The operator welcomes participants to the NextEra Energy and NextEra Energy Partners LP Second Quarter 2024 Earnings Conference Call. The call will feature the company's executive team discussing their combined financial results. The team will also answer questions and make forward-looking statements based on current expectations and assumptions. The presentation will also include references to non-GAAP financial measures.

The speaker, John Ketchum, discusses NextEra Energy's strong financial and operational performance, citing a 9% increase in earnings per share and $16 billion in savings for customers since 2001. He also mentions the company's focus on cost reduction and smart capital investments, particularly in low cost solar generation and battery storage. The company's culture of continuous improvement and productivity, exemplified by Project Velocity, has helped identify $460 million in cost savings opportunities through 2027. As a result, FPL has been able to maintain residential bills at nearly 40% below the national average, the lowest among all Florida investor owned utilities.

FPL's reliability is among the best in the industry and they have been able to maintain their customer value proposition despite rapid growth in Florida. This growth has resulted in increased capital investment, which FPL has shouldered through their reserve amortization mechanism. However, this mechanism has been utilized faster than expected and FPL plans to seek recovery of these increased expenditures in their rate case filing next year. FPL's remaining reserve amortization balance is expected to be sufficient to support their capital investment plan and earn an 11.4% regulatory ROE this year and next. This ROE is expected to have a $0.06 EPS impact in 2024 and 2025, but FPL aims to deliver financial results at or near the top of their adjusted EPS expectation ranges through 2027.

FPL is committed to providing low bills and high reliability for customers through smart investments and cost leadership. They anticipate growth in demand for renewables and battery storage, as well as overall power demand, creating opportunities for faster deployment of low-cost generation. Energy Resources has a 300 gigawatt pipeline and is well-positioned to meet this demand.

The company's experience and technology allow them to meet the growing demands of their customers, and their strong relationships with system operators and utilities enable them to get power where it needs to go. The company has added a significant amount of new renewable and storage projects to their backlog, with a large portion coming from agreements with Google. The company believes that the majority of growth demand will be met by renewables and storage, which are vital for meeting the country's increasing demand for power. These solutions are energy independent, fast to deploy, and support a domestic industry that creates jobs and revitalizes rural communities. The company is uniquely positioned to help customers make smart decisions for their business in the energy sector.

NextEra Energy, the owner and operator of a large natural gas-fired fleet in Florida, recognizes the importance of natural gas as a bridge fuel. However, they are also aware of the challenges and costs associated with building new gas-fired generation. They believe that low-cost and fast-deploying renewables are necessary to keep power prices down and make the economy more competitive. NextEra Energy's strategic focus is on delivering low-cost clean energy and storage, and they have a strong team and competitive advantages to achieve this. For the second quarter of 2024, FPL, a subsidiary of NextEra Energy, increased earnings per share due to regulatory capital employed growth.

In the paragraph, the article discusses the expected growth for FPL in terms of regulatory capital employed and capital investments over the next four years. It also mentions the increase in retail sales for the second quarter and the reported ROE for regulatory purposes. The article then turns to Energy Resources, reporting a 10.8% year-over-year increase in adjusted earnings and a $0.03 increase in adjusted earnings per share. This growth is attributed to new investments and an increase in wind resources. However, there was a decrease in earnings from the customer supply business compared to the previous year.

In this paragraph, the company discusses the decrease in contributions from their gas infrastructure business and the impact of new investments in renewables, storage, and transmission. They also mention the strong quarter of new renewables and storage origination, which has added to their backlog and provides visibility into their ability to deliver on their development program. The company also highlights their competitive advantages in understanding transmission and grid constraints, strong relationships with utilities, and their ability to leverage technology to meet customer needs. They give an example of their collaboration with Entergy to build renewable storage solutions to meet their energy transition goals.

NextEra is excited about their collaboration with Google and their existing portfolio of renewable energy assets. They have the advantage of already having interconnections in place, which allows them to quickly deploy new projects and potentially repower existing ones. They also mentioned their recent financial activities, including issuing equity units and selling a partial interest in a portfolio of projects. Their long-term financial expectations remain unchanged and they expect to deliver strong financial results in the coming years.

NextEra Energy expects to continue growing dividends per share at a rate of 10% per year through at least 2026. NextEra Energy Partners' board has declared a quarterly distribution of $0.95 per common unit, representing a 6% increase from the previous year. The partnership has completed a buyout and paid down debt, leaving them with approximately $2.7 billion in liquidity. In the second quarter, adjusted EBITDA was $560 million and cash available for distribution was $220 million. New projects contributed $39 million of adjusted EBITDA and $9 million of cash available for distribution. Existing projects saw a year-over-year increase in adjusted EBITDA, driven by favorable wind resources. The divestiture of the Texas pipeline portfolio resulted in a decline in adjusted EBITDA and cash available for distribution, partially offset by interest benefits from the sale. The partnership's fourth quarter 2023 distribution per common unit is at an annualized rate of $3.52.

NextEra Energy Partners expects to see 5% to 8% growth per year in LP distributions per unit, with a target of 6% growth per year through 2026. They anticipate a payout ratio in the mid to high 90s during this time period. The partnership does not require any acquisition-related financing until 2024 and does not need gross equity until 2027. They have a strong portfolio of clean energy assets and expect to share more information in the coming quarters on their objectives. The projected run rate for adjusted EBITDA and cash available for distribution in 2024 is $1.9 billion to $2.1 billion and $730 million to $820 million, respectively. The expectations are subject to caveats. The first question from Wolfe Research is related to an update on reserve amortization and earned ROE.

John explains that the increased usage is due to population growth in Florida, which has impacted their service territory. This has led to an increase in regulatory capital employed, from 9% to 12%. They have a surplus of $586 million, which will result in an 11.4% ROE for 2024 and 2025. This is already factored into their financial expectations and will not affect their ability to cover it. Additionally, the surplus mechanism helps customers and the capital investments will be fully recovered in their next filing. Overall, John is not worried about this and it will not impact their financial expectations for this year and next.

John Ketchum, NextEra's CFO, discussed the recent $900 million Blackstone financing and revealed that it was for a 1.6 gigawatt portfolio of renewable assets. He also mentioned that there is a strong demand for NextEra's assets and that they have a good relationship with private equity firms. When asked about the recent issues with GE turbines at Vineyard Wind, Ketchum stated that NextEra is a top operator of wind and has a partnership with GE, but acknowledged that wind turbines can have occasional issues.

The speaker discusses the partnership with GE, stating that they have never had issues and have been able to find win-win solutions. They mention that they are evaluating all options for NEP, including potentially using private capital, to improve its cost of capital and ensure success in the future. They also note that they have time to make a decision, as they do not have any immediate drops or growth equity needs.

Shahriar Pourreza asks Brian Bolster about the company's plans for the next few quarters and NEE's strong origination quarter. Bolster mentions that they will share their solution once they have identified it, and discusses the impact of supply chain on their business. He notes that they are not affected by AD/CVD filing and tariffs, and that they have invested in data and analytical capabilities and risk transfer to ensure supplier performance. The bigger their program, the more leverage they have over their suppliers.

The speaker is discussing the company's ability to transfer tariff risks to their suppliers due to their strong position in the market. They have been able to secure contracts and financing for their projects, unlike smaller developers. The company is confident in their supply chain and their approach to managing risk. The speaker also mentions the recent portfolio sell down with Blackstone and their ongoing focus on their core renewables business. They are considering further asset recycling and will maintain a 70-30 mix as they continue to sell assets.

The speaker addresses a question about recycling and asset mix. They mention their focus on renewables and their success in attracting capital for them. They also mention their efforts to recycle capital in their gas infrastructure and transmission businesses. The speaker is confident in their ability to meet their capital recycling targets. They also mention their rigorous approach to forecasting and planning for the future.

The company is constantly evaluating its business mix and has a lot of headroom for growth. The recent capital recycling plan aligns with their obligations and they have plenty of room for business mix. The origination of new projects has been consistently strong, with the current quarter being the second best ever. However, origination can be a bit lumpy, but the company remains optimistic about their long-term growth potential.

The speaker discusses the strong additions to the company's backlog, particularly in years 2026 and 2027, with some additions in 2028 and beyond. They express confidence in the execution of their team and the value they bring to customers. The next question is about the potential impact of higher tariff costs and two projected rate cuts on the company's returns. The speaker explains that they are always mindful of managing risk and have locked in their cost of capital through interest rate hedge products. They are prepared for potential rate cuts, but if they do not materialize, it will not significantly affect their financial expectations.

John Ketchum, in response to a question from Nick about the potential restart of Duane Arnold nuclear plant, stated that there is a lot of demand from the market for it, but bringing it back into service would require a lot of thought and risk assessment. He also mentioned that they are looking into it, but would only proceed if it can be done in a risk-free manner. In response to a question from Jeremy about the renewables market, Rebecca Kujawa stated that they are seeing strong demand and high returns, and that the returns they laid out at the Investor Conferences are minimum thresholds for adding shareholder value.

The speaker discusses the company's positive positioning in the marketplace and the potential for attractive returns due to customer demand. They mention the recent difficult market conditions and how they have seen a stabilization which has decreased risk and provided an attractive product for customers. The speaker is excited about the company's position to add shareholder value in the future. They also mention the fast-growing pipelines and thousands of megawatts of data center requests from utilities, which could potentially lead to another wave of demand.

The speaker acknowledges that the numbers for data center demand are very large, and it will take time for utilities to address and serve this demand. They have seen interest from both power sector and data center customers, and are excited about the growth. However, it will take a couple of years for this growth to materialize and for utilities to absorb it. The speaker believes their company is well-equipped to partner with customers to solve challenges. The speaker is unable to provide specific details about the Google relationship, such as location or timing, but mentions the possibility of using multiple technologies for these deals.

Rebecca Kujawa, CEO of a renewable energy company, discusses their recent contracts with hyperscaler customers for wind, solar, and battery storage projects. These customers are increasingly interested in projects that are specifically located near their data centers, and the company is focused on delivering value to these customers. They may pursue multi-gigawatt, multi-year framework agreements in the future, but their main priority is meeting the needs of their customers.

NextEra's John Ketchum discusses the potential implications of the U.S. election on the IRA and renewable development plans. He notes that the company has a history of working with both sides of the aisle and investing in American energy infrastructure. Ketchum also mentions that the incentives for clean energy favor Republican states and that there is likely to be little change in tax laws. He emphasizes the positive impact of renewables on job creation, property taxes, and energy independence.

The paragraph discusses the positive impact of low-cost renewables on the U.S. economy, including attracting new investments, creating jobs, and lowering power prices. The speaker believes that the credits for wind, solar, and battery storage will remain in place due to their benefits. They also mention an increase in the backlog for wind projects, potentially signaling an uptick in wind demand.

The speaker is pleased to have added some wind projects to their backlog and is optimistic about their partnership with customers. They believe wind, solar, and battery storage are valuable and complementary technologies that will create value for customers in the long term. They currently have 7 gigawatts of projects with tech and data center customers, with 3 gigawatts already in service and 4 gigawatts planned to be built in the coming years. This does not include transmission projects.

The development of renewable energy for data centers is consistent with overall trends, with a mix of wind, solar, and storage technologies. There is a high demand for these projects from both data center operators and utilities, and new transmission infrastructure is needed to efficiently deliver the energy. The hyperscalers and data center operators are interested in understanding and supporting the development of transmission, but it is a complex process.

The speaker does not believe that political instability will affect their ability to sign contracts for renewable energy. In fact, they believe that any potential changes in policy would only increase demand for renewable energy.

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