The operator welcomes participants to the NextEra Energy Inc and NextEra Energy Partners LP Fourth Quarter 2023 Earnings Conference Call, where executives will discuss the company's fourth quarter and full year results. The call will include forward-looking statements, and listeners are directed to the company's websites for more information.

NextEra Energy has had strong operational and financial performance in 2023, with adjusted earnings per share exceeding expectations and a compound annual growth rate of 11.5% since 2021. Despite challenges such as solar supply chain issues, inflation, and interest rates, NextEra Energy utilized its scale and competitive advantages to navigate the disruption and continue delivering for customers. This has resulted in a long track record of earnings and dividend growth, with a compound annual growth rate of 10% over the past 10 years, the highest among the top 10 power companies.

NextEra Energy has achieved strong adjusted EPS results, but the share price has underperformed. The company remains focused on execution and creating long-term value for shareholders. The disruption over the past two years has made NextEra Energy a stronger company, with a more resilient business model, advanced development platform, and diversified supply chain. The company has taken steps to mitigate exposure to interest rate volatility and has established new solar supply chains, leading to lower prices for solar panels and batteries. NextEra Energy has also proactively procured critical electrical equipment and has not experienced any labor shortages impacting project timelines.

NextEra Energy offers a unique value proposition with two strong businesses that are strategically positioned for future growth. FPL, the nation's largest electric utility, focuses on providing value to customers and supporting Florida's economy while keeping bills low. They continue to modernize their generation fleet and plan to increase solar generation from 5% to 35% by 2032. They also invest in their grid to make it stronger and more resilient for customers.

FPL has invested in hardening their transmission system and plans to continue investing in underground distribution to improve reliability for customers. They have a capital plan in place for growth through 2025, and believe they are strategically positioned for growth in Florida's rapidly growing economy. Energy Resources, with their expertise in renewables and transmission, had a successful year in adding new renewables and storage to their portfolio and expects to continue meeting development expectations in the coming years. By 2026, they plan to have a 63 gigawatt renewable portfolio, making them one of the largest renewable energy providers in the world.

Energy Resources is focused on optimizing its existing wind operating fleet to create additional value for shareholders. They have already repowered six gigawatts and plan to repower more in the future, as well as add solar and battery storage to their existing wind and solar sites. By 2026, they could operate up to 53 gigawatts of generation, with the potential for co-located battery storage. They are also investing in their competitive transmission business, with plans to deploy $1.9 billion in capital to enable up to 12 gigawatts of new renewables.

Energy Resources is well positioned to benefit from the shift towards electrification and has a strong development pipeline for new renewable and storage projects. FPL and Energy Resources work well together and have a strong balance sheet. NextEra Energy Partners is focused on executing its transition plans and delivering a 6% distribution growth target. The company is also working to improve its cost to capital by evaluating alternatives to address its remaining convertible equity portfolio financings.

NextEra Energy Partners has successfully addressed two of the three near-term convertible equity portfolio financings and has sufficient proceeds to complete the remaining one in 2025. The partnership does not expect to require growth equity until 2027 and is optimistic about the renewable sector and its future. They will discuss their development process and long-term plans at upcoming investor events. The strength of their two businesses, FPL and Energy Resources, is what makes them a leader in the industry.

NextEra Energy is optimistic about their future because of their proven playbooks and world-class team. They rely on data analytics and automation to drive innovation and have a track record of execution. FPL's adjusted earnings per share increased in 2023 due to their regulatory capital employed growth. They expect this growth to continue and their reported ROE for regulatory purposes was 11.8%. FPL also used reserve amortization and invested $9.4 billion in capital expenditures in 2023.

In 2023, the company made capital investments that supported the successful commissioning of 1,200 megawatts of solar, grid hardening, and undergrounding of the distribution system. They also achieved commercial operations for a 25 megawatt hydrogen pilot project. The Florida economy and population continue to grow, resulting in a 9.3% increase in the state's GDP. FPL's retail sales also increased, driven by strong customer growth. Energy Resources reported a 12.9% adjusted earnings growth, with contributions from new investments and customer supply and trading businesses. However, weaker wind resources had a negative impact on results.

NextEra Energy's consolidated results for the year show a decline in adjusted earnings due to higher interest costs, but their Energy Resources segment had a successful year with a record number of new renewable and battery storage projects added to their backlog. The company's 20 gigawatt backlog provides visibility for future growth. The company's cash flow from operations exceeded adjusted earnings and they successfully transferred tax credits, giving them a competitive advantage. Their funding plans for the next few years are consistent with previous information shared.

NextEra Energy is confident in its ability to manage the current interest rate environment and remains committed to delivering value for customers and shareholders. The company has $18.5 billion in interest rate swaps and will closely monitor the interest rate environment. They expect to meet or exceed financial expectations and continue to grow dividends and operating cash flow. NextEra Energy Partners closed a sale and expects to complete buyouts in the future. Their growth plan includes repowering wind projects and acquiring assets at attractive yields.

NextEra Energy Partners has announced plans to repower 245 MW of wind facilities by 2026, bringing the total announced repowerings to 985 MW. This will support the partnership's distribution growth target of 6% in 2024. The partnership also completed a $750 million high yield note issuance in the fourth quarter of 2023, allowing them to pay off their corporate revolver. In terms of financial results, adjusted EBITDA for the fourth quarter was $454 million, a growth of 13.6% compared to the previous year. This was primarily driven by new asset additions and the suspension of incentive distribution fees. For the full year 2023, adjusted EBITDA was approximately $1.9 billion, with new investments and the suspension of incentive fees contributing to the growth. Cash available for distribution was $689 million for the full year, with contributions from new projects and the suspension of incentive fees partially offset by weaker wind resources.

The NextEra Energy Partners Board has announced a quarterly distribution increase of 6% and an annualized growth target of 6% through 2026. They expect the partnership payout ratio to be in the mid-90s and have introduced expectations for adjusted EBITDA and cash available for distribution in 2025. They are also considering funding options for higher repowering opportunities and may seek equity investors to help with growth and financing issues. They plan to provide updates on this in the future.

The company is considering options for repowering projects, including project financing and tax equity. They are also exploring alternatives for financing convertible equity portfolios that are due in 2027 and beyond. The company is not currently able to provide a timeline for updates on this matter, but they are focused on maximizing value for shareholders. The company is also looking at different options for addressing an investigation by the FEC, and will update investors on any developments through a press release or 8-K filing.

There is no update on the FEC complaint against the company and they have not been contacted by the FEC. The complaint was filed in November 2022 and historically it takes 12 to 18 months for the FEC to respond. The company does not consider the complaint to be material and will update investors depending on the outcome. In terms of the upcoming elections, the company does not anticipate any changes to tax credits, including the IRA, based on past experience. It is difficult to overturn existing laws.

The speaker discusses the benefits of the IRA for both Democrats and Republicans, particularly in rural communities. They also mention the demand for renewable energy in data centers and the potential for growth in the hydrogen industry.

The demand for energy projects in the technology industry is unique and requires them to be completed on time and within budget. Companies are forming long-term relationships with energy providers to ensure their projects are supported. The company has a backlog of three gigawatts of projects and is expecting more opportunities in the future. The current draft guidance for hydrogen projects may limit their development in the US market, and the company is advocating for a more relaxed approach.

The speaker is discussing the company's origination trends and the strong demand for solar and storage projects. They attribute this to a pull forward of demand in 2020 due to the expected phase down of the production tax credit, as well as the recent stimulation of demand by the solar production tax credit. They are confident in achieving their targets for 2025 and 2026, but note that wind projects have seen a slight decrease in bookings.

The company is seeing strong growth in storage and repowering, which is exceeding their expectations. They have an advantage in being able to quickly respond to customer demand and meet their needs. They feel confident in meeting their development expectations and will continue to look at the mix of technologies. Wind has a short development cycle and there is still time to add more projects to the backlog.

Rebecca Kujawa discusses the company's plans for the next few quarters, including potential opportunities for growth and market share gain in the renewable energy space. She also mentions their focus on prioritizing their greenfield portfolio and remaining opportunistic in the development market. She believes there will be opportunities for acquisitions, but the company's main focus is on keeping control of their own development projects.

The speaker is excited about the greenfield developments and competitive advantages their team is working on, which will benefit customers for the next 5-10 years. The next question is about transmission and the speaker mentions that it takes a couple of years for these opportunities to come to fruition. They are pleased with the awards and investments in renewable energy, with in-service dates set for 2027. More details will be provided at the investor conference.

The company recognizes the need for transmission in order to unlock the potential of renewable energy in the United States. They are ready to be a part of the solution and offer cost-effective solutions to customers. They plan to use a mix of project finance, tax equity, and transferability to finance their growth opportunities and dividend growth.

In response to a question about industry trends and capital allocation, Kirk Crews discusses the company's focus on renewable energy and transmission projects, which offer high returns. He also mentions the use of tax equity, project finance, and transferability provisions to fund these projects. Rebecca Kujawa adds that the company's backlog additions were strong in the quarter, but there were some project-specific items that were removed due to higher interconnection costs.

The speaker discusses the removal of some projects from the backlog due to issues that need to be worked through before committing significant capital. They emphasize the importance of making decisions that are right for shareholders and mention the normal run rate for development issues in their 20 plus gigawatt portfolio. They also mention having worked through previous issues related to anti-dumping and countervailing duties. The speaker concludes by stating that they will only commit capital where it makes sense from a shareholder perspective.

This summary was generated with AI and may contain some inaccuracies.