Q4 2024 NextEra Energy Inc Earnings Call
There we go so I feel like I'm on my grandmother's house.
Speaker Change: Good morning, and welcome to the Nextera energy fourth quarter and full year 'twenty 'twenty four earnings conference call.
Speaker Change: All participants will be in a listen only mode.
Speaker Change: You need assistance. Please you know a conference specialist by pressing the star key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: I ask a question you May press Star and then one using a touchtone telephone.
Speaker Change: To withdraw your question you May press Star two.
Speaker Change: Also note todays event is being recorded.
Market Edelman: At this time I'd like to turn the floor over to market Edelman.
Mark Edelman: Director of Investor Relations. Please go ahead.
Speaker Change: Thank you Jamie good morning, everyone and thank you for joining our fourth quarter and full year 2024 financial results conference call for Nextera Energy with me. This morning are John Ketchum, Chairman, President and Chief Executive Officer of Nextera Energy, Brian bolster executive Vice President and Chief Financial Officer of Nextera Energy Armando Pimentel.
Speaker Change: President and Chief Executive Officer of Florida Power and light company Rebecca Kujawa.
And Chief Executive Officer of Nextera Energy resources, and Mark Hickson Executive Vice President of Nextera Energy, John will start with opening remarks, and then Brian will provide an overview of our results. Our executive team will then be available to answer your questions.
Speaker Change: 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 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.
Speaker Change: Asian or in our latest reports and filings with the Securities and Exchange Commission each of which can be found on our website at www Dot Nextera energy Dot com, 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 and <unk>.
Speaker Change: Company in today's presentation for definitional information reconciliations of historical non-GAAP measures to the closest GAAP financial measure with that I'll turn the call over to John.
John Ketchum: Thanks, Mark and good morning, everyone Nextera energy had strong operational and financial performance in 2020 for delivering full year adjusted earnings per share of $3.43 up over 8% from 2023 once again at the high end of our.
John Ketchum: That EPS expectations range. Since 2021, we have delivered compound annual growth and adjusted EPS of over 10%, which is the highest among all top 10 power companies. In fact, if you looked over the last 510 15, and 20 years, you will see the same absolute.
John Ketchum: And relative performance are.
John Ketchum: Our consistent financial outperformance is due first and foremost to the efforts and execution by our team.
John Ketchum: I couldn't be more proud of how our team has continued to deliver and I firmly believe that our track record of execution positions us to lead the build out of energy infrastructure across the country in the coming years.
John Ketchum: Nextera energy offers a unique value proposition with two strong businesses that we believe are strategically well positioned to meet the growing needs of our customers with outstanding prospects for future growth.
John Ketchum: P. O is the largest electric utility in the U S and energy resources is the world's leader in renewables and storage.
John Ketchum: Gather we operate the largest natural gas fired generation fleet in the country. Our one largest nuclear operators in the U S and are widely viewed as an industry leader in transmission.
John Ketchum: We are one of the top five infrastructure investors in the United States, and we have invested more than $150 billion and our nations energy infrastructure over the last decade building everything from nuclear up rates natural gas pipelines and natural gas fired generation to battery storage and <unk>.
Renewables.
John Ketchum: Over the next four years alone we plan to invest roughly $120 billion across the country, which would allow us to grow our combined fleet to roughly 100 121 gigawatt.
John Ketchum: FPL and energy resources individually have executed well delivering value for our customers and shareholders. We have one of the sector's strongest balance sheets in between the two companies we placed into service approximately $8 seven gigawatts of new renewables and storage projects in 2024.
John Ketchum: Let me start by giving you an update on each of our businesses and then provide you with some comments on the state of our industry.
John Ketchum: FPL continue to deliver what we believe is the best customer value proposition and one of the fastest growing states in the U S. As.
John Ketchum: As we approach our 100 year anniversary at FPL. Our vision remains the same to continue making smart capital investments for the benefit of our customers be an industry leader on cost and deliver high reliability and outstanding customer service, while keeping bills as low as possible for our customers.
John Ketchum: In 2024, we continue to see the fruits of that small smart capital spend for nearly two decades FPL has invested in building a stronger smarter and more storm resilient grid. The performance of our system demonstrates that fpl's hardening underground in automation and smart grid.
John Ketchum: <unk> are providing significant benefits to our customers are.
John Ketchum: Our investments in smart grid technology enabled us to avoid more than $2 7 million outages in 2024, and those investments paid off as our team responded exceptionally well in response to Hurricanes, Debbie Helane and Milton.
John Ketchum: We are able to deliver this performance and keep our bills, 40% below the national average because of our focus on capital and operating efficiency and innovation.
John Ketchum: F. P. L continue to make smart capital investments in low cost solar generation and battery storage further reducing our overall fuel costs. During the year, we placed into service more than 2.2 gigawatts of new cost effective solar and we expect to add more than 15 gigawatts by 2033.
John Ketchum: When combined with generation Modernizations. These additions have saved customers more than $16 billion since 2001.
John Ketchum: We also continue to focus on running the business more efficiently in 2024, we improved upon our best in class non fuel O&M cost per customer, which was already 70% better than the industry's national average saving customers over $3 billion per year versus an average performer.
John Ketchum: Utility.
John Ketchum: Innovation has been one of the keys to our operating efficiency FPL was the only utility in the nation to remotely operate its fossil fleet.
John Ketchum: Our fleet control Center is one of the world's largest monitoring and diagnostic centers in the first in the industry to remotely operate a more than 20 gigawatt natural gas combined cycle fleet from a single location, providing real time, troubleshooting with engineering maintenance and operation support and delivering a world.
John Ketchum: Class predictive analytics and diagnostics. This is just one example of the innovative efforts by FPL to reduce costs for our customers, while continuing to provide exceptional service.
John Ketchum: Late last year FPL filed the test year letter with the Florida Public Service Commission to initiate a rate proceeding for new rates beginning in January 2026.
John Ketchum: The stability of multiyear rate plans has allowed FPL to focus on efficiency in the business.
John Ketchum: Which is critical to keeping customer bills as low as possible and has enabled FPL to maintain a strong balance sheet, which allows for consistent access to the capital markets.
John Ketchum: We look forward to the opportunity to showcase our long term track record of providing low bills and high reliability for Florida ends in our plans to build and even more resilient energy future for Florida.
John Ketchum: We believe FPL is strategically well positioned as Florida remains one of the fastest growing states in the U S. With a population growth rate that is expected to grow 60% more than the national average by 2030.
John Ketchum: We plan to meet Florida, as long term growth outlook with investments in generation transmission and distribution infrastructure, which we believe will further enhance our best in class customer value proposition.
John Ketchum: Energy resources had another record year of new renewables and storage origination, adding more than 12 gigawatts to our backlog, which includes approximately 3.3 gigawatts since our last call a sign of the momentum of demand for new generation and renewables and storage in particular.
John Ketchum: These additions to our backlog increased 30% from the nine Gigawatts. We originated in 2023, our second best year ever to put that into context 12, gigawatts as the size of a large utility in the U S.
John Ketchum: Energy resources also had a record year in solar origination and a record year in battery storage origination again, demonstrating the strong demand for renewables and storage because they are low cost and can be deployed now.
Focusing for a moment on battery storage, we have deployed more than three four gigawatts in total and currently have more than seven two gigawatts in our backlog our extensive portfolio of existing operating sites, which have excess transmission capacity and are nearly 30 gigawatts of standalone storage interconnect.
John Ketchum: <unk> Q positions mean.
John Ketchum: It means we can dramatically speed up our deployment a distinct competitive advantage that no one else in this industry has.
John Ketchum: We also continue to be a leader in serving data center customers with our total renewables portfolio, including assets in operation and in backlog at eight three Gigawatts. However, one point that I believe is being overlooked because the power demand is everywhere across all sectors and increasingly across utilities.
John Ketchum: Municipalities and electric cooperatives, as our 12 gigawatt year of backlog additions reflects and as demand for power increases across all customer classes as we advance our domestic economic agenda.
John Ketchum: So does the potential price of power unless we bring new generation online quickly to meet that demand customers of all types are looking for low cost ways to meet their growing power needs, while reducing their exposure to higher power prices over time, given the current power demand environment. It is more important than ever to them.
John Ketchum: All forms of electric generation, starting with renewables, which are ready now as I will discuss more in a minute.
John Ketchum: There is no better example of this than our own portfolio, we have originated more than three gigawatts and three of the last five quarters and assuming we achieve the midpoint of our development expectations range energy resources will be operating a roughly 75 gigawatt renewable portfolio by the end of 2027, which would be which would be.
John Ketchum: Larger than the installed renewables capacity of all but seven countries.
John Ketchum: In 2024, we continue to demonstrate our leadership as a supplier of choice for buyers of new generation, We announced two framework agreements with two fortune 50 companies that have the potential to develop renewables and storage projects totaling up to 10, five gigawatts between now and 2030 as well as they joined <unk>.
John Ketchum: <unk> agreement with Entergy, when combined our announced framework agreements total up to a potential 15, gigawatts demonstrating our unique position in the market and our customers' confidence in our ability to help meet the nation's need for power.
John Ketchum: And we are not sitting still as we think about our value proposition for our customers. We are constantly looking to make sure. We have the most comprehensive solution set.
John Ketchum: That is why today, we are pleased to announce a framework agreement with GE or Nova where we will partner to build natural gas power generation solutions. This agreement has the potential to support multiple gift gigawatts for data centers, the re shoring of manufacturing and the electrification of industry as well as serve invest.
John Ketchum: Our own utilities municipalities cooperatives, and commercial and industrial customers.
John Ketchum: Nobody has built more gas fired generation over the last decade, the Nextera energy and nobody has sold more gas turbines than GE or Nova.
Speaker Change: This collaboration brings together the nation's leading operator of natural gas fired generation in Nextera energy and the world's leader in natural gas and electrification technology and GE ever Nova to jointly develop opportunities that we believe will enable significantly more renewables to meet growing power demand by pairing low.
Speaker Change: Cost renewables for energy with gas fired generation for capacity.
Speaker Change: Over the next four years, the company's plan to collaborate to identify key locations on the energy grid that would benefit from Nugent generation GE or novo will incorporate its world class natural gas generation technologies and critical electric electrification solutions, while leveraging its financial service capabilities.
Speaker Change: <unk> <unk>.
Speaker Change: Nextera energy expects to provide customers with integrated renewable storage and gas fired solutions for large loads something we can uniquely deliver with our scale experience technology and unmatched development skills. This framework agreement is just another example of why we believe energy resources has the most cop.
Speaker Change: Hence the power generation business in the world and is better positioned than ever to capitalize on long term growth prospects.
Speaker Change: Before I turn it over to Brian I want to take a moment to make some comments regarding the industry as we look to the years ahead, the need to add to the country's power infrastructure is no longer in doubt our industry's mandate is to deliver new generation and capacity solutions at the lowest cost possible in order for the U.
Speaker Change: To achieve the new administrations energy dominance agenda.
Speaker Change: As a leading American energy producer this isn't agenda, we support and believe we are well positioned to deliver on.
John Ketchum: At Nextera energy, we know all forms of energy will be required to meet that mandate. If we don't build new generation to keep up with increasing demand for electricity power prices are going to go up or perhaps worse, new technology or manufacturing load won't be able to connect to the grid.
John Ketchum: Which would slow economic growth and we could miss opportunities to further our leadership in AI.
John Ketchum: Renewables and storage are ready now to meet that demand and will help lower power prices gas fired generation is moving forward, but won't be available at scale until 2030, and then only in certain pockets of the U S.
John Ketchum: In addition gas fired generation is more expensive than it has been with cost having more than doubled over the last five years due to the limited supply of gas turbines are constrained supply chain and much higher EPC costs.
John Ketchum: Nuclear continues to be a much longer term option in our opinion do first of a kind risks and uncertainty with near term opportunities centered on re commissioning and operate projects nuclear plants across the country are already serving existing demand and there are only a few nuclear plants that could be recommissioned.
John Ketchum: In the near term in an economic way, we're continuing to make progress in evaluating the re commissioning of our Duane Arnold nuclear plant in Iowa recently, we filed notice with a new clear regulatory commission to request a licensing change an important first step in establishing the regulatory pathway to restore the facilities operating.
John Ketchum: License and potentially restart plan operations as early as the end of 2028.
John Ketchum: While this is just one part of our broader efforts with regulators government officials potential customers and other stakeholders. We are encouraged by the positive responses. We have received so far from all parties involved. We also continue to evaluate alternatives such as <unk>. However, due to the risks and.
John Ketchum: The practical reality is we are unlikely to add multiple gigawatts of new nuclear to the grid over the next decade.
John Ketchum: That means we need renewables and storage to meet that to meet demand that is here today and as we move towards the next decade, we can supplement renewables and storage with natural gas fired generation and to a more limited extent nuclear given the time it will take to develop and build we know this because we have experienced across the entire.
John Ketchum: Here energy value chain.
John Ketchum: Our mission is to provide our customers with the lowest cost most reliable energy no matter, where they're located we've been doing it for decades in Florida and across the country and are positioned to keep doing it for years to come our scale and experience tells us that all forms of power generation and capacity will be needed as a U S tries to.
John Ketchum: Keep up with demand and that same scale and experience also tells us that renewables and storage should continue to be a critical source of new energy and capacity across the country. Because they are lowest cost and can be deployed now with that let me turn it over to Brian who will review the 2024 results.
John Ketchum: In more detail.
Thanks, John let's begin with Fpl's detailed results.
John Ketchum: For the full year 2024 fields adjusted earnings per share increased 12 versus 2023.
John Ketchum: The principal driver of Fpl's 2020 for full year performance was regulatory capital employed growth of approximately 10%.
John Ketchum: We continue to expect our fields average annual growth in regulatory capital employed to be roughly 10% over the four year term of our current rate agreement, which runs through 2025.
John Ketchum: For the full year 2024.
John Ketchum: Fields reported ROE for regulatory purposes will be approximately 11, 4%.
John Ketchum: During the full year 2024, we used $328 million of reserve amortization, leaving FPL with the year end 2020 for balance of $895 million.
John Ketchum: <unk> capital expenditures were approximately $1 $8 billion in the fourth quarter, bringing its full year capital investments to a total of roughly $8 2 billion.
John Ketchum: Key indicators show that the Florida economy remains strong and Florida's population continues to be one of the fastest growing in the country.
John Ketchum: GDP is now roughly $1 seven trillion.
John Ketchum: An increase of approximately 7% over last year for.
John Ketchum: For the fourth quarter of 2020 for Fpl's retail sales increased one 1% from the prior year on a weather normalized basis, driven primarily by continued strong customer growth.
John Ketchum: In the fourth quarter of 2024, we added nearly 119000 customers as compared to the prior year comparable quarter.
John Ketchum: Bringing our total customer accounts to over $6 million.
John Ketchum: For the full year 2020 for Fpl's retail sales increased one 9% from the prior year on a weather normalized basis.
John Ketchum: Also driven primarily by the strong customer growth in our service territory.
Speaker Change: As John mentioned I feel is preparing to file a base rate case proposal that would cover the four years, beginning 2026 through 2029 and provide customers longer term visibility to the cost of electricity.
As a reminder for the period 2022 through the end of 2025, FPL plans to invest approximately $36 billion.
Speaker Change: With additional significant investments expected in 2026 and beyond to continue to meet the growing needs of Florida's economy.
Speaker Change: This capital will allow FPL to continue delivering outstanding value for Florida customers by keeping reliability high and fuel and other cost as low as possible.
Speaker Change: While the benefit of building a stronger smarter grid.
Speaker Change: And a cleaner more efficient generation fleet are passed along regularly to customers.
Speaker Change: Through higher service reliability, and lower bills, we must periodically seek recovery for these long term investments through base rates.
Speaker Change: While the details are still being finalized we expect the proposal to include base rate adjustments of approximately $155 billion starting in January of 2026.
Speaker Change: $930 million starting in January of 2027.
Speaker Change: We also expect the proposal to request support for continued deployment of low cost generation and capacity additions and.
Speaker Change: And the continuation of our solar and battery base rate adjustment or silver mechanism to recover the revenue requirement of these cost effective projects.
Speaker Change: FPL plans to propose an ROE midpoint at 11, 9%.
Speaker Change: With an allowed ROE band of plus or minus 1%.
11, 9% estimated cost of equity reflects appreciably higher interest rates and other capital markets factors, we have experienced since our last rate case in which we expect to continue during the term of the proposed four year rate plan.
Speaker Change: FPL also expect to propose maintain <unk> long standing equity ratio approved in prior base rate cases.
Speaker Change: Which is intended to keep it in a position to continue to access capital as needed through 2029.
Speaker Change: We continue to believe that a strong balance sheet, which starts with an appropriate equity layer and which supports strong credit ratings remains critical to ensure FPL maintains uninterrupted access to capital to the capital markets.
Speaker Change: Even in times of significant market disruption.
Speaker Change: It also allows us to attract capital to support the investments that fuel is making to further improve the value we offer customers.
Speaker Change: FPL estimates that its proposal.
Speaker Change: Along with the projections for fuel and other costs will grow a typical residential customer bill by an average annual rate of approximately two 5% from.
Speaker Change: From January 2025 through 2029.
Speaker Change: It's the full amount of the request were granted under our proposal and assuming other utilities experienced bill increases only at their historical rates of increase we expect fpl's typical customer bills, we continue to remain significantly lower than the national average through 2029.
Speaker Change: To put this proposal in context. It would result in a typical customer bill in January 2026.
Speaker Change: Nearly 21% less than it was in real terms 20 years ago, even with our proposed base rate increases.
Speaker Change: We look forward to the opportunity to present, the details of our case and.
Speaker Change: And expect to make our formal filing with testimony and required detailed data in February.
Speaker Change: The timeline for proceeding will ultimately be determined by the commission.
Speaker Change: We currently expect that we will have hearings in the third quarter and a final commission decision in the fourth quarter in time for new rates to go into effect in January of 2026.
Speaker Change: We're open to the possibility of resolving our rate request through a fair settlement agreement.
Speaker Change: During the course of the past 22 years.
Speaker Change: <unk> has entered into five multiyear settlement agreements that have provided customers with a high degree of rate stability and certainty.
And helped FPL execute deliver to deliver its best in class customer value proposition.
Speaker Change: Our core focus will be to pursue a fair and objective review of our case.
Speaker Change: That supports continued execution of our successful strategy for customers and we plan to continue to provide updates throughout the process.
Speaker Change: Now, let's turn to energy resources.
Speaker Change: Reported full year adjusted earnings growth of more than 13% year over year.
Speaker Change: For the full year contributions from new investments increased by 48 per share, reflecting continued growth of demand for our renewables and storage portfolio Conor.
Speaker Change: Contributions from existing clean energy assets increased by <unk> <unk> per share.
Speaker Change: Primarily reflecting improved wind resource during the year and the impact that certain revenue and PTC escalation benefits inherent in our existing assets Contra.
Speaker Change: Contributions from our gas infrastructure business decreased by <unk> <unk> per share.
Speaker Change: Most of which was recognized in the second quarter as.
As we discussed at the time, a combination of higher depletion expense related to an expectation for lower production.
Speaker Change: Certain nonrecurring items and the sale of the Texas pipeline portfolio resulted in lower relative earnings in that quarter.
Speaker Change: Contribution since that time have been effectively flat.
Speaker Change: <unk> with the expectations, we provided in the second quarter.
Speaker Change: Our customer supply and trading business, which you will recall had a strong earnings in 2023.
Speaker Change: <unk> results by <unk> <unk> per share driven by normalization of origination activity and margins, which is consistent with our expectations.
Speaker Change: Other impacts decreased results by <unk> 24 per share year over year.
Speaker Change: This decline reflects higher interest costs of <unk> 13 per share nearly half of which is new borrowings to support our build and a half of which reflects increased borrowing cost on existing debt.
Speaker Change: Energy resources again for the third year in a row delivered our best year ever for origination, adding more than 12, gigawatts of new renewables and batteries battery storage projects to our backlog.
Speaker Change: Which includes approximately three three gigawatts since our last call.
Speaker Change: Our 2020 for origination performance reflects continued strong demand from power and commercial and industrial customers looking for the least cost alternative to serve load.
Speaker Change: And meet increasing demand.
Speaker Change: Our renewables backlog now stands at more than 25 Gigawatts after taking into account roughly two four gigawatts of new projects placed into service since our third quarter call.
Speaker Change: We believe our more than 25 gigawatt backlog provides terrific visibility into energy resources' ability to deliver attractive growth in years ahead.
Speaker Change: Turning now to the consolidated results for Nextera energy for the full year adjusted earnings per share from our corporate and other segment decreased by <unk> <unk> per share year over year.
Speaker Change: We successfully supported the growth in our underlying businesses from our strong operating cash flows and grew 2020 forecast flow from operations by more than 17% well in excess of adjusted earnings.
Speaker Change: We also continue to focus on protecting our project economics at energy resources as.
Speaker Change: As well as minimizing the cost of refinancing at the parent we now have $28 5 billion have interest rate hedges in place.
Speaker Change: Put this all in perspective, Nextera energy sensitivity for an immediate 50 basis point upward shift in the yield curve has on average 1% to <unk> <unk> of expected adjusted EPS impact in 2025, 2026 and 2027.
Speaker Change: Which is equivalent to less than 1% of our adjusted EPS expectations.
Speaker Change: The sensitivity of course assumes we do not implement other offsetting initiatives, including among others, our normal process of cost reductions and capital efficiency opportunities.
Speaker Change: As a reminder, the current interest rate environment is taken into account in our financial expectations.
Speaker Change: Overall, our funding plans for 2024 through 2027 remained consistent with the information we shared previously.
Speaker Change: For each of the last 15 years Nextera energy has met or exceeded its financial expectations, which is a record we're proud of and.
Speaker Change: And once again, our long term financial expectations remain unchanged, we will be disappointed if we're not able to deliver financial results at or near the top end of our adjusted EPS expectation ranges in 2025, 2026 and 2027.
Speaker Change: From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at <unk>.
Speaker Change: We're above our adjusted EPS compound annual growth rate range.
Speaker Change: And we will also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026.
Speaker Change: For 2024 base.
Speaker Change: As always our expectations assume our caveat.
Speaker Change: That concludes our prepared remarks and with that.
Speaker Change: That we will open the line for questions.
Speaker Change: Ladies ladies and gentlemen at this.
Speaker Change: At this time, we will open the line for questions.
Speaker Change: If you have a question. Please press star and then one using a touchtone telephone to withdraw your question you May Press Star two.
Speaker Change: If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.
Speaker Change: Once again that is star and then one to join the question queue.
Speaker Change: Our first question today comes from Steve Fleishman from Wolfe Research. Please go ahead with your question.
Speaker Change: Okay.
Steve Fleishman: Yes, hi, good morning. Thanks.
Speaker Change: Just a couple of high level question so on the.
Steve Fleishman: G. The framework agreement announcement could you maybe give a little more color on.
Steve Fleishman: What would you co own projects with them.
Steve Fleishman: And also just.
Speaker Change: Would you only be doing contracted.
Speaker Change: Ah projects long term contracts or would you consider doing kind of Newbuild Merck.
Speaker Change: <unk>.
Speaker Change: In ERCOT or PJM.
Speaker Change: Thanks, Matt.
Steve Thanks for the question.
Speaker Change: First of all we're very excited about this framework agreement.
Speaker Change: <unk> for Nova.
Speaker Change: And as I said in the prepared remarks, nobody has built more gas fired generation in this country.
Speaker Change: Really not only over the last decade. The last two decades, then next era. So we've got significant experience. We have an 80 year relationship with with GE just terrific relationship not only on the renewable side, but also on the gas fire generation side with with all of that pulled that though.
We have historically done so I think youre, bringing two powerhouses together with experience and gas fired.
Speaker Change: Generation the idea would be to <unk>.
Speaker Change: Go after and target large load customers.
Speaker Change: And do it in an integrated way are we kind of combined gas fired generation with renewables battery storage solutions.
Speaker Change: And.
Speaker Change: Each party would bring.
Speaker Change: Expertise that you would expect to the table in terms of the ownership, yes, they would be co owned.
Speaker Change: As part of a 50 50.
Speaker Change: Didn't venture these would be long term contracted.
Speaker Change: <unk> as well.
Speaker Change: Could contemplate in the right situation with the right customer also potentially a build own transfer.
Speaker Change: Gas fired generation as well if that was part of a larger transaction that included.
Speaker Change: Renewables and other growth opportunities, but we're very excited about this I think it.
Speaker Change: <unk> enables us to bring a comprehensive solution set that is right down our alley.
Speaker Change: Yes, now it makes a lot of sense I assume it gets you access to turbines.
Speaker Change: Kind of relatively quickly as well.
Speaker Change: Just one other question on <unk>.
Speaker Change: I think we call it the elephant in the room.
Speaker Change: <unk> administration and.
Speaker Change: Justin.
Speaker Change: Kind of.
Speaker Change: I guess the announcement on the wind.
Speaker Change: Limits on when leases on federal lands and then also <unk>.
Speaker Change: Who's on kind of where things stand on IRR.
Speaker Change: Chris would love any commentary on those topics. Thanks.
Speaker Change: Sure Steve Let me go ahead and take that first of all with what the executive orders as a whole.
Speaker Change: Very consistent with our beliefs that.
Speaker Change: We need electrons so we need electrons right now and we need to unleash.
Speaker Change: The American energy industry and achieve energy dominance, so we embraced the new administrations.
Speaker Change: Dates that have come out in these executive.
Speaker Change: These executive orders and as part of achieving energy dominance, we're going to need all of the above solutions, we can afford to take any options off the table, we're going to need gas, we're going to need nuclear we're going to need to renewables, we're going to need stored as well, but we can't wait.
Speaker Change: Because of that demand is here today I mean, if you think about it power demand is higher than it's ever been in this country the only.
Speaker Change: Close analogy you can draw two last industrial Revolution, and we're expecting low demand to increase over 80% over the next five years six fold.
Speaker Change: Over the next 20 years and.
Speaker Change: If you think about generation types and needing all of the above they're not all created equally in terms of timing, which is one of the things that I hit in my prepared remarks renewables are here today, you can build up a wind project in 12 months a storage facility in <unk>.
Speaker Change: Our solar project in 18 months.
Speaker Change: With gas fired generation, we are pleased with our announcement with GE for Nova.
Speaker Change: With gas fired generation the country is starting from a standing start.
Speaker Change: We've got to go find the sites, we've got to develop the sites, we've got to get gas to those sites.
Speaker Change: We got to get hands on gas turbines. If you if you take all those things together and you think about when is gas really going to be able to contribute at scale. I mean, we're looking to looking at 2030.
Speaker Change: And nuclear later than that and we need shovels in the ground today.
Our customers need the power right now I mean, if you think about it from a customer standpoint, they have already built.
Speaker Change: New manufacturing facilities are well down the road that are going to need electrons our utility customers have already shutdown existing generation theyre counting on.
Speaker Change: These renewable projects some of which include wind to show up to be able to provide the electrons.
Speaker Change: So we don't have reliability issues with with their customers because right now we are short power.
Speaker Change: In this country and so when I think about <unk>.
Speaker Change: When I think about our own portfolio, we don't have any offshore wind as you all know we've never been in the offshore wind business and where we are.
Speaker Change: All of our onshore projects are on private land except for one.
Speaker Change: And.
Speaker Change: And that's a very positive effect in the permitting process is rather limited for onshore private land.
Solutions.
Speaker Change: And I go back to our customers need the power right now.
Speaker Change: They're they're they're building new manufacturing and utilities are already planned for it and I know this administration they support low cost energy they support domestic job creation. So I remain very optimistic that we're going to be able to work through any issues.
Speaker Change: That may they may come up along the way and.
Speaker Change: Feel good about the future of our program.
Speaker Change: Great. Thank you very much and Steve on IRA Let me hit your last one on IRA.
Speaker Change: So really a lot of the same point I mean, obviously, we've been spending a lot of time in Washington on advocacy around IRA and what I will say there is.
Speaker Change: Again, it's all about electrons and needing electrons right now the power demand is here today, we need to we need to serve at renewables.
Speaker Change: Play a very important role in all forms of energy solution, we're going to need gas to backup renewables will have nuclear.
Speaker Change: Later later next decade, but right now if we need we need solutions that are going to deliver electronic electrons to the grid. So we don't have a power crisis.
Speaker Change: <unk>.
Speaker Change: That is that is the thing that is not being overlooked at all by folks that we are meeting with and Congress and then theres. The other factor that look.
Speaker Change: This is a terrific American industry.
Speaker Change: We are creating a substantial number of jobs right here in our backyard and 80% of those jobs are.
Speaker Change: Investments are incurring and Republican states take our own Capex, we've been top five infrastructure investor over the last five years fully expect that to be the case over the next four years Nextera is going to invest $120 billion over the next four years, that's our expectation and again 80 person.
Speaker Change: Are those dollars is going into Republican states, there's a lot of manufacturing a lot of job creation a lot of property taxes, a lot of economic benefits. So those are the messages that we're trying to make sure we get we get across.
Speaker Change: In Washington around the IRA discussion.
Speaker Change: Great very helpful. Thank you.
Speaker Change: Thank you Steve.
Speaker Change: Our next question comes from Shar <unk> from Guggenheim Partners. Please go ahead with your question.
Speaker Change: Hey, guys good morning.
Speaker Change: Good morning, Shar good morning.
Speaker Change: Real quick John I know you noted the time to market for nuclear is between the $27 30 timeframe I guess, where does Duane Arnold fall within that timeframe and also there is obviously one restart out there and there's a cost estimate is there anything you can provide just directionally for Duane Arnold.
Speaker Change: Restart versus the comp that's out there and would you potentially look to expand the size of their support from a counterparty or the federal government.
Speaker Change: Yeah, Hey, Thanks, Shar for the question so.
Speaker Change: Happy to say that we have made our filing with the NRC around the licensee in the <unk>.
Speaker Change: The commission that facility, we have more work to do.
Speaker Change: Some of that work includes work.
Speaker Change: With customers I'm, certainly not going to put the cost estimate out there that would hurt our negotiating position in those discussions.
Speaker Change: You can rest assured that we are in active discussions with customers today, there's a lot of interest in.
Speaker Change: In the plant as we look forward, but my comments around nuclear are really.
Speaker Change: Look you know as one of the largest nuclear operators in the country. We know obviously know a lot about it I think the near term opportunities are around the re commissioning of Palisades a crane.
Speaker Change: Duane Arnold as well and those are really the ones that I think of it confined to the timeframe of being over the next.
Speaker Change: 345 years.
Speaker Change: You think about next decade, and my comments around next day decade, those are really more around the small modular reactors, which are still a first of a kind technology have some uncertainty in terms of developing the permitting and the ability.
Speaker Change: Them to be able to deliver be delivered to market on time and on schedule and so.
Speaker Change: As we think about small modular reactors and we have a team internally at Nextera energy that is focusing on nothing but small modular reactors, we'd love to be able to develop them, but as we get into them there are.
Speaker Change: Some practical limitations, so for thinking as a country about their ability to contribute to all the power demand that we see that's here right. Now my only comment is that I would think about them more as a next decade solution probably middle of the latter part of the next decade, if we're thinking about small modular reactors.
Speaker Change: At scale and cost continues to remain a wildcard.
Speaker Change: Got it maybe just I'll just ask it a slightly different way just what's the condition of the plant right now I guess on Duane Arnold.
Speaker Change: You know the Duane Arnold plan is really in good shape I mean, the only issue that we had if I think about the facility in the condition that it's in I think about the reactor itself in the <unk>.
Speaker Change: Very good condition.
Speaker Change: The only damage that we ever sustained at Duane Arnold was the duration of that ticked down the cooling tower, but building a cooling tower tower is run of the mill I mean, you build them at gas plants, you build them at.
Speaker Change: Nuclear facilities as well so that's pretty conventional construction, so not a whole lot of risk there.
Speaker Change: Got it Okay. That's perfect and then just lastly on just to follow up on Steve's gas question, There 2030 plus <unk>.
Speaker Change: <unk> seems a little far out just given the hyperscale is needs, including just the trends around additionality and speed to market I think supply chain should start to ease in the next couple of years I guess, just directionally this could be pretty sizable.
Speaker Change: Sizable opportunity for Nextera I guess when can this sort of start to become accretive to growth and hit the backlog.
Speaker Change: Yeah, Hey, Thanks Shar for the question So my comments on.
Speaker Change: Oil and gas are.
Speaker Change: When you look at finding a site.
Speaker Change: Getting a permitted getting gas to the facility getting into interconnected and then the equipment limitations of actually getting a turbine slot.
Speaker Change: Getting access to that turbine.
Speaker Change: And then the EPC labor remember, we this is an industry.
Speaker Change: That really hasn't seen any active development or construction and in years and so that's my comment earlier about it.
Speaker Change: Really beginning from a standing start.
Speaker Change: And so all of that puts pressure on cost I mean, we've seen enormous demand as you know from.
Speaker Change: From GE or Novus commentary for gas turbines and it's not only domestic it's international.
Speaker Change: And that's more than double the cost of a gas turbine and EP EPC labor.
Speaker Change: Is in such short supply that the costs. There have triple then I look back to just our last gas fired facility that we built.
Speaker Change: Here in Florida, Dania Beach, if we take the cost we paid for that facility on a dollar per kw basis to today.
Speaker Change: The cost has tripled in price and so those are some of the sensitivity. So it's not only time, but it's money as well and making sure that we can put an economic solution in front of the customer in terms of when it contributes.
Speaker Change: Consistent with that timeframe I mean, I think it's the that 2030 and beyond timeframe and don't get me wrong. There are probably some pockets of the country that would be an exception ERCOT you can build.
Speaker Change: More quickly than you can in other parts of the country. Other parts of the country are just more difficult right because you have to deal with the courts.
Speaker Change: We know from our own experience with what it took to get the MVP pipeline built in the mid Atlantic region. If you think about PJM in particular, it's just not easy to get the gas to those facilities and to get gas infrastructure built this new administration certainly is.
Speaker Change: Undoubtedly going to move.
Speaker Change: Move forward with reforms that will make that easier to achieve but there could be a litigation over over those things as well so as we put all the pieces together.
Speaker Change: Being practical or just being realistic we.
Speaker Change: See it more as a as a later this decade solution.
Speaker Change: Fantastic. Thanks, again, John sound like that's the team I appreciate it.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Our next question comes from Julien Dumoulin Smith from Jefferies. Please go ahead with your question.
Speaker Change: Hey, good morning team. Thank you guys very much I appreciate it hey, so maybe to follow up a little bit on some of the core questions. Here. How do you think about getting into this gas business. I know you talk about development kind of in the 2030, plus any thoughts about strategically entering into it in a proactive way from an acquisition perspective to create some <unk>.
Speaker Change: Nation.
Speaker Change: <unk> right to leverage off of and then related how are you thinking about this explore pivot and having sort of a development sell down partner I E.
Speaker Change: For instance, your comment earlier about a 50 50 development effort with <unk> and their financial services effort. How do you think about the renewable side of that equation in terms of no longer having the same sell down vehicles you did before.
Speaker Change: Thoughts about the monetization sector.
Speaker Change: Yeah, let me take those in pieces, so if I think about.
Speaker Change: The gas business and your question about whether or not we would look to do something through <unk>.
Speaker Change: Acquisition.
Speaker Change: I don't think we need to do that and here's why we don't need to do that Julian is.
Speaker Change: We are a giant development company right that that is our business.
Speaker Change: Or a massive development company, that's been up and running for the better part of a couple of decades, we have all the pieces in place already we have a land team we have a permitting team.
We have gas infrastructure capability to build gas pipeline laterals to build new gas pipelines, we are a transmission business.
Speaker Change: There wouldnt be a whole lot to be gained for us.
Speaker Change: Adding a piece, but through an acquisition.
Speaker Change: <unk>.
Speaker Change: Given that we already have all of those components in place internally, it's an easy pivot for us to move.
Speaker Change: Into gas, so we've already been up and running and that and already have put together a nice pipeline and we will continue to grow that as we as we move forward on the <unk> side.
Speaker Change: I really don't want to answer any questions about ex fuel are on this call given that we have a call scheduled for Tuesday, but I will answer your question about.
Speaker Change: Sell down vehicles and recycling capital generically for.
Nextera energy I think as you can see with our reaffirmation of our capital risk.
Speaker Change: Our recycling plan.
Speaker Change: And our equity plan that we've included in todays call. There are no changes no changes at all and so we feel good about.
Speaker Change: Where we are in terms of our ability to recycle capital and has no impact again on our on our equity needs.
Speaker Change: And we have we have plenty of outlets available to be able to do that whether that would be through <unk> or some other avenue.
Speaker Change: <unk> as we've talked about in the past Julian I'd, just remind you that over the past 18 to 24 months, we've recycled several billion dollars of capital that had nothing to do with with explore so not only.
Speaker Change: We are very comfortable with our expectations, we've been recycling capital now for a good several years through through other avenues.
Yes indeed.
Speaker Change: Indeed, alrighty well best of luck here appreciate it actually sent Julian Thank you.
Speaker Change: Our next question comes from Nick Campanella from Barclays. Please go ahead with your question.
Nick Campanella: Hey, good morning, Thanks for all the updates.
Speaker Change: So hey, just a 2% change to customers for FPL in the upcoming rate case definitely stands out in a positive way.
Speaker Change: Just wanted to see if you had any updated thoughts on how youre thinking about the surplus reserve mechanism and then also just how are you kind of thinking about earned ROE.
Speaker Change: At P&L in 'twenty five.
Speaker Change: Great. Thank you so we are.
Speaker Change: The growth that we saw this last quarter the growth that we saw in the <unk>.
Speaker Change: The year was certainly positive.
Speaker Change: But it's not just this past year, we've been seeing it really since since the pandemic our.
Speaker Change: <unk> going into the next rate case over the next four years is that growth may come down a little bit.
Speaker Change: Over.
Speaker Change: The next four years because of what we saw during the during the pandemic, but we still believe it's going to be fairly strong growth in our in our service territory.
Speaker Change: And that's why our expectations for the $26 29 time period for capital investing in the business would be above the roughly $36 billion that we are going to put in over the four year settlement agreement that ends at the end of 'twenty five so a lot of that detail.
Speaker Change: We will come out here in the next.
Speaker Change: That's probably about six weeks now because we expect to file a rate case at the end of the end of February your question regarding the reserve mechanism, we're sitting at roughly $800 million after using.
Speaker Change: <unk> $400 million or so in 2000.
Speaker Change: 24, so we feel we feel good.
Speaker Change: Certainly not going into 2025.
Speaker Change: Believing that all.
Speaker Change: All of the risks that we use is the surplus.
Speaker Change: Mechanism are behind US we've had to tap debt reserve mechanism.
Speaker Change: For a lot of inflation higher interest rates a lot more growth in our area and therefore, a lot more capex.
Speaker Change: Fences that we expected so.
Speaker Change: With the 11% <unk> ROE at the end of it.
Speaker Change: In 2024, I expect there might be a little bit of upside to that 11 four in 2025, but it's obviously early we want to make sure that we get through.
Speaker Change: This year and in good shape, and we feel really positive about the case that we are going to present to our regulators.
Speaker Change: In February because we've been doing the right things for our customers. So as long as we do that.
Speaker Change: I think we'll be okay.
Speaker Change: Hey, Thanks for all that information and then I'm, sorry, but just a follow up on Fpl's largest youre still including the proportional share of EBITDA and earnings in your own outlook from a need perspective, and I. Just wanted to confirm that you just continue to see that that income stream consistent and preserved kind of regardless of.
Speaker Change: The outcome.
Speaker Change: Just say the accounting is unchanged around.
Speaker Change: Around explore and we'll discuss the outlook for that business on Tuesday.
Speaker Change: Alright, thank you.
Yeah.
And our next question comes from Carly Davenport from Goldman Sachs. Please go ahead with your question.
Carly Davenport: Hey, good morning, Thanks, so much for taking the questions.
Carly Davenport: I just wanted to throw in a couple of follow ups. The first one just on some of the renewables conversation is there anything you can share on how this is or is not impacting the conversations that you're having with customers are they seeing any concern about the ability to build these projects or the economics of them going forward. If you see some change on the policy side.
Carly Davenport: So currently the answer to that question is.
No it hasnt hurt any of our discussions with customers.
Carly Davenport: The only thing customers are concerned about is.
Carly Davenport: Making sure that these these projects.
Carly Davenport: Get built because they need them.
Carly Davenport: They have made decisions already shutdown existing generation, if these projects or for any reason to be delayed.
Carly Davenport: Believe they will be.
Carly Davenport: That would have a significant impact on their ability to provide power.
Carly Davenport: To their own.
Carly Davenport: To their own customer base, I'm talking about utilities and co ops and municipalities who need these electrons right now and then also with our C&I customers.
Carly Davenport: These commercial industrial customers have made investments in manufacturing facilities semiconductor chip facilities.
Their chemical companies.
Carly Davenport: You name it across the board they've invested in infrastructure and our <unk>.
Carly Davenport: Our accounting on the electrons to show up so I think it's actually quite the opposite.
Carly Davenport: Got it and then we've had quite a number of conversations just this week.
With customers across the board that John just mentioned and top of mind to that as time and money. They don't have time to.
Carly Davenport: Get other resources.
Carly Davenport: Available to them in the timeframe that they need.
Carly Davenport: And they know that without these renewable resources storage resources or other things that they have in the queue. It would cost more money and cost more money for their end customers.
Carly Davenport: Top of mind to them to make sure that we meet the demands of the day.
Carly Davenport: We're excited to work with them and all the stakeholders to make sure that happens.
Speaker Change: Great really appreciate that color.
Speaker Change: Then maybe just one on the rate side, it's become a little more topical in our conversations can you just refresh us.
Speaker Change: On the broader interest rate hedge program. It looks like some of the interest rate sensitivities move just a bit relative to prior disclosure. So just can you refresh us on the strategy to manage rate exposure.
Speaker Change: Yeah. So currently we put $32 billion of interest rate swaps in place with an average coupon of around three 9%. So we feel very good about our hedge position and that shows up.
Speaker Change: And what we communicated today. So if you look at our sensitivities for 25 and 26, it's about one to three and EP.
Speaker Change: One to three <unk> on a EPS basis, if you look at 27, 3% to <unk>, So very manageable and we keep a very close eye on interest rate risk exposure around the portfolio, but feel good where we are with the $32 billion of interest rate swaps in place.
Speaker Change: Great. Thanks, so much for the time.
Charlie: Thank you Charlie.
Speaker Change: Our next question comes from Jeremy Today from J P. Morgan. Please go ahead with your question.
Jeremy Today: Hi, good morning.
Charlie: Good morning.
Speaker Change: Just wanted to continue with some of the themes you talked about before but regarding your conversations with hyperscale or at this point just wondering if youre seeing any.
Speaker Change: Changes in the tone or thoughts as far as the renewables clearly still carbon free premiums there, but as far as openness to gas just wondering if there is any change in tone, there or thoughts in your from your customers when you're talking about there what they are looking to achieve.
Speaker Change: Yes.
Speaker Change: For the question, Yeah, I mean, I certainly appreciate it and I think there is.
Speaker Change: A lot of us.
Speaker Change: Discussion about how do we get the resources that we need and the timeframes in which we need it and matching that with some of the other goals that they may have either at.
Speaker Change: Corporate levels or certainly state levels I think top of mind continues to be let John highlighted which is speed to market with the resources that are available today at the lowest cost with higher highest confidence and be able to meet those commitments, including to meet the commitments that those customers.
Speaker Change: So we see demand across the board, where we've seen a lot of increase.
Speaker Change: And demand for natural gas it really is to enable that capacity value.
Speaker Change: Energy still can be met in many places lease cost in terms of resource availability.
Speaker Change: From wind and solar resources, so theres a great pairing there.
Speaker Change: Many of our customers are really interested in.
Speaker Change: So real pragmatic view I think it can't be underestimated how much. This industry has changed in a very short amount of time and really the last 15 to 18 months realizing that demand is significant.
Speaker Change: They are well versed and knowing that it takes three to five years to develop.
Resources.
Speaker Change: And we've talked a lot about demand, but it takes time to build all of this back up so what's available as John highlighted the renewables and storage is top of mind.
Speaker Change: What would be needed longer term are making sure that the capacity resources are there and of course, we and others are very interested in seeing continued diverse supply options available to our customers, including small modular reactors and other technologies that we hope to be more relevant and it bigger scale in the 2030 mid timeframe.
Speaker Change: And beyond.
Speaker Change: Got it that's very helpful. There I didnt know behind the meter gas was.
Speaker Change: <unk> coming up in conversations at all versus prior prior.
Speaker Change: Prior conversations.
Jeremy Today: Jeremy I think there is a novel <unk>.
Speaker Change: Next to that about whether or not that can work.
Jeremy Today: And speed through some of these other issues.
Speaker Change: But you got to think about what does it take.
Speaker Change: Produce reliable energy supply behind the meter without the benefit of our grid and it's significantly more capacity.
Speaker Change: And other things you need to add to it in order to ensure that you have that uninterrupted supply that that these customers are looking for.
Speaker Change: So in Mega scale projects.
Speaker Change: We certainly see the possibility that some of these can be developed.
Speaker Change: And we've had some conversations with customers along those lines.
Speaker Change: Don't know that thats going to be the prevalent way.
Speaker Change: That resources are in that across the country for a variety of different cuts.
Speaker Change: Customer.
Speaker Change: Customer scenarios, there's a huge value to the existing electric grid Ah Theres no place better to see that here in Florida.
Speaker Change: And the low cost power supply solutions that we can offer to our customers.
Speaker Change: There's a place for it I don't think it's the ultimate place, where all demand as Matt.
Speaker Change: That customers need options, they need them now and we're here to provide that broad set of solutions to make that happen.
Speaker Change: Very helpful. Thanks, and if I could just one last quick one on X <unk>. Thanks for your thoughts so far I was just wondering if you could provide.
Incremental thoughts from a need perspective, <unk> perspective, we would expect to hear that on Tuesday, but just as far as need be used <unk> is there any change in the strategic.
Speaker Change: How it fits into new strategic outlook going forward at this point.
Jeremy we're going to have a full conversation around explore on Tuesday, So why don't we plan on having that conversation then.
Speaker Change: Fair enough. Thank you.
Speaker Change: Okay.
Speaker Change: And ladies and gentlemen, with that we're going to end today's question and answer session as well as today's conference call. We do thank you for joining you may now disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: