The paragraph is the introductory portion of NextEra Energy, Inc.'s First Quarter 2025 Earnings Conference Call. The operator introduces Mark Eidelman, the Director of Investor Relations, who welcomes the participants and introduces the key executives present, including John Ketchum, the CEO, and other senior leaders. The call will include opening remarks from John Ketchum and a review of the first quarter results by Mike Dunne, followed by a Q&A session. It is noted that forward-looking statements will be made, which involve risks and uncertainties. These statements are based on current assumptions, and actual results may vary. Additionally, references to non-GAAP financial measures will be included, and there is no obligation to update the forward-looking statements. Relevant documents can be found on their website.

In the second paragraph of the article, John Ketchum discusses NextEra Energy's strong start to the year, highlighting a 9% year-over-year increase in adjusted earnings per share due to solid performance by FPL and Energy Resources. The company has introduced significant new solar capacity and renewable projects, and anticipates substantial demand for new energy generation in the U.S. through 2030. Ketchum emphasizes "energy realism and pragmatism," acknowledging the current necessity for diverse energy solutions. He notes that renewables and battery storage are the most cost-effective power generation methods ready today, acting as a bridge to future technologies like new gas-fired plants, with 75 gigawatts of new gas expected by 2030.

The paragraph discusses the challenges in meeting energy demands with over 450 gigawatts needed by 2030. Gas-fired plants are costly due to scarce turbine supply and workforce issues, causing project delays and increased expenses. Nuclear energy remains crucial, but options are limited with few opportunities to restart old plants and SMR technology still a decade away. Extending the life of coal plants offers minimal additional capacity, insufficient to meet future demands.

The paragraph emphasizes the need for a diverse energy mix to meet America's growing energy demand, highlighting the importance of practical energy policies. It argues against relying solely on expensive and time-consuming technologies like gas and nuclear. NextEra Energy exemplifies a comprehensive approach, managing renewable, gas, and nuclear energy, and showcases Florida Power & Light Company (FPL) as a success in utilizing a diverse energy portfolio. FPL has significantly grown while maintaining high reliability and low customer bills, demonstrating effective energy management during periods of growth.

The paragraph highlights FPL's commitment to being an industry leader by investing in smart capital projects, maintaining high reliability, and keeping customer costs low. As part of its growth strategy, FPL has installed approximately 8.4 gigawatts of solar and battery storage in Florida, saving customers $16 billion in fuel costs since 2001. The company plans to invest $50 billion between 2025 and 2029 to add 25 gigawatts of battery storage by 2034 and accommodate an expected 335,000 new customer accounts by 2029. FPL's multiyear rate plans and strong financial position ensure continued efficiency and reliability. As Florida continues to grow, FPL aims to enhance its infrastructure to support the state's long-term energy needs.

Energy Resources had a strong quarter, adding 3.2 gigawatts of renewables and battery storage projects to its portfolio, marking the fifth time in seven quarters it exceeded 3 gigawatts in additions, highlighting strong demand for renewable energy. The company achieved its largest solar and battery storage origination ever and aims to operate a more than 70 gigawatt generation and storage portfolio by 2027. NextEra Energy, combining FPL and Energy Resources, positions itself as a leader in power generation, with extensive diversification of its supply chain to mitigate tariff risks. The company's strategic sourcing decisions ensure minimal tariff exposure, at less than 0.2% of its capital expenditure through 2028, even before activating trade measure protections in contracts.

The paragraph discusses strategies employed by NextEra Energy to manage risks and capitalize on opportunities in the current market. Emphasizing the value of size and scale, the company aims to reduce its $150 million tariff exposure, potentially to zero, by using its supply chain management to secure U.S.-made batteries and contractually passing tariff risks to suppliers outside China. This approach ensures competitive pricing, makes batteries an attractive alternative to gas-fired plants, and minimizes tariff impacts, thereby maintaining low costs for customers. Additionally, NextEra has implemented nearly $37 billion in interest rate hedges to manage financial risks, notably locking in favorable rates following tariff announcements. These strategic moves enhance their competitive edge and customer relationships in battery storage projects.

The paragraph discusses the planned leadership transition at NextEra Energy, with Rebecca Kujawa retiring after 18 years and being succeeded by Brian Bolster as President and CEO of NextEra Energy Resources. Mike Dunne will replace Brian as CFO. The company highlights the strong strategic and leadership capabilities of the new appointees, emphasizing their readiness to tackle challenges in the energy industry, particularly the high electricity demand in the U.S. They express confidence in their experienced team to continue delivering successfully despite these challenges. The paragraph ends with Mike Dunne beginning to review the first quarter results for 2025, noting an increase in FPL's earnings per share by $0.07 year-over-year.

The paragraph discusses FPL's financial and operational performance, highlighting an 8.1% year-over-year growth in regulatory capital employed and projecting over 10% average annual growth through 2025. The company's capital expenditures for the quarter were $2.4 billion, with an annual expectation between $8 billion and $8.8 billion. FPL's return on equity for regulatory purposes is projected to be 11.6% by March 2025. The company used $622 million of reserve amortization in the first quarter, leaving $274 million. FPL added 894 megawatts of solar power, boosting its solar portfolio to over 7.9 gigawatts, and plans to increase solar generation by over 17 gigawatts and deploy 7.6 gigawatts of battery storage over the next decade. This would raise the solar mix from 9% of total generation in 2024 to 35% by 2034. Additionally, in February 2023, FPL submitted documentation for its 2025 base rate proceeding.

Florida Power & Light (FPL) plans to request a base rate adjustment totaling $1.5 billion starting in January 2026, followed by $927 million in January 2027, and seeks to implement a solar and base rate adjustment mechanism in 2028 and 2029 to fund solar and battery storage projects. These changes aim to keep the average annual residential bill growth at 2.5% from 2025 to 2029, maintaining bills significantly lower than the projected national average and past inflation-adjusted rates. The Florida Public Service Commission will conduct hearings, concluding later this year, to decide on these adjustments. The state’s healthy and rapidly growing economy, including strong customer growth for FPL, underlines the utility’s justification for the rate changes.

The paragraph discusses Energy Resources' financial performance and growth, reporting a nearly 10% increase in adjusted earnings year-over-year. Contributions from new investments in their power generation portfolio increased earnings by $0.12 per share. However, their existing clean energy portfolio saw a $0.03 decline per share due to various business factors, and a $0.01 decrease in the customer supply business. NextEra Energy Transmission contributed an increase of $0.01 per share. Higher interest costs reduced earnings by $0.05 per share, attributed partly to new borrowing for investments. Gas infrastructure was reclassified, and both gas pipelines and upstream gas infrastructure saw a $0.01 decline. Energy Resources added approximately 3.2 gigawatts of new renewables and storage to its backlog, totaling 28 gigawatts. They announced their first solar repowering project, expected by 2026, and plan to include repowering megawatts in development expectations. The backlog growth reflects diverse power demand, with 40% driven by commercial and industrial customers and 60% by power companies.

The paragraph discusses a company's financial outlook and strategy, highlighting their confidence in battery storage as an economical solution for customers' capacity needs. They report a slight decrease in adjusted earnings per share for the first quarter of 2025 but maintain their long-term financial goals. They anticipate growth in both operating cash flow and dividends per share from 2023 to 2027. During the Q&A session, Steve Fleishman from Wolfe Research questions the company about their domestic production of battery components. John Ketchum clarifies that while some parts are sourced internationally, the batteries are assembled in the U.S., meeting domestic content standards due to sufficient local concentration and contractual protections.

The paragraph discusses the protection against tariff exposure for imported parts and components related to batteries, emphasizing that these are backed by substantial credits. John Ketchum expresses confidence in supplier commitments due to NextEra's strong buying power, the credit protections in contracts, and the attractiveness of the U.S. market for suppliers. Steve Fleishman inquires about the implications of changes in transferability under the Inflation Reduction Act (IRA), questioning if existing and safe harbor assets would still be covered if transferability were to be removed.

The paragraph discusses the Fedorchak bill, which involves the phase-down of tech neutrality and the eventual phase-out of transferability, though safe harbor and transferability remain for non-tech neutral sections for four years. The speaker highlights the importance of transferability and tax credits, especially given the cost challenges with gas turbines due to tariffs. They emphasize the need for renewables and storage to meet demand and point out that utilities struggle to utilize tax equity financing, which is a focus in advocacy efforts in Washington.

The paragraph discusses the importance of transferability in tax equity financing for energy projects, particularly nuclear, wind, solar, and battery storage. It highlights that selling part of a plant is necessary for tax equity financing, but this is impractical for nuclear projects. Therefore, transferability of tax credits is crucial to stimulate investment, as it allows companies to monetize credits, thereby increasing household income and encouraging investments, particularly under the 45X credit. Many Republican House Representatives and Senators support maintaining these credits and their transferability, understanding their interconnected nature despite potential legislative challenges.

In this dialogue, Julien Dumoulin-Smith from Jefferies congratulates John and his team on their new roles and asks about the factors contributing to reaching the higher end of their range for 2025. John Ketchum responds that they are confident in their business plan, noting positive first-quarter results. Julien then shifts the topic to inquire about the timing dynamics of tariffs and their impact on customers, specifically regarding higher Power Purchase Agreements (PPAs) and the potential effects similar to those seen with COVID-19 impacts. John asks for clarification to focus on Julien's question about tariffs, not transferability.

In the paragraph, John Ketchum addresses concerns about tariff exposure in their supply chain, explaining that their projected exposure is around $150 million. This estimate is based on their existing supplier contracts and discussions since "Liberation Day." They have mechanisms in place to shift tariff risks to suppliers through supply contracts and have trade measure protection provisions in customer contracts. Consequently, they are optimistic about significantly reducing this exposure, potentially to zero, based on past experiences with circumvention. Ketchum feels confident that tariffs will have minimal impact on their business. He clarifies that the $150 million estimate exists due to certain risk-sharing mechanisms in the contracts, although typically, suppliers bear most of the risk.

In the paragraph, John Ketchum and Julien Dumoulin-Smith discuss financial risk management in contracts, highlighting that a small portion of risk remains but efforts are being made to eliminate it. Ketchum emphasizes there is no battery exposure in their operations, instead seeing batteries as an opportunity. Nick Campanella from Barclays inquires about how tariffs impact returns and competitiveness. Ketchum responds that their strong position and ability to manage risk make them more competitive compared to smaller developers lacking the same buying power and leverage.

The paragraph discusses the company's strategic approach to supply chain management, highlighting that they have been planning for challenges for years, particularly in relation to tariffs. They see these challenges as opportunities, especially as smaller developers struggle to meet commitments, often due to reliance on Chinese manufacturers for batteries. There is also mention of continued progress and demand at the Duane Arnold project, with no major issues. Additionally, there is interest in any updates on the GEV partnership following recent discussions.

The paragraph discusses ongoing advancements under a framework agreement, focusing on collaboration in customer origination and opportunities, especially for large-scale loads. An event called Deploy following Development Day, hosted by Scott and the speaker, gathered companies from various sectors to foster these opportunities. The conversation shifts to the role of gas power for hyperscalers, considering decarbonization goals and gas attributes. John Ketchum highlights three goals: achieving development expectations, addressing large load needs, and facilitating behind and front-of-the-meter solutions. Hyperscalers prefer front-of-the-meter solutions for reliability and power monetization benefits from grid interconnection, though behind-the-meter dialogues continue.

The paragraph discusses the added cost of building redundant power generation, which some consider worthwhile due to difficulties accessing the electricity grid in parts of the U.S. Although these entities aim to connect to the grid eventually, they also explore gas-powered generation as a solution, while being mindful of carbon emissions. The company highlights its ability to create carbon-neutral solutions by combining gas and renewable energy through Virtual Power Purchase Agreements (VPPAs) and other means. This strategy leverages their strong relationships with utilities and the hyperscale market. It then shifts to a discussion where Jeremy Tonet thanks the speaker, and David Arcaro from Morgan Stanley asks about contingency plans for changes in tax credit transfers and financing strategies, directing the question to John Ketchum for his insights.

The paragraph discusses a company's successful use of tax equity to finance projects over the past two decades, with a recent trend of increased interest from tax equity providers due to the company's reliable project completion and performance. It highlights the company's strategy of choosing between tax equity and transferability for optimal project returns, particularly mentioning higher returns with transferability for PTC projects while maintaining similar credit outcomes. Despite potential impacts, the company feels confident in its financing position for transferability. Additionally, there is no change in renewable energy demand from tech customers, especially data centers, as they continue to show strong interest in renewables, complemented by discussions on gas-fired generation as a supplementary solution in areas with limited grid capacity.

In the discussion, John Ketchum addresses a question from Carly Davenport regarding the potential risk of project delays in the renewable sector beyond 2027 due to an uncertain macro environment and complex contract negotiations. Ketchum explains that while there was an initial impact on demand and development expectations due to circumvention issues, leading to some project timelines being adjusted to 2026-2028 and beyond, the current demand for electrons remains strong. Customers are eager to secure energy supplies without delay, as building gas-based solutions has seen increased timelines. Ketchum expresses confidence in the near-term demand, albeit acknowledging some dependence on developments in Washington.

In the paragraph, Bill Appicelli from UBS asks about the impact of the company's 10-year site plan on their capital expenditure program, specifically in relation to a $34 billion to $37 billion budget and future growth projections. Armando Pimentel responds by stating that their capital expenditure plan is set at roughly $50 billion over the next four years and aligns with an expected growth rate of approximately 8.8%. This plan is driven by the addition of 335,000 new customers in the FPL area and the goal of enhancing customer value. Regarding rate cases, John Ketchum mentions that reaching a settlement is preferred but involves negotiations with multiple parties to ensure a favorable outcome for customers.

The paragraph discusses the timing and likelihood of settlements related to a rate case, which are historically made anywhere from six weeks before the rate case starts (mid-August in this situation) to just after it. While a settlement could technically occur at any time, the focus is on preparing a strong case for mid-August. Bill Appicelli asks about the 11.6% return on equity (ROE) and whether it might decrease throughout the year due to surplus amortization. John Ketchum responds that they file their expectations with the commission annually, with the current expectation of maintaining an 11.6% ROE based on normal weather conditions, although this is subject to quarterly reviews. The conversation wraps up as the question-and-answer session concludes.

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