 8.00% for medical and
8.50% for prescription drug benefits and for those age 65 and over is 7.50% for
medical and 8.00% for prescription drug benefits. These rates are
assumed to decrease over the next 9 years for medical benefits and 11 years for
prescription drug benefits to the ultimate trend rate of 5.50% and remain at
that level thereafter. The ultimate trend rate is assumed to be
reached in 2018 for medical benefits and 2020 for prescription drug
benefits. Assumed health care cost trend rates have an effect on the
amounts reported for postretirement plans providing health care
benefits. An increase or decrease of one percentage point in assumed
health care cost trend rates would have a corresponding effect on the other
benefits accumulated obligation of approximately $6 million and $5 million,
respectively, at December 31, 2009.
FPL
Group's current investment policy for the pension plan recognizes the benefit of
protecting the plan's funded status, thereby avoiding the necessity of future
employer contributions. Its broad objectives are to achieve a high
rate of total return with a prudent level of risk taking while maintaining
sufficient liquidity and diversification to avoid large losses and preserve
capital over the long term.
FPL
Group's pension plan fund has a strategic asset allocation that currently
targets a mix of 45% equity investments, 45% fixed income investments and 10%
convertible bonds. The fund's investment strategy emphasizes
traditional investments, broadly diversified across the global equity and fixed
income markets, using a combination of different investment styles and
vehicles. The pension fund's equity investments include direct equity
holdings and assets classified as equity commingled
vehicles. Similarly, its fixed income investments include direct debt
security holdings and assets classified as debt security commingled
vehicles. These equity and debt security commingled vehicles include
common and collective trusts, pooled separate accounts, registered investment
companies or other forms of pooled investment arrangements.
With
regard to its other benefits plan, FPL Group's policy is to fund claims as
incurred during the year through FPL Group contributions, participant
contributions and plan assets. The other benefits plan's assets are
invested with a focus on assuring the availability of funds to pay benefits
while maintaining sufficient diversification to avoid large losses and preserve
capital. The other benefits plan's fund has a strategic asset
allocation that currently targets a mix of 60% equity investments and 40% fixed
income investments. The fund's investment strategy emphasizes
traditional investments, diversified across the global equity and fixed income
markets. The fund's equity investments are comprised of assets
classified as equity commingled vehicles. Similarly, its fixed income
investments are comprised of assets classified as debt security commingled
vehicles. These equity and debt commingled vehicles include common
and collective trusts, pooled separate accounts, registered investment companies
or other forms of pooled investment arrangements.
The fair
value measurements of FPL Group's pension plan assets by fair value hierarchy
level are as follows:
|
|
December
31, 2009
|
|
|
|
Quoted
Prices
in
Active
Markets
for
Identical
Assets
or
Liabilities
(Level
1)
|
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
|
Total
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
$
|
424
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
424
|
|
Equity
commingled vehicles
(a)
|
|
|
-
|
|
|
|
941
|
|
|
|
-
|
|
|
|
941
|
|
U.S.
Government and municipal bonds
|
|
|
77
|
|
|
|
30
|
|
|
|
-
|
|
|
|
107
|
|
Corporate
debt securities
(b)
|
|
|
-
|
|
|
|
399
|
|
|
|
-
|
|
|
|
399
|
|
Mortgage-backed
securities
|
|
|
-
|
|
|
|
361
|
|
|
|
-
|
|
|
|
361
|
|
Debt
security commingled vehicles
(c)
|
|
|
-
|
|
|
|
503
|
|
|
|
-
|
|
|
|
503
|
|
Convertible
bonds
|
|
|
-
|
|
|
|
293
|
|
|
|
-
|
|
|
|
293
|
|
Total
|
|
$
|
501
|
|
|
$
|
2,527
|
|
|
$
|
-
|
|
|
$
|
3,028
|
|
¾¾¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
foreign investments of $499 million.
|
(b)
|
Includes
foreign investments of $45 million.
|
(c)
|
Includes
foreign investments of $56 million and $53 million of short-term
commingled vehicles.
|
The fair
value measurements of FPL Group's other benefits plan assets at
December 31, 2009 were approximately $19 million of equity commingled
vehicles ($4 million of which were foreign investments) and $13 million of debt
security commingled vehicles; all of which were Level 2.
Expected
Cash Flows - FPL Group anticipates paying approximately $29 million for eligible
retiree medical expenses on behalf of the other benefits plan during 2010 with
substantially all amounts being reimbursed through a transfer of assets from the
qualified pension plan.
The
following table provides information about benefit payments expected to be paid
by the plans, net of government drug subsidy, for each of the following calendar
years:
|
Pension
Benefits
|
|
Other
Benefits
|
|
(millions)
|
|
|
|
|
|
|
2010
|
$
|
155
|
|
$
|
35
|
2011
|
$
|
161
|
|
$
|
35
|
2012
|
$
|
165
|
|
$
|
34
|
2013
|
$
|
162
|
|
$
|
32
|
2014
|
$
|
159
|
|
$
|
31
|
2015
- 2019
|
$
|
801
|
|
$
|
161
|
Net
Periodic Cost - The components of net periodic benefit (income) cost for the
plans are as follows:
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
|
51
|
|
|
$
|
54
|
|
|
$
|
50
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Interest
cost
|
|
|
109
|
|
|
|
102
|
|
|
|
94
|
|
|
|
24
|
|
|
|
25
|
|
|
|
24
|
|
Expected
return on plan assets
|
|
|
(239
|
)
|
|
|
(240
|
)
|
|
|
(221
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Amortization
of transition obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
Amortization
of prior service benefit
|
|
|
(3
|
)
|
|
|
(4
|
)
|
|
|
(4
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Amortization
of gains
|
|
|
(23
|
)
|
|
|
(29
|
)
|
|
|
(18
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net
periodic benefit (income) cost at FPL Group
|
|
$
|
(105
|
)
|
|
$
|
(117
|
)
|
|
$
|
(99
|
)
|
|
$
|
30
|
|
|
$
|
31
|
|
|
$
|
30
|
|
Net
periodic benefit (income) cost at FPL
|
|
$
|
(73
|
)
|
|
$
|
(84
|
)
|
|
$
|
(76
|
)
|
|
$
|
23
|
|
|
$
|
24
|
|
|
$
|
25
|
|
Other
Comprehensive Income - The components of net periodic benefit income (cost)
recognized in OCI for the plans are as follows:
|
|
Pension
Benefits
|
|
|
Other
Benefits
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
service cost (net of $1 tax benefit for 2008)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
gains (losses) (net of $24 tax expense, $102 tax benefit, $7 tax benefit
and $2 tax expense, respectively)
|
|
|
38
|
|
|
|
(162
|
)
|
|
|
(10
|
)
|
|
|
2
|
|
Transition
obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
Amortization
of prior service benefit
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization
of net gains (net of $3 and $3 tax benefit, respectively)
|
|
|
(4
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
-
|
|
Amortization
of transition obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
1
|
|
|
|
1
|
|
Total
|
|
$
|
32
|
|
|
$
|
(170
|
)
|
|
$
|
(10
|
)
|
|
$
|
3
|
|
Regulatory
Assets (Liabilities) - The components of net periodic benefit (income) cost
recognized during the year in regulatory assets (liabilities) for the plans are
as follows:
|
|
Regulatory
Assets
(Liabilities)
(Pension)
|
|
|
Regulatory
Assets
(SERP
and Other)
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior
service cost
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Unrecognized
(gains) losses
|
|
|
(159
|
)
|
|
|
801
|
|
|
|
51
|
|
|
|
(14
|
)
|
Transition
obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
-
|
|
Amortization
of prior service benefit
|
|
|
3
|
|
|
|
3
|
|
|
|
-
|
|
|
|
-
|
|
Amortization
of gains
|
|
|
16
|
|
|
|
21
|
|
|
|
-
|
|
|
|
-
|
|
Amortization
of transition obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Total
|
|
$
|
(138
|
)
|
|
$
|
834
|
|
|
$
|
46
|
|
|
$
|
(17
|
)
|
The
weighted-average assumptions used to determine net periodic benefit (income)
cost for the plans are as follows:
|
Pension
Benefits
|
|
Other
Benefits
|
|
2009
|
|
2008
|
|
2007
|
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
Discount
rate
|
6.90%
|
|
6.25%
|
|
5.85%
|
|
6.90%
|
|
6.35%
|
|
5.90%
|
Salary
increase
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
Expected
long-term rate of return
(a)
|
7.75%
|
|
7.75%
|
|
7.75%
|
|
8.00%
|
|
8.00%
|
|
8.00%
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
In
developing the expected long-term rate of return on assets assumption for
its plans, FPL Group evaluated input from its actuaries as well as
information available in the marketplace. FPL Group considered
the 10-year and 20-year historical median returns for a portfolio with an
equity/bond asset mix similar to its funds. FPL Group also
considered its funds' historical compounded returns. No
specific adjustments were made to reflect expectations of future
returns.
|
Assumed
health care cost trend rates have an effect on the amounts reported for
postretirement plans providing health care benefits. An increase or
decrease of one percentage point in assumed health care cost trend rates would
have a corresponding effect on the total service and interest cost recognized at
December 31, 2009 by less than $1 million.
Employee Contribution Plans
-
FPL Group offers employee retirement savings plans which allow eligible
participants to contribute a percentage of qualified compensation through
payroll deductions. FPL Group makes matching contributions to
participants' accounts. Defined contribution expense pursuant to
these plans was approximately $38 million, $37 million and $35 million for FPL
Group ($28 million, $28 million and $27 million for FPL) for the years ended
December 31, 2009, 2008 and 2007, respectively. See Note 11
- Employee Stock Ownership Plan.
3. Derivative
Instruments
FPL
Group and FPL use derivative instruments (primarily swaps, options, futures and
forwards) to manage the commodity price risk inherent in the purchase and sale
of fuel and electricity, as well as interest rate and foreign currency exchange
rate risk associated with long-term debt.
With
respect to commodities related to FPL Group's competitive energy business,
NextEra Energy Resources employs rigorous risk management procedures in order to
optimize the value of its power generation assets, provide full energy and
capacity requirements services primarily to distribution utilities, and engage
in power and gas marketing and trading activities to take advantage of expected
future favorable price movements and changes in the expected volatility of
prices in the energy markets. These risk management activities
involve the use of derivative instruments executed within prescribed limits to
manage the risk associated with fluctuating commodity
prices. Transactions in derivative instruments are executed on
recognized exchanges or via the over the counter markets, depending on the most
favorable credit and market execution factors. For NextEra Energy
Resources' power generation assets, derivative instruments are used to hedge the
commodity price risk associated with the fuel inputs for requirements of the
assets, where applicable, as well as to hedge the expected energy output of
these assets for the portion of the output that is not covered by long term
power purchase agreements (PPA). These hedges protect NextEra Energy
Resources against adverse changes in the wholesale forward commodity markets
associated with its generation assets. With regard to full energy and
capacity requirements services, NextEra Energy Resources is required to vary the
quantity of energy and related services based on the load demands of the
customer served by the distribution utility. For this type of
transaction, derivative instruments are used to hedge the anticipated
electricity quantities required to serve these customers and protect against
unfavorable changes in the forward energy markets. Additionally,
NextEra Energy Resources takes positions in the energy markets based on
differences between actual forward market levels and management's view of
fundamental market conditions. NextEra Energy Resources uses
derivative instruments to realize value from these market dislocations, subject
to strict risk management limits around market, operational and credit
exposure.
Derivative
instruments, when required to be marked to market, are recorded on FPL Group's
and FPL's consolidated balance sheets as either an asset or liability measured
at fair value. At FPL, substantially all changes in the derivatives'
fair value are deferred as a regulatory asset or liability until the contracts
are settled, and, upon settlement, any gains or losses are passed through the
fuel and purchased power cost recovery clause (fuel clause) or the capacity
clause. For FPL Group's non-rate regulated operations, predominantly
NextEra Energy Resources, essentially all changes in the derivatives' fair value
for power purchases and sales and trading activities are recognized on a net
basis in operating revenues; fuel purchases and sales are recognized on a net
basis in fuel, purchased power and interchange expense; and the equity method
investees' related activity is recognized in equity in earnings of equity method
investees in FPL Group's consolidated statements of income unless hedge
accounting is applied. Settlement gains and losses are included
within the line items in the consolidated statements of income to which they
relate.
While
most of NextEra Energy Resources' derivative transactions are entered into for
the purpose of managing commodity price risk, and to reduce the impact of
volatility in interest rates stemming from changes in variable interest rates on
outstanding debt, hedge accounting is only applied where specific criteria are
met and it is practicable to do so. In order to apply hedge
accounting, the transaction must be designated as a hedge and it must be highly
effective in offsetting the hedged risk. Additionally, for hedges of
commodity price risk, physical delivery for forecasted commodity transactions
must be probable. FPL Group believes that, where offsetting positions
exist at the same location for the same time, the transactions are considered to
have been netted and therefore physical delivery has been deemed not to have
occurred for financial reporting purposes. Transactions for which
physical delivery is deemed not to have occurred are presented on a net
basis. Generally, the hedging instrument's effectiveness is assessed
using regression analysis for commodity contracts, and nonstatistical methods
including dollar value comparisons of the change in the fair value of the
derivative to the change in the fair value or cash flows of the hedged item, for
interest rate swaps. Hedge effectiveness is tested at the inception
of the hedge and on at least a quarterly basis throughout its
life. At December 31, 2009, FPL Group had cash flow hedges with
expiration dates through December 2012 for energy contract derivative
instruments, interest rate cash flow hedges with expiration dates through
May 2024 and a foreign currency cash flow hedge that expires in December
2011. The effective portion of the gain or loss on a derivative
instrument designated as a cash flow hedge is reported as a component of OCI and
is reclassified into earnings in the period(s) during which the transaction
being hedged affects earnings. See Note 7. The
ineffective portion of net unrealized gains (losses) on these hedges is reported
in earnings in the current period, and amounted to approximately $29 million,
$25 million and $3 million for the years ended December 31, 2009, 2008 and
2007, respectively. In January 2010, FPL Group discontinued hedge
accounting for its cash flow hedges related to energy contract derivative
instruments.
FPL
Group's and FPL's mark-to-market derivative instrument assets (liabilities) are
included in the consolidated balance sheets as follows:
|
FPL
Group
|
|
FPL
|
|
|
December
31,
|
|
December
31,
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
derivative assets
(a)
|
$
|
357
|
|
$
|
433
|
|
$
|
10
|
(b)
|
$
|
4
|
(b)
|
Noncurrent
other assets
(c)
|
|
329
|
|
|
212
|
|
|
4
|
|
|
2
|
|
Current
derivative liabilities
(d)
|
|
(221
|
)
|
|
(1,300
|
)
|
|
(77
|
)
|
|
(1,114
|
)
|
Noncurrent
derivative liabilities
(e)
|
|
(170
|
)
|
|
(218
|
)
|
|
(1
|
)
(f)
|
|
(1
|
)
(f)
|
Total
mark-to-market derivative instrument liabilities
|
$
|
295
|
|
$
|
(873
|
)
|
$
|
(64
|
)
|
$
|
(1,109
|
)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
At
December 31, 2009 and 2008, FPL Group's balances reflect the netting
of $4 million and $60 million (none at FPL), respectively, in margin cash
collateral received from counterparties.
|
(b)
|
Included
in current other assets on FPL's consolidated balance
sheets.
|
(c)
|
At
December 31, 2009, FPL Group's balance reflects the netting of $1
million (none at FPL), in margin cash collateral received from
counterparties.
|
(d)
|
At
December 31, 2009 and 2008, FPL Group's balances reflect the netting
of $75 million and $33 million (none at FPL), respectively, in margin cash
collateral provided to counterparties.
|
(e)
|
At
December 31, 2008, FPL Group's balance reflects the netting of $25
million (none at FPL), in margin cash collateral provided to
counterparties.
|
(f)
|
Included
in noncurrent other liabilities on FPL's consolidated balance
sheets.
|
At
December 31, 2009 and 2008, FPL Group had approximately $18 million and $66
million (none at FPL), respectively, in margin cash collateral received from
counterparties that was not offset against derivative assets. These
amounts are included in other current liabilities in the consolidated balance
sheets. Additionally, at December 31, 2009 and 2008, FPL Group
had approximately $95 million and $98 million (none at FPL), respectively, in
margin cash collateral provided to counterparties that was not offset against
derivative liabilities. These amounts are included in other current
assets in the consolidated balance sheets.
As
discussed above, FPL Group uses derivative instruments to, among other things,
manage its commodity price risk, interest rate risk and foreign currency
exchange rate risk. The table above presents FPL Group's and FPL's
net derivative positions at December 31, 2009, which reflect the offsetting
of positions of certain transactions within the portfolio, the contractual
ability to settle contracts under master netting arrangements and the netting of
margin cash collateral. However, disclosure rules require that the
following tables be presented on a gross basis.
The fair
values of FPL Group's derivatives designated as hedging instruments for
accounting purposes are presented below as gross asset and liability values, as
required by disclosure rules. However, the majority of the underlying
contracts are subject to master netting arrangements and would not be
contractually settled on a gross basis.
|
|
December 31,
2009
|
|
|
|
Derivative
Assets
|
|
|
Derivative
Liabilities
|
|
|
|
(millions)
|
|
Commodity
contracts:
|
|
|
|
|
|
|
Current
derivative assets
|
|
$
|
54
|
|
|
$
|
1
|
|
Current
derivative liabilities
|
|
|
45
|
|
|
|
4
|
|
Noncurrent
other assets
|
|
|
44
|
|
|
|
2
|
|
Noncurrent
derivative liabilities
|
|
|
8
|
|
|
|
13
|
|
Interest
rate swaps:
|
|
|
|
|
|
|
|
|
Current
derivative liabilities
|
|
|
-
|
|
|
|
51
|
|
Noncurrent
other assets
|
|
|
61
|
|
|
|
-
|
|
Noncurrent
derivative liabilities
|
|
|
-
|
|
|
|
27
|
|
Foreign
currency swap:
|
|
|
|
|
|
|
|
|
Noncurrent
other assets
|
|
|
5
|
|
|
|
-
|
|
Total
|
|
$
|
217
|
|
|
$
|
98
|
|
Gains
(losses) related to FPL Group's cash flow hedges are recorded on FPL Group's
consolidated financial statements (none at FPL) as follows:
|
Year
Ended
December 31,
2009
|
|
Commodity
Contracts
|
|
Interest
Rate
Swaps
|
|
Foreign
Currency
Swap
|
|
Total
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains
recognized in OCI
|
$
|
197
|
|
$
|
28
|
|
$
|
3
|
|
$
|
228
|
Gains
(losses) reclassified from AOCI
|
$
|
164
|
(a)
|
$
|
(39
|
)
(b)
|
$
|
4
|
(c)
|
$
|
129
|
Gains
recognized in income
(d)
|
$
|
29
|
(a)
|
$
|
-
|
|
$
|
-
|
|
$
|
29
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Included
in operating revenues.
|
(b)
|
Included
in interest expense.
|
(c)
|
$1
million loss is included in interest expense, and the balance is included
in other - net.
|
(d)
|
Represents
the ineffective portion of the hedging
instrument.
|
For the
year ended December 31, 2009, FPL Group recorded a loss of $6 million on a
fair value hedge which is reflected in interest expense in the consolidated
statements of income and resulted in a corresponding reduction of the related
debt.
The fair
values of FPL Group's and FPL's derivatives not designated as hedging
instruments for accounting purposes are presented below as gross asset and
liability values, as required by disclosure rules. However, the
majority of the underlying contracts are subject to master netting arrangements
and would not be contractually settled on a gross basis.
|
December 31,
2009
|
|
|
FPL
Group
|
|
FPL
|
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
Derivative
Assets
|
|
Derivative
Liabilities
|
|
|
(millions)
|
|
Commodity
contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
derivative assets
|
$
|
611
|
|
$
|
303
|
|
$
|
11
|
(a)
|
$
|
1
|
(a)
|
Current
derivative liabilities
|
|
1,002
|
|
|
1,288
|
|
|
18
|
|
|
95
|
|
Noncurrent
other assets
|
|
921
|
|
|
699
|
|
|
4
|
|
|
-
|
|
Noncurrent
derivative liabilities
|
|
128
|
|
|
260
|
|
|
-
|
|
|
1
|
(b)
|
Foreign
currency swap:
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent
derivative liabilities
|
|
-
|
|
|
6
|
|
|
-
|
|
|
-
|
|
Total
|
$
|
2,662
|
|
$
|
2,556
|
|
$
|
33
|
|
$
|
97
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Included
in current other assets on FPL's consolidated balance
sheets.
|
(b)
|
Included
in noncurrent other liabilities on FPL's consolidated balance
sheets.
|
Gains
(losses) related to FPL Group's derivatives not designated as hedging
instruments are recorded on FPL Group's consolidated statements of income (none
at FPL) as follows:
|
Year
Ended
December 31,
2009
|
|
|
(millions)
|
|
Commodity
contracts:
|
|
|
|
Operating
revenues
|
$
|
279
|
(a)
|
Fuel,
purchased power and interchange
|
|
28
|
|
Foreign
currency swap:
|
|
|
|
Other
- net
|
|
(3
|
)
|
Total
|
$
|
304
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
In
addition, for the year ended December 31, 2009, FPL recorded
approximately $688 million of losses related to commodity contracts as
regulatory assets on its consolidated balance
sheets.
|
The
following table represents net notional volumes associated with derivative
instruments that are required to be reported at fair value in FPL Group's and
FPL's consolidated financial statements. The table includes
significant volumes of transactions that have minimal exposure to commodity
price changes because they are variable priced agreements. The table
does not present a complete picture of FPL Group's and FPL's overall net
economic exposure because FPL Group and FPL do not use derivative instruments to
hedge all of their commodity exposures. At December 31, 2009,
FPL Group and FPL had derivative commodity contracts for the following net
notional volumes:
Commodity
Type
|
|
FPL
Group
|
|
FPL
|
|
|
(millions)
|
|
|
|
|
|
Power
|
|
(23
|
)
|
mwh
(a)
|
|
-
|
mwh
(a)
|
Natural
gas
|
|
790
|
|
mmbtu
(b)
|
|
794
|
mmbtu
(b)
|
Oil
|
|
1
|
|
barrels
|
|
1
|
barrels
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Megawatt-hours
|
(b)
|
One
million British thermal units
|
At
December 31, 2009, FPL Group had fifteen interest rate swaps with a notional
amount totaling approximately $2.3 billion and two foreign currency swaps with a
notional amount totaling approximately $290 million.
Certain
of FPL Group's and FPL's derivative instruments contain credit-risk-related
contingent features including, among other things, the requirement to maintain
an investment grade credit rating from specified credit rating agencies and
certain financial ratios, as well as credit-related cross default and material
adverse change triggers. At December 31, 2009, the aggregate
fair value of FPL Group's derivative instruments with credit-risk-related
contingent features that were in a liability position was approximately $1.0
billion ($0.1 billion for FPL).
If the
credit-risk-related contingent features underlying these agreements and other
wholesale commodity contracts were triggered, FPL Group or FPL could be required
to post collateral or settle contracts according to contractual terms which
generally allow netting of contracts in offsetting positions. Certain
contracts contain multiple types of credit-related triggers. To the
extent these contracts contain a credit ratings downgrade trigger, the maximum
exposure is included in the following credit ratings collateral posting
requirements. If FPL Group Capital's or FPL's credit ratings were
downgraded to BBB+/Baa1 (a two level downgrade for FPL and a one level downgrade
for FPL Group Capital from the current lowest rating), FPL Group would be
required to post collateral such that the total posted collateral would be
approximately $50 million (none at FPL).
If FPL Group
Capital's and FPL's credit ratings were downgraded to below investment grade,
FPL Group would be required to post additional collateral such that the total
posted collateral would be approximately $1.4 billion ($0.6 billion at
FPL). Some contracts at FPL Group, including some FPL contracts, do
not contain credit ratings downgrade triggers, but do contain provisions that
require certain financial measures be maintained and/or have credit-related
cross-default triggers. In the event these provisions were triggered,
FPL Group could be required to post additional collateral of up to approximately
$500 million ($100 million at FPL).
Collateral
may be posted in the form of cash or credit support. At
December 31, 2009, FPL Group had posted approximately $75 million (none at
FPL) in the form of letters of credit in the normal course of business which
could be applied toward the collateral requirements described
above. FPL and FPL Group Capital have bank revolving lines of credit
in excess of the collateral requirements described above that would be available
to support, among other things, derivative activities. Under the
terms of the bank revolving lines of credit, maintenance of a specific credit
rating is not a condition to drawing on these credit facilities, although there
are other conditions to drawing on these credit facilities.
Additionally,
some contracts contain certain adequate assurance provisions where a
counterparty may demand additional collateral based on subjective events and/or
conditions. Due to the subjective nature of these provisions, FPL
Group and FPL are unable to determine an exact value for these items and they
are not included in any of the quantitative disclosures above.
4. Fair
Value Measurements
FPL
Group and FPL use several different valuation techniques to measure the fair
value of assets and liabilities, relying primarily on the market approach of
using prices and other market information for identical and/or comparable assets
and liabilities for those assets and liabilities that are measured on a
recurring basis. Certain derivatives and financial instruments are
valued using option pricing models and take into consideration multiple inputs
including commodity prices, volatility factors and discount rates, as well as
counterparty credit ratings and credit enhancements. Additionally,
when observable market data is not sufficient, valuation models are developed
that incorporate FPL Group's and FPL's proprietary views of market factors and
conditions. FPL Group's and FPL's assessment of the significance of
any particular input to the fair value measurement requires judgment and may
affect the valuation of fair value assets and liabilities and their placement
within the fair value hierarchy levels.
FPL
Group's and FPL's financial assets and liabilities and other fair value
measurements made on a recurring basis by fair value hierarchy level are as
follows:
|
|
December 31,
2009
|
|
|
|
Quoted
Prices
in
Active
Markets
for
Identical
Assets
or
Liabilities
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
Netting
(a)
|
|
Total
|
|
|
|
(millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group - equity securities
|
|
|
$
|
-
|
|
|
|
$
|
79
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
79
|
|
FPL
- equity securities
|
|
|
$
|
-
|
|
|
|
$
|
43
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
43
|
|
Special
use funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
|
|
$
|
657
|
|
|
|
$
|
1,048
|
(b)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
1,705
|
|
U.S.
Government and municipal bonds
|
|
|
$
|
275
|
|
|
|
$
|
299
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
574
|
|
Corporate
debt securities
|
|
|
$
|
-
|
|
|
|
$
|
452
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
452
|
|
Mortgage-backed
securities
|
|
|
$
|
-
|
|
|
|
$
|
618
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
618
|
|
Other
debt securities
|
|
|
$
|
-
|
|
|
|
$
|
41
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
41
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
|
|
$
|
104
|
|
|
|
$
|
920
|
(b)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
1,024
|
|
U.S.
Government and municipal bonds
|
|
|
$
|
230
|
|
|
|
$
|
278
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
508
|
|
Corporate
debt securities
|
|
|
$
|
-
|
|
|
|
$
|
346
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
346
|
|
Mortgage-backed
securities
|
|
|
$
|
-
|
|
|
|
$
|
503
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
503
|
|
Other
debt securities
|
|
|
$
|
-
|
|
|
|
$
|
27
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
27
|
|
Other
investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
|
|
$
|
3
|
|
|
|
$
|
4
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
7
|
|
U.S.
Government and municipal bonds
|
|
|
$
|
-
|
|
|
|
$
|
38
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
38
|
|
Corporate
debt securities
|
|
|
$
|
-
|
|
|
|
$
|
35
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
35
|
|
Mortgage-backed
securities
|
|
|
$
|
-
|
|
|
|
$
|
31
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
31
|
|
Other
|
|
|
$
|
4
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
4
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
988
|
|
|
|
$
|
1,089
|
|
|
|
$
|
801
|
|
|
|
$
|
(2,192
|
)
|
|
$
|
686
|
(c)
|
FPL
|
|
|
$
|
-
|
|
|
|
$
|
20
|
|
|
|
$
|
13
|
|
|
|
$
|
(19
|
)
|
|
$
|
14
|
(c)
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
1,110
|
|
|
|
$
|
1,106
|
|
|
|
$
|
437
|
|
|
|
$
|
(2,262
|
)
|
|
$
|
391
|
(c)
|
FPL
|
|
|
$
|
-
|
|
|
|
$
|
95
|
|
|
|
$
|
2
|
|
|
|
$
|
(19
|
)
|
|
$
|
78
|
(c)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
the effect of the contractual ability to settle contracts under master
netting arrangements and margin cash collateral payments and
receipts.
|
(b)
|
At
FPL Group, approximately $918 million ($836 million at FPL) are invested
in commingled funds whose underlying investments would be Level 1 if those
investments were held directly by FPL Group or FPL.
|
(c)
|
See
Note 3 for a reconciliation of net derivatives to FPL Group's and FPL's
consolidated balance sheets.
|
|
|
December 31,
2008
|
|
|
|
Quoted
Prices
in
Active
Markets
for
Identical
Assets
or
Liabilities
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
Significant
Unobservable
Inputs
(Level
3)
|
|
Netting
(a)
|
|
Total
|
|
|
|
(millions)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
109
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
109
|
|
FPL
|
|
|
$
|
27
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
27
|
|
Other
current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
-
|
|
|
|
$
|
17
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
17
|
|
Special
use funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
536
|
|
|
|
$
|
2,411
|
(b)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
2,947
|
|
FPL
|
|
|
$
|
149
|
|
|
|
$
|
2,009
|
(b)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
2,158
|
|
Other
investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
6
|
|
|
|
$
|
101
|
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
$
|
107
|
|
Net
derivative assets (liabilities):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group
|
|
|
$
|
(55
|
)
|
|
|
$
|
(1,227
|
)
|
|
|
$
|
404
|
|
|
|
$
|
5
|
|
|
$
|
(873
|
)
(c)
|
FPL
|
|
|
$
|
-
|
|
|
|
$
|
(1,108
|
)
|
|
|
$
|
(1
|
)
|
|
|
$
|
-
|
|
|
$
|
(1,109
|
)
(c)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
amounts for margin cash collateral and net option premium payments and
receipts.
|
(b)
|
At
FPL Group, approximately $712 million ($650 million at FPL) are invested
in commingled funds whose underlying investments would be Level 1 if those
investments were held directly by FPL Group or FPL. The
remaining investments are primarily comprised of fixed income securities
including municipal, mortgage-backed, corporate and governmental
bonds.
|
(c)
|
See
Note 3 for a reconciliation of net derivatives to FPL Group's and
FPL's consolidated balance sheets.
|
The
reconciliation of changes in the fair value of derivatives that are based on
significant unobservable inputs is as follows:
|
|
Year
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
FPL
Group
|
|
|
FPL
|
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
value of net derivatives based on significant unobservable inputs at
December 31 of prior year
|
|
$
|
404
|
|
|
$
|
(1
|
)
|
|
$
|
(127
|
)
|
|
$
|
(10
|
)
|
Realized
and unrealized gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in earnings
(a)
|
|
|
555
|
|
|
|
-
|
|
|
|
196
|
|
|
|
(1
|
)
|
Included
in regulatory assets and liabilities
|
|
|
7
|
|
|
|
7
|
|
|
|
5
|
|
|
|
5
|
|
Settlements
and net option premiums
|
|
|
(521
|
)
|
|
|
6
|
|
|
|
152
|
|
|
|
4
|
|
Net
transfers in/out
|
|
|
(81
|
)
|
|
|
(1
|
)
|
|
|
178
|
|
|
|
1
|
|
Fair
value of net derivatives based on significant unobservable inputs at
December 31
|
|
$
|
364
|
|
|
$
|
11
|
|
|
$
|
404
|
|
|
$
|
(1
|
)
|
The
amount of gains (losses) for the period included in earnings attributable
to the change in unrealized gains (losses) relating to derivatives still
held at the reporting date
(a)
|
|
$
|
270
|
|
|
$
|
-
|
|
|
$
|
410
|
|
|
$
|
(1
|
)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Essentially
all realized and unrealized gains (losses) are reflected in operating
revenues in the consolidated statements of
income.
|
5. Financial
Instruments
FPL
Group and FPL adopted new accounting and disclosure provisions related to other
than temporary impairments and the fair value of financial instruments beginning
April 1, 2009. Under the new accounting provisions, an
investment in a debt security is required to be assessed for an other than
temporary impairment based on whether the entity has an intent to sell or more
likely than not will be required to sell the debt security before recovery of
its amortized cost basis. Additionally, if the entity does not expect
to recover the amortized cost of a debt security, an impairment is recognized in
earnings equal to the estimated credit loss. For debt securities held
as of April 1, 2009 for which an other than temporary impairment had been
previously recognized but for which assessment under the new accounting
provisions indicates the impairment is temporary, FPL Group recorded an
adjustment to increase April 1, 2009 retained earnings by approximately $5
million with a corresponding reduction in AOCI.
The
carrying amounts of cash equivalents, notes payable and commercial paper
approximate their fair values. At both December 31, 2009 and
2008, other investments of FPL Group, not included in the table below, included
financial instruments of approximately $39 million, which primarily consist of
notes receivable that are carried at estimated fair value or cost, which
approximates fair value. See Note 10.
The
following estimates of the fair value of financial instruments have been made
primarily using available market information. However, the use of
different market assumptions or methods of valuation could result in different
estimated fair values.
|
|
December 31,
2009
|
|
December 31,
2008
|
|
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
|
|
(millions)
|
|
FPL
Group:
|
|
|
|
Special
use funds
|
|
$
|
3,390
|
(a)
|
$
|
3,390
|
(b)
|
$
|
2,947
|
|
$
|
2,947
|
(b)
|
Other
investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
receivable
|
|
$
|
534
|
|
$
|
556
|
(c)
|
$
|
534
|
|
$
|
524
|
(c)
|
Debt
securities
|
|
$
|
104
|
(d)
|
$
|
104
|
(b)
|
$
|
105
|
(d)
|
$
|
105
|
(b)
|
Equity
securities
|
|
$
|
45
|
|
$
|
105
|
(e)
|
$
|
27
|
|
$
|
43
|
(e)
|
Long-term
debt, including current maturities
|
|
$
|
16,869
|
|
$
|
17,256
|
(f)
|
$
|
15,221
|
|
$
|
15,152
|
(f)
|
Interest
rate swaps - net unrealized losses
|
|
$
|
(17
|
)
|
$
|
(17
|
)
(g)
|
$
|
(78
|
)
|
$
|
(78
|
)
(g)
|
Foreign
currency swaps - net unrealized losses
|
|
$
|
(1
|
)
|
$
|
(1
|
)
(g)
|
$
|
(4
|
)
|
$
|
(4
|
)
(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special
use funds
|
|
$
|
2,408
|
(a)
|
$
|
2,408
|
(b)
|
$
|
2,158
|
|
$
|
2,158
|
(b)
|
Long-term
debt, including current maturities
|
|
$
|
5,836
|
|
$
|
6,055
|
(f)
|
$
|
5,574
|
|
$
|
5,652
|
(f)
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
See
Note 4 for classification by major security type. The
amortized cost of debt and equity securities is $1,638 million and $1,396
million, respectively ($1,344 million and $873 million, respectively, for
FPL).
|
(b)
|
Based
on quoted market prices for these or similar issues.
|
(c)
|
Classified
as held to maturity. Based on market prices provided by
external sources. Additionally, notes receivable bear interest
at variable rates based on an underlying index plus a margin and mature
from 2014 to 2029.
|
(d)
|
Classified
as trading securities. In 2008, approximately $8 million of
current maturities are included in other current assets in FPL Group's
consolidated balance sheet.
|
(e)
|
Modeled
internally.
|
(f)
|
Based
on market prices provided by external sources.
|
(g)
|
Modeled
internally based on market values.
|
Special Use Funds
- The
special use funds consist of FPL's storm fund assets of $123 million and FPL
Group's and FPL's nuclear decommissioning fund assets of $3,267 million and
$2,285 million, respectively, at December 31, 2009. Securities
held in the special use funds consist of equity and debt securities which are
classified as available for sale and are carried at estimated fair value based
on quoted market prices. For FPL's special use funds, consistent with
regulatory treatment, market adjustments, including any other than temporary
impairment losses, result in a corresponding adjustment to the related
regulatory liability accounts. For FPL Group's non-rate regulated
operations, market adjustments result in a corresponding adjustment to OCI,
except for unrealized losses associated with marketable securities considered to
be other than temporary, including any credit losses, which are recognized as a
loss in FPL Group's consolidated statements of income. Debt
securities included in the nuclear decommissioning funds have a weighted-average
maturity at December 31, 2009 of approximately seven years at both FPL
Group and FPL. FPL's storm fund primarily consists of municipal debt
securities with a weighted-average maturity at December 31, 2009 of
approximately three years. The cost of securities sold is determined
using the specific identification method.
The
approximate realized gains and losses and proceeds from the sale of available
for sale securities are as follows:
|
FPL
Group
|
|
FPL
|
|
|
Years
Ended December 31,
|
|
Years
Ended December 31,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2009
|
|
2008
|
|
2007
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized
gains
|
|
$
|
108
|
|
|
$
|
50
|
|
|
$
|
59
|
|
|
$
|
48
|
|
|
$
|
38
|
|
|
$
|
52
|
|
Realized
losses
|
|
$
|
30
|
|
|
$
|
54
|
|
|
$
|
40
|
|
|
$
|
25
|
|
|
$
|
50
|
|
|
$
|
37
|
|
Proceeds
from sale of securities
|
|
$
|
4,592
|
|
|
$
|
2,235
|
|
|
$
|
2,349
|
|
|
$
|
3,270
|
|
|
$
|
1,454
|
|
|
$
|
1,978
|
|
The
unrealized gains on available for sale securities are as follows:
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
securities
|
|
$
|
400
|
|
|
$
|
103
|
|
|
$
|
240
|
|
|
$
|
95
|
|
Debt
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government and municipal bonds
|
|
$
|
14
|
|
|
|
|
|
|
$
|
13
|
|
|
|
|
|
Corporate
debt securities
|
|
|
21
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
Mortgage-backed
securities
|
|
|
22
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
Other
debt securities
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Total
debt securities
|
|
$
|
58
|
|
|
$
|
83
|
|
|
$
|
48
|
|
|
$
|
72
|
|
The
total unrealized losses on available for sale debt securities and the fair value
of available for sale debt securities in an unrealized loss position are as
follows:
|
|
December
31, 2009
|
|
|
|
FPL
Group
(a)
|
|
|
FPL
(a)
|
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
Unrealized
Losses
|
|
|
Fair
Value
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Government and municipal bonds
|
|
$
|
6
|
|
|
$
|
255
|
|
|
$
|
5
|
|
|
$
|
207
|
|
Corporate
debt securities
|
|
$
|
2
|
|
|
$
|
104
|
|
|
$
|
1
|
|
|
$
|
84
|
|
Mortgage-backed
securities
|
|
$
|
4
|
|
|
$
|
225
|
|
|
$
|
3
|
|
|
$
|
184
|
|
Other
debt securities
|
|
$
|
-
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
8
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
FPL
Group had 47 securities in an unrealized loss position for greater than
twelve months, including 18 securities for FPL. The total
unrealized loss on these securities was approximately $3 million and the
fair value was approximately $37 million for FPL Group, including
approximately $2 million of unrealized losses with a fair value of
approximately $25 million for FPL. Consistent with regulatory
treatment for FPL, marketable securities held in special use funds are
classified as available for sale and are carried at market value with
market adjustments, including any other than temporary impairment losses,
resulting in a corresponding adjustment to the related regulatory
liability accounts.
|
Regulations
issued by the FERC and the NRC provide general risk management guidelines to
protect nuclear decommissioning funds and to allow such funds to earn a
reasonable return. The FERC regulations prohibit investments in any
securities of FPL Group or its subsidiaries, affiliates or associates, excluding
investments tied to market indices or mutual funds. Similar
restrictions applicable to the decommissioning funds for NextEra Energy
Resources' nuclear plants are contained in the NRC operating licenses for those
facilities or in NRC regulations applicable to NRC licensees not in
cost-of-service environments. With respect to the decommissioning
fund for NextEra Energy Resources' Seabrook nuclear plant, decommissioning fund
contributions and withdrawals are also regulated by the NDFC pursuant to New
Hampshire law.
The
nuclear decommissioning reserve funds are managed by investment managers who
must comply with the guidelines of FPL Group and FPL and rules of the applicable
regulatory authorities. The funds' assets are invested giving
consideration to taxes, liquidity, risk, diversification and other prudent
investment objectives.
Interest Rate and Foreign Currency
Swaps
- FPL Group and its subsidiaries use a combination of fixed rate
and variable rate debt to manage interest rate exposure. Interest
rate swaps are used to mitigate and adjust interest rate exposure when deemed
appropriate based upon market conditions or when required by financing
agreements. In addition, FPL Group Capital entered into a cross
currency basis swap to hedge against currency movements with respect to both
interest and principal payments on a loan and a cross currency swap to hedge
against currency and interest rate movements with respect to both interest and
principal payments on a loan.
6. Income
Taxes
The
components of income taxes are as follows:
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
Years
Ended December 31,
|
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(millions)
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
(a)
|
|
$
|
(18
|
)
|
|
$
|
(132
|
)
|
|
$
|
(35
|
)
|
|
$
|
63
|
|
|
$
|
117
|
|
|
$
|
98
|
|
Deferred
|
|
|
298
|
|
|
|
557
|
|
|
|
356
|
|
|
|
350
|
|
|
|
274
|
|
|
|
302
|
|
Amortization
of ITCs - FPL
|
|
|
(8
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
|
|
(8
|
)
|
|
|
(15
|
)
|
|
|
(15
|
)
|
Total
federal
|
|
|
272
|
|
|
|
410
|
|
|
|
306
|
|
|
|
405
|
|
|
|
376
|
|
|
|
385
|
|
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
(a)
|
|
|
77
|
|
|
|
29
|
|
|
|
16
|
|
|
|
57
|
|
|
|
34
|
|
|
|
22
|
|
Deferred
|
|
|
(22
|
)
|
|
|
11
|
|
|
|
46
|
|
|
|
11
|
|
|
|
33
|
|
|
|
44
|
|
Total
state
|
|
|
55
|
|
|
|
40
|
|
|
|
62
|
|
|
|
68
|
|
|
|
67
|
|
|
|
66
|
|
Total
income taxes
|
|
$
|
327
|
|
|
$
|
450
|
|
|
$
|
368
|
|
|
$
|
473
|
|
|
$
|
443
|
|
|
$
|
451
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
provision for unrecognized tax
benefits.
|
A
reconciliation between the effective income tax rates and the applicable
statutory rates is as follows:
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
Years
Ended December 31,
|
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statutory
federal income tax rate
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
|
|
35.0
|
%
|
Increases
(reductions) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State
income taxes - net of federal income tax benefit
|
|
|
1.9
|
|
|
|
1.3
|
|
|
|
2.4
|
|
|
|
3.4
|
|
|
|
3.5
|
|
|
|
3.4
|
|
Allowance
for other funds used during construction
|
|
|
(1.0
|
)
|
|
|
(0.6
|
)
|
|
|
(0.6
|
)
|
|
|
(1.5
|
)
|
|
|
(1.1
|
)
|
|
|
(0.8
|
)
|
Amortization
of ITCs - FPL
|
|
|
(0.4
|
)
|
|
|
(0.7
|
)
|
|
|
(0.9
|
)
|
|
|
(0.6
|
)
|
|
|
(1.2
|
)
|
|
|
(1.2
|
)
|
PTCs
and ITCs - NextEra Energy Resources
|
|
|
(13.1
|
)
|
|
|
(12.7
|
)
|
|
|
(13.7
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Convertible
ITCs - NextEra Energy Resources
|
|
|
(4.3
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Manufacturers'
deduction
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(0.1
|
)
|
Amortization
of deferred regulatory credit - income taxes
|
|
|
(0.3
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(0.5
|
)
|
|
|
(0.3
|
)
|
|
|
(0.3
|
)
|
Other
- net
|
|
|
(0.9
|
)
|
|
|
(0.5
|
)
|
|
|
(0.1
|
)
|
|
|
0.5
|
|
|
|
-
|
|
|
|
(0.9
|
)
|
Effective
income tax rate
|
|
|
16.9
|
%
|
|
|
21.6
|
%
|
|
|
21.9
|
%
|
|
|
36.3
|
%
|
|
|
35.9
|
%
|
|
|
35.1
|
%
|
The
income tax effects of temporary differences giving rise to consolidated deferred
income tax liabilities and assets are as follows:
|
FPL
Group
|
|
FPL
|
|
December 31,
|
|
December 31,
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
(millions)
|
Deferred
tax liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Property-related
|
$
|
6,968
|
|
$
|
5,650
|
|
$
|
4,202
|
|
$
|
3,687
|
Investment-related
|
|
-
|
|
|
139
|
|
|
-
|
|
|
-
|
Pension
|
|
457
|
|
|
354
|
|
|
392
|
|
|
373
|
Regulatory
asset - pension and other benefits
|
|
14
|
|
|
49
|
|
|
-
|
|
|
-
|
Deferred
fuel costs
|
|
-
|
|
|
99
|
|
|
-
|
|
|
99
|
Storm
reserve deficiency
|
|
279
|
|
|
312
|
|
|
279
|
|
|
312
|
Other
|
|
674
|
|
|
451
|
|
|
157
|
|
|
199
|
Total
deferred tax liabilities
|
|
8,392
|
|
|
7,054
|
|
|
5,030
|
|
|
4,670
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
tax assets and valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
Decommissioning
reserves
|
|
379
|
|
|
297
|
|
|
313
|
|
|
297
|
Postretirement
benefits
|
|
183
|
|
|
157
|
|
|
133
|
|
|
131
|
Net
operating loss carryforwards
|
|
270
|
(a)
|
|
60
|
|
|
-
|
|
|
-
|
Tax
credit carryforwards
|
|
1,364
|
(b)
|
|
899
|
(b)
|
|
-
|
|
|
-
|
ARO
and accrued asset removal costs
|
|
896
|
|
|
874
|
|
|
811
|
|
|
776
|
Other
|
|
683
|
|
|
605
|
|
|
249
|
|
|
353
|
Valuation
allowance
(c)
|
|
(129
|
)
|
|
(137
|
)
|
|
-
|
|
|
-
|
Net
deferred tax assets
|
|
3,646
|
|
|
2,755
|
|
|
1,506
|
|
|
1,557
|
Net
accumulated deferred income taxes
|
$
|
4,746
|
|
$
|
4,299
|
|
$
|
3,524
|
|
$
|
3,113
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Amount
is presented net of $26 million of tax carryforwards that are available to
offset FPL Group's liability for unrecognized tax
benefits.
|
(b)
|
Amount
is presented net of $58 million and $49 million, respectively, of tax
carryforwards that are available to offset FPL Group's liability for
unrecognized tax benefits.
|
(c)
|
Amount
relates to deferred state tax credits and state operating loss
carryforwards.
|
Deferred
tax assets and liabilities are included in the consolidated balance sheets as
follows:
|
|
FPL
Group
|
|
FPL
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
|
2008
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
current assets
|
|
$
|
128
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Other
current liabilities
|
|
|
14
|
|
|
|
68
|
|
|
|
15
|
|
|
|
8
|
|
Accumulated
deferred income taxes
|
|
|
4,860
|
|
|
|
4,231
|
|
|
|
3,509
|
|
|
|
3,105
|
|
Net
accumulated deferred income taxes
|
|
$
|
4,746
|
|
|
$
|
4,299
|
|
|
$
|
3,524
|
|
|
$
|
3,113
|
|
The
components of FPL Group's deferred tax assets relating to net operating loss
carryforwards and tax credit carryforwards at December 31, 2009 are as
follows:
|
Amount
|
|
Expiration
Dates
|
|
(millions)
|
|
|
|
|
|
|
|
Net
operating loss carryforwards:
|
|
|
|
|
Federal
|
$
|
179
|
(a)
|
2025
- 2029
|
State
|
|
85
|
|
2010
- 2029
|
Foreign
|
|
6
|
|
2027
- 2029
|
Net
operating loss carryforwards
|
$
|
270
|
|
|
|
|
|
|
|
Tax
credit carryforwards:
|
|
|
|
|
Federal
|
$
|
1,203
|
(b)
|
2025
- 2029
|
State
|
|
161
|
|
2010
- 2028
|
Net
tax credit carryforwards
|
$
|
1,364
|
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Amount
is presented net of $26 million of tax carryforwards that are available to
offset FPL Group's liability for unrecognized tax
benefits.
|
(b)
|
Amount
is presented net of $58 million of tax carryforwards that are available to
offset FPL Group's liability for unrecognized tax
benefits.
|
The
majority of the liabilities for unrecognized tax benefits represent tax
positions for which the ultimate deductibility is highly certain but for which
there is uncertainty about the timing of such deductibility. A
disallowance of the shorter deductibility period for these tax positions would
not affect the annual effective income tax rate. Included in the
liabilities for unrecognized tax benefits at December 31, 2009 is
approximately $5 million at FPL Group ($1 million at FPL) that, if disallowed,
could impact the annual effective income tax rate.
FPL
Group recognizes interest income (expense) related to unrecognized tax benefits
(liabilities) in interest income and interest expense, respectively, net of the
amount deferred at FPL. At FPL, the offset to accrued interest
receivable (payable) on income taxes is classified as a regulatory liability
(regulatory asset) which will be amortized to income (expense) over a five-year
period upon settlement in accordance with regulatory treatment. At
December 31, 2009 and 2008, FPL Group accrued approximately $135 million
and $111 million for net interest receivable ($38 million and $23 million for
FPL), respectively. For the years ended December 31, 2009 and
2008, FPL Group recorded $9 million and $10 million of interest, $13 million and
$14 million of which was recognized as interest income in FPL Group's
consolidated statements of income and $(4) million and $(4) million,
respectively, in regulatory liabilities on FPL Group's and FPL's consolidated
balance sheets.
A
reconciliation of unrecognized tax benefits is as follows:
|
|
FPL
Group
|
|
|
FPL
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of year
|
|
$
|
249
|
|
|
$
|
320
|
|
|
$
|
316
|
|
|
$
|
217
|
|
|
$
|
281
|
|
|
$
|
274
|
|
Additions
based on tax positions related to the current year
|
|
|
24
|
|
|
|
14
|
|
|
|
71
|
|
|
|
24
|
|
|
|
13
|
|
|
|
71
|
|
Reductions
based on tax positions related to the current year
|
|
|
-
|
|
|
|
(44
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(44
|
)
|
|
|
-
|
|
Additions
for tax positions of the prior years
|
|
|
26
|
|
|
|
91
|
|
|
|
13
|
|
|
|
26
|
|
|
|
89
|
|
|
|
13
|
|
Reductions
for tax positions of the prior years
|
|
|
(20
|
)
|
|
|
(40
|
)
|
|
|
(80
|
)
|
|
|
(20
|
)
|
|
|
(30
|
)
|
|
|
(77
|
)
|
Reductions
relating to settlements with taxing authorities
|
|
|
-
|
|
|
|
(92
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(92
|
)
|
|
|
-
|
|
Balance
at end of year
|
|
|
279
|
|
|
|
249
|
|
|
|
320
|
|
|
|
247
|
|
|
|
217
|
|
|
|
281
|
|
Tax
carryforwards, deposits and other receivables
|
|
|
(239
|
)
|
|
|
(219
|
)
|
|
|
(249
|
)
|
|
|
(192
|
)
|
|
|
(176
|
)
|
|
|
-
|
|
Balance
at end of year, net
|
|
$
|
40
|
|
|
$
|
30
|
|
|
$
|
71
|
|
|
$
|
55
|
|
|
$
|
41
|
|
|
$
|
281
|
|
FPL
Group and its subsidiaries file income tax returns in the U.S. federal
jurisdiction and various states, the most significant of which is
Florida. FPL Group and FPL are effectively no longer subject to U.S.
federal, state and local examinations by taxing authorities for years before
2003. FPL Group is planning to appeal an adverse court decision
related to FPL Group's and FPL's method for deducting certain repairs related to
years prior to 2000 and the denial of a refund claim related to
ITCs. FPL Group is planning to file refund claims with respect to its
U.S. income tax returns for 2000 through 2002, primarily related to deductions
for repairs and depreciation deductions attributable to an acquired power
plant. FPL Group is also disputing certain adjustments proposed by
the Internal Revenue Service (IRS) to its U.S. income tax returns for 2003
through 2005. These IRS proposed adjustments primarily relate to FPL
Group's and FPL's method for certain deductions for repairs, casualty losses and
capitalizing indirect service costs. Additionally, income tax returns
for 2006, 2007 and 2008 are under examination. As such, the amount of
unrecognized tax benefits and related interest accruals may change within the
next twelve months; however, FPL Group and FPL do not expect these changes to
have a significant impact on FPL Group's or FPL's financial
statements.
7. Comprehensive
Income
The
components of FPL Group's comprehensive income and accumulated other
comprehensive income (loss) are as follows:
|
|
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
|
|
|
Net
Income
|
|
Net
Unrealized
Gains
(Losses)
On
Cash
Flow
Hedges
|
|
Pension
and
Other
Benefits
|
|
Other
|
|
Total
|
|
Comprehensive
Income
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances,
December 31, 2006
|
|
|
|
|
$
|
(25
|
)
|
$
|
98
|
|
$
|
42
|
|
$
|
115
|
|
|
|
|
|
Net
income of FPL Group
|
|
$
|
1,312
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,312
|
|
Net
unrealized gains (losses) on commodity cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized losses (net of $37 tax benefit)
|
|
|
|
|
|
(55
|
)
|
|
-
|
|
|
-
|
|
|
(55
|
)
|
|
|
(55
|
)
|
Reclassification
from OCI to net income (net of $16 tax expense)
|
|
|
|
|
|
23
|
|
|
-
|
|
|
-
|
|
|
23
|
|
|
|
23
|
|
Net
unrealized gains (losses) on interest rate cash flow
hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized losses (net of $13 tax benefit)
|
|
|
|
|
|
(19
|
)
|
|
-
|
|
|
-
|
|
|
(19
|
)
|
|
|
(19
|
)
|
Reclassification
from OCI to net income (net of $2 tax benefit)
|
|
|
|
|
|
(5
|
)
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
|
(5
|
)
|
Net
unrealized gains on available for sale securities (net of $8 tax
expense)
|
|
|
|
|
|
-
|
|
|
-
|
|
|
12
|
|
|
12
|
|
|
|
12
|
|
Defined
benefit pension and other benefit plans (net of $28 tax
expense)
|
|
|
|
|
|
-
|
|
|
45
|
|
|
-
|
|
|
45
|
|
|
|
45
|
|
Balances,
December 31, 2007
|
|
|
|
|
|
(81
|
)
|
|
143
|
|
|
54
|
|
|
116
|
|
|
$
|
1,313
|
|
Net
income of FPL Group
|
|
$
|
1,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,639
|
|
Net
unrealized gains (losses) on commodity cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized gains (net of $31 tax expense)
|
|
|
|
|
|
45
|
|
|
-
|
|
|
-
|
|
|
45
|
|
|
|
45
|
|
Reclassification
from OCI to net income (net of $62 tax expense)
|
|
|
|
|
|
84
|
|
|
-
|
|
|
-
|
|
|
84
|
|
|
|
84
|
|
Net
unrealized gains (losses) on interest rate cash flow
hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized losses (net of $31 tax benefit)
|
|
|
|
|
|
(49
|
)
|
|
-
|
|
|
-
|
|
|
(49
|
)
|
|
|
(49
|
)
|
Reclassification
from OCI to net income (net of $4 tax expense)
|
|
|
|
|
|
6
|
|
|
-
|
|
|
-
|
|
|
6
|
|
|
|
6
|
|
Net
unrealized losses on available for sale securities (net of $30 tax
benefit)
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(46
|
)
|
|
(46
|
)
|
|
|
(46
|
)
|
Reclassification
from AOCI to retained earnings
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
-
|
|
Defined
benefit pension and other benefit plans (net of $104 tax
benefit)
|
|
|
|
|
|
-
|
|
|
(168
|
)
|
|
-
|
|
|
(168
|
)
|
|
|
(167
|
)
|
Balances,
December 31, 2008
|
|
|
|
|
|
5
|
|
|
(25
|
)
|
|
7
|
|
|
(13
|
)
|
|
$
|
1,512
|
|
Net
income of FPL Group
|
|
$
|
1,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,615
|
|
Net
unrealized gains (losses) on commodity cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized gains (net of $78 tax expense)
|
|
|
|
|
|
118
|
|
|
-
|
|
|
-
|
|
|
118
|
|
|
|
118
|
|
Reclassification
from OCI to net income (net of $63 tax benefit)
(a)
|
|
|
|
|
|
(98
|
)
|
|
-
|
|
|
-
|
|
|
(98
|
)
|
|
|
(98
|
)
|
Net
unrealized gains (losses) on interest rate cash flow
hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized gains (net of $10 tax expense)
|
|
|
|
|
|
17
|
|
|
-
|
|
|
-
|
|
|
17
|
|
|
|
17
|
|
Reclassification
from OCI to net income (net of $15 tax expense)
|
|
|
|
|
|
25
|
|
|
-
|
|
|
-
|
|
|
25
|
|
|
|
25
|
|
Net
unrealized gains (losses) on foreign currency cash flow
hedge:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective
portion of net unrealized gains (net of $2 tax expense)
|
|
|
|
|
|
2
|
|
|
-
|
|
|
-
|
|
|
2
|
|
|
|
2
|
|
Reclassification
from AOCI to net income (net of $2 tax benefit)
|
|
|
|
|
|
(2
|
)
|
|
-
|
|
|
-
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Net
unrealized gains (losses) on available for sale
securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gains on securities still held (net of $77 tax
expense)
|
|
|
|
|
|
-
|
|
|
-
|
|
|
119
|
|
|
119
|
|
|
|
119
|
|
Reclassification
from OCI to net income (net of $17 tax benefit)
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(27
|
)
|
|
(27
|
)
|
|
|
(27
|
)
|
Reclassification
from AOCI to retained earnings
|
|
|
|
|
|
-
|
|
|
-
|
|
|
(5
|
)
|
|
(5
|
)
|
|
|
-
|
|
Defined
benefit pension and other benefit plans (net of $14 tax
expense)
|
|
|
|
|
|
-
|
|
|
22
|
|
|
-
|
|
|
22
|
|
|
|
22
|
|
Net
unrealized gains on foreign currency translation (net of $5 tax
expense)
|
|
|
|
|
|
-
|
|
|
-
|
|
|
11
|
|
|
11
|
|
|
|
11
|
|
Balances,
December 31, 2009
|
|
|
|
|
$
|
67
|
(b)
|
$
|
(3
|
)
(c)
|
$
|
105
|
|
$
|
169
|
|
|
$
|
1,802
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
amounts reclassified into earnings due to discontinuance of cash flow
hedges of approximately $3 million (net of $2 million tax benefit) for
which the hedged transactions are no longer probable of
occurring.
|
(b)
|
Approximately
$39 million of gains is expected to be reclassified into earnings within
the next 12 months as either the hedged fuel is consumed, electricity is
sold or interest payments are made. Such amount assumes no
change in fuel prices, power prices or interest rates.
|
(c)
|
Less
than $1 million of prior service benefits and less than $1 million of
transition obligations is expected to be reclassified into earnings within
the next 12 months.
|
8.
Jointly-Owned Electric
Plants
Certain
FPL Group subsidiaries own undivided interests in the jointly-owned facilities
described below, and are entitled to a proportionate share of the output from
those facilities. FPL and NextEra Energy Resources are responsible
for their share of the operating costs, as well as providing their own
financing. Accordingly, each subsidiary includes its proportionate
share of the facilities and related revenues and expenses in the appropriate
balance sheet and statement of income captions. FPL Group's and FPL's
respective shares of direct expenses for these facilities are included in fuel,
purchased power and interchange, O&M expenses, depreciation and amortization
expense and taxes other than income taxes and other on FPL Group's and FPL's
consolidated statements of income.
FPL
Group's and FPL's proportionate ownership interest in jointly-owned facilities
is as follows:
|
December
31, 2009
|
|
Ownership
Interest
|
|
Gross
Investment
(a)
|
|
Accumulated
Depreciation
(a)
|
|
Construction
Work
in
Progress
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
St.
Lucie Unit No. 2
|
85
|
%
|
|
$
|
1,345
|
|
|
$
|
672
|
|
|
$
|
101
|
|
St.
Johns River Power Park units and coal terminal
|
20
|
%
|
|
$
|
391
|
|
|
$
|
218
|
|
|
$
|
1
|
|
Scherer
Unit No. 4
|
76
|
%
|
|
$
|
599
|
|
|
$
|
405
|
|
|
$
|
227
|
|
Transmission
substation assets located in Seabrook, New Hampshire
|
88.23
|
%
|
|
$
|
66
|
|
|
$
|
11
|
|
|
$
|
11
|
|
NextEra
Energy Resources:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Duane
Arnold
|
70
|
%
|
|
$
|
345
|
|
|
$
|
48
|
|
|
$
|
29
|
|
Seabrook
|
88.23
|
%
|
|
$
|
823
|
|
|
$
|
122
|
|
|
$
|
53
|
|
Wyman
Station Unit No. 4
|
84.35
|
%
|
|
$
|
103
|
|
|
$
|
36
|
|
|
$
|
1
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Excludes
nuclear fuel.
|
9.
Variable Interest
Entities
Accounting
guidance requires the consolidation of entities which are determined to be VIEs
when the reporting company determines that it will absorb a majority of the
VIE's expected losses, receive a majority of the VIE's residual returns, or
both. The company that is required to consolidate the VIE is called
the primary beneficiary. Conversely, the reporting company would not
consolidate VIEs in which it has a majority ownership interest when the company
is not considered to be the primary beneficiary. Variable interests
are contractual, ownership or other monetary interests in an entity that change
as the fair value of the entity's net assets, excluding variable interests,
change. An entity is considered to be a VIE when its capital is
insufficient to permit it to finance its activities without additional
subordinated financial support or its equity investors, as a group, lack the
characteristics of having a controlling financial interest. As of
December 31, 2009, FPL Group has two VIEs which it
consolidates.
FPL
- FPL is considered the
primary beneficiary of, and therefore consolidates, a VIE from which it leases
nuclear fuel for its nuclear units. FPL is considered the primary
beneficiary of this VIE because in the case of default by the VIE on its debt,
FPL would be required to purchase the VIE's nuclear fuel and because FPL
guarantees the VIE's debt. For ratemaking purposes, these leases are
treated as operating leases. For financial reporting, the cost of
nuclear fuel is capitalized and amortized to fuel expense on a unit of
production method except for the interest component, which is recorded as
interest expense. These charges, as well as a charge for spent
nuclear fuel, are recovered through the fuel clause. FPL makes
quarterly payments to the lessor for the lease commitments. The
lessor has issued commercial paper to fund the procurement of nuclear fuel and
FPL has provided a $600 million guarantee to support the commercial paper
program. Under certain lease termination circumstances, the
associated debt, which consists primarily of commercial paper (approximately
$425 million and $347 million at December 31, 2009 and 2008, respectively)
would become due. The consolidated assets of the VIE consist
primarily of nuclear fuel, which had a net carrying value of approximately $389
million and $338 million at December 31, 2009 and 2008,
respectively.
FPL is
considered the primary beneficiary of, and therefore consolidates, a VIE that is
a wholly-owned bankruptcy remote special purpose subsidiary that it formed in
2007 for the sole purpose of issuing storm-recovery bonds pursuant to the
securitization provisions of the Florida Statutes and an FPSC financing
order. Four hurricanes in 2005 and three hurricanes in 2004 caused
major damage in parts of FPL's service territory. Storm restoration
costs incurred by FPL during 2005 and 2004 exceeded the amount in FPL's funded
storm and property insurance reserve, resulting in a storm reserve
deficiency. In 2007, the VIE issued $652 million aggregate principal
amount of senior secured bonds (storm-recovery bonds), primarily for the
after-tax equivalent of the total of FPL's unrecovered balance of the 2004 storm
restoration costs, the 2005 storm restoration costs and approximately $200
million to reestablish FPL's storm and property insurance
reserve. See Note 12.
In
connection with this financing, net proceeds, after debt issuance costs, to the
VIE (approximately $644 million) were used to acquire the storm-recovery
property, which includes the right to impose, collect and receive a
storm-recovery charge from all customers receiving electric transmission or
distribution service from FPL under rate schedules approved by the FPSC or under
special contracts, certain other rights and interests that arise under the
financing order issued by the FPSC and certain other collateral pledged by the
VIE that issued the bonds. The storm-recovery bonds are payable only
from and secured by the storm-recovery property. FPL, as the
servicer, collects storm-recovery charges on behalf of the VIE through a
surcharge to retail customers and remits them to the trustee under the indenture
pursuant to which the storm-recovery bonds were issued for payment of fees and
expenses and payment of principal and interest on the storm-recovery
bonds. The revenues from the storm-recovery bonds surcharge and a
2004 storm damage surcharge through which FPL had been recovering underrecovered
2004 storm restoration costs prior to the issuance of these storm-recovery bonds
are included in operating revenues on FPL Group's and FPL's consolidated
statements of income. For the years ended December 31, 2009,
2008 and 2007, both the amount billed to retail customers related to the 2004
storm damage surcharge and/or the storm-recovery bonds surcharge amounted to
approximately $91 million, $97 million and $94 million,
respectively. The VIE is consolidated for financial reporting
purposes; however, the storm-recovery bonds do not constitute a debt, liability
or other legal obligation of, or interest in, FPL or any of its affiliates other
than the VIE that issued the storm-recovery bonds. The assets of the
VIE that issued the storm-recovery bonds, including the storm-recovery property,
are not available to pay creditors of FPL or any of its affiliates other than
the VIE that issued the storm-recovery bonds. The consolidated assets
of the VIE were approximately $588 million and $628 million at December 31,
2009 and 2008, respectively, and consisted primarily of storm-recovery property,
which is included in securitized storm-recovery costs on FPL Group's and FPL's
consolidated balance sheets.
In
connection with this financing, the net proceeds to FPL from the sale of the
storm-recovery property were used primarily to reimburse FPL for its estimated
net of tax storm reserve deficiency as of May 31, 2007 (approximately $517
million) and provide for a storm and property insurance reserve fund of
approximately $127 million net of tax. Securities held in the storm
and property insurance reserve fund are carried at market value with market
adjustments resulting in a corresponding adjustment to the storm and property
insurance reserve. Fund earnings, net of taxes, are reinvested in the
fund. The tax effects of amounts not yet recognized for tax purposes
are included in accumulated deferred income taxes. The storm and
property insurance reserve fund is included in special use funds on FPL Group's
and FPL's consolidated balance sheets and was approximately $123 million at both
December 31, 2009 and 2008, respectively. Upon the issuance of
the storm-recovery bonds, the storm reserve deficiency was reclassified to
securitized storm-recovery costs on FPL Group's and FPL's consolidated balance
sheets. As storm-recovery charges are billed to customers, the
securitized storm-recovery costs are amortized, the amount of which is included
in storm cost amortization on FPL Group's and FPL's consolidated statements of
income.
The
storm and property insurance reserve of approximately $200 million that was
reestablished in the FPSC financing order is not reflected in FPL Group's and
FPL's consolidated balance sheets as of December 31, 2009 or 2008 because
the associated regulatory asset does not meet the specific recognition criteria
under regulatory accounting guidance. As a result, the storm and
property insurance reserve will be recognized as a regulatory liability as the
storm-recovery charges are billed to customers and charged to storm cost
amortization on FPL Group's and FPL's consolidated statements of
income. Although FPL Group's and FPL's consolidated balance sheets as
of December 31, 2009 reflect a storm and property insurance reserve of
approximately $23 million (included in regulatory liabilities - other on FPL
Group's and FPL's consolidated balance sheets), FPL has the capacity to absorb
up to approximately $198 million in future prudently incurred storm restoration
costs without seeking recovery through a rate adjustment from the
FPSC.
FPL
identified one potential VIE, which is considered a qualifying facility as
defined by the Public Utility Regulatory Policies Act of 1978, as amended
(PURPA). PURPA requires FPL to purchase the electricity output of the
project. FPL entered into a PPA in 1990 with this 250 megawatt (mw)
coal-fired qualifying facility to purchase substantially all of the project's
electrical output over a substantial portion of its estimated useful
life. FPL absorbs a portion of the project’s variability related to
changes in the market price of coal through the price it pays per mwh (energy
payment). After making exhaustive efforts, FPL was unable to obtain
the information from the project necessary to determine whether the project is a
VIE or whether FPL is the primary beneficiary of the project. The PPA
with the project contains no provision which legally obligates the project to
release this information to FPL. The energy payments paid by FPL will
fluctuate as coal prices change. This fluctuation does not expose FPL
to losses since the energy payments paid by FPL to the project are passed on to
FPL's customers through the fuel clause as approved by the
FPSC. Notwithstanding the fact that FPL's energy payments are
recovered through the fuel clause, if the project was determined to be a VIE,
the absorption of some of the project's fuel price variability might cause FPL
to be considered the primary beneficiary. During the years ended
December 31, 2009, 2008 and 2007, FPL purchased 1,604,735 mwh, 1,725,798
mwh and 1,694,810 mwh, respectively, from the project at a total cost of
approximately $173 million, $158 million and $153 million,
respectively. FPL will continue to make exhaustive efforts to obtain
the necessary information from the potential VIE in order to determine if it is
a VIE and, if so, whether FPL is the primary beneficiary.
Additionally,
FPL entered into a PPA in 1995 with a 330 mw coal-fired qualifying facility to
purchase substantially all of the project's electrical output over a substantial
portion of its estimated useful life. FPL absorbs a portion of the
project’s variability related to changes in the market price of coal through the
energy payment. After making exhaustive efforts, FPL determined that
the project is a VIE, however, FPL was unable to obtain the information
necessary to determine if FPL is the project’s primary
beneficiary. The PPA with the project contains no provisions which
legally obligate the project to release this information to FPL. The
energy payments paid by FPL will fluctuate as coal prices
changes. This fluctuation does not expose FPL to losses since the
energy payments paid by FPL to the project are passed on to FPL’s customers
through the fuel clause as approved by the FPSC. During the years
ended December 31, 2009, 2008 and 2007, FPL purchased 1,485,662 mwh,
2,317,345 mwh and 2,320,991 mwh, respectively, from the project at a total cost
of approximately $205 million, $227 million and $220 million,
respectively. FPL will continue to make exhaustive efforts to obtain
the necessary information from the project in order to determine if FPL is the
primary beneficiary.
FPL Group
- In 2004, a trust
created by FPL Group sold $300 million of 5 7/8% preferred trust securities to
the public and $9 million of common trust securities to FPL
Group. The trust is considered a VIE because FPL Group's investment
through the common trust securities is not considered equity at
risk. The proceeds from the sale of the preferred and common trust
securities were used to buy 5 7/8% junior subordinated debentures maturing in
March 2044 from FPL Group Capital. The trust exists only to issue its
preferred trust securities and common trust securities and to hold the junior
subordinated debentures of FPL Group Capital as trust assets. FPL
Group has fully and unconditionally guaranteed the preferred trust securities
and the junior subordinated debentures. Since FPL Group, as the
common security holder, is not considered to have equity at risk and will
therefore not absorb any variability of the trust, FPL Group is not the primary
beneficiary and does not consolidate the trust. FPL Group includes
the junior subordinated debentures issued by FPL Group Capital on its
consolidated balance sheets. The junior subordinated debentures are
FPL Group's maximum exposure to loss. See Note 12.
10. Investments
in Partnerships and Joint Ventures
NextEra Energy Resources
- NextEra Energy Resources
has non-controlling non-majority owned interests in various partnerships and
joint ventures, essentially all of which are electricity
producers. At December 31, 2009 and 2008, NextEra Energy
Resources' investment in partnerships and joint ventures totaled approximately
$173 million and $189 million, respectively, which is included in other
investments on FPL Group's consolidated balance sheets. NextEra
Energy Resources' interest in these partnerships and joint ventures range from
approximately 5.5% to 50%. At December 31, 2009, the principal
operating entities included in NextEra Energy Resources' investments in
partnerships and joint ventures were Northeast Energy, LP, Luz Solar Partners
Ltd., V, Mojave 16/17/18 LLC, Luz Solar Partners Ltd., III, and Luz Solar
Partners Ltd., IV and in 2008 also included TPC Windfarms LLC.
Summarized
combined information for these principal entities is as follows:
|
|
2009
|
|
|
2008
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
74
|
|
|
$
|
145
|
|
Total
assets
|
|
$
|
716
|
|
|
$
|
841
|
|
Total
liabilities
|
|
$
|
353
|
|
|
$
|
435
|
|
Partners'/members'
equity
|
|
$
|
363
|
|
|
$
|
407
|
|
|
|
|
|
|
|
|
|
|
NextEra
Energy Resources' share of underlying equity in the principal
entities
|
|
$
|
179
|
|
|
$
|
202
|
|
Difference
between investment carrying amount and underlying equity in net assets
(a)
|
|
|
(14
|
)
|
|
|
(18
|
)
|
NextEra
Energy Resources' investment carrying amount for the principal
entities
|
|
$
|
165
|
|
|
$
|
184
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
The
majority of the difference between the investment carrying amount and the
underlying equity in net assets is being amortized over the remaining life
of the investee's assets.
|
Certain
subsidiaries of NextEra Energy Resources provide services to the partnerships
and joint ventures, including operations and maintenance and business management
services. FPL Group's operating revenues for the years ended
December 31, 2009, 2008 and 2007 include approximately $21 million, $21
million and $20 million, respectively, related to such services. The
net receivables at December 31, 2009 and 2008, for these services, as well
as for affiliate energy commodity transactions, payroll and other payments made
on behalf of these investees, were approximately $29 million and $33 million,
respectively, and are included in other current assets on FPL Group's
consolidated balance sheets.
Notes
receivable (long- and short-term) include approximately $16 million and $24
million at December 31, 2009 and 2008, respectively, due from partnerships
and joint ventures in which NextEra Energy Resources has an ownership
interest. Approximately $6 million of the notes receivable balance at
December 31, 2009 mature in 2011 and bear interest at a fixed rate of
8.5%. The remaining $10 million mature in 2014 and bear interest at a
variable rate which averaged approximately 10.4% in
2009. Approximately $11 million of the notes receivable balance at
December 31, 2008 mature in 2011 and bear interest at a fixed rate of
8.5%. The remaining $13 million mature in 2014 and bear interest at a
variable rate which averaged approximately 13.4% in 2008. Interest
income related to notes receivable totaled approximately $2 million, $4 million
and $4 million for the years ended December 31, 2009, 2008 and 2007,
respectively, and is included in interest income in FPL Group's consolidated
statements of income. Interest receivable associated with these notes
as of December 31, 2009 and 2008 was not material.
Sale of Differential Membership
Interests
- In December 2007, an indirect wholly-owned subsidiary of
NextEra Energy Resources sold its Class B membership interests in a subsidiary
that owns five wind facilities totaling 598 mw of wind generation for
approximately $705 million. In exchange for the cash received, the
holders of the Class B membership interests will receive a portion of the
economic attributes of the facilities, including tax attributes, for a variable
period. Recognition of the proceeds from the sale of the differential
membership interests was deferred and is recorded in other liabilities on FPL
Group's consolidated balance sheets. The deferred amount totaled $700
million and $706 million at December 31, 2009 and 2008, respectively, and
is being recognized as an adjustment to taxes other than income taxes and other
in FPL Group's consolidated statements of income as the members receive their
portion of the economic attributes. FPL Group continues to operate
and manage the wind facilities, and consolidates the entity that owns the wind
facilities.
11.
Common and Preferred
Stock
Earnings Per Share
- The
reconciliation of FPL Group's basic and diluted earnings per share of common
stock is as follows:
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
(millions,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
Numerator
- net income
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares outstanding - basic
|
|
|
404.4
|
|
|
|
400.1
|
|
|
|
397.7
|
|
Restricted
stock, performance share awards, options, warrants and equity units
(a)
|
|
|
2.8
|
|
|
|
2.6
|
|
|
|
2.9
|
|
Weighted-average
number of common shares outstanding - assuming dilution
|
|
|
407.2
|
|
|
|
402.7
|
|
|
|
400.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
3.99
|
|
|
$
|
4.10
|
|
|
$
|
3.30
|
|
Assuming
dilution
|
|
$
|
3.97
|
|
|
$
|
4.07
|
|
|
$
|
3.27
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Performance
share awards are included in diluted weighted-average number of common
shares outstanding based upon what would be issued if the end of the
reporting period was the end of the term of the
award. Restricted stock, performance share awards, options,
warrants and equity units are included in diluted weighted-average number
of common shares outstanding by applying the treasury stock
method.
|
Restricted
stock, performance share awards and common shares issuable upon the exercise of
stock options which were not included in the denominator above due to their
antidilutive effect were approximately 0.8 million, 0.5 million and 0.2 million
for the years ended December 31, 2009, 2008 and 2007,
respectively.
On
January 1, 2009, FPL Group adopted accounting guidance which required companies
to treat unvested stock-based payment awards that have non-forfeitable rights to
dividends or dividend equivalents as participating
securities. Therefore, these participating securities had to be
included in the computation of earnings per share, pursuant to the two-class
method described in the accounting guidance. The effect of the
retrospective application of the new accounting guidance was a reduction of less
than $0.01 per share on FPL Group's earnings per share, assuming dilution, for
the years ended December 31, 2008 and 2007.
Common Stock Dividend
Restrictions
- FPL Group's charter does not limit the dividends that may
be paid on its common stock. FPL's mortgage securing FPL's first
mortgage bonds contains provisions which, under certain conditions, restrict the
payment of dividends and other distributions to FPL Group. These
restrictions do not currently limit FPL's ability to pay dividends to FPL
Group.
Employee Stock Ownership Plan
- The employee retirement savings plans of FPL Group include a leveraged ESOP
feature. Shares of common stock held by the trust for the employee
retirement savings plans (Trust) are used to provide all or a portion of the
employers' matching contributions. Dividends received on all shares,
along with cash contributions from the employers, are used to pay principal and
interest on an ESOP loan held by a subsidiary of FPL Group
Capital. Dividends on shares allocated to employee accounts and used
by the Trust for debt service are replaced with shares of common stock, at
prevailing market prices, in an equivalent amount. For purposes of
computing basic and fully diluted earnings per share, ESOP shares that have been
committed to be released are considered outstanding.
ESOP-related
compensation expense of approximately $42 million, $40 million and $35 million
in 2009, 2008 and 2007, respectively, was recognized based on the fair value of
shares allocated to employee accounts during the period. Interest
income on the ESOP loan is eliminated in consolidation. ESOP-related
unearned compensation included as a reduction of common shareholders' equity at
December 31, 2009 was approximately $85 million, representing unallocated
shares at the original issue price. The fair value of the
ESOP-related unearned compensation account using the closing price of FPL Group
common stock at December 31, 2009 was approximately $308
million.
Stock-Based Compensation
-
FPL Group accounts for stock-based payment transactions based on grant-date fair
value. Net income for the years ended December 31, 2009, 2008
and 2007 includes approximately $51 million, $47 million and $39 million,
respectively, of compensation costs and $20 million, $18 million and $15
million, respectively, of income tax benefits related to stock-based
compensation arrangements. Compensation cost capitalized as part of
the cost of an asset for the years ended December 31, 2009 and 2008 was
approximately $3 million and $2 million, respectively. No
compensation cost was capitalized in the year ended December 31,
2007. As of December 31, 2009, there were approximately $67
million of unrecognized compensation costs related to nonvested/nonexercisable
stock-based compensation arrangements. These costs are expected to be
recognized over a weighted-average period of 1.5 years. For awards
granted subsequent to December 31, 2005, compensation costs for awards with
graded vesting are recognized on a straight-line basis over the requisite
service period for the entire award. For awards granted prior to that
date, compensation costs for awards with graded vesting are recognized using the
graded vesting attribution method.
At
December 31, 2009, approximately 26 million shares of common stock were
authorized and approximately 13 million were available for awards (including
outstanding awards) to officers, employees and non-employee directors of FPL
Group and its subsidiaries under FPL Group's amended and restated long-term
incentive plan and non-employee directors stock plans. FPL Group
satisfies restricted stock and performance share awards by issuing new shares of
its common stock or by purchasing shares of its common stock in the open
market. FPL Group satisfies stock option exercises by issuing new
shares of its common stock and generally grants most of its stock options in the
first quarter of each year.
Restricted
Stock and Performance Share Awards
- Restricted stock
typically vests within three years after the date of grant and is subject to,
among other things, restrictions on transferability prior to
vesting. The fair value of restricted stock is measured based upon
the closing market price of FPL Group common stock as of the date of
grant. Performance share awards are typically payable at the end of a
three-year performance period if the specified performance criteria are
met. The fair value of performance share awards is estimated based
upon the closing market price of FPL Group common stock as of the date of grant
less the present value of expected dividends, multiplied by an estimated
performance multiple determined on the basis of historical experience, which is
subsequently trued up based on actual performance.
The
activity in restricted stock and performance share awards for the year ended
December 31, 2009 was as follows:
|
Shares
|
|
Weighted-Average
Grant
Date
Fair
Value
Per
Share
|
|
|
|
|
|
|
|
Restricted
Stock:
|
|
|
|
|
|
|
Nonvested
balance, January 1, 2009
|
956,697
|
|
|
$
|
57.51
|
|
Granted
|
586,695
|
|
|
$
|
51.50
|
|
Vested
|
(345,695
|
)
|
|
$
|
53.50
|
|
Forfeited
|
(54,415
|
)
|
|
$
|
58.97
|
|
Nonvested
balance, December 31, 2009
|
1,143,282
|
|
|
$
|
55.55
|
|
|
|
|
|
|
|
|
Performance
Share Awards:
|
|
|
|
|
|
|
Nonvested
balance, January 1, 2009
|
1,044,486
|
|
|
$
|
50.31
|
|
Granted
|
717,840
|
|
|
$
|
42.66
|
|
Vested
|
(544,051
|
)
|
|
$
|
37.99
|
|
Forfeited
|
(60,932
|
)
|
|
$
|
53.24
|
|
Nonvested
balance, December 31, 2009
|
1,157,343
|
|
|
$
|
51.20
|
|
The
weighted-average grant date fair value per share of restricted stock granted for
the years ended December 31, 2008 and 2007 was $62.66 and $61.08,
respectively. The weighted-average grant date fair value per share of
performance share awards granted for the years ended December 31, 2008 and
2007 was $51.48 and $45.04, respectively.
The
total fair value of restricted stock and performance share awards vested was $46
million, $64 million and $51 million for the years ended December 31, 2009,
2008 and 2007, respectively.
Options
- Options typically vest within three years after the date of grant and have a
maximum term of ten years. The exercise price of each option granted
equals the closing market price of FPL Group common stock on the date of
grant. The fair value of the options is estimated on the date of the
grant using the Black-Scholes option-pricing model and based on the following
assumptions:
|
2009
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
Expected
volatility
(a)
|
19.02
- 20.23
|
%
|
|
17.33
|
%
|
|
16.60
|
%
|
Expected
dividends
|
3.35
- 3.71
|
%
|
|
2.75
|
%
|
|
2.54
|
%
|
Expected
term (years)
|
6
|
(b)
|
|
6
|
(c)
|
|
6
|
(c)
|
Risk-free
rate
|
2.68
- 2.97
|
%
|
|
3.24
|
%
|
|
4.64
|
%
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Based
on historical experience.
|
(b)
|
Based
on historical exercise and post-vesting cancellation experience adjusted
for outstanding awards.
|
(c)
|
FPL
Group used the "simplified" method to calculate the expected
term.
|
Option
activity for the year ended December 31, 2009 was as follows:
|
Shares
Underlying
Options
|
|
Weighted-
Average
Exercise
Price
Per
Share
|
|
Weighted-
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate
Intrinsic
Value
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2009
|
5,581,214
|
|
$
|
33.71
|
|
|
|
|
|
|
|
|
|
Granted
|
521,314
|
|
$
|
51.59
|
|
|
|
|
|
|
|
|
|
Exercised
|
(358,265
|
)
|
$
|
28.84
|
|
|
|
|
|
|
|
|
|
Forfeited
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Expired
|
(5,000
|
)
|
$
|
28.38
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
5,739,263
|
|
$
|
35.65
|
|
|
|
4.0
|
|
|
$
|
104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
December 31, 2009
|
4,952,965
|
|
$
|
32.50
|
|
|
|
4.3
|
|
|
$
|
91
|
|
The
weighted-average grant date fair value of options granted was $6.79, $9.90 and
$10.96 per share for the years ended December 31, 2009, 2008 and 2007,
respectively. The total intrinsic value of stock options exercised
was approximately $9 million, $17 million and $26 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
Cash
received from option exercises was approximately $10 million, $14 million and
$23 million for the years ended December 31, 2009, 2008 and 2007,
respectively. The tax benefits realized from options exercised were
approximately $3 million, $6 million and $6 million for the years ended
December 31, 2009, 2008 and 2007, respectively.
Continuous Offering of FPL Group
Common Stock
-
In January 2009,
FPL Group entered into an agreement under which FPL Group may offer and sell,
from time to time, FPL Group common stock having a gross sales price of up to
$400 million. During 2009, FPL Group received gross proceeds through
the sale and issuance of common stock under this agreement of approximately $160
million consisting of 2,890,000 shares at an average price of
$55.53.
Preferred Stock
- FPL Group's
charter authorizes the issuance of 100 million shares of serial preferred stock,
$0.01 par value, none of which are outstanding. FPL's charter
authorizes the issuance of 10,414,100 shares of preferred stock, $100 par value;
5 million shares of subordinated preferred stock, no par value and 5 million
shares of preferred stock, no par value, none of which are
outstanding.
12. Debt
Long-term
debt consists of the following:
|
|
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(millions)
|
|
FPL:
|
|
|
|
|
|
|
First
mortgage bonds:
|
|
|
|
|
|
|
Maturing
2013 through 2017 - 4.85% to 5.55%
|
|
$
|
700
|
|
|
$
|
925
|
|
Maturing
2033 through 2039 - 4.95% to 6.20%
|
|
|
3,940
|
|
|
|
3,440
|
|
Storm-recovery
bonds
-
maturing 2013 through 2021 - 5.0440% to 5.2555%
(a)
|
|
|
572
|
|
|
|
611
|
|
Pollution
control, solid waste disposal and industrial development revenue bonds -
maturing 2020 through 2029 - variable, 0.2% and 1.3% weighted-average
interest rates, respectively
(b)
|
|
|
633
|
|
|
|
633
|
|
Other
long-term debt - maturing 2011 through 2040 - 4.000% to
5.250%
|
|
|
24
|
|
|
|
-
|
|
Unamortized
discount
|
|
|
(33
|
)
|
|
|
(35
|
)
|
Total
long-term debt of FPL
|
|
|
5,836
|
|
|
|
5,574
|
|
Less
current maturities of long-term debt
|
|
|
42
|
|
|
|
263
|
|
Long-term
debt of FPL, excluding current maturities
|
|
|
5,794
|
|
|
|
5,311
|
|
FPL
Group Capital:
|
|
|
|
|
|
|
|
|
Debentures
- maturing 2011 through 2019 - 5.35% to 7 7/8%
|
|
|
1,850
|
|
|
|
1,975
|
|
Debentures
- maturing 2011 through 2012 - variable, 0.9% and 2.8% weighted-average
interest rate, respectively
(c)
|
|
|
450
|
|
|
|
250
|
|
Debentures,
related to FPL Group's equity units - maturing 2014 -
3.60%
|
|
|
350
|
|
|
|
-
|
|
Junior
Subordinated Debentures - maturing 2044 through 2069 - 5 7/8% to
8.75%
|
|
|
2,353
|
|
|
|
2,009
|
|
Senior
secured bonds - maturing 2030 - 7.500%
(d)
|
|
|
500
|
|
|
|
-
|
|
Term
loans - maturing 2010 through 2011 - variable, 1.0% and 1.5%
weighted-average interest rate, respectively
(c)
|
|
|
910
|
|
|
|
1,070
|
|
Japanese
yen denominated term loan - maturing 2011 - variable, 3.3% and 3.7%
weighted-average interest rate, respectively
(c)
|
|
|
287
|
|
|
|
138
|
|
Fair
value swap
|
|
|
14
|
|
|
|
21
|
|
Unamortized
premium (discount)
|
|
|
(3
|
)
|
|
|
1
|
|
Total
long-term debt of FPL Group Capital
|
|
|
6,711
|
|
|
|
5,464
|
|
Less
current maturities of long-term debt
|
|
|
200
|
|
|
|
835
|
|
Long-term
debt of FPL Group Capital, excluding current maturities
|
|
|
6,511
|
|
|
|
4,629
|
|
NextEra
Energy Resources:
|
|
|
|
|
|
|
|
|
Senior
secured limited recourse bonds - maturing 2017 through 2024 - 5.608% to
7.52%
|
|
|
815
|
|
|
|
903
|
|
Senior
secured limited recourse notes - maturing 2013 through 2037 - 6.31% to
7.59%
|
|
|
1,673
|
|
|
|
1,702
|
|
Other
long-term debt - maturing 2010 through 2023 - primarily limited recourse
and variable, 2.4% and 4.1% weighted-average interest rates, respectively
(c)
|
|
|
1,833
|
|
|
|
1,449
|
|
Canadian
dollar denominated term loan - variable, 2.3%
(c)
|
|
|
-
|
|
|
|
128
|
|
Unamortized
premium
|
|
|
1
|
|
|
|
-
|
|
Total
long-term debt of NextEra Energy Resources
|
|
|
4,322
|
|
|
|
4,182
|
|
Less
current maturities of long-term debt
|
|
|
327
|
|
|
|
289
|
|
Long-term
debt of NextEra Energy Resources, excluding current
maturities
|
|
|
3,995
|
|
|
|
3,893
|
|
Total
long-term debt
|
|
$
|
16,300
|
|
|
$
|
13,833
|
|
¾¾¾¾¾¾¾¾¾¾¾¾¾
(a)
|
Principal
on the storm-recovery bonds is due on the final maturity date (the date by
which the principal must be repaid to prevent a default) for each tranche,
however, it began being paid semiannually and sequentially on February 1,
2008, when the first semiannual interest payment became
due.
|
(b)
|
Tax
exempt bonds that permit individual bond holders to tender the bonds for
purchase at any time prior to maturity. In the event bonds are
tendered for purchase, they would be remarketed by a designated
remarketing agent in accordance with the related indenture. If the
remarketing is unsuccessful, FPL would be required to purchase the tax
exempt bonds. As of December 31, 2009, all tax exempt
bonds tendered for purchase have been successfully remarketed. FPL's
bank revolving lines of credit are available to support the purchase of
tax exempt bonds.
|
(c)
|
Variable
rate is based on an underlying index plus a margin. Interest
rate swap agreements have been entered into for some of these debt
issuances.
|
(d)
|
Collateralized
by a third-party note receivable held by a wholly-owned subsidiary of FPL
Group Capital. See Note
5.
|
Minimum
annual maturities of long
-
term debt for FPL Group are
approximately $569 million, $2,239 million, $627 million, $1,136 million and
$676 million for 2010, 2011, 2012, 2013 and 2014, respectively. The
respective amounts for FPL are approximately $42 million, $46 million, $50
million, $453 million and $56 million.
At
December 31, 2009, commercial paper borrowings had a weighted-average
interest rate of 0.19% (0.19% for FPL), and at December 31, 2008,
commercial paper and short-term borrowings had a weighted-average interest rate
of 2.10% (0.92% for FPL). Available lines of credit aggregated
approximately $6.4 billion ($3.9 billion for FPL Group Capital and $2.5 billion
for FPL) at December 31, 2009 and were available to support FPL's and FPL
Group Capital's commercial paper programs. These facilities provide
for the issuance of letters of credit of up to approximately $6.4
billion. The issuance of letters of credit is subject to the
aggregate commitment under the applicable facility. While no direct
borrowings were outstanding at December 31, 2009, letters of credit
totaling $492 million and $3 million were outstanding under the FPL Group
Capital and FPL credit facilities, respectively.
FPL
Group has guaranteed certain payment obligations of FPL Group Capital, including
most of those under FPL Group Capital's debt, including all of its debentures
and commercial paper issuances, as well as most of its
guarantees. FPL Group Capital has guaranteed certain debt and other
obligations of NextEra Energy Resources and its subsidiaries.
In 2008,
FPL entered into a reclaimed water agreement with Palm Beach County, Florida
(PBC) to provide FPL's WCEC with reclaimed water for cooling purposes beginning
in January 2011. Under the reclaimed water agreement, FPL is to
construct a reclaimed water system, including modifications to an existing
treatment plant and a water pipeline, that PBC will legally own and
operate. The reclaimed water agreement also requires PBC to issue
bonds for the purpose of paying the costs associated with the construction of
the reclaimed water system. In 2009, PBC issued approximately $68
million principal amount of Palm Beach County, Florida Water and Sewer Revenue
Bonds. Under the reclaimed water agreement, FPL will pay PBC an
operating fee for the reclaimed water delivered which will be used by PBC to,
among other things, service the principal of, and interest on, the
bonds. The portion of the operating fee related to PBC's servicing
principal of, and interest on, the bonds will be paid by FPL, beginning October
2011, until final maturity of the bonds. FPL does not have a direct
obligation to the bondholders; however, if FPL or PBC were to terminate the
reclaimed water agreement, FPL would be obligated to continue to pay the portion
of the operating fee intended to reimburse PBC for costs related to issuance of
the bonds, including amounts to be used by PBC to service the principal of, and
interest on, the bonds. In the event of a default by PBC under the
reclaimed water agreement, FPL would have certain rights, including, among other
things, the right to appoint a third-party contractor to repair, and restore
operations of, the reclaimed water treatment plant, and, in the event of a
termination of the reclaimed water agreement by FPL relating to a PBC default,
the right to assume ownership of the reclaimed water pipeline from
PBC. For financial reporting purposes, FPL is considered the owner of
the reclaimed water system and FPL and FPL Group are recording electric utility
plant in service and other property as costs are incurred and long-term debt as
costs are eligible for reimbursement by PBC to FPL (see table
above).
In 2009,
FPL Group sold $350 million of equity units (initially consisting of Corporate
Units). Each equity unit has a stated amount of $50 and consists of a
purchase contract issued by FPL Group and, initially, a 1/20, or 5%, undivided
beneficial ownership interest in $1,000 principal amount of a Series C Debenture
due June 1, 2014 issued by FPL Group Capital (see table
above). Total annual distributions on the equity units will be at the
rate of 8.375%, consisting of interest on the debentures (3.60% per year) and
payments under the stock purchase contracts (4.775% per year). The
interest rate on the debentures is expected to be reset on or after
December 1, 2011. Each stock purchase contract will require the
holder to purchase FPL Group common stock for cash, which can be satisfied from
proceeds raised from remarketing the FPL Group Capital debentures, based on a
price per share range of $55.67 to $66.80 (subject to adjustment under certain
circumstances) no later than the settlement date of June 1,
2012. The undivided beneficial ownership interest in the FPL Group
Capital debenture that is a component of each Corporate Unit is pledged to FPL
Group to secure the holder’s obligation to purchase common stock under the
related purchase contract. If a successful remarketing does not occur
on or before the third business day prior to the settlement date, and a holder
has not notified FPL Group of its intention to settle the stock purchase
contract with cash, FPL Group would exercise its rights as a secured party in
the debentures to satisfy in full the holders’ obligations to purchase FPL Group
common stock under the related purchase contracts on the settlement
date. The debentures are fully and unconditionally guaranteed by FPL
Group.
Prior to
the issuance of FPL Group's common stock, the purchase contracts will be
reflected in FPL Group's diluted earnings per share calculations using the
treasury stock method. Under this method, the number of shares of FPL
Group common stock used in calculating diluted earnings per share is deemed to
be increased by the excess, if any, of the number of shares that would be issued
upon settlement of the purchase contracts over the number of shares that could
be purchased by FPL Group in the market, at the average market price during the
period, using the proceeds receivable upon settlement.
In
February 2010, FPL issued $500 million principal amount of 5.69% first mortgage
bonds maturing in 2040.
13. Asset
Retirement Obligations
FPL's
ARO relates primarily to the nuclear decommissioning obligation of its nuclear
units. FPL's AROs other than nuclear decommissioning are not
significant. The accounting provisions result in timing differences
in the recognition of legal asset retirement costs for financial reporting
purposes and the method the FPSC allows FPL to recover in
rates. NextEra Energy Resources' ARO relates primarily to the nuclear
decommissioning obligation of its nuclear plants and obligations for the
dismantlement of its wind facilities located on leased property. See
Note 1 - Decommissioning of Nuclear Plants, Dismantlements of Plants and
Other Accrued Asset Removal Costs.
A
rollforward of FPL Group's and FPL's ARO is as follows:
|
FPL
|
|
NextEra
Energy Resources
|
|
FPL
Group
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
$
|
1,653
|
|
|
$
|
504
|
|
|
$
|
2,157
|
|
Liabilities
incurred
|
|
-
|
|
|
|
6
|
|
|
|
6
|
|
Accretion
expense
|
|
91
|
|
|
|
33
|
|
|
|
124
|
|
Liabilities
settled
|
|
-
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
Revision
in estimated cash flows - net
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(2
|
)
|
Balance,
December 31, 2008
|
|
1,743
|
|
|
|
540
|
|
|
|
2,283
|
|
Liabilities
incurred
|
|
-
|
|
|
|
4
|
|
|
|
4
|
|
Accretion
expense
|
|
96
|
|
|
|
36
|
|
|
|
132
|
|
Revision
in estimated cash flows - net
|
|
(6
|
)
|
|
|
5
|
|
|
|
(1
|
)
|
Balance,
December 31, 2009
|
$
|
1,833
|
|
|
$
|
585
|
|
|
$
|
2,418
|
|
Restricted
funds for the payment of future expenditures to decommission FPL Group's and
FPL's nuclear units included in special use funds on FPL Group's and FPL's
consolidated balance sheets are as follows (see Note 5):
|
|
FPL
|
|
NextEra
Energy Resources
|
|
|
FPL
Group
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2009
|
|
$
|
2,285
|
|
|
$
|
982
|
|
|
$
|
3,267
|
|
Balance,
December 31, 2008
|
|
$
|
2,035
|
|
|
$
|
789
|
|
|
$
|
2,824
|
|
FPL
Group and FPL have identified but not recognized ARO liabilities related to
electric transmission and distribution and telecommunications assets resulting
from easements over property not owned by FPL Group or FPL. In
addition, FPL Group has identified but not recognized ARO liabilities related to
the majority of NextEra Energy Resources' hydro facilities. These
easements are generally perpetual and, along with the hydro facilities, only
require retirement action upon abandonment or cessation of use of the property
or facility for its specified purpose. The ARO liability is not
estimable for such easements and hydro facilities as FPL Group and FPL intend to
use these properties and facilities indefinitely. In the event FPL
Group and FPL decide to abandon or cease the use of a particular easement and/or
hydro facility, an ARO liability would be recorded at that
time.
14. Commitments
and Contingencies
Commitments
- FPL Group and
its subsidiaries have made commitments in connection with a portion of their
projected capital expenditures. Capital expenditures at FPL include,
among other things, the cost for construction or acquisition of additional
facilities and equipment to meet customer demand, as well as capital
improvements to and maintenance of existing facilities. At NextEra
Energy Resources, capital expenditures include, among other things, the cost,
including capitalized interest, for construction of wind and solar projects and
the procurement of nuclear fuel. FPL FiberNet, LLC's (FPL FiberNet)
capital expenditures primarily include costs to meet customer-specific
requirements and maintain its fiber-optic network.
At
December 31, 2009, estimated planned capital expenditures for 2010 through
2014 were estimated as follows:
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Total
|
|
|
|
(millions)
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Generation:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
(b)
(c)
|
|
$
|
1,120
|
|
|
$
|
985
|
|
|
$
|
305
|
|
|
$
|
5
|
|
|
$
|
-
|
|
|
$
|
2,415
|
|
Existing
|
|
|
530
|
|
|
|
490
|
|
|
|
390
|
|
|
|
320
|
|
|
|
330
|
|
|
|
2,060
|
|
Transmission
and distribution
|
|
|
440
|
|
|
|
460
|
|
|
|
480
|
|
|
|
480
|
|
|
|
480
|
|
|
|
2,340
|
|
Nuclear
fuel
|
|
|
105
|
|
|
|
200
|
|
|
|
175
|
|
|
|
250
|
|
|
|
205
|
|
|
|
935
|
|
General
and other
|
|
|
260
|
|
|
|
270
|
|
|
|
270
|
|
|
|
260
|
|
|
|
130
|
|
|
|
1,190
|
|
Total
(d)
|
|
$
|
2,455
|
|
|
$
|
2,405
|
|
|
$
|
1,620
|
|
|
$
|
1,315
|
|
|
$
|
1,145
|
|
|
$
|
8,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NextEra
Energy Resources:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind
(e)
|
|
$
|
1,895
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
1,940
|
|
Nuclear
(f)
|
|
|
560
|
|
|
|
325
|
|
|
|
315
|
|
|
|
255
|
|
|
|
235
|
|
|
|
1,690
|
|
Natural
gas
|
|
|
75
|
|
|
|
75
|
|
|
|
70
|
|
|
|
50
|
|
|
|
20
|
|
|
|
290
|
|
Solar
|
|
|
195
|
|
|
|
440
|
|
|
|
485
|
|
|
|
95
|
|
|
|
-
|
|
|
|
1,215
|
|
Other
|
|
|
65
|
|
|
|
60
|
|
|
|
45
|
|
|
|
45
|
|
|
|
50
|
|
|
|
265
|
|
Total
|
|
$
|
2,790
|
|
|
$
|
915
|
|
|
$
|
930
|
|
|
$
|
455
|
|
|
$
|
310
|
|
|
$
|
5,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
FiberNet
|
|
$
|
30
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
110
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
AFUDC of approximately $47 million, $27 million and $4 million in 2010 to
2012, respectively.
|
(b)
|
Includes
land, generating structures, transmission interconnection and integration
and licensing.
|
(c)
|
Includes
pre-construction costs and carrying charges (equal to a pretax AFUDC rate)
on construction costs recoverable through the capacity clause of
approximately $147 million, $390 million and $37 million in 2010 to 2012,
respectively.
|
(d)
|
Excludes
capital expenditures of approximately $685 million in 2010, $1,310 million
in 2011, $2,505 million in 2012, $2,605 million in 2013 and $1,805 million
in 2014 for the following: (1) construction costs for the two
additional nuclear units at FPL's Turkey Point site beyond what is
required to receive an NRC license for each unit, (2) modernization of the
Cape Canaveral and Riviera power plants and (3) other infrastructure
projects. See Note 1 - Revenue and Rates.
|
(e)
|
Includes
capital expenditures for new wind projects that have been identified and
related transmission. NextEra Energy Resources expects to add
new wind generation of approximately 1,000 mw in 2010 and 1,000 mw to
1,500 mw in each of 2011 and 2012, subject to, among other things,
continued public policy support, support for the construction and
availability of sufficient transmission facilities and capacity, continued
market demand, supply chain expansion and access to capital at reasonable
cost and on reasonable terms. The cost of the planned wind
additions for 2011 and 2012 is estimated to be approximately $2.2 billion
to $3.3 billion in each year, which is not included in the table
above.
|
(f)
|
Includes
nuclear fuel.
|
FPL
Group has guaranteed certain payment obligations of FPL Group Capital, including
most payment obligations under FPL Group Capital's debt and
guarantees. Additionally, at December 31, 2009, subsidiaries of
FPL Group, other than FPL, in the normal course of business, have guaranteed
certain debt service and fuel payments of non-consolidated entities of NextEra
Energy Resources. The terms of the guarantees are equal to the terms
of the related agreements/contracts, with remaining terms ranging from less than
two years to nine years. The maximum potential amount of future
payments that could be required under these guarantees at December 31, 2009
was approximately $54 million. At December 31, 2009, FPL Group
did not have any liabilities recorded for these guarantees. In
certain instances, FPL Group can seek recourse from third parties for amounts
paid under the guarantees. At December 31, 2009, the fair value
of these guarantees was not material.
Contracts
- In addition to
the estimated planned capital expenditures included in the table in Commitments
above, FPL has commitments under long-term purchased power and fuel
contracts. FPL is obligated under take-or-pay purchased power
contracts with JEA and with subsidiaries of The Southern Company (Southern
subsidiaries) to pay for approximately 1,300 mw of power annually through
mid-2010, approximately 1,330 mw annually from mid-2010 to mid-2015 and 375 mw
annually thereafter through 2021, and one of the Southern subsidiaries'
contracts is subject to minimum quantities. FPL also has various firm
pay-for-performance contracts to purchase approximately 700 mw from certain
cogenerators and small power producers (qualifying facilities) with expiration
dates ranging from March 2010 through 2032. The purchased power
contracts provide for capacity and energy payments. Energy payments
are based on the actual power taken under these contracts. Capacity
payments for the pay-for-performance contracts are subject to the qualifying
facilities meeting certain contract conditions. FPL has one agreement
with an electricity supplier to purchase approximately 155 mw of power with an
expiration date of May 2012. In general, the agreement requires FPL
to make a capacity payment and supply the fuel consumed by the plant under the
contract. FPL has contracts with expiration dates through 2032 for
the purchase and transportation of natural gas and coal, and storage of natural
gas.
NextEra
Energy Resources has entered into several contracts primarily for the purchase
of wind turbines and towers, solar reflectors, steam generators and heat
collection elements and related construction activities, as well as for the
supply, conversion, enrichment and fabrication of nuclear fuel, with expiration
dates ranging from March 2010 through 2022, approximately $2.1 billion of which
is included in the estimated planned capital expenditures table in Commitments
above. In addition, NextEra Energy Resources has contracts primarily
for the purchase, transportation and storage of natural gas and firm
transmission service with expiration dates ranging from March 2010 through
2033.
The
required capacity and/or minimum payments under these contracts as of
December 31, 2009 were estimated as follows:
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
Thereafter
|
|
FPL:
|
|
(millions)
|
|
Capacity
payments:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
JEA
and Southern subsidiaries
(b)
|
|
$
|
230
|
|
|
$
|
215
|
|
|
$
|
215
|
|
|
$
|
215
|
|
|
$
|
195
|
|
|
$
|
365
|
|
Qualifying
facilities
(b)
|
|
$
|
300
|
|
|
$
|
270
|
|
|
$
|
290
|
|
|
$
|
270
|
|
|
$
|
270
|
|
|
$
|
2,900
|
|
Other
electricity suppliers
(b)
|
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Minimum
payments, at projected prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Southern
subsidiaries - energy
(b)
|
|
$
|
40
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Natural
gas, including transportation and storage
(c)
|
|
$
|
2,405
|
|
|
$
|
1,570
|
|
|
$
|
550
|
|
|
$
|
510
|
|
|
$
|
505
|
|
|
$
|
3,820
|
|
Oil
|
|
$
|
-
|
|
|
$
|
60
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Coal
(c)
|
|
$
|
70
|
|
|
$
|
25
|
|
|
$
|
10
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NextEra
Energy Resources
(d)
|
|
$
|
1,710
|
|
|
$
|
220
|
|
|
$
|
225
|
|
|
$
|
80
|
|
|
$
|
60
|
|
|
$
|
795
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Capacity
payments under these contracts, the majority of which are recoverable
through the capacity clause, totaled approximately $603 million, $584
million and $578 million for the years ended December 31, 2009, 2008 and
2007, respectively.
|
(b)
|
Energy
payments under these contracts, which are recoverable through the fuel
clause, totaled approximately $439 million, $510 million and $447 million
for the years ended December 31, 2009, 2008 and 2007,
respectively.
|
(c)
|
Recoverable
through the fuel clause.
|
(d)
|
Includes
termination payments primarily associated with wind turbine contracts
beyond 2010.
|
In
addition, FPL has entered into several long-term agreements for storage capacity
and transportation of natural gas from facilities that have not yet started
construction or, if started, have not yet completed
construction. These agreements range from 15 to 25 years in length
and contain firm commitments by FPL totaling up to approximately $175 million
annually or $4.3 billion over the terms of the agreements. These firm
commitments are contingent upon the occurrence of certain events, including
completion of construction of the facilities in 2011.
Insurance
- Liability
for accidents at nuclear power plants is governed by the Price-Anderson Act,
which limits the liability of nuclear reactor owners to the amount of insurance
available from both private sources and an industry retrospective payment
plan. In accordance with this Act, FPL Group maintains $375 million
of private liability insurance per site, which is the maximum obtainable, and
participates in a secondary financial protection system, which provides up to
$12.6 billion of liability insurance coverage per incident at any nuclear
reactor in the United States. Under the secondary financial
protection system, FPL Group is subject to retrospective assessments of up to
$940 million ($470 million for FPL), plus any applicable taxes, per incident at
any nuclear reactor in the United States, payable at a rate not to exceed $140
million ($70 million for FPL) per incident per year. FPL Group and
FPL are contractually entitled to recover a proportionate share of such
assessments from the owners of minority interests in Seabrook, Duane Arnold and
St. Lucie Unit No. 2, which approximates $14 million, $35 million and $18
million, plus any applicable taxes, per incident, respectively.
FPL
Group participates in nuclear insurance mutual companies that provide $2.75
billion of limited insurance coverage per occurrence per site for property
damage, decontamination and premature decommissioning risks at its nuclear
plants. The proceeds from such insurance, however, must first be used
for reactor stabilization and site decontamination before they can be used for
plant repair. FPL Group also participates in an insurance program
that provides limited coverage for replacement power costs if a nuclear plant is
out of service for an extended period of time because of an
accident. In the event of an accident at one of FPL Group's or
another participating insured's nuclear plants, FPL Group could be assessed up
to $175 million ($102 million for FPL), plus any applicable taxes, in
retrospective premiums. FPL Group and FPL are contractually entitled
to recover a proportionate share of such assessments from the owners of minority
interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which
approximates $2 million, $4 million and $4 million, plus any applicable taxes,
respectively.
Due to
the high cost and limited coverage available from third-party insurers, FPL does
not have insurance coverage for a substantial portion of its transmission and
distribution property and FPL Group has no insurance coverage for FPL FiberNet's
fiber-optic cable located throughout Florida. Should FPL's future
storm restoration costs exceed the reserve amount established through the
issuance of storm-recovery bonds, FPL may recover storm restoration costs,
subject to prudence review by the FPSC, either through securitization provisions
pursuant to Florida law or through surcharges approved by the FPSC.
In the
event of a loss, the amount of insurance available might not be adequate to
cover property damage and other expenses incurred. Uninsured losses
and other expenses, to the extent not recovered from customers in the case of
FPL, would be borne by FPL Group and FPL and could have a material adverse
effect on FPL Group's and FPL's financial condition and results of
operations.
Legal Proceedings
- In
November 1999, the Attorney General of the United States, on behalf of the U.S.
Environmental Protection Agency (EPA), brought an action in the U.S. District
Court for the Northern District of Georgia against Georgia Power Company and
other subsidiaries of The Southern Company for certain alleged violations of the
Prevention of Significant Deterioration (PSD) provisions and the New Source
Performance Standards (NSPS) of the Clean Air Act. In May 2001, the
EPA amended its complaint to allege, among other things, that Georgia Power
Company constructed and is continuing to operate Scherer Unit No. 4, in
which FPL owns a 76% interest, without obtaining a PSD permit, without complying
with NSPS requirements, and without applying best available control technology
for nitrogen oxides, sulfur dioxides and particulate matter as required by the
Clean Air Act. It also alleges that unspecified major modifications
have been made at Scherer Unit No. 4 that require its compliance with the
aforementioned Clean Air Act provisions. The EPA seeks injunctive
relief requiring the installation of best available control technology and civil
penalties of up to $25,000 per day for each violation from an unspecified date
after June 1, 1975 through January 30, 1997. The EPA has
made revisions to its civil penalty rule such that the maximum penalty is
$27,500 per day for each violation from January 31, 1997 through
March 15, 2004, $32,500 per day for each violation from March 16, 2004
through January 12, 2009 and $37,500 per day for each violation
thereafter. Georgia Power Company has answered the amended complaint,
asserting that it has complied with all requirements of the Clean Air Act,
denying the plaintiff's allegations of liability, denying that the plaintiff is
entitled to any of the relief that it seeks and raising various other
defenses. In June 2001, a federal district court stayed discovery and
administratively closed the case and the EPA has not yet moved to reopen the
case. In April 2007, the U.S. Supreme Court in a separate unrelated
case rejected an argument that a "major modification" occurs at a plant only
when there is a resulting increase in the hourly rate of air
emissions. Georgia Power Company has made a similar argument in
defense of its case, but has other factual and legal defenses that are
unaffected by the Supreme Court's decision.
In
February 2009, Florida Municipal Power Agency (FMPA) filed a petition for review
with the U.S. Court of Appeals for the District of Columbia (DC Circuit) asking
the DC Circuit to reverse and remand orders of the FERC denying FMPA's request
for certain credits for transmission facilities owned by FMPA
members. This matter arose from a 1993 FPL filing of a comprehensive
restructuring of its then-existing tariff structure. All issues in
this case have been closed by the FERC. If FMPA is successful in its
petition, any reduction in FPL's network service rates also would apply
effective January 1, 2004 to Seminole Electric Cooperative Inc. (Seminole),
FPL's other network customer. FPL's position, which was approved by
the FERC, was to reduce its current network service rates by $0.04 per kilowatt
(kw) per month, which resulted in FPL issuing refunds of approximately $4
million to FMPA and $2 million to Seminole in March 2008. FMPA's
position is that FPL's rates should be reduced by an additional $0.20 per kw per
month, which, if upheld, would result in an additional refund obligation to FMPA
of approximately $27 million, and approximately $17 million to Seminole, at
December 31, 2009.
In 1995
and 1996, FPL Group, through an indirect subsidiary, purchased from Adelphia
Communications Corporation (Adelphia) 1,091,524 shares of Adelphia common stock
and 20,000 shares of Adelphia preferred stock (convertible into 2,358,490 shares
of Adelphia common stock) for an aggregate price of approximately
$35,900,000. On January 29, 1999, Adelphia repurchased all of
these shares for $149,213,130 in cash. In June 2004, Adelphia,
Adelphia Cablevision, L.L.C. and the Official Committee of Unsecured Creditors
of Adelphia filed a complaint against FPL Group and its indirect subsidiary in
the U.S. Bankruptcy Court, Southern District of New York. The
complaint alleges that the repurchase of these shares by Adelphia was a
fraudulent transfer, in that at the time of the transaction Adelphia (i) was
insolvent or was rendered insolvent, (ii) did not receive reasonably equivalent
value in exchange for the cash it paid, and (iii) was engaged or about to engage
in a business or transaction for which any property remaining with Adelphia had
unreasonably small capital. The complaint seeks the recovery for the
benefit of Adelphia's bankruptcy estate of the cash paid for the repurchased
shares, plus interest. FPL Group has filed an answer to the
complaint. FPL Group believes that the complaint is without merit
because, among other reasons, Adelphia will be unable to demonstrate that (i)
Adelphia's repurchase of shares from FPL Group, which repurchase was at the
market value for those shares, was not for reasonably equivalent value, (ii)
Adelphia was insolvent at the time of the repurchase, or (iii) the repurchase
left Adelphia with unreasonably small capital. The case is in
discovery and has been scheduled for trial in June 2011.
In
October 2004, TXU Portfolio Management Company (TXU) served FPL Energy
Pecos Wind I, LP, FPL Energy Pecos Wind I GP, LLC, FPL Energy Pecos Wind II, LP,
FPL Energy Pecos Wind II GP, LLC and Indian Mesa Wind Farm, LP (NextEra Energy
Resources Affiliates) as defendants in a civil action filed in the District
Court in Dallas County, Texas. FPL Energy, LLC, now known as NextEra
Energy Resources, was added as a defendant in 2005. The petition
alleged that the NextEra Energy Resources Affiliates had a contractual
obligation to produce and sell to TXU a minimum quantity of renewable energy
credits each year and that the NextEra Energy Resources Affiliates failed to
meet this obligation. The plaintiff asserted claims for breach of
contract and declaratory judgment and sought damages of approximately $34
million. The NextEra Energy Resources Affiliates filed their answer
and counterclaim in 2004, denying the allegations. The counterclaim,
as amended, asserted claims for conversion, breach of fiduciary duty, breach of
warranty, conspiracy, breach of contract and fraud and sought termination of the
contract and damages. Following a jury trial in 2007, among other
findings, both TXU and the NextEra Energy Resources Affiliates were found to
have breached the contract. In August 2008, the judge issued a final
judgment pursuant to which the contract is not terminated and neither party will
recover any damages. In November 2008, TXU appealed the final
judgment to the Fifth District Court of Appeals in Dallas, Texas.
FPL
Group and FPL are vigorously defending, and believe that they or their
affiliates have meritorious defenses to, the lawsuits described
above. In addition to the legal proceedings discussed above, FPL
Group and its subsidiaries, including FPL, are involved in other legal and
regulatory proceedings, actions and claims in the ordinary course of their
businesses. Generating plants in which FPL Group or FPL have an
ownership interest are also involved in legal and regulatory proceedings,
actions and claims, the liabilities from which, if any, would be shared by FPL
Group or FPL. In the event that FPL Group and FPL, or their
affiliates, do not prevail in the lawsuits described above or these other legal
and regulatory proceedings, actions and claims, there may be a material adverse
effect on their financial statements. While management is unable to
predict with certainty the outcome of the lawsuits described above or these
other legal and regulatory proceedings, actions and claims, based on current
knowledge it is not expected that their ultimate resolution, individually or
collectively, will have a material adverse effect on the financial statements of
FPL Group or FPL.
15. Segment
Information
FPL
Group's reportable segments include FPL, a rate-regulated utility, and NextEra
Energy Resources, a competitive energy business. Corporate and Other
represents other business activities, other segments that are not separately
reportable and eliminating entries. FPL Group's operating revenues
derived from the sale of electricity represented approximately 98%, 96% and 98%
of FPL Group's operating revenues for the years ended December 31, 2009,
2008 and 2007. Less than 1% of operating revenues were from foreign
sources for each of the three years ended December 31, 2009, 2008 and
2007. At December 31, 2009 and 2008, less than 1% of long-lived
assets were located in foreign countries.
FPL
Group's segment information is as follows:
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
FPL
|
|
|
NextEra
Energy
Resources
(a)
|
|
|
Corp.
and
Other
|
|
|
Total
|
|
|
FPL
|
|
|
NextEra
Energy
Resources
(a)
|
|
|
Corp.
and
Other
|
|
|
Total
|
|
|
FPL
|
|
|
NextEra
Energy
Resources
(a)
|
|
|
Corp.
and
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
11,491
|
|
|
$
|
3,997
|
|
|
$
|
155
|
|
|
$
|
15,643
|
|
|
$
|
11,649
|
|
|
$
|
4,570
|
|
|
$
|
191
|
|
|
$
|
16,410
|
|
|
$
|
11,622
|
|
|
$
|
3,474
|
|
|
$
|
167
|
|
|
$
|
15,263
|
|
Operating
expenses
|
|
$
|
9,910
|
|
|
$
|
2,984
|
|
|
$
|
155
|
|
|
$
|
13,049
|
|
|
$
|
10,120
|
|
|
$
|
3,275
|
|
|
$
|
190
|
|
|
$
|
13,585
|
|
|
$
|
10,059
|
|
|
$
|
2,753
|
|
|
$
|
168
|
|
|
$
|
12,980
|
|
Interest
expense
|
|
$
|
318
|
|
|
$
|
354
|
|
|
$
|
177
|
|
|
$
|
849
|
|
|
$
|
334
|
|
|
$
|
311
|
|
|
$
|
168
|
|
|
$
|
813
|
|
|
$
|
304
|
|
|
$
|
312
|
|
|
$
|
146
|
|
|
$
|
762
|
|
Interest
income
|
|
$
|
1
|
|
|
$
|
23
|
|
|
$
|
54
|
|
|
$
|
78
|
|
|
$
|
11
|
|
|
$
|
27
|
|
|
$
|
34
|
|
|
$
|
72
|
|
|
$
|
17
|
|
|
$
|
40
|
|
|
$
|
32
|
|
|
$
|
89
|
|
Depreciation
and amortization
|
|
$
|
1,097
|
|
|
$
|
651
|
|
|
$
|
17
|
|
|
$
|
1,765
|
|
|
$
|
860
|
|
|
$
|
565
|
|
|
$
|
17
|
|
|
$
|
1,442
|
|
|
$
|
846
|
|
|
$
|
473
|
|
|
$
|
16
|
|
|
$
|
1,335
|
|
Equity
in earnings of equity method investees
|
|
$
|
-
|
|
|
$
|
52
|
|
|
$
|
-
|
|
|
$
|
52
|
|
|
$
|
-
|
|
|
$
|
93
|
|
|
$
|
-
|
|
|
$
|
93
|
|
|
$
|
-
|
|
|
$
|
68
|
|
|
$
|
-
|
|
|
$
|
68
|
|
Income
tax expense (benefit)
(b)
|
|
$
|
473
|
|
|
$
|
(102
|
)
|
|
$
|
(44
|
)
|
|
$
|
327
|
|
|
$
|
443
|
|
|
$
|
80
|
|
|
$
|
(73
|
)
|
|
$
|
450
|
|
|
$
|
451
|
|
|
$
|
(35
|
)
|
|
$
|
(48
|
)
|
|
$
|
368
|
|
Net
income (loss)
|
|
$
|
831
|
|
|
$
|
849
|
|
|
$
|
(65
|
)
|
|
$
|
1,615
|
|
|
$
|
789
|
|
|
$
|
915
|
|
|
$
|
(65
|
)
|
|
$
|
1,639
|
|
|
$
|
836
|
|
|
$
|
540
|
|
|
$
|
(64
|
)
|
|
$
|
1,312
|
|
Capital
expenditures, independent power investments and nuclear fuel
purchases
|
|
$
|
2,717
|
|
|
$
|
3,235
|
|
|
$
|
54
|
|
|
$
|
6,006
|
|
|
$
|
2,367
|
|
|
$
|
2,829
|
|
|
$
|
40
|
|
|
$
|
5,236
|
|
|
$
|
2,007
|
|
|
$
|
2,981
|
|
|
$
|
31
|
|
|
$
|
5,019
|
|
Property,
plant and equipment
|
|
$
|
30,982
|
|
|
$
|
18,844
|
|
|
$
|
343
|
|
|
$
|
50,169
|
|
|
$
|
28,972
|
|
|
$
|
16,268
|
|
|
$
|
288
|
|
|
$
|
45,528
|
|
|
$
|
27,251
|
|
|
$
|
13,534
|
|
|
$
|
255
|
|
|
$
|
41,040
|
|
Accumulated
depreciation and amortization
|
|
$
|
10,578
|
|
|
$
|
3,341
|
|
|
$
|
172
|
|
|
$
|
14,091
|
|
|
$
|
10,189
|
|
|
$
|
2,771
|
|
|
$
|
157
|
|
|
$
|
13,117
|
|
|
$
|
10,081
|
|
|
$
|
2,167
|
|
|
$
|
140
|
|
|
$
|
12,388
|
|
Total
assets
|
|
$
|
26,812
|
|
|
$
|
20,136
|
|
|
$
|
1,510
|
|
|
$
|
48,458
|
|
|
$
|
26,175
|
|
|
$
|
17,157
|
|
|
$
|
1,489
|
|
|
$
|
44,821
|
|
|
$
|
24,044
|
|
|
$
|
14,505
|
|
|
$
|
1,574
|
|
|
$
|
40,123
|
|
Investment
in equity method investees
|
|
$
|
-
|
|
|
$
|
173
|
|
|
$
|
10
|
|
|
$
|
183
|
|
|
$
|
-
|
|
|
$
|
189
|
|
|
$
|
9
|
|
|
$
|
198
|
|
|
$
|
-
|
|
|
$
|
216
|
|
|
$
|
9
|
|
|
$
|
225
|
|
¾¾¾¾¾¾¾¾¾¾¾¾
(a)
|
NextEra
Energy Resources' interest expense is based on a deemed capital structure
of 50% debt for operating projects and 100% debt for projects under
construction. For these purposes, the deferred credit
associated with differential membership interests sold by a NextEra Energy
Resources subsidiary in December 2007 is included with
debt. Residual non-utility interest expense is included in
Corporate and Other.
|
(b)
|
NextEra
Energy Resources' tax expense (benefit) includes PTCs that were recognized
based on its tax sharing agreement with FPL Group. See Note 1 -
Income Taxes.
|
16. Summarized
Financial Information of FPL Group Capital
FPL
Group Capital, a 100% owned subsidiary of FPL Group, provides funding for and
holds ownership interest in FPL Group's operating subsidiaries other than
FPL. Most of FPL Group Capital's debt, including its debentures, and
payment guarantees are fully and unconditionally guaranteed by FPL
Group. Condensed consolidating financial information is as
follows:
Condensed
Consolidating Statements of Income
|
|
Year
Ended
December 31,
2009
|
|
|
Year
Ended
December 31,
2008
|
|
|
Year
Ended
December 31,
2007
|
|
|
|
FPL
Group
(Guaran-
tor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
Group
(Guaran-
tor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
Group
(Guaran-
tor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
-
|
|
|
$
|
4,164
|
|
|
$
|
11,479
|
|
|
$
|
15,643
|
|
|
$
|
-
|
|
|
$
|
4,770
|
|
|
$
|
11,640
|
|
|
$
|
16,410
|
|
|
$
|
-
|
|
|
$
|
3,646
|
|
|
$
|
11,617
|
|
|
$
|
15,263
|
|
Operating
expenses
|
|
|
-
|
|
|
|
(3,151
|
)
|
|
|
(9,898
|
)
|
|
|
(13,049
|
)
|
|
|
-
|
|
|
|
(3,474
|
)
|
|
|
(10,111
|
)
|
|
|
(13,585
|
)
|
|
|
-
|
|
|
|
(2,926
|
)
|
|
|
(10,054
|
)
|
|
|
(12,980
|
)
|
Interest
expense
|
|
|
(17
|
)
|
|
|
(531
|
)
|
|
|
(301
|
)
|
|
|
(849
|
)
|
|
|
(18
|
)
|
|
|
(479
|
)
|
|
|
(316
|
)
|
|
|
(813
|
)
|
|
|
(19
|
)
|
|
|
(458
|
)
|
|
|
(285
|
)
|
|
|
(762
|
)
|
Other
income (deductions) - net
|
|
|
1,632
|
|
|
|
160
|
|
|
|
(1,595
|
)
|
|
|
197
|
|
|
|
1,663
|
|
|
|
44
|
|
|
|
(1,630
|
)
|
|
|
77
|
|
|
|
1,322
|
|
|
|
133
|
|
|
|
(1,296
|
)
|
|
|
159
|
|
Income
(loss) before income taxes
|
|
|
1,615
|
|
|
|
642
|
|
|
|
(315
|
)
|
|
|
1,942
|
|
|
|
1,645
|
|
|
|
861
|
|
|
|
(417
|
)
|
|
|
2,089
|
|
|
|
1,303
|
|
|
|
395
|
|
|
|
(18
|
)
|
|
|
1,680
|
|
Income
tax expense (benefit)
|
|
|
-
|
|
|
|
(145
|
)
|
|
|
472
|
|
|
|
327
|
|
|
|
6
|
|
|
|
2
|
|
|
|
442
|
|
|
|
450
|
|
|
|
(9
|
)
|
|
|
(75
|
)
|
|
|
452
|
|
|
|
368
|
|
Net
income (loss)
|
|
$
|
1,615
|
|
|
$
|
787
|
|
|
$
|
(787
|
)
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
859
|
|
|
$
|
(859
|
)
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
|
$
|
470
|
|
|
$
|
(470
|
)
|
|
$
|
1,312
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
FPL and consolidating adjustments.
|
Condensed
Consolidating Balance Sheets
|
|
December 31,
2009
|
|
|
December 31,
2008
|
|
|
|
FPL
Group
(Guaran-
tor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
Group
(Guaran-
tor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
|
(millions)
|
|
PROPERTY,
PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
utility plant in service and other property
|
|
$
|
2
|
|
|
$
|
19,185
|
|
|
$
|
30,982
|
|
|
$
|
50,169
|
|
|
$
|
2
|
|
|
$
|
16,554
|
|
|
$
|
28,972
|
|
|
$
|
45,528
|
|
Less
accumulated depreciation and amortization
|
|
|
-
|
|
|
|
(3,513
|
)
|
|
|
(10,578
|
)
|
|
|
(14,091
|
)
|
|
|
-
|
|
|
|
(2,928
|
)
|
|
|
(10,189
|
)
|
|
|
(13,117
|
)
|
Total
property, plant and equipment - net
|
|
|
2
|
|
|
|
15,672
|
|
|
|
20,404
|
|
|
|
36,078
|
|
|
|
2
|
|
|
|
13,626
|
|
|
|
18,783
|
|
|
|
32,411
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
-
|
|
|
|
156
|
|
|
|
82
|
|
|
|
238
|
|
|
|
-
|
|
|
|
414
|
|
|
|
121
|
|
|
|
535
|
|
Receivables
|
|
|
453
|
|
|
|
1,247
|
|
|
|
547
|
|
|
|
2,247
|
|
|
|
339
|
|
|
|
948
|
|
|
|
420
|
|
|
|
1,707
|
|
Other
|
|
|
4
|
|
|
|
1,258
|
|
|
|
590
|
|
|
|
1,852
|
|
|
|
19
|
|
|
|
1,016
|
|
|
|
2,115
|
|
|
|
3,150
|
|
Total
current assets
|
|
|
457
|
|
|
|
2,661
|
|
|
|
1,219
|
|
|
|
4,337
|
|
|
|
358
|
|
|
|
2,378
|
|
|
|
2,656
|
|
|
|
5,392
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in subsidiaries
|
|
|
12,785
|
|
|
|
-
|
|
|
|
(12,785
|
)
|
|
|
-
|
|
|
|
11,511
|
|
|
|
-
|
|
|
|
(11,511
|
)
|
|
|
-
|
|
Other
|
|
|
557
|
|
|
|
3,257
|
|
|
|
4,229
|
|
|
|
8,043
|
|
|
|
251
|
|
|
|
2,695
|
|
|
|
4,072
|
|
|
|
7,018
|
|
Total
other assets
|
|
|
13,342
|
|
|
|
3,257
|
|
|
|
(8,556
|
)
|
|
|
8,043
|
|
|
|
11,762
|
|
|
|
2,695
|
|
|
|
(7,439
|
)
|
|
|
7,018
|
|
TOTAL
ASSETS
|
|
$
|
13,801
|
|
|
$
|
21,590
|
|
|
$
|
13,067
|
|
|
$
|
48,458
|
|
|
$
|
12,122
|
|
|
$
|
18,699
|
|
|
$
|
14,000
|
|
|
$
|
44,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shareholders' equity
|
|
$
|
12,967
|
|
|
$
|
4,349
|
|
|
$
|
(4,349
|
)
|
|
$
|
12,967
|
|
|
$
|
11,681
|
|
|
$
|
3,422
|
|
|
$
|
(3,422
|
)
|
|
$
|
11,681
|
|
Long-term
debt
|
|
|
-
|
|
|
|
10,506
|
|
|
|
5,794
|
|
|
|
16,300
|
|
|
|
-
|
|
|
|
8,522
|
|
|
|
5,311
|
|
|
|
13,833
|
|
Total
capitalization
|
|
|
12,967
|
|
|
|
14,855
|
|
|
|
1,445
|
|
|
|
29,267
|
|
|
|
11,681
|
|
|
|
11,944
|
|
|
|
1,889
|
|
|
|
25,514
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
due within one year
|
|
|
-
|
|
|
|
1,729
|
|
|
|
860
|
|
|
|
2,589
|
|
|
|
-
|
|
|
|
2,217
|
|
|
|
1,036
|
|
|
|
3,253
|
|
Accounts
payable
|
|
|
-
|
|
|
|
453
|
|
|
|
539
|
|
|
|
992
|
|
|
|
-
|
|
|
|
421
|
|
|
|
641
|
|
|
|
1,062
|
|
Other
|
|
|
417
|
|
|
|
1,170
|
|
|
|
1,281
|
|
|
|
2,868
|
|
|
|
265
|
|
|
|
887
|
|
|
|
2,222
|
|
|
|
3,374
|
|
Total
current liabilities
|
|
|
417
|
|
|
|
3,352
|
|
|
|
2,680
|
|
|
|
6,449
|
|
|
|
265
|
|
|
|
3,525
|
|
|
|
3,899
|
|
|
|
7,689
|
|
OTHER
LIABILITIES AND DEFERRED CREDITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
retirement obligations
|
|
|
-
|
|
|
|
585
|
|
|
|
1,833
|
|
|
|
2,418
|
|
|
|
-
|
|
|
|
539
|
|
|
|
1,744
|
|
|
|
2,283
|
|
Accumulated
deferred income taxes
|
|
|
94
|
|
|
|
1,318
|
|
|
|
3,448
|
|
|
|
4,860
|
|
|
|
(78
|
)
|
|
|
1,153
|
|
|
|
3,156
|
|
|
|
4,231
|
|
Regulatory
liabilities
|
|
|
16
|
|
|
|
-
|
|
|
|
3,166
|
|
|
|
3,182
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,880
|
|
|
|
2,880
|
|
Other
|
|
|
307
|
|
|
|
1,480
|
|
|
|
495
|
|
|
|
2,282
|
|
|
|
254
|
|
|
|
1,538
|
|
|
|
432
|
|
|
|
2,224
|
|
Total
other liabilities and deferred credits
|
|
|
417
|
|
|
|
3,383
|
|
|
|
8,942
|
|
|
|
12,742
|
|
|
|
176
|
|
|
|
3,230
|
|
|
|
8,212
|
|
|
|
11,618
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
CAPITALIZATION AND LIABILITIES
|
|
$
|
13,801
|
|
|
$
|
21,590
|
|
|
$
|
13,067
|
|
|
$
|
48,458
|
|
|
$
|
12,122
|
|
|
$
|
18,699
|
|
|
$
|
14,000
|
|
|
$
|
44,821
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
FPL and consolidating adjustments.
|
Condensed
Consolidating Statements of Cash Flows
|
|
Year
Ended
December 31,
2009
|
|
|
Year
Ended
December 31,
2008
|
|
|
Year
Ended
December 31,
2007
|
|
|
|
FPL
Group
(Guar-
antor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
Group
(Guar-
antor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
FPL
Group
(Guar-
antor)
|
|
|
FPL
Group
Capital
|
|
|
Other
(a)
|
|
|
FPL
Group
Consoli-
dated
|
|
|
|
(millions)
|
|
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
|
$
|
591
|
|
|
$
|
1,513
|
|
|
$
|
2,359
|
|
|
$
|
4,463
|
|
|
$
|
766
|
|
|
$
|
1,182
|
|
|
$
|
1,455
|
|
|
$
|
3,403
|
|
|
$
|
1,031
|
|
|
$
|
1,499
|
|
|
$
|
1,063
|
|
|
$
|
3,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures, independent power investments and nuclear fuel
purchases
|
|
|
-
|
|
|
|
(3,289
|
)
|
|
|
(2,717
|
)
|
|
|
(6,006
|
)
|
|
|
(12
|
)
|
|
|
(2,857
|
)
|
|
|
(2,367
|
)
|
|
|
(5,236
|
)
|
|
|
(12
|
)
|
|
|
(3,000
|
)
|
|
|
(2,007
|
)
|
|
|
(5,019
|
)
|
Capital
contribution to FPL
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(75
|
)
|
|
|
-
|
|
|
|
75
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Sale
of independent power investments
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
|
15
|
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
|
25
|
|
|
|
-
|
|
|
|
700
|
|
|
|
-
|
|
|
|
700
|
|
Loan
repayments and capital distributions from equity method
investees
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11
|
|
|
|
-
|
|
|
|
11
|
|
Funding
of loan
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(500
|
)
|
|
|
-
|
|
|
|
(500
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other
- net
|
|
|
(7
|
)
|
|
|
86
|
|
|
|
(23
|
)
|
|
|
56
|
|
|
|
-
|
|
|
|
(25
|
)
|
|
|
(72
|
)
|
|
|
(97
|
)
|
|
|
(405
|
)
|
|
|
(58
|
)
|
|
|
193
|
|
|
|
(270
|
)
|
Net
cash used in investing activities
|
|
|
(7
|
)
|
|
|
(3,188
|
)
|
|
|
(2,740
|
)
|
|
|
(5,935
|
)
|
|
|
(87
|
)
|
|
|
(3,357
|
)
|
|
|
(2,364
|
)
|
|
|
(5,808
|
)
|
|
|
(417
|
)
|
|
|
(2,347
|
)
|
|
|
(1,814
|
)
|
|
|
(4,578
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of long-term debt
|
|
|
-
|
|
|
|
2,704
|
|
|
|
516
|
|
|
|
3,220
|
|
|
|
-
|
|
|
|
3,238
|
|
|
|
589
|
|
|
|
3,827
|
|
|
|
-
|
|
|
|
1,969
|
|
|
|
1,230
|
|
|
|
3,199
|
|
Retirements
of long-term debt
|
|
|
-
|
|
|
|
(1,371
|
)
|
|
|
(264
|
)
|
|
|
(1,635
|
)
|
|
|
-
|
|
|
|
(1,118
|
)
|
|
|
(240
|
)
|
|
|
(1,358
|
)
|
|
|
-
|
|
|
|
(1,616
|
)
|
|
|
(250
|
)
|
|
|
(1,866
|
)
|
Net
change in short-term debt
|
|
|
-
|
|
|
|
110
|
|
|
|
44
|
|
|
|
154
|
|
|
|
-
|
|
|
|
917
|
|
|
|
(69
|
)
|
|
|
848
|
|
|
|
-
|
|
|
|
(292
|
)
|
|
|
212
|
|
|
|
(80
|
)
|
Issuances
of common stock
|
|
|
198
|
|
|
|
-
|
|
|
|
-
|
|
|
|
198
|
|
|
|
41
|
|
|
|
-
|
|
|
|
-
|
|
|
|
41
|
|
|
|
46
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46
|
|
Dividends
on common stock
|
|
|
(766
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(766
|
)
|
|
|
(714
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(714
|
)
|
|
|
(654
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(654
|
)
|
Other
-
net
|
|
|
(16
|
)
|
|
|
(26
|
)
|
|
|
46
|
|
|
|
4
|
|
|
|
(6
|
)
|
|
|
(675
|
)
|
|
|
687
|
|
|
|
6
|
|
|
|
(6
|
)
|
|
|
458
|
|
|
|
(442
|
)
|
|
|
10
|
|
Net
cash provided by (used in) financing activities
|
|
|
(584
|
)
|
|
|
1,417
|
|
|
|
342
|
|
|
|
1,175
|
|
|
|
(679
|
)
|
|
|
2,362
|
|
|
|
967
|
|
|
|
2,650
|
|
|
|
(614
|
)
|
|
|
519
|
|
|
|
750
|
|
|
|
655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
-
|
|
|
|
(258
|
)
|
|
|
(39
|
)
|
|
|
(297
|
)
|
|
|
-
|
|
|
|
187
|
|
|
|
58
|
|
|
|
245
|
|
|
|
-
|
|
|
|
(329
|
)
|
|
|
(1
|
)
|
|
|
(330
|
)
|
Cash
and cash equivalents at beginning of year
|
|
|
-
|
|
|
|
414
|
|
|
|
121
|
|
|
|
535
|
|
|
|
-
|
|
|
|
227
|
|
|
|
63
|
|
|
|
290
|
|
|
|
-
|
|
|
|
556
|
|
|
|
64
|
|
|
|
620
|
|
Cash
and cash equivalents at end of year
|
|
$
|
-
|
|
|
$
|
156
|
|
|
$
|
82
|
|
|
$
|
238
|
|
|
$
|
-
|
|
|
$
|
414
|
|
|
$
|
121
|
|
|
$
|
535
|
|
|
$
|
-
|
|
|
$
|
227
|
|
|
$
|
63
|
|
|
$
|
290
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
FPL and consolidating adjustments.
|
FPL
GROUP, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
17. Quarterly
Data (Unaudited)
Condensed
consolidated quarterly financial information is as follows:
|
|
March
31
(a)
|
|
June
30
(a)
|
|
September 30
(a)
|
|
December 31
(a)
|
|
|
(millions,
except per share amounts)
|
FPL
GROUP:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
(b)
|
|
$
|
3,705
|
|
|
|
$
|
3,811
|
|
|
|
$
|
4,473
|
|
|
|
$
|
3,655
|
|
|
Operating
income
(b)
|
|
$
|
583
|
|
|
|
$
|
605
|
|
|
|
$
|
849
|
|
|
|
$
|
557
|
|
|
Net
income
(b)
|
|
$
|
364
|
|
|
|
$
|
370
|
|
|
|
$
|
533
|
|
|
|
$
|
349
|
|
|
Earnings
per share
(c)
|
|
$
|
0.90
|
|
|
|
$
|
0.92
|
|
|
|
$
|
1.32
|
|
|
|
$
|
0.86
|
|
|
Earnings
per share - assuming dilution
(c)
|
|
$
|
0.90
|
|
|
|
$
|
0.91
|
|
|
|
$
|
1.31
|
|
|
|
$
|
0.85
|
|
|
Dividends
per share
|
|
$
|
0.4725
|
|
|
|
$
|
0.4725
|
|
|
|
$
|
0.4725
|
|
|
|
$
|
0.4725
|
|
|
High-low
common stock sales prices
|
|
$
|
53.99
|
-
|
41.48
|
|
$
|
59.00
|
-
|
49.70
|
|
$
|
60.61
|
-
|
53.13
|
|
$
|
56.57
|
-
|
48.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
(b)
|
|
$
|
3,434
|
|
|
|
$
|
3,585
|
|
|
|
$
|
5,387
|
|
|
|
$
|
4,003
|
|
|
Operating
income
(b)
|
|
$
|
443
|
|
|
|
$
|
313
|
|
|
|
$
|
1,316
|
|
|
|
$
|
752
|
|
|
Net
income
(b)
|
|
$
|
249
|
|
|
|
$
|
209
|
|
|
|
$
|
774
|
|
|
|
$
|
408
|
|
|
Earnings
per share
(c)
|
|
$
|
0.62
|
|
|
|
$
|
0.52
|
|
|
|
$
|
1.93
|
|
|
|
$
|
1.02
|
|
|
Earnings
per share - assuming dilution
(c)
|
|
$
|
0.62
|
|
|
|
$
|
0.52
|
|
|
|
$
|
1.92
|
|
|
|
$
|
1.01
|
|
|
Dividends
per share
|
|
$
|
0.445
|
|
|
|
$
|
0.445
|
|
|
|
$
|
0.445
|
|
|
|
$
|
0.445
|
|
|
High-low
common stock sales prices
|
|
$
|
73.75
|
-
|
57.21
|
|
$
|
68.98
|
-
|
62.75
|
|
$
|
68.76
|
-
|
49.74
|
|
$
|
51.87
|
-
|
33.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
(b)
|
|
$
|
2,573
|
|
|
|
$
|
2,864
|
|
|
|
$
|
3,301
|
|
|
|
$
|
2,753
|
|
|
Operating
income
(b)
|
|
$
|
262
|
|
|
|
$
|
396
|
|
|
|
$
|
554
|
|
|
|
$
|
369
|
|
|
Net
income
(b)
|
|
$
|
127
|
|
|
|
$
|
213
|
|
|
|
$
|
306
|
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
(b)
|
|
$
|
2,534
|
|
|
|
$
|
2,871
|
|
|
|
$
|
3,423
|
|
|
|
$
|
2,820
|
|
|
Operating
income
(b)
|
|
$
|
244
|
|
|
|
$
|
416
|
|
|
|
$
|
549
|
|
|
|
$
|
320
|
|
|
Net
income
(b)
|
|
$
|
108
|
|
|
|
$
|
217
|
|
|
|
$
|
314
|
|
|
|
$
|
151
|
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
In
the opinion of FPL Group and FPL, all adjustments, which consist of normal
recurring accruals necessary to present a fair statement of the amounts
shown for such periods, have been made. Results of operations
for an interim period generally will not give a true indication of results
for the year.
|
(b)
|
The
sum of the quarterly amounts may not equal the total for the year due to
rounding.
|
(c)
|
The
sum of the quarterly amounts may not equal the total for the year due to
rounding and changes in weighted-average number of common shares
outstanding.
|
Item
9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
Item
9A. Controls and Procedures
Disclosure
Controls and Procedures
As of
December 31, 2009, each of FPL Group and FPL had performed an evaluation,
under the supervision and with the participation of its management, including
FPL Group's and FPL's chief executive officer and chief financial officer, of
the effectiveness of the design and operation of each company's disclosure
controls and procedures (as defined in Exchange Act Rule 13a-15(e) or
15d-15(e)). Based upon that evaluation, the chief executive officer
and chief financial officer of each of FPL Group and FPL concluded that the
company's disclosure controls and procedures are effective in timely alerting
them to material information relating to the company and its consolidated
subsidiaries required to be included in the company's reports filed or submitted
under the Exchange Act and ensuring that information required to be disclosed in
the company's reports filed or submitted under the Exchange Act is accumulated
and communicated to management, including its principal executive and principal
financial officers, to allow timely decisions regarding required
disclosure. FPL Group and FPL each have a Disclosure Committee, which
is made up of several key management employees and reports directly to the chief
executive officer and chief financial officer of each company, to monitor and
evaluate these disclosure controls and procedures. Due to the
inherent limitations of the effectiveness of any established disclosure controls
and procedures, management of FPL Group and FPL cannot provide absolute
assurance that the objectives of their respective disclosure controls and
procedures will be met.
Internal
Control Over Financial Reporting
(a)
|
Management's
Annual Report on Internal Control Over Financial Reporting
See
Item 8. Financial Statements and Supplementary Data.
|
(b)
|
Attestation
Report of the Independent Registered Public Accounting Firm
See
Item 8. Financial Statements and Supplementary Data.
|
(c)
|
Changes
in Internal Control Over Financial Reporting
|
|
FPL
Group and FPL are continuously seeking to improve the efficiency and
effectiveness of their operations and of their internal
controls. This results in refinements to processes throughout
FPL Group and FPL. However, there has been no change in FPL
Group's or FPL's internal control over financial reporting that occurred
during FPL Group's and FPL's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, FPL
Group's or FPL's internal control over financial
reporting.
|
Item
9B. Other Information
None
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
The
information required by this item will be included under the headings "Business
of the Annual Meeting," "Corporate Governance and Board Matters" and
"Information About FPL Group and Management" in FPL Group's Proxy Statement
which will be filed with the SEC in connection with the 2010 Annual Meeting of
Shareholders (FPL Group's Proxy Statement) and is incorporated herein by
reference, or is included in Item 1. Business - Executive Officers of FPL
Group.
FPL
Group has adopted the FPL Group, Inc. Code of Ethics for Senior Executive and
Financial Officers (the Senior Financial Executive Code), which is applicable to
the chief executive officer, the chief financial officer, the chief accounting
officer and other senior financial officers. The Senior Financial
Executive Code is available in the Governance section of FPL Group’s internet
website at www.fplgroup.com. Any amendments to, or waivers of any
provision of, the Senior Financial Executive Code which are required to be
disclosed to shareholders under applicable SEC rules will be disclosed on the
FPL Group website at the address listed above within the time period required
under SEC rules from time to time.
Item
11. Executive Compensation
The
information required by this item will be included in FPL Group's Proxy
Statement under the headings "Executive Compensation" and "Corporate Governance
and Board Matters" and is incorporated herein by reference.
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The
information required by this item relating to security ownership of certain
beneficial owners and management will be included in FPL Group's Proxy Statement
under the heading "Information About FPL Group and Management" and is
incorporated herein by reference.
Securities
Authorized For Issuance Under Equity Compensation Plans
FPL
Group's equity compensation plan information as of December 31, 2009 is as
follows:
Plan
Category
|
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
(a)
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans approved by security holders
|
|
|
7,964,106
|
(a)
|
|
$
|
35.65
|
(b)
|
|
|
5,085,492
|
|
Equity
compensation plans not approved by security holders
(c)
|
|
|
2,523
|
|
|
$
|
27.11
|
|
|
|
-
|
|
Total
|
|
|
7,966,629
|
|
|
$
|
35.65
|
(b)
|
|
|
5,085,492
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Represents
outstanding options, nonvested performance share awards (at maximum
payout), deferred vested performance shares under the FPL Group, Inc.
Amended and Restated Long Term Incentive Plan and shares deferred by
directors under the FPL Group, Inc. 2007 Non-Employee Directors Stock Plan
and the FPL Group, Inc. Amended and Restated Non-Employee Directors Stock
Plan at December 31, 2009.
|
(b)
|
Relates
to outstanding options only.
|
(c)
|
Represents
options granted by Gexa under its Amended and Restated 2004 Incentive Plan
and pursuant to various individual grants, all of which were made prior to
FPL Group’s acquisition of Gexa. All such options were assumed
by FPL Group in connection with the acquisition of Gexa and are fully
vested and exercisable for shares of FPL Group common stock. No
further grants of stock options will be made under this
plan.
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence
The
information required by this item, to the extent applicable, will be included in
FPL Group's Proxy Statement under the heading "Corporate Governance and Board
Matters" and is incorporated herein by reference.
Item
14. Principal Accounting Fees and Services
FPL Group
-
The information required by this item will be included in FPL Group's Proxy
Statement under the heading "Audit-Related Matters" and is incorporated herein
by reference.
FPL
- The
following table presents fees billed for professional services rendered by
Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and
their respective affiliates (collectively, Deloitte & Touche) for the fiscal
years ended December 31, 2009 and 2008. The amounts presented
below reflect allocations from FPL Group for FPL's portion of the fees, as well
as amounts billed directly to FPL.
|
2009
|
|
2008
|
|
|
|
|
Audit
fees
(a)
|
$
|
2,706,000
|
|
$
|
2,559,000
|
Audit-related
fees
(b)
|
|
252,000
|
|
|
39,000
|
Tax
fees
(c)
|
|
30,000
|
|
|
33,000
|
All
other fees
(d)
|
|
4,000
|
|
|
-
|
Total
|
$
|
2,992,000
|
|
$
|
2,631,000
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Audit
fees consist of fees billed for professional services rendered for the
audit of FPL's and FPL Group's annual consolidated financial statements
for the fiscal year, the reviews of the financial statements included in
FPL's and FPL Group's Quarterly Reports on Form 10-Q for the fiscal
year and the audit of the effectiveness of internal control over financial
reporting, comfort letters, consents, and other services related to SEC
matters, services in connection with annual and semi-annual filings of FPL
Group's financial statements with the Japanese Ministry of Finance and
accounting consultations to the extent necessary for Deloitte & Touche
to fulfill its responsibility under Public Company Accounting Oversight
Board standards.
|
(b)
|
Audit-related
fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of FPL's and
FPL Group's consolidated financial statements and are not reported under
audit fees. These fees primarily related to audits of
subsidiary financial statements, comfort letters, consents and other
services related to subsidiary (non-SEC registrant) financing activities,
consultation on accounting standards and on transactions, agreed-upon
procedures and examinations related to applications for government
grants.
|
(c)
|
Tax
fees consist of fees billed for professional services rendered for tax
compliance, tax advice and tax planning. In 2009 and 2008, all
tax fees paid related to tax compliance services.
|
(d)
|
All
other fees consist of fees for products and services other than the
services reported under the other named categories. In 2009,
these fees related to the use of data extraction software. In
2008, there were no other fees incurred in this
category.
|
In
accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of
2002, FPL Group's Audit Committee's pre-approval policy for services provided by
the independent auditor to FPL and the charter of the Audit Committee, all
services performed by Deloitte & Touche are approved in advance by the Audit
Committee, except for audits of certain employee benefit plans and trust funds
where the fees are paid by the plan or the trust. Audit and
audit-related services specifically identified in an appendix to the
pre-approval policy are pre-approved by the Audit Committee each
year. This pre-approval allows management to request the specified
audit and audit-related services on an as-needed basis during the year, provided
any such services are reviewed with the Audit Committee at its next regularly
scheduled meeting. Any audit or audit-related service for which the
fee is expected to exceed $250,000, or that involves a service not listed on the
pre-approval list, must be specifically approved by the Audit Committee prior to
commencement of such work. In addition, the Audit Committee approves
all services other than audit and audit-related services performed by Deloitte
& Touche in advance of the commencement of such work. The Audit
Committee has delegated to the chairman of the committee the right to approve
audit, audit-related, tax and other services, within certain limitations,
between meetings of the Audit Committee, provided any such decision is presented
to the Audit Committee at its next regularly scheduled meeting. The
Audit Committee reviews on a quarterly basis a schedule of all services for
which Deloitte & Touche has been engaged and the estimated fees for those
services. In 2009 and 2008, no services provided to FPL Group or FPL
by Deloitte & Touche were approved by the Audit Committee after services
were rendered pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X (which
provides for a waiver of the otherwise applicable pre-approval requirement if
certain conditions are met).
PART
IV
Item
15. Exhibits, Financial Statement Schedules
|
|
|
Page(s)
|
(a)
|
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
Management's
Report on Internal Control Over Financial Reporting
|
53
|
|
|
Attestation
Report of Independent Registered Public Accounting Firm
|
54
|
|
|
Report
of Independent Registered Public Accounting Firm
|
55
|
|
|
FPL
Group:
|
|
|
|
Consolidated
Statements of Income
|
56
|
|
|
Consolidated
Balance Sheets
|
57
|
|
|
Consolidated
Statements of Cash Flows
|
58
|
|
|
Consolidated
Statements of Common Shareholders' Equity
|
59
|
|
|
|
|
|
|
FPL:
|
|
|
|
Consolidated
Statements of Income
|
60
|
|
|
Consolidated
Balance Sheets
|
61
|
|
|
Consolidated
Statements of Cash Flows
|
62
|
|
|
Consolidated
Statements of Common Shareholder's Equity
|
63
|
|
|
Notes
to Consolidated Financial Statements
|
64
- 103
|
|
|
|
|
|
2.
|
Financial
Statement Schedules - Schedules are omitted as not applicable or not
required.
|
|
|
|
|
|
|
3.
|
Exhibits
(including those incorporated by reference)
|
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*3(i)a
|
|
Restated
Articles of Incorporation of FPL Group filed December 31, 1984, as
amended through July 3, 2006 (filed as Exhibit 3(i)a to Form 10-K for
the year ended December 31, 2008, File No. 1-8841)
|
|
x
|
|
|
|
*3(i)b
|
|
Restated
Articles of Incorporation of FPL dated March 23, 1992 (filed as
Exhibit 3(i)a to Form 10-K for the year ended December 31, 1993,
File No. 1-3545)
|
|
|
|
x
|
|
*3(i)c
|
|
Amendment
to FPL's Restated Articles of Incorporation dated March 23, 1992
(filed as Exhibit 3(i)b to Form 10-K for the year ended
December 31, 1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)d
|
|
Amendment
to FPL's Restated Articles of Incorporation dated May 11, 1992 (filed
as Exhibit 3(i)c to Form 10-K for the year ended December 31,
1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)e
|
|
Amendment
to FPL's Restated Articles of Incorporation dated March 12, 1993
(filed as Exhibit 3(i)d to Form 10-K for the year ended
December 31, 1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)f
|
|
Amendment
to FPL's Restated Articles of Incorporation dated June 16, 1993
(filed as Exhibit 3(i)e to Form 10-K for the year ended
December 31, 1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)g
|
|
Amendment
to FPL's Restated Articles of Incorporation dated August 31, 1993
(filed as Exhibit 3(i)f to Form 10-K for the year ended
December 31, 1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)h
|
|
Amendment
to FPL's Restated Articles of Incorporation dated November 30, 1993
(filed as Exhibit 3(i)g to Form 10-K for the year ended
December 31, 1993, File No. 1-3545)
|
|
|
|
x
|
|
*3(i)i
|
|
Amendment
to FPL's Restated Articles of Incorporation dated January 20, 2004
(filed as Exhibit 3(i)j to Form 10-K dated December 31, 2003, File
No. 2-27612)
|
|
|
|
x
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*3(i)j
|
|
Amendment
to FPL's Restated Articles of Incorporation dated January 20,
2004 (filed as Exhibit 3(i)k to Form 10-K dated December 31,
2003, File No. 2-27612)
|
|
|
|
x
|
|
*3(i)k
|
|
Amendment
to FPL's Restated Articles of Incorporation dated February 11,
2005 (filed as Exhibit 3(i)m to Form 10-K for the year ended
December 31, 2004, File No. 2-27612)
|
|
|
|
x
|
|
3(ii)a
|
|
Amended
and Restated Bylaws of FPL Group, as amended through February 12,
2010
|
|
x
|
|
|
|
*3(ii)b
|
|
Amended
and Restated Bylaws of FPL, as amended through October 17, 2008
(filed as Exhibit 3(ii)b to Form 10-Q for the quarter ended
September 30, 2008, File No. 2-27612)
|
|
|
|
x
|
|
*4(a)
|
|
Mortgage
and Deed of Trust dated as of January 1, 1944, and One hundred
and fifteen Supplements thereto, between FPL and Deutsche Bank
Trust Company Americas, Trustee (filed as Exhibit B-3, File No. 2-4845;
Exhibit 7(a), File No. 2-7126; Exhibit 7(a), File No. 2-7523; Exhibit
7(a), File No. 2-7990; Exhibit 7(a), File No. 2-9217; Exhibit 4(a)-5, File
No. 2-10093; Exhibit 4(c), File No. 2-11491; Exhibit 4(b)-1, File No.
2-12900; Exhibit 4(b)-1, File No. 2-13255; Exhibit 4(b)-1, File No.
2-13705; Exhibit 4(b)-1, File No. 2-13925; Exhibit 4(b)-1, File No.
2-15088; Exhibit 4(b)-1, File No. 2-15677; Exhibit 4(b)-1, File No.
2-20501; Exhibit 4(b)-1, File No. 2-22104; Exhibit 2(c), File No. 2-23142;
Exhibit 2(c), File No. 2-24195; Exhibit 4(b)-1, File No. 2-25677; Exhibit
2(c), File No. 2-27612; Exhibit 2(c), File No. 2-29001; Exhibit 2(c), File
No. 2-30542; Exhibit 2(c), File No. 2-33038; Exhibit 2(c), File No.
2-37679; Exhibit 2(c), File No. 2-39006; Exhibit 2(c), File No. 2-41312;
Exhibit 2(c), File No. 2-44234; Exhibit 2(c), File No. 2-46502;
Exhibit 2(c), File No. 2-48679; Exhibit 2(c), File No. 2-49726; Exhibit
2(c), File No. 2-50712; Exhibit 2(c), File No. 2-52826; Exhibit 2(c),
File No. 2-53272; Exhibit 2(c), File No. 2-54242; Exhibit 2(c), File
No. 2-56228; Exhibits 2(c) and 2(d), File No. 2-60413; Exhibits 2(c) and
2(d), File No. 2-65701; Exhibit 2(c), File No. 2-66524; Exhibit 2(c),
File No. 2-67239; Exhibit 4(c), File No. 2-69716; Exhibit 4(c), File
No. 2-70767; Exhibit 4(b), File No. 2-71542; Exhibit 4(b), File No.
2-73799; Exhibits 4(c), 4(d) and 4(e), File No. 2-75762; Exhibit 4(c),
File No. 2-77629; Exhibit 4(c), File No. 2-79557; Exhibit 99(a) to
Post-Effective Amendment No. 5 to Form S-8, File No. 33-18669;
Exhibit 99(a) to Post-Effective Amendment No. 1 to Form S-3, File No.
33-46076; Exhibit 4(b) to Form 10-K for the year ended
December 31, 1993, File No. 1-3545; Exhibit 4(i) to Form 10-Q
for the quarter ended June 30, 1994, File No. 1-3545; Exhibit
4(b) to Form 10-Q for the quarter ended June 30, 1995, File
No. 1-3545; Exhibit 4(a) to Form 10-Q for the quarter ended
March 31,1996, File No. 1-3545; Exhibit 4 to Form 10-Q for the
quarter ended June 30, 1998, File No. 1-3545; Exhibit 4 to Form 10-Q
for the quarter ended March 31, 1999, File No. 1-3545; Exhibit 4(f)
to Form 10-K for the year ended December 31, 2000, File No. 1-3545;
Exhibit 4(g) to Form 10-K for the year ended December 31, 2000, File
No. 1-3545; Exhibit 4(o), File No. 333-102169; Exhibit 4(k) to
Post-Effective Amendment No. 1 to Form S-3, File No. 333-102172;
Exhibit 4(l) to Post-Effective Amendment No. 2 to Form S-3, File No.
333-102172; Exhibit 4(m) to Post-Effective Amendment No. 3 to Form
S-3, File No. 333-102172; Exhibit 4(a) to Form 10-Q for the quarter ended
September 30, 2004, File No. 2-27612; Exhibit 4(f) to Amendment No. 1 to
Form S-3, File No. 333-125275; Exhibit 4(y) to Post-Effective Amendment
No. 2 to Form S-3, File Nos. 333-116300, 333-116300-01 and 333-116300-02;
Exhibit 4(z) to Post-Effective Amendment No. 3 to Form S-3, File
Nos. 333-116300, 333-116300-01 and 333-116300-02; Exhibit 4(b) to
Form 10-Q for the quarter ended March 31, 2006, File No. 2-27612;
Exhibit 4(a) to Form 8-K dated April 17, 2007, File No. 2-27612;
Exhibit 4 to Form 8-K dated October 10, 2007, File No. 2-27612;
Exhibit 4 to Form 8-K dated January 16, 2008, File No. 2-27612;
Exhibit 4(a) to Form 8-K dated March 17, 2009, File No. 2-27612; and
Exhibit 4 to Form 8-K dated February 9, 2010, File No.
2-27612)
|
|
x
|
|
x
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*4(b)
|
|
Indenture,
dated as of June 1, 1999, between FPL Group Capital and The Bank of
New York Mellon, as Trustee (filed as Exhibit 4(a) to Form 8-K dated
July 16, 1999, File No. 1-8841)
|
|
x
|
|
|
|
*4(c)
|
|
Guarantee
Agreement between FPL Group (as Guarantor) and The Bank of New York Mellon
(as Guarantee Trustee) dated as of June 1, 1999 (filed as Exhibit
4(b) to Form 8-K dated July 16, 1999, File No. 1-8841)
|
|
x
|
|
|
|
*4(d)
|
|
Officer's
Certificate of FPL Group Capital, dated August 18, 2006, creating the
5 5/8% Debentures, Series due September 1, 2011 (filed as
Exhibit 4 to Form 8-K dated August 18, 2006, File No.
1-8841)
|
|
x
|
|
|
|
*4(e)
|
|
Officer's
Certificate of FPL Group Capital dated June 17, 2008, creating the 5.35%
Debentures, Series due June 15, 2013 (filed as Exhibit 4(a) to Form
8-K dated June 17, 2008, File No. 1-8841)
|
|
x
|
|
|
|
*4(f)
|
|
Officer's
Certificate of FPL Group Capital dated June 17, 2008, creating the
Floating Rate Debentures, Series due June 17, 2011 (filed as Exhibit
4(b) to Form 8-K dated June 17, 2008, File No. 1-8841)
|
|
x
|
|
|
|
*4(g)
|
|
Officer's
Certificate of FPL Group Capital dated December 12, 2008, creating
the 7 7/8% Debentures, Series due December 15, 2015 (filed as
Exhibit 4 to Form 8-K dated December 12, 2008, File No.
1-8841)
|
|
x
|
|
|
|
*4(h)
|
|
Officer's
Certificate of FPL Group Capital, dated March 9, 2009, creating the 6.00%
Debentures, Series due March 1, 2019 (filed as Exhibit 4 to Form 8-K dated
March 9, 2009, file No. 1-8841)
|
|
x
|
|
|
|
*4(i)
|
|
Officer's
Certificate of FPL Group Capital, dated May 26, 2009, creating the
Series C Debentures due June 1, 2014 (filed as Exhibit 4(c) to Form
8-K dated May 22, 2009, File No. 1-8841)
|
|
x
|
|
|
|
*4(j)
|
|
Officer's
Certificate of FPL Group Capital dated November 10, 2009, creating
the Floating Rate Debentures, Series due November 9, 2012 (filed as
Exhibit 4 to Form 8-K dated November 10, 2009, File
No. 1-8841)
|
|
x
|
|
|
|
*4(k)
|
|
Indenture
(For Unsecured Subordinated Debt Securities relating to Trust Securities)
dated as of March 1, 2004 among FPL Group Capital, FPL Group (as
Guarantor) and The Bank of New York Mellon (as Trustee) (filed as Exhibit
4(au) to Post-Effective Amendment No. 3 to Form S-3, File Nos.
333-102173, 333-102173-01, 333-102173-02 and 333-102173-03)
|
|
x
|
|
|
|
*4(l)
|
|
Preferred
Trust Securities Guarantee Agreement between FPL Group (as Guarantor) and
The Bank of New York Mellon (as Guarantee Trustee) relating to FPL Group
Capital Trust I, dated as of March 15, 2004 (filed as Exhibit 4(aw)
to Post-Effective Amendment No. 3 to Form S-3, File Nos. 333-102173,
333-102173-01, 333-102173-02 and 333-102173-03)
|
|
x
|
|
|
|
*4(m)
|
|
Amended
and Restated Trust Agreement relating to FPL Group Capital Trust I, dated
as of March 15, 2004 (filed as Exhibit 4(at) to Post-Effective
Amendment No. 3 to Form S-3, File Nos. 333-102173, 333-102173-01,
333-102173-02 and 333-102173-03)
|
|
x
|
|
|
|
*4(n)
|
|
Agreement
as to Expenses and Liabilities of FPL Group Capital Trust I, dated as of
March 15, 2004 (filed as Exhibit 4(ax) to Post-Effective Amendment
No. 3 to Form S-3, File Nos. 333-102173, 333-102173-01, 333-102173-02
and 333-102173-03)
|
|
x
|
|
|
|
*4(o)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group, dated March 15, 2004,
creating the 5 7/8% Junior Subordinated Debentures, Series due
March 15, 2044 (filed as Exhibit 4(av) to Post-Effective Amendment
No. 3 to Form S-3, File Nos. 333-102173, 333-102173-01, 333-102173-02
and 333-102173-03)
|
|
x
|
|
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*4(p)
|
|
Indenture
(For Unsecured Subordinated Debt Securities) dated as of September 1,
2006, among FPL Group Capital, FPL Group (as Guarantor) and The Bank of
New York Mellon (as Trustee) (filed as Exhibit 4(a) to Form 8-K dated
September 19, 2006, File No. 1-8841)
|
|
x
|
|
|
|
*4(q)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group dated September 19,
2006, creating the Series A Enhanced Junior Subordinated Debentures due
2066 (filed as Exhibit 4(b) to Form 8-K dated September 19, 2006,
File No. 1-8841)
|
|
x
|
|
|
|
*4(r)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group dated September 19,
2006, creating the Series B Enhanced Junior Subordinated Debentures due
2066 (filed as Exhibit 4(c) to Form 8-K dated September 19, 2006,
File No. 1-8841)
|
|
x
|
|
|
|
*4(s)
|
|
Replacement
Capital Covenant dated September 19, 2006 by FPL Group Capital and
FPL Group relating to FPL Group Capital's Series A and Series B Enhanced
Junior Subordinated Debentures due 2066 (filed as Exhibit 4(d) to Form 8-K
dated September 19, 2006, File No. 1-8841)
|
|
x
|
|
|
|
*4(t)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group dated June 12, 2007,
creating the Series C Junior Subordinated Debentures due 2067 (filed as
Exhibit 4(a) to Form 8-K dated June 12, 2007, File No.
1-8841)
|
|
x
|
|
|
|
*4(u)
|
|
Replacement
Capital Covenant, dated June 12, 2007, by FPL Group Capital and FPL
Group relating to FPL Group Capital's Series C Junior Subordinated
Debentures due 2067 (filed as Exhibit 4(b) to Form 8-K dated June 12,
2007, File No. 1-8841)
|
|
x
|
|
|
|
*4(v)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group dated September 17,
2007, creating the Series D Junior Subordinated Debentures due 2067 (filed
as Exhibit 4(a) to Form 8-K dated September 17, 2007, File No.
1-8841)
|
|
x
|
|
|
|
*4(w)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group dated September 18,
2007, creating the Series E Junior Subordinated Debentures due 2067 (filed
as Exhibit 4(b) to Form 8-K dated September 17, 2007, File No.
1-8841)
|
|
x
|
|
|
|
*4(x)
|
|
Replacement
Capital Covenant, dated September 18, 2007, by FPL Group Capital and
FPL Group relating to FPL Group Capital's Series D and Series E Junior
Subordinated Debentures due 2067 (filed as Exhibit 4(c) to Form 8-K dated
September 17, 2007, File No. 1-8841)
|
|
x
|
|
|
|
*4(y)
|
|
Officer's
Certificate of FPL Group Capital and FPL Group, dated March 19, 2009,
creating the Series F Junior Subordinated Debentures due 2069 (filed as
Exhibit 4(b) to Form 8-K dated March 17, 2009, File No.
1-8841)
|
|
x
|
|
|
|
*4(z)
|
|
Replacement
Capital Covenant, dated March 19, 2009, by FPL Group Capital and FPL Group
(filed as Exhibit 4(c) to Form 8-K dated March 17, 2009, File No.
1-8841)
|
|
x
|
|
|
|
*4(aa)
|
|
Indenture
(for Securing Senior Secured Bonds, Series A), dated May 22, 2007,
between FPL Recovery Funding LLC (as Issuer) and The Bank of New York
Mellon (as Trustee and Securities Intermediary) (filed as Exhibit 4.1 to
Form 8-K dated May 22, 2007 and filed June 1, 2007, File No.
333-141357)
|
|
|
|
x
|
|
*4(bb)
|
|
Purchase
Contract Agreement, dated as of May 1, 2009, between FPL Group and
The Bank of New York Mellon, as Purchase Contract Agent (filed as Exhibit
4(a) to Form 8-K dated May 22, 2009, File No. 1-8841)
|
|
x
|
|
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*4(cc)
|
|
Pledge
Agreement, dated as of May 1, 2009, among FPL Group, Deutsche Bank
Trust Company Americas, as Collateral Agent, Custodial Agent and
Securities Intermediary, and The Bank of New York Mellon, as Purchase
Contract Agent and Trustee (filed as Exhibit 4(b) to Form 8-K dated
May 22, 2009, File No. 1-8841)
|
|
x
|
|
|
|
*10(a)
|
|
FPL
Group Supplemental Executive Retirement Plan, amended and restated
effective January 1, 2005 (Restated SERP) (filed as Exhibit 10(b) to
Form 8-K dated December 12, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(b)
|
|
FPL
Group Supplemental Executive Retirement Plan, amended and restated
effective April 1, 1997 (SERP) (filed as Exhibit 10(a) to Form 10-K
for the year ended December 31, 1999, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(c)
|
|
Appendix
A1 and A2 (revised as of December 12, 2008) to the Restated SERP
(filed as Exhibit 10(f) to Form 10-K for the year ended December 31, 2008,
File No. 1-8841)
|
|
x
|
|
x
|
|
10(d)
|
|
Appendix
A2 (revised as of October 15, 2009) to the Restated SERP
|
|
x
|
|
x
|
|
10(e)
|
|
Appendix
A1 and A2 (revised as of January 1, 2010) to the Restated
SERP
|
|
x
|
|
x
|
|
*10(f)
|
|
Amended
and Restated Supplement to the Restated SERP as it applies to Lewis Hay,
III effective January 1, 2005 (filed as Exhibit 10(c) to Form 8-K
dated December 12, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(g)
|
|
Supplement
to the SERP as it applies to Lewis Hay, III effective March 22, 2002
(filed as Exhibit 10(g) to Form 10-K for the year ended December 31,
2001, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(h)
|
|
Supplement
to the Restated SERP relating to a special credit to certain executive
officers and other officers effective February 15, 2008 (filed as
Exhibit 10(g) to Form 10-K
for the year ended
December 31, 2007, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(i)
|
|
Supplement
to the Restated SERP effective February 15, 2008 as it applies to
Armando Pimentel, Jr. (filed as Exhibit 10(i) to Form 10-K for the year
ended
December 31,
2007, File No. 1-8841)
|
|
x
|
|
x
|
|
10(j)
|
|
Supplement
to the SERP effective December 14, 2007 as it applies to Manoochehr
K.
Nazar
|
|
x
|
|
x
|
|
*10(k)
|
|
FPL
Group Amended and Restated Long-Term Incentive Plan, effective
December 12, 2008 (filed as Exhibit 10(e) to Form 8-K dated
December 12, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(l)
|
|
FPL
Group Amended and Restated Long-Term Incentive Plan, most recently amended
and restated on May 22, 2009 (filed as Exhibit 10(a) to Form 10-Q for the
quarter ended June 30, 2009, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(m)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Performance
Share Award Agreement effective February 15, 2007 (filed as Exhibit 10(i)
to Form 10-K for the year ended December 31, 2006, File No.
1-8841)
|
|
x
|
|
x
|
|
*10(n)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Performance
Share Award Agreement effective February 15, 2008 (filed as Exhibit
10(c) to Form 8-K dated February 15, 2008, File No.
1-8841)
|
|
x
|
|
x
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*10(o)
|
|
Form
of FPL Group Amended and Restated Long-Term Incentive Plan Performance
Share Award Agreement effective February 13, 2009 with Christopher A.
Bennett, Paul I. Cutler, K. Michael Davis, Chris N. Froggatt, Joseph T.
Kelliher, Robert L. McGrath, James W. Poppell, Sr., Antonio Rodriguez and
John A. Stall (filed as Exhibit 10(l) to Form 10-K for the year ended
December 31, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
10(p)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Amended and
Restated Performance Share Award Agreement effective December 10, 2009
with F. Mitchell Davidson, Lewis Hay, III, Manoochehr K. Nazar, Armando J.
Olivera, Armando Pimentel, Jr., James L. Robo and Charles E.
Sieving
|
|
x
|
|
x
|
|
10(q)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Performance
Share Award Agreement effective February 12, 2010
|
|
x
|
|
x
|
|
*10(r)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Restricted
Stock Award Agreement (filed as Exhibit 10(b) to Form 8-K dated
December 29, 2004, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(s)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Restricted
Stock Award Agreement effective February 15, 2007 (filed as Exhibit
10(l) to Form 10-K for the year ended December 31, 2006, File No.
1-8841)
|
|
x
|
|
x
|
|
*10(t)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Restricted
Stock Award Agreement effective February 15, 2008 (filed as Exhibit
10(a) to Form 8-K dated February 15, 2008, File No.
1-8841)
|
|
x
|
|
x
|
|
*10(u)
|
|
Form
of FPL Group Amended and Restated Long-Term Incentive Plan Restricted
Stock Award Agreement effective February 13, 2009 (filed as Exhibit
10(q) to Form 10-K for the year ended December 31, 2008, File No.
1-8841)
|
|
x
|
|
x
|
|
*10(v)
|
|
Form
of Amendment to Restricted Stock Award Agreements under the FPL Group
Amended and Restated Long Term Incentive Plan executed March 2009 between
FPL Group and each of Christopher A. Bennett, F. Mitchell Davidson, Lewis
Hay, III, Robert L. McGrath, Armando J. Olivera, Armando Pimentel, Jr.,
James W. Poppell, Sr., James L. Robo, Antonio Rodriguez and John A. Stall
(filed as Exhibit 10(c) to Form 10-Q for the quarter ended March 31,
2009, File No. 1-8841)
|
|
x
|
|
x
|
|
10(w)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Restricted
Stock Award Agreement effective February 12, 2010
|
|
x
|
|
x
|
|
*10(x)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Stock Option
Award - Non-Qualified Stock Option Agreement (filed as Exhibit 10(c) to
Form 8-K dated December 29, 2004, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(y)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Stock Option
Award - Non-Qualified Stock Option Agreement (filed as Exhibit 10(d) to
Form 8-K dated December 29, 2004, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(z)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Stock Option
Award - Non-Qualified Stock Option Agreement effective February 15,
2008 (filed as Exhibit 10(b) to Form 8-K dated February 15, 2008,
File No. 1-8841)
|
|
x
|
|
x
|
|
*10(aa)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Stock Option
Award - Non-Qualified Stock Option Agreement effective February 13,
2009 (filed as Exhibit 10(u) to Form 10-K for the year ended
December 31, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
10(bb)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan - Non-Qualified
Stock Option Agreement effective February 12, 2010
|
|
x
|
|
x
|
|
*10(cc)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Deferred Stock
Award Agreement (filed as Exhibit 10(dd) to Form10-K for the year ended
December 31, 2005, File No. 1-8841)
|
|
x
|
|
x
|
|
10(dd)
|
|
Form
of FPL Group Amended and Restated Long Term Incentive Plan Amended and
Restated Deferred Stock Award Agreement effective February 12, 2010
between FPL Group and each of Moray P. Dewhurst and James L.
Robo
|
|
x
|
|
x
|
|
*10(ee)
|
|
FPL
Group Executive Annual Incentive Plan as amended and restated on
December 12, 2008 (filed as Exhibit 10(a) to Form 8-K dated
December 12, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(ff)
|
|
FPL
Group Deferred Compensation Plan effective January 1, 2005 (filed as
Exhibit 10(d) to Form 8-K dated December 12, 2008, File No.
1-8841)
|
|
x
|
|
x
|
|
*10(gg)
|
|
FPL
Group Deferred Compensation Plan, amended and restated effective
January 1, 2003 (filed as Exhibit 10(k) to Form 10-K for the year
ended December 31, 2002, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(hh)
|
|
FPL
Group Executive Long Term Disability Plan effective January 1, 1995
(filed as Exhibit 10(g) to Form 10-K for the year ended December 31,
1995, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(ii)
|
|
FPL
Group Amended and Restated Non-Employee Directors Stock Plan, as amended
and restated October 13, 2006 (filed as Exhibit 10(b) to Form 10-Q
for the quarter ended September 30, 2006, File No.
1-8841)
|
|
x
|
|
|
|
*10(jj)
|
|
FPL
Group 2007 Non-Employee Directors Stock Plan (filed as Exhibit 99 to Form
S-8, File No. 333-143739)
|
|
x
|
|
|
|
*10(kk)
|
|
Non-Employee
Director Compensation Summary effective January 1, 2009 (filed as
Exhibit 10(a) to Form 10-Q for the quarter ended September 30, 2008, File
No. 1-8841)
|
|
x
|
|
x
|
|
10(ll)
|
|
FPL
Group Non-Employee Director Compensation Summary effective January 1,
2010
|
|
x
|
|
|
|
*10(mm)
|
|
Form
of Amended and Restated Executive Retention Employment Agreement between
FPL Group and each of Christopher A. Bennett, Robert L. McGrath, James W.
Poppell, Antonio Rodriguez and John A. Stall (filed as Exhibit 10(g) to
Form 8-K dated December 12, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
10(nn)
|
|
Form
of Amended and Restated Executive Retention Employment Agreement effective
December 10, 2009 between FPL Group and each of Lewis Hay, III, Moray
P. Dewhurst, James L. Robo, Armando J. Olivera, F. Mitchell Davidson,
Armando Pimentel, Jr., and Charles E. Sieving
|
|
x
|
|
x
|
|
*10(oo)
|
|
Amended
and Restated Employment Agreement with Lewis Hay, III dated December 12,
2008 (filed as Exhibit 10(f) to Form 8-K dated December 12, 2008, File No.
1-8841)
|
|
x
|
|
x
|
|
10(pp)
|
|
Amended
and Restated Employment Letter with Lewis Hay, III dated December 10,
2009
|
|
x
|
|
x
|
|
*10(qq)
|
|
Executive
Retention Employment Agreement between FPL Group and Joseph T. Kelliher
dated as of May 21, 2009 (filed as Exhibit 10(b) to Form 10-Q for the
quarter ended June 30, 2009, File No. 1-8841)
|
|
x
|
|
x
|
|
10(rr)
|
|
Executive
Retention Employment Agreement between FPL Group and Manoochehr K. Nazar
dated as of January 1, 2010
|
|
x
|
|
x
|
|
Exhibit
Number
|
|
Description
|
|
FPL
Group
|
|
FPL
|
|
|
|
|
|
|
|
|
|
*10(ss)
|
|
Restricted
Stock Award and Retention Agreement between FPL Group and K. Michael
Davis dated August 28, 2008 (filed as Exhibit 10(b) to Form 10-Q for
the quarter ended September 30, 2008, File No. 1-8841)
|
|
x
|
|
x
|
|
*10(tt)
|
|
Guarantee
Agreement between FPL Group and FPL Group Capital, dated as of
October 14, 1998 (filed as Exhibit 10(y) to Form 10-K for the year
ended December 31, 2001, File No. 1-8841)
|
|
x
|
|
|
|
12(a)
|
|
Computation
of Ratios
|
|
x
|
|
|
|
12(b)
|
|
Computation
of Ratios
|
|
|
|
x
|
|
21
|
|
Subsidiaries
of FPL Group
|
|
x
|
|
|
|
23
|
|
Consent
of Independent Registered Public Accounting Firm
|
|
x
|
|
x
|
|
31(a)
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer of FPL
Group
|
|
x
|
|
|
|
31(b)
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer of FPL
Group
|
|
x
|
|
|
|
31(c)
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer of
FPL
|
|
|
|
x
|
|
31(d)
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer of
FPL
|
|
|
|
x
|
|
32(a)
|
|
Section
1350 Certification of FPL Group
|
|
x
|
|
|
|
32(b)
|
|
Section
1350 Certification of FPL
|
|
|
|
x
|
|
101.INS
|
|
XBRL
Instance Document of FPL Group
|
|
x
|
|
|
|
101.SCH
|
|
XBRL
Schema Document
|
|
x
|
|
|
|
101.PRE
|
|
XBRL
Presentation Linkbase Document
|
|
x
|
|
|
|
101.CAL
|
|
XBRL
Calculation Linkbase Document
|
|
x
|
|
|
|
101.LAB
|
|
XBRL
Label Linkbase Document
|
|
x
|
|
|
|
101.DEF
|
|
XBRL
Definition Linkbase Document
|
|
x
|
|
|
¾¾¾¾¾¾¾¾¾¾
*
Incorporated herein by reference
FPL
Group and FPL agree to furnish to the SEC upon request any instrument with
respect to long-term debt that FPL Group and FPL have not filed as an exhibit
pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation
S-K.
FPL
GROUP, INC. SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FPL
Group, Inc.
|
JAMES
L. ROBO
|
|
|
James
L. Robo
President
and Chief Operating Officer
|
|
Date: February
25, 2010
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
Signature and Title as of
February 25, 2010:
LEWIS
HAY, III
|
|
K.
MICHAEL DAVIS
|
Lewis
Hay, III
Chairman
and Chief Executive Officer
and
Director
(Principal
Executive Officer)
|
|
K.
Michael Davis
Controller
and Chief Accounting Officer
(Principal
Accounting Officer)
|
ARMANDO
PIMENTEL, JR.
|
|
|
Armando
Pimentel, Jr.
Executive
Vice President, Finance
and
Chief Financial Officer
(Principal
Financial Officer)
|
|
|
Directors:
SHERRY
S. BARRAT
|
|
OLIVER
D. KINGSLEY, JR.
|
Sherry
S. Barrat
|
|
Oliver
D. Kingsley, Jr.
|
ROBERT
M. BEALL, II
|
|
RUDY
E. SCHUPP
|
Robert
M. Beall, II
|
|
Rudy
E. Schupp
|
J.
HYATT BROWN
|
|
WILLIAM
H. SWANSON
|
J.
Hyatt Brown
|
|
William
H. Swanson
|
JAMES
L. CAMAREN
|
|
MICHAEL
H. THAMAN
|
James
L. Camaren
|
|
Michael
H. Thaman
|
J.
BRIAN FERGUSON
|
|
HANSEL
E. TOOKES, II
|
J.
Brian Ferguson
|
|
Hansel
E. Tookes, II
|
TONI
JENNINGS
|
|
PAUL
R. TREGURTHA
|
Toni
Jennings
|
|
Paul
R. Tregurtha
|
FLORIDA
POWER & LIGHT COMPANY SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Florida
Power & Light Company
|
ARMANDO
J. OLIVERA
|
|
|
Armando
J. Olivera
President
and Chief Executive Officer
and
Director
(Principal
Executive Officer)
|
|
Date: February
25, 2010
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
Signature and Title as of
February 25, 2010:
ARMANDO
PIMENTEL, JR.
|
|
K.
MICHAEL DAVIS
|
Armando
Pimentel, Jr.
Executive
Vice President, Finance
and
Chief Financial Officer and Director
(Principal
Financial Officer)
|
|
K.
Michael Davis
Vice
President, Accounting and Chief Accounting Officer
(Principal
Accounting Officer)
|
Directors:
LEWIS
HAY, III
|
|
|
Lewis
Hay, III
JAMES
L. ROBO
|
|
|
James
L. Robo
ANTONIO
RODRIGUEZ
|
|
|
Antonio
Rodriguez
JOHN
A. STALL
|
|
|
John
A. Stall
|
|
|
Supplemental
Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the
Exchange Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Exchange Act
No
annual report, proxy statement, form of proxy or other proxy soliciting material
has been sent to security holders of FPL during the period covered by this
Annual Report on Form 10-K for the fiscal year ended December 31,
2009.
Exhibit
3(ii)a
FPL
GROUP, INC.
AMENDED
AND RESTATED BYLAWS
ARTICLE
I. MEETINGS OF SHAREHOLDERS
Section
1.
Annual
Meeting.
The annual meeting of the shareholders of the
Corporation shall be held at the time and place designated by the board of
directors of the Corporation.
Section
2.
Special
Meetings.
Special meetings of the shareholders may be called
by the chairman of the board of directors or the president or the secretary of
the Corporation and shall be called upon the written request of a majority of
the entire board of directors or the holder or holders of not less than a
majority of all the outstanding shares of stock of the Corporation entitled to
vote on the matter or matters to be presented at the meeting. Such
request shall state the purpose or purposes of the proposed
meeting. No business shall be conducted at any special meeting other
than the business for which the special meeting is called as set forth in the
notice of the special meeting. Special meetings shall be held at the
time and place designated by the chief executive officer of the
Corporation.
Section
3.
Place and
Presiding Officer.
Meetings of the shareholders may be held
within or without the State of Florida.
Meetings of the shareholders may be
presided over by the chairman of the board, the president or any vice
president. The secretary of the Corporation, or any person chosen by
the person presiding over the shareholders' meeting, shall act as secretary for
the meeting.
Section
4.
Notice.
Written
notice stating the place, day and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called, shall
be given not less than ten nor more than sixty days before the meeting,
personally, by United States mail, or in such other manner as may be permitted
by law, by or at the direction of the chairman of the board, the president, the
secretary, or the officer or persons calling the meeting. If mailed,
such notice shall be deemed to be given when deposited in the United States mail
addressed to the shareholder at his or her address as it appears on the stock
transfer books of the Corporation, with postage thereon prepaid.
Section
5.
Notice of
Adjourned Meetings.
When a meeting is adjourned to another
time or place, it shall not be necessary to give any notice of the adjourned
meeting if the time and place to which the meeting is adjourned are announced at
the meeting at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted on the original date
of the meeting. If, however, after the adjournment the board of
directors fixes a new record date for the adjourned meeting, a notice of the
adjourned meeting shall be given as provided in Section 4 of this Article I to
each shareholder of record on the new record date entitled to vote at such
meeting.
Section
6.
Closing
of Transfer Books and Fixing Record Date.
For the purpose of
determining shareholders entitled to notice of, or to vote at, any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
purpose, the board of directors may provide that the stock transfer books shall
be closed for a stated period not to exceed, in any case, sixty days (or such
longer period as may from time to time be permitted by law). If the
stock transfer books shall be closed for the purpose of determining shareholders
entitled to notice of, or to vote at, a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such
meeting.
In lieu of closing the stock transfer
books, the board of directors may fix in advance a date as the record date for
any determination of shareholders, such date in any case to be not more than
sixty days (or such longer period as may from time to time be permitted by law)
and, in case of a meeting of shareholders, not less than ten days prior to the
date on which the particular action requiring such determination of shareholders
is to be taken.
If the stock transfer books are not
closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed or the date on which the resolution of the board of directors
declaring such dividend is adopted, as the case may be, shall be the record date
for such determination of shareholders.
When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this Section 6, such determination shall apply to any adjournment thereof,
unless the board of directors fixes a new record date for the adjourned
meeting.
Section
7.
Shareholder
Quorum and Voting.
(a)
Quorum
and General Voting Requirements
. A majority of the total number of shares
outstanding and entitled to vote, present in person or represented by proxy
thereat, shall constitute a quorum at a meeting of shareholders for the
transaction of business, except as otherwise provided by the Florida Business
Corporation Act or by the Corporation's Articles of Incorporation, as amended
and restated from time to time (the "Charter"). If a specified item
of business is required to be voted on by a class or series of shares, a
majority of the total number of shares outstanding and entitled to vote of such
class or series, present in person or represented by proxy thereat, shall
constitute a quorum at a meeting of shareholders for the transaction of such
item of business by such class or series. If, however, a quorum does
not exist at a meeting, the holders of a majority of the shares present at such
meeting and entitled to vote may adjourn the meeting from time to time, without
notice other than by announcement at the meeting, until the requisite number of
shares entitled to vote shall be present. At any such adjourned
meeting at which a quorum exists, any business may be transacted which might
have been transacted at the meeting as originally noticed. After a
quorum has been established at a meeting, the subsequent withdrawal of
shareholders, so as to reduce the number of shares entitled to vote at the
meeting below the number required for a quorum, shall not affect the validity of
any action taken at the meeting or any adjournment thereof.
For purposes of this Section 7, (1)
shares entitled to vote on any item of business presented for action by
shareholders at a meeting, present in person or represented by proxy thereat,
shall be counted for purposes of establishing a quorum for the transaction of
all business at such meeting, and (2) broker non-votes, if any, with respect to
any item of business shall not count as shares entitled to vote on that item of
business.
If a quorum exists, action on a matter
(other than the election of directors) shall be approved by the shareholders of
the Corporation if the votes cast by shareholders present in person or
represented by proxy at the meeting and entitled to vote on the matter favoring
such action exceed the number of votes cast by such shareholders opposing such
action.
(b)
Election
of Directors
. If a quorum exists, a nominee for director shall
be elected to the board of directors if the votes cast for such nominee's
election by shareholders present in person or represented by proxy at the
meeting and entitled to vote on the matter exceed the votes cast by such
shareholders against such nominee's election; provided, however, that if the
number of persons considered by the shareholders for election as directors
exceeds the total number of directors to be elected, directors shall be elected
by a plurality of the votes cast; and further provided that all persons
considered for election (other than those recommended for nomination by or at
the direction of the board of directors or any duly authorized committee
thereof) shall have met all applicable requirements and procedures in being
placed in nomination and considered for election, including without limitation
the requirements set forth in these bylaws and in all applicable laws, rules and
regulations.
(c) Notwithstanding
the foregoing provisions of this Section 7, any item of business may require a
greater or different vote (i) by express provision of the Florida Business
Corporation Act or the Charter, or (ii) to the extent permitted by the Florida
Business Corporation Act, by express provision of these bylaws or by action of
the board of directors, in which event such greater or different vote
requirement shall govern or, if so provided in such a requirement or action of
the board of directors, shall apply in addition to the vote otherwise
required.
Section
8.
Inspectors
of Election.
Prior to each meeting of shareholders, the board
of directors shall appoint not less than one nor more than five inspectors of
election who shall have such duties and perform such functions in connection
with the meeting as shall be determined by the board of directors.
Section
9.
Notice of Shareholder
Business and Director Nominations
.
(a) (1)
General
. Nominations
of persons for election to the board of directors of the Corporation and the
proposal of any other business to be considered by the shareholders of the
Corporation may be made at any annual meeting of shareholders, only (i) pursuant
to the Corporation's notice of meeting (or any supplement thereto), (ii) by or
at the direction of the board of directors (or any duly authorized committee
thereof) or (iii) by any shareholder of the Corporation who (A) is a shareholder
of record at the time of the giving of the notice provided for in this Section 9
and at the time of the annual meeting, (B) is entitled to vote at the annual
meeting on the election of directors or proposal and (C) complies with the
notice procedures set forth in this Section 9 as to such business or
nomination. Clause (iii) of this Section 9(a)(1) shall be the
exclusive means for a shareholder to make nominations or submit other business
(other than matters properly brought under Rule 14a-8 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and included in the
Corporation’s notice of meeting) before an annual meeting of
shareholders.
(2)
Timely
Notice
. Without qualification or limitation, for any
nominations or any other business to be properly brought before an annual
meeting by a shareholder of the Corporation pursuant to Section 9(a)(1)(iii)
hereof, the shareholder previously must have given timely notice thereof in
proper written form (as more fully described in Section 9(a)(3) hereof) to the
secretary of the Corporation and any such other business must constitute a
proper matter for shareholder action. To be timely, a shareholder's notice must
be delivered to the secretary of the Corporation in person or by facsimile, or
sent by U.S. certified mail and received by the secretary of the Corporation, at
the principal executive offices of the Corporation, not earlier than the opening
of business on the 120th day prior and not later than the close of business on
the 90th day prior to the first anniversary of the date of the Corporation’s
immediately preceding annual meeting; provided, however, that in the event that
the date of the annual meeting is more than 30 days earlier or more than 60 days
later than such first anniversary date, notice by the shareholder to be timely
must be so delivered or received not earlier than the opening of business on the
120th day prior to the date of such annual meeting and not later than the close
of business on the later of the 90th day prior to the date of such annual
meeting or the 10th day following the day on which public announcement of the
date of such annual meeting is first made by the Corporation. In no event shall
any adjournment or postponement of an annual meeting or the public announcement
thereof commence a new time period (or extend any time period) for the giving of
notice by a shareholder as described above.
(3)
Notice
in
Proper
Written Form
. To be in proper written form, a shareholder's
notice to the secretary of the Corporation (whether given pursuant to Section
9(a) or Section 9(b) hereof) must set forth in writing:
(A) as
to the shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made:
(i) the
name and address of such shareholder as they appear on the Corporation’s books,
and of such beneficial owner, if any;
(ii)
information about all holdings or other interests in the Corporation’s
securities, including without limitation:
(a) the
class or series and number of shares of the Corporation which are, directly or
indirectly, owned of record and/or owned beneficially by the shareholder and
such beneficial owner, if any, and a representation that the shareholder and
beneficial owner, if any, will notify the Corporation in writing of the class or
series and number of such shares owned of record and beneficially as of the
record date for the meeting, promptly following the later of the record date and
the date notice of the record date is first publicly announced;
(b) any
option, warrant, convertible security, stock appreciation right, or similar
right with an exercise or conversion privilege or a settlement payment or
mechanism at a price related to any class or series of shares of the Corporation
or with a value derived in whole or in part from the value of any class or
series of shares of the Corporation, whether or not such instrument or right
shall be subject to settlement in the underlying class or series of capital
stock of the Corporation or otherwise (a “Derivative Instrument”) directly or
indirectly owned beneficially by such shareholder and beneficial owner, if any,
and any other direct or indirect opportunity to profit or share in any profit
derived from any increase or decrease in the value of shares of the
Corporation;
(c) any
proxy, contract, arrangement, understanding or relationship pursuant to which
such shareholder and beneficial owner, if any, has a right to vote any shares of
any security of the Corporation;
(d) any
short interest in any security of the Corporation (for purposes hereof, a person
or entity shall be deemed to have a short interest in a security if such person
or entity directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has the opportunity to profit or share
in any profit derived from any decrease in the value of the subject
security);
(e) any
rights to dividends on the shares of the Corporation owned beneficially by such
shareholder and beneficial owner, if any, that are separated or separable from
the underlying shares of the Corporation;
(f) any
proportionate interest in shares of the Corporation or Derivative Instruments
held, directly or indirectly, by (X) a general or limited partnership in which
such shareholder and beneficial owner, if any, is a general partner or, directly
or indirectly, beneficially owns an interest in a general partner or (Y) a
limited liability company in which such shareholder and beneficial owner, if
any, is a managing member or, directly or indirectly, beneficially owns an
interest in a managing member or (Z) another entity or enterprise in which such
shareholder and beneficial owner, if any, serves in a similar management
capacity or directly or indirectly, beneficially owns an interest in an entity
or enterprise that serves in such a management capacity; and
(g) any
performance-related fees (other than an asset-based fee) that such shareholder
and beneficial owner, if any, is entitled to based on any increase or decrease
in the value of shares of the Corporation or Derivative Instruments, if any, as
of the date of such notice, including without limitation any such interests held
by such shareholder’s and beneficial owner’s, if any, affiliates, any person or
entity with whom such shareholder and beneficial owner, if any, is acting in
concert or members of such shareholder’s and beneficial owner’s, if any,
immediate family sharing the same household (which information shall be
supplemented by such shareholder and beneficial owner, if any, not later than
ten (10) days after the later of the record date for the annual meeting or the
date on which the record date for the annual meeting is first publicly announced
to disclose such ownership as of the record date);
(iii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such annual meeting on the matter proposed and
intends to appear in person or by proxy at such meeting to propose such
nomination or other business;
(iv) if
the shareholder intends to solicit proxies in support of such shareholder's
proposal, a representation to that effect; and
(v) any
other information relating to such shareholder and beneficial owner, if any,
that would be required to be disclosed in a proxy statement or other filings
required to be made in connection with solicitations of proxies for, as
applicable, the proposal and/or for the election of directors in a contested
election pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder.
(B) if
the notice relates to any business that the shareholder proposes to bring before
the meeting other than a nomination of a director or directors:
(i) a
brief description of the business desired to be brought before the meeting, the
text of the proposal or business (including the text of any resolutions proposed
for consideration), the reasons for conducting such business at the meeting, any
material interest of such shareholder and beneficial owner, if any, in such
business and, in the event that such business includes a proposal to amend the
Charter or by-laws of the Corporation, the language of the proposed amendment;
and
(ii) a
description of all agreements, arrangements and understandings between such
shareholder and beneficial owner, if any, and any other person or persons
(including the names of such persons) in connection with the proposal of such
business by such shareholder.
(C) If
the shareholder proposes to nominate a person for election to the board of
directors, as to each such person whom the shareholder proposes to
nominate:
(i)
all information relating to such person that would be required to be disclosed
in a proxy statement or other filings required to be made in connection with
solicitations of proxies for the election of directors in a contested election
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder (including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director if elected);
and
(ii) a
description of all direct and indirect compensation and other material monetary
agreements, arrangements and understandings during the past three years, and any
other material relationships, between or among such shareholder and beneficial
owner, if any, and their respective affiliates and associates, or others acting
in concert therewith, on the one hand, and each proposed nominee, and his or her
respective affiliates and associates, or others acting in concert therewith, on
the other hand, including without limitation all information that would be
required to be disclosed pursuant to Rule 404 promulgated by the Securities and
Exchange Commission under Regulation S-K (or any successor rule or regulation)
if the shareholder making the nomination and any beneficial owner on whose
behalf the nomination is made, if any, or any affiliate or associate thereof or
person acting in concert therewith, were the “registrant” for purposes of such
rule and the nominee were a director or executive officer of such “registrant”;
and
(D) with
respect to each nominee for election to the board of directors, include a
completed and signed questionnaire, representation and agreement as required by
Article 1, Section 10 hereof. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of such proposed nominee to
serve as an independent director of the Corporation or that could be material to
a reasonable shareholder’s understanding of the independence, or lack thereof,
of such nominee.
(4)
Notwithstanding anything in Section 9(a)(2) above to the contrary, in the event
that the number of directors to be elected to the board of directors at an
annual meeting of the shareholders is increased in accordance with Article II,
Section 2 and there is no public announcement naming all of the nominees for
directors or specifying the size of the increased board of directors made by the
Corporation at least 90 days prior to the first anniversary of the date of the
immediately preceding annual meeting, a shareholder's notice required by this
Section 9 shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to the
secretary of the Corporation in person or by facsimile, or sent by U.S.
certified mail and received by the secretary of the Corporation, at the
principal executive offices of the Corporation, not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
(5) For
purposes of this Section 9, (a) an “affiliate”
of, or person
“affiliated” with, a specified person, is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person specified, and (b) an “associate”
,
when used to indicate a
relationship with any person, means (i) a corporation or organization of which
such person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (ii)
any trust or other estate in which such person has a substantial beneficial
interest or as to which such person serves as trustee or in a similar capacity,
and (iii) any relative or spouse of such person, or any relative of such spouse,
who has the same home as such person or who is a director or officer of the
Corporation or any of its subsidiaries.
(b)
Special
Meetings of Shareholders
.
Only such business shall
be conducted at a special meeting of shareholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting. Nominations
of persons for election to the board of directors may be made at a special
meeting of shareholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (i) by or at the direction of the board of
directors (or any duly authorized committee thereof) or (ii) provided that the
board of directors has determined that directors shall be elected at such
meeting, by any shareholder of the Corporation who (i) is a shareholder of
record at the time of the giving of notice provided for in this Section 9 and at
the time of the special meeting, (ii) is entitled to vote at the meeting for the
election of directors and (iii) complies with the notice procedures set forth in
this Section 9 as to such nomination. In the event a special meeting of
shareholders is properly called by the Corporation for the purpose of electing
one or more directors to the board of directors, any such shareholder may
nominate a person or persons (as the case may be), for election to such
position(s) as specified in the Corporation's notice of meeting, if the
shareholder’s notice required by Sections 9(a)(2) and 9(a)(3) hereof with
respect to any nomination (including the completed and signed questionnaire,
representation and agreement required by Section 9(a)(3)(D) hereof) shall be
delivered to the secretary of the Corporation in person or by facsimile, or sent
by U.S. certified mail and received by the secretary of the Corporation, at the
principal executive offices of the Corporation, not earlier than the opening of
business on the 120th day prior to such special meeting and not later than the
close of business on the later of the 90th day prior to such special meeting or
the 10th day following the day on which public announcement is first made by the
Corporation of the date of such special meeting and of the fact that directors
are to be elected. In no event shall any adjournment or postponement of a
special meeting or the public announcement thereof commence a new time period
(or extend any time period) for the giving of notice by a shareholder as
described above.
(c) If
the notice requirements set forth in this Section 9 are satisfied by a
shareholder and such shareholder's nominee or proposal has been included in a
proxy statement that has been prepared by management of the Corporation to
solicit proxies for the applicable meeting of shareholders and such shareholder
does not appear or send a qualified representative to present such nominee or
proposal at such meeting, the Corporation need not present such nominee or
proposal for a vote at such meeting notwithstanding that proxies in respect of
such vote may have been received by the Corporation. For purposes of this
Section 9, to be considered a qualified representative of the shareholder, a
person must be authorized by a writing executed by such shareholder or an
electronic transmission (as defined in the Florida Business Corporation Act)
delivered by such shareholder to the secretary of the Corporation (in the case
of a writing, delivered in person or by facsimile, or sent by U.S. certified
mail and received, at the principal executive offices of the Corporation) to act
for such shareholder as proxy at the meeting of shareholders and such person
must produce such writing or electronic transmission, or a reliable printed
reproduction of such writing or electronic transmission, at the meeting of
shareholders.
(d) Except as otherwise provided in the
Corporation’s Charter, only such persons as are nominated in accordance with the
procedures set forth in this Article I, Section 9 or are chosen to fill any
vacancy occurring in the board of directors in accordance with Article II,
Section 3 shall be eligible to serve as directors and only such business shall
be conducted at a meeting of shareholders as shall have been brought before the
meeting in accordance with the procedures set forth in this Article I, Section
9. Except as otherwise provided by law, the Charter or these bylaws,
the chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this Article 1, Section 9, and, if any proposed nomination or business is not in
compliance with this Article 1, Section 9, to declare that such defective
proposal or nomination shall be disregarded.
(e) For
purposes of this Section 9, "public announcement" shall mean disclosure in a
press release reported by the Dow Jones News Services, Associated Press or
comparable national news service, in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act and the rules and regulations promulgated
thereunder, or posted on the Corporation’s website.
(f)
Notwithstanding the foregoing provisions of this Section 9, a shareholder shall
also comply with all applicable requirements of the Exchange Act and the rules
and regulations thereunder, and all applicable rules and requirements of the
NYSE or, if the Corporation's shares are not listed on the NYSE, the applicable
rules and requirements of the primary securities exchange or quotation system on
which the Corporation's shares are listed or quoted, in each case with respect
to the matters set forth in this Section 9; provided, however, that any
references in these bylaws to the Exchange Act or the rules promulgated
thereunder are not intended to and shall not limit the requirements applicable
to nominations or proposals as to any other business to be considered pursuant
to Section 9(a)(1)(iii) or Section 9(b) hereof. Nothing in this Section 9 shall
be deemed to affect any rights (i) of shareholders to request inclusion of
proposals in the Corporation's proxy statement pursuant to Rule 14a-8 (or any
successor provision) under the Exchange Act or (ii) of the holders of any series
of stock having preference over the common stock as to dividends or upon
liquidation, if and to the extent provided for under law, the Charter or these
bylaws.
Section
10.
Submission of Questionnaire,
Representation and Agreement
.
To be
eligible to be a nominee for initial election as a director of the Corporation,
a person must deliver (in accordance with the time periods prescribed for
delivery of notice under Section 9 of this Article I) to the secretary of the
Corporation in person or by facsimile, or sent by U.S. certified mail and
received by the secretary of the Corporation, at the principal executive offices
of the Corporation, a written questionnaire with respect to the background and
qualification of such person and the background of any other person or entity on
whose behalf the nomination is being made (which questionnaire shall be provided
by the secretary upon written request) and a written representation and
agreement (in the form provided by the secretary upon written request) that such
person
(i) is
not and will not become a party to (A) any agreement, arrangement or
understanding with, and has not given any commitment or assurance to, any person
or entity as to how such person, if elected as a director of the Corporation,
will act or vote on any issue or question (a "Voting Commitment") that has not
been disclosed to the Corporation or (B) any Voting Commitment that could limit
or interfere with such person's ability to comply, if elected as a director of
the Corporation, with such person's fiduciary duties under applicable
law,
(ii) is
not and will not become a party to any agreement, arrangement or understanding
with any person or entity other than the Corporation with respect to any direct
or indirect compensation, reimbursement or indemnification in connection with
service or action as a director that has not been disclosed therein,
and
(iii)
in such person's individual capacity and on behalf of any person or entity on
whose behalf the nomination is being made, would be in compliance, if elected as
a director of the Corporation, and will comply with, applicable law and all
applicable publicly disclosed corporate governance, business conduct, ethics,
conflict of interest, corporate opportunities, confidentiality and stock
ownership and trading policies and guidelines of the Corporation.
ARTICLE
II. DIRECTORS
Section
1.
Function.
All
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed under the direction of,
the board of directors.
Section
2.
Number.
The
number of directors of the Corporation shall not be less than three nor more
than sixteen. The authorized number of directors, within the limits
above specified, shall be determined by the affirmative vote of a majority of
the entire board of directors given at a regular or special meeting
thereof. No decrease in the number of directors constituting the
board of directors shall shorten the term of any incumbent
director.
At each annual meeting the shareholders
shall elect directors to hold office until the next succeeding annual
meeting. Each director so elected shall hold office for the term of
which he or she is elected and until his or her successor shall have been
elected and qualified or until his or her earlier resignation, retirement,
removal from office or death. No person who shall have attained the
age of 72 years by the date of election shall be eligible for election as a
director of the Corporation, provided, however, that the board of directors is
authorized, in circumstances it deems appropriate and by unanimous approval of
all of the directors then in office (except the director whose qualification is
the subject of the action), to render a director then in office (the “Affected
Director”) eligible for election as a director of the Corporation until either
the date of election next following the Affected Director’s 73
rd
birthday or the date of election next following the Affected Director’s 74
th
birthday, and no director who shall have attained the age of 70 years by the
date of election shall be eligible for election as chairman of the board of
directors; provided, however, that these limitations shall not be applied in a
manner which would cause the involuntary retirement of an employee of the
Corporation.
Section
3.
Vacancies.
Any
vacancy occurring in the board of directors, including any vacancy created by
reason of an increase in the number of directors, shall be filled only by a
majority vote of the directors then in office, and directors so chosen shall
hold office for a term expiring at the next annual meeting of
shareholders.
Section
4.
Removal.
A
director may be removed by the majority vote of the entire board of
directors. A director may also be removed by shareholders, but only
for cause and only by the affirmative vote of the holders of at least 75% of the
voting power of the then outstanding shares of Voting Stock (as defined in the
Charter), voting together as a single class. Except as may otherwise
be provided by law, cause for removal shall be construed to exist only if the
director whose removal is proposed has been convicted of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct appeal
or has been adjudged by a court of competent jurisdiction to be liable for
negligence or misconduct in the performance of his or her duty to the
Corporation in a matter of substantial importance to the Corporation, and such
adjudication is no longer subject to direct appeal.
Notwithstanding the foregoing, and
except as otherwise provided by law, in the event that holders of any class or
series of Preferred Stock are entitled, voting separately as a class, to elect
one or more directors, the provisions of this Section 4 shall apply, in respect
to the removal of a director so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares of Voting Stock voting together as a single
class.
Section
5.
Quorum
and Voting.
A majority of the number of directors fixed by, or
in the manner provided in, these bylaws shall constitute a quorum for the
transaction of business; provided, however, that whenever, for any reason, a
vacancy occurs in the board of directors, the quorum shall consist of a majority
of the remaining directors until the vacancy has been filled. The act
of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the board of directors.
Section
6.
Executive
and Other Committees.
The board of directors, by resolution
adopted by a majority of the entire board of directors, may designate from among
its members an executive committee and one or more other
committees. Each committee of the board of directors shall have such
powers and functions as may be delegated to it by resolution adopted by the
entire board of directors, except as prohibited by law.
The board of directors, by resolution
adopted in accordance with this Section 6, shall designate a chairman for each
committee it establishes who shall preside at all meetings of the committee and
who shall have such additional duties as shall from time to time be designated
by the board of directors.
The board of directors, by resolution
adopted in accordance with this Section 6, may designate one or more directors
as alternate members of any such committee, who may act in the place and stead
of any absent member or members at any meeting of such committee.
Section
7.
Meetings.
Regular
meetings of the board of directors shall be held without notice at the location
of and immediately after the adjournment of the annual meeting of shareholders
in each year, and at such other time and place, as may be determined by the
board of directors. Notice of the time and place of special meetings
of the board of directors shall be given to each director either by personal
delivery, e-mail, facsimile, reputable overnight delivery service, telegram,
cablegram, or by telephone at least two days prior to the
meeting. Notice may also be given through the postal service if
mailed at least five days prior to the meeting.
Notice of a meeting of the board of
directors need not be given to any director who signs a waiver of notice either
before or after the meeting. Attendance of a director at a meeting
shall constitute a waiver of notice of such meeting and a waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting, any objection to the transaction of business because
the meeting is not lawfully called or convened.
Except as otherwise provided in the
Charter, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
A majority of the directors present,
whether or not a quorum exists, may adjourn any meeting of the board of
directors to another time and place. Notice of any such adjourned
meeting shall be given to the directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of adjournment, to the other directors.
Meetings of the board of directors may
be called by the chairman of the board, the president, or by any two
directors. Regular meetings of committees shall be held on the
schedule approved by the Board. Special meetings of committees may be
called by the chairman of the board, the chairman of such committee or any two
members of such committee.
Members of the board of directors may
participate in a meeting of such board by means of a conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time. Participation by
such means shall constitute presence in person at a meeting.
Meetings of the board of directors
shall be presided over by the chairman of the board, or if such position is
vacant or such person is absent, by the lead director (if such a position shall
have been duly established by the board of directors), or, if such position is
vacant or such person is absent, by the chief executive officer designated as
such by the board of directors pursuant to Article III, Section 1 of these
bylaws. If none of the chairman of the board, the lead director or
the chief executive officer is present, the directors shall elect a chairman for
the meeting from one of their members present.
Section
8.
Action
Without a Meeting.
Any action required to be taken at a
meeting of the directors or any action which may be taken at a meeting of the
directors or a committee thereof, may be taken without a meeting if a consent in
writing, setting forth the action so to be taken, signed by all of the directors
or all the members of the committee, as the case may be, is filed in the minutes
of the proceedings of the board or of the committee. Such consent
shall have the same effect as a unanimous vote.
ARTICLE
III. OFFICERS
Section
1.
Types.
The
officers of the Corporation shall consist of a chairman of the board, a
president, a secretary, a treasurer and such vice presidents and other officers
as may be appointed by the board of directors or by a duly appointed officer
authorized by these bylaws or by resolution of the board of directors to appoint
officers.
The chief executive officer of the
Corporation shall be either the chairman of the board or the president as
determined by the board of directors.
The chief executive officer of the
Corporation shall have the authority to appoint one or more assistant
treasurers, assistant controllers and assistant secretaries.
Section
2.
Appointment
and Term.
The officers of the Corporation shall be appointed
by the board of directors or by a duly appointed officer authorized to appoint
officers. Each officer shall hold office until the first board of
directors meeting immediately following the annual shareholders' meeting next
occurring after his or her appointment to office and until his or her successor
shall have been appointed or until his or her earlier resignation, retirement,
removal from office or death.
Section
3.
Duties.
All
officers of the Corporation shall have such authority and shall perform such
duties as generally pertain to their respective offices and shall have such
additional authority and perform such additional duties as may from time to time
be determined by resolution of the board of directors.
Section
4.
Removal
of Officers.
Any officer may be removed by the board of
directors at any time with or without cause. Any officer appointed by
the chief executive officer may be removed by the chief executive officer at any
time with or without cause.
Removal of any officer shall be without
prejudice to the contract rights, if any, of the person so removed; provided,
however, the appointment of any officer shall not of itself create contract
rights.
ARTICLE IV. STOCK
CERTIFICATES
Certificates representing shares in the
Corporation shall be signed by the president or a vice president and the
secretary or an assistant secretary. In addition, such certificates
may be signed by a transfer agent or a registrar (other than the Corporation
itself) and may be sealed with the seal of the Corporation or a facsimile
thereof. Any or all of the signatures on such certificates may be
facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, such certificate may be issued by the Corporation with
the same effect as if he or she were such officer, transfer agent or registrar
at the date of its issuance.
Each certificate representing shares
shall state upon the face thereof: the name of the Corporation; that
the Corporation is organized under the laws of Florida; the name of the person
or persons to whom issued; the number and class of shares and the designation of
the series, if any, which such certificate represents; and the par value of each
share represented by such certificate or a statement that the shares are without
par value.
ARTICLE V.
DIVIDENDS
The board of directors of the
Corporation may, from time to time, declare, and the Corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law and by the Charter.
ARTICLE
VI. INDEMNIFICATION/ADVANCEMENT OF EXPENSES
Section
1.
Right to
Indemnification.
Each person who was or is made a party or is
threatened to be made a party to or was or is called as a witness or was or is
otherwise involved in any Proceeding in connection with his or her status as an
Indemnified Person, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted under the Florida Business Corporation Act (the
"Act"), as the same now exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the Act permitted the
Corporation to provide prior to such amendment). Such indemnification
shall cover all expenses incurred by an Indemnified Person (including, but not
limited to, attorneys' fees and other expenses of litigation) and all
liabilities and losses (including, but not limited to, judgments, fines, ERISA
or other excise taxes or penalties and amounts paid or to be paid in settlement)
incurred by such person in connection therewith.
Notwithstanding the foregoing, except
with respect to indemnification specified in Section 3 of this Article VI,
the Corporation shall indemnify an Indemnified Person in connection with a
Proceeding (or part thereof) initiated by such person only if authorization for
such Proceeding (or part thereof) was not denied by the board of directors of
the Corporation prior to 60 days after receipt of notice thereof from such
person.
For purposes of this Article
VI:
|
(i)
a "Proceeding" is an action, suit or proceeding, whether civil, criminal,
administrative or investigative, and any appeal
therefrom;
|
|
(ii)
an "Indemnified Person" is a person who is, or who was (whether at the
time the facts or circumstances underlying the Proceeding occurred or were
alleged to have occurred or at any other time), (A) a director or officer
of the Corporation, (B) a director, officer or other employee of the
Corporation serving as a trustee or fiduciary of an employee benefit plan
of the Corporation, (C) an agent or non-officer employee of the
Corporation as to whom the Corporation has agreed to grant such indemnity,
or (D) serving at the request of the Corporation in any capacity with any
entity or enterprise other than the Corporation and as to whom the
Corporation has agreed to grant such
indemnity.
|
Section
2.
Expenses.
Expenses,
including attorneys' fees, incurred by an Indemnified Person in defending or
otherwise being involved in a Proceeding in connection with his or her status as
an Indemnified Person shall be paid by the Corporation in advance of the final
disposition of such Proceeding, including any appeal therefrom, (i) in the case
of (A) a director or officer, or former director or officer, of the Corporation
or (B) a director, officer or other employee, or former director, officer or
other employee, of the Corporation serving as a trustee or fiduciary of any
employee benefit plan of the Corporation, upon receipt of an undertaking
("Undertaking") by or on behalf of such person to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by the
Corporation; or (ii) in the case of any other Indemnified Person, upon such
terms and as the board of directors, the chairman of the board or the president
of the Corporation deems appropriate.
Notwithstanding the foregoing, in
connection with a Proceeding (or part thereof) initiated by such person, except
a Proceeding authorized by Section 3 of this Article VI, the Corporation shall
pay said expenses in advance of final disposition only if authorization for such
Proceeding (or part thereof) was not denied by the board of directors of the
Corporation prior to 60 days after receipt of a request for such advancement
accompanied by an Undertaking.
A person to whom expenses are advanced
pursuant to this Section 2 shall not be obligated to repay such expenses
pursuant to an Undertaking until the final determination of any pending
Proceeding in a court of competent jurisdiction concerning the right of such
person to be indemnified or the obligation of such person to repay pursuant to
such Undertaking.
Section
3.
Protection
of Rights.
If a claim for indemnification under Section 1 of
this Article VI is not promptly paid in full by the Corporation after a written
claim has been received by the Corporation or if expenses pursuant to Section 2
of this Article VI have not been promptly advanced after a written request for
such advancement accompanied by an Undertaking has been received by the
Corporation (in each case, except if authorization thereof was denied by the
board of directors of the Corporation as provided in Article VI, Section 1 and
Section 2, as applicable), the Indemnified Person may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the claim or
the advancement of expenses. If successful, in whole or in part, in
such suit, such Indemnified Person shall also be entitled to be paid the
reasonable expense thereof. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any Proceeding in advance of its final disposition where the required
Undertaking has been tendered to the Corporation) that indemnification of the
Indemnified Person is prohibited by law, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation
(including its board of directors, independent legal counsel, or its
shareholders) to have made a determination, if required, prior to the
commencement of such action that indemnification of the Indemnified Person is
proper in the circumstances, nor an actual determination by the Corporation
(including its board of directors, independent legal counsel, or its
shareholders) that indemnification of the Indemnified Person is prohibited,
shall be a defense to the action or create a presumption that indemnification of
the Indemnified Person is prohibited.
Section
4.
Miscellaneous.
|
(i)
Power to Request Service and to Grant
Indemnification.
The chairman of the board or the
president or the board of directors may request any director, officer,
agent or employee of the Corporation to serve as its representative in the
position of a director or officer (or in a substantially similar capacity)
of an entity or enterprise other than the Corporation, and may grant to
such person indemnification by the Corporation as described in Section 1
of this Article VI.
|
|
(ii)
Non-Exclusivity of Rights.
The rights conferred on any
person by this Article VI shall not be exclusive of any other rights
which such person may have or hereafter acquire under any statute,
provision of the Charter, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise. The board of directors
shall have the authority, by resolution, to provide for such
indemnification of employees or agents of the Corporation or others and
for such other indemnification of directors, officers, employees or agents
as it shall deem appropriate.
|
|
(iii)
Insurance Contracts and Funding.
The Corporation may
maintain insurance, at its expense, to protect itself and any director,
officer, employee or agent of or person serving in any other capacity
with, the Corporation or another corporation, partnership, joint venture,
trust or other enterprise (including serving as a trustee or fiduciary of
any employee benefit plan) against any expenses, liabilities or losses,
whether or not the Corporation would have the power to indemnify such
person against such expenses, liabilities or losses under the
Act. The Corporation may enter into contracts with any
director, officer, agent or employee of the Corporation in furtherance of
the provisions of this Article VI, and may create a trust fund, grant a
security interest or use other means (including, without limitation, a
letter of credit) to ensure the payment of such amounts as may be
necessary to effect the advancing of expenses and indemnification as
provided in this Article VI.
|
|
(iv)
Contractual Nature.
The provisions of this Article VI
shall continue in effect as to a person who has ceased to be a director,
officer, agent or employee and shall inure to the benefit of the heirs,
executors and administrators of such person. This Article VI
shall be deemed to be a contract between the Corporation and each person
who, at any time that this Article VI is in effect, serves or served in
any capacity which entitles him or her to indemnification hereunder and
any repeal or other modification of this Article VI or any repeal or
modification of the Act, or any other applicable law shall not limit any
rights of indemnification with respect to Proceedings in connection with
which he or she is an Indemnified Person, or advancement of expenses in
connection with such Proceedings, then existing or arising out of events,
acts or omissions occurring prior to such repeal or modification,
including without limitation, the right to indemnification for
Proceedings, and advancement of expenses with respect to such Proceedings,
commenced after such repeal or modification to enforce this Article VI
with regard to Proceedings arising out of acts, omissions or events
arising prior to such repeal or
modification.
|
|
(v)
Savings Clause.
If this Article VI or any portion hereof
shall be invalidated or held to be unenforceable on any ground by any
court of competent jurisdiction, the decision of which shall not have been
reversed on appeal, the Corporation shall nevertheless (A) indemnify each
Indemnified Person as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement and (B) advance
expenses in accordance with Section 2 of this Article VI, in each case
with respect to any Proceeding in connection with which he or she is an
Indemnified Person, including an action by or in the right of the
Corporation, to the fullest extent permitted by any applicable portion of
this Article VI that shall not have been invalidated or held to be
unenforceable and as permitted by applicable
law.
|
ARTICLE
VII. ACTION WITH RESPECT TO
SECURITIES OF OTHER
CORPORATIONS
Unless otherwise directed by the board
of directors, the chief executive officer or his or her designee shall have
power to vote and otherwise act on behalf of the Corporation, in person or by
proxy, at any meeting of shareholders of or with respect to any action of
shareholders of any other corporation in which the Corporation may hold
securities and to otherwise exercise any and all rights and powers which the
Corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE
VIII. AMENDMENT
The power to adopt, alter, amend or
repeal bylaws shall be vested in the board of directors. Bylaws
adopted by the board of directors may be repealed or changed, and new bylaws may
be adopted by shareholders only if such repeal, change or adoption is approved
by the affirmative vote of the holders of at least 75% of the then outstanding
Voting Stock (as defined in the Charter), voting together as a single
class.
ARTICLE
IX. CONTINUING EFFECT OF BYLAW PROVISIONS
Any provisions contained in these
bylaws which, at the time of its adoption, was authorized or permitted by
applicable law shall continue to remain in full force and effect until such time
as such provision is specifically amended in accordance with these bylaws,
notwithstanding any subsequent modification of such law (except to the extent
such bylaw provision expressly provides for its modification by or as a result
of any such subsequently enacted law).
(Amended
and restated effective February 12, 2010)
Exhibit
10(d)
Appendix
A2
Last
Revised On: October 15, 2009
|
Name
|
Company
|
Pre-4/1/1997
Participant
|
Class
A “Bonus SERP” Status
|
Double
Basic Credits
|
Double
Transition Credits
|
BENNETT,
CHRISTOPHER A. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
KELLIHER,
JOSEPH T. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
MCGRATH,
ROBERT L.
3
*
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
X
1
|
POPPELL,
JAMES W. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
RODRIGUEZ,
ANTONIO *
|
FPL
Group, Inc
|
X
|
|
|
|
SIEVING,
CHARLES E. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
CUTLER,
PAUL I. *
|
FPL
Group, Inc
|
|
X
1
|
|
|
DAVIS,
K. MICHAEL *
|
FPL
Group, Inc
|
X
|
|
|
|
FROGGATT,
CHRIS N. *
|
FPL
Group, Inc
|
|
X
1
|
|
|
|
|
|
|
|
|
1
The
Compensation Committee has expressly identified these items and
acknowledged that they are subject to Internal Revenue Code Section
409A. In particular, these items include: (i) the additional
deferred compensation provided by the designation of certain officers as
Class A Executives, effective on or after January 1, 2006; and (ii) the
additional deferred compensation set forth in SERP Amendment #4 to the
Prior Plan (meaning amounts deferred by certain senior officers specified
by the Compensation Committee who became participants in the SERP on or
after April 1, 1997 at the rate of two times the basic credit and, to the
extent applicable, the transition credit under the cash balance formula in
the SERP for their pensionable earnings on or after January 1,
2006). Importantly, nothing in Amendment #4 to the Prior Plan,
the SERP, Compensation Committee resolutions, or any other document shall
be construed as subjecting to Code Section 409A any deferrals made under
the SERP
prior
to
January 1, 2005, except as expressly noted herein.
3
Due
to material modification of the SERP benefit pursuant to Executive
Retention Employment Agreements entered into after December 31, 2004, no
amount of the SERP benefit for Mr. McGrath is eligible for grandfathered
treatment under Code Section 409A.
*Executive
Officer of FPL Group, Inc.
|
Exhibit
10(e)
Appendix
A1
Last
Revised On: January 1, 2010
|
Name
|
Company
|
Pre-4/1/1997
Participant
|
Class
A “Bonus SERP” Status
|
Double
Basic Credits
|
Double
Transition Credits
|
HAY,
LEWIS, III *
|
FPL
Group, Inc
|
|
X
|
|
|
PIMENTEL,
ARMANDO *
|
FPL
Group, Inc
|
|
X
|
X
1
|
|
ROBO,
JAMES L. *
|
FPL
Group, Inc
|
|
X
|
X
1
|
|
DEWHURST,
MORAY P. *
|
FPL
Group, Inc
|
|
X
|
X
1
|
|
OLIVERA,
ARMANDO J. *
|
Florida
Power & Light Company
|
X
|
X
|
|
|
DAVIDSON, F.
MITCHELL *
|
NextEra
Energy Resources, LLC
|
|
X
1
|
X
1
|
|
NAZAR,
MANO K. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
1
The
Compensation Committee has expressly identified these items and
acknowledged that they are subject to Internal Revenue Code Section
409A. In particular, these items include: (i) the additional
deferred compensation provided by the designation of certain officers as
Class A Executives, effective on or after January 1, 2006; and (ii) the
additional deferred compensation set forth in SERP Amendment #4 to the
Prior Plan (meaning amounts deferred by certain senior officers specified
by the Compensation Committee who became participants in the SERP on or
after April 1, 1997 at the rate of two times the basic credit and, to the
extent applicable, the transition credit under the cash balance formula in
the SERP for their pensionable earnings on or after January 1,
2006). Importantly, nothing in Amendment #4 to the Prior Plan,
the SERP, Compensation Committee resolutions, or any other document shall
be construed as subjecting to Code Section 409A any deferrals made under
the SERP prior to January 1, 2005, except as expressly noted
herein.
*Executive
Officer of FPL Group, Inc.
|
Appendix
A2
Last
Revised On: January 1, 2010
|
Name
|
Company
|
Pre-4/1/1997
Participant
|
Class
A “Bonus SERP” Status
|
Double
Basic Credits
|
Double
Transition Credits
|
BENNETT,
CHRISTOPHER A. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
KELLIHER,
JOSEPH T. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
MCGRATH,
ROBERT L.
2
*
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
X
1
|
POPPELL,
JAMES W. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
RODRIGUEZ,
ANTONIO *
|
FPL
Group, Inc
|
X
|
|
|
|
SIEVING,
CHARLES E. *
|
FPL
Group, Inc
|
|
X
1
|
X
1
|
|
CUTLER,
PAUL I. *
|
FPL
Group, Inc
|
|
X
1
|
|
|
DAVIS,
K. MICHAEL *
|
FPL
Group, Inc
|
X
|
|
|
|
FROGGATT,
CHRIS N. *
|
FPL
Group, Inc
|
|
X
1
|
|
|
1
The
Compensation Committee has expressly identified these items and
acknowledged that they are subject to Internal Revenue Code Section
409A. In particular, these items include: (i) the additional
deferred compensation provided by the designation of certain officers as
Class A Executives, effective on or after January 1, 2006; and (ii) the
additional deferred compensation set forth in SERP Amendment #4 to the
Prior Plan (meaning amounts deferred by certain senior officers specified
by the Compensation Committee who became participants in the SERP on or
after April 1, 1997 at the rate of two times the basic credit and, to the
extent applicable, the transition credit under the cash balance formula in
the SERP for their pensionable earnings on or after January 1,
2006). Importantly, nothing in Amendment #4 to the Prior Plan,
the SERP, Compensation Committee resolutions, or any other document shall
be construed as subjecting to Code Section 409A any deferrals made under
the SERP
prior
to
January 1, 2005, except as expressly noted herein.
2
Due
to material modification of the SERP benefit pursuant to an Executive
Retention Employment Agreement entered into after December 31, 2004, no
amount of the SERP benefit for Mr. McGrath is eligible for grandfathered
treatment under Code Section 409A.
*Executive
Officer of FPL Group, Inc.
|
Exhibit
10(j)
ANNEX
B
Supplemental
Benefits
1. Pursuant
to Section 5.03 of the FPL Group, Inc. Supplemental Executive Retirement Plan
(the “Plan”), which provides for the approval of this Supplement to the Plan,
additional pension credits shall be added to the Supplemental Pension Benefit
for certain Participants from time to time. The amount and effective
date for the additional credits shall be shown on this Supplement to the
Plan.
2. Schedule
of Supplemental Benefits:
Participant
|
Amount/Description
of Supplemental Pension Benefit
|
Effective
Date
|
Manoochehr
K.
Nazar
|
A
$300,000 one-time credit to the participant’s Supplemental Pension
Benefit
|
12/14/2007
|
3. This
Supplement shall be deemed incorporated by reference into the
Plan. In the event of any discrepancy between this Supplement and the
provisions of the Plan, the provisions of this Supplement shall
govern.
Exhibit
10(p)
AMENDED
AND RESTATED
PERFORMANCE
SHARE AWARD AGREEMENT
under
the
FPL
GROUP, INC. AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
This
Performance Share Award Agreement ("Agreement") between FPL Group, Inc.
(hereinafter called the "Company") and
___________________
(hereinafter called the "Participant") is dated ______ ___, 20___ and
amends and restates the performance Share Award Agreement between the Company
and the Participant dated _________ __, 2009.
1.
Grant of Performance Share Award
- The Company hereby grants to the Participant a Performance Share Award
("Award") which confers upon the Participant the right to receive a number of
shares ("Performance Shares") of the Company's common stock, par value $.01 per
share ("Common Stock"), determined as set forth in section 2, below. The
Participant's right to receive the Performance Shares shall be subject to the
terms and conditions set forth in this Agreement and in the Company's Amended
and Restated Long Term Incentive Plan, as amended from time to time (the
"Plan"). The performance period for which this Award is granted is
the period beginning on January 1, 2009 and ending on December 31,
2011 (such period hereinafter referred to as the "Performance
Period").
The
"Target" number of Performance Shares granted to the Participant for the
Performance Period is __________.
2.
Payment of Performance Share
Award
– (a) Payment of the Award shall be conditioned upon (i) the
achievement of the annual corporate performance objective established by the
Compensation Committee of the Board (or such other committee designated to
administer the Plan, including, for participants who are not executive officers,
a committee to whom administration has been delegated under the Plan (the
"Committee")) for the Company under the FPL Group, Inc. Amended and Restated
Executive Annual Incentive Plan (or any successor annual incentive plan,
hereinafter the "Annual Incentive Plan") for each of the three calendar years of
the Performance Period (each, a “Corporate Performance Objective”), (ii)
certification of such achievement for each year in the Performance Period by the
Committee and (iii) Committee approval of the number of shares to be paid to the
Participant. Subject to the provisions of the Plan, the Participant
shall have the right to payment of that percentage of the Participant's Target
number of Performance Shares set forth in section 1 hereof which is equal to the
average of the Participant's percentage achievement under the Annual Incentive
Plan for each year in the Performance Period, but in no event more than 160% of
such Target number of Performance Shares. In addition, the maximum number of
shares of Common Stock which a Participant may receive in any year under this
Agreement and pursuant to all other stock-based Awards which are also subject to
performance criteria is 250,000 shares of Common Stock. The Committee
has the discretion to reduce the payout, but not to increase it.
(b) Notwithstanding the
foregoing or the provisions of section 4 hereof, if (i) the Participant is a
party to an Executive Retention Employment Agreement with the Company
("Retention Agreement") and has not waived his or her rights, either entirely or
in pertinent part, under such Retention Agreement, and (ii) the Effective Date
(as defined in the Retention Agreement as in effect on the date hereof) has
occurred and the Employment Period (as defined in the Retention Agreement as in
effect on the date hereof) has commenced and has not terminated pursuant to
section 3(b) of the Retention Agreement (as in effect on the date hereof) then,
so long as the Participant is then employed by the Company or one of its
subsidiaries or affiliates:
(1) one-half
(1/2) of the Performance Shares shall vest upon a Change of Control (as defined
in the Retention Agreement as in effect on the date hereof) and shall be payable
as soon as practicable thereafter (but in all cases within thirty days of the
Change of Control) earned at a deemed achievement level equal to the higher of
(x) the Target number of shares of Common Stock set forth in this Agreement or
(y) the average level (expressed as a percentage of the Target number of shares
of Common Stock set forth in this Agreement) of achievement in respect of
similar performance stock-based awards which matured over the three fiscal years
immediately preceding the year in which the Change of Control occurred;
and
(2) the
other one-half (1/2) of the Performance Shares (earned at a deemed achievement
level calculated as set forth in subsection (1), above) shall vest on the
earlier of (i) the date which is one year after the date on which the Change of
Control occurs, if the Participant is then employed by the Company or its
successor, payable as soon as practicable thereafter, or (ii) the date on which
the Participant's employment with the Company or its successor terminates,
payable as soon as practicable thereafter (but in all cases no later than the
15
th
day of the third month following the
end of the first taxable year in which the right to such payment
arises).
(c) Notwithstanding
the provisions of sections 2(a) and 4 hereof, if the Participant is not a party
to a Retention Agreement, the rights of the Participant upon a Change of Control
(as defined in the Plan) shall be as set forth in section 9 of the Plan on the
date hereof.
(d) If,
as a result of a Change of Control, the Common Stock is exchanged for or
converted into a different form of equity security and/or the right to receive
other property (including cash), payment in respect of the Performance Shares
shall, to the maximum extent practicable, be made in the same form.
3.
Payment of Award
- Awards
shall be payable in shares of Common Stock. Upon delivery of
Performance Shares to the Participant, the Company shall have the right to
withhold from any such distribution, in order to meet the Company's obligations
for the payment of withholding taxes, shares of Common Stock with a Fair Market
Value (as defined in the Plan) equal to the minimum statutory withholding for
taxes (including federal and state income taxes and payroll taxes applicable to
the supplemental taxable income relating to such distribution) and any other tax
liabilities for which the Company has an obligation relating to such
distribution. For the purpose of this Agreement, the date of
determination of Fair Market Value shall be the date as of which the
Participant's rights to payments under this Award are determined by the
Committee in accordance with section 2 hereof.
Delivery
of Performance Shares shall occur as soon as administratively practicable
following the Committee's determination of the Participant's right to such
delivery.
4.
Termination of Employment
–
Except as otherwise set forth herein, in the event the Participant terminates
employment with the Company during the Performance Period, the Participant's
right to payment of the Award shall be determined as follows:
(a)
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If
the Participant's termination of employment is due to resignation,
discharge, or retirement prior to age 65 which does not meet the condition
set forth in section 4(c), below, all rights to the Award shall be
immediately forfeited.
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(b)
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If
the Participant's termination of employment is due to (1) total and
permanent disability (as defined under the Company's executive long-term
disability plan), (2) death, or (3) retirement on or after age 65 not
meeting the condition set forth in section 4(c),
below:
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(i)
|
Participant's
Target number of Performance Shares for the Performance Period shall be
reduced to a prorated number of Performance Shares based on the number of
full days of Participant's service during the Performance Period;
and
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(ii)
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Participant's
right to Performance Shares under Section 2 hereof shall be determined as
the Participant's Target number of Performance Shares, reduced as set
forth in section 4(b)(i), times the average of the Participant's
percentage achievement under the Annual Incentive Plan for each year in
the Performance Period (subject to a maximum of 160%); provided that,
subject to section 4(e) hereof, the Participant's percentage achievement
for the year in which the Participant's employment terminates, and any
subsequent years in the Performance Period, shall be deemed to be 100%;
and
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(iii)
|
Payment
of Awards under this section 4(b) shall be made after the end of the
Performance Period at the time and in the manner specified in section 3
hereof.
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Notwithstanding
the foregoing, if, after termination of employment but prior to payment of any
Award, the Participant breaches any provision hereof, including without
limitation the provisions of section 9 hereof, the Participant shall immediately
forfeit all rights to the Award.
(c) If
the Participant's termination of employment is due to retirement on or after age
50, and if, but only if, such retirement is evidenced by a writing which
specifically acknowledges that this provision shall apply to such retirement and
is executed by the Company's chief executive officer (or, if the Participant is
an executive officer, by a member of the Committee or the chief executive
officer at the direction of the Committee, other than with respect to himself),
Participant's Target number of Performance Shares for the Performance Period
shall be as set forth in section 1 hereof and Participant's right to Performance
Shares under Section 2 hereof shall be determined as the Participant's Target
number of Performance Shares times the average of the Participant's percentage
achievement under the Annual Incentive Plan for each year in the Performance
Period (subject to a maximum of 160%); provided that, subject to section 4(e)
hereof, the Participant's percentage achievement for the year in which the
Participant's employment terminates, and any subsequent years in the Performance
Period, shall be deemed to be 100%. Payment of Awards under this
section 4(c) shall be made after the end of the Performance Period at the time
and in the manner specified in section 3 hereof. Notwithstanding the
foregoing, if, after termination of employment but prior to payment of any
Award, the Participant breaches any provision hereof, including without
limitation the provisions of section 9 hereof, the Participant shall immediately
forfeit all rights to the Award.
(d) If
a Participant's employment is terminated during the Performance Period for any
reason other than as set forth in sections 4(a), (b) and (c) above, or if an
ambiguity exists as to the interpretation of those sections, the Committee shall
determine whether the Participant's Award shall be forfeited or whether the
Participant shall be entitled to full vesting or pro rata vesting based upon
full days of service completed during the Performance Period. Payment
of Awards under this section 4(d) shall be made after the end of the Performance
Period at the time and in the manner specified in section 3 hereof.
Notwithstanding the foregoing, if, after termination of employment but prior to
payment of any Award, the Participant breaches any provision hereof, including
without limitation the provisions of section 9 hereof, the Participant shall
immediately forfeit all rights to the Award.
(e) Notwithstanding anything to the
contrary in this Agreement, if the Participant’s employment is terminated during
the Performance Period due to retirement as set forth in section 4(b)(3) or
section 4(c), no portion of any Award that is subject to the achievement of the
Corporate Performance Objective for the portion of the Performance Period (1)
beginning January 1, 2010 and ending on December 31, 2010(“2010 Period”) or
(2) the portion of the Performance Period beginning January 1, 2011 and ending
on December 31, 2011 (“2011 Period”), to which the Participant would
otherwise be entitled pursuant to section 4(b) or section 4(c) shall be payable
unless and until the date on which such Corporate Performance Objective shall
have been achieved, as certified by the Committee as contemplated by section
2(a). If the Corporate Performance Objective is not achieved and
certified for the 2010 Period, the Participant's percentage achievement for the
2010 Period shall be deemed to be 0%. If the Corporate Performance
Objective is not achieved and certified for the 2011 Period, the Participant's
percentage achievement for the 2011 Period shall be deemed to be
0%.
Notwithstanding
the foregoing, if the Employment Period (as defined in the Retention Agreement
as in effect on the date hereof) is not then in effect, and the Participant
terminates employment for Good Reason (as defined in the Participant's
Employment Letter with the Company (as in effect on the date hereof, the
"Employment Letter") or the Company terminates the Participant's employment
without Cause (as defined in the Employment Letter), prior to the end of the
Performance Period, then the Participant shall be entitled to a pro rata portion
of this Performance Share Award, calculated assuming that the Participant's
percentage achievement for the year in which the Participant's employment
terminates, and any subsequent years in the Performance Period, shall be deemed
to be 100%; provided, that no portion of any Award that is subject to
the achievement of the Corporate Performance Objective for the portion of the
Performance Period (1) beginning January 1, 2010 and ending on December 31, 2010
(“2010 Period”) or (2) the portion of the Performance Period beginning January
1, 2011 and ending on December 31, 2011 (the “2011 Period”) shall be
payable unless and until the date on which such Corporate Performance Objective
shall have been achieved, as certified by the Committee as contemplated by
section 2(a). If the Corporate Performance Objective is not achieved
and certified for the 2010 Period, the Participant's percentage achievement for
the 2010 Period shall be deemed to be 0%. If the Corporate
Performance Objective is not achieved and certified for the 2011 Period, the
Participant's percentage achievement for the 2011 Period shall be deemed to be
0%.
5.
Adjustments
- In the event of
any change in the outstanding shares of Common Stock by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination or exchange of shares or similar corporate change, then the Target
number of Performance Shares granted hereunder shall be adjusted
proportionately. No adjustment will be made in connection with the
payment by the Company of any cash dividend on its Common Stock or in connection
with the issuance by the Company of any warrants, rights, or options to acquire
additional shares of Common Stock or of securities convertible into Common
Stock.
6.
No Rights of Stock Ownership
- This grant of Performance Shares does not entitle the Participant to any
interest in or to any dividend, voting, or other rights normally attributable to
Common Stock ownership.
7.
Nonassignability
- The
Participant's rights and interest in the Performance Shares may not be sold,
transferred, assigned, pledged, exchanged, hypothecated or otherwise disposed of
except, in the event of death, to a designated beneficiary or by will or by the
laws of descent and distribution.
8.
Effect Upon Employment
- This
Agreement is not to be construed as giving any right to the Participant for
continuous employment by the Company or a subsidiary or
affiliate. The Company and its subsidiaries and affiliates retain the
right to terminate the Participant at will and with or without cause at any time
(subject to any rights the Participant may have under the Participant's
Retention Agreement and the Participant’s Employment Letter).
9.
Protective Covenants
-
In consideration of the
Award granted under this Agreement, the Participant covenants and agrees as
follows (the "Protective Covenants"):
(a)
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During
the Participant's employment with the Company, and for a two-year period
following the termination of the Participant's employment with the
Company, Participant agrees (i) not to compete or attempt to compete for,
or act as a broker or otherwise participate in, any projects in which the
Company has at any time done any work or undertaken any development
efforts, or (ii) directly or indirectly solicit any of the Company's
customers, vendors, contractors, agents, or any other parties with which
the Company has an existing or prospective business relationship, for the
benefit of the Participant or for the benefit of any third party, nor
shall the Participant accept consideration or negotiate or enter into
agreements with such parties for the benefit of the Participant or any
third party.
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(b)
|
During
the Participant's employment with the Company and for a two-year period
following the termination of the Participant's employment with the
Company, the Participant shall not, directly or indirectly, on behalf of
the Participant or for any other business, person or entity, entice,
induce or solicit or attempt to entice, induce or solicit any employee of
the Company or its subsidiaries or affiliates to leave the Company's
employ (or the employ of such subsidiary or affiliate) or to hire or to
cause any employee of the Company to become employed for any reason
whatsoever.
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(c)
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The
Participant shall not, at any time or in any way, disparage the Company or
its current or former officers, directors, and employees, orally or in
writing, or make any statements that may be derogatory or detrimental to
the Company's good name or business
reputation.
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(d)
|
The
Participant acknowledges that the Company would not have an adequate
remedy at law for monetary damages if the Participant breaches these
Protective Covenants. Therefore, in addition to all remedies to
which the Company may be entitled for a breach or threatened breach of
these Protective Covenants, including but not limited to monetary damages,
the Company will be entitled to specific enforcement of these Protective
Covenants and to injunctive or other equitable relief as a remedy for a
breach or threatened breach. In addition, upon any breach of
these Protective Covenants or any separate confidentiality agreement or
confidentiality provision between the Company and the Participant, all
Participant's rights to receive Performance Shares not theretofor
delivered under this Agreement shall be
forfeited.
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(e)
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For
purposes of this section 9, the term "Company" shall include all
subsidiaries and affiliates of the Company, including, without limitation,
Florida Power & Light Company and NextEra Energy Resources, LLC, and
their respective subsidiaries and affiliates (such subsidiaries and
affiliates being hereinafter referred to as the "FPL Entities"). The
Company and the Participant agree that each of the FPL Entities is an
intended third-party beneficiary of this section 9, and further agree that
each of the FPL Entities is entitled to enforce the provisions of this
section 9 in accordance with its
terms.
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(f)
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Notwithstanding
anything to the contrary contained in this Agreement, the terms of these
Protective Covenants shall survive the termination of this Agreement and
shall remain in effect.
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10.
Successors
and Assigns
- This Agreement
shall inure to the benefit of and shall be binding upon the Company and the
Participant and their respective heirs, successors and assigns.
11.
Incorporation of Plan's Terms
- This Agreement is made under and subject to the provisions of the Plan, and
all the provisions of the Plan are also provisions of this Agreement (including,
but not limited to, the provisions of Section 9 of the Plan pertaining to a
Change of Control; provided that if the Participant is a party to a Retention
Agreement, the provisions of section 2(b) hereof shall supercede the provisions
of the Plan with respect to a Change of Control). If there is a
difference or conflict between the provisions of this Agreement and the
mandatory provisions of the Plan, the provisions of the Plan will
govern. If there is a difference or conflict between the provisions
of this Agreement and a provision of the Plan as to which the Committee is
authorized to make a contrary determination, the provisions of this Agreement
will govern. Except as otherwise expressly defined in this Agreement,
all terms used herein are used as defined in the Plan as it may be amended from
time to time. The Company and Committee retain all authority and
powers granted by the Plan as it may be amended from time to time not expressly
limited by this Agreement. The Participant acknowledges that he or
she may not and will not rely on any statement of account or other communication
or document issued in connection with the Plan other than the Plan, this
Agreement, and any document signed by an authorized representative of the
Company that is designated as an amendment of the Plan or this
Agreement.
12.
Interpretation
- The
Committee has the sole and absolute right to interpret the provisions of this
Agreement.
13
.
Governing Law/Jurisdiction
-
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Florida, without regard to its conflict of laws
principles. All suits, actions, and proceedings relating to this
Agreement may be brought only in the courts of the State of Florida located in
Palm Beach County or in the United States District Court for the Southern
District of Florida in West Palm Beach, Florida. The Company and the
Participant shall consent to the nonexclusive personal jurisdiction of the
courts described in this section for the purpose of all suits, actions, and
proceedings relating to the Agreement or the Plan. The Company and
Participant each waive all objections to venue and to all claims that a court
chosen in accordance with this section is improper based on a venue or a forum
non conveniens claim.
14.
Amendment
.
This
Agreement may be amended, in whole or in part and in any manner not inconsistent
with the provisions of the Plan, at any time and from time to time, by written
agreement between the Company and the Participant.
15.
Data Privacy
. By
entering into this Agreement, the Participant: (i) authorizes the
Company or any of its subsidiaries or affiliates, and any agent of the Company
or a subsidiary or affiliate administering the Plan or providing Plan
recordkeeping services, to disclose to the Company or any of its subsidiaries or
affiliates such information and data as the Company or any such subsidiary or
affiliate shall reasonably request in order to facilitate the administration of
this Agreement; and (ii) authorizes the Company or any of its subsidiaries or
affiliates to store and transmit such information in electronic form, provided
such information is appropriately safeguarded in accordance with Company
policy.
By
signing this Agreement, the Participant accepts and agrees to all of the
foregoing terms and provisions and to all the terms and provisions of the Plan
incorporated herein by reference and confirms that he has received a copy of the
Plan.
IN
WITNESS WHEREOF, the parties have signed this Agreement as of the date and year
first above written.
FPL
GROUP, INC.
By: ______________________________
Accepted: _________________________
Participant
Exhibit
10(q)
PERFORMANCE
SHARE AWARD AGREEMENT
for
the Performance Period beginning January 1, 2010
and
ending December 31, 2012
under
the
FPL
GROUP, INC. AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
This
Performance Share Award Agreement ("Agreement") between FPL Group, Inc.
(hereinafter called the "Company") and
___________________
(hereinafter called the "Participant") is dated February ___,
2010.
1.
Grant of Performance Share Award
- The Company hereby grants to the Participant a Performance Share Award
("Award") which confers upon the Participant the right to receive a number of
shares ("Performance Shares") of the Company's common stock, par value $.01 per
share ("Common Stock"), determined as set forth in section 2, below. The
Participant's right to receive the Performance Shares shall be subject to the
terms and conditions set forth in this Agreement and in the Company's Amended
and Restated Long Term Incentive Plan, as amended from time to time (the
"Plan"). The performance period for which this Award is granted is
the period beginning on January 1, 2010 and ending on December 31,
2012 (such period hereinafter referred to as the "Performance
Period").
The
"Target" number of Performance Shares granted to the Participant for the
Performance Period is __________.
2.
Payment of Performance Share
Award
– (a) Payment of the Award shall be conditioned upon (i) the
achievement of the annual corporate performance objective established by the
Compensation Committee of the Board or such other Board committee designated to
administer the Plan, (including, for participants who are not executive
officers, a committee to whom administration has been delegated under the Plan)
(the "Committee") for the Company under the FPL Group, Inc. Amended and Restated
Executive Annual Incentive Plan (or any successor annual incentive plan,
hereinafter the "Annual Incentive Plan") for each of the three calendar years of
the Performance Period (each, a “Corporate Performance Objective”), (ii)
certification of such achievement for each year in the Performance Period by the
Committee and (iii) Committee approval of the number of shares to be paid to the
Participant. Subject to the provisions of the Plan, the Participant
shall have the right to payment of that percentage of the Participant's Target
number of Performance Shares set forth in section 1 hereof which is equal to the
average of the Participant's percentage achievement under the Annual Incentive
Plan for each year in the Performance Period, but in no event more than 160% of
such Target number of Performance Shares. In addition, the maximum number of
shares of Common Stock which a Participant may receive in any year under this
Agreement and pursuant to all other stock-based Awards which are also subject to
performance criteria is 250,000 shares of Common Stock. The Committee
has the discretion to reduce the payout, but not to increase it.
(b) Notwithstanding the
foregoing or the provisions of section 4 hereof, if (i) the Participant is a
party to an Executive Retention Employment Agreement with the Company
("Retention Agreement") and has not waived his or her rights, either entirely or
in pertinent part, under such Retention Agreement, and (ii) the Effective Date
(as defined in the Retention Agreement as in effect on the date hereof) has
occurred and the Employment Period (as defined in the Retention Agreement as in
effect on the date hereof) has commenced and has not terminated pursuant to
section 3(b) of the Retention Agreement (as in effect on the date hereof) then,
so long as the Participant is then employed by the Company or one of its
subsidiaries or affiliates:
(1) one-half
(1/2) of the Performance Shares shall vest upon a Change of Control (as defined
in the Retention Agreement as in effect on the date hereof) and shall be payable
as soon as practicable thereafter (but in all cases within thirty days of the
Change of Control) earned at a deemed achievement level equal to the higher of
(x) the Target number of shares of Common Stock set forth in this Agreement or
(y) the average level (expressed as a percentage of the Target number of shares
of Common Stock set forth in this Agreement) of achievement in respect of
similar performance stock-based awards which matured over the three fiscal years
immediately preceding the year in which the Change of Control occurred;
and
(2) the
other one-half (1/2) of the Performance Shares (earned at a deemed achievement
level calculated as set forth in subsection (1), above) shall vest on the date
after the Change of Control which is the earlier of (i) one year after the date
on which the Change of Control occurs, if the Participant is then employed by
the Company (or a subsidiary, affiliate or successor of the Company), or (ii)
the date on which the Participant's employment with the Company (or such
subsidiary, affiliate or successor of the Company) terminates; payable (whether
under clause (i) or clause (ii) of this section 2(b)(2)) as soon as practicable
thereafter (and in any event no later than the 15
th
day of the third month following the
end of the first taxable year in which the right to such payment
arises).
(c) Notwithstanding
the provisions of sections 2(a) and 4 hereof, if the Participant is not a party
to a Retention Agreement, the rights of the Participant upon a Change of Control
(as defined in the Plan as in effect on the date hereof) shall be as set forth
in section 9 of the Plan as in effect on the date hereof.
(d) If,
as a result of a Change of Control, the Common Stock is exchanged for or
converted into a different form of equity security and/or the right to receive
other property (including cash), payment in respect of the Performance Shares
shall, to the maximum extent practicable, be made in the same form.
3.
Payment of Award
- Awards
shall be payable in shares of Common Stock. Upon delivery of
Performance Shares to the Participant, the Company shall have the right to
withhold from any such distribution, in order to meet the Company's obligations
for the payment of withholding taxes, shares of Common Stock with a Fair Market
Value (as defined in the Plan as in effect on the date hereof) equal to the
minimum statutory withholding for taxes (including federal and state income
taxes and payroll taxes applicable to the supplemental taxable income relating
to such distribution) and any other tax liabilities for which the Company has an
obligation relating to such distribution. For the purpose of this
Agreement, the date of determination of Fair Market Value shall be the date as
of which the Participant's rights to payments under this Award are determined by
the Committee in accordance with section 2 hereof.
Delivery
of Performance Shares shall occur as soon as administratively practicable
following the Committee's determination of the Participant's right to such
delivery.
4.
Termination of Employment
–
Except as otherwise set forth herein and
except to the extent that the Participant’s termination of
employment is governed by the terms of a Retention Agreement (in which event the
terms of such Retention Agreement shall control)
, in the event the
Participant terminates employment with the Company (or a subsidiary, affiliate
or successor of the Company) during the Performance Period, the Participant's
right to payment of the Award shall be determined as follows:
(a)
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If
the Participant's termination of employment is due to resignation,
discharge, or retirement prior to age 65 which does not meet the condition
set forth in section 4(c), below, all rights to the Award shall be
immediately forfeited.
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(b)
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If
the Participant's termination of employment is due to (1) total and
permanent disability (as defined under the Company's executive long-term
disability plan as in effect on the date the Participant’s employment
terminates), (2) death, or (3) retirement on or after age 65 not meeting
the condition set forth in section 4(c),
below:
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(i)
|
Participant's
Target number of Performance Shares for the Performance Period shall be
reduced to a prorated number of Performance Shares based on the number of
full days of Participant's service during the Performance Period;
and
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(ii)
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Participant's
right to Performance Shares under section 2 hereof shall be determined as
the Participant's Target number of Performance Shares, reduced as set
forth in section 4(b)(i), times the average of the Participant's
percentage achievement under the Annual Incentive Plan for each year in
the Performance Period (subject to a maximum of 160%); provided that,
subject to section 4(e) hereof, if the Participant is a Covered Employee
(as defined below) for any year during the Performance Period, the
Participant's percentage achievement for the year in which the
Participant's employment terminates, and any subsequent years in the
Performance Period, shall be deemed to be 100%;
and
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(iii)
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Payment
of Awards under this section 4(b) shall be made after the end of the
Performance Period at the time and in the manner specified in section 3
hereof.
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Notwithstanding
the foregoing, if, after termination of employment but prior to payment of any
Award, the Participant breaches any provision hereof, including without
limitation the provisions of section 9 hereof, the Participant shall immediately
forfeit all rights to the Award. For purposes of this Agreement, a
Participant is a “Covered Employee” if, the Participant is a Covered
Employee as defined by Section 162(m) of the Internal Revenue Code of 1986, as
amended, provided, that, as of the date of termination of the Participant’s
employment, such Section 162(m) is applicable to the Performance
Shares.
(c) If
the Participant's termination of employment is due to retirement on or after age
50, and if, but only if, such retirement is evidenced by a writing which
specifically acknowledges that this provision shall apply to such retirement and
is executed by the Company's chief executive officer (or, if the Participant is
an executive officer, by a member of the Committee or the chief executive
officer at the direction of the Committee, other than with respect to himself),
Participant's Target number of Performance Shares for the Performance Period
shall be as set forth in section 1 hereof and Participant's right to Performance
Shares under section 2 hereof shall be determined as the Participant's Target
number of Performance Shares times the average of the Participant's percentage
achievement under the Annual Incentive Plan for each year in the Performance
Period (subject to a maximum of 160%); provided that, subject to section 4(e)
hereof, if, for any year during the Performance Period, the Participant is a
Covered Employee, the Participant's percentage achievement for the year in which
the Participant's employment terminates, and any subsequent years in the
Performance Period, shall be deemed to be 100%. Payment of Awards
under this section 4(c) shall be made after the end of the Performance Period at
the time and in the manner specified in section 3
hereof. Notwithstanding the foregoing, if, after termination of
employment but prior to payment of any Award, the Participant breaches any
provision hereof, including without limitation the provisions of section 9
hereof, the Participant shall immediately forfeit all rights to the
Award.
(d) If
a Participant's employment is terminated during the Performance Period for any
reason other than as set forth in sections 4(a), (b) and (c) above, or if an
ambiguity exists as to the interpretation of those sections, the Committee shall
determine whether the Participant's Award shall be forfeited or whether the
Participant shall be entitled to full vesting or pro rata vesting based upon
full days of service completed during the Performance Period. Payment
of Awards under this section 4(d) shall be made after the end of the Performance
Period at the time and in the manner specified in section 3 hereof.
Notwithstanding the foregoing, if, after termination of employment but prior to
payment of any Award, the Participant breaches any provision hereof, including
without limitation the provisions of section 9 hereof, the Participant shall
immediately forfeit all rights to the Award.
(e) Notwithstanding anything to the
contrary in this Agreement, if, for any year during the Performance Period, the
Participant is a Covered Employee and the Participant’s employment is terminated
during the Performance Period due to retirement as set forth in section 4(b)(3)
or section 4(c), no portion of any Award that is subject to the achievement of
the Corporate Performance Objective (1) for the portion of the Performance
Period beginning January 1, 2010 and ending on December 31, 2010(“2010
Period”), or (2) for the portion of the Performance Period beginning January 1,
2011 and ending on December 31, 2011 (“2011 Period”), or (3) for the portion of
the Performance Period beginning January 1, 2012 and ending on December 31, 2012
(“2012 Period”), to which the Participant would otherwise be entitled
pursuant to section 4(b) or section 4(c) shall be payable unless and until the
date on which such Corporate Performance Objective shall have been achieved, as
certified by the Committee as contemplated by section 2(a). If the
Corporate Performance Objective is not achieved and certified for the 2010
Period, the Participant's percentage achievement for the 2010 Period shall be
deemed to be 0%. If the Corporate Performance Objective is not
achieved and certified for the 2011 Period, the Participant's percentage
achievement for the 2011 Period shall be deemed to be 0%. If the
Corporate Performance Objective is not achieved and certified for the 2012
Period, the Participant's percentage achievement for the 2012 Period shall be
deemed to be 0%.
[the
following applies only to Mr. Hay] Notwithstanding the foregoing, if the
Employment Period (as defined in the Retention Agreement as in effect on the
date hereof) is not then in effect, and the Participant terminates employment
for Good Reason (as defined in the Participant's Employment Letter with the
Company (as in effect on the date hereof, the "Employment Letter") or the
Company terminates the Participant's employment without Cause (as defined in the
Employment Letter), prior to the end of the Performance Period, then the
Participant shall be entitled to a pro rata portion of this Performance Share
Award, calculated assuming that the Participant's percentage achievement for the
year in which the Participant's employment terminates, and any subsequent years
in the Performance Period, shall be deemed to be 100%; provided,
that no portion of any Award that is subject to the achievement of
the Corporate Performance Objective for (1) the portion of the Performance
Period beginning January 1, 2010 and ending on December 31, 2010 (“2010 Period”)
or (2) the portion of the Performance Period beginning January 1, 2011 and
ending on December 31, 2011 (the “2011 Period”) or (3) the portion of the
Performance Period beginning January 1, 2012 and ending on December 31,
2012 (the “2012 Period”) shall be payable unless and until the
date on which such Corporate Performance Objective shall have been achieved, as
certified by the Committee as contemplated by section 2(a). If the
Corporate Performance Objective is not achieved and certified for the 2010
Period, the Participant's percentage achievement for the 2010 Period shall be
deemed to be 0%. If the Corporate Performance Objective is not
achieved and certified for the 2011 Period, the Participant's percentage
achievement for the 2011 Period shall be deemed to be 0%. If the
Corporate Performance Objective is not achieved and certified for the 2012
Period, the Participant's percentage achievement for the 2012 Period shall be
deemed to be 0%. Notwithstanding the foregoing, if the Employment
Period (as defined in the Retention Agreement as in effect on the date hereof)
is not then in effect, and the Participant terminates employment due to death,
Disability, Retirement or an Approved Early Retirement (each as defined in the
Participant's Employment Letter), prior to the end of the Performance Period,
the Performance Share Award shall be earned in accordance with the Employment
Letter.
5.
Adjustments
- In the event of
any change in the outstanding shares of Common Stock by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination or exchange of shares or similar corporate change, then the Target
number of Performance Shares granted hereunder shall be adjusted
proportionately. No adjustment will be made in connection with the
payment by the Company of any cash dividend on its Common Stock or in connection
with the issuance by the Company of any warrants, rights, or options to acquire
additional shares of Common Stock or of securities convertible into Common
Stock.
6.
No Rights of Stock Ownership
- This grant of Performance Shares does not entitle the Participant to any
interest in or to any dividend, voting, or other rights normally attributable to
Common Stock ownership.
7.
Nonassignability
- The
Participant's rights and interest in the Performance Shares may not be sold,
transferred, assigned, pledged, exchanged, hypothecated or otherwise disposed of
except, in the event of death, to a designated beneficiary or by will or by the
laws of descent and distribution.
8.
Effect Upon Employment
- This
Agreement is not to be construed as giving any right to the Participant for
continuous employment by the Company or a subsidiary or
affiliate. The Company and its subsidiaries and affiliates retain the
right to terminate the Participant at will and with or without cause at any time
(subject to any rights the Participant may have under the Participant's
Retention Agreement [and Employment Letter, in the case of Mr.
Hay]).
9.
Protective Covenants
-
In consideration of the
Award granted under this Agreement, the Participant covenants and agrees as
follows (the "Protective Covenants"):
(a)
|
During
the Participant's employment with the Company, and for a two-year period
following the termination of the Participant's employment with the
Company, Participant agrees (i) not to compete or attempt to compete for,
or act as a broker or otherwise participate in, any projects in which the
Company has at any time done any work or undertaken any development
efforts, or (ii) directly or indirectly solicit any of the Company's
customers, vendors, contractors, agents, or any other parties with which
the Company has an existing or prospective business relationship, for the
benefit of the Participant or for the benefit of any third party, nor
shall the Participant accept consideration or negotiate or enter into
agreements with such parties for the benefit of the Participant or any
third party.
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(b)
|
During
the Participant's employment with the Company and for a two-year period
following the termination of the Participant's employment with the
Company, the Participant shall not, directly or indirectly, on behalf of
the Participant or for any other business, person or entity, entice,
induce or solicit or attempt to entice, induce or solicit any employee of
the Company or its subsidiaries or affiliates to leave the Company's
employ (or the employ of such subsidiary or affiliate) or to hire or to
cause any employee of the Company to become employed for any reason
whatsoever.
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(c)
|
The
Participant shall not, at any time or in any way, disparage the Company or
its current or former officers, directors, and employees, orally or in
writing, or make any statements that may be derogatory or detrimental to
the Company's good name or business
reputation.
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(d)
|
The
Participant acknowledges that the Company would not have an adequate
remedy at law for monetary damages if the Participant breaches these
Protective Covenants. Therefore, in addition to all remedies to
which the Company may be entitled for a breach or threatened breach of
these Protective Covenants, including but not limited to monetary damages,
the Company will be entitled to specific enforcement of these Protective
Covenants and to injunctive or other equitable relief as a remedy for a
breach or threatened breach. In addition, upon any breach of
these Protective Covenants or any separate confidentiality agreement or
confidentiality provision between the Company and the Participant, all
Participant's rights to receive Performance Shares not theretofore
delivered under this Agreement shall be
forfeited.
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(e)
|
For
purposes of this section 9, the term "Company" shall include all
subsidiaries and affiliates of the Company, including, without limitation,
Florida Power & Light Company and NextEra Energy Resources, LLC, and
their respective subsidiaries and affiliates (such subsidiaries and
affiliates being hereinafter referred to as the "FPL Entities"). The
Company and the Participant agree that each of the FPL Entities is an
intended third-party beneficiary of this section 9, and further agree that
each of the FPL Entities is entitled to enforce the provisions of this
section 9 in accordance with its
terms.
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(f)
|
Notwithstanding
anything to the contrary contained in this Agreement, the terms of these
Protective Covenants shall survive the termination of this Agreement and
shall remain in effect.
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10.
Successors
and Assigns
- This Agreement
shall inure to the benefit of and shall be binding upon the Company and the
Participant and their respective heirs, successors and assigns.
11.
Incorporation of Plan's Terms
- This Agreement is made under and subject to the provisions of the Plan, and
all the provisions of the Plan are also provisions of this Agreement (including,
but not limited to, the provisions of section 9 of the Plan pertaining to a
Change of Control as in effect on the date hereof; provided that if the
Participant is a party to a Retention Agreement, the provisions of section 2(b)
hereof shall supersede the provisions of the Plan with respect to a Change of
Control). If there is a difference or conflict between the provisions
of this Agreement and the mandatory provisions of the Plan, the provisions of
the Plan will govern. If there is a difference or conflict between
the provisions of this Agreement and a provision of the Plan as to which the
Committee is authorized to make a contrary determination, the provisions of this
Agreement will govern. Except as otherwise expressly defined in this
Agreement, all terms used herein are used as defined in the Plan as it may be
amended from time to time. The Company and Committee retain all
authority and powers granted by the Plan as it may be amended from time to time
not expressly limited by this Agreement. The Participant acknowledges
that he or she may not and will not rely on any statement of account or other
communication or document issued in connection with the Plan other than the
Plan, this Agreement, and any document signed by an authorized representative of
the Company that is designated as an amendment of the Plan or this
Agreement.
12.
Interpretation
- The
Committee has the sole and absolute right to interpret the provisions of this
Agreement.
13
.
Governing Law/Jurisdiction
-
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Florida, without regard to its conflict of laws
principles. All suits, actions, and proceedings relating to this
Agreement shall be brought only in the courts of the State of Florida located in
Palm Beach County or in the United States District Court for the Southern
District of Florida in West Palm Beach, Florida. The Company and the
Participant shall consent to the personal jurisdiction of the courts described
in this section for the purpose of all suits, actions, and proceedings relating
to the Agreement or the Plan. The Company and Participant each waive
all objections to venue and to all claims that a court chosen in accordance with
this section is improper based on a venue or a forum non conveniens
claim.
14.
Amendment
.
This
Agreement may be amended, in whole or in part and in any manner not inconsistent
with the provisions of the Plan, at any time and from time to time, by written
agreement between the Company and the Participant.
15.
Data Privacy
. By
entering into this Agreement, the Participant: (i) authorizes the
Company or any of its subsidiaries or affiliates, and any agent of the Company
or a subsidiary or affiliate administering the Plan or providing Plan
recordkeeping services, to disclose to the Company or any of its subsidiaries or
affiliates such information and data as the Company or any such subsidiary or
affiliate shall reasonably request in order to facilitate the administration of
this Agreement; and (ii) authorizes the Company or any of its subsidiaries or
affiliates to store and transmit such information in electronic form, provided
such information is appropriately safeguarded in accordance with Company
policy.
By
signing this Agreement, the Participant accepts and agrees to all of the
foregoing terms and provisions and to all the terms and provisions of the Plan
incorporated herein by reference and confirms that he has received a copy of the
Plan.
IN
WITNESS WHEREOF, the parties have signed this Agreement as of the date and year
first above written.
FPL
GROUP, INC.
By: ________________________
Accepted: ___________________
Participant
Exhibit
10(w)
Form
of
RESTRICTED
STOCK AWARD AGREEMENT
under
the
FPL
GROUP, INC. AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
This Restricted Stock Award Agreement
(“Agreement”), between FPL Group, Inc. (hereinafter called the "Company") and
___________________
(hereinafter called the "Participant") is dated
___________________
.
1.
Grant of Restricted Stock
Award
- The Company hereby grants to the Participant
_________
shares of the
Company’s common stock, par value $.01 per share ("Common Stock"), which shares
(the “Awarded Shares”) shall be subject to the restrictions set forth in
sections 2, 3 and 4, below, as well as all other terms and conditions set forth
in this Agreement and in the Company’s Amended and Restated Long Term Incentive
Plan, as amended from time to time (the “Plan”). Subject to the terms
of section 3(d) hereof, the Participant shall have the right to receive
dividends on the Awarded Shares as and when paid.
2.
Vesting - Restrictions and
Limitations
– (a) Subject to the limitations and other terms and
conditions set forth in this Agreement and in the Plan, the Awarded Shares shall
vest, the Company shall remove all restrictions from such Awarded Shares and the
Participant shall obtain unrestricted ownership of the Awarded Shares in
accordance with the schedule set forth below:
-
|
___ shares
on the later
to occur of (i) the date which is [
1 year following
grant
], or (ii) the date on which the Compensation Committee of the
Board or such other committee designated to administer the Plan (the
"Committee") makes the certification described in section 2(b)(i) hereof
(the “First Vest”);
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-
|
___ shares
on the later
to occur of (i) the date which is [
2 years following
grant]
, or (ii) the date on which the Committee makes the
certification described in section 2(b)(ii) hereof (the “Second Vest”);
and
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-
|
___ shares
on the later
to occur of (i) the date which is [
3 years following
grant
], or (ii) the date on which the Committee makes the
certification described in section 2(b)(iii) hereof (the “Final
Vest”)
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The period from the date of grant of
the Awarded Shares through the date immediately preceding the date on which such
Awarded Shares vest shall be hereinafter referred to as the “Restriction
Period.”
(b) Notwithstanding
the provisions of section 2(a) hereof,
(i)
The First Vest shall be conditioned on, subject to and shall not occur until
certification by the Committee (by resolution or in such other manner as the
Committee deems appropriate) that the Corporate Performance Objective (as such
term is defined in the FPL Group, Inc. Executive Annual Incentive Plan as
amended and restated on December 12, 2008) or similar objective under the
Company’s then-existing annual incentive plan, or, if there is no such Corporate
Performance Objective or similar objective so established, such other
appropriate performance target as the Committee may establish (such Corporate
Performance Objective, similar objective or other performance target being
hereinafter referred to as the “Performance Target”), for [
year of grant
] has been
achieved. If the Committee does not or cannot certify that the
Performance Target has been achieved by December 31, [
following year
], then the
Participant shall forfeit the right to the shares subject to the First Vest, and
such shares shall be cancelled.
(ii)
The Second Vest shall be conditioned on, subject to and shall not occur until
certification by the Committee (by resolution or in such other manner as the
Committee deems appropriate) that the Performance Target for [
year following year of grant
]
has been achieved. If the Committee does not or cannot certify that
the Performance Target has been achieved by December 31, [
following year
], then the
Participant shall forfeit the right to the shares subject to the Second Vest,
and such shares shall be cancelled.
(iii)
The Final Vest shall be conditioned on, subject to and shall not occur until
certification by the Committee (by resolution or in such other manner as the
Committee deems appropriate) that the Performance Target for [
two years following year of
grant
] has been achieved. If the Committee does not or cannot
certify that the Performance Target has been achieved by December 31, [
following year
], then the
Participant shall forfeit the right to the shares subject to the Final Vest, and
such shares shall be cancelled.
(c) Notwithstanding the provisions of
sections 2(a) and 2(b), if (i) the Participant is a party to an Executive
Retention Employment Agreement with the Company (“Retention Agreement”) and has
not waived his or her rights, either entirely or in pertinent part, under such
Retention Agreement, and (ii) the Effective Date (as defined in the Retention
Agreement as in effect on the date hereof) has occurred and the Employment
Period (as defined in the Retention Agreement as in effect on the date hereof)
has commenced and has not terminated pursuant to section 3(b) of the Retention
Agreement (as in effect on the date hereof) then, so long as the Participant is
then employed by the Company or one of its subsidiaries or affiliates, the
Awarded Shares shall vest upon a Change of Control (as defined in the Retention
Agreement as in effect on the date hereof), in lieu of the vesting schedule set
forth in this section 2. Notwithstanding the provisions of sections
2(a) and 2(b), if the Participant is not a party to a Retention Agreement, the
rights of the Participant upon a Change of Control (as defined in the Plan as in
effect on the date hereof) shall be as set forth in section 9 of the Plan as in
effect on the date hereof.
(d) If as a result of a Change of
Control (as defined in the Plan as in effect on the date hereof), the shares of
Common Stock are exchanged for or converted into a different form of equity
security and/or the right to receive other property (including cash), payment in
respect of the Restricted Stock shall, to the maximum extent practicable, be
made in the same form.
3.
Terms and Conditions
- The
Awarded Shares shall be registered in the name of the Participant effective on
the date of grant. The Company will issue the Awarded Shares either
(i) in certificated form, subject to a restrictive legend substantially in the
form attached hereto as Exhibit "A" and stop transfer instructions to its
transfer agent, and will provide for retention of custody of the Awarded Shares
prior to vesting and/or (ii) in non-certificated form, subject to restrictions
and instructions of like effect. Prior to vesting (and if the Awarded
Shares have not theretofore been forfeited in accordance herewith), the
Participant shall have the right to enjoy all shareholder rights (including
without limitation the right to receive dividends (subject to forfeiture as more
fully set forth below) and to vote the Awarded Shares at all meetings of the
shareholders of the Company at which holders of Common Stock have the right to
vote), with the exception that:
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(a)
|
The
Participant shall not be entitled to delivery of unrestricted shares until
vesting.
|
|
(b)
|
The
Participant may not sell, transfer, pledge, exchange, hypothecate, or
otherwise dispose of the Awarded Shares prior to
vesting.
|
|
(c)
|
In
addition to the provisions set forth in section 4 hereof, a breach by the
Participant of the terms and conditions set forth in this Agreement shall
result in the immediate forfeiture of all then unvested Awarded
Shares.
|
|
(d)
|
Notwithstanding
anything herein to the contrary, if all or a portion of the Awarded Shares
do not vest, whether upon the termination of the Participant’s employment
with the Company or a subsidiary or affiliate of the Company (including
any successors to the Company), or otherwise (including without limitation
if the Company fails to meet one or more Performance Targets established
as described in section 2(b) hereof), all dividends paid to the
Participant on Awarded Shares which have not vested (and which shall not
thereafter vest in accordance with section 4 hereof) shall be forfeited,
and shall be repaid to the Company within thirty (30) days after the date
on which Participant’s obligation to repay such dividends
accrues. For purposes hereof, such obligation to repay such
dividends shall accrue (1) on such date as the Committee establishes that
a Performance Target has not been met, as to all dividends paid on Awarded
Shares which are forfeited due to failure to meet such Performance Target;
(2) on the date of termination of employment, as to all dividends paid on
Awarded Shares which are forfeited upon such termination of employment;
and (3) after termination of employment if, prior to vesting of all or any
portion of the Awarded Shares, the Participant breaches any provision
hereof, including without limitation the provisions of section 9 hereof,
in which event the Participant shall immediately forfeit all rights to the
then-unvested Awarded Shares and any dividends theretofore paid on such
then-unvested Awarded Shares.
|
4.
Vesting Conditions
– Except
as otherwise set forth herein, the Participant must remain in the continuous
employment of the Company or a subsidiary or affiliate of the Company (including
any successors to the Company) from the effective date of this Agreement through
the relevant vesting date (or dates) set forth in (or determined in accordance
with) section 2, above, in order for the Awarded Shares to vest and in order to
retain the dividends paid prior to vesting with respect to such Awarded
Shares. Except as otherwise set forth herein, in the Plan in
connection with a Change of Control (as defined in a Retention Agreement as in
effect on the date hereof, if the Participant is a party to a Retention
Agreement, or in the Plan as in effect on the date hereof, if the Participant is
not a party to a Retention Agreement), or in a Retention Agreement, in the event
that the Participant’s employment with the Company (or a subsidiary, affiliate
or successor of the Company) terminates for any reason prior to vesting, his or
her rights hereunder will be determined as follows:
|
(a)
|
If
the Participant’s termination of employment is due to resignation,
discharge, or retirement prior to age 65 which does not meet the condition
set forth in section 4(c), below, all rights to Awarded Shares not
theretofore vested (including without limitation rights to dividends not
theretofore paid and rights to retain dividends on Awarded Shares which
have not theretofore vested, as more fully set forth in section 3(d)
hereof) under this Agreement shall be immediately
forfeited. Forfeited dividends shall be repaid to the Company
within thirty (30) days after the Participant’s termination of
employment.
|
|
(b)
|
If
the Participant’s termination of employment is due to (1) total and
permanent disability (as defined under the Company’s executive long-term
disability plan), (2) death or (3) retirement on or after age 65 not
meeting the condition set forth in section 4(c), below, a pro rata share
(calculated based upon the number of completed years of service during the
Restriction Period) of the then unvested portion of the Awarded Shares
shall vest (a) in the event of disability or death, on the date of
termination of employment or (b) in the event of retirement on or after
age 65 which does not meet the condition set forth in section 4(c), below,
on the vesting schedule and otherwise in accordance with the terms and
conditions (including without limitation satisfaction of the applicable
performance conditions) set forth in section 2 hereof, notwithstanding
that the Participant’s employment will have previously
terminated. Notwithstanding the foregoing, if, after
termination of employment but prior to vesting of all or any portion of
the Awarded Shares, the Participant breaches any provision hereof,
including without limitation the provisions of section 9 hereof, the
Participant shall immediately forfeit all rights to the then-unvested
Awarded Shares and any dividends theretofore paid on such then-unvested
Awarded Shares. Forfeited dividends shall be repaid to the Company within
thirty (30) days after the date on which Participant’s obligation to repay
such dividends accrues.
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|
(c)
|
If
the Participant’s termination of employment is due to retirement on or
after age 50, and if, but only if, such retirement is evidenced by a
writing which specifically acknowledges that this provision shall apply to
such retirement and is executed by the Company’s chief executive officer
(or, if the Participant is an executive officer, by a member of the
Committee or the chief executive officer at the direction of the
Committee, other than with respect to himself), the then-unvested portion
of the Awarded Shares shall vest on the vesting schedule and otherwise in
accordance with the terms and conditions (including without limitation
satisfaction of the applicable performance conditions) set forth in
section 2 hereof, notwithstanding that the Participant’s employment will
have previously terminated. Notwithstanding the foregoing, if,
after termination of employment but prior to vesting of all or a portion
of the Awarded Shares, the Participant breaches any provision hereof,
including without limitation the provisions of section 9 hereof, the
Participant shall immediately forfeit all rights to the then-unvested
Awarded Shares and any dividends theretofore paid on such then-unvested
Awarded Shares. Forfeited dividends shall be repaid to the
Company within thirty (30) days after the date on which Participant’s
obligation to repay such dividends
accrues.
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|
(d)
|
If
a Participant's employment is terminated prior to vesting of all or a
portion of the Awarded Shares for any reason other than as set forth in
sections 4(a), (b) and (c) above, or if an ambiguity exists as to the
interpretation of those sections, the Committee shall determine whether
the Participant's then-unvested Awarded Shares shall be forfeited or
whether the Participant shall be entitled to full vesting or pro rata
vesting as set forth above based upon completed years of service during
the Restriction Period, and any Awarded Shares which may vest shall do so
on the vesting schedule and otherwise in accordance with the terms and
conditions (including without limitation satisfaction of the applicable
performance conditions) set forth in section 2 hereof, notwithstanding
that the Participant’s employment will have previously
terminated. Notwithstanding the foregoing, if, after
termination of employment but prior to vesting of all or a portion of the
Awarded Shares, the Participant breaches any provision hereof, including
without limitation the provisions of section 9 hereof, the Participant
shall immediately forfeit all rights to the then-unvested Awarded Shares
and any dividends theretofore paid on such then-unvested Awarded
Shares. Forfeited dividends shall be repaid to the Company
within thirty (30) days after the date on which Participant’s obligation
to repay such dividends accrues.
|
[the following applies only to Mr.
Hay] Notwithstanding the foregoing, if the Employment Period (as defined in the
Retention Agreement as in effect on the date hereof) is not then in effect, and
the Participant terminates employment for Good Reason (as defined in the
Participant’s Employment Letter with the Company as in effect on the date hereof
(such Employment Letter, as in effect on the date hereof, the “Employment
Letter”) or the Company terminates the Participant’s employment without Cause
(as defined in the Employment Letter), then the Participant shall continue to
vest in the Awarded Shares on the schedule and otherwise on the terms and
conditions (including without limitation satisfaction of the applicable
performance conditions) set forth in section 2 hereof until the date which is
two years after the date on which the Participant’s employment is
terminated. Awarded Shares which are scheduled to vest after the date
which is two years after the date on which the Participant’s employment is
terminated in accordance herewith shall be forfeited effective on the date on
which the Participant’s employment is terminated.
5.
Income Taxes
- The
Participant shall notify the Company immediately of any election made with
respect to this Agreement under Section 83(b) of the Internal Revenue Code of
1986, as amended. Upon vesting and delivery of Awarded Shares to the
Participant, the Company shall have the right to withhold from any such
distribution, in order to meet the Company’s obligations for the payment of
withholding taxes, shares of Common Stock with a Fair Market Value equal to the
minimum statutory withholding for taxes (including federal and state income
taxes and payroll taxes applicable to the supplemental taxable income relating
to such distribution) and any other tax liabilities for which the Company has an
obligation relating to such distribution.
6.
Nonassignability
- The
Participant's rights and interest in the Awarded Shares may not be assigned,
pledged, or transferred prior to vesting except, in the event of death, to a
designated beneficiary or by will or by the laws of descent and
distribution.
7.
Effect Upon Employment
- This
Agreement is not to be construed as giving any right to the Participant for
continuous employment by the Company or a subsidiary or
affiliate. The Company and its subsidiaries and affiliates retain the
right to terminate the Participant at will and with or without cause at any time
(subject to any rights the Participant may have under the Participant’s
Retention Agreement [or the Participant’s Employment Letter][for Mr. Hay
only]).
8.
Successors
and Assigns
- This Agreement
shall inure to the benefit of and shall be binding upon the Company and the
Participant and their respective heirs, successors and assigns.
9.
Protective Covenants -
In
consideration of the Awarded Shares granted under this Agreement, the
Participant covenants and agrees as follows: (the "Protective
Covenants"):
(a)
|
During
the Participant's employment with the Company, and for a two-year period
following the termination of the Participant's employment with the
Company, Participant agrees (i) not to compete or attempt to compete for,
or act as a broker or otherwise participate in, any projects in which the
Company has at any time done any work or undertaken any development
efforts, or (ii) directly or indirectly solicit any of the Company’s
customers, vendors, contractors, agents, or any other parties with which
the Company has an existing or prospective business relationship, for the
benefit of the Participant or for the benefit of any third party, nor
shall the Participant accept consideration or negotiate or enter into
agreements with such parties for the benefit of the Participant or any
third party.
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(b)
|
During
the Participant's employment with the Company and for a two-year period
following the termination of the Participant's employment with the
Company, the Participant shall not, directly or indirectly, on behalf of
the Participant or for any other business, person or entity, entice,
induce or solicit or attempt to entice, induce or solicit any employee of
the Company or its subsidiaries or affiliates to leave the Company's
employ (or the employ of such subsidiary or affiliate) or to hire or to
cause any employee of the Company to become employed for any reason
whatsoever.
|
(c)
|
The
Participant shall not, at any time or in any way, disparage the Company or
its current or former officers, directors, and employees, orally or in
writing, or make any statements that may be derogatory or detrimental to
the Company’s good name or business
reputation.
|
(d)
|
The
Participant acknowledges that the Company would not have an adequate
remedy at law for monetary damages if the Participant breaches these
Protective Covenants. Therefore, in addition to all remedies to
which the Company may be entitled for a breach or threatened breach of
these Protective Covenants, including but not limited to monetary damages,
the Company will be entitled to specific enforcement of these Protective
Covenants and to injunctive or other equitable relief as a remedy for a
breach or threatened breach. In addition, upon any breach of
these Protective Covenants or any separate confidentiality agreement or
confidentiality provision between the Company and the Participant, all the
Participant’s rights to receive theretofore unvested Awarded Shares and
dividends relating thereto under this Agreement shall be
forfeited.
|
(e)
|
For
purposes of this section 9, the term "Company" shall include all
subsidiaries and affiliates of the Company, including, without limitation,
Florida Power & Light Company and NextEra Energy Resources, LLC, and
their respective subsidiaries and affiliates (such subsidiaries and
affiliates being hereinafter referred to as the “FPL Entities”). The
Company and the Participant agree that each of the FPL Entities is an
intended third-party beneficiary of this section 9, and further agree that
each of the FPL Entities is entitled to enforce the provisions of this
section 9 in accordance with its
terms.
|
(f)
|
Notwithstanding
anything to the contrary contained in this Agreement, the terms of these
Protective Covenants shall survive the termination of this Agreement and
shall remain in effect.
|
10.
Incorporation of Plan's Terms
– This Agreement is made under and subject to the provisions of the Plan, and
all the provisions of the Plan are also provisions of this Agreement (including,
but not limited to, the provisions of section 9 of the Plan pertaining to a
Change of Control as in effect on the date hereof, provided that if the
Participant is a party to a Retention Agreement, the provisions of section 2(c)
hereof shall supersede the provisions of the Plan with respect to a Change of
Control). If there is a difference or conflict between the provisions
of this Agreement and the mandatory provisions of the Plan, the provisions of
the Plan will govern. If there is a difference or conflict between
the provisions of this Agreement and a provision of the Plan as to which the
Committee is authorized to make a contrary determination, the provisions of this
Agreement will govern. Except as otherwise expressly defined in this
Agreement, all capitalized terms used herein are used as defined in the
Plan. The Company and Committee retain all authority and powers
granted by the Plan as it may be amended from time to time not expressly limited
by this Agreement. The Participant acknowledges that he or she may
not and will not rely on any statement of account or other communication or
document issued in connection with the Plan other than the Plan, this Agreement,
and any document signed by an authorized representative of the Company that is
designated as an amendment of the Plan or this Agreement.
11.
Interpretation
- The
Committee has the sole and absolute right to interpret the provisions of this
Agreement.
12.
Governing Law/Jurisdiction
-
This Agreement shall be construed and interpreted in accordance with the laws of
the State of Florida, without regard to its conflict of laws
principles. All suits, actions, and proceedings relating to this
Agreement shall be brought only in the courts of the State of Florida located in
Palm Beach County or in the United States District Court for the Southern
District of Florida in West Palm Beach, Florida. The Company and
Participant shall consent to the personal jurisdiction of the courts described
in this section 12 for the purpose of all suits, actions, and proceedings
relating to the Agreement or the Plan. The Company and the
Participant each waive all objections to venue and to all claims that a court
chosen in accordance with this section is improper based on a venue or a forum
non conveniens claim.
13.
Amendment -
This Agreement
may be amended, in whole or in part and in any manner not inconsistent with the
provisions of the Plan, at any time and from time to time, by written agreement
between the Company and the Participant.
14.
Adjustments
- In the event of
any change in the outstanding shares of Common Stock by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination or exchange of shares or similar corporate change, then the number
of Awarded Shares shall be adjusted proportionately. No adjustment
will be made in connection with the payment by the Company of any cash dividend
on its Common Stock or in connection with the issuance by the Company of any
warrants, rights, or options to acquire additional shares of Common Stock or of
securities convertible into Common Stock.
15.
Data Privacy
. By
entering into this Agreement, the Participant: (i) authorizes the
Company or any of its subsidiaries or affiliates, and any agent of the Company
or a subsidiary or affiliate administering the Plan or providing Plan
recordkeeping services, to disclose to the Company or any of its subsidiaries or
affiliates such information and data as the Company or any such subsidiary or
affiliate shall reasonably request in order to facilitate the administration of
this Agreement; and (ii) authorizes the Company or any of its subsidiaries or
affiliates to store and transmit such information in electronic form, provided
such information is appropriately safeguarded in accordance with Company
policy.
By signing this Agreement, the
Participant accepts and agrees to all of the foregoing terms and provisions and
to all the terms and provisions of the Plan incorporated herein by reference and
confirms that he has received a copy of the Plan.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
FPL
GROUP, INC.
________________________________
Name:
Title:
________________________________
Participant
Exhibit
"A"
LEGEND
TO BE PLACED ON STOCK CERTIFICATE
The
shares represented by this certificate are subject to the provisions of the
Amended and Restated FPL Group Long-Term Incentive Plan (the "Plan") and a
Restricted Stock Award Agreement (the "Agreement") between the holder hereof and
FPL Group, Inc. and may not be sold or transferred except in accordance
therewith. Copies of the Plan and Agreement are kept on file by the
Vice President & Corporate Secretary of FPL Group, Inc.
Exhibit
10(bb)
Form
of
NON-QUALIFIED
STOCK OPTION AGREEMENT
under
the
FPL
GROUP, INC. AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
This Non-Qualified Stock Option
Agreement (“Agreement”), between FPL Group, Inc. (hereinafter called the
"Company") and the optionee identified on Schedule 1 attached hereto
(“Optionee”)
is
dated ______ ___, 20___.
1.
Grant of
Option
. In accordance with and subject to the terms and
conditions of (a) the FPL Group, Inc. Amended and Restated Long Term Incentive
Plan, as it may be amended from time to time (the "Plan") and (b) this
Agreement, the Company hereby grants to the Optionee a nonqualified stock option
(the "Option") to purchase the number of shares (the "Shares") of its common
stock, par value $.01 per share ("Common Stock"), set forth on Schedule 1, at
the option exercise price per Share set forth in Schedule
1. Capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in the Plan.
2.
Acceptance by
Optionee
. The exercise of the Option or any portion thereof is
conditioned upon acceptance by the Optionee of the terms and conditions of this
Agreement, as evidenced by the Optionee's execution of Schedule 1 to this
Agreement and the delivery of an executed copy of Schedule 1 to the
Company.
3.
Vesting of
Option
. Subject to the terms and provisions hereof, including
Section 5 hereof, and the Plan, the Option shall vest and the Optionee may
exercise the Option in accordance with the vesting schedule set forth in
Schedule 1.
[
for Messrs. Hay,
Robo, Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar, Olivera, Pimentel,
Poppell, Rodriguez and Sieving
] Notwithstanding the foregoing, if (i) the
Optionee is a party to an Executive Retention Employment Agreement with the
Company (“Retention Agreement”) and has not waived his or her rights, either
entirely or in pertinent part, under such Retention Agreement, and (ii) the
Effective Date (as defined in the Retention Agreement as in effect on the date
hereof) has occurred and the Employment Period (as defined in the Retention
Agreement as in effect on the date hereof) has commenced and has not terminated
pursuant to section 3(b) of the Retention Agreement (as in effect on the date
hereof) then, so long as the Optionee is then employed by the Company or one of
its subsidiaries or affiliates, the then-unvested portion of the Option shall
vest upon a Change of Control (as defined in the Retention Agreement as in
effect on the date hereof), in lieu of the vesting schedule set forth in
Schedule 1.
[
for Messrs.
Cutler and Froggatt
] Notwithstanding the foregoing, the rights of the
Participant upon a Change of Control (as defined in the Plan as in effect on the
date hereof) shall be as set forth in section 9 of the Plan on the date hereof,
in lieu of the vesting schedule set forth in Schedule 1.
If
as a result of the Change of Control, the Common Stock is exchanged for or
converted into a different form of equity security and/or the right to receive
other property (including cash), the Option may be exercised, to the maximum
extent practicable, in the same form.
4.
Expiration of
Option
. The Option shall expire on the date set forth in
Schedule 1 (the “Expiration Date”), unless terminated earlier as set forth in
Section 5 below, and may not be exercised after the earlier of (i) the
Expiration Date and (ii) the earlier termination date established in accordance
with Section 5.
5.
Termination of
Employment
.
In
the event that the Optionee’s employment with the Company (or a subsidiary,
affiliate or successor of the Company) terminates for any reason prior to the
date on which the Option has been fully exercised except to the extent that the
Optionee’s termination of employment is governed by the terms of a Retention
Agreement (in which event the terms of such Retention Agreement shall govern),
the Optionee’s rights hereunder will be determined as follows:
|
(a)
|
If
the Optionee’s termination of employment is due to resignation, discharge
or retirement prior to age 65 which does not meet the condition set forth
in Section 5(c), below, all rights to exercise the Option (or any portion
thereof) which is not then vested shall be immediately forfeited, and all
rights to exercise the vested portion of the Option shall expire on [
for Messrs.
Hay, Robo, Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar, Olivera,
Pimentel, Poppell, Rodriguez and Sieving
]
the Expiration Date
[
for
Messrs. Cutler and Froggatt
] the earlier to occur of (i) the
Expiration Date and (ii) sixty (60) days after the date of termination of
employment.
|
|
(b)
|
If
the Optionee’s termination of employment is due to (i) total and permanent
disability (as defined under the Company’s executive long-term disability
plan), (ii) death or (iii) retirement on or after age 65 not meeting the
condition set forth in section 5(c), below, a pro rata share of the
then-unvested portion of the Option shall vest on the date of termination,
based upon the number of completed days of service during the vesting
period, and the vested portion of the Option shall be exercisable until
[
for
Messrs. Hay, Robo, Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar,
Olivera, Pimentel, Poppell, Rodriguez and Sieving
] the Expiration
Date [
for Messrs.
Cutler and Froggatt
] the earlier to occur of (i) the Expiration
Date and (ii) one (1) year after the date of termination of
employment. The portion of the Option which does not so vest
shall be forfeited effective on the date of termination of
employment.
|
|
(c)
|
If
the Optionee’s termination of employment is due to retirement on or after
age 50, and if, but only if, such retirement is evidenced by a writing
which specifically acknowledges that this provision shall apply to such
retirement and is executed by the Company’s chief executive officer (or,
if the Optionee is an executive officer, by a member of the Committee or
the chief executive officer at the direction of the Committee, other than
with respect to himself), the then-unvested portion of the Option shall
vest on the date of termination and all outstanding Options granted hereby
shall be exercisable until [
for
Messrs.
Hay, Robo,
Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar, Olivera, Pimentel,
Poppell, Rodriguez and Sieving
] the Expiration Date [
for Messrs.
Cutler and Froggatt
] the earlier to occur of (i) the Expiration
Date and (ii) one (1) year after the date of termination of
employment.
|
|
(d)
|
If
an Optionee's employment is terminated for any reason other than as set
forth in Sections 5(a), (b) and (c), above, or if an ambiguity exists as
to the interpretation of those sections, the Committee shall determine
whether the Optionee's then-unvested Options shall be forfeited or whether
the Optionee shall be entitled to full vesting or to pro rata vesting
based upon days of service during the vesting period, and shall also
determine the period during which the Optionee may exercise any vested
portion of the Option.
|
[the following applies only to Mr.
Hay] Notwithstanding the foregoing, if the Employment Period (as defined in the
Retention Agreement as in effect on the date hereof) is not then in effect, and
the Optionee terminates employment for Good Reason (as defined in the Optionee’s
Employment Letter with the Company (such Employment Letter as in effect on the
date hereof, the “Employment Letter”) or the Company terminates the Optionee’s
employment without Cause (as defined in the Employment Letter), then the
Optionee shall continue to vest in any theretofore unvested portion of the
Option on the schedule set forth in Schedule 1 attached hereto until the date
which is two years after the date on which the Optionee’s employment is
terminated, and the vested portion of the Option may be exercised until the
Expiration Date. The Portion of the option which is scheduled to vest
after the date which is two years after the date on which the Optionee’s
employment is terminated shall be forfeited effective on the date Optionee’s
employment is terminated.
6.
Procedure for
Exercise
. Subject to this Agreement and the Plan, the Option
may be exercised in whole or in part by the transmittal of a written notice to
the Company at its principal place of business. Such notice shall
specify the number of Shares which the Optionee elects to purchase, shall be
signed by the Optionee and shall be accompanied by payment of the exercise price
for the Shares which the Optionee elects to purchase. Except as
otherwise provided by the Compensation Committee of the Board or such other
committee designated to administer the Plan (the “Committee”) before the Option
is exercised, such payment may be made in whole or in part (i) by check payable
to the Company for the full exercise price plus the applicable tax withholding
resulting from such exercise; (ii) by delivery of shares of Common Stock owned
by the Optionee for at least six months and acceptable to the Committee having
an aggregate Fair Market Value (valued as of the date of exercise) that is equal
to the amount of cash that would otherwise be required; or (iii) by authorizing
a Company-approved third party to remit to the Company a sufficient portion of
the sale proceeds to pay the entire exercise price and any tax withholding from
such exercise. The Option shall not be exercisable if and to the
extent the Company determines that such exercise would violate applicable State
or Federal securities laws or the rules and regulations of any securities
exchange on which the Common Stock is traded. If any applicable law requires the
Company to take any action with respect to the Shares specified in the written
notice of exercise, or if any action remains to be taken under the Articles of
Incorporation or Bylaws of the Company, as in effect at the time, to effect due
issuance of the Shares, then the Company shall take such action and the day for
delivery of such Shares shall be extended for the period necessary to take such
action. No Optionee shall have any of the rights of a shareholder of
the Company under any Option unless and until Shares are duly issued upon
exercise of the Option.
7.
Non-Transferability of Stock
Options
. The Option granted hereunder to the Optionee shall
not be transferable by the Optionee otherwise than by will or by the laws of
descent and distribution, and such Option shall be exercisable, during the
lifetime of the Optionee, only by the Optionee.
8.
Effect Upon
Employment
. This Agreement is not to be construed as giving
any right to the Optionee for continuous employment by the Company or a
subsidiary or affiliate. The Company and its subsidiaries and
affiliates retain the right to terminate the Optionee at will and with or
without cause at any time [
for
Messrs.
Hay, Robo,
Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar, Olivera, Pimentel,
Poppell, Rodriguez and Sieving
] (subject to any rights the Optionee may
have under the Optionee’s Retention Agreement [and Employment Letter, in the
case of Mr. Hay]).
9.
Protective Covenants
.
In consideration of the
Non-Qualified Stock Option Award granted under this Agreement, the Optionee
covenants and agrees as follows (the "Protective Covenants"):
(a)
|
During
the Optionee's employment with the Company, and for a two-year period
following the termination of the Optionee's employment with the Company,
Optionee agrees (i) not to compete or attempt to compete for, or act as a
broker or otherwise participate in, any projects in which the Company has
at any time done any work or undertaken any development efforts, or (ii)
directly or indirectly solicit any of the Company’s customers, vendors,
contractors, agents, or any other parties with which the Company has an
existing or prospective business relationship, for the benefit of the
Optionee or for the benefit of any third party, nor shall the Optionee
accept consideration or negotiate or enter into agreements with such
parties for the benefit of the Optionee or any third
party.
|
(b)
|
During
the Optionee's employment with the Company and for a two-year period
following the termination of the Optionee's employment with the Company,
the Optionee shall not, directly or indirectly, on behalf of the Optionee
or for any other business, person or entity, entice, induce or solicit or
attempt to entice, induce or solicit any employee of the Company or its
subsidiaries or affiliates to leave the Company's employ (or the employ of
such subsidiary or affiliate) or to hire or to cause any employee of the
Company to become employed for any reason
whatsoever.
|
(c)
|
The
Optionee shall not, at any time or in any way, disparage the Company or
its current or former officers, directors, and employees, orally or in
writing, or make any statements that may be derogatory or detrimental to
the Company’s good name or business
reputation.
|
(d)
|
The
Optionee acknowledges that the Company would not have an adequate remedy
at law for monetary damages if the Optionee breaches these Protective
Covenants. Therefore, in addition to all remedies to which the
Company may be entitled for a breach or threatened breach of these
Protective Covenants, including but not limited to monetary damages, the
Company will be entitled to specific enforcement of these Protective
Covenants and to injunctive or other equitable relief as a remedy for a
breach or threatened breach. In addition, upon any breach of
these Protective Covenants or any separate confidentiality agreement or
confidentiality provisions between the Company and the Optionee, all
Optionee’s rights to exercise the Option as to theretofore unvested Shares
under this Agreement shall be
forfeited.
|
(e)
|
For
purposes of this Section 9, the term "Company" shall include all
subsidiaries and affiliates of the Company, including, without limitation,
Florida Power & Light Company and NextEra Energy Resources, LLC, and
their respective subsidiaries and affiliates (such subsidiaries and
affiliates being hereinafter referred to as the “FPL Entities”). The
Company and the Optionee agree that each of the FPL Entities is an
intended third-party beneficiary of this Section 9, and further agree that
each of the FPL Entities is entitled to enforce the provisions of this
Section 9 in accordance with its
terms.
|
(f)
|
Notwithstanding
anything to the contrary contained in this Agreement, the terms of these
Protective Covenants shall survive the termination of this Agreement and
shall remain in effect.
|
10.
Successors
and Assigns.
This
Agreement shall inure to the benefit of and shall be binding upon the Company
and the Optionee and their respective heirs, successors and
assigns.
11.
Adjustments
. In
the event of any change in the outstanding Shares of Common Stock by reason of
any stock dividend or split, recapitalization, reclassification, merger,
consolidation, combination or exchange of shares or similar corporate change,
then the number of Shares granted under this Option shall be adjusted
proportionately. No adjustment will be made in connection with the
payment by the Company of any cash dividend on its Common Stock or in connection
with the issuance by the Company of any warrants, rights, or options to acquire
additional Shares of Common Stock or of securities convertible into Common
Stock.
12.
Compliance With Applicable
Law/Governing Law/
Jurisdiction
. The
issuance of the Shares pursuant to the exercise of this Option is subject to
compliance with all applicable laws, including without limitation laws governing
withholding from employees and nonresident aliens for income tax
purposes.
This
Agreement shall be construed and interpreted in accordance with the laws of the
State of Florida, without regard to its conflict of laws
principles. All suits, actions, and proceedings relating to this
Agreement or the Plan shall be brought only in the courts of the State of
Florida located in Palm Beach County or in the United States District Court for
the Southern District of Florida in West Palm Beach, Florida. The
Company and Optionee hereby consent to the personal jurisdiction of the courts
described in this section for the purpose of all suits, actions, and proceedings
relating to the Agreement or the Plan. The Company and Optionee each
waive all objections to venue and to all claims that a court chosen in
accordance with this section is improper based on a venue or a forum non
conveniens claim.
13.
Incorporation of Plan's Terms
- This Agreement is made under and subject to the provisions of the Plan, and
all the provisions of the Plan are also provisions of this Agreement (including,
but not limited to, the provisions of Section 9 of the Plan as in effect on the
date hereof pertaining to a Change of Control [
for
Messrs.
Hay, Robo,
Bennett, Davidson, Dewhurst, Kelliher, McGrath, Nazar, Olivera, Pimentel,
Poppell, Rodriguez and Sieving
] provided that if the Optionee is a party
to a Retention Agreement, the provisions of Section 3 hereof shall supersede the
provisions of the Plan with respect to a Change of Control). If there
is a difference or conflict between the provisions of this Agreement and the
mandatory provisions of the Plan, the provisions of the Plan will
govern. If there is a difference or conflict between the provisions
of this Agreement and a provision of the Plan as to which the Committee is
authorized to make a contrary determination, the provisions of this Agreement
will govern. Except as otherwise expressly defined in this Agreement,
all terms used herein are used as defined in the Plan as it may be amended from
time to time. The Company and Committee retain all authority and
powers granted by the Plan as it may be amended from time to time not expressly
limited by this Agreement. The Optionee acknowledges that he or she
may not and will not rely on any statement of account or other communication or
document issued in connection with the Plan other than the Plan, this Agreement,
and any document signed by an authorized representative of the Company that is
designated as an amendment of the Plan or this Agreement.
14.
Interpretation.
The
Committee has the sole and absolute right to interpret the provisions of this
Agreement.
15.
Amendment
. This
Agreement may be amended, in whole or in part and in any manner not inconsistent
with the provisions of the Plan, at any time and from time to time, by written
agreement between the Company and the Optionee.
16.
Data Privacy
. By
entering into this Agreement, the Optionee: (i) authorizes the
Company or any of its Subsidiaries, and any agent of the Company or a Subsidiary
administering the Plan or providing Plan recordkeeping services, to disclose to
the Company or any of its Subsidiaries such information and data as the Company
or any such Subsidiary shall reasonably request in order to facilitate the grant
of the Option, the exercise of the Option, or delivery of Shares upon exercise;
and (ii) authorizes the Company or any of its Subsidiaries to store and transmit
such information in electronic form, provided such information is appropriately
safeguarded in accordance with Company policy.
By
signing this Agreement, the Optionee accepts and agrees to all of the foregoing
terms and provisions and to all the terms and provisions of the Plan
incorporated herein by reference and confirms that he has received a copy of the
Plan.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed as of the
Date of Grant set forth in Schedule 1.
FPL
GROUP, INC.
By: ___________________________________
Schedule
1
Non-Qualified Stock Option
Agreement
Name
of Optionee:
Date
of Grant:
Number
of Shares:
|
_______
shares of Common Stock
|
Option
Exercise Price Per Share:
|
$______
|
Expiration
Date:
|
________
(subject to earlier termination in accordance with
the
attached Agreement)
|
Vesting
Schedule:
|
The
shares of Common Stock subject to this Option shall
vest
according to the following schedule:
______
shares on ______, 20___,
______
shares on ______, 20___ and
______
shares on ______, 20___
except
that such Shares shall become fully vested upon the
occurrence
of a Change of Control if the Optionee is
employed
by the Company or a Subsidiary on such date,
[
for
Messrs.
Hay, Robo,
Bennett, Davidson, Dewhurst,
Kelliher,
McGrath, Nazar, Olivera, Pimentel, Poppell,
Rodriguez
and Sieving
] as more fully set forth in Section 3
of
the Agreement of which this Schedule is a part.
[
for Messrs.
Cutler and Froggatt
] For purposes of this
Agreement,
the term “Change of Control” shall have the
meaning
ascribed to such term in the Plan as in effect on
the
date hereof.
|
The
undersigned agrees to the terms and conditions of the Non-Qualified Stock Option
Agreement of which this Schedule 1 is a part.
Date
Accepted: ___________________ By: _________________________
Exhibit
10(dd)
Form
of
FPL
GROUP, INC.
AMENDED
AND RESTATED LONG-TERM INCENTIVE PLAN
AMENDED
AND RESTATED DEFERRED STOCK AWARD
AGREEMENT
AGREEMENT,
originally dated as of ___________ and amended and completely restated as of
February 11, 2010, between FPL Group, Inc. (hereinafter called the "Company")
and _________ (hereinafter called the "Participant").
1.
Grant of Deferred Stock
Award
. The Company hereby grants to the Participant as of
__________ (the “Effective Date”), a Deferred Stock Award (the “Deferred Stock
Award”) consisting of _________ shares of common stock of the Company, par value
$.01 per share (“Common Stock”), which shares shall be subject to the
restrictions noted below. The number of shares of Common Stock comprising the
Deferred Stock Award from time to time shall be referred to in this Agreement as
the "Deferred Stock." The Deferred Stock, together with any dividends
or other earnings or proceeds derived therefrom, shall be referred to in this
Agreement as the "Deferred Stock Award."
[
Mr.
Dewhurst
] 2.
Issuance of
Shares.
Subject
to the limitations and other terms and conditions set forth in this Agreement
and the Company's Amended and Restated Long-Term Incentive Plan, as amended from
time to time (the "Plan"), on, or within thirty (30) days following, the last
day of the Deferral Period the Company shall issue, in the manner and from the
Common Stock authorized under the Plan, the Deferred Stock. The
Participant's rights under this Agreement shall be the same as those of other
general, unsecured creditors of the Company.
[
Mr.
Robo
] 2.
Issuance of Shares; Grantor Trust
Fund.
(a) Subject
to the limitations and other terms and conditions set forth in this Agreement
and the Company's Amended and Restated Long-Term Incentive Plan, as amended from
time to time (the "Plan"), on or as soon as practicable following the Effective
Date, the Company shall issue, in the manner and from the Common Stock
authorized under the Plan, the Deferred Stock.
(b) To
assist it in meeting its obligations under this Agreement, the Company shall
establish a trust fund (the "Deferred Stock Trust Fund") with a trustee (the
"Deferred Stock Trustee") pursuant to a written trust agreement (the "Deferred
Stock Trust Agreement"). The Deferred Stock Trust Agreement shall
contain such terms and conditions not inconsistent with the Plan and this
Agreement as may be determined by or under the authority of the committee
constituted pursuant to section 2.07 of the Plan (the "LTIP Committee"), subject
to the following:
(i) the
assets of the Deferred Stock Trust Fund shall be subject to the claims of the
Company's general creditors in the event of the Company's insolvency (as such
term is defined for purposes of Revenue Procedure 92-65, as modified from time
to time); and
(ii) the
Company shall at all times be treated as the owner of the entirety of the
Deferred Stock Trust Fund for federal income tax purposes under the so-called
"grantor trust" provisions of sections 671 through 679 of the Internal Revenue
Code of 1986 (the "Code").
Notwithstanding
the establishment of the Deferred Stock Trust Fund, the Participant's rights
under this Agreement shall be the same as those of other general, unsecured
creditors of the Company.
[
Mr.
Dewhurst
]
3.
Dividends and Other
Income.
In the event a dividend is payable on Common Stock in
additional shares of Common Stock, an amount denominated in shares of Common
Stock equal to such dividend shall, as of the
ex dividend
date for such
dividend, become part of the Deferred Stock Award for all purposes of this
Agreement. In the event a dividend on Common Stock is payable in
property other than cash or Common Stock, an amount equal to such dividend
shall, as of the
ex dividend
date for such dividend, become part of the Deferred Stock Award for all
purposes of this Agreement, unless the committee constituted for purposes of
section 2.08 of the Plan (the “LTIP Committee”) directs that such property be
deemed to be reinvested in additional shares of Common Stock. In the
event a dividend on Common Stock is payable in cash, such dividend shall, as of
the
ex dividend
date
for such dividend, become part of the Deferred Stock Award for all purposes of
this Agreement. Unless the LTIP Committee directs otherwise, cash
dividends paid with respect to Deferred Stock and any property comprising the
Deferred Stock Award payable on or after the date of amendment and restatement
of this Deferred Stock Award (February 11, 2010) shall be deemed to be applied
to the purchase of additional shares of Common Stock on the dividend payment
date, at a price equal to the closing price of the Common Stock on the dividend
payment date
.
[
Mr.
Robo
]
3.
Dividends and Other
Income.
In the event the Deferred Stock entitles its
holder to a dividend payable in additional shares of Common Stock, such dividend
shall be deposited with the Deferred Stock Trustee and shall, as of the
ex dividend
date for such
dividend, become part of the Deferred Stock Award for all purposes of this
Agreement. In the event the Deferred Stock entitles its holder to a
dividend payable in property other than cash or Common Stock, such dividend
shall be deposited with the Deferred Stock Trustees and shall, as of the
ex dividend
date for such
dividend, become part of the Deferred Stock Award for all purposes of this
Agreement, unless the LTIP Committee directs that such property be sold and the
sales proceeds reinvested in additional shares of Common Stock. In
the event the Deferred Stock entitles its holder to a cash dividend, such
dividend shall be deposited with the Deferred Stock Trustees and shall, as of
the
ex dividend
date
for such dividend, become part of the Deferred Stock Award for all purposes of
this Agreement. Unless the LTIP Committee directs otherwise, cash
dividends paid with respect to Deferred Stock and the proceeds of sale of any
property comprising the Deferred Stock Award payable on or after the date of
amendment and restatement of this Deferred Stock Award (February 11, 2010) shall
be applied to the purchase of additional shares of Common Stock as soon as
practicable after the dividend payment date
.
:
Shares
of Common Stock purchased in such manner shall be purchased by the Deferred
Stock Trustee in transactions for the account of the Deferred Stock Trust Fund
or, if not purchased in such manner, deposited with the Deferred Stock Trustee
and shall, when purchased, become part of the Deferred Stock and the Deferred
Stock Award.
4.
Voting and other Shareholders'
Rights.
Unless otherwise determined by the LTIP Committee, [any and
all][
Mr. Robo
] [the
Participant shall have no] [
Mr.
Dewhurst
] rights appurtenant to [the Deferred Stock and other assets
comprising][
Mr. Robo
]
the Deferred Stock Award, including but not limited to voting rights, responses
to tender offers and exchange offers, election of consideration in business
combination transactions, and dissent and appraisal rights [shall be exercised
by the Deferred Stock Trustee in accordance with applicable laws, rules and
regulations][
Mr.
Robo
].
5. Deferral
Period.
(a)
The [Deferred Stock
Award][
Mr. Robo
] [Common
Stock][
Mr. Dewhurst
]
shall not be distributed or distributable to the Participant [in satisfaction of
the Deferred Stock Award][
Mr.
Dewhurst
] prior to the end of a deferral period which shall begin on the
Effective Date and end on:
(i) January
1st of the calendar year following the calendar year in which the Participant
experiences a Termination of Service; or
(ii) if
later and the Participant is a "specified employee" (within the meaning of
section 409A of the Code and the regulations thereunder), the date which is six
(6) months after the Participant's Termination of Service
(the
"Deferral Period"). For purposes of this Agreement the
term "Termination of Service" shall have the meaning assigned to it under
section 409A of the Code and the regulations promulgated
thereunder.
(b) On
or within ten (10) days following the last day of the Deferral Period, the
Vested Portion of the Deferred Stock Award (as determined in accordance with
section 6 of this Agreement) shall be distributed to the Participant (or in the
event of the Participant's death, to his beneficiary determined in accordance
with the terms of this Agreement). To the extent the Deferred Stock
Award [consists][
Mr.
Robo
] [is deemed to consist][
Mr. Dewhurst
] of shares of
Common Stock, distribution shall be made in kind. To the extent the
Deferred Stock Award [consists][
Mr. Robo
] [is deemed to
consist][
Mr. Dewhurst
]
of property other than cash or Common Stock, distribution shall be made in cash
unless the LTIP Committee directs otherwise. If the Deferred Stock
Award consists of cash or other property in addition to Deferred Stock, the
distribution shall be applied proportionately to each asset included in the
Deferred Stock Award, unless the LTIP Committee determines
otherwise.
6. Vesting.
(a) In
General. Except as otherwise provided in this section 6, the Vested
Portion of the Deferred Stock Award shall be (i) 0%, if the Participant's
Termination of Employment occurs prior to _________; (ii) 50%, if the
Participant's Termination of Employment occurs after _________ and prior to
__________; and (ii) 100%, if the Participant's Termination of Employment occurs
on or after ____________. For all purposes of this Agreement, unless
otherwise determined by the LTIP Committee, the Participant's Termination of
Employment will occur on the date on which he ceases to perform any services for
the Company or an affiliated entity for which he receives compensation that is
reportable on IRS Form W-2 for federal income tax purposes.
(b) Vesting
due to the Death or Disability of the Participant.
If the Participant's
Termination of Employment results from the Participant's death or Disability,
the Vested Portion of the Deferred Stock Award shall be the greater of the (i)
percentage determined under section 6(a) of this Agreement or (ii) the
percentage determined under the following table:
For
Mr. Robo:
If
Termination of Employment Due to Death or Disability
Occurs
|
The
Percentage Is
|
after
|
but
prior to
|
January
1, 2006
|
January
1, 2007
|
10%
|
December
31, 2006
|
January
1, 2008
|
20%
|
December
31, 2007
|
January
1, 2009
|
30%
|
December
31, 2008
|
January
1, 2010
|
40%
|
December
31, 2009
|
January
1, 2011
|
50%
|
December
31, 2010
|
January
1, 2012
|
60%
|
December
31, 2011
|
January
1, 2013
|
70%
|
December
31, 2012
|
January
1, 2014
|
80%
|
December
31, 2013
|
January
1, 2015
|
90%
|
December
31, 2014
|
|
100%
|
For
Mr. Dewhurst:
If
Termination of Employment Due to Death or Disability
Occurs
|
The
Percentage Is
|
after
|
but
prior to
|
|
|
|
December
31, 2008
|
January
1, 2010
|
20%
|
December
31, 2009
|
January
1, 20011
|
30%
|
December
31, 2010
|
January
1, 2012
|
40%
|
December
31, 2011
|
January
1, 2013
|
50%
|
December
31, 2012
|
January
1, 2014
|
60%
|
December
31, 2013
|
January
1, 2015
|
70%
|
December
31, 2014
|
January
1, 2016
|
80%
|
December
31, 2015
|
January
1, 2017
|
90%
|
December
31, 2016
|
|
100%
|
Disability
shall be considered to exist at the Participant's Termination of Employment if,
on such date, the Participant is suffering from a medical condition which
qualifies him (or would, upon completion of any applicable waiting or
elimination period, qualify him) for benefits under the FPL Group Long Term
Disability Plan for Executives as in effect on the date of this
Agreement.
(c) Vesting
Due to a Change of Control
.
In the
event of a Change of Control, followed by the Participant's Involuntary
Discharge without Cause or Resignation with Good Reason, the Vested Portion of
the Deferred Stock Award shall be the greater of the (i) percentage determined
under section 6(a) of this Agreement or (ii) the percentage determined under the
following table:
For
Mr. Robo:
If
Termination of Employment following a Change of Control
Occurs
|
The
Percentage Is
|
On
or after
|
but
prior to
|
January
1, 2006
|
December
31, 2006
|
20%
|
December
31, 2006
|
December
31, 2007
|
30%
|
December
31, 2007
|
December
31, 2008
|
40%
|
December
31, 2008
|
December
31, 2009
|
50%
|
December
31, 2009
|
December
31, 2010
|
60%
|
December
31, 2010
|
December
31, 2011
|
70%
|
December
31, 2011
|
December
31, 2012
|
80%
|
December
31, 2012
|
December
31, 2012
|
90%
|
December
31, 2013
|
|
100%
|
For
Mr. Dewhurst:
If
Termination of Employment following a Change of Control
Occurs
|
The
Percentage Is
|
On
or after
|
but
prior to
|
|
|
|
December
31, 2008
|
December
31, 2009
|
30%
|
December
31, 2009
|
December
31, 2010
|
40%
|
December
31, 2010
|
December
31, 2011
|
50%
|
December
31, 2011
|
December
31, 2012
|
60%
|
December
31, 2012
|
December
31, 2013
|
70%
|
December
31, 2013
|
December
31, 2014
|
80%
|
December
31, 2014
|
December
31, 2015
|
90%
|
December
31, 2015
|
|
100%
|
For
purposes of this section 6(c), the terms "Change of Control", "Involuntary
Discharge without Cause" and "Resignation with Good Reason" shall have the
meanings assigned to them in section 8. With respect to the Deferred Stock Award
granted hereunder, the provisions of this section 6(c) shall supersede the
provisions of that certain Amended and Restated Executive Retention and
Employment Agreement between the Participant and the Company dated December 10,
2009, as such may be amended (“Retention Agreement”), and the Participant
specifically acknowledges and agrees that the terms and conditions of the
Retention Agreement shall not apply to this Deferred Stock Award.
7.
Forfeitures.
(a) If,
on the date of the Participant's Termination of Employment, the Vested Portion
of the Deferred Stock Award is less than 100%, the portion of the Deferred Stock
Award that is not vested shall be forfeited and shall not be eligible to be
reinstated in the event the Participant is subsequently
re-employed. If the Deferred Stock Award [consists][
Mr. Robo
] [is deemed to
consist][
Mr. Dewhurst
]
of cash or other property in addition to Deferred Stock, the forfeiture shall be
applied proportionately to each asset included in the Deferred Stock Award,
unless the LTIP Committee determines otherwise.
(b) If,
at any time, the Participant violates any of the provisions of section 15, the
Participant shall forfeit his entire interest, vested and unvested, in any
portion of the Deferred Stock Award that has not been distributed.
8. Certain
Defined Terms.
(a) For
all purposes of this Agreement, the term "Change of Control" shall have the
meaning assigned to it under the Plan as in effect on the date of this
Agreement.
(b) For
all purposes of this Agreement, "Involuntary Discharge without Cause" shall mean
a Termination of Employment by the Company that is not for "Cause" described in
section 7(b) of the Retention Agreement as in effect on the date of this
Agreement or the result of the Participant's death or Disability.
(c) For
purposes of this Agreement, "Resignation with Good Reason" shall mean the
Participant's voluntary resignation under the circumstances described in section
7(c) of the Retention Agreement as in effect on the date of this
Agreement.
9.
Tax
Withholding
. Upon vesting, distribution, or any other taxable
event in relation to the Deferred Stock, the Company shall be authorized, in
order to meet the Company’s obligations for the payment of withholding taxes
(including federal and state income taxes and payroll taxes applicable to the
taxable income relating to such event), to remit [or direct the Deferred Stock
Trustee to remit][
Mr.
Robo
] the minimum required withholding taxes to the appropriate tax
authority on the Participant's behalf and to deduct the amount so remitted from
the Deferred Stock Award. Unless the Committee determines otherwise,
any such deduction shall be applied first to cash balances included in the
Deferred Stock Award, second (if necessary) to assets other than cash and
Deferred Stock that comprise the Deferred Stock Award and third (if necessary)
to Deferred Stock. Deductions applied to property other than cash
shall be based on the fair market value of the property as of the date of
withholding.
10.
Compliance with Laws and
Regulations.
(a) The
Deferred Stock Award is intended to be, to the maximum extent permitted under
applicable laws, an unfunded, non-qualified plan maintained primarily for the
purpose of providing deferred compensation for highly compensated employees, as
contemplated by sections 201(2), 301(a)(3), and 401(a)(1) of ERISA. The Deferred
Stock Award is not intended to comply with the requirements of section 401(a) of
the Code or to be subject to Parts 2, 3, and 4 of Title I of ERISA. The Deferred
Stock Award shall be administered and construed so as to effectuate this
intent.
(b) The
Deferred Stock Award is further intended to be a non-qualified deferred
compensation plan described in section 409A of the Code. The Deferred Stock
Award shall be operated, administered, and construed to comply with the
requirements of section 409A of the Code and the regulations
thereunder. In addition, the Deferred Stock Award shall be subject to
amendment, with or without advance notice to Participants and other interested
parties, and on a prospective or retroactive basis, including but not limited
amendment in a manner that adversely affects the rights of participants and
other interested parties, to the extent necessary to effect such
compliance.
11.
Designation of
Beneficiary
. The Participant may designate a beneficiary or
beneficiaries (which may be an entity other than a natural person) to receive
payments and other distributions in respect of the Deferred Stock Award upon the
Participant's death. At any time, and from time to time, any such
designation may be changed or canceled by the Participant without the consent of
any beneficiary. Any such designation, change or cancellation must be
by written notice filed with the Executive Vice President, Human Resources of
the Company and shall not be effective until received by the Executive Vice
President, Human Resources of the Company. If the Participant designates more
than one beneficiary, such beneficiaries shall receive an equal portion of any
distribution, unless the Participant has designated otherwise, in which case
each beneficiary shall receive the portion designated by the
Participant. If no beneficiary has been named by the Participant, the
Participant's beneficiary shall be the executor or administrator of the
Participant's estate.
12.
Nonassignability
. The
Participant's rights and interest in the Deferred Stock and other vested
balances may not be assigned, pledged, or transferred prior to the expiration of
the Deferral Period except, in the event of death, to a designated beneficiary
or by will or by the laws of descent and distribution.
13.
Effect Upon Employment
. This
Deferred Stock Award is not to be construed as giving any right to the
Participant for continuous employment by the Company or a subsidiary or to any
specific term, condition or privilege of employment other than the Deferred
Stock Award evidenced by this Agreement. The Company and its
subsidiaries retain the right to terminate an employee at will and with or
without cause at any time to the full extent such rights exist in the absence of
this Agreement.
14.
Successors
. This
Deferred Stock Award shall be binding upon any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) of the Company.
The
Company
shall require any successor to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.
15.
Protective
Covenants
. In consideration of the Deferred Stock Award
granted under this Agreement, the Participant covenants and agrees as follows
(the "Protective Covenants"):
(a) During
Participant's employment with the Company, and for a two-year period following
the termination of the Participant's employment with the Company, Participant
agrees not to compete or attempt to compete for, or act as a broker or otherwise
participate in, any projects in which the Company has at any time done any work
or undertaken any development efforts. Furthermore, during the Participant's
employment with the Company, Participant shall not directly or indirectly
solicit any of the Company’s customers, vendors, contractors, agents, or any
other parties with which the Company has an existing or prospective business
relationship, for the benefit of Participant or for the benefit of any third
party, nor shall the Participant accept consideration or negotiate or enter into
agreements with such parties for the benefit of Participant or any third
party.
(b) During
the Participant's employment with the Company and for a two-year period
following the termination of the Participant's employment with the Company, the
Participant shall not, directly or indirectly, on behalf of the Participant or
for any other business, person or entity, entice, induce or solicit or attempt
to entice, induce or solicit any employee of the Company to leave the Company's
employ or to hire or to cause any employee of the Company to become employed for
any reason whatsoever.
(c) Participant
shall not, at any time in the future and in any way, disparage the Company or
its current or former officers, directors, and employees, orally or in writing,
or make any statements that may be derogatory or detrimental to the Company’s
good name or business reputation.
(d) Participant
acknowledges that the Company would not have an adequate remedy at law for
monetary damages if Participant breaches these Protective
Covenants. Therefore, in addition to all remedies to which the
Company may be entitled for a breach or threatened breach of these Protective
Covenants, including but not limited to monetary damages, the Company will be
entitled to specific enforcement of these Protective Covenants and to injunctive
or other equitable relief as a remedy for a breach or threatened
breach. In addition, upon any breach of these Protective Covenants or
any separate Confidentiality Agreement between the Company and the Participant,
all rights to receive shares of Common Stock and dividends under this Award
shall be forfeited.
(e) For
purposes of this Section 15, the term “Company” shall include all subsidiaries
and affiliates of the Company, including, without limitation, Florida Power
& Light Company and NextEra Energy Resources, LLC, and their respective
subsidiaries and affiliates.
(f) Notwithstanding
anything to the contrary contained in this Agreement, the terms of these
Protective Covenants shall survive the termination of this Agreement and shall
remain in effect.
16.
Incorporation of Plan's
Terms
. This Agreement is made under and subject to the
provisions of the Plan, and all the provisions of the Plan are also provisions
of this Agreement. If there is a difference or conflict between the
provisions of this Agreement and the mandatory provisions of the Plan, the
provisions of the Plan will govern. If there is a difference or
conflict between the provisions of this Agreement and a provision of the Plan as
to which the LTIP Committee is authorized to make a contrary determination, the
provisions of this Agreement will govern. (For example, the provisions of this
Agreement with respect. to Change of Control shall govern.) All terms used
herein are used as defined in the Plan as it may be amended from time to time,
except where explicitly stated to the contrary. The Company and
Committee retain all authority and powers granted by the Plan as it may be
amended from time to time not expressly limited by this Agreement.
17.
Interpretation
. The
Committee has the sole and absolute right to interpret the provisions of this
Agreement.
18.
Governing
Law/Jurisdiction
. This Agreement shall be construed and
interpreted in accordance with the laws of the State of Florida, without regard
to its conflict of laws principles. All suits, actions, and
proceedings relating to this Agreement may be brought only in the courts of the
State of Florida located in Palm Beach County or in the United States District
Court for the Southern District in West Palm Beach, Florida. The
Company and Participant shall consent to the nonexclusive personal jurisdiction
of the courts described in this section for the purpose of all suits, actions,
and proceedings. The Company and Participant each waive all
objections to venue and to all claims that a court chosen in accordance with
this section is improper based on a venue or a forum non conveniens
claim.
By
signing this Agreement, the Participant accepts and agrees to all of the
foregoing terms and provisions and to all the terms and provisions of the Plan
incorporated herein by reference and confirms that he has received or has access
to a copy of the Plan.
IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Agreement as of the day and year first above written.
FPL
GROUP, INC.
________________________________
Participant
________________________________
Exhibit
10(ll)
FPL
GROUP, INC.
NON-EMPLOYEE
DIRECTOR COMPENSATION SUMMARY
(effective
January 1, 2010)
Annual
Retainer
(payable
quarterly in common stock or cash)
|
$50,000
|
Board
or Committee meeting fee
|
$2,000/meeting
|
Audit
Committee Chair retainer (annual)
(payable
quarterly)
|
$15,000
|
Other
Committee Chair retainer (annual)
(payable
quarterly)
|
$10,000
|
Annual
grant of restricted stock
(under
Non-Employee Directors Stock Plan)
|
that
number of shares
determined
by
dividing
$110,000 by
closing
price of FPL
Group
common stock
on
effective date of
grant
(rounded up
to
the
nearest 10 shares)
|
Miscellaneous
|
-
Travel and Accident
Insurance
while on
Company
business.
-
Certain directors
accrue
dividends and
interest
on the
phantom
stock units
granted
to them upon
the
termination of the
Non-Employee
Director
Retirement
Plan
in 1996.
-
Travel and related
expenses
while on
Board
business are
paid
or reimbursed by
the
Company.
Directors
may travel
on
Company aircraft
in
accordance with
the
Company’s
Aviation
Policy
(primarily
to or from
Board
meetings and
while
on Board
business;
in limited
circumstances
for
other
reasons).
-
Directors may
participate
in the
Company’s
Deferred
Compensation
Plan.
-
Directors may
participate
in the
Company’s
matching
gift
program, which
matches
gifts to
educational
institutions
to a
maximum
of $10,000
per
donor.
|
Exhibit
10(nn)
Form
of
AMENDED
AND RESTATED
EXECUTIVE
RETENTION EMPLOYMENT AGREEMENT
Amended
and Restated Executive Retention Employment Agreement between FPL Group, Inc., a
Florida corporation (the "Company"), and ___________ (the "Executive"),
originally dated as of _________, [amended and completely restated as of
________][Messrs. Davidson, Hay, Olivera, Pimentel and Robo] and hereby
[further][ Messrs. Davidson, Hay, Olivera, Pimentel and Robo] amended and
completely restated as of ________. The Board of Directors of the
Company (the "Board") has determined that it is in the best interests of the
Company and its shareholders to assure that the Company and its Affiliated
Companies will have the continued dedication of the Executive, notwithstanding
the possibility, threat or occurrence of a Potential Change of Control or a
Change of Control (each as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by the
circumstances surrounding a Potential Change of Control or a Change of Control
and to encourage the Executive's full attention and dedication to the Company
and its Affiliated Companies currently and in the event of any Potential Change
of Control or Change of Control (and, under certain circumstances, in the event
of the termination or abandonment of a Change of Control transaction), and to
provide the Executive with compensation and benefits arrangements which ensure
that the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other corporations which may
compete with the Company for the services of the Executive. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Amended and Restated Executive Retention Employment Agreement (this
"Agreement"). The Agreement supersedes and replaces in its entirety
the predecessor [Amended and Restated][Messrs. Davidson, Hay, Olivera, Pimentel
and Robo] Executive Retention Employment Agreement dated ________between the
Company and the Executive.
Therefore,
the Company and the Executive agree as follows:
1.
Effective
Date
.
The effective date of this Agreement
(the "Effective Date") shall be the date on which (i) a Potential Change of
Control occurs, (ii) the Board approves a plan of complete liquidation or
dissolution of the Company, (iii) a Change of Control occurs pursuant to Section
2(a)(1) or (2) below or (iv) a definitive agreement is signed by the Company
which provides for a transaction that, if approved by shareholders or
consummated, as applicable, would result in a Change of Control pursuant to
Section 2(a)(3) or (4) below; provided, however, that any of the foregoing which
may have occurred prior to the date hereof shall be
disregarded. Anything in this Agreement to the contrary
notwithstanding, if, prior to the Effective Date, the Executive's employment
with the Company or its Affiliated Companies was terminated by the Company or
its Affiliated Companies, or both, as applicable, other than for Cause or
Disability (each as defined below) or by the Executive for Good Reason (as
defined below) and the Executive can reasonably demonstrate that such
termination (or the event constituting Good Reason) took place (a) at the
request or direction of a third party who took action that caused a Potential
Change of Control or (b) in contemplation of an event that would give rise to an
Effective Date, an Effective Date will be deemed to have occurred (“Deemed
Effective Date”) immediately prior to the Date of Termination (as defined in
Section 7(e) below), provided that a Change of Control occurs within a two-year
period following such Date of Termination. As used in this Agreement, the term
"Affiliated Companies" shall include any corporation or other entity controlled
by, controlling or under common control with the Company and
the term “Subsidiary” shall mean (x) any corporation or
other entity (other than the Company) with respect to which the Company owns,
directly or indirectly, 50% or more of the total combined voting power of all
classes of stock or other ownership interests or (y) any other related entity
which may be designated by the Board as a Subsidiary, provided such entity could
be considered a subsidiary according to generally accepted accounting
principles
.
2.
Change of
Control; Potential Change of Control
.
For the purposes
of this Agreement:
(a)
A
"Change of Control" shall mean the first (and only the first) to occur of the
following:
(1)
The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (y) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions (collectively, the "Excluded Acquisitions") shall not
constitute a Change of Control (it being understood that shares acquired in an
Excluded Acquisition may nevertheless be considered in determining whether any
subsequent acquisition by such individual, entity or group (other than an
Excluded Acquisition) constitutes a Change of Control): (i) any acquisition
directly from the Company or any Subsidiary; (ii) any acquisition by the Company
or any Subsidiary; (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Subsidiary; (iv)
any acquisition by an underwriter temporarily holding Company securities
pursuant to an offering of such securities; (v) any acquisition in connection
with which, pursuant to Rule 13d-1 promulgated pursuant to the Exchange Act, the
individual, entity or group is permitted to, and actually does, report its
beneficial ownership on Schedule 13G (or any successor Schedule); provided that,
if any such individual, entity or group subsequently becomes required to or does
report its beneficial ownership on Schedule 13D (or any successor Schedule),
then, for purposes of this paragraph, such individual, entity or group shall be
deemed to have first acquired, on the first date on which such individual,
entity or group becomes required to or does so report, beneficial ownership of
all of the Outstanding Company Common Stock and/or Outstanding Company Voting
Securities beneficially owned by it on such date; or (vi) any acquisition in
connection with a Business Combination (as hereinafter defined) which, pursuant
to subparagraph (3) below, does not constitute a Change of Control;
or
(2)
Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of an individual, entity or group other than the Board; or
(3)
Consummation
by the Company of a reorganization, merger, consolidation or other business
combination (any of the foregoing, a "Business Combination") of the Company or
any Subsidiary of the Company with any other corporation, in any case with
respect to which:
(i)
the
Outstanding Company Voting Securities outstanding immediately prior to such
Business Combination do not, immediately following such Business Combination,
continue to represent (either by remaining outstanding or being converted into
voting securities of the resulting or surviving entity or any ultimate parent
thereof) more than [55% - Messrs. Davidson, Dewhurst, Pimentel and Sieving][60%
- Messrs. Hay, Olivera, and Robo] of the outstanding common stock and of the
then outstanding voting securities entitled to vote generally in the election of
directors of the resulting or surviving entity (or any ultimate parent thereof);
or
(ii)
less
than a majority of the members of the board of directors of the resulting or
surviving entity (or any ultimate parent thereof) in such Business Combination
(the "New Board") consists of individuals ("Continuing Directors") who were
members of the Incumbent Board (as defined in subparagraph (2) above)
immediately prior to consummation of such Business Combination (excluding from
Continuing Directors for this purpose, however, any individual whose election or
appointment to the Board was at the request, directly or indirectly, of the
entity which entered into the definitive agreement with the Company or any
Subsidiary providing for such Business Combination); or
(4)
(i)
Consummation of a sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation with respect to which,
following such sale or other disposition, more than [55% - Messrs. Davidson,
Dewhurst, Pimentel and Sieving][60% - Messrs. Hay, Olivera, and Robo] of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities as the case may be; or (ii) shareholder
approval of a complete liquidation or dissolution of the Company.
The
term "the sale or disposition by the Company of all or substantially all of the
assets of the Company" shall mean a sale or other disposition transaction or
series of related transactions involving assets of the Company or of any
Subsidiary (including the stock of any Subsidiary) in which the value of the
assets or stock being sold or otherwise disposed of (as measured by the purchase
price being paid therefor or by such other method as the Board determines is
appropriate in a case where there is no readily ascertainable purchase price)
constitutes more than two-thirds of the fair market value of the Company (as
hereinafter defined). The "fair market value of the Company" shall be
the aggregate market value of the then Outstanding Company Common Stock (on a
fully diluted basis) plus the aggregate market value of the Company's other
outstanding equity securities. The aggregate market value of the
shares of Outstanding Company Common Stock shall be determined by multiplying
the number of shares of Outstanding Company Common Stock (on a fully diluted
basis) outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of the shares of Outstanding
Company Common Stock for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other equity
securities of the Company shall be determined in a manner similar to that
prescribed in the immediately preceding sentence for determining the aggregate
market value of the shares of Outstanding Company Common Stock or by such other
method as the Board shall determine is appropriate.
(b)
A
"Potential Change of Control" shall be deemed to have occurred if an event set
forth in either of the following subparagraphs shall have occurred:
(1)
the
Company or any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) publicly
announces or otherwise communicates to the Board in writing an
intention to take or to consider taking actions (
e.g.
, a "bear hug"
letter, an unsolicited offer or the commencement of a proxy contest) which, if
consummated or approved by shareholders, as applicable, would constitute a
Change of Control; or
(2)
any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) directly or indirectly, acquires beneficial
ownership of 15% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities; provided, however, that Excluded Acquisitions shall
not constitute a Potential Change of Control.
3.
Employment
Period
.
(a)
The
Company hereby agrees to continue the Executive in its or its Affiliated
Companies' employ, or both, as the case may be, and the Executive hereby agrees
to remain in the employ of the Company, or its Affiliated Companies, or both, as
the case may be, subject to the terms of this Agreement, for a period commencing
on the Effective Date and ending on the third anniversary of such date (such
period or, if shorter, the period from the Effective Date to the Date of
Termination, is hereinafter referred to as the "Employment
Period").
(b)
Anything
in this Agreement to the contrary notwithstanding, (x) if an Effective Date
occurs (other than as a result of a Change of Control under Section 2(a)(1) or
(2) above) and the Board adopts a resolution to the effect that the event or
circumstance giving rise to the Effective Date no longer exists (including by
reason of the termination or abandonment of the transaction contemplated by the
definitive agreement referred to in clause (iv) of Section 1 hereof), the
Employment Period shall terminate on the date the Board adopts such resolution,
but this Agreement shall otherwise remain in effect, and (y) if a Change of
Control occurs pursuant to Section 2(a)(3) or (4) above during the Employment
Period, the Employment Period shall immediately extend to and end on the
third
anniversary
of the date of such Change of Control (or, if earlier, to the Date of
Termination) and a new Effective Date will be deemed to have occurred on the
date of such Change of Control.
4.
Position and
Duties
.
During
the Employment Period, the Executive's status, offices, titles, and reporting
requirements with the Company or its Affiliated Companies or both, as the case
may be, shall be commensurate with those in effect during the 90-day period
immediately preceding the Effective Date. The duties and responsibilities
assigned to the Executive may be increased, decreased or otherwise changed
during the Employment Period, provided that the duties and responsibilities
assigned to the Executive at any given time are not materially inconsistent with
the Executive's status, offices, titles, and reporting requirements as in effect
during the 90-day period immediately preceding the Effective Date. The
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any location less than 20
miles from such location, although the Executive understands and agrees that he
may be required to travel from time to time for business purposes.
During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his time and attention during normal business hours to the business and
affairs of the Company and its Affiliated Companies and to use his reasonable
best efforts to perform faithfully and efficiently the duties and
responsibilities assigned to him hereunder. During the Employment
Period it shall not be a violation of this Agreement for the Executive to serve
on corporate, civic or charitable boards or committees, deliver lectures,
fulfill speaking engagements or teach at educational institutions and devote
reasonable amounts of time to the management of his and his family's personal
investments and affairs, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company or its Affiliated Companies in accordance with this
Agreement. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the
Effective Date, the reinstatement or continued conduct of such activities (or
the reinstatement or conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company and its
Affiliated Companies.
5.
Compensation
.
During
the Employment Period, the Executive shall be compensated as
follows:
(a)
Annual Base
Salary
. The Executive shall be paid an annual base salary
("Annual Base Salary"), in equal biweekly installments or otherwise in
accordance with the Company’s then-current payroll practice, at least equal to
the annual rate of base salary being paid to the Executive by the Company and
its Affiliated Companies as of the Effective Date. The Annual Base
Salary shall be reviewed at least annually and shall be increased substantially
consistent with increases in base salary generally awarded to other peer
executives of the Company and its Affiliated Companies. Such
increases shall in no event be less than the increases in the U.S. Department of
Labor Consumer Price Index - U.S. City Average Index. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term "Annual Base Salary" as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
(b)
Annual
Bonus
. In addition to Annual Base Salary, upon the terms and
subject to the conditions of this paragraph (b), the Executive shall be awarded,
for each fiscal year ending during the Employment Period an annual cash bonus
(the "Annual Bonus") equal to a percentage of his Annual Base
Salary. Such percentage shall be substantially consistent with the
targeted percentages generally awarded to other peer executives of the Company
and its Affiliated Companies, but at least equal to the higher of (i) the
percentage obtained by dividing his targeted annual bonus for the then current
fiscal year by his then Annual Base Salary or (ii) the average percentage
of his annual base salary (as in effect for the applicable years)
that was paid or payable, including by reason of any deferral, to the Executive
by the Company and its Affiliated Companies as an annual bonus (however
described, including as annual incentive compensation) for each of
the three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (or, if higher, for each of the three fiscal years
immediately preceding the fiscal year in which a Change of Control occurs, if a
Change of Control occurs following the Effective Date). For the
purposes of any calculation required to be made under clause (ii) of the
preceding sentence, an annual bonus shall be annualized for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive was employed for, and received pro-rated annual incentive compensation
with respect to, less than the full twelve months, and, if the Executive has not
been employed for the full duration of the three fiscal years immediately
preceding the year in which the Effective Date occurs, the average shall be
calculated over the duration of the Executive's employment in such
period. Each such Annual Bonus shall be paid no later than the end of
the second month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer the
receipt of such Annual Bonus in accordance with a deferred compensation plan of
the Company or its Affiliated Companies that complies with Section 409A of the
Internal Revenue Code (the “Code”). The foregoing provisions of this
paragraph (b) shall be qualified by the following terms and
conditions. If (A) as of the end of any fiscal year during the
Employment Period the Executive is a “Covered Employee” as defined in Code
Section 162(m), (B) Code Section 162(m) remains in effect as of the end of
such fiscal year and as of such date is applicable to the payment of an Annual
Bonus for such fiscal year and (C) the Executive participated for such fiscal
year in an Annual Incentive Plan (as hereinafter defined), the Annual Bonus for
such fiscal year shall be paid to the Executive pursuant to the Annual Incentive
Plan, rather than in accordance with the first four sentences of this paragraph
(b), in the amount, at the time and upon the other terms and conditions
specified in such Annual Incentive Plan; provided, however, that if a Change of
Control occurs before such payment is made, the Executive shall be paid, in lieu
of such amount and on the date on which such Change of Control occurs, as
follows: (A) as the Annual Bonus for such fiscal year, an amount equal to the
greater of (x) the maximum amount payable to the Executive under the Annual
Incentive Plan for such fiscal year assuming achievement thereunder of the
Corporate Performance Objective (as hereinafter defined) for such fiscal year
and (y) the maximum amount payable in accordance with the first four sentences
of this paragraph (b) and (B) as Annual Bonuses for all prior fiscal years ended
during the Employment Period, an amount equal to the aggregate amount, if any,
by which the maximum amount otherwise payable in accordance with the first four
sentences of this paragraph (b) for all such prior fiscal years exceeds the
aggregate amount of all Annual Bonuses previously paid to the Executive for such
prior fiscal years pursuant to the Annual Incentive Plan or otherwise under this
paragraph (b). If, as of the end of any fiscal year for which an
Annual Bonus is payable pursuant to this paragraph (b), the Executive is not,
and at any time during the three full fiscal years preceding such date was not,
a “Covered Employee” as defined in Section 162(m), the Executive shall be paid
the Annual Bonus for such fiscal year in accordance with the first four
sentences of this paragraph (b); provided, however, that the amount of the
Annual Bonus so paid to the Executive shall be reduced by the amount, if any, of
the annual cash bonus paid to the Executive for such fiscal year pursuant to an
Annual Incentive Plan. For purposes of this paragraph (b), “Annual
Incentive Plan” means an annual cash incentive compensation plan of the Company
that (x) is intended to result in, and, in the opinion of a nationally reputable
law firm having significant experience with Code Section 162(m), does result in,
the payment of qualified performance-based compensation for purposes of Code
Section 162(m) (assuming solely for this purpose achievement of the Corporate
Performance Objective to which the payment of such compensation is subject), (y)
conditions the payment of all compensation pursuant thereto on the achievement
of a Corporate Performance Objective that is generally applicable to all
participants in such plan, and (z) is administered, and includes a Corporate
Performance Objective that is selected, in a manner that is consistent in all
material respects with past practice as applied to the most recent annual cash
incentive compensation plan of the Company that was in effect prior to the date
of this Agreement (December 31, 2009) for which the applicable Corporate
Performance Objective was achieved. For purposes of this Agreement,
the “Corporate Performance Objective” to which any payment of compensation is
subject shall mean the objective performance objective which is selected and
established by the Compensation Committee of the Board for purposes of making
such payment fully deductible for federal income tax purposes pursuant to Code
Section 162(m).
(c)
Long Term Incentive
Compensation
. During the Employment Period, the Executive
shall be entitled to participate in all incentive compensation plans, practices,
policies, and programs applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with incentive
opportunities and potential benefits, both as to amount and percentage of
compensation, less favorable, in the aggregate, than those provided by the
Company and its Affiliated Companies for the Executive under the FPL Group, Inc.
Amended and Restated Long Term Incentive Plan (including, without limitation,
performance share awards, stock option grants and restricted stock awards), or
other plan providing for the grant of equity compensation for executive
officers, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its Affiliated Companies.
(d)
Savings and Retirement
Plans
. During the Employment Period, the Executive shall be
entitled to participate in all savings and retirement plans, practices,
policies, and programs applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its Affiliated Companies for the Executive under such plans,
practices, policies, and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its Affiliated Companies.
In
addition, during the Employment Period the Executive shall be entitled under
this Agreement to the Payment in Lieu of Lost Future Benefits described in Annex
A attached hereto and made a part hereof by this reference (“Payment in Lieu of
Lost Future Benefits”). The vesting of such Payment in Lieu of Lost
Future Benefits shall be determined in accordance with Section 8 of this
Agreement. The payment of such amount shall be determined in
accordance with Section 8 of this Agreement, to the extent the ability to make
such payment under Section 8 is consistent with the limitations of Code Section
409A and the terms of the Company’s Supplemental Executive Retirement
Plan.
To
the extent that the payment of this amount pursuant to Section 8 would be
inconsistent with the limitations of Code Section 409A or the terms of the
Company’s Supplemental Executive Retirement Plan, the payment of this amount
described in Annex A shall be made under the terms of the Company’s Supplemental
Executive Retirement Plan, pursuant to the provisions therein relating to
post-2005 accrued benefits that are subject to Code Section 409A.
(e)
Benefit
Plans
. During the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies,
and programs provided by the Company and its Affiliated Companies (including,
without limitation, medical, executive medical, annual executive physical,
prescription, dental, vision, short-term disability, long-term disability,
executive long-term disability, salary continuance, employee life, group life,
accidental death and dismemberment, and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such plans,
practices, policies, and programs in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, those provided generally at any time after the Effective Date
to other peer executives of the Company and its Affiliated
Companies.
(f)
Expenses
. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices, and procedures of the
Company and its Affiliated Companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its Affiliated
Companies. The payment of such reimbursements shall be made within
thirty (30) days after submission of requests for reimbursement in accordance
with applicable policies and procedures of the
Company. Notwithstanding anything to the contrary in this Section
5(f) or elsewhere, reimbursement of expenses will be made consistent with the
Company’s Expense Reimbursement Policy, which is intended to comply with the
requirements of Code Section 409A and Treasury Regulation Section
1.409A-3(i)(1)(iv).
(g)
Fringe
Benefits
. During the Employment Period, the Executive shall be
entitled to fringe benefits, including but not limited to those described in
Section 8(a)(5), in accordance with the most favorable plans, practices,
programs, and policies of the Company and its Affiliated Companies in effect for
the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
Affiliated Companies.
(h)
Office and Support
Staff
. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and its Affiliated Companies at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies.
(i)
Vacation
. During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs, and practices of
the Company and its Affiliated Companies as in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its Affiliated
Companies. In addition to, and notwithstanding anything to the
contrary in, the preceding sentence, any unused vacation days shall be carried
over from year to year.
6.
Change of
Control
.
(a)
Benefits Upon Change of
Control
. If, as of the date of a Change of Control which
occurs during the Employment Period (including on the Effective Date), the
Executive is employed by the Company or one of its Affiliated Companies, then as
of such date:
(1)
50%
of each outstanding performance stock-based award granted to the Executive shall
become fully vested and earned at a deemed achievement level equal to the higher
of (x) the targeted level of performance for such award or (y) the average
level (expressed as a percentage of target) of achievement in respect of similar
performance stock-based awards which matured over the three fiscal years
immediately preceding the year in which the Change of Control occurred; payment
of each such vested award shall be made to the Executive, in the form described
below, as soon as practicable following such Change of Control consistent with
Code Section 409A; and the remainder of each such award shall remain outstanding
(on a converted basis, if applicable) and shall remain subject to the terms and
conditions of the plan under which such award was granted, as well as the terms
and conditions of this Agreement; and
(2)
all
other outstanding stock-based awards granted to the Executive shall be fully
vested and earned; and
(3)
any
outstanding option, stock appreciation right, and other outstanding award in the
nature of a right that may be exercised that was granted to the Executive and
which was not previously exercisable and vested shall become fully exercisable
and vested; and
(4)
the
restrictions and forfeiture conditions applicable to any outstanding award
granted to the Executive under an incentive compensation plan, practice, policy
or program shall lapse and such award shall be deemed fully vested.
If
as a result of the Change of Control, the Outstanding Company Common Stock is
exchanged for or converted into a different form of equity security and/or the
right to receive other property (including cash), payment in respect of the
underlying awards described in subparagraphs (1), (2) and, with respect to
stock-based awards, (4) hereof shall, to the maximum extent practicable, be made
in the same form. If a Change of Control occurs and Company
shareholders do not, as a group, receive consideration in connection with such
Change of Control, then payment in respect of awards described in subparagraphs
(1),(2) and, with respect to stock-based awards, (4) hereof shall be made in
cash based on the average closing price of the shares of Outstanding Company
Common Stock for the 20 trading days immediately preceding the date of the
Change of Control.
(b)
Benefits Upon First
Anniversary of Change of Control
. If the Executive has
remained employed by the Company or one of its Affiliated Companies from the
date of a Change of Control which occurs during the Employment Period (including
on the Effective Date) to the date of the first anniversary of such Change of
Control, the performance stock-based awards outstanding immediately prior to
such Change of Control that did not become vested and earned at the time of such
Change of Control pursuant to Section 6(a)(1) shall become vested and earned as
of such first anniversary date and payment in respect of such awards shall be
made as soon as practicable following such date, but in no event later than the
15th day of the third month following the end of the first taxable year in which
the right to such payment arises. The deemed level of achievement
with respect to such awards, as well as the form of payment thereof, shall be as
described in paragraph (a) above.
7.
Termination of
Employment
.
(a)
Death or
Disability
. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 15(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b)
Cause
. The
Company may terminate the Executive's employment during the Employment Period
for Cause. For purposes of this Agreement, "Cause" shall mean (i)
repeated violations by the Executive of the Executive's obligations under
Section 4 of this Agreement (other than as a result of incapacity due to
physical or mental illness) which are demonstrably willful and deliberate on the
Executive's part, which are committed in bad faith or without reasonable belief
that such violations are in the best interests of the Company and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial personal
enrichment at the expense of the Company or its Affiliated
Companies.
(c)
Good
Reason
. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean:
(1)
any
failure by the Company to comply with the provisions of Section 4 of this
Agreement, including without limitation, the assignment to the Executive of any
duties and responsibilities that are materially inconsistent with the
Executive's status, offices, titles, and reporting requirements as in effect
during the 90-day period immediately preceding the Effective Date, but excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of written
notice thereof given by the Executive;
(2)
any
failure by the Company to comply with any of the provisions of Sections 5 or 6
of this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(3)
the
Company's requiring the Executive to be based at any office or location other
than that described in Section 4 hereof;
(4)
any
purported termination by the Company of the Executive's employment
other than as expressly permitted by this Agreement; or
(5)
any
failure by the Company to comply with and satisfy Section 14(c) of this
Agreement, provided that such successor has received at least ten days prior
written notice from the Company or the Executive of the requirements of Section
14(c) of the Agreement.
For
purposes of this Section 7(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d)
Notice of
Termination
. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 15(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen calendar days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any facts or circumstances which contribute to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such facts or circumstances in enforcing the Executive's or the
Company's rights hereunder.
(e)
Date of
Termination
. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination, and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case
may be.
8.
Obligations of the Company
upon Termination
.
(a)
Following a Change of
Control: Good Reason; Other Than for Cause or Disability
. If
following a Change of Control and during the Employment Period, the Company
terminates the Executive's employment other than for Cause or Disability or
death or the Executive terminates employment for Good Reason, then:
(1)
the
Company shall pay to the Executive in a lump sum in cash within 45 days after
the Date of Termination the aggregate of the following amounts (such aggregate
being hereinafter referred to as the "Special Termination Amount"):
(i)
the
sum of (1) the Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (2) the product of (x) the Annual Bonus in
effect at such date and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the
denominator of which is 365 (such amount to be paid in addition to and not in
lieu of any Annual Bonus earned for such year), and (3) any accrued vacation pay
at the Annual Base Salary rate in effect as of the termination of employment, in
each case to the extent not theretofore paid (the sum of the amounts described
in subclauses (1), (2), and (3) herein shall be called the "Accrued
Obligations"); and
(ii)
the
amount equal to the product of (1)
three
, and (2) the sum of (x)
the Executive's Annual Base Salary and (y) the Executive's Annual Bonus in
effect at such date; provided, however, that such amount shall be paid in lieu
of, and the Executive hereby waives the right to receive, any other amount of
severance relating to salary or bonus continuation to be received by the
Executive upon termination of employment of the Executive under any severance
plan, policy or arrangement of the Company; and
(iii)
a
separate lump-sum equal to the greater of (1) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled to had his employment continued at the compensation level provided for
in Sections 5(a) and 5(b) of this Agreement for three
years and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and his
Projected Age (as defined in Paragraph 2(b) of Annex A), or (2) the difference
between (x) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the FPL Group Employee Pension Plan (or any
successor plan thereto) (the "Pension Plan") during the 90-day period
immediately preceding the Effective Date) of the benefit payable under the
Pension Plan and all supplemental and/or excess retirement plans providing
benefits for the Executive (“Supplemental Retirement Plans”) (other than the
Payment in Lieu of Lost Future Benefits described in Annex A) including, but not
limited to the Supplemental Pension Benefit as defined in the FPL Group, Inc.
Supplemental Executive Retirement Plan (the “SERP”) which the Executive would
receive if the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for, and his age
increased by, three years, assuming for this purpose that all accrued benefits
are fully vested and that benefit accrual formulas are no less advantageous to
the Executive than those in effect during the 90-day period immediately
preceding the Effective Date, or, if more favorable to the Executive, as in
effect generally at any time thereafter during the Employment Period with
respect to other peer executives of the Company and its Affiliated Companies,
and (y) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the Pension Plan during the 90-day period
immediately preceding the Effective Date) of the Executive's actual benefits
(paid or payable), if any, under the Pension Plan and the Supplemental
Retirement Plans;
(iv)
a
separate lump-sum equal to the greater of (1) the supplemental matching
contribution account described in Paragraph 1(c) of Annex A that the Executive
would have been entitled to had his employment continued at the compensation
level provided for in Sections 5(a) and 5(b) of this Agreement for three years
and assuming that the Executive made After Tax Contributions (within the meaning
of the FPL Group Employee Retirement Savings Plan or any successor plan thereto
(the "Retirement Savings Plan")) and Pretax Contributions (within the meaning of
the Retirement Savings Plan) to the Retirement Savings Plan at the highest
permissible rate (disregarding any limitations imposed by the Code) following
the Date of Termination, or (2) the difference between (x) the value of the
Company Account (as defined in the Retirement Savings Plan) and any other
matching contribution accounts (including, but not limited to the Supplemental
Matching Contribution Account (as defined in the SERP)) under the Supplemental
Retirement Plans (other than the Payment in Lieu of Lost Future Benefits
described in Annex A) which the Executive would receive if (A) the Executive's
employment continued at the compensation level provided for in Sections 5(a) and
5(b) of this Agreement for three years, (B) the Executive made pre- and
after-tax contributions at the highest permissible rate (disregarding any
limitations imposed by the Code, which may or may not be set forth in the
Retirement Savings Plan) for three years, (C) the Company Account and the
matching contribution accounts are fully vested, and (D) the matching
contribution formulas are no less advantageous to the Executive than those in
effect during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time during the
remainder of the Employment Period with respect to other peer executives of the
Company and its Affiliated Companies, and (y) the actual value of the
Executive's Company Account and matching contribution accounts (paid or
payable), if any, under the Retirement Savings Plan and the Supplemental
Retirement Plans; and
(v)
if
the Change of Control hereunder is also a “change in ownership,” a “change in
effective control” or a “change in the ownership of a substantial portion of the
assets” of the Company within the meaning of Code Section 409A, any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) including, without limitation, compensation, bonus, incentive
compensation or awards deferred under the FPL Group, Inc. Deferred Compensation
Plan or incentive compensation or awards deferred under the FPL Group, Inc.
Long-Term Incentive Plan of 1985, the FPL Group, Inc. Long-Term Incentive Plan
of 1994, or pursuant to any individual deferral agreement; provided that, for
the avoidance of doubt, if the Change of Control hereunder is not any such event
within the meaning of Code Section 409A, payment of the foregoing amounts shall
be made as soon as practicable consistent with Code Section 409A;
(2)
the
Company shall provide the Executive, if such termination occurs prior to the
first anniversary of the Change of Control, with the vested and earned awards
that the Executive would have received pursuant to Section 6(b) hereof had the
Executive remained employed to the first anniversary of the Change of
Control;
(3)
Subject
to the provisions of this paragraph (3):
(A)
a
pro rata portion of each outstanding performance stock-based award granted to
the Executive on or after the date of the Change of Control shall be fully
vested and earned at a deemed achievement level equal to the higher of (x) the
targeted level of performance for such award or (y) the average level (expressed
as a percentage of target) of achievement in respect of similar performance
stock-based awards which matured over the three fiscal years immediately
preceding the year in which the Change of Control occurred; and
(B)
a
pro rata portion of each other outstanding stock-based award granted to the
Executive on or after the date of the Change of Control shall be fully vested
and earned;
(C)
a
pro rata portion of each outstanding option, stock appreciation right, and other
award in the nature of a right that may be exercised that was granted to the
Executive on or after the date of the Change of Control and which was not
previously exercisable and vested shall become fully exercisable and vested;
and
(D)
the
restrictions and forfeiture conditions applicable to any outstanding award
granted to the Executive on or after the date of the Change of Control under an
incentive compensation plan, practice, policy or program shall lapse and a pro
rata portion of such award shall be deemed fully vested and earned.
In determining the pro rata portion of
an award that shall become fully vested and earned or fully vested and
exercisable pursuant to this paragraph (3), an Executive shall be deemed to have
remained employed to the end of the Employment Period (determined without regard
to his earlier termination of employment). Anything to the contrary
notwithstanding, an award shall not become vested and earned or vested and
exercisable hereunder (and instead shall be cancelled) to the extent that
pursuant to Section 6 or Section 8(a)(2) hereof, a similar predecessor award in
respect of the same performance or vesting period shall have become vested and
earned, shall have become vested and exercisable or shall have been
paid. Payment in respect of the underlying awards described in
subparagraphs (A), (B) and (D) hereof shall be made in the shares to which such
awards relate if such shares are then admitted for trading on a national
securities exchange or are then admitted for quotation on a national quotation
system as soon as practicable following the Date of Termination, but in no event
later than the 15th day of the third month following the end of the first
taxable year in which the right to such payment arises. If such
shares are not so admitted, payment in respect of the underlying awards
described in subparagraphs (A), (B) and (D) hereof shall be made in cash based
on the fair market value of the shares (as determined by the board of directors
of the issuer of such shares in good faith) to which such awards
relate. Any portion of an award that does not become vested and
earned or vested and exercisable pursuant to this paragraph (3) shall be
cancelled as of the Date of Termination.
(4)
for
a three year period commencing on the Date of Termination (the "Continuation
Period"), or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company and its Affiliated Companies applicable
generally to other peer executives and their families during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Continuation Period and to have retired
on the last day of such period. In addition to, and notwithstanding
anything to the contrary in, the foregoing provisions of this paragraph (4), and
to the extent that the benefit referred to in this sentence is more favorable to
the Executive than the benefit conferred by the foregoing provisions of this
paragraph (4), upon termination of employment, the Executive shall be entitled
without limitation as to period to enroll in Access Only Benefits, as defined in
the Retiree Benefits Plan for Employees of FPL Group, Inc., as amended and
restated effective January 1, 2008 (the “Retiree Benefits Plan”), or in a
comparable medical benefits arrangement, if the Executive satisfies the
eligibility requirements as stated in Appendix B to the Retiree Benefits Plan as
in effect as of December 12, 2008, even if Access Only Benefits, or comparable
medical benefits, are no longer being provided to other employees of the
Company; provided, that such medical benefits shall be provided to the Executive
to the extent that such coverage is available under the Company’s health, dental
and vision plans or can be obtained on commercially reasonable
terms;
(5)
for
the remainder of the Continuation Period and to the extent previously paid for
or provided by the Company or its Affiliated Companies, the Company shall
continue to provide the following, consistent with the Company’s Expense
Reimbursement Policy, which is intended to comply with the requirements of Code
Section 409A and Treasury Regulation Section 1.409A-3(i)(1)(iv):
(A)
social
and business club memberships to the Executive (as in effect immediately prior
to the Date of Termination);
(B)
use,
maintenance, insurance, and repair of the company car that is in the possession
of the Executive, until the earlier of the end of the lease term or the end of
the Continuation Period, at which time the Executive may purchase such car (in
accordance with the Company’s then-existing executive car
program). The Company shall replace the company car in the
Executive's possession on the Effective Date with a new company car at such
time(s) as provided under the Company car policy applicable to other peer
executives, but in no case less frequently than the Company car policy in effect
during the 90-day period immediately preceding the Effective Date;
(C)
up
to $15,000 annually for personal financial planning, accounting and legal
advice;
(D)
communication
equipment such as a car and/or cellular phone, and home or laptop computer until
the end of the Continuation Period, at which time the Executive may purchase
such equipment;
(E)
security
system at the Executive's residence, and the related monitoring and maintenance
fees; and
(F)
up
to $800 annually for personal excess liability insurance coverage;
To
the extent that any of these benefits is determined to be deferred compensation
subject to Code Section 409A (and ineligible for any exception from the
application of Code Section 409A), payment shall not be made prior to, and
shall, if necessary, be deferred to and paid (with interest using 120% of the
applicable federal long-term rate, with compounding, as prescribed under Code
Section 1274(d)) on the first day of the seventh month following the date on
which the Executive experiences a separation from service (within the meaning of
Treasury Regulation Section 1.409A-1(h)).
(6)
to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive pursuant to this
Agreement or otherwise under any plan, program, policy or practice or contract
or agreement of the Company and its Affiliated Companies, but excluding solely
for purposes of this Section 8(a)(6) (and subsequent sections hereof which make
reference to payments of amounts or benefits described in this
Section 8(a)(6)) amounts waived by the Executive pursuant to Section
8(a)(1)(ii); and
(7)
the
Company shall provide the Executive with the following benefits consistent with
the Company’s Expense Reimbursement Policy, which is intended to comply with the
requirements of Code Section 409A and Treasury Regulation Section
1.409A-3(i)(1)(iv):
(A)
If
the Executive is required to move his primary residence in order to pursue other
business opportunities during the Continuation Period, the Company shall
reimburse the Executive for all such relocation expenses incurred during the
Employment Period (not in excess of $10,000) that are not reimbursed by another
employer, including, without limitation, assistance in selling the Executive's
home and all other assistance and benefits that were customarily provided by the
Company to transferred executives prior to the Effective Date;
(B)
If
the Executive retains counsel or an accounting firm in connection with the
taxation of payments made pursuant to Section 11 of this Agreement, the Company
shall reimburse the Executive for such reasonable legal and/or accounting fees
and disbursements (not in excess of $15,000);
(C)
The
Company shall continue to pay the Executive's Annual Base Salary during the
pendency of a dispute over his termination. However, such amounts
shall not be paid to the Executive prior to, and shall, if necessary, be
deferred to and paid (with interest at 120% of the applicable federal long-term
rate, with compounding as prescribed under Code Section 1274(d)) on the first
day of the seventh month following the date on which the Executive experiences a
separation from service (within the meaning of Treasury Regulation Section
1.409A-1(h)). Amounts paid under this subsection are in addition to all other
amounts due under this Agreement (other than those due under Section 5(a)
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement; and
(D)
The
Company shall provide the Executive with outplacement services commensurate with
those provided to terminated executives of comparable level made available
through and at the facilities of a reputable and experienced
vendor.
Notwithstanding
the foregoing, the benefits described in paragraphs (A),(B) and (D) above are
limited to expenses incurred no later than the end of the second calendar year
following the Executive’s termination, and the reimbursements will be made
timely upon receipt of the Executive’s request for payment (but in no event
later than the third year following such termination).
(b)
Following An Effective Date
and Prior to a Change of Control: Good Reason; Other Than for Cause or
Disability
. If, following an actual Effective Date (
i.e.
, not a Deemed
Effective Date) and prior to a Change of Control, the Company terminates the
Executive's employment during the Employment Period other than for Cause or
Disability or death or the Executive terminates employment for Good Reason,
then:
(1)
the
Company shall provide the Executive with the payments and benefits described
under Sections 8(a)(1), (4), (5), (6) and (7);
(2)
the
Company shall provide the Executive with the benefits the Executive would have
received under Section 6(a) hereof as if a Change of Control had occurred
immediately prior to the Date of Termination, except that, for purposes of
Section 6(a)(1), (i) 100% of each outstanding performance stock-based award
granted to the Executive which is outstanding immediately prior to the Date of
Termination shall become fully vested and earned and (ii) payment shall be
made in the form contemplated by the terms of the award.
(c)
Deemed Effective
Date
. If the Executive's employment terminates under
circumstances described in the second sentence of Section 1 hereof,
then:
(1)
the
Company shall provide the Executive with the payments and benefits described
under Sections 8(a)(1), (4), (5), (6) and (7); and
(2)
a
pro rata portion of each outstanding performance stock-based award granted to
the Executive shall be fully vested and earned at a deemed achievement level
equal to the higher of (x) the targeted level of performance for such award or
(y) the average level (expressed as a percentage of target) of achievement in
respect of similar performance stock-based awards which matured over the three
fiscal years immediately preceding the year in which the Date of Termination
occurs; payment in respect of such award shall be made at the time and in the
manner provided under the plan pursuant to which such award was granted; and the
remainder of the award shall be cancelled, subject, however, to the provisions
of this paragraph (c);
(3)
a
pro rata portion of each other outstanding stock-based award granted to the
Executive shall be fully vested and earned; payment in respect of such award
shall be made at the time and in the manner provided under the plan pursuant to
which such award was granted; and the remainder of the award shall be cancelled,
subject, however, to the provisions of this paragraph (c);
(4)
a
pro rata portion of each outstanding option, stock appreciation right, and each
other outstanding award in the nature of a right that may be exercised that was
granted to the Executive and which was not previously exercisable and vested
shall become fully exercisable and vested; and the remainder of each such award
shall be cancelled, subject, however, to the provisions of this paragraph (c);
and
(5)
the
restrictions and forfeiture conditions applicable to a pro rata portion of any
outstanding award granted to the Executive under an incentive compensation plan,
practice, policy or program shall lapse; such portion shall be deemed fully
vested; and the remainder of each such award shall be cancelled, subject,
however, to the provisions of this paragraph (c).
For
purposes of this Section 8 (c), pro ration of the foregoing awards shall be
determined in accordance with the past practice of the Company generally
applicable to peer executives whose employment had been involuntarily
terminated.
Notwithstanding
cancellation of awards hereunder, if a Change of Control occurs following the
Date of Termination and the Board determines in good faith prior to the Change
of Control that there is a reasonable relationship between the Change of Control
and the events or circumstances surrounding the Executive's termination, then
the Company shall pay to the Executive, on the 60th day following the Change of
Control, a lump sum cash amount (determined by the Board in good faith) which,
when added to the value received by the Executive under the provisions of
clauses (2)-(5) above, will provide to Executive an aggregate value equal to the
aggregate value that would have been provided to the Executive under
Section 6(a) and Section 8(a)(2) hereof had the Executive remained employed
to the date of the Change of Control and been involuntarily terminated without
Cause immediately thereafter.
Notwithstanding
anything in Section 8(b) or in this Section 8(c) to the contrary, if (A) the
Executive was at any time during a Performance Period which has not ended prior
to the Date of Termination, a “Covered Employee” as defined by Code Section
162(m) and (B) Code Section 162(m) remains in effect as of the Date of
Termination and as of such date is applicable to the element of compensation
(including, without limitation, annual cash bonus, performance shares and
restricted stock) contemplated for payment or vesting, in each case, as
described in Section 8(b) or in this Section 8(c), no such element of
compensation to which the Executive shall otherwise be entitled pursuant to
Section 8(b) or this Section 8(c) that is intended to constitute and, in the
opinion of a nationally reputable law firm having significant experience with
Code Section 162(m), absent the Executive’s termination, would have constituted,
qualified performance-based compensation for purposes of Code Section 162(m)
(assuming, solely for this purpose, that the Corporate Performance Objective to
which the payment or vesting of such element of compensation is subject had been
achieved) shall be paid or shall vest unless and until the earlier of (i) the
date on which a Change of Control occurs, but only if such delay in payment or
vesting of such element of compensation is necessary for prior payments or
vesting of compensation to or for the benefit of the Executive to continue to
constitute qualified performance-based compensation for purposes of Code Section
162(m), or (ii) the date on which the Compensation Committee of the Board shall
have certified achievement of the Corporate Performance Objective to which the
payment or vesting of such element of compensation is subject, but only if such
delay in payment or vesting of such element of compensation is necessary for
prior payments or vesting of compensation to or for the benefit of the Executive
to continue to constitute qualified performance-based compensation for purposes
of Code Section 162(m). For purposes of this Section 8(c),
“Performance Period” means a period of service for which the Compensation
Committee of the Board has established a Corporate Performance Objective and for
which the Company intends to pay qualified performance-based compensation for
purposes of Code Section 162(m) if such Corporate Performance Objective is
achieved.
(d)
Death
. Upon
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations, the Payment
in Lieu of Lost Future Benefits described in Annex A, and the timely payment or
provision of the benefits described in Sections 8(a)(4) and 8(a)(6) (the "Other
Benefits"). All Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. The Payment in Lieu of Lost Future Benefits shall be
paid to the Executive's Beneficiary (within the meaning of the SERP) under the
terms set forth in, and pursuant to the elections made under, the SERP. The term
"Other Benefits" as utilized in this Section 8(d) shall include, without
limitation, and the Executive's family shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the Company and any of
its Affiliated Companies to surviving families of peer executives of the Company
and such Affiliated Companies under such plans, programs, practices and policies
relating to family death benefits, if any, as in effect with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its Affiliated
Companies and their families.
(e)
Disability
. If
the Executive's employment is terminated by reason of the Executive's Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations, the
Payment in Lieu of Lost Future Benefits described in Annex A, and the timely
payment or provision of Other Benefits (as defined in Section
8(d)). All Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
The Payment in Lieu of
Lost Future Benefits shall be paid to the Executive or his Beneficiary (within
the meaning of the SERP), as the case may be, under the terms set forth in, and
pursuant to the elections made under, the SERP. The term "Other Benefits" as
utilized in this Section 8(e) shall also include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by the
Company and its Affiliated Companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its Affiliated
Companies and their families.
(f)
Cause; Other Than for Good
Reason
. If the Executive's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination plus the amount of
any compensation previously deferred by the Executive (under the terms set forth
in, and pursuant to the elections made under, the applicable deferred
compensation plan or arrangement), in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations, the Payment in Lieu of Lost Future Benefits, if any, described in
Annex A to the extent the Executive is vested in his benefits under the Pension
Plan, and the timely payment or provision of benefits pursuant to the last
sentence of Section 8(a)(4) and Section 8(a)(6). In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. The Payment in Lieu of
Lost Future Benefits, if any, shall be paid to the Executive or his Beneficiary
(within the meaning of the SERP), as the case may be, under the terms set forth
in, and pursuant to the elections made under, the SERP.
(g)
Payment Schedule
. Notwithstanding anything to the contrary in
this
Agreement, to the extent required to comply with Code Section 409A(a)(2)(B), (i)
if the Executive's termination of employment does not constitute a "separation
from service" within the meaning of Code Section 409A, any taxable payment or
benefit which becomes due under this Agreement as a result of such termination
of employment shall be deferred to the earliest date on which the Executive has
a "separation from service” within the meaning of Code Section 409A; and (ii) if
the Executive is deemed to be a “specified employee” for purposes of Code
Section 409A(a)(2)(B), payments due to him that would otherwise have been
payable at any time during the six-month period immediately following separation
from service (as defined for purposes of Code Section 409A) shall not be paid
prior to, and shall instead be payable in a lump sum as soon as practicable
following, the expiration of such six-month period.
Any amounts deferred under this Section 8(g)
shall bear interest from the date originally scheduled to be paid through and
including the date of actual payment at 120% of the applicable federal long-term
rate (as prescribed under Code Section 1274(d)) per annum, compounded
quarterly.
In addition to the
foregoing, payments that are or become due on account of a Deemed Effective Date
shall be made at the time otherwise provided in this Agreement or, if later, the
earlier of the second anniversary of the Date of Termination and the date of
occurrence of a “change of control” (within the meaning of Code Section 409A and
the regulations thereunder).
9.
Non-Exclusivity of
Rights
.
Except as otherwise
expressly provided for in this Agreement, nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its Affiliated
Companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its Affiliated
Companies. Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its Affiliated Companies
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement and consistent with Code Section
409A.
10.
Full
Settlement
.
The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others.
In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided for in
this Agreement, such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay, to the fullest
extent permitted by law (but only to the extent consistent with Code Section
409A), all legal fees and expenses which the Executive may reasonably incur at
all stages of proceedings, including, without limitation, preparation and
appellate review, as a result of any contest (regardless of whether formal legal
proceedings are ever commenced and regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Code Section
7872(f)(2)(A).
11.
Certain
Additional Payments by the Company
.
[Messrs. Hay,
Davidson, Pimentel, Olivera, Robo and Sieving]
(a) Anything
in any section of this Agreement other than this Section 11 to the contrary
notwithstanding, in the event it shall be determined that any Payment (as
hereinafter defined) would be subject to the Excise Tax (as hereinafter
defined), then the Executive shall be entitled to receive an additional payment
(the "Gross-Up Payment") in an amount such that after payment by the Executive
of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income or employment taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, but excluding any income taxes and penalties imposed
pursuant to Section 409A of the Code, the Executive retains a portion of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments;
provided that
, if it
is determined that the Executive is entitled to the Gross-Up Payment, but that
the Parachute Value (as hereinafter defined) of all Payments does not exceed
110% of the Safe Harbor Amount (as hereinafter defined), then no Gross-Up
Payment shall be made to the Executive and the amounts payable under this
Agreement shall be reduced so that the Parachute Value of all Payments, in the
aggregate, equals the Safe Harbor Amount. To the extent that
the payment of any compensation or benefits to Executive from the Company is
required to be reduced by this Section 11, such reduction shall be implemented
by determining the “Parachute Payment Ratio” (as hereinafter defined) for each
“parachute payment” (within the meaning of Section 280G of the Code and then
reducing the parachute payments in order beginning with the parachute payment
with the highest Parachute Payment Ratio. For parachute payments with
the same Parachute Payment Ratio, such parachute payments shall be reduced based
on the time of payment of such parachute payments, with amounts having later
payment dates being reduced first. For parachute payments with the
same Parachute Payment Ratio and the same time of payment, such parachute
payments shall be reduced on a pro rata basis (but not below zero) prior to
reducing parachute payments with a lower Parachute Payment Ratio. Any
Gross-Up Payment, as determined pursuant to this Section 11, shall be paid by
the Company to the Executive no later than the end of the taxable year following
the taxable year in which the related taxes are remitted by the
Executive.
(b)
Definitions
. The
following terms shall have the following meanings for purposes of this Section
11.
(i)
“
Excise Tax
”
shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.
(ii)
“Parachute Payment Ratio” shall mean a fraction the numerator of which is the
value of the applicable parachute payment for purposes of Section 280G of the
Code and the denominator of which is the intrinsic value of such parachute
payment.
(iii) “
Parachute Value
” of a
Payment shall mean the present value as of the date of the change of control for
purposes of Section 280G of the Code of the portion of such Payment that
constitutes a “parachute payment” under Section 280G(b)(2), as determined for
purposes of determining whether and to what extent the Excise Tax will apply to
such Payment.
(iv)
A “
Payment
”
shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of the
Executive, whether paid or payable pursuant to this Agreement or
otherwise.
(v)
The “
Safe Harbor
Amount
” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.
(c) In
the event that Federal or state legislation is enacted by imposing additional
excise or supplementary income taxes on amounts payable or benefits provided to
the Executive (other than a mere change in marginal income tax rates), the
Company agrees to review the Agreement with the Executive and to consider in
good faith any changes hereto that may be required to preserve the full amount
of all Payments and the economic purposes of the foregoing provisions of this
Section 11.
11.
Parachute
Payments
.
[Mr. Dewhurst]
(a)
Anything in any section
of this Agreement other than this Section 11 to the contrary notwithstanding, in
the event it shall be determined that any Payment (as hereinafter defined) would
be subject to the Excise Tax (as hereinafter defined), the right to receive any
Payment under this Agreement shall be reduced if but only if:
(i)
such right to such Payment, taking into account all other Payments to or for
Participant, would cause any Payment to the Participant under this Agreement to
be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code as then in effect;
and
(ii)
as a result of receiving a parachute payment and paying any applicable tax
(including Excise Tax) thereon, the aggregate after-tax amounts received by the
Participant from the Company under this Agreement and all Payments would be less
than the maximum after-tax amount that could be received by Participant without
causing any such Payment to be considered a parachute payment.
In
the event that the receipt of any such right to Payment under this Agreement, in
conjunction with all other Payments, would cause the Participant to be
considered to have received a parachute payment under this Agreement that would
have the effect of decreasing the after-tax amount received by the Participant
as described in clause (ii) of the preceding sentence, then the amounts
payable under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount.
To
the extent that the payment of any compensation or benefits to Executive from
the Company is required to be reduced by this Section 11, such reduction shall
be implemented by determining the “Parachute Payment Ratio” (as hereinafter
defined) for each parachute payment and then reducing the parachute payments in
order beginning with the parachute payment with the highest Parachute Payment
Ratio. For parachute payments with the same Parachute Payment Ratio,
such parachute payments shall be reduced based on the time of payment of such
parachute payments, with amounts having later payment dates being reduced
first. For parachute payments with the same Parachute Payment Ratio
and the same time of payment, such parachute payments shall be reduced on a pro
rata basis (but not below zero) prior to reducing parachute payments with a
lower Parachute Payment Ratio.
(b)
Definitions
.
The following terms shall have the following meanings for purposes of this
Section 11.
(i)
“
Excise Tax
”
shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.
(ii)
“
Parachute Payment
Ratio
” shall mean a fraction the numerator of which is the value of the
applicable parachute payment for purposes of Section 280G of the Code and the
denominator of which is the intrinsic value of such parachute
payment.
(iii) “
Parachute Value
” of a
Payment shall mean the present value as of the date of the change of control for
purposes of Section 280G of the Code of the portion of such Payment that
constitutes a “parachute payment” under Section 280G(b)(2), as determined for
purposes of determining whether and to what extent the Excise Tax will apply to
such Payment.
(iv)
A “
Payment
”
shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of the
Executive, whether paid or payable pursuant to this Agreement or
otherwise.
(v)
The “
Safe Harbor
Amount
” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.
12.
Confidential
Information
. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its Affiliated Companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its Affiliated
Companies and which shall not be or become public knowledge (other than by acts
of the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation
of the provisions of this Section 12 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
13.
Indemnification
.
The Company will, to the
fullest extent permitted by law, indemnify the Executive in accordance with the
terms of Article VI of the Company’s bylaws as in effect on the date hereof, a
copy of which Article VI is attached to this Agreement as Annex B and made a
part hereof by this reference. This indemnification provision shall survive the
expiration or other termination of this Agreement.
14.
Successors
.
(a)
This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b)
This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c)
The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
15.
Miscellaneous.
(a)
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be
amended or modified other than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b)
All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the Executive:
If
to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach,
Florida 33408
Attention: Executive Vice
President, Human Resources
or
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c)
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d)
The
Company may withhold from any amounts payable under this Agreement such Federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e)
The
Executive's or the Company's failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 7(c)(1)-(5) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(f)
The
Executive and the Company acknowledge that, except as may otherwise be provided
under this Agreement or any other written agreement between the Executive and
the Company, the employment of the Executive by the Company is "at will" and,
prior to the Effective Date, the Executive’s employment may be terminated by
either the Executive or the Company at any time. Moreover, except as
provided herein in the case of a Deemed Effective Date, if prior to the
Effective Date, (i) the Executive's employment with the Company terminates, or
(ii) there is a diminution in the Executive's position (including status,
offices, titles, and reporting requirements), authority, duties, and
responsibilities with the Company or its Affiliated Companies, then the
Executive shall have no rights under this Agreement.
From and after the Effective Date, this Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof, and in furtherance but not in limitation of this, the Executive
hereby waives the right to receive any amount of severance relating to salary or
bonus continuation to be received by the Executive upon termination of
employment of the Executive under the circumstances contemplated hereby under
any severance plan, policy or arrangement of the Company.
(g)
The
Executive and the Company acknowledge that this Agreement contains the full and
complete expression of the rights and obligations of the parties with respect to
the matters contained in the Agreement. This Agreement supersedes any and all
other agreements, written or oral, made by the parties with respect to the
matters contained in the Agreement.
N
otwithstanding anything herein to the contrary, and
except in the case of death, it shall be a condition to the Executive receiving
any payments or benefits under this Agreement that the Executive shall have (a)
executed and delivered to the Company a release of claims against the Company,
such release to be in the Company’s then standard form of release; and (b)
executed and delivered to the Company resignations of all officer and director
positions the Executive holds
with the Company or its Affiliated
Companies,
in each case no later than forty-five
(45) days after
the Date of
Termination
unless there is a genuine dispute as to the Executive’s
substantive rights under this Agreement within the meaning of Treasury
Regulation 1.409A-3(g) (or any successor provision)
.
The
Executive and the Company acknowledge that the benefits and payments provided
under this Agreement are intended to comply fully with the requirements of Code
Section 409A. This Agreement shall be construed and administered as
necessary to comply with Code Section 409A and shall be subject to
amendment in the future, in such a manner as the Company may deem necessary or
appropriate to attain compliance; provided, however, that any such amendment
shall provide the Executive with benefits and payments that are substantially
economically equivalent to the benefits and payments that would have been made
to the Executive absent such amendment and the requirements of Code Section
409A.
16.
Retention
Payment
[
Messrs.
Davidson and Robo only
]
If
an Effective Date occurs under clause (iv) of Section 1 hereof and if, by reason
of the termination or abandonment of the transaction contemplated by the
definitive agreement referred to in said clause (iv), the Board adopts a
resolution pursuant to Section 3(b) hereof that terminates the Employment
Period, then so long as the Executive had remained employed to the date of
termination or abandonment of such transaction, the Company shall pay the
Executive in a lump sum in cash, within 30 days after the date of the adoption
of such resolution, an amount equal to 50% of the sum of the Executive's Annual
Base Salary and Annual Bonus (each as in effect as of the date of such
termination or abandonment).
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the
Company has caused this [further][ Messrs. Davidson, Hay, Olivera, Pimentel and
Robo] Amended and Restated Executive Retention Employment Agreement to be
executed in its name on its behalf, all as of ___________________,
2009.
EXECUTIVE
By __________________________________
FPL
GROUP, INC.
By __________________________________
ANNEX
A
TO
THE
FORM
OF AMENDED AND RESTATED
EXECUTIVE
RETENTION EMPLOYMENT AGREEMENT
PAYMENT
IN LIEU OF LOST FUTURE BENEFITS
(1) Payment
in Lieu of Lost Future Benefits.
(a) In
General. The Payment in Lieu of Lost Future Benefits to which the
Executive shall be entitled under this Agreement shall be (i) the supplemental
pension benefit described in Paragraph 1(b) of this Annex A, and (ii) the
supplemental matching contribution account described in Paragraph 1(c) of this
Annex A.
(b) Supplemental
Pension Benefit. The "supplemental pension benefit" shall be the
greater of (i) the supplemental cash balance accrued benefit described in
Paragraph 1(b)(1) of this Annex A, or (ii) the supplemental unit credit accrued
benefit described in Paragraph 1(b)(2) of this Annex A.
(1) The
"supplemental cash balance accrued benefit" is the difference, if any, between
(A) and (B) where:
(A) is
the benefit to which the Executive would be entitled under the Pension Plan as
in effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and its
Affiliated Companies, expressed in the normal form of benefit, if such benefit
was computed (i) as if benefits under such plan were based upon the Executive's
Bonus Compensation (within the meaning of the SERP as in effect immediately
prior to the Change of Control), (ii) without the annual compensation limitation
imposed by Code Section 401(a)(17), and (iii) without the restrictions or the
limitations imposed by Code Section 415(b); and
(B) is
the sum of the benefits payable to the Executive under the Pension Plan and the
Supplemental Retirement Plans, expressed in the normal form of
benefit.
(2) The
"supplemental unit credit accrued benefit" is the difference, if any, between
(A) and (B) where:
(A) is
the benefit to which the Executive would be entitled under the Prior Pension
Plan (within the meaning of the SERP as in effect immediately prior to the
Change of Control) (provided that the Executive was actually a participant in
the Prior Pension Plan), expressed in the normal form of benefit, if such
benefit was computed (i) as if benefits under such plan were based upon the
Executive's Bonus Compensation, (ii) without the annual compensation limitation
imposed by Code Section 401(a)(17), and (iii) without the restrictions or the
limitations imposed by Code Section 415(b); and
(B) is
the sum of the benefits payable to the Executive under the Pension Plan and the
Supplemental Retirement Plans, expressed in the normal form of
benefit.
(c) Supplemental
Matching Contribution Account. The "supplemental matching
contribution account" shall be an account that is credited annually with (i)
supplemental matching contributions described in Paragraph 1(c)(1) of this Annex
A, and (ii) theoretical earnings described in Paragraph 1(c)(2) of this Annex
A.
(1) "Supplemental
matching contributions" shall be for each year ending on or prior to the
Effective Date in which the Executive participated in the Supplemental
Retirement Plans and for each year ending after the Effective Date in which the
Executive performs services for the Company or its Affiliated Companies the
difference, if any, between (A) and (B) where:
(A) is
the matching contribution allocation for such year to which the Executive would
be entitled under the Retirement Savings Plan as in effect immediately prior to
the Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect to
other peer executives of the Company and its Affiliated Companies if such
allocation were computed (i) as if the matching contribution allocation under
such plan was based upon the Executive's Bonus Compensation, (ii) without the
annual compensation limitation imposed by Code Section 401(a)(17), (iii) without
the restrictions or the limitations imposed by Code Section 415(c), and (iv) as
if he made After Tax Contributions (within the meaning of the Retirement Savings
Plan) and Pretax Contributions (within the meaning of the Retirement Savings
Plan) at the same percentage of Bonus Compensation as he made such contributions
to the Retirement Savings Plan for such years; and
(B) is
the sum of the matching contributions allocated or credited to the Executive
under the Retirement Savings Plan and the Supplemental Retirement Plans for such
year.
(2) "Theoretical
earnings" shall be the income, gains and losses which would have been credited
on the Executive's supplemental matching contribution account balance if such
account were invested in the Company Stock Fund (within the meaning of the
Retirement Savings Plan) offered as a part of the Retirement Savings
Plan.
(2) Construction
and Definitions.
Unless
defined below or otherwise in this Annex A, all of the capitalized terms used in
this Annex A shall have the meanings assigned to them in this
Agreement:
(a) "Projected
Years of Service" shall mean the Years of Service (within the meaning of the
SERP as in effect immediately prior to the Change of
Control). Notwithstanding the foregoing and except in the event the
Executive terminates employment during the Employment Period other than for Good
Reason, in determining the Executive's Years of Service, in addition to his
actual Years of Service he shall be treated as if his employment terminated on
the later of the third anniversary of the Date of Termination or the last day of
the Employment Period.
(b) "Projected
Age" shall mean the age that the Executive will have attained on the later of
the third anniversary of the Date of Termination or the last day of the
Employment Period, except that in the event the Executive terminates employment
during the Employment Period other than for Good Reason, "Projected Age" shall
mean the age of the Executive on the Date of Termination.
Annex B
FPL
GROUP, INC. AMENDED AND RESTATED BYLAWS
ARTICLE
VI. INDEMNIFICATION/ADVANCEMENT OF EXPENSES
Section
1. Right to Indemnification
.
Each person who
was or is made a party or is threatened to be made a party to or was or is
called as a witness or was or is otherwise involved in any Proceeding in
connection with his or her status as an Indemnified Person, shall be indemnified
and held harmless by the Company to the fullest extent permitted under the
Florida Business Corporation Act (the "Act"), as the same now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than the Act permitted the Company to provide prior to such
amendment). Such indemnification shall cover all expenses incurred by
an Indemnified Person (including, but not limited to, attorneys' fees and other
expenses of litigation) and all liabilities and losses (including, but not
limited to, judgments, fines, ERISA or other excise taxes or penalties and
amounts paid or to be paid in settlement) incurred by such person in connection
therewith.
Notwithstanding the foregoing, except
with respect to indemnification specified in Section 3 of this Article VI, the
Company shall indemnify an Indemnified Person in connection with a Proceeding
(or part thereof) initiated by such person only if authorization for such
Proceeding (or part thereof) was not denied by the board of directors of the
Company prior to 60 days after receipt of notice thereof from such
person.
For purposes of this Article
VI:
(i) a "Proceeding" is an action, suit
or proceeding, whether civil, criminal, administrative or investigative, and any
appeal therefrom;
(ii) an "Indemnified Person" is a
person who is, or who was (whether at the time the facts or circumstances
underlying the Proceeding occurred or were alleged to have occurred or at any
other time), (A) a director or officer of the Company, (B) a director, officer
or other employee of the Company serving as a trustee or fiduciary of an
employee benefit plan of the Company, (C) an agent or non-officer employee of
the Company as to whom the Company has agreed to grant such indemnity, or (D)
serving at the request of the Company in any capacity with any entity or
enterprise other than the Company and as to whom the Company has agreed to grant
such indemnity.
Section
2. Expenses
.
Expenses,
including attorneys' fees, incurred by an Indemnified Person in defending or
otherwise being involved in a Proceeding in connection with his or her status as
an Indemnified Person shall be paid by the Company in advance of the final
disposition of such Proceeding, including any appeal therefrom, (i) in the case
of (A) a director or officer, or former director or officer, of the Company or
(B) a director, officer or other employee, or former director, officer or other
employee, of the Company serving as a trustee or fiduciary of any employee
benefit plan of the Company, upon receipt of an undertaking ("Undertaking") by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company; or
(ii) in the case of any other Indemnified Person, upon such terms and as the
board of directors, the chairman of the board or the president of the Company
deems appropriate.
Notwithstanding the foregoing, in
connection with a Proceeding (or part thereof) initiated by such person, except
a Proceeding authorized by Section 3 of this Article VI, the Company shall pay
said expenses in advance of final disposition only if authorization for such
Proceeding (or part thereof) was not denied by the board of directors of the
Company prior to 60 days after receipt of a request for such advancement
accompanied by an Undertaking.
A person to whom expenses are advanced
pursuant to this Section 2 shall not be obligated to repay such expenses
pursuant to an Undertaking until the final determination of any pending
Proceeding in a court of competent jurisdiction concerning the right of such
person to be indemnified or the obligation of such person to repay pursuant to
such Undertaking.
Section
3. Protection of Rights
.
If a claim for
indemnification under Section 1 of this Article VI is not promptly paid in full
by the Company after a written claim has been received by the Company or if
expenses pursuant to Section 2 of this Article VI have not been promptly
advanced after a written request for such advancement accompanied by an
Undertaking has been received by the Company (in each case, except if
authorization thereof was denied by the board of directors of the Company as
provided in Article VI, Section 1 and Section 2, as applicable), the Indemnified
Person may at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim or the advancement of expenses. If
successful, in whole or in part, in such suit, such Indemnified Person shall
also be entitled to be paid the reasonable expense thereof. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any Proceeding in advance of its final
disposition where the required Undertaking has been tendered to the Company)
that indemnification of the Indemnified Person is prohibited by law, but the
burden of proving such defense shall be on the Company. Neither the
failure of the Company (including its board of directors, independent legal
counsel, or its shareholders) to have made a determination, if required, prior
to the commencement of such action that indemnification of the Indemnified
Person is proper in the circumstances, nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
shareholders) that indemnification of the Indemnified Person is prohibited,
shall be a defense to the action or create a presumption that indemnification of
the Indemnified Person is prohibited.
Section 4.
Miscellaneous
.
(i) Power
to Request Service and to Grant Indemnification
.
The chairman of
the board or the president or the board of directors may request any director,
officer, agent or employee of the Company to serve as its representative in the
position of a director or officer (or in a substantially similar capacity) of an
entity or enterprise other than the Company, and may grant to such person
indemnification by the Company as described in Section 1 of this Article
VI.
(ii)
Non-Exclusivity of Rights
.
The rights
conferred on any person by this Article VI shall not be exclusive of any other
rights which such person may have or hereafter acquire under any statute,
provision of the Charter, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise. The board of directors shall
have the authority, by resolution, to provide for such indemnification of
employees or agents of the Company or others and for such other indemnification
of directors, officers, employees or agents as it shall deem
appropriate.
(iii)
Insurance Contracts and Funding
.
The Company may
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of or person serving in any other capacity with, the Company
or another corporation, partnership, joint venture, trust or other enterprise
(including serving as a trustee or fiduciary of any employee benefit plan)
against any expenses, liabilities or losses, whether or not the Company would
have the power to indemnify such person against such expenses, liabilities or
losses under the Act. The Company may enter into contracts with any
director, officer, agent or employee of the Company in furtherance of the
provisions of this Article VI, and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect the
advancing of expenses and indemnification as provided in this Article
VI.
(iv)
Contractual Nature
.
The provisions of
this Article VI shall continue in effect as to a person who has ceased to be a
director, officer, agent or employee and shall inure to the benefit of the
heirs, executors and administrators of such person. This Article VI
shall be deemed to be a contract between the Company and each person who, at any
time that this Article VI is in effect, serves or served in any capacity which
entitles him or her to indemnification hereunder and any repeal or other
modification of this Article VI or any repeal or modification of the Act, or any
other applicable law shall not limit any rights of indemnification with respect
to Proceedings in connection with which he or she is an Indemnified Person, or
advancement of expenses in connection with such Proceedings, then existing or
arising out of events, acts or omissions occurring prior to such repeal or
modification, including without limitation, the right to indemnification for
Proceedings, and advancement of expenses with respect to such Proceedings,
commenced after such repeal or modification to enforce this Article VI with
regard to Proceedings arising out of acts, omissions or events arising prior to
such repeal or modification.
(v)
Savings Clause
.
If this Article
VI or any portion hereof shall be invalidated or held to be unenforceable on any
ground by any court of competent jurisdiction, the decision of which shall not
have been reversed on appeal, the Company shall nevertheless (A) indemnify each
Indemnified Person as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement and (B) advance expenses
in accordance with Section 2 of this Article VI, in each case with respect to
any Proceeding in connection with which he or she is an Indemnified Person,
including an action by or in the right of the Company, to the fullest extent
permitted by any applicable portion of this Article VI that shall not have been
invalidated or held to be unenforceable and as permitted by applicable
law.
Exhibit
10(pp)
December
10, 2009
Lewis
Hay, III
Chairman
and Chief Executive Officer
FPL
Group, Inc.
700
Universe Boulevard
Juno
Beach, FL 33408
Re:
Amended and
Restated Employment Letter with FPL Group, Inc. (“FPL
Group”)
Dear
Lew:
Regarding
your employment by FPL Group, or the ultimate parent entity of FPL Group, in the
event that any entity, directly or through one or more subsidiaries, holds fifty
percent or more of the outstanding voting stock of FPL Group (the
“Corporation”), we have agreed as follows:
1.
This Amended and Restated Employment Letter (“Letter Agreement”) amends and
restates (and when executed supersedes in its entirety) that certain Amended and
Restated Employment Letter dated December 12, 2008. The terms of your
employment will be governed by the terms of this Letter Agreement. The initial
term of your employment hereunder shall be three years beginning on January 1,
2005, subject to earlier termination pursuant to Section 4.
2.
Commencing January 1, 2006, and each January 1 thereafter, unless notice of
non-extension is given by either party no later than 90 days prior to any such
scheduled extension date, the term of your employment hereunder shall be
extended for an additional year, still subject to earlier termination pursuant
to Section 4.
3.
During the term of your employment hereunder and subject to Section 4 below, you
shall serve as the Corporation’s Chief Executive Officer and as a Director and
Chairman of the Corporation’s Board of Directors (the “Board”). You shall devote
your full business time and attention to the business and affairs of the
Corporation and its Affiliates, except during (a) four weeks of vacation per
year, and (b) periods of incapacity due to accident or illness. Nothing in this
Letter Agreement shall preclude you from devoting reasonable periods required
for serving as a director or a member of an advisory committee of any
organization involving no conflict of interest with the Corporation, from
engaging in charitable and community activities, and from managing your personal
investments; provided, however, that such activities do not materially interfere
with the performance of your duties and responsibilities under this Letter
Agreement and that you limit your participation on public-company boards to no
more than two other than the Board or the board of directors of any
Affiliate.
As
used in this Letter Agreement, (i) the term “Affiliate” means any entity
controlled by the Corporation, whether by means of ownership or otherwise, (ii)
the term “Corporate Performance Objective” means, with respect to any element of
your compensation, the objective performance objective, if any, which is
selected and established by the Compensation Committee of the Board (the
“Committee”) for purposes of making such element of compensation, if paid, fully
deductible for federal income tax purposes pursuant to Section 162(m)(1) of the
Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
thereunder or any successor provision, (iii) the term “named executive officer”
has the meaning given to such term in Item 402(a) of Regulation S-K promulgated
under the Securities Act of 1933, as amended, and (iv) the term
“Performance Share” means a performance-based equity award other than a Stock
Option or a Stock Appreciation Right. "Termination of employment" as
used in this Letter Agreement shall occur only upon a “separation of service”
within the meaning of Section 409A of the Code (“Section
409A”).
4.
Your employment hereunder may be terminated upon written notice (except that
notice shall not be required in the event of a termination due to death or
Disability) prior to the end of the scheduled term as follows: by the
Corporation with or without Cause (as defined below); upon your death; upon your
Disability (as defined below); upon your Retirement (as defined below); or upon
your resignation with or without Good Reason (as defined below).
a.
Termination for
Cause
: For purposes of this Letter Agreement, “Cause” shall mean a
material and willful failure by you to meet your obligations described in
Section 3, which is not remedied in a reasonable period of time after receipt of
written notice from the Corporation specifying such failure. Cause shall also
mean your conviction of, or plea of guilty or nolo contendere to, a felony
involving (i) an act of dishonesty against the Corporation, (ii) an act of moral
turpitude, or (iii) an act that causes, or could reasonably be expected to
cause, material harm to the Corporation’s financial status or reputation. The
Corporation’s termination of you for Cause shall be effected in accordance with
the following procedures: The Corporation will give you written notice of its
intention to terminate you for Cause, setting forth in reasonable detail the
specific conduct that it considers to constitute Cause and the specific
provision(s) under this Letter Agreement on which it relies. The Board will
convene a special meeting held specifically for the purpose of considering your
termination for Cause. This special meeting will take place not less than 30 and
not more than 60 days after you have received written notice of the
Corporation’s intention. You will be given an opportunity, together with
counsel, to be heard at this meeting. If the Board thereafter duly adopts a
resolution stating that, in the good faith opinion of the Board, your conduct
constitutes Cause under this Letter Agreement, your termination for Cause will
be effective as of the date of such resolution, subject to your rights under
Section 17.
In
the event of termination of your employment by the Corporation for Cause, you
shall be entitled to the following benefits (“Accrued
Obligations”):
(i)
any earned but unpaid base salary through your date of termination;
(ii)
all benefits in accordance with the terms of all pension, 401(k), deferred
compensation, SERP and Supplemental SERP plans and all other benefit plans
(e.g., life insurance, disability insurance, etc.) in accordance with their
terms and conditions;
(iii)
all accrued vacation pay;
(iv)
reimbursement of reasonable business expenses incurred prior to the date of
termination; and
(v)
any other or additional compensation or benefits to which you are entitled under
and in accordance with the terms of applicable plans or employee benefit
programs of the Corporation, including, without limitation, the FPL Group, Inc.
Amended and Restated Long Term Incentive Plan (together with any successor or
other long term incentive plan, the “LTIP”) and any award agreements
thereunder.
The
Accrued Obligations described in paragraphs a(i) and a(iii) of this Section 4
shall be paid:
(A)
to the extent a deferral election has been made with respect to such amounts
under the terms of the Corporation’s Deferred Compensation Plan (the “Deferred
Compensation Plan”), at the time and in the manner determined under such
election; and
(B)
in all other cases, within 30 days after your termination of
employment.
The
Accrued Obligations described in paragraph a(iv) of this Section 4 shall be paid
within 30 days after submission of requests for reimbursement in accordance with
applicable policies and procedures of the Corporation
and in any event no later than the end of the calendar year
following the calendar year in which termination
occurs
. The Accrued Obligations described in
paragraphs a(ii) and a(v) of this Section 4 shall be paid within the periods for
payment specified in the benefit plans or employee programs (and any award
agreements thereunder) referred to in such paragraphs a(ii) and
a(v).
b.
Death, Disability or
Retirement
. For purposes of this Letter Agreement, “Disability” shall
mean that you have been determined to be eligible for long-term disability
benefits under the executive long-term disability plan sponsored by the
Corporation applicable to you and you shall be deemed to have incurred a
Disability as of the date such determination is made. Your employment shall be
automatically terminated as of the date of your death or, if applicable, as of
the date of your being determined to have incurred a Disability, and in any
event not later than the date which is after 29 months of disability
leave. Your employment may also be voluntarily terminated by your
Retirement, which shall mean your voluntary termination of employment (A) on or
after your normal retirement date (as defined under the provisions of the FPL
Group Employee Pension Plan (the “Pension Plan”)) or, (B) with the consent of
the Board, either prior to, on or after your normal retirement date (an
“Approved Early Retirement”). You, or your estate or legal representative, as
applicable, shall be entitled to the following benefits under the circumstances
indicated, unless, with respect to any specific benefit set forth below, you are
entitled to more favorable benefits under the express terms of such
benefits:
(i)
upon your death, Disability or Retirement (including, without limitation, upon
an Approved Early Retirement), the Accrued Obligations listed in paragraph a. of
this Section 4, as well as any earned but unpaid annual incentive bonus for the
prior fiscal year under the Corporation’s Annual Incentive Plan or any successor
or other annual incentive plan (the “Annual Incentive Plan”);
(ii) upon
your death or Disability, a pro rata portion of your then-current annual
incentive bonus at the average annual achievement level for the prior two
years;
(iii) upon
your Retirement (including, without limitation, upon an Approved Early
Retirement), a pro rata portion of your annual incentive bonus for the year in
which your Retirement occurs, if the Corporate Performance Objective for such
year is achieved; provided, that, any percentage reduction approved by the
Committee to the maximum amount of the annual incentive bonus payable to you
based on the achievement of such Corporate Performance Objective shall not
exceed the lowest percentage reduction approved by the Committee to the maximum
amount of any annual incentive bonus payable for such year to any other named
executive officer; provided, further, that if such Corporate Performance
Objective has been achieved, in no event will the pro rated portion of such
annual incentive bonus payable to you be less than the pro rated amount of your
average annual incentive bonus for the two years prior to the year in which your
Retirement occurs;
(iv)
upon your death, Disability or Retirement (other than an Approved Early
Retirement):
(x)
with respect to each outstanding and unvested Performance Share award that
provides for vesting in a fixed number of shares that is not subject to
reduction by the Committee other than if the Corporate Performance Objective is
not achieved or you cease continued employment by the Company (which type of
award, for example, is reflected by the terms of the Restricted Stock awards
most recently awarded to you prior to the date of this Letter Agreement) (a
“Time-Vesting Award”), vesting of a pro rata share (calculated in the manner
specified in the agreement evidencing such Time-Vesting Award or, if there is no
manner of calculation so specified, based upon the number of completed days of
service during the entire vesting period divided by the number of days in the
entire vesting period multiplied by the number of unvested shares) of the then
unvested portion of such award (A) in the event of death or Disability, on the
date of your termination of employment, or (B) in the event of Retirement (other
than an Approved Early Retirement), on the vesting schedule and otherwise in
accordance with the terms and conditions (including, without limitation,
satisfaction of the applicable performance conditions) set forth in such award,
notwithstanding that your employment will have previously terminated;
and
(y)
with respect to each outstanding and unvested Performance Share award that,
assuming achievement of applicable Corporate Performance Objectives, if any,
provides for vesting in the maximum number of shares subject to reduction by the
Committee (which, for example, is reflected by the terms of the Performance
Share awards most recently awarded to you prior to the date of this Letter
Agreement) (an “Achievement Award”), reduction of the target number of shares
subject to such award to a pro rated number of shares based on the number of
full days of your service during the performance period, with your right to
shares under such award determined as such reduced number of target shares times
the average of your percentage achievement under the Annual Incentive Plan for
each year or other applicable period in the performance period (subject to the
maximum percentage achievement specified by the Committee); provided that,
subject to paragraph (vii) of this Section 4b, your percentage achievement for
each year or other applicable portion of the performance period that shall not
have been certified or otherwise fixed by the Committee prior to the date of
your termination and each subsequent year or other applicable period in the
performance period shall be deemed to be 100%; and
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(v)
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upon
an Approved Early Retirement:
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(x) with
respect to each outstanding and unvested Time-Vesting Award, vesting of the
then-unvested portion of such award on the vesting schedule and otherwise in
accordance with the terms and conditions (including, without limitation,
satisfaction of the applicable performance conditions) set forth in such award,
notwithstanding that your employment will have previously terminated;
and
(y)
with respect to each outstanding and unvested Achievement Award, the target
number of shares for the performance period covered by such award shall be as
expressly specified in such award, with your right to shares under such award
determined as such target number of shares times the average of your
percentage achievement under the Annual Incentive Plan for each year or other
applicable period in the performance period (subject to the maximum percentage
achievement specified by the Committee); provided that, subject to paragraph
(vii) of this Section 4b, your percentage achievement for each year or other
applicable portion of the performance period that shall not have been certified
or otherwise fixed by the Committee prior to the date of your termination and
each subsequent year or other applicable period in the performance period shall
be deemed to be 100%.
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(vi)
|
Notwithstanding
paragraph (iv) or (v) of this Section 4b, if, after your termination of
employment but prior to your receipt of the shares specified therein, you
breach any provision set forth in the award agreement applicable to such
shares, including without limitation any non-competition or
non-solicitation covenants set forth therein, and such award agreement so
provides, you shall immediately forfeit all rights to such shares and any
dividends theretofore paid on such
shares.
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|
(vii)
Notwithstanding anything to the contrary in this Letter Agreement, if your
employment is terminated due to Retirement or Approved Early Retirement as
set forth in paragraph (iv)(y) or (v)(y) of this Section 4b, no
portion of any award that is subject to the achievement of a Corporate
Performance Objective to which you would otherwise be entitled pursuant to
paragraph (iv)(y) or (v)(y) of this Section 4b shall be payable unless and
until the date on which such Corporate Performance Objective shall have
been achieved, as certified by the Committee. If the Corporate
Performance Objective for any such performance period is not achieved and
certified, your percentage achievement for such performance period shall
be deemed to be 0%.
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(viii)
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The
additional payments described in paragraphs b(i) (other than the payments
described therein which are referred to in paragraphs a(ii), a(iv) and
a(v) of this Section 4), b(iii), b(iv) and b(v) of this Section 4 shall be
paid:
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(A)
to the extent a deferral election has been made under the Deferred Compensation
Plan with respect to such amounts if paid under the terms of the Annual
Incentive Plan or LTIP, at the time and in the manner determined under such
election; and
(B)
in all other cases, 30 days after your termination of employment, unless
calculation of such payment depends on the Committee’s determination of whether
the Corporate Performance Objective has been achieved, in which case the payment
shall be made within two months after the end of the applicable performance
measurement period. In the event that any payment that is payable in
cash is delayed solely as a result of provisions of this Letter Agreement that
are primarily intended to ensure that any amounts which the Company has deducted
or wishes to deduct for federal income tax purposes pursuant to Section
162(m)(1) of the Code will not be disallowed, interest shall accrue on the
amount of such payments at an annual rate equal to 120% of the applicable
short-term federal rate established pursuant to Section 1274(d) of the Code as
set forth for the previous fiscal quarter (based on actual number of days
elapsed and a 365-day year) from the date such payment would have been made but
for such provisions through and including the actual date of such
payment. In the event that any payment that is payable in common
stock is delayed solely as a result of provisions of this Letter Agreement that
are primarily intended to ensure that any amounts which the Company has deducted
or wishes to deduct for federal income tax purposes will not be disallowed
pursuant to Section 162(m)(1) of the Code, any dividend payments on such common
stock that you otherwise would have received had such delay not occurred shall
be payable to you at the same time as the payment of such common stock, together
with interest thereon, at the rate and on the terms set forth in the preceding
sentence, from the applicable dividend payment dates through and including the
actual date of such payment.
c.
Termination by
Corporation Without Cause or by you for Good Reason.
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For
purposes of this Letter Agreement “Good Reason” shall mean any of the
following:
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(i)
a material reduction in the amount of your then current base salary, target
annual incentive bonus, target LTIP compensation, or aggregate employee
benefits, other than any such reduction that the Board, in good faith, believes
to be in the best interests of the Corporation and that is uniformly applicable
to all other senior executives of the Corporation;
(ii)
the removal of, or failure to elect or reelect, you as Chief Executive Officer
or Chairman of the Board of the Corporation; provided, however, (1) the failure
to elect you as Chairman of the Board shall not, by itself, constitute Good
Reason if such failure results from any law, regulation or listing requirement
to the effect that the positions of Chairman of the Board and Chief Executive
Officer shall not be held by the same individual or that the Chairman of the
Corporation shall be independent; or if the Board elects a non-executive
Chairman whose duties as Chairman consist primarily of establishing the Board
agenda and presiding over Board meetings and shareholder meetings;
(iii)
the assignment to you of duties or responsibilities which are materially
inconsistent with your current position, excluding for this purpose an isolated,
insubstantial, and inadvertent failure not occurring in bad faith which is
remedied by the Corporation reasonably promptly after receipt of written notice
thereof from you;
(iv)
the Corporation’s amendment or termination of this Letter Agreement without your
prior written consent; or
(v)
any material violation by the Corporation of the provisions of this Letter
Agreement other than a violation that is remedied by the Corporation reasonably
promptly after receipt of written notice thereof given by you.
If
the Corporation should terminate your employment without Cause, or in the event
you terminate employment for Good Reason, you shall be entitled to the following
benefits (“Termination Benefits”):
(1)
the Accrued Obligations listed in paragraph a. of this Section 4, as well as any
earned but unpaid annual incentive bonus for the prior fiscal year;
(2)
your annual incentive bonus for the year in which your termination of employment
occurs, pro rated based on the portion of such year in which you were employed,
if the Corporate Performance Objective for such year is achieved; provided,
that, any reduction approved by the Committee to the maximum amount of the
annual incentive bonus payable to you based on the achievement of such Corporate
Performance Objective shall not exceed the lowest percentage reduction approved
by the Committee to the maximum amount of any annual incentive bonus payable for
such year to any other named executive officer; provided, further, that if the
Corporate Performance Objective has been achieved, in no event will the pro
rated portion of such annual incentive bonus payable to you be less than the
greater of the pro rated amount of (A) your average annual incentive bonus
for the two years prior to the year in which your termination of employment
occurs or (B) your target annual incentive bonus for the year in which your
termination of employment occurs;
(3) two
times your then current base salary;
(4)
two times the higher of (A) your average annual incentive bonus for the two
years prior to the year in which your termination of employment occurs or (B)
your target annual incentive bonus for the year in which your termination of
employment occurs;
(5)
a pro rata portion of each outstanding and not theretofore vested and paid
Performance Share award under the LTIP; provided, however, that (A) with respect
to each year (if any) of the applicable performance measurement period which
shall have elapsed prior to the year in which your termination of employment
occurs, your percentage achievement shall be the actual percentage achievement
(if any) approved by the Committee, and (B) with respect to the year in which
your termination of employment occurs and any subsequent years in the applicable
performance measurement period, your percentage achievement shall be (x) target
for any such year for which the Corporate Performance Objective is achieved and
(y) 0% for any such year in which the Corporate Performance Objective is not
achieved;
(6)
notwithstanding the terms and conditions of any applicable Restricted Stock or
Stock Option agreements, continued vesting in all unvested Restricted Stock and
Stock Options outstanding under the LTIP for a period of two years following the
date of termination of your employment; provided, however, that no portion of
any award of Restricted Stock that is expressly intended to constitute qualified
performance-based compensation for purposes of Section 162(m) of the Code
shall vest unless and until the Corporate Performance Objective shall have been
achieved (it being understood that all other conditions to vesting, if any,
shall be deemed waived);
(7)
continued participation in the medical, dental, hospitalization, short-term and
long-term disability and group life insurance coverage plans of the Corporation
(“Welfare Plans”) in which you were participating on the date of termination of
your employment until the earlier of:
(A)
the end of the two-year period following your termination of employment;
and
(B)
the date, or dates you receive comparable coverage and benefits under the plans
and programs of a subsequent employer;
provided,
however, that if under the terms of any such Welfare Plan you cannot continue to
participate in such Welfare Plan, the Corporation shall otherwise provide such
benefits on the same after-tax basis as if continued participation had been
permitted; and provided, further, however, that at the end of your period of
continued participation (determined under (A) or (B) above, as applicable), the
Corporation will provide you with continued medical coverage at your own expense
pursuant to COBRA; and
(8)
the cash value of two additional years of service credit under all applicable
pension, 401(k), SERP and Supplemental SERP plans (including, without
limitation, the FPL Group, Inc. Supplemental Executive Retirement Plan amended
and restated effective January 1, 2005 and the Amended and Restated Supplement
to the FPL Group, Inc. Supplemental Executive Retirement Plan as it applies to
Lewis Hay, III dated December 12, 2008).
The
additional payments described in paragraphs c(1) (other than the payments
described therein which are referred to in paragraphs a(ii), a(iv) and a(v) of
this Section 4), c(5) and c(6) of this Section 4 shall be paid:
(A)
to the extent a deferral election has been made under the Deferred Compensation
Plan with respect to such amounts if paid under the terms of the Annual
Incentive Plan or LTIP, at the time and in the manner determined under such
election; and
(B)
in all other cases, 30 days after your termination of employment (unless
(aa) calculation of such payment depends on the Committee’s determination
of whether the Corporate Performance Objective has been achieved, in which case
the payment shall be made within two months after the end of the applicable
performance measurement period, or (bb) the revocation period for the
release of claims referred to in Section 10(a) has not yet lapsed, in which case
the payment shall be made ten days after the lapse of such revocation
period).
The
Termination Benefits described in paragraphs c(2), c(3), c(4) and c(8) of this
Section 4 shall be paid 30 days after your termination of employment
(unless the revocation period for the release of claims referred to in
Section 10(a) has not yet lapsed, in which case the payment shall be made ten
days after the lapse of such revocation period).
If
you believe that the Committee shall not have acted in a manner “materially
consistent with past practice,” as defined in the following two sentences, in
making any determination referred to in paragraph b(iii), b(iv), b(v), b(vii),
c(2), (c)5 or c(6) of this Section 4, and you so notify the Corporation in
writing, the Corporation shall promptly enter into discussions with you
concerning the impact, if any, of the Committee’s determination on the
compensation payable to you pursuant to paragraph b(iii), b(iv), b(v),
b(vii), c(2), (c)5 or c(6), as the case may be, which discussions
shall include consideration of modifications to the terms of payment of the
elements of compensation referred to in paragraph b(iii), b(iv), b(v),
b(vii), c(2), (c)5 or c(6), as applicable. For purposes of
this paragraph, “materially consistent with past practice” shall mean the
practice observed by the Committee during the two year period ending on the date
of this Letter Agreement with respect to the determination of the elements of
compensation referred to in paragraph b(iii), b(iv), b(v),
b(vii), c(2), (c)5 or c(6), including, without limitation, the
Committee’s practice relating to the establishment of the Corporate Performance
Objective and the Committee’s certification of the achievement of the Corporate
Performance Objective. Without limiting the foregoing sentence, the
Committee shall be deemed to have acted in a manner materially consistent with
past practice with respect to awards under the LTIP with a multi-year
performance period only if it shall have fixed the performance targets for
periods within such multi-year performance period in the same manner with
respect to each period within such multi-year performance period.
d.
Termination without
Good Reason
. In the event of a termination of employment by you without
Good Reason, you shall be entitled to the Accrued Obligations listed in
paragraph a. of this Section 4, as well as any earned but unpaid annual
incentive bonus under the Annual Incentive Plan or any similar plan or
arrangement for the prior fiscal year.
e.
Section
409A
. You and the Corporation acknowledge that each of the
payments and benefits promised to you under this Agreement must either comply
with the requirements of Section 409A and the regulations thereunder or
qualify for an exception from compliance. To that end, you and the
Corporation agree that:
(i)
In the case of Termination Benefits that are not exempt from Section 409A, as
mutually determined by the Corporation and you, payment shall not be made prior
to, and shall, if necessary, be deferred (with interest at the annual rate of
the lesser of (x) the prime rate and (y) 120% of the applicable federal
long-term rate (as prescribed under Section 1274(d) of the Code) per annum,
compounded quarterly from the date of your termination of employment to the date
of actual payment) to and paid on the later of the earliest date on which you
experience a separation from service (within the meaning of Treasury Regulation
Section 1.409A-1(h)) and, if you are a specified employee (within the meaning of
Treasury Regulation Section 1.409A-1(i), including a determination under the
Corporation’s policy for determining such individuals, as permitted by Treasury
Regulation Section 1.409A-1(i)) on the date of your separation from service, the
first day of the seventh month following your separation from
service.
(ii)
This Letter Agreement shall be subject to amendment in the future in such manner
as the Corporation and you shall reasonably deem necessary or appropriate to
effect compliance with Section 409A and the regulations thereunder and to avoid
the imposition of penalties and additional taxes under Section 409A, it being
the express intent of the parties that neither the Corporation nor you shall be
subject to penalties or taxes under Section 409A by virtue of the provisions of
this Letter Agreement.
f.
Certain
Benefits
. During the term of your employment, any unused
vacation days shall be carried over from year to year. Upon
termination of your employment for any reason, any unused vacation days shall be
reimbursed to you at your then current base salary rate. On your
termination of employment other than for Cause, you will be entitled to enroll
in Access Only Benefits, as defined in the Retiree Benefits Plan for Employees
of FPL Group, Inc., as amended and restated effective January 1, 2008 (the
“Retiree Benefits Plan”), or in a comparable medical benefits arrangement, if
you satisfy the eligibility requirements as stated in Appendix B to the Retiree
Benefits Plan as in effect as of the date of this Letter Agreement, even if
Access Only Benefits, or comparable medical benefits, are no longer being
provided to other employees of the Corporation. Such medical benefits
will be provided to you to the extent that such coverage is available under the
Corporation’s health, dental and vision plans or can be obtained on commercially
reasonable terms.
g.
Section
162(m)
. Notwithstanding anything in this Agreement to the
contrary, any performance-based compensation with respect to which the
applicable performance period commenced on or before January 1, 2009 shall be
payable to you in accordance with the terms of your Amended and Restated
Employment Letter in effect immediately prior to the date of this Letter
Agreement and any other agreement with respect to such performance-based
compensation.
5.
During your employment with the Corporation and for a period of two years after
the date your employment is terminated for whatever reason, you will not
directly or indirectly hire, employ, or solicit the employment or services of
(whether as an employee, officer, director, agent, consultant or independent
contractor), any person who is serving as an employee, representative, officer
or director of the Corporation or any of its Affiliates (or who served in such
capacity at any time during the six-month period preceding such hiring,
employment, or solicitation) without the prior written consent of the
Corporation or such Affiliate, as applicable.
6.
You shall hold in a fiduciary capacity for the benefit of the Corporation all
secret or confidential information, knowledge or data relating to the
Corporation or any of its Affiliates and their respective businesses, which is
obtained by you during your employment by the Corporation or any of its
Affiliates and which is not public knowledge. While you are employed by the
Corporation and thereafter, you shall not, without prior written consent of the
Corporation or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Corporation and those designated by it.
7.
You acknowledge that a breach of the restrictions contained in Sections 5 or 6
will cause irreparable damage to the Corporation and its Affiliates, the exact
amount of which will be difficult to ascertain, and that the remedies at law for
any such breach will be inadequate. Accordingly, you and the Corporation agree
that if you breach any of the restrictions contained in Sections 5 or 6, then
the Corporation and its Affiliates shall be entitled to injunctive relief,
without posting bond or other security, in addition to any other remedy or
relief to which they may be entitled. You further agree that if you breach any
of the restrictions contained in Sections 5 or 6, then in addition to being
subject to injunctive relief and any other remedy or relief to which the
Corporation and its
Affiliates may be
entitled, you shall forfeit your right to all entitlements under this Letter
Agreement that have not yet been paid or provided to you, including your right
to any unpaid Termination Benefits; provided, however, that such forfeiture
shall not apply to any entitlements included in the Accrued Obligations or where
not permitted by applicable law.
8.
In the event your employment is terminated for any reason, you shall not be
required to mitigate any payment or benefits provided to you by the Corporation
by seeking other employment.
9.
Your Executive Retention Employment Agreement dated June 17, 2002, as
amended through the date hereof (“Executive Retention Employment
Agreement”), remains in full force and effect and is not modified or amended in
any manner whatsoever as a result of your entering into this Letter Agreement.
In the event of an “Effective Date” under and as defined in the Executive
Retention Employment Agreement, you shall be entitled to the compensation and
benefits provided under the Executive Retention Employment Agreement if your
employment terminates under the circumstances provided under the Executive
Retention Employment Agreement; provided, however, that such compensation and
benefits shall be in lieu of any entitlements payable or provided to you under
this Letter Agreement.
10.
Notwithstanding anything herein to the contrary, and except in the case of
death, it shall be a condition to your receiving any payments or benefits
referred to in Section 4 (other than the Accrued Obligations) that you shall
have (a) executed and delivered to the Corporation a release of claims against
the Corporation, such release to be in the Corporation’s then standard form of
release, and (b) executed and delivered to the Corporation resignations of all
officer and director positions you hold with the Corporation or its Affiliates,
in each case no later than 45 days after your termination of
employment, unless there is a genuine dispute as to your substantive rights
under this Letter Agreement within the meaning of Treasury Regulation
1.409A-3(g) (or any successor provision).
11.
You acknowledge that you have received the advice of counsel with respect to the
matters contemplated in this Letter Agreement and the Corporation has agreed to
pay directly your reasonable legal fees and expenses.
12.
This Letter Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Florida, without reference to rules
relating to conflicts of law.
13.
Your employment pursuant to this Letter Agreement is not a guarantee of
employment. As stated in this Letter Agreement, the Corporation may terminate
your employment on written notice; provided, however, that in certain instances
as specified in Section 4, such termination may require the Corporation to
provide compensation or other benefits to you.
14.
This Letter Agreement between you and the Corporation sets forth the entire
agreement with respect to the subject matters hereof and supersedes all prior
understandings and agreements (except the Executive Retention Employment
Agreement) as to employment of you by the Corporation.
15
.
This Letter Agreement
cannot be amended, changed or modified without the written consent of you and
the Corporation.
16.
If any one or more of the provisions contained in this Letter Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
17.
Any controversy or claim arising out of or relating to this Letter Agreement, or
any breach thereof, shall be settled by arbitration conducted in accordance with
the Florida Arbitration Code (Fla. Stat. Sec. 682.01 et seq.) and judgment upon
such award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. There will be one arbitrator, who shall be mutually
selected by you and the Corporation and if agreement cannot be reached, then the
arbitrator shall be selected from the CPR National Panel of Distinguished
Neutrals by a senior executive official of the CPR Institute for Dispute
Resolution. The arbitration shall be held in West Palm Beach, Florida, or such
other place as may be agreed upon at the time by the parties to the arbitration.
The cost of arbitration shall be borne among the parties to the arbitration as
determined by the arbitrator. It is the intention of the parties that to the
extent your position is upheld, your expenses (including cost of witnesses,
evidence, and attorneys), as determined by the arbitrator, shall be reimbursed
by the Corporation.
18.
This Letter Agreement shall be binding upon any and all successors to the
Corporation.
|
|
Sincerely,
|
|
|
|
FPL
GROUP, INC.
J.
BRIAN FERGUSON
|
|
|
By:
|
Brian
Ferguson
Chairperson
of the
Compensation
Committee
|
Agreed
to and accepted:
LEWIS
HAY, III
|
|
Date:
|
December
10, 2009
|
Lewis
Hay, III
|
|
|
|
Exhibit
10(rr)
EXECUTIVE
RETENTION EMPLOYMENT AGREEMENT
Executive
Retention Employment Agreement between FPL Group, Inc., a Florida corporation
(the "Company"), and Manoochehr Nazar (the "Executive"), dated as of January 1,
2010. The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company and its Affiliated Companies will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Potential Change of Control or a Change of Control (each as
defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by the circumstances surrounding a Potential
Change of Control or a Change of Control and to encourage the Executive's full
attention and dedication to the Company and its Affiliated Companies currently
and in the event of any Potential Change of Control or Change of Control (and,
under certain circumstances, in the event of the termination or abandonment of a
Change of Control transaction), and to provide the Executive with compensation
and benefits arrangements which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are competitive with
those of other corporations which may compete with the Company for the services
of the Executive. Therefore, in order to accomplish these objectives, the Board
has caused the Company to enter into this Executive Retention Employment
Agreement (this "Agreement").
Therefore,
the Company and the Executive agree as follows:
1.
Effective
Date
.
The effective date of this Agreement
(the "Effective Date") shall be the date on which (i) a Potential Change of
Control occurs, (ii) the Board approves a plan of complete liquidation or
dissolution of the Company, (iii) a Change of Control occurs pursuant to Section
2(a)(1) or (2) below or (iv) a definitive agreement is signed by the Company
which provides for a transaction that, if approved by shareholders or
consummated, as applicable, would result in a Change of Control pursuant to
Section 2(a)(3) or (4) below; provided, however, that any of the foregoing which
may have occurred prior to the date hereof shall be
disregarded. Anything in this Agreement to the contrary
notwithstanding, if, prior to the Effective Date, the Executive's employment
with the Company or its Affiliated Companies was terminated by the Company or
its Affiliated Companies, or both, as applicable, other than for Cause or
Disability (each as defined below) or by the Executive for Good Reason (as
defined below) and the Executive can reasonably demonstrate that such
termination (or the event constituting Good Reason) took place (a) at the
request or direction of a third party who took action that caused a Potential
Change of Control or (b) in contemplation of an event that would give rise to an
Effective Date, an Effective Date will be deemed to have occurred (“Deemed
Effective Date”) immediately prior to the Date of Termination (as defined in
Section 7(e) below), provided that a Change of Control occurs within a two-year
period following such Date of Termination. As used in this Agreement, the term
"Affiliated Companies" shall include any corporation or other entity controlled
by, controlling or under common control with the Company and
the term “Subsidiary” shall mean
(x) any corporation or other entity (other than the Company) with respect to
which the Company owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock or other ownership interests or
(y) any other related entity which may be designated by the Board as a
Subsidiary, provided such entity could be considered a subsidiary according to
generally accepted accounting principles
.
2.
Change of
Control; Potential Change of Control
.
For the purposes
of this Agreement:
(a)
A
"Change of Control" shall mean the first (and only the first) to occur of the
following:
(1)
The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (x) the
then outstanding shares of common stock of the Company (the "Outstanding Company
Common Stock") or (y) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
the following acquisitions (collectively, the "Excluded Acquisitions") shall not
constitute a Change of Control (it being understood that shares acquired in an
Excluded Acquisition may nevertheless be considered in determining whether any
subsequent acquisition by such individual, entity or group (other than an
Excluded Acquisition) constitutes a Change of Control): (i) any acquisition
directly from the Company or any Subsidiary; (ii) any acquisition by the Company
or any Subsidiary; (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Subsidiary; (iv)
any acquisition by an underwriter temporarily holding Company securities
pursuant to an offering of such securities; (v) any acquisition in connection
with which, pursuant to Rule 13d-1 promulgated pursuant to the Exchange Act, the
individual, entity or group is permitted to, and actually does, report its
beneficial ownership on Schedule 13G (or any successor Schedule); provided that,
if any such individual, entity or group subsequently becomes required to or does
report its beneficial ownership on Schedule 13D (or any successor Schedule),
then, for purposes of this paragraph, such individual, entity or group shall be
deemed to have first acquired, on the first date on which such individual,
entity or group becomes required to or does so report, beneficial ownership of
all of the Outstanding Company Common Stock and/or Outstanding Company Voting
Securities beneficially owned by it on such date; or (vi) any acquisition in
connection with a Business Combination (as hereinafter defined) which, pursuant
to subparagraph (3) below, does not constitute a Change of Control;
or
(2)
Individuals
who, as of the date hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of an individual, entity or group other than the Board; or
(3)
Consummation
by the Company of a reorganization, merger, consolidation or other business
combination (any of the foregoing, a "Business Combination") of the Company or
any Subsidiary of the Company with any other corporation, in any case with
respect to which:
(i)
the
Outstanding Company Voting Securities outstanding immediately prior to such
Business Combination do not, immediately following such Business Combination,
continue to represent (either by remaining outstanding or being converted into
voting securities of the resulting or surviving entity or any ultimate parent
thereof) more than 55% of the outstanding common stock and of the then
outstanding voting securities entitled to vote generally in the election of
directors of the resulting or surviving entity (or any ultimate parent thereof);
or
(ii)
less
than a majority of the members of the board of directors of the resulting or
surviving entity (or any ultimate parent thereof) in such Business Combination
(the "New Board") consists of individuals ("Continuing Directors") who were
members of the Incumbent Board (as defined in subparagraph (2) above)
immediately prior to consummation of such Business Combination (excluding from
Continuing Directors for this purpose, however, any individual whose election or
appointment to the Board was at the request, directly or indirectly, of the
entity which entered into the definitive agreement with the Company or any
Subsidiary providing for such Business Combination); or
(4)
(i)
Consummation of a sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation with respect to which,
following such sale or other disposition, more than 55% of, respectively, the
then outstanding shares of common stock of such corporation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly,
by all or substantially
all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities as the case may be; or (ii) shareholder
approval of a complete liquidation or dissolution of the Company.
The
term "the sale or disposition by the Company of all or substantially all of the
assets of the Company" shall mean a sale or other disposition transaction or
series of related transactions involving assets of the Company or of any
Subsidiary (including the stock of any Subsidiary) in which the value of the
assets or stock being sold or otherwise disposed of (as measured by the purchase
price being paid therefor or by such other method as the Board determines is
appropriate in a case where there is no readily ascertainable purchase price)
constitutes more than two-thirds of the fair market value of the Company (as
hereinafter defined). The "fair market value of the Company" shall be
the aggregate market value of the then Outstanding Company Common Stock (on a
fully diluted basis) plus the aggregate market value of the Company's other
outstanding equity securities. The aggregate market value of the
shares of Outstanding Company Common Stock shall be determined by multiplying
the number of shares of Outstanding Company Common Stock (on a fully diluted
basis) outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related transactions (the
"Transaction Date") by the average closing price of the shares of Outstanding
Company Common Stock for the ten trading days immediately preceding the
Transaction Date. The aggregate market value of any other equity
securities of the Company shall be determined in a manner similar to that
prescribed in the immediately preceding sentence for determining the aggregate
market value of the shares of Outstanding Company Common Stock or by such other
method as the Board shall determine is appropriate.
(b)
A
"Potential Change of Control" shall be deemed to have occurred if an event set
forth in either of the following subparagraphs shall have occurred:
(1)
the
Company or any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) publicly
announces or otherwise communicates to the Board in writing an
intention to take or to consider taking actions (
e.g.
, a "bear hug"
letter, an unsolicited offer or the commencement of a proxy contest) which, if
consummated or approved by shareholders, as applicable, would constitute a
Change of Control; or
(2)
any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) directly or indirectly, acquires beneficial
ownership of 15% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities; provided, however, that Excluded Acquisitions shall
not constitute a Potential Change of Control.
3.
Employment
Period
.
(a)
The
Company hereby agrees to continue the Executive in its or its Affiliated
Companies' employ, or both, as the case may be, and the Executive hereby agrees
to remain in the employ of the Company, or its Affiliated Companies, or both, as
the case may be, subject to the terms of this Agreement, for a period commencing
on the Effective Date and ending on the second anniversary of such date (such
period or, if shorter, the period from the Effective Date to the Date of
Termination, is hereinafter referred to as the "Employment
Period").
(b)
Anything
in this Agreement to the contrary notwithstanding, (x) if an Effective Date
occurs (other than as a result of a Change of Control under Section 2(a)(1) or
(2) above) and the Board adopts a resolution to the effect that the event or
circumstance giving rise to the Effective Date no longer exists (including by
reason of the termination or abandonment of the transaction contemplated by the
definitive agreement referred to in clause (iv) of Section 1 hereof), the
Employment Period shall terminate on the date the Board adopts such resolution,
but this Agreement shall otherwise remain in effect, and (y) if a Change of
Control occurs pursuant to Section 2(a)(3) or (4) above during the Employment
Period, the Employment Period shall immediately extend to and end on the
second
anniversary
of the date of such Change of Control (or, if earlier, to the Date of
Termination) and a new Effective Date will be deemed to have occurred on the
date of such Change of Control.
4.
Position and
Duties
.
During
the Employment Period, the Executive's status, offices, titles, and reporting
requirements with the Company or its Affiliated Companies or both, as the case
may be, shall be commensurate with those in effect during the 90-day period
immediately preceding the Effective Date. The duties and responsibilities
assigned to the Executive may be increased, decreased or otherwise changed
during the Employment Period, provided that the duties and responsibilities
assigned to the Executive at any given time are not materially inconsistent with
the Executive's status, offices, titles, and reporting requirements as in effect
during the 90-day period immediately preceding the Effective Date. The
Executive's services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date or any location less than 20
miles from such location, although the Executive understands and agrees that he
may be required to travel from time to time for business purposes.
During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote substantially
all of his time and attention during normal business hours to the business and
affairs of the Company and its Affiliated Companies and to use his reasonable
best efforts to perform faithfully and efficiently the duties and
responsibilities assigned to him hereunder. During the Employment
Period it shall not be a violation of this Agreement for the Executive to serve
on corporate, civic or charitable boards or committees, deliver lectures,
fulfill speaking engagements or teach at educational institutions and devote
reasonable amounts of time to the management of his and his family's personal
investments and affairs, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company or its Affiliated Companies in accordance with this
Agreement. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the
Effective Date, the reinstatement or continued conduct of such activities (or
the reinstatement or conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to interfere
with the performance of the Executive's responsibilities to the Company and its
Affiliated Companies.
5.
Compensation
.
During
the Employment Period, the Executive shall be compensated as
follows:
(a)
Annual Base
Salary
. The Executive shall be paid an annual base salary
("Annual Base Salary"), in equal biweekly installments or otherwise in
accordance with the Company’s then-current payroll practice, at least equal to
the annual rate of base salary being paid to the Executive by the Company and
its Affiliated Companies as of the Effective Date. The Annual Base
Salary shall be reviewed at least annually and shall be increased substantially
consistent with increases in base salary generally awarded to other peer
executives of the Company and its Affiliated Companies. Such
increases shall in no event be less than the increases in the U.S. Department of
Labor Consumer Price Index - U.S. City Average Index. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term "Annual Base Salary" as utilized in
this Agreement shall refer to Annual Base Salary as so increased.
(b)
Annual
Bonus
. In addition to Annual Base Salary, upon the terms and
subject to the conditions of this paragraph (b), the Executive shall be awarded,
for each fiscal year ending during the Employment Period an annual cash bonus
(the "Annual Bonus") equal to a percentage of his Annual Base
Salary. Such percentage shall be substantially consistent with the
targeted percentages generally awarded to other peer executives of the Company
and its Affiliated Companies, but at least equal to the higher of (i) the
percentage obtained by dividing his targeted annual bonus for the then current
fiscal year by his then Annual Base Salary or (ii) the average percentage
of his annual base salary (as in effect for the applicable years)
that was paid or payable, including by reason of any deferral, to the Executive
by the Company and its Affiliated Companies as an annual bonus (however
described, including as annual incentive compensation) for each of
the three fiscal years immediately preceding the fiscal year in which the
Effective Date occurs (or, if higher, for each of the three fiscal years
immediately preceding the fiscal year in which a Change of Control occurs, if a
Change of Control occurs following the Effective Date). For the
purposes of any calculation required to be made under clause (ii) of the
preceding sentence, an annual bonus shall be annualized for any fiscal year
consisting of less than twelve full months or with respect to which the
Executive was employed for, and received pro-rated annual incentive compensation
with respect to, less than the full twelve months, and, if the Executive has not
been employed for the full duration of the three fiscal years immediately
preceding the year in which the Effective Date occurs, the average shall be
calculated over the duration of the Executive's employment in such
period. Each such Annual Bonus shall be paid no later than the end of
the second month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive otherwise elects to defer the
receipt of such Annual Bonus in accordance with a deferred compensation plan of
the Company or its Affiliated Companies that complies with Section 409A of the
Internal Revenue Code (the “Code”). The foregoing provisions of this
paragraph (b) shall be qualified by the following terms and
conditions. If (A) as of the end of any fiscal year during the
Employment Period the Executive is a “Covered Employee” as defined in Code
Section 162(m), (B) Code Section 162(m) remains in effect as of the end of
such fiscal year and as of such date is applicable to the payment of an Annual
Bonus for such fiscal year and (C) the Executive participated for such fiscal
year in an Annual Incentive Plan (as hereinafter defined), the Annual Bonus for
such fiscal year shall be paid to the Executive pursuant to the Annual Incentive
Plan, rather than in accordance with the first four sentences of this paragraph
(b), in the amount, at the time and upon the other terms and conditions
specified in such Annual Incentive Plan; provided, however, that if a Change of
Control occurs before such payment is made, the Executive shall be paid, in lieu
of such amount and on the date on which such Change of Control occurs, as
follows: (A) as the Annual Bonus for such fiscal year, an amount equal to the
greater of (x) the maximum amount payable to the Executive under the Annual
Incentive Plan for such fiscal year assuming achievement thereunder of the
Corporate Performance Objective (as hereinafter defined) for such fiscal year
and (y) the maximum amount payable in accordance with the first four sentences
of this paragraph (b) and (B) as Annual Bonuses for all prior fiscal years ended
during the Employment Period, an amount equal to the aggregate amount, if any,
by which the maximum amount otherwise payable in accordance with the first four
sentences of this paragraph (b) for all such prior fiscal years exceeds the
aggregate amount of all Annual Bonuses previously paid to the Executive for such
prior fiscal years pursuant to the Annual Incentive Plan or otherwise under this
paragraph (b). If, as of the end of any fiscal year for which an
Annual Bonus is payable pursuant to this paragraph (b), the Executive is not,
and at any time during the three full fiscal years preceding such date was not,
a “Covered Employee” as defined in Section 162(m), the Executive shall be paid
the Annual Bonus for such fiscal year in accordance with the first four
sentences of this paragraph (b); provided, however, that the amount of the
Annual Bonus so paid to the Executive shall be reduced by the amount, if any, of
the annual cash bonus paid to the Executive for such fiscal year pursuant to an
Annual Incentive Plan. For purposes of this paragraph (b), “Annual
Incentive Plan” means an annual cash incentive compensation plan of the Company
that (x) is intended to result in, and, in the opinion of a nationally reputable
law firm having significant experience with Code Section 162(m), does result in,
the payment of qualified performance-based compensation for purposes of Code
Section 162(m) (assuming solely for this purpose achievement of the Corporate
Performance Objective to which the payment of such compensation is subject), (y)
conditions the payment of all compensation pursuant thereto on the achievement
of a Corporate Performance Objective that is generally applicable to all
participants in such plan, and (z) is administered, and includes a Corporate
Performance Objective that is selected, in a manner that is consistent in all
material respects with past practice as applied to the most recent annual cash
incentive compensation plan of the Company that was in effect prior to the date
of this Agreement (December 31, 2009) for which the applicable Corporate
Performance Objective was achieved. For purposes of this Agreement,
the “Corporate Performance Objective” to which any payment of compensation is
subject shall mean the objective performance objective which is selected and
established by the Compensation Committee of the Board for purposes of making
such payment fully deductible for federal income tax purposes pursuant to Code
Section 162(m).
(c)
Long Term Incentive
Compensation
. During the Employment Period, the Executive
shall be entitled to participate in all incentive compensation plans, practices,
policies, and programs applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with incentive
opportunities and potential benefits, both as to amount and percentage of
compensation, less favorable, in the aggregate, than those provided by the
Company and its Affiliated Companies for the Executive under the FPL Group, Inc.
Amended and Restated Long Term Incentive Plan (including, without limitation,
performance share awards, stock option grants and restricted stock awards), or
other plan providing for the grant of equity compensation for executive
officers, as in effect at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other peer executives
of the Company and its Affiliated Companies.
(d)
Savings and Retirement
Plans
. During the Employment Period, the Executive shall be
entitled to participate in all savings and retirement plans, practices,
policies, and programs applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with savings
opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its Affiliated Companies for the Executive under such plans,
practices, policies, and programs as in effect at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its Affiliated Companies.
In
addition, during the Employment Period the Executive shall be entitled under
this Agreement to the Payment in Lieu of Lost Future Benefits described in Annex
A attached hereto and made a part hereof by this reference (“Payment in Lieu of
Lost Future Benefits”). The vesting of such Payment in Lieu of Lost
Future Benefits shall be determined in accordance with Section 8 of this
Agreement. The payment of such amount shall be determined in
accordance with Section 8 of this Agreement, to the extent the ability to make
such payment under Section 8 is consistent with the limitations of Code Section
409A and the terms of the Company’s Supplemental Executive Retirement
Plan.
To
the extent that the payment of this amount pursuant to Section 8 would be
inconsistent with the limitations of Code Section 409A or the terms of the
Company’s Supplemental Executive Retirement Plan, the payment of this amount
described in Annex A shall be made under the terms of the Company’s Supplemental
Executive Retirement Plan, pursuant to the provisions therein relating to
post-2005 accrued benefits that are subject to Code Section 409A.
(e)
Benefit
Plans
. During the Employment Period, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies,
and programs provided by the Company and its Affiliated Companies (including,
without limitation, medical, executive medical, annual executive physical,
prescription, dental, vision, short-term disability, long-term disability,
executive long-term disability, salary continuance, employee life, group life,
accidental death and dismemberment, and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives of the
Company and its Affiliated Companies, but in no event shall such plans,
practices, policies, and programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such plans,
practices, policies, and programs in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, those provided generally at any time after the Effective Date
to other peer executives of the Company and its Affiliated
Companies.
(f)
Expenses
. During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices, and procedures of the
Company and its Affiliated Companies in effect for the Executive at any time
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its Affiliated
Companies. The payment of such reimbursements shall be made within
thirty (30) days after submission of requests for reimbursement in accordance
with applicable policies and procedures of the
Company. Notwithstanding anything to the contrary in this Section
5(f) or elsewhere, reimbursement of expenses will be made consistent with the
Company’s Expense Reimbursement Policy, which is intended to comply with the
requirements of Code Section 409A and Treasury Regulation Section
1.409A-3(i)(1)(iv).
(g)
Fringe
Benefits
. During the Employment Period, the Executive shall be
entitled to fringe benefits, including but not limited to those described in
Section 8(a)(5), in accordance with the most favorable plans, practices,
programs, and policies of the Company and its Affiliated Companies in effect for
the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
Affiliated Companies.
(h)
Office and Support
Staff
. During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and its Affiliated Companies at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies.
(i)
Vacation
. During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs, and practices of
the Company and its Affiliated Companies as in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its Affiliated
Companies. In addition to, and notwithstanding anything to the
contrary in, the preceding sentence, any unused vacation days shall be carried
over from year to year.
6.
Change of
Control
.
(a)
Benefits Upon Change of
Control
. If, as of the date of a Change of Control which
occurs during the Employment Period (including on the Effective Date), the
Executive is employed by the Company or one of its Affiliated Companies, then as
of such date:
(1)
50%
of each outstanding performance stock-based award granted to the Executive shall
become fully vested and earned at a deemed achievement level equal to the higher
of (x) the targeted level of performance for such award or (y) the average
level (expressed as a percentage of target) of achievement in respect of similar
performance stock-based awards which matured over the three fiscal years
immediately preceding the year in which the Change of Control occurred; payment
of each such vested award shall be made to the Executive, in the form described
below, as soon as practicable following such Change of Control consistent with
Code Section 409A; and the remainder of each such award shall remain outstanding
(on a converted basis, if applicable) and shall remain subject to the terms and
conditions of the plan under which such award was granted, as well as the terms
and conditions of this Agreement; and
(2)
all
other outstanding stock-based awards granted to the Executive shall be fully
vested and earned; and
(3)
any
outstanding option, stock appreciation right, and other outstanding award in the
nature of a right that may be exercised that was granted to the Executive and
which was not previously exercisable and vested shall become fully exercisable
and vested; and
(4)
the
restrictions and forfeiture conditions applicable to any outstanding award
granted to the Executive under an incentive compensation plan, practice, policy
or program shall lapse and such award shall be deemed fully vested.
If
as a result of the Change of Control, the Outstanding Company Common Stock is
exchanged for or converted into a different form of equity security and/or the
right to receive other property (including cash), payment in respect of the
underlying awards described in subparagraphs (1), (2) and, with respect to
stock-based awards, (4) hereof shall, to the maximum extent practicable, be made
in the same form. If a Change of Control occurs and Company
shareholders do not, as a group, receive consideration in connection with such
Change of Control, then payment in respect of awards described in subparagraphs
(1),(2) and, with respect to stock-based awards, (4) hereof shall be made in
cash based on the average closing price of the shares of Outstanding Company
Common Stock for the 20 trading days immediately preceding the date of the
Change of Control.
(b)
Benefits Upon First
Anniversary of Change of Control
. If the Executive has
remained employed by the Company or one of its Affiliated Companies from the
date of a Change of Control which occurs during the Employment Period (including
on the Effective Date) to the date of the first anniversary of such Change of
Control, the performance stock-based awards outstanding immediately prior to
such Change of Control that did not become vested and earned at the time of such
Change of Control pursuant to Section 6(a)(1) shall become vested and earned as
of such first anniversary date and payment in respect of such awards shall be
made as soon as practicable following such date, but in no event later than the
15th day of the third month following the end of the first taxable year in which
the right to such payment arises. The deemed level of achievement
with respect to such awards, as well as the form of payment thereof, shall be as
described in paragraph (a) above.
7.
Termination of
Employment
.
(a)
Death or
Disability
. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 15(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(b)
Cause
. The
Company may terminate the Executive's employment during the Employment Period
for Cause. For purposes of this Agreement, "Cause" shall mean (i)
repeated violations by the Executive of the Executive's obligations under
Section 4 of this Agreement (other than as a result of incapacity due to
physical or mental illness) which are demonstrably willful and deliberate on the
Executive's part, which are committed in bad faith or without reasonable belief
that such violations are in the best interests of the Company and which are not
remedied in a reasonable period of time after receipt of written notice from the
Company specifying such violations or (ii) the conviction of the Executive of a
felony involving an act of dishonesty intended to result in substantial personal
enrichment at the expense of the Company or its Affiliated
Companies.
(c)
Good
Reason
. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean:
(1)
any
failure by the Company to comply with the provisions of Section 4 of this
Agreement, including without limitation, the assignment to the Executive of any
duties and responsibilities that are materially inconsistent with the
Executive's status, offices, titles, and reporting requirements as in effect
during the 90-day period immediately preceding the Effective Date, but excluding
for this purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt of written
notice thereof given by the Executive;
(2)
any
failure by the Company to comply with any of the provisions of Sections 5 or 6
of this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(3)
the
Company's requiring the Executive to be based at any office or location other
than that described in Section 4 hereof;
(4)
any
purported termination by the Company of the Executive's employment
other than as expressly permitted by this Agreement; or
(5)
any
failure by the Company to comply with and satisfy Section 14(c) of this
Agreement, provided that such successor has received at least ten days prior
written notice from the Company or the Executive of the requirements of Section
14(c) of the Agreement.
For
purposes of this Section 7(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d)
Notice of
Termination
. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 15(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated, and
(iii) if the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than fifteen calendar days after the giving of such notice). The
failure by the Executive or the Company to set forth in the Notice of
Termination any facts or circumstances which contribute to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such facts or circumstances in enforcing the Executive's or the
Company's rights hereunder.
(e)
Date of
Termination
. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination, and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case
may be.
8.
Obligations of the Company
upon Termination
.
(a)
Following a Change of
Control: Good Reason; Other Than for Cause or Disability
. If
following a Change of Control and during the Employment Period, the Company
terminates the Executive's employment other than for Cause or Disability or
death or the Executive terminates employment for Good Reason, then:
(1)
the
Company shall pay to the Executive in a lump sum in cash within 45 days after
the Date of Termination the aggregate of the following amounts (such aggregate
being hereinafter referred to as the "Special Termination Amount"):
(i)
the
sum of (1) the Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (2) the product of (x) the Annual Bonus in
effect at such date and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the
denominator of which is 365 (such amount to be paid in addition to and not in
lieu of any Annual Bonus earned for such year), and (3) any accrued vacation pay
at the Annual Base Salary rate in effect as of the termination of employment, in
each case to the extent not theretofore paid (the sum of the amounts described
in subclauses (1), (2), and (3) herein shall be called the "Accrued
Obligations"); and
(ii)
the
amount equal to the product of (1)
two
, and (2) the sum of (x) the
Executive's Annual Base Salary and (y) the Executive's Annual Bonus in effect at
such date; provided, however, that such amount shall be paid in lieu of, and the
Executive hereby waives the right to receive, any other amount of severance
relating to salary or bonus continuation to be received by the Executive upon
termination of employment of the Executive under any severance plan, policy or
arrangement of the Company; and
(iii)
a
separate lump-sum equal to the greater of (1) the supplemental pension benefit
described in Paragraph 1(b) of Annex A that the Executive would have been
entitled to had his employment continued at the compensation level provided for
in Sections 5(a) and 5(b) of this Agreement for two years and based upon his
Projected Years of Service (as defined in Paragraph 2(a) of Annex A) and his
Projected Age (as defined in Paragraph 2(b) of Annex A), or (2) the difference
between (x) the actuarial equivalent (utilizing for this purpose the actuarial
assumptions utilized with respect to the FPL Group Employee Pension Plan (or any
successor plan thereto) (the "Pension Plan") during the 90-day period
immediately preceding the Effective Date) of the benefit payable under the
Pension Plan and all supplemental and/or excess retirement plans providing
benefits for the Executive (“Supplemental Retirement Plans”) (other than the
Payment in Lieu of Lost Future Benefits described in Annex A) including, but not
limited to the Supplemental Pension Benefit as defined in the FPL Group, Inc.
Supplemental Executive Retirement Plan (the “SERP”) which the Executive would
receive if the Executive's employment continued at the compensation level
provided for in Sections 5(a) and 5(b) of this Agreement for, and his age
increased by, two years, assuming for this purpose that all accrued benefits are
fully vested and that benefit accrual formulas are no less advantageous to the
Executive than those in effect during the 90-day period immediately preceding
the Effective Date, or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect to
other peer executives of the Company and its Affiliated Companies, and (y) the
actuarial equivalent (utilizing for this purpose the actuarial assumptions
utilized with respect to the Pension Plan during the 90-day period immediately
preceding the Effective Date) of the Executive's actual benefits (paid or
payable), if any, under the Pension Plan and the Supplemental Retirement
Plans;
(iv)
a
separate lump-sum equal to the greater of (1) the supplemental matching
contribution account described in Paragraph 1(c) of Annex A that the Executive
would have been entitled to had his employment continued at the compensation
level provided for in Sections 5(a) and 5(b) of this Agreement for two years and
assuming that the Executive made After Tax Contributions (within the meaning of
the FPL Group Employee Retirement Savings Plan or any successor plan thereto
(the "Retirement Savings Plan")) and Pretax Contributions (within the meaning of
the Retirement Savings Plan) to the Retirement Savings Plan at the highest
permissible rate (disregarding any limitations imposed by the Code) following
the Date of Termination, or (2) the difference between (x) the value of the
Company Account (as defined in the Retirement Savings Plan) and any other
matching contribution accounts (including, but not limited to the Supplemental
Matching Contribution Account (as defined in the SERP)) under the Supplemental
Retirement Plans (other than the Payment in Lieu of Lost Future Benefits
described in Annex A) which the Executive would receive if (A) the Executive's
employment continued at the compensation level provided for in Sections 5(a) and
5(b) of this Agreement for two years, (B) the Executive made pre- and after-tax
contributions at the highest permissible rate (disregarding any limitations
imposed by the Code, which may or may not be set forth in the Retirement Savings
Plan) for two years, (C) the Company Account and the matching contribution
accounts are fully vested, and (D) the matching contribution formulas are no
less advantageous to the Executive than those in effect during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time during the remainder of the Employment Period
with respect to other peer executives of the Company and its Affiliated
Companies, and (y) the actual value of the Executive's Company Account and
matching contribution accounts (paid or payable), if any, under the Retirement
Savings Plan and the Supplemental Retirement Plans; and
(v)
if
the Change of Control hereunder is also a “change in ownership,” a “change in
effective control” or a “change in the ownership of a substantial portion of the
assets” of the Company within the meaning of Code Section 409A, any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) including, without limitation, compensation, bonus, incentive
compensation or awards deferred under the FPL Group, Inc. Deferred Compensation
Plan or incentive compensation or awards deferred under the FPL Group, Inc.
Long-Term Incentive Plan of 1985, the FPL Group, Inc. Long-Term Incentive Plan
of 1994, or pursuant to any individual deferral agreement; provided that, for
the avoidance of doubt, if the Change of Control hereunder is not any such event
within the meaning of Code Section 409A, payment of the foregoing amounts shall
be made as soon practicable consistent with Code Section 409A;
(2)
the
Company shall provide the Executive, if such termination occurs prior to the
first anniversary of the Change of Control, with the vested and earned awards
that the Executive would have received pursuant to Section 6(b) hereof had the
Executive remained employed to the first anniversary of the Change of
Control;
(3)
Subject
to the provisions of this paragraph (3):
(A)
a
pro rata portion of each outstanding performance stock-based award granted to
the Executive on or after the date of the Change of Control shall be fully
vested and earned at a deemed achievement level equal to the higher of (x) the
targeted level of performance for such award or (y) the average level (expressed
as a percentage of target) of achievement in respect of similar performance
stock-based awards which matured over the three fiscal years immediately
preceding the year in which the Change of Control occurred; and
(B)
a
pro rata portion of each other outstanding stock-based award granted to the
Executive on or after the date of the Change of Control shall be fully vested
and earned;
(C)
a
pro rata portion of each outstanding option, stock appreciation right, and other
award in the nature of a right that may be exercised that was granted to the
Executive on or after the date of the Change of Control and which was not
previously exercisable and vested shall become fully exercisable and vested;
and
(D)
the
restrictions and forfeiture conditions applicable to any outstanding award
granted to the Executive on or after the date of the Change of Control under an
incentive compensation plan, practice, policy or program shall lapse and a pro
rata portion of such award shall be deemed fully vested and earned.
In determining the pro rata portion of
an award that shall become fully vested and earned or fully vested and
exercisable pursuant to this paragraph (3), an Executive shall be deemed to have
remained employed to the end of the Employment Period (determined without regard
to his earlier termination of employment). Anything to the contrary
notwithstanding, an award shall not become vested and earned or vested and
exercisable hereunder (and instead shall be cancelled) to the extent that
pursuant to Section 6 or Section 8(a)(2) hereof, a similar predecessor award in
respect of the same performance or vesting period shall have become vested and
earned, shall have become vested and exercisable or shall have been
paid. Payment in respect of the underlying awards described in
subparagraphs (A), (B) and (D) hereof shall be made in the shares to which such
awards relate if such shares are then admitted for trading on a national
securities exchange or are then admitted for quotation on a national quotation
system as soon as practicable following the Date of Termination, but in no event
later than the 15th day of the third month following the end of the first
taxable year in which the right to such payment arises. If such
shares are not so admitted, payment in respect of the underlying awards
described in subparagraphs (A), (B) and (D) hereof shall be made in cash based
on the fair market value of the shares (as determined by the board of directors
of the issuer of such shares in good faith) to which such awards
relate. Any portion of an award that does not become vested and
earned or vested and exercisable pursuant to this paragraph (3) shall be
cancelled as of the Date of Termination.
(4)
for
a two year period commencing on the Date of Termination (the "Continuation
Period"), or such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and/or the
Executive's family at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Sections 5(e) and 5(g) of this Agreement if the Executive's employment had not
been terminated, in accordance with the most favorable plans, practices,
programs or policies of the Company and its Affiliated Companies applicable
generally to other peer executives and their families during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies and their families,
provided, however, that if the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described
herein shall be secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Continuation Period and to have retired
on the last day of such period. In addition to, and notwithstanding
anything to the contrary in, the foregoing provisions of this paragraph (4), and
to the extent that the benefit referred to in this sentence is more favorable to
the Executive than the benefit conferred by the foregoing provisions of this
paragraph (4), upon termination of employment, the Executive shall be entitled
without limitation as to period to enroll in Access Only Benefits, as defined in
the Retiree Benefits Plan for Employees of FPL Group, Inc., as amended and
restated effective January 1, 2008 (the “Retiree Benefits Plan”), or in a
comparable medical benefits arrangement, if the Executive satisfies the
eligibility requirements as stated in Appendix B to the Retiree Benefits Plan as
in effect as of December 12, 2008, even if Access Only Benefits, or comparable
medical benefits, are no longer being provided to other employees of the
Company; provided, that such medical benefits shall be provided to the Executive
to the extent that such coverage is available under the Company’s health, dental
and vision plans or can be obtained on commercially reasonable
terms;
(5)
for
the remainder of the Continuation Period and to the extent previously paid for
or provided by the Company or its Affiliated Companies, the Company shall
continue to provide the following, consistent with the Company’s Expense
Reimbursement Policy, which is intended to comply with the requirements of Code
Section 409A and Treasury Regulation Section 1.409A-3(i)(1)(iv):
(A)
social
and business club memberships to the Executive (as in effect immediately prior
to the Date of Termination);
(B)
use,
maintenance, insurance, and repair of the company car that is in the possession
of the Executive, until the earlier of the end of the lease term or the end of
the Continuation Period, at which time the Executive may purchase such car (in
accordance with the Company’s then-existing executive car
program). The Company shall replace the company car in the
Executive's possession on the Effective Date with a new company car at such
time(s) as provided under the Company car policy applicable to other peer
executives, but in no case less frequently than the Company car policy in effect
during the 90-day period immediately preceding the Effective Date;
(C)
up
to $15,000 annually for personal financial planning, accounting and legal
advice;
(D)
communication
equipment such as a car and/or cellular phone, and home or laptop computer until
the end of the Continuation Period, at which time the Executive may purchase
such equipment;
(E)
security
system at the Executive's residence, and the related monitoring and maintenance
fees; and
(F)
up
to $800 annually for personal excess liability insurance coverage;
To
the extent that any of these benefits is determined to be deferred compensation
subject to Code Section 409A (and ineligible for any exception from the
application of Code Section 409A), payment shall not be made prior to, and
shall, if necessary, be deferred to and paid (with interest using 120% of the
applicable federal long-term rate, with compounding, as prescribed under Code
Section 1274(d)) on the first day of the seventh month following the date on
which the Executive experiences a separation from service (within the meaning of
Treasury Regulation Section 1.409A-1(h)).
(6)
to
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive pursuant to this
Agreement or otherwise under any plan, program, policy or practice or contract
or agreement of the Company and its Affiliated Companies, but excluding solely
for purposes of this Section 8(a)(6) (and subsequent sections hereof which make
reference to payments of amounts or benefits described in this
Section 8(a)(6)) amounts waived by the Executive pursuant to Section
8(a)(1)(ii); and
(7)
the
Company shall provide the Executive with the following benefits consistent with
the Company’s Expense Reimbursement Policy, which is intended to comply with the
requirements of Code Section 409A and Treasury Regulation Section
1.409A-3(i)(1)(iv):
(A)
If
the Executive is required to move his primary residence in order to pursue other
business opportunities during the Continuation Period, the Company shall
reimburse the Executive for all such relocation expenses incurred during the
Employment Period (not in excess of $10,000) that are not reimbursed by another
employer, including, without limitation, assistance in selling the Executive's
home and all other assistance and benefits that were customarily provided by the
Company to transferred executives prior to the Effective Date;
(B)
If
the Executive retains counsel or an accounting firm in connection with the
taxation of payments made pursuant to Section 11 of this Agreement, the Company
shall reimburse the Executive for such reasonable legal and/or accounting fees
and disbursements (not in excess of $15,000);
(C)
The
Company shall continue to pay the Executive's Annual Base Salary during the
pendency of a dispute over his termination. However, such amounts
shall not be paid to the Executive prior to, and shall, if necessary, be
deferred to and paid (with interest at 120% of the applicable federal long-term
rate, with compounding as prescribed under Code Section 1274(d)) on the first
day of the seventh month following the date on which the Executive experiences a
separation from service (within the meaning of Treasury Regulation Section
1.409A-1(h)). Amounts paid under this subsection are in addition to all other
amounts due under this Agreement (other than those due under Section 5(a)
hereof) and shall not be offset against or reduce any other amounts due under
this Agreement; and
(D)
The
Company shall provide the Executive with outplacement services commensurate with
those provided to terminated executives of comparable level made available
through and at the facilities of a reputable and experienced
vendor.
Notwithstanding
the foregoing, the benefits described in paragraphs (A),(B) and (D) above are
limited to expenses incurred no later than the end of the second calendar year
following the Executive’s termination, and the reimbursements will be made
timely upon receipt of the Executive’s request for payment (but in no event
later than the third year following such termination).
(b)
Following An Effective Date
and Prior to a Change of Control: Good Reason; Other Than for Cause or
Disability
. If, following an actual Effective Date (
i.e.
, not a Deemed
Effective Date) and prior to a Change of Control, the Company terminates the
Executive's employment during the Employment Period other than for Cause or
Disability or death or the Executive terminates employment for Good Reason,
then:
(1)
the
Company shall provide the Executive with the payments and benefits described
under Sections 8(a)(1), (4), (5), (6) and (7);
(2)
the
Company shall provide the Executive with the benefits the Executive would have
received under Section 6(a) hereof as if a Change of Control had occurred
immediately prior to the Date of Termination, except that, for purposes of
Section 6(a)(1), (i) 100% of each outstanding performance stock-based award
granted to the Executive which is outstanding immediately prior to the Date of
Termination shall become fully vested and earned and (ii) payment shall be
made in the form contemplated by the terms of the award.
(c)
Deemed Effective
Date
. If the Executive's employment terminates under
circumstances described in the second sentence of Section 1 hereof,
then:
(1)
the
Company shall provide the Executive with the payments and benefits described
under Sections 8(a)(1), (4), (5), (6) and (7); and
(2)
a
pro rata portion of each outstanding performance stock-based award granted to
the Executive shall be fully vested and earned at a deemed achievement level
equal to the higher of (x) the targeted level of performance for such award or
(y) the average level (expressed as a percentage of target) of achievement in
respect of similar performance stock-based awards which matured over the three
fiscal years immediately preceding the year in which the Date of Termination
occurs; payment in respect of such award shall be made at the time and in the
manner provided under the plan pursuant to which such award was granted; and the
remainder of the award shall be cancelled, subject, however, to the provisions
of this paragraph (c);
(3)
a
pro rata portion of each other outstanding stock-based award granted to the
Executive shall be fully vested and earned; payment in respect of such award
shall be made at the time and in the manner provided under the plan pursuant to
which such award was granted; and the remainder of the award shall be cancelled,
subject, however, to the provisions of this paragraph (c);
(4)
a
pro rata portion of each outstanding option, stock appreciation right, and each
other outstanding award in the nature of a right that may be exercised that was
granted to the Executive and which was not previously exercisable and vested
shall become fully exercisable and vested; and the remainder of each such award
shall be cancelled, subject, however, to the provisions of this paragraph (c);
and
(5)
the
restrictions and forfeiture conditions applicable to a pro rata portion of any
outstanding award granted to the Executive under an incentive compensation plan,
practice, policy or program shall lapse; such portion shall be deemed fully
vested; and the remainder of each such award shall be cancelled, subject,
however, to the provisions of this paragraph (c).
For
purposes of this Section 8 (c), pro ration of the foregoing awards shall be
determined in accordance with the past practice of the Company generally
applicable to peer executives whose employment had been involuntarily
terminated.
Notwithstanding
cancellation of awards hereunder, if a Change of Control occurs following the
Date of Termination and the Board determines in good faith prior to the Change
of Control that there is a reasonable relationship between the Change of Control
and the events or circumstances surrounding the Executive's termination, then
the Company shall pay to the Executive, on the 60th day following the Change of
Control, a lump sum cash amount (determined by the Board in good faith) which,
when added to the value received by the Executive under the provisions of
clauses (2)-(5) above, will provide to Executive an aggregate value equal to the
aggregate value that would have been provided to the Executive under
Section 6(a) and Section 8(a)(2) hereof had the Executive remained employed
to the date of the Change of Control and been involuntarily terminated without
Cause immediately thereafter.
Notwithstanding
anything in Section 8(b) or in this Section 8(c) to the contrary, if (A) the
Executive was at any time during a Performance Period which has not ended prior
to the Date of Termination, a “Covered Employee” as defined by Code Section
162(m) and (B) Code Section 162(m) remains in effect as of the Date of
Termination and as of such date is applicable to the element of compensation
(including, without limitation, annual cash bonus, performance shares and
restricted stock) contemplated for payment or vesting, in each case, as
described in Section 8(b) or in this Section 8(c), no such element of
compensation to which the Executive shall otherwise be entitled pursuant to
Section 8(b) or this Section 8(c) that is intended to constitute and, in the
opinion of a nationally reputable law firm having significant experience with
Code Section 162(m), absent the Executive’s termination, would have constituted,
qualified performance-based compensation for purposes of Code Section 162(m)
(assuming, solely for this purpose, that the Corporate Performance Objective to
which the payment or vesting of such element of compensation is subject had been
achieved) shall be paid or shall vest unless and until the earlier of (i) the
date on which a Change of Control occurs, but only if such delay in payment or
vesting of such element of compensation is necessary for prior payments or
vesting of compensation to or for the benefit of the Executive to continue to
constitute qualified performance-based compensation for purposes of Code Section
162(m), or (ii) the date on which the Compensation Committee of the Board shall
have certified achievement of the Corporate Performance Objective to which the
payment or vesting of such element of compensation is subject, but only if such
delay in payment or vesting of such element of compensation is necessary for
prior payments or vesting of compensation to or for the benefit of the Executive
to continue to constitute qualified performance-based compensation for purposes
of Code Section 162(m). For purposes of this Section 8(c),
“Performance Period” means a period of service for which the Compensation
Committee of the Board has established a Corporate Performance Objective and for
which the Company intends to pay qualified performance-based compensation for
purposes of Code Section 162(m) if such Corporate Performance Objective is
achieved.
(d)
Death
. Upon
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations, the Payment
in Lieu of Lost Future Benefits described in Annex A, and the timely payment or
provision of the benefits described in Sections 8(a)(4) and 8(a)(6) (the "Other
Benefits"). All Accrued Obligations shall be paid to the Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. The Payment in Lieu of Lost Future Benefits shall be
paid to the Executive's Beneficiary (within the meaning of the SERP) under the
terms set forth in, and pursuant to the elections made under, the SERP. The term
"Other Benefits" as utilized in this Section 8(d) shall include, without
limitation, and the Executive's family shall be entitled to receive, benefits at
least equal to the most favorable benefits provided by the Company and any of
its Affiliated Companies to surviving families of peer executives of the Company
and such Affiliated Companies under such plans, programs, practices and policies
relating to family death benefits, if any, as in effect with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the Executive's death
with respect to other peer executives of the Company and its Affiliated
Companies and their families.
(e)
Disability
. If
the Executive's employment is terminated by reason of the Executive's Disability
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations, the
Payment in Lieu of Lost Future Benefits described in Annex A, and the timely
payment or provision of Other Benefits (as defined in Section
8(d)). All Accrued Obligations shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination.
The Payment in Lieu of
Lost Future Benefits shall be paid to the Executive or his Beneficiary (within
the meaning of the SERP), as the case may be, under the terms set forth in, and
pursuant to the elections made under, the SERP. The term "Other Benefits" as
utilized in this Section 8(e) shall also include, and the Executive shall be
entitled after the Disability Effective Date to receive, disability and other
benefits at least equal to the most favorable of those generally provided by the
Company and its Affiliated Companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect at any time thereafter generally
with respect to other peer executives of the Company and its Affiliated
Companies and their families.
(f)
Cause; Other Than for Good
Reason
. If the Executive's employment shall be terminated for
Cause during the Employment Period, this Agreement shall terminate without
further obligations to the Executive other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination plus the amount of
any compensation previously deferred by the Executive (under the terms set forth
in, and pursuant to the elections made under, the applicable deferred
compensation plan or arrangement), in each case to the extent theretofore
unpaid. If the Executive terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued
Obligations, the Payment in Lieu of Lost Future Benefits, if any, described in
Annex A to the extent the Executive is vested in his benefits under the Pension
Plan, and the timely payment or provision of benefits pursuant to the last
sentence of Section 8(a)(4) and Section 8(a)(6). In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination. The Payment in Lieu of
Lost Future Benefits, if any, shall be paid to the Executive or his Beneficiary
(within the meaning of the SERP), as the case may be, under the terms set forth
in, and pursuant to the elections made under, the SERP.
(g)
Payment Schedule
. Notwithstanding anything to the
contrary in
this Agreement, to the extent
required to comply with Code Section 409A(a)(2)(B), (i) if the Executive's
termination of employment does not constitute a "separation from service" within
the meaning of Code Section 409A, any taxable payment or benefit which becomes
due under this Agreement as a result of such termination of employment shall be
deferred to the earliest date on which the Executive has a "separation from
service” within the meaning of Code Section 409A; and (ii) if the Executive is
deemed to be a “specified employee” for purposes of Code Section 409A(a)(2)(B),
payments due to him that would otherwise have been payable at any time during
the six-month period immediately following separation from service (as defined
for purposes of Code Section 409A) shall not be paid prior to, and shall instead
be payable in a lump sum as soon as practicable following, the expiration of
such six-month period.
Any amounts
deferred under this Section 8(g) shall bear interest from the date originally
scheduled to be paid through and including the date of actual payment at 120% of
the applicable federal long-term rate (as prescribed under Code Section 1274(d))
per annum, compounded quarterly.
In addition to the foregoing, payments that
are or become due on account of a Deemed Effective Date shall be made at the
time otherwise provided in this Agreement or, if later, the earlier of the
second anniversary of the Date of Termination and the date of occurrence of a
“change of control” (within the meaning of Code Section 409A and the regulations
thereunder).
9.
Non-Exclusivity of
Rights
.
Except as otherwise
expressly provided for in this Agreement, nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its Affiliated
Companies and for which the Executive may qualify, nor shall anything herein
limit or otherwise affect such rights as the Executive may have under any
contract or agreement with the Company or any of its Affiliated
Companies. Amounts which are vested benefits or which the Executive
is otherwise entitled to receive under any plan, policy, practice or program of
or any contract or agreement with the Company or any of its Affiliated Companies
at or subsequent to the Date of Termination shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement and consistent with Code Section
409A.
10.
Full
Settlement
.
The
Company's obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others.
In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and, except as otherwise expressly provided for in
this Agreement, such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay, to the fullest
extent permitted by law (but only to the extent consistent with Code Section
409A), all legal fees and expenses which the Executive may reasonably incur at
all stages of proceedings, including, without limitation, preparation and
appellate review, as a result of any contest (regardless of whether formal legal
proceedings are ever commenced and regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Code Section
7872(f)(2)(A).
11.
Parachute
Payments
.
(a)
Anything in any section
of this Agreement other than this Section 11 to the contrary notwithstanding, in
the event it shall be determined that any Payment (as hereinafter defined) would
be subject to the Excise Tax (as hereinafter defined), the right to receive any
Payment under this Agreement shall be reduced if but only if:
(i)
such right to such Payment, taking into account all other Payments to or for
Participant, would cause any Payment to the Participant under this Agreement to
be considered a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code as then in effect;
and
(ii)
as a result of receiving a parachute payment and paying any applicable tax
(including Excise Tax) thereon, the aggregate after-tax amounts received by the
Participant from the Company under this Agreement and all Payments would be less
than the maximum after-tax amount that could be received by Participant without
causing any such Payment to be considered a parachute payment.
In
the event that the receipt of any such right to Payment under this Agreement, in
conjunction with all other Payments, would cause the Participant to be
considered to have received a parachute payment under this Agreement that would
have the effect of decreasing the after-tax amount received by the Participant
as described in clause (ii) of the preceding sentence, then the amounts
payable under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount.
To
the extent that the payment of any compensation or benefits to Executive from
the Company is required to be reduced by this Section 11, such reduction shall
be implemented by determining the “Parachute Payment Ratio” (as hereinafter
defined) for each parachute payment and then reducing the parachute payments in
order beginning with the parachute payment with the highest Parachute Payment
Ratio. For parachute payments with the same Parachute Payment Ratio,
such parachute payments shall be reduced based on the time of payment of such
parachute payments, with amounts having later payment dates being reduced
first. For parachute payments with the same Parachute Payment Ratio
and the same time of payment, such parachute payments shall be reduced on a pro
rata basis (but not below zero) prior to reducing parachute payments with a
lower Parachute Payment Ratio.
(b)
Definitions
.
The following terms shall have the following meanings for purposes of this
Section 11.
(i)
“
Excise Tax
”
shall mean the excise tax imposed by Section 4999 of the Code, together with any
interest or penalties imposed with respect to such excise tax.
(ii)
“
Parachute Payment
Ratio
” shall mean a fraction the numerator of which is the value of the
applicable parachute payment for purposes of Section 280G of the Code and the
denominator of which is the intrinsic value of such parachute
payment.
(iii) “
Parachute Value
” of a
Payment shall mean the present value as of the date of the change of control for
purposes of Section 280G of the Code of the portion of such Payment that
constitutes a “parachute payment” under Section 280G(b)(2), as determined for
purposes of determining whether and to what extent the Excise Tax will apply to
such Payment.
(iv)
A “
Payment
”
shall mean any payment or distribution in the nature of compensation (within the
meaning of Section 280G(b)(2) of the Code) to or for the benefit of the
Executive, whether paid or payable pursuant to this Agreement or
otherwise.
(v)
The “
Safe Harbor
Amount
” means 2.99 times the Executive’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.
12.
Confidential
Information
. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its Affiliated Companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its Affiliated
Companies and which shall not be or become public knowledge (other than by acts
of the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation
of the provisions of this Section 12 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
13.
Indemnification
.
The Company will, to the
fullest extent permitted by law, indemnify the Executive in accordance with the
terms of Article VI of the Company’s bylaws as in effect on the date hereof, a
copy of which Article VI is attached to this Agreement as Annex B and made a
part hereof by this reference. This indemnification provision shall survive the
expiration or other termination of this Agreement.
14.
Successors
.
(a)
This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive other than by will or the
laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b)
This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.
(c)
The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
15.
Miscellaneous.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of Florida, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be
amended or modified other than by a written agreement executed by the parties
hereto or their respective successors and legal representatives.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the Executive:
Mano Nazar
[Address]
If
to the Company:
FPL Group, Inc.
700 Universe Boulevard
Juno Beach,
Florida 33408
Attention: Executive Vice
President, Human Resources
or
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d)
The
Company may withhold from any amounts payable under this Agreement such Federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
(e)
The
Executive's or the Company's failure to insist upon strict compliance with any
provision hereof or any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate employment for Good
Reason pursuant to Section 7(c)(1)-(5) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement.
(f)
The
Executive and the Company acknowledge that, except as may otherwise be provided
under this Agreement or any other written agreement between the Executive and
the Company, the employment of the Executive by the Company is "at will" and,
prior to the Effective Date, the Executive’s employment may be terminated by
either the Executive or the Company at any time. Moreover, except as
provided herein in the case of a Deemed Effective Date, if prior to the
Effective Date, (i) the Executive's employment with the Company terminates, or
(ii) there is a diminution in the Executive's position (including status,
offices, titles, and reporting requirements), authority, duties, and
responsibilities with the Company or its Affiliated Companies, then the
Executive shall have no rights under this Agreement.
From and after the Effective Date,
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof, and in furtherance but not in limitation
of this, the Executive hereby waives the right to receive any amount of
severance relating to salary or bonus continuation to be received by the
Executive upon termination of employment of the Executive under the
circumstances contemplated hereby under any severance plan, policy or
arrangement of the Company.
(g)
The
Executive
and the Company
acknowledge that this Agreement contains the full and complete expression of the
rights and obligations of the parties with respect to the matters contained in
the Agreement. This Agreement supersedes any and all other agreements,
written or oral, made by the parties with respect to the matters contained in
the Agreement.
Notwithstanding anything herein to the contrary, and except
in the case of death, it shall be a condition to the Executive receiving any
payments or benefits under this Agreement that the Executive shall have (a)
executed and delivered to the Company a release of claims against the Company,
such release to be in the Company’s then standard form of release; and (b)
executed and delivered to the Company resignations of all officer and director
positions the Executive holds with the Company or its Affiliated Companies, in
each case no later than forty-five (45) days after the Date of Termination
unless there is a genuine dispute as to the Executive’s substantive rights under
this Agreement within the meaning of Treasury Regulation 1.409A-3(g) (or any
successor provision).
The
Executive and the Company acknowledge that the benefits and payments provided
under this Agreement are intended to comply fully with the requirements of Code
Section 409A. This Agreement shall be construed and administered as
necessary to comply with Code Section 409A and shall be subject to
amendment in the future, in such a manner as the Company may deem necessary or
appropriate to attain compliance; provided, however, that any such amendment
shall provide the Executive with benefits and payments that are substantially
economically equivalent to the benefits and payments that would have been made
to the Executive absent such amendment and the requirements of Code Section
409A.
IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the
Company has caused Executive Retention Employment Agreement to be executed in
its name on its behalf, all as of January 1, 2010.
|
|
EXECUTIVE
|
|
By
|
/s/
MANOOCHEHR NAZAR
|
|
|
Manoochehr
Nazar
|
|
|
FPL
GROUP, INC.
|
|
By
|
/s/
JAMES W. POPPELL
|
|
|
James
W. Poppell
Executive
Vice President, Human Resources
|
ANNEX
A
TO
THE
EXECUTIVE
RETENTION EMPLOYMENT AGREEMENT
PAYMENT
IN LIEU OF LOST FUTURE BENEFITS
(1) Payment
in Lieu of Lost Future Benefits.
(a) In
General. The Payment in Lieu of Lost Future Benefits to which the
Executive shall be entitled under this Agreement shall be (i) the supplemental
pension benefit described in Paragraph 1(b) of this Annex A, and (ii) the
supplemental matching contribution account described in Paragraph 1(c) of this
Annex A.
(b) Supplemental
Pension Benefit. The "supplemental pension benefit" shall be the
greater of (i) the supplemental cash balance accrued benefit described in
Paragraph 1(b)(1) of this Annex A, or (ii) the supplemental unit credit accrued
benefit described in Paragraph 1(b)(2) of this Annex A.
(1) The
"supplemental cash balance accrued benefit" is the difference, if any, between
(A) and (B) where:
(A) is
the benefit to which the Executive would be entitled under the Pension Plan as
in effect immediately prior to the Change of Control or, if more favorable to
the Executive, as in effect generally at any time thereafter during the
Employment Period with respect to other peer executives of the Company and its
Affiliated Companies, expressed in the normal form of benefit, if such benefit
was computed (i) as if benefits under such plan were based upon the Executive's
Bonus Compensation (within the meaning of the SERP as in effect immediately
prior to the Change of Control), (ii) without the annual compensation limitation
imposed by Code Section 401(a)(17), and (iii) without the restrictions or the
limitations imposed by Code Section 415(b); and
(B) is
the sum of the benefits payable to the Executive under the Pension Plan and the
Supplemental Retirement Plans, expressed in the normal form of
benefit.
(2) The
"supplemental unit credit accrued benefit" is the difference, if any, between
(A) and (B) where:
(A) is
the benefit to which the Executive would be entitled under the Prior Pension
Plan (within the meaning of the Supplemental Retirement Plans as in effect
immediately prior to the Change of Control) (provided that the Executive was
actually a participant in the Prior Pension Plan), expressed in the normal form
of benefit, if such benefit was computed (i) as if benefits under such plan were
based upon the Executive's Bonus Compensation, (ii) without the annual
compensation limitation imposed by Code Section 401(a)(17), and (iii) without
the restrictions or the limitations imposed by Code Section 415(b);
and
(B) is
the sum of the benefits payable to the Executive under the Pension Plan and the
Supplemental Retirement Plans, expressed in the normal form of
benefit.
(c) Supplemental
Matching Contribution Account. The "supplemental matching
contribution account" shall be an account that is credited annually with (i)
supplemental matching contributions described in Paragraph 1(c)(1) of this Annex
A, and (ii) theoretical earnings described in Paragraph 1(c)(2) of this Annex
A.
(1) "Supplemental
matching contributions" shall be for each year ending on or prior to the
Effective Date in which the Executive participated in the Supplemental
Retirement Plans and for each year ending after the Effective Date in which the
Executive performs services for the Company or its Affiliated Companies the
difference, if any, between (A) and (B) where:
(A) is
the matching contribution allocation for such year to which the Executive would
be entitled under the Retirement Savings Plan as in effect immediately prior to
the Change of Control or, if more favorable to the Executive, as in effect
generally at any time thereafter during the Employment Period with respect to
other peer executives of the Company and its Affiliated Companies if such
allocation were computed (i) as if the matching contribution allocation under
such plan was based upon the Executive's Bonus Compensation, (ii) without the
annual compensation limitation imposed by Code Section 401(a)(17), (iii) without
the restrictions or the limitations imposed by Code Section 415(c), and (iv) as
if he made After Tax Contributions (within the meaning of the Retirement Savings
Plan) and Pretax Contributions (within the meaning of the Retirement Savings
Plan) at the same percentage of Bonus Compensation as he made such contributions
to the Retirement Savings Plan for such years; and
(B) is
the sum of the matching contributions allocated or credited to the Executive
under the Retirement Savings Plan and the Supplemental Retirement Plans for such
year.
(2) "Theoretical
earnings" shall be the income, gains and losses which would have been credited
on the Executive's supplemental matching contribution account balance if such
account were invested in the Company Stock Fund (within the meaning of the
Retirement Savings Plan) offered as a part of the Retirement Savings
Plan.
(2) Construction
and Definitions.
Unless
defined below or otherwise in this Annex A, all of the capitalized terms used in
this Annex A shall have the meanings assigned to them in this
Agreement:
(a) "Projected
Years of Service" shall mean the Years of Service (within the meaning of the
SERP as in effect immediately prior to the Change of
Control). Notwithstanding the foregoing and except in the event the
Executive terminates employment during the Employment Period other than for Good
Reason, in determining the Executive's Years of Service, in addition to his
actual Years of Service he shall be treated as if his employment terminated on
the later of the second anniversary of the Date of Termination or the last day
of the Employment Period.
(b) "Projected
Age" shall mean the age that the Executive will have attained on the later of
the second anniversary of the Date of Termination or the last day of the
Employment Period, except that in the event the Executive terminates employment
during the Employment Period other than for Good Reason, "Projected Age" shall
mean the age of the Executive on the Date of Termination.
ANNEX
B
TO
THE
EXECUTIVE
RETENTION EMPLOYMENT AGREEMENT
FPL
GROUP, INC. AMENDED AND RESTATED BYLAWS
ARTICLE
VI. INDEMNIFICATION/ADVANCEMENT OF EXPENSES
Section
1. Right to Indemnification
.
Each person who
was or is made a party or is threatened to be made a party to or was or is
called as a witness or was or is otherwise involved in any Proceeding in
connection with his or her status as an Indemnified Person, shall be indemnified
and held harmless by the Company to the fullest extent permitted under the
Florida Business Corporation Act (the "Act"), as the same now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than the Act permitted the Company to provide prior to such
amendment). Such indemnification shall cover all expenses incurred by
an Indemnified Person (including, but not limited to, attorneys' fees and other
expenses of litigation) and all liabilities and losses (including, but not
limited to, judgments, fines, ERISA or other excise taxes or penalties and
amounts paid or to be paid in settlement) incurred by such person in connection
therewith.
Notwithstanding the foregoing, except
with respect to indemnification specified in Section 3 of this Article VI, the
Company shall indemnify an Indemnified Person in connection with a Proceeding
(or part thereof) initiated by such person only if authorization for such
Proceeding (or part thereof) was not denied by the board of directors of the
Company prior to 60 days after receipt of notice thereof from such
person.
For purposes of this Article
VI:
(i) a "Proceeding" is an action, suit
or proceeding, whether civil, criminal, administrative or investigative, and any
appeal therefrom;
(ii) an "Indemnified Person" is a
person who is, or who was (whether at the time the facts or circumstances
underlying the Proceeding occurred or were alleged to have occurred or at any
other time), (A) a director or officer of the Company, (B) a director, officer
or other employee of the Company serving as a trustee or fiduciary of an
employee benefit plan of the Company, (C) an agent or non-officer employee of
the Company as to whom the Company has agreed to grant such indemnity, or (D)
serving at the request of the Company in any capacity with any entity or
enterprise other than the Company and as to whom the Company has agreed to grant
such indemnity.
Section
2. Expenses
.
Expenses,
including attorneys' fees, incurred by an Indemnified Person in defending or
otherwise being involved in a Proceeding in connection with his or her status as
an Indemnified Person shall be paid by the Company in advance of the final
disposition of such Proceeding, including any appeal therefrom, (i) in the case
of (A) a director or officer, or former director or officer, of the Company or
(B) a director, officer or other employee, or former director, officer or other
employee, of the Company serving as a trustee or fiduciary of any employee
benefit plan of the Company, upon receipt of an undertaking ("Undertaking") by
or on behalf of such person to repay such amount if it shall ultimately be
determined that he or she is not entitled to be indemnified by the Company; or
(ii) in the case of any other Indemnified Person, upon such terms and as the
board of directors, the chairman of the board or the president of the Company
deems appropriate.
Notwithstanding the foregoing, in
connection with a Proceeding (or part thereof) initiated by such person, except
a Proceeding authorized by Section 3 of this Article VI, the Company shall pay
said expenses in advance of final disposition only if authorization for such
Proceeding (or part thereof) was not denied by the board of directors of the
Company prior to 60 days after receipt of a request for such advancement
accompanied by an Undertaking.
A person to whom expenses are advanced
pursuant to this Section 2 shall not be obligated to repay such expenses
pursuant to an Undertaking until the final determination of any pending
Proceeding in a court of competent jurisdiction concerning the right of such
person to be indemnified or the obligation of such person to repay pursuant to
such Undertaking.
Section
3. Protection of Rights
.
If a claim for
indemnification under Section 1 of this Article VI is not promptly paid in full
by the Company after a written claim has been received by the Company or if
expenses pursuant to Section 2 of this Article VI have not been promptly
advanced after a written request for such advancement accompanied by an
Undertaking has been received by the Company (in each case, except if
authorization thereof was denied by the board of directors of the Company as
provided in Article VI, Section 1 and Section 2, as applicable), the Indemnified
Person may at any time thereafter bring suit against the Company to recover the
unpaid amount of the claim or the advancement of expenses. If
successful, in whole or in part, in such suit, such Indemnified Person shall
also be entitled to be paid the reasonable expense thereof. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any Proceeding in advance of its final
disposition where the required Undertaking has been tendered to the Company)
that indemnification of the Indemnified Person is prohibited by law, but the
burden of proving such defense shall be on the Company. Neither the
failure of the Company (including its board of directors, independent legal
counsel, or its shareholders) to have made a determination, if required, prior
to the commencement of such action that indemnification of the Indemnified
Person is proper in the circumstances, nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
shareholders) that indemnification of the Indemnified Person is prohibited,
shall be a defense to the action or create a presumption that indemnification of
the Indemnified Person is prohibited.
Section 4.
Miscellaneous
.
(i) Power
to Request Service and to Grant Indemnification
.
The chairman of
the board or the president or the board of directors may request any director,
officer, agent or employee of the Company to serve as its representative in the
position of a director or officer (or in a substantially similar capacity) of an
entity or enterprise other than the Company, and may grant to such person
indemnification by the Company as described in Section 1 of this Article
VI.
(ii)
Non-Exclusivity of Rights
.
The rights
conferred on any person by this Article VI shall not be exclusive of any other
rights which such person may have or hereafter acquire under any statute,
provision of the Charter, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise. The board of directors shall
have the authority, by resolution, to provide for such indemnification of
employees or agents of the Company or others and for such other indemnification
of directors, officers, employees or agents as it shall deem
appropriate.
(iii)
Insurance Contracts and Funding
.
The Company may
maintain insurance, at its expense, to protect itself and any director, officer,
employee or agent of or person serving in any other capacity with, the Company
or another corporation, partnership, joint venture, trust or other enterprise
(including serving as a trustee or fiduciary of any employee benefit plan)
against any expenses, liabilities or losses, whether or not the Company would
have the power to indemnify such person against such expenses, liabilities or
losses under the Act. The Company may enter into contracts with any
director, officer, agent or employee of the Company in furtherance of the
provisions of this Article VI, and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect the
advancing of expenses and indemnification as provided in this Article
VI.
(iv)
Contractual Nature
.
The provisions of
this Article VI shall continue in effect as to a person who has ceased to be a
director, officer, agent or employee and shall inure to the benefit of the
heirs, executors and administrators of such person. This Article VI
shall be deemed to be a contract between the Company and each person who, at any
time that this Article VI is in effect, serves or served in any capacity which
entitles him or her to indemnification hereunder and any repeal or other
modification of this Article VI or any repeal or modification of the Act, or any
other applicable law shall not limit any rights of indemnification with respect
to Proceedings in connection with which he or she is an Indemnified Person, or
advancement of expenses in connection with such Proceedings, then existing or
arising out of events, acts or omissions occurring prior to such repeal or
modification, including without limitation, the right to indemnification for
Proceedings, and advancement of expenses with respect to such Proceedings,
commenced after such repeal or modification to enforce this Article VI with
regard to Proceedings arising out of acts, omissions or events arising prior to
such repeal or modification.
(v)
Savings Clause
.
If this Article
VI or any portion hereof shall be invalidated or held to be unenforceable on any
ground by any court of competent jurisdiction, the decision of which shall not
have been reversed on appeal, the Company shall nevertheless (A) indemnify each
Indemnified Person as to costs, charges and expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement and (B) advance expenses
in accordance with Section 2 of this Article VI, in each case with respect to
any Proceeding in connection with which he or she is an Indemnified Person,
including an action by or in the right of the Company, to the fullest extent
permitted by any applicable portion of this Article VI that shall not have been
invalidated or held to be unenforceable and as permitted by applicable
law.
Exhibit
12(a)
FPL
GROUP, INC. AND SUBSIDIARIES
COMPUTATION
OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(a)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(millions
of dollars)
|
|
Earnings,
as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,615
|
|
|
$
|
1,639
|
|
|
$
|
1,312
|
|
|
$
|
1,281
|
|
|
$
|
901
|
|
Income
taxes
|
|
|
327
|
|
|
|
450
|
|
|
|
368
|
|
|
|
397
|
|
|
|
282
|
|
Fixed
charges included in the determination of net income, as
below
|
|
|
899
|
|
|
|
859
|
|
|
|
799
|
|
|
|
732
|
|
|
|
622
|
|
Amortization
of capitalized interest
|
|
|
17
|
|
|
|
15
|
|
|
|
12
|
|
|
|
11
|
|
|
|
11
|
|
Distributed
income of equity method investees
|
|
|
69
|
|
|
|
124
|
|
|
|
175
|
|
|
|
104
|
|
|
|
86
|
|
Less: Equity
in earnings of equity method investees
|
|
|
52
|
|
|
|
93
|
|
|
|
68
|
|
|
|
181
|
|
|
|
124
|
|
Total
earnings, as defined
|
|
$
|
2,875
|
|
|
$
|
2,994
|
|
|
$
|
2,598
|
|
|
$
|
2,344
|
|
|
$
|
1,778
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
charges, as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
849
|
|
|
$
|
813
|
|
|
$
|
762
|
|
|
$
|
706
|
|
|
$
|
593
|
|
Rental
interest factor
|
|
|
28
|
|
|
|
28
|
|
|
|
23
|
|
|
|
15
|
|
|
|
16
|
|
Allowance
for borrowed funds used during construction
|
|
|
22
|
|
|
|
18
|
|
|
|
14
|
|
|
|
11
|
|
|
|
13
|
|
Fixed
charges included in the determination of net income
|
|
|
899
|
|
|
|
859
|
|
|
|
799
|
|
|
|
732
|
|
|
|
622
|
|
Capitalized
interest
|
|
|
88
|
|
|
|
55
|
|
|
|
40
|
|
|
|
18
|
|
|
|
8
|
|
Total
fixed charges, as defined
|
|
$
|
987
|
|
|
$
|
914
|
|
|
$
|
839
|
|
|
$
|
750
|
|
|
$
|
630
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Ratio
of earnings to fixed charges and ratio of earnings to combined fixed
charges and preferred stock dividends
(a)
|
|
|
2.91
|
|
|
|
3.28
|
|
|
|
3.10
|
|
|
|
3.13
|
|
|
|
2.82
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
FPL
Group, Inc. has no preference equity securities outstanding; therefore,
the ratio of earnings to fixed charges is the same as the ratio of
earnings to combined fixed charges and preferred stock
dividends.
|
Exhibit
12(b)
FLORIDA
POWER & LIGHT COMPANY AND SUBSIDIARIES
COMPUTATION
OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO
OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(a)
|
|
Years
Ended December 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(millions
of dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings,
as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
831
|
|
|
$
|
789
|
|
|
$
|
836
|
|
|
$
|
802
|
|
|
$
|
748
|
|
Income
taxes
|
|
|
473
|
|
|
|
443
|
|
|
|
451
|
|
|
|
424
|
|
|
|
408
|
|
Fixed
charges included in the determination of net income, as
below
|
|
|
347
|
|
|
|
359
|
|
|
|
325
|
|
|
|
296
|
|
|
|
244
|
|
Total
earnings, as defined
|
|
$
|
1,651
|
|
|
$
|
1,591
|
|
|
$
|
1,612
|
|
|
$
|
1,522
|
|
|
$
|
1,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
charges, as defined:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
318
|
|
|
$
|
334
|
|
|
$
|
304
|
|
|
$
|
278
|
|
|
$
|
224
|
|
Rental
interest factor
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
|
|
7
|
|
Allowance
for borrowed funds used during construction
|
|
|
22
|
|
|
|
18
|
|
|
|
14
|
|
|
|
11
|
|
|
|
13
|
|
Fixed
charges included in the determination of net income
|
|
|
347
|
|
|
|
359
|
|
|
|
325
|
|
|
|
296
|
|
|
|
244
|
|
Capitalized
interest
|
|
|
2
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
fixed charges, as defined
|
|
$
|
349
|
|
|
$
|
359
|
|
|
$
|
325
|
|
|
$
|
296
|
|
|
$
|
244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of earnings to fixed charges and ratio of earnings to combined fixed
charges and preferred stock dividends
(a)
|
|
|
4.73
|
|
|
|
4.43
|
|
|
|
4.96
|
|
|
|
5.14
|
|
|
|
5.74
|
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Florida
Power & Light Company’s preference equity securities were redeemed in
January 2005. For the year ended December 31, 2005, preferred
stock dividends were less than $1 million. Therefore, for the
years ended December 31, 2009, 2008, 2007, 2006 and 2005, the ratio of
earnings to fixed charges is the same as the ratio of earnings to combined
fixed charges and preferred stock
dividends.
|
Exhibit
21
SUBSIDIARIES
OF FPL GROUP, INC.
FPL
Group, Inc.'s principal subsidiaries as of December 31, 2009 are listed
below.
|
Subsidiary
|
|
|
State
or Jurisdiction
of
Incorporation
|
|
|
|
|
|
1.
|
Florida
Power & Light Company (100%-owned)
|
|
|
Florida
|
2.
|
FPL
Group Capital Inc (100%-owned)
|
|
|
Florida
|
3.
|
NextEra
Energy Resources, LLC
(a)
(b)
|
|
|
Delaware
|
4.
|
Palms
Insurance Company, Limited
(b)
|
|
|
Cayman
Islands
|
¾¾¾¾¾¾¾¾¾¾
(a)
|
Includes
361 subsidiaries that operate in the United States and 32 subsidiaries
that operate in foreign countries in the same line of business as NextEra
Energy Resources, LLC.
|
(b)
|
100%-owned
subsidiary of FPL Group Capital
Inc.
|
Exhibit 23
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the incorporation by reference in the following Registration
Statements of our reports dated February 25, 2010, relating to the
consolidated financial statements of FPL Group, Inc. and subsidiaries (FPL
Group) and Florida Power & Light Company and subsidiaries (FPL) and the
effectiveness of FPL Group's and FPL's internal control over financial
reporting, appearing in this Annual Report on Form 10-K of FPL Group and FPL for
the year ended December 31, 2009:
FPL
Group, Inc.
|
|
|
|
Florida
Power & Light Company Trust I
|
Form
S-8
|
|
No.
33-11631
|
|
Form
S-3
|
|
No.
333-160987-06
|
Form
S-8
|
|
No. 33-57673
|
|
|
Form
S-8
|
|
No. 333-27079
|
|
Florida
Power & Light Company Trust II
|
Form
S-8
|
|
No.
333-88067
|
|
Form
S-3
|
|
No.
333-160987-05
|
Form
S-8
|
|
No.
333-114911
|
|
|
|
|
Form
S-8
|
|
No.
333-116501
|
|
FPL
Group Capital Inc
|
Form
S-3
|
|
No.
333-125275
|
|
Form
S-3
|
|
No.
333-160987-08
|
Form
S-8
|
|
No.
333-125954
|
|
|
|
|
Form
S-3
|
|
No.
333-129482
|
|
FPL
Group Capital Trust II
|
Form
S-8
|
|
No.
333-130479
|
|
Form
S-3
|
|
No.
333-160987-04
|
Form
S-3
|
|
No.
333-160987
|
|
|
|
|
Form
S-8
|
|
No.
333-143739
|
|
FPL
Group Capital Trust III
|
Form
S-3
|
|
No.
333-159011
|
|
Form
S-3
|
|
No.
333-160987-03
|
|
|
|
|
|
|
|
FPL
Group Trust I
|
|
|
|
|
|
|
Form
S-3
|
|
No.
333-160987-02
|
|
|
|
|
|
|
|
|
|
|
|
FPL
Group Trust II
|
|
|
|
|
|
|
Form
S-3
|
|
No.
333-160987-01
|
|
|
|
|
|
|
|
|
|
|
|
Florida
Power & Light Company
|
|
|
|
|
Form
S-3
|
|
No.
333-160987-07
|
|
|
|
|
DELOITTE
& TOUCHE LLP
Miami,
Florida
February
25, 2010
Exhibit
31(a)
Rule
13a-14(a)/15d-14(a) Certification
I, Lewis
Hay, III, certify that:
1.
|
I
have reviewed this Form 10-K for the annual period ended December 31,
2009 of FPL Group, Inc. (the registrant);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date: February
25, 2010
|
|
|
|
LEWIS
HAY, III
|
|
|
Lewis
Hay, III
Chairman
and Chief Executive Officer
of
FPL Group, Inc.
|
|
Exhibit
31(b)
Rule
13a-14(a)/15d-14(a) Certification
I,
Armando Pimentel, Jr., certify that:
1.
|
I
have reviewed this Form 10-K for the annual period ended December 31,
2009 of FPL Group, Inc. (the registrant);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
4.
|
The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
|
d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
5.
|
The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
Date: February 25,
2010
|
|
|
|
ARMANDO
PIMENTEL, JR.
|
|
|
Armando
Pimentel, Jr.
Executive
Vice President, Finance
and
Chief Financial Officer
of
FPL Group, Inc.
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Exhibit
31(c)
Rule
13a-14(a)/15d-14(a) Certification
I,
Armando J. Olivera, certify that:
1.
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I
have reviewed this Form 10-K for the annual period ended December 31,
2009 of Florida Power & Light Company (the
registrant);
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
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b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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c)
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Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
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d)
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Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
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5.
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The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
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Date: February
25, 2010
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ARMANDO
J. OLIVERA
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Armando
J. Olivera
President
and Chief Executive Officer
of
Florida Power & Light Company
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Exhibit
31(d)
Rule
13a-14(a)/15d-14(a) Certification
I,
Armando Pimentel, Jr., certify that:
1.
|
I
have reviewed this Form 10-K for the annual period ended December 31,
2009 of Florida Power & Light Company (the
registrant);
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
|
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d)
|
Disclosed
in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
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5.
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The
registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's
board of directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
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Date: February 25,
2010
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ARMANDO
PIMENTEL, JR.
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|
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Armando
Pimentel, Jr.
Executive
Vice President, Finance
and
Chief Financial Officer of
Florida
Power & Light Company
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Exhibit
32(a)
Section
1350 Certification
We,
Lewis Hay, III and Armando Pimentel, Jr., certify, pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:
(1)
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The
Annual Report on Form 10-K of FPL Group, Inc. (FPL Group) for the annual
period ended December 31, 2009 (Report) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
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(2)
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The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of FPL
Group.
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Dated: February 25,
2010
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LEWIS
HAY, III
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Lewis
Hay, III
Chairman
and Chief Executive Officer
of
FPL Group, Inc.
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ARMANDO
PIMENTEL, JR.
|
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Armando
Pimentel, Jr.
Executive
Vice President, Finance and
Chief
Financial Officer of FPL Group, Inc.
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A signed
original of this written statement required by Section 906 has been provided to
FPL Group and will be retained by FPL Group and furnished to the Securities and
Exchange Commission or its staff upon request.
The
foregoing certification is being furnished as an exhibit to the Report pursuant
to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act
of 2002 and, accordingly, is not being filed with the Securities and Exchange
Commission as part of the Report and is not to be incorporated by reference into
any filing of FPL Group under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (whether made before or after the date of the Report,
irrespective of any general incorporation language contained in such
filing).
Exhibit
32(b)
Section
1350 Certification
We,
Armando J. Olivera and Armando Pimentel, Jr., certify, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1)
|
The
Annual Report on Form 10-K of Florida Power & Light Company (FPL) for
the annual period ended December 31, 2009 (Report) fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
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(2)
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The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of
FPL.
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Dated: February 25,
2010
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ARMANDO
J. OLIVERA
|
|
|
Armando
J. Olivera
President
and Chief Executive Officer of
Florida
Power & Light Company
|
|
|
ARMANDO
PIMENTEL, JR.
|
|
|
Armando
Pimentel, Jr.
Executive
Vice President, Finance
and
Chief Financial Officer of
Florida
Power & Light Company
|
|
A signed
original of this written statement required by Section 906 has been provided to
FPL and will be retained by FPL and furnished to the Securities and Exchange
Commission or its staff upon request.
The
foregoing certification is being furnished as an exhibit to the Report pursuant
to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act
of 2002 and, accordingly, is not being filed with the Securities and Exchange
Commission as part of the Report and is not to be incorporated by reference into
any filing of FPL under the Securities Act of 1933 or the Securities Exchange
Act of 1934 (whether made before or after the date of the Report, irrespective
of any general incorporation language contained in such
filing).