Q2 2025 NextEra Energy Inc Earnings Call
Good day and welcome to the next error. Energy Inc, second quarter 2025 earnings conference call. All participants will be in a listen-only mode. Should you need assistance? Please signal conference specialist by pressing the star key followed by zero.
Speaker Change: 1 on your touchtone phone and to withdraw your question, please press star then 2, please note. This event is being recorded. I will now like to turn the conference over to Mr. Marcus, Idleman, director of investor relations. Please go ahead sir.
Speaker Change: Thank you, Chuck. Good morning, everyone and thank you for joining our second quarter 2025 Financial results conference call for next era energy.
John Ketchum: With me this morning are John Ketchum, chairman president and chief executive officer of next year energy Mike Don Executive Vice President and Chief Financial Officer of next are energy.
John Ketchum: Armando Pentel, president and chief executive officer of Florida, Power, and Light Company.
Speaker Change: Brian bolster president and chief executive officer of next are energy resources and Mark Hixson Executive Vice President of next are energy.
John Ketchum: John will start with opening remarks and then Mike will provide an overview of our second quarter results. Our executive team will then be available to answer your questions.
John Ketchum: We will be making 4 looking statements. During this call based on car, expectations and assumptions, which are subject to risks and uncertainties actual results could differ materially from our forward-looking statements. If any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release, and the comments made during this conference call, and the risk factor section of the company presentation or in our latest reports and filings with the Securities and Exchange Commission, Each of, which can be found in our website www.nextera.com. We
John Ketchum: Do not undertake any duty to update any forward-looking statements.
Speaker Change: Today's presentation also includes references to non-gaap financial measures. You should refer to the information contained in the slides, accompanying today's presentation for definitional information, and 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.
Speaker Change: Next era, energy delivered, strong second quarter results with adjusted earnings per share, increasing 9.4% year-over-year. In addition, through the first 6 months of the year are adjusted earnings per share has increased 9.1% year-over-year.
Speaker Change: That continued strong financial and operational performance, at both FPL and energy resources, positions our company. Well, to meet its overall objectives for the year.
America continues to be at a unique moment and our industry remains front and center.
Speaker Change: After Decades of stagnant electricity demand. We're now seeing growth across sectors of the US economy.
Speaker Change: Artificial intelligence and reshoring of manufacturing, grab most of the headlines. And for good reason,
Speaker Change: But that doesn't tell the full story demand for more electricity. Is also coming from all sectors, including residential commercial, industrial and oil and gas to name a few
Speaker Change: A new study from ICF released this month described demand growth as both sudden and sharp.
The report says demand growth over. The next decade is expected to exceed the last 3 decades combined. Just the latest data point. Putting into perspective, how unique this moment, truly is
Speaker Change: bottom line, America needs more electricity, not less. Importantly America needs it. Now, not just in the future. We are firmly aligned with the administration's goal to unleash American Energy dominance and to do so,
Speaker Change: We need all of the electrons we can get on the grid.
Speaker Change: There's truly no time to wait.
Speaker Change: We see this every day from our customers who aren't just saying they need power, they're signing contracts with us to build energy infrastructure because we can do it quickly.
Speaker Change: And at a low cost.
Speaker Change: Again, the need for more electricity is real.
Speaker Change: We must do more than just plan for what's on our doorstep. We must act
Speaker Change: As I've said, many times.
Speaker Change: We're going to need all forms of energy to meet this moment.
Speaker Change: New gas and nuclear are on the way and will be critical to meeting demand over the long term.
Speaker Change: Renewables and storage can bridge the gap and will play an important role in an all of the above future.
Speaker Change: Storage in particular is a game changer, it's low cost, all forms of energy can charge it.
Speaker Change: And the Greg can rely on it for capacity.
Speaker Change: Storage is also flexible and can utilize excess transmission capacity.
Quickly be deployed to where customers need it. Most
Speaker Change: importantly, Renewables and storage are ready now and can provide much needed electricity and capacity. But in order to achieve our objectives, we will need to continue to navigate a challenging Regulatory and policy environment. The 1 big beautiful Act was tough but constructive
Providing for a phase out of wind and solar tax credits over time together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders agency rulemaking is tariffs and trade actions.
Speaker Change: While there are to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment, as we expect a natural pull forward of demand.
We are in a constant state of construction.
and over the last few years, prior to the enactment of the obv
Made sign substantial Financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects. We plan to place into service through 2029.
Speaker Change: We have a large pipeline of early and late stage projects. We have a supply chain capability that I believe is the best in the sector and we are leveraging artificial intelligence across our business including in customer origination.
Speaker Change: We have the balance sheet.
Speaker Change: Scale experience and Technology while no company is immune from all risk we've proven time. And again what I firmly believe that there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead than next era.
Speaker Change: as the quintessential, all the above Energy company, we believe more energy infrastructure than anyone, we
Speaker Change: We build more energy infrastructure than anyone in the United States from Renewables and storage to gas and nuclear. We do it all and we will continue to build what customers need including the critical in the critical transmission to bring, power from Plants to communities.
Speaker Change: at FPL, we are going to continue to do what we have done so well for customers over the past 2 decades,
Speaker Change: Florida's longstanding constructive Regulatory and legislative environment and enables infrastructure investment to serve Florida's growing population.
Speaker Change: In fact, just last week, the Florida Supreme, Court concluded, that state Regulators properly approved. Our 2021 settlement agreement by a firming, the Florida Public Service commission's, final and supplemental final orders.
Speaker Change: FPL continues to invest in infrastructure to keep reliability high in bills low and we continue to operate and invest in the nation's largest gas fired Fleet along with 4 nuclear units in Florida, which provides us the flexibility to leverage. Cost-effective solar and storage to meet the significant demand from our state's growing population.
Speaker Change: FPL is doubling down on what we've proven benefits. Our customers investing in generation to meet growing electricity demand. While driving fuel costs, out of the bill, FPL plans to add more than 8 gigabytes of reliable cost-effective solar and battery storage by 2029.
Speaker Change: It's the perfect compliment to our existing natural gas and nuclear Fleet in Florida together.
Speaker Change: It's how we serve our customers with a diversified Energy. Mix this, not only further Secours, Florida's energy Independence.
It also improves system reliability and resource adequacy by delivering energy when customers need it. Most FPL continues to be America's blueprint for utilizing, all forms of energy to keep reliability high and electric bills low.
outside of Florida energy, resources continues to be the nation's leading energy, infrastructure developer,
Speaker Change: The team originated 3.2 gigawatts of new projects.
Speaker Change: Since the last earnings call, including over 1, gigawatt serving, hyperscalers, to help enable their Ai buildout and further Drive America's leadership in the space.
Speaker Change: Log alone. Now includes approximately 6, gigawatts of projects intended to serve, technology, and data data center customers. If you include our operating portfolio together with the expected buildout of our backlog, we will have over 10 and a half, gigawatts serving technology and data center customers across the United States.
Speaker Change: We continue to make progress toward the potential restart of our Dwayne Arnold nuclear facility while also working to advance new gas, fire generation opportunities and we continue to build what's essentially a standalone rate regulated utility within energy resources through next era, energy transmission
Speaker Change: With our scale experience and Technology including our supply chain capability and balance sheet.
Speaker Change: We are positioned to meet the opportunity set increase power demand will provide I firmly believe no 1 has a better team a better culture or a better track record of execution. The next era energy with that, I'll turn the call over to Mike to walk. You through detailed results from the quarter.
Mike: Thank you, John. And good morning everyone.
For the second quarter of 2025 fpl's earnings per share, increase by 2 cents year over year.
Mike: The principal driver of this performance was fpos regulatory Capital employee growth of nearly 8% year-over-year.
Mike: Is capital expenditures for approximately 2 billion, for the quarter and we expect fpl's full year Capital Investments to be between 8 and 8.8 billion.
Mike: For the 12 months ending. June 2025 FPL is reported return on equity for regulatory purposes will be approximately 11.6%.
Mike: During the second quarter, we utilize approximately 19 million of Reserve ammunition.
Mike: Leaving FPL with a balance of roughly 2 5 4.
Mike: Fpl's second quarter retail sales increased 1.7% from the prior year comparable period.
Mike: Driven primarily by continued. Strong customer growth.
Mike: Overall usage per customer grew by 0.1% year-over-year.
Mike: Which includes a decline of 0.8% due to milder weather.
Mike: As a result FPL grew retail sales in the second quarter are roughly 2.6% on a weather, normalized basis.
Mike: February 28th, we initiated Florida Power and lights 2025 base rate proceeding.
Mike: The 4 year base rate plan, we have proposed has been designed to support continued investments in cost-effective generation.
Mike: Long-term infrastructure and advanced technology.
Mike: Which improves reliability and helps. Keep customer bills low.
Mike: Today FPL is typical residential Bill remains well, below the national average and amongst the lowest of the top 20 investor-owned Utilities in the nation.
With the proposed base rate, adjustments, and current projections for few on other costs.
Mike: Fpl's typical residential bill is expected to be approximately 20% below the projected national average.
A technical hearing. The Florida Public Service Commission is scheduled next month.
Mike: We expect a final decision in the fourth quarter.
Mike: If State Regulators approve, our plan, a typical FPL residential bill will grow in an annual average rate of just 2.5%
from 2025.
Mike: Through 2029.
Mike: Now, let's turn to energy resources, which reported an adjusted earnings per share, increase of 11 cents year over year.
Mike: As you recall the prior comparable quarter reflected higher than expected and 1-time expenses.
Mike: Contributions from new Investments increase 14 cents per share year-over-year.
Mike: By continued growth in our renewable and storage portfolios.
Mike: Our existing clean energy portfolio, decreased 2 cents per share.
Mike: Primarily reflecting weaker wind resource during the quarter.
Mike: When resource for the second quarter of 2025 was approximately 97% of the long-term average.
Our customer supply business increased 6 cents per share compared to the second quarter last year.
Mike: Which was impacted by higher, depletion expense, and certain non-recurring items.
Mike: All other impacts decrease by 7 cents per share.
Mike: Driven by higher interest. Costs of 6 cents per share.
Mike: Energy resources had a strong quarter of newer Renewables and storage origination adding 3.2 gigawatts to the backlog.
With these additions, our backlog now total is nearly 30 gigawatts.
Mike: After taking into account, more than 1.1, gigawatts of new projects, placed into service since our last earnings call.
Mike: we expect the backlog additions will go into service over the next few years and into 2029
Mike: This marks the 6th time in the past, 8 quarters that energy resources has added more than 3 gigawatts to its backlog.
Mike: We have now originated approximately 12.7 gigawatts of new Renewables in battery storage projects over the last 12 months.
Mike: Roughly 30% of our current backlog. Comes from Storage which demonstrates our customers demand for a low-cost ready. Now solution to meet their capacity needs,
Turning now to our second quarter, 2025 Consolidated results.
Mike: Adjusted earnings from corporate and other decreased by 4 cents per share.
Mike: Our long-term Financial expectations remain unchanged.
Mike: We will be disappointed. If we are not able to deliver Financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025,
Mike: 2026 and 2027.
Mike: From 2023 to 2027, we continue to expect that our average annual growth in operating. Cash flow will be at or above or adjusted earnings per share, compound, annual growth, rate range,
Mike: And we also continue to expect to grow our dividends per share at roughly 10% per year.
Mike: Through at least 2026.
Mike: Offer 2024 Bass.
As always our expectations assume our caveats.
Mike: That concludes our prepared remarks. And with that, we will open the line for questions.
Mike: We will now begin the question and answer session.
Mike: To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker-phone, please pick up your handset before pressing the keys.
Mike: If at any time your question has been addressed and you would like to withdraw your question please press star then 2 and at this time we'll pause momentarily to assemble our roster.
Speaker Change: In the first question will come from Steve fleshman with wolf research. Please go ahead.
Steve Fleshman: Yeah, hi, good morning, thanks. Um, so I, I guess for, uh, just on the, uh, obb. And then also the Trump executive orders, could you maybe talk to
Steve Fleshman: uh, I guess the Safe Harbor uh, because start of construction issue and how much
Steve Fleshman: obb is effectively maybe codified that uh and what can really the administration changed at this point and then also just how to think about some of the recent
Steve Fleshman: permitting. Uh,
Steve Fleshman: Uh, kind of updates that came out and just your exposure to Federal lands in your, uh, backlog. Thanks,
Yeah, thank you Steve for your question. This is John. So let me just start with um,
Your question around the, uh, tax, Provisions, uh, the Safe Harbor. Uh, you know, in particular, I think, as most folks know by now,
Steve Fleshman: Uh the way the obba was drafted. It it basically provides that wind and solar facilities have to be placed in service by
Steve Fleshman: December 3127. However there's a there is a very important exception in that that says that um you know projects that begin Construction.
Steve Fleshman: Before July 4th 2026 are not subject to that placed in service requirements. So uh, the issue is, uh, you know, what what is meant by begin construction and
Steve Fleshman: Has been around for, you know, well over a decade it has a settled you know, meeting meaning within the industry. Uh that meaning is informed by long-standing Treasury Department.
Steve Fleshman: Uh, guidance, it's been, you know, relied upon uh not only by next era, but the you know, the solar and wind industry.
Uh uh, for years. So I start with the fact that as a plain meaning, uh, it's, it's also a term that's defined, uh, you know, in the obba in the in the fiak provisions in that definition is
Steve Fleshman: consistent with, um,
Steve Fleshman: you know, the settled meeting and the longstanding treasury guidance, that I just spoke about.
Steve Fleshman: And importantly the term you know beginning construction has certain safe harbors for what actually constitutes starting construction. And it also has a 4-year continuity of service so far. We're so when I look at you know the steps that we've been taking and Reliance on the settlement meeting in the long-standing guidelines uh around the term beginning construction, we've made significant financial commitments over the last
Steve Fleshman: few years, uh, you know, including in the first half of 2025 to begin Construction
Under these rules, uh, that were in effect at the time, those commitments were made and doing. So, we believe that we've begun construction, on a sufficient number of projects to cover our development expectations through.
Steve Fleshman: Uh, 2029 and of course, you know, like, while we can't provide any guarantees, this is our interpretation. And this is our belief as to what the statute provides based on our experience in this industry over the last couple of decades.
Steve Fleshman: Just on the sighting permitting. Uh, yeah, yeah. And on the permitting, uh, you know, on federal lands, you know, first of all, I'll say, uh, you know, there was an EO and I think a response made by the department of interior, you know, a couple of months ago, just
Steve Fleshman: You know, articulating that, you know, solar and wind projects, uh, would not be prioritized. The executive order itself, that came out on, July 7th directed, the department of interior to come up with new procedures on, you know, on how it would handle wind and solar, uh permitting to not favour them and so they instituted an additional layer that would require secretary or the deputy deputy secretary.
Steve Fleshman: Secretary, uh, review. It's new. Um, obviously we're working with the Department of interior. Let's just see how it actually, um, you know, is applied, uh, you know, in practice. But again, I think this letter is being responsive to
Steve Fleshman: The eeo, uh, you know, when I look at it and I look at, um, our backlog, most of our backlog already, you know, has secured, uh, Federal Federal permits. But let's, let's also just see how how this gets applied. And, uh, you know, I, I, I continue to feel, you know, comfortable, uh, with where we stand in terms of being able to to navigate the, the federal permitting issue.
Speaker Change: 1 1, other question? Uh, just you mentioned, uh, natural pull forward and maybe is, could you give any
Speaker Change: Sense on. Just have you started seeing signs from what have been the reaction of customers from the bill. Have you started seeing any
Speaker Change: Kind of sense of natural pull forward and just your market share.
Speaker Change: Expectations and thoughts.
Speaker Change: Given all the different things that have occurred.
Speaker Change: Compete against a lot of really small developers who don't have the balance sheet, the construction financing to do things, um, around Safe Harbor. And so I, you know, you could also look and and say, based on that, we would expect the pull forward naturally in the 28, uh, and 29. You know, as well, where there might be less competition from folks that have Not Safe Harbor, that could create bigger opportunities for folks. Like next era that are in a Perpetual state of construction and are, are safe harboring all the time based on the rules that were that were in, in effect that could create, uh, you know, potentially, you know, bigger opportunities for us, uh, you know, in those years
Speaker Change: Great. Thank you.
Steve Fleshman: Thank you, Steve.
Steve Fleshman: The next question will come from Julian Smith with Jeffrey's please. Go ahead. Hey, good morning team. Thank you guys very much for the time. I appreciate it. Maybe to follow up on, on Steve's. Um, questions earlier, I mean, just just to crystallize our understanding under the existing 0, triple D, that was passed here. How do you think about your EPS growth and sort of the, the waterfall if you will of of credits and especially given the Dynamics? You talk about whether it's the pull forward or otherwise having an opportunity to step in and and um enable other projects that that you might not necessarily have envisioned today. How do you think about the ability to sustain your growth?
Steve Fleshman: Through the decade in as much as now you have visibility that's been effectively crystallized under this. This this legislation obviously barring changes with the EO.
Steve Fleshman: Or not ready to go there. Given this backdrop.
Steve Fleshman: Yeah, I mean you know first I'll start with that last piece. Right? Which is, you know, as I said in the prepared remarks, I think um,
you know, the the 1, big beautiful, you know, Bill lack, what, you know, while tough was constructive, I think it does create, um, some opportunities, you know, for us going forward for some of the reasons that I laid out, uh, you know, with with Steve on, on the eps,
Steve Fleshman: uh, you know, growth point, uh, you know, a hold off on that until our our, you know, next analyst day which you know will will hold, you know, sometime uh later this year, beginning at the beginning of next year. Uh, but as I think about the waterfall opportunity in that pull forward, you know that again Julian, you know that you were hitting on
Steve Fleshman: Um, you know, again, you know, the the uncertainty that um, could be created with the 27, placed in service and then you come down to who Safe Harbor for 28 and 29 uh you know, obviously that favors.
Steve Fleshman: Large developers, like next era that planned ahead, right? And if you're in a market, where you have folks drop out, right, because they didn't plan ahead, they don't have the ability to get construction financing, you know, the ability to save Harbor and obviously, you know, creates bigger opportunities for us, um, in these natural, uh, pull forward points. And I'm going to come back to, you know, a point that I think some important for, uh, you know, to make and for investors to understand. I think, if you look at our track record uh, over time, not just the last 3 years, but you know, going back over time. Um, whenever there's a little bit of, uh, uncertainty, a little bit of risk, a little bit of complexity.
Steve Fleshman: That typically favors our business, right? Because, you know, I firmly believe that, you know, we have the capability, um, to navigate and to, um,
Steve Fleshman: Plan the business, you know, in a way that, you know, helps mitigate, you know, these risks going forward and look, I mean, no companies immune from everything, um, uh, but you know, I think we, we do. Um, uh, if you look at the track record, uh, have demonstrated inability to um,
You know, really, uh, you know, figure out how to mitigate these exposures, you know, go forward bases. And the last piece I'll make is
Steve Fleshman: You know, don't forget if we do see some small Developers.
Steve Fleshman: Uh, given some of the backdrop of, some of the uh, challenges that we're, we're addressing, uh, in the industry that I think we're we're best equipped to, uh, address.
Speaker Change: excellent and thanks John just quick follow up if I can um
Smaller detail here, but not trivial at all. Um, how is progress going on the nuclear Contracting front? I mean, is is certainly the theme of the day. You guys have 2 different bites of the Apple potentially. It seems Dwayne progress of just from an engineering perspective, just to kind of get a little bit of a sense on on where that could land and and when and then separately here Point Beach obviously spoken for but it seems like there could be some opportunity there. I mean 2 different bites of the Apple seem to be coming right here in in the medium term.
Speaker Change: Yeah, no thanks for asking the question. Julian. You know, Dwayne Arnold just continues to advance, I mean, I think anytime you have a, uh,
a, you know, there's only 3 of them in the country, right? Um, you know, between Palisades and uh,
Speaker Change: The crane facility, uh, in Dwayne. I mean, these are unique opportunities because you don't face the the new bill costs associated with with nuclear and so these are really, you know, unicorn type opportunities. And so that we continue to advance Dwayne. I'm very pleased with the way things are going on. The
The on-site reviews and some of the engineering analysis that we've done. But more importantly, you know, we continue to, um, Advanced discussions with customers. So, you know, feel good, you know, where we sit down about, you know, how things are, are progressing on the Dwayne front.
Speaker Change: And, uh, you know, look with with Point Beach. It's not only the Point Beach facility but also, you know, the opportunity to do some things around. Smrs, we have the same opportunity set, you know, at Dwayne, um, you know, if we're successful in bringing Dwayne Ford that obviously creates a hot bed of data center activity, you know, around that facility, the same as what you've seen in Wisconsin with Clover League Leafs and
Speaker Change: And and the fox, um, you know, facility that, you know, micro micro Microsoft is behind as well. And so I like the potential, you know, longer term um options there, in addition to just the the recommissioning efforts that we potentially have at.
Speaker Change: at at Dwayne and look, we have a, I don't want to lose sight of the fact that not only do we have an active, uh, gas fired generation development effort at our company, you know, we are also, you know,
Speaker Change: Very active in the development of.
Speaker Change: Uh, small module reactors in the potential that nuclear, you know, could provide uh going forward. And again that goes back to my comments of being uh in all of the above uh Energy company. Our goal is to provide the customer with what it wants when it needs it at the right price to help address the power demand.
Speaker Change: Uh, you know that we that we see in this country and, you know, look no further than the pjm cat capacity option yesterday. I mean, there's a lot of demand out there. And there are very few companies that have the development.
Speaker Change: Capability that we do a lot of companies that have an existing asset position. Very few companies.
Speaker Change: Can develop new generation assets or have the skill sets with, you know, on their teams to do it and uh, that gives us a unique advantage in this market.
Speaker Change: Awesome. Thank you all the best I speak soon.
Hey, thanks, Julie.
Speaker Change: See you. Next question will come from Nick Campanella with barklay, please. Go ahead.
Nick Campanella: Hey, good morning, thanks for all the updates.
Um hey I just wanted to uh ask maybe just for an update on FPL. You know we've seen some testimonies in the rate case at this point you kind of pointed to the fact that hearings will kick off in mid August. Um just you know, is a settlement still on the table in any way, or are you expecting this to go, right to hearings if you can comment at all? Thanks.
Speaker Change: Well, that's a great question. Um, we always prepare like we are going to hearings because we want to be as as prepared as uh as possible and they're uh they're about 3 weeks away at this point. It doesn't mean that there is uh not the opportunity for discussions uh that would lead to uh to a settlement. I think the
Speaker Change: Last uh, 3 rate cases. So I'm still confident that uh, that we have a great rate case to present to the Public Service Commission in the uh, in the middle of August, that has been my focus.
Speaker Change: Uh, really for the last 6 months. Uh, if there is the opportunity of the opportunity pops up, I am going to absolutely make myself available to make sure that uh, we can put our best foot forward for our customers, um, in a settlement
Speaker Change: Makes a lot of sense, appreciate that. Um, and I just wanted to take 1 of Julian's questions, a step further, just um, on the on the financing side and kind of thinking about the comments about the Safe Harbor visibility through 2029. Um, you know, as I understand the current plan, uh, 24 through 27, you know, roughly about half of the funding is tax equity and project finance. And I'm just wondering, you know, because you have these comments, this commentary around, Safe Harbor visibility through 29. Is that kind of the same mix that we should be expecting and financing the business through the late decade. Are there other sources of financing that you're thinking about leaning on? And I guess maybe you can kind of talk about what's been contemplated at this point.
Speaker Change: Sure. Um so as we look at where we sit today and as we look at what our renewable build looks like it is a lot more of what we've done over the course of the last 20 years.
Speaker Change: And that has been building good projects.
Speaker Change: That are very attractive to our tax act. We providers that are very attractive to our project Finance providers and those parties looking at the quality of those projects and providing the financing for them.
Speaker Change: As we look today, and the result of the last 2 years, we have increased, our tax Equity providers by. You know 50%, just last week, I was talking to 1 of our long-term tax Equity providers who was asking and mentioned. They wanted to increase their exposure to us. So we feel very good about where we sit in terms of accessing, both the tax equity and the project financing market. And as a, you know, attractive low-cost way for us to finance our uh, our renewable and storage facilities.
All right. Thank you.
Speaker Change: The next question will come from Anthony Crowell with meizuo. Please go ahead.
Anthony Crowell: Hey, hey, good morning, Keem. I just have 1 quick 1. Uh, you talked about maybe the company's gas strategy going forward. You talked about it on the development day, just curious. You've seen some recent sales in the country at, you know, already in service gas assets at attractive multiples. Just is that an Avenue of the company would pursue or more of with the gev partnership in building, you know, new build guests.
Anthony Crowell: Sure, it's Brian on the on the gas strategy front. Listen. We're going to look at
Anthony Crowell: Uh, new build will look, look at opportunities in the market. I think what what we need to do, if we're going to look at the market is obviously the value has to make sense. I think we have to feel very good that we're going to be able to do something with that on the Contracting front, in the near term. So I don't think we want to just go spec long Merchant generation so but we are, you know, we're turning over kind of every rock. As we look at that. Everything from are their assets that are going to be interesting to fit nicely that we think we can offer back to the market and we're going to look at Greenfield opportunities. So, you know, we're we're pursuing it on all fronts.
Speaker Change: Great. And just a quick Clarity did did John John, say earlier that
Speaker Change: Maybe an analyst a uh end of the calendar year or beginning of next calendar. And I apologize if I did not hear that correctly.
Speaker Change: That's what I said.
Speaker Change: Great, thank you so much.
Speaker Change: The next question, will come from Andrew weisel with Scotia Bank. Please go ahead.
Andrew Weisel: Hey, good morning everybody.
Andrew Weisel: First question, I want to follow up a little bit on the big beautiful Bill. How are you thinking about the foreign entities of concern? The Fiat Clause, are you confident that you won't face exposure to that giving your Safe Harbor equipment position?
Andrew Weisel: Feel very confident about the Fiat Provisions. Uh, again the way they work are
Andrew Weisel: Uh, as long as you've begun construction by December 31st 2025, you're not subject.
Andrew Weisel: Uh, with those provisions.
Speaker Change: Great. Thanks for clarifying. Next, on Dwayne Arnold. I know there's a lot of ifs and nothing has been decided yet, but if you were to move forward with a potential restart, would I be correct in thinking? The timing might be such that the earnings contribution would maybe mitigate, or offset the loss of renewable tax credits to their phased out. Could that be a way to smooth out the earnings and offset a potential cliff in 5 years or so? I know that's far off, but people are already thinking about it today.
Speaker Change: yeah, I mean, that's, you know, obviously, pretty far off, but sure, I mean that, you know, that is a, you know, you you add Dwayne Arnold to the mix and, uh,
Speaker Change: You know, that's that's 1 of uh, you know, many ways that, you know, we have to continue to grow the business uh, in the future.
Yeah, I just the only thing I I comment because this is a second question, its kind of got at this concept of a cliff and I just want to remind remind everyone that the tax laws may be changing the demand picture that we've been talking about. Now, going on 4 or 5 quarters is not the, the customer dialogue, whether it's in 2728 29 or 30 is as robust as it's ever been. And so, you know, while the the framework may be changing for for some of these projects that the overall demand picture is is very important to to remember, you know our job at energy resources is to build energy infrastructure for our customers. Uh there is an outrageous amount of Need for energy infrastructure in this country that's going to go. Well, past the end of this decade,
Speaker Change: And so we feel well positioned Dwayne would be an example of 1 of the things that we'll we'll be looking at. So, you know, Dwayne is another example of 1 of the things that we can bring to bear. Uh storage is another element of something that we're seeing a lot of focus on. So you know I I just you know I think there's this view that the 1 big beautiful, bill is creating a Sunset and a cliff. And I I think the answer is it's just changing the rule set and and we'll continue to build the energy infrastructure that this country needs.
Speaker Change: Agrees and thank you for clarifying and framing. That up 1, last 1 1 other point, I want to add on to that too. Is you know, don't forget about storage too, right?
Speaker Change: I mean storage is a massive opportunity. You know, for this for this company and for this country given the capacity uh that it provides. So don't lose sight of
Speaker Change: Of storage and additional all the other opportunities that we have around the demand picture, the ability to build gas, the ability to build nuclear, the contributions from Dwayne. Um there's a lot that goes into that.
Speaker Change: Thank you very much, just 1 last brief 1 on the quarter at FPL, the earnings growth was pretty modest. Only like less than 3 and a half percent, despite the capital employed growing at your typical 8ish percent. Can you just talk to the Delta there? What was weighing on the earnings growth? And how are you thinking about the rest of this year? The utility
Speaker Change: So, if you look at the, the 2 signs that offset the, uh, the 4 cents of regulatory Capital Growth, there's a variety of factors that can move that across recall that in 2024, the return on Equity was at 11.8%. And, you know, for this year, it was at 11.6%. So that is 1 factor and there's other puts and takes that can, you know, uh, drive that that 2 cent differential.
Speaker Change: However, as we look on the go forward basis, I wouldn't expect that to uh that differential to to continue throughout the rest of the year.
Speaker Change: Great, thank you so much.
Speaker Change: The next question will come from Jeremy tonette with JP Morgan. Please go ahead.
Jeremy Tonette: Hi, good morning.
Speaker Change: Good morning.
Speaker Change: Um, not to belabor the point here with, uh, the Outlook post. Op. Oh, 1 beautiful Bill. Uh, and I guess, you know, tax credits transitioning towards the end of the decade here.
Speaker Change: But just wondering if you could talk a bit more about the Dynamics in the power markets, at that point in time, particularly renewable PPA pricing and just see how you think that, you know, shifts at that point. Um, and have that, you know, in any impacts on margins, for participants across the value chain and maybe what sets, uh, knee apart from others.
Speaker Change: Yeah, I mean, you know, first of all um you know, we've got a a large pricing, you know, advantage and, you know, 2 advantages on neutral on uh, on Renewables, you know. First of all, they're very fast to build, right? I mean, you can get a renewable project, you know, up and built 12 to 18 months, don't forget about our early and late stage, um, inventory of projects that's very important to keep in mind.
Speaker Change: Um, we have a lot of pricing power, right? You know, in the market and we have a significant you know, cost advantage over other resources that will show up later. You know, and we we need more capacity from nuclear and gas. That's just given the development pipeline being
Speaker Change: Pipeline, you know, timeline being, you know, a little bit longer than what you see on on on Renewables. That's why, you know, you've seen so much demand for Renewables, uh, you know today and so, uh, you know,
And then don't forget too, we have a lot of renewable projects that, you know, continue to roll off of contract, right. And not a whole lot of attention gets paid to that, but when we're out in the market and able to recontract, you know, power purchase agreements that were entered into
Speaker Change: You know, a you know, a decade or more ago. Um, into this new higher price priced, you know, power Market. Uh there's a lot of embedded value in the existing uh portfolio. And then you start thinking about layering in, not only on top of a Renewables, the ability uh you know to continue to develop around gas fire generation and then nuclear you know as it comes along uh and our transmission business, right? Where we uh you know, made some comments today about how we're basically building a rate regulated utility inside of of next Arrow. We've had an enormous amount of
Speaker Change: Success around the competitive transmission business. So a lot of a lot of um, things to feel very good about as we look to the Future.
Speaker Change: Got it. That's, uh, that's helpful there. And then just want to, uh, continue I guess with, uh, the pjm capacity auction results. Uh, yesterday, um, how do you think about the current price backdrop? Now, as enough to, um, incent generators at this point, how do you think about next terra's opportunity set with with gas bills, at that point? Given that data point?
Speaker Change: yeah I mean I think that data point you know suggests that you know first of all you look at where new bill gas prices are you know, in order to build to make the economic and I think you see the pjm
Speaker Change: capacity Market, you know, reacting to that because don't forget, right? And and this is why I keep emphasizing development skills and capabilities and and the ability to add new infrastructure to the system.
Speaker Change: Existing assets are already there to accommodate the demand that exists today, right? And so what you're trying to do with a capacity Market is and sent generation that does not exist today. Somebody's got to go out and develop and build that no matter what you do with the existing generation today, it's got to be if that's going to be used to serve, uh, new demand. That generation has to be replaced by something.
Speaker Change: Whether it's Renewables, whether it's storage, whether it's gas, fire generation, uh, whether it's new nuclear. And so, what I would be focused on as well is uh the you know who has the development skills and capabilities and who doesn't, because we are going to have to build new generation, there's only so much you can do around existing assets. Uh, they already exist today to accommodate the power that exists demand that exists today, you know, when you look to the Future, you've got to, you've got to start adding incremental generation, we are uniquely uh advantaged and have a unique capability set in that regard because we're 1 of the very few companies in this country that have been building
Speaker Change: for the last 2 decades and we have a, you know, a development, you know, team that is up and running and 49 states across this country. So I'd put our development team up against anyone. We need new uh, incremental generation, the existing stuff. Um is, is it going to get us there?
Speaker Change: Got it. That's helpful and just 1 last Quick 1. If I could you touch on smrs briefly before just wondering any updated thoughts in terms of your uh, assessment of smrs at this point in in timing for when this resource could be uh widely deployed, we've been Advanced, you know, we've been uh you know, like I said we have a whole development team on smrs. Uh, we've been
Advising corporate clients. So I think our knowledge curve is is probably higher than most in the market today as a result of that.
Speaker Change: Competing generation types. And you know, and then cost sharing particularly on the first few out of the gate, how we, how we will continue to work with this new Administration around supporting nuclear. So, um, it's something that is, um, a point of emphasis and focus for us and, um, you know, look to us, look for us to continue to, uh, Advanced those efforts, uh, you know, in that regard on top of what we're doing on gas for Generation, uh, development and all the opportunities that we have around Renewables uh, in storage and uh, storage being, you know, truly a, you know, terrific capacity resource for a long.
Time to come given how quick it could be deployed and uh, given that, you know, it doesn't need a, you know, a gas connection to make it to make it work.
Speaker Change: Got it. I'll leave it there. Thank you.
Speaker Change: The next question will come from David araro with Morgan Stanley. Please go ahead.
David araro: Hey, thanks so much. Good morning.
David araro: Um, I was thinking I was I was wondering as you um, book out. Well, I'm curious if you're booking 2029 volumes at this point and if you are, do you have, you know, contingencies that you're uh incorporating into contracts for any potential tax credit risk? That might arise just depending on the Safe Harbor, uh, provisions and the clarity from Treasury.
David araro: Yeah. So first of all, we feel we feel good about, you know, our 29, uh, you know, build and all of our contracts. We have, um,
David araro: Some some limited protections around tax and and and trade measures, you know, as well as we've talked about on some of our, our prior calls. But uh you know, we feel we feel
Very good about where we stand around our 29 program.
Speaker Change: Okay great. And um I guess looking at even farther, I'm just curious if you're, you know, getting having any discussions on 2030 kind of a no tax credit. Um you know uh the conversations around pricing. What is demand look like just any early indications or feedback from your customer base. Um if they're looking out that far and any feedback you're getting on what the uh reduction in tax credits on the on the renewable side could be? Yeah, I think it's still a little too early on 2030. I mean, most of the focus from our customer base is, you know, 29 and then uh, just given their need for power and electrons right now. Uh, that's where the demand is. And, you know, like, you know, you can see that just in our
Speaker Change: Originations, you know this quarter about, you know, 3.2 uh you know gigawatts so you know I think we'll naturally see.
Speaker Change: uh you know 2030 start to become more of a point of focus probably as we move forward over the next
You know, 12 to 24, uh, months. But right now it's been a lot of attention paid around, you know, 27. But 28 and 29 in particular, in terms of the need for New Generation.
Speaker Change: Got it. Okay, appreciate it. Thanks so much.
Speaker Change: The next question will come from Carly Davenport, with Goldman Sachs. Please go ahead.
Hey good morning. Thanks so much for taking the questions. Um, maybe just on the origination this quarter. You highlighted 1 gigawatt of backlog ads, tied to the hyperscalers. Are you able to share any detail on those particular additions in terms of resource mix timing or, or geography just to get a sense of what's resonating with that customer base?
Hey Carly, it's Brian. So without going into into details with regard to the specific customers or the timing. I mean it it is you literally kind of need to go but customer by customer region by region. They they all have different needs depending on how they're looking at their
Speaker Change: That their, their demand, when they're when they're trying to bring that on there. There is a lot of focus on the next couple years and and then there. There's but there's also folks who are looking to, to build out at the end. So I, I hate to say it, but it's kind of a mixed bag of of, really depends by the customer and and where they are and and I guess that's why we're, we're able to spend and do well with them because we can meet the customers kind of with their need. We've got a a broad Pipeline and portfolio that allows us to to to give them, you know, a little bit of every flavor that they're interested in. So, you know, it is, it is a um, there's no kind of common theme other than engaging in a dialogue and on a national basis over multiple years
Speaker Change: Thank you for that. And then, just back to the comments earlier on the natural pull forward in demand, I guess. So, they're practical limitations to the degree to, which you could accelerate development plans, um, whether labor supply chain or connection, uh, that could be pain points on, on the kind of ability to get projects online by that 29 2030 time frame.
Speaker Change: I think, uh, all those things you just listed are actually competitive advantages and why we would do really well in a pull forward Market. Because
we have each of the things that you listed, whether it's
Speaker Change: Sites.
Interconnects.
you know, East, you know, engineering construction, supply chain, balance sheet, all of those things are, um,
Speaker Change: you know, massive competitive advantages, you know, for us for the, you know, compared to the rest of the industry. And, you know, I think create substantial, you know, you know, opportunities for us in a pulse, pull forward scenario.
Speaker Change: Great, thank you for the color.
The next question will come from Ryan LaVine with City. Please go ahead.
Speaker Change: Good morning and thanks for taking my question. 2 questions on the gas generation front. What regions of the United States? Are you seeing more traction and does the fur Eros decision from yesterday? Impact your outlook and myself?
Speaker Change: Yeah, I mean I think you know, first of all we're seeing you know, gas generation demand um really across the country. So if you look at our gas
Speaker Change: development pipeline, you know, it's not
Speaker Change: Focused, you know, in any 1 region, I mean, if you're looking at getting gas online quicker, you know, obviously they're, um, there are states that are, uh, more accommodating to be able to do that. Texas, obviously is a
Speaker Change: is, you know, you know, comes to mind, you know, uh, you know, in that regard when I think about the
Speaker Change: Uh, as decision, you know, yesterday, uh, you know, by myso. Uh, you know, sure that could create
Some additional, you know opportunities, but you're going to have to be able to also monitor through where is there gas supply? You know, how long will it take to get the turbine can and more importantly aside from gas supply in the tournament the labor some of the skilled labor constraints that we've seen in that sector. What does that do to timing in terms of being able to bring those? You know assets, um, uh in line. But certainly something that we are we are focused on and that's why I think, you know, given the timing of some of the
Speaker Change: Of those projects we're going to continue to need and all of the above solution, to accommodate the demand that we are seeing in those regions.
Speaker Change: Thanks. And then what are the key? Technical Milestones remaining on Dwayne Arnold and when you expect any ramp and the labor force in the coming months in order to hit the reiterated guidance around execution.
Yeah. I mean it's the typical work that you would expect on a recommissioning, right? You know doing um you know work, you know a a across the site. Looking at what the condition of the site is in looking at um, you know, containment, you know, in particular, looking at the equipment, all those things, we feel, we feel good about based on what we, what we have seen, uh, you know, so far and uh, you know, things continue to progress. Well.
Speaker Change: Thank you.
Speaker Change: This will conclude our question and answer session as well as our conference call for today.
Speaker Change: Thank you for attending today's presentation. You may now disconnect