NextEra Energy Partners, LP (Form: 10-K, Received: 02/18/2020 16:39:56)

false--12-31FY20190001603145P6Y6MP6YP7YP3Y6MP3Y6MP3YP4Y103000000071000000200000000.7520000000.11116111388703000000020000002000000467385293000000.0189171.491.71251.96750.350.210.21103000000170000001030000001700000010300000017000000103000000170000000003000000300000030000003000000561000006550000056100000655000000100000010000000200000010000000140000004700000140000004700000P35YP35YP50YP35YP3YP7YP25YP3YP35YP35YP50YP35YP3YP3YP7YP25YP3Y45.3836.8448.7538.0550.6644.0449.1639.3547.9539.5150.5043.6853.9047.4553.6349.89039000000In 2019, NEP converted approximately 9.3 million Series A convertible preferred units into NEP common units on a one-for-one basis and recognized a deferred tax asset of approximately $39 million related to the issuance of NEP common units.Net income attributable to noncontrolling interest includes the pre-acquisition net income of the common control acquisitions. See Note 2 - Basis of Presentation.Deferred tax asset recognized by NEP related to NEP equity issuances and/or acquisition of subsidiary membership interests.{F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjEzNTgzMDM1Nzc4NzQyMmJiNzRhYzEwMTZmZTZiMWU4fFRleHRTZWxlY3Rpb246NkU3MEM3NkQ5MkE0RUJCQjg5N0ZDN0E0OTkxQkE1RkEM}Distributions per common unit were $1.9675, $1.7125 and $1.49 for the years ended December 31, 2019, 2018, and 2017, respectively. 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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2019

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

For the transition period from ________ to ________



Commission File Number	Exact name of registrant as specified in its charter, address of principal executive offices and registrant's telephone number	IRS Employer Identification Number
1-36518	NEXTERA ENERGY PARTNERS, LP	30-0818558

700 Universe Boulevard

Juno Beach, Florida 33408

(561) 694-4000

State or other jurisdiction of incorporation or organization: Delaware

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of exchange on which registered
Common units	NEP	New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes o No þ

Indicate by check mark whether the registrant (1) has 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) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

Large Accelerated Filer þ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ☐ No þ

Aggregate market value of the voting and non-voting common equity of NextEra Energy Partners, LP held by non-affiliates at June 28, 2019 (based on the closing market price on the Composite Tape on June 28, 2019) was $2,625,980,436.

Number of NextEra Energy Partners, LP common units outstanding at January 31, 2020: 65,497,618

DOCUMENTS INCORPORATED BY REFERENCE

__________________________________

Portions of NextEra Energy Partners, LP's Proxy Statement for the 2020 Annual Meeting of Unitholders are incorporated by reference in Part III hereof.

DEFINITIONS

Acronyms and defined terms used in the text include the following:



Term	Meaning
ASA	administrative services agreement
Bcf	billion cubic feet
BLM	U.S. Bureau of Land Management
Canadian Holdings	NextEra Energy Canada Partners Holdings, ULC and subsidiaries
CITC	convertible investment tax credit
COD	commercial operation date
Code	U.S. Internal Revenue Code of 1986, as amended
CSCS agreement	cash sweep and credit support agreement
Desert Sunlight	Desert Sunlight Investment Holdings, LLC, which owns a solar generation plant located in Riverside County, California
FCPA	Foreign Corrupt Practices Act of 1977, as amended
FERC	U.S. Federal Energy Regulatory Commission
GWh	gigawatt-hour(s)
IPO	initial public offering
IPP	independent power producer
ITC	investment tax credit
limited partner interest in NEP OpCo	limited partner interest in NEP OpCo's common units
management sub-contract	management services subcontract between NEE Management and NEER
Management's Discussion	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
MSA	amended and restated management services agreement among NEP, NEE Management, NEP OpCo and NEP OpCo GP
MW	megawatt(s)
NEE	NextEra Energy, Inc.
NEECH	NextEra Energy Capital Holdings, Inc.
NEE Equity	NextEra Energy Equity Partners, LP
NEE Management	NextEra Energy Management Partners, LP
NEER	NextEra Energy Resources, LLC
NEP	NextEra Energy Partners, LP
NEP GP	NextEra Energy Partners GP, Inc.
NEP OpCo	NextEra Energy Operating Partners, LP
NEP OpCo GP	NextEra Energy Operating Partners GP, LLC
NEP OpCo ROFR assets	all assets owned or hereafter acquired by NEP OpCo or its subsidiaries
NERC	North American Electric Reliability Corporation
NOLs	net operating losses
Note __	Note __ to consolidated financial statements
NYSE	New York Stock Exchange
O&M	operations and maintenance
Pemex	Petróleos Mexicanos
PPA	power purchase agreement, which could include contracts under a Feed-in-Tariff or Renewable Energy Standard Offer Program
preferred units	Series A convertible preferred units representing limited partner interests in NEP
PTC	production tax credit
RPS	renewable portfolio standards
SEC	U.S. Securities and Exchange Commission
STX Holdings	South Texas Midstream Holdings, LLC
STX Midstream	South Texas Midstream, LLC
tax reform	the Tax Cuts and Jobs Act
Texas pipelines	natural gas pipeline assets located in Texas
Texas pipelines acquisition	acquisition of NET Holdings Management, LLC
Texas pipeline entities	the subsidiaries of NEP that directly own the Texas pipelines
the board	the board of directors of NEP
U.S.	United States of America

Each of NEP and NEP OpCo has subsidiaries and affiliates with names that may include NextEra Energy, NextEra Energy Partners and similar references. For convenience and simplicity, in this report, the terms NEP and NEP OpCo are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context. Discussions of NEP's ownership of subsidiaries and projects refers to its controlling interest in the general partner of NEP OpCo and NEP's indirect interest in and control over the subsidiaries of NEP OpCo. See Note 1 for a description of the non-controlling interest in NEP OpCo. References to NEP's projects and NEP's pipelines generally includes NEP's consolidated subsidiaries and the projects and pipelines in which NEP has equity method investments.

TABLE OF CONTENTS



		Page No.
Definitions		2
Forward-Looking Statements		3
	PART I
Item 1.	Business	4
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	34
Item 2.	Properties	34
Item 3.	Legal Proceedings	34
Item 4.	Mine Safety Disclosures	34
	PART II
Item 5.	Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities	35
Item 6.	Selected Financial Data	37
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	79
Item 9A.	Controls and Procedures	79
Item 9B.	Other Information	79
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	80
Item 11.	Executive Compensation	80
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters	80
Item 13.	Certain Relationships and Related Transactions, and Director Independence	80
Item 14.	Principal Accounting Fees and Services	80
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	81
Item 16.	Form 10-K Summary	83
Signatures		84

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, anticipate, 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, important factors included in Part I, Item 1A. Risk Factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on NEP's operations and financial results, and could cause NEP's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of NEP in this Form 10-K, in presentations, on its website, in response to questions or otherwise.

Any forward-looking statement speaks only as of the date on which such statement is made, and NEP undertakes 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.

PART I

Item 1. Business

NEP is a growth-oriented limited partnership formed to acquire, manage and own contracted clean energy projects with stable long-term cash flows. At December 31, 2019, NEP owned a controlling, non-economic general partner interest and a 39.2% limited partner interest in NEP OpCo. Through NEP OpCo, NEP owns a portfolio of contracted renewable generation assets consisting of wind and solar projects, as well as contracted natural gas pipeline assets.

NEP expects to take advantage of trends in the North American energy industry, including the addition of clean energy projects as aging or uneconomic generation facilities are phased out, increased demand from utilities for renewable energy to meet state RPS requirements, improving competitiveness of energy generated from wind and solar projects relative to energy generated using other fuels and increased demand for natural gas transportation. NEP plans to focus on high-quality, long-lived projects operating under long-term contracts that are expected to produce stable long-term cash flows. NEP believes its cash flow profile, geographic, technological and resource diversity, operational excellence and cost-efficient business model provide NEP with a significant competitive advantage and enable NEP to execute its business strategy.

NEP was formed as a Delaware limited partnership in 2014 as an indirect wholly owned subsidiary of NEE. In 2017, NEP and NEP GP implemented governance changes that, among other things, enhanced NEP unitholder governance rights. The new governance structure established a NEP board of directors whereby, beginning in 2018, NEP unitholders have the ability to nominate and elect board members, subject to certain limitations and requirements. The following diagram depicts NEP's simplified ownership structure at December 31, 2019:

At December 31, 2019, NEP owned interests in the following portfolio of clean, contracted renewable energy projects located in 16 states:



Project	Resource	Net MW		Contract Expiration	NEP Acquisition / Investment Date
Genesis	Solar	250		2039	July 2014
Northern Colorado	Wind	174		2029 (22 MW) 2034 (152 MW)	July 2014
Tuscola Bay^(a)	Wind	120		2032	July 2014
Elk City	Wind	99		2030	July 2014
Perrin Ranch^(a)	Wind	99		2037	July 2014
Palo Duro^(b)	Wind	250		2034	January 2015
Shafter^(c)	Solar	20		2035	February 2015
Stateline^(a)	Wind	300		2026	May 2015
Mammoth Plains^(b)	Wind	199		2034	May 2015
Baldwin Wind	Wind	102		2041	May 2015
Ashtabula Wind III^(a)	Wind	62		2038	May 2015
Seiling Wind^(b)	Wind	199		2035	March 2016
Seiling Wind II^(b)	Wind	100		2034	March 2016
Cedar Bluff Wind^(b)	Wind	199		2035	July 2016
Golden Hills Wind^(b)	Wind	86		2035	July 2016
Investment in Desert Sunlight^(c)(d)	Solar	275	(e)	2035 (125 MW) 2039 (150 MW)	October 2016 (132 MW) November 2017 (143 MW)
Golden West Wind^(b)	Wind	249		2040	May 2017
Brady Wind I^(b)	Wind	150		2046	November 2017
Brady Wind II^(b)	Wind	149		2046	November 2017
Javelina I^(b)	Wind	250		2030 (200 MW) 2035 (50 MW)	November 2017
Breckinridge^(a)(b)	Wind	98		2035	December 2018
Carousel^(a)(b)	Wind	150		2041	December 2018
Javelina Wind II^(a)(b)	Wind	200		2036	December 2018
Rush Springs^(a)(b)	Wind	250		2031	December 2018
Mountain View Solar^(a)(c)	Solar	20		2039	December 2018
Bluff Point Wind^(a)(b)	Wind	120		2037	December 2018
Cottonwood Wind^(a)(b)	Wind	90		2042	December 2018
Golden Hills North Wind^(a)(b)	Wind	46		2037	December 2018
Kingman Wind I^(a)(b)	Wind	103		2036	December 2018
Kingman Wind II^(a)(b)	Wind	103		2036	December 2018
Ninnescah Wind^(a)(b)	Wind	208		2036	December 2018
Ashtabula Wind II^(a)	Wind	120		2034 (69 MW) 2040 (51 MW)	June 2019
Story County Wind II^(a)	Wind	150		2030	June 2019
White Oak Wind^(a)	Wind	150		2031	June 2019
Investment in Rosmar (Roswell and Marshall)^(a)(d)	Solar	66	(e)	2041 (35 MW) 2042 (31 MW)	June 2019
Silver State South^(a)(d)	Solar	125	(e)	2036	June 2019
		5,331	(f)

____________________


(a)	Third party investors own noncontrolling Class B interests in the NEP subsidiaries that own these projects. See Note 2 - Noncontrolling Interests and Note 11 - Equity.


(b)	NEP owns these wind projects together with third-party investors with differential membership interests. See Note 2 - Noncontrolling Interests and Note 10.


(c)	These projects are encumbered by liens against their assets securing various financings.


(d)	NEP has indirect approximately 50% equity method investments in Desert Sunlight and Rosmar and an indirect controlling 50% interest in Silver State South. See Note 2 - Investments in Unconsolidated Entities and Noncontrolling Interests.


(e)	MWs reflect NEP's net ownership interest in plant capacity based on respective ownership interests as discussed in (d).


(f)	In addition, NEP owns an approximately 50% non-economic ownership interest in three NEER solar projects with a total generating capacity of 277 MW. All equity in earnings of these non-economic ownership interests is allocated to net income attributable to noncontrolling interests. See Note 2 - Investments in Unconsolidated Entities.

At December 31, 2019, NEP owned interests in the following contracted natural gas pipeline assets:

Pipeline^(a)

Miles of

Pipeline

Diameter (inches)

Net capacity per day^(b)

Contracted

Capacity per day^(b)

Contract

Expiration

In Service Date

Location

NEP Acquisition Date

NET Mexico^(c)

120

42" / 48"

2.07 Bcf

1.94 Bcf

2034 - 2035

December 2014

Texas

October 2015

Eagle Ford

158

16" / 24" - 30"

1.10 Bcf

0.65 Bcf

2020 - 2027

September 2011 / June 2013

Texas

October 2015

Monument

156

16"

0.25 Bcf

0.12 Bcf

2022 - 2030

Built in the 1950s - 2000s

Texas

October 2015

Other

108

8" - 16"

0.40 Bcf

0.28 Bcf

2029 - 2035

Built in the 1960s - 1980s; upgraded in 2001 / others placed in service in 2002 - 2015

Texas

October 2015

Investment in CPL^(d)

185

30" / 42"

0.50 Bcf

2034

October 2018

Pennsylvania

November 2019

____________________


(a)	NEP's ownership interests in the pipelines are pledged as collateral securing various financings. Additionally, third party investors own noncontrolling Class B interests in the respective NEP subsidiaries that have ownership interests in these pipelines. See Note 2 - Noncontrolling Interests and Note 11 - Equity.


(b)	Reflects NEP's net ownership interest in pipeline capacity based on respective ownership interests as discussed in (c) and (d).


(c)	A subsidiary of Pemex owns a 10% interest in the NET Mexico pipeline.

(d)

Through its ownership interest in Meade Pipeline Co, LLC, NEP has an indirect equity method investment in the Central Penn Line (CPL), which represents an approximately 39% aggregate ownership interest in the CPL, and a 40% interest in an expansion project that is expected to add an estimated 0.2 Bcf per day of natural gas capacity through the addition of compression at new and existing stations scheduled for commercial operation by mid-2022, subject to receipt of certain regulatory approvals. See Note 3.

At December 31, 2019, NEP's clean energy projects and pipelines, excluding its non-economic ownership interests, are as follows:

Each of the renewable energy projects sells substantially all of its output and related renewable energy attributes pursuant to long-term, fixed price PPAs to various counterparties. The pipelines primarily operate under long-term firm transportation contracts under which counterparties pay for a fixed amount of capacity that is reserved by the counterparties and also generate revenues based on the volume of natural gas transported on the pipelines. In 2019, NEP derived approximately 16% and 15% of its consolidated

revenues from its contracts with Pacific Gas and Electric Company (PG&E) and Mex Gas Supply S.L., respectively. See Item 1A for a discussion of risks related to NEP's counterparties and business relationship with Pemex and Note 15 - PG&E Bankruptcy.

NEP, NEP OpCo and NEP OpCo GP are parties to the MSA with an indirect wholly owned subsidiary of NEE, under which operational, management and administrative services are provided to NEP under the direction of the board, including managing NEP’s day-to-day affairs and providing individuals to act as NEP’s executive officers, in addition to those services that are provided under O&M agreements and ASAs between NEER subsidiaries and NEP subsidiaries. NEP OpCo pays NEE an annual management fee and makes certain payments to NEE based on the achievement by NEP OpCo of certain target quarterly distribution levels to its common unitholders (incentive distribution rights fees, or IDRs). See Note 13 - Management Services Agreement. In addition, certain subsidiaries of NEP are parties to transportation agreements and a fuel management agreement with a subsidiary of NEE. See Note 13 - Transportation and Fuel Management Agreements.

NEP and NEP OpCo are parties to a right of first refusal (ROFR) agreement with NEER granting NEER and its subsidiaries (other than NEP OpCo and its subsidiaries) a right of first refusal on any proposed sale of any of the NEP OpCo ROFR assets. Pursuant to the terms of the ROFR agreement, prior to engaging in any negotiation regarding any sale of a NEP OpCo asset, NEP OpCo must first negotiate for 30 days with NEER to attempt to reach an agreement on a sale of such asset to NEER or any of its subsidiaries. If an agreement is not reached within the initial 30-day period, NEP OpCo will be able to negotiate with any third party for the sale of such asset for a 30-day period. Prior to accepting any third party offer, NEP OpCo will be required to restart negotiations with NEER for the next 30 days and will not be permitted to sell the applicable asset to the third party making the offer if NEER agrees to terms substantially consistent with those proposed by such third party. If, by the end of the 30-day period, NEER and NEP OpCo have not reached an agreement, NEP OpCo will have the right to sell such asset to such third party within 30 days.

INDUSTRY OVERVIEW

Renewable Energy Industry

Growth in renewable energy is largely attributable to the increasing cost competitiveness of renewable energy driven primarily by government incentives, RPS, improving technology and declining installation costs and the impact of environmental rules and regulations on fossil-fired generation.

U.S. federal, state and local governments have established various incentives to support the development of renewable energy. These incentives make the development of renewable energy projects more competitive by providing accelerated depreciation, tax credits or grants for a portion of the development costs, decreasing the costs associated with developing such projects or creating demand for renewable energy assets through RPS programs. In addition, RPS provide incentives to utilities to contract for energy generated from renewable energy providers.

Renewable energy technology has improved and installation costs have declined meaningfully in recent years. Wind technology is improving as a result of taller towers, longer blades and more efficient energy conversion equipment, which allow wind projects to more efficiently capture wind resource and produce more energy. Solar technology is also improving as solar cell efficiencies improve and solar equipment costs decline.

Natural Gas Pipeline Transportation Industry

The increase in natural gas production in the U.S. has led to opportunities to construct new gas pipelines to transport natural gas from areas of strong production to areas of strong demand. Over the next several years, NEP expects electricity generators to continue to demand higher volumes of natural gas due to prices being near historic lows and societal pressure to reduce greenhouse gas (GHG) emissions. NEP expects these factors to continue to support a growing natural gas transportation industry.

Policy Incentives

Policy incentives in the U.S. have the effect of making the development of renewable energy projects more competitive by providing credits for a portion of the development costs or by providing favorable contract prices. A loss of or reduction in such incentives could decrease the attractiveness of renewable energy projects to developers, including NEE, which could reduce NEP's future acquisition opportunities. Such a loss or reduction could also reduce NEP's willingness to pursue or develop certain renewable energy projects due to higher operating costs or decreased revenues under its PPAs.

U.S. federal, state and local governments have established various incentives to support the development of renewable energy projects. These incentives include accelerated tax depreciation, PTCs, ITCs, cash grants, tax abatements and RPS programs. Pursuant to the U.S. federal Modified Accelerated Cost Recovery System (MACRS), wind and solar projects are fully depreciated for tax purposes over a five-year period even though the useful life of such projects is generally much longer than five years.

Owners of utility-scale wind facilities are eligible to claim an income tax credit (the PTC, or an ITC in lieu of the PTC) upon initially achieving commercial operation. The PTC is determined based on the amount of electricity produced by the wind facility during the first ten years of commercial operation. This incentive was created under the Energy Policy Act of 1992 and has been extended several times. Alternatively, an ITC equal to 30% of the cost of a wind facility may be claimed in lieu of the PTC. Owners of solar

facilities are eligible to claim a 30% ITC for new solar facilities. Previously, owners of solar facilities could have elected to receive an equivalent cash payment from the U.S. Department of Treasury for the value of the 30% ITC (CITC) for qualifying solar facilities where construction began before the end of 2011 and the facilities were placed in service before 2017. In order to qualify for the PTC (or an ITC in lieu of the PTC) for wind or ITC for solar, construction of a facility must begin before a specified date and the taxpayer must maintain a continuous program of construction or continuous efforts to advance the project to completion. The Internal Revenue Service (IRS) issued guidance stating that the safe harbor for continuous efforts and continuous construction requirements will generally be satisfied if the facility is placed in service no more than four years after the year in which construction of the facility began. The IRS also confirmed that retrofitted wind facilities may re-qualify for PTCs or ITCs pursuant to the 5% safe harbor for the begin construction requirement, as long as the cost basis of the new investment is at least 80% of the facility’s total fair value. Tax credits for qualifying wind and solar projects are subject to the following schedule.



	Year construction of project begins^(a)
	2015		2016		2017		2018		2019		2020		2021		2022
PTC^(b)	100	%	100	%	80	%	60	%	40	%	60	%	-		-
Wind ITC^(c)	30	%	30	%	24	%	18	%	12	%	18	%	-		-
Solar ITC^(d)	30	%	30	%	30	%	30	%	30	%	26	%	22	%	10	%

______________________


(a)	Project must be placed in service no more than four years after the year in which construction of the project began to qualify for the PTC or ITC.


(b)	Percentage of the full PTC available for wind projects that begin construction during the applicable year.


(c)	Percentage of eligible project costs that can be claimed as ITC by wind projects that begin construction during the applicable year.


(d)	Percentage of eligible project costs that can be claimed as ITC by solar projects that begin construction during the applicable year. ITC is limited to 10% for solar projects not placed in service before January 1, 2024.

RPS, currently in place in certain states, require electricity providers in the state to meet a certain percentage of their retail sales with energy from renewable sources. Additionally, other states in the U.S. have set renewable energy goals to reduce GHG emissions from historic levels. NEP believes that these standards and goals will create incremental demand for renewable energy in the future.

BUSINESS STRATEGY

NEP's primary business objective is to acquire interests in contracted clean energy projects from NEER or third parties that allow NEP to increase its cash distributions to the holders of its common units over time. To achieve this objective, NEP intends to execute the following business strategy:


•	Focus on contracted clean energy projects. NEP intends to focus on long-term contracted clean energy projects with newer and more reliable technology, lower operating costs and relatively stable cash flows, subject to seasonal variances, consistent with the characteristics of its portfolio.


•	Focus on North America. NEP intends to focus its investments in North America, where it believes industry trends present significant opportunities to acquire contracted clean energy projects in diverse regions and favorable locations. By focusing on North America, NEP believes it will be able to take advantage of NEE’s long-standing industry relationships, knowledge and experience.

•

Maintain a sound capital structure and financial flexibility. NEP and its subsidiaries have various financing structures in place including limited-recourse project-level financings, the sale of differential membership interests and equity interests in certain subsidiaries, preferred units, convertible senior unsecured notes and senior unsecured notes, as well as revolving credit facilities and term loans. NEP believes its cash flow profile, its credit rating, the long-term nature of its contracts and its ability to raise capital provide flexibility for optimizing its capital structure and increasing distributions. NEP intends to continually evaluate opportunities to finance future acquisitions or refinance its existing debt and seeks to limit recourse, optimize leverage, hedge exposure, extend maturities and increase cash distributions to common unitholders over the long term.

•

Take advantage of NEER’s operational excellence to maintain the value of the projects in NEP's portfolio. At the direction of the board, NEER provides O&M, administrative and management services to NEP's projects pursuant to the MSA and other agreements. Through these agreements, NEP benefits from the operational expertise that NEER currently provides across its entire portfolio. NEP expects that these services will maximize the operational efficiencies of its portfolio.

•

Grow NEP's business and cash distributions through selective acquisitions of operating projects or projects under construction. NEP intends to grow primarily through the acquisition of projects that have similar characteristics to the renewable energy projects and pipelines in its portfolio. NEP intends to focus on acquiring projects in operation, maintaining a disciplined investment approach and taking advantage of opportunities to acquire additional projects from NEER and third parties in the future, which it believes will enable it to increase cash distributions to its common unitholders over the long term.

COMPETITION

Wholesale power generation is a capital-intensive, commodity-driven business with numerous industry participants. While NEP's renewable energy projects are currently fully contracted, NEP may compete in the future primarily on the bases of price and terms, but also believes the green attributes of NEP's renewable energy generation assets, among other strengths discussed below, are competitive advantages. Wholesale power generation is a regional business that is highly fragmented relative to many other commodity industries and diverse in terms of industry structure. As such, there is a wide variation in terms of the capabilities, resources, nature and identity of the companies NEP competes with depending on the market. In wholesale markets, customers' needs are met through a variety of means, including long-term bilateral contracts, standardized bilateral products such as full requirements service and customized supply and risk management services.

In addition, NEP competes with other companies to acquire well-developed projects with projected stable cash flows. NEP believes its primary competitors for opportunities in North America are regulated utilities, developers, IPPs, pension funds and private equity funds.

NEP's pipeline projects face competition with respect to retaining and obtaining firm transportation contracts and compete with other pipeline companies based on location, capacity, price and reliability. The market for supply of natural gas is highly competitive, and new pipelines, storage facilities, treating facilities and facilities for related services are currently being built to serve the growing demand for natural gas.

NEP believes that it is well-positioned to execute its strategy and increase cash distributions to its common unitholders over the long term based on the following competitive strengths:

NEE Management and Operational Expertise. NEP believes it benefits from NEE’s experience, operational excellence, cost-efficient operations and reliability. Through the MSA and other agreements with NEE and its subsidiaries, NEP's projects will receive the same benefits and expertise that NEE currently provides across its entire portfolio.

Contracted projects with stable cash flows. The contracted nature of NEP's portfolio of projects supports expected stable long-term cash flows. The renewable energy projects in NEP's portfolio are fully contracted under long-term contracts that generally provide for fixed price payments over the contract term. Revenues from the Texas pipeline projects are primarily generated from firm transportation contracts based on the fixed amount of capacity reserved by the counterparties. The renewable energy projects and pipeline projects have a total weighted average remaining contract term of approximately 16 years at December 31, 2019 based on expected contributions to cash available for distribution.

New, well-maintained portfolio. Approximately 75% of NEP's portfolio, based on expected contributions to cash available for distribution, of renewable energy projects and pipelines have been operating for fewer than six years. Because NEP's portfolio of projects is relatively new and uses what NEP believes is industry-leading technology, NEP believes that it will achieve the expected levels of availability and performance without incurring unexpected operating and maintenance costs.

Geographic and resource diversification. NEP's portfolio is geographically diverse across the U.S. In addition, NEP's portfolio includes both wind and solar electric generating facilities, as well as natural gas pipeline operations. A diverse portfolio tends to reduce the magnitude of individual project or regional deviations from historical resource conditions, providing a more stable stream of cash flows over the long term than a non-diversified portfolio. In addition, NEP believes the geographic diversity of its portfolio helps minimize the impact of adverse regulatory conditions in particular jurisdictions.

Competitiveness of renewable energy. Renewable energy technology has improved and installation costs have declined meaningfully in recent years. Wind technology has improved as a result of taller towers, longer blades and more efficient energy conversion equipment, which allow wind projects to more efficiently capture wind resource and produce more energy. Solar technology is also improving as solar cell efficiencies improve and installation costs are declining.

REGULATION

NEP's projects and pipelines are subject to regulation by a number of U.S. federal, state and other organizations, including, but not limited to, the following:


•	the FERC, which oversees the acquisition and disposition of generation, transmission and other facilities, transmission of electricity and natural gas in interstate commerce and wholesale purchases and sales of electric energy, among other things;


•	the NERC, which, through its regional entities, establishes and enforces mandatory reliability standards, subject to approval by the FERC, to ensure the reliability of the U.S. electric transmission and generation system and to prevent major system blackouts;


•	the Environmental Protection Agency (EPA), which has the responsibility to maintain and enforce national standards under a variety of environmental laws. The EPA also works with industries and all levels of government, including federal and state governments, in a wide variety of voluntary pollution prevention programs and energy conservation efforts;


•	various agencies in Texas and Pennsylvania, which oversee safety, environmental and certain aspects of rates and transportation related to the pipeline projects; and


•	the Pipeline and Hazardous Materials Safety Administration and the Texas Railroad Commission's Pipeline Safety Division, which, among other things, oversee the safety of natural gas pipelines.

NEP is subject to environmental laws and regulations, and is affected by the issues described in the Environmental Matters section below.

ENVIRONMENTAL MATTERS

NEP is subject to environmental laws and regulations, including federal, state and local environmental statutes, rules and regulations, for the ongoing operations, siting and construction of its facilities. Complying with these environmental laws and regulations could result in, among other things, changes in the design and operation of existing facilities and changes or delays in the location, design, construction and operation of any new facilities and failure to comply could result in fines and penalties. The following is a discussion of certain existing rules, some of which could potentially have a material effect on NEP and its subsidiaries.

Avian/Bat Regulations and Wind Turbine Siting Guidelines. NEP is subject to numerous environmental regulations and guidelines related to threatened and endangered species and/or their habitats, as well as avian and bat species, for the ongoing operations of its facilities. The environmental laws in the U.S., including, among others, the Endangered Species Act, the Migratory Bird Treaty Act and the Bald and Golden Eagle Protection Act provide for the protection of migratory birds, eagles and bats and endangered species of birds and bats and/or their habitats. Regulations have been adopted under some of these laws that contain provisions that allow the owner/operator of a facility to apply for a permit to undertake specific activities, including those associated with certain siting decisions, construction activities and operations. In addition to regulations, voluntary wind turbine siting guidelines established by the U.S. Fish and Wildlife Service set forth siting, monitoring and coordination protocols that are designed to support wind development in the U.S. while also protecting both birds and bats and/or their habitats. These guidelines include provisions for specific monitoring and study conditions which need to be met in order for projects to be in adherence with these voluntary guidelines. Complying with these environmental regulations and adhering to the provisions set forth in the voluntary wind turbine siting guidelines could result in additional costs or reduced revenues at existing or new wind and solar facilities and transmission and distribution facilities at NEP and, in the case of environmental laws and regulations, failure to comply could result in fines, penalties, criminal sanctions or injunctions.

EMPLOYEES

NEP does not have any employees and relies solely on employees of affiliates of the manager under the MSA, including employees of NEE and NEER, to serve as officers of NEP. See further discussion of the MSA and other payments to NEE in Note 13.

WEBSITE ACCESS TO SEC FILINGS

NEP makes its 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 NEP's internet website, www.nexteraenergypartners.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC. The information and materials available on NEP's website are not incorporated by reference into this Form 10-K.

Item 1A. Risk Factors

Limited partnership interests are inherently different from shares of capital stock of a corporation, although many of the business risks to which NEP is subject are similar to those that would be faced by a corporation engaged in similar businesses and NEP has elected to be treated as a corporation for U.S. federal income tax purposes. If any of the following risks were to occur, NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders could be materially and adversely affected. In that case, it may not be able to pay distributions to its unitholders, the trading price of its common units could decline and investors could lose all or part of their investment in NEP.

Operational Risks

NEP's ability to make cash distributions to its unitholders is affected by wind and solar conditions at its renewable energy projects.

The amount of energy that a wind project can produce depends on wind speeds, air density, weather and equipment, among other factors. If wind speeds are too low, NEP's wind projects may not perform as expected or may not be able to generate energy at all and, if wind speeds are too high, the wind projects may have to shut down to avoid damage. As a result, the output from NEP's wind projects can vary greatly as local wind speeds and other conditions vary. Similarly, the amount of energy that a solar project is able to produce depends on several factors, including, but not limited to, the amount of solar energy that reaches its solar panels. Wind turbine or solar panel placement, interference from nearby wind projects or other structures and the effects of vegetation, snow, ice, land use and terrain also affect the amount of energy that NEP's wind and solar projects generate. If wind, solar, meteorological, topographical or other conditions at NEP's wind or solar projects are less conducive to energy production, NEP's projects may not produce the amount of energy NEP expects. The failure of some or all of NEP's projects to perform according to NEP's expectations could have a material adverse effect on its business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP'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.

Weather conditions directly influence the demand for electricity, natural gas and other fuels and affect the price of energy and energy-related commodities. In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, icing events and earthquakes, can be destructive and cause power outages and property damage, reduce revenue, affect the availability of water, and require NEP to incur additional costs. Furthermore, NEP's physical plants could be placed at greater risk of damage should changes in the global climate produce unusual variations in temperature and weather patterns, resulting in more intense, frequent and extreme weather events and abnormal levels of precipitation. A disruption or failure of electric generation, transmission or distribution systems or natural gas production, transmission, storage or distribution systems in the event of a hurricane, tornado or other severe weather event, or otherwise, could prevent NEP from operating its business in the normal course and could result in any of the adverse consequences described above. Any of the foregoing could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Severe weather, natural disasters, meteorological conditions or seismic activity could damage or require NEP to shut down its turbines, solar panels, pipelines or other equipment or facilities (including, but not limited to, generation transmission tie lines). Such damage or a shutdown could impede NEP's ability to operate its projects, or decrease its energy production levels, pipeline transportation capability and revenues. To the extent these conditions equate to a force majeure event under NEP's PPAs, the PPA counterparty may terminate such PPAs if such a force majeure event continues for a period ranging from 12 months to 36 months, as specified in the applicable PPA. These conditions could also damage or reduce the useful life of interconnection and transmission facilities of a project or of third parties relied upon by NEP's projects and increase maintenance costs. Replacement and spare parts for solar panels, wind turbines and key pieces of equipment may be difficult or costly to acquire or may be unavailable. In certain instances, NEP's renewable energy projects would be unable to sell energy until a replacement part is installed. If NEP experiences a prolonged interruption at one of its renewable energy projects or pipelines, energy production or gas transportation capability would decrease. Production of less energy than expected, or an inability to transport natural gas at expected levels due to these or other conditions, could reduce NEP's revenues, which could have a material adverse effect on its business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Changes in weather can also affect the level of wind and solar resource, and thus the production of electricity, at NEP's power generating facilities. Because the levels of wind and solar resources are variable and difficult to predict, NEP’s results of operations for individual wind and solar facilities specifically, and NEP's results of operations generally, may vary significantly from period to period, depending on the level of available resources. To the extent that resources are not available at planned levels, the financial results from these facilities may be less than expected.

Operation and maintenance of renewable energy projects involve significant risks that could result in unplanned power outages, reduced output, personal injury or loss of life.

There are risks associated with the operation of NEP's renewable energy projects, including:


•	breakdown or failure of, or damage to, turbines, blades, blade attachments, solar panels, mirrors and other equipment, which could reduce a project’s energy output or result in personal injury or loss of life;


•	catastrophic events, such as fires, earthquakes, severe weather, tornadoes, ice or hail storms, other meteorological conditions, landslides and other similar events beyond NEP's control, which could severely damage or destroy all or a part of a project, reduce its energy output or result in personal injury or loss of life;


•	technical performance below expected levels, including, but not limited to, the failure of wind turbines, solar panels, mirrors and other equipment to produce energy as expected due to incorrect measures of expected performance provided by equipment suppliers;


•	increases in the cost of operating the projects, including, but not limited to, costs relating to labor, equipment, insurance and real estate taxes;


•	operator or contractor error or failure to perform;


•	serial design or manufacturing defects, which may not be covered by warranty;


•	extended events, including, but not limited to, force majeure, under certain PPAs that may give rise to a termination right of the customer under such a PPA (renewable energy counterparty);


•	failure to comply with permits and the inability to renew or replace permits that have expired or terminated;


•	the inability to operate within limitations that may be imposed by current or future governmental permits;


•	replacements for failed equipment, which may need to meet new interconnection standards or require system impact studies and compliance that may be difficult or expensive to achieve;


•	land use, environmental or other regulatory requirements;


•	disputes with the BLM, other owners of land on which NEP's projects are located or adjacent landowners;


•	changes in law, including, but not limited to, changes in governmental permit requirements, corporate income tax laws, regulations and policies and international trade laws, regulations, agreements, treaties and policies;


•	government or utility exercise of eminent domain power or similar events; and


•	existence of liens, encumbrances and other imperfections in title affecting real estate interests.

These and other factors could require NEP to shut down its wind or solar projects. These factors could also degrade equipment, reduce the useful life of interconnection and transmission facilities and materially increase maintenance and other costs. Unanticipated capital expenditures associated with maintaining or repairing NEP's projects may reduce profitability.

In addition, replacement and spare parts for solar panels, wind turbines and other key equipment may be difficult or costly to acquire or may be unavailable. Each solar and wind project may require a specific design for certain critical equipment and, if it does not have acceptable spare equipment available, the project would need to order replacements with potentially lengthy order lead times.

Such events or actions could significantly decrease or eliminate the revenues of a project, significantly increase its operating costs, cause a default under NEP's financing agreements or give rise to damages or penalties to a PPA counterparty, another contractual counterparty, a governmental authority or other third parties or cause defaults under related contracts or permits. Any of these events could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Natural gas gathering and transmission activities involve numerous risks that may result in accidents or otherwise affect NEP's pipeline operations.

There are a variety of hazards and operating risks inherent in natural gas gathering and transmission activities, such as leaks, explosions, mechanical problems, activities of third parties, including, but not limited to, the possibility of terrorist acts, and damage to pipelines, facilities and equipment caused by hurricanes, tornadoes, floods, fires and other natural disasters, that could cause substantial financial losses. In addition, portions of NEP’s transmission system and its gathering system have been in service for several decades, which could result in increased maintenance and repair activities. These risks could result in significant injury, loss of life, significant damage to property, environmental pollution, impairment of operations, increased maintenance or repair expenditures and significant loss of revenue, any of which could result in substantial losses. For pipeline assets located near populated areas, including, but not limited to, residential areas, commercial business centers, industrial sites and other public gathering areas, the level of damage resulting from these risks could be greater. Therefore, should any of these risks materialize, it could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP depends on certain of the renewable energy projects and pipelines in its portfolio for a substantial portion of its anticipated cash flows.

NEP depends on certain of the renewable energy projects and pipelines in its portfolio for a substantial portion of its anticipated cash flows. Consequently, the impairment or loss of any one or more of those projects or pipelines could materially and, depending on the relative size of the affected projects or pipelines, disproportionately reduce NEP’s cash flows and, as a result, have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP is pursuing the expansion of natural gas pipelines and the repowering of wind projects that will require up-front capital expenditures and expose NEP to project development risks.

NEP is pursuing the expansion of natural gas pipelines and the repowering of wind projects in its portfolio. The development of pipeline expansion and wind repowering projects involves numerous regulatory, environmental, construction, safety, political and legal uncertainties and may require the expenditure of significant amounts of capital. These projects may not be completed on schedule, at the budgeted cost or at all. There may be cost overruns and construction difficulties. In addition, NEP may agree to pay liquidated damages to committed shippers or PPA counterparties if a project does not achieve commercial operations before a specified date that the parties may agree to in advance. Any cost overruns NEP experiences or liquidated damages NEP pays could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders. In addition, NEP may choose to finance all or a portion of the development costs of any expansion or repowering project through the sale of additional common units or securities convertible into common units, which could result in dilution to NEP’s unitholders. The construction related to the expansion or repowering projects may occur over an extended period of time and NEP may not receive increases in revenues until the projects are placed in service, or at all. Accordingly, NEP's expansion and repowering efforts may not result in additional long-term contracted revenue streams that increase the amount of cash available to execute NEP's business plan and make cash distributions to its unitholders.

Terrorist acts, cyberattacks or other similar events could impact NEP's projects, pipelines or surrounding areas and adversely affect its business.

Terrorists have attacked energy assets such as substations and related infrastructure in the past and may attack them in the future. Any attacks on NEP’s projects, pipelines or the facilities of third parties on which its projects or pipelines rely could severely damage such projects or pipelines, disrupt business operations, result in loss of service to customers and require significant time and expense to repair. Projects and pipelines in NEP's portfolio, as well as projects or pipelines it may acquire and the transmission and other facilities of third parties on which NEP's projects rely, may also be targets of terrorist acts and affected by responses to terrorist acts, each of which could fully or partially disrupt the ability of NEP's projects or pipelines to operate.

Cyberattacks, including, but not limited to, those targeting information systems or electronic control systems used to operate NEP's energy projects (including, but not limited to, generation transmission tie lines) and the transmission and other facilities of third parties on which NEP's projects rely, could severely disrupt business operations and result in loss of service to customers and significant expense to repair security breaches or system damage. As cyber incidents continue to evolve, NEP may be required to expend additional resources to continue to modify or enhance NEP's protective measures or to investigate and remediate any vulnerability to cyber incidents.

To the extent terrorist acts, cyberattacks or other similar events equate to a force majeure event under NEP's PPAs, the renewable energy counterparty may terminate such PPAs if such a force majeure event continues for a period ranging from 12 months to 36 months, as specified in the applicable agreement. As a result, a terrorist act, cyberattack or other similar event could significantly decrease revenues or result in significant reconstruction or remediation costs, any of which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

The ability of NEP 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. NEP's insurance coverage does not insure against all potential risks and it may become subject to higher insurance premiums.

NEP is exposed to numerous risks inherent in the operation of wind and solar projects and natural gas pipelines, including, but not limited to, equipment failure, manufacturing defects, natural disasters, terrorist acts, cyberattacks, sabotage, vandalism and environmental risks. The occurrence of any one of these events may result in NEP being named as a defendant in lawsuits asserting claims for substantial damages, including, but not limited to, environmental cleanup costs, personal injury, property damage, fines and penalties. Further, with respect to any future acquisitions of any projects that are under construction, NEP is, or will be, exposed to risks inherent in the construction of these projects.

NEP shares insurance coverage with NEE and its affiliates, for which NEP reimburses NEE. NEE currently maintains liability insurance coverage for itself and its affiliates, including NEP, which covers legal and contractual liabilities arising out of bodily injury, personal injury or property damage, including, but not limited to, resulting loss of use, to third parties. NEE also maintains coverage for itself and its affiliates, including NEP, for physical damage to assets and resulting business interruption, including, but not limited to, damage caused by terrorist acts. However, such policies do not cover all potential losses and coverage is not always available

in the insurance market on commercially reasonable terms. To the extent NEE or any of its affiliates experience covered losses under the insurance policies, the limit of NEP's coverage for potential losses may be decreased.

NEE may also reduce or eliminate such coverage at any time. NEP may not be able to maintain or obtain insurance of the type and amount NEP desires at reasonable rates and NEP may elect to self-insure some of its wind and solar projects and natural gas pipelines. The insurance coverage NEP does obtain may contain large deductibles or fail to cover certain risks or all potential losses. In addition, insurance coverage may not continue to be available or may not be available at rates or on terms similar to those presently available to NEE. NEE’s insurance policies are subject to annual review by its insurers and may not be renewed on similar or favorable terms, including, but not limited to, coverage, deductibles or premiums, or at all. The ability of NEE 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. If insurance coverage is not available or obtainable on acceptable terms, NEP may be required to pay costs associated with adverse future events. A loss for which NEP is not fully insured could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Warranties provided by the suppliers of equipment for NEP's projects may be limited by the ability of a supplier to satisfy its warranty obligations, or by the terms of the warranty, so the warranties may be insufficient to compensate NEP for its losses.

NEP expects to benefit from various warranties, including, but not limited to, product quality and performance warranties, provided by suppliers in connection with the purchase of equipment necessary to operate its projects. NEP's suppliers may fail to fulfill their warranty obligations. Even if a supplier fulfills its obligations, the warranty may not be sufficient to compensate NEP for all of its losses. In addition, these warranties generally expire within two to five years after the date each equipment item is delivered or commissioned and are subject to liability limits. If installation is delayed, NEP may lose all or a portion of the benefit of a warranty. If NEP seeks warranty protection and a supplier is unable or unwilling to perform its warranty obligations, whether as a result of its financial condition or otherwise, or if the term of the warranty has expired or a liability limit has been reached, there may be a reduction or loss of warranty protection for the affected equipment, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Supplier concentration at certain of NEP's projects may expose it to significant credit or performance risks.

NEP often relies on a single supplier or a small number of suppliers to provide equipment, technology and other services required to operate its projects. If any of these suppliers cannot perform under their agreements with NEP, NEP may need to seek alternative suppliers. Alternative suppliers, products and services may not perform similarly and replacement agreements may not be available on favorable terms or at all. NEP may be required to make significant capital expenditures to remove, replace or redesign equipment that cannot be supported or maintained by replacement suppliers. A number of factors, including, but not limited to, the financial condition of NEP's suppliers, may impact their ability to perform under NEP's supply agreements. The failure of any supplier to fulfill its contractual obligations to NEP could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP relies on interconnection, transmission and other pipeline facilities of third parties to deliver energy from its renewable energy projects and to transport natural gas to and from its pipelines. If these facilities become unavailable, NEP's projects and pipelines may not be able to operate or deliver energy or may become partially or fully unavailable to transport natural gas.

NEP depends on interconnection and transmission facilities owned and operated by third parties to deliver energy from its wind and solar projects. In addition, some of the renewable energy projects in NEP's portfolio share essential facilities, including, but not limited to, interconnection and transmission facilities, with projects that are owned by other affiliates of NEE. Many of the interconnection and transmission arrangements for the projects in NEP's portfolio are governed by separate agreements with the owners of the transmission or distribution facilities. Congestion, emergencies, maintenance, outages, overloads, requests by other parties for transmission service, actions or omissions by other projects with which NEP shares facilities and other events beyond NEP's control could partially or completely curtail deliveries of energy by its renewable energy projects and increase project costs. In addition, any termination of a project’s interconnection or transmission arrangements or non-compliance by an interconnection provider, the owner of shared facilities or another third party with its obligations under an interconnection or transmission arrangement may delay or prevent NEP's renewable energy projects from delivering energy in a manner that entitles it to receive revenue. If the interconnection or transmission arrangement for a project is terminated, NEP may not be able to replace it on similar terms to the existing arrangement, or at all, or NEP may experience significant delays or costs in connection with such replacement. Moreover, if NEP acquires any renewable energy projects that are under construction, a failure or delay in the construction of interconnection or transmission facilities could delay the completion of the project.

NEP depends upon third-party pipelines and other facilities that transport natural gas to and from its pipelines. Because NEP does not own these third-party pipelines or facilities, their continuing operation are not within its control. If these pipelines and other facilities were to become unavailable for current or future volumes of natural gas due to repairs, damage to the facility, lack of capacity or any other reason, NEP's ability to operate efficiently and to transport natural gas could be restricted, thereby reducing revenues.

The unavailability of interconnection, transmission, pipeline or shared facilities could adversely affect the operation of NEP's projects and pipelines and the revenues received, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP's business is subject to liabilities and operating restrictions arising from environmental, health and safety laws and regulations, compliance with which may require significant capital expenditures, increase NEP’s cost of operations and affect or limit its business plans.

NEP's projects and pipelines are subject to numerous environmental, health and safety laws, regulations, guidelines, policies, directives and other requirements governing or relating to, among other things:


•	the protection of wildlife, including, but not limited to, migratory birds, bats and threatened and endangered species, such as desert tortoises, or protected species, such as eagles, and other protected plants or animals whose presence or movements often cannot be anticipated or controlled;


•	the storage, handling, use and transportation of natural gas as well as other hazardous or toxic substances and other regulated substances, materials, and/or chemicals;


•	air emissions, water quality, releases of hazardous materials into the environment and the prevention of and responses to releases of hazardous materials into soil and groundwater;

•

federal, state or local land use, zoning, building and transportation laws and requirements, which may mandate conformance with sound levels, radar and communications interference, hazards to aviation or navigation, or other potential nuisances, such as the flickering effect, caused when rotating wind turbine blades periodically cast shadows through openings, such as the windows of neighboring properties, which is known as shadow flicker;


•	the presence or discovery of archaeological, religious or cultural resources at or near NEP's projects or pipelines; and


•	the protection of workers’ health and safety.

If NEP's projects or pipelines do not comply with such laws, regulations, environmental licenses, permits, inspections or other requirements, NEP may be required to incur significant expenditures, pay penalties or fines, or curtail or cease operations of the affected projects or pipelines. Violations of environmental and other laws, regulations and permit requirements, including, but not limited to, certain violations of laws protecting wetlands, migratory birds, bald and golden eagles and threatened or endangered species, may also result in criminal sanctions or injunctions.

NEP's projects and pipelines also carry inherent environmental, health and safety risks, including, but not limited to, the potential for related civil litigation, regulatory compliance actions, remediation orders, fines and other penalties. For instance, NEP's projects or pipelines could malfunction or experience other unplanned events that cause spills or emissions that exceed permitted levels, resulting in personal injury, fines or property damage.

Additionally, NEP may be held liable for related investigatory and cleanup costs, which are typically not limited by law or regulation, for any property where there has been a release or potential release of a hazardous substance, regardless of whether NEP knew of or caused the release or potential release. NEP could also be liable for other costs, including, but not limited to, fines, personal injury or property damage or damage to natural resources. In addition, some environmental laws place a lien on a contaminated site in favor of the government as security for damages and costs it may incur for contamination and cleanup. Contained or uncontained hazardous substances on, under or near NEP's projects or pipelines, regardless of whether it owns or leases the sited property, or the inability to remove or otherwise remediate such substances, may restrict or eliminate the ability to operate NEP's projects or pipelines.

Each of NEP's projects and pipelines covers a large area and, as such, archaeological discoveries could occur at its projects or pipelines at any time. Such discoveries could result in the restriction or elimination of the ability to operate any affected project. For example, utility-scale projects and operations may cause impacts to certain landscape views, trails, or traditional cultural activities. Such impacts may trigger claims from citizens that a NEP project or its operations are infringing upon their legal rights or other claims, resulting in the restriction or elimination of the ability to operate the affected project.

NEP may not be able to obtain or maintain from time to time all required environmental regulatory approvals for its operating assets. If there is a delay in obtaining or renewing any required environmental regulatory approvals, if NEP fails to obtain or comply with them or if environmental laws or regulations change or are administered in a more stringent manner, the operations of facilities could be prevented, delayed or become subject to additional costs. The costs that may be incurred to comply with environmental regulations in the future may have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Environmental, health and safety laws and regulations have generally become more stringent over time, and NEP expects this trend to continue. Significant capital and operating costs may be incurred at any time to keep NEP's projects or pipelines in compliance with environmental, health and safety laws and regulations. If it is not economical to make those expenditures, or if NEP violates any of these laws and regulations, it may be necessary to retire the affected project or pipeline or restrict or modify its operations, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP's renewable energy projects or pipelines may be adversely affected by legislative changes or a failure to comply with applicable energy and pipeline regulations.

NEP's renewable energy projects, pipelines and PPA/transportation agreement counterparties are subject to regulation by U.S. federal, state and local authorities. The wholesale sale of electric energy in the continental U.S., other than portions of Texas, is subject to the jurisdiction of the FERC and the ability of a project to charge the negotiated rates contained in its PPA is subject to that project’s maintenance of its general authorization from the FERC to sell electricity at market-based rates. The FERC may revoke a project's market-based rate authorization if it determines that the project entity can exercise market power in transmission or generation, creates barriers to entry, has engaged in abusive affiliate transactions or fails to meet compliance requirements associated with such rates. The negotiated rates entered into under PPAs could be changed by the FERC if it determines such change is in the public interest or just and reasonable, depending on the standard in the respective PPA. While a public interest determination would require a finding by the FERC that the contract rate seriously harms the consuming public under applicable U.S. Supreme Court precedent, if the FERC decreases the prices paid to NEP for energy delivered under any of its PPAs, NEP’s revenues could be below its projections and its business, financial condition, results of operations and ability to make cash distributions to its unitholders could be materially adversely affected.

The Texas pipelines are intrastate natural gas transportation pipelines and natural gas-gathering facilities which are exempt from the jurisdiction of the FERC under the Natural Gas Act of 1938 (NGA). The rates, terms and conditions of some of the transportation services provided by the Texas pipelines are subject to FERC regulation under the Natural Gas Policy Act of 1978 (NGPA), which requires that rates charged for transportation must be fair and equitable, and amounts collected in excess of fair and equitable rates are subject to refund with interest. In addition, NEP’s investment in CPL, including the related expansion project, is subject to FERC regulation as the CPL is a segment of a larger, interstate pipeline. Further, state regulation of transportation facilities generally includes various safety, environmental and, in some cases, non-discriminatory take requirements and complaint-based rate regulation. If any of NEP's pipelines were found to have provided services or otherwise operated in violation of the NGA or NGPA, that could result in the imposition of civil penalties, as well as a requirement to disgorge charges collected for such services in excess of the rate established by the FERC.

NEP's renewable energy projects are subject to the mandatory reliability standards of the NERC. The NERC reliability standards are a series of requirements that relate to maintaining the reliability of the North American bulk electric system and cover a wide variety of topics, including, but not limited to, physical and cybersecurity of critical assets, information protocols, frequency response and voltage standards, testing, documentation and outage management. If NEP fails to comply with these standards, NEP could be subject to sanctions, including, but not limited to, substantial monetary penalties. Although the renewable energy projects are not subject to state utility rate regulation because they sell energy exclusively on a wholesale basis, NEP is subject to other state regulations that may affect NEP's projects’ sale of energy and operations. Changes in state regulatory treatment are unpredictable and could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

The structure of the industry and regulation in the U.S. is currently, and may continue to be, subject to challenges and restructuring proposals. Additional regulatory approvals may be required due to changes in law or for other reasons. NEP expects the laws and regulation applicable to its business and the energy industry generally to be in a state of transition for the foreseeable future. Changes in the structure of the industry or in such laws and regulations could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Pemex may claim certain immunities under the Foreign Sovereign Immunities Act and Mexican law, and the Texas pipeline entities' ability to sue or recover from Pemex for breach of contract may be limited and may be exacerbated if there is a deterioration in the economic relationship between the U.S. and Mexico.

Pemex is an autonomous state enterprise controlled by the Mexican Government. Accordingly, Pemex may claim sovereign immunity and it may not be possible to obtain a judgment in a U.S. court against Pemex unless the U.S. court determines that Pemex is not entitled to sovereign immunity with respect to that action. In addition, Mexican law does not allow attachment prior to judgment or attachment in aid of execution upon a judgment by Mexican courts upon the assets of Pemex or its subsidiary entities. As a result, the Texas pipeline entities’ or NEP's ability to enforce any judgments against Pemex in the courts of Mexico may be limited. Therefore, even if NEP were able to obtain a U.S. judgment against Pemex for breach of contract or in a similar action, NEP might not be able to obtain a judgment in Mexico that is based on that U.S. judgment. Further, renegotiation of existing trade agreements or changes in international trade laws, regulations, agreements, treaties or policies of the U.S. or Mexico could result in a deterioration in the economic relationship between the U.S. and Mexico. Such a deterioration could increase the difficulty of collecting receivables from Pemex or of filing suit for recovery of amounts owed and recovering amounts due from Pemex. This inability to sue or recover from Pemex could inhibit NEP from enforcing the Texas pipeline entities’ contracts with Pemex, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP does not own all of the land on which the projects in its portfolio are located and its use and enjoyment of the property may be adversely affected to the extent that there are any lienholders or land rights holders that have rights that are superior to NEP's rights or the BLM suspends its federal rights-of-way grants.

NEP does not own all of the land on which the projects in its portfolio are located and they generally are, and its future projects may be, located on land occupied under long-term easements, leases and rights-of-way. The ownership interests in the land subject to these easements, leases and rights-of-way may be subject to mortgages securing loans or other liens and other easements, lease rights and rights-of-way of third parties that were created prior to NEP's projects’ easements, leases and rights-of-way. As a result, some of NEP's projects’ rights under such easements, leases or rights-of-way may be subject to the rights of these third parties. While NEP performs title searches, obtains title insurance, records its interests in the real property records of the projects’ localities and enters into non-disturbance agreements to protect itself against these risks, such measures may be inadequate to protect against all risk that NEP's rights to use the land on which its projects are or will be located and its projects’ rights to such easements, leases and rights-of-way could be lost or curtailed. Additionally, NEP operations located on properties owned by others are subject to termination for violation of the terms and conditions of the various easements, leases or rights-of-way under which such operations are conducted.

Further, NEP's activities conducted under federal rights-of-way grants are subject to “immediate temporary suspension” of unspecified duration, at any time, at the discretion of the BLM. A suspension of NEP activities within a federal right-of-way may be issued by BLM to protect public health or safety or the environment. An order to suspend NEP activities may be issued by BLM prior to an administrative proceeding. Such an order may be issued verbally or in writing, and may require immediate compliance by NEP. Any violation of such an order could result in the loss or curtailment of NEP's rights to use any federal land on which its projects are or will be located.

Any such loss or curtailment of NEP's rights to use the land on which its projects are or will be located as a result of any lienholders or leaseholders that have rights that are superior to NEP's rights or the BLM’s suspension of its federal rights-of-way grants could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders. Additionally, NEP does not own all of the land on which its pipelines are located, and NEP is subject to the possibility of more onerous terms or increased costs when NEP needs to extend the duration of any necessary existing land use rights or if NEP needs to obtain any new land use rights in connection with any expansion projects NEP may choose to pursue. In certain instances, rights-of-way may be subordinate to the rights of government agencies, which could result in costs or interruptions to NEP's service. Restrictions on NEP's ability to use rights-of-way could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP is subject to risks associated with litigation or administrative proceedings that could materially impact its operations, including, but not limited to, proceedings related to projects it acquires in the future.

NEP is subject to risks and costs, including, but not limited to, potential negative publicity, associated with lawsuits or claims contesting the operation, construction or expansion of its projects. The result and costs of defending any such lawsuit, regardless of the merits and eventual outcome, may be material.

NEP is and may also become subject to additional claims based on alleged negative health effects related to acoustics, shadow flicker or other claims associated with wind turbines from individuals who live near NEP's projects. Any such legal proceedings or disputes could materially increase the costs associated with NEP's operations. In addition, NEP may become subject to legal proceedings or claims contesting the construction or operation of NEP's projects. Any such legal proceedings or disputes could materially delay NEP's ability to complete construction of a project in a timely manner, or at all, or materially increase the costs associated with commencing or continuing a project’s commercial operations. Any elective settlement of claims and unfavorable outcomes or developments relating to these proceedings or disputes, such as judgments for monetary damages, injunctions or denial or revocation of permits, could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP's cross-border operations require NEP to comply with anti-corruption laws and regulations of the U.S. government and Mexico.

Doing business in the U.S. and conducting business with an entity controlled by the Mexican government, requires NEP to comply with U.S. and Mexican anti-corruption laws and regulations. NEP's failure to comply with these laws and regulations may expose NEP to liabilities. These laws and regulations may apply to NEP, the manager under the MSA, their respective affiliates and their respective individual directors, officers, employees (if any) and agents and may restrict NEP's operations, trade practices, investment decisions and partnering activities.

In particular, NEP's business relationship with Pemex is subject to U.S. laws and regulations, such as the FCPA. The FCPA prohibits U.S. companies and their officers, directors, employees and agents acting on their behalf from offering, promising, authorizing or providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise securing an improper advantage. The FCPA also requires companies to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. As part of its business, NEP deals with foreign officials for purposes of the FCPA. As a result, business dealings between NEP's employees and any such foreign official could expose NEP to the risk of violating anti-corruption laws even if such business practices may be customary or are not otherwise prohibited between NEP and a private third party. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment

from government contracts as well as remedial measures. In recent years, the U.S. government has brought FCPA enforcement actions that have led to significant monetary penalties against several companies operating in the oil and gas industry.

NEP has established policies and procedures designed to assist it and personnel acting on its behalf in complying with applicable U.S. and Mexican laws and regulations. NEP's compliance procedures to mitigate anti-corruption compliance risks may not detect or prevent potential violations of the FCPA or other applicable anti-corruption laws. Under such circumstances, NEP could be subject to criminal and civil penalties and other legal and regulatory liabilities and government-imposed requirements to undertake remedial measures, any of which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP is subject to risks associated with its ownership or acquisition of projects or pipelines that are under construction, which could result in its inability to complete construction projects on time or at all, and make projects too expensive to complete or cause the return on an investment to be less than expected.

NEP has chosen and may choose to acquire projects or pipelines that have not yet commenced operations or are under construction and is pursuing pipeline expansion and wind repowering projects. There may be delays or unexpected developments in completing any future construction projects, which could cause the construction costs of these projects to exceed NEP's expectations, result in substantial delays or prevent the project or pipeline from commencing commercial operations. Various factors could contribute to construction-cost overruns, construction halts or delays or failure to commence commercial operations, including, but not limited to:


•	delays in obtaining, or the inability to obtain, necessary permits and licenses;


•	delays and increased costs related to the interconnection of new projects to the transmission system;


•	the inability to acquire or maintain land use and access rights;


•	the failure to receive contracted third-party services;


•	interruptions to dispatch at the projects;


•	supply interruptions, including as a result of changes in international trade laws, regulations, agreements, treaties or policies of the U.S. or other countries in which NEP's suppliers are located;


•	work stoppages;


•	labor disputes;


•	weather interferences;


•	unforeseen engineering, environmental and geological problems, including, but not limited to, discoveries of contamination, protected plant or animal species or habitat, archaeological or cultural resources or other environment-related factors;


•	unanticipated cost overruns in excess of budgeted contingencies; and


•	failure of contracting parties to perform under contracts.

In addition, if NEP or one of its subsidiaries controlling the NEP projects or pipelines has an agreement with a third party to complete construction of any project, NEP is subject to the viability and performance of the third party. NEP's inability to find a replacement contracting party, if the original contracting party has failed to perform, could result in the abandonment of the construction of such project, while NEP could remain obligated under other agreements associated with the project, including, but not limited to, offtake power sales agreements.

Any of these risks could cause NEP's financial returns on these investments to be lower than expected or otherwise delay or prevent the completion of such projects or distribution of cash to NEP, or could cause NEP to operate below expected capacity or availability levels, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Contract Risks

NEP relies on a limited number of customers and is exposed to the risk that they may be unwilling or unable to fulfill their contractual obligations to NEP or that they otherwise terminate their agreements with NEP.

In most instances, NEP sells the energy generated by each of its renewable energy projects to a single PPA counterparty under a long-term PPA. Further, NEP transports natural gas under long-term natural gas transportation agreements with a limited number of counterparties. NEP's equity method investees also have contracts with a limited number of counterparties.

NEP expects that its existing and future contracts will be the principal source of cash flows available to make distributions to its unitholders. Thus, the actions of even one customer may cause variability of NEP’s revenue, financial results and cash flows that are difficult to predict. Similarly, significant portions of NEP’s credit risk may be concentrated among a limited number of customers and the failure of even one of these key customers to fulfill its contractual obligations to NEP could significantly impact NEP's business and financial results. Any or all of NEP's customers may fail to fulfill their obligations under their contracts with NEP, whether as a result of the occurrence of any of the following factors or otherwise:


•	Specified events beyond NEP's control or the control of a customer may temporarily or permanently excuse the customer from its obligation to accept and pay for delivery of energy generated by a project. These events could include, among other things, a system emergency, transmission failure or curtailment, adverse weather conditions or labor disputes.

•

Since Pemex, an autonomous state entity controlled by the government of Mexico, makes payments with respect to natural gas transportation agreements, NEP is subject to the risk that Pemex may attempt to unilaterally change or terminate its contract with NEP, whether as a result of legislative, regulatory, political or other activities, including changes in international trade laws, regulations, agreements, treaties or policies of the U.S. or other countries.


•	Certain of NEP’s customers, including PG&E, have been impacted by wildfires in California and have been or could be subject to significant liability in excess of their insurance coverage which could be expected to have a significant impact on their financial condition.

•

The ability of NEP's customers to fulfill their contractual obligations to NEP depends on their financial condition. NEP is exposed to the credit risk of its customers over an extended period of time due to the long-term nature of NEP's contracts with them. These customers could become subject to insolvency or liquidation proceedings or otherwise suffer a deterioration of their financial condition when they have not yet paid for services delivered, any of which could result in underpayment or nonpayment under such agreements.


•	A default or failure by NEP to satisfy minimum energy or natural gas delivery requirements or mechanical availability levels under NEP's agreements could result in damage payments to the applicable customer or termination of the applicable agreement.

If NEP's customers are unwilling or unable to fulfill their contractual obligations to NEP, or if they otherwise terminate such contracts, NEP may not be able to recover contractual payments due to NEP. Since the number of customers that purchase wholesale bulk energy or require the transportation of natural gas is limited, NEP may be unable to find a new customer on similar or otherwise acceptable terms or at all. In some cases, there currently is no economical alternative counterparty to the original customer. The loss of, or a reduction in sales to, any of NEP's customers could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

PG&E, which contributes a significant portion of NEP's revenues, filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Any rejection by PG&E of a material portion of NEP's PPAs with it or any material reduction in the prices NEP charges PG&E under those PPAs that occurs in connection with PG&E's Chapter 11 proceedings could have a material adverse effect on NEP's results of operations, financial condition or business.

For the year ended December 31, 2019, NEP derived approximately 16% of its consolidated revenues from its PPAs with PG&E. In addition, the Desert Sunlight solar project, in which NEP has an approximately 50% equity method investment, derived a significant portion of its revenues from its PPA with PG&E. In January 2019, PG&E filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code and PG&E may seek under the U.S. Bankruptcy Code and applicable laws to reject some or all of NEP's PPAs with it or to use the threat of rejection to renegotiate PPA pricing in its favor. If PG&E attempts and is successful in rejecting or renegotiating a material portion of its PPAs with NEP or Desert Sunlight, NEP's results of operations, financial condition or business could be materially adversely affected.

NEP may not be able to extend, renew or replace expiring or terminated PPAs, natural gas transportation agreements or other customer contracts at favorable rates or on a long-term basis.

NEP's ability to extend, renew or replace its existing PPAs, natural gas transportation agreements or other customer contracts depends on a number of factors beyond its control, including, but not limited to:


•	whether the PPA counterparty has a continued need for energy at the time of the agreement’s expiration, which could be affected by, among other things, the presence or absence of governmental incentives or mandates, prevailing market prices, and the availability of other energy sources;


•	the amount of commercial natural gas supply available to its pipelines' systems and changing natural gas supply flow patterns in North America;


•	the satisfactory performance of NEP's obligations under such PPAs, natural gas transportation agreements or other customer contracts;


•	the regulatory environment applicable to NEP's contract counterparties at the time;


•	macroeconomic factors present at the time, such as population, business trends, international trade laws, regulations, agreements, treaties or policies of the U.S. or other countries and related energy demand; and


•	the effects of regulation on the contracting practices of NEP's contract counterparties.

If NEP is not able to extend, renew or replace on acceptable terms existing PPAs before contract expiration, or if such agreements are otherwise terminated prior to their expiration, NEP may be required to sell the energy on an uncontracted basis at prevailing market prices, which could be materially lower than under the applicable contract. If there is no satisfactory market for a project’s uncontracted energy, NEP may decommission the project before the end of its useful life. If the portion of its pipelines' capacity covered by long-term firm transportation agreements decline, NEP's revenues and contract volumes would be exposed to increased volatility. Any failure to extend, renew or replace a significant portion of NEP's existing PPAs, natural gas transportation agreements or other customer contracts, or extending, renewing or replacing them at lower prices or with other unfavorable terms, or the

decommissioning of a project could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

If the energy production by or availability of NEP's renewable energy projects is less than expected, they may not be able to satisfy minimum production or availability obligations under their PPAs.

NEP's energy production or its renewable energy projects’ availability could be less than expected due to various factors, including, but not limited to, wind or solar conditions, natural disasters, equipment underperformance, operational issues, changes in law or regulations or actions taken by third parties. The PPAs contain provisions that require NEP to produce a minimum amount of energy or be available a minimum percentage of time over periods specified in the PPAs. A failure to produce sufficient energy or to be sufficiently available to meet NEP's commitments under its PPAs could result in the payment of damages or the termination of PPAs and could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Risks Related to NEP's Acquisition Strategy and Future Growth

NEP's growth strategy depends on locating and acquiring interests in additional projects consistent with its business strategy at favorable prices.

NEP intends to pursue opportunities to acquire contracted clean energy projects that are either operational or, in limited circumstances, under construction, from NEER and third parties consistent with its business strategy. Various factors could affect the availability of such projects to grow NEP's business, including, but not limited to, the following factors and those described in more detail in the additional risk factors below:


•	competing bids for a project from companies that may have substantially greater purchasing power, capital or other resources or a greater willingness to accept lower returns or more risk than NEP does;


•	NEP's failure to agree to favorable financial or legal terms with sellers with respect to any proposed acquisitions;


•	fewer acquisition opportunities than NEP expects, which could result from, among other things, available projects having less desirable economic returns or higher risk profiles than NEP believes suitable for its acquisition strategy and future growth;


•	NEP's failure to successfully complete construction of and finance projects, to the extent that it decides to acquire projects that are not yet operational or to otherwise pursue construction activities with respect to new projects;


•	NEP's inability to obtain regulatory approvals or other necessary consents to consummate an acquisition; and


•	the presence or potential presence of:


•	pollution, contamination or other wastes at the project site;


•	protected plant or animal species;


•	archaeological or cultural resources;


•	wind waking or solar shadowing effects caused by neighboring activities, which reduce potential energy production by decreasing wind speeds or reducing available insolation;


•	land use restrictions and other environment-related siting factors; and


•	local opposition to wind and solar projects and pipeline projects in certain markets due to concerns about noise, health, environmental or other alleged impacts of such projects.

Any of these above factors could limit NEP's acquisition opportunities and prevent it from executing, or diminish its ability to execute, its growth strategy as planned. Further, even if NEP consummates acquisitions that it believes will be accretive to cash distribution to its unitholders, those acquisitions may decrease cash distributions to its unitholders as a result of incorrect assumptions in NEP's evaluation of such acquisitions, unforeseen consequences or other external events beyond its control.

Any failure to identify and acquire an interest in additional, contracted clean energy projects at favorable prices could have a material adverse effect on NEP's ability to grow its business and make cash distributions to its unitholders.

Lower prices for other fuel sources may reduce the demand for wind and solar energy.

Demand for wind and solar energy is affected by the price and availability of other fuels, including, but not limited to, nuclear, coal, natural gas and oil, as well as other sources of renewable energy. To the extent renewable energy, particularly wind and solar energy, becomes less cost-competitive due to reduced or eliminated government renewable energy targets and other incentives that favor renewable energy, cheaper alternatives or otherwise, demand for wind and solar energy and other forms of renewable energy could decrease. Slow growth or a long-term reduction in wind and solar energy demand could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Reductions in demand for natural gas in the United States or Mexico and low market prices of natural gas could materially adversely affect NEP's pipeline operations and cash flows.

The price of natural gas fluctuates in response to changes in supply and demand, market uncertainty and additional factors that are beyond NEP's control. These factors include worldwide economic conditions; weather conditions and seasonal trends; the levels

of domestic and Mexican natural gas production and consumer demand; fluctuations in demand from electric power generators and industrial customers; the availability of imported liquid natural gas (LNG); the ability to export LNG; the availability of transportation systems with adequate capacity; the volatility and uncertainty of regional pricing differences; the price and availability of alternative fuels; the effect of energy efficiency and conservation measures; the nature and extent of governmental regulation and taxation; worldwide political events, including, but not limited to, actions taken by foreign natural gas producing nations and changes in international trade laws, regulations, agreements, treaties or policies of the U.S. or other countries; and the anticipated future prices of natural gas, LNG and other commodities. These events are beyond NEP's control and could impair its ability to execute its long-term strategy. Lower overall economic output could reduce the volume of natural gas transported or gathered, resulting in lower revenues and cash flows. Transmission revenues could be affected by long-term economic declines which could result in the non-renewal of long-term contracts. Any of these events could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Government laws, regulations and policies providing incentives and subsidies for clean energy could be changed, reduced or eliminated at any time and such changes may negatively impact NEP's growth strategy.

NEP's strategy to grow its business through the acquisition of clean energy projects partly depends on current laws, regulations and policies that promote and support clean energy and enhance the economic viability of owning clean energy projects. Clean energy projects currently benefit from various U.S. federal, state and local governmental incentives, such as PTCs, ITCs, CITCs, loan guarantees, RPS, MACRS for depreciation and other incentives, accelerated cost recovery deductions and other commercially oriented incentives. These laws, regulations and policies have had a significant impact on the development of clean energy and they could be changed, reduced or eliminated at any time. These incentives make the development of clean energy projects more competitive by providing tax credits or grants and accelerated depreciation for a portion of the development costs, decreasing the costs and risks associated with developing such projects or creating demand for renewable energy assets through RPS programs. The elimination of, loss of or reduction in such incentives could decrease the attractiveness of clean energy projects to developers, including, but not limited to, NEE, which could reduce NEP's acquisition opportunities. Such an elimination, loss or reduction could also reduce NEP's willingness to pursue or develop certain renewable energy projects due to higher operating costs or decreased revenues under its PPAs.

If these laws, regulations and policies are not continued or renewed, the market for future renewable energy PPAs may be smaller and the prices for future clean energy PPAs may be lower. If the IRS issues guidance that limits the availability of the PTC or the ITC, the projects could generate reduced revenues and reduced economic returns, experience increased financing costs and encounter difficulty obtaining financing on acceptable terms.

Additionally, some states with RPS targets have met, or in the near future will meet, their renewable energy targets. If, as a result of achieving these targets, these and other U.S. states do not increase their targets in the near future, demand for additional renewable energy could decrease. To the extent other states decrease their RPS targets, programs or goals, demand for renewable energy could decrease in the future. Any of the foregoing could have a material adverse effect on NEP's business, financial condition, results of operations and ability to grow its business and make cash distributions to its unitholders.

NEP's growth strategy depends on the acquisition of projects developed by NEE and third parties, which face risks related to project siting, financing, construction, permitting, the environment, governmental approvals and the negotiation of project development agreements.

Project development is a capital intensive business that relies heavily on the availability of debt and equity financing sources to fund projected construction and other capital expenditures. As a result, in order to successfully develop a project, development companies, including, but not limited to, other affiliates of NEE, must obtain sufficient financing to complete the development phase of their projects. Any significant disruption in the credit and capital markets or a significant increase in interest rates could make it difficult for development companies to raise funds when needed to secure capital financing, which would limit a project’s ability to complete the construction of a project that NEP may seek to acquire.

Project developers, including, but not limited to, other affiliates of NEE, develop, construct, manage, own and operate clean energy generation facilities and energy transmission facilities. A key component of their businesses is their ability to construct and operate generation and transmission facilities to meet customer needs. As part of these activities, project developers must periodically apply for licenses and permits from various regulatory authorities and abide by their respective conditions and requirements. If project developers, including, but not limited to, other affiliates of NEE, are unsuccessful in obtaining necessary licenses or permits on acceptable terms or encounter delays in obtaining or renewing such licenses or permits, or if regulatory authorities initiate any associated investigations or enforcement actions or impose penalties or reject projects, the potential number of projects that may be available for NEP to acquire may be reduced or potential transaction opportunities may be delayed.

If the challenges of developing projects increase for project developers, including, but not limited to, other affiliates of NEE, NEP's pool of available opportunities may be limited, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to grow its business and make cash distributions to its unitholders.

Acquisitions of existing clean energy projects involve numerous risks.

NEP's strategy includes growing its business through the acquisition of existing clean energy projects. The acquisition of existing clean energy projects involves numerous risks, including, but not limited to, exposure to existing liabilities and unanticipated post-acquisition costs associated with the pre-acquisition activities by the project, difficulty in integrating the acquired projects into NEP's business and, if the projects are in new markets, the risks of entering markets where NEP has limited experience. Additionally, NEP risks overpaying for such projects or not making acquisitions on an accretive basis. Although NEP performs due diligence on prospective acquisitions, NEP may not discover all potential risks, operational issues or other issues in such projects. Further, the integration and consolidation of acquisitions require substantial human, financial and other resources and, ultimately, NEP's acquisitions may divert NEP's management’s attention from its existing business concerns, disrupt its ongoing business or not be successfully integrated. Future acquisitions might not perform as expected or the returns from such acquisitions might not support the financing utilized to acquire or maintain them. A failure to achieve the financial returns NEP expects when NEP acquires clean energy projects could have a material adverse effect on NEP's business, financial condition, results of operations and ability to grow its business and make cash distributions to its unitholders.

Renewable energy procurement is subject to U.S. state regulations, with relatively irregular, infrequent and often competitive procurement windows.

Each U.S. state has its own renewable energy regulations and policies. Renewable energy developers must anticipate the future policy direction in each state and secure viable projects before they can bid to procure a PPA or other contract through often highly competitive auctions. A failure to anticipate accurately the future policy direction in a state or to secure viable projects could have a material adverse effect on NEP's ability to grow its business and make cash distributions to its unitholders.

NEP may continue to acquire other sources of clean energy and may expand to include other types of assets. Any further acquisition of non-renewable energy projects may present unforeseen challenges and result in a competitive disadvantage relative to NEP's more-established competitors.

NEP may continue to acquire other sources of clean energy, including, but not limited to, contracted natural gas and nuclear projects, and other types of assets, including, but not limited to, transmission projects. NEP may be unable to identify attractive non-renewable energy or transmission acquisition opportunities or acquire such projects at prices and on terms that are attractive. In addition, the consummation of such acquisitions could expose NEP to increased operating costs, unforeseen liabilities and additional risks including, but not limited to, regulatory and environmental issues associated with entering new sectors of the energy industry. This could require a disproportionate amount of NEP's management’s attention and resources, which could have an adverse impact on NEP's business and place NEP at a competitive disadvantage relative to more established non-renewable energy market participants. A failure to successfully integrate such acquisitions as a result of unforeseen operational difficulties or otherwise, could have a material adverse effect on NEP's business, financial condition, results of operations and ability to grow its business and make cash distributions to its unitholders.

NEP faces substantial competition primarily from regulated utilities, developers, IPPs, pension funds and private equity funds for opportunities in North America.

NEP believes its primary competitors for opportunities in North America are regulated utilities, developers, IPPs, pension funds and private equity funds. NEP competes with these companies to acquire projects and pipelines with projected stable cash flows. NEP also competes for personnel with requisite industry knowledge and experience. Furthermore, the industry has experienced and may experience volatile demand for wind turbines, solar panels, pipeline equipment and related components. If demand for this equipment increases, suppliers may give priority to other market participants, including, but not limited to, NEP's competitors, who may have greater resources than NEP. An inability to effectively compete with regulated utilities, developers, IPPs, pension funds and private equity funds for opportunities in North America could have a material adverse effect on NEP's ability to grow its business and to make cash distributions to its unitholders.

The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's business.

NEP's pipelines compete with other energy midstream enterprises, some of which are much larger and have significantly greater financial resources and operating experience in its areas of operation. The pipelines’ competitors may expand or construct infrastructure that competes with the services it provides to customers. The ability to renew or replace existing contracts with the pipelines’ customers at rates sufficient to maintain current revenues and cash flows could be adversely affected by the activities of NEP's competitors and customers. All of these competitive pressures could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Risks Related to NEP's Financial Activities

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.

Since NEP expects, from time to time, to finance acquisitions of clean energy projects partially or wholly through the issuance of additional securities of NEP, NEP OpCo and their subsidiaries, NEP needs to be able to access capital on commercially reasonable terms when acquisition opportunities arise. NEP’s ability to access capital is dependent on, among other factors, the overall state of the capital markets and investor appetite for investment in clean energy projects in general and NEP, NEP OpCo or their subsidiaries securities or securities convertible into NEP common units in particular. An inability to obtain financing on commercially reasonable terms could significantly limit NEP’s ability to consummate future acquisitions and to effectuate its growth strategy. In addition, the issuance of additional common units, securities convertible into NEP common units or other securities in connection with acquisitions could cause significant common unitholder dilution and reduce the cash distribution per common unit if the acquisitions are not sufficiently accretive.

Furthermore, there may not be sufficient availability under NEP OpCo’s subsidiaries’ revolving credit facility or the ability to obtain other financing arrangements on commercially reasonable terms when acquisition opportunities arise. An inability to obtain the required or desired financing could significantly limit NEP's ability to consummate acquisitions and effectuate its growth strategy. If financing is available, it may be available only on terms that could significantly increase NEP's interest expense, impose additional or more restrictive covenants and reduce cash distributions to its unitholders. NEP's inability to effectively consummate future acquisitions could have a material adverse effect on NEP's ability to grow its business and make cash distributions to its unitholders.

Restrictions in NEP and its subsidiaries' financing agreements could adversely affect NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP and its subsidiaries have entered into financing agreements which contain various covenants and restrictive provisions that may limit their ability to, among other things:


•	incur or guarantee additional debt;


•	make distributions on or redeem or repurchase common units;


•	make certain investments and acquisitions;


•	incur certain liens or permit them to exist;


•	enter into certain types of transactions with affiliates;


•	merge or consolidate with another company; and


•	transfer, sell or otherwise dispose of projects.

Certain of the financing agreements also contain covenants requiring NEP OpCo and its subsidiaries to maintain certain financial ratios, including, but not limited to, as a condition to making cash distributions to NEP and its other unitholders. NEP OpCo's and its subsidiaries' ability to meet those financial ratios can be affected by events beyond NEP's control, and NEP OpCo may be unable to meet those ratios and tests and, therefore, may be unable to make cash distributions to its unitholders, including, but not limited to, NEP. As a result, NEP may be unable to make distributions to its unitholders. In addition, the financing agreements contain events of default provisions, including, but not limited to, provisions relating to certain changes in ownership of NEP or its subsidiaries and other customary provisions.

The provisions of the financing agreements may affect NEP's ability to obtain future financing and pursue attractive business opportunities and NEP's flexibility in planning for, and reacting to, changes in business conditions. A failure to comply with the provisions of the applicable financing agreement could result in an event of default, which could enable the lenders to declare, subject to the terms and conditions of the applicable financing agreement any outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable and entitle lenders to enforce their security interest. If the payment of the debt is accelerated and NEP or one of its subsidiaries fails to repay the debt pursuant to their guarantees, the revenue from the projects may be insufficient to repay such debt in full, the lenders could enforce their security interest and NEP's unitholders could experience a partial or total loss of their investment.

NEP's cash distributions to its unitholders may be reduced as a result of restrictions on NEP's subsidiaries’ cash distributions to NEP under the terms of their indebtedness or other financing agreements.

NEP intends to pay quarterly cash distributions on all of its outstanding units and NEP OpCo intends to pay quarterly cash distributions on its outstanding units (except for its Class B units). However, in any period, NEP's and NEP OpCo’s ability to pay cash distributions to their respective unitholders depends on, among other things, the performance of NEP's subsidiaries. The ability of NEP's subsidiaries to make distributions to NEP and NEP OpCo may be restricted by, among other things, the provisions of existing and future indebtedness and other financing agreements.

The agreements governing NEP's subsidiaries’ project-level debt contain financial tests and covenants that NEP's subsidiaries must satisfy prior to making distributions and restrict the subsidiaries from making more than one distribution per quarter or per six-month period. If any of NEP's subsidiaries is unable to satisfy these tests and covenants or is otherwise in default under such agreements, it would be prohibited from making distributions that could, in turn, affect the amount of cash distributed by NEP OpCo, and ultimately limit NEP's ability to pay cash distributions to its unitholders. Additionally, such agreements require NEP's projects to establish a number of reserves out of their revenues, including, but not limited to, reserves to service NEP OpCo's debt and reserves for O&M expenses. These cash reserves will affect the amount of cash distributed by NEP OpCo, which ultimately will affect the amount of cash distributions NEP is able to make to its unitholders. Also, upon the occurrence of certain events, including, but not limited to,

NEP's subsidiaries’ inability to satisfy distribution conditions for an extended period of time, NEP's subsidiaries’ revenues may be swept into one or more accounts for the benefit of the lenders under the subsidiaries’ debt agreements and the subsidiaries may be required to prepay indebtedness.

Under certain other financing agreements, noncontrolling Class B investors own interests in certain NEP subsidiaries and receive a portion of the related NEP subsidiaries’ cash distributions specified in the applicable limited liability company agreements. NEP has the option (buyout right), subject to certain limitations, to purchase 100% of the noncontrolling Class B interests during specified periods. If NEP does not exercise the buyout rights during the specified periods, or if NEP only partially exercises the buyout rights during the specified periods, the portion of the NEP subsidiaries’ cash distribution allocated to the noncontrolling Class B investors would significantly increase. Any increase in the portion of NEP subsidiaries’ cash distributions allocated to the noncontrolling Class B investors would reduce the amount of cash distributions allocated to NEP OpCo and NEP.

Provisions preventing or reducing NEP's subsidiaries’ cash distributions could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP's subsidiaries’ substantial amount of indebtedness may adversely affect NEP's ability to operate its business, and its failure to comply with the terms of its subsidiaries' indebtedness could have a material adverse effect on NEP's financial condition.

NEP's subsidiaries’ substantial indebtedness could have important consequences. For example,


•	failure to comply with the covenants in the agreements governing these obligations could result in an event of default under those agreements, which could be difficult to cure, result in bankruptcy or, with respect to subsidiary debt, result in loss of NEP OpCo's ownership interest in one or more of its subsidiaries or in some or all of their assets as a result of foreclosure;


•	NEP's subsidiaries’ debt service obligations require them to dedicate a substantial portion of their cash flow to pay principal and interest on their debt, thereby reducing their cash available for distribution to NEP;


•	NEP's subsidiaries’ substantial indebtedness could limit NEP's ability to fund operations of any projects acquired in the future and NEP's financial flexibility, which could reduce its ability to plan for and react to unexpected opportunities or challenges;


•	NEP's subsidiaries’ substantial debt service obligations make NEP vulnerable to adverse changes in general economic, credit markets, capital markets, industry, competitive conditions and government regulation that could place NEP at a disadvantage compared to competitors with less debt; and


•	NEP's subsidiaries’ substantial indebtedness could limit NEP's ability to obtain financing for working capital, including, but not limited to, collateral postings, capital expenditures, debt service requirements, acquisitions and general partnership or other purposes.

If NEP's subsidiaries, including, but not limited to, NEP OpCo, do not comply with their obligations under their debt instruments, they may be required to refinance all or a part of their indebtedness, which they may not be able to do on similar terms or at all. Increases in interest rates and changes in debt covenants may reduce the amounts that NEP and its subsidiaries can borrow, reduce NEP's cash flows and increase the equity investment NEP may be required to make in any projects NEP may acquire. In addition, the project-level financing for projects that NEP may acquire that are under construction may prohibit distributions until such project commences operations. If NEP's subsidiaries are not able to generate sufficient operating cash flow to repay their outstanding indebtedness or otherwise are unable to comply with the terms of their indebtedness, NEP could be required to reduce overhead costs, reduce the scope of its projects, sell some or all of its projects or delay construction of projects NEP may acquire, all of which could have a material adverse effect on its business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP is exposed to risks inherent in its use of interest rate swaps.

Some of NEP's subsidiaries’ indebtedness accrues interest at variable rates, and some of its subsidiaries use interest rate swaps to try to protect against market volatility. The use of interest rate swaps, however, does not eliminate the possibility of fluctuations in the value of a position or prevent losses if the value of a position declines. Such transactions may also limit the opportunity for gain if the value of a position increases. In addition, to the extent that actively-quoted market prices and pricing information from external sources are not available, the valuation of these contracts involves judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts. If the values of these financial contracts change in a manner that NEP does not anticipate, or if a counterparty fails to perform under a contract, it could have a material adverse effect on its business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Risks Related to NEP's Relationship with NEE

NEE has influence over NEP.

Under NEP’s partnership agreement, the board oversees and directs the operations and policies of NEP and exercises management oversight over NEP. At each annual meeting, four of NEP’s seven directors will be elected by NEP’s limited partners. Three directors will be appointed by NEP GP, in its sole discretion. The directors appointed by NEP GP will be, and one director elected by holders of NEP’s common units may be, officers or employees of NEE or its affiliates. In addition, NEE holds voting power over certain matters that require NEP unitholder approval. NEE Management, pursuant to the terms of the MSA, will designate the officers of NEP so long as NEE or one of its affiliates is the manager under the MSA.

The attorneys, independent accountants and others who perform services for NEP will be selected by the board, which may be affiliated with NEE, or its conflicts committee and may perform services for NEE or its affiliates. NEP may retain separate counsel for itself or the holders of common units in the event of a conflict of interest between NEE and its affiliates, on the one hand, and NEP or the holders of common units, on the other, depending on the nature of the conflict. NEP does not intend to do so in most cases.

Under the CSCS agreement, NEP receives credit support from NEE and its affiliates. NEP's subsidiaries may default under contracts or become subject to cash sweeps if credit support is terminated, if NEE or its affiliates fail to honor their obligations under credit support arrangements, or if NEE or another credit support provider ceases to satisfy creditworthiness requirements, and NEP will be required in certain circumstances to reimburse NEE for draws that are made on credit support.

Under the CSCS agreement, guarantees and letters of credit that have been provided by NEECH, NEER and other NEE affiliates to counterparties on behalf of NEP's subsidiaries to satisfy NEP's subsidiaries’ contractual obligations to provide credit support, including, but not limited to, under PPAs. These NEE affiliates also have provided credit support to lenders to fund reserve accounts and to cover the risk that CITC proceeds received by any U.S. project entity are later recaptured by the U.S. Department of Treasury. NEP expects NEECH, NEER and other NEE affiliates, upon NEP's request and at NEER’s option, to provide credit support on behalf of any projects NEP may acquire in the future on similar terms but they are under no obligation to do so. Any failure of NEP's subsidiaries to maintain acceptable credit support or credit support providers to honor their obligations under their respective credit support arrangements could cause, among other things, events of default to arise under NEP's subsidiaries’ PPAs and financing agreements. Such events of default could entitle customers to terminate their contracts with NEP's subsidiaries or could entitle lenders to accelerate indebtedness owed to them, which could result in the insolvency of NEP's subsidiaries. In addition, if beneficiaries draw on credit support provided by NEECH, NEER and these other NEE affiliates, then NEP OpCo may be required to reimburse them for the amounts drawn, which could reduce NEP OpCo’s cash distributions. These events could decrease NEP's revenues, restrict distributions from its subsidiaries, or result in a sale of or foreclosure on its assets. Further, NEE affiliates may not provide credit support in respect of new projects on the same terms on which they currently provide credit support for NEP’s existing projects, which may require NEP to obtain credit support from third parties on less favorable terms and may prevent NEP from acquiring additional projects. All of the foregoing events, including, but not limited to, a failure of NEP OpCo to have sufficient funds to satisfy its reimbursement obligations, could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEER or one of its affiliates is permitted to borrow funds received by NEP's subsidiaries and is obligated to return these funds only as needed to cover project costs and distributions or as demanded by NEP OpCo. NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a portion of these funds.

Under the CSCS agreement, NEER or one of its affiliates is permitted to withdraw funds received by NEP's subsidiaries, including, but not limited to, NEP OpCo, and hold them in an account of NEER or one of its affiliates to the extent the funds are not required to pay NEP's or its subsidiaries’ costs or otherwise not required to be retained by its subsidiaries, until the financing agreements of its subsidiaries permit distributions to be made to NEP OpCo or, in the case of NEP OpCo, until a minimum quarterly distribution is scheduled to be paid. Further, NEER will not pay NEP any interest or additional consideration for the use of these funds. If NEER or one of its affiliates realizes any earnings on NEP OpCo’s or its subsidiaries’ funds prior to the return of such funds, it is permitted to retain those earnings for its own account. The failure of NEER to return funds to NEP's subsidiaries for any reason could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP may not be able to consummate future acquisitions.

NEP's ability to grow through acquisitions and increase distributions to its unitholders is dependent in part on its ability to make acquisitions that result in an increase in cash distributions per common unit. Such acquisitions may not be available to NEP on acceptable terms or at all. The consummation and timing of future acquisitions, whether from NEER or any third parties, will depend upon, among other things, whether:


•	NEP is able to identify attractive acquisition candidates;


•	NEP is able to negotiate acceptable purchase agreements;


•	NEP is able to obtain financing for these acquisitions on economically acceptable terms; and


•	NEP is outbid by competitors.

Additionally, several factors could materially and adversely impact the extent to which suitable acquisition opportunities are made available from NEER, including, but not limited to, an assessment by NEER relating to its liquidity position, the risk profile of an opportunity, its fit with NEP's operations and other factors. Furthermore, if NEER reduces its ownership interest in NEP, it may be less willing to sell NEER projects to NEP. An inability by NEER to identify, or a failure by NEER to make available, suitable acquisition opportunities could hinder NEP's growth and materially adversely impact its business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP may not be able to successfully consummate future acquisitions, whether from NEER or any third parties. Any acquisitions that may be available to NEP may require that it be able to access the debt and equity markets. However, NEP may be unable to access such markets on attractive terms or at all. If NEP is unable to make future acquisitions, its future growth and ability to increase distributions to its unitholders will be limited. Furthermore, even if NEP does consummate acquisitions that NEP believes will be accretive, they may in fact result in a decrease in cash distributions per common unit as a result of incorrect assumptions in NEP's evaluation of such acquisitions or unforeseen consequences or other external events beyond its control. Acquisitions involve numerous risks, including, but not limited to, difficulties in integrating acquired businesses, inefficiencies and unexpected costs and liabilities. These events could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEER's right of first refusal may adversely affect NEP's ability to consummate future sales or to obtain favorable sale terms.

NEP and NEP OpCo have entered into a ROFR agreement with NEER granting NEER and its subsidiaries (other than NEP OpCo and its subsidiaries) a right of first refusal on any proposed sale of any of the NEP OpCo ROFR assets. The obligations of NEP OpCo under the ROFR agreement may discourage a third party from pursuing a transaction with NEP OpCo. Even if such third party is able to acquire the applicable asset, NEP OpCo’s compliance with its obligations under the ROFR agreement could result in delays and transaction costs, as well as a reduced sales price. In addition, since the number of third parties willing to make an offer for a NEP OpCo ROFR asset may be limited due to the ROFR agreement, NEP OpCo may consummate the sale of any NEP OpCo ROFR asset on less favorable terms, or may not be able to sell such asset, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP GP and its affiliates may have conflicts of interest with NEP and have limited duties to NEP and its unitholders.

The board will appoint officers of NEP (including its chief executive officer) designated by the manager in accordance with the terms of the MSA. As a result, all of NEP’s executive officers could be, and currently are, officers of NEE or one of its affiliates. NEP’s partnership agreement provides contractual standards governing the duties of directors and officers, and directors and officers will not have fiduciary duties to NEP or its unitholders. Conflicts of interest exist and may arise as a result of the relationships between NEE and the directors and officers of NEP affiliated with NEE, on the one hand, and NEP and NEP's limited partners, on the other hand. To the extent any directors or officers of NEP are also officers of NEE, such directors and officers will have fiduciary duties to both NEE and NEP, and the interests of NEE and NEP may be different or in conflict. In resolving such conflicts of interest, the directors and officers of NEP affiliated with NEE may favor NEE's interests and the interests of NEE's affiliates over the interests of NEP and its unitholders. These conflicts include the following situations, among others:


•	No agreement requires NEE or its affiliates to pursue a business strategy that favors NEP or uses NEP's projects or dictates what markets to pursue or grow.


•	NEE and its affiliates are not limited in their ability to compete with NEP, and neither NEP GP nor its affiliates have any obligation to present business opportunities to NEP.


•	So long as the officers of NEP are officers of NEE or its affiliates, they will also devote significant time to the business of NEE or its affiliates and will be compensated by NEE or its affiliates.


•	The board may cause NEP to borrow funds in order to permit the payment of cash distributions, even if the purpose or effect of the borrowing is to make a payment of the IDR fee.

•

NEP's partnership agreement replaces the fiduciary duties that would otherwise be owed by NEP GP and the directors and officers of NEP with contractual standards governing their duties and limits NEP GP’s and such directors’ and officers' liabilities and the remedies available to NEP's unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty under applicable Delaware law.


•	Except in limited circumstances, the board has the power and authority to conduct NEP's business without the approval of NEP GP or NEP's unitholders.


•	Actions taken by the board may affect the amount of cash available to pay distributions to NEP's unitholders.


•	NEP GP has limited liability regarding NEP's contractual and other obligations.


•	The board controls the exercise of the rights of NEP against NEE and its affiliates, and the enforcement of the obligations that NEE and its affiliates owe to NEP.


•	NEP may choose not to retain counsel, independent accountants or other advisors separate from those retained by NEP GP or NEE to perform services for NEP or for the holders of common units.

As a result of the overlapping nature of the management of NEP and NEE and its affiliates, effectively managing these actual, perceived and potential conflicts may require substantial attention, and there is no assurance that all relevant actual, perceived or potential conflicts will be identified or that such conflicts will be adequately addressed. A decision by NEP GP or the board to favor

its own interests or the interests of NEE over NEP's interests and the interests of its unitholders could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP GP and its affiliates and the directors and officers of NEP are not restricted in their ability to compete with NEP, whose business is subject to certain restrictions.

NEP’s partnership agreement provides that its general partner is restricted from engaging in any business activities other than acting as NEP GP and those activities incidental to its ownership of interests in NEP. Affiliates of NEP GP, including, but not limited to, NEE and its other subsidiaries, are not prohibited from owning projects or engaging in businesses that compete directly or indirectly with NEP. NEE currently holds interests in, and may make investments in and purchases of, entities that acquire, own and operate clean energy projects. NEER is under no obligation to make any acquisition opportunities available to NEP. In addition, pursuant to NEP’s partnership agreement, its subsidiaries generally will not have any power or authority to solicit, review, respond to or otherwise participate in certain activities or lines of business.

Under the terms of NEP’s partnership agreement, the doctrine of corporate opportunity, or any analogous doctrine, does not apply to NEP GP and its affiliates, including, but not limited to, NEE or to NEP's directors or officers. Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for NEP will not have any duty to communicate or offer such opportunity to NEP. Any such person or entity will not be liable to NEP or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to NEP. This may create actual and potential conflicts of interest between NEP and affiliates of NEP GP and result in less than favorable treatment of NEP and holders of its common units.

NEP may only terminate the MSA under certain specified conditions.

The MSA provides that NEP and certain affiliates may terminate the agreement only upon 90 days' prior written notice to NEE Management upon the occurrence of any of the following:


•	NEE Management defaults in the performance or observance of any material term, condition or covenant contained therein in a manner that results in material harm to NEP or its affiliates and the default continues unremedied for a period of 90 days after written notice thereof is given to NEE Management;


•	NEE Management engages in any act of fraud, misappropriation of funds or embezzlement that results in material harm to NEP or its affiliates;


•	NEE Management is reckless in the performance of its duties under the agreement and such recklessness results in material harm to NEP or its affiliates;


•	upon the happening of certain events relating to the bankruptcy or insolvency of NEP or certain of its affiliates; or

•

NEE Management intentionally or willfully takes any action that materially conflicts with or directly contravenes any resolution or other determination of the board relating to certain significant activities of NEP, such action has caused, or would reasonably be expected to cause, material harm to NEP and its subsidiaries, and such action continues unremedied for a period of 90 days after written notice thereof is given to NEE Management.

NEP is not able to terminate the agreement for any other reason, including, but not limited to, if NEE Management experiences a change of control or if a majority of the directors of NEP are not affiliates of NEE. The agreement continues until January 1, 2068 and thereafter renews for successive five-year periods unless NEP OpCo or NEE Management provides written notice to the other that it does not wish for the agreement to be renewed. If NEE Management’s performance does not meet the expectations of investors and NEP is unable to terminate the MSA, the market price of NEP's common units could suffer. In addition, even if the MSA is terminated, it may not terminate in respect of provisions relating to the payment of the IDR fee payable to NEE Management under that agreement, which could result in NEE or its affiliates receiving payments that could otherwise be distributed to NEP's unitholders even though NEE Management would be no longer obligated to provide services to NEP under the MSA.

If the agreements with NEE Management or NEER are terminated, NEP may be unable to contract with a substitute service provider on similar terms.

NEE's affiliates provide, or arrange for the provision of, administrative, O&M and construction management services under agreements with NEE Management and NEER, respectively. Any failure by NEE Management or NEER to perform their administrative, O&M and construction management services obligations or the failure by NEP to identify and contract with replacement service providers, if required, could materially impact the successful operation of its projects. Under these agreements, certain NEE employees provide services to NEP. These services are not the primary responsibility of these employees, nor are these employees required to act for NEP alone. The agreements do not require any specific individuals to be provided by NEE and NEE has the discretion to determine which of its employees perform services required to be provided to NEP.

NEE Management and NEER have agreed to provide NEP with management services under the MSA and the management sub-contract, respectively, and NEP does not have independent executive or senior management personnel. Each of the MSA and the management sub-contract, respectively, provides that NEE Management and NEER, respectively, may terminate the applicable agreement upon 180 days’ prior written notice of termination to NEP if NEP defaults in the performance or observance of any material

term, condition or covenant contained in the agreement in a manner that results in material harm to NEE Management or its affiliates other than NEP or its subsidiaries, and the default continues unremedied for a period of 90 days after written notice thereof is given to NEP or upon the happening of certain specified events. If NEE Management terminates the MSA, if NEER terminates the management sub-contract or if either of them defaults in the performance of its obligations under the respective agreement, NEP may be unable to contract with a substitute service provider on similar terms, and the costs of substituting service providers may be substantial. If NEP cannot locate a service provider that is able to provide NEP with substantially similar services as NEE Management and NEER provide under the MSA and the management sub-contract, respectively, on similar terms, it would likely have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

NEP's arrangements with NEE limit NEE’s potential liability, and NEP has agreed to indemnify NEE against claims that it may face in connection with such arrangements, which may lead NEE to assume greater risks when making decisions relating to NEP than it otherwise would if acting solely for its own account.

Under the MSA, NEE Management and its affiliates do not assume any responsibility other than to provide or arrange for the provision of the services described in the MSA in good faith. Additionally, under the MSA, the liability of NEE Management and its affiliates is limited to the fullest extent permitted by law to conduct involving bad faith, fraud, willful misconduct or recklessness or, in the case of a criminal matter, to action that was known to have been unlawful. NEP has agreed, and will cause certain affiliates to, indemnify NEE Management and its affiliates and any of their directors, officers, agents, members, partners, stockholders and employees and other representatives of NEE Management and its affiliates to the fullest extent permitted by law from and against any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection with NEP's, NEP OpCo GP's, NEP OpCo's and certain affiliates' operations, investments and activities or in respect of or arising from the MSA or the services provided thereunder by NEE Management and its affiliates, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the conduct in respect of which such persons have liability as described above. Additionally, the maximum amount of the aggregate liability of NEE Management or any of its affiliates in providing services under the MSA or otherwise (including, but not limited to, NEER under the management sub-contract), or of any director, officer, employee, contractor, agent, advisor or other representative of NEE Management or any of its affiliates, will be equal to the base management fee previously paid by NEP in the most recent calendar year under the MSA but in no event less than $4 million. These protections may result in NEE Management and its affiliates tolerating greater risks when making decisions than otherwise would be the case, including, but not limited to, when determining whether to use leverage in connection with acquisitions. The indemnification arrangements to which NEE Management and its affiliates are a party may also give rise to legal claims for indemnification, which could have a material adverse effect on NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.

Risks Related to Ownership of NEP's Units

NEP's ability to make distributions to its unitholders depends on the ability of NEP OpCo to make cash distributions to its limited partners.

NEP's cash flow is generated from distributions NEP receives from NEP OpCo, which will consist primarily of cash distributions that NEP OpCo has received from its subsidiaries. The amount of cash that NEP OpCo’s subsidiaries will be able to distribute to NEP OpCo each quarter principally depends upon the amount of cash such subsidiaries generate from their operations and investments. NEP OpCo may not have sufficient available cash each quarter to continue paying distributions at its current level or at all. If NEP OpCo reduces its per unit distribution, because of reduced operating cash flow, higher expenses, capital requirements or otherwise, NEP will have less cash to distribute to its unitholders and would likely be required to reduce its per common unit distribution.

The amount of cash that NEP OpCo can distribute to its limited partners, including NEP, each quarter principally depends upon the amount of cash it generates from its operations, which will fluctuate from quarter to quarter based on, among other things:


•	the amount of power generated from its projects and the amount of natural gas transported in its pipelines, and the prices received therefor;


•	its operating costs;


•	payment of interest and principal amortization, which depends on the amount of its indebtedness and the interest payable thereon;


•	the ability of NEP OpCo’s subsidiaries to distribute cash under their respective financing agreements;


•	the completion of any ongoing construction activities on time and on budget;


•	its capital expenditures; and


•	if NEP OpCo acquires a project prior to its COD, timely completion of future construction projects.

In addition, the amount of cash that NEP OpCo will have available for distribution will depend on other factors, some of which are beyond its control, including, but not limited to:


•	availability of borrowings under its subsidiaries' credit facility to pay distributions;


•	the costs of acquisitions, if any;


•	fluctuations in its working capital needs;


•	timing and collectability of receivables;


•	restrictions on distributions contained in its subsidiaries' credit facility and other financing documents;


•	prevailing economic conditions;


•	access to credit or capital markets; and


•	the amount of cash reserves established by NEP OpCo GP, NEP OpCo’s general partner, for the proper conduct of its business.

Because of these factors, NEP OpCo may not have sufficient available cash each quarter to pay its minimum quarterly distribution per common unit or any other amount. Furthermore, the amount of cash that NEP OpCo has available for distribution depends primarily upon its cash flow, including, but not limited to, cash flow from financial reserves and working capital borrowings, and is not solely a function of profitability, which will be affected by non-cash items. As a result, NEP OpCo may be able to make cash distributions during periods when it records net losses and may not be able to make cash distributions during periods when it records net income.

If NEP incurs material tax liabilities, NEP's distributions to its unitholders may be reduced, without any corresponding reduction in the amount of the IDR fee.

The IDR fee is an expense of NEP OpCo that reduces the amount of cash distributions by NEP OpCo to NEP OpCo's unitholders, including NEP. The IDR fee is not reduced for NEP's income tax liabilities. Instead, NEP must use the cash proceeds of any distributions NEP receives from NEP OpCo to satisfy NEP's income tax liabilities. Any such payments of income taxes by NEP will reduce the amount of cash distributions by NEP to its unitholders. As a result, if NEP incurs material income tax liabilities, NEP's distributions to its unitholders may be reduced, without any corresponding reduction in the amount of the IDR fee.

Holders of NEP’s units may be subject to voting restrictions.

Under NEP’s partnership agreement, limited partners are allowed to vote for four of the seven members of the board. Moreover, any person, together with the members of any related group, who beneficially owns 5% or more of the outstanding units will be permitted to vote not more than 5% of such outstanding units in an election or removal of certain directors. Further, if, after giving effect to the 5% limitation, any person, together with the members of any related group, still has the power to cast votes equal to or greater than 10% of the units present and actually voted on any matter (including an election or removal of certain directors), such person will be entitled to direct the voting of only the units held by such person representing not more than 9.99% of the units actually voted on such matter, and any units held by such person equal to 10% or more of such voting power will be voted proportionally with the votes cast by other unitholders on such matter. However, if such person is NEP's general partner or any of its affiliates, the 9.99% limitation on voting power applies only to the election or removal of certain directors.

NEP’s partnership agreement replaces the fiduciary duties that NEP GP and NEP’s directors and officers might have to holders of its common units with contractual standards governing their duties.

NEP’s partnership agreement contains provisions that eliminate the fiduciary standards to which NEP GP or any of NEP’s directors and officers would otherwise be held by state fiduciary duty law and replaces those standards with several different contractual standards.

For example, NEP’s partnership agreement permits the board to make some decisions in its sole discretion, free of any duties to NEP or its unitholders other than the implied contractual covenant of good faith and fair dealing (which means that a court will enforce the reasonable expectations of the partners where the language of the partnership agreement does not provide for a clear course of action). These provisions entitle the board to consider only the interests and factors that the board desires and relieves the board of any duty or obligation to give any consideration to any interest of, or factors affecting, NEP, its affiliates or NEP's limited partners.

NEP’s partnership agreement permits NEP GP to make a number of decisions in its individual capacity, as opposed to in its capacity as NEP's general partner, free of any duties to NEP or its unitholders other than the implied contractual covenant of good faith and fair dealing. These provisions entitle NEP GP and its affiliates to consider only the interests and factors that they desire and relieve them of any duty or obligation to give any consideration to any interest of, or factors affecting, NEP, its affiliates or NEP's limited partners. Examples of decisions that NEP GP and its affiliates may make in their individual capacities include:


•	appointment of three directors of NEP;


•	how to exercise voting rights with respect to the units NEP GP or its affiliates own in NEP OpCo and NEP;


•	whether to exchange NEP OpCo common units owned by NEE Equity for NEP common units or, with the approval of the conflicts committee, to have NEP OpCo redeem NEP OpCo common units owned by NEE Equity for cash; and


•	whether to consent to, among other things, NEP’s participation in certain activities or lines of business, the sale of all or substantially all of the assets of NEP, any merger, consolidation or conversion of NEP, dissolution of NEP, or an amendment to NEP OpCo’s partnership agreement.

NEP’s partnership agreement restricts the remedies available to holders of NEP's common units for actions taken by NEP’s directors or NEP GP that might otherwise constitute breaches of fiduciary duties.

NEP’s partnership agreement contains provisions that restrict the remedies available to its unitholders for actions taken by NEP’s directors or NEP GP that might otherwise constitute breaches of fiduciary duties under state law. For example, NEP’s partnership agreement provides that:


•	whenever NEP GP or the board, or any director or any committee of the board (including, but not limited to, the conflicts committee), makes a determination or takes, or declines to take, any other action in its respective capacity, they are required to act in good faith;


•	NEP GP will not have any liability to NEP or its unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;

•

NEP GP and its officers and directors and the officers and directors of NEP will not be liable for monetary damages to NEP or NEP's limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining such persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and


•	NEP GP and its affiliates and NEP’s directors will not be in breach of their obligations under NEP’s partnership agreement (including, but not limited to, any duties to NEP or its unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:


•	approved by the conflicts committee of the board, although the board is not obligated to seek such approval;


•	approved by the vote of a majority of the outstanding common units, excluding any common units owned by NEP GP and its affiliates if the conflict involves NEP GP or any of its affiliates;


•	determined by the board to be on terms no less favorable to NEP than those generally being provided to or available from unrelated third parties; or


•	determined by the board to be fair and reasonable to NEP, taking into account the totality of the relationships among the parties involved, including, but not limited to, other transactions that may be particularly favorable or advantageous to NEP.

In connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by NEP GP or the board, or the conflicts committee of the board, must be made in good faith. If an affiliate transaction or the resolution of a conflict of interest is not approved by NEP's unitholders or the conflicts committee and the board determines that the resolution or course of action taken with respect to the affiliate transaction or conflict of interest satisfies either of the standards set forth in the third and fourth sub-bullets above, then it will be presumed that, in making its decision, the board acted in good faith, and in any proceeding brought by or on behalf of any limited partner or NEP challenging such determination, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.

Certain of NEP’s actions require the consent of NEP GP.

Under NEP’s partnership agreement, NEP GP's consent is required for certain actions of NEP, in addition to approval by NEP’s board or unitholders, as applicable. Because NEP GP is indirectly owned by NEE, NEE can cause NEP GP to exercise certain protective rights. NEP’s partnership agreement provides that NEP GP may grant or withhold its consent in its sole discretion. To the extent NEP GP withholds its consent, NEP unitholders and the board will be prevented from taking actions which they may consider beneficial to NEP or its unitholders.

Holders of NEP's common units and preferred units currently cannot remove NEP GP without NEE’s consent.

The vote of the holders of at least 66 2⁄3% of all outstanding common units, preferred units and special voting units voting together as a single class is required to remove NEP's general partner. Further, the vote of the holders of at least a majority of all outstanding common units, preferred units and special voting units voting together as a single class is required to name a new general partner of NEP. Given NEP GP and its affiliates current voting power with respect to NEP’s outstanding units, a vote to remove NEP’s general partner would currently require NEE’s consent.

NEE’s interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent.

NEP’s partnership agreement does not restrict the ability of NEE to transfer all or a portion of its ownership interest in NEP GP to a third party. NEP’s partnership agreement also does not restrict the ability of NEP GP to issue equity securities in a public or private transaction. A new owner of all or a portion of an ownership interest in NEP GP could then be in a position to designate its own representatives to the board.

The IDR fee may be assigned to a third party without unitholder consent.

Under the MSA, NEE, through NEE Management, may assign the IDR fee, or may sell a portion of the affiliate that has the right to receive the IDR fee to an unaffiliated third party, at any time. If NEE, through NEE Management, transfers the right to receive the IDR fee to a third party, NEE, through NEE Management, may not have the same incentive to provide services necessary to carry out NEP's operations and grow NEP's business so as to increase quarterly distributions to unitholders over time as it would if it had retained ownership of the IDR fee.

NEP may issue additional units without unitholder approval, which would dilute unitholder interests.

NEP’s partnership agreement does not limit the number of additional limited partnership interests, including, but not limited to, limited partnership interests that rank senior to the common units, which NEP may issue at any time without the approval of its unitholders. The issuance by NEP of additional common units or other equity securities of equal or senior rank will have the following effects:


•	NEP's existing unitholders’ proportionate ownership interest in NEP will decrease;


•	the amount of cash distributions per common unit may decrease;


•	because the IDR fee is based on a percentage of total available cash, the IDR fee will increase if total available cash increases even if the per unit distribution on common units remains the same;


•	the relative voting strength of each previously outstanding unit may be diminished; and


•	the market price of the common units may decline.

Reimbursements and fees owed to NEP GP and its affiliates for services provided to NEP or on NEP's behalf will reduce cash distributions from NEP OpCo and from NEP to NEP's unitholders, and there are no limits on the amount that NEP OpCo may be required to pay.

Under NEP OpCo’s partnership agreement, prior to making any distributions on its units, NEP OpCo will reimburse NEP GP and its affiliates, including, but not limited to, NEE, for out-of-pocket expenses they incur and payments they make on NEP's behalf and for certain payments made under credit support arrangements provided by NEER on behalf of NEP's subsidiaries. NEP OpCo will also pay certain fees and reimbursements under the MSA and the CSCS agreement prior to making any distributions on its units. The reimbursement of expenses and certain payments made under credit support arrangements and payment of fees, if any, to NEP GP and its affiliates will reduce the amount of available cash NEP OpCo has to pay cash distributions to NEP and the amount that NEP has available to pay distributions to NEP's unitholders. Under NEP OpCo’s partnership agreement, there is no limit on the fees and expense reimbursements NEP OpCo may be required to pay.

Discretion in establishing cash reserves by NEP OpCo GP may reduce the amount of cash distributions to unitholders.

NEP OpCo’s partnership agreement requires its general partner, NEP OpCo GP, to deduct from operating surplus cash reserves that it determines are necessary to fund NEP OpCo’s future operating expenditures. In addition, NEP OpCo's partnership agreement permits its general partner to reduce available cash by establishing cash reserves for the proper conduct of NEP OpCo’s business, to comply with applicable law or agreements to which NEP OpCo is a party or to provide funds for future distributions to partners. These cash reserves will affect the amount of cash distributed by NEP OpCo, which ultimately will affect the amount of cash distributions to NEP's unitholders.

NEP OpCo can borrow money to pay distributions, which would reduce the amount of credit available to operate NEP's business.

NEP OpCo’s partnership agreement allows it to make working capital borrowings to pay distributions to its unitholders. Accordingly, if NEP OpCo has available borrowing capacity, it can make distributions on its units even though cash generated by its operations may not be sufficient to pay such distributions. Any working capital borrowings by NEP OpCo to make distributions will reduce the amount of working capital borrowings it can make for NEP OpCo’s operations.

Increases in interest rates could adversely impact the price of NEP's common units, NEP's ability to issue equity or incur debt for acquisitions or other purposes and NEP's ability to make cash distributions to its unitholders.

Interest rates on future credit facilities and debt offerings could be higher than current levels, causing NEP's financing costs to increase accordingly. NEP's common unit price is impacted by the level of its cash distributions and implied distribution yield. The distribution yield is used by investors to compare yield-oriented securities for investment decision-making purposes. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in NEP's common units, and a rising interest rate environment could adversely impact the price of NEP's common units, NEP's ability to issue equity or incur debt for acquisitions or other purposes and NEP's ability to make cash distributions to its unitholders.

The liability of holders of NEP's units, which represent limited partnership interests in NEP, may not be limited if a court finds that unitholder action constitutes control of NEP's business.

A general partner of a partnership generally has unlimited liability for the obligations of the partnership except for those contractual obligations of the partnership that are expressly made without recourse to the general partner. NEP is organized under Delaware law and NEP conducts business in a number of other states. The limitations on the liability of holders of limited partnership interests for the obligations of a limited partnership have not been clearly established in some of the other states in which NEP does business. A unitholder could be liable for any and all of NEP's obligations as if the unitholder were a general partner if a court or government agency were to determine that:


•	NEP was conducting business in a state but had not complied with that particular state ’s partnership statute; or


•	the unitholder’s right to act with other unitholders to remove or replace NEP GP, to approve some amendments to NEP's partnership agreement or to take other actions under NEP's partnership agreement constitute “control” of NEP's business.

Unitholders may have liability to repay distributions that were wrongfully distributed to them.

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Delaware law, NEP may not make a distribution to its unitholders if the distribution would cause NEP's liabilities to exceed the fair value of its assets. Delaware law provides that for a period of three years from the date of an impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distributed amount. Transferees of common units are liable both for the obligations of the transferor to make contributions to the partnership that were known to the transferee at the time of transfer and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement. Neither liabilities to partners on account of their partnership interest nor liabilities that are non-recourse to the partnership are counted for purposes of determining whether a distribution is permitted.

Provisions in NEP’s partnership agreement may discourage or delay an acquisition of NEP that NEP unitholders may consider favorable, which could decrease the value of NEP's common units, and could make it more difficult for NEP unitholders to change the board.

NEP’s partnership agreement contains provisions that make it difficult for a third party to acquire NEP without the consent of the board. For example, NEP's partnership agreement provides that, with respect to annual meetings of limited partners, limited partners cannot nominate persons for election to the board unless such nominations are included in the proxy statement of NEP in accordance with the proxy access provisions of NEP’s partnership agreement, and the limited partners cannot make any binding proposals of other business to be considered at any annual meeting of limited partners. In addition, limited partners may request a special meeting of limited partners only if the request is made by limited partners holding 20% or more of the units then outstanding and only for the removal of certain directors for cause or NEP's general partner. These provisions may have the effect of limiting the ability of a third party to acquire control of NEP that might involve a premium to the market price of NEP's common units or otherwise be in the unitholders' best interests.

The NYSE does not require a publicly traded limited partnership like NEP to comply with certain of its corporate governance requirements.

NEP's common units are listed on the NYSE. Because NEP is a publicly traded limited partnership, the NYSE does not require NEP to have, and it does not have, a majority of independent directors on the board or to establish a compensation committee or a nominating and corporate governance committee. Accordingly, unitholders do not have the same protections afforded to corporations that are subject to all of the NYSE corporate governance requirements.

The issuance of preferred units or other securities convertible into common units may affect the market price for NEP's common units, will dilute common unitholders’ ownership in NEP and may decrease the amount of cash available for distribution for each common unit.

NEP issued preferred units and convertible notes in 2017 and noncontrolling Class B interests in certain NEP OpCo subsidiaries in 2018 and 2019. Subject to certain limitations, the preferred units and convertible notes are convertible into common units by the holders of such units and notes, or, for the preferred units, at NEP’s option under certain circumstances. NEP will have the option, subject to certain limitations and extensions, to purchase the noncontrolling Class B interests. If exercised, NEP has the right to pay a portion of the buyout price in NEP non-voting common units or NEP common units, as specified in the related agreement, issued at the then-current market price of NEP common units, subject to certain limitations. If holders of the preferred units or noncontrolling Class B interests, or any convertible securities issued in the future, were to dispose of a substantial portion of these common units in the public market following such a conversion, whether in a single transaction or series of transactions, it could adversely affect the market price for NEP's common units. These sales, or the possibility that these sales may occur, could make it more difficult for NEP to sell NEP's common units in the future.

In addition, the terms of the preferred units permit NEP, in certain circumstances and subject to certain limitations, to pay the quarterly distributions on the preferred units in the form of additional convertible preferred units (PIK Units). Pursuant to the terms of the

preferred units, such quarterly distributions may be paid, at NEP’s option, in (i) PIK Units, (ii) cash, or (iii) a combination of PIK Units and cash.

Any issuance of preferred units or other securities convertible into common units and/or the payment of quarterly distributions on the preferred units in PIK Units will or may have the following effects:


•	an existing unitholder’s proportionate ownership interest in NEP will decrease;


•	the amount of cash available for distribution on each common unit may decrease;


•	the relative voting strength of each previously outstanding common unit will be diminished; and


•	the market price of NEP's common units may decline.

The preferred units have rights, preferences and privileges that are not held by, and are preferential to the rights of, holders of the common units.

The preferred units rank senior to the common units with respect to distribution rights. These preferences could adversely affect the market price of the common units, or could make it more difficult for NEP to sell common units in the future.

NEP’s obligation to pay distributions on the preferred units, or on the common units issued following the conversion of such preferred units, could impact NEP's liquidity and reduce the amount of cash available for working capital, capital expenditures, growth opportunities, acquisitions, and other general partnership purposes. NEP’s obligations to the holders of the preferred units could also limit its ability to obtain additional financing or increase NEP's borrowing costs, which could have an adverse effect on NEP’s financial condition.

Taxation Risks

NEP's future tax liability may be greater than expected if NEP does not generate NOLs sufficient to offset taxable income or if tax authorities challenge certain of NEP's tax positions.

Even though NEP is organized as a limited partnership under state law, it is treated as a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal income tax at regular corporate rates on NEP's net taxable income. NEP expects to generate NOLs and NOL carryforwards that it can use to offset future taxable income. As a result, NEP does not expect to pay meaningful U.S. federal income tax for over 15 years. This estimate is based upon assumptions NEP has made regarding, among other things, NEP OpCo's income, capital expenditures, cash flows, net working capital and cash distributions. Further, the IRS or other tax authorities could challenge one or more tax positions NEP or NEP OpCo takes, such as the classification of assets under the income tax depreciation rules, the characterization of expenses (including, but not limited to, NEP's share of the IDR fee) for income tax purposes, the extent to which sales, use or goods and services tax applies to operations in a particular state or the availability of property tax exemptions with respect to NEP's projects. Further, any change in tax law may affect NEP's tax position, including changes in corporate income tax laws, regulations and policies applicable to NEP. While NEP expects that its NOLs and NOL carryforwards will be available to NEP as a future benefit, in the event that they are not generated as expected, are successfully challenged by the IRS (in a tax audit or otherwise) or are subject to future limitations as described below, NEP's ability to realize these benefits may be limited.

NEP's federal, state, local or Canadian tax positions may be challenged by the relevant tax authority. The process and costs, including, but not limited to, potential penalties for nonpayment of disputed amounts, of appealing such challenges, administratively or judicially, regardless of the merits, could be material. A reduction in NEP's expected NOLs, a limitation on NEP's ability to use such losses, or other tax attributes, such as tax credits, and future tax audits or a challenge by tax authorities to NEP's tax positions may result in a material increase in NEP's estimated future income taxes or other tax liabilities, which would negatively impact the amount of after-tax cash distributions to NEP's unitholders and its financial condition.

NEP's ability to use NOLs to offset future income may be limited.

NEP's ability to use its NOLs to offset future taxable income could be substantially limited if NEP’s unitholders that own 5% or more of NEP’s outstanding common units, as defined under Code Section 382, increase their ownership in NEP by more than 50 percentage points over a rolling three-year period through, among other things, additional purchases of NEP's common units and certain types of reorganization transactions. Any NOLs that exceed this limitation may be carried forward and used to offset taxable income for the remainder of the carryforward period (i.e., 20 years from the year in which such NOL was generated for NOLs generated prior to January 1, 2018 and no carryforward limitation for any subsequently generated NOLs). Based on NEP’s most recent annual assessment, NEP does not expect the Section 382 limitation to impact its ability to utilize any of its NOLs to offset future taxable income. However, potential changes in the tax law or in NEP’s projections could impact this assessment.

NEP will not have complete control over NEP's tax decisions.

NEP and/or NEP OpCo may be included in the combined or unitary tax returns of NEE or one or more of its subsidiaries for U.S. state or local income tax purposes. NEP is a party to a tax sharing arrangement which determines the share of taxes that NEP will pay to, or receive from, NEE. In addition, by virtue of NEP's inclusion in NEE’s combined or unitary income tax returns, NEE will effectively control all of NEP's state and local tax decisions in connection with any combined or unitary income tax returns in which NEP is included. NEE will have sole authority to respond to and conduct all tax proceedings (including, but not limited to, tax audits)

related to NEP, to file all state and local income tax returns on NEP's behalf, and to determine the amount of NEP's liability to, or entitlement to payment from, NEE in connection with any combined or unitary income tax returns in which NEP is included. This may result in conflicts of interest between NEE and NEP.

A valuation allowance may be required for NEP's deferred tax assets.

NEP's expected NOLs will be reflected as a deferred tax asset as they are generated until used to offset taxable income. Additional valuation allowances may be needed for deferred tax assets that NEP estimates are more likely than not to be unusable, based on available evidence at the time the estimate is made. Valuation allowances related to deferred tax assets can be affected by changes to tax laws, statutory tax rates and future taxable income levels and based on input from NEP's tax advisors or regulatory authorities. In the event that NEP were to determine that it would not be able to realize all or a portion of NEP's net deferred tax assets in the future, NEP would reduce such amounts through a charge to income tax expense in the period in which that determination was made, which could have a material adverse impact on NEP's financial condition and results of operations and NEP's ability to maintain profitability.

Distributions to unitholders may be taxable as dividends.

Even though NEP is organized as a limited partnership under state law, NEP is treated as a corporation for U.S. federal income tax purposes. Accordingly, if NEP makes distributions from current or accumulated earnings and profits as computed for U.S. federal income tax purposes, such distributions will generally be taxable to unitholders as ordinary dividend income for U.S. federal income tax purposes. Distributions paid to non-corporate U.S. unitholders will be subject to U.S. federal income tax at preferential rates, provided that certain holding period and other requirements are satisfied. However, it is difficult to predict whether NEP will generate earnings and profits as computed for U.S. federal income tax purposes in any given tax year, and although NEP expects that a portion of its distributions to unitholders may exceed its current and accumulated earnings and profits as computed for U.S. federal income tax purposes and therefore constitute a non-taxable return of capital distribution to the extent of a unitholder’s basis in its units, this may not occur. In addition, although return-of-capital distributions are generally non-taxable to the extent of a unitholder’s basis in its units, such distributions will reduce the unitholder’s adjusted tax basis in its units, which will result in an increase in the amount of gain (or a decrease in the amount of loss) that will be recognized by the unitholder on a future disposition of NEP's common units, and to the extent any return-of-capital distribution exceeds a unitholder’s basis, such distributions will be treated as gain on the sale or exchange of the units.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

NEP and its subsidiaries maintain properties consisting of renewable generation projects and natural gas pipeline assets which are adequate for their operations; the principal properties are described in Item 1. Business, which description is incorporated herein by reference.

Character of Ownership

The majority of NEP's generating facilities and pipelines are owned by NEP subsidiaries and are currently subject to NEE Equity's 60.8% noncontrolling limited partner interest in NEP OpCo. In addition, a subsidiary of Pemex owns a 10% interest in the NET Mexico pipeline, NEER owns an approximately 50% noncontrolling ownership interest in Silver State and other third-party investors own noncontrolling interests in certain NEP OpCo subsidiaries. Certain of the generating facilities and all of the pipelines are encumbered by liens securing various financings. Additionally, some of the generating facilities and pipelines occupy or use real property that is not owned by NEP subsidiaries, primarily through various easements, leases, rights-of-way, permits or licenses from private landowners or governmental entities.

Item 3. Legal Proceedings

None

Item 4. Mine Safety Disclosures

Not applicable

PART II

Item 5. Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities

Common Unit Data. NEP's common units are traded on the NYSE under the symbol "NEP".

NEP's partnership agreement requires it to distribute available cash quarterly. Generally, available cash is all cash on hand at the date of determination relating to that quarter (including any expected distributions from NEP OpCo), less the amount of cash reserves established by the board. NEP currently expects that cash reserves would be established solely to provide for the payment of income taxes by NEP, if any. Cash flow is generated from distributions NEP receives from NEP OpCo each quarter. Although, as described above, NEP currently expects that cash reserves would be established by the board solely to provide for the payment of NEP's income taxes, if any, NEP expects NEP OpCo to establish cash reserves prior to making distributions to NEP to pay costs and expenses of NEP's subsidiaries, in addition to NEP's expenses, as well as any debt service requirements and future capital expenditures.

NEP OpCo's partnership agreement requires it to distribute all of its available cash to its common and preferred unitholders, including NEP, each quarter. Generally, NEP OpCo's available cash is all cash on hand at the date of determination relating to that quarter, plus any funds borrowed, less the amount of cash reserves established by NEP OpCo GP. The majority of such available cash is expected to be derived from the operations of the projects. The cash available for distribution is likely to fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind resource, maintenance and outage schedules, timing of debt service and other factors. See Note 15 - PG&E Bankruptcy for a discussion of events of default that continue to limit future cash distributions from certain projects.

In February 2020, NEP paid a distribution of $0.5350 per common unit to its unitholders of record on February 6, 2020. See Management's Discussion - Liquidity and Capital Resources - Financing Arrangements and Note 11 - Debt with respect to distribution restrictions. There are currently no restrictions in effect that limit NEP's ability to pay dividends to its unitholders.

At the close of business on January 31, 2019, there were 11 holders of record of NEP's common units.

Preferred Unit Data. In November 2017, NEP issued and sold 14,021,561 preferred units for an aggregate purchase price of approximately $550 million. In both July and November 2019, NEP converted approximately 4,673,852 preferred units into NEP common units. Holders of preferred units receive cumulative quarterly distributions equal to $0.4413 per unit for quarters ending on or before November 15, 2020, which was prorated for the fourth quarter of 2017 and which may be paid, at NEP’s election, in cash, in kind or a combination thereof. For quarters ending after November 15, 2020, holders will receive cumulative quarterly distributions equal to the greater of $0.4413 per unit and the amount that the preferred units would have received if they had converted into common units at the then-applicable conversion rate (see Note 11 - Equity), and NEP may elect to pay up to 1/9th of the subsequent distribution period amounts in kind. The quarterly distribution amount and portion of the distribution that may be paid in kind will be prorated for the fourth quarter of 2020. If NEP fails to pay a distribution during a subsequent distribution period, NEP would be unable to pay any distributions on or redeem or repurchase any junior securities, including the common units, prior to paying the unpaid cash component of the quarterly distribution, including any previously accrued and unpaid cash distributions. During 2019, NEP paid approximately $21 million of preferred distributions and accrued approximately $2 million of preferred unit distributions which were paid in February 2020. In connection with the sale of the preferred units, NEP entered into a registration rights agreement with the purchasers pursuant to which, among other things, beginning on January 1, 2021, the purchasers will have certain rights to require NEP, under certain circumstances, to initiate underwritten offerings for the common units that are issuable upon conversion of the preferred units.

Incentive Distribution Rights Fee. IDRs represent the right to receive a fee calculated based on the amount of adjusted available cash from operating surplus, as defined in the MSA, that NEP OpCo would be able to distribute to its common unitholders after specified minimum quarterly and target quarterly distribution levels have been achieved. The right to receive the IDR fee is currently held by NEE Management, but may be assigned, subject to restrictions in the MSA. The following discussion assumes that NEE Management continues to own the IDRs.

Under the MSA, for any quarter in which NEP OpCo has adjusted available cash at least equal to a base incentive amount (total common units outstanding multiplied by $0.3525, plus approximately $14 million paid to NEE Management quarterly for IDRs) any excess adjusted available cash will be split 75% to NEP OpCo common unitholders and 25% to NEE Management for IDRs.

If NEP OpCo's adjusted available cash for any quarter falls below the base incentive amount, the IDRs will be paid using the target quarterly distribution levels below calculated using the number of NEP OpCo common units outstanding on January 26, 2017, subject to certain adjustments for repurchases, splits and combinations:



	Total Quarterly Distribution per NEP OpCo Common Unit Target Amount	Marginal Percentage Interest in Adjusted Available Cash
		NEP OpCo Common Unitholders	NEE Management
Minimum Quarterly Distribution	$0.1875	100%	—%
First Target Quarterly Distribution	Above $0.1875 up to $0.215625	100%	—%
Second Target Quarterly Distribution	Above $0.215625 up to $0.234375	85%	15%
Third Target Quarterly Distribution	Above $0.234375 up to $0.281250	75%	25%
Thereafter	Above $0.281250	50%	50%

During 2019, 2018 and 2017, NEP paid IDR fees of approximately $86 million, $72 million and $60 million, respectively.

Purchases of Equity Securities by Affiliated Purchaser. In October 2015, NEP was advised that NEE authorized a program to purchase, from time to time, up to $150 million of NEP's outstanding common units. Under the program, purchases may be made in amounts, at prices and at such times as NEE or its subsidiaries deem appropriate, all subject to market conditions and other considerations. The common unit purchase program does not require NEE to acquire any specific number of common units and may be modified or terminated by NEE at any time. The purpose of the program is not to cause NEP’s common units to be delisted from the NYSE or to cause the common units to be deregistered with the SEC. During 2019, 2018 and 2017, there were no purchases under the program. At December 31, 2019, the dollar value of units that may yet be purchased under the program was approximately $114 million.

Item 6. Selected Financial Data

The selected financial data below is presented using the basis of accounting relevant to each period. For all periods prior to 2018, the selected financial data represents the consolidated financial results of NEP, including the acquisitions from NEER prior to 2018 (the common control acquisitions). The common control acquisitions were a transfer of assets between entities under common control, which required them to be accounted for as if the transfers occurred since the inception of common control, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the consolidated financial data has been retrospectively adjusted to include the historical results and financial position of the common control acquisitions prior to their respective acquisition dates. All years presented reflect the October 2015 Texas pipelines acquisition. The years ended December 31, 2019 and 2018 also reflect an acquisition in December 2018 and the year ended December 31, 2019 reflects acquisitions in June 2019 and November 2019. See Note 3.



	Years Ended December 31,
	2019			2018		2017			2016		2015
SELECTED DATA OF NEP (millions, except per unit and GWh amounts):
Operating revenues	$	855		$	771	$	807		$	772	$	501
Net income (loss)^(a)	$	(404	)	$	267	$	114		$	383	$	107
Net income (loss) attributable to NEP^(a)	$	(88	)	$	167	$	(64	)	$	83	$	10
Earnings (loss) per common unit attributable to NEP - basic^(a)	$	(1.51	)	$	3.05	$	(1.18	)	$	1.90	$	0.46
Earnings (loss) per common unit attributable to NEP - assuming dilution^(a)	$	(1.51	)	$	2.91	$	(1.18	)	$	1.90	$	0.46
Distributions paid per common unit	$	1.9675		$	1.7125	$	1.4900		$	1.2975	$	0.9050
Total assets	$	12,256		$	9,405	$	8,425		$	8,691	$	8,237
Long-term debt, excluding current maturities	$	4,132		$	2,728	$	4,218		$	3,508	$	3,334
GWh generated	16,687			11,471		11,117			10,215		7,373

______________________

(a)

The year ended December 31, 2019 reflects higher losses related to NEP's derivative instruments (see Note 7 - Financial Statement Impact of Derivative Instruments). The year ended December 31, 2018 reflects a gain of approximately $153 million (see Note 2 - Disposal of Canadian Holdings). The year ended December 31, 2017 reflects an income tax charge of approximately $100 million, all of which was attributable to NEP, related to tax reform (see Note 5). The year ended December 31, 2016 reflects a favorable fair value adjustment of approximately $189 million.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the Notes to Consolidated Financial Statements contained herein. All comparisons are with the corresponding items in the prior year.

Overview

Company Description

NEP is a growth-oriented limited partnership formed to acquire, manage and own contracted clean energy projects with stable long-term cash flows. NEP consolidates the results of NEP OpCo and its subsidiaries through its controlling interest in the general partner of NEP OpCo. At December 31, 2019, NEP owned an approximately 39.2% limited partner interest in NEP OpCo and NEE Equity owned a noncontrolling 60.8% limited partner interest in NEP OpCo. Through NEP OpCo, NEP has ownership interests in a portfolio of contracted renewable generation assets consisting of wind and solar projects and a portfolio of contracted natural gas pipeline assets. NEP's financial results are shown on a consolidated basis with financial results attributable to NEE Equity reflected in noncontrolling interests.

During 2019, 2018 and 2017, NEP acquired various projects from NEER as discussed in Note 3. The acquisitions from NEER prior to 2018 (common control acquisitions) were considered a transfer of assets between entities under common control, which required them to be accounted for as if the transfers occurred since the inception of common control, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the consolidated financial statements were retrospectively adjusted to include the historical results and financial position of the common control acquisitions prior to their respective acquisition dates. Beginning in January 2018, acquisitions from NEER are no longer treated as common control acquisitions. In addition, on November 13, 2019, a subsidiary of NEP acquired an equity method investment in a natural gas pipeline located in Pennsylvania from third parties. See Note 3.

In June 2018, a subsidiary of NEP completed the sale of Canadian Holdings which owned four wind generation facilities and two solar generation facilities located in Ontario, Canada with a generating capacity totaling approximately 396 MW. See Note 2 - Disposal of Canadian Holdings.

In late January 2019, PG&E, a significant customer of NEP, filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. See Note 15 - PG&E Bankruptcy.

Results of Operations



	Years Ended December 31,
	2019			2018			2017
	(millions)
STATEMENT OF INCOME (LOSS) DATA:
OPERATING REVENUES
Renewable energy sales	$	645		$	551		$	613
Texas pipelines service revenue	210			220			194
Total operating revenues	855			771			807
OPERATING EXPENSES
Operations and maintenance	336			257			248
Depreciation and amortization	259			203			226
Taxes other than income taxes and other	27			21			21
Gain on disposal of Canadian Holdings	—			(153		)	—
Total operating expenses	622			328			495
OPERATING INCOME	233			443			312
OTHER INCOME (DEDUCTIONS)
Interest expense	(702		)	(248		)	(199		)
Benefits associated with differential membership interests - net	—			—			119
Equity in earnings of equity method investees	38			41			40
Equity in earnings (losses) of non-economic ownership interests	(4		)	15			11
Other - net	5			22			(2		)
Total other deductions - net	(663		)	(170		)	(31		)
INCOME (LOSS) BEFORE INCOME TAXES	(430		)	273			281
INCOME TAX EXPENSE (BENEFIT)	(26		)	6			167
NET INCOME (LOSS)	(404		)	267			114
Net income attributable to preferred distributions	(17		)	(25		)	(3		)
Net loss (income) attributable to noncontrolling interests	333			(75		)	(175		)
NET INCOME (LOSS) ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP	$	(88	)	$	167		$	(64	)

2019 Compared to 2018

Operating Revenues

Operating revenues primarily consist of income from the sale of energy under NEP's PPAs and services provided under natural gas transportation agreements, partly offset by the amortization of intangible assets - PPAs (see Note 2 - Intangible Assets - PPAs). Operating revenues increased $84 million during the year ended December 31, 2019. The increase in renewable energy sales primarily reflects an increase of approximately $170 million related to the projects acquired in December 2018 and June 2019, partly offset by a decrease of $78 million as a result of the sale of Canadian Holdings. Texas pipelines service revenues decreased by approximately $10 million primarily due to the absence of certain deferred revenue recognized in 2018 related to new contracts.

Wind and solar resource levels, weather conditions and the performance of NEP's renewable energy portfolio represent significant factors that could affect its operating results because these variables impact energy sales. Additionally, project acquisitions or expansion opportunities could impact future revenues.

Operating Expenses

Operations and Maintenance

O&M expenses include interconnection costs, labor expenses, turbine servicing costs, land payments, insurance, materials, supplies, shared services and administrative expenses attributable to NEP's projects, and costs and expenses under the MSA, ASAs and O&M agreements (see Note 13). O&M expenses also include the cost of maintaining and replacing certain parts for the projects in the portfolio to maintain, over the long term, operating income or operating capacity. O&M expenses increased $79 million during the year ended December 31, 2019 primarily due to increases of approximately $53 million related to the projects acquired in December 2018 and June 2019 and $23 million in higher other corporate expenses, including higher IDR fees related to growth in NEP's distributions to its common unitholders.

O&M expenses related to the existing portfolio are expected to remain relatively stable from year to year. However, NEP's O&M expenses are likely to increase as NEP acquires new projects.

Depreciation and Amortization

Depreciation and amortization expense reflects costs associated with depreciation and amortization of NEP's assets, based on depreciable asset lives and consistent depreciation methodologies. For certain of the renewable energy projects, CITCs are recorded as a reduction in property, plant and equipment - net on the consolidated balance sheets and amortized as a reduction to depreciation and amortization expense over the estimated life of the related property. Depreciation and amortization expense also includes a provision for wind and solar facility dismantlement, asset removal costs and accretion related to asset retirement obligations and the amortization of finite-lived intangible assets.

Depreciation and amortization expense increased $56 million during the year ended December 31, 2019 primarily as a result of approximately $61 million of depreciation related to projects acquired in December 2018 and June 2019.

Gain on Disposal of Canadian Holdings

During the year ended December 31, 2018, a subsidiary of NEP completed the sale of Canadian Holdings and NEP recognized a pre-tax gain of approximately $153 million. See Note 2 - Disposal of Canadian Holdings.

Other Income (Deductions)

Interest Expense

Interest expense primarily consists of interest under long-term debt agreements and mark-to-market gains and losses on interest rate contracts. In 2019, interest expense also reflects approximately $153 million of costs, including cash payments and the write-off of debt issuance costs, primarily related to the retirement of debt associated with Genesis (see Note 15 - PG&E Bankruptcy) and certain wind projects that are being repowered. Interest expense increased approximately $454 million during the year ended December 31, 2019 primarily due to unfavorable mark-to-market activity of $315 million. Interest expense also reflects decreases in interest expense associated with the absence of interest associated with the sale of Canadian Holdings as well as other debt retired in 2019 as discussed above, mostly offset by increases in interest expense related to debt incurred in 2019 (see Note 11 - Debt).

Equity in Earnings (Losses) of Non-Economic Ownership Interests

The decrease in equity in earnings (losses) for non-economic ownership interests for the year ended December 31, 2019 reflects lower earnings at the related projects.

Other - net

The decrease in other - net for the year ended December 31, 2019 primarily reflects the absence of 2018 gains on foreign currency exchange contracts (see Note 7).

Income Taxes

NEP recognizes in income its applicable ownership share of U.S. income taxes due to the disregarded tax status of substantially all of the U.S. projects under NEP OpCo. Prior to the sale of Canadian Holdings, NEP's former Canadian subsidiaries were all Canadian taxpayers, and therefore NEP recognized in income all of the Canadian taxes. Net income or loss attributable to noncontrolling interests includes minimal U.S. taxes and NEER's applicable ownership share of Canadian taxes.

For periods through December 31, 2017, when NEP acquired a NEER project, income taxes were calculated on the predecessor method using the separate return method applied to the group of renewable energy projects acquired. As a result of the governance changes discussed in Note 3, beginning in January 1, 2018, acquisitions from NEER are no longer treated as common control acquisitions, and income taxes are calculated on the successor method under which taxes are calculated for NEP as a single taxpaying corporation for U.S. federal and state income taxes (based on its election to be taxed as a corporation).

For the year ended December 31, 2019, NEP recorded income tax benefit of $26 million on loss before income taxes of $430 million, resulting in an effective tax rate of approximately 6%. The income tax benefit is primarily comprised of income tax benefit of approximately $90 million at the statutory rate of 21% and $5 million of state income tax benefit, partly offset by income tax expense of $70 million related to income tax attributable to noncontrolling interests. See Note 5.

For the year ended December 31, 2018, NEP recorded income tax expense of $6 million on income before income taxes of $273 million, resulting in an effective tax rate of approximately 2%. The income tax expense is primarily comprised of income tax expense of approximately $57 million at the statutory rate of 21%, $17 million of federal income tax expense related to an adjustment to differential membership interests as a result of the change in federal corporate income tax rates due to tax reform (see Note 2 - Noncontrolling Interests) and $10 million of state income taxes, partly offset by income tax benefits of $67 million related to the disposal of Canadian Holdings and $17 million of income tax attributable to noncontrolling interests. See Note 5.

Net Loss (Income) Attributable to Noncontrolling Interests

For 2018 and 2019, net loss (income) attributable to noncontrolling interests reflects the net income or loss attributable to NEE Equity's noncontrolling interest in NEP OpCo, a non-affiliated party's interest in one of the Texas pipelines and the loss allocated to differential membership interest investors. Additionally, for 2019, net income attributable to noncontrolling interests reflects the income allocated to Class B noncontrolling ownership interests and NEER's noncontrolling ownership interest in Silver State. See Note 2 - Noncontrolling Interests.

2018 Compared to 2017

The comparison of the results of operations for the years ended December 31, 2018 and 2017 are included in Management's Discussion in NEP's Annual Report on Form 10-K for the year ended December 31, 2018.

Liquidity and Capital Resources

NEP’s ongoing operations use cash to fund O&M expenses, maintenance capital expenditures, debt service payments and distributions to common and preferred unitholders and holders of noncontrolling interests. NEP expects to satisfy these requirements primarily with internally generated cash flow. In addition, as a growth-oriented limited partnership, NEP expects from time to time to make acquisitions and other investments. These acquisitions and investments are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness, issuances of additional NEP common units or preferred units, capital raised pursuant to other financing structures, cash on hand and cash generated from operations.

These sources of funds are expected to be adequate to provide for NEP's short-term and long-term liquidity and capital needs, although its ability to make future acquisitions, expand or repower existing projects and increase its distributions to common unitholders will depend on its ability to access capital on acceptable terms.

As a normal part of its business, depending on market conditions, NEP expects from time to time to consider opportunities to repay, redeem, repurchase or refinance its indebtedness. In addition, NEP expects from time to time to consider potential investments in new acquisitions. These events may cause NEP to seek additional debt or equity financing, which may not be available on acceptable terms or at all. Additional debt financing, if available, could impose operating restrictions, additional cash payment obligations and additional covenants.

NEP OpCo has agreed to allow NEER or one of its affiliates to withdraw funds received by NEP OpCo or its subsidiaries and to hold those funds in accounts of NEER or one of its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by NEP's subsidiaries, until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs. NEP OpCo will have a claim for any funds that NEER fails to return:


•	when required by its subsidiaries’ financings;


•	when its subsidiaries’ financings otherwise permit distributions to be made to NEP OpCo;


•	when funds are required to be returned to NEP OpCo; or


•	when otherwise demanded by NEP OpCo.

In addition, NEER and certain of its affiliates may withdraw funds in connection with certain long-term debt agreements and hold those funds in accounts belonging to NEER or its affiliates and provide credit support in the amount of such withdrawn funds. If NEER fails to return withdrawn funds when required by NEP's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER in the amount of such withdrawn funds.

If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings.

Liquidity Position

At December 31, 2019, NEP's liquidity position was approximately $758 million. The table below provides the components of NEP’s liquidity position:



	December 31, 2019			Maturity Date
	(millions)
Cash and cash equivalents	$	128
Amounts due under the CSCS agreement	12
Revolving credit facilities^(a)	1,250			2024^(b)
Less borrowings^(b)	(510		)
Less issued letters of credit	(122		)
Total^(c)	$	758

____________________


(a)	Excludes credit facilities discussed below due to restrictions on the use of the borrowings. See Note 11 - Debt.


(b)	In February 2020, an additional $50 million was borrowed under the NEP OpCo credit facility and the maturity date was extended until 2025.


(c)	Excludes current restricted cash of approximately $3 million and $8 million at December 31, 2019 and 2018, respectively. See Note 2 - Restricted Cash.

Management believes that NEP's liquidity position and cash flows from operations will be adequate to finance O&M, maintenance capital expenditures, distributions to its unitholders and liquidity commitments. Management continues to regularly monitor NEP's financing needs consistent with prudent balance sheet management.

Financing Arrangements

NEP OpCo and its direct subsidiary are parties to a $1,250 million revolving credit facility (NEP OpCo credit facility) maturing in February 2025. During 2019, $1,150 million was drawn under the NEP OpCo credit facility and $640 million of the outstanding borrowings under this facility were repaid with proceeds from other financing activities discussed in Note 11. At December 31, 2019, $510 million was outstanding under the NEP OpCo credit facility. For a discussion of the NEP OpCo credit facility, see Note 11 - Debt.

During 2019, an indirect subsidiary of NEP entered into a credit agreement which provides $205 million under a limited-recourse senior secured variable rate term loan and provides up to $270 million under a revolving credit facility (STX Holdings revolving credit facility). Proceeds from any borrowings under the STX Holdings revolving credit facility are available exclusively to fund the cash portion of NEP's repurchase, if any, of the Class B noncontrolling interests related to STX Midstream (see Note 11), subject to certain limitations. At December 31, 2019, $270 million remains available under the STX Holdings revolving credit facility.

During 2017, NEP issued $300 million in aggregate principal amount of convertible notes and NEP OpCo issued $550 million in aggregate principal amount of 4.25% senior notes due September 2024 and $550 million in aggregate principal amount of 4.50% senior notes due September 2027. During 2019, NEP OpCo issued $700 million in aggregate principal amount of 4.25% senior notes due July 2024 and $500 million in aggregate principal amount of 3.875% senior notes due October 2026. See Note 11 - Debt.

In 2019, indirect subsidiaries of NEP entered into a credit agreement (Meade credit agreement) which provides up to $915 million under three limited-recourse senior secured variable rate term loans to finance a portion of the Meade acquisition and the expansion (see Note 3). At December 31, 2019, approximately $90 million remains available under the Meade credit agreement to fund the expansion. See Note 11 - Debt.

NEP OpCo and certain indirect subsidiaries are subject to financings that contain financial covenants and distribution tests, including debt service coverage ratios. In general, these financings contain covenants customary for these types of financings, including limitations on investments and restricted payments. Certain of NEP's financings provide for interest payable at a fixed interest rate. However, certain of NEP's financings accrue interest at variable rates based on an underlying index plus a margin. Interest rate contracts were entered into for certain of these financings to hedge against interest rate movements with respect to interest payments on the related borrowings. In addition, under the project-level financings, each project will be permitted to pay distributions out of available cash so long as certain conditions are satisfied, including that reserves are funded with cash or credit support, no default or event of default under the applicable financings has occurred and is continuing at the time of such distribution or would result therefrom, and each project is otherwise in compliance with the project-level financing’s covenants. For the majority of the project financings, minimum debt service coverage ratios must be satisfied in order to make a distribution. For one project financing, the project must maintain a leverage ratio and an interest coverage ratio in order to make a distribution. At December 31, 2019, NEP's subsidiaries were in compliance with all financial debt covenants under their financings other than as discussed in Note 15 - PG&E Bankruptcy.

Equity Arrangements

In 2019, NEP converted approximately 9.35 million Series A convertible preferred units into NEP common units on a one-for-one basis. See Note 11 - Equity.

In 2019 and 2018, NEP issued and sold noncontrolling Class B interests in certain of its subsidiaries. NEP has buyout rights, subject to certain limitations and extensions, under which NEP has the right to pay a portion of the buyout price in NEP non-voting common units or NEP common units, as specified in the related agreement. The Class B investors receive a specified allocation of the related subsidiaries' distributable cash, which could increase if certain minimum buyout rights are not exercised or are not exercised during a certain period. See Note 11 - Equity.

NEP established an at-the-market equity issuance program (ATM program) in 2015 pursuant to which NEP may issue, from time to time, up to $150 million of its common units which gives NEP the flexibility to issue new units when the price is acceptable. In July 2018, NEP implemented a $150 million ATM program which replaced its prior program. At December 31, 2019, NEP may issue up to approximately $64 million in additional common units under the ATM program.

In July 2018, NEP filed a shelf registration statement with the SEC, which became effective upon filing, for an unspecified amount of securities. The amount of securities issuable by NEP is established from time to time by its board of directors. Securities that may be issued under the registration statement include common units, preferred units, warrants, rights, debt securities, equity purchase contracts and equity purchase units.

Contractual Obligations

NEP's contractual obligations at December 31, 2019 were as follows:



	2020		2021		2022		2023		2024		Thereafter		Total
	(millions)
Debt, including interest^(a)	$	476	$	169	$	170	$	372	$	1,908	$	2,045	$	5,140
Other contractual obligations^(b)	235		45		25		13		14		139		471
Asset retirement activities^(c)	—		—		—		—		—		566		566
MSA and credit support^(d)	8		8		8		8		8		182		222
Total	$	719	$	222	$	203	$	393	$	1,930	$	2,932	$	6,399

____________________


(a)	Includes principal, interest, fees on credit facilities and interest rate swaps. Variable rate interest was computed using December 31, 2019 rates. Such amounts reflect scheduled payments under the financing agreements for debt in default as the lenders have not issued any acceleration notices. See Note 11 - Debt.


(b)	Primarily reflects commitments related to construction activities (see Note 15 - Development, Engineering and Construction Commitments), lease payment obligations (see Note 14) and payments related to the acquisition of certain development rights.


(c)	Represents expected cash payments adjusted for inflation for estimated costs to perform asset retirement activities.


(d)	Represents minimum fees under the MSA and CSCS agreement. See Note 13.

Capital Expenditures

Annual capital spending plans are developed based on projected requirements by the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including construction expenditures that are expected to increase NEP OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the years ended December 31, 2019 and 2018, NEP had capital expenditures of approximately $93 million and $23 million, respectively, excluding the purchase prices of acquired projects. Subject to regulatory approvals, NEP expects to have capital expenditures totaling approximately $128 million related to a potential expansion investment at one of the Texas pipelines expected to be in-service during the fourth quarter of 2020 and $90 million of additional investment in CPL related to an expansion scheduled for commercial operation by mid-2022. In addition, NEP expects to have capital expenditures totaling approximately $200 million related to the repowering investments at two wind generation facilities expected to be completed in 2020. See Note 15 - Development, Engineering and Construction Commitments. These estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.

Cash Distributions to Unitholders

expected to be derived from the operations of the projects. The cash available for distribution is likely to fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind resource, maintenance and outage schedules, timing of debt service and other factors. See Note 15 - PG&E Bankruptcy for a discussion of events of default that continue to limit future cash distributions from certain projects.

During 2019 and 2018, NEP distributed approximately $115 million and $94 million, respectively, to its common unitholders. In addition, NEP paid approximately $35 million in distributions to its common unitholders and $2 million in distributions to its preferred unitholders in February 2020.

Credit Ratings

NEP’s liquidity, ability to access credit and capital markets and cost of borrowings is dependent on its credit ratings. At February 18, 2020, Moody’s Investors Service, Inc. (Moody’s), S&P Global Ratings (S&P) and Fitch Ratings, Inc. (Fitch) had assigned the following credit ratings to NEP:



	Moody's^(a)	S&P^(a)	Fitch^(a)
NEP corporate credit rating^(b)	Ba1	BB	BB+

_________________________


(a)	A security rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating. The rating is subject to revision or withdrawal at any time by the assigning rating organization.


(b)	The outlook indicated by each of Moody's, S&P and Fitch is stable.

Cash Flows

The following table reflects the changes in cash flows for the comparative periods:



	Years Ended December 31,
	2019			2018			2017
	(millions)
Net cash provided by operating activities	$	346		$	362		$	413
Net cash used in investing activities	$	(2,349	)	$	(763	)	$	(1,368	)
Net cash provided by financing activities	$	1,969		$	371		$	959

Net Cash Provided by Operating Activities

The net decrease in cash provided by operating activities in 2019 compared to 2018 was primarily driven by the 2018 sale of Canadian Holdings, the absence of distributions from the equity method investment in Desert Sunlight and higher corporate operating expenses, including higher IDR fees. This decrease was partly offset by cash flows from the investments in projects acquired in December 2018, June 2019 and November 2019.

Net Cash Used in Investing Activities



	Years Ended December 31,
	2019			2018			2017
	(millions)
Acquisitions of membership interests in subsidiaries - net	$	(2,322	)	$	(1,283	)	$	(1,074	)
Capital expenditures	(93		)	(25		)	(349		)
Proceeds from the sale of Canadian Holdings - net	—			517			—
Proceeds from CITCs	—			3			77
Payments from (to) related parties under CSCS agreement - net	54			21			(22		)
Other	12			4			—
Net cash used in investing activities	$	(2,349	)	$	(763	)	$	(1,368	)

The increase in cash used in investing activities during 2019 was driven by the 2019 acquisitions described in Note 3, the absence of the proceeds from the 2018 sale of Canadian Holdings (see Note 2 - Disposal of Canadian Holdings) and higher capital expenditures related to certain construction activities (see Note 15 - Development, Engineering and Construction Commitments).

Net Cash Provided by Financing Activities



	Years Ended December 31,
	2019			2018			2017
	(millions)
Proceeds from issuance of common units – net	$	2		$	86		$	—
Proceeds from issuance of preferred units – net	—			—			548
Issuances (retirements) of long-term debt – net	588			(233		)	695
Partners/Members' contributions	14			36			316
Partners/Members' distributions	(362		)	(281		)	(307		)
Proceeds related to differential membership interests - net	36			35			8
Payment of acquisition holdback	—			—			(186		)
Proceeds related to Class B noncontrolling interests - net	1,765			750			—
Debt issuance costs	(48		)	—			(24		)
Other	(26		)	(22		)	(91		)
Net cash provided by financing activities	$	1,969		$	371		$	959

The increase in cash provided by financing activities in 2019 is primarily due to higher net proceeds related to Class B noncontrolling interests and debt issuances in 2019 compared to debt retirements in 2018, partly offset by higher distributions and lower proceeds from the issuance of common units.

The comparison of the cash flows for the years ended December 31, 2018 and 2017 are included in Management's Discussion in NEP's Annual Report on Form 10-K for the year ended December 31, 2018.

Critical Accounting Policies and Estimates

NEP's significant accounting policies are described in Note 2 to the consolidated financial statements, which were prepared under generally accepted accounting principles in the U.S. Critical accounting policies are those that NEP believes are both most important to the portrayal of its financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. The following policies are those considered to be the most critical in understanding the judgments that are involved in preparing the consolidated financial statements.

Income Taxes

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating NEP's ability to recover its deferred tax assets individually by entity and by taxing jurisdiction, NEP considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, NEP begins with historical results and incorporates assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates NEP is using to manage the underlying businesses.

ASC 740 provides that a tax benefit from an uncertain tax position will be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition.

NEP recognizes tax liabilities in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from NEP's current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined.

Acquisitions from NEER in Periods Prior to January 1, 2018

The projects located in the U.S. (U.S. projects) acquired from NEER presented in these financial statements were historically included in the consolidated federal income tax return of NEE. Income taxes as presented herein attributed current and deferred income taxes to the U.S. projects acquired from NEER in a manner that is systematic, rational and consistent with the asset and liability method prescribed by Accounting Standards Codification Topic (ASC) 740, Accounting for Income Taxes. Accordingly, with regard to periods prior to the NEP acquisition date, income taxes were calculated on the predecessor method using the separate return method applied to the group of renewable energy projects acquired. The separate return method applies ASC 740 as if each

group of renewable energy projects were a separate taxpayer. Accordingly, the sum of the amounts allocated to the U.S. projects’ provisions may not equal the income taxes that would have resulted from a consolidated filing.

The projects located in Canada were not included in the consolidated U.S. tax filing of NEE, as they were excluded from the U.S. federal income tax group. Canadian corporations that filed separate Canadian income tax returns had taxes provided herein on that basis. Canadian entities that were Canadian limited partnerships from which virtually all of the tax attributes flow through to the owner, a Canadian corporation, which was not a predecessor entity, had no taxes provided for the period before acquisition. None of the income nor any tax attributes of the flow through entities flow through to a U.S. taxpayer and were not reflected in any U.S. tax return. No U.S. income taxes were provided with regard to these entities for periods prior to the NEP acquisition date.

See Note 5.

Impairment of Long-Lived Assets

NEP evaluates long-lived assets, including finite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset. The impairment loss to be recognized is the amount by which the carrying value of the long-lived asset exceeds the asset’s fair value. In most instances, the fair value is determined by discounting estimated future cash flows using an appropriate interest rate.

The amount of future net cash flows, the timing of such cash flows and the determination of an appropriate interest rate all involve estimates and judgments about future events. In particular, the aggregate amount of cash flows determines whether an impairment exists, and the timing of the cash flows is critical in determining fair value for the purposes of determining the impairment loss to be recognized. Because each assessment is based on the facts and circumstances associated with each long-lived asset, the effects of changes in assumptions cannot be generalized. See Note 15 - PG&E Bankruptcy for a discussion of an impairment analysis related to the PG&E bankruptcy filing.

Business Combinations

Certain assumptions and estimates are employed in determining the fair value of assets acquired, evaluating the fair value of liabilities assumed, as well as in determining the allocation of goodwill to a reporting unit. These estimates may be affected by factors such as changing market conditions, technological advances in the energy industry or changes in regulations governing that industry. Other key inputs that require judgment include discount rates, comparable market transactions, estimated useful lives and probability of future transactions. The most significant assumptions requiring the most judgment involve identifying and estimating the fair value of intangible assets and property, plant and equipment and the associated useful lives for establishing amortization periods. To finalize purchase accounting for significant transactions, NEP may utilize the services of independent valuation specialists to assist in the determination of the fair value of acquired intangible assets and property, plant and equipment. The allocation of the purchase price may be modified up to one year from the date of the acquisition if new information is obtained about the fair value of assets acquired and liabilities assumed. See Note 3.

Goodwill and Other Intangible Assets

Goodwill acquired in connection with business combinations represents the excess of consideration over the fair value of net assets acquired. For goodwill and intangible assets with indefinite lives, an assessment for impairment is performed annually or whenever an event indicating impairment may have occurred. NEP completes the annual impairment test for goodwill and indefinite-lived intangibles using an assessment date of October 1. Goodwill is reviewed for impairment by comparing the carrying value of a reporting unit’s net assets, including allocated goodwill, to the estimated fair value of a reporting unit. NEP estimates the fair value of a reporting unit using a combination of the income, market and cost approaches. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, future operating margins, the weighted average cost of capital, and future market conditions, among others. If a reporting unit’s carrying value is greater than its fair value, a second step is performed whereby the implied fair value of goodwill is estimated by allocating the fair value of a reporting unit in a hypothetical purchase price allocation analysis. A goodwill impairment charge would be recognized for the amount by which the carrying value of goodwill exceeds its reassessed fair value. NEP performed its annual goodwill impairment test in October 2019 and determined, based on the results, that no goodwill impairment charge was required.

Quantitative and Qualitative Disclosures about Market Risk

NEP is exposed to several market risks in its normal business activities. Market risk is the potential loss that may result from market changes associated with its business. The types of market risks include interest rate and counterparty credit risks.

Interest Rate Risk

NEP is exposed to risk resulting from changes in interest rates associated with outstanding and expected future debt issuances and borrowings. NEP manages interest rate exposure by monitoring current interest rates, entering into interest rate swap contracts and using a combination of fixed rate and variable rate debt. Interest rate swaps are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements.

NEP has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At December 31, 2019, approximately 12% of the long-term debt, including current maturities, was exposed to fluctuations in interest expense as the remaining balance was either fixed rate debt or financially hedged. At December 31, 2019, the estimated fair value of NEP's long-term debt was approximately $4.2 billion and the carrying value of the long-term debt was $4.1 billion. See Note 6 - Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, which is a reasonable near-term market change, the fair value of NEP's long-term debt would increase by approximately $87 million at December 31, 2019.

At December 31, 2019, NEP had interest rate contracts with a notional amount of approximately $6.9 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, NEP’s net derivative liabilities at December 31, 2019 would increase by approximately $300 million.

Counterparty Credit Risk

Risks surrounding counterparty performance and credit risk could ultimately impact the amount and timing of expected cash flows. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties under the terms of their contractual obligations. NEP monitors and manages credit risk through credit policies that include a credit approval process and the use of credit mitigation measures such as prepayment arrangements in certain circumstances. NEP also seeks to mitigate counterparty risk by having a diversified portfolio of counterparties. See Note 15 - PG&E Bankruptcy for a discussion of risks related to PG&E.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

See Management's Discussion - Quantitative and Qualitative Disclosures About Market Risk.

Item. 8 Financial Statements and Supplementary Data

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

NextEra Energy Partners, LP's (NEP) management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f). The consolidated financial statements, which in part are based on informed judgments and estimates made by management, have been prepared in conformity with generally accepted accounting principles applied on a consistent basis.

To aid in carrying out this responsibility, we, along with all other members of management, maintain a system of internal accounting control which is established after weighing the cost of such controls against the benefits derived. In the opinion of management, the overall system of internal accounting control provides reasonable assurance that the assets of NEP and its subsidiaries are safeguarded and that transactions are executed in accordance with management's authorization and are properly recorded for the preparation of financial statements. In addition, management believes the overall system of internal accounting control provides reasonable assurance that material errors or irregularities would be prevented or detected on a timely basis by employees in the normal course of their duties. Any system of internal accounting control, no matter how well designed, has inherent limitations, including the possibility that controls can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation and reporting.

The system of internal accounting control is supported by written policies and guidelines, the selection and training of qualified employees, an organizational structure that provides an appropriate division of responsibility and a program of internal auditing. NEP's written policies include a Code of Business Conduct & Ethics that states management's policy on conflicts of interest and ethical conduct. Compliance with the Code of Business Conduct & Ethics is confirmed annually by key personnel.

The Board of Directors pursues its oversight responsibility for financial reporting and accounting through its Audit Committee. This Committee, which is comprised entirely of independent directors, meets regularly with management, the internal auditors and the independent auditors to make inquiries as to the manner in which the responsibilities of each are being discharged. The independent auditors and the internal audit staff have free access to the Committee without management's presence to discuss auditing, internal accounting control and financial reporting matters.

Management assessed the effectiveness of NEP's internal control over financial reporting as of December 31, 2019, using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the Internal Control - Integrated Framework (2013). Based on this assessment, management believes that NEP's internal control over financial reporting was effective as of December 31, 2019.

NEP's independent registered public accounting firm, Deloitte & Touche LLP, is engaged to express an opinion on NEP's consolidated financial statements and an opinion on NEP's internal control over financial reporting. Their reports are based on procedures believed by them to provide a reasonable basis to support such opinions. These reports appear on the following pages.



JAMES L. ROBO		REBECCA J. KUJAWA
James L. Robo Chairman of the Board and Chief Executive Officer NextEra Energy Partners, LP		Rebecca J. Kujawa Chief Financial Officer NextEra Energy Partners, LP



JAMES M. MAY
James M. May Controller and Chief Accounting Officer NextEra Energy Partners, LP

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the unitholders and the Board of Directors of NextEra Energy Partners, LP

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of NextEra Energy Partners, LP and subsidiaries (NEP) as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, NEP maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019 of NEP and our report dated February 18, 2020 expressed an unqualified opinion on those financial statements.

Basis for Opinion

NEP’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on NEP's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to NEP in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

DELOITTE & TOUCHE LLP

Boca Raton, Florida

February 18, 2020

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the unitholders and the Board of Directors of NextEra Energy Partners, LP

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of NextEra Energy Partners, LP and subsidiaries (NEP) as of December 31, 2019 and 2018, the related consolidated statements of income (loss), comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of NEP as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), NEP’s internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2020 expressed an unqualified opinion on NEP’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of NEP’s management. Our responsibility is to express an opinion on NEP's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to NEP in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Noncontrolling Interest, Income Allocation and Asset Valuation - Refer to Notes 2, 3 and 11 to the financial statements

Critical Audit Matter Description

In March 2019, NEP and its affiliates entered into a Membership Interest Purchase Agreement with a third party to finance the acquisition of wind and solar assets from NextEra Energy, Inc. (NEE). The third-party investor (Class B Investor) contributed $900 million for 100% of a noncontrolling Class B membership interest in NEP Renewable II, LLC. The joint venture agreement contained cash and income allocations that differ from the ownership percentages which results in accounting that requires the application of hypothetical liquidation of book value (HLBV) accounting. The application of HLBV required significant consideration of the allocations between NEP and the Class B Investor over the life of the agreement, the call option and the liquidation provisions of the agreement to determine the appropriate methodology for allocating income between the parties. NEP’s allocation of the purchase price among acquired assets required management to make estimates and assumptions related to the future cash flows and the discount rate in determining and assigning fair value.

The accounting and reporting for this transaction required an increased extent of audit effort and specialized skill and knowledge with respect to the appropriateness of the accounting model based on the provisions of the agreement. Auditing the unobservable inputs used by management to estimate the fair value of the acquired assets involved subjective judgments and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures included the following, among others:


•	We tested the effectiveness of controls over purchase accounting, including NEP’s review of the third-party specialist’s valuation report.


•	We tested the effectiveness of NEP’s controls over the accounting and reporting for the transaction and the Class B

Investor’s non-controlling interest (NCI) and income allocation.


•	We read the joint venture agreement to evaluate the business purpose of the transaction.


•	We used our firm specialist resources to assist in auditing management’s conclusions through an accounting consultation. The accounting consultation included evaluation of the terms of the agreement to determine the appropriateness of the accounting conclusions reached regarding the application of HLBV accounting.


•	We tested the initial recording of the NCI balance related to the Class B Investor and the income allocation to the Class B Investor for the period.


•	We evaluated the competency of the third party specialist engaged by NEP to perform the valuation. We read and tested the third party valuation report.


•	We assessed the reasonableness of management’s future cash flows by comparing the projections to historical results and similar companies acquired in previous years.


•	We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.


•	With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate, including testing the source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management.

DELOITTE & TOUCHE LLP

Boca Raton, Florida

February 18, 2020

We have served as NEP's auditor since 2014.

NEXTERA ENERGY PARTNERS, LP

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(millions, except per unit amounts)



	Years Ended December 31,
	2019			2018			2017
OPERATING REVENUES
Renewable energy sales	$	645		$	551		$	613
Texas pipelines service revenue	210			220			194
Total operating revenues^(a)	855			771			807
OPERATING EXPENSES
Operations and maintenance^(b)	336			257			248
Depreciation and amortization	259			203			226
Taxes other than income taxes and other	27			21			21
Gain on disposal of Canadian Holdings	—			(153		)	—
Total operating expenses	622			328			495
OPERATING INCOME	233			443			312
OTHER INCOME (DEDUCTIONS)
Interest expense	(702		)	(248		)	(199		)
Benefits associated with differential membership interests - net	—			—			119
Equity in earnings of equity method investees	38			41			40
Equity in earnings (losses) of non-economic ownership interests	(4		)	15			11
Other - net	5			22			(2		)
Total other deductions - net	(663		)	(170		)	(31		)
INCOME (LOSS) BEFORE INCOME TAXES	(430		)	273			281
INCOME TAX EXPENSE (BENEFIT)	(26		)	6			167
NET INCOME (LOSS)	(404		)	267			114
Net income attributable to preferred distributions	(17		)	(25		)	(3		)
Net loss (income) attributable to noncontrolling interests^(c)	333			(75		)	(175		)
NET INCOME (LOSS) ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP	$	(88	)	$	167		$	(64	)

Earnings (loss) per common unit attributable to NextEra Energy Partners, LP - basic	$	(1.51	)	$	3.05		$	(1.18	)
Earnings (loss) per common unit attributable to NextEra Energy Partners, LP - assuming dilution	$	(1.51	)	$	2.91		$	(1.18	)

____________________


(a)	Includes related party revenues of approximately $8 million, $4 million and $9 million for 2019, 2018 and 2017, respectively.

(b)

Includes operations and maintenance (O&M) expenses related to renewable energy projects of approximately $182 million, $128 million and $132 million and O&M expenses related to the Texas pipelines of $47 million, $45 million and $44 million for 2019, 2018 and 2017, respectively. Total O&M expenses presented includes related party amounts of approximately $116 million, $97 million and $88 million for 2019, 2018 and 2017, respectively.


(c)	For 2017, net income attributable to noncontrolling interests includes the pre-acquisition net income of the common control acquisitions. See Note 2 - Basis of Presentation.

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(millions)



	Years Ended December 31,
	2019			2018			2017
NET INCOME (LOSS)	$	(404	)	$	267		$	114
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Reclassification from accumulated other comprehensive income (loss) to net income (net of $0 tax benefit, $1 tax expense and $2 tax expense, respectively)	(6		)	2			5
Net unrealized gains (losses) on foreign currency translation (net of $0, $1 tax benefit and $1 tax expense, respectively)	—			(6		)	7
Other comprehensive income related to equity method investee (net of $0 tax expense, $2 tax benefit and $1 tax benefit, respectively)	2			6			5
Total other comprehensive income (loss), net of tax	(4		)	2			17
Impact of disposal of Canadian Holdings (net of $0, $3 tax expense, and $0, respectively)	—			107			—
COMPREHENSIVE INCOME (LOSS)	(408		)	376			131
Comprehensive income attributable to preferred distributions	(17		)	(25		)	(3		)
Comprehensive loss (income) attributable to noncontrolling interests^(a)	335			(192		)	(188		)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP	$	(90	)	$	159		$	(60	)

____________________


(a)	For 2017, comprehensive income attributable to noncontrolling interests includes the pre-acquisition comprehensive income of the common control acquisitions. See Note 2 - Basis of Presentation.

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

CONSOLIDATED BALANCE SHEETS

(millions)



	December 31,
	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	128		$	147
Accounts receivable	79			63
Other receivables	173			17
Due from related parties	17			68
Other current assets	36			45
Total current assets	433			340
Non-current assets:
Property, plant and equipment - net	6,970			6,770
Intangible assets - PPAs - net	1,655			617
Intangible assets - customer relationships - net	627			644
Goodwill	609			584
Investments in equity method investees	1,653			214
Deferred income taxes	172			108
Other non-current assets	137			128
Total non-current assets	11,823			9,065
TOTAL ASSETS	$	12,256		$	9,405
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	122		$	10
Due to related parties	58			45
Current portion of long-term debt	12			707
Accrued interest	40			31
Accrued property taxes	21			19
Other current liabilities	48			47
Total current liabilities	301			859
Non-current liabilities:
Long-term debt	4,132			2,728
Asset retirement obligation	139			95
Derivatives	417			104
Non-current due to related party	34			34
Other non-current liabilities	167			47
Total non-current liabilities	4,889			3,008
TOTAL LIABILITIES	5,190			3,867
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred units (4.7 and 14.0 units issued and outstanding, respectively)	183			548
Common units (65.5 and 56.1 units issued and outstanding, respectively)	2,008			1,804
Accumulated other comprehensive loss	(8		)	(6		)
Noncontrolling interests	4,883			3,192
TOTAL EQUITY	7,066			5,538
TOTAL LIABILITIES AND EQUITY	$	12,256		$	9,405

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions)



	Years Ended December 31,
	2019			2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(404	)	$	267		$	114
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	259			203			226
Intangible amortization - PPAs	72			—			—
Change in value of derivative contracts	323			60			11
Deferred income taxes	(26		)	23			162
Benefits associated with differential membership interests - net	—			—			(119		)
Equity in earnings of equity method investees, net of distributions received	(23		)	8			7
Equity in losses (earnings) of non-economic ownership interests	4			(15		)	(11		)
Gain on disposal of Canadian Holdings	—			(153		)	—
Costs related to retirement of debt - net	153			—			—
Other - net	12			(4		)	11
Changes in operating assets and liabilities:
Other current assets	(17		)	(10		)	(6		)
Other non-current assets	(1		)	5			(3		)
Other current liabilities	(6		)	(26		)	35
Other non-current liabilities	—			4			(14		)
Net cash provided by operating activities	346			362			413
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of membership interests in subsidiaries - net	(2,322		)	(1,283		)	(1,074		)
Capital expenditures	(93		)	(25		)	(349		)
Proceeds from the sale of Canadian Holdings - net	—			517			—
Proceeds from CITCs	—			3			77
Payments from (to) related parties under CSCS agreement - net	54			21			(22		)
Other	12			4			—
Net cash used in investing activities	(2,349		)	(763		)	(1,368		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common units - net	2			86			—
Proceeds from issuance of preferred units - net	—			—			548
Issuances of long-term debt	3,380			750			1,880
Retirements of long-term debt	(2,792		)	(983		)	(1,185		)
Debt issuance costs	(48		)	—			(24		)
Capped call transaction including fees	—			—			(13		)
Partners/Members' contributions	14			36			316
Partners/Members' distributions	(362		)	(281		)	(307		)
Preferred unit distributions	(21		)	(22		)	—
Proceeds on sale of Class B noncontrolling interests - net	1,788			750			—
Payments to Class B noncontrolling interests investors	(23		)	—			—
Proceeds from differential membership investors	66			56			33
Payments to differential membership investors	(30		)	(21		)	(25		)
Other, primarily change in amounts due to related parties	(5		)	—			(78		)
Payment of acquisition holdback	—			—			(186		)
Net cash provided by financing activities	1,969			371			959
Effect of exchange rate changes on cash	—			(2		)	3
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(34		)	(32		)	7
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - BEGINNING OF YEAR	166			198			191
CASH, CASH EQUIVALENTS AND RESTRICTED CASH - END OF YEAR	$	132		$	166		$	198
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized	$	162		$	171		$	163
Cash paid for income taxes	$	1		$	5		$	—
Members’ noncash contributions for construction costs and other	$	11		$	—		$	13
Change in noncash investments in equity method investees - net	$	12		$	2		$	7
Partners/Members' noncash distributions	$	3		$	17		$	—
Asset retirement obligation additions	$	—		$	—		$	3
Accrued but not paid for capital and other expenditures	$	10		$	1		$	2
Noncash member contribution upon transition from predecessor method	$	—		$	—		$	3
Accrued preferred distributions	$	2		$	6		$	3

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(millions)



	Preferred Units					Common Units
	Units		Amount			Units	Amount				Accumulated Other Comprehensive Income (Loss)			Non-controlling Interests				Total Equity
Balances, December 31, 2016	—		$	—		54.2	$	1,747			$	(3	)	$	833			$	2,577
Limited partners/related party contribution and transition	—		—			—	51			^(a)	—			(3		)	^(b)	48
Issuance of common units - net	—		—			0.1	1				—			—				1
Acquisitions of membership interests in subsidiaries and equity method investee	—		—			—	—				—			(1,074		)		(1,074		)
Issuance of preferred units - net	14		548			—	—				—			—				548
Capped call transaction	—		—			—	(13		)		—			—				(13		)
Related party note receivable	—		—			—	—				—			7				7
Net income^(c)	—		3			—	(64		)		—			175				114
Other comprehensive income	—		—			—	—				4			13				17
Related party contributions	—		—			—	—				—			321				321
Related party distributions	—		—			—	—				—			(226		)		(226		)
Changes in non-economic ownership interests	—		—			—	—				—			(12		)		(12		)
Distributions to unitholders^(d)	—		(3		)	—	(81		)		—			—				(84		)
Balances, December 31, 2017	14		548			54.3	1,641				1			34				2,224
Limited partners/related party contribution and transition	—		—			—	(3		)	^(a)	1			—				(2		)
Issuance of common units - net	—		—			1.8	86				—			—				86
Acquisition of subsidiaries with differential membership interests	—		—			—	—				—			941				941
Related party note receivable	—		—			—	—				—			31				31
Net income	—		25			—	167				—			75				267
Other comprehensive income (loss)	—		—			—	—				(10		)	12				2
Related party contributions	—		—			—	—				—			4				4
Related party distributions	—		—			—	—				—			(204		)		(204		)
Changes in non-economic ownership interests	—		—			—	—				—			(7		)		(7		)
Other differential membership investment activity	—		—			—	—				—			35				35
Distributions to unitholders^(d)	—		(25		)	—	(94		)		—			—				(119		)
Sale of Class B noncontrolling interest - net	—		—			—	—				—			750				750
Disposal of Canadian Holdings	—		—			—	—				2			105				107
Adoption of accounting standards update	—		—			—	7				—			1,416				1,423
Balances, December 31, 2018	14.0		548			56.1	1,804				(6		)	3,192				5,538
Issuance of common units - net^(e)	(9.3	)	(365		)	9.4	407				—			—				42
Acquisition of subsidiary with noncontrolling ownership interests	—		—			—	—				—			462				462
Related party note receivable	—		—			—	—				—			2				2
Net income (loss)	—		17			—	(88		)		—			(333		)		(404		)
Other comprehensive loss	—		—			—	—				(2		)	(2		)		(4		)
Related party contributions	—		—			—	—				—			23				23
Related party distributions	—		—			—	—				—			(249		)		(249		)
Changes in non-economic ownership interests	—		—			—	—				—			(12		)		(12		)
Other differential membership investment activity	—		—			—	—				—			36				36
Payments to Class B noncontrolling interest investors	—		—			—	—				—			(23		)		(23		)
Distributions to unitholders^(d)	—		(17		)	—	(115		)		—			—				(132		)
Sale of Class B noncontrolling interests - net	—		—			—	(2		)		—			1,788				1,786
Other - net	—		—			—	2				—			(1		)		1
Balances, December 31, 2019	4.7		$	183		65.5	$	2,008			$	(8	)	$	4,883			$	7,066

____________________________

(a)

Deferred tax asset recognized by NEP related to NEP equity issuances and/or acquisition of subsidiary membership interests.

(b)

Related party noncash contributions, net, upon transition from predecessor accounting method.

(c)

Net income attributable to noncontrolling interests includes the pre-acquisition net income of the common control acquisitions. See Note 2 - Basis of Presentation.

(d)

Distributions per common unit were $1.9675, $1.7125 and $1.49 for the years ended December 31, 2019, 2018, and 2017, respectively. At December 31, 2019, approximately $2 million of preferred unit distributions were accrued and are payable in February 2020.

(e)

In 2019, NEP converted approximately 9.3 million Series A convertible preferred units into NEP common units on a one-for-one basis and recognized a deferred tax asset of approximately $39 million related to the issuance of NEP common units.

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2019, 2018 and 2017

1. Organization and Nature of Business

NextEra Energy Partners, LP (NEP) was formed as a Delaware limited partnership on March 6, 2014 as an indirect wholly owned subsidiary of NextEra Energy, Inc. (NEE), a Florida corporation. NEP was formed to be a growth-oriented limited partnership that would acquire, manage and own contracted clean energy projects with stable long-term cash flows.

On July 1, 2014, NEP completed its initial public offering (IPO). NEP used the proceeds from the IPO to purchase common units of NextEra Energy Operating Partners, LP (NEP OpCo) from NextEra Energy Equity Partners, LP (NEE Equity), a limited partnership formed under the laws of the State of Delaware and an indirect wholly owned subsidiary of NEE, and to purchase NEP OpCo common units from NEP OpCo.

NEP OpCo is a limited partnership with a general partner and limited partners. NEP consolidates the results of NEP OpCo and its subsidiaries because of its controlling interest in the general partner of NEP OpCo. At December 31, 2019, NEP owned an approximately 39.2% limited partner interest in NEP OpCo's common units and NEE Equity owned a noncontrolling 60.8% limited partner interest in NEP OpCo's common units.

In connection with the IPO, NEP acquired a portfolio of clean, contracted renewable energy assets including wind and solar energy generating facilities located in the United States (U.S.) and Canada. Subsequent to the IPO, NEP expanded its portfolio through the acquisition of additional interests in wind and solar generating facilities from NextEra Energy Resources, LLC (NEER), as well as the 2015 acquisition of interests in seven natural gas pipeline assets located in Texas (Texas pipelines) and the 2019 acquisition of an interest in a natural gas pipeline located in Pennsylvania from third parties. See Note 3. In 2018, NEP's interests in wind and solar energy generating facilities located in Canada were sold to a third party. See Note 2 - Disposal of Canadian Holdings.

2. Summary of Significant Accounting and Reporting Policies

Basis of Presentation - NEP’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., or GAAP. The consolidated financial statements include NEP’s accounts and operations and those of its subsidiaries in which NEP has a controlling interest. The acquisitions from NEER in 2017 described in Note 3 (the common control acquisitions) were a transfer of assets between entities under common control, which required them to be accounted for as if the transfers occurred since the inception of common control, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, the consolidated financial statements were retrospectively adjusted to include the historical results of the common control acquisitions prior to their respective acquisition dates. Adjustments related to the historical results of the common control acquisitions were attributable to noncontrolling interests for all periods prior to the date the project was acquired by NEP.

All intercompany transactions have been eliminated in consolidation. Certain amounts included in prior years' consolidated financial statements have been reclassified to conform to the current year's presentation. The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Disposal of Canadian Holdings - In June 2018, a subsidiary of NEP completed the sale of NextEra Energy Canada Partners Holdings, ULC and subsidiaries (Canadian Holdings) for cash proceeds of approximately CAD $740 million (USD $563 million at June 29, 2018), subject to post-closing working capital adjustments of approximately $1 million. In addition, the purchaser assumed approximately $676 million of existing debt. Canadian Holdings owned four wind generation facilities and two solar generation facilities located in Ontario, Canada with a generating capacity totaling approximately 396 megawatts (MW). NEP recognized a gain of approximately $153 million ($201 million after tax). Income before income taxes associated with Canadian Holdings, excluding the financial statement impacts resulting from the sale in 2018, was approximately $47 million and $68 million for the years ended December 31, 2018 and 2017, respectively.

Revenue Recognition - Revenue is generated primarily from various non-affiliated parties under long-term power purchase agreements, and prior to the sale of Canadian Holdings in 2018, Feed-in-Tariff agreements and Renewable Energy Standard Offer Program agreements (collectively, PPAs), and natural gas transportation agreements. Revenue is recognized as energy and any related renewable energy attributes are delivered, which is when revenue is earned based on energy delivered at rates stipulated in the respective PPAs, or natural gas transportation services are performed. See Note 4.

In 2019, 2018 and 2017, approximately $125 million, $234 million and $275 million, respectively, of NEP's consolidated revenues were attributable to foreign countries, primarily related to its contract with a Mexican counterparty and, prior to the sale of Canadian Holdings in 2018, its Canadian operations.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Income Taxes - NEP recognizes in income its applicable ownership share of U.S. income taxes due to the disregarded tax status of substantially all of the U.S. projects under NEP OpCo. Prior to the sale of Canadian Holdings, NEP's former Canadian subsidiaries were all Canadian taxpayers, and therefore NEP recognized in income all of the Canadian taxes. Net income or loss attributable to noncontrolling interests includes minimal U.S. taxes and, prior to the sale, NEER's applicable ownership share of Canadian taxes.

For periods through December 31, 2017, when NEP acquired a NEER project, income taxes were calculated on the predecessor method using the separate return method applied to the group of renewable energy projects acquired. As a result of the governance changes discussed in Note 3, beginning in January 2018, acquisitions from NEER are no longer treated as common control acquisitions, and income taxes are calculated on the successor method under which taxes are calculated for NEP as a single taxpaying corporation for U.S. federal and state income taxes (based on its election to be taxed as a corporation).

Foreign Operations and Currency Translation - NEP’s reporting currency is the U.S. dollar. Prior to the disposal of Canadian Holdings, the functional currency for the Canadian project companies was the Canadian dollar because Canada was the primary economic environment in which they conducted their Canadian operations. The assets and liabilities of the Canadian project companies were translated to U.S. dollars at exchange rates at the balance sheet date. The income and expenses of the Canadian project companies were translated to U.S. dollars at exchange rates in effect during each respective period. The translation adjustment was recorded in accumulated other comprehensive income (loss) (AOCI).

Equity - Equity reflects the financial position of the parties with an ownership interest in the consolidated financial statements. NextEra Energy Partners GP, Inc. has a total equity interest in NEP of $10,000 at December 31, 2019 and 2018.

Limited partners' equity in common units at December 31, 2019 and 2018 reflects the investment of NEP common unitholders, changes to net income attributable to NEP, distributions of available cash to common unitholders and other contributions from or distributions to NEP common unitholders. Accumulated other comprehensive loss at December 31, 2019 and 2018 reflects comprehensive income (loss) attributable to NEP.

Noncontrolling Interests - Noncontrolling interests represents the portion of net assets in consolidated entities that are not owned by NEP and are reported as a component of equity on NEP’s consolidated balance sheets. At December 31, 2019, NEE Equity's 60.8% noncontrolling interest in NEP OpCo, a non-affiliated party's 10% interest in one of the Texas pipelines, NEER's approximately 50% noncontrolling ownership interest in Silver State, the interests related to differential membership interests discussed below and the Class B noncontrolling ownership interests discussed below are reflected as noncontrolling interests on NEP's consolidated balance sheets.

Prior to being acquired by NEP, certain subsidiaries of NEER sold Class B membership interests in entities that have ownership interests in 20 wind projects (differential membership interests) to third-party investors. Although the third-party investors own equity interests in the wind projects, NEP retains a controlling interest in the entities as of December 31, 2019 and therefore presents the differential membership interests as noncontrolling interests. The third-party investors are allocated earnings, tax attributes and cash flows in accordance with the respective limited liability company agreements. Those economics are allocated primarily to the third-party investors until they receive a targeted return (the flip date) and thereafter to NEP. NEP has the unilateral right to call the third-party interests at specified amounts if and when the flip date occurs. Pursuant to previous accounting guidance, prior to 2018, the proceeds received on the sale of the differential membership interests were deferred and recorded as a liability on NEP's consolidated balance sheets. The deferred amount was being recognized in benefits associated with differential membership interests - net in NEP's consolidated statements of income (loss) as the third-party investors received their portion of the economic attributes. NEP operates and manages the 20 wind projects, and consolidates the entities that directly and indirectly own the 20 wind projects.

During 2018 and 2019, subsidiaries of NEP sold Class B noncontrolling membership interests in NEP Renewables, LLC (NEP Renewables), NEP Renewables II, LLC (NEP Renewables II), NextEra Energy Partners Pipelines, LLC (NEP Pipelines) and South Texas Midstream, LLC (STX Midstream) (collectively, Class B noncontrolling ownership interests). See Note 11 - Equity. The NEP subsidiaries selling the Class B noncontrolling ownership interests retain controlling interests in the related entities as of December 31, 2019 and therefore NEP presents the Class B noncontrolling ownership interests as noncontrolling interests.

For the differential membership interests and Class B noncontrolling interests, NEP has determined the allocation of economics between the controlling party and third-party investor should not follow the respective ownership percentages for each investment but rather the hypothetical liquidation of book value (HLBV) method based on the governing provisions in each respective limited liability company agreement. Under the HLBV method, the amounts of income and loss attributable to the noncontrolling interests reflects changes in the amount the owners would hypothetically receive at each balance sheet date under the respective liquidation provisions, assuming the net assets of these entities were liquidated at the recorded amounts, after taking into account any capital transactions, such as contributions and distributions, between the entities and the owners. At the point in time that the third-party, in hypothetical liquidation, would achieve its targeted return, NEP attributes the additional hypothetical proceeds to the differential membership interests based on the call price.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the noncontrolling interests, other than the differential membership interests and the Class B noncontrolling interests, net income (loss) is allocated based on the respective ownership percentages. Thus, the impact of the net income (loss) attributable to the Class B noncontrolling ownership interests and the differential membership interests are allocated to NEE Equity's noncontrolling ownership interest and the net income attributable to NEP based on their respective ownership percentage of NEP OpCo. Distributions related to the noncontrolling interests, other than the differential membership interests and Class B noncontrolling interests, are reflected as Partners/Members' distributions in NEP's consolidated statements of cash flows. Details of the activity in noncontrolling interests for the years ended December 31, 2019 and 2018 are below:



	Class B Noncontrolling Ownership Interests			Differential Membership Interests			Noncontrolling Ownership Interests in NEP OpCo, Silver State and Texas pipeline			Total Noncontrolling Interests
	(millions)
Balances, December 31, 2017	$	—		$	—		$	34		$	34
Sale of Class B noncontrolling interest - net	750			—			—			750
Acquisition of subsidiaries with differential membership interests	—			941			—			941
Related party note receivable	—			—			31			31
Net income (loss) attributable to noncontrolling interests^(a)	1			(370		)	444			75
Other comprehensive income	—			—			12			12
Related party contributions	—			—			4			4
Related party distributions	—			—			(204		)	(204		)
Changes in non-economic ownership interests	—			—			(7		)	(7		)
Differential membership investment contributions, net of distributions	—			35			—			35
Disposal of Canadian Holdings	—			—			105			105
Adoption of accounting standards update	—			1,413			3			1,416
Balances, December 31, 2018	751			2,019			422			3,192
Sales of Class B noncontrolling interests - net	1,788			—			—			1,788
Acquisition of subsidiary with noncontrolling interests	—			—			462			462
Related party note receivable	—			—			2			2
Net income (loss) attributable to noncontrolling interests	112			(257		)	(188		)	(333		)
Other comprehensive loss	—			—			(2		)	(2		)
Related party contributions	—			—			23			23
Related party distributions	—			—			(249		)	(249		)
Changes in non-economic ownership interests	—			—			(12		)	(12		)
Differential membership investment contributions, net of distributions	—			36			—			36
Payments to Class B noncontrolling interest investors	(23		)	—			—			(23		)
Other	—			—			(1		)	(1		)
Balances, December 31, 2019	$	2,628		$	1,798		$	457		$	4,883

____________________


(a)	Net loss attributable to differential membership interests includes approximately $231 million ($211 million after tax) related to the reduction of differential membership interests as a result of the change in federal corporate income tax rates effective January 1, 2018.

Property, Plant and Equipment - net - Property, plant and equipment consists primarily of development, engineering and construction costs for the renewable energy assets, equipment, land, substations, transmission lines and pipeline facilities. Property, plant and equipment, excluding land and perpetual rights-of-way, is recorded at cost and depreciated on a straight-line basis over the estimated useful lives ranging from three to 50 years, commencing on the date the assets are placed in service or acquired. See Note 8. Maintenance and repairs of property, plant and equipment are charged to O&M expense as incurred.

Property, plant and equipment - net on NEP's consolidated balance sheets includes construction work in progress which reflects construction materials, other equipment, third-party engineering costs, capitalized interest and other costs directly associated with the development and construction of the various projects. Upon commencement of plant or pipeline operations, costs associated with construction work in progress are transferred to the appropriate category in property, plant and equipment - net.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Convertible investment tax credits (CITCs) of approximately $703 million at both December 31, 2019 and 2018, are recorded as a reduction in property, plant and equipment - net on NEP's consolidated balance sheets and are amortized as a corresponding reduction to depreciation expense over the estimated life of the related asset. At December 31, 2019, other receivables on NEP's consolidated balance sheets includes a CITC receivable of approximately $124 million associated with one of its solar projects. At December 31, 2019, corresponding liabilities of approximately $100 million and $12 million related to the CITC payments required to be paid to the third party who constructed the project are reflected as accounts payable and accrued expenses and other current liabilities, respectively, and $12 million of CITC payments to be paid to NEER are reflected as current due to related parties on NEP's consolidated balance sheets.

Cash and Cash Equivalents - Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. NEP primarily holds such investments in money market funds.

Accounts Receivable and Allowance for Doubtful Accounts - Accounts receivable are reported at the invoiced or estimated amount adjusted for any write-offs and any estimated allowance for doubtful accounts on NEP's consolidated balance sheets. The allowance for doubtful accounts is reviewed periodically based on amounts past due and significance. There was no allowance for doubtful accounts recorded at December 31, 2019 and 2018.

Restricted Cash - At December 31, 2019 and 2018, NEP had approximately $3 million and $8 million, respectively, of restricted cash included in other current assets and, in 2018, approximately $11 million of restricted cash included in other non-current assets on NEP's consolidated balance sheets. Restricted cash at December 31, 2019 is primarily related to collateral deposits from a counterparty and, at December 31, 2018, is primarily related to amounts held by certain subsidiaries to pay for certain capital or operating expenditures, as well as to fund required equity contributions pursuant to restrictions contained in the subsidiaries' debt agreements. Restricted cash reported as current assets are recorded as such based on the anticipated use of these funds.

Concentration of Credit Risk - Financial instruments which potentially subject NEP to concentrations of credit risk consist primarily of accounts receivable and derivative instruments. Accounts receivable are comprised primarily of amounts due from various non-affiliated parties who are counterparties to the PPAs or natural gas transportation agreements. The majority of NEP's counterparties are in the energy industry, and this concentration may impact the overall exposure to credit risk, either positively or negatively, in that the counterparties may be similarly affected by changes in economic, industry or other conditions. If any of these customers’ receivable balances should be deemed uncollectible, it could have a material adverse effect on NEP’s consolidated results of operations and financial condition. Substantially all amounts due from such counterparties at December 31, 2019 have been collected.

During 2019, NEP derived approximately 16% and 15% of its consolidated revenue from its contracts with Pacific Gas and Electric Company (PG&E) and Mex Gas Supply S.L., respectively. See Note 15 - PG&E Bankruptcy.

Inventories - Spare parts inventories are carried at the lower of weighted-average cost and net realizable value and are included in other current assets on NEP’s consolidated balance sheets. Spare parts inventories were approximately $20 million and $19 million at December 31, 2019 and 2018, respectively.

Impairment of Long-Lived Assets and Finite-Lived Intangible Assets - Long-lived assets that are held and used and finite-lived intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset. The impairment loss to be recognized is the amount by which the carrying value of the asset exceeds the asset's fair value. In most instances, the fair value is determined by discounting estimated future cash flows using an appropriate interest rate. During the years ended December 31, 2019 and 2018, no impairment adjustments were necessary.

Business Combinations - For projects acquired in a business combination, NEP allocates the cost of the acquisition to assets acquired and liabilities assumed based on fair values as of the acquisition date. Goodwill acquired in connection with business combinations represents the excess of consideration over the fair value of net assets acquired. Certain assumptions and estimates are employed in determining the fair value of assets acquired and evaluating the fair value of liabilities assumed. See Note 3.

Goodwill and Indefinite-Lived Intangible Assets - Goodwill and indefinite-lived intangible assets are assessed for impairment at least annually by applying a fair value-based analysis. NEP completed the annual impairment test for goodwill and indefinite-lived intangibles using an assessment date of October 1 and determined, based on the results, that no goodwill impairment charge was required. As a result of the sale of Canadian Holdings discussed above, goodwill was reduced by approximately $44 million during 2018.

Intangible Asset - Customer Relationships - At December 31, 2019 and 2018, NEP's consolidated balance sheets reflect intangible asset - customer relationships related to the acquisition of the Texas pipelines in 2015. Intangible asset - customer relationships are amortized on a straight-line basis over the estimated useful life of approximately 40 years. For each of the years ended December 31, 2019, 2018 and 2017, amortization expense was approximately $17 million and is expected to be approximately $17 million in each of the next five years.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Intangible Asset - PPAs - At December 31, 2019 and 2018, NEP's consolidated balance sheets reflect intangible asset - PPAs primarily related to the acquisitions from NEER in 2019 and 2018 (see Note 3). Intangible asset - PPAs are amortized into operating revenues on a straight-line basis over the remaining contract terms of the related PPAs, which approximates the period giving rise to the value. At December 31, 2019, amortization of the intangible asset - PPAs is expected to be approximately $103 million in each of the next five years.

Derivative Instruments and Hedging Activities - Derivative instruments, when required to be marked to market, are recorded on NEP’s consolidated balance sheets as either an asset or a liability measured at fair value. See Note 7.

Fair Value Measurements - NEP uses 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 or comparable assets and liabilities for those assets and liabilities that are measured on a recurring basis. Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the fair value measurement of its assets and liabilities and the placement of those assets and liabilities within the fair value hierarchy levels. See Note 6.

Long-term Debt Costs - NEP recognizes interest expense using the effective interest method over the life of the related debt. Certain of NEP’s debt obligations include escalating interest rates that are incorporated into the effective interest rate for the related debt. Deferred interest includes interest expense recognized in excess of the interest payments accrued for the related debt’s stated interest payments and is recorded in other non-current liabilities on NEP’s consolidated balance sheets. Debt issuance costs include fees and costs incurred to obtain long-term debt and are amortized over the life of the related debt using the effective interest rate established at debt issuance. NEP incurred approximately $42 million of debt issuance costs during the year ended December 31, 2019. The amortization of debt issuance costs totaled approximately $11 million, $12 million and $11 million for the years ended December 31, 2019, 2018 and 2017, respectively, and is included in interest expense in NEP’s consolidated statements of income (loss). In addition, NEP wrote-off approximately $22 million of debt issuance costs during 2019 due to the retirement of the related debt. See Note 11 - Debt.

Asset Retirement Obligations - Asset retirement obligations are those for which a legal obligation exists under laws, statutes, and written or oral contracts, including obligations arising under the doctrine of promissory estoppel, and for which the timing or method of settlement may be conditioned on a future event.

NEP accounts for asset retirement obligations and conditional asset retirement obligations (collectively, AROs) under accounting guidance that requires a liability for the fair value of an ARO to be recognized in the period in which it is incurred if it can be reasonably estimated, with the offsetting associated asset retirement costs capitalized as part of the carrying amount of the long-lived asset. The asset retirement cost is subsequently allocated to expense using a systematic and rational method over the asset’s estimated useful life. Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense, which is included in depreciation and amortization expense in NEP’s consolidated statements of income (loss). Changes resulting from revisions to the timing or amount of the original estimate of cash flows are recognized as an increase or a decrease in the asset retirement cost, or income when the asset retirement cost is depleted.

NEP recorded accretion expense of approximately $6 million, $4 million and $4 million in the years ended December 31, 2019, 2018 and 2017. Additional AROs were established amounting to approximately $38 million in 2019 and $24 million in 2018 related to the acquisitions from NEER (see Note 3), partly offset by a decrease in 2018 of $13 million related to the sale of Canadian Holdings.

Investments in Unconsolidated Entities - NEP accounts for the investments in its unconsolidated entities under the equity method. NEP’s share of earnings (losses) in the unconsolidated entities is included in equity in earnings of equity method investees and equity in earnings (losses) of non-economic ownership interests in NEP's consolidated statements of income (loss). NEP records losses of the unconsolidated entities only to the extent of its investment unless there is an obligation to provide further financial support for the investee. All equity in earnings (losses) of the non-economic ownership interests is allocated to net income attributable to noncontrolling interests. See Note 9 and Note 10.

Variable Interest Entities (VIEs) - An entity is considered to be a VIE when its total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, or its equity investors, as a group, lack the characteristics of having a controlling financial interest. A reporting company is required to consolidate a VIE as its primary beneficiary when it has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. NEP evaluates whether an entity is a VIE whenever reconsideration events as defined by the accounting guidance occur. See Note 10.

Leases - NEP determines if an arrangement is a lease at inception. NEP recognizes a right-of-use (ROU) asset and a lease liability for operating leases by recognizing and measuring leases at the commencement date based on the present value of lease payments over the lease term. NEP has elected not to apply the recognition requirements to short-term leases and not to separate nonlease

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

components from associated lease components for substantially all classes of underlying assets. ROU assets are included primarily in noncurrent other assets and lease liabilities are included in current and noncurrent other liabilities on NEP's consolidated balance sheets. Operating lease expense is included in O&M expense and amortization expense is included in depreciation and amortization expense in NEP’s consolidated statements of income (loss). See Note 14.

3. Acquisitions

In May 2017, an indirect subsidiary of NEP completed the acquisition from NEER of Golden West Wind Holdings, LLC for approximately $238 million, plus working capital of $4 million and the assumption of $184 million in existing liabilities related to differential membership interests. Golden West Wind Holdings, LLC indirectly owns an approximately 249 MW wind generation facility located in Colorado.

In November 2017, a subsidiary of NEP completed the acquisition from NEER of (1) Javelina Wind Funding, LLC, which indirectly owns an approximately 250 MW wind generation facility located in Texas; (2) Nokota Wind Holdings, LLC, which indirectly owns two wind generation facilities with a combined generating capacity of 299 MW located in North Dakota; and (3) an additional indirect approximately 26% interest in Desert Sunlight Investment Holdings, LLC (Desert Sunlight), for approximately $812 million, plus working capital of $20 million and the assumption of $459 million in existing liabilities related to differential membership interests. NEER retained an interest in Desert Sunlight which owns two project entities, that together make up the Desert Sunlight Solar Energy Center, a 550 MW solar generation plant located in California, and remains the managing member.

The acquisitions from NEER in 2017 discussed above are collectively referred to as the common control acquisitions. The common control acquisitions were transfers of assets between entities under common control, which require them to be accounted for as if the transfers occurred since the inception of common control, with prior periods retrospectively adjusted to furnish comparative information. Accordingly, NEP's consolidated financial statements were retrospectively adjusted to include the historical results and financial position of the common control acquisitions prior to their respective acquisition dates.

In 2017, NEP and NEP GP implemented governance changes that, among other things, enhanced NEP unitholder governance rights. The new governance structure established a NEP board of directors whereby NEP unitholders have the ability to nominate and elect board members, subject to certain limitations and requirements, which elected board members commenced service in January 2018. As a result of these governance changes, beginning in January 2018, acquisitions from NEER are no longer treated as common control acquisitions.

In December 2018, a subsidiary of NEP completed the acquisition from NEER of NEP Renewables, which owns (1) Breckinridge Wind Class A Holdings, LLC, which indirectly owns an approximately 98 MW wind generation facility located in Oklahoma, (2) Carousel Wind Holdings, LLC, which indirectly owns an approximately 150 MW wind generation facility located in Colorado, (3) Monarch Wind Holdings, LLC, which indirectly owns two wind generation facilities with a combined generating capacity of approximately 450 MW located in Texas and Oklahoma, (4) Mountain View Solar Holdings, LLC, which indirectly owns a 20 MW solar generation facility located in Nevada, (5) Pacific Plains Wind Class A Holdings, LLC, which indirectly owns three wind generation facilities with a combined generating capacity of approximately 255 MW, located in Indiana, Nebraska and California and (6) Palomino Wind Holdings, LLC, which indirectly owns three wind generation facilities located in Kansas with a combined generating capacity of approximately 415 MW. The purchase price included approximately $1,275 million in cash consideration plus working capital of $29 million, and included the assumption of approximately $941 million in existing noncontrolling interests related to differential membership interests and $38 million of existing debt. NEP incurred approximately $1 million in acquisition-related costs during the year ended December 31, 2018 which are reflected in other - net in NEP's consolidated statements of income (loss).

Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed on December 20, 2018 based on their estimated fair value. All fair value measurements of assets acquired and liabilities assumed, including the noncontrolling interests, were based on significant estimates and assumptions, including Level 3 (unobservable) inputs, which require judgment. Estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting risk inherent in future cash flows and future market prices. The amount by which the total net identifiable assets at fair value exceeded the total consideration transferred is reflected in other - net in NEP's consolidated statements of income (loss) during the year ended December 31, 2018.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the amounts recognized by NEP for the estimated fair value of assets acquired and liabilities assumed for the acquisition of NEP Renewables:



	As of December 20, 2018
	(millions)

Total consideration transferred	$	1,304
Identifiable assets acquired and liabilities assumed
Cash	$	17
Accounts receivable and prepaid expenses	25
Property, plant and equipment - net	1,675
Intangible assets – PPAs	610
Other non-current assets	13
Accounts payable, accrued expenses and other current liabilities	(13		)
Long-term debt, including current portion	(37		)
Other non-current liabilities	(38		)
Noncontrolling interests at fair value	(941		)
Total net identifiable assets, at fair value	$	1,311

The amounts of the NEP Renewables' revenues, operating income, net income and net income attributable to NEP included in NEP’s consolidated statements of income for the period from December 20, 2018 through December 31, 2018 were not material.

In June 2019, an indirect subsidiary of NEP completed the acquisition from NEER (June 2019 acquisition) of the following:


•	100% of the membership interests in Ashtabula Wind II, LLC, a project company that owns a 120 MW wind generation facility located in North Dakota;


•	100% of the membership interests in Garden Wind, LLC, a project company that owns a 150 MW wind generation facility (Story County II) located in Iowa;


•	100% of the membership interests in White Oak Energy Holdings, LLC, which owns 100% of the membership interests of White Oak Energy LLC, which owns a 150 MW wind generation facility located in Illinois;


•	100% of the Class C membership interests in Rosmar Holdings, LLC (Rosmar), which represents a 49.99% noncontrolling ownership interest in two solar generation facilities, Marshall and Roswell, with a total combined generating capacity of approximately 132 MW located in Minnesota and New Mexico, respectively; and


•	49.99% of the membership interests, representing a controlling ownership interest, in Silver State South Solar, LLC (Silver State), which indirectly owns a 250 MW solar generation facility located in Nevada.

NEER retained ownership interests in Rosmar and Silver State and remains the managing member of Rosmar. Thus, NEP's interest in Rosmar is reflected within investments in equity method investees on the consolidated balance sheets. NEER's remaining interest in Silver State is reflected within noncontrolling interests on the consolidated balance sheets (see Note 2 - Noncontrolling Interests).

The purchase price included approximately $1,020 million in cash consideration, plus working capital of $12 million. Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed on June 11, 2019 based on their estimated fair value. All fair value measurements of assets acquired and liabilities assumed were based on significant estimates and assumptions, including Level 3 (unobservable) inputs, which require judgment. Estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting risk inherent in future cash flows and future market prices.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the preliminary amounts recognized by NEP for the estimated fair value of assets acquired and liabilities assumed in the June 2019 acquisition:



	As of June 11, 2019
	(millions)
Total consideration transferred	$	1,032
Identifiable assets acquired and liabilities assumed
Cash	$	4
Accounts receivable, other receivables and prepaid expenses	159
Property, plant and equipment – net	400
Intangible assets – PPAs	1,080
Goodwill	14
Other non-current assets	133
Accounts payable, accrued expenses and other current liabilities	(132		)
Other non-current liabilities	(154		)
Noncontrolling interest	(472		)
Total net identifiable assets, at fair value	$	1,032

During 2019, NEP recorded adjustments to the preliminary purchase price allocation based on a final valuation report which increased intangible assets - PPAs, goodwill and other non-current liabilities by approximately $30 million, $11 million and $1 million, respectively, and decreased property, plant and equipment - net and noncontrolling interests by $50 million and $10 million, respectively.

In November 2019, Meade Pipeline Investment, LLC (the Meade purchaser), an indirect subsidiary of NEP, completed the acquisition of all of the ownership interests in Meade Pipeline Co LLC (Meade), which owns an approximately 39.2% aggregate ownership interest in the Central Penn Line (CPL), a 185-mile natural gas pipeline that operates in Pennsylvania, and a 40% ownership interest in an expansion project of the gas pipeline. The purchase price included cash consideration of $1,280 million. NEP recorded an investment in equity method investee of approximately $1,296 million after adjusting for working capital, other closing items and direct acquisition costs. In addition, NEP expects to fund approximately $90 million of estimated future capital expenditures related to the expansion project. NEP's indirect ownership interest in Meade, including Meade's ownership interests in the CPL and the related expansion project, is reflected as investment in equity method investees. See Note 9.

Supplemental Unaudited Pro forma Results of Operations

NEP’s pro forma results of operations in the combined entity had the December 2018 acquisition of NEP Renewables been completed on January 1, 2017 are as follows:



	Years Ended December 31,
	2018		2017
	(millions)
Unaudited pro forma results of operations:
Pro forma revenues	$	878	$	892
Pro forma operating income	$	456	$	316
Pro forma net income	$	254	$	178
Pro forma net income (loss) attributable to NEP	$	219	$	(62	)

The unaudited pro forma consolidated results of operations include adjustments to:


•	reflect the historical results of NEP Renewables beginning on January 1, 2017;


•	reflect the estimated depreciation and amortization expense based on the estimated fair value of property, plant and equipment - net and the intangible assets - PPAs;


•	reflect allocations of income to noncontrolling interests related to the financing transaction to fund the acquisition; and


•	reflect related income tax effects.

The unaudited pro forma information is not necessarily indicative of the results of operations that would have occurred had the transaction been made at the beginning of the periods presented or the future results of the consolidated operations.

4. Revenue

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. NEP's operating revenues are

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

generated primarily from various non-affiliated parties under PPAs and natural gas transportation agreements. NEP's operating revenues from contracts with customers are partly offset by the amortization of intangible assets - PPAs. Revenue is recognized as energy and any related renewable energy attributes are delivered, based on rates stipulated in the respective PPAs, or natural gas transportation services are performed. NEP believes that the obligation to deliver energy and provide the natural gas transportation services is satisfied over time as the customer simultaneously receives and consumes benefits provided by NEP. In addition, NEP believes that the obligation to deliver renewable energy attributes is satisfied at multiple points in time, with the control of the renewable energy attribute being transferred at the same time the related energy is delivered. Included in NEP’s operating revenues for the years ended December 31, 2019 and 2018 is revenue from contracts with customers for renewable energy sales of approximately $624 million and $513 million, respectively, and revenue from contracts with customers for natural gas transportation services of $207 million and $215 million, respectively. NEP's accounts receivable are primarily associated with revenues earned from contracts with customers. Receivables represent unconditional rights to consideration and reflect the differences in timing of revenue recognition and cash collections. For substantially all of NEP's receivables, regardless of the type of revenue transaction from which the receivable originated, customer and counterparty credit risk is managed in the same manner and the terms and conditions of payment are similar.

NEP recognizes revenues as energy and any related renewable energy attributes are delivered or natural gas transportation services are performed, consistent with the amounts billed to customers based on rates stipulated in the respective PPAs. NEP considers the amount billed to represent the value of energy delivered or services provided to the customer. NEP’s customers typically receive bills monthly with payment due within 30 days.

The contracts with customers related to pipeline service revenues contain a fixed price related to firm natural gas transportation capacity with maturity dates ranging from 2020 to 2035. At December 31, 2019, NEP expects to record approximately $2.1 billion of revenues over the remaining terms of the related contracts as the capacity is provided. Revenues yet to be earned under contracts with customers to deliver energy and any related energy attributes, which have maturity dates ranging from 2030 to 2046, will vary based on the volume of energy delivered. At December 31, 2019, NEP expects to record approximately $212 million of revenues related to the fixed price components of one PPA through 2039 as the energy is delivered.

5. Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (tax reform) 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, NEP performed an analysis to preliminarily revalue its deferred income taxes and included an estimate of changes in the balances in NEP's December 31, 2017 financial statements. At December 31, 2017, the revaluation reduced NEP’s net deferred income tax assets by approximately $100 million, which decreased NEP’s 2017 net income and net income attributable to NEP. At December 31, 2018, NEP had completed the accounting for all of the enactment-date income tax effects of tax reform resulting in no material adjustments in 2018 to the initial provisional amounts recorded. The U.S. Department of Treasury has also released proposed regulations related to the business interest expense limitations and foreign tax credits associated with tax reform. These proposed regulations are not final and are subject to change in the regulatory review process.

The components of income (loss) before income taxes are as follows:



	Years Ended December 31,
	2019			2018		2017
	(millions)
U.S.	$	(430	)	$	62	$	213
Foreign	—			211		68
Income (loss) before income taxes	$	(430	)	$	273	$	281

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The components of income tax expense (benefit) are as follows:



	Years Ended December 31,
	2019			2018			2017
	(millions)
Federal:
Current	$	—		$	4		$	—
Deferred	(20		)	47			143
Total federal	(20		)	51			143
State:
Current	—			(21		)	—
Deferred	(6		)	33			8
Total state	(6		)	12			8
Foreign:
Current	—			—			5
Deferred	—			(57		)	11
Total foreign	—			(57		)	16
Total income tax expense (benefit)	$	(26	)	$	6		$	167

A reconciliation of U.S. federal income tax at the statutory rate to the actual income taxes is as follows:



	Years Ended December 31,
	2019			2018			2017
	(millions)
Income tax expense (benefit) at U.S. statutory rate of 21%, 21% and 35%, respectively	$	(90	)	$	57		$	98
Increases (reductions) resulting from:
Taxes attributable to noncontrolling interests	70			(17		)	(32		)
Tax reform impact on differential membership interests	—			17			—
State income taxes, net of federal tax benefit	(5		)	10			6
Tax credits	(2		)	(1		)	(1		)
Valuation allowance	—			—			(1		)
Effect of flow through entities and foreign tax differential	—			3			(7		)
U.S. taxes on foreign earnings	—			3			7
Impact of tax reform	—			—			100
Adjustments associated with Canadian assets	—			(67		)	—
Other	1			1			(3		)
Income tax expense (benefit)	$	(26	)	$	6		$	167

The effective tax rate was approximately 6%, 2% and 59% for the years ended December 31, 2019, 2018 and 2017, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These items are stated at the enacted tax rates that are expected to be in effect when taxes are actually paid or recovered. NEP believes that it is more likely than not that the deferred tax assets at December 31, 2019 shown in the table below, net of the valuation allowances, will be realized due to sufficient future income.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The income tax effects of temporary differences giving rise to NEP's deferred income tax liabilities and assets are as follows:



	December 31,
	2019			2018
	(millions)
Deferred tax liabilities:
Investment in partnership^(a)	$	(98	)	$	(133	)
Total deferred tax liabilities	(98		)	(133		)
Deferred tax asset:
Net operating loss	256			228
Tax credit carryforwards	6			3
Valuation allowance	(2		)	(2		)
Total deferred tax asset	260			229
Net deferred tax asset	$	162		$	96

____________________

(a) At December 31, 2019, includes a deferred tax asset of approximately $17 million of interest limitation carryforward with an indefinite expiration period.

Deferred tax assets and liabilities included on NEP's consolidated balance sheets are as follows:



	December 31,
	2019			2018
	(millions)
Deferred income taxes - assets	$	172		$	108
Other non-current liabilities	(10		)	(12		)
Net deferred income taxes	$	162		$	96

The components of deferred tax assets, before valuation allowance, relating to net operating loss carryforwards and tax credit carryforwards at December 31, 2019 are as follows:



	Amount			Expiration Dates
	(millions)
Net operating loss carryforwards:
Federal	$	233		2034 - 2037
State	23			2034 - 2039
Total net operating loss carryforwards	$	256	^(a)
Tax credit carryforwards	$	6		2020 - 2039

____________________

(a) Includes approximately $79 million of net operating loss carryforwards with an indefinite expiration period.

The open tax years in all jurisdictions are 2014 through 2018.

6. 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. NEP uses 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. Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities 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. Transfers between fair value hierarchy levels occur at the beginning of the period in which the transfer occurred.

Cash Equivalents and Restricted Cash Equivalents - The fair value of money market funds that are included in cash and cash equivalents, other current assets and other non-current assets on NEP's consolidated balance sheets is estimated using a market approach based on current observable market prices.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Interest Rate Contracts - NEP estimates the fair value of its 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. The primary inputs used in the fair value measurements include the contractual terms of the derivative agreements, current interest rates and credit profiles. The significant inputs for the resulting fair value measurement are market-observable inputs and the measurements are reported as Level 2 in the fair value hierarchy.

NEP’s financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:



	December 31, 2019						December 31, 2018
	Level 1		Level 2		Total		Level 1		Level 2		Total
	(millions)
Assets:
Cash equivalents	$	16	$	—	$	16	$	71	$	—	$	71
Restricted cash equivalents^(a)	—		—		—		12		—		12
Interest rate contracts	—		9		9		—		24		24
Total assets	$	16	$	9	$	25	$	83	$	24	$	107
Liabilities:
Interest rate contracts	$	—	$	427	$	427	$	—	$	116	$	116
Total liabilities	$	—	$	427	$	427	$	—	$	116	$	116

____________________


(a)	At December 31, 2018, approximately $9 million of restricted cash equivalents are included in other non-current assets on NEP's consolidated balance sheets.

Financial Instruments Recorded at Other than Fair Value - The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:



	December 31, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(millions)
Long-term debt, including current maturities^(a)	$	4,144	$	4,235	$	3,435	$	3,301

____________________

(a)

At December 31, 2019 and December 31, 2018, approximately $4,211 million and $2,826 million respectively, of the fair value is estimated using a market approach based on quoted market prices for the same or similar issues (Level 2); the balance is estimated using an income approach utilizing a discounted cash flow valuation technique, considering the current credit profile of the debtor (Level 3).

7. Derivative Instruments and Hedging Activity

NEP uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings. NEP records all derivative instruments that are required to be marked to market as either assets or liabilities on its consolidated balance sheets and measures them at fair value each reporting period. NEP does not utilize hedge accounting for its derivatives. All changes in the derivatives' fair value are recognized in interest expense in NEP's consolidated statements of income (loss). At December 31, 2019 and 2018, the net notional amounts of the interest rate contracts were approximately $6,859 million and $7,056 million, respectively.

During 2019, NEP reclassified approximately $6 million from AOCI to interest expense primarily because the related future transactions being hedged were no longer going to occur. At December 31, 2019, NEP's AOCI does not include any amounts related to discontinued cash flow hedges. Cash flows from the interest rate swap contracts are reported in cash flows from operating activities in NEP's consolidated statements of cash flows.

Prior to the sale of Canadian Holdings, NEP entered into certain foreign currency exchange contracts to economically hedge its cash flows from foreign currency rate fluctuations. During 2018 and 2017, NEP recorded approximately $13 million of gains and $4 million of losses, respectively, related to the foreign currency contracts in other - net in NEP's consolidated statements of income (loss).

Fair Value of Derivative Instruments - The tables below present NEP's gross derivative positions, based on the total fair value of each derivative instrument, at December 31, 2019 and 2018, as required by disclosure rules, as well as the location of the net derivative positions, based on the expected timing of future payments, on NEP's consolidated balance sheets.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



	December 31, 2019
		Gross Basis				Net Basis
		Assets		Liabilities		Assets		Liabilities
	(millions)
Interest rate contracts		$	9	$	427	$	—	$	418

Net fair value by balance sheet line item:
Other current assets						$	—
Other non-current assets						—
Other current liabilities								$	1
Derivatives								417
Total derivatives						$	—	$	418



	December 31, 2018
		Gross Basis				Net Basis
		Assets		Liabilities		Assets		Liabilities
	(millions)
Interest rate contracts		$	24	$	116	$	13	$	105

Net fair value by balance sheet line item:
Other current assets						$	7
Other non-current assets						6
Other current liabilities								$	1
Derivatives								104
Total derivatives						$	13	$	105

Financial Statement Impact of Derivative Instruments - Gains (losses) related to NEP's interest rate contracts are recorded in NEP's consolidated financial statements as follows:



	Years Ended December 31,
	2019			2018			2017
	(millions)
Interest rate contracts:
Gains (losses) reclassified from AOCI to interest expense	$	5		$	(3	)	$	(7	)
Losses recognized in interest expense	$	(373	)	$	(58	)	$	(14	)

Credit-Risk-Related Contingent Features - Certain of NEP's derivative instruments contain credit-related cross-default and material adverse change triggers, none of which contain requirements to maintain certain credit ratings or financial ratios. At December 31, 2019 and 2018, the aggregate fair value of NEP's derivative instruments with contingent risk features that were in a liability position was approximately $420 million and $108 million, respectively.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Property, Plant and Equipment

Property, plant and equipment consists of the following at December 31:



	2019			2018			Range of Useful Lives (in years)
	(millions)
Power-generation assets^(a)	$	6,553		$	6,262		3 - 35
Pipeline assets, including temporary rights-of-way	813			810			25 - 50
Land improvements and buildings	385			362			7 - 35
Land, including perpetual rights-of-way	60			60
Construction work in progress	80			5
Other depreciable assets	279			237			3 - 35
Property, plant and equipment, gross	8,170			7,736
Accumulated depreciation	(1,200		)	(966		)
Property, plant and equipment - net	$	6,970		$	6,770

^{___________________________}


(a)	Approximately 87% of power generation assets represent machinery and equipment used to generate electricity with a 35-year depreciable life.

Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was approximately $236 million, $199 million and $204 million, respectively. A number of NEP's generation and pipeline facilities are encumbered by liens securing various financings. The net book value of NEP's assets serving as collateral was approximately $3.6 billion at December 31, 2019.

9. Equity Method Investments

At December 31, 2019, investments in equity method investees primarily includes the approximately 50% ownership interest in Desert Sunlight's solar projects, approximately 50% ownership interest in Rosmar, and the ownership interest in Meade, including Meade's ownership interest in the CPL and related expansion project described in Note 3. NEP is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have controlling interests in these entities.

Summarized information for these equity method investees is as follows:



	2019		2018		2017
	(millions)
Revenues	$	213	$	208	$	207
Operating income	$	124	$	129	$	127
Net income^(a)	$	67	$	84	$	80

________________________

(a) Includes the earnings from equity method investee related to Meade's ownership interest in CPL and the related expansion subsequent to the Meade acquisition in November 2019.



	December 31, 2019			December 31, 2018
	(millions)
Current assets	$	211		$	133
Non-current assets^(a)	$	2,853		$	1,298
Current liabilities^(b)	$	545		$	561
Non-current liabilities	$	497		$	459

NEP's share of underlying equity in the equity method investees	$	1,668		$	206
Difference between investment carrying amounts and underlying equity in net assets^(c)	(15		)	8
NEP's investment carrying amounts	$	1,653		$	214

________________________


(a)	For 2019, includes the equity method investment related to Meade's ownership interests in the CPL and the related expansion project.


(b)	At December 31, 2019 and 2018, approximately $479 million and $503 million, respectively, of long-term debt is reflected as current liabilities as a result of being notified by the lender of an event of default under the related financing agreement. See Note 15 - PG&E Bankruptcy.


(c)	Substantially all of the difference between the investment carrying amount and the underlying equity in net assets is being amortized over the life of the related projects.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

10. Variable Interest Entities

NEP has identified NEP OpCo, a limited partnership with a general partner and limited partners, as a VIE. NEP has consolidated the results of NEP OpCo and its subsidiaries because of its controlling interest in the general partner of NEP OpCo. At December 31, 2019, NEP owned an approximately 39.2% limited partner interest in NEP OpCo and NEE Equity owned a noncontrolling 60.8% limited partner interest in NEP OpCo. The assets and liabilities of NEP OpCo as well as the operations of NEP OpCo represent substantially all of NEP's assets and liabilities and its operations.

In addition, at December 31, 2019, NEP OpCo consolidated 12 VIEs related to certain subsidiaries which have sold differential membership interests (see Note 2 - Noncontrolling Interests) in entities which own and operate 20 wind electric generation facilities. These entities are considered VIEs because the holders of the differential membership interests do not have substantive rights over the significant activities of these entities. The assets, primarily property, plant and equipment - net, and liabilities, primarily asset retirement obligation and non-current due to related party, of the VIEs, totaled approximately $4,814 million and $122 million, respectively, at December 31, 2019, and $4,937 million and $132 million, respectively, at December 31, 2018.

At December 31, 2019, NEP OpCo also consolidated four VIEs related to the sales of noncontrolling Class B interests in certain NEP subsidiaries. See Note 2 - Noncontrolling Interests and Note 11 - Equity. These entities are considered VIEs because the holders of the noncontrolling Class B interests do not have substantive rights over the significant activities of the entities. The assets, primarily property, plant and equipment - net and intangible assets - PPAs, and the liabilities, primarily long-term debt, other long-term liabilities and asset retirement obligation, of the VIEs totaled approximately $7,900 million and $1,448 million, respectively, at December 31, 2019. The assets, primarily property, plant and equipment - net, and the liabilities, primarily long-term debt and asset retirement obligation, of the VIEs totaled approximately $2,339 million and $89 million, respectively, at December 31, 2018. Certain of these VIEs include three other VIEs related to NEP's ownership interests in Rosmar, Silver State and Meade (see Note 3). In addition, certain of these VIEs contain entities which have sold differential membership interests and approximately $2,122 million and $2,183 million of assets and $53 million and $55 million of liabilities are also included in the disclosure of the VIEs related to differential membership interests at December 31, 2019 and 2018, respectively.

NEP has an indirect equity method investment in three NEER solar projects with a total generating capacity of 277 MW. Through a series of transactions, a subsidiary of NEP issued 1,000,000 NEP OpCo Class B Units, Series 1 and 1,000,000 NEP OpCo Class B Units, Series 2, to NEER for approximately 50% of the ownership interests in the three solar projects (non-economic ownership interests). NEER, as holder of the NEP OpCo Class B Units, will retain 100% of the economic rights in the projects to which the respective Class B Units relate, including the right to all distributions paid by the project subsidiaries that own the projects to NEP OpCo. NEER has agreed to indemnify NEP against all risks relating to NEP’s ownership of the projects until NEER offers to sell economic interests to NEP and NEP accepts such offer, if NEP chooses to do so. NEER has also agreed to continue to manage the operation of the projects at its own cost, and to contribute to the projects any capital necessary for the operation of the projects, until NEER offers to sell economic interests to NEP and NEP accepts such offer. At December 31, 2019 and 2018, NEP's equity method investment related to the non-economic ownership interests of approximately $11 million and $20 million, respectively, is reflected as other non-current assets and, at December 31, 2019, $7 million is reflected as other non-current liabilities on NEP's consolidated balance sheets. All equity in earnings of the non-economic ownership interests is allocated to net income attributable to noncontrolling interests. NEP is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have a controlling interest in these entities.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Capitalization

Debt - NEP’s long-term debt agreements require monthly, quarterly or semi-annual payments of interest. Principal payments on the senior secured limited-recourse debt is primarily due monthly or semi-annually. The carrying value of NEP’s long-term debt consists of the following:



		December 31,
		2019					2018
	Maturity Date	Balance			Weighted-Average Interest Rate		Balance			Weighted-Average Interest Rate
		(millions)					(millions)
NEP:
Senior unsecured convertible notes - fixed^(a)	2020	$	300		1.50	%	$	300		1.50	%
NEP OpCo:
Senior unsecured notes - fixed^(b)	2024 - 2027	2,300			4.23	%	$	1,100		4.38	%
Revolving credit facility - variable^(a)(c)	2024	510			3.35	%	—
Project level:
Senior secured limited-recourse debt - fixed	2033	25			4.52	%	985			5.16	%
Senior secured limited-recourse debt - variable^(c)(d)	2026 - 2032	859			3.38	%	269			4.43	%
Bank loan^(c)	2023	205			3.46	%	200			4.76	%
Non-recourse notes payable - fixed		—					20			6.30	%
Limited-recourse term loan - variable^(c)(d)		—					604			4.93	%
Unamortized debt issuance costs		(55		)			(45		)
Unamortized premium		—					2
Total long-term debt		4,144					3,435
Less current portion of long-term debt^(e)		12					707
Long-term debt, excluding current portion		$	4,132				$	2,728

________________________


(a)	See additional discussion of the convertible notes and the NEP OpCo credit facility below.


(b)	The NEP OpCo senior unsecured notes are absolutely and unconditionally guaranteed, on a senior unsecured basis, by NEP and a subsidiary of NEP OpCo.


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


(d)	Interest rate contracts, primarily swaps, have been entered into for a majority of these debt issuances. See Note 7.


(e)	At December 31, 2018, included approximately $641 million of principal with final maturity dates ranging from 2033 - 2038, net of the related unamortized debt issuance costs, which was reclassified to current debt as a result of events of default under the related financing agreements. See Note 15 - PG&E Bankruptcy.

Minimum annual maturities of long-term debt are approximately $312 million, $12 million, $14 million, $220 million and $1,776 million for 2020, 2021, 2022, 2023 and 2024, respectively.

NEP OpCo and its direct subsidiary (loan parties) are parties to a variable rate, senior secured revolving credit facility (NEP OpCo credit facility). At December 31, 2019, the NEP OpCo credit facility provided up to $1.25 billion of revolving credit loans and included borrowing capacity of up to $400 million for letters of credit and incremental commitments to increase the NEP OpCo credit facility to up to $2.0 billion in the aggregate, subject to certain conditions. Borrowings under the NEP OpCo credit facility can be used by the loan parties to fund working capital and expansion projects, to make acquisitions and for general business purposes. The NEP OpCo credit facility is subject to a facility fee ranging from 0.20% to 0.35% per annum depending on NEP OpCo's leverage ratio (as defined in the NEP OpCo credit facility). At December 31, 2019, approximately $122 million of letters of credit were issued under the NEP OpCo credit facility primarily related to debt service reserves and as security for certain financing agreements of NEP OpCo's subsidiaries. In February 2020, the loan parties extended the maturity date of the NEP OpCo credit facility to 2025 and borrowed $50 million under the NEP OpCo credit facility.

At December 31, 2019, the Meade purchaser and Pipeline Investment Holdings, LLC (Meade Holdings) are parties to a credit agreement (Meade credit agreement) which provides up to $915 million under three limited-recourse senior secured variable rate term loans maturing in 2026 to finance a portion of the Meade acquisition and the expansion (see Note 3). Approximately $816 million was borrowed simultaneously with the closing of the Meade acquisition and the remaining amount available under the credit agreement is expected to be borrowed regularly through the completion of the expansion. At December 31, 2019, approximately $90 million remains available under the Meade credit agreement.

In addition, at December 31, 2019, South Texas Midstream Holdings, LLC (STX Holdings) is party to a credit agreement which provides up to $270 million under a revolving credit facility (STX Holdings revolving credit facility). Proceeds from any borrowings under the STX Holdings revolving credit facility are available exclusively to fund the cash portion of NEP's repurchase, if any, of the Class B noncontrolling interests related to STX Midstream (see discussion below), subject to certain limitations.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The long-term debt agreements listed above contain default and related acceleration provisions relating to the failure to make required payments or to observe other covenants in the respective financing agreements and related documents including financial covenants primarily related to debt service coverage ratios, as well as a maximum leverage ratio and a minimum interest coverage ratio. Additionally, under the NEP OpCo credit facility, NEP OpCo and its direct subsidiary are required to comply with certain financial covenants on a quarterly basis and NEP OpCo's ability to pay cash distributions is subject to certain other restrictions. All borrowings under the NEP OpCo credit facility and the NEP OpCo senior unsecured notes are guaranteed by NEP OpCo and NEP.

The NEP OpCo credit facility contains various covenants and restrictive provisions that limit NEP OpCo’s ability to, among other things:

•incur or guarantee additional debt;

•make distributions on or redeem or repurchase common units;

•make certain investments and acquisitions;

•incur certain liens or permit them to exist;

•enter into certain types of transactions with affiliates;

•merge or consolidate with another company; and

•transfer, sell or otherwise dispose of projects.

The long-term debt agreements listed above all contain provisions which, under certain conditions, restrict the payment of dividends and other distributions. At December 31, 2019, NEP and its subsidiaries were in compliance with all financial debt covenants under their respective financing agreements except as discussed in Note 15 - PG&E Bankruptcy.

The $300 million senior unsecured convertible notes (convertible notes) are unsecured obligations of NEP and are absolutely and unconditionally guaranteed, on a senior unsecured basis, by NEP OpCo. A holder may convert all or a portion of its notes into NEP common units and cash in lieu of any fractional common unit at the conversion rate. At December 31, 2019, the conversion rate, subject to certain adjustments, was 18.9170 NEP common units per $1,000 principal amount of the convertible notes, which rate is equivalent to a conversion price of approximately $52.8625 per NEP common unit. Upon the occurrence of a fundamental change (as defined in the related indenture), holders of the convertible notes may require NEP to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the convertible notes to be repurchased, plus accrued and unpaid interest, if any. The convertible notes are not redeemable at NEP’s option prior to maturity.

NEP entered into a capped call transaction (capped call) in connection with the issuance of the convertible notes. Under the capped call, NEP purchased capped call options with a strike price of $52.8625 and a cap price of $63.4350. The capped call was purchased for approximately $12 million, which was recorded as a reduction to common units equity on NEP's consolidated balance sheets. If, upon conversion of the convertible notes, the price per NEP common unit during the relevant settlement period is above the strike price, there would generally be a payment to NEP (if NEP elects to cash settle) or an offset of potential dilution to NEP's common units (if NEP elects to settle in NEP common units).

Equity - In November 2017, NEP issued and sold 14,021,561 Series A convertible preferred units representing limited partner interests in NEP (preferred units) for an aggregate purchase price of approximately $550 million. NEP contributed the proceeds to NEP OpCo in exchange for an equivalent number of a new series of NEP OpCo preferred units with economically equivalent rights to the preferred units. In both July 2019 and November 2019, NEP converted approximately 4,673,852 Series A convertible preferred units into NEP common units on a one-for-one basis.

The preferred units are a class of securities that rank senior to the common units representing limited partner interests in NEP. The preferred units will vote on an as-converted basis with the common units and have certain class voting rights with respect to amendments that adversely affect their distribution, liquidation or conversion rights, their ranking or certain other protections under the NEP partnership agreement.

Holders of the preferred units will receive cumulative quarterly distributions equal to $0.4413 per unit for quarters ending on or before November 15, 2020, which was prorated for the fourth quarter of 2017 and which may be paid, at NEP’s election, in cash, in kind or a combination thereof. For quarters ending after November 15, 2020, holders will receive cumulative quarterly distributions equal to the greater of $0.4413 per unit and the amount that the preferred units would have received if they had converted into common units at the then-applicable conversion rate (defined below), and NEP may elect to pay up to 1/9th of the subsequent distribution period amounts in kind. The quarterly distribution amount and portion of the distribution that may be paid in kind will be prorated for the fourth quarter of 2020. If NEP fails to pay a distribution during a subsequent distribution period, NEP would be unable to pay any distributions on or redeem or repurchase any junior securities, including the common units, prior to paying the unpaid cash component of the quarterly distribution, including any previously accrued and unpaid cash distributions.

Each holder of preferred units (together with its affiliates) may elect to convert all or any portion of its preferred units into common units initially on a one-for-one basis, subject to customary adjustments and an adjustment for any distributions that have accrued but have not been paid when due (the conversion rate), at any time after June 20, 2019, subject to certain conditions. NEP may

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

elect to convert all or a portion of the preferred units into common units based on the conversion rate at any time after November 15, 2018 if certain conditions, including specific common unit price and trading volume conditions, are met and subject to certain maximum conversion amounts prior to November 2020 under the purchase agreement. In addition, certain change of control events, as specified in the NEP partnership agreement, will result in, or provide holders of the preferred units with the right to elect, conversion of preferred units to common units (or substantially equivalent securities of a surviving entity) or redemption of the preferred units, with such redemption to be paid in cash or common units at NEP's discretion. Beginning January 1, 2021, NEP will give the purchasers certain rights to require NEP, under certain circumstances, to initiate underwritten offerings for the common units that are issuable upon conversion of the preferred units.

During 2019, 2018 and 2017, NEP distributed approximately $115 million, $94 million and $81 million, respectively, to its common unitholders. In addition, NEP paid approximately $35 million in distributions to its common unitholders and $2 million in distributions to its preferred unitholders in February 2020.

During 2019 and 2018, subsidiaries of NEP sold Class B noncontrolling membership interests in NEP Renewables, NEP Renewables II, NEP Pipelines and STX Midstream as described below:



	NEP Renewables	NEP Renewables II	NEP Pipelines	STX Midstream
Underlying projects/pipelines	Renewable energy projects with a combined generating capacity of approximately 1,388 MW	Renewable energy projects with a combined net generating capacity of approximately 611 MW	Equity method interest in a natural gas pipeline located in Pennsylvania	Seven natural gas pipeline assets located in Texas
Date of sale	December 21, 2018	June 11, 2019	November 13, 2019	December 4, 2019
Gross proceeds	$750 million	$900 million	$168 million	$750 million
Initial allocation of distributable cash to Class B investor	15%	5%	1%	12.5%
Period for initial allocation	3 years	6 years	6 years	4 years
Period for initial allocation if minimum buyouts have not occurred	n/a	4.5 years	5 years	3.5 years
Allocation of distributable cash to Class B investor after initial allocation period	80%	99%	99%	75%^(a)
Date buyout period begins	December 21, 2021	December 11, 2022	May 13, 2023	December 4, 2022
Buyout right timing	One time during year 4	Periodically, and for partial interests between years 3.5 and 6^(b)	Periodically, and for partial interests between years 3.5 and 6.5^(b)	Periodically, and for partial interests between years 3 and 7^(b)
Percentage of buyout price that can be paid in NEP non-voting common units at current market price^(c)	70%	70%	100%	70%
Date registration rights begin	January 1, 2025	January 1, 2025	Date of first buyout notice	January 1, 2023

________________


(a)	Increases to 95% if NEP has not exercised its entire buyout right by December 4, 2025.


(b)	The buyout right is subject to certain limitations, including NEP being able to purchase a maximum of the Class B units at certain anniversaries specified in the agreement.


(c)	The NEP non-voting common units will have the right to receive pro rata quarterly cash distributions and rights to convert, subject to certain limitation, the NEP non-voting common units into NEP common units on a one-for-one basis. The specified percentage of the buyout price for the Class B noncontrolling interests in STX Midstream are payable in NEP common units.

In 2015, NEP established an at-the-market equity issuance program (ATM program) pursuant to which NEP could issue, from time to time, up to $150 million of its common units, giving NEP the flexibility to issue new units when the price is acceptable. In July 2018, NEP implemented a $150 million ATM program which replaced its prior program. During the year ended December 31, 2018, NEP issued approximately 1.8 million common units under the ATM program for gross proceeds of approximately $86 million. During the years ended December 31, 2019 and 2017, NEP did not issue any common units under the ATM program. Fees related to the ATM program totaled approximately $1 million in 2018.

Earnings Per Unit - Diluted earnings per unit are based on the weighted-average number of common units and potential common units outstanding during the period, including the dilutive effect of the convertible notes and preferred units. The dilutive effect of the convertible notes and preferred units is computed using the if-converted method.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The reconciliation of NEP's basic and diluted earnings (loss) per unit is as follows:



		Years Ended December 31,
		2019			2018		2017
	(millions, except per unit data)
Numerator:
Net income (loss) attributable to NEP – basic		$	(88	)	$	167	$	(64	)
Adjustments for convertible notes and preferred units^(a)		—			50		—
Net income (loss) attributable to NEP used to compute diluted earnings per unit		$	(88	)	$	217	$	(64	)
Denominator:
Weighted-average number of common units outstanding – basic		58.8			54.9		54.2
Effect of dilutive convertible notes and preferred units^(a)		—			19.7		—
Weighted-average number of common units outstanding and assumed conversions		58.8			74.6		54.2
Earnings (loss) per unit attributable to NEP:
Basic		$	(1.51	)	$	3.05	$	(1.18	)
Assuming dilution		$	(1.51	)	$	2.91	$	(1.18	)

____________________

(a) Due to the net losses incurred during the years ended December 31, 2019 and 2017, the weighted-average number of common units issuable pursuant to the convertible notes and preferred units totaling approximately 17.0 million and 3.6 million, respectively, were not included in the calculation of diluted earnings per unit due to their antidilutive effect.

12. Accumulated Other Comprehensive Income (Loss)



	Accumulated Other Comprehensive Income (Loss)
	Net Unrealized Gains (Losses) on Cash Flow Hedges			Net Unrealized Gains (Losses) on Foreign Currency Translation			Other Comprehensive Income (Loss) Related to Equity Method Investee			Total
	(millions)
Balances, December 31, 2016	$	(4	)	$	(105	)	$	(35	)	$	(144	)
Other comprehensive income before reclassification	—			7			—			7
Amounts reclassified from AOCI to interest expense	5			—			—			5
Other comprehensive income related to equity method investee	—			—			5			5
Net other comprehensive income	5			7			5			17
Balances, December 31, 2017	1			(98		)	(30		)	(127		)
Other comprehensive income before reclassification	—			(6		)	—			(6		)
Amounts reclassified from AOCI to interest expense	2			—			—			2
Other comprehensive income related to equity method investee	—			—			6			6
Net other comprehensive income (loss)	2			(6		)	6			2
Impact of disposal of Canadian Holdings	3			104			—			107
Balances, December 31, 2018	6			—			(24		)	(18		)
Amounts reclassified from AOCI to interest expense	(6		)	—			—			(6		)
Other comprehensive income related to equity method investee	—			—			2			2
Net other comprehensive income (loss)	(6		)	—			2			(4		)
Balances, December 31, 2019	$	—		$	—		$	(22	)	$	(22	)
AOCI attributable to noncontrolling interest	$	—		$	—		$	(14	)	$	(14	)
AOCI attributable to NextEra Energy Partners, December 31, 2019	$	—		$	—		$	(8	)	$	(8	)

13. Related Party Transactions

Each project entered into O&M and administrative services agreements (ASAs) with subsidiaries of NEER whereby the projects pay a certain annual fee plus actual costs incurred in connection with certain O&M and administrative services performed under these agreements. These services are reflected as operations and maintenance in NEP's consolidated statements of income (loss). Additionally, a NEP subsidiary pays an affiliate for transmission services which are reflected as operations and maintenance in NEP's consolidated statements of income (loss). Certain projects have also entered into various types of agreements including those related to shared facilities and transmission lines, transmission line easements, technical support and construction coordination with subsidiaries of NEER whereby certain fees or cost reimbursements are paid to, or received by, certain subsidiaries of NEER.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Management Services Agreement (MSA) - Under the MSA, an indirect wholly owned subsidiary of NEE provides operational, management and administrative services to NEP, including managing NEP’s day-to-day affairs and providing individuals to act as NEP’s executive officers and directors, in addition to those services that are provided under the existing O&M agreements and ASAs described above between NEER subsidiaries and NEP subsidiaries. NEP OpCo pays NEE an annual management fee equal to the greater of 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the most recently ended fiscal year and $4 million (as adjusted for inflation beginning in 2016), which is paid in quarterly installments with an additional payment each January to the extent 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the preceding fiscal year exceeds $4 million (as adjusted for inflation beginning in 2016). NEP OpCo also makes certain payments to NEE based on the achievement by NEP OpCo of certain target quarterly distribution levels to its unitholders. NEP’s O&M expenses for the years ended December 31, 2019, 2018 and 2017 include approximately $93 million, $78 million and $67 million, respectively, related to the MSA.

Cash Sweep and Credit Support Agreement (CSCS agreement) - NEP OpCo is a party to the CSCS agreement with NEER under which NEER and certain of its affiliates provide credit support in the form of letters of credit and guarantees to satisfy NEP’s subsidiaries’ contractual obligations. NEP OpCo pays NEER an annual credit support fee based on the level and cost of the credit support provided, payable in quarterly installments. NEP’s O&M expenses for the years ended December 31, 2019, 2018 and 2017 include approximately $6 million, $4 million and $4 million, respectively, related to the CSCS agreement.

NEER and certain of its affiliates may withdraw funds (Project Sweeps) received by NEP OpCo under the CSCS agreement, or its subsidiaries in connection with certain long-term debt agreements, and hold those funds in accounts belonging to NEER or its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by NEP's subsidiaries. NEER and its affiliates may keep the funds until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or NEP OpCo otherwise demands the return of such funds. If NEER or its affiliates fail to return withdrawn funds when required by NEP's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER or its affiliates in the amount of such withdrawn funds. If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings. At December 31, 2019 and 2018, the cash sweep amounts held in accounts belonging to NEER or its affiliates were approximately $12 million and $66 million, respectively, and are included in due from related parties on NEP’s consolidated balance sheets.

Guarantees and Letters of Credit Entered into by Related Parties - Certain PPAs include requirements of the project entities to meet certain performance obligations. NextEra Energy Capital Holdings, Inc. (NEECH) or NEER has provided letters of credit or guarantees for certain of these performance obligations and payment of any obligations from the transactions contemplated by the PPAs. In addition, certain financing agreements require cash and cash equivalents to be reserved for various purposes. In accordance with the terms of these financing agreements, guarantees from NEECH have been substituted in place of these cash and cash equivalents reserve requirements. Also, under certain financing agreements, indemnifications have been provided by NEECH. In addition, certain interconnection agreements and site certificates require letters of credit or a surety bond to secure certain payment or restoration obligations related to those agreements. NEECH also guarantees the Project Sweep amounts held in accounts belonging to NEER as described above. At December 31, 2019, NEECH or NEER guaranteed or provided indemnifications, letters of credit or surety bonds totaling approximately $658 million related to these obligations. Agreements related to the sale of differential membership interests require NEER to guarantee payments due by the VIEs and the indemnifications to the VIEs' respective investors. At December 31, 2019, NEER guaranteed a total of approximately $11 million related to these obligations.

Due to Related Party - Non-current amounts due to related party on NEP's consolidated balance sheets primarily represent amounts owed by certain of NEP's wind projects to NEER to refund NEER for certain transmission costs paid on behalf of the wind projects. Amounts will be paid to NEER as the wind projects receive payments from third parties for related notes receivable recorded in other non-current assets on NEP’s consolidated balance sheets.

Transportation and Fuel Management Agreements - A subsidiary of NEP assigned to a subsidiary of NEER certain gas commodity agreements in exchange for entering into transportation agreements and a fuel management agreement whereby the benefits of the gas commodity agreements (net of transportation paid to the NEP subsidiary) are passed back to the NEP subsidiary. During the years ended December 31, 2019, 2018 and 2017, NEP recognized approximately $7 million, $7 million and $9 million, respectively, in revenues related to the transportation and fuel management agreements.

Related Party Note Receivable - As part of the 2016 acquisition from NEER of Seiling Wind Investments, LLC, a subsidiary of NEP acquired an approximately $25 million receivable from a subsidiary of NEER (Seiling related party note receivable) relating to operational performance issues at this facility. The Seiling related party note receivable is intended to compensate NEP for the operational performance issues and is supported in full by compensation expected from an equipment vendor under an undertaking the vendor has with NEER. This receivable bears interest at 7.1% per annum, is payable by NEER in equal semi-annual installments and matures in December 2035. During each of the years ended December 31, 2019, 2018 and 2017, NEP received payments of approximately $2 million. The Seiling related party note receivable, interest and related payments are reflected in noncontrolling interests on NEP's consolidated financial statements.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Leases

NEP has operating leases primarily related to land use agreements for certain of its renewable energy projects. At December 31, 2019 and 2018, NEP had recorded ROU assets of approximately $43 million and $24 million, respectively, and $41 million and $24 million of operating lease liabilities, respectively. NEP’s operating lease liabilities were calculated based on a weighted average discount rate of 4.52% and 4.46% based on the incremental borrowing rate at the lease commencement date and have a weighted-average remaining lease term of 25 years and 25 years, at December 31, 2019 and 2018, respectively. Lease payments under the land use agreements, which convey exclusive use of the land during the arrangement, are either fixed based on the terms of the related lease agreement or variable primarily based on the amount of generation at the renewable energy project. NEP’s operating leases with fixed payments have expiration dates ranging from 2022 to 2046. NEP recognized approximately $3 million, $2 million, and $2 million in 2019, 2018 and 2017, respectively, of operating lease costs associated with its ROU assets and which are included in O&M expenses in NEP’s consolidated statements of income (loss). In addition, approximately $7 million, $5 million and $5 million was recorded related to variable lease costs in 2019, 2018 and 2017, respectively. Short-term lease expense, which is included in O&M expenses, was not material to NEP’s consolidated statements of income (loss) for the periods presented. At December 31, 2019, NEP's lease agreements call for fixed payments of approximately $3 million annually over the next five years and $56 million thereafter.

15. Commitments and Contingencies

Development, Engineering and Construction Commitments - At December 31, 2019, indirect subsidiaries of NEP had several engineering, procurement and construction contracts and a funding commitment related to the repowering of certain wind facilities and expansion projects at certain pipelines. Those contracts have varying payment terms and some include performance obligations that allow the NEP subsidiaries to receive liquidated damages if the contractor does not perform. As of December 31, 2019, the NEP subsidiaries had purchased approximately $54 million under these contracts, of which $36 million was purchased from NEER. Such costs primarily have been capitalized in property, plant and equipment - net on the consolidated balance sheets. As of December 31, 2019, the NEP subsidiaries have remaining commitments under these contracts of approximately $278 million.

PG&E Bankruptcy - During 2019, approximately $1 million of net income attributable to NEP relates to PPAs that the Genesis, Desert Sunlight and Shafter solar projects have with PG&E. On January 29, 2019, PG&E filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. While PG&E or other stakeholders in the bankruptcy proceeding could seek to reject some or all of the PPAs, PG&E's proposed plan of reorganization, which is the only plan of reorganization that is progressing through the PG&E bankruptcy proceeding as of February 18, 2020, specifies that PG&E would assume all of the PPAs. PG&E’s Chapter 11 filing, or related events, caused events of default under the financings for the Genesis and Shafter projects, which, among other things, blocked the distribution of cash generated by those projects.

At December 31, 2018, the debt outstanding under the Genesis and Shafter financings totaled approximately $682 million, of which $641 million with scheduled final maturity dates ranging from 2033 to 2038 was reclassified into current debt on NEP's consolidated balance sheets. An indirect subsidiary of NEP repaid or redeemed all of the outstanding principal under the Genesis financings during 2019. At December 31, 2019, the debt outstanding under the Shafter financing totaled approximately $25 million, substantially all of which was classified as long-term debt as a result of a default waiver obtained in April 2019 that extends to April 2021.

Based on the estimated future cash flows related to the Genesis, Shafter and Desert Sunlight solar projects, no impairment adjustment was recorded at December 31, 2019. NEP will continue to monitor its investments in these projects. At December 31, 2019, cumulative cash distributions of approximately $41 million from the Shafter and Desert Sunlight solar projects were not distributed as a result of the events of default under the financings that arose due to PG&E’s bankruptcy filing.

NEXTERA ENERGY PARTNERS, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

16. Quarterly Data (Unaudited)

Condensed consolidated quarterly financial information is as follows:



	March 31^(a)			June 30^(a)			September 30^(a)			December 31^(a)
	(millions, except per unit amounts)
2019
Operating revenues	$	177		$	219		$	253		$	206
Operating income	$	34		$	67		$	88		$	43
Net income (loss)	$	(121	)	$	(124	)	$	(243	)	$	83
Net income (loss) attributable to NEP	$	(22	)	$	(28	)	$	(72	)	$	34
Earnings (loss) per unit - basic	$	(0.38	)	$	(0.49	)	$	(1.21	)	$	0.53
Earnings (loss) per unit - assuming dilution	$	(0.38	)	$	(0.49	)	$	(1.21	)	$	0.50
Distributions per unit	$	0.47		$	0.48		$	0.50		$	0.52
High-low common unit sales prices	$47.98 - $39.51			$50.50 - $43.68			$53.90 - $47.45			$53.63 - $49.89

2018
Operating revenues	$	212		$	225		$	178		$	155
Operating income^(b)	$	92		$	261		$	59		$	31
Net income (loss)^(b)(c)	$	(19	)	$	292		$	110		$	(117	)
Net income (loss) attributable to NEP^(b)(c)	$	74		$	82		$	33		$	(22	)
Earnings (loss) per unit - basic	$	1.36		$	1.51		$	0.60		$	(0.39	)
Earnings (loss) per unit - assuming dilution	$	1.22		$	1.42		$	0.58		$	(0.39	)
Distributions per unit	$	0.41		$	0.42		$	0.44		$	0.45
High-low common unit sales prices	$45.38 - $36.84			$48.75 - $38.05			$50.66 - $44.04			$49.16 - $39.35

______________________

(a)

In the opinion of management, all adjustments, which consist of normal recurring accruals necessary to present a fair statement of the amounts shown for such periods, have been made. Results of operations for an interim period generally will not give a true indication of results for the year. Variations in operations reported on a quarterly basis primarily reflect the seasonal nature of NEP's business. The sum of the quarterly amounts may not equal the total for the year due to rounding.


(b)	Second quarter of 2018 includes the gain on the sale of Canadian Holdings. See Note 2 - Disposal of Canadian Holdings.


(c)	First quarter of 2018 reflects a reduction of differential membership interests as a result of the change in federal income tax rates effective January 1, 2018, which is included in net loss attributable to noncontrolling interests. See Note 2 - Noncontrolling Interests.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of December 31, 2019, NEP had performed an evaluation, under the supervision and with the participation of its management, including its chief executive officer and chief financial officer, of the effectiveness of the design and operation of NEP'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 NEP concluded that NEP's disclosure controls and procedures were effective as of December 31, 2019.

Internal Control Over Financial Reporting

(a) Management's Annual Report on Internal Control Over Financial Reporting

See Item 8. Financial Statements and Supplementary Data.

(b) Attestation Report of the Independent Registered Public Accounting Firm

See Item 8. Financial Statements and Supplementary Data.

NEP is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal controls. This results in refinements to processes throughout NEP. However, there has been no change in NEP'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 NEP's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NEP's internal control over financial reporting.

Item 9B. Other Information

None

PART III - OTHER INFORMATION

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item will be included under the headings "Business of the Annual Meeting," "Information About NextEra Energy Partners and Management" and "Corporate Governance and Board Matters" in NEP's Proxy Statement which will be filed with the SEC in connection with the 2020 Annual Meeting of Unitholders (NEP's Proxy Statement) and is incorporated herein by reference.

NEP has adopted the NextEra Energy Partners, LP Code of Ethics for Senior Executive and Financial Officers (the Senior Financial Executive Code), which is applicable to the chief executive officer, the chief financial officer, the chief accounting officer and other senior executive and financial officers. The Senior Financial Executive Code is available under Corporate Governance in the Investor Relations section of NEP’s internet website at www.nexteraenergypartners.com. Any amendments or waivers of the Senior Financial Executive Code which are required to be disclosed to unitholders under SEC rules will be disclosed on NEP’s website at the address listed above.

Item 11. Executive Compensation

The information required by this item will be included in NEP's Proxy Statement under the headings "Executive Compensation" and "Corporate Governance and Board Matters" and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item relating to security ownership of certain beneficial owners and management will be included in NEP's Proxy Statement under the heading "Information About NextEra Energy Partners and Management" and is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides certain information as of December 31, 2019 with respect to equity compensation under the NextEra Energy Partners, LP 2014 Long-Term Incentive Plan:



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column)
Equity compensation plans approved by security holders	—	N/A	1,138,502
Equity compensation plans not approved by security holders	—	N/A	—
Total	—	N/A	1,138,502

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item, to the extent applicable, will be included in NEP's Proxy Statement under the heading "Corporate Governance and Board Matters" and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

The information required by this item will be included in NEP's Proxy Statement under the heading "Audit-Related Matters" and is incorporated herein by reference.

PART IV

Item 15. Exhibits, Financial Statement Schedules



			Page(s)
(a)	1.	Financial Statements
		Management's Report on Internal Control over Financial Reporting	48
		Attestation Report of Independent Registered Public Accounting Firm	49
		Report of Independent Registered Public Accounting Firm	50
		Consolidated Statements of Income (Loss)	52
		Consolidated Statements of Comprehensive Income (Loss)	53
		Consolidated Balance Sheets	54
		Consolidated Statements of Cash Flows	55
		Consolidated Statements of Changes in Equity	56
		Notes to Consolidated Financial Statements	57-78

	2.	Financial Statement Schedules - Schedules are omitted as not applicable or not required.

	3.	Exhibits (including those incorporated by reference)



Exhibit Number		Description
2.1*		Amended and Restated Purchase and Sale Agreement, dated as of February 22, 2016, by and between NEP US SellCo, LLC and NextEra Energy Partners Acquisitions, LLC, as amended by First Global Amendment to Amended and Restated Purchase and Sale Agreement, dated as of September 8, 2016, by and between NEP US SellCo, LLC, NextEra Energy Partners Acquisitions, LLC and ESI Energy, LLC (filed as Exhibit 2.1 to Form 10-Q for the quarter ended September 30, 2017, File No. 1-36518)
2.2*		Amendment to Amended and Restated Purchase and Sale Agreement (Desert Sunlight, Nokota, and Javelina Projects Annex), dated as of October 25, 2017, by and among NEP US SellCo LLC, NextEra Energy Partners Acquisitions, LLC and ESI Energy, LLC (filed as Exhibit 2.2 to Form 10-Q for the quarter ended September 30, 2017, File No. 1-36518)
2.3*		Purchase and Sale Agreement by and between NextEra Energy Operating Partners, LP and Canada Pension Plan Investment Board dated as of March 30, 2018 (filed as Exhibit 2.1 to Form 8-K dated March 30, 2018, File No. 1-36518)
2.4*		Amendment to Amended and Restated Purchase and Sale Agreement (2018 Projects Annex), dated as of August 31, 2018, by and among NEP US SellCo LLC, NextEra Energy Partners Acquisitions, LLC and ESI Energy, LLC (filed as Exhibit 2.2 to Form 8-K dated August 31, 2018, File No. 1-36518)
2.5*		Membership Interest Purchase Agreement, dated as of August 31, 2018, between NEP Renewables, LLC, NextEra Energy Partners, LP, NEP Renewables Holdings, LLC and the Class B purchasers party thereto (filed as Exhibit 2.3 to Form 8-K dated August 31, 2018, File No. 1-36518)
2.6*		Amendment to Amended and Restated Purchase and Sale Agreement (2019 Projects Annex), dated as of March 4, 2019, by and among NEP US SellCo LLC, NextEra Energy Partners Acquisitions, LLC and ESI Energy, LLC (filed as Exhibit 2.2 to Form 8-K dated March 4, 2019, File No. 1-36518)
2.7*		Membership Interest Purchase Agreement, dated as of March 4, 2019, between NEP Renewables II, LLC, NextEra Energy Partners, LP, NEP Renewables Holdings II, LLC and the Class B Purchasers party thereto (filed as Exhibit 2.3 to Form 8-K dated March 4, 2019, File No. 1-36518)
2.8*		Purchase and Sale Agreement by and among EIF Meade Holdings, LLC, VED NPI II, LLC, VED NPI I, LLC, WGL Midstream MP, LLC and COG Holdings LLC, and Meade Pipeline Investment, LLC, dated as of September 29, 2019 (filed as Exhibit 2.1 to Form 8‑K dated September 29, 2019, File No. 1-36518)
2.9*		Membership Interest Purchase Agreement, dated as of September 29, 2019, by and among NextEra Energy Partners Pipelines, LLC, NextEra Energy Partners, LP, NextEra Energy Partners Pipelines Holdings, LLC and GEPIF III Meade Investco, L.P. (filed as Exhibit 2.2 to Form 8-K dated September 29, 2019, File No. 1-36518)
3.1*		Fifth Amended and Restated Agreement of Limited Partnership of NextEra Energy Partners, LP, dated as of November 12, 2019 (filed as Exhibit 3.1 to Form 8-K dated November 12, 2019, File No. 1-36518)
3.2*		Certificate of Limited Partnership of NextEra Energy Partners, LP (filed as Exhibit 3.3 to Form 10-K for the year ended December 31, 2014, File No. 1-36518)
3.3*		Certificate of Incorporation of NextEra Energy Partners GP, Inc. (filed as Exhibit 3.5 to Form 10-K for the year ended December 31, 2014, File No. 1-36518)
3.4*		Bylaws of NextEra Energy Partners GP, Inc. (filed as Exhibit 3.6 to Form 10-K for the year ended December 31, 2014, File No. 1-36518)
4.1*		Indenture, dated as of September 8, 2017, by and among NextEra Energy Partners, LP, NextEra Energy Operating Partners, LP and The Bank of New York Mellon, as trustee (filed as Exhibit 4.1 to Form 8-K dated September 8, 2017, File No. 1-36518)
4.2*		Indenture, dated as of September 25, 2017, between NextEra Energy Operating Partners, LP and The Bank of New York Mellon, as trustee (filed as Exhibit 4.1 to Form 8-K dated September 19, 2017, File No. 1-36518)
4.3*		Guarantee Agreement dated as of September 25, 2017, between NextEra Energy Partners, LP and The Bank of New York Mellon, as guarantee trustee (filed as Exhibit 4.2 to Form 8-K dated September 19, 2017, File No. 1-36518)



Exhibit Number		Description
4.3(a)*		First Amendment to the Guarantee Agreement dated as of September 25, 2017, between NextEra Energy Partners, LP and The Bank of New York Mellon, as guarantee trustee, entered into as of June 27, 2019 (filed as Exhibit 4.5 to Form 8-K dated June 27, 2019, File No. 1-36518)
4.4*		Guarantee Agreement dated as of September 25, 2017, between NextEra Energy US Partners Holdings, LLC and The Bank of New York Mellon, as guarantee trustee (filed as Exhibit 4.3 to Form 8-K dated September 19, 2017, File No. 1-36518)
4.4(a)*		First Amendment to the Guarantee Agreement dated as of September 25, 2017, between NextEra Energy US Partners Holdings, LLC and The Bank of New York Mellon, as guarantee trustee, entered into as of June 27, 2019 (filed as Exhibit 4.6 to Form 8-K dated June 27, 2019, File No. 1-36518)
4.5*		Officer's Certificate of NextEra Energy Operating Partners, LP, dated September 25, 2017, creating the 4.25% Senior Notes due 2024 and the 4.50% Senior Notes due 2027 (filed as Exhibit 4.4 to Form 8-K dated September 19, 2017, File No. 1-36518)
4.6*		Officer's Certificate of NextEra Energy Operating Partners, LP, dated June 27, 2019, creating the 4.25% Senior Notes due July 2024 (filed as Exhibit 4.4 to Form 8-K dated June 27, 2019, File No. 1-36518)
4.7*		Officer's Certificate of NextEra Energy Operating Partners, LP, dated September 23, 2019, creating the 3.875% Senior Notes due 2026 (filed as Exhibit 4.6 to Form 8-K dated September 23, 2019, File No. 1-36518)
4.8		Description of Securities Registered Pursuant to Section 12 of the Exchange Act
10.1*		Second Amended and Restated Management Services Agreement, dated as of August 4, 2017, by and among NextEra Energy Partners, LP, NextEra Energy Operating Partners GP, LLC, NextEra Energy Operating Partners, LP, and NextEra Energy Management Partners, LP (filed as Exhibit 10.2 to Form 8-K dated August 4, 2017, File No. 1-36518)
10.2*		Amended and Restated Right of First Offer Agreement by and among NextEra Energy Partners, LP, NextEra Energy Operating Partners, LP and NextEra Energy Resources, LLC, dated as of August 4, 2017 (filed as Exhibit 10.4 to Form 10-Q for the quarter ended September 30, 2017, File No. 1-36518)
10.3*		Equity Purchase Agreement by and between NextEra Energy Operating Partners, LP and NextEra Energy Partners, LP, dated as of July 1, 2014 (filed as Exhibit 10.4 to Form 8‑K dated July 1, 2014, File No. 1-36518)
10.4*		Exchange Agreement by and among NextEra Energy Equity Partners, LP, NextEra Energy Operating Partners, LP, NextEra Energy Partners GP, Inc. and NextEra Energy Partners, LP, dated as of July 1, 2014 (filed as Exhibit 10.5 to Form 8‑K dated July 1, 2014, File No. 1-36518)
10.4(a)*		Amendment No. 1 to Exchange Agreement by and among NextEra Energy Equity Partners, LP, NextEra Energy Operating Partners, LP, NextEra Energy Partners GP, Inc. and NextEra Energy Partners, LP dated as of July 5, 2016 (filed as Exhibit 10 to Form 10-Q dated for the quarter ended June 30, 2016, File No. 1-36518)
10.5*		Registration Rights Agreement by and between NextEra Energy Partners, LP and NextEra Energy, Inc., dated as of July 1, 2014 (filed as Exhibit 10.6 to Form 8‑K dated July 1, 2014, File No. 1-36518)
10.6*		Amended and Restated Revolving Credit Agreement by and between NextEra Energy US Partners Holdings, LLC, NextEra Energy Operating Partners, LP and the lenders party thereto, dated as of October 24, 2017 (filed as Exhibit 10.6 to Form 10-Q for the quarter ended September 30, 2017, File No. 1-36518)
10.6(a)*		Letter Amendment Agreement and Request for Extension to the Amended and Restated Revolving Credit Agreement by and between NextEra US Partners Holdings, LLC, NextEra Energy Operating Partners, LP and the lenders party thereto, dated as of May 3, 2019 (filed as Exhibit 10.1 to Form 8-K dated May 3, 2019, File No. 1-36518)
10.6(b)		Letter Amendment to the Amended and Restated Revolving Credit Agreement by and between NextEra US Partners Holdings, LLC, NextEra Energy Operating Partners, LP and the lenders party thereto, dated as of December 10, 2019
10.6(c)		Request for Extension to the Amended and Restated Revolving Credit Agreement by and between NextEra US Partners Holdings, LLC, NextEra Energy Operating Partners, LP and the lenders party thereto, dated as of December 10, 2019
10.7*		Amended and Restated Cash Sweep and Credit Support Agreement by and between NextEra Energy Operating Partners, LP and NextEra Energy Resources, LLC, dated as of August 4, 2017 (filed as Exhibit 10.5 to Form 10-Q for the quarter ended September 30, 2017, File No. 1-36518)
10.8*		NextEra Energy Partners, LP Guaranty dated as of July 1, 2014 in favor of Bank of America, N.A., as collateral agent under the Revolving Credit Agreement by and between NextEra Energy US Partners Holdings, LLC, NextEra Energy Operating Partners, LP, Bank of America, N.A., as administrative agent and collateral agent, and the lenders party thereto, dated as of July 1, 2014 (filed as Exhibit 10.1 to Form 10‑Q for the quarter ended March 31, 2015, File No. 1-36518)
10.9*		Certificate of Limited Partnership of NextEra Energy Operating Partners, LP (filed as Exhibit 3.4 to Form 10-K for the year ended December 31, 2014, File No. 1-36518)
10.10*		Third Amended and Restated Agreement of Limited Partnership of NextEra Energy Operating Partners, LP, dated as of December 21, 2018 (filed as Exhibit 10.1 to Form 8-K dated December 20, 2018, File No. 1-36518)
10.11*		Right of First Refusal Agreement, dated as of August 4, 2017, by and among NextEra Energy Partners, LP, NextEra Energy Operating Partners, LP, and NextEra Energy Resources, LLC (filed as Exhibit 10.3 to Form 8-K dated August 4, 2017, File No. 1-36518)
10.12*		Series A Preferred Unit Purchase Agreement, dated June 20, 2017, among NextEra Energy Partners, LP and the purchasers party thereto (filed as Exhibit 10 to Form 8-K dated June 20, 2017, File No. 1-36518)
10.12(a)*		Amendment No. 1 to Series A Preferred Unit Purchase Agreement, dated as of June 28, 2017, among NextEra Energy Partners, LP and the purchasers thereto (filed as Exhibit 10.2 to Form 10-Q for the quarter ended June 30, 2017, File No. 1-36518)
10.13*		NextEra Energy Partners, LP 2014 Long-Term Incentive Plan (filed as Exhibit 10.8 to Form 8‑K dated July 1, 2014, File No. 1-36518)
10.14*		Form of NextEra Energy Partners, GP, Inc. Indemnity Agreement (filed as Exhibit 10.10 to Form 10-K for the year ended December 31, 2014, File No. 1-36518)
10.15*		NextEra Energy Partners, LP Compensation Summary for Independent Non-Employee Director of NextEra Energy Partners, LP, effective January 1, 2018 (filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 2017, File No. 1-36518)



Exhibit Number		Description
10.16*		NextEra Energy Partners, LP Compensation Summary for Independent Non-Employee Director of NextEra Energy Partners, LP, effective January 1, 2019 (filed as Exhibit 10.16 to Form 10-K for the year ended December 31, 2018, File No. 1-36518)
10.17		NextEra Energy Partners, LP Compensation Summary for Independent Non-Employee Director of NextEra Energy Partners, LP, effective January 1, 2020
10.18*		Form of Restricted Unit Award Agreement under the NextEra Energy Partners, LP 2014 Long-Term Incentive Plan (filed as Exhibit 10.17 to Form 10-K for the year ended December 31, 2017, File No. 1-36518)
10.19*		Amended and Restated Limited Liability Company Agreement of NEP Renewables, LLC, dated December 21, 2018 (filed as Exhibit 10.2 to Form 8-K dated December 20, 2018, File No. 1-36518)
10.20*		Amended and Restated Limited Liability Company Agreement of NEP Renewables II, LLC, dated as of June 11, 2019 (filed as Exhibit 10.1 to Form 8-K dated June 10, 2019, File No. 1-36518)
10.21*		Contribution Agreement among South Texas Midstream, LLC, NextEra Energy Partners, LP, South Texas Midstream Holdings, LLC, and EIG NET Holdings III, LLC, dated November 1, 2019 (filed as Exhibit 10.1 to Form 8-K dated November 1, 2019, File No. 1-36518)
10.22*		Amended and Restated Limited Liability Company Agreement of NextEra Energy Partners Pipelines, LLC, dated as of November 13, 2019 (filed as Exhibit 10.1 to Form 8-K dated November 12, 2019, File No. 1-36518)
10.23*		Amended and Restated Limited Liability Company Agreement of South Texas Midstream, LLC, dated as of December 4, 2019 (filed as Exhibit 10.1 to Form 8-K dated December 4, 2019, File No. 1-36518)
21		Subsidiaries of NextEra Energy Partners, LP
23		Consent of Independent Registered Public Accounting Firm
31(a)		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of NextEra Energy Partners, LP
31(b)		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of NextEra Energy Partners, LP
32		Section 1350 Certification of NextEra Energy Partners, LP
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Schema Document
101.PRE		Inline XBRL Presentation Linkbase Document
101.CAL		Inline XBRL Calculation Linkbase Document
101.LAB		Inline XBRL Label Linkbase Document
101.DEF		Inline XBRL Definition Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

__________________________


*	Incorporated herein by reference.

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

Item 16. Form 10-K Summary

Not applicable.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: February 18, 2020



NEXTERA ENERGY PARTNERS, LP
(Registrant)




JAMES L. ROBO
James L. Robo Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities with NextEra Energy Partners, LP and on the date indicated.

Signature and Title as of February 18, 2020:



REBECCA J. KUJAWA		JAMES M. MAY
Rebecca J. Kujawa Chief Financial Officer and Director (Principal Financial Officer)		James M. May Controller and Chief Accounting Officer (Principal Accounting Officer)



SUSAN DAVENPORT AUSTIN		PETER H. KIND
Susan Davenport Austin Director		Peter H. Kind Director



ROBERT J. BYRNE		JOHN W. KETCHUM
Robert J. Byrne Director		John W. Ketchum Director

MARK E. HICKSON
Mark E. Hickson Director

Exhibit 4.8

Description of Securities
Registered Pursuant to Section 12
of the Securities Exchange Act of 1934

As of January 1, 2020 (“Description Date”), NextEra Energy Partners, LP (“NEP”) had one class of securities registered under Section 12 of the Securities Exchange Act of 1934—its common units representing limited partner interests in NEP (“common units”). The common units are listed on The New York Stock Exchange (“NYSE”) under the symbol “NEP.”

The following description is as of the Description Date, unless otherwise noted.

In this Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (“Description”), “NEP,” “we,” “us,” “our,” and similar terms refer to NextEra Energy Partners, LP, unless the context requires otherwise.

Index

Page

Description of Common Units 1

Provisions of the Partnership Agreements and Other Arrangements Relating to Cash Distributions 3

Material Provisions of Our Partnership Agreement 14

Material Provisions of the NEP OpCo Partnership Agreement 30

DESCRIPTION OF COMMON UNITS

The Units

All holders of common units are entitled to participate in partnership distributions and exercise the rights or privileges available to limited partners under our partnership agreement. For a description of the rights and privileges of limited partners under our partnership agreement, including voting rights, see “Material Provisions of Our Partnership Agreement.”

For a description of the relative rights and preferences of holders of our (i) common units, (ii) Series A convertible preferred units representing limited partner interests in NEP (“Series A preferred units”) and (iii) non-voting common units representing limited partnership interests in NEP (“non-voting common units”) in and to partnership distributions, please read “Provisions of The Partnership Agreements and Other Arrangements Relating to Cash Distributions.”

See “Potential Issuances of Voting and Non-Voting Common Units under Existing Financing Arrangements” below for an overview of potential units that may be issued under financing arrangements that we have outstanding as of the Description Date.

Transfer Agent and Registrar

Duties

Computershare Trust Company, N.A. serves as registrar and transfer agent for our common units. We pay all fees charged by the transfer agent for transfers of common units, except the following that must be paid by unitholders:


•	surety bond premiums to replace lost or stolen certificates, taxes and other governmental charges;


•	special charges for services requested by a common unitholder; and


•	other similar fees or charges.

There is no charge to unitholders for disbursements of our cash distributions. We indemnify the transfer agent, its agents and each of their stockholders, directors, officers and employees against all claims and losses that may arise out of acts performed or omitted for their activities in those capacities, except for any liability due to any gross negligence or intentional misconduct of the indemnified person or entity.

Resignation or Removal

The transfer agent may resign, by notice to us, or be removed by us. The resignation or removal of the transfer agent will become effective upon our appointment of a successor transfer agent and registrar and its acceptance of the appointment. If no successor has been appointed and has accepted the appointment within 30 days after notice of the resignation or removal, our general partner may act as the transfer agent and registrar until a successor is appointed.

Transfer of Common Units

By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited partner with respect to our common units transferred when such transfer or admission is reflected in our register and such limited partner becomes the record holder of our common units so transferred. Each transferee:


•	will become bound and will be deemed to have agreed to be bound by the terms of our partnership agreement;


•	will be deemed to represent that the transferee has the capacity, power and authority to enter into our partnership agreement; and


•	will be deemed to make the consents, acknowledgements and waivers contained in our partnership agreement.

We are entitled to treat the nominee holder of a common unit as the absolute owner in the event such nominee is the record holder of such common unit. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

Common units are securities and are transferable according to the laws governing transfer of securities. Until a common unit has been transferred on our register, we and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

Potential Issuances of Voting and Non-Voting Common Units under Existing Financing Arrangements

As of the Description Date, our 1.50% Convertible Senior Notes due 2020 (“convertible notes”) were outstanding, which convertible notes are guaranteed by NextEra Energy Operating Partners, LP (“NEP OpCo”). A holder of the convertible notes may convert all or a portion of its convertible notes into common units and cash in lieu of any fractional common unit at the conversion rate. Upon the occurrence of a fundamental change (as defined in the indenture governing the convertible notes) holders of the convertible notes may require us to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the convertible notes to be repurchased, plus accrued and unpaid interest, if any.

We also have entered into financing arrangements under which we have the option (each, a “Buyout Right”), subject to certain limitations, to purchase certain membership interests in project entities using our non-voting common units (a “Non-Voting Buyout Right”) or using our voting common units. Following an exercise of any Non-Voting Buyout Right, the non-voting common units will have, among other terms, the right to receive pro rata quarterly cash distributions and the right to convert, subject to certain limitations, the non-voting common units into our common units on a one-for-one basis. We have entered into certain registration rights agreements with

respect to units that may be issuable under these financings. Please NEP’s Annual Report on Form 10-K to which this Description is an exhibit (“Form 10-K”), for additional information regarding these financing arrangements.

PROVISIONS OF THE PARTNERSHIP AGREEMENTS AND OTHER ARRANGEMENTS
RELATING TO CASH DISTRIBUTIONS

We will distribute our available cash (as defined below, with respect to each quarter) to our unitholders. Our cash flow is generated from distributions we receive from NEP OpCo. As a result, our ability to make distributions to our unitholders depends on the ability of NEP OpCo to make cash distributions to its limited partners, including us. Set forth below is a summary of the significant provisions of our partnership agreement, the partnership agreement of NEP OpCo (“NEP OpCo partnership agreement”) and certain other agreements as they relate to cash distributions. The summary below is as of the Description Date and is qualified in its entirety by reference to all of the provisions of the partnership agreements, each of which is filed as an exhibit to the Form 10‑K. The summary is also qualified in its entirety by reference to the other agreements referenced below, each of which is filed as an exhibit to the Form 10-K. Under Delaware law and the provisions of our partnership agreement, we may also issue additional series or classes of limited partnership interests, such as the Series A preferred units and the non-voting common units, that may have rights which differ from the rights applicable to our common units as described in this Description.

As described below under “—Provisions of the NEP OpCo Partnership Agreement Relating to Cash Distributions,” NextEra Energy Operating Partners GP, LLC (“NEP OpCo GP”) has broad discretion to make certain decisions under NEP OpCo’s partnership agreement, including with respect to the establishment of cash reserves. Since we own all of the equity interests of NEP OpCo GP, decisions made by NEP OpCo GP under NEP OpCo’s partnership agreement are ultimately made at the direction of our Board of Directors (“Board”) or, in certain limited circumstances, our general partner.

On April 29, 2015, NEP OpCo made an equity method investment in the McCoy and Adelanto solar projects. In connection with this investment, NEP OpCo issued 1,000,000 of its Class B, Series 1 limited partner interests (with respect to the McCoy project) and 1,000,000 of its Class B, Series 2 limited partner interests (with respect to the Adelanto projects) (together, the “OpCo Class B units”) to NextEra Energy Equity Partners, LP (“NEE Equity”) for approximately 50% of the ownership interests in three solar projects. NEE Equity, as holder of the OpCo Class B units, retains 100% of the economic rights in the projects to which the respective OpCo Class B units relate, including the right to all distributions paid to NEP OpCo by the project subsidiaries that own the projects. Distributions on the OpCo Class B units are separate from distributions of available cash to the holders of NEP OpCo’s voting and non-voting common units, and the available distribution amount for the OpCo Class B units is calculated separately from available cash, operating surplus, capital surplus and minimum quarterly distribution pursuant to the NEP OpCo partnership agreement, and as a result such OpCo Class B units are not included in the determinations discussed below. See also “Material Provisions of the NEP OpCo Partnership Agreement—Issuance of Additional Partnership Interests—OpCo Class B Units.”

Provisions of Our Partnership Agreement Relating to Cash Distributions

Distributions of Available Cash by NEP

Our partnership agreement requires that, within 45 days after the end of each quarter, we distribute all of our available cash first to holders of Series A preferred units in an amount equal to the Series A distribution amount (as discussed under “—Series A Distribution Amount” and excluding any portion of the Series A distribution amount paid in Series A preferred units), and then to all holders of our common units and non-voting common units of record on the applicable record date. Generally, our available cash is all cash on hand at the date of determination in respect of such quarter (including any expected distributions from NEP OpCo), less the amount of cash reserves established by our Board. Our available cash does not include any proceeds received for the sale of any Series A preferred units or our securities that rank pari passu with the Series A preferred units as to distributions. Although we currently expect that cash reserves would be established solely to provide for the payment of income taxes, if any, or other liabilities of our partnership, we expect NEP OpCo to establish cash reserves prior to making distributions to our partnership to pay costs and expenses of our subsidiaries, in addition to our expenses, as well as

any debt service requirements and future capital expenditures. Our cash flow is generated from distributions we receive from NEP OpCo each quarter.

Units Eligible for Distribution

As of the Description Date, the only classes of our limited partnership interests for which units were outstanding were common units, Series A preferred units and Special Voting Units. Our partnership agreement also provides for the issuance of non-voting common units; however, no non-voting common units were outstanding as of the Description Date.

Each common unit (including each non-voting common unit) is entitled to receive distributions (including upon liquidation) on a pro rata basis. Series A preferred units are entitled to receive distributions in an amount equal to the Series A distribution amount (as discussed under “—Series A Distribution Amount” and excluding any portion of the Series A distribution amount paid in Series A preferred units). Special Voting Units are not entitled to receive any distributions. We may issue additional units to fund the redemption of NEP OpCo’s common units tendered by NEE Equity under the exchange agreement between NEP, NEP OpCo and NEE Equity or under other financing arrangements that we have outstanding. Under Delaware law and the provisions of our partnership agreement, we may also issue additional series or classes of limited partnership interests that, as determined by our Board, may have rights which differ from the rights applicable to our common units as described in this Description.

General Partner Interest

Our general partner owns a non-economic, general partner interest in us, which does not entitle it to receive cash distributions. However, to the extent our general partner owns common units or other equity securities in us, it will be entitled to receive cash distributions on any such interests. Similarly, to the extent our general partner owns units that have voting rights, it will be entitled to exercise its voting power with respect to such interests.

Distributions of Cash Upon Liquidation

If we dissolve in accordance with our partnership agreement, we will sell or otherwise dispose of our assets in a process called liquidation. We will first apply the proceeds of liquidation to discharge any outstanding liabilities, next to holders of Series A preferred units to satisfy the applicable liquidation preference, and finally to our holders of our common units (including non-voting common units) on a pro rata basis.

Series A Distribution Amount

Holders of the Series A preferred units will receive cumulative quarterly distributions equal to $0.4413 per unit for quarters ending on or before November 15, 2020 (the third anniversary of the issuance date of the Series A preferred units), which may be paid, at our election, in cash, in kind or a combination thereof. If we fail to pay a distribution for quarters ended on or before November 15, 2020, the distribution automatically will be deemed paid in kind under our partnership agreement. For quarters ending after November 15, 2020, holders will receive cumulative quarterly distributions equal to the greater of $0.4413 per unit and the amount that the Series A preferred units would have received if they had converted into our common units at the then-applicable Series A conversion rate (as defined under “Material Provisions of Our Partnership Agreement—Issuance of Additional Partnership Interest—Conversion of Series A Preferred Units”), and we may elect to pay up to 1/9th of the distribution period amounts in kind. The quarterly distribution amount and portion of the distribution that may be paid in kind will be prorated for the quarter that includes November 15, 2020. If we fail to pay a distribution during a subsequent distribution period, we would be unable to pay any distributions on or redeem or repurchase any junior securities, including our common units, prior to paying the unpaid cash component of the quarterly distribution, including any previously accrued and unpaid cash distributions.

Capital Distribution Basket

While any Series A preferred units are outstanding, we may not declare or pay distributions in any given quarter that exceed an amount equal to the then-available Capital Distribution Basket (as defined below) from

(i) borrowings, refinancing or refundings of indebtedness and sales of debt securities by us, (ii) sales of equity interests by us and (iii) sales or dispositions of any of our assets (any of the foregoing, “Capital Proceeds”). “Capital Distribution Basket” means, at the time of determination, (i) an amount equal to four times the total distributions to the holders of NEP OpCo common units and NEP OpCo non-voting common units under the NEP OpCo partnership agreement for the preceding quarter less (ii) the sum of (x) any amounts previously distributed by NEP OpCo to the holders of NEP OpCo common units and NEP OpCo non-voting common units under the NEP OpCo partnership agreement from capital surplus on or following June 20, 2017 (the date we entered into the Series A Preferred Unit Purchase Agreement (as amended, “Series A purchase agreement”)) and (y) any amounts previously distributed by us to our common unitholders and non-voting common unitholders under our partnership agreement from Capital Proceeds on or following the date of the Series A purchase agreement; provided that if during the preceding quarter, there was a distribution by us or NEP OpCo that reduced the Capital Distribution Basket, the amount in clause (i) shall be determined by reference to the last preceding quarter during which no such distributions were made.

Provisions of the NEP OpCo Partnership Agreement Relating to Cash Distributions

Distributions of Available Cash by NEP OpCo

General

NEP OpCo’s partnership agreement requires that, within 45 days after the end of each quarter, NEP OpCo distribute its available cash to its unitholders of record on the applicable record date.

Definition of Available Cash

Available cash generally means, for any quarter, the sum of all cash and cash equivalents on hand at the end of that quarter plus the amount of excess funds borrowed by NextEra Energy Resources, LLC (“NEER”) which remain unreturned:


•	less, the amount of cash reserves established by NEP OpCo GP to:


•	provide for the proper conduct of NEP OpCo’s business, including reserves for expected debt service requirements and future capital expenditures;

•

comply with applicable law or NEP OpCo’s debt instruments or other agreements, including to pay any amount necessary to make IDR Fee payments (which are certain payments from NEP OpCo to NextEra Energy Management Partners, LP, as manager (“NEE Management”) as a component of the Second Amended and Restated Management Services Agreement among NEP, NEE Management, NEP OpCo and our general partner (“Management Services Agreement”) that are based on the achievement by NEP OpCo of certain target quarterly distribution levels to its unitholders) with respect to that quarter based on NEP OpCo GP’s determination of the amount of available cash that would otherwise be available for distribution in that quarter; and


•	provide funds for distributions to NEP OpCo’s unitholders for any one or more of the next four quarters, provided that NEP OpCo GP may not establish cash reserves for future distributions if the effect of the establishment of such reserves prevents NEP OpCo from distributing an amount equal to the minimum quarterly distribution with respect to all voting and non-voting common units;


•	less, the amount of cash contributed by an affiliate of NEP OpCo GP (other than us or our subsidiaries) for the purpose of funding construction costs of our subsidiaries that would otherwise constitute available cash;


•	plus, if NEP OpCo GP so determines, all or any portion of the cash and cash equivalents on hand on the date of determination of available cash for the quarter resulting from working capital borrowings made subsequent to the end of such quarter.

Notwithstanding the foregoing, available cash does not include any proceeds received pursuant to the purchase of or contribution of cash in exchange for any NEP OpCo preferred units with economically equivalent rights to the Series A preferred units (“OpCo Series A preferred units”) or any OpCo Series A parity securities (limited partnership interests of OpCo that rank pari passu as to distributions with the OpCo Series A preferred units) issued in accordance with the NEP OpCo partnership agreement.

Because the amount of available cash for any quarter includes the amount of excess funds borrowed by NEER which remain unreturned, NEP OpCo will be required to demand the return of all or a portion of such funds from NEER and distribute such funds to its unitholders to the extent that NEP OpCo GP is not permitted to reserve the amount of such funds under its partnership agreement, including any reserves established to fund future distributions. In addition, the purpose and effect of the last bullet point above is to allow NEP OpCo GP, if it so decides, to use cash from working capital borrowings made after the end of the quarter but on or before the date of determination of available cash for that quarter to pay distributions to unitholders. Under NEP OpCo’s partnership agreement, working capital borrowings are generally borrowings under a credit facility, commercial paper facility or similar financing arrangement that are used solely for working capital purposes or to pay distributions to partners, provided that NEP OpCo intends to repay the borrowings within 12 months with funds other than from additional working capital borrowings.

Intent to Distribute the Minimum Quarterly Distribution

We intend to cause NEP OpCo to pay a minimum quarterly distribution to the holders of its common units and non-voting common units, including us, of $0.1875 per unit, or $0.75 per unit on an annualized basis, to the extent NEP OpCo has sufficient cash from its operations after the establishment of cash reserves and the payment of expenses, including: (i) expenses of NEP OpCo GP and its affiliates; (ii) our expenses; and (iii) payments to NEER and its affiliates under the Management Services Agreement and the Amended and Restated Cash Sweep and Credit Support Agreement by and between NEP OpCo and NEER (the “CSCS Agreement”). However, NEP OpCo may not be able to pay the minimum quarterly distribution on its units in any quarter. Since we own all of the equity interests of NEP OpCo GP, decisions made by NEP OpCo GP under NEP OpCo’s partnership agreement are ultimately made at the direction of our Board or, in certain limited circumstances, our general partner.

Incentive Distribution Right Fee

Under the Management Services Agreement, NEE Management is entitled to receive an incentive distribution right fee (“IDR Fee”) that increases based on the hypothetical amount of adjusted available cash from operating surplus that NEP OpCo would be able to distribute to its voting and non-voting common unitholders. Since the IDR Fee is paid from NEP OpCo’s total cash on hand and increases depending on the hypothetical amount of distributions NEP OpCo would have made to its voting and non-voting common unitholders, the IDR Fee effectively reduces the amount of cash NEP OpCo has available for distribution to its voting and non-voting common unitholders. See “—Payments of the Incentive Distribution Right Fee” for additional information.

Operating Surplus and Capital Surplus

General

All cash distributed to NEP OpCo unitholders will be characterized as either being paid from “operating surplus” or “capital surplus.” NEP OpCo will treat distributions of available cash from operating surplus differently than distributions of available cash from capital surplus.

Operating Surplus

Operating surplus of NEP OpCo is defined as:


•	$35.0 million (as described below); plus

•

all of NEP OpCo’s cash receipts after the closing of our initial public offering on July 1, 2014 (“IPO”), excluding cash from interim capital transactions (as defined below), provided that cash receipts from the termination of certain hedges prior to their specified termination date will be included in operating surplus in equal quarterly installments over the remaining scheduled life of such hedges; plus


•	working capital borrowings by NEP OpCo made after the end of a quarter but on or before the date of determination of operating surplus for that quarter; plus

•

cash distributions paid on equity issued, other than equity issued in connection with the IPO, to finance all or a portion of the construction, replacement, acquisition, development or improvement of a capital asset in respect of the period beginning on the date that NEP OpCo enters into a binding obligation to commence the construction, replacement, acquisition, development or improvement of a capital asset and ending on the earlier to occur of the date that the capital asset commences commercial service and the date that it is abandoned or disposed of; plus


•	cash distributions paid on equity issued to pay the construction period interest on debt incurred, including periodic net payments under related interest rate swap arrangements, or to pay construction period distributions on equity issued, to finance the construction, replacement, acquisition, development or improvement of a capital asset described in the preceding bullet; plus


•	the portion of any IDR Fee payments made to NEE Management as a result of cash distributions paid on equity issued as described in the preceding two bullets; less


•	all of NEP OpCo’s operating expenditures after the closing of the IPO; less


•	the amount of cash reserves established by NEP OpCo GP to provide funds for future operating expenditures; less


•	all working capital borrowings not repaid within 12 months after having been incurred, or repaid within such 12-month period with the proceeds of additional working capital borrowings.

As described above, the definition of operating surplus does not solely reflect actual cash on hand that is available for distribution to unitholders of NEP OpCo and is not limited to cash generated by operations. For example, the definition of operating surplus includes a provision that enables us to direct NEP OpCo to distribute as operating surplus up to $35.0 million of cash that NEP OpCo receives in the future from non-operating sources such as asset sales, issuances of securities and long-term borrowings that would otherwise be distributed as capital surplus. As a result, NEP OpCo may distribute as operating surplus up to such amount of any cash that it receives from non-operating sources. In addition, the effect of including certain cash distributions on equity interests in operating surplus, as described above, increases operating surplus by the amount of any such cash distributions.

The proceeds of working capital borrowings increase operating surplus and repayments of working capital borrowings are generally operating expenditures that reduce operating surplus at the time of repayment. However, if NEP OpCo does not repay working capital borrowings, which increase operating surplus, during the 12-month period following the borrowing, they will be deemed to have been repaid at the end of such period, thus decreasing operating surplus at that time. When the working capital borrowings are subsequently repaid, they will not be treated as a further reduction in operating surplus because operating surplus will have been previously reduced by the deemed repayment.

Interim capital transactions are defined as:


•	borrowings, refinancings or refundings of indebtedness, other than working capital borrowings and items purchased on open account or for a deferred purchase price in the ordinary course of business, and sales of debt securities;


•	sales of equity securities;


•	sales or other voluntary or involuntary dispositions of assets, other than sales or other dispositions of inventory, accounts receivable and other assets in the ordinary course of business and sales or other dispositions of assets as part of normal asset retirements or replacements; and


•	capital contributions received.

Operating expenditures are defined as, without duplication:

•

all cash expenditures of NEP OpCo and its subsidiaries, including taxes, reimbursements of expenses of NEP OpCo GP and its affiliates, director and employee compensation of NEP OpCo’s subsidiaries, payments under the Management Services Agreement and the CSCS Agreement for services rendered, including management and credit support fees, or in reimbursement of draws made on credit support provided by NEER or its affiliates, debt service payments (including principal amortization payments under financing arrangements of NEP OpCo’s subsidiaries), payments made in the ordinary course of business under certain hedge contracts (provided that payments made in connection with the termination of any such hedge contract prior to the expiration of its settlement or termination date specified therein will be included in operating expenditures in equal quarterly installments over the remaining scheduled life of such hedge contract and amounts paid in connection with the initial purchase of such a contract will be amortized at the life of such contract), maintenance capital expenditures (as described below), and repayment of working capital borrowings;


•	all expenses and other cash expenditures (other than U.S. federal income taxes) of NEP, including reimbursements of expenses of its general partner and its affiliates as set forth in the Management Services Agreement and of NEER and its affiliates as set forth in the CSCS Agreement; and


•	payments of the IDR Fee to NEE Management, other than payments of the IDR Fee described in the sixth bullet in the definition of “operating surplus.”

Notwithstanding the foregoing, operating expenditures will not include:


•	repayments of working capital borrowings where such borrowings have previously been deemed to have been repaid, as described above;


•	payments, including prepayments and prepayment penalties, of principal of and premium on indebtedness other than working capital borrowings and financing arrangements of NEP OpCo’s subsidiaries;


•	expansion capital expenditures, as described below;


•	payment of transaction expenses, including taxes, relating to interim capital transactions;


•	distributions to unitholders of NEP OpCo; or


•	repurchases of partnership interests (including cash redemptions under the exchange agreement between NEP, NEP OpCo and NEE Equity), excluding repurchases NEP OpCo makes to satisfy obligations under employee benefit plans.

Capital Surplus

Capital surplus is defined in NEP OpCo’s partnership agreement as any distribution of available cash in excess of its cumulative operating surplus. Accordingly, except as described above, capital surplus would generally be generated by:


•	borrowings other than working capital borrowings;


•	sales of NEP OpCo’s equity and debt securities; and


•	sales or other dispositions of assets, other than inventory, accounts receivable and other assets sold in the ordinary course of business or as part of ordinary course retirement or replacement of assets.

Characterization of Cash Distributions

NEP OpCo’s partnership agreement requires that it treat all available cash distributed as coming from operating surplus until the sum of all available cash distributed since the IPO equals the operating surplus from the IPO through the end of the quarter immediately preceding that distribution. NEP OpCo’s partnership agreement requires that NEP OpCo treat any amount distributed in excess of operating surplus, regardless of the source, as capital surplus. We do not anticipate that NEP OpCo will make any distributions from capital surplus.

NEP OpCo Capital Distribution Basket

While any Series A preferred units are outstanding, NEP OpCo may not declare or pay distributions from capital surplus in any given quarter that exceed an amount equal to the then-available NEP OpCo Capital Distribution Basket. “NEP OpCo Capital Distribution Basket” means, at the time of determination, (i) an amount equal to four times the total distributions to the holders of NEP OpCo common units and NEP OpCo non-voting common units under the NEP OpCo partnership agreement for the preceding quarter less (ii) the sum of (x) any amounts previously distributed by NEP OpCo to its common unitholders and non-voting common unitholders under the NEP OpCo partnership agreement from capital surplus on or following the date of the Series A purchase agreement and (y) any amounts previously distributed by us to holders of our common units and non-voting common units under our partnership agreement from Capital Proceeds on or following the date of the Series A purchase agreement; provided that if during the preceding quarter, there was a distribution by NEP OpCo or us that reduced the NEP OpCo Capital Distribution Basket, the amount in clause (i) shall be determined by reference to the last preceding quarter during which no such distributions were made.

Capital Expenditures

Expansion capital expenditures are cash expenditures incurred for those acquisitions or capital improvements that are expected to increase NEP OpCo’s operating income, operating capacity or operating cash flow over the long term. Examples of expansion capital expenditures include the acquisition of equipment or additional clean energy projects to the extent such capital expenditures are expected to increase NEP OpCo’s operating capacity or its operating income. Expansion capital expenditures include interest expense associated with borrowings used to fund expansion capital expenditures.

Maintenance capital expenditures are cash expenditures incurred for those acquisitions or capital improvements that are made to maintain, over the long term, operating capacity, operating income or operating cash flow. Examples of maintenance capital expenditures are expenditures to repair, refurbish or replace NEP OpCo’s clean energy projects, to upgrade transmission networks, to maintain equipment reliability, integrity and safety and to comply with laws and regulations.

Distributions and Payments of Available Cash from Operating Surplus

NEP OpCo will make distributions or payments of 100% of its available cash from operating surplus for any quarter in the following order of priority:


•	first, as distributions or payments with respect to NEP OpCo’s Series A preferred units; and


•	second, to the holders of NEP OpCo’s common units and non-voting common units, pro rata.

Holders of OpCo Class B units are not entitled to distributions from available cash.

Payments of the Incentive Distribution Right Fee

Under the Management Services Agreement, NEE Management is entitled to the IDR Fee, which is calculated based on the hypothetical amount of adjusted available cash from operating surplus that NEP OpCo would be able to distribute to its voting and non-voting common unitholders after the minimum quarterly and the target quarterly distribution levels described below have been achieved. The right to receive the IDR Fee is currently held by NEE Management, but may be assigned. Although cash used to pay the IDR Fee will be an operating expenditure, the description below assumes that any IDR Fee will not reduce NEP OpCo’s operating surplus and will be paid with available cash from operating surplus. We use this assumption in the description below for illustrative purposes to demonstrate that the calculation of IDR Fee payments for each quarter will be based on hypothetical amounts that would be available for distribution to NEP OpCo voting and non-voting common unitholders if the IDR Fee was not an operating expense and NEE Management held a class of equity interests in NEP OpCo entitled to such distributions based on the achievement of the target quarterly distribution levels. Once the amount of IDR Fee payments is determined, the amount will be classified as an operating expense and operating surplus will be reduced by a like amount before available cash is distributed by NEP OpCo to its voting and non-voting common unitholders on a pro rata basis.

If, for any quarter, NEP OpCo has adjusted available cash equal to or greater than $14,039,546.64 plus the product of (i) the NEP OpCo voting and non-voting common units outstanding on the record date for that quarter and (ii) $0.3525 per NEP OpCo voting and non-voting common unit (subject to adjustment under the Management Services Agreement) (such sum, the “base incentive amount”), NEP OpCo will calculate the IDR Fee using the hypothetical distributions of adjusted available cash to NEP OpCo voting and non-voting common unitholders described below:


•	first, to make a payment of $14,039,546.64 to NEE Management in respect of the IDR Fee and to distribute any remaining adjusted available cash to all NEP OpCo voting and non-voting common unitholders, pro rata, until the sum of fees paid to NEE Management and distributions deemed to be made to NEP OpCo voting and non-voting common unitholders is equal to the base incentive amount; and


•	thereafter, to distribute 75% of any remaining adjusted available cash to all NEP OpCo voting and non-voting common unitholders, pro rata, and to make a payment of 25% of any remaining adjusted available cash to NEE Management in respect of the IDR Fee.

If, for any quarter, NEP OpCo has adjusted available cash less than the base incentive amount, then, NEP OpCo will calculate the IDR Fee using the hypothetical distributions of adjusted available cash described below, provided that the hypothetical distributions to NEP OpCo voting and non-voting common unitholders set forth below will be calculated as though the total NEP OpCo voting and non-voting common units outstanding is equal to the base unit amount:


•	first, to distribute 100% to all NEP OpCo voting and non-voting common unitholders, pro rata, until each voting and non-voting common unitholder is deemed to have received a total of $0.215625 per unit (or 115% of the minimum quarterly distribution) for that quarter;


•	second, to distribute 85% to all NEP OpCo voting and non-voting common unitholders, pro rata, and to make a payment of 15% to NEE Management in respect of the IDR Fee, until each voting and non-voting common unitholder is deemed to have received a total of $0.234375 per unit (or 125% of the minimum quarterly distribution) for that quarter;


•	third, to distribute 75% to all NEP OpCo voting and non-voting common unitholders, pro rata, and to make a payment of 25% to NEE Management in respect of the IDR Fee, until each voting and non-voting common unitholder is deemed to have received a total of $0.281250 per unit (or 150% of the minimum quarterly distribution) for that quarter; and


•	thereafter, to distribute 50% to all NEP OpCo voting and non-voting common unitholders, pro rata, and to make a payment of 50% to NEE Management in respect of the IDR Fee;

provided that, in each case, the IDR Fee will be paid until (x) the aggregate deemed per NEP OpCo voting and non-voting common unit distribution to NEP OpCo unitholders equals (y) the per NEP OpCo voting and non-voting common unit distribution declared by NEP OpCo to NEP OpCo unitholders in accordance with the NEP OpCo limited partnership agreement for the applicable quarter. Further, if NEP OpCo has adjusted available cash less than the base incentive amount for any quarter, the aggregate IDR Fee for such quarter will not exceed $14,039,546.64.

As used in this Description, “base unit amount” means 155,676,955 NEP OpCo voting and non-voting common units, subject to proportional adjustment in the event of any distribution, combination or subdivision (whether effected by a distribution payable in units or otherwise) of NEP OpCo limited partnership interests in accordance with the NEP OpCo limited partnership agreement or in any redemption, repurchase, acquisition or similar transaction by NEP OpCo of NEP OpCo voting and non-voting common units.

“Adjusted available cash” means, in respect of any quarter, any remaining available cash that would be deemed to be operating surplus under the NEP OpCo limited partnership agreement before giving effect to the payment of the IDR Fee and after giving effect to the payment of the Series A distribution amount; provided that, if NEP OpCo has adjusted available cash less than the base incentive amount for any quarter, “adjusted available cash” means, in respect of such quarter, any remaining available cash that would be deemed to be operating surplus under the NEP OpCo limited partnership agreement before giving effect to the payment of the IDR Fee, after giving effect to the payment of the Series A distribution amount, and after subtracting the aggregate amount that would be required to be distributed to NEP OpCo voting and non-voting common unitholders to equal the product of the base unit amount on the applicable record date for such quarter multiplied by the first target quarterly distribution.

Percentage Allocations of Adjusted Available Cash from Operating Surplus

Adjusted Available Cash Equal to or Greater than Base Incentive Amount



	Marginal Percentage Interest in Adjusted Available Cash
Total Quarterly Distribution per NEP OpCo Voting and Non-Voting Common Unit Target Amount	NEP OpCo Voting and Non-Voting Common Unitholders		NEE Management
above $0.3525	75.0	%	25.0	%

Adjusted Available Cash Less than Base Incentive Amount

The following table sets forth the percentage allocations of adjusted available cash from operating surplus between NEE Management (in respect of the IDR Fee) and NEP OpCo’s voting and non-voting common unitholders (in respect of their voting and non-voting common units), assuming that NEP OpCo has adjusted available cash from operating surplus in an aggregate amount less than the base incentive amount for a particular quarter, and based on the specified target quarterly distribution levels. For illustrative purposes (as described above), the following also assumes that the IDR Fee is paid with available cash from operating surplus and does not constitute an operating expenditure. The amounts set forth under “Marginal Percentage Interest in Adjusted Available Cash” are the percentage interests of NEE Management (in respect of the IDR Fee) and the NEP OpCo voting and non-voting common unitholders (in respect of their voting and non-voting common units) in any adjusted available cash from operating surplus NEP OpCo distributes to voting and non-voting common unitholders and pays in respect of the IDR Fee, corresponding to the incremental amounts of distributions to voting and non-voting common unitholders in the column “Total Quarterly Distribution per NEP OpCo Voting and Non-Voting Common Unit Target Amount.” The percentage interests shown for NEP OpCo’s unitholders and NEE Management for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. The percentage interests assume that NEE Management has not assigned its right to the IDR Fee.



			Marginal Percentage Interest in Adjusted Available Cash
	Total Quarterly Distribution per NEP OpCo Voting and Non-Voting Common Unit Target Amount		NEP OpCo Voting and Non-Voting Common Unitholders		NEE Management

Minimum Quarterly Distribution		$0.1875	100.0	%	0.0	%
First Target Quarterly Distribution	above $0.1875 up to $0.215625		100.0	%	0.0	%
Second Target Quarterly Distribution	above $0.215625 up to $0.234375		85.0	%	15.0	%
Third Target Quarterly Distribution	above $0.234375 up to $0.281250		75.0	%	25.0	%
Thereafter	above $0.281250		50.0	%	50.0	%

Distributions from Capital Surplus

How Distributions from Capital Surplus Will Be Made

NEP OpCo will make distributions of available cash from capital surplus, if any, in the following manner:


•	first, to the holders of the Series A preferred units, as provided above;


•	second, to the holders of NEP OpCo’s common units and non-voting common units, pro rata until the minimum quarterly distribution is reduced to zero, as described below under “—Effect of a Distribution from Capital Surplus;” and


•	thereafter, as if such distributions were from operating surplus, provided that because the minimum quarterly distribution is reduced to zero, NEP OpCo will pay the IDR Fee at the highest level as described below.

The preceding discussion is based on (1) the assumption that NEP OpCo does not issue any additional classes of equity securities and (2) the fact that holders of OpCo Class B units are not entitled to such distributions.

Effect of a Distribution from Capital Surplus

NEP OpCo’s partnership agreement treats a distribution of capital surplus as the repayment of the initial unit price on NEP OpCo’s common units (equal to the IPO price of $25.00 per common unit), which is a return of capital. The initial unit price less any distributions of capital surplus per unit is referred to as the “unrecovered initial unit price.” Each time a distribution of capital surplus is made, the minimum quarterly distribution and the target quarterly distribution levels will be reduced in the same proportion as the corresponding reduction in the unrecovered initial unit price. Any distribution of capital surplus before the unrecovered initial unit price is reduced to zero cannot be applied to the payment of the minimum quarterly distribution.

Once NEP OpCo distributes capital surplus on a voting and non-voting common unit in an amount equal to the initial unit price, the minimum quarterly distribution and the target quarterly distribution levels will be equal to zero. NEP OpCo will then make all future distributions from operating surplus to voting and non-voting common unitholders, pro rata, after making required distributions, if any, to Series A preferred unitholders. However, once the minimum quarterly distribution and the target quarterly distribution levels are reduced to zero, NEP OpCo will pay the IDR Fee to NEE Management at the highest level, which will be equal to 100% of any distributions paid to the voting and non-voting common unitholders, effectively reducing the total cash available for distributions to unitholders. See “—Incentive Distribution Right Fee” above.

Adjustment to the Minimum Quarterly Distribution and the Target Quarterly Distribution Levels

In addition to adjusting the minimum quarterly distribution and target quarterly distribution levels to reflect a distribution of capital surplus, if NEP OpCo combines its units into fewer units or subdivides its units into a greater number of units, it will proportionately adjust:


•	the minimum quarterly distribution;


•	the target quarterly distribution levels; and


•	the unrecovered initial unit price.

For example, if a two-for-one split of NEP OpCo’s common units should occur, the minimum quarterly distribution, the target distribution levels and the unrecovered initial unit price would each be reduced to 50% of its initial level. NEP OpCo will not make any adjustment by reason of the issuance of additional units for cash or property.

Distributions of Cash Upon Liquidation

If NEP OpCo dissolves in accordance with its partnership agreement, it will sell or otherwise dispose of its assets in a process called liquidation. NEP OpCo will first apply the proceeds of liquidation to discharge any outstanding liabilities, including any payments of the IDR Fee to which NEE Management is entitled, next to holders of OpCo Series A preferred units to satisfy the applicable liquidation preference, and finally to holders of NEP OpCo’s common units and non-voting common units on a pro rata basis.

MATERIAL PROVISIONS OF OUR PARTNERSHIP AGREEMENT

The following is a summary of certain material provisions of our partnership agreement, which is filed as an exhibit to the Form 10-K. Other material provisions of our partnership agreement are summarized in other sections of this Description and the documents incorporated by reference herein, including under “Provisions of the Partnership Agreements and Other Arrangements Relating to Cash Distributions.” The summary below is as of the Description Date and is qualified in its entirety by reference to all of the provisions of our partnership agreement, which is filed as an exhibit to the Form 10-K. Under Delaware law and the provisions of our partnership agreement, we may also issue additional series or classes of limited partner interests that, as determined by our Board, may have rights that differ from the rights applicable to our common units as described in this Description.

Organization and Duration

Our partnership was formed in March 2014 and has a perpetual existence unless terminated under the terms of our partnership agreement.

Purpose

Our purpose under our partnership agreement is limited to any business activity that is approved by our Board and our general partner and that lawfully may be conducted by a limited partnership organized under Delaware law; provided, however, that, without the prior written consent of our general partner, which consent may be granted or withheld in its sole discretion, we and our subsidiaries do not have any power or authority to solicit, review, respond to or otherwise participate in any request for proposal relating to, or otherwise engage in, or seek to engage in, certain activities or lines of business.

Although our Board and our general partner have the ability to cause us to engage in activities other than the business of acquiring, managing and owning contracted clean energy projects with stable long-term cash flows, our Board and our general partner may, to the fullest extent permitted by law, decline to do so free of any duty or obligation whatsoever to us or our limited partners, including any duty to act in our best interests or in the best interests of our limited partners, other than the implied contractual covenant of good faith and fair dealing. Our Board and our general partner are authorized in general to perform all acts they determine to be necessary or appropriate to carry out our purposes and to conduct our business.

Capital Contributions

Our limited partners are not obligated to make additional capital contributions, except as described below under “—Limited Liability.” Our general partner is not obligated to make any capital contributions.

Management by Board; Officers

Our general partner has delegated substantially all management power and authority over the business and affairs of the Partnership to our Board established pursuant to our partnership agreement. Our Board consists of seven directors, four of whom are elected by unitholders and three of whom are appointed by our general partner, in its sole discretion. Any decision to be made by our Board will require the approval of at least four directors present and voting at any meeting at which a quorum is present, and four directors constitute a quorum. If our Board is unable to make a decision with respect to certain matters relating to our distribution of cash, our capital expenditures, the acquisition, disposition and use of our assets and purchases and sales of our partnership interests or

related derivative securities, NEE Management, which serves as the Manager under the terms of the Management Services Agreement, is authorized to take any action with respect to such matter that is consistent with our operational plan then in effect, which plan is approved annually by our Board. Notwithstanding the foregoing, our general partner retains the authority to make tax filings and to consent to certain matters of the Partnership. See “—Certain Matters Requiring Consent of the General Partner.”

Our officers and, if any, employees are appointed, retained, terminated and replaced by our Board. However, so long as NEE Management (or another affiliate of NextEra Energy, Inc. (“NEE”)) serves as the Manager under the Management Services Agreement, the Manager, pursuant to the terms of the Management Services Agreement, will designate individuals (i) to serve on the boards of directors or their equivalents of our subsidiaries and (ii) to carry out the functions of principal executive, accounting and financial officers and otherwise to act as our officers and officers of our subsidiaries. Our Board (i) will appoint such individuals designated by the Manager as our officers and, if any, employees and (ii) will cause the boards of directors or their equivalents or the controlling shareholder, member or general partner of our subsidiaries to appoint such individuals designated by the Manager to the applicable roles with respect to the applicable entity, as long as, in each case, the designees are determined by the Manager in good faith to have the appropriate experience, qualifications, skills and such other relevant attributes to carry out such persons’ designated functions.

Annual and Special Meetings

Pursuant to the terms of our partnership agreement, an annual meeting of limited partners for the election of directors and for other properly presented business will be held. Limited partners are not entitled to bring any business before the annual meeting except pursuant to Rule 14a-8 promulgated under the Exchange Act.

Special meetings may be called (i) by our Board, (ii) by our general partner or (iii) by limited partners owning 20% or more of the outstanding units of the class or classes for which such meeting is proposed (without giving effect to any of the voting limitations described below in “—Voting Rights—Limitations on Voting Rights”). Special meetings may be called by limited partners only for the purposes of removing directors elected by limited partners (“LP Elected Directors”) for cause or removing our general partner.

Voting Rights

Our limited partnership interests include our common units, non-voting common units, the Special Voting Units and the Series A preferred units. For purposes of this summary, matters described as requiring the approval of a “unit majority” require the approval of at least a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting common units) and the Special Voting Units, voting together as a single class. Except as related to certain amendments that would have a material adverse effect on the rights or preferences of the non-voting common units in relation to other classes of limited partnership interests, holders of non-voting common units do not have voting rights under our partnership agreement.

Our limited partners may vote at meetings either in person or by proxy. The holders of a majority of the outstanding units (including those deemed owned by our general partner and its affiliates) represented in person or by proxy and that are entitled to vote at such meeting constitutes a quorum at a meeting of the limited partners (including annual and special meetings), unless any action by the limited partners requires approval by a greater percentage of the voting power, in which case the quorum will be the greater percentage. The vote of limited partners holding outstanding units representing a majority of the outstanding units entitled to vote at the meeting (on all matters on which the holders of all units vote together as a single class) or a majority of the outstanding units of each class entitled to vote at the meeting (on all matters on which the holders of each class of units vote separately by class) constitutes the vote of all limited partners, unless a different percentage is required under our partnership agreement, in which case the vote of limited partners holding outstanding units representing at least such different percentage with respect to the outstanding units entitled to vote at such meeting (on all matters on which the holders of all units vote together as a single class) or such different percentage with respect to the outstanding units of each class entitled to vote at such meeting (on all matters on which the holders of each class of units vote separately by class) will be required.

Any action of the limited partners that may be taken at a meeting of the limited partners may be taken, if authorized by our Board, without a meeting if consents in writing describing the action so taken are signed by holders of the number of units that would be necessary to authorize or take that action at a meeting where all limited partners were present and voted.

The following table sets forth a summary of the unitholder vote required for the matters specified below. Other than the implied contractual covenant of good faith and fair dealing, our Board, our general partner and its affiliates, including NEE Equity, have no duty or obligation whatsoever to us or our limited partners, including any duty to act in our best interests or the best interests of our limited partners, in voting units any of them holds or acquires or otherwise.



Partnership Action	Unitholder Vote Required
Issuance of additional units	No approval right. See “—Issuance of Additional Partnership Interests.”
Amendment of our partnership agreement	Certain amendments may be made by our Board or our general partner without the approval of the unitholders. Other amendments generally require the approval of a unit majority subject to certain exceptions. See “—Amendment of Our Partnership Agreement,” “—Series A Preferred Units” and “—Non-Voting Common Units” below.
Certain matters relating to NEP OpCo	Any matters relating to NEP OpCo which require the consent or approval of a majority of the outstanding units of NEP OpCo, including certain amendments of NEP OpCo’s partnership agreement, requires the approval of a unit majority. Any other matters requiring approval by a higher percentage of NEP OpCo common units requires the approval by a corresponding percentage of our unitholders, subject to certain exceptions. Any amendment of the NEP OpCo partnership agreement also requires the approval of our general partner, in its sole discretion. See also “—Series A Preferred Units” below.
Merger or conversion of our partnership	Under most circumstances, a merger or conversion of our partnership requires approval of (i) our general partner, in its sole discretion, (ii) our Board, (iii) a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units and the units owned by our general partner and its affiliates), voting as a separate class, and (iv) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units) owned by our general partner and its affiliates, voting together as a single class. Our general partner must also consent to any merger or conversion of any of our subsidiaries. See “—Merger, Consolidation, Conversion, Sale or Other Disposition of Assets.”
Sale of all or substantially all of the assets of our partnership and our subsidiaries	Under most circumstances, a sale of all or substantially all of the assets of our partnership and our subsidiaries requires approval of (i) our general partner, in its sole discretion, (ii) our Board, (iii) a majority of the outstanding common units (including Series A preferred units, voting as if



	converted into common units, but excluding non-voting common units and the units owned by our general partner and its affiliates), voting as a separate class, and (iv) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units) owned by our general partner and its affiliates, voting together as a single class. Pursuant to the Right of First Refusal Agreement, dated as of August 4, 2017, among us, NEP OpCo and NEER, NEP OpCo granted NEER and its subsidiaries a right of first refusal to acquire all the assets owned or acquired by NEP OpCo or its subsidiaries.
Dissolution of our partnership	Under most circumstances, dissolution of our partnership requires approval of (i) our general partner, in its sole discretion, (ii) our Board, (iii) a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting common units and the units owned by our general partner and its affiliates), voting as a separate class, and (iv) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units) owned by our general partner and its affiliates, voting together as a single class. Our general partner must also consent to the dissolution of any of our subsidiaries. See “—Termination and Dissolution.”
Continuation of our business upon dissolution	Under certain circumstances, upon the dissolution of our partnership, the limited partners may elect to continue the business of our partnership on the same terms and conditions set forth in our partnership agreement by appointing as a successor general partner a person approved by a unit majority. See “—Termination and Dissolution.”
Election of LP Elected Director	A nominee for LP Elected Director will be elected to our Board if, subject to the voting limitations described below, the votes cast for the nominee’s election exceed the votes cast against the nominee’s election. If the number of nominees exceeds the total number of LP Elected Directors to be elected, LP Elected Directors will be elected by a plurality of the votes cast (subject to the voting limitations described below).
Removal of LP Elected Director	An LP Elected Director will be removed for cause from our Board if, subject to the voting limitations described below, the votes cast for such LP Elected Director’s removal exceed the votes cast against such LP Elected Director’s removal.
Withdrawal of our general partner	No approval right. See “—Withdrawal or Removal of the General Partner.”

Removal of our general partner	Approval of not less than 66-2/3% of the outstanding units, voting as a single class, excluding non-voting common units but including units held by our general partner and its affiliates (including the Special Voting Units). Any removal



	of our general partner is also subject to the approval of a successor general partner by a unit majority. See “—Withdrawal or Removal of the General Partner.”
Transfer of the general partner interest	No approval right. See “—Transfer of General Partner Interest.”
Transfer of ownership interests in our general partner	No approval right. See “—Transfer of Ownership Interests in the General Partner.”

Record holders of our outstanding voting units on the record date will be entitled to notice of, and to vote at, meetings of the limited partners and to act upon matters for which approvals may be solicited.

Common units held in nominee or street name account will be voted by the broker or other nominee in accordance with the instruction of the beneficial owner unless the arrangement between the beneficial owner and his or her nominee provides otherwise. Any notice, demand, request, report or proxy materials required or permitted to be given or made to record holders of common units eligible to vote under our partnership agreement will be delivered to the record holder by us or by the transfer agent.

Limitations on Voting Rights

Pursuant to our partnership agreement, if any person owns, together with the members of any related group, the power to vote 5% or more of our outstanding units, then such person, together with any related group, is entitled to vote not more than 5% of such outstanding units in the election or removal of LP Elected Directors, and the amount of such units in excess of 5% in voting power is not entitled to vote in the election or removal of LP Elected Directors. In addition, if, after giving effect to the 5% limitation, any person, together with the members of any related group, still has the power to cast votes equal to or greater than 10% of the units present and actually voted on any matter (including the election or removal of LP Elected Directors), an additional cutback will be imposed so that such person, together with the members of any related group, is entitled to cast votes for not more than 9.99% of the units present and actually voted on such matter, and any units held by such person (together with the members of any related group) equal to 10% or greater in voting power will be voted proportionally with all other votes on such matter; provided that, if such person is our general partner or any of its affiliates, such additional cutback applies only to the election or removal of LP Elected Directors.

Series A Preferred Units

The Series A preferred units vote on an as-converted basis with our common units as a single class, so that each outstanding Series A preferred unit is entitled to one vote for each common unit into which such Series A preferred unit would be convertible at the then-applicable Series A conversion rate on each matter with respect to which each record holder of a common unit is entitled to vote. The Series A preferred units also have certain class voting rights with respect to amendments that adversely affect their distribution, liquidation or conversion rights, their ranking or certain other protections under our partnership agreement and with respect to certain amendments of NEP OpCo’s partnership agreement.

Special Voting Units

NEE Equity will hold the same number of Special Voting Units as the number of common units of NEP OpCo held by NEE Equity. If the ratio at which common units of NEP OpCo held by NEE Equity are exchangeable for our common units changes from one-for-one, the number of votes to which the holders of the Special Voting Units are entitled will be adjusted accordingly. Additional limited partner interests having special voting rights could also be issued. See “—Issuance of Additional Partnership Interests” below.

Non-Voting Common Units

Holders of non-voting common units generally do not have voting rights under our partnership agreement. However, non-voting common units have certain class voting rights with respect to amendments that adversely affect their distribution, liquidation, transfer, conversion, voting or economic rights or certain other protections under our partnership agreement. To the extent non-voting common unit holders are entitled to vote, each non-voting common unit is entitled to one vote on such matter.

Proxy Access

Our partnership agreement permits a holder of common units, or a group of up to 20 holders of common units, owning continuously for specified periods of time 10% or more of the aggregate number of outstanding common units and Special Voting Units (an “eligible unitholder”) to nominate candidates for election as LP Elected Directors, provided that such eligible unitholder satisfies the requirements set forth in our partnership agreement. The number of common unitholder nominees eligible to appear in our proxy materials for any annual meeting cannot exceed four. No eligible unitholder, or group of eligible unitholders, is entitled to nominate more than two candidates at any annual meeting.

Limited Liability

Assuming that a limited partner does not participate in the control of our business within the meaning of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”) and that the limited partner otherwise acts in conformity with the provisions of the partnership agreement, the limited partner’s liability under the Delaware Act will be limited, subject to possible exceptions, to the amount of capital that the limited partner is obligated to contribute to us for our limited partner’s limited partner interest plus the limited partner’s share of any undistributed profits and assets. If it were determined, however, that the right, or exercise of the right, by the limited partners as a group:


•	to elect or remove directors;


•	to remove or replace our general partner;


•	to approve some amendments to the partnership agreement; or


•	to take other action under the partnership agreement;

constituted “participation in the control” of our business for the purposes of the Delaware Act, then the limited partners could be held personally liable for our obligations under the laws of Delaware, to the same extent as our general partner. This liability would extend to persons who transact business with us who reasonably believe that the limited partner is a general partner. Neither the partnership agreement nor the Delaware Act specifically provides for legal recourse against our general partner if a limited partner were to lose limited liability through any fault of our general partner.

Under the Delaware Act, a limited partnership may not make a distribution to a partner if, after the distribution, all liabilities of the limited partnership, other than liabilities to partners on account of their limited partner interests and liabilities for which the recourse of creditors is limited to specific property of the partnership, would exceed the fair value of the assets of the limited partnership, except that the fair value of property that is subject to a liability for which the recourse of creditors is limited is included in the assets of the limited partnership only to the extent that the fair value of that property exceeds that liability. For the purpose of determining the fair value of the assets of a limited partnership, the Delaware Act provides that the fair value of property subject to liability for which recourse of creditors is limited will be included in the assets of the limited partnership only to the extent that the fair value of that property exceeds the non-recourse liability. The Delaware Act provides that a limited partner who receives a distribution and knew at the time of the distribution that the distribution was in violation of the Delaware Act will be liable to the limited partnership for the amount of the distribution for three years. Under the Delaware Act, a substituted limited partner of a limited partnership is liable for the obligations of

his assignor to make contributions to the partnership, except that such person is not obligated for liabilities unknown to him at the time he became a limited partner and that could not be ascertained from the partnership agreement.

Our subsidiaries conduct business in the U.S. and we may have subsidiaries that conduct business in other countries in the future. Maintenance of our limited liability as a limited partner of our operating subsidiaries may require compliance with legal requirements in the jurisdictions in which our operating subsidiaries conduct business, including qualifying our subsidiaries to do business there.

Limitations on the liability of limited partners or members for the obligations of a limited partnership have not been clearly established in many jurisdictions. If, by virtue of our limited partner interests in NEP OpCo or otherwise, it were determined that we were conducting business in any state without compliance with the applicable limited partnership statute, or that the right or exercise of the right by the limited partners as a group to remove or replace our general partner, to approve some amendments to the partnership agreement, or to take other action under the partnership agreement constituted “participation in the control” of our business for purposes of the statutes of any relevant jurisdiction, then the limited partners could be held personally liable for our obligations under the law of that jurisdiction to the same extent as our general partner under the circumstances. We will operate in a manner that our general partner considers reasonable and necessary or appropriate to preserve the limited liability of the limited partners.

Issuance of Additional Partnership Interests

Our partnership agreement authorizes us to issue an unlimited number of additional partnership interests for the consideration and on the terms and conditions determined by our Board without the approval of any partner of our partnership; provided, however, that we may not issue any additional common units, non-voting common units, Series A preferred units or additional partnership interests that rank pari passu as to distributions with the Series A preferred units (“Series A parity securities”) unless we contribute the cash proceeds or other consideration received from the issuance of such additional units in exchange for an equivalent number of corresponding NEP OpCo units.

We have funded acquisitions through the issuance of additional units. It is likely that we will fund acquisitions through the issuance of additional common units, preferred units or other partnership interests. Holders of any additional common units that we issue will be entitled to share equally with the then-existing holders of common units in our distributions of available cash. In addition, our issuance of additional common units, preferred units or other partnership interests may dilute the value of the interests of the then-existing holders of common units in our net assets.

Under Delaware law and the provisions of our partnership agreement, we may also issue partnership interests that, as determined by our Board, may have special voting or economic rights to which our common units are not entitled. Our partnership agreement does not prohibit the issuance by our subsidiaries of equity interests, which may effectively rank senior to our common units. However, our partnership agreement does prohibit us from issuing additional partnership interests that rank senior to the Series A preferred units without the affirmative vote of 66-2/3% of the outstanding Series A preferred units, subject to certain exceptions.

Conversion of Series A Preferred Units

Each holder of Series A preferred units (together with its affiliates) may elect to convert all or any portion of its Series A preferred units into common units initially on a one-for-one basis, subject to customary adjustments and an adjustment for any distributions that have accrued but have not been paid when due (“Series A conversion rate”), at any time (but not more than once per quarter), but partial conversions must involve at least $50 million in value of common units unless otherwise approved by us. We may elect to convert all or a portion of the Series A preferred units into common units based on the Series A conversion rate at any time (but not more than once per quarter) after the first anniversary of the date of issuance of the Series A preferred units being converted if:


•	the closing price of our common units exceeds specified thresholds for at least 20 out of 30 trading days immediately preceding the date of our conversion election,


•	the average daily trading volume of our common units for at least 20 out of the 30 trading days immediately preceding the date of our conversion election is equal to or exceeds 165,000 (as adjusted to reflect splits, combinations or similar events),


•	our common units are listed on a national securities exchange, and


•	the conversion involves at least $50 million in value of common units or such lesser amount that relates to all of the then-outstanding Series A preferred units.

We may not convert more than two-thirds (2/3) of the Series A preferred units issued under the Series A purchase agreement prior to November 15, 2020 (the third anniversary of the final closing date under the Series A purchase agreement). As of the Description Date, we have converted two-thirds (2/3) of the Series A preferred units that were issued under the Series A purchase agreement into common units. With respect to the closing price condition for a conversion of the Series A preferred units by us on or after November 15, 2020, the market closing price of our common units must be greater than 140% of the preferred unit purchase price for the specified period.

Upon certain events involving a change of control (as defined in our partnership agreement) in which more than 90% of the consideration payable to the holders of our common units is payable in cash, the Series A preferred units automatically convert into our common units at a conversion ratio equal to the higher of:


•	the then-applicable Series A conversion rate (adjusted to reflect pro rata unpaid distributions for the quarter in which the transaction occurs), and


•	the quotient of


•	the sum of the purchase price plus any accrued and unpaid distributions on the Series A preferred units multiplied by a premium factor (ranging from 115% to 101% depending on when such transaction occurs), plus a pro rata share of unpaid distributions for the quarter in which the transaction occurs) divided by


•	the average of the volume weighted average price of our common units for the 20 trading days prior to the execution of definitive documentation relating to such change of control.

In connection with other change of control events that do not meet the 90% cash consideration threshold described above, each holder of Series A preferred units may elect to:


(a)	convert all of its Series A preferred units to our common units at the then-applicable conversion rate,

(b)

if we are not the surviving entity (or if we are the surviving entity, but our common units cease to be listed on a national securities exchange), require us to use commercially reasonable efforts to cause the surviving entity in any such transaction to issue a substantially equivalent security (or if we are unable to cause such substantially equivalent securities to be issued, to convert into our common units at a premium based on a specified formula subject to aggregate return limitations or to be converted in accordance with clause (a) above or redeemed in accordance with clause (d) below),


(c)	if we are the surviving entity, continue to hold the Series A preferred units, or

(d)

require us to redeem the Series A preferred units at a price per unit equal to 101% of the sum of the purchase price and accrued and unpaid distributions on the applicable Series A preferred units, plus a pro rata share of unpaid distributions for the quarter in which the transaction occurs, which may be paid in cash or our common units (and if paid in our common units, our common units will be issued at 95% of the average of the volume weighted average price for the 30 trading days ending on the fifth trading day prior to the change of control).

Conversion of Non-Voting Common Units

Each holder of non-voting common units will have the right, but not the obligation, to convert all or a portion of its non-voting common units into one common unit for each non-voting common unit being converted, subject to certain limitations. However, certain holders shall not have the right to convert any non-voting common units to the extent that, after giving effect to the conversion, the holder (together with its affiliates and others acting as a group) would beneficially own in excess of 19.8% of the number of common units outstanding immediately after giving effect to such conversion. Further, each non-voting common unit held by certain qualified holders under the partnership agreement shall automatically convert into one common unit (subject to certain adjustments) immediately upon its transfer to any non-affiliate of such qualified holder.

Amendment of Our Partnership Agreement

General

Amendments to our partnership agreement may be proposed only by our Board or, in limited circumstances, our general partner. However, other than the implied contractual covenant of good faith and fair dealing, neither our Board nor our general partner have any duty or obligation to propose any amendment and our Board and our general partner may decline to do so free of any duty or obligation whatsoever to us or our limited partners, including any duty to act in our best interests or the best interests of the limited partners. In order to adopt a proposed amendment, other than the amendments described below under “—Amendments that Do Not Require Unitholder Approval,” our Board or our general partner, as applicable, is required to seek approval of such amendment by the limited partners. Except as described below, an amendment that requires approval by the limited partners must be approved by a unit majority.

Prohibited Amendments

No amendment may be made that would:


•	enlarge the obligations of any limited partner without its consent, unless the amendment is deemed to have occurred as a result of an amendment approved by at least a majority of the type or class of limited partner interests so affected; or


•	enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by us to our general partner or any of its affiliates without our general partner’s consent, which consent may be given or withheld at its option.

The provisions of our partnership agreement preventing these types of amendments can be amended upon the approval of the holders of at least 90% of the outstanding units.

Amendments Requiring Dual Class Voting

Any amendment to our partnership agreement with respect to the provisions relating to the distributions of available cash, the management and operation of our business, our general partner’s authority to amend our partnership agreement (as described below), our Board’s authority to amend our partnership agreement to prevent consolidation (as described below), annual meetings and special meetings, quorum and voting, limitations on voting power, and proxy access, or any defined terms used in those provisions, will require the approval of the holders of (i) at least a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units and excluding common units owned by our general partner and its affiliates), voting as a separate class, and (ii) at least a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units) owned by our general partner and its affiliates, voting together as a single class.

Amendments that Do Not Require Unitholder Approval

Our partnership agreement provides that our Board (instead of our general partner) generally may make amendments to our partnership agreement without the approval of any partner to reflect:


•	a change in our name, the location of our principal office, our registered agent or our registered office;


•	the admission, substitution, withdrawal or removal of partners in accordance with our partnership agreement;


•	a change that our Board determines to be necessary or appropriate to qualify or continue our qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that our subsidiaries will not be taxable as corporations or otherwise taxed as entities for U.S. federal income tax purposes;

•

any amendment that is necessary, in the opinion of our counsel, to prevent us, our general partner or their respective directors, officers, agents or trustees from, in any manner, being subjected to the provisions of the Investment Company Act of 1940, as amended (“Investment Company Act”), the Investment Advisors Act of 1940, as amended (“Advisors Act”), or “plan asset” regulations adopted under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the U.S. Department of Labor;


•	any amendment that our Board determines to be necessary or appropriate for the authorization or issuance of additional partnership interests or in connection with splits or combinations of our partnership interests in accordance with our partnership agreement;


•	any amendment expressly permitted in our partnership agreement to be made by our Board acting alone;


•	any amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of our partnership agreement;


•	any amendment that our Board determines to be necessary or appropriate to reflect and account for the formation by us of, or our investment in, any corporation, partnership or other entity, in connection with our conduct of activities permitted by our partnership agreement;


•	any change in our fiscal year or taxable year and any other changes that our Board determines to be necessary or appropriate as a result of such change;


•	certain conversions into, mergers with or conveyances to another limited liability entity;


•	a modification of the qualification of eligible unitholders for nominating directors with respect to any annual meeting of limited partners; or


•	any other amendments substantially similar to any of the matters described in the clauses above.

In addition, our Board may make amendments to our partnership agreement without the approval of any limited partner if our Board determines that those amendments:


•	do not adversely affect in any material respect the limited partners considered as a whole or any particular class of partnership interests as compared to other classes of partnership interests;


•	are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute;


•	are necessary or appropriate to facilitate the trading of limited partner interests or to comply with any rule, regulation, guideline or requirement of any securities exchange on which the limited partner interests are or will be listed or admitted to trading;


•	are necessary or appropriate for any action taken by our Board relating to splits or combinations of units under the provisions of our partnership agreement; or


•	are required to effect the intent of the provisions of our partnership agreement or are otherwise contemplated by our partnership agreement.

Further, our Board, without the approval of any partner of our partnership, may amend any provision of our partnership agreement in such manner as our Board determines to be necessary or appropriate to prevent the consolidation of the financial results of our partnership and our subsidiaries with those of NEE and its subsidiaries (other than our partnership and our subsidiaries) under United States generally accepted accounting principles (“U.S. GAAP”), so long as such amendment is not materially adverse to us or our limited partners.

Our general partner, without the approval of any other partner of our partnership, may, in its sole discretion, amend any provision of our partnership agreement in connection with such changes to the ownership structure of NEP OpCo’s common units and the Special Voting Units held by our general partner or its affiliates as may be required to avoid adverse tax consequences resulting from changes to tax laws, so long as such amendment is not materially adverse to us or our limited partners.

No Opinion of Counsel

For amendments of the type not requiring unitholder approval, neither our Board nor our general partner will be required to obtain an opinion of counsel to the effect that an amendment will not affect the limited liability of any limited partner under Delaware law. No other amendments to our partnership agreement will become effective without the approval of holders of at least 90% of the outstanding units voting as a single class unless we first obtain such an opinion.

Amendment Affecting a Class of Partnership Interest

Without limitation of our Board’s or our general partner’s authority to adopt amendments without the approval of any partner of our partnership as described above, any amendment that would have a material adverse effect on the rights or preferences of any class of partnership interests (including non-voting common units) in relation to other classes of partnership interests will require the approval of at least a majority of the class of partnership interests so affected.

Amendment Changing Percentage of Units Required to Take Actions

Any amendment that would reduce the percentage of units required to take any action, other than to remove our general partner or call a meeting of limited partners, must be approved by the written consent or affirmative vote of limited partners (excluding non-voting common units) whose aggregate outstanding units constitute not less than the percentage sought to be reduced. Any amendment that would increase the percentage of units required to remove our general partner must be approved by the written consent or affirmative vote of limited partners whose aggregate outstanding units constitute not less than 90% of the outstanding units (excluding non-voting common units). Any amendment that would increase the percentage of units required to call a meeting of limited partners must be approved by the written consent or affirmative vote of limited partners whose aggregate outstanding units constitute at least a majority of the outstanding units (excluding non-voting common units).

Amendment of the IDR Fee Provisions

Any amendment to the provisions relating to the IDR Fee (as defined in the Management Services Agreement) contained in the Management Services Agreement that would materially adversely affect holders of our common units requires the approval of a unit majority.

Amendment of the NEP OpCo Partnership Agreement

Any amendment of the NEP OpCo partnership agreement that requires approval by holders of at least a majority of the outstanding units of NEP OpCo requires the approval of a unit majority. Any other amendment that requires approval by holders of at least 90% of the NEP OpCo’s common units requires the approval by holders of at least 90% of our outstanding units.

Merger, Consolidation, Conversion, Sale or Other Disposition of Assets

A merger, consolidation or conversion involving us requires the prior consent of our general partner and approval of our Board. However, our general partner and our Board have no duty or obligation to consent to or approve any merger, consolidation or conversion and may decline to do so free of any duty or obligation whatsoever to us or our limited partners, including any duty to act in our best interests or in the best interests of our limited partners. The merger agreement or plan of conversion also must be approved by the affirmative vote or consent of the holders of (i) a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting common units and the units owned by our general partner and its affiliates), voting as a separate class, and (ii) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting common units) owned by our general partner and its affiliates, voting together as a single class, unless such merger agreement or plan of conversion effects an amendment to our partnership agreement that would require for its approval the vote or consent of a greater percentage of the outstanding units or of any class of limited partners, in which case such greater percentage will be required. Notwithstanding the foregoing, without the approval of limited partners, we or any of our subsidiaries may convert into a new limited liability entity, or merge into or convey all of our assets to, a newly formed limited liability entity if the sole purpose of that conversion, merger or conveyance is to effect a mere change in our legal form into another limited liability entity, we have received an opinion of counsel regarding limited liability and our Board determines that the governing instruments of the new entity provide the limited partners and our general partner with substantially the same rights and obligations as contained in our partnership agreement. Additionally, without the approval of limited partners, we may merge with another limited liability entity if we are the surviving entity in the transaction, our general partner has received an opinion of counsel regarding limited liability, the transaction would not result in an amendment to our partnership agreement requiring unitholder approval, each of our units will be an identical unit of our partnership following the transaction, and the partnership interests to be issued by us in such merger do not exceed 20% of our outstanding partnership interests immediately prior to the transaction. Our general partner must also consent to any merger or conversion of any of our subsidiaries.

Under our partnership agreement, we may not sell, exchange or otherwise dispose of all or substantially all of our assets in a single transaction or a series of related transactions without the consent of our general partner and the approval of (i) a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting units and excluding the units owned by our general partner and its affiliates), voting as a separate class, and (ii) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting units) owned by our general partner and its affiliates, voting together as a single class. We may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without such approval. We may also sell any or all of our assets under a foreclosure of, or other realization upon, those encumbrances without that approval.

Termination and Dissolution

We will continue as a limited partnership until dissolved and terminated under our partnership agreement. We will dissolve upon:

•

the election by our Board to dissolve our partnership, if consented to by our general partner and approved by (i) a majority of the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding the non-voting common units and excluding the units owned by our general partner and its affiliates), voting as a separate class, and (ii) a majority of the outstanding Special Voting Units and the outstanding common units (including Series A preferred units, voting as if converted into common units, but excluding non-voting common units) owned by our general partner and its affiliates, voting together as a single class;


•	there being no limited partners, unless we are continued without dissolution in accordance with applicable Delaware law;


•	the entry of a decree of judicial dissolution of our partnership; or


•	the withdrawal or removal of our general partner or any other event that results in its ceasing to be our general partner, other than by reason of a transfer of its general partner interest in accordance with our partnership agreement or withdrawal or removal followed by approval and admission of a successor.

Upon a dissolution under the last clause above, a unit majority may also elect, within specific time limitations, to continue our business on the same terms and conditions described in our partnership agreement by appointing as a successor general partner an entity approved by a unit majority, subject to our receipt of an opinion of counsel to the effect that the action would not result in the loss of limited liability of any limited partner. Our general partner must also consent to the dissolution of any of our subsidiaries.

Certain Matters Requiring Consent of the General Partner

Our general partner’s consent, which may be granted or withheld in its sole discretion, is required for the following actions:


•	a sale of all or substantially all of our and our subsidiaries’ assets;


•	a merger, consolidation or conversion involving us or any of our subsidiaries;


•	dissolution of us or any of our subsidiaries;


•	any amendment of NEP OpCo’s partnership agreement;


•	any direct or indirect transfer of all or any portion of the general partner interest in NEP OpCo to any person;


•	our participation in certain activities or lines of business; and


•	the granting of certain information rights to our limited partners.

Liquidation and Distribution of Proceeds

Upon our dissolution, unless we are continued as a new limited partnership, the liquidator authorized to wind up our affairs will, acting with all of the powers of our general partner and our Board that are necessary or appropriate to, liquidate our assets and apply the proceeds of the liquidation first to discharge any outstanding liabilities, next to holders of Series A preferred units to satisfy the applicable liquidation preference, and finally to our unitholders on a pro rata basis. The liquidator may defer liquidation or distribution of our assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to our partners.

Duties of the General Partner and our Board

The Delaware Act provides that Delaware limited partnerships may, in their partnership agreements, expand, restrict or eliminate the fiduciary duties otherwise owed by a general partner or board of directors to limited partners and the partnership. The duties described below have not materially changed and are summarized because our Board is also subject to the contractual standards described below.

Our partnership agreement contains various provisions replacing the fiduciary duties that would otherwise be owed by our general partner, our Board, any director, any committee of our Board or any officer with contractual standards governing the duties of such persons and the methods of resolving conflicts of interest. We believe this is appropriate and necessary because our general partner is owned by NEE, and to the extent any members of our Board are also officers or directors of NEE, such officers or directors have fiduciary duties to NEE. Without these provisions, our general partner and such officers’ or directors’ ability to make decisions involving conflicts of interests would be unduly restricted. These provisions represent a possible detriment to the limited partners, however, because they restrict the remedies available to limited partners for actions that, without those provisions, might constitute breaches of fiduciary duty.

Partnership agreement standards

Our partnership agreement contains provisions that waive or consent to conduct by our general partner and its affiliates, our Board, or any director or any committee of our Board that might otherwise raise issues as to compliance with fiduciary duties or applicable law. For example, our partnership agreement provides that when our general partner is acting in its capacity as our general partner, as opposed to in its individual capacity, and when our Board or any director or committee of our Board makes a determination or takes or declines to take any other action, it must act in “good faith,” meaning that it subjectively believed that the decision was in our best interests, and will not be subject to any other standard under applicable law, other than the implied contractual covenant of good faith and fair dealing. In addition, when our general partner is acting in its individual capacity, as opposed to in its capacity as our general partner, it may act free of any duty or obligation whatsoever to us or our limited partners, other than the implied contractual covenant of good faith and fair dealing.

Our partnership agreement generally provides that affiliated transactions and resolutions of conflicts of interest not approved by the public unitholders or the conflicts committee of our Board must be determined by our Board to be:


•	on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or


•	“fair and reasonable” to us, taking into account the totality of the relationships between the parties involved, including other transactions that may be particularly favorable or advantageous to us.

If our Board determines that the resolution or course of action taken with respect to the conflict of interest satisfies either of the standards set forth in the bullet points above, then it will be presumed that, in making its decision, our Board acted in good faith, and in any proceeding brought by or on behalf of any limited partner or our partnership challenging such determination, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption. These standards reduce the obligations to which our general partner and our directors would otherwise be held under applicable Delaware law.

Rights and remedies of limited partners

The Delaware Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third party where a general partner or board of directors has wrongfully refused to institute the action or where an effort to cause a general partner or board of directors to do so is not likely to succeed. These actions include actions against a general partner or board of directors for breach of its contractual duties under the partnership agreement.

Under our partnership agreement, we must indemnify our general partner, its affiliates and their managers, officers and directors (including our directors), to the fullest extent permitted by law, against liabilities, costs and expenses incurred by such indemnitees. We must provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that these persons acted in bad faith or engaged in fraud or willful misconduct. We also must provide this indemnification for criminal proceedings unless such indemnitees acted with knowledge that their conduct was unlawful. Thus, our general partner and our directors could be indemnified for their negligent acts if they meet the requirements set forth above. See “—Indemnification” above regarding the duties of our general partner.

A transferee of or other person acquiring a Unit will be deemed to have agreed to be bound by the provisions in our partnership agreement, including the provisions described above. See “—Transfer of Common Units.” The failure of a limited partner to sign our partnership agreement does not render our partnership agreement unenforceable against that person.

Withdrawal or Removal of the General Partner

Our general partner will be deemed to have withdrawn from our partnership upon the occurrence of, among others, any of the following events:


•	Voluntary withdrawal. Our partnership agreement permits our general partner to voluntarily withdraw by giving at least ninety days’ advance notice to our unitholders, and such withdrawal will take effect on the date specified in such notice.


•	Transfer of all of our general partner’s general partner interest.

•

Removal by limited partners. Our general partner may not be removed unless (i) the removal is approved by the vote of the holders of not less than 66-2/3% of the outstanding units (including units held by our general partner and its affiliates, but excluding non-voting common units), voting together as a single class, and (ii) we receive an opinion of counsel regarding limited liability. Any removal of our general partner is also subject to the election of a successor general partner by a unit majority. The ownership of more than 33-1/3% of the outstanding units by NEE and its affiliates would give them the practical ability to prevent our general partner’s removal.

Prior to the effective date of the voluntary withdrawal or the removal of our general partner, a unit majority may elect a successor general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability cannot be obtained, we will be dissolved, wound up and liquidated, unless within a specified period after that withdrawal, a unit majority agrees to continue our business by appointing a successor general partner. See “—Termination and Dissolution.”

Transfer of General Partner Interest

Our general partner may transfer its general partner interest without the consent of the limited partners if certain conditions are met, including (i) the transferee assumes the rights and duties of our general partner and agrees to be bound by the provisions of our partnership agreement, (ii) our partnership receives an opinion of counsel regarding limited liability matters and (iii) the transferee agrees to purchase all or the appropriate portion of the partnership or membership interest of our general partner as the general partner or managing member of each of our subsidiaries.

In general, our general partner and its affiliates may, at any time, transfer common units to one or more persons without unitholder approval.

Transfer of Ownership Interests in the General Partner

At any time, NEE and its affiliates may sell or transfer all or part of their direct or indirect interest in our general partner without the approval of our unitholders.

Status as Limited Partner

By transfer of common units in accordance with our partnership agreement, each transferee of common units will be admitted as a limited partner with respect to our common units transferred when such transfer and admission is reflected in our register. Except as described under “—Limited Liability,” our common units will be fully paid, and unitholders will not be required to make additional contributions.

Indemnification

In most circumstances, we will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:


•	our general partner;


•	any departing general partner;


•	any person who is or was an affiliate of a general partner or any departing general partner;


•	any person who is or was a director (including each LP Elected Director and each GP Appointed Director), officer, managing member, manager, general partner, fiduciary or trustee of (i) our partnership, our subsidiaries, our general partner or any departing general partner or (ii) any affiliate of our partnership, our subsidiaries, our general partner or any departing general partner;


•	any person who is or was serving as director, officer, managing member, manager, general partner, fiduciary or trustee of another person owing certain duties to us or any of our subsidiaries at the request of our Board, our general partner or any departing general partner or any of their affiliates; and


•	any person designated by our Board or our general partner.

Any indemnification under these provisions will only be out of our assets. Our general partner will not be personally liable for, or have any obligation to contribute or lend funds or assets to us to enable us to effectuate, indemnification. An affiliate of our general partner has purchased insurance against liabilities asserted against and expenses incurred by our general partner’s directors and executive officers, as well as our directors and executive officers, regardless of whether we would have the power to indemnify such persons against such liabilities under our partnership agreement.

Reimbursement of Expenses

Our partnership agreement requires us to reimburse our general partner for all direct and indirect expenses it incurs or payments it makes on our behalf and all other expenses allocable to us or otherwise incurred by our general partner in connection with its service as our general partner. The general partner is entitled to determine in good faith the expenses that are allocable to us.

Tax Matters

We have elected to be treated as an association taxable as a corporation for U.S. federal income tax purposes. Our general partner determines whether we will make any other tax elections permitted by federal, state, local or foreign tax law.

Our general partner has exclusive authority for the making of tax filings, or rendering of periodic or other tax reports to governmental or other agencies having jurisdiction over our business or assets.

Books and Reports

We are required to keep appropriate books of our business at our principal offices. The books will be maintained for financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, our fiscal year is the calendar year.

We will mail or make available to record holders of common units, within 105 days after the close of each fiscal year, an annual report containing audited financial statements and a report on those financial statements by our independent public accountants. Except for our fourth quarter, we will also mail or make available summary financial information within 50 days after the close of each quarter.

Right to Inspect Our Books and Records

Our partnership agreement provides that a limited partner can, for a purpose reasonably related to his or her interest as a limited partner, upon reasonable written demand stating the purpose of such demand and at his or her own expense, have furnished to him or her:


•	a current list of the name and last known address of each record holder;


•	copies of our partnership agreement and our certificate of limited partnership and all amendments thereto; and


•	certain information regarding the status of our business and financial condition.

Our Board may, and intends to, keep confidential from the limited partners trade secrets or other information the disclosure of which our Board determines is not in our best interests or that we are required by law or by agreements with third parties to keep confidential. Any disclosure of such information to the limited partners requires the prior written consent of our general partner. Our partnership agreement limits the right to information that a limited partner would otherwise have under Delaware law.

Dissenters’ Rights of Appraisal

The unitholders are not entitled to dissenters’ rights of appraisal under our partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of our assets or any other transaction or event.

MATERIAL PROVISIONS OF THE NEP OPCO PARTNERSHIP AGREEMENT

The following is a summary of certain material provisions of the NEP OpCo partnership agreement. The summary below is as of the Description Date and is qualified in its entirety by reference to all of the provisions of the NEP OpCo partnership agreement, which is filed as an exhibit to the Form 10-K.

We summarize the provisions of the NEP OpCo partnership agreement regarding distributions of available cash elsewhere in this Description. See “Provisions of the Partnership Agreements and Other Arrangements Relating to Cash Distributions.”

Organization and Duration

NEP OpCo was formed in March 2014 and has a perpetual existence unless terminated under the terms of its partnership agreement.

Purpose

NEP OpCo’s purpose under the NEP OpCo partnership agreement is limited to any business activity that is approved by its general partner and that lawfully may be conducted by a limited partnership organized under

Delaware law; provided, however, that, without the prior written consent of our general partner, which consent may be granted or withheld in its sole discretion, NEP OpCo and its subsidiaries do not have any power or authority to solicit, review, respond to or otherwise participate in any request for proposal relating to, or otherwise engage in, or seek to engage in, certain activities or lines of business.

Although NEP OpCo GP has the ability to cause it and its subsidiaries to engage in activities other than the business of acquiring, managing and owning contracted clean energy projects with stable long-term cash flows, NEP OpCo GP may decline to do so free of any duty or obligation whatsoever to NEP OpCo or the limited partners, including any duty to act in the best interests of NEP OpCo or the limited partners, other than the implied contractual covenant of good faith and fair dealing. NEP OpCo GP is authorized in general to perform all acts it determines to be necessary or appropriate to carry out its purposes and to conduct its business. Since we own all of the equity interests of NEP OpCo GP, decisions made by NEP OpCo GP under NEP OpCo’s partnership agreement are ultimately made at the direction of our Board or, in certain limited circumstances, our general partner.

Capital Contributions

Unitholders are not obligated under NEP OpCo’s partnership agreement to make additional capital contributions with respect to the units in NEP OpCo that they own. NEP OpCo GP is not obligated under the NEP OpCo partnership agreement to make any capital contributions.

Meetings; Voting Rights

Record holders of common units on the record date will be entitled to notice of, and to vote at, meetings of NEP OpCo’s limited partners and to act upon matters for which approvals may be solicited. For purposes of this summary, matters described as requiring the approval of a “unit majority” of NEP OpCo require the approval of at least a majority of the outstanding NEP OpCo common units (including OpCo Series A preferred units, voting as if converted into NEP OpCo common units, but excluding NEP OpCo non-voting common units).

We do not anticipate that any meeting of NEP OpCo unitholders will be called in the foreseeable future. Any action that is required or permitted to be taken by the unitholders may be taken at a meeting of the unitholders or without a meeting if consents in writing describing the action so taken are signed by holders of the number of units that would be necessary to authorize or take that action at a meeting where all limited partners were present and voted. Meetings of the unitholders may be called by NEP OpCo GP. Eligible unitholders may vote either in person or by proxy at meetings. The holders of a majority of the outstanding units of the class or classes for which a meeting has been called and which are entitled to vote at such meeting, represented in person or by proxy, constitutes a quorum unless any action by the unitholders requires approval by holders of a greater percentage of the units, in which case the quorum will be the greater percentage.

Generally, each record holder of a unit is entitled to a number of votes on any matter presented to the holders of units for a vote that is equal to the holder’s percentage interest in NEP OpCo units, although additional limited partner interests having special voting rights could be issued. See “—Issuance of Additional Partnership Interests.” Further, except as related to certain amendments that would have a material adverse effect on the rights or preferences of the NEP OpCo non-voting common units in relation to other classes of limited partnership interests, holders of NEP OpCo non-voting common units generally do not have voting rights under the NEP OpCo partnership agreement.

Any notice, demand, request, report or proxy materials required or permitted to be given or made to record holders of common units under NEP OpCo’s partnership agreement will be delivered to the record holder by NEP OpCo or by the transfer agent.

Issuance of Additional Partnership Interests

NEP OpCo’s partnership agreement authorizes NEP OpCo to issue an unlimited number of additional partnership interests for the consideration and on the terms and conditions determined by its general partner without the approval of holders of NEP OpCo’s common units.

Under Delaware law and the provisions of NEP OpCo’s partnership agreement, NEP OpCo may also issue additional series or classes of limited partner interests that may have rights or preferences which differ from the terms of NEP OpCo’s common units. NEP OpCo’s partnership agreement does not prohibit the issuance by its subsidiaries of equity interests, which may effectively rank senior to NEP OpCo common units.

At any time when NEP issues additional common units, non-voting common units, Series A preferred units or Series A parity securities, NEP OpCo will issue an equivalent number of corresponding units to NEP. In addition, at any time when NEP issues other classes or series of partnership interests, we expect that NEP OpCo will issue an equivalent number of such other classes or series of partnership interests to NEP. As a result, if NEP issues additional securities to fund acquisitions or for other purposes, we expect that NEP OpCo will be required to issue a like amount of additional securities to NEP, which may dilute the value of the interests of the then-existing holders of NEP OpCo’s common units in NEP OpCo’s net assets.

OpCo Class B Units

On April 29, 2015, NEP OpCo made an equity method investment in the McCoy and Adelanto solar projects. In connection with this investment, NEP OpCo issued the OpCo Class B Units to NEE Equity for approximately 50% of the ownership interests in three solar projects. NEE Equity, as holder of the OpCo Class B units, retains 100% of the economic rights in the projects to which the respective OpCo Class B units relate, including the right to all distributions paid to NEP OpCo by the project subsidiaries that own the projects. See “Provisions of the Partnership Agreements and Other Arrangements Relating to Cash Distributions.”

In the event of a liquidation of NEP OpCo, the holders of the OpCo Class B units will be entitled to receive as a preferential distribution any and all proceeds from any sale or disposition of the applicable projects. So long as any OpCo Class B units remain outstanding, NEP OpCo is not permitted to issue or sell any additional units of the same class or any other interests in or rights to the contributed projects. In addition, so long as any OpCo Class B units remain outstanding, NEP OpCo cannot amend its partnership agreement in any manner that would adversely affect the designations, preferences, rights, powers and duties of the holders of OpCo Class B units.

Transfer of Common Units

By transfer of common units in accordance with NEP OpCo’s partnership agreement, each transferee of common units will be admitted as a limited partner with respect to NEP OpCo common units transferred when such transfer or admission is reflected in NEP OpCo’s register and such limited partner becomes the record holder of NEP OpCo common units so transferred. Each transferee:


•	will become bound and will be deemed to have agreed to be bound by the terms of NEP OpCo’s partnership agreement;


•	will be deemed to represent that the transferee has the capacity, power and authority to enter into NEP OpCo’s partnership agreement; and


•	will be deemed to make any consents, acknowledgements or waivers contained in NEP OpCo’s partnership agreement.

NEP OpCo is entitled to treat the nominee holder of a common unit as the absolute owner in the event such nominee is the record holder of such common unit. In that case, the beneficial holder’s rights are limited solely to those that it has against the nominee holder as a result of any agreement between the beneficial owner and the nominee holder.

Common units are securities and are transferable according to the laws governing transfer of securities. Until a common unit has been transferred on NEP OpCo’s register, NEP OpCo and the transfer agent may treat the record holder of the unit as the absolute owner for all purposes, except as otherwise required by law or stock exchange regulations.

Amendment of NEP OpCo’s Partnership Agreement

General

Amendments to NEP OpCo’s partnership agreement may be proposed only by NextEra Energy Partners GP, Inc. (“NEP GP”), the general partner of NEP. However, other than the implied contractual covenant of good faith and fair dealing, NEP GP has no duty or obligation to propose any amendment and may decline to do so free of any duty or obligation whatsoever to NEP OpCo or the limited partners, including any duty to act in the best interests of NEP OpCo or the limited partners. In order to adopt a proposed amendment, other than the amendments described below, NEP OpCo GP is required to seek written approval of the holders of the number of units and other interests, if any, required to approve the amendment or call a meeting of the limited partners to consider and vote upon the proposed amendment. Except as described below, an amendment must be approved by a unit majority.

Prohibited Amendments

No amendment may be made that would:


•	enlarge the obligations of any limited partner without its consent, unless the amendment is deemed to have occurred as a result of an amendment approved by at least a majority of the type or class of limited partner interests so affected; or


•	enlarge the obligations of, restrict in any way any action by or rights of, or reduce in any way the amounts distributable, reimbursable or otherwise payable by NEP OpCo to NEP OpCo GP or any of its affiliates without NEP OpCo GP’s consent, which consent may be given or withheld at its option.

The provisions of NEP OpCo’s partnership agreement preventing these types of amendments can be amended upon the approval of the holders of at least 90% of the outstanding units voting together as a single class (including units owned by NEP OpCo GP and its affiliates).

No Unitholder Approval

NEP GP may generally make amendments to NEP OpCo’s partnership agreement without the approval of any limited partner to reflect:


•	a change in NEP OpCo’s name, the location of NEP OpCo’s principal office, its registered agent or its registered office;


•	the admission, substitution, withdrawal or removal of partners in accordance with the NEP OpCo partnership agreement;

•

a change that NEP GP determines to be necessary or appropriate to qualify or continue NEP OpCo’s qualification as a limited partnership or a partnership in which the limited partners have limited liability under the laws of any state or to ensure that none of NEP OpCo’s subsidiaries will be treated as an association taxable as a corporation or otherwise taxed as an entity for U.S. federal income tax purposes;

•

any amendment that is necessary, in the opinion of NEP OpCo’s counsel, to prevent NEP OpCo or its general partner or NEP GP or its directors, officers, agents or trustees from, in any manner, being subjected to the provisions of the Investment Company Act, the Advisors Act, or “plan asset” regulations adopted under ERISA regardless of whether such are substantially similar to plan asset regulations currently applied or proposed by the U.S. Department of Labor;


•	any amendment that NEP GP determines to be necessary or appropriate for the authorization or issuance of additional partnership interests or in connection with splits or combinations of NEP OpCo’s partnership interests in accordance with NEP OpCo’s partnership agreement;


•	any amendment expressly permitted in NEP OpCo’s partnership agreement to be made by NEP GP acting alone;


•	any amendment effected, necessitated or contemplated by a merger agreement that has been approved under the terms of NEP OpCo’s partnership agreement;


•	any amendment that NEP GP determines to be necessary or appropriate to reflect and account for the formation by NEP OpCo of, or NEP OpCo’s investment in, any corporation, partnership or other entity, in connection with NEP OpCo’s conduct of activities permitted by its partnership agreement;


•	any change in NEP OpCo’s fiscal year or taxable year and any other changes that NEP GP determines to be necessary or appropriate as a result of such change;


•	any conversions into, mergers with or conveyances to another limited liability entity that is newly formed and has no assets, liabilities or operations at the time of the conversion, merger or conveyance other than those it receives by way of the conversion, merger or conveyance; or


•	any other amendments substantially similar to any of the matters described in the clauses above.

In addition, NEP GP may make amendments to NEP OpCo’s partnership agreement without the approval of any limited partner if NEP GP determines that those amendments:


•	do not adversely affect in any material respect the limited partners considered as a whole or any particular class of partnership interests as compared to other classes of partnership interests;


•	are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute; or


•	are required to effect the intent of the provisions of NEP OpCo’s partnership agreement or are otherwise contemplated by the NEP OpCo partnership agreement.

Further, NEP GP, without the approval of any partner of NEP OpCo, may amend any provision of NEP OpCo’s partnership agreement in such manner as NEP’s board of directors determines to be necessary or appropriate to prevent the consolidation of the financial results of NEP OpCo and its subsidiaries with those of NEE and its subsidiaries (other than with us and our subsidiaries) under U.S. GAAP, so long as such amendment is not materially adverse to NEP OpCo or any class of NEP OpCo’s unitholders.

NEP GP, without the approval of any other partner of NEP OpCo, may, in its sole discretion, amend any provision of the NEP OpCo partnership agreement in connection with such changes to the ownership structure of NEP OpCo’s common units held by NEP OpCo GP or its affiliates as may be required to avoid adverse tax consequences resulting from changes to tax laws, so long as such amendment is not materially adverse to NEP OpCo or any class of NEP OpCo’s unitholders.

Opinion of Counsel and Unitholder Approval

For amendments of the type not requiring unitholder approval, NEP OpCo will not be required to obtain an opinion of counsel to the effect that an amendment will not affect the limited liability of any limited partner under Delaware law. No other amendments to the NEP OpCo partnership agreement will become effective without the approval of holders of at least 90% of the outstanding units voting as a single class unless NEP OpCo first obtains such an opinion.

In addition to the above restrictions, any amendment that would have a material adverse effect on the rights or preferences of any type or class of partnership interests in relation to other classes of partnership interests requires the approval of at least a majority of the type or class of partnership interests so affected. Any amendment that

would reduce the percentage of units required to take any action, other than to remove NEP OpCo GP or call a meeting of unitholders, must be approved by the affirmative vote of limited partners whose aggregate outstanding units (excluding non-voting common units) constitute not less than the percentage sought to be reduced. Any amendment that would increase the percentage of units required to remove NEP OpCo GP must be approved by the affirmative vote of limited partners whose aggregate outstanding units (excluding non-voting common units) constitute not less than 90% of the outstanding units (excluding non-voting common units). Any amendment that would increase the percentage of units required to call a meeting of unitholders must be approved by the affirmative vote of limited partners whose aggregate outstanding units constitute at least a majority of the outstanding units (excluding non-voting common units).

Merger, Consolidation, Conversion, Sale or Other Disposition of Assets

A merger, consolidation or conversion of NEP OpCo requires the prior consent of our general partner, which consent may be granted or withheld in its sole discretion, and the prior consent of NEP OpCo GP. However, our general partner and NEP OpCo GP have no duty or obligation to consent to any merger, consolidation or conversion and may decline to do so free of any duty or obligation whatsoever to NEP OpCo or the limited partners, including any duty to act in the best interests of NEP OpCo or the limited partners.

In addition, the NEP OpCo partnership agreement generally prohibits NEP OpCo GP without the prior approval of NEP GP and the holders of a unit majority, from causing NEP OpCo to, among other things, sell, exchange or otherwise dispose of all or substantially all of NEP OpCo’s assets in a single transaction or a series of related transactions. The general partner may, however, mortgage, pledge, hypothecate or grant a security interest in all or substantially all of NEP OpCo’s assets without such approval. NEP OpCo GP may also sell any or all of NEP OpCo’s assets under a foreclosure or other realization upon those encumbrances without that approval. Finally, NEP GP and NEP OpCo GP may consummate any merger or consolidation of NEP OpCo with another limited liability entity without the prior approval of NEP OpCo’s unitholders if NEP OpCo is the surviving entity in the transaction, NEP OpCo GP has received an opinion of counsel regarding limited liability, the transaction would not result in an amendment to the NEP OpCo partnership agreement requiring unitholder approval, each of NEP OpCo’s units will be an identical unit of the partnership following the transaction, and the partnership interests to be issued by NEP OpCo in such merger do not exceed 20% of NEP OpCo’s outstanding partnership interests immediately prior to the transaction.

If the conditions specified in the NEP OpCo partnership agreement are satisfied, our general partner and NEP OpCo GP may convert NEP OpCo or any of its subsidiaries into a new limited liability entity or merge NEP OpCo or any of its subsidiaries into, or convey all of NEP OpCo’s assets to, a newly formed entity if the sole purpose of that conversion, merger or conveyance is to effect a mere change in NEP OpCo’s legal form into another limited liability entity, the general partner of NEP OpCo has received an opinion of counsel regarding limited liability and NEP OpCo GP determines that the governing instruments of the new entity provide the limited partners and NEP OpCo GP with the same rights and obligations as contained in the NEP OpCo partnership agreement. The unitholders are not entitled to dissenters’ rights of appraisal under the NEP OpCo partnership agreement or applicable Delaware law in the event of a conversion, merger or consolidation, a sale of substantially all of NEP OpCo’s assets or any other similar transaction or event.

Termination and Dissolution

NEP OpCo will continue as a limited partnership until dissolved and terminated under the NEP OpCo partnership agreement. NEP OpCo will dissolve upon:


•	the election of NEP OpCo GP to dissolve it, if approved by the holders of units representing a unit majority and our general partner;


•	there being no limited partners, unless NEP OpCo is continued without dissolution in accordance with applicable Delaware law;


•	the entry of a decree of judicial dissolution of NEP OpCo’s partnership; or


•	the withdrawal or removal of NEP OpCo GP or any other event that results in its ceasing to be NEP OpCo GP, other than by reason of a transfer of its general partner interest in accordance with the NEP OpCo partnership agreement or withdrawal or removal followed by approval and admission of a successor.

Upon a dissolution under the last clause above, the holders of a unit majority may also elect, within specific time limitations, to continue NEP OpCo’s business on the same terms and conditions described in NEP OpCo’s partnership agreement by appointing as a successor general partner an entity approved by the holders of units representing a unit majority, subject to NEP OpCo’s receipt of an opinion of counsel to the effect that the action would not result in the loss of limited liability of any limited partner.

Liquidation and Distribution of Proceeds

Upon NEP OpCo’s dissolution, unless it is continued as a new limited partnership, the liquidator authorized to wind up NEP OpCo’s affairs will, acting with all of the powers of NEP OpCo GP that are necessary or appropriate, liquidate NEP OpCo’s assets and apply the proceeds of the liquidation as described in “Provisions of the Partnership Agreements and Other Arrangements Relating to Cash Distributions—Provisions of the NEP OpCo Partnership Agreement Relating to Cash Distributions—Distributions of Cash Upon Liquidation” and “Issuance of Additional Partnership Interests—OpCo Class B units.” The liquidator may defer liquidation or distribution of NEP OpCo’s assets for a reasonable period of time or distribute assets to partners in kind if it determines that a sale would be impractical or would cause undue loss to NEP OpCo’s partners.

Withdrawal or Removal of the General Partner

NEP OpCo GP may voluntarily withdraw as general partner of NEP OpCo without first obtaining approval of any unitholder by giving 90 days’ written notice that such withdrawal will not violate NEP OpCo’s partnership agreement. Upon voluntary withdrawal of NEP OpCo GP by giving written notice to the other partners, the holders of a unit majority may select a successor, which shall be approved by our general partner. If a successor is not elected, or is elected but an opinion of counsel regarding limited liability cannot be obtained, NEP OpCo will be dissolved, wound up and liquidated, unless, within a specified period after that withdrawal, the holders of a unit majority agree to continue NEP OpCo’s business by appointing a successor general partner. See “—Termination and Dissolution.”

NEP OpCo GP may not be removed unless our general partner is removed as our general partner. If our general partner is removed as general partner by unitholders, NEP OpCo GP will also be removed as general partner of NEP OpCo. Any removal of NEP OpCo GP is also subject to the approval of a successor general partner by the vote of the holders of a unit majority.

Transfer of General Partner Units

NEP OpCo GP and its affiliates may at any time transfer NEP OpCo’s general partner units to one or more persons without unitholder approval, although such transfer requires the consent of our general partner.

Transfer of Ownership Interests in the General Partner

At any time, NEE and its affiliates, including us, may sell or transfer all or part of their direct or indirect interest in NEP OpCo GP without the approval of NEP OpCo’s unitholders.

Status as Limited Partner

By transfer of common units in accordance with NEP OpCo’s partnership agreement, each transferee of common units will be admitted as a limited partner with respect to NEP OpCo common units transferred when such transfer and admission is reflected in NEP OpCo’s register.

Indemnification

Under its partnership agreement, in most circumstances, NEP OpCo will indemnify the following persons, to the fullest extent permitted by law, from and against all losses, claims, damages or similar events:


•	NEP OpCo GP;


•	any departing general partner;


•	any person who is or was an affiliate of a general partner or any departing general partner;


•	any person who is or was a director, officer, managing member, manager, general partner, fiduciary or trustee of NEP OpCo, any of NEP OpCo’s subsidiaries or any entity set forth in the preceding three bullet points;


•	any person who is or was serving as director, officer, managing member, manager, general partner, fiduciary or trustee of another person owing certain duties to NEP OpCo or any of its subsidiaries at the request of NEP OpCo GP or any departing general partner or any of their affiliates; and


•	any person designated by NEP OpCo GP.

Any indemnification under these provisions will only be out of NEP OpCo’s assets. Unless it otherwise agrees, NEP OpCo GP will not be personally liable for NEP OpCo’s indemnification obligations, or have any obligation to contribute or lend funds or assets to NEP OpCo to enable it to effectuate indemnification.

Reimbursement of Expenses

NEP OpCo’s partnership agreement requires NEP OpCo to reimburse NEP OpCo GP for all direct and indirect expenses it incurs or payments it makes on NEP OpCo’s behalf or otherwise incurred by NEP OpCo GP in connection with operating NEP OpCo’s business.

Books and Reports

NEP OpCo GP is required to keep appropriate books of NEP OpCo’s business at NEP OpCo’s principal offices. The books will be maintained for financial reporting purposes on an accrual basis. For tax and fiscal reporting purposes, NEP OpCo’s fiscal year is the calendar year.



Annual Retainer (payable quarterly)	$77,500

Committee Chair retainer (annual) (payable quarterly)	$15,000

Annual grant of restricted common units (under 2014 Long-Term Incentive Plan)	That number of common units determined by dividing $127,500 by closing price of NextEra Energy Partners, LP common units on effective date of grant (rounded up to the nearest 10 common units)

Miscellaneous	Travel and Accident Insurance (including spouse coverage)


(a)	Pursuant to the provisions of Section 2.11(a) of the Credit Agreement, each of the Loan Parties hereby requests that each Lender extend its respective Commitment Termination Date to February 8, 2025.


(b)	The Loan Parties, Agent and the Lenders hereby acknowledge and agree that, for the purposes of this particular request for extension only, the Consent Date shall be January 17, 2020, and this Extension Request shall constitute Notice provided to Agent in accordance with Section 2.11(a) of the Credit Agreement.



Subsidiary		Jurisdiction
NextEra Energy Operating Partners GP, LLC		Delaware
NextEra Energy Operating Partners, LP^(a)		Delaware


(a)	Includes 135 subsidiaries that operate in the United States in the same line of business as NextEra Energy Operating Partners, LP.


1.	I have reviewed this Form 10-K for the annual period ended December 31, 2019 of NextEra Energy Partners, LP (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


(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.


(1)	The Annual Report on Form 10-K of NextEra Energy Partners, LP (the registrant) for the annual period ended December 31, 2019 (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.



	JAMES L. ROBO
	James L. Robo Chairman and Chief Executive Officer of NextEra Energy Partners, LP