NEXTERAENERGY.JPG
 
FPL.JPG

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended   March 31, 2018

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
 
NEXTERA ENERGY, INC.
 
59-2449419
2-27612
 
FLORIDA POWER & LIGHT COMPANY
 
59-0247775
 
 
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000
 
 

State or other jurisdiction of incorporation or organization:  Florida

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.
NextEra Energy, 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.
NextEra Energy, Inc.    Yes  þ     No  ¨                                                                      Florida Power & Light Company    Yes  þ     No  ¨

Indicate by check mark whether the registrants are a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
NextEra Energy, Inc.
Large Accelerated Filer   þ
Accelerated Filer   ¨
Non-Accelerated Filer   ¨
Smaller Reporting Company   ¨
Emerging Growth Company   ¨
Florida Power & Light Company
Large Accelerated Filer   ¨
Accelerated Filer  ¨
Non-Accelerated Filer   þ
Smaller Reporting Company   ¨
Emerging Growth Company   ¨
If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. o

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

Number of shares of NextEra Energy, Inc. common stock, $0.01 par value, outstanding at March 31, 2018 471,436,476

Number of shares of Florida Power & Light Company common stock, without par value, outstanding at March 31, 2018 , all of which were held, beneficially and of record, by NextEra Energy, Inc.: 1,000

This combined Form 10-Q represents separate filings by NextEra Energy, 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 NextEra Energy, Inc.'s other operations.

Florida Power & Light Company meets the conditions set forth in General Instruction H.(1)(a) and (b) of Form 10-Q 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 AFUDC
AOCI
accumulated other comprehensive income
capacity clause
capacity cost recovery clause, as established by the FPSC
Duane Arnold
Duane Arnold Energy Center
EPA
U.S. Environmental Protection Agency
FASB
Financial Accounting Standards Board
FERC
U.S. Federal Energy Regulatory Commission
Florida Southeast Connection
Florida Southeast Connection, LLC, a wholly owned NEER subsidiary
FPL
Florida Power & Light Company
FPSC
Florida Public Service Commission
fuel clause
fuel and purchased power cost recovery clause, as established by the FPSC
GAAP
generally accepted accounting principles in the U.S.
ISO
independent system operator
ITC
investment tax credit
kWh
kilowatt-hour(s)
Management's Discussion
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
MMBtu
One million British thermal units
MW
megawatt(s)
MWh
megawatt-hour(s)
NEE
NextEra Energy, Inc.
NEECH
NextEra Energy Capital Holdings, Inc.
NEER
NextEra Energy Resources, LLC
NEET
NextEra Energy Transmission, LLC
NEP
NextEra Energy Partners, LP
NEP OpCo
NextEra Energy Operating Partners, LP
Note __
Note __ to condensed consolidated financial statements
NRC
U.S. Nuclear Regulatory Commission
O&M expenses
other operations and maintenance expenses in the condensed consolidated statements of income
OCI
other comprehensive income
OTC
over-the-counter
OTTI
other than temporary impairment
PTC
production tax credit
PV
photovoltaic
Recovery Act
American Recovery and Reinvestment Act of 2009, as amended
regulatory ROE
return on common equity as determined for regulatory purposes
Sabal Trail
Sabal Trail Transmission, LLC, an entity in which a wholly owned NEER subsidiary has a 42.5% ownership interest
Seabrook
Seabrook Station
SEC
U.S. Securities and Exchange Commission
tax reform
Tax Cuts and Jobs Act
U.S.
United States of America

NEE, FPL, NEECH and NEER each has subsidiaries and affiliates with names that may include NextEra Energy, FPL, NextEra Energy Resources, NextEra, FPL Group, FPL Group Capital, FPL Energy, FPLE, NEP and similar references. For convenience and simplicity, in this report the terms NEE, FPL, NEECH and NEER are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context.

2


TABLE OF CONTENTS


 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



3


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, strategies, future events or performance (often, but not always, through the use of words or phrases such as may result, are expected to, will continue, is anticipated, aim, believe, will, could, should, would, estimated, may, plan, potential, future, projection, goals, 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, the following important 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 NEE's and/or FPL's operations and financial results, and could cause NEE'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 NEE and/or FPL in this combined Form 10-Q, in presentations, on their respective websites, in response to questions or otherwise.

Regulatory, Legislative and Legal Risks
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected by the extensive regulation of their business.
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected if they are unable to recover in a timely manner any significant amount of costs, a return on certain assets or a reasonable return on invested capital through base rates, cost recovery clauses, other regulatory mechanisms or otherwise.
Regulatory decisions that are important to NEE and FPL may be materially adversely affected by political, regulatory and economic factors.
FPL's use of derivative instruments could be subject to prudence challenges and, if found imprudent, could result in disallowances of cost recovery for such use by the FPSC.
Any reductions or modifications to, or the elimination of, governmental incentives or policies that support utility scale renewable energy, including, but not limited to, tax laws, policies and incentives, renewable portfolio standards, feed-in tariffs or the EPA's final rule under Section 111(d) of the Clean Air Act, or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development and/or financing of new renewable energy projects, NEER abandoning the development of renewable energy projects, a loss of NEER's investments in renewable energy projects and reduced project returns, any of which could have a material adverse effect on NEE's business, financial condition, results of operations and prospects.
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected as a result of new or revised laws, regulations, interpretations or other regulatory initiatives.
NEE and FPL are subject to numerous environmental laws, regulations and other standards that may result in capital expenditures, increased operating costs and various liabilities, and may require NEE and FPL to limit or eliminate certain operations.
NEE's and FPL's business could be negatively affected by federal or state laws or regulations mandating new or additional limits on the production of greenhouse gas emissions.
Extensive federal regulation of the operations and businesses of NEE and FPL exposes NEE and FPL to significant and increasing compliance costs and may also expose them to substantial monetary penalties and other sanctions for compliance failures.
Changes in tax laws, guidance or policies, including but not limited to changes in corporate income tax rates, as well as judgments and estimates used in the determination of tax-related asset and liability amounts, could materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected due to adverse results of litigation.
Operational Risks
NEE's and FPL's business, financial condition, results of operations and prospects could suffer if NEE and FPL do not proceed with projects under development or are unable to complete the construction of, or capital improvements to, electric generation, transmission and distribution facilities, gas infrastructure facilities or other facilities on schedule or within budget.
NEE and FPL may face risks related to project siting, financing, construction, permitting, governmental approvals and the negotiation of project development agreements that may impede their development and operating activities.
The operation and maintenance of NEE's and FPL's electric generation, transmission and distribution facilities, gas infrastructure facilities and other facilities are subject to many operational risks, the consequences of which could have a material adverse effect on NEE's and FPL's business, financial condition, results of operations and prospects.
NEE's and FPL's business, financial condition, results of operations and prospects may be negatively affected by a lack of growth or slower growth in the number of customers or in customer usage.

4


NEE's and FPL's business, financial condition, results of operations and prospects can be materially adversely affected by weather conditions, including, but not limited to, the impact of severe weather.
Threats of terrorism and catastrophic events that could result from terrorism, cyber attacks, or individuals and/or groups attempting to disrupt NEE's and FPL's business, or the businesses of third parties, may materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
The ability of NEE and FPL to obtain insurance and the terms of any available insurance coverage could be materially adversely affected by international, national, state or local events and company-specific events, as well as the financial condition of insurers. NEE's and FPL's insurance coverage does not provide protection against all significant losses.
NEE invests in gas and oil producing and transmission assets through NEER’s gas infrastructure business. The gas infrastructure business is exposed to fluctuating market prices of natural gas, natural gas liquids, oil and other energy commodities. A prolonged period of low gas and oil prices could impact NEER’s gas infrastructure business and cause NEER to delay or cancel certain gas infrastructure projects and for certain existing projects to be impaired, which could materially adversely affect NEE's results of operations.
If supply costs necessary to provide NEER's full energy and capacity requirement services are not favorable, operating costs could increase and materially adversely affect NEE's business, financial condition, results of operations and prospects.
Due to the potential for significant volatility in market prices for fuel, electricity and renewable and other energy commodities, NEER's inability or failure to manage properly or hedge effectively the commodity risks within its portfolios could materially adversely affect NEE's business, financial condition, results of operations and prospects.
Reductions in the liquidity of energy markets may restrict the ability of NEE to manage its operational risks, which, in turn, could negatively affect NEE's results of operations.
NEE's and FPL's hedging and trading procedures and associated risk management tools may not protect against significant losses.
If price movements significantly or persistently deviate from historical behavior, NEE's and FPL's risk management tools associated with their hedging and trading procedures may not protect against significant losses.
If power transmission or natural gas, nuclear fuel or other commodity transportation facilities are unavailable or disrupted, FPL's and NEER's ability to sell and deliver power or natural gas may be limited.
NEE and FPL are subject to credit and performance risk from customers, hedging counterparties and vendors.
NEE and FPL could recognize financial losses or a reduction in operating cash flows if a counterparty fails to perform or make payments in accordance with the terms of derivative contracts or if NEE or FPL is required to post margin cash collateral under derivative contracts.
NEE and FPL are highly dependent on sensitive and complex information technology systems, and any failure or breach of those systems could have a material adverse effect on their business, financial condition, results of operations and prospects.
NEE's and FPL's retail businesses are subject to the risk that sensitive customer data may be compromised, which could result in a material adverse impact to their reputation and/or have a material adverse effect on the business, financial condition, results of operations and prospects of NEE and FPL.
NEE and FPL could recognize financial losses as a result of volatility in the market values of derivative instruments and limited liquidity in OTC markets.
NEE and FPL may be materially adversely affected by negative publicity.
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected if FPL is unable to maintain, negotiate or renegotiate franchise agreements on acceptable terms with municipalities and counties in Florida.
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected by work strikes or stoppages and increasing personnel costs.
NEE'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.


5


Nuclear Generation Risks
The operation and maintenance of NEE's and FPL's nuclear generation facilities involve environmental, health and financial risks that could result in fines or the closure of the facilities and in increased costs and capital expenditures.
In the event of an incident at any nuclear generation facility in the U.S. or at certain nuclear generation facilities in Europe, NEE and FPL could be assessed significant retrospective assessments and/or retrospective insurance premiums as a result of their participation in a secondary financial protection system and nuclear insurance mutual companies.
NRC orders or new regulations related to increased security measures and any future safety requirements promulgated by the NRC could require NEE and FPL to incur substantial operating and capital expenditures at their nuclear generation facilities and/or result in reduced revenues.
The inability to operate any of NEE's or FPL's nuclear generation units through the end of their respective operating licenses could have a material adverse effect on NEE's and FPL's business, financial condition, results of operations and prospects.
NEE's and FPL's nuclear units are periodically removed from service to accommodate planned refueling and maintenance outages, and for other purposes. If planned outages last longer than anticipated or if there are unplanned outages, NEE's and FPL's results of operations and financial condition could be materially adversely affected.
Liquidity, Capital Requirements and Common Stock Risks
Disruptions, uncertainty or volatility in the credit and capital markets may negatively affect NEE's and FPL's ability to fund their liquidity and capital needs and to meet their growth objectives, and can also materially adversely affect the results of operations and financial condition of NEE and FPL.
NEE's, NEECH's and FPL's inability to maintain their current credit ratings may materially adversely affect NEE's and FPL's liquidity and results of operations, limit the ability of NEE and FPL to grow their business, and increase interest costs.
NEE's and FPL's liquidity may be impaired if their credit providers are unable to fund their credit commitments to the companies or to maintain their current credit ratings.
Poor market performance and other economic factors could affect NEE's defined benefit pension plan's funded status, which may materially adversely affect NEE's and FPL's business, financial condition, liquidity and results of operations and prospects.
Poor market performance and other economic factors could adversely affect the asset values of NEE's and FPL's nuclear decommissioning funds, which may materially adversely affect NEE's and FPL's liquidity, financial condition and results of operations.
Certain of NEE's investments are subject to changes in market value and other risks, which may materially adversely affect NEE's liquidity, financial condition and results of operations.
NEE 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 NEE.
NEE may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if NEE is required to perform under guarantees of obligations of its subsidiaries.
NEP may not be able to access sources of capital on commercially reasonable terms, which would have a material adverse effect on its ability to consummate future acquisitions and on the value of NEE’s limited partner interest in NEP OpCo.
Disruptions, uncertainty or volatility in the credit and capital markets may exert downward pressure on the market price of NEE's common stock.

These factors should be read together with the risk factors included in Part I, Item 1A. Risk Factors in NEE's and FPL's Annual Report on Form 10-K for the year ended December 31, 2017 ( 2017 Form 10-K), and investors should refer to that section of the 2017 Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made, and NEE and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including, but not limited to, 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.

Website Access to SEC Filings. NEE 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 NEE's internet website, www.nexteraenergy.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC. The information and materials available on NEE's website (or any of its subsidiaries' or affiliates' websites) are not incorporated by reference into this combined Form 10-Q. The SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC at www.sec.gov.

6


PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share amounts)
(unaudited)

 
 
Three Months Ended
March 31,
 
 
2018
 
2017 (a)
OPERATING REVENUES
 
$
3,863

 
$
3,972

OPERATING EXPENSES (INCOME)
 
 
 
 
Fuel, purchased power and interchange
 
819

 
899

Other operations and maintenance
 
777

 
838

Depreciation and amortization
 
857

 
619

Gains on disposal of a business/assets - net
 
(16
)
 
(1,100
)
Taxes other than income taxes and other - net
 
379

 
354

Total operating expenses - net
 
2,816

 
1,610

OPERATING INCOME
 
1,047

 
2,362

OTHER INCOME (DEDUCTIONS)
 
 
 
 
Interest expense
 
(226
)
 
(360
)
Benefits associated with differential membership interests - net
 

 
125

Equity in earnings of equity method investees
 
197

 
31

Allowance for equity funds used during construction
 
22

 
22

Interest income
 
18

 
19

Gain on NEP deconsolidation
 
3,935

 

Gains on disposal of investments and other property - net
 
50

 
45

Change in unrealized losses on equity securities held in NEER's nuclear decommissioning funds - net
 
(20
)
 

Other net periodic benefit income
 
51

 
43

Other - net
 
6

 
(21
)
Total other income (deductions) - net
 
4,033

 
(96
)
INCOME BEFORE INCOME TAXES
 
5,080

 
2,266

INCOME TAXES
 
1,249

 
675

NET INCOME
 
3,831

 
1,591

NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
 
597


(8
)
NET INCOME ATTRIBUTABLE TO NEE
 
$
4,428


$
1,583

Earnings per share attributable to NEE:
 
 
 
 
Basic
 
$
9.41

 
$
3.39

Assuming dilution
 
$
9.32

 
$
3.37

Dividends per share of common stock
 
$
1.11

 
$
0.9825

Weighted-average number of common shares outstanding:
 
 
 
 
Basic
 
470.7

 
467.5

Assuming dilution
 
474.3

 
470.2

———————————————
 
 
 
 
(a)   Prior period amounts have been retrospectively adjusted as discussed in Note 3 - Amendments to Presentation of Retirement Benefits.








This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

7




NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(unaudited)

 
Three Months Ended
March 31,
 
2018
 
2017
NET INCOME
$
3,831

 
$
1,591

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
 
 
 
Reclassification of unrealized losses on cash flow hedges from accumulated other comprehensive income (loss) to net income (net of $3 and $4 tax expense, respectively)
7

 
9

Net unrealized gains (losses) on available for sale securities:
 

 
 

Net unrealized gains (losses) on securities still held (net of $2 tax benefit and $26 tax expense, respectively)
(5
)
 
34

Reclassification from accumulated other comprehensive income (loss) to net income (net of $2 and $10 tax benefit, respectively)
(1
)
 
(16
)
Defined benefit pension and other benefits plans (net of $1 and $2 tax benefit, respectively)
(2
)
 
(3
)
Net unrealized gains on foreign currency translation (net of $0 and less than $1 tax expense, respectively)
(20
)
 
16

Other comprehensive income related to equity method investees (net of $1 and less than $1 tax expense, respectively)
2

 
1

Total other comprehensive income (loss), net of tax
(19
)
 
41

IMPACT OF NEP DECONSOLIDATION (NET OF $15 TAX EXPENSE)
58

 

COMPREHENSIVE INCOME
3,870

 
1,632

COMPREHENSIVE (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
597

 
(19
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NEE
$
4,467

 
$
1,613






























This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

8


NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except par value)
(unaudited)
 
 
March 31,
2018
 
December 31,
2017
PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
Electric plant in service and other property
 
$
79,611

 
$
85,337

Nuclear fuel
 
1,834

 
1,767

Construction work in progress
 
6,670

 
6,679

Accumulated depreciation and amortization
 
(20,919
)
 
(21,367
)
Total property, plant and equipment - net ($10,199 and $16,485 related to VIEs, respectively)
 
67,196

 
72,416

CURRENT ASSETS
 
 

 
 

Cash and cash equivalents
 
550

 
1,714

Customer receivables, net of allowances of $5 and $7, respectively
 
1,881

 
2,220

Other receivables
 
508

 
517

Materials, supplies and fossil fuel inventory
 
1,205

 
1,273

Regulatory assets ($72 and $71 related to a VIE, respectively)
 
314

 
336

Derivatives
 
577

 
489

Other
 
577

 
608

Total current assets
 
5,612

 
7,157

OTHER ASSETS
 
 

 
 

Special use funds
 
6,035

 
6,003

Investment in equity method investees
 
6,774

 
2,321

Prepaid benefit costs
 
1,459

 
1,427

Regulatory assets ($28 and $37 related to a VIE, respectively)
 
2,597

 
2,469

Derivatives
 
1,441

 
1,315

Other ($470 related to a VIE at December 31, 2017)
 
3,170

 
4,719

Total other assets
 
21,476

 
18,254

TOTAL ASSETS
 
$
94,284

 
$
97,827

CAPITALIZATION
 
 

 
 

Common stock ($0.01 par value, authorized shares - 800; outstanding shares - 471 and 471, respectively)
 
$
5

 
$
5

Additional paid-in capital
 
9,698

 
9,100

Retained earnings
 
23,181

 
18,992

Accumulated other comprehensive income (loss)
 
(178
)
 
111

Total common shareholders' equity
 
32,706

 
28,208

Noncontrolling interests ($3,287 and $1,006 related to VIEs, respectively)
 
3,287

 
1,290

Total equity
 
35,993

 
29,498

Long-term debt ($1,186 and $5,941 related to VIEs, respectively)
 
28,062

 
31,463

Total capitalization
 
64,055

 
60,961

CURRENT LIABILITIES
 
 

 
 

Commercial paper
 
2,964

 
1,687

Other short-term debt
 
5

 
255

Current maturities of long-term debt ($72 and $70 related to a VIE, respectively)
 
1,168

 
1,676

Accounts payable
 
1,748

 
3,235

Customer deposits
 
450

 
448

Accrued interest and taxes
 
696

 
622

Derivatives
 
450

 
364

Accrued construction-related expenditures
 
797

 
1,033

Regulatory liabilities
 
346

 
346

Other
 
955

 
1,566

Total current liabilities
 
9,579

 
11,232

OTHER LIABILITIES AND DEFERRED CREDITS
 
 

 
 

Asset retirement obligations
 
2,998

 
3,031

Deferred income taxes
 
7,007

 
5,754

Regulatory liabilities
 
8,916

 
8,765

Derivatives
 
469

 
535

Deferral related to differential membership interests - VIEs
 

 
5,403

Other
 
1,260

 
2,146

Total other liabilities and deferred credits
 
20,650

 
25,634

COMMITMENTS AND CONTINGENCIES
 


 


TOTAL CAPITALIZATION AND LIABILITIES
 
$
94,284

 
$
97,827






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

9




NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)


 
Three Months Ended
March 31,
 
 
2018
 
2017 (a)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
3,831

 
$
1,591

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
 
857

 
619

Nuclear fuel and other amortization
 
67

 
72

Unrealized gains on marked to market derivative contracts - net
 
(193
)
 
(169
)
Foreign currency transaction losses
 
38

 
28

Deferred income taxes
 
1,271

 
565

Cost recovery clauses and franchise fees
 
(47
)
 
16

Acquisition of purchased power agreement
 
(52
)
 
(259
)
Gains on disposal of a business/assets - net
 
(66
)
 
(1,145
)
Gain on NEP deconsolidation
 
(3,935
)
 

Recoverable storm-related costs
 

 
(90
)
Other - net
 
(86
)
 
69

Changes in operating assets and liabilities:
 
 
 
 
Current assets
 
237

 
36

Noncurrent assets
 
(22
)
 
(170
)
Current liabilities
 
(590
)
 
261

Noncurrent liabilities
 
(20
)
 
(166
)
Net cash provided by operating activities
 
1,290

 
1,258

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures of FPL
 
(1,166
)
 
(1,687
)
Independent power and other investments of NEER
 
(2,300
)
 
(3,337
)
Nuclear fuel purchases
 
(110
)
 
(129
)
Other capital expenditures and other investments
 
(12
)
 
(26
)
Proceeds from sale of the fiber-optic telecommunications business
 

 
1,484

Proceeds from sale or maturity of securities in special use funds and other investments
 
919

 
735

Purchases of securities in special use funds and other investments
 
(1,039
)
 
(804
)
Other - net
 
41

 
94

Net cash used in investing activities
 
(3,667
)
 
(3,670
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Issuances of long-term debt
 
1,804

 
689

Retirements of long-term debt
 
(942
)
 
(548
)
Net change in commercial paper
 
1,277

 
2,041

Proceeds from other short-term debt
 

 
200

Repayments of other short-term debt
 
(250
)
 

Issuances of common stock - net
 
7

 
7

Dividends on common stock
 
(523
)
 
(460
)
Other - net
 
(62
)
 
(246
)
Net cash provided by financing activities
 
1,311

 
1,683

Effects of currency translation on cash, cash equivalents and restricted cash
 
(9
)
 

Net decrease in cash, cash equivalents and restricted cash
 
(1,075
)
 
(729
)
Cash, cash equivalents and restricted cash at beginning of period
 
1,983

 
1,529

Cash, cash equivalents and restricted cash at end of period
 
$
908

 
$
800

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
 
 
 
Accrued property additions
 
$
1,639

 
$
972

Increase in property, plant and equipment - net as a result of cash grants primarily under the Recovery Act
 
$

 
$
(147
)
———————————————
 
 
 
 
(a) Prior period amounts have been retrospectively adjusted as discussed in Note 10 - Restricted Cash.
 
 
 
 






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

10




NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(millions)
(unaudited)

 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income
(Loss)
 
Retained
Earnings
 
Total
Common
Shareholders'
Equity
 
Non-
controlling
Interests
 
Total
Equity
 
Shares
 
Aggregate
Par Value
 
Balances, December 31, 2017
471

 
$
5

 
$
9,100

 
$
111

 
$
18,992

 
$
28,208

 
$
1,290

 
$
29,498

Net income (loss)

 

 

 

 
4,428

 
4,428

 
(597
)
 
 
Share-based payment activity

 

 
5

 

 

 
5

 

 
 
Dividends on common stock

 

 

 

 
(523
)
 
(523
)
 

 
 
Other comprehensive loss

 

 

 
(19
)
 

 
(19
)
 

 
 
Impact of NEP deconsolidation (a)

 

 

 
58

 

 
58

 
(2,695
)
 

Adoption of accounting standards updates (b)

 

 
593

 
(328
)
 
285

 
550

 
5,303

 
 
Other

 

 

 

 
(1
)
 
(1
)
 
(14
)
 
 
Balances, March 31, 2018
471

 
$
5

 
$
9,698

 
$
(178
)
 
$
23,181

 
$
32,706

 
$
3,287

 
$
35,993

———————————————
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) See Note 2.
(b) See Notes 1, 5 - Financial Instruments Accounting Standards Update, 6 and 10 - Accounting for Partial Sales of Nonfinancial Assets.


 
Common Stock
 
Additional
Paid-In
Capital
 
Accumulated
Other
Comprehensive
Income
(Loss)
 
Retained
Earnings
 
Total
Common
Shareholders'
Equity
 
Non-
controlling
Interests
 
Total
Equity
 
Shares
 
Aggregate
Par Value
 
Balances, December 31, 2016
468

 
$
5

 
$
8,948

 
$
(70
)
 
$
15,458

 
$
24,341

 
$
990

 
$
25,331

Net income

 

 

 

 
1,583

 
1,583

 
8

 
 
Issuances of common stock, net of issuance cost of less than $1

 

 
6

 

 

 
6

 

 
 
Dividends on common stock

 

 

 

 
(460
)
 
(460
)
 

 
 
Other comprehensive income

 

 

 
30

 

 
30

 
11

 
 
Other

 

 
(3
)
 

 

 
(3
)
 
(37
)
 
 
Balances, March 31, 2017
468

 
$
5

 
$
8,951

 
$
(40
)
 
$
16,581

 
$
25,497

 
$
972

 
$
26,469





















This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

11




FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(millions)
(unaudited)

 
 
Three Months Ended
March 31,
 
 
2018
 
2017
OPERATING REVENUES
 
$
2,620

 
$
2,527

OPERATING EXPENSES (INCOME)
 
 

 
 

Fuel, purchased power and interchange
 
712

 
768

Other operations and maintenance
 
347

 
371

Depreciation and amortization
 
545

 
273

Taxes other than income taxes and other - net
 
308

 
304

Total operating expenses - net
 
1,912

 
1,716

OPERATING INCOME
 
708

 
811

OTHER INCOME (DEDUCTIONS)
 
 

 
 

Interest expense
 
(134
)
 
(119
)
Allowance for equity funds used during construction
 
21

 
16

Other - net
 
1

 

Total other deductions - net
 
(112
)
 
(103
)
INCOME BEFORE INCOME TAXES
 
596

 
708

INCOME TAXES
 
112

 
263

NET INCOME (a)
 
$
484

 
$
445

_______________________
(a)
FPL's comprehensive income is the same as reported net income.






























This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

12




FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except share amount)
(unaudited)
 
 
March 31,
2018
 
December 31,
2017
ELECTRIC UTILITY PLANT AND OTHER PROPERTY
 
 
 
 
Plant in service and other property
 
$
48,284

 
$
47,167

Nuclear fuel
 
1,228

 
1,192

Construction work in progress
 
3,280

 
3,623

Accumulated depreciation and amortization
 
(13,025
)
 
(12,802
)
Total electric utility plant and other property - net
 
39,767

 
39,180

CURRENT ASSETS
 
 

 
 

Cash and cash equivalents
 
26

 
33

Customer receivables, net of allowances of $1 and $2, respectively
 
922

 
1,073

Other receivables
 
334

 
160

Materials, supplies and fossil fuel inventory
 
811

 
840

Regulatory assets ($72 and $71 related to a VIE, respectively)
 
313

 
335

Other
 
226

 
243

Total current assets
 
2,632

 
2,684

OTHER ASSETS
 
 

 
 

Special use funds
 
4,139

 
4,090

Prepaid benefit costs
 
1,371

 
1,351

Regulatory assets ($28 and $37 related to a VIE, respectively)
 
2,372

 
2,249

Other
 
614

 
690

Total other assets
 
8,496

 
8,380

TOTAL ASSETS
 
$
50,895

 
$
50,244

CAPITALIZATION
 
 

 
 

Common stock (no par value, 1,000 shares authorized, issued and outstanding)
 
$
1,373

 
$
1,373

Additional paid-in capital
 
9,141

 
8,291

Retained earnings
 
7,853

 
7,376

Total common shareholder's equity
 
18,367

 
17,040

Long-term debt ($35 and $74 related to a VIE, respectively)
 
11,803

 
11,236

Total capitalization
 
30,170

 
28,276

CURRENT LIABILITIES
 
 

 
 

Commercial paper
 
1,561

 
1,687

Other short-term debt
 

 
250

Current maturities of long-term debt ($72 and $70 related to a VIE, respectively)
 
93

 
466

Accounts payable
 
782

 
893

Customer deposits
 
446

 
445

Accrued interest and taxes
 
397

 
439

Accrued construction-related expenditures
 
229

 
300

Regulatory liabilities
 
332

 
333

Other
 
490

 
984

Total current liabilities
 
4,330

 
5,797

OTHER LIABILITIES AND DEFERRED CREDITS
 
 

 
 

Asset retirement obligations
 
2,072

 
2,047

Deferred income taxes
 
5,077

 
5,005

Regulatory liabilities
 
8,795

 
8,642

Other
 
451

 
477

Total other liabilities and deferred credits
 
16,395

 
16,171

COMMITMENTS AND CONTINGENCIES
 


 


TOTAL CAPITALIZATION AND LIABILITIES
 
$
50,895

 
$
50,244








This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

13


FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)

 
 
Three Months Ended
March 31,
 
 
2018
 
2017 (a)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
484

 
$
445

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 

 
 

Depreciation and amortization
 
545

 
273

Nuclear fuel and other amortization
 
40

 
49

Deferred income taxes
 
265

 
275

Cost recovery clauses and franchise fees
 
(47
)
 
16

Acquisition of purchased power agreement
 
(52
)
 
(259
)
Recoverable storm-related costs
 

 
(90
)
Other - net
 
(8
)
 
137

Changes in operating assets and liabilities:
 
 

 
 

Current assets
 
(51
)
 
29

Noncurrent assets
 
(20
)
 
(145
)
Current liabilities
 
(512
)
 
81

Noncurrent liabilities
 
(56
)
 
(42
)
Net cash provided by operating activities
 
588

 
769

CASH FLOWS FROM INVESTING ACTIVITIES
 
 

 
 

Capital expenditures
 
(1,166
)
 
(1,687
)
Nuclear fuel purchases
 
(37
)
 
(79
)
Proceeds from sale or maturity of securities in special use funds
 
430

 
493

Purchases of securities in special use funds
 
(534
)
 
(519
)
Other - net
 
19

 
65

Net cash used in investing activities
 
(1,288
)
 
(1,727
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

Issuances of long-term debt
 
1,000

 
200

Retirements of long-term debt
 
(787
)
 
(35
)
Net change in commercial paper
 
(126
)
 
956

Proceeds from other short-term debt
 

 
200

Repayments of other short-term debt
 
(250
)
 

Capital contribution from NEE
 
850

 

Dividends to NEE
 

 
(400
)
Other - net
 
(19
)
 
11

Net cash provided by financing activities
 
668

 
932

Net decrease in cash, cash equivalents and restricted cash
 
(32
)
 
(26
)
Cash, cash equivalents and restricted cash at beginning of period
 
174

 
153

Cash, cash equivalents and restricted cash at end of period
 
$
142

 
$
127

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
 

 
 

Accrued property additions
 
$
641

 
$
435

———————————————
 
 
 
 
 
(a) Prior period amounts have been retrospectively adjusted as discussed in Note 10 - Restricted Cash.
 
 
 
 
 






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2017 Form 10-K.

14


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The accompanying condensed consolidated financial statements should be read in conjunction with the 2017 Form 10-K. In the opinion of NEE and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's condensed consolidated financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period generally will not give a true indication of results for the year.

1.  Revenue from Contracts with Customers

Effective January 1, 2018, NEE and FPL adopted an accounting standards update that provides guidance on the recognition of revenue from contracts with customers and requires additional disclosures regarding such contracts (new revenue standard). Under the new revenue standard, revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The promised goods or services in the majority of NEE’s contracts with customers is, at FPL, for the delivery of electricity and, at NEER, for the delivery of energy commodities and the availability of electric capacity and electric transmission. NEE and FPL adopted the new revenue standard using the modified retrospective approach applying it only to contracts that were not complete at January 1, 2018. On January 1, 2018, NEE recorded a reduction to retained earnings of approximately $25 million representing the cumulative effect of adopting the new revenue standard, which was primarily due to identifying separate performance obligations in certain energy-related contracts at NEER. The cumulative effect of adopting the new revenue standard was not material at FPL. The impact of applying the new revenue standard to NEE’s and FPL's March 31, 2018 financial statements as compared to the prior revenue standard was not material.
FPL and NEER generate substantially all of NEE’s operating revenues, which primarily include revenues from contracts with customers, as well as, at NEER, derivative and lease transactions. For the vast majority of contracts with customers, NEE believes that the obligation to deliver energy, capacity or transmission is satisfied over time as the customer simultaneously receives and consumes benefits as NEE performs. For the three months ended March 31, 2018 , NEE’s revenue from contracts with customers was approximately $3.3 billion ( $2.6 billion at FPL). At March 31, 2018 , NEE's accounts receivable balances related to contracts with customers was approximately $1.3 billion ( $951 million at FPL) which are primarily included in customer receivables on NEE's and FPL's condensed consolidated balance sheets.
 
FPL - FPL’s revenue from contracts with customers is derived primarily from tariff-based sales that result from providing electricity to retail customers in Florida with no defined contractual term. Electricity sales to retail customers account for over 90% of FPL’s operating revenues, the majority of which is to residential customers. FPL’s retail customers receive a bill monthly based on the amount of monthly kWh usage with payment due monthly. For these types of sales, FPL recognizes revenue as electricity is delivered and billed to customers, as well as an estimate for electricity delivered and not yet billed. FPL considers the billed and unbilled amounts to represent the value of electricity delivered to the customer.
NEER - NEER’s revenue from contracts with customers is derived primarily from the sale of energy commodities, electric capacity and electric transmission. For these types of sales, NEER recognizes revenue as energy commodities are delivered and as electric capacity and electric transmission are made available, consistent with the amounts billed to customers based on rates stipulated in the respective contracts. NEER considers the amount billed to represent the value of energy or transmission delivered and/or the capacity of energy or transmission available to the customer. Revenues yet to be earned under these contracts, which have maturity dates ranging from 2018 to 2043 , will vary based on the volume of energy or transmission delivered and/or available. NEER’s customers typically receive bills monthly with payment due within 30 days. Certain contracts with customers contain a fixed price related to electric capacity sales associated with ISO annual auctions through 2020 and certain power purchase agreements with maturity dates through 2034. At March 31, 2018, NEER expects to record approximately $750 million of revenues related to the fixed price components of such contracts over the remaining terms of the related contracts as the capacity is provided.

2.  NEP Deconsolidation

During the third quarter of 2017, changes to NEP's governance structure were made that, among other things, enhanced NEP unitholder governance rights. The new governance structure established a NEP board of directors where NEP unitholders have the ability to nominate and elect board members, subject to certain limitations and requirements. As a result of these governance changes, NEP was deconsolidated from NEE on January 1, 2018, which is when the term of office of the first NEP unitholder-elected directors took effect. NEER continues to operate the projects owned by NEP and provide services to NEP under various related party operations and maintenance, administrative and management services agreements.
In connection with the deconsolidation, NEE recorded an investment in NEP of approximately $4.4 billion , which is reflected as investment in equity method investees on NEE's condensed consolidated balance sheets at March 31, 2018 , based on the fair value of NEP OpCo and NEP common units that were held by subsidiaries of NEE on the deconsolidation date. The fair value was based on the market price of NEP common units as of January 1, 2018, which resulted in NEE recording a gain of approximately $3.9 billion ( $3.0 billion after tax) during the three months ended March 31, 2018 . Total assets of approximately $7.8 billion , primarily

15


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


property, plant and equipment, total liabilities of approximately $4.8 billion , primarily long-term debt, and total noncontrolling interests of approximately $2.7 billion were removed from NEE's balance sheet as part of the deconsolidation.

The equity method investment in NEP represents NEE’s partnership interest in NEP OpCo's operating projects of approximately  65.1% (and NEE’s direct interest in 2.6% of NEP’s common units) at March 31, 2018 . The equity method investment in NEP included approximately $3.5 billion related to NEE’s share of the basis difference between the fair value and the underlying carrying value of NEP’s net assets attributable to NEP OpCo's common unitholders at March 31, 2018 , a portion of which will be amortized. Basis difference amounts related to property, plant and equipment, net are being amortized over the remaining useful lives of such property, and amounts related to power purchase agreements are being amortized over the remaining terms of such agreements. The related amortization is reflected in equity in earnings of equity method investees in NEE's condensed consolidated statements of income.

NEER provides management, administrative and transportation and fuel management services to NEP and its subsidiaries under various agreements (service agreements). NEER is also party to a cash sweep and credit support (CSCS) agreement with a subsidiary of NEP. At March 31, 2018 , the cash sweep amount (due to NEP and its subsidiaries) held in accounts belonging to NEER or its subsidiaries was approximately $89 million . Fee income totaling approximately $24 million related to the CSCS agreement and the service agreements is included in operating revenues in NEE's condensed consolidated statements of income for the three months ended March 31, 2018 . Amounts due from NEP of approximately $40 million and $22 million at March 31, 2018 are primarily included in other receivables and noncurrent other assets, respectively. Under the CSCS agreement, NEECH or NEER guaranteed or provided indemnifications, letters of credit or bonds totaling approximately $690 million at March 31, 2018 related to obligations on behalf of NEP's subsidiaries with maturity dates ranging from 2018 to 2050 and including certain project performance obligations, obligations under financing and interconnection agreements and obligations related to the sale of differential membership interests. Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded on NEE’s condensed consolidated balance sheet at fair value. Upon deconsolidation, approximately $32 million related to the fair value of the credit support provided under the CSCS agreement is recorded as noncurrent other liabilities on NEE's condensed consolidated balance sheet at March 31, 2018 .

3.  Employee Retirement Benefits

NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

The components of net periodic benefit (income) cost for the plans are as follows:
 
Pension Benefits
 
Postretirement Benefits
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
(millions)
Service cost
$
18

 
$
16

 
$

 
$

Interest cost
20

 
21

 
2

 
2

Expected return on plan assets
(69
)
 
(67
)
 

 

Amortization of prior service benefit

 

 
(4
)
 

Special termination benefits

 
1

 

 

Net periodic benefit (income) cost at NEE
$
(31
)
 
$
(29
)
 
$
(2
)
 
$
2

Net periodic benefit (income) cost at FPL
$
(20
)
 
$
(18
)
 
$
(2
)
 
$
2


Amendments to Presentation of Retirement Benefits - Effective January 1, 2018, NEE adopted an accounting standards update that requires certain changes in classification of components of net periodic pension and postretirement benefit costs within the income statement and allows only the service cost component to be eligible for capitalization. NEE adopted the standards update using the retrospective approach for presentation of the components of net periodic pension and postretirement benefit costs and the prospective approach for capitalization of service cost. Upon adoption, NEE, among other things, reclassified the non-service cost components noted in the net periodic benefit (income) cost table above from O&M expense to other net periodic benefit income in NEE's condensed consolidated statements of income. The adoption of this standards update did not have an impact on net income attributable to NEE and did not have any impact on FPL as NEE is the plan sponsor.


16


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


4.  Derivative Instruments
 
NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the physical and financial risks inherent in the purchase and sale of fuel and electricity, as well as interest rate and foreign currency exchange rate risk associated primarily with outstanding and expected future debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets. NEE and FPL do not utilize hedge accounting for their cash flow and fair value hedges.
 
With respect to commodities related to NEE's competitive energy business, NEER employs risk management procedures to conduct its activities related to optimizing the value of its power generation and gas infrastructure assets, providing full energy and capacity requirements services primarily to distribution utilities, and engaging 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 OTC markets, depending on the most favorable credit terms and market execution factors. For NEER's power generation and gas infrastructure assets, derivative instruments are used to hedge all or a portion of the expected output of these assets. These hedges are designed to reduce the effect of adverse changes in the wholesale forward commodity markets associated with NEER's power generation and gas infrastructure assets. With regard to full energy and capacity requirements services, NEER is required to vary the quantity of energy and related services based on the load demands of the customers served. For this type of transaction, derivative instruments are used to hedge the anticipated electricity quantities required to serve these customers and reduce the effect of unfavorable changes in the forward energy markets. Additionally, NEER takes positions in energy markets based on differences between actual forward market levels and management's view of fundamental market conditions, including supply/demand imbalances, changes in traditional flows of energy, changes in short- and long-term weather patterns and anticipated regulatory and legislative outcomes. NEER 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 NEE's and FPL's condensed 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 clause. For NEE's non-rate regulated operations, predominantly NEER, essentially all changes in the derivatives' fair value for power purchases and sales, fuel sales and trading activities are recognized on a net basis in operating revenues; the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEE's condensed consolidated statements of income. Settlement gains and losses are included within the line items in the condensed consolidated statements of income to which they relate. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis in the condensed consolidated statements of income. For commodity derivatives, NEE 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. Settlements related to derivative instruments are primarily recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.
 
For interest rate and foreign currency derivative instruments, essentially all changes in the derivatives' fair value, as well as the transaction gain or loss on foreign denominated debt, are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEE's condensed consolidated statements of income. At March 31, 2018 , NEE's AOCI included amounts related to discontinued interest rate cash flow hedges with expiration dates through March 2035 and foreign currency cash flow hedges with expiration dates through September 2030. Approximately $24 million of net losses included in AOCI at March 31, 2018 is expected to be reclassified into earnings within the next 12 months as the principal and/or interest payments are made. Such amounts assume no change in scheduled principal payments.


17


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Fair Value of Derivative Instruments - The tables below present NEE's and FPL's gross derivative positions at March 31, 2018 and December 31, 2017 , as required by disclosure rules. However, the majority of the underlying contracts are subject to master netting agreements and generally would not be contractually settled on a gross basis. Therefore, the tables below also present the derivative positions on a net basis, 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 (see Note 5 - Recurring Fair Value Measurements for netting information), as well as the location of the net derivative position on the condensed consolidated balance sheets.
 
March 31, 2018
 
Gross Basis
 
Net Basis
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
(millions)
NEE:
 
 
 
 
 
 
 
Commodity contracts
$
4,308

 
$
3,071

 
$
1,893

 
$
674

Interest rate contracts
77

 
208

 
78

 
209

Foreign currency contracts
35

 
24

 
47

 
36

Total fair values
$
4,420

 
$
3,303

 
$
2,018

 
$
919

 
 
 
 
 
 
 
 
FPL:
 
 
 
 
 
 
 
Commodity contracts
$
3

 
$
3

 
$
2

 
$
2

 
 
 
 
 
 
 
 
Net fair value by NEE balance sheet line item:
 
 
 
 
 
 
 
Current derivative assets (a)
 
 
 
 
$
577

 
 
Noncurrent derivative assets
 
 
 
 
1,441

 
 
Current derivative liabilities
 
 
 
 
 
 
$
450

Noncurrent derivative liabilities (b)
 
 
 
 
 
 
469

Total derivatives
 
 
 
 
$
2,018

 
$
919

 
 
 
 
 
 
 
 
Net fair value by FPL balance sheet line item:
 
 
 
 
 
 
 
Current other assets
 
 
 
 
$
2

 
 
Current other liabilities
 
 
 
 
 
 
$
2

Total derivatives
 
 
 
 
$
2

 
$
2

———————————————
(a)
Reflects the netting of approximately $34 million in margin cash collateral received from counterparties.
(b)
Reflects the netting of approximately $16 million in margin cash collateral paid to counterparties.

18


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


 
December 31, 2017
 
Gross Basis
 
Net Basis
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
(millions)
NEE:
 
 
 
 
 
 
 
Commodity contracts
$
3,962

 
$
2,792

 
$
1,737

 
$
567

Interest rate contracts
50

 
275

 
55

 
280

Foreign currency contracts

 
40

 
12

 
52

Total fair values
$
4,012

 
$
3,107

 
$
1,804

 
$
899

 
 
 
 
 
 
 
 
FPL:
 
 
 
 
 
 
 
Commodity contracts
$
3

 
$
3

 
$
2

 
$
2

 
 
 
 
 
 
 
 
Net fair value by NEE balance sheet line item:
 
 
 
 
 
 
 
Current derivative assets (a)
 
 
 
 
$
489

 
 
Noncurrent derivative assets
 
 
 
 
1,315

 
 
Current derivative liabilities
 
 
 
 
 
 
$
364

Noncurrent derivative liabilities (b)
 
 
 
 
 
 
535

Total derivatives
 
 
 
 
$
1,804

 
$
899

 
 
 
 
 
 
 
 
Net fair value by FPL balance sheet line item:
 
 
 
 
 
 
 
Current other assets
 
 
 
 
$
2

 
 
Current other liabilities
 
 
 
 
 
 
$
2

Total derivatives
 
 
 
 
$
2

 
$
2

———————————————
(a)
Reflects the netting of approximately $39 million in margin cash collateral received from counterparties.
(b)
Reflects the netting of approximately $39 million in margin cash collateral paid to counterparties.

At March 31, 2018 and December 31, 2017 , NEE had approximately $7 million and $10 million ( none at FPL), respectively, in margin cash collateral received from counterparties that was not offset against derivative assets in the above presentation. These amounts are included in current other liabilities on NEE's condensed consolidated balance sheets. Additionally, at March 31, 2018 and December 31, 2017 , NEE had approximately $202 million and $40 million ( none at FPL), respectively, in margin cash collateral paid to counterparties that was not offset against derivative assets or liabilities in the above presentation. These amounts are included in current other assets on NEE's condensed consolidated balance sheets.

Income Statement Impact of Derivative Instruments - Gains (losses) related to NEE's derivatives are recorded in NEE's condensed consolidated statements of income as follows:
 
Three Months Ended
March 31,
 
2018
 
2017
 
(millions)
Commodity contracts (a)  - operating revenues
$
137

 
$
291

Foreign currency contracts - interest expense
45

 
21

Foreign currency contracts - other - net

 
(1
)
Interest rate contracts - interest expense
59

 
(45
)
Losses reclassified from AOCI to interest expense:
 
 
 
Interest rate contracts
(9
)
 
(10
)
Foreign currency contracts
(1
)
 
(3
)
Total
$
231

 
$
253

———————————————
(a)
For the three months ended March 31, 2018 and 2017 , FPL recorded approximately $4 million of gains and $104 million of losses, respectively, related to commodity contracts as regulatory liabilities and regulatory assets, respectively, on its condensed consolidated balance sheets.

19


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Notional Volumes of Derivative Instruments - The following table represents net notional volumes associated with derivative instruments that are required to be reported at fair value in NEE's and FPL's condensed consolidated financial statements. The table includes significant volumes of transactions that have minimal exposure to commodity price changes because they are variably priced agreements. These volumes are only an indication of the commodity exposure that is managed through the use of derivatives. They do not represent net physical asset positions or non-derivative positions and their hedges, nor do they represent NEE’s and FPL’s net economic exposure, but only the net notional derivative positions that fully or partially hedge the related asset positions. NEE and FPL had derivative commodity contracts for the following net notional volumes:
 
 
March 31, 2018
 
December 31, 2017
Commodity Type
 
NEE
 
FPL
 
NEE
 
FPL
 
 
(millions)
Power
 
(105
)
 
MWh
 

 
 
 
(109
)
 
MWh
 

 
 
Natural gas
 
(40
)
 
MMBtu
 
319

 
MMBtu
 
(74
)
 
MMBtu
 
142

 
MMBtu
Oil
 
(19
)
 
barrels
 

 
 
 
(15
)
 
barrels
 

 
 

At March 31, 2018 and December 31, 2017 , NEE had interest rate contracts with notional amounts totaling approximately $8.6 billion and $12.1 billion , respectively, and foreign currency contracts with notional amounts totaling approximately $656 million and $718 million , respectively.

Credit - Risk - Related Contingent Features - Certain 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 March 31, 2018 and December 31, 2017 , the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $1.6 billion ( $3 million for FPL) and $1.1 billion ( $3 million for FPL), respectively.

If the credit-risk-related contingent features underlying these derivative agreements were triggered, certain subsidiaries of NEE, including FPL, could be required to post collateral or settle contracts according to contractual terms which generally allow netting of contracts in offsetting positions. Certain derivative 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's and NEECH's credit ratings were downgraded to BBB/Baa2 (a two level downgrade for FPL and a one level downgrade for NEECH from the current lowest applicable rating), applicable NEE subsidiaries would be required to post collateral such that the total posted collateral would be approximately $95 million ( none at FPL ) at March 31, 2018 and $145 million ( none at FPL) at December 31, 2017 . If FPL's and NEECH's credit ratings were downgraded to below investment grade, applicable NEE subsidiaries would be required to post additional collateral such that the total posted collateral would be approximately $1.1 billion ( $25 million at FPL) at March 31, 2018 and $1.2 billion ( $45 million at FPL) at December 31, 2017 . Some derivative 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, applicable NEE subsidiaries could be required to post additional collateral of up to approximately $195 million ( $85 million at FPL) at March 31, 2018 and $210 million ( $95 million at FPL) at December 31, 2017 .

Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At March 31, 2018 and December 31, 2017 , applicable NEE subsidiaries have posted approximately $2 million ( none at FPL) and $2 million ( none at FPL), respectively, in cash and $25 million ( none at FPL) and $20 million ( none at FPL), respectively, in the form of letters of credit, each of which could be applied toward the collateral requirements described above. FPL and NEECH have capacity under their credit facilities generally in excess of the collateral requirements described above that would be available to support, among other things, derivative activities. Under the terms of the credit facilities, 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 whereby a counterparty may demand additional collateral based on subjective events and/or conditions. Due to the subjective nature of these provisions, NEE and FPL are unable to determine an exact value for these items and they are not included in any of the quantitative disclosures above.

5.  Fair Value Measurements

The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEE 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 at fair value on a recurring basis.

20


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


NEE's and FPL's assessment of the significance of any particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value.

Cash Equivalents and Restricted Cash Equivalents - NEE and FPL hold investments in money market funds. The fair value of these funds is estimated using a market approach based on current observable market prices.

Special Use Funds and Other Investments - NEE and FPL hold primarily debt and equity securities directly, as well as indirectly through commingled funds. Substantially all directly held equity securities are valued at their quoted market prices. For directly held debt securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validations. A primary price source is identified based on asset type, class or issue of each security. Commingled funds, which are similar to mutual funds, are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives. The fair value of commingled funds is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.

Derivative Instruments - NEE and FPL measure the fair value of commodity contracts using a combination of market and income approaches utilizing prices observed on commodities exchanges and in the OTC markets, or through the use of industry-standard valuation techniques, such as option modeling or discounted cash flows techniques, incorporating both observable and unobservable valuation inputs. The resulting measurements are the best estimate of fair value as represented by the transfer of the asset or liability through an orderly transaction in the marketplace at the measurement date.

Most exchange-traded derivative assets and liabilities are valued directly using unadjusted quoted prices. For exchange-traded derivative assets and liabilities where the principal market is deemed to be inactive based on average daily volumes and open interest, the measurement is established using settlement prices from the exchanges, and therefore considered to be valued using other observable inputs.

NEE, through its subsidiaries, including FPL, also enters into OTC commodity contract derivatives. The majority of these contracts are transacted at liquid trading points, and the prices for these contracts are verified using quoted prices in active markets from exchanges, brokers or pricing services for similar contracts.

NEE, through NEER, also enters into full requirements contracts, which, in most cases, meet the definition of derivatives and are measured at fair value. These contracts typically have one or more inputs that are not observable and are significant to the valuation of the contract. In addition, certain exchange and non-exchange traded derivative options at NEE have one or more significant inputs that are not observable, and are valued using industry-standard option models.

In all cases where NEE and FPL use significant unobservable inputs for the valuation of a commodity contract, consideration is given to the assumptions that market participants would use in valuing the asset or liability. The primary input to the valuation models for commodity contracts is the forward commodity curve for the respective instruments. Other inputs include, but are not limited to, assumptions about market liquidity, volatility, correlation and contract duration as more fully described below in Significant Unobservable Inputs Used in Recurring Fair Value Measurements. In instances where the reference markets are deemed to be inactive or do not have transactions for a similar contract, the derivative assets and liabilities may be valued using significant other observable inputs and potentially significant unobservable inputs. In such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts, or estimated basis adjustments from liquid trading points. NEE and FPL regularly evaluate and validate the inputs used to determine fair value by a number of methods, consisting of various market price verification procedures, including the use of pricing services and multiple broker quotes to support the market price of the various commodities. In all cases where there are assumptions and models used to generate inputs for valuing derivative assets and liabilities, the review and verification of the assumptions, models and changes to the models are undertaken by individuals that are independent of those responsible for estimating fair value.

NEE uses interest rate contracts and foreign currency contracts to mitigate and adjust interest rate and foreign currency exchange exposure related primarily to certain outstanding and expected future debt issuances and borrowings when deemed appropriate based on market conditions or when required by financing agreements. NEE estimates the fair value of these derivatives using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements.


21


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Recurring Fair Value Measurements - NEE'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:
 
March 31, 2018
 
 
Level 1
 
Level 2
 
Level 3
 
Netting (a)
 
Total
 
 
(millions)
 
Assets:
 
 
 
 
 
 
 
 
 
 
Cash equivalents and restricted cash equivalents: (b)
 
 
 
 
 
 
 
 
 
 
NEE - equity securities
$
227

 
$

 
$

 
 
 
$
227

 
FPL - equity securities
$
117

 
$

 
$

 
 
 
$
117

 
Special use funds: (c)
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
1,631

 
$
1,691

(d)  
$

 
 
 
$
3,322

 
U.S. Government and municipal bonds
$
444

 
$
151

 
$

 
 
 
$
595

 
Corporate debt securities
$
1

 
$
716

 
$

 
 
 
$
717

 
Mortgage-backed securities
$

 
$
427

 
$

 
 
 
$
427

 
Other debt securities
$

 
$
141

 
$

 
 
 
$
141

 
FPL:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
457

 
$
1,537

(d)  
$

 
 
 
$
1,994

 
U.S. Government and municipal bonds
$
346

 
$
118

 
$

 
 
 
$
464

 
Corporate debt securities
$

 
$
545

 
$

 
 
 
$
545

 
Mortgage-backed securities
$

 
$
322

 
$

 
 
 
$
322

 
Other debt securities
$

 
$
127

 
$

 
 
 
$
127

 
Other investments: (e)
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
2

 
$
12

 
$


 
 
$
14

 
Debt securities
$
32

 
$
103

 
$

 
 
 
$
135

 
Derivatives:
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
1,030

 
$
2,023

 
$
1,255

 
$
(2,415
)
 
$
1,893

(f)  
Interest rate contracts
$

 
$
77

 
$

 
$
1

 
$
78

(f)  
Foreign currency contracts
$

 
$
35

 
$

 
$
12

 
$
47

(f)  
FPL - commodity contracts
$

 
$
2

 
$
1

 
$
(1
)
 
$
2

(f)  
Liabilities:
 
 
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
1,038

 
$
1,550

 
$
483

 
$
(2,397
)
 
$
674

(f)  
Interest rate contracts
$

 
$
61

 
$
147

 
$
1

 
$
209

(f)  
Foreign currency contracts
$

 
$
24

 
$

 
$
12

 
$
36

(f)  
FPL - commodity contracts
$

 
$

 
$
3

 
$
(1
)
 
$
2

(f)  
———————————————
(a)
Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)
Includes restricted cash equivalents of approximately $107 million ( $103 million for FPL) in current other assets on the condensed consolidated balance sheets.
(c)
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(d)
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(e)
Included in noncurrent other assets in the condensed consolidated balance sheets.
(f)
See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.


22


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


 
December 31, 2017
 
 
Level 1
 
Level 2
 
Level 3
 
Netting (a)
 
Total
 
 
(millions)
 
Assets:
 
 
 
 
 
 
 
 
 
 
Cash equivalents and restricted cash equivalents: (b)
 
 
 
 
 
 
 
 
 
 
NEE - equity securities
$
1,294

 
$

 
$

 
 
 
$
1,294

 
FPL - equity securities
$
144

 
$

 
$

 
 
 
$
144

 
Special use funds: (c)
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
1,595

 
$
1,719

(d)  
$

 
 
 
$
3,314

 
U.S. Government and municipal bonds
$
478

 
$
139

 
$

 
 
 
$
617

 
Corporate debt securities
$
1

 
$
764

 
$

 
 
 
$
765

 
Mortgage-backed securities
$

 
$
435

 
$

 
 
 
$
435

 
Other debt securities
$

 
$
129

 
$

 
 
 
$
129

 
FPL:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
473

 
$
1,562

(d)  
$

 
 
 
$
2,035

 
U.S. Government and municipal bonds
$
362

 
$
112

 
$

 
 
 
$
474

 
Corporate debt securities
$

 
$
539

 
$

 
 
 
$
539

 
Mortgage-backed securities
$

 
$
333

 
$

 
 
 
$
333

 
Other debt securities
$

 
$
116

 
$

 
 
 
$
116

 
Other investments: (e)
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Equity securities
$
2

 
$
10

 
$

 
 
 
$
12

 
Debt securities
$
34

 
$
103

 
$

 
 
 
$
137

 
Derivatives:
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
1,303

 
$
1,301

 
$
1,358

 
$
(2,225
)
 
$
1,737

(f)  
Interest rate contracts
$

 
$
50

 
$

 
$
5

 
$
55

(f)  
Foreign currency contracts
$

 
$

 
$

 
$
12

 
$
12

(f)  
FPL - commodity contracts
$

 
$
1

 
$
2

 
$
(1
)
 
$
2

(f)  
Liabilities:
 
 
 
 
 
 
 
 
 
 
Derivatives:
 
 
 
 
 
 
 
 
 
 
NEE:
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
1,217

 
$
915

 
$
660

 
$
(2,225
)
 
$
567

(f)  
Interest rate contracts
$

 
$
143

 
$
132

 
$
5

 
$
280

(f)  
Foreign currency contracts
$

 
$
40

 
$

 
$
12

 
$
52

(f)  
FPL - commodity contracts
$

 
$
1

 
$
2

 
$
(1
)
 
$
2

(f)  
———————————————
(a)
Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)
Includes restricted cash equivalents of approximately $159 million ( $128 million for FPL) in current other assets on the condensed consolidated balance sheets.
(c)
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
(d)
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(e)
Included in noncurrent other assets in the condensed consolidated balance sheets.
(f)
See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

23


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Significant Unobservable Inputs Used in Recurring Fair Value Measurements - The valuation of certain commodity contracts requires the use of significant unobservable inputs. All forward price, implied volatility, implied correlation and interest rate inputs used in the valuation of such contracts are directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices, implied volatilities and interest rates used for determining fair value are updated daily to reflect the best available market information. Unobservable inputs which are related to observable inputs, such as illiquid portions of forward price or volatility curves, are updated daily as well, using industry standard techniques such as interpolation and extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Other unobservable inputs, such as implied correlations, customer migration rates from full requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.

All price, volatility, correlation and customer migration inputs used in valuation are subject to validation by the Trading Risk Management group. The Trading Risk Management group performs a risk management function responsible for assessing credit, market and operational risk impact, reviewing valuation methodology and modeling, confirming transactions, monitoring approval processes and developing and monitoring trading limits. The Trading Risk Management group is separate from the transacting group. For markets where independent third-party data is readily available, validation is conducted daily by directly reviewing this market data against inputs utilized by the transacting group, and indirectly by reviewing daily risk reports. For markets where independent third-party data is not readily available, additional analytical reviews are performed on at least a quarterly basis. These analytical reviews are designed to ensure that all price and volatility curves used for fair valuing transactions are adequately validated each quarter, and are reviewed and approved by the Trading Risk Management group. In addition, other valuation assumptions such as implied correlations and customer migration rates are reviewed and approved by the Trading Risk Management group on a periodic basis. Newly created models used in the valuation process are also subject to testing and approval by the Trading Risk Management group prior to use and established models are reviewed annually, or more often as needed, by the Trading Risk Management group.

On a monthly basis, the Exposure Management Committee (EMC), which is comprised of certain members of senior management, meets with representatives from the Trading Risk Management group and the transacting group to discuss NEE's and FPL's energy risk profile and operations, to review risk reports and to discuss fair value issues as necessary. The EMC develops guidelines required for an appropriate risk management control infrastructure, which includes implementation and monitoring of compliance with Trading Risk Management policy. The EMC executes its risk management responsibilities through direct oversight and delegation of its responsibilities to the Trading Risk Management group, as well as to other corporate and business unit personnel.

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at March 31, 2018 are as follows:
 
 
Fair Value at
 
Valuation
 
Significant
 
 
 
 
Transaction Type
 
March 31, 2018
 
Technique(s)
 
Unobservable Inputs
 
Range
 
 
Assets
 
Liabilities
 
 
 
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
 
 
Forward contracts - power
 
$
783

 
$
254

 
Discounted cash flow
 
Forward price (per MWh)
 
$(40)
$284
Forward contracts - gas
 
57

 
8

 
Discounted cash flow
 
Forward price (per MMBtu)
 
$1
$6
Options - power
 
49

 
15

 
Option models
 
Implied correlations
 
1%
100%
 
 
 
 
 
 
 
 
Implied volatilities
 
7%
485%
Options - primarily gas
 
100

 
168

 
Option models
 
Implied correlations
 
1%
100%
 
 
 
 
 
 
 
 
Implied volatilities
 
1%
95%
Full requirements and unit contingent contracts
 
266

 
38

 
Discounted cash flow
 
Forward price (per MWh)
 
$(29)
$928
 
 
 
 
 
 
 
 
Customer migration rate (a)
 
—%
20%
Total
 
$
1,255

 
$
483

 
 
 
 
 
 
 
 
———————————————
(a)
Applies only to full requirements contracts.


24


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:
Significant Unobservable Input
 
Position
 
Impact on
Fair Value Measurement
Forward price
 
Purchase power/gas
 
Increase (decrease)
 
 
Sell power/gas
 
Decrease (increase)
Implied correlations
 
Purchase option
 
Decrease (increase)
 
 
Sell option
 
Increase (decrease)
Implied volatilities
 
Purchase option
 
Increase (decrease)
 
 
Sell option
 
Decrease (increase)
Customer migration rate
 
Sell power (a)
 
Decrease (increase)
———————————————
(a)  Assumes the contract is in a gain position.

In addition, the fair value measurement of interest rate contract net liabilities related to the solar projects in Spain of approximately $147 million at March 31, 2018 includes a significant credit valuation adjustment. The credit valuation adjustment, considered an unobservable input, reflects management's assessment of non-performance risk of the subsidiaries related to the solar projects in Spain that are party to the contracts.

The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:
 
Three Months Ended March 31,
 
2018
 
2017
 
NEE
 
FPL
 
NEE
 
FPL
 
(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period
$
564

 
$

 
$
578

 
$
1

Realized and unrealized gains (losses):
 
 
 
 
 
 
 
Included in earnings (a)
16

 

 
216

 

Included in other comprehensive income (b)
(3
)
 

 
(1
)
 

Included in regulatory assets and liabilities
(1
)
 
(2
)
 
(2
)
 
(2
)
Purchases
42

 

 
21

 

Settlements
48

 

 
(85
)
 
(3
)
Issuances
(33
)
 

 
(16
)
 

Impact of adoption of new revenue standard (c)
(30
)
 

 

 

Transfers in (d)

 

 
9

 

Transfers out (d)
22

 

 
(5
)
 

Fair value of net derivatives based on significant unobservable inputs at March 31
$
625

 
$
(2
)
 
$
715

 
$
(4
)
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 (e)
$
19

 
$

 
$
141

 
$

———————————————
(a)
For the three months ended March 31, 2018 and 2017 , realized and unrealized gains of approximately $26 million and $215 million , respectively, are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.
(b)
Reflected in net unrealized gains on foreign currency translation on the condensed consolidated statements of comprehensive income.
(c)
See Note 1.
(d)
Transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.
(e)
For the three months ended March 31, 2018 and 2017 , unrealized gains of approximately $29 million and $141 million , respectively, are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.

Fair Value of Financial Instruments Recorded at Other than Fair Value - The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:

25


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


 
March 31, 2018
 
December 31, 2017
 
 
Carrying
Amount
 
Estimated
Fair Value
 
Carrying
Amount
 
Estimated
Fair Value
 
 
(millions)
 
NEE:
 
 
Special use funds (a)
$
833

 
$
833

 
$
743

 
$
744

 
Other investments - primarily notes receivable (b)
$
19


$
19

 
$
500

 
$
680

 
Long-term debt, including current maturities
$
29,226

 
$
30,828

(c)  
$
33,134

   
$
35,447

(c)  
FPL:
 
 
 
 
 
 
 
 
Special use funds (a)
$
687

 
$
687

 
$
593

 
$
593

 
Long-term debt, including current maturities
$
11,895

 
$
13,077

(c)  
$
11,702

 
$
13,285

(c)  
———————————————
(a)
Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis.
(b)
Included in noncurrent other assets in the condensed consolidated balance sheets. At December 31, 2017, primarily a note receivable (Level 3) classified as held for sale and under contract, along with debt secured by this note receivable (see Note 7 - NEER).
(c)
At March 31, 2018 and December 31, 2017 , for NEE, approximately $30,649 million and $33,743 million , respectively, is Level 2; the balance is Level 3. For FPL, all is Level 2.

Special Use Funds - The special use funds noted above and those carried at fair value (see Recurring Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately $5,957 million and $6,003 million at March 31, 2018 and December 31, 2017 , respectively, ( $4,061 million and $4,090 million , respectively, for FPL) and FPL's storm fund assets of $78 million at March 31, 2018 . The investments held in the special use funds consist of equity and debt securities which are primarily carried at estimated fair value. In connection with the adoption of a new accounting standards update as discussed below, available for sale securities include only debt securities in 2018 and debt and equity securities in 2017. The amortized cost of debt securities is approximately $1,894 million and $1,921 million at March 31, 2018 and December 31, 2017 , respectively, ( $1,469 million and $1,443 million , respectively, for FPL). The amortized cost of equity securities was approximately $1,521 million at December 31, 2017 ( $783 million for FPL). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory asset or liability accounts. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for unrealized losses considered to be other than temporary, including any credit losses, which are recognized in other - net in NEE's condensed consolidated statements of income. For NEE's non-rate regulated operations, changes in fair value of equity securities are recorded in change in unrealized losses on equity securities held in NEER's nuclear decommissioning funds - net in NEE’s condensed consolidated statements of income. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at March 31, 2018 of approximately eight years at both NEE and FPL. The cost of securities sold is determined using the specific identification method.

Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:
 
 
NEE
 
FPL
 
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
 
 
2018
 
2017
 
2018
 
2017
 
(millions)
Realized gains
 
$
8

 
$
55

 
$
5

 
$
13

Realized losses
 
$
14

 
$
29

 
$
9

 
$
19

Proceeds from sale or maturity of securities
 
$
595

 
$
626

 
$
389

 
$
441


The unrealized gains and 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:
 
NEE
 
FPL
 
March 31, 2018
 
December 31, 2017
 
March 31, 2018
 
December 31, 2017
 
(millions)
Unrealized gains
$
18

 
$
37

 
$
15

 
$
28

Unrealized losses (a)
$
32

 
$
12

 
$
25

 
$
9

Fair value
$
1,295

 
$
918

 
$
1,008

 
$
670

———————————————
(a)
Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at March 31, 2018 and December 31, 2017 were not material to NEE or FPL.


26


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


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, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included 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 Seabrook, decommissioning fund contributions and withdrawals are also regulated by the New Hampshire Nuclear Decommissioning Financing Committee pursuant to New Hampshire law.

The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.

Financial Instruments Accounting Standards Update - Effective January 1, 2018, NEE and FPL adopted an accounting standards update which modifies guidance for financial instruments and makes certain changes to presentation and disclosure requirements. The standards update requires that equity investments (except investments accounted for under the equity method and investments that are consolidated) be measured at fair value with changes in fair value recognized in net income. This standards update primarily impacts the equity securities in NEER's special use funds and is expected to result in increased earnings volatility in future periods based on market conditions. NEE and FPL adopted this standards update using the modified retrospective approach with the cumulative effect recognized as an adjustment to retained earnings on January 1, 2018. Upon adoption, NEE reclassified net unrealized after-tax gains of approximately $312 million from AOCI to retained earnings. The implementation of this standards update had no impact on FPL as changes in the fair value of equity securities in FPL's special use funds are deferred as regulatory assets or liabilities pursuant to accounting guidance for regulated operations.

6.  Income Taxes

NEE's effective income tax rates for the three months ended March 31, 2018 and 2017 were approximately 25% and 30% , respectively. The rates for both periods reflect the benefit of PTCs of approximately $ 23 million and $ 28 million , respectively, related to NEER's wind projects, as well as ITCs and deferred income taxes associated with grants under the Recovery Act (convertible ITCs) totaling approximately $ 36 million and $ 128 million , respectively, related to solar and certain wind projects at NEER. During the three months ended March 31, 2018, NEE recorded an income tax charge of approximately $125 million related to an adjustment to differential membership interests primarily as a result of the change in federal income tax rates effective January 1, 2018 (see Note 10 - Accounting for Partial Sales of Nonfinancial Assets).

NEE recognizes PTCs as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the financial viability of most wind projects and a fundamental component of such wind projects' results of operations. PTCs, as well as ITCs and deferred income taxes associated with convertible ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production.

On December 22, 2017, tax reform legislation was signed into law which, among other things, reduced the federal corporate income tax rate from 35% to 21% effective January 1, 2018. As a result, NEE, including FPL, performed an analysis to preliminarily revalue its deferred income taxes and included an estimate of changes in the balances in NEE's and FPL's December 31, 2017 financial statements. At December 31, 2017, the revaluation reduced NEE’s net deferred income tax liabilities by approximately $6.5 billion , of which $4.5 billion related to net deferred income tax liabilities at FPL and the remaining $2 billion related to net deferred income tax liabilities at NEER. The $2 billion reduction in NEER’s deferred income tax liabilities increased NEER’s 2017 net income. The $4.5 billion reduction in FPL’s deferred income tax liabilities was recorded as a regulatory liability. While NEE and FPL continue to believe that the provisional tax reform adjustments are reasonable estimates of the effects on its existing deferred taxes, additional analysis and detailed reviews are still being performed to finalize the accounting for the remeasurement of deferred tax assets and liabilities as a result of the enactment of tax reform. Effective January 1, 2018, NEE early adopted an accounting standards update that provided entities the option to reclassify certain tax effects from AOCI to retained earnings as a result of tax reform. Upon adoption, NEE reclassified approximately $16 million of tax benefits from AOCI to retained earnings.

7.  Variable Interest Entities (VIEs)

At March 31, 2018 , NEE had twenty-eight VIEs which it consolidated and had interests in certain other VIEs which it did not consolidate.

FPL - 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 a financing order of the FPSC. FPL is considered the primary beneficiary because FPL has

27


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


the power to direct the significant activities of the VIE, and its equity investment, which is subordinate to the bondholder's interest in the VIE, is at risk. 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 to reestablish FPL's storm and property insurance reserve. 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 are secured by the storm-recovery property. The bondholders have no recourse to the general credit of FPL. The assets of the VIE were approximately $ 107 million and $ 148 million at March 31, 2018 and December 31, 2017 , respectively, and consisted primarily of storm-recovery property, which are included in both current and noncurrent regulatory assets on NEE's and FPL's condensed consolidated balance sheets. The liabilities of the VIE were approximately $ 108 million and $ 147 million at March 31, 2018 and December 31, 2017 , respectively, and consisted primarily of storm-recovery bonds, which are included in current maturities of long-term debt and long-term debt on NEE's and FPL's condensed consolidated balance sheets.

NEER - NEE consolidates twenty-seven NEER VIEs. NEER is considered the primary beneficiary of these VIEs since NEER controls the most significant activities of these VIEs, including operations and maintenance, and has the obligation to absorb expected losses of these VIEs.

Prior to January 1, 2018, a subsidiary of NEER was the primary beneficiary of, and therefore consolidated NEP, which consolidated NEP OpCo because of NEP’s controlling interest as the general partner of NEP OpCo. At December 31, 2017, NEE owned a controlling non-economic general partner interest in NEP and a limited partner interest in NEP OpCo, and presented limited partner interests in NEP and NEP OpCo as noncontrolling interests in NEE's consolidated financial statements. At December 31, 2017, NEE owned common units of NEP OpCo representing a noncontrolling interest in NEP's operating projects of approximately 65.1% . The assets and liabilities of NEP were approximately $ 8.4 billion and $ 6.2 billion , respectively, at December 31, 2017 , and primarily consisted of property, plant and equipment and long-term debt. During the third quarter of 2017, changes to NEP's governance structure were made that, among other things, enhanced NEP unitholder governance rights. As a result of these governance changes, NEP is no longer a VIE and NEP was deconsolidated from NEE in January 2018 (see Note 2) resulting in NEE no longer indirectly consolidating NEP OpCo. NEP OpCo continues to be a VIE and NEE records its noncontrolling interest in NEP OpCo as an equity method investment (See Other below).

A NEER VIE consolidates two entities which own and operate natural gas/oil electric generation facilities with the capability of producing 110 MW. These entities sell their electric output under power sales contracts to a third party, with expiration dates in 2018 and 2020 . The power sales contracts provide the offtaker the ability to dispatch the facilities and require the offtaker to absorb the cost of fuel. The entities have third-party debt which is secured by liens against the generation facilities and the other assets of these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of the VIE were approximately $ 68 million and $ 22 million , respectively, at March 31, 2018 and $ 89 million and $ 29 million , respectively, at December 31, 2017 , and consisted primarily of property, plant and equipment and long-term debt.

Two indirect subsidiaries of NEER each contributed, to a NEP subsidiary, an approximately 50 % ownership interest in three entities which own and operate solar PV facilities with the capability of producing a total of approximately 277 MW. Each of the two indirect subsidiaries of NEER is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NEER. These three entities sell their electric output to third parties under power sales contracts with expiration dates in 2035 and 2036 . The three entities have third-party debt which is secured by liens against the assets of the entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs were approximately $ 546 million and $ 569 million , respectively, at March 31, 2018 and $ 548 million and $ 594 million , respectively, at December 31, 2017 , and consisted primarily of property, plant and equipment and long-term debt.

In February 2018, NEER sold a special purpose entity for net cash proceeds of approximately $71 million. In connection with the sale and the related consolidating state income tax effects, a gain of approximately $50 million (approximately $37 million after tax) was recorded in gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income during the three months ended March 31, 2018. Prior to the sale, the special purpose entity had insufficient equity at risk and was considered a VIE. The entity provided a loan in the form of a note receivable (see Note 5 - Fair Value of Financial Instruments Recorded at Other than Fair Value) to an unrelated third party, and also issued senior secured bonds which are collateralized by the note receivable. The assets and liabilities of the VIE were approximately $ 490 million and $ 502 million , respectively, at December 31, 2017 , and consisted primarily of notes receivables (included in noncurrent other assets and classified as held for sale) and long-term debt.


28


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


The other twenty-four NEER VIEs that are consolidated relate to certain subsidiaries which have sold differential membership interests in entities which own and operate wind electric generation and solar PV facilities with the capability of producing a total of approximately 6,367 MW and 374 MW, respectively. These entities sell their electric output either under power sales contracts to third parties with expiration dates ranging from 2018 through 2046 or in the spot market. These entities are considered VIEs because the holders of differential membership interests do not have substantive rights over the significant activities of these entities. Certain entities have third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NEER's ownership interest in these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs totaled approximately $ 9.9 billion and $ 1.3 billion , respectively, at March 31, 2018 . There were thirty-one consolidated VIEs at December 31, 2017 which included seven NEP-owned projects prior to the NEP deconsolidation; the assets and liabilities of those VIEs totaled approximately $ 13.1 billion and $ 6.9 billion , respectively. At March 31, 2018 and December 31, 2017 , the assets and liabilities of the VIEs consisted primarily of property, plant and equipment and long-term debt, and also deferral related to differential membership interests at December 31, 2017 .

Other - At March 31, 2018 and December 31, 2017 , several NEE subsidiaries had investments totaling approximately $2,653 million ( $2,176 million at FPL) and $2,634 million ( $2,195 million at FPL), respectively, which are included in special use funds and noncurrent other assets on NEE's condensed consolidated balance sheets and in special use funds on FPL's condensed consolidated balance sheets. These investments represented primarily commingled funds and mortgage-backed securities. NEE subsidiaries, including FPL, are not the primary beneficiary and therefore do not consolidate any of these entities because they do not control any of the ongoing activities of these entities, were not involved in the initial design of these entities and do not have a controlling financial interest in these entities.

Certain subsidiaries of NEE have noncontrolling interests in entities accounted for under the equity method. These entities are limited partnerships or similar entity structures in which the limited partners or nonmanaging members do not have substantive rights, and therefore are considered VIEs. NEE is not the primary beneficiary because it does not have a controlling financial interest in these entities, and therefore does not consolidate any of these entities. Beginning in January 2018, as a result of the deconsolidation of NEP, NEE records its noncontrolling interest in NEP OpCo as an equity method investment. NEE’s investment in these entities totaled approximately $4,797 million and $248 million at March 31, 2018 and December 31, 2017 , respectively. Subsidiaries of NEE had committed to invest an additional approximately $70 million and $ 75 million in three of the entities at March 31, 2018 and December 31, 2017 , respectively.

8. Equity

Earnings Per Share - The reconciliation of NEE's basic and diluted earnings per share attributable to NEE is as follows:
 
Three Months Ended
March 31,
 
2018
 
2017
 
(millions, except per share amounts)
Numerator:
 
 
 
    Net income attributable to NEE - basic
$
4,428

 
$
1,583

Adjustment for the impact of dilutive securities at NEP
(9
)
 

    Net income attributable to NEE - assuming dilution
$
4,419

 
$
1,583

 
 
 
 
Denominator:
 
Weighted-average number of common shares outstanding - basic
470.7

 
467.5

Equity units, stock options, performance share awards, forward sale agreements and restricted stock (a)
3.6

 
2.7

Weighted-average number of common shares outstanding - assuming dilution
474.3

 
470.2

Earnings per share attributable to NEE:
 
Basic
$
9.41

 
$
3.39

Assuming dilution
$
9.32

 
$
3.37

———————————————
(a)
Calculated using the treasury stock method. 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.

Common shares issuable pursuant to stock options, performance share awards and/or equity units, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were 0.2 million and 11.9 million for the three months ended March 31, 2018 and 2017 , respectively.


29


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Accumulated Other Comprehensive Income (Loss) - The components of AOCI, net of tax, are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Accumulated Other Comprehensive Income (Loss)

Net Unrealized Gains (Losses) on Cash Flow Hedges
 
Net Unrealized Gains (Losses) on Available for Sale Securities
 
Defined Benefit Pension and Other Benefits Plans
 
Net Unrealized Gains (Losses) on Foreign Currency Translation
 
Other Comprehensive Income (Loss) Related to Equity Method Investees
 
Total

(millions)
Three Months Ended March 31, 2018
 
Balances, December 31, 2017
$
(77
)
 
$
316

 
$
(39
)
 
$
(69
)
 
$
(20
)
 
$
111

Other comprehensive income (loss) before reclassifications

 
(5
)
 
(2
)
 
(20
)
 
2

 
(25
)
Amounts reclassified from AOCI
7

(a)  
(1
)
(b)  

 

 

 
6

Net other comprehensive income (loss)
7

 
(6
)
 
(2
)
 
(20
)
 
2

 
(19
)
Impact of NEP deconsolidation (c)
3

 

 

 
37

 
18

 
58

Adoption of accounting standards updates (d)
(7
)
 
(312
)
 
(9
)
 

 

 
(328
)
Balances, March 31, 2018
$
(74
)
 
$
(2
)
 
$
(50
)
 
$
(52
)
 
$

 
$
(178
)
———————————————
(a)
Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 4 - Income Statement Impact of Derivative Instruments.
(b)
Reclassified to gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income.
(c)
Reclassified and reflected in gain on NEP deconsolidation. See Note 2.
(d)
Reclassified to retained earnings. See Notes 5 - Financial Instruments Accounting Standards Update and 6.


Accumulated Other Comprehensive Income (Loss)

Net Unrealized Gains (Losses) on Cash Flow Hedges
 
Net Unrealized Gains (Losses) on Available for Sale Securities
 
Defined Benefit Pension and Other Benefits Plans
 
Net Unrealized Gains (Losses) on Foreign Currency Translation
 
Other Comprehensive Income (Loss) Related to Equity Method Investees
 
Total
 
(millions)
Three Months Ended March 31, 2017

Balances, December 31, 2016
$
(100
)
 
$
225

 
$
(83
)
 
$
(90
)
 
$
(22
)
 
$
(70
)
Other comprehensive income (loss) before reclassifications

 
34

 
(3
)
 
16

 
1

 
48

Amounts reclassified from AOCI
9

(a)  
(16
)
(b)  

 

 

 
(7
)
Net other comprehensive income (loss)
9

 
18

 
(3
)
 
16

 
1

 
41

Other comprehensive income attributable to noncontrolling interests
(10
)
 

 

 
(1
)
 

 
(11
)
Balances, March 31, 2017
$
(101
)
 
$
243

 
$
(86
)
 
$
(75
)
 
$
(21
)
 
$
(40
)
———————————————
(a)
Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 4 - Income Statement Impact of Derivative Instruments.
(b)
Reclassified to gains on disposal of investments and other property - net in NEE's condensed consolidated statements of income.

 
9.  Debt

Significant long-term debt issuances and borrowings during the three months ended March 31, 2018 were as follows:
 
Principal Amount
 
Interest Rate
 
Maturity Date
 
(millions)
 
 
 
 
FPL - First mortgage bonds
$
1,000

 
3.95
%
 
2048
NEECH - Debentures
$
800

 
Variable

(a)  
2019
———————————————
(a)
Variable rate is based on an underlying index plus a margin.


30


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


10.  Summary of Significant Accounting and Reporting Policies

Goodwill and Other Intangible Assets - Effective January 1, 2018, NEE and FPL adopted an accounting standards update that clarified the definition of a business. The revised guidance affects the evaluation of whether a transaction should be accounted for as an acquisition or disposition of an asset or a business. NEE and FPL adopted this guidance on a prospective basis effective January 1, 2018.

Restricted Cash - In the fourth quarter of 2017, NEE and FPL early adopted an accounting standards update which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the consolidated statements of cash flows. NEE and FPL adopted the standards update retrospectively, which adoption did not have a material impact on NEE’s or FPL’s consolidated statements of cash flows.

At March 31, 2018 and December 31, 2017 , NEE had approximately $358 million ( $116 million for FPL) and $269 million ( $141 million for FPL), respectively, of restricted cash, of which approximately $345 million ( $103 million for FPL) and $247 million ( $128 million for FPL), respectively, is included in current other assets and the remaining balance is included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets. Restricted cash is primarily related to debt service payments, bond proceeds held for construction at FPL and margin cash collateral requirements. In addition, where offsetting positions exist, restricted cash related to margin cash collateral is netted against derivative instruments, which totaled $2 million at March 31, 2018 . See Note 4.

Leases - In February 2016, the FASB issued an accounting standards update which requires, among other things, that lessees recognize a lease liability, initially measured at the present value of the future lease payments, and a right-of-use asset for all leases (with the exception of short-term leases) (new lease standard). The new lease standard also requires new qualitative and quantitative disclosures for both lessees and lessors. The new lease standard will be effective for NEE and FPL beginning January 1, 2019. Early adoption is permitted.

NEE and FPL are currently reviewing their portfolio of contracts and evaluating the proper application of the new lease standard to these contracts in order to determine the impact the adoption will have on their consolidated financial statements, including timing of adoption. NEE and FPL are implementing a number of system enhancements to facilitate the identification, tracking and reporting of leases based upon the requirements of the new lease standard. NEE and FPL are continuing to assess the transition options and practical expedients and monitoring industry implementation issues.

Accounting for Partial Sales of Nonfinancial Assets - Effective January 1, 2018, NEE and FPL adopted an accounting standards update regarding the accounting for partial sales of nonfinancial assets using the modified retrospective approach, resulting in cumulative effects being recognized on January 1, 2018. This standards update affects the accounting and related financial statement presentation for the sales of differential membership interests to third-party investors and the sales of NEER assets to indirect subsidiaries of NEP. The adoption of this standards update did not have an impact on FPL.

For the sales of differential membership interests to third-party investors, NEE recorded an increase to retained earnings of approximately $34 million ( $56 million pretax) and a reduction to additional paid-in capital of $77 million ( $59 million after tax) on January 1, 2018. In addition, the liability reflected as deferral related to differential membership interests - VIEs on NEE's consolidated balance sheets at December 31, 2017 was reclassified to noncontrolling interests. In future periods, as the third-party investors receive their portion of the economic attributes of the related facilities, NEE records such amounts as net loss attributable to noncontrolling interests. Prior to the adoption of this standards update, the income related to differential membership interests was being recognized in benefits associated with differential membership interests - net in NEE's condensed consolidated statements of income. Additionally, net (income) loss attributable to noncontrolling interests for the three months ended March 31, 2018 includes approximately $497 million ( $373 million after tax) related to a reduction of differential membership interests as a result of the change in federal income tax rates effective January 1, 2018.

Also upon adoption of the standards update, the profit sharing liability associated with the sales of NEER assets to NEP was eliminated and NEE recorded an increase to additional paid-in capital of approximately $842 million ( $652 million after tax) and a reduction to retained earnings of approximately $52 million ( $69 million pretax) on January 1, 2018. Due to the deconsolidation of NEP, the previous accounting guidance would not have had an impact on NEE's 2018 financial statements, but rather the profit sharing liability would have increased the gain on NEP deconsolidation.

Assets and Liabilities Associated with Assets Held for Sale - In January 2017, an indirect wholly owned subsidiary of NEE completed the sale of its membership interests in its fiber-optic telecommunications business for net cash proceeds of approximately $1.1 billion , after repayment of $370 million of related long-term debt. In connection with the sale and the related consolidating state income tax effects, a gain of approximately $1.1 billion (approximately $685 million after tax) was recorded in NEE's condensed consolidated statements of income during the three months ended March 31, 2017 and is included in gains on disposal of a business/assets - net.

31


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



11.  Commitments and Contingencies

Commitments - NEE 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 and the procurement of nuclear fuel. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction and development of wind and solar projects and the procurement of nuclear fuel, as well as equity contributions to joint ventures for the construction of natural gas pipeline assets. Capital expenditures for Corporate and Other primarily include the cost to maintain existing transmission facilities at NEET.

At March 31, 2018 , estimated capital expenditures for the remainder of 2018 through 2022 for which applicable internal approvals (and also, if required, regulatory approvals such as FPSC approvals for FPL) have been received were as follows:
 
Remainder of 2018
 
2019
 
2020
 
2021
 
2022
 
Total
 
(millions)
FPL:
 
 
 
 
 
 
 
 
 
 
 
Generation: (a)
 
 
 
 
 
 
 
 
 
 
 
New (b)(c)
$
430

 
$
465

 
$
1,245

 
$
1,100

 
$
1,105

 
$
4,345

Existing
980

 
855

 
460

 
550

 
490

 
3,335

Transmission and distribution
1,870

 
2,135

 
2,280

 
2,545

 
2,570

 
11,400

Nuclear fuel
130

 
150

 
135

 
145

 
165

 
725

General and other
385

 
320

 
290

 
300

 
280

 
1,575

Total
$
3,795

 
$
3,925

 
$
4,410

 
$
4,640

 
$
4,610

 
$
21,380

NEER:
 

 
 

 
 

 
 

 
 

 
 

Wind (d)
$
1,550

 
$
1,750

 
$
40

 
$
30

 
$
25

 
$
3,395

Solar (e)
90

 

 

 

 

 
90

Nuclear, including nuclear fuel
200

 
225

 
205

 
195

 
240

 
1,065

Natural gas pipelines (f)
850

 
50

 
25

 
15

 
25

 
965

Other
450

 
50

 
50

 
40

 
45

 
635

Total
$
3,140

 
$
2,075

 
$
320

 
$
280

 
$
335

 
$
6,150

Corporate and Other
$
40

 
$
20

 
$
30

 
$
15

 
$

 
$
105

———————————————
(a)
Includes AFUDC of approximately $ 74 million , $ 46 million , $ 47 million , $ 31 million and $ 14 million for the remainder of 2018 through 2022, respectively.
(b)
Includes land, generation structures, transmission interconnection and integration and licensing.
(c)
Excludes capital expenditures of approximately $800 million for the modernization of two generating units at FPL's Lauderdale facility to a high-efficiency natural gas-fired unit (Dania Beach Clean Energy Center), which is pending approval by the Florida Power Plant Siting Board, comprised of the Florida governor and cabinet.
(d)
Consists of capital expenditures for new wind projects, repowering of existing wind projects and related transmission totaling approximately 4,050 MW.
(e)
Includes capital expenditures for new solar projects and related transmission totaling approximately 100 MW.
(f)
Includes equity contributions associated with joint venture equity investments for the construction of natural gas pipelines.

The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.

Contracts - In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has commitments under long-term purchased power and fuel contracts. FPL has various firm pay-for-performance contracts to purchase approximately 114 MW from certain cogenerators and small power producers with expiration dates ranging from 2026 through 2034. These contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts and capacity payments are subject to the facilities meeting certain contract conditions. FPL has contracts with expiration dates through 2042 for the purchase and transportation of natural gas and coal, and storage of natural gas.

At March 31, 2018 , NEER has entered into contracts with expiration dates ranging from May 2018 through 2032 primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium, and the conversion, enrichment and fabrication of nuclear fuel, and has made commitments for the construction of natural gas pipelines. Approximately $2.9 billion of related commitments are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the purchase, transportation and storage of natural gas with expiration dates ranging from late April 2018 through 2038 .


32


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


The required capacity and/or minimum payments under contracts, including those discussed above, at March 31, 2018 were estimated as follows:
 
Remainder of 2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
(millions)
FPL:
 
 
 
 
 
 
 
 
 
 
 
Capacity charges (a)
$
15

 
$
20

 
$
20

 
$
20

 
$
20

 
$
225

Minimum charges, at projected prices: (b)
 

 
 

 
 

 
 

 
 

 
 

Natural gas, including transportation and storage (c)
$
1,485

 
$
980

 
$
940

 
$
905

 
$
895

 
$
11,240

Coal, including transportation
$
30

 
$
5

 
$

 
$

 
$

 
$

NEER (d)
$
2,145

 
$
540

 
$
175

 
$
145

 
$
170

 
$
1,330

Corporate and Other (e)(f)
$
205

 
$
15

 
$
15

 
$
10

 
$

 
$

———————————————
(a)
Capacity charges, substantially all of which are recoverable through the capacity clause, totaled approximately $ 5 million and $ 20 million for the three months ended March 31, 2018 and 2017 , respectively. Energy charges, which are recoverable through the fuel clause, totaled approximately $ 7 million and $ 16 million for the three months ended March 31, 2018 and 2017 , respectively.
(b)
Recoverable through the fuel clause.
(c)
Includes approximately $220 million , $290 million , $360 million , $390 million , $390 million and $7,175 million for the remainder of 2018 through 2022 and thereafter, respectively, of firm commitments related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection.
(d)
Includes approximately $65 million , $65 million , $65 million , $65 million and $1,035 million in 2019 through 2022 and thereafter, respectively, of firm commitments related to a natural gas transportation agreement with a joint venture, in which NEER has a 31% equity investment, that is constructing a natural gas pipeline. These firm commitments are subject to the completion of construction of the pipeline which is expected at the end of 2018.
(e)
Includes an approximately $70 million commitment to invest in clean power and technology businesses through 2021.
(f)
Excludes approximately $170 million for the remainder of 2018 of joint obligations of NEECH and NEER which are included in the NEER amounts above.

FPL made an approximately $90 million payment to JEA, the 80% owner of St. Johns River Power Park coal units (SJRPP) in connection with the shutdown of SJRPP in January 2018, which had the effect of terminating a 375 MW take-or-pay purchased power contract, retiring SJRPP and eliminating FPL's 20% ownership interest. In connection with the FPSC's approval of the retirement, FPL recorded a regulatory asset of approximately $90 million at December 31, 2017, which is being amortized over the remaining life of the take-or-pay purchased power contract (October 2021) and recovered through the capacity clause. In January 2018, NEE and FPL reclassified the SJRPP net book value of approximately $191 million to a regulatory asset. Approximately $150 million of the regulatory asset will be amortized over 15 years in base rates beginning July 1, 2018 and the remainder will be amortized over 10 years through the environmental cost recovery clause beginning when FPL's base rates are next adjusted in a general base rate case. In addition, in connection with the shutdown of the plant, FPL had regulatory liabilities of approximately $62 million at December 31, 2017, which is being refunded to customers through the capacity clause over the remaining life of the take-or-pay purchased power contract.

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, NEE maintains $ 450 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 U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $ 1.0 billion ($ 509 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $ 152 million ($ 76 million for FPL) per incident per year. NEE 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 $ 15 million , $ 38 million and $ 19 million , plus any applicable taxes, per incident, respectively.

NEE participates in a nuclear insurance mutual company that provides $ 2.75 billion of limited insurance coverage per occurrence per site for property damage, decontamination and premature decommissioning risks at its nuclear plants and a sublimit of $ 1.5 billion for non-nuclear perils, except for Duane Arnold which has a sublimit of $ 1.0 billion . NEE participates in co-insurance of 10% of the first $ 400 million of losses per site per occurrence. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. NEE 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 NEE's or another participating insured's nuclear plants, NEE could be assessed up to $ 177 million ($ 108 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE 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 , $ 5 million and $ 4 million , plus any applicable taxes, respectively.


33


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of either its transmission and distribution property or natural gas pipeline assets. If FPL's future storm restoration costs exceed the storm reserve, FPL may recover storm restoration costs, subject to prudence review by the FPSC, either through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.

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 NEE and FPL and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.

12.  Segment Information

NEE's reportable segments are FPL, a rate-regulated electric utility, and NEER, a competitive energy business. Corporate and Other represents other business activities and includes eliminating entries. NEE's segment information is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2018
 
2017
 
 
FPL
 
NEER (a)(b)
 
Corporate
and Other
 
NEE
Consoli-
dated
(b)
 
FPL
 
NEER (a)
 
Corporate
and Other
 
NEE
Consoli-
dated
 
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
 
Operating revenues
$
2,620

 
$
1,247

 
$
(4
)
 
$
3,863

 
$
2,527

 
$
1,424

 
$
21

 
$
3,972

 
Operating expenses (income) - net
$
1,912

 
$
861

 
$
43

 
$
2,816

 
$
1,716

 
$
931


$
(1,037
)
(d)  
$
1,610

(d)  
Net income attributable to NEE
$
484

 
$
3,926

(c)  
$
18

 
$
4,428

 
$
445

 
$
476

(c)  
$
662

 
$
1,583

 
———————————————
(a)
Interest expense allocated from NEECH is based on a deemed capital structure of 70% debt. For this purpose, differential membership interests sold by NEER subsidiaries are included with debt. Residual NEECH corporate interest expense is included in Corporate and Other.
(b)
NEP was deconsolidated from NEER in January 2018. See Note 2.
(c)
See Note 6 for a discussion of NEER's tax benefits related to PTCs.
(d)
Prior period amounts have been retrospectively adjusted as discussed in Note 3 - Amendments to Presentation of Retirement Benefits.
 
March 31, 2018
 
December 31, 2017
 
FPL
 
NEER (a)
 
Corporate
and Other
 
NEE
Consoli-
dated (a)
 
FPL
 
NEER
 
Corporate
and Other
 
NEE
Consoli-
dated
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
Total assets
$
50,895

 
$
42,171

 
$
1,218

 
$
94,284

 
$
50,244

 
$
45,549

 
$
2,034

 
$
97,827

———————————————
(a)
NEP was deconsolidated from NEER in January 2018. See Note 2.


34


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


13.  Summarized Financial Information of NEECH

NEECH, a 100% owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL. NEECH’s debentures and junior subordinated debentures including those that were registered pursuant to the Securities Act of 1933, as amended, are fully and unconditionally guaranteed by NEE. Condensed consolidating financial information is as follows:

Condensed Consolidating Statements of Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
 
NEE
(Guarantor)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated
 
NEE
(Guarantor) (b)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated (b)
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
Operating revenues
$

 
$
1,277

 
$
2,586

 
$
3,863

 
$

 
$
1,462

 
$
2,510

 
$
3,972

Operating expenses - net
(56
)
 
(878
)
 
(1,882
)
 
(2,816
)
 
(49
)
 
150

 
(1,711
)
 
(1,610
)
Interest expense
(1
)
 
(91
)
 
(134
)
 
(226
)
 

 
(241
)
 
(119
)
 
(360
)
Equity in earnings of subsidiaries
4,361

 

 
(4,361
)
 

 
1,563

 

 
(1,563
)
 

Gain on NEP deconsolidation

 
3,935

 

 
3,935

 

 

 

 

Other income (deduction) - net
51

 
250

 
23

 
324

 
43

 
229

 
(8
)
 
264

Income (loss) before income taxes
4,355

 
4,493

 
(3,768
)
 
5,080

 
1,557

 
1,600

 
(891
)
 
2,266

Income tax expense (benefit)
(73
)
 
1,210

 
112

 
1,249

 
(26
)
 
450

 
251

 
675

Net income (loss)
4,428

 
3,283


(3,880
)

3,831


1,583

 
1,150


(1,142
)

1,591

Net (income) loss attributable to noncontrolling interests

 
597

 

 
597

 

 
(8
)
 

 
(8
)
Net income (loss) attributable to NEE
$
4,428

 
$
3,880

 
$
(3,880
)
 
$
4,428

 
$
1,583

 
$
1,142

 
$
(1,142
)
 
$
1,583

———————————————
(a)
Represents primarily FPL and consolidating adjustments.
(b)
Prior period amounts have been retrospectively adjusted as discussed in Note 3 - Amendments to Presentation of Retirement Benefits.


Condensed Consolidating Statements of Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2018
 
2017
 
NEE
(Guarantor)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated
 
NEE
(Guarantor)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
Comprehensive income (loss) attributable to NEE
$
4,467

 
$
3,921

 
$
(3,921
)
 
$
4,467

 
$
1,613

 
$
1,175

 
$
(1,175
)
 
$
1,613

———————————————
(a)
Represents primarily FPL and consolidating adjustments.

35


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



Condensed Consolidating Balance Sheets
 
March 31, 2018
 
December 31, 2017
 
NEE
(Guaran-
tor)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated
 
NEE
(Guaran-
tor)
 
NEECH
 
Other (a)
 
NEE
Consoli-
dated
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electric plant in service and other property
$
31

 
$
35,292

 
$
52,792

 
$
88,115

 
$
20

 
$
41,782

 
$
51,981

 
$
93,783

Accumulated depreciation and amortization
(26
)
 
(7,868
)
 
(13,025
)
 
(20,919
)
 
(15
)
 
(8,551
)
 
(12,801
)
 
(21,367
)
Total property, plant and equipment - net
5

 
27,424

 
39,767

 
67,196

 
5

 
33,231

 
39,180

 
72,416

CURRENT ASSETS
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
3

 
521

 
26

 
550

 
1

 
1,679

 
34

 
1,714

Receivables
265

 
1,488

 
636

 
2,389

 
442

 
1,633

 
662

 
2,737

Other
5

 
1,323

 
1,345

 
2,673

 
5

 
1,283

 
1,418

 
2,706

Total current assets
273

 
3,332

 
2,007

 
5,612

 
448

 
4,595

 
2,114

 
7,157

OTHER ASSETS
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Investment in subsidiaries
32,417

 


 
(32,417
)
 

 
27,825

 

 
(27,825
)
 

Investment in equity method investees

 
6,774

 

 
6,774

 

 
2,321

 

 
2,321

Other
657

 
6,131

 
7,914

 
14,702

 
591

 
7,620

 
7,722

 
15,933

Total other assets
33,074

 
12,905

 
(24,503
)
 
21,476

 
28,416

 
9,941

 
(20,103
)
 
18,254

TOTAL ASSETS
$
33,352

 
$
43,661

 
$
17,271

 
$
94,284

 
$
28,869

 
$
47,767

 
$
21,191

 
$
97,827

CAPITALIZATION
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Common shareholders' equity
$
32,706

 
$
14,011

 
$
(14,011
)
 
$
32,706

 
$
28,208

 
$
10,745

 
$
(10,745
)
 
$
28,208

Noncontrolling interests

 
3,287

 

 
3,287

 

 
1,290

 

 
1,290

Long-term debt

 
16,259

 
11,803

 
28,062

 

 
20,227

 
11,236

 
31,463

Total capitalization
32,706

 
33,557

 
(2,208
)
 
64,055

 
28,208

 
32,262

 
491

 
60,961

CURRENT LIABILITIES
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Debt due within one year

 
2,484

 
1,653

 
4,137

 

 
1,215

 
2,403

 
3,618

Accounts payable
1

 
1,158

 
589

 
1,748

 
3

 
2,427

 
805

 
3,235

Other
524

 
1,745

 
1,425

 
3,694

 
325

 
2,073

 
1,981

 
4,379

Total current liabilities
525

 
5,387

 
3,667

 
9,579

 
328

 
5,715

 
5,189

 
11,232

OTHER LIABILITIES AND DEFERRED CREDITS
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Asset retirement obligations

 
927

 
2,071

 
2,998

 

 
984

 
2,047

 
3,031

Deferred income taxes
(282
)
 
2,551

 
4,738

 
7,007

 
(82
)
 
1,247

 
4,589

 
5,754

Other
403

 
1,239

 
9,003

 
10,645

 
415

 
7,559

 
8,875

 
16,849

Total other liabilities and deferred credits
121

 
4,717

 
15,812

 
20,650

 
333

 
9,790

 
15,511

 
25,634

COMMITMENTS AND CONTINGENCIES


 


 


 


 


 


 


 


TOTAL CAPITALIZATION AND LIABILITIES
$
33,352

 
$
43,661

 
$
17,271

 
$
94,284

 
$
28,869

 
$
47,767

 
$
21,191

 
$
97,827

———————————————
(a)
Represents primarily FPL and consolidating adjustments.

36


NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)



Condensed Consolidating Statements of Cash Flows
 
Three Months Ended March 31,
 
2018
 
2017 (a)
 
NEE
(Guaran-
tor)
 

NEECH
 
Other (b)
 
NEE
Consoli-
dated
 
NEE
(Guaran-
tor)
 

NEECH
 
Other (b)
 
NEE
Consoli-
dated
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
NET CASH PROVIDED BY OPERATING ACTIVITIES
$
1,392

 
$
503

 
$
(605
)
 
$
1,290

 
$
522

 
$
493

 
$
243

 
$
1,258

CASH FLOWS FROM INVESTING ACTIVITIES
 

 
 

 
 

 
 

 
 

 
 

 
 

 


Capital expenditures, independent power and other investments and nuclear fuel purchases

 
(2,385
)
 
(1,203
)
 
(3,588
)
 

 
(3,413
)
 
(1,766
)
 
(5,179
)
Proceeds from sale of the fiber-optic telecommunications business

 

 

 

 

 
1,484

 

 
1,484

Capital contributions from NEE
(853
)
 

 
853

 

 
(38
)
 

 
38

 

Proceeds from sale or maturity of securities in special use funds and other investments

 
489

 
430

 
919

 

 
243

 
492

 
735

Purchases of securities in special use funds and other investments

 
(506
)
 
(533
)
 
(1,039
)
 

 
(285
)
 
(519
)
 
(804
)
Other - net
12

 
11

 
18

 
41

 
1

 
27

 
66

 
94

Net cash used in investing activities
(841
)
 
(2,391
)
 
(435
)
 
(3,667
)
 
(37
)
 
(1,944
)
 
(1,689
)
 
(3,670
)
CASH FLOWS FROM FINANCING ACTIVITIES
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Issuances of long-term debt

 
804

 
1,000

 
1,804

 

 
489

 
200

 
689

Retirements of long-term debt

 
(155
)
 
(787
)
 
(942
)
 

 
(514
)
 
(34
)
 
(548
)
Net change in commercial paper

 
1,403

 
(126
)
 
1,277

 

 
1,085

 
956

 
2,041

Proceeds from other short-term debt

 

 

 

 

 

 
200

 
200

Repayments of other short-term debt

 

 
(250
)
 
(250
)
 

 

 

 

Issuances of common stock - net
7

 

 

 
7

 
7

 

 

 
7

Dividends on common stock
(523
)
 

 

 
(523
)
 
(460
)
 

 

 
(460
)
Contributions from (dividends to) NEE

 
(1,191
)
 
1,191

 

 

 
(89
)
 
89

 

Other - net
(33
)
 
(9
)
 
(20
)
 
(62
)
 
(32
)
 
(224
)
 
10

 
(246
)
Net cash provided by (used in) financing activities
(549
)
 
852

 
1,008

 
1,311

 
(485
)
 
747

 
1,421

 
1,683

Effects of currency translation on cash, cash equivalents and restricted cash

 
(9
)
 

 
(9
)
 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash
2

 
(1,045
)
 
(32
)
 
(1,075
)
 

 
(704
)
 
(25
)
 
(729
)
Cash, cash equivalents and restricted cash at beginning of period
1

 
1,807

 
175

 
1,983

 
1

 
1,375

 
153

 
1,529

Cash, cash equivalents and restricted cash at end of period
$
3

 
$
762

 
$
143

 
$
908

 
$
1

 
$
671

 
$
128

 
$
800

———————————————
(a)
Prior period amounts have been retrospectively adjusted as discussed in Note 10 - Restricted Cash.
(b)
Represents primarily FPL and consolidating adjustments.



37




Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

NEE’s operating performance is driven primarily by the operations of its two principal subsidiaries, FPL, which serves nearly five million customer accounts in Florida and is one of the largest electric utilities in the U.S., and NEER, which together with affiliated entities is the world's largest operator of wind and solar projects based on 2017 MWh produced. The table below presents net income attributable to NEE and earnings p er share attributable to NEE , assuming dilution, by reportable segment, FPL and NEER , and by Corporate and Other, which is primarily comprised of the operating results of NEET and other business activities, as well as other income and expense items, including interest expense, income taxes and eliminating entries ( See Note 12 f or additional segment information). The following discussions should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2017 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussions, all comparisons are with the corresponding items in the prior year period.
 
Net Income Attributable to NEE
 
Earnings
Per Share Attributable to NEE,
Assuming Dilution
 
Three Months Ended
March 31,
 
Three Months Ended
March 31,
 
2018
 
2017
 
2018
 
2017
 
(millions)
 
 
 
 
FPL
$
484

 
$
445

 
$
1.02

 
$
0.95

NEER (a)(b)
3,926

 
476

 
8.26

 
1.01

Corporate and Other
18

 
662

 
0.04

 
1.41

NEE (b)
$
4,428

 
$
1,583

 
$
9.32

 
$
3.37

———————————————
(a)
NEER’s results reflect an allocation of interest expense from NEECH based on a deemed capital structure of 70% debt.
(b)
NEP was deconsolidated from NEER in January 2018. See Note 2.

Adjusted Earnings

NEE prepares its financial statements under GAAP . However, management uses earnings excluding certain items (adjusted earnings), a non-GAAP financial measure, internally for financial planning, analysis of performance, reporting of results to the Board of Directors and as an input in determining performance-based compensation under NEE’s employee incentive compensation plans. NEE also uses adjusted earnings when communicating its financial results and earnings outlook to analysts and investors. NEE ’s management believes that adjusted earnings provide a more meaningful representation of NEE 's fundamental earnings power. Although the excluded amounts are properly included in the determination of net income under GAAP , managemen t 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 under GAAP .

The following table provides details of the after-tax adjustments to net income considered in computing NEE's adjusted earnings discussed above.
 
Three Months Ended
March 31,
 
2018
 
2017
 
(millions)
Net gains associated with non-qualifying hedge activity (a)
$
88

 
$
109

Tax reform-related (b)
$
465

 
$

NEP investment gains, net (c)
$
2,973

 
$

Change in unrealized losses on NEER's nuclear decommissioning funds and OTTI, net (d)
$
(11
)
 
$

Operating results of solar projects in Spain - NEER
$
(6
)
 
$
(8
)
Merger-related expenses - Corporate and Other
$

 
$
(23
)
Gain on sale of the fiber-optic telecommunications business - Corporate and Other (e)
$

 
$
685

———————————————
(a)
For the three months ended March 31, 2018 and 2017 , approximately $93 million and $127 million of gains, respectively, are included in NEER's net income; the balance is included in Corporate and Other. The change in non-qualifying hedge activity is primarily attributable to changes in forward power and natural gas prices, interest rates and foreign currency exchange rates, as well as the reversal of previously recognized unrealized mark-to-market gains or losses as the underlying transactions were realized.
(b)
For the three months ended March 31, 2018 , approximately $467 million of favorable tax reform-related impacts are included in NEER's net income; the balance is included in Corporate and Other. See Note 10 - Accounting for Partial Sales of Nonfinancial Assets for a discussion of the impact of tax reform on differential membership interests.
(c)
For the three months ended March 31, 2018 , approximately $2,999 million of gains are included in NEER's net income; the balance is included in Corporate and Other. See Note 2.
(d)
For the three months ended March 31, 2018 , approximately $13 million of losses are included in NEER's net income; the balance is included in Corporate and Other.
(e)
See Note 10 - Assets and Liabilities Associated with Assets Held for Sale for a discussion of the sale of the fiber-optic telecommunications business.

38





NEE segregates into two categories unrealized mark-to-market gains and losses and timing impacts related to derivative transactions. The first category, referred to as non-qualifying hedges, represents certain energy derivative, interest rate derivative and foreign currency transactions entered into as economic hedges, which do not meet the requirements for hedge accounting, or for which hedge accounting treatment is not elected or has been discontinued. Changes in the fair value of those transactions are marked to market and reported in the condensed consolidated statements of income, resulting in earnings volatility because the economic offset to certain of the positions are generally not marked to market. As a consequence, NEE's net income reflects only the movement in one part of economically-linked transactions. For example, a gain (loss) in the non-qualifying hedge category for certain energy derivatives 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 GAAP. For this reason, NEE's management views results expressed excluding the impact of the non-qualifying hedges as a meaningful measure of current period performance. The second category, referred to as trading activities, which is included in adjusted earnings, represents the net unrealized effect of actively traded positions entered into to take advantage of expected market price movements and all other commodity hedging activities. 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. See Note  4 .

RESULTS OF OPERATIONS

Summary

Net income attributable to NEE for the three months ended March 31, 2018 was higher tha n the prior year period by $2,845 million , reflecting higher results at FPL and NEER, partly offset by lower results at Corporate and Other.

FPL's increase in net income for the three months ended March 31, 2018 was primarily driven by increased retail base revenues and lower income tax expense, partly offset by higher depreciation and amortization due to the absence of reserve amortization. For the three months ended March 31, 2018 and 2017 , FPL earned a regulatory ROE on its retail rate base of approximately 11.17% and 11.50% , respectively.

NEER's results increased for the three months ended March 31, 2018 primarily reflecting NEP investment gains and favorable tax reform-related impacts .

Corporate and Other's results decreased for the three months ended March 31, 2018 primarily due to the absence of the 2017 gain on sale of the fiber-optic telecommunications business.

NEE's effective income tax rates for the three months ended March 31, 2018 and 2017 were 25% and 30% , respectively. The decrease in rates for the three months ended March 31, 2018 reflects lower federal corporate income tax rates due to tax reform, partly offset by the impact of PTCs and ITCs and an adjustment related to differential membership interests. See Note 6.

FPL: Results of Operations

Investments in plant in service and other property grew FPL's average retail rate base for the three months ended March 31, 2018 by approximately $2.6 billion when compared to the same period in the prior year, reflecting, among other things, solar generation additions and ongoing transmission and distribution additions.

The use of reserve amortization is permitted by a December 2016 FPSC final order approving a stipulation and settlement between FPL and several intervenors in FPL's base rate proceeding (2016 rate agreement). In order to earn a targeted regulatory ROE, subject to limitations associated with the 2016 rate agreement, reserve amortization is calculated using a trailing thirteen-month average of retail rate base and capital structure in conjunction with the trailing twelve months regulatory retail base net operating income, which primarily includes the retail base portion of base and other revenues, net of O&M, depreciation and amortization, interest and tax expenses. In general, the net impact of these income statement line items must be adjusted, in part, by reserve amortization to earn the targeted regulatory ROE. In certain periods, reserve amortization is reversed so as not to exceed the targeted regulatory ROE. The drivers of FPL's net income not reflected in the reserve amortization calculation typically include wholesale and transmission service revenues and expenses, cost recovery clause revenues and expenses, AFUDC - equity and revenue and costs not recoverable from retail customers by the FPSC. During the three months ended March 31, 2018 , FPL did not record any reserve amortization as there was no amount remaining in accrued asset removal costs related to reserve amortization (see below). During the three months ended March 31, 2017 , FPL recorded reserve amortization of approximately $211 million.

In September 2017, Hurricane Irma passed through Florida causing damage to much of FPL’s service territory. In December 2017, following the enactment of tax reform, FPL determined that it would not seek recovery of Hurricane Irma storm restoration costs through a storm surcharge from customers and, as a result, the regulatory asset associated with Hurricane Irma was written off in December 2017 as storm restoration costs. As allowed under the 2016 rate agreement, FPL used available reserve amortization to offset nearly all of the expense, and plans to partially restore the reserve amortization through tax savings generated during the term of the 2016 rate agreement. In February 2018, the FPSC opened separate dockets for FPL and several other utilities in Florida to address the impacts of tax reform. FPL believes that the benefits of tax reform will be realized by FPL's customers in accordance with the 2016 rate agreement as discussed above.

39





Operating Revenues
During the three months ended March 31, 2018 , FPL’s operating revenues increased $93 million primarily related to an increase of approximately $110 million in retail base revenues, partly offset by a decrease in revenues of $26 million for fuel cost recovery. The increases in retail base revenues reflect additional revenues during the three months ended March 31, 2018 of approximately $60 million related to new retail base rates under the 2016 rate agreement. Retail base revenues during the three months ended March 31, 2018 were also impacted by a 1.8% increase in the average usage per retail customer and a 1.1% increase in the average number of customer accounts. Warmer than normal weather contributed to the increased revenues. The decrease in fuel cost recovery revenues primarily reflects lower average fuel factors resulting in lower revenues of approximately $36 million during the three months ended March 31, 2018 , partly offset by increased revenues related to higher energy sales.

Fuel, Purchased Power and Interchange Expense
Fuel, purchased power and interchange expense decreased $56 million for the three months ended March 31, 2018 primarily reflecting the deferral of approximately $25 million of retail fuel costs for the three months ended March 31, 2018 compared to the recognition of approximately $29 million of deferred retail fuel costs in the prior year period. The decrease also reflects approximately $36 million related to lower capacity fees, partly offset by an increase in fuel charges primarily due to higher energy sales.

Depreciation and Amortization Expense
Depreciation and amortization expense increased $272 million during the three months ended March 31, 2018 primarily reflecting the absence of approximately $211 million of reserve amortization recorded during the three months ended March 31, 2017 . Reserve amortization reflects adjustments to accrued asset removal costs provided under the 2016 rate agreement in order to achieve the targeted regulatory ROE. Reserve amortization is recorded as a reduction to accrued asset removal costs which is reflected in noncurrent regulatory liabilities on the condensed consolidated balance sheets. At March 31, 2018 , no amounts remain in accrued asset removal costs related to reserve amortization. Depreciation and amortization expense during the three months ended March 31, 2018 also reflects higher storm-recovery cost amortization related to the recovery of eligible storm restoration costs following hurricanes impacting FPL's service territory in 2016 as well as higher plant in service balances.

Income Taxes
During the three months ended March 31, 2018 , FPL’s income taxes decreased $151 million primarily related to the decrease in federal corporate income tax rates.

NEER : Results of Operations

NEER ’s net income less net loss attributable to noncontrolling interests increased $3,450 million for the three months ended March 31, 2018 . The primary drivers, on an after-tax basis, of the changes are in the following table.
 
Increase (Decrease)
From Prior Year Period
 
Three Months Ended
March 31, 2018
 
(millions)
New investments (a)
$
(82
)
Existing assets (a)
26

Gas infrastructure (a)
26

Customer supply and proprietary power and gas trading (b)
6

Asset sales
33

Interest and other general and administrative expenses (c)
(53
)
Income taxes, primarily due to corporate federal income tax rate reduction
69

Other
4

Change in non-qualifying hedge activity (d)
(34
)
Tax reform-related (d)
467

NEP investment gains, net (d)
2,999

Change in unrealized losses on securities held in NEER's nuclear decommissioning funds and OTTI, net
(13
)
Operating results of the solar projects in Spain
2

Increase in net income less net loss attributable to noncontrolling interests
$
3,450

———————————————
(a)
Reflects after-tax project contributions, including PTCs, ITCs and deferred income taxes and other benefits associated with convertible ITCs for wind and solar projects, as applicable, but excludes allocation of interest expense or corporate general and administrative expenses. Results from projects and pipelines are included in new investments during the first twelve months of operation or ownership. Project results are included in existing assets and pipeline results are included in gas infrastructure beginning with the thirteenth month of operation or ownership.
(b)
Excludes allocation of interest expense and corporate general and administrative expenses.
(c)
Includes differential membership interest costs. Excludes unrealized mark-to-market gains and losses related to interest rate derivative contracts, which are included in change in non-qualifying hedge activity.
(d)
See Overview - Adjusted Earnings for additional information.

40





New Investments

Results from new investments for the three months ended March 31, 2018 decreased primarily due to:

lower earnings including the net effect of deferred income taxes and other benefits associated with ITCs and convertible ITCs, related to the addition of approximately 354 MW of wind generating capacity and 198 MW of solar generating capacity during or after the three months ended March 31, 2017 .

Other Factors

Supplemental to the primary drivers of the changes in NEER's net income less net loss attributable to noncontrolling interests discussed above, the discussion below describes changes in certain line items set forth in NEE's condensed consolidated statements of income as they relate to NEER.

Operating Revenues

Operating revenues for the three months ended March 31, 2018 decreased $177 million primarily due to:

lower revenues of approximately $177 million related to the deconsolidation of NEP, and
lower gains from non-qualifying commodity hedges ($84 million of gains for the three months ended March 31, 2018 compared to $207 million of gains for the comparable period in 2017),
partly offset by,
higher revenues from customer supply and proprietary power and gas trading of approximately $40 million,
higher revenues from new investments of approximately $35 million, and
higher revenues from existing assets primarily related to favorable generation due to winter weather.

Operating Expenses - net

Operating expenses - net for the three months ended March 31, 2018 decreased $70 million primarily due to:

the absence of approximately $95 million of operating expenses related to NEP which is no longer consolidated,
partly offset by,
higher operating expenses associated with new investments of approximately $12 million.

Interest Expense
NEER’s interest expense for the three months ended March 31, 2018 decreased approximately $105 million primarily reflecting $77 million of favorable changes in the fair value of interest rate derivative instruments compared to $10 million of unfavorable changes in the comparable period in 2017 as well as the absence of approximately $43 million of interest expense related to NEP which is no longer consolidated. The decreases discussed above were partly offset by higher borrowing costs to support growth of the business.

Benefits Associated with Differential Membership Interests - net
For the three months ended March 31, 2017 , benefits associated with differential membership interests - net reflect benefits recognized by NEER as third-party investors received their portion of the economic attributes, including income tax attributes, of the underlying wind and solar projects, net of associated costs. For the three months ended March 31, 2018 , NEER recognized income related to differential membership interests of approximately $597 million as net loss attributable to noncontrolling interests on the condensed consolidated statements of income. The increase primarily relates to an adjustment of approximately $497 million ( $373 million after tax) related to the change in federal corporate income tax rates effective January 1, 2018. See Note 10 - Accounting for Partial Sales of Nonfinancial Assets.

Equity in Earnings of Equity Method Investees
After the deconsolidation of NEP, approximately $141 million of equity in earnings of NEP was recognized during the three months ended March 31, 2018 . See Note 2. Approximately $150 million recognized in equity in earnings of equity method investees relates to an adjustment at NEP to adjust the differential membership interests due to the change in federal corporate income tax rates.

Gain on NEP Deconsolidation
The NEP deconsolidation resulted in a gain of approximately $3.9 billion ( $3.0 billion after tax) in NEE's condensed consolidated statements of income during the three months ended March 31, 2018. See Note 2.

Tax Credits, Benefit s and Expenses
PTC s from wind projects and ITCs and deferred income taxes associated with convertible ITCs from solar and certain wind projects are reflected in NEER’s earnings. PTCs are recognized as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes. A portion of the PTCs and ITCs have been allocated to investors in connection with sales of differential membership interests. Also see Note 6 for a discussion of tax reform-related impacts and PTCs, ITCs and deferred income taxes associated with convertible ITCs.

41





Net (Income) Loss Attributable to Noncontrolling Interests
For the three months ended March 31, 2018 , net loss attributable to noncontrolling interests primarily represents the activity related to the sales of differential membership interests. See Benefits Associated with Differential Membership Interests - net above and Note 10 - Accounting for Partial Sales of Nonfinancial Assets. For the three months ended March 31, 2017 , net income attributable to noncontrolling interests primarily represented the income attributable to the noncontrolling ownership interest in NEP. After the deconsolidation of NEP, NEE's earnings from its noncontrolling interest in NEP are reflected as equity in earnings of equity method investees. See Note 2.

Capital Initiatives

During the three months ended March 31, 2018 , NEER placed into service approximately 95 MW of new solar generating capacity and sold approximately 223 MW of wind generating capacity.

Corporate and Other: Results of Operations

Corporate and Other is primarily comprised of the operating results o f NEET a nd other business activities, as well as corporate interest income and expenses. Corporate and Other allocates a portion of NEECH 's corporate interest expense to NEER . Interest expense is allocated based on a deemed capital structure of 70% debt and, for purposes of allocating NEECH 's corporate interest expense, differential membership interests sold by NEER 's subsidiaries are 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.

Corporate and Other's results decreased $644 million during the three months ended March 31, 2018 primarily due to the absence of the approximately $685 million after-tax gain on sale of the fiber-optic telecommunications business in January 2017. See Note 10 - Assets and Liabilities Associated with Assets Held for Sale.

LIQUIDITY AND CAPITAL RESOURCES

NEE and its subsidiaries require funds to support and grow their businesses. These funds are used for, among other things, working capital, capital expenditures, investments in or acquisitions of assets and businesses, payment of maturing debt obligations and, from time to time, redemption or repurchase of outstanding debt or equity securities. It is anticipated that these requirements will be satisfied through a combination of cash flows from operations, short- and long-term borrowings, the issuance of short- and long-term debt and, from time to time, equity securities, and proceeds from differential membership investors, consistent with NEE’s and FPL’s objective of maintaining, on a long-term basis, a capital structure that will support a strong investment grade credit rating. NEE , FPL and NEECH rely on access to credit and capital markets as significant sources of liquidity for capital requirements and other operations that are not satisfied by operating cash flows. The inability of NEE , FPL and NEECH 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.


42




Cash Flows

NEE's sources and uses of cash for the three months ended March 31, 2018 and 2017 were as follows:
 
Three Months Ended
March 31,
 
 
2018
 
2017 (a)
 
 
(millions)
 
Sources of cash:
 
 
 
 
Cash flows from operating activities
$
1,290

 
$
1,258

 
Long-term borrowings
1,804

 
689

 
Proceeds from sale of the fiber-optic telecommunications business

 
1,484

 
Issuances of common stock - net
7

 
7

 
Net increase in commercial paper and other short-term debt
1,027

 
2,241

 
Other sources - net
41

 
94

 
Total sources of cash
4,169

 
5,773

 
Uses of cash:
 
 
 
 
Capital expenditures, independent power and other investments and nuclear fuel purchases
(3,588
)
 
(5,179
)
 
Retirements of long-term debt
(942
)
 
(548
)
 
Dividends
(523
)
 
(460
)
 
Effects of currency translation on cash, cash equivalents and restricted cash
(9
)
 

 
Other uses - net
(182
)
 
(315
)
 
Total uses of cash
(5,244
)
 
(6,502
)
 
Net decrease in cash, cash equivalents and restricted cash
$
(1,075
)
 
$
(729
)
 
———————————————
(a) Prior period amounts have been retrospectively adjusted as discussed in Note 10 - Restricted Cash.

NEE 's primary capital requirements are for expanding and enhancing FPL 's electric system and generation facilities to continue to provide reliable service to meet customer electricity demands and for funding NEER 's investments in independent power and other projects. See Note 11 – Commitments for estimated capital expenditures for the remainder of 2018 through 2022. The following table provides a summary of the major capital investments for the three months ended March 31, 2018 and 2017 .
 
Three Months Ended
March 31,
 
2018
 
2017
 
(millions)
FPL:
 
 
 
Generation:
 
 
 
New
$
66

 
$
357

Existing
276

 
527

Transmission and distribution
583

 
516

Nuclear fuel
37

 
79

General and other
76

 
72

Other, primarily change in accrued property additions and the exclusion of AFUDC - equity
165

 
215

Total
1,203

 
1,766

NEER:
 
 
 
Wind
1,557

 
2,340

Solar
390

 
451

Nuclear, including nuclear fuel
91

 
89

Natural gas pipelines
112

 
393

Other
223

 
114

Total
2,373

 
3,387

Corporate and Other
12

 
26

Total capital expenditures, independent power and other investments and nuclear fuel purchases
$
3,588

 
$
5,179




43




Liquidity

At March 31, 2018 , NEE 's total net available liquidity was approximately $6.7 billion . The table below provides the components of FPL's and NEECH's ne t available liquidity at March 31, 2018 :
 
 
 
 
 
 
 
Maturity Date
 
FPL
 
NEECH
 
Total
 
FPL
 
NEECH
 
 
 
(millions)
 
 
 
 
 
 
Bank revolving line of credit facilities (a)
$
2,943

 
$
4,997

 
$
7,940

 
2019 - 2023
 
2019 - 2023
Issued letters of credit
(3
)
 
(140
)
 
(143
)
 
 
 
 
 
2,940

 
4,857

 
7,797

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit facilities
1,000

 
1,150

 
2,150

 
2018 - 2019
 
2018 - 2021
Borrowings
(1,000
)
 

 
(1,000
)
 
 
 
 
 

 
1,150

 
1,150

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letter of credit facilities (b)

 
800

 
800

 
 
 
2019 - 2021
Issued letters of credit

 
(601
)
 
(601
)
 
 
 
 
 

 
199

 
199

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subtotal
2,940

 
6,206

 
9,146

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
26

 
521

 
547

 
 
 
 
Commercial paper and other short-term borrowings outstanding
(1,561
)
 
(1,408
)
 
(2,969
)
 
 
 
 
Net available liquidity
$
1,405

 
$
5,319

 
$
6,724

 
 
 
 
———————————————
(a)
Provide for the funding of loans up to $7,940 million ($2,943 million for FPL) and the issuance of letters of credit up to $2,450 million ($575 million for FPL). The entire amount of the credit facilities is available for general corporate purposes 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). FPL’s bank revolving line of credit facilities are also available to support the purchase of $838 million of pollution control, solid waste disposal and industrial development revenue bonds (tax exempt bonds) in the event they are tendered by individual bondholders and not remarketed prior to maturity. Approximately $2,389 million of FPL's and $3,871 million of NEECH's bank revolving line of credit facilities expire in 2023.
(b)
Only available for the issuance of letters of credit.

Capital Support

Guarantees, Letters of Credit, Surety Bonds and Indemnifications (Guarantee Arrangements)
Certain subsidiaries of NEE issue guarantees and obtain letters of credit and surety bonds, as well as provide indemnities, to facilitate commercial transactions with third parties and financings. Substantially all of the guarantee arrangements are on behalf of NEE’s consolidated subsidiaries, as discussed in more detail below. NEE is not required to recognize liabilities associated with guarantee arrangements issued on behalf of its consolidated subsidiaries unless it becomes probable that they will be required to perform. At March 31, 2018 , NEE believes that there is no material exposure related to these guarantee arrangements.

NEE subsidiaries issue guarantees related to equity contribution agreements associated with the development, construction and financing of certain power generation facilities, engineering, procurement and construction agreements and equity contributions associated with natural gas pipeline projects under construction and a related natural gas transportation agreement. Commitments associated with these activities are included in the contracts table in Note 11.

In addition, at March 31, 2018 , NEE subsidiaries had approximately $4.0 billion in guarantees related to obligations under purchased power agreements, nuclear-related activities, payment obligations related to PTCs, as well as other types of contractual obligations.

In some instances, subsidiaries of NEE elect to issue guarantees instead of posting other forms of collateral required under certain financing arrangements, as well as for other project-level cash management activities. At March 31, 2018 , these guarantees totaled approximately $702 million and support, among other things, cash management activities, including those related to debt service and O&M service agreements, as well as other specific project financing requirements.

Subsidiaries of NEE also issue guarantees to support customer supply and proprietary power and gas trading activities, including the buying and selling of wholesale and retail energy commodities. At March 31, 2018 , the estimated mark-to-market exposure (the total amount that these subsidiaries of NEE could be required to fund based on energy commodity market prices at March 31, 2018 ) plus contract settlement net payables, net of collateral posted for obligations under these guarantees totaled approximately $633 million.

At March 31, 2018 , subsidiaries of NEE also had approximately $1.2 billion of standby letters of credit and approximately $288 million of surety bonds to support certain of the commercial activities discussed above. FPL's and NEECH's credit facilities are available to support the amount of the standby letters of credit.


44




In addition, as part of contract negotiations in the normal course of business, certain subsidiaries of NEE have agreed and in the future may agree to make payments to compensate or indemnify other parties, including those associated with asset divestitures, for possible unfavorable financial consequences resulting from specified events. The specified events may include, but are not limited to, an adverse judgment in a lawsuit or the imposition of additional taxes due to a change in tax law or interpretations of the tax law, or the triggering of cash grant recapture provisions under the Recovery Act. NEE is unable to estimate the maximum potential amount of future payments under some of these contracts because events that would obligate them to make payments have not yet occurred or, if any such event has occurred, they have not been notified of its occurrence.

Certain guarantee arrangements described above contain requirements for NEECH and FPL to maintain a specified credit rating. NEE has guaranteed certain payment obligations of NEECH, including most of its debt and all of its debentures and commercial paper issuances, as well as most of its payment guarantees and indemnifications, and NEECH has guaranteed certain debt and other obligations of NEER and its subsidiaries.

New Accounting Rules and Interpretations

Leases - In February 2016, the FASB issued an accounting standards update which requires, among other things, that lessees recognize a lease liability and a right-of-use asset for all leases. See Note 10 - Leases.

ENERGY MARKETING AND TRADING AND MARKET RISK SENSITIVITY

NEE and FPL are exposed to risks associated with adverse changes in commodity prices, interest rates and equity prices. Financial instruments and positions affecting the financial statements of NEE 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 or equity prices over the next year. Management has established risk management policies to monitor and manage such market risks, as well as credit risks.

Commodity Price Risk

NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the physical and financial risks inherent in the purchase and sale of fuel and electricity. In addition, NEE , through NEER , uses derivatives to optimize the value of its power generation and gas infrastructure assets and engages in power and gas marketing and trading activities to take advantage of expected future favorable price movements. See Note 4.

The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2018 were as follows:
 
 
 
 
 
 
 
 
 
 
 
Hedges on Owned Assets
 
 
 
Trading
 
Non-
Qualifying
 
FPL Cost
Recovery
Clauses
 
NEE Total
 
(millions)
Three months ended March 31, 2018
 
 
 
 
 
 
 
Fair value of contracts outstanding at December 31, 2017
$
442

 
$
728

 
$

 
$
1,170

Reclassification to realized at settlement of contracts
(52
)
 
(3
)
 
(3
)
 
(58
)
Inception value of new contracts

 
1

 

 
1

Net option premium purchases (issuances)
2

 
5

 

 
7

Impact of adoption of new revenue standard
3

 
(27
)
 

 
(24
)
Changes in fair value excluding reclassification to realized
38

 
101

 
2

 
141

Fair value of contracts outstanding at March 31, 2018
433

 
805

 
(1
)
 
1,237

Net margin cash collateral paid (received)
 
 
 
 
 
 
(18
)
Total mark-to-market energy contract net assets (liabilities) at March 31, 2018
$
433

 
$
805

 
$
(1
)
 
$
1,219


NEE's total mark-to-market energy contract net assets (liabilities) at March 31, 2018 shown above are included on the condensed consolidated balance sheets as follows:
 
March 31, 2018
 
(millions)
Current derivative assets
$
571

Noncurrent derivative assets
1,322

Current derivative liabilities
(382
)
Noncurrent derivative liabilities
(292
)
NEE's total mark-to-market energy contract net assets
$
1,219


45





The sources of fair value estimates and maturity of energy contract derivative instruments at March 31, 2018 were as follows:
 
 
Maturity
 
 
2018
 
2019
 
2020
 
2021
 
2022
 
Thereafter
 
Total
 
 
(millions)
Trading:
 
 
Quoted prices in active markets for identical assets
 
$
(4
)
 
$
(4
)
 
$
(10
)
 
$
(12
)
 
$

 
$

 
$
(30
)
Significant other observable inputs
 
41

 
38

 
12

 
4

 
(12
)
 
(6
)
 
77

Significant unobservable inputs
 
73

 
35

 
48

 
32

 
47

 
151

 
386

Total
 
110

 
69

 
50

 
24

 
35

 
145

 
433

Owned Assets - Non-Qualifying:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quoted prices in active markets for identical assets
 
20

 
7

 
(6
)
 
1

 

 

 
22

Significant other observable inputs
 
105

 
113

 
80

 
58

 
37

 
2

 
395

Significant unobservable inputs
 
25

 
6

 
19

 
26

 
23

 
289

 
388

Total
 
150

 
126

 
93

 
85

 
60

 
291

 
805

Owned Assets - FPL Cost Recovery Clauses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quoted prices in active markets for identical assets
 

 

 

 

 

 

 

Significant other observable inputs
 
1

 

 

 

 

 

 
1

Significant unobservable inputs
 
(2
)
 

 

 

 

 

 
(2
)
Total
 
(1
)
 

 

 

 

 

 
(1
)
Total sources of fair value
 
$
259

 
$
195

 
$
143

 
$
109

 
$
95

 
$
436

 
$
1,237


The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2017 were as follows:
 
 
 
 
 
 
 
 
 
 
 
Hedges on Owned Assets
 
 
 
Trading
 
Non-
Qualifying
 
FPL Cost
Recovery
Clauses
 
NEE
Total
 
(millions)
Three months ended March 31, 2017
 
 
 
 
 
 
 
Fair value of contracts outstanding at December 31, 2016
$
430

 
$
984

 
$
208

 
$
1,622

Reclassification to realized at settlement of contracts
(44
)
 
(69
)
 
(26
)
 
(139
)
Inception value of new contracts
1

 

 

 
1

Net option premium purchases (issuances)
1

 
4

 

 
5

Changes in fair value excluding reclassification to realized
97

 
195

 
(105
)
 
187

Fair value of contracts outstanding at March 31, 2017
485

 
1,114

 
77

 
1,676

Net margin cash collateral paid (received)
 

 
 

 
 

 
(228
)
Total mark-to-market energy contract net assets (liabilities) at March 31, 2017
$
485

 
$
1,114

 
$
77

 
$
1,448


With respect to commodities, the EMC, which is compri sed of certain members of senior management, and NEE 's chief executive officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The EMC and NEE 's chief executive officer receive periodic updates on market positions and related exposures, credit exposures and overall risk management activities.

NEE uses a value-at-risk (VaR) model to measure commodity price 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. The VaR figures are as follows:
 
Trading
 
Non-Qualifying Hedges
and Hedges in FPL Cost
Recovery Clauses (a)
 
Total
 
FPL
 
NEER
 
NEE
 
FPL
 
NEER
 
NEE
 
FPL
 
NEER
 
NEE
 
 
 
 
 
 
 
 
 
(millions)
 
 
 
 
 
 
 
 
December 31, 2017
$

 
$
7

 
$
7

 
$

 
$
43

 
$
44

 
$

 
$
37

 
$
37

March 31, 2018
$

 
$
2

 
$
2

 
$

 
$
33

 
$
34

 
$

 
$
31

 
$
31

Average for the three months ended March 31, 2018
$

 
$
4

 
$
4

 
$

 
$
36

 
$
36

 
$

 
$
33

 
$
33

———————————————
(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 FPL cost recovery clauses category do not represent the economic exposure to commodity price movements.


46




Interest Rate Risk

NEE 's and FPL 's financial results are exposed to risk resulting from changes in interest rates as a result of their respective outstanding and expected future issuances of debt, investments in special use funds and other investments. NEE and FPL manage their respective interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed rate and variable rate debt. Interest rate contracts are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements.

The following are estimates of the fair value of NEE's and FPL's financial instruments that are exposed to interest rate risk:
 
March 31, 2018
 
December 31, 2017
 
 
Carrying
Amount
 
Estimated
Fair Value (a)
 
Carrying
Amount
 
Estimated
Fair Value (a)
 
 
(millions)
 
NEE:
 
 
 
 
 
 
 
 
Fixed income securities:
 
 
 
 
 
 
 
 
Special use funds
$
1,880

 
$
1,880

 
$
1,946

 
$
1,946

 
Other investments:
 
 
 
 
 
 
 
 
Debt securities
$
136

 
$
136

 
$
136

 
$
136

 
Primarily notes receivable
$
19

 
$
19

 
$
500

 
$
680

 
Long-term debt, including current maturities
$
29,226

 
$
30,828

 
$
33,134

 
$
35,447

 
Interest rate contracts - net unrealized gains (losses)
$
(131
)
 
$
(131
)
 
$
(225
)
 
$
(225
)
 
FPL:
 
 
 
 
 
 
 
 
Fixed income securities - special use funds
$
1,458

 
$
1,458

 
$
1,462

 
$
1,462

 
Long-term debt, including current maturities
$
11,895

 
$
13,077

 
$
11,702

 
$
13,285

 
———————————————
(a)
See Note 5.

The special use funds of NEE and FPL consist of restricted funds set aside to cover the cost of storm damage for FPL and for the decommissioning of NEE's and FPL's nuclear power plants. A portion of these funds is invested in fixed income debt securities primarily carried at estimated fair value. At FPL, changes in fair value, including any OTTI losses, result in a corresponding adjustment to the related liability accounts based on current regulatory treatment. The changes in fair value of NEE's non-rate regulated operations result in a corresponding adjustment to OCI, except for impairments deemed to be other than temporary, including any credit losses, 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 in the near term.

At March 31, 2018 , NEE had interest rate contracts with a notional amount of approximately $8.6 billion related to outstanding and expected future debt issuances and borrowings, of which approximately $6.2 billion manages exposure to the variability of cash flows associated with outstanding and expected future debt issuances at NEECH and NEER. The remaining $2.4 billion of notional amount of interest rate contracts effectively convert fixed-rate debt to variable-rate debt instruments at NEECH. See Note 4.

Based upon a hypothetical 10% decrease in interest rates, which is a reasonable near-term market change, the fair value of NEE's net liabilities would increase by approximately $1,509 million ($558 million for FPL) at March 31, 2018 .

Equity Price Risk

NEE and FPL are exposed to risk resulting from changes in prices for equity securities. For example, NEE ’s nuclear decommissioning reserve funds include marketable equity securities primarily carried at their market value of approximately $3,322 million and $3,314 million ( $1,994 million and $2,035 million for FPL ) at March 31, 2018 and December 31, 2017 , respectively. NEE's and FPL’s investment strategy for equity securities in their nuclear decommissioning reserve funds emphasizes primarily marketable securities which are broadly diversified. At March 31, 2018 , a hypothetical 10% decrease in the prices quoted on stock exchanges, which is a reasonable near-term market change, would result in a $300 million ($183 million for FPL) reduction in fair value. For FPL, a corresponding adjustment would be made to the related liability accounts based on current regulatory treatment, and for NEE’s non-rate regulated operations, a corresponding amount would be recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds in NEE's condensed consolidated statements of income.

Credit Risk

NEE 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. NEE 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.


47




Credit risk is also managed through the use of master netting agreements. NEE ’s credit department monitors current and forward credit exposure to counterparties and their affiliates, both on an individual and an aggregate basis. For all derivative and contractual transactions , NEE’s energy marketing and trading operations, which include FPL’s energy marketing and trading division, are exposed to losses in the event of nonperformance by counterparties to these transactions. Some relevant considerations when assessing NEE’s energy marketing and trading operations’ credit risk exposure include the following:

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 U.S.
Overall credit risk is managed through established credit policies and is overseen by the EMC.
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.
Master netting agreements are used to offset cash and noncash gains and losses arising from derivative instruments with the same counterparty. NEE ’s policy is to have master netting agreements in place with significant counterparties.

Based on NEE ’s policies and risk exposures related to credit, NEE and FPL do not anticipate a material adverse effect on their financial statements as a result of counterparty nonperformance. At March 31, 2018 , approxi mately 94% of NEE’s and 99% o f FPL ’s energy marketing and trading counterparty credit risk exposure is associated with companies that have investment grade credit ratings.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

See Management's Discussion - Energy Marketing and Trading and Market Risk Sensitivity.

Item 4.  Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures

As of March 31, 2018 , each of NEE and FPL had performed an evaluation, under the supervision and with the participation of its management, including NEE'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 the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the chief executive officer and the chief financial officer of each of NEE and FPL concluded that the company's disclosure controls and procedures were effective as of March 31, 2018 .

(b)
Changes in Internal Control Over Financial Reporting

NEE 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 NEE and FPL . However, there has been no change in NEE's or FPL's internal control over financial reporting (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) that occurred during NEE's and FPL's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NEE's or FPL's internal control over financial reporting.


48




PART II - OTHER INFORMATION

Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in the 2017 Form 10-K. The factors discussed in Part I, Item 1A. Risk Factors in the 2017 Form 10-K, as well as other information set forth in this report, which could materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects should be carefully considered. The risks described in the 2017 Form 10-K are not the only risks facing NEE and FPL. Additional risks and uncertainties not currently known to NEE or FPL, or that are currently deemed to be immaterial, also may materially adversely affect NEE's or FPL's business, financial condition, results of operations and prospects.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(a)
Information regarding purchases made by NEE of its common stock during the three months ended March 31, 2018 is as follows:
Period
 
Total Number
of Shares Purchased (a)
 
Average Price Paid
Per Share
 
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)
1/1/18 - 1/31/18
 

 

 
 
45,000,000
2/1/18 - 2/28/18
 
66,427

 
$
154.43

 
 
45,000,000
3/1/18 - 3/31/18
 
495

 
$
158.31

 
 
45,000,000
Total
 
66,922

 
$
154.46

 
 
 
————————————
(a)
Includes: (1) in February 2018, shares of common stock withheld from employees to pay certain withholding taxes upon the vesting of stock awards granted to such employees under the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan; and (2) in March 2018, shares of common stock purchased as a reinvestment of dividends by the trustee of a grantor trust in connection with NEE's obligation under a February 2006 grant under the NextEra Energy, Inc. Amended and Restated Long-Term Incentive Plan to an executive officer of deferred retirement share awards.
(b)
In May 2017, NEE's Board of Directors authorized common stock repurchases of up to 45 million over an unspecified period.


49




Item 6.  Exhibits
Exhibit Number
 
Description
 
NEE
 
FPL
4(a)
 
 
x
 
x
*4(b)
 
 
x
 
 
*10(a)
 
 
x
 
 
10(b)
 
 
x
 
x
10(c)
 
 
x
 
x
10(d)
 
 
x
 
x
12(a)
 
 
x
 
 
12(b)
 
 
 
 
x
31(a)
 
 
x
 
 
31(b)
 
 
x
 
 
31(c)
 
 
 
 
x
31(d)
 
 
 
 
x
32(a)
 
 
x
 
 
32(b)
 
 
 
 
x
101.INS
 
XBRL Instance Document
 
x
 
x
101.SCH
 
XBRL Schema Document
 
x
 
x
101.PRE
 
XBRL Presentation Linkbase Document
 
x
 
x
101.CAL
 
XBRL Calculation Linkbase Document
 
x
 
x
101.LAB
 
XBRL Label Linkbase Document
 
x
 
x
101.DEF
 
XBRL Definition Linkbase Document
 
x
 
x
_________________________
*
Incorporated herein by reference

NEE and FPL agree to furnish to the SEC upon request any instrument with respect to long-term debt that NEE and FPL have not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.

50




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

Date: April 24, 2018

NEXTERA ENERGY, INC.
(Registrant)
 
 
TERRELL KIRK CREWS, II
Terrell Kirk Crews, II
Vice President, Controller and Chief Accounting Officer
of NextEra Energy, Inc.
(Principal Accounting Officer of NextEra Energy, Inc.)
 
 
 
 
FLORIDA POWER & LIGHT COMPANY
(Registrant)
 
 
KIMBERLY OUSDAHL
Kimberly Ousdahl
Vice President and Chief Accounting Officer
of Florida Power & Light Company
(Principal Accounting Officer of
Florida Power & Light Company)



51


Exhibit 4(a)






This instrument was prepared by:
 
 
Paul I. Cutler
 
EXECUTED IN 50 COUNTERPARTS OF
Florida Power & Light Company
 
WHICH THIS IS COUNTERPART NO. 3
700 Universe Boulevard
 
 
Juno Beach, Florida 33408
 
 



FLORIDA POWER & LIGHT COMPANY
to
DEUTSCHE BANK TRUST COMPANY AMERICAS
(formerly known as Bankers Trust Company)
As Trustee under Florida Power & Light
Company’s Mortgage and Deed of Trust,
Dated as of January 1, 1944.
One Hundred Twenty-Sixth Supplemental Indenture
Relating to $1,000,000,000 Principal Amount
of First Mortgage Bonds, 3.95% Series
due March 1, 2048
Dated as of February 1, 2018



This Supplemental Indenture has been executed in several counterparts, all of which constitute but one and the same instrument. This Supplemental Indenture has been recorded in several counties and documentary stamp taxes as required by law in the amount of $3,500,000.00 and non-recurring intangible taxes as required by law in the amount of $110,985.44 were paid on the Supplemental Indenture recorded in the public records of Palm Beach County, Florida.
Note to Examiner : The new bonds (“New Bonds”) being issued in connection with this Supplemental Indenture are secured by real property and personal property located both within Florida and outside of Florida. The aggregate fair market value of the collateral exceeds the aggregate principal amount of (y) the New Bonds plus (z) the other outstanding bonds secured by the mortgage supplemented hereby and all previous supplemental indentures thereto. The intangible tax has been computed pursuant to Section 199.133(2), Florida Statutes, by (i) determining the percentage of the aggregate fair market value of the collateral constituting real property situated in Florida and by multiplying that percentage times the principal amount of the New Bonds (the result hereinafter defined as the “Tax Base”) and (ii) multiplying the tax rate times the Tax Base.







ONE HUNDRED TWENTY-SIXTH SUPPLEMENTAL INDENTURE
INDENTURE, dated as of the 1st day of February, 2018, made and entered into by and between Florida Power & Light Company, a corporation of the State of Florida, whose post office address is 700 Universe Boulevard, Juno Beach, Florida 33408 (hereinafter sometimes called “ FPL” ), and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust Company), a corporation of the State of New York, whose post office address is 60 Wall Street, 16th Floor, New York, New York 10005 (hereinafter called the “ Trustee ”), as the one hundred twenty-sixth supplemental indenture (hereinafter called the “ One Hundred Twenty-Sixth Supplemental Indenture” ) to the Mortgage and Deed of Trust, dated as of January 1, 1944 (hereinafter called the “ Mortgage” ), made and entered into by FPL, the Trustee and The Florida National Bank of Jacksonville, as Co‑Trustee (now resigned), the Trustee now acting as the sole trustee under the Mortgage, which Mortgage was executed and delivered by FPL to secure the payment of bonds issued or to be issued under and in accordance with the provisions thereof, reference to which Mortgage is hereby made, this One Hundred Twenty-Sixth Supplemental Indenture being supplemental thereto;
Whereas, by an instrument, dated as of April 15, 2002, filed with the Banking Department of the State of New York, Bankers Trust Company effected a corporate name change pursuant to which, effective such date, it is known as Deutsche Bank Trust Company Americas; and
Whereas, FPL has transferred to New Hampshire Transmission, LLC, a Delaware limited liability company, all of FPL’s property located in the State of New Hampshire that previously was subject to the lien of the Mortgage, and the Trustee by instrument dated June 29, 2010 (the “ Release ”) released such property from the lien of the Mortgage, and released and discharged the supplemental indentures and mortgages recorded in the State of New Hampshire listed on Exhibit B to the Release; and
Whereas, Section 8 of the Mortgage provides that the form of each series of bonds (other than the first series) issued thereunder shall be established by Resolution of the Board of Directors of FPL and that the form of such series, as established by said Board of Directors, shall specify the descriptive title of the bonds and various other terms thereof, and may also contain such provisions not inconsistent with the provisions of the Mortgage as the Board of Directors may, in its discretion, cause to be inserted therein expressing or referring to the terms and conditions upon which such bonds are to be issued and/or secured under the Mortgage; and
Whereas, Section 120 of the Mortgage provides, among other things, that any power, privilege or right expressly or impliedly reserved to or in any way conferred upon FPL by any provision of the Mortgage, whether such power, privilege or right is in any way restricted or is unrestricted, may be in whole or in part waived or surrendered or subjected to any restriction if at the time unrestricted or to additional restriction if already restricted, and FPL may enter into any further covenants, limitations or restrictions for the benefit of any one or more series of bonds issued thereunder, or FPL may cure any ambiguity contained therein, or in any supplemental indenture, or may establish the terms and provisions of any series of bonds other than said first



- 1 -







series, by an instrument in writing executed and acknowledged by FPL in such manner as would be necessary to entitle a conveyance of real estate to be recorded in all of the states in which any property at the time subject to the Lien of the Mortgage shall be situated; and
Whereas, FPL now desires to create the series of bonds described in Article I hereof and to add to its covenants and agreements contained in the Mortgage certain other covenants and agreements to be observed by it and to alter and amend in certain respects the covenants and provisions contained in the Mortgage; and
Whereas, the execution and delivery by FPL of this One Hundred Twenty-Sixth Supplemental Indenture, and the terms of the bonds, hereinafter referred to in Article I , have been duly authorized by the Board of Directors of FPL by appropriate resolutions of said Board of Directors;
Now, Therefore, This Indenture Witnesseth: That FPL, in consideration of the premises and of One Dollar to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, and in further evidence of assurance of the estate, title and rights of the Trustee and in order further to secure the payment of both the principal of and interest and premium, if any, on the bonds from time to time issued under the Mortgage, according to their tenor and effect, and the performance of all the provisions of the Mortgage (including any instruments supplemental thereto and any modification made as in the Mortgage provided) and of said bonds, hereby grants, bargains, sells, releases, conveys, assigns, transfers, mortgages, pledges, sets over and confirms (subject, however, to Excepted Encumbrances as defined in Section 6 of the Mortgage) unto Deutsche Bank Trust Company Americas, as Trustee under the Mortgage, and to its successor or successors in said trust, and to said Trustee and its successors and assigns forever, all property, real, personal and mixed, acquired by FPL after the date of the execution and delivery of the Mortgage (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted), now owned (except any properties heretofore released pursuant to any provisions of the Mortgage and in the process of being sold or disposed of by FPL) or, subject to the provisions of Section 87 of the Mortgage, hereafter acquired by FPL and wheresoever situated, including (without in anywise limiting or impairing by the enumeration of the same the scope and intent of the foregoing) all lands, power sites, flowage rights, water rights, water locations, water appropriations, ditches, flumes, reservoirs, reservoir sites, canals, raceways, dams, dam sites, aqueducts, and all rights or means for appropriating, conveying, storing and supplying water; all rights of way and roads; all plants for the generation of electricity by steam, water and/or other power; all power houses, gas plants, street lighting systems, standards and other equipment incidental thereto, telephone, radio and television systems, air-conditioning systems and equipment incidental thereto, water works, water systems, steam heat and hot water plants, substations, lines, service and supply systems, bridges, culverts, tracks, ice or refrigeration plants and equipment, offices, buildings and other structures and the equipment thereof; all machinery, engines, boilers, dynamos, electric, gas and other machines, regulators, meters, transformers, generators, motors, electrical, gas and mechanical appliances, conduits, cables, water, steam heat, gas or other pipes, gas mains and pipes, service pipes, fittings, valves and connections, pole and transmission lines, wires, cables, tools, implements, apparatus, furniture, chattels, and choses in action; all municipal and other franchises, consents or permits; all lines for the transmission and distribution of electric current, gas, steam heat or water for any purpose including towers, poles, wires, cables, pipes, conduits,




- 2 -








ducts and all apparatus for use in connection therewith; all real estate, lands, easements, servitudes, licenses, permits, franchises, privileges, rights of way and other rights in or relating to real estate or the occupancy of the same and (except as herein or in the Mortgage, as heretofore supplemented, expressly excepted) all the right, title and interest of FPL in and to all other property of any kind or nature appertaining to and/or used and/or occupied and/or enjoyed in connection with any property hereinbefore or in the Mortgage, as heretofore supplemented, described.
Together With all and singular the tenements, hereditaments and appurtenances belonging or in anywise appertaining to the aforesaid property or any part thereof, with the reversion and reversions, remainder and remainders and (subject to the provisions of Section 57 of the Mortgage) the tolls, rents, revenues, issues, earnings, income, products and profits thereof, and all the estate, right, title and interest and claim whatsoever, at law as well as in equity, which FPL now has or may hereinafter acquire in and to the aforesaid property and franchises and every part and parcel thereof.
It Is Hereby Agreed by FPL that, subject to the provisions of Section 87 of the Mortgage, all the property, rights, and franchises acquired by FPL after the date hereof (except any herein or in the Mortgage, as heretofore supplemented, expressly excepted) shall be and are as fully granted and conveyed hereby and as fully embraced within the Lien of the Mortgage, as if such property, rights and franchises were now owned by FPL and were specifically described herein and conveyed hereby.
Provided that the following are not and are not intended to be now or hereafter granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed hereunder and are hereby expressly excepted from the Lien and operation of this One Hundred Twenty-Sixth Supplemental Indenture and from the Lien and operation of the Mortgage, as heretofore supplemented, viz: (1) cash, shares of stock, bonds, notes and other obligations and other securities not hereafter specifically pledged, paid, deposited, delivered or held under the Mortgage or covenanted so to be; (2) merchandise, equipment, materials or supplies held for the purpose of sale in the usual course of business and fuel (including Nuclear Fuel unless expressly subjected to the Lien and operation of the Mortgage by FPL in a future supplemental indenture), oil and similar materials and supplies consumable in the operation of any properties of FPL; rolling stock, buses, motor coaches, automobiles and other vehicles; (3) bills, notes and accounts receivable, and all contracts, leases and operating agreements not specifically pledged under the Mortgage or covenanted so to be; (4) the last day of the term of any lease or leasehold which may hereafter become subject to the Lien of the Mortgage; (5) electric energy, gas, ice, and other materials or products generated, manufactured, produced or purchased by FPL for sale, distribution or use in the ordinary course of its business; all timber, minerals, mineral rights and royalties; (6) FPL’s franchise to be a corporation; and (7) the properties already sold or in the process of being sold by FPL and heretofore released from the Mortgage and Deed of Trust, dated as of January 1, 1926, from Florida Power & Light Company to Bankers Trust Company and The Florida National Bank of Jacksonville, trustees, and specifically described in three separate releases executed by Bankers Trust Company and The Florida National Bank of Jacksonville, dated July 28, 1943, October 6, 1943 and December 11, 1943, which releases have heretofore been delivered by the said trustees to FPL and recorded by FPL among the Public Records of all Counties in which such properties are





- 3 -








located; provided , however , that the property and rights expressly excepted from the Lien and operation of the Mortgage in the above subdivisions (2) and (3) shall (to the extent permitted by law) cease to be so excepted in the event and as of the date that the Trustee or a receiver or trustee shall enter upon and take possession of the Mortgaged and Pledged Property in the manner provided in Article XIII of the Mortgage by reason of the occurrence of a Default as defined in Section 65 thereof.
To Have And To Hold all such properties, real, personal and mixed, granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged, pledged, set over or confirmed by FPL as aforesaid, or intended so to be, unto Deutsche Bank Trust Company Americas, the Trustee, and its successors and assigns forever.
In Trust Nevertheless, for the same purposes and upon the same terms, trusts and conditions and subject to and with the same provisos and covenants as are set forth in the Mortgage, as heretofore supplemented, this One Hundred Twenty-Sixth Supplemental Indenture being supplemental thereto.
And It Is Hereby Covenanted by FPL that all terms, conditions, provisos, covenants and provisions contained in the Mortgage shall affect and apply to the property hereinbefore described and conveyed and to the estate, rights, obligations and duties of FPL and the Trustee and the beneficiaries of the trust with respect to said property, and to the Trustee and its successors as Trustee of said property in the same manner and with the same effect as if said property had been owned by FPL at the time of the execution of the Mortgage, and had been specifically and at length described in and conveyed to said Trustee, by the Mortgage as a part of the property therein stated to be conveyed.
FPL further covenants and agrees to and with the Trustee and its successors in said trust under the Mortgage, as follows:
ARTICLE I
One Hundred Twenty-Third Series of Bonds

Section 1. (I) There shall be a series of bonds designated “3.95% Series due March 1, 2048”, herein sometimes referred to as the “ One Hundred Twenty-Third Series ”, each of which shall also bear the descriptive title First Mortgage Bond, and the form thereof, which shall be established by Resolution of the Board of Directors of FPL, shall contain suitable provisions with respect to the matters hereinafter in this Section specified. Bonds of the One Hundred Twenty-Third Series shall mature on March 1, 2048 and shall be issued as fully registered bonds in denominations of Two Thousand Dollars and, at the option of FPL, in integral multiples of One Thousand Dollars in excess thereof (the exercise of such option to be evidenced by the execution and delivery thereof); they shall bear interest at the rate of 3.95% per annum, payable semi-annually on March 1 and September 1 of each year (each an “ Interest Payment Date ”) commencing on September 1, 2018; the principal of and interest on each said bond to be payable at the office or agency of FPL in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for public and private debts. Bonds of the One Hundred Twenty-Third Series shall be dated as in Section 10 of the Mortgage provided. The record date for payments of interest on any Interest





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Payment Date shall be the close of business on (1) the Business Day (as defined below) immediately preceding such Interest Payment Date so long as all of the bonds of the One Hundred Twenty-Third Series are held by a securities depository in book‑entry only form or (2) the 15th calendar day immediately preceding such Interest Payment Date if any of the bonds of the One Hundred Twenty-Third Series are not held by a securities depository in book‑entry only form. Interest on the bonds of the One Hundred Twenty-Third Series will accrue from and including February 28, 2018 to but excluding September 1, 2018 and, thereafter, from and including the last Interest Payment Date to which interest has been paid or duly provided for (and if no interest has been paid on the bonds of the One Hundred Twenty-Third Series, from February 28, 2018) to but excluding the next succeeding Interest Payment Date. No interest will accrue on a bond of the One Hundred Twenty-Third Series for the day on which such bond matures. The amount of interest payable for any period will be computed on the basis of a 360‑day year consisting of twelve 30‑day months. The amount of interest payable for any period shorter than a full semi‑annual period for which interest is computed will be computed on the basis of the number of days in the period using 30‑day calendar months. If any date on which interest, principal or premium is payable on the bonds of the One Hundred Twenty-Third Series falls on a day that is not a Business Day, then payment of the interest, principal or premium payable on that date will be made on the next succeeding day which is a Business Day, and without any interest or other payment in respect of such delay. A “ Business Day ” is any day that is not a Saturday, a Sunday, or a day on which banking institutions or trust companies in New York City are generally authorized or required by law or executive order to remain closed.

(II) Bonds of the One Hundred Twenty-Third Series shall be redeemable either at the option of FPL or pursuant to the requirements of the Mortgage (including, among other requirements, the application of cash delivered to or deposited with the Trustee pursuant to the provisions of Section 64 of the Mortgage or with proceeds of Released Property) in whole at any time, or in part from time to time, prior to maturity of the bonds of the One Hundred Twenty-Third Series, upon notice as provided in Section 52 of the Mortgage (the “ Redemption Notice ”), mailed at least thirty (30) days prior to the date fixed for redemption (the “ Redemption Date ”), at the applicable price (the “Redemption Price” ) described below. If FPL redeems all or any part of the bonds of the One Hundred Twenty-Third Series at any time prior to September 1, 2047, the Redemption Price will equal the sum of (i) 100% of the principal amount thereof plus (ii) accrued and unpaid interest thereon, if any, to but excluding the Redemption Date, plus (iii) a premium, if any (the “ Make‑Whole Premium ”). In no event will the Redemption Price be less than 100% of the principal amount of the bonds of the One Hundred Twenty-Third Series being redeemed plus accrued and unpaid interest thereon, if any, to but excluding the Redemption Date.

The amount of the Make‑Whole Premium with respect to any bond of the One Hundred Twenty-Third Series (or portion thereof) to be redeemed will be equal to the excess, if any, of:
(1)
the sum of the present values, calculated as of the Redemption Date, of:

a.
each interest payment that, but for such redemption, would have been payable on the bond of the One Hundred Twenty-Third Series (or portion thereof) being redeemed on each Interest Payment Date occurring after the Redemption Date that would be payable if such bond of the One Hundred



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Twenty-Third Series (or portion thereof) matured on September 1, 2047 (excluding any interest accruing (i) from and including the last Interest Payment Date preceding the Redemption Date as of which all then-accrued interest was paid (ii) to but excluding the Redemption Date); and

b.
the principal amount that, but for such redemption, would have been payable at the final maturity of the bond of the One Hundred Twenty-Third Series (or portion thereof) being redeemed; over

(2)
the principal amount of the bond of the One Hundred Twenty-Third Series (or portion thereof) being redeemed.

The present values of interest and principal payments referred to in clause (1) above will be determined in accordance with generally accepted principles of financial analysis. Such present values will be calculated by discounting the amount of each payment of interest or principal from the date that each such payment would have been payable, but for the redemption, to but excluding the Redemption Date at a discount rate equal to the Treasury Yield (as defined below) plus 15 basis points.
If FPL redeems all or any part of the bonds of the One Hundred Twenty-Third Series at any time on or after September 1, 2047, the Redemption Price will be 100% of the principal amount thereof plus accrued and unpaid interest thereon, if any, to but excluding the Redemption Date.
FPL will appoint an independent investment banking institution of national standing to calculate the Make‑Whole Premium when and as applicable; provided that if FPL fails to make such appointment at least thirty (30) days prior to the Redemption Date, or if the institution so appointed is unwilling or unable to make such calculation, such calculation will be made by Barclays Capital Inc., Goldman Sachs & Co. LLC, MUFG Securities Americas Inc., Scotia Capital (USA) Inc. or Wells Fargo Securities, LLC or if such firms are unwilling or unable to make such calculation, by an independent investment banking institution of national standing appointed by the Trustee in consultation with, and at the expense of, FPL (in any such case, an “ Independent Investment Banker ”).
For purposes of determining the Make‑Whole Premium, “ Treasury Yield ” means a rate of interest per annum equal to the weekly average yield to maturity of United States Treasury Notes that have a constant maturity that corresponds to the remaining term to maturity of the bonds of the One Hundred Twenty-Third Series to be redeemed (assuming for this purpose that the bonds of the One Hundred Twenty-Third Series mature on September 1, 2047), in each case calculated to the nearest 1/12th of a year (the “ Remaining Term ”). The Independent Investment Banker will determine the Treasury Yield as of the third Business Day immediately preceding the applicable Redemption Date.
The Independent Investment Banker will determine the weekly average yields of United States Treasury Notes by reference to the most recent statistical release published by the Federal Reserve Bank of New York and designated “H.15(519) Selected Interest Rates” or any successor release (the “ H.15 Statistical Release ”). If the H.15 Statistical Release sets forth a weekly




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average yield for the United States Treasury Notes having a constant maturity that is the same as the Remaining Term, then the Treasury Yield will be equal to such weekly average yield. In all other cases, the Independent Investment Banker will calculate the Treasury Yield by interpolation, on a straight-line basis, between the weekly average yields on the United States Treasury Notes that have a constant maturity closest to and greater than the Remaining Term and the United States Treasury Notes that have a constant maturity closest to and less than the Remaining Term (in each case as set forth in the H.15 Statistical Release). The Independent Investment Banker will round any weekly average yields so calculated to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being rounded upward. If weekly average yields for United States Treasury Notes are not available in the H.15 Statistical Release or otherwise, then the Independent Investment Banker will select comparable rates and calculate the Treasury Yield by reference to those rates.
(III)    At the option of the registered owner, any bonds of the One Hundred Twenty-Third Series, upon surrender thereof for exchange at the office or agency of FPL in the Borough of Manhattan, The City of New York, together with a written instrument of transfer wherever required by FPL, duly executed by the registered owner or by his duly authorized attorney, shall (subject to the provisions of Section 12 of the Mortgage) be exchangeable for a like aggregate principal amount of bonds of the same series of other authorized denominations.

Bonds of the One Hundred Twenty-Third Series shall be transferable (subject to the provisions of Section 12 of the Mortgage) at the office or agency of FPL in the Borough of Manhattan, The City of New York.
Upon any exchange or transfer of bonds of the One Hundred Twenty-Third Series, FPL may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage, but FPL hereby waives any right to make a charge in addition thereto for any exchange or transfer of bonds of the One Hundred Twenty-Third Series.
ARTICLE II
Dividend Covenant

Section 2. Section 3 of the Third Supplemental Indenture, as heretofore amended, is hereby further amended by inserting the words “or One Hundred Twenty-Third Series” immediately before the words “remain Outstanding”.

ARTICLE III
Miscellaneous Provisions

Section 3. Subject to the amendments provided for in this One Hundred Twenty-Sixth Supplemental Indenture, the terms defined in the Mortgage, as heretofore supplemented, shall, for all purposes of this One Hundred Twenty-Sixth Supplemental Indenture, have the meanings specified in the Mortgage, as heretofore supplemented.

    Section 4. The holders of bonds of the One Hundred Twenty-Third Series consent that FPL may, but shall not be obligated to, fix a record date for the purpose of determining the holders of bonds of the One Hundred Twenty-Third Series entitled to consent to any amendment,

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supplement or waiver. If a record date is fixed, those persons who were holders at such record date (or their duly designated proxies), and only those persons, shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be holders after such record date. No such consent shall be valid or effective for more than ninety (90) days after such record date.

Section 5. The Trustee hereby accepts the trust herein declared, provided, created or supplemented and agrees to perform the same upon the terms and conditions herein and in the Mortgage, as heretofore supplemented, set forth and upon the following terms and conditions:

The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this One Hundred Twenty-Sixth Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made by FPL solely. In general, each and every term and condition contained in Article XVII of the Mortgage, as heretofore amended, shall apply to and form part of this One Hundred Twenty-Sixth Supplemental Indenture with the same force and effect as if the same were herein set forth in full with such omissions, variations and insertions, if any, as may be appropriate to make the same conform to the provisions of this One Hundred Twenty-Sixth Supplemental Indenture.
Section 6. Whenever in this One Hundred Twenty-Sixth Supplemental Indenture either of the parties hereto is named or referred to, this shall, subject to the provisions of Articles XVI and XVII of the Mortgage, as heretofore amended, be deemed to include the successors and assigns of such party, and all the covenants and agreements in this One Hundred Twenty-Sixth Supplemental Indenture contained by or on behalf of FPL, or by or on behalf of the Trustee, or either of them, shall, subject as aforesaid, bind and inure to the respective benefits of the respective successors and assigns of such parties, whether so expressed or not.

Section 7. Nothing in this One Hundred Twenty-Sixth Supplemental Indenture, expressed or implied, is intended, or shall be construed, to confer upon, or to give to, any person, firm or corporation, other than the parties hereto and the holders of the bonds and coupons Outstanding under the Mortgage, any right, remedy or claim under or by reason of this One Hundred Twenty-Sixth Supplemental Indenture or any covenant, condition, stipulation, promise or agreement hereof, and all the covenants, conditions, stipulations, promises and agreements in this One Hundred Twenty-Sixth Supplemental Indenture contained by or on behalf of FPL shall be for the sole and exclusive benefit of the parties hereto, and of the holders of the bonds and coupons Outstanding under the Mortgage.

Section 8. The Mortgage, as heretofore supplemented and amended and as supplemented hereby, is intended by the parties hereto, as to properties now or hereafter encumbered thereby and located within the States of Florida and Georgia, to operate and is to be construed as granting a lien only on such properties and not as a deed passing title thereto.

Section 9. This One Hundred Twenty-Sixth Supplemental Indenture shall be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.



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In Witness Whereof, FPL has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by its President or one of its Vice Presidents, and its corporate seal to be attested by its Secretary or one of its Assistant Secretaries for and in its behalf, and Deutsche Bank Trust Company Americas has caused its corporate name to be hereunto affixed, and this instrument to be signed and sealed by one or more of its Vice Presidents or Assistant Vice Presidents, and its corporate seal to be attested by one of its Vice Presidents, Assistant Vice Presidents, one of its Assistant Secretaries or one of its Associates, all as of the day and year first above written.













































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FLORIDA POWER & LIGHT COMPANY
 
 
 
 
 
By:     /s/ Kimberly Ousdahl          
 
 
Kimberly Ousdahl
 
 
Vice President and Chief Accounting Officer
 
 
 
 
 
 
Attest:
 
 
 
 
 
        /s/ Charlotte B. Anderson          
 
Charlotte B. Anderson
 
Assistant Secretary
 
 
 
 
 
 
 
Executed, sealed and delivered by
 
  FLORIDA POWER & LIGHT COMPANY
 
  in the presence of:
 
 
 
 
          /s/ Jon Coatoam          
 
 
 
 
 
 
 
          /s/ W. Jay Frazier          
 
 
 
 

































DEUTSCHE BANK TRUST COMPANY AMERICAS
 
 
As Trustee
 
 
 
 
 
By:      /s/ Carol Ng          
 
 
Carol Ng
 
 
Vice President
 
 
60 Wall Street, 16th Floor
 
 
New York, NY 10005
 
 
 
 
 
 
 
 
By:     /s/ James Briggs          
 
 
James Briggs
 
 
Vice President
 
 
60 Wall Street, 16th Floor
 
 
New York, NY 10005
 
 
 
 
 
 
 
 
 
Attest:
 
 
 
 
 
        /s/ Scott Dodic        
 
Scott Dodic
 
Assistant Vice President
 
60 Wall Street, 16th Floor
 
New York, NY 10005
 
 
 
 
 
 
 
Executed, sealed and delivered by
 
  DEUTSCHE BANK TRUST COMPANY AMERICAS
  in the presence of:
 
 
 
 
          /s/ Nigel Luke          
 
          Nigel Luke
 
 
 
 
 
 
 
 
          /s/ Randy Kahn          
 
          Randy Kahn
 
 
 
 
 
 
 
 















State of Florida
County of Palm Beach
}
SS:


On the 23rd day of February, in the year 2018 before me personally came Kimberly Ousdahl, to me known, who, being by me duly sworn, did depose and say that she is the Vice President and Chief Accounting Officer of Florida Power & Light Company, one of the corporations described in and which executed the above instrument; that she knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that she signed her name thereto by like order.
I Hereby Certify, that on this 23rd day of February, 2018, before me personally appeared Kimberly Ousdahl and Charlotte B. Anderson, respectively, the Vice President and Chief Accounting Officer and an Assistant Secretary of Florida Power & Light Company, a corporation under the laws of the State of Florida, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation.
Witness my signature and official seal at Juno Beach, in the County of Palm Beach, and State of Florida, the day and year last aforesaid.
 
 
 
/s/ Cassandra A. Kelly               
 
 
 
Notary Public - State of Florida
 
 
 
Cassandra A. Kelly
 
 
 
My Commission FF 124846
 
 
 
Expires 05/20/2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 























State of New York
County of New York
}
SS:
On the 21st day of February in the year 2018, before me personally came Carol Ng and James Briggs, to me known, who, being by me duly sworn, did depose and say that they are respectively a Vice President and a Vice President of Deutsche Bank Trust Company Americas, one of the corporations described in and which executed the above instrument; that they know the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by order of the Board of Directors of said corporation, and that they signed their names thereto by like order.
I Hereby Certify, that on this 21st day of February, 2018, before me personally appeared Carol Ng, James Briggs and Scott Dodic, respectively, a Vice President, a Vice President and an Assistant Vice President of Deutsche Bank Trust Company Americas, a corporation under the laws of the State of New York, to me known to be the persons described in and who executed the foregoing instrument and severally acknowledged the execution thereof to be their free act and deed as such officers, for the uses and purposes therein mentioned; and that they affixed thereto the official seal of said corporation, and that said instrument is the act and deed of said corporation.
Witness my signature and official seal at New York, in the County of New York, and State of New York, the day and year last aforesaid.
 
 
 
/s/ Julia Engel               
 
 
 
Notary Public - State of Florida
 
 
 
 
 
 
 
Julia Engel
 
 
 
Notary Public - State of New York
 
 
 
No. 02EN6194015
 
 
 
Qualified in New York County
 
 
 
Commission Expires 09/29/2020
 
 
 
 
 
 
 
 





Exhibit 10(b)

Form of

PERFORMANCE SHARE AWARD AGREEMENT
for the Performance Period beginning January 1, {{GRANTYR}}
and ending December 31, {{2YRSAFTERGRANT}}

under the

NEXTERA ENERGY, INC. AMENDED AND RESTATED
2011 LONG TERM INCENTIVE PLAN

This Performance Share Award Agreement (“Agreement”) between NextEra Energy, Inc. (hereinafter called the “Company”) and {{EMPLOYEENAME}} (hereinafter called the “Grantee”) is dated {{GRANTDATE}} . All capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to such terms in the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan, as amended from time to time (the “Plan”).

1.     Grant of Performance Share Award. The Company hereby grants to the Grantee a Performance Share Award (“Award”) which confers upon the Grantee the right to receive a number of shares (“Performance Shares”) of Stock, determined as set forth in section 2 hereof. The par value of the Performance Shares shall be deemed paid by the promise by the Grantee to perform future Service to the Company or an Affiliate. The Grantee’s right to receive the Performance Shares shall be subject to the terms and conditions set forth in this Agreement and in the Plan. The performance period for which the Award is granted is the period beginning on January 1, {{GRANTYR}} and ending on December 31, {{2YRSAFTERGRANT}} (such period hereinafter referred to as the “Performance Period”).

The “Target” number of Performance Shares granted to the Grantee for the Performance Period is {{AMTGRANTED}} .

2.     Payment of Performance Share Award .

(a)    Payment of the Award shall be conditioned upon (i) the Company’s achievement of the corporate performance objective(s) established by the Committee for the Performance Period (the “Performance Objective”), (ii) certification by the Committee of (1) achievement of the Performance Objective for the Performance Period and (2) the Company’s achievement of any secondary corporate performance objective(s) which were established by the Committee for the Performance Period for determining the percentage of the Target number of Performance Shares that actually may become vested under the Award (the “Award Performance Objectives,” which are attached hereto as Exhibit “A”), and (iii) Committee approval of the number of Performance Shares to be paid to the Grantee. Subject to the provisions of the Plan, the Grantee shall have the right to payment of that percentage of the Grantee’s Target number of Performance Shares set forth in











section 1 hereof which is equal to the percentage achievement of the Award Performance Objectives (including an individual performance modifier based on an assessment by the Company’s chief executive officer or the Committee of the Grantee’s individual relative contribution to the attainment of the Award Performance Objectives) certified by the Committee for the Performance Period, which will be between 0% and 200%, inclusive (the “Achieved Percentage”). In no event will the Grantee vest in or have a right to payment of more than 200% of such Target number of Performance Shares. The Committee has the discretion to reduce the payout. If the Committee does not certify that the Performance Objective has been achieved for the Performance Period, the Grantee will forfeit all, and will not vest in any, of the Performance Shares and, in such a case for purposes of this Agreement, the Achieved Percentage shall be 0%.

(b)    Notwithstanding the foregoing or the provisions of section 4 hereof or any other provision of this Agreement or the Plan, if (i) the Grantee is a party to an Executive Retention Employment Agreement with the Company (as amended from time to time, “Retention Agreement”) and has not waived his or her rights, either entirely or in pertinent part, under such Retention Agreement, (ii) the Effective Date (as defined in the Retention Agreement) has occurred and the Employment Period (as defined in the Retention Agreement) has commenced and has not terminated pursuant to section 3(b) of the Retention Agreement, and (iii) a Change of Control (as defined in the Retention Agreement) has occurred, then, so long as the Grantee is then providing Service:

(1)    fifty percent (50%) of the Performance Shares, earned at a deemed achievement level equal to the higher of (x) the Target number of Performance Shares set forth in this Agreement or (y) the average level (expressed as a percentage of the Target number of Performance Shares 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 fiscal year in which such Change of Control occurred (such higher level, the “Deemed Performance Award Achievement Level”), shall vest upon such Change of Control and shall be payable as soon as practicable thereafter (but in all cases within thirty days after such Change of Control); and

(2)    the other fifty percent (50%) of the Performance Shares (earned at the Deemed Performance Award Achievement level calculated as set forth in subsection (1), above) shall vest on the date after such Change of Control which is the earlier of (i) one year after the date on which such Change of Control occurred, if the Grantee is then providing Service to the Company or an Affiliate (including to a successor to the Company or such Affiliate), or (ii) the date on which the Grantee’s Service to the Company or an Affiliate (including to a successor to the Company or such Affiliate) terminates, and shall be 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 or any other provision of this Agreement or the Plan, if the Grantee is not a party to a Retention Agreement and so long as the Grantee is still providing Service upon the occurrence of a Change in Control (as defined, as of the














date hereof, in the Plan for all purposes of this Agreement), fifty percent (50%) of the Performance Shares, earned at the Deemed Performance Award Achievement Level, shall vest upon such Change in Control and shall be payable as soon as practicable thereafter (but in all cases within thirty days after such Change in Control). The remainder of the Performance Shares shall remain outstanding (on a converted basis, if applicable) and shall remain subject to the terms and conditions of the Plan. If the Grantee provides Service to the Company or an Affiliate (including to a successor to the Company or such Affiliate) from the date of such Change in Control to the date of the first anniversary of such Change in Control or if, prior to the first anniversary of such Change in Control, the Grantee is involuntarily terminated other than for Cause or Disability, the fifty percent (50%) of the Performance Shares outstanding immediately prior to such Change in Control that did not vest at the time of such Change in Control shall vest on the date which is the earlier of (a) the first anniversary of such Change in Control or (b) the date on which the Grantee’s Service to the Company or an Affiliate (including to a successor to the Company or such Affiliate) terminates and shall be payable (whether under clause (a) or clause (b) of this section 2(c)) as soon as practicable thereafter (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 shall be the Deemed Performance Award Achievement Level.

(d)    If, as a result of a Change of Control or a Change in Control, as applicable, shares of 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 Performance Shares shall, to the maximum extent practicable, be made in the same form.

3.     Form of Payment of Award. Subject to section 2(d) hereof, the Award shall be payable in shares of Stock. Upon delivery of Performance Shares to the Grantee, 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 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. For the purpose of this Agreement, the date of determination of Fair Market Value shall be the date as of which the Grantee’s rights to payments under the 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 Grantee’s right to such delivery.

4.     Termination of Service. Except as otherwise set forth herein, the Grantee must remain in continuous Service (including to any successors to the Company or an Affiliate) through the Performance Period for the Award to vest. Except as otherwise set forth (a) herein, (b) in the Plan in connection with a Change in Control if the Grantee is not a party to a Retention Agreement, or (c) in a Retention Agreement to which the Grantee is a party in connection with a Change of Control (as defined in such Retention Agreement), in the event the Grantee’s Service (including to any successors to the Company or an Affiliate) terminates (or converts to inactive status in the manner













specified in Section 4(b) hereof) during the Performance Period, the Grantee’s right to payment of the Award shall be determined as follows:

(a)    If the Grantee’s termination of Service is due to resignation, discharge, or retirement prior to age 55 and does not meet the condition set forth in section 4(e) hereof, all rights to the Award shall be immediately forfeited.

(b)    In the case of (1) the Grantee’s termination of Service due to Disability, or (2) the Grantee’s conversion to inactive employee status on account of a determination of such Grantee’s total and permanent Disability under any long-term disability plan of the Company or an Affiliate:

(i) The Grantee’s right to Performance Shares under section 2 hereof shall be determined as the Grantee’s Target number of Performance Shares times the Achieved Percentage (subject to a maximum of 200%); and

(ii) Payment of the Award 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.

(c)      In the case of the Grantee’s termination of Service due to death:

(i) The Grantee’s right to Performance Shares under section 2 hereof shall be determined as the greater of (x) the Grantee's Target number of Performance Shares or (y) the Grantee's Target number of Performance Shares times the Achieved Percentage (subject to a maximum of 200%); and

(ii) Payment of the Award under this section 4(c) shall be made as soon as reasonably practicable thereafter (it being understood that the Committee shall determine the Achieved Percentage in good faith even though such determination will occur prior to the end of the Performance Period).

(d) In the case of the Grantee’s termination of Service due to retirement on or after age 55 after completing at least ten years of continuous Service with the Company and does not meet the condition set forth in Section 4(e) hereof:

(i) The Grantee’s Target number of Performance Shares for the Performance Period shall be reduced to a prorated number (equal to (A) the total number of full days of the Grantee’s Service completed during the Performance Period divided by the total number of days in the Performance Period, multiplied by (B) the Target number of Performance Shares granted to Grantee as set forth in section 1 hereof, and rounded to the nearest Performance Share, with 0.5 of a Performance Share being rounded up to the nearest share) of Performance Shares; and

















(ii) The Grantee’s right to Performance Shares under section 2 hereof shall be determined as the Grantee’s Target number of Performance Shares, reduced as set forth in section 4(d)(i) hereof, times the Achieved Percentage; and

(iii) Payment of the Award 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, the Grantee’s Award shall not be paid if the Company’s chief executive officer, or chief executive officer’s delegate, objectively determines that the Grantee’s retirement is detrimental to the Company. Additionally, if, after termination of Service but prior to payment of the Award, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee shall immediately forfeit all rights to the Award.

(e)    If the Grantee’s termination of Service 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 Grantee 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 Grantee’s Target number of Performance Shares for the Performance Period shall be as set forth in section 1 hereof and the Grantee’s right to Performance Shares under section 2 hereof shall be determined as the Grantee’s Target number of Performance Shares times the Achieved Percentage. Payment of the Award under this section 4(e) 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 Service but prior to payment of the Award, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee shall immediately forfeit all rights to the Award.

(f)    If the Grantee’s Service is terminated during the Performance Period for any reason other than as set forth in sections 4(a), (b), (c), (d) and (e) hereof, or if an ambiguity exists as to the interpretation of those sections, the Committee shall determine whether the Award shall be forfeited or whether the Grantee shall be entitled to full vesting or pro rata vesting as set forth above based upon full days of Service completed during the Performance Period. Payment of the Award under this section 4(f) 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 Service but prior to payment of the Award, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee shall immediately forfeit all rights to the Award.

5.     Adjustments . If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock

















split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company, then the Target number of Performance Shares granted hereunder shall be adjusted proportionately. No adjustment shall be made in connection with the payment by the Company of any cash dividend on its Stock or in connection with the issuance by the Company of any warrants, rights, or options to acquire additional shares of Stock or of securities convertible into Stock.

6.     No Rights of Stock Ownership . This grant of Performance Shares does not entitle the Grantee to any interest in or to any dividend, voting, or other rights normally attributable to Stock ownership.

7.     Nonassignability . The Grantee’s rights and interest in the Performance Shares may not be sold, transferred, assigned, pledged, exchanged, hypothecated or otherwise disposed of except by will or the laws of descent and distribution.

8.     Effect Upon Employment . This Agreement is not to be construed as giving any right to the Grantee for continuous employment by the Company or a Subsidiary or other Affiliate. The Company and its Subsidiaries and other Affiliates retain the right to terminate the Grantee at will and with or without cause at any time (subject to any rights the Grantee may have under the Grantee’s Retention Agreement).

9.     Protective Covenants . In consideration of the Award granted under this Agreement, the Grantee covenants and agrees as follows (the “Protective Covenants”):

(a)    During the Grantee’s Service with the Company, and for a two-year period following the termination of the Grantee’s Service with the Company, the Grantee agrees not to (i) 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 Grantee or for the benefit of any third party, nor shall the Grantee accept consideration or negotiate or enter into agreements with such parties for the benefit of the Grantee or any third party.

(b)    During the Grantee’s Service with the Company and for a two-year period following the termination of the Grantee’s Service with the Company, the Grantee shall not, directly or indirectly, on behalf of the Grantee 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 other Affiliates to leave the Company’s employ (or the employ of any such Subsidiary or other Affiliate) or to hire or to cause any employee of the Company to become employed for any reason whatsoever.


















(c)    The Grantee 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 Grantee acknowledges that the Company would not have an adequate remedy at law for monetary damages if the Grantee 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 Grantee, all of the Grantee’s rights to receive Performance Shares not theretofore delivered under this Agreement shall be forfeited.

(e)    For purposes of this section 9, the term “Company” shall include all Subsidiaries and other Affiliates of the Company (such Subsidiaries and other Affiliates being hereinafter referred to as the “NextEra Entities”). The Company and the Grantee agree that each of the NextEra Entities is an intended third-party beneficiary of this section 9, and further agree that each of the NextEra 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 Grantee and their respective heirs, successors and assigns.

11.     Incorporation of Plan’s Terms; Other Governing Provisions. 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, provided, however, (a) if there is a difference or conflict between the provisions of this Agreement and the mandatory provisions of the Plan, such mandatory provisions of the Plan shall govern, (b) if there is a difference or conflict between the provisions of this Agreement and the non-mandatory provisions of the Plan, the provisions of this Agreement shall govern, and (c) if there is a difference or conflict between the provisions of this Agreement and/or a provision of the Plan with a provision of a Retention Agreement, such provision of such Retention Agreement shall govern. Any Retention Agreement constitutes “another agreement with the Grantee” within the meaning of the Plan (including without limitation sections 17.3 and 17.4 thereof). The Company and Committee retain all authority and powers granted by the Plan and not expressly limited by this Agreement. The Grantee acknowledges that he or she may not and shall 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 shall have the authority to interpret and construe all provisions of this Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or this Agreement, by the Committee shall be final, binding and conclusive, absent manifest error.

13 .      Governing Law/Jurisdiction/Waiver of Jury Trial . 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 the Grantee hereby consent to the personal jurisdiction of the courts described in this section 13 for the purpose of all suits, actions, and proceedings relating to the Agreement or the Plan. The Company and the Grantee each waive all objections to venue and to all claims that a court chosen in accordance with this section 13 is improper based on a venue or a forum non conveniens claim.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

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 Grantee.

15.     Data Privacy . By entering into this Agreement, the Grantee: (i) authorizes the Company or any of the NextEra Entities, and any agent of the Company or any of the NextEra Entities administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of the NextEra Entities such information and data as the Company or any such NextEra Entities shall reasonably request in order to facilitate the administration of this Agreement; and (ii) authorizes the Company or any of the NextEra Entities 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 Grantee 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 the Grantee has received a copy of the Plan.



















IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.



 
 
 
NEXTERA ENERGY, INC.
 
 
 
 
 
 
By:
 
 
 
 
Deborah H. Caplan
 
 
 
Executive Vice President,
 
 
 
Human Resources &
 
 
 
Corporate Services
 
 
 
 
 
 
 
Accepted:
 
 
 
 
{{EMPLOYEENAME}}
 
 
 
{{PERN}}





Exhibit 10(c)

Form of
RESTRICTED STOCK AWARD AGREEMENT
under the
NEXTERA ENERGY, INC. AMENDED AND RESTATED 2011 LONG TERM
INCENTIVE PLAN

This Restricted Stock Award Agreement (“Agreement”), between NextEra Energy, Inc. (hereinafter called the “Company”) and {{EMPLOYEENAME}} (hereinafter called the “Grantee”) is dated {{GRANTDATE}} . All capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to such terms in the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan, as amended from time to time (the “Plan”).

1.     Grant of Restricted Stock Award. The Company hereby grants to the Grantee {{AMTGRANTED}} shares of Stock, which shares (the “Awarded Shares”) shall be subject to the restrictions set forth in sections 2, 3 and 4 hereof, as well as all other terms and conditions set forth in this Agreement and in the Plan. The par value of the Awarded Shares shall be deemed paid by the promise by the Grantee to perform future Service to the Company or an Affiliate. Subject to the terms of section 3(d) hereof, the Grantee 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 the Awarded Shares and the Grantee shall obtain unrestricted ownership of the Awarded Shares in accordance with the schedule set forth below:

{{AMTVESTINGYR1}} shares on the later to occur of (i) {{VESTDATE1}} , or (ii) the date on which the Committee makes the certification described in section 2(b)(i) hereof (the “First Vest”);
{{AMTVESTINGYR2}} shares on the later to occur of (i) {{VESTDATE2}} , or (ii) the date on which the Committee makes the certification described in section 2(b)(ii) hereof (the “Second Vest”); and
{{AMTVESTINGYR3}} shares on the later to occur of (i) {{VESTDATE3}} , or (ii) the date on which the Committee makes the certification described in section 2(b)(iii) hereof (the “Final Vest”).

The period from the Grant Date of any Awarded Shares through the date immediately preceding the date on which such Awarded Shares vest shall, with respect to such Awarded Shares, be hereinafter referred to as the “Restricted 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 performance target established by the Committee for purposes of this

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Agreement (such performance target being hereinafter referred to as the “Performance Target”), for {{GRANTYR}} has been achieved. If the Committee does not or cannot certify that the Performance Target has been achieved by December 31, {{1YRAFTERGRANT}}, then the Grantee shall forfeit the right to the Awarded Shares subject to the First Vest, and such Awarded 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 {{1YRAFTERGRANT}} has been achieved. If the Committee does not or cannot certify that the Performance Target has been achieved by December 31, {{2YRSAFTERGRANT}}, then the Grantee shall forfeit the right to the Awarded Shares subject to the Second Vest, and such Awarded 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 {{2YRSAFTERGRANT}} has been achieved. If the Committee does not or cannot certify that the Performance Target has been achieved by December 31, {{3YRSAFTERGRANT}}, then the Grantee shall forfeit the right to the Awarded Shares subject to the Final Vest, and such Awarded Shares shall be cancelled.

(c)    Notwithstanding the provisions of sections 2(a), 2(b) and 4 hereof or any other provision of this Agreement or the Plan, if (i) the Grantee is a party to an Executive Retention Employment Agreement with the Company (as amended from time to time, “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) has occurred and the Employment Period (as defined in the Retention Agreement) has commenced and has not terminated pursuant to section 3(b) of the Retention Agreement then, so long as the Grantee is then providing Service, the Awarded Shares shall vest upon a Change of Control (as defined in the Retention Agreement), instead of in accordance with the vesting schedule set forth in this section 2.

(d)    Notwithstanding the provisions of sections 2(a), 2(b) and 4 hereof or any other provision of this Agreement or the Plan, if the Grantee is not a party to a Retention Agreement with the Company upon the occurrence of a Change in Control (as defined, as of the date hereof, in the Plan for all purposes of this Agreement), and so long as the Grantee is still providing Service on the date of such occurrence, 50% of the Awarded Shares shall vest upon such Change in Control. The remainder of the Awarded Shares shall remain outstanding (on a converted basis, if applicable) and shall remain subject to the terms and conditions of the Plan. If the Grantee remains in Service from the date of a Change in Control to the date of the first anniversary of such Change in Control, or if prior to the first anniversary of such Change in Control, the Grantee is involuntarily terminated other than for Cause or Disability, the 50% of the Awarded Shares outstanding immediately prior to such Change in Control that did not become vested at the time of such Change in Control shall vest on the earlier of (a) the first anniversary of such Change in Control or (b) the date on which the Grantee’s Service is terminated.




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(e)      If as a result of a Change of Control (as defined in the Retention Agreement) or Change in Control, as applicable, the shares of 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 Awarded Shares 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 Grantee effective on the Grant Date. The Company shall 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 shall provide for retention of custody of the Awarded Shares prior to vesting and/or (ii) in the form of a book-entry or direct registration, 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 Grantee 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 Stock have the right to vote) with the exception that:
(a)
The Grantee shall not be entitled to delivery of unrestricted shares until vesting.
(b)
The Grantee may not sell, transfer, assign, pledge or otherwise encumber or dispose of the Awarded Shares prior to vesting.
(c)
In addition to the provisions set forth in section 4 hereof, a breach by the Grantee 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 Grantee’s Service (including without limitation Service to any successors to the Company or an Affiliate), or otherwise (including without limitation if the Company fails to meet one or more Performance Targets established as described in section 2(b) hereof or if the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof), all dividends paid to the Grantee 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 the Grantee’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 Service, as to all dividends paid on Awarded Shares which are forfeited upon such termination of Service; and (3) upon forfeiture of unvested Awarded Shares upon a breach by the Grantee of the terms and conditions set forth in this Agreement (including without limitation any such forfeiture occurring after termination of Service).
4.      Termination of Service. Except as otherwise set forth herein, with respect to any Awarded Shares, the Grantee must remain in continuous Service (including to any successors to the Company or an Affiliate) from the effective date of this Agreement through the relevant


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vesting date for such Awarded Shares as set forth in (or determined in accordance with) section 2 hereof in order for such 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 (a) herein, (b) in the Plan in connection with a Change in Control if the Grantee is not a party to a Retention Agreement, or (c) in a Retention Agreement to which the Grantee is a party in connection with a Change of Control (as defined in such Retention Agreement), in the event that the Grantee’s Service (including to any successors to the Company or an Affiliate) terminates for any reason (or converts to inactive status in the manner specified in Section 4(b) hereof) prior to vesting, his or her rights hereunder shall be determined as follows:
(a)
If the Grantee’s termination of Service is due to resignation, discharge, or retirement prior to age 55 and does not meet the condition set forth in section 4(d) hereof, 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 Grantee’s termination of Service.
(b)
If the Grantee’s termination of Service is due to Disability or death, or if the Grantee converts to inactive employee status on account of a determination of such Grantee’s total and permanent Disability under any long-term disability plan of the Company or an Affiliate (a “Disability Plan”), the then-unvested portion of the Awarded Shares shall vest (1) in the case of the Grantee’s Disability, on the vesting schedule and otherwise in accordance with the terms and conditions (including without limitation satisfaction of the applicable Performance Targets) set forth in section 2 hereof, notwithstanding that the Grantee’s Service shall have previously terminated or the Grantee has converted to inactive employee status on account of Disability under any Disability Plan, and (2) in the case of the Grantee’s death, upon such termination of Service (treating the applicable Performance Targets in section 2 hereof as having been achieved).
( c)
If the Grantee’s termination of Service is due to retirement on or after age 55 after completing at least ten years of continuous Service with the Company and does not meet the condition set forth in section 4(d) hereof, a pro rata share of the then-unvested portion of the Awarded Shares (determined as follows: (A) with respect to any unvested Awarded Shares included in the First Vest, the product of (x) the quotient (which shall not exceed 1.0) of (I) the total number of full days of the Grantee’s Service completed during the Restricted Period divided by (II) 365, multiplied by (y) such unvested portion of the Awarded Shares, and rounded to the nearest share of Stock; (B) with respect to any unvested Awarded Shares included in the Second Vest, the product of (x) the quotient (which shall not exceed 1.0) of (I) the total number of full days of the Grantee’s Service completed during the Restricted Period divided by (II) 730, multiplied by (y) such unvested portion of the Awarded Shares, and rounded to the nearest share of Stock; and (C) with respect to any unvested Awarded Shares included in the Final Vest, the product of (x) the quotient (which shall not exceed 1.0) of (I) the total number of full days of the Grantee’s Service completed during the Restricted Period divided





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by (II) 1,095, multiplied by (y) such unvested portion of the Awarded Shares, and rounded to the nearest share of Stock) shall vest on the vesting schedule and otherwise in accordance with the terms and conditions (including without limitation satisfaction of the applicable Performance Targets) set forth in section 2 hereof, notwithstanding that the Grantee’s Service shall have previously terminated. For purposes of this section 4(c), 0.5 of a share of Stock shall be rounded up to the nearest share. Notwithstanding the foregoing, if, after termination of Service but prior to vesting of all or any portion of the Awarded Shares, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee 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 the Grantee’s obligation to repay such dividends accrues. Notwithstanding the foregoing, any then-unvested Award Shares shall not vest if the Company’s chief executive officer, or chief executive officer’s delegate, objectively determines that the Grantee’s retirement is detrimental to the Company.
(d)
If the Grantee’s termination of Service 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 Grantee 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 Targets) set forth in section 2 hereof, notwithstanding that the Grantee’s Service shall have previously terminated. Notwithstanding the foregoing, if, after termination of Service but prior to vesting of all or a portion of the Awarded Shares, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee 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 the Grantee’s obligation to repay such dividends accrues.
(e)
If the Grantee's Service 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), (c), and (d) hereof, or if an ambiguity exists as to the interpretation of those sections, the Committee shall determine whether the Grantee's then-unvested Awarded Shares shall be forfeited or whether the Grantee shall be entitled to full vesting or pro rata vesting as set forth above based upon completed days of service during the Restricted 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 Targets) set forth in section 2 hereof, notwithstanding that the Grantee’s Service shall have previously terminated. Notwithstanding the foregoing, if, after termination of Service but prior to vesting of all or a portion of the Awarded Shares, the Grantee




5





breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee 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 the Grantee’s obligation to repay such dividends accrues.
5.      Income Taxes. The Grantee 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 Grantee, 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 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 Grantee's rights and interest in the Awarded Shares may not be sold, transferred, assigned, pledged, exchanged, hypothecated or otherwise disposed of prior to vesting except by will or the laws of descent and distribution.
7.      Effect Upon Employment. This Agreement is not to be construed as giving any right to the Grantee for continuous employment by the Company or a Subsidiary or other Affiliate. The Company and its Subsidiaries and other Affiliates retain the right to terminate the Grantee at will and with or without cause at any time (subject to any rights the Grantee may have under the Grantee’s Retention Agreement).
8.      Successors and Assigns. This Agreement shall inure to the benefit of and shall be binding upon the Company and the Grantee and their respective heirs, successors and assigns.
9.      Protective Covenants. In consideration of the Awarded Shares granted under this Agreement, the Grantee covenants and agrees as follows: (the “Protective Covenants”):
(a)
During the Grantee's Service with the Company, and for a two-year period following the termination of the Grantee's Service with the Company, the Grantee agrees not to (i) 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 Grantee or for the benefit of any third party, nor shall the Grantee accept consideration or negotiate or enter into agreements with such parties for the benefit of the Grantee or any third party.

(b)
During the Grantee's Service with the Company, and for a two-year period following the termination of the Grantee's Service with the Company, the Grantee shall not, directly or indirectly, on behalf of the Grantee 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 other Affiliates to leave the Company's employ (or the employ of such Subsidiary or



6





other Affiliate) or to hire or to cause any employee of the Company to become employed for any reason whatsoever.

( c)
The Grantee 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 Grantee acknowledges that the Company would not have an adequate remedy at law for monetary damages if the Grantee 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 shall 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 Grantee, all the Grantee’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 other Affiliates of the Company (such Subsidiaries and other Affiliates being hereinafter referred to as the “NextEra Entities”). The Company and the Grantee agree that each of the NextEra Entities is an intended third-party beneficiary of this section 9, and further agree that each of the NextEra 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; Other Governing Provisions. 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, provided, however, (a) if there is a difference or conflict between the provisions of this Agreement and the mandatory provisions of the Plan, such mandatory provisions of the Plan shall govern, (b) if there is a difference or conflict between the provisions of this Agreement and the non-mandatory provisions of the Plan, the provisions of this Agreement shall govern, and (c) if there is a difference or conflict between the provisions of this Agreement and/or a provision of the Plan with a provision of a Retention Agreement, such provision of such Retention Agreement shall govern. Any Retention Agreement constitutes “another agreement with the Grantee” within the meaning of the Plan (including without limitation sections 17.3 and 17.4 thereof). The Company and Committee retain all authority and powers granted by the Plan and not expressly limited by this Agreement. The Grantee acknowledges that he or she may not and shall 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.




7





11.     Interpretation. The Committee shall have the authority to interpret and construe all provisions of this Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or this Agreement, by the Committee shall be final, binding and conclusive, absent manifest error.

12.     Governing Law/Jurisdiction/Waiver of Jury Trial. 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 the Grantee hereby 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 Grantee each waive all objections to venue and to all claims that a court chosen in accordance with this section 12 is improper based on a venue or a forum non conveniens claim.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

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 Grantee.

14.     Adjustments. If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company, then the number of Awarded Shares shall be adjusted proportionately. No adjustment shall be made in connection with the payment by the Company of any cash dividend on its Stock or in connection with the issuance by the Company of any warrants, rights, or options to acquire additional shares of Stock or of securities convertible into Stock.

15.     Data Privacy . By entering into this Agreement, the Grantee: (i) authorizes the Company or any of the NextEra Entities, and any agent of the Company or any of the NextEra Entities administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of the NextEra Entities such information and data as the Company or any such NextEra Entities shall reasonably request in order to facilitate the administration of this Agreement; and (ii) authorizes the Company or any of the NextEra Entities to store and transmit such information in electronic form, provided such information is appropriately safeguarded in accordance with Company policy.






8





By signing this Agreement, the Grantee 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 the Grantee has received a copy of the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
 
 
NEXTERA ENERGY, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deborah H. Caplan
 
 
 
Executive Vice President, Human Resources &
 
 
 
Corporate Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
{{EMPLOYEENAME}}
 
 
 
{{PERN}}
 
 
 
 
 



























9





Exhibit “A”


LEGEND TO BE PLACED ON STOCK CERTIFICATE
The shares represented by this certificate are subject to the provisions of the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan (the “Plan”) and a Restricted Stock Award Agreement (the “Agreement”) between the holder hereof and NextEra Energy, Inc. and may not be sold or transferred except in accordance therewith. Copies of the Plan and Agreement are kept on file by the Executive Services Department of NextEra Energy, Inc.





Exhibit 10(d)

Form of

NON-QUALIFIED STOCK OPTION AGREEMENT

under the

NEXTERA ENERGY, INC. AMENDED AND RESTATED 2011 LONG TERM INCENTIVE PLAN

This Non-Qualified Stock Option Agreement (“Agreement”), between NextEra Energy, Inc. (hereinafter called the “Company”) and the grantee identified on Schedule 1 attached hereto (the “Grantee”) is dated {{GRANTDATE}} . All capitalized terms used in this Agreement which are not defined herein shall have the meanings ascribed to such terms in the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan, as amended from time to time (the “Plan”).

1.     Grant of Option . In accordance with and subject to the terms and conditions of (a) the Plan, and (b) this Agreement, the Company hereby grants to the Grantee a non-qualified stock option (the “Option”) to purchase the number of shares of Stock set forth in Schedule 1 attached hereto ("Schedule 1"), at the Option Price per share set forth in Schedule 1.

2.     Acceptance by Grantee . The exercise of the Option or any portion thereof is conditioned upon acceptance by the Grantee of the terms and conditions of this Agreement, as evidenced by the Grantee's execution of Schedule 1 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 Grantee may exercise the Option in accordance with the vesting schedule set forth in Schedule 1 (the “Vesting Schedule”).

Notwithstanding the foregoing or any other provision of this Agreement or the Plan, if (i) the Grantee is a party to an Executive Retention Employment Agreement with the Company (as amended from time to time, “Retention Agreement”) and has not waived his or her rights, either entirely or in pertinent part, under the Retention Agreement, and (ii) the Effective Date (as defined in the Retention Agreement) has occurred and the Employment Period (as defined in the Retention Agreement) has commenced and has not terminated pursuant to section 3(b) of the Retention Agreement, then, so long as the Grantee is providing Service, the then-unvested portion of the Option shall vest upon a Change of Control (as defined in the Retention Agreement ), instead of in accordance with the vesting schedule set forth in Schedule 1.

Notwithstanding the foregoing or any other provision of this Agreement or the Plan, if (i) the Grantee is not a party to a Retention Agreement with the Company, upon the occurrence of a Change in Control (as defined, as of the date hereof, in the Plan for all purposes of this Agreement) then, so long as the Grantee is still providing Service on the date of such occurrence, the then-unvested portion of the Option shall vest upon such Change in Control, instead of in











accordance with the vesting schedule set forth in Schedule 1, and (ii) the Grantee’s Service is terminated other than for Cause during the 24-month period following a Change in Control, the portion of the Option that remains outstanding on the date of such termination may thereafter be exercised by the Grantee until the earlier of the second anniversary of the date of such termination or the expiration of the term of the Option.

If, as a result of a Change in Control, the shares of Stock are 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 hereof, 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 hereof.

5.     Termination of Service . Except as otherwise set forth herein, with respect to any portion of the Option, the Grantee must remain in continuous Service (including to any successors to the Company or an Affiliate) from the effective date of this Agreement through the relevant vesting date for such portion of the Option as set forth in (or determined in accordance with) Schedule 1 hereof in order for such portion of the Option to vest. Except as otherwise set forth (a) herein, (b) in the Plan in connection with a Change in Control if the Grantee is not a party to a Retention Agreement, or (c) in a Retention Agreement to which the Grantee is a party in connection with a Change of Control (as defined in such Retention Agreement), in the event that the Grantee’s Service (including to any successors to the Company or an Affiliate) terminates for any reason (or converts to inactive status in the manner specified in Section 5(b) hereof) prior to vesting of any portion of the Option, the Grantee’s rights hereunder shall be determined as follows:

(a)
If the Grantee’s termination of Service is due to resignation, discharge or retirement prior to age 55 and does not meet the condition set forth in section 5(d) hereof, 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 the Expiration Date.

(b)
If the Grantee’s termination of Service is due to Disability or death, or the Grantee converts to inactive employee status on account of a determination of such Grantee’s total and permanent Disability under any long-term disability plan of the Company or an Affiliate (a “Disability Plan”), the then-unvested portion of the Option shall vest on the date of termination of Service or the date the Grantee converts to inactive employee status due to Disability under any Disability Plan. The then-unexercised portion of the Option shall be exercisable until the Expiration Date.

(c) If the Grantee’s termination of Service is due to retirement on or after age 55 after completing at least ten years of continuous Service with the Company and does not meet the condition set forth in section 5(d) hereof, a pro rata share of the then-unvested portion of the Option (determined as follows: (A) with respect to any






2





unvested portion of the Option which vests on the First Vest Date (as defined in Schedule 1 hereto), the product of (x) the quotient (which shall not exceed 1.0) of (a) the total number of full days of the Grantee’s Service completed from the Grant Date of the Option through termination of Service divided by (b) 365, multiplied by (y) such unvested portion of the Option, and rounded to the nearest share of Stock; (B) with respect to any unvested portion of the Option which vests on the Second Vest Date (as defined in Schedule 1 hereto), the product of (x) the quotient (which shall not exceed 1.0) of (a) the total number of full days of the Grantee’s Service completed from the Grant Date of the Option through termination of Service divided by (b) 730, multiplied by (y) such unvested portion of the Option, and rounded to the nearest share of Stock; and (C) with respect to any unvested portion of the Option which vests on the Third Vest Date (as defined in Schedule 1 hereto), the product of (x) the quotient (which shall not exceed 1.0) of (a) the total number of full days of the Grantee’s Service completed from the Grant Date of the Option through termination of Service divided by (b) 1,095, multiplied by (y) such unvested portion of the Option, and rounded to the nearest share of Stock) shall vest on the vesting schedule and otherwise in accordance with the terms and conditions set forth in Section 3 hereof, notwithstanding that the Grantee’s service shall have previously terminated, and shall be exercisable until the Expiration Date. For purposes of this section 5(c), 0.5 of a share of Stock shall be rounded up to the nearest share. The portion of the Option which does not so vest shall be forfeited effective on the date of termination of Service. Notwithstanding the foregoing, any unvested portion of the Option shall not vest if the Company’s chief executive officer, or chief executive officer’s delegate, objectively determines that the Grantee’s retirement is detrimental to the Company.

(d) If the Grantee’s termination of Service 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 Grantee 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 vesting schedule and otherwise in accordance with the terms and conditions set forth in Section 3 hereof, notwithstanding that the Grantee’s service shall have previously terminated, and shall be exercisable until the Expiration Date. Notwithstanding the foregoing, if, after termination of Service but prior to vesting of all or a portion of the Option, the Grantee breaches any provision hereof, including without limitation the provisions of section 9 hereof, the Grantee shall immediately forfeit all rights to the then-unvested portion of the Option.

(e) If a Grantee's Service is terminated for any reason other than as set forth in sections 5(a), (b), (c), and (d) hereof, or if an ambiguity exists as to the interpretation of those sections, the Committee shall determine whether the Grantee's then-unvested Option shall be forfeited or whether the Grantee shall be entitled to full vesting or to pro rata vesting based upon completed days of Service during the vesting period,







3





and shall also determine the period during which the Grantee may exercise any vested portion of the Option.

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 of Stock which the Grantee elects to purchase, shall be signed by the Grantee and shall be accompanied by payment of the Option Price for the shares of Stock which the Grantee elects to purchase. Except as otherwise provided by the Committee before the Option is exercised, such payment may be made in whole or in part (i) in cash or cash equivalents acceptable to the Company in the amount of the Option Price plus applicable tax withholding; (ii) by the tender or attestation to the Company of shares of Stock owned by the Grantee which, if acquired from the Company, have been owned for at least six months and acceptable to the Committee having an aggregate Fair Market Value (valued on the date of exercise) that is equal to the amount of cash that would otherwise be required for payment; 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 Option 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 any provision of Applicable Laws, including applicable state or federal securities laws or the rules of any Stock Exchange on which the Stock is listed. If any Applicable Laws require the Company to take any action with respect to the shares of Stock 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 such 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 Grantee shall have any of the rights of a shareholder of the Company under the Option unless and until shares of Stock are fully paid and duly issued upon exercise of the Option.

7.     Non-Transferability of Stock Options . The Option granted hereunder to the Grantee shall not be assignable or transferable by the Grantee otherwise than by will or the laws of descent and distribution, and such Option shall be exercisable, during the lifetime of the Grantee, only by the Grantee (or, in the event of the Grantee's legal incapacity or incompetency, the Grantee's guardian or legal representative).

8.     Effect Upon Employment . This Agreement is not to be construed as giving any right to the Grantee for continuous employment by the Company or a Subsidiary or other Affiliate. The Company and its Subsidiaries and other Affiliates retain the right to terminate the Grantee at will and with or without cause at any time (subject to any rights the Grantee may have under the Grantee’s Retention Agreement).

9.     Protective Covenants . In consideration of the Option granted under this Agreement, the Grantee covenants and agrees as follows (the “Protective Covenants”):
(a) During the Grantee's Service with the Company, and for a two-year period following the termination of the Grantee's Service with the Company, the Grantee agrees not to (i) 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







4





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 Grantee or for the benefit of any third party, nor shall the Grantee accept consideration or negotiate or enter into agreements with such parties for the benefit of the Grantee or any third party.

(b) During the Grantee's Service with the Company and for a two-year period following the termination of the Grantee's Service with the Company, the Grantee shall not, directly or indirectly, on behalf of the Grantee 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 other Affiliates to leave the Company's employ (or the employ of such Subsidiary or other Affiliate) or to hire or to cause any employee of the Company to become employed for any reason whatsoever.

(c) The Grantee 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 Grantee acknowledges that the Company would not have an adequate remedy at law for monetary damages if the Grantee 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 shall 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 Grantee, all the Grantee’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 other Affiliates of the Company (such Subsidiaries and other Affiliates being hereinafter referred to as the “NextEra Entities”). The Company and the Grantee agree that each of the NextEra Entities is an intended third-party beneficiary of this section 9, and further agree that each of the NextEra 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 Grantee and their respective heirs, successors and assigns.






5





11.     Adjustments . If the number of outstanding shares of Stock is increased or decreased or the shares of Stock are changed into or exchanged for a different number of shares or kind of capital stock or other securities of the Company on account of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of stock, exchange of stock, stock dividend or other distribution payable in capital stock, or other increase or decrease in shares of Stock effected without receipt of consideration by the Company, then the number of shares granted under this Option and the Option Price shall be adjusted proportionately. No adjustment shall be made in connection with the payment by the Company of any cash dividend on its Stock or in connection with the issuance by the Company of any warrants, rights, or options to acquire additional shares of Stock or of securities convertible into Stock.

12.     Governing Law/Jurisdiction/Waiver of Jury Trial . 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 the Grantee hereby 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 Grantee each waive all objections to venue and to all claims that a court chosen in accordance with this section 12 is improper based on a venue or a forum non conveniens claim.

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY PROCEEDING, LITIGATION OR COUNTERCLAIM BASED ON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.

13.     Incorporation of Plan's Terms; Other Governing Provisions. 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, provided, however, (a) if there is a difference or conflict between the provisions of this Agreement and the mandatory provisions of the Plan, such mandatory provisions of the Plan shall govern, (b) if there is a difference or conflict between the provisions of this Agreement and the non-mandatory provisions of the Plan, the provisions of this Agreement shall govern, and (c) if there is a difference or conflict between the provisions of this Agreement and/or a provision of the Plan with a provision of a Retention Agreement, as applicable, such provision of such Retention Agreement, as the case may be, shall govern. Any Retention Agreement, as applicable, constitutes “another agreement with the Grantee” within the meaning of the Plan (including without limitation sections 17.3 and 17.4 thereof). The Company and Committee retain all authority and powers granted by the Plan and not expressly limited by this Agreement. The Grantee acknowledges that he or she may not and shall 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.







6





14.     Interpretation. The Committee shall have the authority to interpret and construe all provisions of this Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or this Agreement, by the Committee shall be final, binding and conclusive, absent manifest error.

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 Grantee.

16.     Data Privacy . By entering into this Agreement, the Grantee: (i) authorizes the Company or any of the NextEra Entities, and any agent of the Company or any of the NextEra Entities administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of the NextEra Entities such information and data as the Company or any such NextEra Entities shall reasonably request in order to facilitate the administration of this Agreement; and (ii) authorizes the Company or any of the NextEra Entities 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 Grantee 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 the Grantee has received a copy of the Plan.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed as of the Grant Date set forth in Schedule 1.


 
 
 
NEXTERA ENERGY, INC.
 
 
 
 
 
 
 
By:
 
 
 
 
Deborah H. Caplan
 
 
 
Executive Vice President, Human Resources
 
 
 
& Corporate Services
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 












7





 
 
Schedule 1
 
 
 
 
 
 
 
 
Non-Qualified Stock Option Agreement
 
 
 
 
 
 
 
 
 
 
 
Name of Grantee:
 
{{EMPLOYEENAME}}
 
 
 
 
 
 
Grant Date:
 
{{GRANTDATE}}
 
 
 
 
 
 
Number of Shares:
 
{{AMTGRANTED}}  shares of Stock
 
 
 
 
 
Option Price Per Share:
 
${{EXERCISEPRICE}}
 
 
 
 
 
 
Expiration Date:
 
{{EXPIRATIONDATE}} (subject to earlier termination in
accordance with
 
 
 
 
 
 
 
the attached Agreement)
 
 
 
 
 
Vesting Schedule:
 
The shares of Stock subject to this Option shall vest
 
 
according to the following schedule:
 
 
 
 
 
 
 
{{AMTVESTINGYR1}}  shares on {{VESTDATE1}}  
 
 
("First Vest Date"),
 
 
 
{{AMTVESTINGYR2}}  shares on {{VESTDATE2}}  
 
 
("Second Vest Date") and
 
 
 
{{AMTVESTINGYR3}}  shares on {{VESTDATE3}}  
 
 
("Third Vest Date")
 
 
 
 
 
 
 
 
subject   to the terms and conditions set forth in the
 
 
Agreement of which this Schedule is a part, including
 
 
without limitation the terms and conditions related to
 
 
vesting upon the occurrence of a Change in Control and
 
 
forfeiture under certain circumstances.
 
 
 
 
 
 
 
 
 
 
          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 12(a)


NEXTERA ENERGY, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS (a)  


 
Three Months Ended
March 31, 2018
 
(millions of dollars)
Earnings, as defined:


Net income
$
3,831.1

Income taxes
1,248.9

Fixed charges included in the determination of net income, as below
247.9

Amortization of capitalized interest
7.8

Distributed income of equity method investees
84.4

Less equity in earnings of equity method investees
197.1

Total earnings, as defined
$
5,223.0

 
 
Fixed charges, as defined:
 
Interest expense
$
226.0

Rental interest factor
15.8

Allowance for borrowed funds used during construction
6.1

Fixed charges included in the determination of net income
247.9

Capitalized interest
16.8

Total fixed charges, as defined
$
264.7

 
 
Ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred stock dividends (a)
19.73

————————————
(a)
NextEra Energy, 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)  


 
Three Months Ended
March 31, 2018
 
(millions of dollars)
Earnings, as defined:


Net income
$
484

Income taxes
112

Fixed charges, as below
143

Total earnings, as defined
$
739

 
 
Fixed charges, as defined:
 
Interest expense
$
134

Rental interest factor
3

Allowance for borrowed funds used during construction
6

Total fixed charges, as defined
$
143

 
 
Ratio of earnings to fixed charges and ratio of earnings to combined fixed charges and preferred stock dividends (a)
5.17

————————————
(a)
Florida Power & Light Company 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 31(a)

Rule 13a-14(a)/15d-14(a) Certification



I, James L. Robo, certify that:

1.
I have reviewed this Form 10-Q for the quarterly period ended March 31, 2018 of NextEra Energy, 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:
April 24, 2018


JAMES L. ROBO
James L. Robo
Chairman, President and Chief Executive Officer
of NextEra Energy, Inc.





Exhibit 31(b)

Rule 13a-14(a)/15d-14(a) Certification



I, John W. Ketchum, certify that:

1.
I have reviewed this Form 10-Q for the quarterly period ended March 31, 2018 of NextEra Energy, 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:
April 24, 2018


JOHN W. KETCHUM
John W. Ketchum
Executive Vice President, Finance and
Chief Financial Officer
of NextEra Energy, Inc.





Exhibit 31(c)

Rule 13a-14(a)/15d-14(a) Certification



I, Eric E. Silagy, certify that:

1.
I have reviewed this Form 10-Q for the quarterly period ended March 31, 2018 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;

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:
April 24, 2018


ERIC E. SILAGY
Eric E. Silagy
President and Chief Executive Officer
of Florida Power & Light Company





Exhibit 31(d)

Rule 13a-14(a)/15d-14(a) Certification



I, John W. Ketchum, certify that:

1.
I have reviewed this Form 10-Q for the quarterly period ended March 31, 2018 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;

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:
April 24, 2018


JOHN W. KETCHUM
John W. Ketchum
Executive Vice President, Finance
and Chief Financial Officer
of Florida Power & Light Company





Exhibit 32(a)







Section 1350 Certification





We, James L. Robo and John W. Ketchum, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of NextEra Energy, Inc. (the registrant) for the quarterly period ended March 31, 2018 (Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Dated:
April 24, 2018


 
JAMES L. ROBO
 
 
James L. Robo
Chairman, President and Chief Executive Officer
of NextEra Energy, Inc.
 

 
JOHN W. KETCHUM
 
 
John W. Ketchum
Executive Vice President, Finance and
Chief Financial Officer
of NextEra Energy, Inc.
 

A signed original of this written statement required by Section 906 has been provided to the registrant and will be retained by the registrant 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 the registrant 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, Eric E. Silagy and John W. Ketchum, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)
The Quarterly Report on Form 10-Q of Florida Power & Light Company (the registrant) for the quarterly period ended March 31, 2018 (Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Dated:
April 24, 2018


 
ERIC E. SILAGY
 
 
Eric E. Silagy
President and Chief Executive Officer
of Florida Power & Light Company
 

 
JOHN W. KETCHUM
 
 
John W. Ketchum
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 the registrant and will be retained by the registrant 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 the registrant 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).