Q4 2021 Nextera Energy Inc and Nextera Energy Partners LP Earnings Presentation
Good morning, and welcome to the next era energy and Nextera Energy partners fourth quarter and full year 2021 earnings conference call. All participants will be in listen only mode should you need assistance. Please.
Signal a conference specialist by pressing Star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions to ask a question. You May Press Star then one on your telephone keypad to withdraw your question.
Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Jessica Aldridge Director of Investor Relations. Please go ahead.
Okay.
Thank you Andrew Good morning, everyone and thank you for joining our fourth quarter and full year 2021, 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.
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.
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 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 websites Nextera energy Dot com and Nextera energy partners Dot Com would.
We do not undertake any duty to update any forward looking statements.
Today's presentation also includes references to non-GAAP financial measures you.
You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure.
As a reminder, Gulf power legally merged into Florida power <unk> Light company effective on January one 2021.
Gulf Power continued as a separate reportable segment within Florida power and light and Nextera energy through 2021, serving its existing customers under separate retail rates.
Throughout today's presentation, when we refer to FPL, we are referring to Florida power and light excluding Gulf power, unless otherwise noted or when using the term combined with that I will turn the call over to Jim.
Thanks, Jessica and good morning, everyone.
Both Nextera energy and Nextera energy partners had an outstanding year in 2021.
We are well positioned to capitalize on the substantial opportunities that lie ahead.
Nextera Energy's performance was strong both financially and operationally and we executed the largest capital program in our history investing approximately $16 billion in American energy infrastructure in 2021, which we expect will again place Nextera energy among the top capital investors in the U S across all industries.
Continuing our long track record of delivering value for shareholders Nextera energy achieved full year adjusted earnings per share of $2 55 up more than 10% from 2020.
Over the past 10 years, we've delivered compound annual growth in adjusted EPS of approximately 9%.
Which is the highest among all top 10 U S power companies, who have achieved on average compound annual growth of roughly 3% over the same period.
Amidst this significant growth the company has maintained one of the strongest balance sheets and credit positions in the industry.
In 2021, we delivered a total shareholder return of more than 23% significantly outperforming the S&P 500 utilities index and continuing to outperform both the S&P 500, and the S&P 500 utilities index in terms of total shareholder return on a three 510 and 15 year basis.
Over the past 15 years, we've outperformed nearly all of the other companies in the S&P 500 utilities index and quadrupled the average total shareholder return of the index.
Over the same period, we've outperformed 80% of the companies in the S&P 500, while nearly tripling the average total shareholder return of the index.
We are proud of our long term track record of providing growth and value creation opportunities for our shareholders and we remain intensely focused on execution and continuing to drive shareholder value over the coming years.
At FPL net income increased nearly 11% year over year, while continuing to deliver on its commitment to make to making smart long term investments.
Innovative technology clean energy and strengthening our electric grid for the benefit of our customers.
We were pleased the Florida Public Service Commission unanimously approved the settlement agreement in October an agreement, which we believe is a fair and balanced outcome in our base rate case the.
The 2021 settlement agreement supports continued smart capital investments, including the largest solar build out by a utility in the U S. While keeping fpl's typical residential bills well below the national average and among lowest in Florida through the end of 2025.
For customers in northwest, Florida typical customer bills are projected to decline over the next four years.
Among the long term infrastructure investments anticipated in the new agreement New solar generation is expected to grow through the expanded so altogether community solar program, which is expected to more than double over the next four years as well as through new base rates solar generation, including the nearly 800 megawatts to be recovered under solar base rate adjustments were sober.
Upon reaching commercial operations in 2024 and 2025.
In total our current solar build out expectations are for approximately 4800 megawatts of new solar over the term of the settlement agreement.
In early 2019.
FPL announced its groundbreaking goal to install 30 million solar panels in Florida by 2030.
With the anticipated solar additions approved under the settlement agreement I am pleased to announce that we now expect to reach this milestone by 2025.
Five years earlier than previously anticipated.
Including the solar additions anticipated through 2025. This ambitious 30 by 30 initiative is expected to have generated approximately $2 5 billion in fuel cost savings for customers and created more than 20000 construction jobs, while supporting the Florida economy with more than $700 million and prop.
Pretty taxes over the life of the assets.
During 2021.
FPL successfully executed on its strategic initiatives, including placing another 671 megawatts of cost effective solar and service.
Completing the first roughly 1500 megawatt phase of our solar together community solar program.
Additionally, last month, we commissioned the world's largest integrated solar powered battery system. The 409 megawatt manatee energy storage center, which will allow our customers to benefit from low cost solar energy even during times when the Sun is not shining.
FPL has also continued to provide exceptional service reliability, achieving its best ever reliability rate in 2021 and.
And FPL was recognized for the sixth time in seven years as being the most reliable electric utility in the nation.
Moreover, FPL was ranked number one in both residential and business customer satisfaction in the southern U S. Amongst.
A large electric providers by J D power in 2021, and we are completely committed to continuing to provide clean affordable and reliable service to our customers for many years to come.
Energy resources also had a terrific year in 2021, delivering adjusted earnings growth of 13% versus the prior year.
The team also had an outstanding record year of renewables and storage origination.
Adding approximately 70 7200 megawatts to our backlog during the year as we continue to capitalize on the ongoing clean energy transition that is occurring in our nation's generation fleet.
Our backlog additions have grown at a more than 20% compound annual growth rates since 2017, and we're well on our way to meeting our current development expectations for new signed contracts with the significant additions to our backlog of signed contracts over the last year. We've now signed nearly 80% of the megawatts needed to realize the mid point of our <unk>.
2021 to 2024 development expectations range with significant time remaining to sign additional power purchase agreements.
Our supply chain and engineering and construction teams also continued to execute in 2021 commissioning approximately 3800 megawatts of new wind and wind repowering solar and storage projects.
Over the past two years energy resources is constructed more than 9500 megawatts of renewables and storage projects demonstrate the strength and resiliency of its execution expertise even in the midst of a global pandemic and industry wide supply chain disruptions.
Finally during 2021 Nextera energy transmission further its efforts to grow America's leading competitive transmission company and had its best year ever.
During the year the business delivered a record earnings contribution by increasing net income by nearly 20% over its previous earnings contribution record in 2020.
Growth in renewables means that there is also a growing imperative to build additional transmission across the U S to support this transition to a low cost low carbon economy fueled by renewable energy.
We anticipate that Nextera energy transmission will continue to capitalize on the growing opportunity set to both deploy capital profitably as well as to enable further renewables deployment.
The tremendous execution of both the major businesses in recent years, including 21.
Gives us great visibility to the longer term outlook of Nextera energy.
Let me start with our opportunity set which I would not trade with anyone in our industry at Florida power and light settlement agreement allows us to focus on operating the business efficiently reliably and affordably for the benefit of our customers.
Under the new agreement, we expect our average annual growth in regulatory capital employed to be between 8% to 9% over the four year term through 2025.
When you put it all together low bills best in class reliability award, winning customer service and a clean emissions profile are what help FPL provide what we believe is one of the best customer value propositions and the nation.
At energy resources, our outlook for new renewables and storage development remains as strong as ever and we are excited to be.
Able to continue supporting the industry's transition away from old inefficient forms of generation and into clean reliable low cost renewables torch.
We believe that the rapidly accelerating trend toward electrification and decarbonization of a broad range of sectors across the U S. Economy has significantly increased the total addressable market for new renewables and storage even beyond our expectations. Just a few years ago and is now measured in trillions of dollars of capital investment opportunity and.
The coming decades.
We believe that energy resources is uniquely positioned to advance its market leadership position in this environment.
We have been in the renewables business for more than 30 years and have the experience resources balance sheet talent and advanced data capabilities necessary to execute complex renewable energy generation and storage integration projects at scale.
We believe we have an excellent opportunity set for continued growth ahead of us at energy resources, and we will further discuss our long term plans for deploying renewables at both energy resources, and Florida power and light.
And the associated impact to our overall emissions profile in future goals at our upcoming Investor Conference, which we plan to hold on June 14th in New York City.
With the anticipated continued strength of the investment opportunities at both Florida power and light and Nextera energy resources I am pleased to announce that we are increasing our adjusted earnings per share expectations for 2022, and 2023 and.
In introducing our expectations for 2024 and 2025.
For 2022, we are now expecting our adjusted earnings per share to be in a range of $2 75 to $2 85 up from our prior range of $2 55 to $2 75.
Four years 23 through 25, we expect to grow our adjusted earnings per share by roughly 6% to 8% per year off the expected 2022 adjusted earnings per share.
For 2023, this translates to a new range of $2 93 to 308 up from our prior range of $2 77.
To $2 97.
Our new adjusted earnings per share expectations for 2024, or $3 13 to $3 33, and for 2025 or $3 35 to $3 60.
As always our expectations assume our usual caveat incur.
Including normal weather and operating conditions.
In summary, we continue to remain as enthusiastic as ever about Nextera Energy's long term growth prospects based on the strength and resiliency of our underlying businesses. We will do we 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 each.
Each of 2022 23, 24% in 2025, while at the same time, maintaining our strong credit ratings.
Let me now turn to Nextera energy partners, which delivered a total unitholder return of approximately 30% in 2021.
Its two year total unit holder return up to more than 72% and further advancing its history of value creation since the IPO in 2014.
For 2021, the Nextera energy partners grew.
Its LP distributions per unit by 15% year over year and is now grown as distributions per unit by nearly 280% since the IPO.
Nextera energy partners achieved its distribution growth objectives, while maintaining a trailing 12 month payout ratio of approximately 80% as of year end 2021.
Nextera energy partners had a terrific year of execution in 'twenty, one and we are increasing our year end 2021 financial expectations to reflect this better than expected growth execution.
Nextera energy partners delivered year end run rate adjusted EBITDA and cash available for distribution in excess of our prior expectations, including delivering more than 13% year over year growth in run rate cash available for distribution at the midpoint.
This execution is supported by Nextera energy Partners' outstanding portfolio of clean energy assets, which was further diversified in 2021.
During the year Nextera.
Nextera energy partners acquired interests in approximately 1900 net megawatts of long term contracted renewables and storage assets from energy resources.
In addition during the year.
Nextera energy partners successfully completed two acquisitions of renewable energy assets from third parties, adding nearly 500 megawatts of operating wind projects to its portfolio.
These transactions demonstrate nextera energy's ability to leverage the operational expertise of Nextera energy resources low cost sources of capital and a strong industry relationships to be successful in third party acquisitions.
The combination of a growing portfolio of energy resources, and a growing set of opportunities to acquire renewables from third parties as well as significant organic growth opportunities further supports the partnerships long term growth visibility.
Nextera Energy partners also continued to demonstrate its ability to access attractive sources of capital to finance its growth investments, including executing on the lowest cost convertible equity equity portfolio financing in its history.
The roughly $820 million convertible equity portfolio financing carries a low implied cash coupon to the investor and partially funded Nextera energy partners' acquisition of a 50% interest.
In our renewables portfolio, consisting of approximately 2500 20 megawatts.
Of newly constructed or in construction renewables projects and approximately 115 megawatts of integrated battery storage.
Nextera energy partners was able to demonstrate the benefits to LP unit holders of the convertible equity portfolio financing structure during the fourth quarter when the partnership exercised its right to purchase 100% of the outstanding minority equity interests and the portfolio of wind and solar assets supporting its 2018 convertible.
Equity portfolio financing.
Relative to issuing the same amount of common equity in 2018 to fund our growth needs. This.
This financing allowed us to reduce unit issuance by more than 50% and save more than $140 million or roughly 75% in nominal cash costs, while retaining the more than 80% increase in the NEP unit price over the last three years.
Nextera energy partners public float has increased approximately 50% since 2019.
We believe our strategy of using low cost convertible equity products to efficiently layer in common equity over time has created significant value.
For existing LP unit holders.
I continue to believe that the combination of Nextera energy partners' clean energy portfolio growth visibility and financing flexibility offers LP unit holders, a uniquely attractive investor value proposition.
As with Nextera energy, we remain intensely focused on continuing to execute and deliver that unit holder value over the coming years.
Finally, I'd like to comment on some important organizational changes that we announced this morning.
These changes are part of our long term succession process undertaken by the board and me over the better part of the last six years.
Effective March one John Ketchum will price me as president and CEO of Nextera energy.
Rebecca will succeed John as President and CEO of Nextera energy resources.
Crews currently Vice President business management for Nextera Energy resources will succeed Rebecca as executive Vice President and Chief Financial Officer of Nextera energy.
John Rebecca and Kirk will also be appointed to the respective roles at Nextera Energy partners.
In addition, Eric <unk>, President and Chief Executive Officer of Florida Power and Light company, who has been named Chairman and Chief Executive Officer of Florida Power and light.
It has been an honor and a privilege to serve as CEO for nearly 10 years I'm as excited as I've ever been about the future prospects of Nextera energy and Nextera energy partners.
A big part of our Ceos legacy as the new leader in the next generation leadership team that follows and.
And I couldnt be more thrilled about turning over the CEO role of this great company to John I know he will be as focused on creating value for you our owners as I have been over the last two decades.
John has been an incredible partner to me in a senior leader in this company for more than 19 years and I can think of no better person to succeed me as CEO John .
John's breadth of experience across all aspects of our company, including commercial operational financial and legal as well as the significant leadership capabilities envision position him exceptionally well to lead Nextera energy to even greater heights in the coming years.
I also want to congratulate Rebecca Eric and Kirk on their new roles one of the defining characteristics of this company over the last 30 years has been the quality and strength of its leadership team and I'm very proud of and excited for the team that will lead this company into the future.
Most importantly, I want to thank my team and all our employees for all that they've done our team the best in the business has built this amazing company and I can't thank them enough.
As the announcement mentioned I'm going to remain as executive chairman for a transition period to support John in his new role.
I will now turn the call over to John who would like to make some remarks.
Thank you Jim and good morning, everyone I've been privileged to have worked with.
And learned from Jim during an incredible period of growth for our company and I am honored.
They have the opportunity to lead this company in the years ahead.
As CEO I intend to remain intensely focused on delivering value for our shareholders and building upon our long track record of success.
I believe there is no company better positioned to lead our country's energy transformation, the nextera energy and I am humbled by the opportunity to lead this team through such an exciting period for our company.
I am fortunate to have a broad leadership team with the experience and capability that I too believe is the best in the industry.
I am very excited to have Eric Rebecca and Kirk take on these expanded in new roles in the company.
They along with our broader leadership team and all of our approximately 15000 employees.
Work tirelessly every day to serve our customers in Florida and across North America.
Finally, I wanted to take a moment to thank Jim for his exceptional leadership and friendship.
Jim has been an unbelievable steward of this company over his nearly 10 years as CEO growing the leading most profitable electric utility and renewable energy company in North America.
Our total shareholder return during Jim's tenure has been more than 500% and it is great evidence of Jim's exceptional vision leadership and commitment to excellence.
I know I speak for all of our employees that we are deeply grateful for everything Jim has done for our company.
Let me now turn it over to Rebecca for a more detailed review of our results.
Yeah.
Thank you John and good morning, everyone, Let's now turn to the detailed results beginning with FPL.
The fourth quarter of 2021, FPL reported net income of $560 million or 28 cents per share up <unk> <unk> per share year over year.
Full year 2021, FPL reported net income of $2 $94 billion or $1 49 per share an increase of 14 cents per share versus 2020.
Regulatory capital employed increased by approximately 11% for 2021 and was the principal driver of Fpl's net income growth of nearly 11% for the full year.
During the fourth quarter net income was impacted by a number of factors, including an approximately $32 million pretax contribution to our charitable foundation.
To continue to support the communities that we serve.
Capital expenditures were approximately $2 $2 billion in the fourth quarter.
Its full year capital investments to a total of roughly $6 $8 billion.
Fpl's reported ROE for regulatory purposes is expected to be 11, 6% in the 12 months ended December 31 2021.
During the fourth quarter, we utilized approximately $137 million of reserve amortization, leaving FPL with a year end 2021 balance of $460 million.
As a reminder, our new four year settlement agreement became effective this month and includes the flexibility over the four year term to amortize up to $1 $45 billion of depreciation reserve surplus, which is inclusive of $346 million in reserve and out that we previously anticipated to be remaining at year end 2020.
One under Fpl's now expired 2016 rate agreement.
Consistent with the terms of the 2021 settlement agreement half of the $114 million in excess reserve balance at year end 2021 will be used to reduce our outstanding capital recovery asset Alan and the other half will increase FPL storm reserve to offset future restoration costs.
As a reminder, the new agreement limits reserve amortization to $200 million in 2022, which we will treat as a limitation in any given quarter during the year.
Given historical shape of our customer usage, we typically use more reserve amortization in the first half of the year and reversed reserve amortization and a hotter summer months.
We currently expect FPL to initially earn below our target regulatory ROE in the early part of 2022, although for the full year. We are targeting the upper end of the allowed range of nine 7% to 11, 7%.
As a result, we also expect Fpl's earnings growth to be lower in the first half of the year and higher in the second half.
As always our expectations assume our usual caveat, including normal weather and operating conditions.
Our overall capital program at Florida Power and light is progressing well, we continue to advance one of the nation's largest solar expansions and that our solar deployment objectives at both FPL and Gulf power in 2021, including commissioning more than 800 megawatts of new solar across the combined system.
Beyond solar construction on highly efficient roughly 200 megawatt Dania Beach clean energy center remains on schedule and on budget.
Denise to advance towards its projected commercial operations date later this year.
The North Florida resiliency connection remains on track to be in service by mid 2022.
Let me now turn to Gulf power, which as a reminder, with legally merged into FPL on January one 2021, they'll continue to be reported as a separate regulated segment during 2021.
Gulf Power's reported fourth quarter, 2021, GAAP earnings of $60 million or <unk> <unk> per share.
At the full year Gulf power reported net income of $271 million or <unk> 14 per share an increase of two cents per share year over year.
Based on O&M reductions and investments in the business were the primary drivers of Gulf Power's approximately 14% year over year growth in net income.
<unk> capital expenditures for the full year or roughly $800 million and reported ROE for regulatory purposes is expected to be approximately 11, 5% for the 12 months ending December 2021.
Given that this is the last time, we will be talking about Gulf Power's financial results, Let me take a moment to summarize the team's execution over the past three years.
Gulf Power has delivered significant improvements in all key financial and operational metrics, while meaningfully improving its customer value proposition the.
The execution of the Nextera energy playbook at Gulf power, which is focusing on reducing costs and making smart capital investments for the benefit of customers has been a remarkable success Gulf.
Gulf Power has realized a nearly 40% reduction in O&M costs since the acquisition.
In 2018 Gulf power improved service reliability by nearly 60% and it was awarded national recognition for its outstanding reliability performance and our southeast suburban and rural service area for the second year in a row in 2021.
Over the same period Gulf power, realizing approximately 60% improvement in safety among our employees, who have worked tirelessly to help us execute on our plans.
Regulatory capital employed has grown by approximately 16% compound annual growth rate since 2018.
We have invested approximately to $2 $5 billion and long term improvements to Gulf Power's existing system and generation fleet.
As a result of our clean power modernization indefinite at Gulf power, we have already delivered and approximately 25% reduction in C. O. Two emissions over the last three years and we look forward to further expanding opportunity for our customers to access clean low cost solar and storage in the years to come.
This high level of performance across the board could not have been possible without the hard work and commitment of all of the Gulf power employees and I would like to thank all of our Florida power and light employees old and new for their relentless focus on reducing costs.
Improving reliability and safety over the past three years.
Execution of the plans that we laid out at Gulf power has generated great outcomes for our shareholders as well Gulf Power's net income has grown by a compound annual growth rate of approximately 19% since 2018, an outcome that was even better than our expectations when we announced the acquisition.
Our performance with Gulf power is a clear validation of our strategy and our conviction that you can be clean reliable affordable and profitable at the same time.
The Florida economy remains strong over the last 10 years, Florida's GDP has grown at a roughly 5% compound annual growth rate.
The GDP of Florida is roughly one two trillion.
He is up approximately 8% from pre pandemic levels and would make Florida, the 15th largest economy in the world.
At the same time Florida's population continues to grow at one of the fastest rates in the nation. According to recent census Bureau data more people move to Florida from other parts of the country and to any other state in 2021.
We believe this is a reflection of Florida's unique proposition in terms of great weather low taxes, and a pro business economy, all of which should support ongoing customer growth at Florida power and light.
Over the past year, Florida has created more than 485000, new private sector jobs, and Florida Labor force participation rate has improved significantly.
Three months average, Florida building permits a leading indicator of residential and you start with accounts are up 15% year over year and have outpaced the nation's quarterly growth and new building permits by roughly 13%.
Other measures of confidence in the Florida economy has meaningfully improved versus the prior year, including a 34% improvement in Florida as retail sales index and a two 6% decline in mortgage delinquencies on mortgage delinquencies across the U S have remained roughly flat.
During the quarter Fpl's average customer growth was strong increasing by nearly 82000 customers from the comparable prior year quarter.
Fourth quarter retail sales were down one 5% versus the prior year period, driven by an unfavorable weather comparison.
For 2021, Fpl's retail sales increased one 7% from the prior year on a weather normalized basis, driven primarily by ongoing.
Strong customer growth and a one 5% year over year increase in underlying usage per customer additional details are shown on the accompanying slide.
Energy resources reported fourth quarter 2021, GAAP net income of $851 million or 43 per share adjusted earnings for the fourth quarter were $414 million or 21 cents per share.
Energy resources contribution to adjusted earnings per share in the fourth quarter is up <unk> <unk> versus the prior year comparable period.
For the full year energy resources reported GAAP earnings of $599 million or <unk> 30 per share and adjusted earnings of approximately $2 1 billion or $1 12 per share.
Okay resources full year adjusted earnings per share contribution increased to 13.
Approximately 13% versus 2020.
So therefore for the full year growth was driven by continued new additions to our renewables and energy storage portfolio as contributions from new investments increased by 12 per share.
Attrition from existing generation and storage assets decreased four versus the prior year due primarily to underperformance in our existing wind fleet as a result of extreme market conditions in Texas in February of last year.
Nextera energy transmission and gas infrastructure contributed favorably increasing results by <unk> and <unk>, respectively year over year, while the contribution from our customer supply and trading businesses decreased two <unk> versus 2020.
All other impacts increased results by four cents year over year.
As Jim mentioned energy resources had an outstanding year, delivering our best year ever for origination, adding approximately 7200 megawatts of new renewables and battery storage projects to our backlog.
In 2021, Recommissioned, approximately 3800 megawatts of wind solar and storage projects, including a 110 megawatt build own transfer project that was not included in our backlog.
In addition, since the last call. We have added approximately 500 megawatts of renewable projects to our backlog.
Approximately 700 megawatts of new wind and wind Repowering 300 megawatts of solar and 500 megawatts of battery storage.
Origination performance in 2021 reflects continued high demand among all customer classes for clean energy solutions that not only help achieve their renewable energy goals.
But perhaps more importantly allow our customers to save energy and save money on energy costs, while switching to lower cost forms of generation like wind solar and solar plus storage.
Our renewables backlog now stands at more than 16600 megawatts, which is roughly the size of our entire renewables generation portfolio at the end of 2017, and nearly 25% larger than our backlog at year end 2020, and this provides terrific visibility into the strong growth that lies ahead for energy resources.
Over the next few years.
The accompanying slide provides additional details on where our development program that energy resources now stands.
We remain optimistic about the expanded investment opportunities that the broad de carbonization of the U S economy presents for energy resources. We believe that there are many new market opportunities, where our industry, leading development platform will provide a competitive advantage to further grow our core long term contracted renewables and storage business.
As we've previously discussed green hydrogen presented particularly compelling new market for energy resources.
Fourth quarter, our clean energy technology company in which we are a minority equity investor and it has developed a proprietary process to decarbonize industrial production of hydrogen economic prices.
One a conditional approval for an approximately $1 billion Doe department of energy loan to expand its clean hydrogen and carbon black production facilities in Nebraska.
Our agreement with this company provides energy resources the opportunity to be its preferred renewable energy supplier for the facility and we are encouraged by the acceleration of the facility build out is expected to occur as a result of this new loan.
Similarly early in the year, we completed a strategic investment in a liquid fuels company with a proprietary process to produce zero emissions synthetic fuels by combining green hydrogen with concentrated carbon dioxide streams captured from industrial processes are.
Our strategic partnership with this company includes the opportunity for energy resources to provide up to 3000 megawatts under a preferential energy supply agreement.
Finally, as part of our efforts to help our commercial and industrial customers achieve their substantial goals for both energy savings and de Carbonization, We recently announced an agreement with Jpmorgan Chase that allows for use of our proprietary state of the art Smart energy software to optimize its energy use and reduce its carbon footprint.
Energy resources and advanced software platform uses artificial intelligence and blockchain technology and Leverages data from the industry, leading renewables and storage fleet owned and operated by energy resources to among other things match energy demand with clean energy resources available on the market in real time.
We recently signed a similar agreement that allows a large university to use our advanced software platform to manage and optimize and more than 100 megawatt solar plus storage asset in California.
These initiatives energy resources is leveraging its best in class renewable energy expertise to provide significant value to its customers in a market with meaningful growth potential.
We are at the Vanguard in building a sustainable energy era that is both clean and affordable and we are driving hard to continue to be at the forefront of this.
The disruption that is occurring within the energy sector and broader parts of the U S economy.
With our long term track record, we will remain disciplined as we take steps to be at the forefront of these developing markets. We're taking a leadership role in clean energy transition expected to drive tremendous growth for energy resources over the next decade and beyond.
Turning now to the consolidated results for Nextera energy for the fourth quarter of 2021, GAAP net income attributable to Nextera energy was $1 2 billion or <unk> 61 per share.
Nextera Energy's 2021 fourth quarter adjusted earnings and adjusted EPS were $814 million or <unk> 41 per share respectively for the full year 2021, GAAP net income attributable to Nextera energy was $3 $5 7 billion.
Or $1 81 per share.
Adjusted earnings were $5 2 billion or $2 55 per share.
For the corporate and other segment adjusted earnings for the full year decreased <unk> <unk> per share compared to the prior year, primarily as a result of higher interest and refinancing costs associated with certain liability management initiatives completed during the fourth quarter to take advantage of the low interest rate environment.
Our fourth quarter refinancing activities reduced nominal adjusted net income by roughly $140 million.
We expect these initiatives to translate into favorable net income contribution in future years, and an overall improvement in net present value for our shareholders.
Specifically during the fourth quarter extra energy successfully refinanced approximately $5 $2 billion in existing debt and hybrid securities and proactively issued roughly $4 $9 billion in replacement funding.
This combination of redemptions and new issuance extended its maturity profile by over six years and is expected to generate approximately $30 million after tax reduction in annual interest expense in the near term.
Capital recycling.
It remains an important part of our financing plan as we continue to execute on the tremendous growth opportunities in front of us during the fourth quarter energy resources closed on its previously announced agreements to sell a portfolio of newly constructed and under construction renewable assets to Nextera energy partners and to a third party infrastructure investor.
Through the sale of this two five gigawatt.
<unk> portfolio energy resources was able to recycle nearly three $3 $5 billion of capital, including the tax equity proceeds in accretive matter manner and take advantage of the strong market for wind solar and storage assets, we believe that our renewables development platform and energy resources is second to none in our ability to.
We need to harness market demand for new renewables and recognize the value of that platform is a key competitive advantage for nextera energy as it continues to grow its portfolio of long term contracted operating renewables and storage.
At energy resources.
Turning now to our financial expectations for Nextera energy.
Jim discussed today, we are increasing the ranges of our adjusted EPS expectations for 2022, and 2023 and introducing our expectations for 2024 and 2025.
For 2020 to Nextera energy now expects adjusted earnings per share to be in a range of $2 75 to $2 85.
For 2023 through 2025, Nextera energy expects to grow roughly 6% to 8% off of the expected 2022 adjusted earnings per share range, and we will be disappointed if we're not able to deliver financial results at or near the top end of these ranges for each year.
Details of our new financial expectations are included on the accompanying slide.
From 2021 to 2025, we expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range.
We also continue to expect to grow our dividends per share at roughly 10% through year per year through at least 2022 off of a 2020 base.
As always our expectations assume our usual caveat.
Let me now turn to the detailed financial results for Nextera Energy partners fourth quarter, adjusted EBITDA was $322 million and cash available for distribution was $91 million.
Adjusted EBITDA growth versus the prior year comparable quarter.
Merely due to the growth in the underlying portfolio.
For the full year 2021, adjusted EBITDA was $1 three 6 billion up 8% year over year.
And was primarily driven by the full contribution from new projects acquired late in 2020.
Our existing projects portfolio favorable performance from Nextera energy Partners' natural gas pipeline investments and contributions from the wind wind Repowering that we added at the end of 2020 were partially offset by weaker wind resource and lower generation at our Genesis Solar project as a result of outages for major maintenance in the first and fourth quarters.
As of 2021.
For the full year wind resource was 98% of the long term average versus 100% in 2020.
Cash available for distribution was $584 million for the full year the.
The benefit to cash available for distribution from lower corporate level interest expense was partially offset by comparably higher project level financing costs on our Genesis solar project and other existing assets that will be capitalized to fund the acquisition of approximately 500 megawatts from energy resources at the end of 2020.
Over the past three years Nextera energy partners' cash available for distribution has grown at a compound annual growth rate of approximately 20%.
As a reminder, these results include the impact of 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 <unk> $70 75 per common unit or $2 83 per unit on an annualized basis.
Up 15% from the comparable quarterly distribution a year earlier and at the top end of the range, we discussed going into 2021.
During the quarter ex energy partners closed on the initial funding of its approximately $820 million convertible equity portfolio financing with Apollo Global management and use those proceeds along with existing Nextera energy partners debt capacity to fund its acquisition of approximately 300 net megawatts of renewables and storage from energy resources.
Forces.
Under the terms of the agreement next energy partners is expected to benefit from our low implied initial cash coupon over the first 10 years, despite only providing approximately 4% of the upfront capital needed to purchase the assets, while we expect to allow Nextera partners to achieve a full return of its capital invested into these into this.
Acquisition in less than two years.
Additionally, the financing will provide next energy partners the flexibility to periodically buy out the investors equity interest between the five and 10 year anniversaries of the agreement at a fixed pretax return of approximately five 6% inclusive of all prior distributions, making this next strategy partners lowest.
Cost convertible equity portfolio financing today.
Next energy partners will have the right to pay up to a 100% of the buyout price in any common units issued at no discount to the then current market price.
Next energy partners also issued approximately 725 million new common units during the fourth quarter to acquire the remaining equity interest in a portfolio of 1388 megawatts of wind and solar assets associated with the convertible equity portfolio financing that NEP entered into in 2018.
Nextera energy partners funded the remaining roughly $265 million of the approximately $885 million of total consideration for the acquisition of equity in our portfolio with project level debt issued on a subset of the underlying assets.
The nearly $650 million project financings supported by this by these assets, which was also the lowest cost project level debt financing in the partnership's history is reflective of the strong performance of the underlying assets in the portfolio and also supportive financing of other growth opportunities executed in 2021.
From an updated base of our fourth quarter 2021 distribution per common unit at an annualized rate of $2 83.
We continue to see 12% to 15% per growth growth per year in LP distributions as being a reasonable range of expectations through at least 2024.
We expect the annualized rate of the fourth quarter 2022 distribution that is payable in February of 2023 to be in a range of $3 17 to $3 25 per common unit.
We continue to expect to achieve our 2022 distribution growth of 12% to 15%, while maintaining a trailing 12 month payout ratio in the low 80% range.
Given the successful execution of the recent acquisition from energy resources as well as the approximately 100 megawatt operating wind facility from a third party.
Year end December 31, 2021 run rate adjusted EBITDA and cash available for distribution exceeded our previous expectations ranges.
As a result today, we are introducing new year end 2021 run rate expectation ranges for adjusted EBITDA and cash available for distribution of $1 six $3 5 billion to.
179 5 billion.
$640 million to $720 million respectively.
With a combination of strong cash flow generation from existing Nextera energy partners' portfolio, including the approximately 2400 net megawatts of new renewables and storage added during 2021 and its relatively low payout ratio nextera.
Nextera energy partners has significant flexibility in terms of acquisitions in the coming year.
Although acquisitions could occur at any time during 2022 for modeling purposes. It may be practical to assume that any new unannounced asset additions occurred late in 2022, and therefore had limited contributions to the calendar year 2022 expectations implied by the year end 2021, one run rates for adjusted.
EBITDA and cash available for distribution for the portfolio that we just discussed.
Nextera energy partners run rate expectations for adjusted EBITDA and Kathy at December 31, 2022 remain unchanged.
And 2020 to run rate adjusted EBITDA expectations are $1 775 billion to $1 97 5 billion.
And Kathy and the range of 675 million to $765 million respectively.
Reflecting calendar year 2023 expectations for the forecasted portfolio at year end 2022.
As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated <unk> fees as we anticipate as we treat those as an operating expense.
In summary, we continue to believe that both Nextera energy and extra energy partners have excellent prospects for growth both in the near and longer term.
Florida power and light energy resources, and Nextera energy partners, each have outstanding set of opportunities across the board.
The progress we made in 2021 reinforces our longer term growth prospects and while we have a lot to execute on in 2022, we believe that we have the building blocks in place for another excellent year.
That concludes our prepared remarks, and with that we will open up the line for questions.
Okay.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Julien Dumoulin Smith with Bank of America. Please go ahead.
Hey, good morning team. Thank you for the time and congratulations to everyone here. So many folks so well deserved indeed, Jim we'll Miss you, but we will see centered up here I'm sure.
Great.
Absolutely.
If I can pivot here just to some of the core question.
First off just impressive guidance can you talk about how youre thinking about bvd.
Maybe the way to ask this is a little bit in reverse how do you think about BBB status actually happened here.
What assumptions are you, making out in 'twenty five on extensions, which frankly appear more likely not eventually anyway.
And perhaps more directly how are you thinking about investments beyond wind and solar.
And those 2025 figures for instance storage or hydrogen for instance.
So so Julien let me, let me take that.
So we.
We don't need BBB to deliver on the expectations that we've just laid out right.
I think about BBB is an accelerate or not is not is something that we.
We would need in order to deliver on what we just laid out in terms of the.
In terms of the earnings or the.
Backlog growth that we have.
Projected through 2004.
<unk>.
In terms of how.
How am I feeling about BBB I would I would say.
Two things I am optimistic about something happening some point this year.
And I.
I would say that.
When I say optimistic I would say more likely than not I think I was I think I felt.
More optimistic in the fourth quarter than I do now I think that's I think that's just reality, but I do I do think it's more likely than not that.
That the clean energy piece of BBB gets get acted on this year.
I do think it's going to take a while and.
Everything we have heard.
Sure.
Says there is particularly in the Senate I think a desire for them.
For some process and process takes time, given the Senate rules and.
My sense is that it's not going to be a first quarter event, that's going to be post that either a second quarter event or honestly.
Probably more more likely sometime in the fourth quarter after the election.
Yeah, I got you there.
Feel free to opine anymore on the 25 guidance I know this is probably preempting a little bit.
The June analyst day, regardless, and then maybe if I could pivot.
Any thoughts or comments, you would like to share some of the headlines pertaining to FBL here I know, there's been a lot of back and forth.
Perhaps there is a lot of context to provide there.
Sure Julian I think.
On the on some of the Florida political headlines I think what I'd like to say on that.
It's pretty simple you know when we got when we received.
The report and those allegations.
<unk> that have been in the press.
We are.
We conducted a very extensive and thorough investigation.
That included.
Looking at company Financial Records that include looking at.
Everyone, who was named in its company emails.
Yeah.
Also looking at there.
All provided access to their personal emails and texts to us as part of that investigation.
And the bottom line is we found no evidence.
Of any.
If any of any issues at all any illegality or any wrongdoing on the part of FPL or any of its employees and so.
That's kind of the bottom line and.
I feel very good about.
Investigation that we did and I feel very good.
The.
There is.
No basis to any of these allegations so.
That's probably all that we're going to say on that today and I think Rebecca is going to talk about the.
2025, Youre question on 2021.
Julian as you might appreciate it and I'm sure everyone does on the call. When we think about our range of expectations, particularly when we're talking about several years out like you asked about specifically 2025, there are quite a number of variables that we consider in order to set those ranges and in particular for the comment that we provided that we'd be disappointed.
And not to be at the high end of each of those ranges, including 2025.
I would say the key parts.
That we think about first on Florida power and light company. We've got the outcome from the four year settlement agreement that is that is now the how.
How we expect to operate for the next couple of years and that creates the opportunity to continue investing in the business and executing on a strategy. That's been so successful for customers over quite a number of years looking back that we can continue that for the next couple of years.
And we believe that that will enable us to grow our rate base in the range of 8% to 9% on a compound annual growth rate basis, assuming all of the investments that were anticipated in the settlement agreement ultimately were able to successfully bring into service.
On the energy resources side. The biggest drivers are the ones that we've talked about and you laid out in the slide materials on page 16.
Looking at our development ranges for all of wind and solar energy storage and wind Repowering over this four year period from from 'twenty, one through 2024, which obviously would have the largest impact on what.
Our earnings look like in 2025, as Jim highlighted if there's change in regulatory or or incentive structures. We would obviously factor that in the future, but that's not anticipated and these estimates and we feel really good about how we're positioned to execute between now and then would you have to execute a lot we have to execute and energy.
Resources, which I'm excited to take on that challenge and we have a lot to do to continue delivering like we have at Florida power and light.
But I think we're in a great position to do so.
Excellent best of luck speak soon.
Thank you Julien.
The next question comes from Steve Fleishman with Wolfe Research. Please go ahead.
Yes. Thanks.
Congrats to John and everyone else.
So maybe Jim could you just give us a little more color on.
What you are going to focus your time on as executive chair and how long you intend to likely be in that role.
Sure Steve So I think my focus is going to be the.
Sure.
Help John with the transition in particular he'll help John with the transition as it relates to the board.
You should think about my my transition time in terms of months not not not not not years and and.
Thats, probably all we were ready to say about it today, but.
My real focus is going to be on on making John .
As successful as successful as I know he will be.
Okay.
Yeah.
That's helpful. Second question just on the on the renewable development, maybe you could just talk a little bit to the trends that youre seeing there it did seem like fourth quarter slowdown versus the prior quarters in terms of backlog growth.
Is there may be some kind of waiting to see what happens with folks on BBB.
The market right now or anything else that.
You might want to highlight.
Yes, Steve I'll take this is this is John .
First of all we're coming off a record year with seven three.
Gigawatts had had a strong fourth quarter posting about 500 megawatts.
What we're seeing in the market is continued strong demand.
And that's coming from.
A number of different sources, it's not only coming from investor owned utilities, and munis and co ops, but but also C&I.
There's been a lot of rotation of capital.
Into ESG funds, its certainly getting investor attention and putting.
And the impetus on companies to become sustainable and so one of the things that we've spent a lot of time on over the last couple of couple of years is our customer base and how do we market to.
A different customer base.
Not that the investor owned utility in Muni Coop wont always be our core it will be.
But we're doing some things differently to around C&I for example.
Some of you might have seen the op dose release, where JP Morgan is partnering with us on a new software product.
Where we go in and we basically are able to calculate.
You know exactly what their energy footprint looks like today, how we can make it better how we can take money out of the bill how we can make a greener.
That's just one example of some of the things that we're doing differently in terms of the ways that we approach the customer and when I look at the pipeline that we have in place to land positions Interconnects.
It's second to none that's an area of certainly a focus that we are continuing to build out we'll talk a lot more about that.
At the analyst day, but we have the best sites. The best team the best talent, the best analytics, and you know the normal competitive advantages of being able to manage the supply chain operate cheaper finance cheaper all those things coming together give us.
A lot of optimism about the future.
Okay, Great and then one last question just on the.
Guidance.
<unk>.
If I had to kind of simplify what's driving.
The higher guidance 22 and beyond.
Any just kind of.
Any reasons, you would say for the for the higher.
Alright got it.
Yeah, I'll take that as well, Steve I think Rebecca covered certainly the FPL piece and then you think about it.
Energy resources, we've doubled the backlog in the last few years.
Continue to see a lot of promise there with or without build back better Jim said.
More likely than not that we're able to get something passed there by the end of the year, but we plan our business as if it doesn't happen.
And our our financial forecast is based on it not happening and that's why we were very resolute and our ability to take our expectations up not only for 2022, but the extent of the guidance out through <unk>.
Through 2025, and that's just based on what we see.
In our renewable backlog and when do you think about the expectations that we've laid out.
For investors for 'twenty, one and 'twenty two I think we've done it.
A terrific job of meeting those and then laying out 'twenty three and 'twenty four we've made tremendous headway.
Against.
Against those expectations.
Great. Thank you.
Thanks, Steve.
The next question comes from Shar <unk> with Guggenheim Partners. Please go ahead.
Good morning, guys.
Good morning, and congrats Jim John and Rebecca containment on the moves well deserved.
Just most of my questions actually just got answered, but just a quick question on near Adventures.
Obviously, you guys are starting to expand the playbook into Ccs water wastewater treatment and obviously in the prepared remarks, you just highlighted the hydrogen value chain opportunities. There is the future growth of any of these type of investments more specifically predicated on any outcomes of federal policy like a high.
And PTC and seen sort of a lack of progress on that front do you anticipate any pullback from these sort of opportunities not not the base business that the base and your opportunities for more specifically on the venture side.
Thanks, Sharon and I. Appreciate the question, we do think there's a lot of opportunities as I talked about in the prepared remarks, not only is purely executing our renewables for the electricity sector, but helping us clean energy to Decarbonize. These other industries.
And where are you thinking about some of these investment opportunities is way to explore how those business models and investment opportunities are ultimately going to shape up over time.
But to answer your direct question around the incentives.
Once we've made today do not assume that theres, a change of incentives or even the specific question around hydrogen that theres a hydrogen PTC.
But as John and his team the energy resources team has evaluated a number of hydrogen pilot opportunities our future business opportunities. They certainly would be furthered and helped some of them would be buy a hydrogen PTC and that's one of the things that I know, we as a whole team remain optimistic about that if something happens whether it's the full of BBB.
Or just a climate title that happens through reconciliation.
We're optimistic that our hydrogen incentive would be included in that package I think theres a lot of opportunities to further the de carbonization of the U S economy through the through the use of hydrogen.
Short answer the investments don't assume it but I think theres, even more opportunity. If there are some incentives like the hydrogen PTC in the future.
And then let me ask you just obviously the opportunities is sort of that especially as youre thinking about on the hydrogen side.
As sort of the growth starts to transpire, how are you sort of thinking about credit metrics any potential pressures there as that business grows and how we should be thinking about equity funding on US yeah. One of the strategic imperatives. The way that we think about managing the business over the long term and I highlighted a couple of times and remarks and we highly.
On a consistent basis, because it's a high priority for us is maintain that strong balance sheet and as you've seen quality of credit degrade elsewhere in the industry, we remain as committed as ever to maintaining that strong balance sheet. We think it's a huge differentiator.
For us in being able to execute our business to deploy the capital that we deploy.
And to provide the stability that our customers assume and expect from us.
We think our strong balance sheet is imperative. So as we think about all of these investment opportunities.
The growth in our business that will remain a priority and we will assume that as part of the way that we're thinking about the business as a as a private fascia.
Part of the strategy.
Terrific. Thanks, again, I'll pass it to someone else and again big Congrats John and no surprises here. Thanks.
Thanks, Chuck next question.
Thank you. The next question comes from Stephen Boyd with Morgan Stanley .
Go ahead.
Hey, good morning, I, just wanted to echo the congratulations to Jim and to John and Rebecca and Kirk and Erica.
Performance you all have achieved is really quite remarkable. So congrats are absolutely in order. So just so happy for you all.
I wanted to.
Spent a little time on.
On the technology side I guess it strikes me that within next era for years, you all been developing a variety of interesting technology, sometimes not always has is visible to us but it just strikes me that some of those developments are becoming both more visible and potentially more commercial more more of interest in terms of.
Always you can.
Is that to a fairly broad customer base and then just curious I know this is a high level question, but just interested in your take on how important technologies such as some of the software development that you all mentioned.
Could be two to driving earnings power to driving growth of Nextera and the long term.
Yes, Stephen Thank you for the question and I think you're absolutely right. It's probably something that we have not talked about very much and Paul we will talk about more going forward.
The reason why we have not talked about a lot in the past is we really have thought about it as a strategic advantage to us which we continue to believe it is a strategic advantage to us and we've largely used as a way to you further.
But both the profitability and the win rates on developing renewables.
As we thought about how does the business grow and change and recapitalize all of these opportunities that you and we and the industry fee.
One of the shifts is thinking about our commercial industrial customers whether they're in.
Additional C&I customers that have been interested in the products that we sell or new ones. The ones that are more industrial in nature or agricultural in nature.
Often need some additional services to help them understand how to manage their.
Generation and load needs think about their carbon intensity deliver on their own environmental social and governance goals and some of the things that we've developed internally through all of our expertise are very appropriate and enormously valuable to these customers.
So we've seen the opportunity to.
Continue these investments.
Think about how we package them and sell them to customers and you'll see a lot more of that from us going forward can we think there's a huge opportunity.
To sell not only those services, but also use them as a way to deepen our relationships with our customers and ultimately deploy renewables over time.
That's really helpful. Rebecca would that be essentially upside to the plan in other words sort of beyond the typical kind of numbers, we see around renewables deployment et cetera, as the scenario of upside or have you factored some of this into to thinking about your growth.
Thank for base assumptions were including.
Some assumptions around what we think we can do the deal with these types of businesses, but as always there's pluses and minuses.
For us they've largely been pluses and.
In recent history, and we've been able to deliver.
Good EPS growth in excess of even what we may.
They have anticipated or laid out for investors prior to delivering so hopefully we'll be in a position to do that again over time, but for now I think you should safely assume that our expectations are the ones. We just laid out in the last couple of minutes.
And we'll lose use all these levers to deliver against those and again hopefully achieve as we expect the high end of each of these ranges, which we are we would feel very proud of them and see us and honestly value creative to shareholders.
Sorry, maybe just one last one for me, where we're often asked about.
Impediments to growth in clean energy and pretty clearly nextera is not experiencing that.
Curious if you could talk a little bit more about just sort of some of those impediments sort of.
Perception versus reality things like supply chain labor availability permitting anything else just sort of.
I think there frankly is sometimes a misconception about it.
Those limits to growth and it looks like a clean energy growth remains very strong, especially for next year, but just curious if you could just comment on those perceptions of.
Limits on growth.
Yeah, Let me, let me take that one thank you.
You identified some of the obvious ones that we have you know that we are that we are addressing certainly supply chain and those types of issues and I think we've answered those I think when I look at the market today Steven.
The issue for companies to be successful.
Not successful the biggest differentiator is going to be many of the questions that you just asked and are you positioning your company for what is going to be a more complex.
Energy offering that is gonna be demanded by the customer Rebecca gave the example of a C&I customer it's not as simple as being able to approach the C&I customer and say, hey, I'm going to sell you a 100 megawatts of wind or a 100 megawatts of solar or what do you think about a 50 megawatt battery. These are people that are selling candy bars and <unk>.
Those are water and things or things of that nature are they're not in our business. They need the expertise as to how they think about that addition, with their within their existing energy needs and so it takes a comprehensive skill set in order to come.
Forward with a clean energy solution that makes sense for that business and so when you think about a lot of the small developers that we have to compete against in solar and wind. They don't have that expertise. They don't have the ability to offer firm and shaped products and things that it's going to take to really win the business. That's the first piece the second.
Pieces. The question you asked around technology, we have been very aggressive in our investment around technology, we've talked about the nextera.
Energy analytics team.
You know that we bought back and back in <unk> five we have really built that team out. It's a group of Phd mathematician software developers software engineers that not only use those tools to help manage our existing.
Fleet and help leverage and drive operating efficiencies around what we do every day and managing our existing footprint, but they're now able to take all that data all that information all that know how to develop comprehensive software solutions for customers and that is a huge delay.
That we have over the rest of the industry and one of the things that we're looking at and then the third thing is renewable enablers. We are really looking at what it means to lead the energy transition. What are you going what are you going to have to be good at and what capabilities are you going to have to have it.
As an organization to really do that and we have been spending the last three or four years very focused on it we don't talk a lot about some of the things that were up two you'll give more details at the analyst day, but needless to say and be self assured we're ready.
That's great overview. Thank you so much.
Thank you Steve next question.
The next question comes from Michael <unk> with Goldman Sachs. Please go ahead.
Hi, guys. Thank you and congrats to everyone on all of the leadership changes.
I actually have two questions on the regulated business in Florida first of all can you just remind us and I know you'll give us more detail six months from now, but just can you remind us what the capital spend levels for the next couple of years, our combined GAAP P&L in golf or if you want to break it out and separate it.
Yes, it's probably about $7 billion to $8 billion per year. It's included Michael in the regulatory capital employed growth of roughly 8% to 9% per year.
Got it seven to eight per year.
And kind of flat or do you see that escalating over time and how.
How should we think about what percent of that capital is either recovered as part of the rate case revenue.
Requirement increase or via the tracker and what part May.
Wood buildup as rate base and you'd get it back in a future case.
Theres a theres a mix of course, Michael as you as you might expect.
And we certainly have our best laid plans that will include as part of the updated Capex tables in the 10-K, when we publish it in a couple of weeks.
One comment on that I would make and obviously there is a difference between as you recall from the Capex table for FPL versus for <unk> versus energy resources, but in both cases.
And as you get closer to that operating year. The teams tend to find good investment opportunities that are value accretive from a from a customer standpoint, and may add and subtract to those over time, but those will be our best estimates based on what we've seen so far and also under the parameters of the settlement agreement.
Inclusive of the solar together investments that were approved as part of the settlement agreement and also anticipate the.
Current views around the investments on the storm hardening and underground and that as you know are included in a clause mechanism.
And recovered separately and approved separately over time those change over time depending.
Depending on what we see and where we see the value coming for our customers but.
But we feel very good about the overall views and of course, we'll give more details as we go into the Investor Conference in June .
Got it.
I just want to come back with some of the comments you made in your prepared remarks about our P&L and in the earnings targets for next year and beyond.
Is it getting harder operationally.
Just given the size and the amount of capital you're deploying it at P&L.
Hit the highest end or the top end of the earnings band.
Historically, if you kind of go back and skin the transcript.
You're always kind of talk about hitting that high end and it almost seems that may be misinterpreting, but the language today was kind of towards the high end, but maybe not exactly at it and I was just curious if there's a change there in terms of being able to hit the 11 seven level.
Sure Let me, let me answer the.
No if you're asking for on the Nextera energy Saga, we typically have a language we'd be disappointed not to be at or near the high end that language is exactly the same.
If anything changes solely yes.
Assemble on my part in terms of speaking, but the language is exactly exactly the same if you were asking specifically around Florida power <unk> light company.
The approved range as you know for the settlement agreement is the range at nine 7% to 11, 7% and my comment was specifically around our expectations for 2022.
Which of course is the first year of the new settlement agreement and that also includes the the one year limitation that was included in the settlement agreement around the use of surplus amortization just in this year, which is a maximum amount of $200 million. When we think about everything what our investment plans are our op.
<unk> for continuing to focus on cost improvements other improvements for customers.
<unk> that we plan to make and they use that the surplus amortization, including the shape over time, we believe that at the end of the year, we'll be able to report a regulatory Roe.
At the high end of the range.
Exactly that is of course, we'll refine it over the as the year progresses.
Progresses.
Then of course, we'd be targeting the high end of the ROE range in future years as well.
Got it. Thank you Rebecca I appreciate you, taking the time and congrats again.
Thank you so much Michael.
The next question comes from Jeremy Tonet with Jpmorgan. Please go ahead.
Hi, good morning.
Good morning, Jeremy.
You covered a lot of ground today, just one question from me and it's kind of been touched on a few different times, but just diving in with the transition in general just wondering if you could comment a little bit more about why now is the right time versus any point in the past or in the future to make the transition and then should we expect anything new in messaging from Nextera with the <unk>.
Session here could we expect something kind of new along these lines at the analyst day.
Okay.
So.
Jeremy This is Jim on the on the transition.
I think you heard in the prepared remarks.
This is something that the board and I have been working on.
Really in earnest since.
Well honestly in earnest since my first.
Succession planning discussions CEO pack in 2012, but but I let.
Let the board know that.
<unk> target.
<unk>.
Retiring as CEO was was after.
I'll, let them know this in 2016 honestly my target was after the.
The 2020 rate case and I actually.
Extended kind of my timeline a bit to get pet get through this rate case and so.
That's been a it's been my plan for a very long time.
Obviously, we didn't make any decisions about it until.
Until we announced it here but.
It's been something that the board and I have been discussing for a very long time.
We've been very deliberate about the succession planning that we've done and I'm really pleased with.
With.
With the team that's going to be leading the company into the future.
Okay.
And I think Jim you had a second question going into the Investor Conference can you remind me what that was.
Yes.
Thank you for that Jim that's very helpful. Details there just as we look at the analyst day here should we expect kind of what the transition any any kind of change that might materialize in messaging at that point at the analyst day or that's not really the expectation at this point.
Yes for the Analyst day, you know first of all.
We have never been in a better position, we're coming off of.
What I would characterize as our best year as a company.
And it's been really a testament to the entire lead team that not only obviously the job Jim's done, but the job Eric has done the job Rebecca has done and the leadership team that we have in place at.
At energy resources, we have an extremely deep bench with a ton of experience I've been here almost two decades Eric's been here almost two decades, Rebecca has been or 15 years and we have just.
A wealth of experience.
<unk>.
And the team that will bring full bear on the opportunity set that we have.
That we have going forward and the way I think about it is we will continue to double down on the core that means execution.
Like.
Unlike what we've seen in the past around FPL in the capital plan that they have for customers and for shareholders of renewable opportunity that we that we have in this country don't forget renewables are cheap or the cheapest form of generation in this country without with or without incentives. So we have a tremendous.
Opportunity there as well and then the third piece I would characterize us as the renewable enablers what are the other things that.
We can do as a company that we've been working on behind the scenes that will help position us to be.
The leader of the energy transition.
In this country are going to do with the best team in the industry. So thats really what youre going to hear about at the analyst day.
Got it.
This concludes our question and answer session and Thats era energy and Nextera Energy Partners earnings Conference call.
Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
Thank you.
Yeah.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
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