Q4 2020 Nextera Energy Inc and Nextera Energy Partners LP Earnings Call
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Good morning, and welcome to the next era energy and Nextera energy partners fourth quarter, and full year 'twenty and 'twenty earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions. Please.
Note. This event is being recorded and now I'd like to turn the conference over to Jessica Aldridge Director of Investor Relations. Please go ahead.
Thank you Jason Good morning, everyone and thank you for joining our fourth quarter and full year 'twenty and 'twenty combined earnings conference call for Nextera energy and Nextera energy partners.
With me. This morning are Jim Robo, Chairman and Chief Executive Officer of Nextera Energy, Rebecca Kujawa Executive Vice President and Chief Financial Officer of Nextera Energy, John Ketchum, President and Chief Executive Officer of Nextera Energy resources, and Mark Hickson Executive Vice President of Nextera energy.
And all of whom are also officers of Nextera energy partners as well as Eric <unk>, President and Chief Executive Officer of Florida Power and light company.
Jim will provide some opening remarks and will then turn the call over to Rebecca for a review of our fourth quarter and full year results.
Our executive team will then be available to answer your questions.
We will be making forward looking statements. During this call based on current expectations and assumptions, which are subject to risks and uncertainties.
Actual results could differ materially from our forward looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call and the risk factors section of the accompanying presentation or in our latest reports and filings with the securities.
And exchange Commission each of which can be found on our website Nextera energy Dot com and Nextera energy partners Dotcom.
We do not undertake any duty to update any forward looking statements.
Today's presentation also includes references to non-GAAP financial measures you should refer to the information contained in the slides accompanying today's presentation for definitions and information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.
With that I will turn the call over to Jim.
Thanks, Jessica and good morning, everyone 2020 was a terrific year for both Nextera energy and Nextera energy partners.
Nextera energy performance was strong both financially and operationally, we had announced we had outstanding execution on our initiatives to continue to drive future growth across the company.
Cross all of our businesses, we successfully executed on the largest capital program and our history deploying more than 14 billion and 2020 as we read America's clean energy transformation.
By successfully executing on our plans Nextera energy extended its long track record of delivering value for shareholders with adjusted earnings per share of $2.31 up 10, 5% from 2019.
A key element of our value proposition and Nextera energy is a culture focused on delivering outstanding results for our shareholders.
For the past 10 years, we've delivered compound annual growth and adjusted EPS of 8%, which is the highest among all top 10 power companies, who have achieved on average compound annual growth of less than 3% over the same period.
Amid this significant growth the company has maintained one of the strongest balance sheets and credit positions and the industry.
And 2020, we delivered a total shareholder return of approximately 30%.
Significantly outperforming both the S&P 500, and the S&P 500 utilities index and continuing to outperform both indices in terms of total shareholder return on.
On a one year three year five year, seven year and 10 year basis.
Over the past 15 years, we've outperformed all of the other companies and the S&P 500 utilities index and 86% of the companies and the S&P 500 and why.
And more than tripling the average total shareholder return of both indices.
While we are proud of our long term track record of creating shareholder value, we remain laser focused on the future and on delivering our commitments.
Nextera energy remains well positioned to capitalize on the disruptive forces reshaping our industry, which have expanded and accelerated over the past two years, even beyond what we had anticipated.
The combination of low cost renewables with low cost storage and the form of batteries today and hydrogen and the longer term.
Has substantially increased the total addressable market for Nextera energy.
We now believe that a substantial and economic de carbonization of the electricity transportation and industrial sectors as possible, which represents the potential investment opportunity of trillions of dollars and in the coming decades.
And the electricity sector, we expect that older and more inefficient generation will continue to be retired and replaced with cleaner and more affordable alternatives.
And the transportation sector, we believe it will be increasingly economic to replace fossil fuel vehicles with vehicles powered by fuel cells and batteries charged with renewable energy.
And and the industrial sector Gray hydrogen and other high carbon feedstocks can be replaced with green hydrogen.
We believe these trends have already been put into motion driven by economics. In addition, we believe it is possible that the Bud and administration supported by a significant shift and public support towards taking action to address climate change May Act to further accelerate these shifts through the extension of existing incentives as well as initiating other.
Forms of policy support.
Importantly, we believe that no company is better equipped to take advantage of these substantial and long term trends the nextera energy.
In fact, Nextera energy is already proof that you can be clean low cost and financially successful all at the same time.
We were at the Vanguard and building a sustainable energy era that is both clean and affordable and we are driving hard to continue to be at the forefront of the disruption that is occurring within the energy sector and broader parts of the U S economy.
We expect that the execution of our strategy will drive meaningful C O two emissions reductions across the country and.
And we will help advance nextera energy towards its goal of reducing it's cotwo emissions rate by 67% by 2025 from a 2005 baseline while simultaneously lowering generation costs for customers and maintaining best in class reliability.
We expect the disruptive nature of renewables to be terrific for customers terrific for the environment and terrific for shareholders by helping to drive tremendous growth for this company over the next decade and beyond.
FPL was already capitalizing on the disruption in our sector with continued focus on its grid and fleet modernization efforts. During 2020, FPL successfully executed on our strategic initiatives, including placing more than 1100 megawatts of cost effective solar and service on time.
And on budget and support of its ongoing capital plan and.
This solar expansion as part of Fpl's solar together community Solar program and its groundbreaking 30 by 30 plan, which is one of the world's largest solar expansions and was and would result, and roughly 10000 megawatts of total solar capacity on FPL system by 2030.
Additionally, the 409 megawatt manatee energy storage center, which will be the world's largest integrated solar powered powered battery system is on track and on budget to be placed in service later this year as part of the approximately $1 billion that Nextera energy is investing and battery storage projects in 2021.
Smart capital investments such as these help FPL improve its already best in class customer value proposition, while also maintaining and emissions profile that is among the cleanest and the nation.
FPL also had continued success with its cost saving initiatives, making even further reductions to its already best in class dollar per retail megawatt hour and non fuel O&M costs from 2019 to 2020.
Through our unrelenting focus on cost savings and on making disciplined long term investments for the benefit of our customers.
<unk> has been able to maintain typical customer bills that are the lowest in the nation when compared to the 20 largest investor owned utilities and the country.
In addition to low bills.
FPL has continued to provide reliability that is by far the best and the state of Florida and.
<unk> its best ever reliability rate and 2020.
Fpl's investments to build a stronger smarter energy grid have resulted and best in state reliability for the last 14 years in a row as well as earning numerous national awards.
And 2020 FPL was recognized for the fifth time and six years as being the most reliable electric utility and the nation.
Let me now turn to Gulf power.
And the two years that has been part of the Nextera energy family Gulf Power has realized and an approximately 30% reduction and O&M costs.
And 50% improvement and service reliability, a 93% improvement and safety and a nearly 20% reduction and Cotwo <unk>.
Gulf Power has grown regulatory capital employed at a 17% compound annual growth rate since 2018.
And we are well on our way to achieving the objectives, we laid out at our Investor Conference and 2019.
In addition to the excellent operational execution that we delivered in 2020.
We continued to progress our smart capital investment program that is expected to generate further customer benefits over the coming years.
And the fourth quarter, we completed the plant crist coal to natural gas conversion.
As a result, consistent with our commitment to remain a clean energy leader.
We were able to complete the accelerated shutdown of the coal units at plant Crist, which has now been renamed the Gulf Clean Energy Center.
With the retirement of Fpl's Indiantown cogeneration facility also occurring late last year 2021 is the first time and nearly 70 years that there are no coal fired power plants, and Florida for either FPL Gulf power.
Earlier this month FPL.
L filed the test your letter with the Florida Public Service Commission to initiate a rate proceeding for new rates beginning in January 2022.
The four year plan that we intend to propose a design to provide continued longer term cost certainty for customers, while allowing FPL to continue investing and clean energy storm harden infrastructure and other innovative technologies that are the foundation of our communities.
Ability of multi year rate plans allows FPL to focus on efficiency and the business, which is critical to keeping customer bills low while at the same time, enabling FPL to maintain strong credit ratings and balance sheet.
Which allows for consistent access to the capital markets.
We look forward to the opportunity to showcase our long term track record.
Providing low bills high reliability, and clean energy for Floridians, and plans and our plans to build and even more resilient and sustainable energy future for Florida, and the coming years.
Turning to energy resources and 2020, we continue to advance our position as the leading developer and operator of wind solar and battery storage projects commissioning approximately 5000, and 750 megawatts of new projects more than doubling the amount of total renewables commission versus the previous year.
This was also a record year for renewables origination and energy resources with the team, adding a net nearly 7000 megawatts to our backlog during the year.
As a result of the team's origination success and alongside the backdrop of the terrific market outlook I just outlined at the beginning of my remarks, we now expect to construct approximately 23 to 30 gigawatts of new renewables and the 'twenty and 'twenty one to 2024 time frame.
Which if we're successful with the midpoint would mean, adding a portfolio of generation projects that is approximately one and a half times the size of energy resources and tire operating renewables portfolio as of year end 2019.
Energy Resources' execution success is reflective of our ability to leverage our significant competitive advantages.
Including our best in class development skills large pipeline of sites and interconnection queue positions strong customer relationships purchasing power best in class construction expertise resource assessment capabilities cost of capital advantages and world class operations capability to capitalize on the ongoing energy transition.
It is occurring and the nation's generation fleet.
We believe that we're in a terrific position to be able to capture a significant share of the market opportunities going forward and what we continue to believe is the best renewables development environment, we've ever seen.
Along with the broader public shift towards calls for action to fight climate change over the past few years Theres been an increased focus on environmental social and governance or ESG on the part of many of our stakeholders.
We expect this trend to amplify demand among our traditional customers in our and our and in our core renewables business. We also believe it is opening up significant new markets and business opportunities for energy resources. We anticipate we anticipate our development program to be further enhanced by and ability to attract new non traditional customers.
<unk>, particularly and the commercial and industrial sector is improving renewable economics are increasingly aligned with corporate objectives to procure energy from clean generation sources.
In summary, I continue to remain as enthusiastic as ever about Nextera energy as long term growth prospects and 2020, we extended our long track record of executing for the benefit of customers and shareholders and further developed our best in class organic growth prospects.
Based on the strength and resiliency of our underlying businesses I will be disappointed if we're not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges and 'twenty 'twenty, one 'twenty and 'twenty two and 2023.
While at the same time, maintaining our strong credit ratings.
We remain intensely focused on execution and continuing to drive shareholder value over the coming years.
Let me now turn to Nextera energy partners, which delivered a total unit returns unitholder return of approximately 32% and 2020 further advancing its history of value creation since the IPO.
Nextera energy partners is uniquely positioned to take advantage of the disruptive factors reshaping the energy industry and benefit from the enormous market opportunity and the coming decades from renewables.
Nextera Energy partners also had a terrific year of execution and 2020 and continued to deliver on its commitments that history of execution is supported by Nextera energy partners outstanding portfolio of clean energy assets, which was further diversified and 2020.
During the year and Nextera energy partners inquired interests, and approximately 1100 megawatts of high quality renewable energy assets, including the partnerships first battery storage projects from energy resources.
Additionally, during the year and Nextera energy partners successfully completed its first three organic growth prospects, including the Repowering of 275 megawatts of wind projects.
For 2020, Nextera energy partners grew its LP distributions by 15% year over year and delivered 40% year over year cash available for distribution growth highlighting the strength of its operating portfolio.
With this strong year over year growth and cash available for distribution Nextera energy partners achieved its distribution growth objectives, while maintaining a trailing 12 month payout ratio and the high 60% range as of year end 2020.
And the fourth quarter, we published our first Nextera energy partners ESG report highlighting its high quality clean energy portfolio visible opportunities for renewables growth and ability to leverage the operational expertise of Nextera energy resources.
The continued origination success at energy resources is expected to benefit Nextera energy partners and meeting its future growth objectives.
I continue to believe that the combination of Nextera energy partners clean energy portfolio growth visibility and flexibility to finance that growth offers LP unitholders, a uniquely attractive investor value proposition.
As with Nextera energy, we remain intensely focused on continuing to execute and deliver that unitholder value over the coming years.
Finally, I would like to take a moment to thank all of Nextera Energy's employees for their continued dedication hard work and focus during the extraordinary circumstances of the past year.
Despite the significant disruption caused by the pandemic and in the midst of the most active hurricane season, and the Atlantic Basin on record on.
Our employees unwavering focus on our customers as one eight is what enabled yet another year of flawless execution and the business, while also delivering our best ever safety results across the company.
It is because of their commitment to excellence that we were able to deliver above and beyond our commitments in 2020 and.
And why I remain as confident as ever and our ability to deliver on all our expectations moving forward.
With that I'll now turn the call over to Rebecca who will review, the 'twenty and 'twenty results and more detail.
Thank you Jan and good morning, everyone, Let's now turn and give a detailed results beginning with FPL.
The fourth quarter of 2020, FPL reported net income of $502 million or 25 cents per share up five cents per share year over year.
All year 2020, FPL reported net income of $2 six $5 billion or $1 35 per share and increase at 15 cents per share versus 2019.
Regulatory capital employed increased by approximately 11% for 'twenty and 'twenty and was the principal driver of Fpl's net income growth of more than 13% for the year.
Capital expenditures were approximately $2 $2 billion and the fourth quarter, bringing its full year capital investments to a total of roughly $6 $7 billion.
Fpl's reported ROE for regulatory purposes was 11, 6% for the 12 months ended December 31, 'twenty and 'twenty, which is at the upper end of the allowed band of nine 6% to 11, 6% under our current rate agreement.
During the fourth quarter, we utilized approximately $100 million reserve amortization, leaving FPL with a year and 2020 balance of $894 million.
Approximately 206 million and preserve amortization was used to offset the restoration costs associated with hurricanes.
And tropical storm, Ada, which FPL elected not to recover from customers through a surcharge.
Sales reserve amortization mechanism under its current settlement agreement combined with our aggressive cost cutting measures and the benefits of tax reform has provided significant customer benefits, including avoided surcharges for approximately $1 $7 billion and storm restoration costs since 2017.
Our overall capital program and at FPL is progressing well, we continue to advance one of the nation's largest ever solar expansion there and.
The year, the Florida Public Service Commission approved Fpl's solar together program, which is the nation's largest community solar program that is expected to generate $249 million and total net cost savings for participating and nonparticipating customers over the program's life.
After commissioning over 1100 megawatts on more than three and a half times the amount of solar capacity and 2020 versus the prior year.
The Isle expects the commission roughly 670 megawatts of additional solar together capacity and 2021 and the customer and customer demand for this innovative program across all customer classes remained strong.
Beyond solar construction of the highly efficient roughly 200 megawatt Dania Beach clean Energy Center remains on schedule and on budget as it continues to advance towards its projected commercial operations date in 'twenty and 'twenty two.
It should be noted that all of these significant accomplishments, including the deployment of nearly $7 billion and capital. We're in the midst of not only a global pandemic, but also doing the most active hurricane season, and the Atlantic Basin on record, we delivered our best ever reliability results when our customers needed us the most and we remain committed to supporting customers experience.
And economic hardship as a result of the challenges caused by the pandemic.
To date FBL has provided customers with approximately $75 million and relief through various programs and initiatives as Florida recovers, we will continue to help our customers navigate this difficult time on maintaining our best in class customer value proposition.
Let me now turn to Gulf power, which as a reminder, with legally merged into FPL on January one 2021, but we'll continue to be reported as a separate regulated segment during 2021.
Both powder reported fourth quarter, 2020, GAAP earnings of $353 million or <unk> <unk> per share on two cents per share year over year.
For the full year Gulf power reported net income of $238 million or 12 cents per share and increase of two cents per share year over year on adjusted basis.
Based on O&M reductions were the primary driver of Gulf, Power's and 19% year over year growth and adjusted earnings.
Gulf Power's reported ROE for regulatory purposes is expected to be approximately 11, 1% for the 12 months ending December 'twenty and 'twenty, which is near the upper end of the allowed band of $9 two 5% to 11 point and two 5% under its current rate agreement.
But for the full year 2021, we expect a regulatory ROE to be on the upper half of this allowed band assuming normal weather and operating conditions.
All of our major capital initiatives at Gulf Power are progressing well Gulf Power's first solar development project. The roughly 75 megawatt Blue Indigo Solar Energy Center went into service in 'twenty and 'twenty and is expected to generate significant customer savings over its lifetime.
Gulf power anticipates, bringing another 150 megawatts of cost effective zero emission and solar capacity on line later this year.
And North, Florida, resiliency connection, which among other things will allow customers to benefit from greater diversity and silver output across two different time zone is expected to be in service and mid 2022.
Continued smart capital investments such as these renewables and core infrastructure are expected to drive customer benefits for many years to come.
The Florida economy continues to recover from the ongoing impacts of the COVID-19 pandemic, a number of current economic indicators, including retail taxable sales new building permits and consumer confidence have meaningfully improved since the start of the pandemic and early 2020.
Additionally, Florida and the most recent seasonally adjusted unemployment rate of six 4% is below the national average.
While it is unclear at this point, how the economy will be impacted by the current wave of COVID-19 cases, we continue to believe that Florida offers a unique proposition in terms of housing affordability, great weather low taxes, and a pro business economy, all of which should support ongoing FPL customer growth and economic rebound once the worst of the pen down.
And it gets behind us.
We remain deeply engaged and helping Florida return from this stronger than ever and we will continue to do our part to support that outcome, including for scaling our smart capital investment program and economic development efforts, which help create jobs provide investment and local communities and further enhance our best in class customer value proposition.
During the quarter Fpl's average customer growth was strong increasing by nearly 76000 and kind of.
From a prior year quarter Fpl's fourth quarter retail sales were up 9% versus the prior year period, largely driven by a two 3% year over year growth and underlying usage per customer are.
2000, 20-F hills retail sales increased one 5% versus the prior year, driven primarily by ongoing strong growth and customers and a favorable weather comparison.
On a weather normalized basis Fpl's retail sales increased by <unk>, 7% for the full year 'twenty and 'twenty.
Overall and tax of the pandemic on last years retail sales were relatively muted and FPL is underlying usage per customer was flat year over year.
For Gulf power, the average number of customers increased approximately 9% versus the comparable prior year quarter.
And for 'twenty and 'twenty Gulf Power's retail sales declined three 3% primarily as a result at the more favorable weather and the prior year as well as lower usage per customer, which we attribute in part to the ongoing and packs at the pandemic on our commercial and industrial customers.
And Jim mentioned FPL is preparing to file a base rate adjustment proposal that would cover the next four years 'twenty and 'twenty two through 2025 and provide customers longer term visibility to the future cost of electricity.
Well the details are still being finalized we expect a proposal to include base rate adjustments of approximately $1 $1 billion starting in January of 2022, and $615 million starting in January of 'twenty and 'twenty three.
We also expect a proposal to request support for continued deployment of cost effective solar with the continuation of our solar base rate adjustment or solar silver and mechanism to recover the revenue requirements associated with up to 900 megawatts of cost effective solar projects and each of 2024 and 2025, which we currently estimate.
And to be approximately $140 million each year.
For the period 2019 through the end of 2022 FPL is planning to have invested approximately $29 billion with additional significant investments expected in 2023 and beyond to meet the growing needs and Florida's economy and to continue delivering outstanding value for Florida customers by keeping reliability high and fee.
And other costs low.
While the benefits of building a stronger smarter and cleaner grid more efficient generation fleet are passed along regularly to customers through higher service reliability and lower bills.
And we must periodically seek recovery for these long term investments supported by base rates.
As we've previously indicated we plan to request the commission authorized unified rates and capital structure that both FPL and Gulf power customers.
We believe the combination of the two businesses will result in approximately $2 $8 billion of savings for customers through both operational savings and overall system benefits.
<unk> expects to request and 11, 5% ROE inclusive of a 50 basis point incentive for superior performance.
Paired with peer utilities and the southeastern U S. F. B L has the most efficient and most cost efficient operations, the highest reliability the lowest customer bills.
All while remaining on the cleanest utilities and the country and is widely regarded as the top overall performer and the industry, bringing exceptional value to customers.
We believe that the performance adder would reflect fpl's current superior value proposition and encourage strong and continued strong performance.
In addition, we continue to believe that a strong balance sheet, including strong credit ratings remains critical to ensure FPL and maintained uninterrupted access to the capital markets, even in times of significant market disruption and the aftermath of hurricanes as well and to attract capital to support the investments FPL is making to further improve the VAT.
And we offer our customers.
The total of these base rate increase request over the four year period from 2022 to 2025.
Salt and and estimated average increase in total revenues of about three 7% per year.
Good day Fpl's typical residential bill is about 30% lower than the national average if the full amount of the request for granted under our proposal and assuming other utilities experienced bill increases only at their historical rate of increase Fpl's typical customer bills would remain significantly lower than the national average through 2025.
Five.
To put this proposal and context. The proposal would result in a typical customer Bill and January 2022 that is nearly 22% less than it was in real terms 15 years ago, even with our proposed base rate increases.
And in nominal terms FBL bills would be only about three 5% higher in 'twenty and 'twenty two than in 2000, and and sex a fraction of the nominal increases of 25% to 75% and the cost of groceries medical care health insurance and housing over the past 15 years.
Moreover, through the consolidation of FPL and Gulf power did the typical thousand kilowatt hour residential customer Bill and northwest, Florida is projected to be lower in 2025 than it was in 2019.
We look forward to the opportunity to present, the details of our case and expect to make our formal filing with testimony and required detailed data in March.
The timing for the proceeding will ultimately be determined by the commission, but we currently expect that we will have hearings and the third quarter and a final commission decision and the fourth quarter and time for new rates to go into effect in January of 'twenty and 'twenty two.
As always we are open to the possibility of resolving our rate request through with their settlement agreement.
During the course of the past 22 years FPL has entered into six multi year settlement agreements that provide our customers with a high degree of rate stability and certainty and helped FPL execute to deliver its best in class customer value proposition our.
Our core focus will be to pursue a fair and objective review of our case that supports continued execution of our successful strategy for customers and we will continue to provide updates throughout the process.
Energy resources reported fourth quarter, 2020, GAAP loss of $644 million or 33 cents per share.
Adjusted earnings for the fourth quarter were $342 million or 17 cents per share.
Energy Resources' contribution to adjusted earnings per share and the fourth quarter is flat versus the prior year comparable period as favorable results from the continued growth and performance and our renewables portfolio were roughly offset by a number of items, none of which are particularly noteworthy.
For the full year energy resources reported GAAP earnings of $531 million or 27 cents per share and adjusted earnings of one nine and $5 billion or <unk> 99 per share.
Energy resources full year adjusted earnings per share contribution increased 12 cents or approximately 14% versus 2019.
For the full year growth was driven by continued new additions to our renewables portfolio as contributions from new investments increased by seven cents per share.
Contributions from existing generation assets increased three versus 2019, due primarily to increased production tax credit volume from our re powered wind projects and an improvement and wind resource, which were partially offset by the planned nuclear outages and retirement of our Duane Arnold nuclear facility.
Also contributing favorably with Nextera energy transmission, which increase results by two cents year over year, primarily as a result, our full year contributions from Trans Bay cable acquisition that closed in the middle of 2019.
Contributions from all other impacts were flat year over year.
Amid the disruption of the pandemic energy resources had one of its best years ever including successfully executing on the largest construction program and our history as well as delivering our best year ever for origination, adding a net nearly 7000 megawatts of new renewables projects to our backlog.
And 2020, Recommissioned, approximately 5000, and 750 megawatts of wind solar and storage projects on schedule and on budget.
In addition, since the last call. We have added approximately 2000 megawatts of renewables projects to our backlog, including approximately 1030 megawatts of new wind and wind Repowering.
670 megawatts of solar and 300 megawatts of battery storage, including 75 additional megawatts of capacity on Desert peak storage, which is now expected to total 400 megawatts and remains the worlds largest standalone storage project.
Following the terrific origination year in 'twenty and 'twenty, our renewables backlog now stands at approximately 13005 hundred megawatts.
Despite our record year of megawatts placed and serviced energy resources grew its year end backlog by approximately 1500 megawatts a year over year, providing terrific visibility to the strong growth that lies ahead.
Since 2017, our backlog editions have grown at a roughly 25% compound annual growth rate.
As a result of our tremendous progress in 'twenty and 'twenty and our strong continued origination success, we are raising our 2021% to 2022 renewables development expectations to a range of 10000 and 525 megawatts. The 12007 hundred megawatts, which at the midpoint is approximately 3500 megawatts above our previous expectations.
Our expectations for 'twenty and 'twenty, one and 2022 are now up more than 50% at the midpoint relative to the expectations that we laid out at the 2019 Investor conference, reflecting the significant acceleration of renewables activity over the past year and a half.
We're also introducing our 2023 to 2020 for renewables development expectations of 12150 megawatts to 17300 megawatts. This is by far the largest expected two year development program and our history and reflects our high level of confidence and energy resources ongoing leadership position and renewable energy development.
And the accompanying slide provides some additional details.
As we've previously discussed we are optimistic about the expanded investment opportunities that the broad de carbonization of the U S economy presents for energy resources, and we are pursuing a number of pilot projects to rapidly develop our capabilities across this potential investment opportunity set.
Today, we are announcing a new innovative green hydrogen project and energy resources and includes a 12 megawatt solar array onsite hydrogen production and storage and a hydrogen fuel cell.
And this emissions free project will utilize solar energy to create green hydrogen to power the fuel cell, which will be able to provide electricity to the local grid during periods of peak demand.
Subject to final terms and regulatory approvals this approximately $20 million innovative green hydrogen project is expected to begin construction in 2022 with commercial operations and mid 2023.
Energy resources is also and advanced discussions with a number of potential customers across the industrial landscape, including food processing specialty chemicals and refineries to continue to develop clean energy solutions for a more efficient green production processes.
And one potential project includes a solar tracker tracker combined with and Electrolyze or at a large industrial plant that project would deliver green hydrogen as and industrial feedstocks and a facility and we're not producing hydrogen the solar power would offset a portion of the plants energy consumption further decarbonising the facilities operations.
In addition, today energy resources announced a planned partnership to preserve pursue large school bus fleet conversions to electric and hydrogen with the nations largest school bus owner and operator and transportation services provider.
With its partner energy Resources', anticipates investing and bus electrification upgrades and charging stations as well as providing energy management services.
This transaction is consistent with our toe and the water approach as we explore potential opportunities and the electrification of the transportation sector.
We are excited about all of these opportunities as well as the previously announced hydrogen pilot project, we plan to propose that Fpl's Okeechobee clean energy center, which highlight the significant opportunities that the broad de carbonization of the U S economy presents.
Consistent with our long term track record Nextera energy will remain disciplined as we take steps to be at the forefront of these developing markets, while taking a leadership role and the clean energy transition.
The on renewables and storage since the last earnings call Mountain Valley pipeline made progress with its outstanding permitting issues, including receiving the Bureau of land management right of way grants, which authorizes N V. P to cross the Jefferson National Forest once the stream and wetland permitting is complete.
While the fourth circuit denied stay request on N V piece, new biological opinion. The court did grant a stay on the nationwide 12 permit and the project is now pursuing and alternate path forward to permit and complete stream and wetland crossings.
It is due to these continued legal and regulatory issues as well as the substantial delays and commercial operation and increase the saw increased costs associated with those delays the carrying value for our investment and M. D. P. Now exceeds its fair market value and there was as a result, we have reflected a one to $1 $2 billion after tax and.
Pyramid, and our GAAP financial statements, which we have excluded from adjusted earnings.
While we are disappointed with the extended development and construction timeline due to the legal challenges that the project has faced we intend to continue pursuing completing the project with our partners.
Finally, during 'twenty and 'twenty Nextera energy transmission furthered its efforts to grow America's leading competitive transmission company and had its best year ever.
During the year the business delivered a record earnings contribution and realized constructive rate case outcomes at Trans Bay cable and Lone star transmission as well as entered into an agreement to acquire great Lions, which owns three FERC regulated transmission utilities spanning six six states.
We continue to expect to obtain all necessary regulatory approvals and close on the grid lines acquisition and the first half of this year.
Turning now to the consolidated results for Nextera energy for the fourth quarter of 'twenty and 'twenty GAAP net losses attributable to Nextera energy was $5 million or zero cents per share nextera.
Nextera Energy's 2024th quarter adjusted earnings and adjusted EPS were $785 million or <unk> 40 per share respectively.
For the full year 2020, GAAP net income attributable to Nextera energy was $2 $92 billion or $1 48 per share.
Adjusted earnings were $4, five $5 billion or $2.31 per share as a reminder, all of our financial results have been adjusted to account for the four for one stock split which became effective in the fourth quarter.
For the corporate and other segment adjusted earnings for the full year decreased seven cents per share compared to the 2019 prior comparable period, primarily as a result of higher interest and refinancing costs associated with certain liability management initiatives completed during the fourth quarter to take advantage of the low interest rate environment.
And total for Nextera energy are refinancing activities reduced nominal adjusted net income by roughly $103 million during the fourth quarter inclusive of approximately $39 million associated with energy resources share of refinancing cost at Nextera Energy partners. We expect these initiatives to translate into favorable.
Net income contributions in future years, and an overall improvement and net present value for our shareholders.
Long term financial expectations, which we increased and extended late last year through 2023 remain unchanged.
For 2021, Nextera energy expects adjusted earnings per share to be and a range of $2 40 to $2.54.
For 'twenty and 'twenty to you and 2023, Nextera energy expects to grow 6% to 8% off the expected 2021 adjusted earnings per share.
And we will be disappointed if we're not able to deliver financial results at or near the top and at these ranges.
From 2018 to 2023, we continue to expect that operating cash flow will grow roughly in line with our adjusted EPS compound annual growth rate range.
We also continue to expect to grow our dividends per share at a roughly 10% per year rate through at least 2022 off of a 'twenty and 'twenty base as always our expectations assume normal weather and operating conditions.
Let me now turn to Nextera Energy partners, which also had a strong year of operation on and financial performance and 2020.
And fourth quarter, adjusted EBITDA was $308 million and cash available for distribution was $106 million and increase of 10% and 8% from the prior year period, respectively.
EBITDA growth was driven primarily by favorable resource across the portfolio and the full contributions from new projects acquired in late 2019, and it was slightly offset by a planned outage at our Genesis project late in the fourth quarter.
For the full year, 'twenty and 'twenty adjusted EBITDA was $1.263 billion up 14% year over year cash.
Cash available for distribution was $570 million and increase of 40% from the prior year.
Similar to the quarterly results full year growth and adjusted EBITDA was primarily driven by full year contributions from acquisitions and the prior year and favorable wind resource.
For the full year wind resource was 100% of the long term average versus 97% and 2019.
The benefit to cash available for distribution from lower project level debt service was partially offset by higher corporate level interest expense.
As a reminder, these results include the impact of I D R fees, which we treat as an operating expense.
Additional details are shown on the accompanying slide.
Yesterday, the Nextera Energy partners Board declared a quarterly distribution of 61, and a half cents per common unit or $2 46 per unit on an annualized basis up 15% from the comparable quarterly distribution a year earlier and at the top end of the range, we discussed going into 'twenty and 'twenty.
During 2020, Nextera energy partners executed several financing to support its ongoing growth investments and optimize its capital structure for the benefit of LP unitholders.
As Jim mentioned during the quarter, we closed on an acquisition from energy resources of interests and and approximately 1100 megawatt portfolio of long term contracted renewables projects.
As part of this transaction Nexstar and D partners raised a 10 year approximately $1 $1 billion convertible equity portfolio financing that includes the acquired assets plus four existing Nextera energy partners wind and solar projects.
Combining this acquisition with the recapitalization of four existing Nextera energy partners assets through the longest dated and lowest cost convertible equity portfolio financing and the partnerships' history is expected to provide significant benefits for unit holders by.
By leveraging strong demand for high quality clean energy assets Nextera partners was able to secure financing for both the current transaction and future growth, while enhancing returns for LP unit holders and limiting downside risk.
Exterran partners expects to further strengthen its balance sheet and have access to approximately 242 $4 billion and available financing capacity, including capacity under its corporate revolving credit facility and commitments from investors to potential future convertible equity portfolio financings, which further supports the partnerships long term growth.
During the second half of the year next turnkey partners completed the successful conversion of approximately $300 million of convertible debt and the remaining balance of the convertible preferred securities that were issued in 2017 into approximately $5 7 million and $4 7 million units a common units respectively.
And these conversions help nextera energy partners achieve its goal of using low cost financing products to efficiently issue equity over time.
Finally, Nextera energy partners raised approximately $600 million and new zero percent coupon convertible notes during the quarter and used the net proceeds from this offering to redeem a portion of its outstanding 4.25% senior notes due in 2024.
So and it coincident with the issuance of the convertible notes next strategy partners entered into a capped call structure that will result in Nextera energy partners retaining up to 90% of the upside and its unit price associated with our convertible note over the next five years.
Nextera energy partners run rate expectations for adjusted EBITDA and Kathy at December 31, 2021.
And unchanged year, and 'twenty 'twenty, one run rate adjusted EBITDA expectations of $144 billion to $1 six $2 billion and.
And Kathy and the range of 600 million to $680 million.
As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated idea our fees as we treat these as an operating expense.
From an updated base of our fourth quarter 2020 distribution per common unit at an annualized rate of $2.46.
We continue to see 12% to 15% growth per year, and LP distributions as being a reasonable range of expectations through at least 2024.
We expect the annualized rate of the fourth quarter 2021 distribution that is payable in February of 'twenty and 'twenty two to be and a range of $2 76 to $2.83 per common unit.
In summary, we continue to believe that both Nextera energy and Nextera energy partners have excellent prospects for growth both in the near and longer term S.
FPL energy resources, and Nextera energy partners, each have outstanding set of opportunities across the board and.
Progress, we made in 'twenty and 'twenty reinforces our longer term growth prospects and while we have a lot to execute on and 2021, we believe that we have the building blocks and place for another excellent year.
That concludes our prepared remarks and with that we'll open up the line for your questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on and you touched on phone and isn't it.
Speakerphone, please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
The first question is from Steve Fleishman from Wolfe Research. Please go ahead.
Yeah.
Yeah, a couple of questions just first.
Just a cleanup on the N.
N V. P announcement could you just talk about maybe a little more color on.
And what you need to get that done and then and when.
And waterways.
Sure Thanks, Steve and I appreciate I appreciate the question and you know.
First obviously, the project has taken longer and and costs more than what we anticipated and says the impairment is really related to reflecting not only that value that we have on our books, but really in relation to you. What we believe is the current fair on valuation.
For the investment given what we do still have to accomplish and obviously a lot changed and the fourth quarter and including the nationwide 12 permit stay that I mentioned in the prepared remarks as well as the various things that have happened in January and against the backdrop of of obvious changes, including the change and the administration, including the change and.
And and control of the Senate, which happened on here in January and.
So the the impairment does reflect our view of what we still need to accomplish AR and the associated fair values related to the chances of being able to successfully execute on that.
But this was an accounting exercise on it it was a lot of due diligence that we needed to evaluate.
And it is we think we've made the appropriate changes, but it does not change and our commitment to work with our partners to put this project into service.
And as I noted in the and the comments, we do have now on a path that we're going to pursue in terms of the day outstanding permitting work closely with closely with our partners to pursue that path, but we are we thought it was appropriate and obviously took the actions that we did with respect to the impairment.
Okay, and then just on the the continued higher growth and renewables could you maybe just talk a little bit on our funding plans for that.
Over the period.
Hi, Rob and you know, it's a super high level on as you know, we've prided ourselves on a variety of approaches to the capital markets on to support our business retaining all of those options as circumstances change as one of the things that I think has been particularly successful for us over a long period of time.
One aspect of it at this point I wouldn't expect to change and particularly as it relates to financing and the projects that energy resources is that we will continue to execute on a significant amount of tax equity given our current position and and and tax capacity, but I think it's all of the tools and the toolbox that you would expect us to utilize to finance the business, but on.
Our commitment to our strong balance sheet remains unchanged and our and we will grow both profitably and and maintaining a strong balance sheet.
Great and then last maybe a kind of a strategic question I guess for Jim just the as we see the continued just dramatic ramp up and renewables growth and.
The revaluation of the company probably tied to that.
What does it mean for some of the statements you've made in the past on utility.
On a does it make it <unk>.
More likely and because you need to balance the mix or less likely because there's just so much opportunity on the southern side of the business.
So Steve.
You know it.
Obviously, the relative valuation of the two big businesses has changed over the last several years right and and that's just accelerated and in particular over the last over the last 24 months.
I think what that means is it has changed a bit of our analytic framework of how we think about you.
Utility M&A on the one and I continue to believe that there's enormous value creation that we can bring to the table and you only need to work and.
And what we've been able to do with golf and the last 24, and a half months to see how much value creation, bringing our playbook and our operating platform and the beer can create right. So.
And that that is.
That I think remains clear and if anything is clear to me.
On the other I think it's also clear that.
Probably the sweet spot for us in terms of M&A as things and the things and.
And the less than $20 billion range that we can pay cash and finance are true.
Through the normal course and at that point, if you do that.
You're not shifting the mix, one way or another on that all that tremendously and and.
And our set of analytics, we're looking really more at how much value creation, we bring to the table when we do this and and.
So for example, and Santee Cooper is a great example of that debt. So you know, it's a roughly yeah.
Eight or $9 billion transaction and.
And you know something that we can finance and the normal course, and a place where we think we can create enormous value very quickly and so that's that's the kind of things that we're focused on and but most importantly.
We're focused on.
Ron and the business and executing staying financially disciplined as we always have been and.
And executing against the terrific growth prospects, we have and energy resources, and then executing and FPL as we always have for the benefit of our customers and continue on and for the benefit of the state. So.
That I think is just.
And we'll give an overview of how our current status of our thinking on.
Great. Okay. Thanks, so much.
The next question is from Julien Dumoulin Smith from Bank of America. Please go ahead.
Hey, good morning, James Thanks for the time I'll make a brief if I can just coming back to these global expectations and the redefined upsides expectations over the longer term here can you talk about a few factors here first and C&I you guys havent been as involved it seems like that could be accelerating here can you talk about.
And how that is filtered into your expectations.
And secondly, the new expectations explicitly do not include any future build on transfer how do you see that as incremental and any heuristics you might offer as to how to think about value.
And there.
And the third one on that if I can just throw in there is the attach rates on storage. It seems like the bulk of the stores that you're talking about on the futures probably tied to your solar assets. How do you think about standalone as being incremental.
Incrementals and so what you're talking about already I'll leave at that.
Okay, Julia and thanks for the questions and you may even need a prompt me if I forgot one of more aspects of the of the and the Multipart question, Let me start with our C&I and as I highlighted in the prepared remarks, John and his team across energy resources have really cultivated a nice suite of opportunities with C&I customers and if we look at our.
Core base of other major investor owned utilities are munis, and co ops and our C&I business.
Yeah, and you know other investor on utilities immune and co ops are still larger overall, but the opportunity set with C&I customers is definitely growing not just in your standard PPA, but more on the suite of types of opportunities that I mentioned and as one of the pilot projects that John and his team are pursuing kind of more.
Holistic energy solution provider to the C&I customers and I think what's really changed over the last year plus maybe it's even two years is the inbound requests to C&I has really expanded and as they've really start to look at their own carbon footprint on their own ESG messaging on <unk>.
How do they source of energy to do their business and how do they source that from a cleaner energy solutions has become a higher topic is of interest and higher priority for them and therefore, a terrific opportunity set for us.
So I think that that's a growing opportunity for us is that we continue to be really excited about in terms of build own transfers. We will continue to present, our expectations, both our expectations and our signed contracts consistent the way that we've shown it in the past.
That there will be some build own transfer and then energy resources on pursues if it is a strict just sell the project to somebody else. We think there's a lot of value creation, there, but we wont necessarily incorporate and our backlog and for purposes of reporting unless there is a long term and operation and maintenance or other stream of revenue.
To us debt that we benefit from and so we'll consistently report that I think the opportunity set is there for both and you know traditional build own transfers as well as build own transfers, where we provide some incremental long term value to our customers and then finally storage and the opportunity set is terrific obviously.
We've had tremendous success and attaching storage two new solar facilities existing solar facilities and even some stand alone storage projects. If there is a standalone storage incentive that Congress pursues obviously that would support our near term growth of standalone storage opportunities even beyond that.
We've seen but the growth is terrific and as we outlined back in 2019, we were surprised how fast the market evolved and I think we continue to be a really supportive of that overall market and one last thing I'll highlight Julian is is really the innovative nature of the S. P L team and working with.
On the solar together program to work with our commercial industrial customers and Florida to support their needs to build the most cost effective solar and that's what those solar together program offered them is the ability to to really source clean energy solutions and the most profitable way for them and in a way.
We structured it that benefits both of us participating customers and our nonparticipating customers to meet their day there their needs. So let me stop there and did I Miss any aspect of it.
And just the Standalone case, and we know how.
Incrementals on it.
And what's your views here.
The standalone storage as a as an investment opportunity.
Absolutely yeah.
Yeah over time, Julian it could be it could be very significant and the short term is it imperative for renewables growth and certain pockets, yes broadly speaking no, but as you start to see what we referenced today trillions of dollars of renewables deployment over time, increasing storage deployment, both and the forms of batteries as well as other forms of long duration.
And storage, which we believe includes hydrogen will become not only increasingly important but a very large capital investment opportunity.
And just just to add and Julian on to what Rebecca said, I mean desert peak, which we announced today 400 megawatts largest stand alone.
Project and the World. So we are actively seeking out stand alone.
And the opportunities and having the largest solar fleet and North America positions us for storage add on so a tremendous amount of leverage off the existing operating fleet and with new origination I think of attach rates being.
Roughly 60% on.
And all the new stuff that we do and then one more comment on C&I, we are positioning the business.
To be the preferred strategic partner with C&I customers and we are.
Looking at the business and a holistic way, where we can provide clean energy solutions across the board its wind and solar and storage. It's hydrogen its mobility you know the first student transaction that we just announced today, it's and it's an energy management services capability, it's analytics.
And.
All the things we've done for decades, we can now offer to C&I customers and we've got a huge head start.
Great got it thank you put on.
On.
Thanks Julien.
The next question is from Shar <unk> from Guggenheim Partners. Please go ahead.
Hey, good morning, guys and good.
Good morning Shar.
And just a couple of quick questions on the rate case and in particular, obviously, we have a march filing that's ahead of us and one of the sort of the big moving pieces as the rate basis, and 11% year over year growth.
FPL, 24% for golf and <unk>.
Trying to think about like the cap structure improvement and especially for golf the ROE at or the capital plan and request how do we sort of think about sort of the filings as it kind of relates to your current growth card.
Effective well within your current trajectory is like is the filing consistent with the top end and extends the runway is it better and more importantly, as we sort of think about your rolling forward the plan and to 'twenty four is that kind of a post DRC decision.
So thanks, Shar I appreciate it and and obviously, we're at the early stages of the rate case proceeding having only filed the test year letter. So theres a lot of additional information that we will provide to the commission and stakeholders and obviously go through a robust process as we should and as we look forward to do to go through the rate case process from a nextera energy.
Perspective, as you would expect and when we provide expectations, we do a variety of a scenario.
Planning analyses to feel comfortable with the expectations that we've laid out so theres not one answer to what what do you have and your assumptions that you've laid out for expectations, there's and there's a range and we feel comfortable today as we thought obviously reiterated those expectations are for the 'twenty and 'twenty, one 'twenty, two and 'twenty three timeframe.
Ames and so.
And we look forward to presenting our case to the commission and stakeholders are we feel very confident and the decisions that we've made in terms of where are where we've been investing where we plan to invest and obviously the results.
And into some measure obviously speak for themselves in terms of low bills high reliability terrific customer service and clean energy profile that is substantial and we're obviously looking forward to not only telling that story, but also the the golf and changes over the last couple of years that that Jim highlighted so we'll have more as the process unfolds.
And and obviously when we have that we finally have clarity on on the rate case outcome or a potential Saddam on if we're so fortunate as to reach a constructive and agreement with with Intervenors will provide some updates once we have that information.
Got it and then just as we think about rolling the consolidated.
Outlook into 'twenty, one is that a post trc decision or settlement.
And so 'twenty, one not 'twenty 'twenty, one obviously assumes the current rate agreement since both for S. P. L and golf are they go see the 'twenty, one time frame and then 'twenty two and 'twenty three again all else.
Put it in context of a variety of scenarios that we assume for both FPL and energy resources to support the expectations that we've laid out.
Got it and then just maybe a quick strategy question for Jim.
Obviously with Santee Cooper and particular, the sales discussions have been steadily growing and and interest and the legislator.
What are you sort of think will be different and 21, either from the legislator side or on the east side are you would you sort of anticipate making a substantially similar bid and the process comes up for sale and then just on FERC transmission, obviously, you highlighted the day.
The grid Lions acquisition last year, how do you sort of see that opportunity set on the FERC transmission side.
Large do you want nextera transmission to be as part of the business mix do you see any and it is there.
There are more to come there.
So.
You know first of all on Santee Cooper well you know there is an offer on the table and that offer remains on the table and as does our $25 million deposit, which the state still has so it's you know the offers there and we are and we're ready to negotiate whenever the state is ready to get going and so.
We stand ready and.
Are hopeful that the.
The legislature will move forward on that process and we'll know more obviously over the next 90 days or so on.
On Nextera energy transmission, I think and you know Rebecca and her.
And her.
Prepared remarks.
Had just a terrific year last year their best year ever as a company and remember we started that business from scratch.
And all over a little over 10 years ago and it's.
It's you know, it's a business that made over $100 million and net income last year and.
We think has the ability to grow mid teens double digit over the next over the next several years just organically with what they have in front of them.
Without doing any other acquisitions and we're pursuing other acquisitions there because we think.
We add an enormous amount of value through our operating model number one and then number two.
You know probably the the.
The biggest.
Inhibitor to renewables and this country is not.
Consumer demand or or it is not there's not interest on the part of the federal government or state governments to get renewables built it's not that customers don't want and.
It is fundamentally broken processes with the isos in terms of how they manage their queues and transmission and cute and and just broadly transmission planning in this country and and I think with.
The button and administration, and Newfield, and there's a new opportunity to fix that and our transmission business. I think is a great example of what FERC order 1000 can do when you get competition are going and the transmission world and it is also I think.
Every bit of transmission rebuild and that business is incremental and helpful to the renewable busy.
Business that we have and that is it makes the delivery of lower cost renewables.
Even.
The more and.
More fast to come on to the grid and than they otherwise would so on.
And I'm very excited about transmission business, we're going to continue to push it and I think that's got a lot of run rate of growth.
Terrific, Thanks for that and congrats on the result.
The next question is from Michael Lapides from Goldman Sachs. Please go ahead.
And for taking my question and actually you have two one and.
And a great 2020, with EPS growth north of 10%.
Just curious do you think you could potentially come in above the high end of day range. So it's kind of 6% to 8% target a.
Very modest target growth when you think about the next couple of years given the run rate at this past year.
So and Michael I appreciate it and I appreciate the the optimism and and the support that that your question Meda and might suggest we're really proud of the results for 'twenty and 'twenty and a couple of things to remind you. One that does include some incremental contributions from golf on and obviously, we expected on golf and the deal.
And if all Florida acquisitions, and we expect some incremental.
Benefit from that for 2021, as we highlighted and and.
And when we laid out expectations. Initially and then as you also recall, we did raise our 'twenty 'twenty one expectations late last year, and then Rebased, our 6% to 8% off of that higher and higher base and what we're really.
Excited about you know both the positioning of the regulated utilities as well as energy resources going into 2021 are we know what we need to accomplish and the teams are set out to go after and and achieve achieve those objectives and of course, we will update you over time as we go through the year, but for today, we have reiterated those expectation.
And so the $2 40 to $2.54 and for for 'twenty and 'twenty one.
Got it and then a follow up on and it's more of a policy one and it and I think it's more of a state policy one.
Theres still lots of coal generation and rate base and a lot of states.
Not all of which probably is economic.
But the owners of that and clearly your Florida utilities don't have exposure to this.
The owners of that benefit from having it and rate base.
How do you from on an earnings perspective.
Got it.
How do you think that dichotomy, Jim gets resolved over time.
And are there lessons that other states can learn from Florida that might be able to hasten the pace of fleet transformation.
So Michael I think you've been kind honestly to the to the regulated coal fleet in this country. There is not a regulated coal plant in this country that is economic today.
Full period and the stock when it's dispatched on a on any any basis not a single one.
And so.
While I have and I think you've hit on the crux of a on.
On the crux of some of the issues, obviously, there have been and certain states.
A.
Our reluctance to wet.
And our utility customers retire the coal plant and then be able to recover their investment right and so of course.
If you're running a utility you don't want to retire and asset that youre going to then either have to write off or not and I'll be able to earn on right. I think one of the things that has been a.
Really constructive and very smart about the Florida, a regulatory environment and headquarter Commission's view on on modernizing the generation fleet is that they have.
You know, we've we've spread that capital recovery over a period of five or 10 years.
And that that his both I think moderated the impact to customer bills on the one hand and also on the other given us the right incentive to do the right thing by our customers and bring on lower cost generation. So.
I think it's about the.
The other piece I think that's going to change.
Is.
There is no question. This administration through the EPA and other means is going to make the continued operation of coal plants very difficult in this country.
And so you know there's going to be I think more.
More pressure for federal pressure to to.
Accelerate that transition away from coal and there has been obviously over the last four years, where theres been and factor the opposite of federal pressure, but you know the complete lack of federal pressure to do anything with your coal fleet.
So I think the combination of that plus.
Uh huh.
States, becoming.
It becoming clearer and clearer the economics.
As we go along that the operating cost of coal plants.
Our higher than the Newbuild cost of renewables and storage as that becomes even clearer as costs come down for renewables and costs continue to go up for operating costs continue to go up for for coal.
You know that's you know I mean, the bottom line and Florida, we've shown our cool down and we said customers literally billions of dollars of present value over the over the expected life of the new generation, we put in place so.
And there's an enormous opportunity there are several states and the country theyre not taking advantage of that opportunity because of.
Some of the regulatory approaches and and and honestly I think with the new administration and some of the policies. There that's going to accelerate the replacement of coal in this country and it should be because theres no its costs and customers' money. We've aside the environmental benefits just on pure economics, its costs and customers' money every day and that's.
It's bad for the country, and let alone and that it's terrible for the for the climate. It's it is and for the environment. It is bad for the for customers because economics or.
Coal economics are so.
Or so out of whack.
Got it thank you Jim much appreciated and and maybe one last one from our backlog went back to the Gulf raised your renewable growth targets and material like.
That implies higher capex, but obviously you get the benefit of the tax every year or so youll you all would utilize convertible financing or equity units.
Should we assume that is part of your EPS growth guidance that there is continued use of kind of new convertible units and the financing plan.
And maybe that level grows and scale with the change and the Capex forecast.
And I'm, Michael I appreciate it and and I'm talking to a couple of comments on that we've made in the past that that I know you know first and we keep all the tools and the toolkit.
And we believe that you know at various times various tools are more economic than others, but at the end of the day, our commitment to our balance sheet remains very strong and that we will finance it and a way that retains our strong balance sheet. One additional thing I'll remind you of debt overtime has certainly been very valuable to us.
Not only and maintaining the balance and our business, which we've talked about frequently but it's the recycling of capital and as a source of proceeds to finance that new growth on.
And is any P grows and or our recycling of capital grows to any P and the obviously that's also a source of financing from the new investments and energy resources is making and if there's one thing that I know at the beginning of the year, we have a financing plan and by the end of the year and ended up being different than what we what we originally thought but again that the.
Most important thing to US is no matter. What we are we remain committed to that balance sheet, and we'll finance it and and a way that makes sense and is ultimately profitable for our shareholders as well.
Got it thank you Rebecca and thank you Jeff.
Thank you very much Michael.
This concludes our question and answer session as well as the conference. Thank you for attending today's presentation. You may now disconnect.
Yeah.
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