Q4 2024 Earnings Call Transcript

Good morning, and welcome to the NextEra Energy Fourth Quarter and Full Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Also note today's event is being recorded. At this time, I'd like to turn the floor over to Mark Eidelman, Director of Investor Relations. Please go ahead.

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, President and Chief Executive Officer of Florida Power & Light Company; Rebecca Kujawa, President 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. 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 presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website www.nexteraenergy.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 accompanying 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.

Thanks, Mark, and good morning, everyone. NextEra Energy had strong operational and financial performance in 2024, delivering full year adjusted earnings per share of $3.43, up over 8% from 2023, once again at the high end of our adjusted 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 five, 10, 15 and 20 years, you will see the same absolute and relative performance.

Our consistent financial outperformance is due first and foremost to the efforts and execution by our team. 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. 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. FPL is the largest electric utility in the U.S. and Energy Resources is the world's leader in renewables and storage.

Together, we operate the largest natural gas fire generation fleet in the country are one of the largest nuclear operators in the U.S. and are widely viewed as an industry leader in transmission. We are one of the top five infrastructure investors in the United States and we have invested more than $150 billion in our nation's energy infrastructure over the last decade, building everything from nuclear upgrades, natural gas pipelines and natural gas fire generation to battery storage and renewables. 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 121 gigawatts.

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 and between the two companies, we placed into service approximately 8.7 gigawatts of new renewables and storage projects in 2024. 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. FPL continued to deliver what we believe is the best customer value proposition in one of the fastest growing states in the U.S. 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 costs and deliver high reliability and outstanding customer service, while keeping bills as low as possible for our customers.

In 2024, we continue to see the fruits of that 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, undergrounding, automation and smart grid investments are providing significant benefits to our customers. 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 Debby, Helene and Milton.

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. FPL continued to make smart capital investments in low cost solar generation and battery storage, further reducing our overall fuel cost. 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. When combined with generation modernizations, these additions have saved customers more than $16 billion since 2001. 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 performing utility. Innovation has been one of the keys to our operating efficiency. FPL is the only utility in the nation to remotely operate its fossil fleet. Our Fleet Control Center is one of the world's largest monitoring and diagnostic centers and 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 world 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. Late last year, FPL filed a test year letter with the Florida Public Service Commission to initiate a rate proceeding for new rates beginning in January 2026. The stability of multi-year rate plans has allowed FPL to focus on efficiency in the business, 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. We look forward to the opportunity to showcase our long-term track record of providing low bills and high reliability for Floridians and our plans to build an even more resilient energy future for Florida.

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. We plan to meet Florida's 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. 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 in renewables and storage in particular.

These additions to our backlog increased 30% from the 9 gigawatts we originated in 2023, our second best year ever. To put that into context, 12 gigawatts is the size of a large utility in the U.S. 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 3.4 gigawatts in total and currently have more than 7.2 gigawatts in our backlog. Our extensive portfolio of existing operating sites, which have excess transmission capacity and are nearly 30 gigawatts of standalone storage interconnection queue positions, means we can dramatically speed up our deployments, a distinct competitive advantage that no one else in this industry has. 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 8.3 gigawatts. However, one point that I believe is being overlooked is that power demand is everywhere across all sectors and increasingly across utilities, 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, 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 unleash all forms of electric generation, starting with renewables, which are ready now, as I will discuss more in a minute. There is no better example of this than our own portfolio.

We have originated more than 3 gigawatts in 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 renewables portfolio by the end of 2027, which would be larger than the installed renewables capacity of all but seven countries. 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 10.5 gigawatts between now and 2030, as well as a joint development 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. 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. That is why today we are pleased to announce a framework agreement with GE Vernova, where we will partner to build natural gas powered generation solutions.

This agreement has the potential to support multiple gigawatts for data centers, the reshoring of manufacturing and the electrification of industry, as well as serve investor-owned utilities, municipalities, cooperatives and commercial and industrial customers. Nobody has built more gas-fired generation over the last decade than NextEra Energy and nobody has sold more gas turbines than GE Vernova. This collaboration brings together the nation's leading operator of natural gas-fired generation and NextEra Energy and the world's leader in natural gas and electrification technology and GE Vernova to jointly develop opportunities that we believe will enable significantly more renewables to meet growing power demand by pairing low-cost renewables for energy with gas-fired generation for capacity.

Over the next four years, the companies plan to collaborate to identify key locations on the energy grid that would benefit from new generation. GE Vernova will incorporate its world class natural gas generation technologies and critical electric -- electrification solutions while leveraging its financial service capabilities. 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 comprehensive power generation business in the world and is better positioned than ever to capitalize on long-term growth prospects.

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.S. to achieve the new administration's energy dominance agenda. As a leading American energy producer, this is an agenda that we support and believe we are well-positioned to deliver on.

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, which would slow economic growth and we can miss opportunities to further our leadership in AI. 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.

In addition, gas-fired generation is more expensive than it's been with costs having more than doubled over the last five years due to the limited supply of gas turbines, a constrained supply chain and much higher EPC costs. Nuclear continues to be a much longer term option in our opinion, due to first of a kind risks and uncertainty with near-term opportunities centered on recommissioning and upgrade projects. Nuclear plants across the country are already serving existing demand and there are only a few nuclear plants that could be recommissioned in the near-term in an economic way. We are continuing to make progress in evaluating the recommissioning of our Duane Arnold nuclear plant in Iowa.

Recently, we filed notice with the Nuclear Regulatory Commission to request a licensing change, an important first step in establishing the regulatory pathway to restore the facility's operating license and potentially restart plant operations as early as the end of 2028. 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 SMRs. However, due to the risks and uncertainty, the practical reality is we are unlikely to add multiple gigawatts of new nuclear to the grid over the next decade.

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 experience across the entire energy value chain. Our mission is to provide our customers with the lowest cost, most reliable energy no matter where they are 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 the U.S. tries to 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 in more detail.

Thanks, John. Let's begin with FPL's detailed results. For the full year 2024, FPL's adjusted earnings per share increased $0.12 versus 2023. The principal driver of FPL's 2024 full year performance was regulatory capital employed growth of approximately 10%. We continue to expect FPL's 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. For the full year 2024, FPL's reported ROE for regulatory purposes will be approximately 11.4%.

During the full year 2024, we used $328 million of reserve amortization, leaving FPL with a year end 2024 balance of $895 million. FPL's 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. Key indicators show that the Florida economy remains strong and Florida's population continues to be one of the fastest growing in the country. Its GDP is now roughly $1.7 trillion, an increase of approximately 7% over last year.

For the fourth quarter of 2024, FPL's retail sales increased 1.1% from the prior year on a weather normalized basis, driven primarily by continued strong customer growth. In the fourth quarter of 2024, we added nearly 119,000 customers as compared to the prior year comparable quarter, bringing our total customer accounts to over 6 million. For the full year 2024, FPL's retail sales increased 1.9% from the prior year on a weather normalized basis, also driven primarily by the strong customer growth in our service territory. As John mentioned, FPL 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 with additional significant investments expected in 2026 and beyond to continue to meet the growing needs of Florida's economy. This capital will allow FPL to continue delivering outstanding value for Florida customers by keeping reliability high and fuel and other costs as low as possible. While the benefit of building a stronger, smarter grid and a cleaner, more efficient generation fleet are passed along regularly to customers, through higher service reliability and lower bills, we must periodically seek recovery for these long-term investments through base rates.

While the details are still being finalized, we expect the proposal to include base rate adjustments of approximately $1.55 billion starting in January of 2026 and $930 million starting in January of 2027. We also expect the proposal to request support for continued deployment of low cost generation and capacity additions and the continuation of our solar and battery base rate adjustment or SoBRA mechanism to recover the revenue requirements of these cost effective projects. FPL plans to propose an ROE midpoint at 11.9% with an allowed ROE band of plus or minus 1%. The 11.9% estimated cost of equity reflects appreciably higher interest rates and other capital markets factors we have experienced since our last rate case and which we expect to continue during the term of the proposed four year rate plan.

FPL also expects to propose maintaining FPL's long standing equity ratio approved in prior base rate cases, which is intended to keep it in a position to continue to access capital as needed through 2029. 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 the capital markets, even in times of significant market disruption. It also allows us to attract capital to support the investments FPL is making to further improve the value we offer customers.

FPL estimates that its proposal, along with the projections for fuel and other costs, will grow a typical residential customer bill by an average annual rate of approximately 2.5% from January 2025 through 2029. If the full amount of the requests 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 will continue to remain significantly lower than the national average through 2029. To put this proposal in context, it would result in a typical customer bill in January 2026 that is nearly 21% less than it was in real terms 20 years ago, even with our proposed base rate increases.

We look forward to the opportunity to present the details of our case and expect to make our formal filing with testimony and required detailed data in February. The timeline for proceeding will ultimately be determined by the commission, but 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 in effect in January of 2026. We're open to the possibility of resolving our rate request through a fair settlement agreement. During the course of the past 22 years, FPL has entered into five multi-year settlement agreements that have provided customers with a high degree of rate stability and certainty and helped FPL execute to deliver its best-in-class customer value proposition.

Our core focus will be to pursue a fair and objective review of our case that supports continued execution of our successful strategy for customers and we plan to continue to provide updates throughout the process. Now let's turn to Energy Resources, which reported full year adjusted earnings growth of more than 13% year-over-year. For the full year, contributions from new investments increased by $0.48 per share, reflecting continued growth of demand for our renewables and storage portfolio. Contributions from existing clean energy assets increased by $0.03 per share, primarily reflecting improved wind resource during the year and the impact of certain revenue and PTC escalation benefits inherent in our existing assets.

Contributions from our gas infrastructure business decreased by $0.08 per share, most of which was recognized in the second quarter. As we discussed at the time, a combination of higher depletion expense related to an expectation for lower production, certain non-recurring items and the sale of the Texas pipeline portfolio resulted in lower relative earnings in that quarter. Contributions since that time have been effectively flat, consistent with the expectations we provided in the second quarter. Our customer supply and trading business, which you will recall, had a strong earnings in 2023, decreased results by $0.04 per share, driven by normalization of origination activity and margins, which is consistent with our expectations.

Other impacts decreased results by $0.24 per share year-over-year. This decline reflects higher interest cost of $0.13 per share, nearly half of which is new borrowing to support our build and half of which reflects increased borrowing costs on existing debt. 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 battery storage projects to our backlog, which includes approximately 3.3 gigawatts since our last call. Our 2024 origination performance reflects continued strong demand from power and commercial and industrial customers looking for the least cost alternative to serve load and meet increasing demand.

Our renewables backlog now stands at more than 25 gigawatts after taking into account roughly 2.4 gigawatts of new projects placed into service since our third quarter call. We believe our more than 25 gigawatt backlog provides terrific visibility into Energy Resources' ability to deliver attractive growth in years ahead. 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 $0.01 per share year-over-year.

We successfully supported the growth in our underlying businesses from our strong operating cash flows and grew 2024 cash flow from operations by more than 17%, well in excess of adjusted earnings. We also continue to focus on protecting our project economics at Energy Resources as well as minimizing the cost of refinancing at the parent. We now have $28.5 billion of interest rate hedges in place. To put this all in perspective, NextEra Energy's sensitivity for an immediate 50 basis point upward shift in the yield curve has on average $0.01 to $0.03 of expected adjusted EPS impact in 2025, 2026 and 2027, which is equivalent to less than 1% of our adjusted EPS expectations.

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. As a reminder, the current interest rate environment is taking into account in our financial expectations. Overall, our funding plans for 2024 through 2027 remain consistent with the information we shared previously. 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 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. From 2023 to 2027, we continue to expect that our average annual growth and operating cash flow will be at or above our adjusted EPS compound annual growth rate range. And we will also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026 off a 2024 base. As always, our expectations assume our caveats.

That concludes our prepared remarks. And with that, we will open the line for questions.

Ladies and gentlemen, at this time, we will open the line for questions. [Operator Instructions] Our first question today comes from Steve Fleishman from Wolfe Research. Please go ahead with your question.

Yeah. Hi. Good morning. Thanks. Just a couple of high level questions. So on the GEV framework agreement announcement, could you maybe give a little more color on, would you co-own projects with them and also just would you only be doing contracted projects, long-term contracts or would you consider doing kind of new build merchant like in ERCOT or PJM? Thanks on that.

Steve, thanks for the question. First of all, we're very excited about this framework agreement with GE Vernova. Again, as I said in the prepared remarks, nobody has built more gas-fired generation in this country really, not only over the last decade, the last two decades than NextEra. So we've got significant experience.

We have an 80 year relationship with GE, just terrific relationship, not only on the renewable side but also on the gas-fired generation side with all that we have historically done. So I think you're bringing two powerhouses together with experience in gas-fired generation. The idea would be to go after and target large load customers and do it in an integrated way where we can combine gas-fired generation with renewable battery storage solutions. And each party would bring the expertise that you would expect to the table.

In terms of the ownership, yes, they would be co-owned as part of a 50-50 joint venture. These would be long-term contracted assets as well. We could contemplate in the right situation with the right customer, also potentially a build on transfer on gas-fired generation as well if it was part of a larger transaction that included renewables and other growth opportunities. But we're very excited about this.

I think it enables us to bring a comprehensive solution set that is right down our alley.

Yeah. No, it makes a lot of sense. I assume it gets you access to turbines kind of relatively quickly as well. Just one other question on, I think, we call it the elephant in the room, the new administration and just the kind of, I guess, the announcement on the wind -- limits on wind leases on federal lands and then also [Technical Difficulty] on kind of where things stand on IRA risks?

Would love any commentary on those topics. Thanks.

Sure, Steve. Let me go ahead and take that. First of all, with the executive orders as a whole, very consistent with our beliefs that we need electrons. We need electrons right now and we need to unleash the American energy industry and achieve energy dominance.

So we embrace the new administration's mandates that have come out in these executive orders. And as part of achieving energy dominance, we're going to need all of the above solutions. We can't 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 renewables. We're going to need storage as well. But we can't wait because 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 close analogy you could draw is to the last industrial revolution. And we're expecting load demand to increase over 80% over the next five years, six-fold over the next 20 years. And 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 a wind project in 12 months, a storage facility in 15 months and a solar project in 18 months. With gas-fired generation, we're pleased with our announcement with GE Vernovo. With gas-fired generation, the country is starting from a standing start.

And we've got to go find the sites. We've got to develop these sites. We've got to get gas to those sites. If we got to get hands-on gas turbines.

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 and nuclear later than that. And we need shovels in the ground today because our customers need the power right now. I mean, if you think about it from a customer standpoint, they have already built new manufacturing facilities or well down the road that are going to need electrons. Our utility customers have already shut down existing generation.

They're counting on these renewable projects, some of which include wind to show up to be able to provide the electrons. So we don't have reliability issues with their customers because right now, we are short power in this country. And so when I think about wind and 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 we only -- we -- all of our onshore projects are on private land except for one.

And that's a very positive fact. And the permitting process is rather limited for onshore private land solutions. And I go back to our customers' need the power right now. They're building new manufacturing.

Utilities have 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 that may come up along the way and feel good about the future of our program.

Great. Thank you very much.

And Steve, on IRA, let me hit your last one on IRA. That's really a lot of...

Okay. Yeah.

That's really a lot of the same points. I mean, obviously, we've been spending a lot of time in Washington on advocacy around IRA. And what I will say there is, again, it's all about electrons and needing electrons right now. The power demand is here today.

We need to serve it. Renewables pay -- play a very important role in all forms of energy solution. We're going to need gas to back up renewables. We'll have nuclear, later next decade.

But right now, if we need solutions that are going to deliver electrons to the grid, so we don't have a power crisis. And that is the thing that is not being overlooked at all by folks that we are meeting with in Congress. And then there's the other factor that, look, this is a terrific American industry. We are creating a substantial number of jobs right here in our backyard and 80% of those jobs are -- and investments are incurring in 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% of those dollars is going into Republican states, that’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 across in Washington around the IRA discussion.

Great. Very helpful. Thank you.

Thank you, Steve.

Our next question comes from Shahriar Pourreza from Guggenheim Partners. Please go ahead with your question.

Hey, guys. Good morning.

Good morning, Shar.

Good morning. Just real quick, John, I know you noted the time to market for nuclear is between the '27 and '30 timeframe. I guess, where does Duane Arnold fall within that timeframe? And also, there's obviously one restart out there and there's a cost estimate.

Is there anything you can provide just directionally for Duane Arnold restart versus the comp that's out there? And would you potentially look to expand the site if there's support from a counterparty or the federal government? Thanks.

Yeah. Hey, thanks, Shar, for the question. So, happy to say that we have made our filing with the NRC around the licensing to recommission that facility. We have more work to do.

Some of that work includes work with customers. I'm certainly not going to put the cost estimate out there that would hurt our negotiating position in those discussions. And you could rest assured that we are in active discussions with customers today. There's a lot of interest in the plant as we look forward.

But my comments around nuclear are really, look as one of the largest nuclear operators in the country, we obviously know a lot about it. I think the near-term opportunities are around the recommissioning with Palisades of Crane (ph) of Duane Arnold as well. And those are really the ones that I think I would confine to the timeframe of being over the next three, four, five years. As you think about next decade, and my comments around next decade, those are really more around the small module reactors, which are still a first of a kind technology have some uncertainty in terms of developing and permitting and the ability of them to be able to be delivered to market on-time and on-schedule.

And so as we think about small module 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 some practical limitations. So if we're 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 at scale and cost continues to remain a wildcard.

Got it. Maybe just -- I'll just ask in a slightly different way. Just what's the condition of the plant right now, I guess, on Duane Arnold?

The Duane Arnold plan is really in good shape. I mean, the only issue that we had -- if I think about the facility and the condition that it's in, I mean, I think about the reactor itself and very good condition. The only damage that we ever sustained at Duane Arnold was a derecho that took down the cooling tower, but building a cooling tower is run of the mill. I mean, you build them at gas plants, you build them at nuclear facilities as well.

So that's pretty conventional construction, so not a whole lot of risk there.

Got it. That's perfect. And then just lastly on, just to follow up on Steve's gas question there. 2030 plus, just to me, seems a little far out just given the hyperscalers' 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, I guess, a quite sizable opportunity for NextEra. I guess, when can this sort of start to become accretive to growth and hit the backlog? Thanks.

Yeah. Hey, thanks, Shar for the question. So my comments on gas are, when you look at finding a site, getting it permitted, getting gas to the facility, getting it interconnected and then the equipment limitations of actually getting a turbine slot, getting access to that turbine and then the EPC labor. Remember, we -- this is an industry that really hasn't seen any active development or construction in years.

And so that's my comment earlier about really beginning from a standing start. And so, all of that puts pressure on cost. I mean, we've seen enormous demand, as you know, from GE Vernova's commentary for gas turbines and it's not only domestic, it's international and that's more than double the cost of a gas turbine. And EPC labor is in such short supply that the costs there have tripled.

And I look back to just our last gas-fired facility that we built here in Florida, Dania Beach. If we take the cost we paid for that facility on a dollar per KW basis to today, I mean, we -- 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, 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 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 courts.

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 undoubtedly going to move forward with reforms that will make that easier to achieve, but there could be litigation over those things as well. So as we put all the pieces together, we're just being practical, we're just being realistic, we see it more as a later this decade solution.

Fantastic. Thanks again, John. Send my best to the team. Appreciate it.

Thank you.

Our next question comes from Julien Dumoulin-Smith from Jefferies. Please go ahead with your question.

Julien Dumoulin-Smith: Hey. Good morning, team. Thank you guys very much. 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 talked 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 origination prospects right to leverage off of? And then related, how are you thinking about this XPLR pivot and having sort of a development sell down partner? I note, for instance, your comment earlier about a 50-50 development effort with GV using 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? Thoughts about the monetization factor?

Yeah. Let me take those in pieces. So if I think about the gas business and your question about whether or not we would look to do something through an acquisition, I don't think we need to do that. And here's why we don't need to do that Julien is, we are a giant development company, right, that is our business.

We are 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 have a transmission business. There wouldn't be a whole lot to be gained for us adding a piece but through an acquisition. Given that we already have all those components in place internally, it's an easy pivot for us to move into gas and we've already been up and running in that and already have put together a nice pipeline and we'll continue to grow that as we move forward.

On the XPLR side, I really don't want to answer any questions about XPLR on this call, given that we have a call scheduled for Tuesday, but I will answer your question about sell-down vehicles and recycling capital generically for NextEra Energy. I think, as you can see with the reaffirmation of our capital recycling plan and our equity plan that we've included in today's call, there are no changes, right? No changes at all. And so we feel good about where we are in terms of our ability to recycle capital, and it has no impact again on our equity needs.

And we have plenty of outlets available to be able to do that, whether that would be through XPLR or some other avenue, as we've talked about in the past.

Julien, I'd just remind you that over the past, 18, 24 months, we've recycled several billion dollars of capital that had nothing to do with XPLR. So, not only are we very comfortable with our expectations, we've been recycling capital now for a good several years through other avenues.

Julien Dumoulin-Smith: Yeah. All right, indeed. All righty. Well, best of luck here. Appreciate it. Talk to you soon.

Julien, thank you.

Our next question comes from Nick Campanella from Barclays. Please go ahead with your question.

Hey, good morning. Thanks for all the updates. So hey, just a 2% change to customers for FPL in this upcoming rate case definitely stands out in a positive way. Just wanted to see if you had any updated thoughts on how you're thinking about the surplus reserve mechanism? And then also just how are you kind of thinking about earned ROEs at FPL in '25? Thanks.

Great. Thank you. So we are -- the growth that we saw this last quarter, the growth that we saw in the year was certainly positive. But it's not just this past year, we've been seeing it really since the pandemic.

Our expectations going into the next rate case over the next four years is that growth may come down a little bit over the next four years because of what we saw during the pandemic. But we still believe it's going to be fairly strong growth in our service territory. 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 '25. So a lot of that detail will come out here in the next -- that's probably about six weeks now because we expect to file our rate case at the end of February.

Your question regarding the reserve mechanism. We're sitting at roughly $800 million after using $400 million or so in 2024. So we feel good. We're certainly not going into 2025 believing that all of the risks that we use as the surplus mechanism are behind us. We've had to tap that reserve mechanism for a lot of inflation, higher interest rates, a lot more growth in our area, and therefore, a lot more capex expenses that we expected.

So with the 11.4% ROE at the end of 2024, I expect there might be a little bit of upside to that 11.4% in 2025, but it's obviously early. We want to make sure that we get through this year in good shape. And we feel really positive about the case that we are going to present to our regulators in February because we've been doing the right things for our customers. So as long as we do that, I think we'll be okay.

Hey, thanks for all that information. And then, I'm sorry, but just a follow-up on XPLR. Just you're still including the proportional share of EBITDA and earnings in your own outlook from NEE perspective. And I just wanted to confirm that you just continue to see that income stream consistent and preserved kind of regardless of the outcome. Thanks.

Just say that the accounting is unchanged around XPLR and we'll discuss the outlook for that business on Tuesday.

All right. Thank you.

And our next question comes from Carly Davenport from Goldman Sachs. Please go ahead with your question.

Hey, good morning. Thanks so much for taking the questions. 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?

So, Carly, the answer to that question is, no, it hasn't hurt any of our discussions with customers. The only thing customers are concerned about is, making sure that these projects get built because they need them. They have made decisions to already shut down existing generation if these projects were for any reason to be delayed, which we don't believe they will be, that would have a significant impact on their ability to provide power 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. I mean, these commercial and industrial customers have made investments in manufacturing facilities, semiconductor chip facilities, their chemical companies, I mean, you name it. Across the board, they've invested in infrastructure and are counting on the electrons to show up. So I think it's actually quite the opposite.

I'd echo that and 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 them is time and money. They don't have time to get other resources available to them in the timeframes that they need 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. So top of mind to them to make sure that we meet the demands of the day and we're excited to work with them and all the stakeholders to make sure that happens.

Great. Really appreciate that color. And then maybe just one on the rate side, it's become a little more topical in our conversations. Can you just refresh us on the broader interest rate hedge program? It looks like some of the interest rate sensitivities moved just a bit relative to prior disclosure. So just can you refresh us on the strategy to manage rates exposure?

Yeah. So, Carly, we put $32 billion of interest rate swaps in place with an average coupon of around 3.9%. So we feel very good about our hedge position and that shows up in what we communicated today. So if you look at our sensitivities for '25 and '26, it's about $0.01 to $0.03 on an EPS basis.

If you look at '27, it's $0.03 to $0.05. 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.

Great. Thanks so much for the time.

Thank you, Carly.

Our next question comes from Jeremy Tonet from JP Morgan. Please go ahead with your question.

Hi, good morning.

Good morning.

Just wanted to continue with some of the themes you talked about before, but regarding your conversations with hyperscalers at this point, just wondering if you're seeing any kind of 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's any change in tone there or thoughts in your -- from your customers when you're talking about their -- what they're looking to achieve.

Yeah. There's -- thanks for the question, Jeremy. I certainly appreciate it. And I think there's a lot of discussion about how do we get the resources that we need in the timeframes in which we need it and matching that with some of the other goals that they may have either at corporate levels or certainly state levels.

I think top of mind continues to be what John highlighted, which is speed to market with the resources that are available today at the lowest cost with highest confidence and be able to meet those commitments, including the meet the commitments of those customers. So, we see demand across the board where we've seen a lot of increase in demand for natural gas, it really is to enable that capacity value where energy still can be met in many places, least cost in terms of resource availability from wind and solar resources. So there's a great pairing there that many of our customers are really interested in.

So it's a 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 months to 18 months realizing that demand is significant. You all are well-versed in knowing that it takes three years to five years to develop resources. And we've talked a lot about demand, but it takes time to build all this back up.

So what's available? As John highlighted, the renewables and storage is top of mind. What will 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 module reactors and other technologies that we hope to be more relevant and at bigger scale in the 2030 mid-timeframe and beyond.

Got it. That's very helpful there. I didn't know if behind-the-meter gas was coming up in conversation at all versus prior conversations.

It does, Jeremy. I think there's a novelness to that about whether or not that can work and speed through some of these other issues. But you got to think about what does it take to produce reliable energy supply behind-the-meter without the benefit of a grid. And it's significantly more capacity and other things you need to add to it in order to ensure that you have that uninterrupted supply that these customers are looking for.

So in mega scale projects, we certainly see the possibility that some of these could be developed and we've had some conversations with customers along those lines. But I don't know that that's going to be the prevalent way that resources are met across the country for a variety of different customer scenarios. There's a huge value to the existing electric grid. There's no place better to see that than here in Florida and the low cost power supply solutions that we can offer to our customers.

So there's a place for it. I don't think it's the ultimate place where all demand is met, but customers need options, they need them now and we're here to provide that broad set of solutions to make that happen.

Very helpful. Thanks. And if I could, just one last quick one on XPLR. Thanks for your thoughts so far. Just wondering if you could provide incremental thoughts from a NEE perspective, non-XPLR perspective, we would expect to hear that on Tuesday, but just as far as NEE views to XPLR, is there any change in the strategic -- how it fits into NEE strategic outlook going forward at this point?

Jeremy, we're going to have a full conversation around XPLR on Tuesday. So why don't we plan on having that conversation then?

Fair enough. Thank you.

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.