NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2016, 2015 and 2014
1. Summary of Significant Accounting and Reporting Policies
Basis of Presentation
- The operations of NextEra Energy, Inc. (NEE) are conducted primarily through Florida Power & Light Company (FPL), a wholly owned subsidiary, and NextEra Energy Resources, LLC (NEER), a wholly owned indirect subsidiary. FPL, a rate-regulated electric utility, supplies electric service to approximately
4.9
million customer accounts throughout most of the east and lower west coasts of Florida. NEER invests in independent power projects through both controlled and consolidated entities and noncontrolling ownership interests in joint ventures essentially all of which are accounted for under the equity method. NEER also participates in natural gas, natural gas liquids and oil production primarily through non-operating ownership interests and in pipeline infrastructure through either wholly owned subsidiaries or noncontrolling or joint venture interests.
The consolidated financial statements of NEE and FPL include the accounts of their respective majority-owned and controlled subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Certain amounts included in prior years' consolidated financial statements have been reclassified to conform to the current year's presentation. The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
NextEra Energy Partners, LP
- NEE, through NEER, formed NextEra Energy Partners, LP (NEP) to acquire, manage and own contracted clean energy projects with stable, long-term cash flows through a limited partner interest in NextEra Energy Operating Partners, LP (NEP OpCo). On July 1, 2014, NEP closed its initial public offering (IPO) by issuing
18,687,500
common units representing limited partner interests. The proceeds from the sale of the common units, net of underwriting discounts, commissions and structuring fees, were approximately $
438 million
. NEP used such proceeds to purchase
18,687,500
common units of NEP OpCo, of which approximately $
288 million
was used to purchase common units from an indirect wholly owned subsidiary of NEE and $
150 million
was used to purchase common units from NEP OpCo. Through an indirect wholly owned subsidiary, NEE retained
74,440,000
units of NEP OpCo representing a
79.9%
interest in NEP's operating projects. Additionally, NEE owns a controlling general partner interest in NEP and consolidates NEP for financial reporting purposes and presents NEP's limited partner interest as a noncontrolling interest in NEE's consolidated financial statements. Certain equity and asset transactions between NEP, NEER and NEP OpCo involve the exchange of cash, energy projects and ownership interests in NEP OpCo. These exchanges are accounted for under the profit sharing method and resulted in a profit sharing liability, net of amortization, of approximately $
757 million
and $
447 million
at
December 31, 2016
and
2015
, respectively, which is reflected in noncurrent other liabilities on NEE's consolidated balance sheets. The profit sharing liability will be amortized into income on a straight-line basis over the estimated useful lives of the underlying energy projects held by NEP OpCo. Accordingly, the profit sharing liability amortization totaled approximately $
37 million
during 2016 and is included in taxes other than income taxes and other - net in NEE’s consolidated statements of income. During the purchase price adjustment period associated with the IPO, which ended in November 2016, approximately
$288 million
of the profit sharing liability was not amortized.
During 2015 and 2016, NEP sold an additional
35,527,435
common units and purchased an additional
35,527,435
NEP OpCo common units. Also, in 2015, a subsidiary of NEE purchased
27,000,000
of NEP OpCo's common units. After giving effect to these transactions, NEE’s partnership interest in NEP OpCo's operating projects is approximately
65.2%
as of
December 31, 2016
. As of
December 31, 2016
, NEP, through NEER's contribution of energy projects to NEP OpCo, owns or has an interest in a portfolio of
22
wind and solar projects with generating capacity totaling approximately
2,787
megawatts (MW), as well as a portfolio of seven long-term contracted natural gas pipeline assets located in Texas.
In October 2015, NEE authorized a program to purchase, from time to time, up to $
150 million
of common units representing limited partner interests of NEP. Under the program, any purchases may be made in amounts, at prices and at such times as NEE or its subsidiaries deem appropriate, all subject to market conditions and other considerations. The common unit purchase program does not require NEE to acquire any specific number of common units and may be modified or terminated by NEE at any time. The purchases may be made in the open market or in privately negotiated transactions. As of
December 31, 2016
, NEE had purchased approximately $
36 million
of NEP common units under this program.
Rate Regulation
- FPL is subject to rate regulation by the Florida Public Service Commission (FPSC) and the Federal Energy Regulatory Commission (FERC). Its rates are designed to recover the cost of providing electric service to its customers including a reasonable rate of return on invested capital. As a result of this cost-based regulation, FPL follows the accounting guidance that allows regulators to create assets and impose liabilities that would not be recorded by non-rate regulated entities. Regulatory assets and liabilities represent probable future revenues that will be recovered from or refunded to customers through the ratemaking process.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NEE's and FPL's regulatory assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
December 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Regulatory assets:
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
—
|
|
|
$
|
218
|
|
|
$
|
—
|
|
|
$
|
218
|
|
|
Storm reserve deficiency
|
203
|
|
|
—
|
|
|
203
|
|
|
—
|
|
|
Other
|
321
|
|
|
285
|
|
|
321
|
|
|
284
|
|
|
Total
|
$
|
524
|
|
|
$
|
503
|
|
|
$
|
524
|
|
|
$
|
502
|
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased power agreement termination
|
$
|
636
|
|
|
$
|
726
|
|
|
$
|
636
|
|
|
$
|
726
|
|
|
Other
|
1,258
|
|
|
1,052
|
|
|
937
|
|
|
787
|
|
|
Total
|
$
|
1,894
|
|
|
$
|
1,778
|
|
|
$
|
1,573
|
|
|
$
|
1,513
|
|
|
Regulatory liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Derivatives
|
$
|
208
|
|
|
$
|
—
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
Other
|
91
|
|
|
14
|
|
|
86
|
|
|
12
|
|
|
Total
|
$
|
299
|
|
|
$
|
14
|
|
|
$
|
294
|
|
|
$
|
12
|
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued asset removal costs
|
$
|
1,956
|
|
|
$
|
1,930
|
|
|
$
|
1,944
|
|
|
$
|
1,921
|
|
|
Asset retirement obligation regulatory expense difference
|
2,294
|
|
|
2,182
|
|
|
2,294
|
|
|
2,182
|
|
|
Other
|
656
|
|
|
494
|
|
|
655
|
|
|
492
|
|
|
Total
|
$
|
4,906
|
|
|
$
|
4,606
|
|
|
$
|
4,893
|
|
|
$
|
4,595
|
|
Cost recovery clauses, which are designed to permit full recovery of certain costs and provide a return on certain assets allowed to be recovered through various clauses, include substantially all fuel, purchased power and interchange expense, certain costs associated with the acquisition of certain generation facilities, certain construction-related costs for certain of FPL's solar generation facilities, and conservation and certain environmental-related costs.
Revenues from cost recovery clauses are recorded when billed; FPL achieves matching of costs and related revenues by deferring the net underrecovery or overrecovery. Any underrecovered costs or overrecovered revenues are collected from or returned to customers in subsequent periods.
In 2015, FPL assumed ownership of a 250 MW coal-fired generation facility located in Jacksonville, Florida (Cedar Bay generation facility) and terminated its long-term purchased power agreement for substantially all of the facility’s capacity and energy for a purchase price of approximately
$521 million
. The FPSC approved a stipulation and settlement between the State of Florida Office of Public Counsel and FPL regarding issues relating to the ratemaking treatment for the Cedar Bay generation facility which provides for recovery of the purchase price and associated income tax gross-up as a regulatory asset of approximately
$847 million
which will be amortized over approximately
nine years
. At
December 31, 2016 and 2015
, the regulatory assets, net of amortization, totaled approximately
$726 million
and
$817 million
, respectively, and are included in current and noncurrent regulatory assets on NEE’s and FPL’s consolidated balance sheets. This settlement also reduced the reserve amount that was available for amortization under the 2012 rate agreement by
$30 million
to
$370 million
. See Revenues and Rates - FPL Rates Effective January 2013 through December 2016 below. In December 2016, FPL retired the Cedar Bay generation facility.
If FPL were no longer subject to cost-based rate regulation, the existing regulatory assets and liabilities would be written off unless regulators specify an alternative means of recovery or refund. In addition, the FPSC has the authority to disallow recovery of costs that it considers excessive or imprudently incurred. The continued applicability of regulatory accounting is assessed at each reporting period.
Revenues and Rates
- FPL's retail and wholesale utility rate schedules are approved by the FPSC and the FERC, respectively. FPL records unbilled base revenues for the estimated amount of energy delivered to customers but not yet billed. FPL's unbilled base revenues are included in customer receivables on NEE's and FPL's consolidated balance sheets and amounted to approximately
$261 million
and
$246 million
at
December 31, 2016 and 2015
, respectively. FPL's operating revenues also include amounts resulting from cost recovery clauses (see Rate Regulation above), franchise fees, gross receipts taxes and surcharges related to storm-recovery bonds (see Note 8 - FPL). Franchise fees and gross receipts taxes are imposed on FPL; however, the FPSC allows FPL to include in the amounts charged to customers the amount of the gross receipts tax for all customers and the franchise fee for those customers located in the jurisdiction that imposes the amount. Accordingly, franchise fees and gross receipts taxes are reported
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
gross in operating revenues and taxes other than income taxes and other in NEE's and FPL's consolidated statements of income and were approximately
$700 million
,
$722 million
and
$716 million
in
2016, 2015 and 2014
, respectively. The revenues from the surcharges related to storm-recovery bonds included in operating revenues in NEE's and FPL's consolidated statements of income were approximately
$119 million
,
$115 million
and
$109 million
in
2016, 2015 and 2014
, respectively. FPL also collects municipal utility taxes which are reported gross in customer receivables and accounts payable on NEE's and FPL's consolidated balance sheets.
FPL Rates Effective January 2017 through December 2020 - In December 2016, the FPSC issued a final order approving a stipulation and settlement between FPL and several intervenors in FPL's base rate proceeding (2016 rate agreement). Key elements of the 2016 rate agreement, which is effective from January 2017 through at least December 2020, include, among other things, the following:
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|
•
|
New retail base rates and charges were established resulting in the following increases in annualized retail base revenues:
|
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|
|
◦
|
$400 million
beginning January 1, 2017;
|
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◦
|
$211 million
beginning January 1, 2018; and
|
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|
◦
|
$200 million
when a new approximately
1,750
MW natural gas-fired combined-cycle unit in Okeechobee County, Florida achieves commercial operation, which is expected to occur in mid-2019.
|
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•
|
In addition, FPL is eligible to receive, subject to conditions specified in the 2016 rate agreement, base rate increases associated with the addition of up to
300
MW annually of new solar generation in each of 2017 through 2020 and may carry forward any unused MW to subsequent years during the term of the 2016 rate agreement. FPL will be required to demonstrate that any proposed solar facilities are cost effective and scheduled to be in service before December 31, 2021. FPL has agreed to an installed cost cap of
$1,750
per kilowatt (kW).
|
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|
|
|
•
|
FPL's allowed regulatory return on common equity (ROE) is
10.55%
, with a range of
9.60%
to
11.60%
. If FPL's earned regulatory ROE falls below
9.60%
, FPL may seek retail base rate relief. If the earned regulatory ROE rises above
11.60%
, any party other than FPL may seek a review of FPL's retail base rates.
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•
|
Subject to certain conditions, FPL may amortize, over the term of the 2016 rate agreement, up to
$1.0 billion
of depreciation reserve surplus plus the reserve amount remaining under FPL's 2012 rate agreement discussed below (approximately
$250 million
), provided that in any year of the 2016 rate agreement, FPL must amortize at least enough reserve to maintain a
9.60%
earned regulatory ROE but may not amortize any reserve that would result in an earned regulatory ROE in excess of
11.60%
.
|
|
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•
|
Future storm restoration costs would be recoverable on an interim basis beginning
60
days from the filing of a cost recovery petition, but capped at an amount that could produce a surcharge of no more than
$4
for every
1,000
kilowatt-hour (kWh) of usage on residential bills during the first
12
months of cost recovery. Any additional costs would be eligible for recovery in subsequent years. If storm restoration costs exceed
$800 million
in any given calendar year, FPL may request an increase to the
$4
surcharge to recover amounts above
$400 million
.
|
In January 2017, the Sierra Club filed a notice of appeal challenging the FPSC’s final order approving the 2016 rate agreement, which notice of appeal is pending before the Florida Supreme Court.
FPL Rates Effective January 2013 through December 2016 - Effective January 2013, pursuant to an FPSC final order approving a stipulation and settlement between FPL and several intervenors in FPL's base rate proceeding (2012 rate agreement), new retail base rates and charges for FPL were established resulting in an increase in retail base revenues of
$350 million
on an annualized basis. The 2012 rate agreement, provided for, among other things, the following:
|
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|
•
|
a regulatory ROE of
10.50%
with a range of plus or minus
100
basis points;
|
|
|
|
|
•
|
an increase in annualized base revenue requirements as each of three FPL modernized power plants became operational in April 2013, April 2014 and April 2016;
|
|
|
|
|
•
|
the continuation of cost recovery through the capacity clause (reported as retail base revenues) for a generating unit which was placed in service in May 2011 (beginning January 2017, under the 2016 rate agreement, cost recovery will be through base rates);
|
|
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|
|
•
|
subject to certain conditions, the right to reduce depreciation expense up to
$400 million
(reserve), provided that in any year of the 2012 rate agreement, FPL was required to amortize enough reserve to maintain an earned regulatory ROE within the range of
9.50%
to
11.50%
(see Rate Regulation above regarding a subsequent reduction in the reserve amount);
|
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•
|
an interim cost recovery mechanism for storm restoration costs (see Securitized Storm-Recovery Costs, Storm Fund and Storm Reserve below); and
|
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|
•
|
an incentive mechanism whereby customers receive
100%
of certain gains, including but not limited to, gains from the purchase and sale of electricity and natural gas (including transportation and storage), up to a specified threshold; gains exceeding that specified threshold were shared by FPL and its customers.
|
NEER's revenue is recorded on the basis of commodities delivered, contracts settled or services rendered and includes estimated amounts yet to be billed to customers. Certain commodity contracts for the purchase and sale of power that meet the definition of a derivative are recorded at fair value with subsequent changes in fair value recognized as revenue. See Energy Trading below and Note 3.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standards update which provides guidance on the recognition of revenue from contracts with customers and requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows from an entity's contracts with customers. The standards update will be effective for NEE and FPL beginning January 1, 2018 with early adoption on January 1, 2017 permitted. The standards update may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as an adjustment to retained earnings as of the date of initial application (modified retrospective method).
NEE and FPL are currently reviewing individual contracts within various identified revenue streams in order to determine the impact, if any, this standards update will have on their consolidated financial statements. A number of industry-specific implementation issues are still unresolved and the final resolution of certain of these issues could impact NEE's and/or FPL's current accounting policies and/or revenue recognition patterns. NEE and FPL currently anticipate adopting the standards update on January 1, 2018 using the modified retrospective method.
Electric Plant, Depreciation and Amortization
- The cost of additions to units of property of FPL and NEER is added to electric plant in service. In accordance with regulatory accounting, the cost of FPL's units of utility property retired, less estimated net salvage value, is charged to accumulated depreciation. Maintenance and repairs of property as well as replacements and renewals of items determined to be less than units of utility property are charged to other operations and maintenance (O&M) expenses. At
December 31, 2016
, the electric generation, transmission, distribution and general facilities of FPL represented approximately
50%
,
11%
,
33%
and
6%
, respectively, of FPL's gross investment in electric utility plant in service and other property. Substantially all of FPL's properties are subject to the lien of FPL's mortgage, which secures most debt securities issued by FPL. A number of NEER's generation and pipeline facilities are encumbered by liens securing various financings. The net book value of NEER's assets serving as collateral was approximately
$15.5 billion
at
December 31, 2016
. The American Recovery and Reinvestment Act of 2009, as amended (Recovery Act), provided for an option to elect a cash grant (convertible investment tax credits (ITCs)) for certain renewable energy property (renewable property). Convertible ITCs are recorded as a reduction in property, plant and equipment on NEE's and FPL's consolidated balance sheets and are amortized as a reduction to depreciation and amortization expense over the estimated life of the related property. At
December 31, 2016
and
2015
, convertible ITCs, net of amortization, were approximately
$2.1 billion
(
$147 million
at FPL) and
$1.8 billion
(
$153 million
at FPL). At
December 31, 2016
and
2015
, approximately
$289 million
and
$207 million
, respectively, of such convertible ITCs are included primarily in other receivables on NEE's consolidated balance sheets.
Depreciation of FPL's electric property is primarily provided on a straight-line average remaining life basis. FPL includes in depreciation expense a provision for fossil and solar plant dismantlement, interim asset removal costs, accretion related to asset retirement obligations (see Decommissioning of Nuclear Plants, Dismantlement of Plants and Other Accrued Asset Removal Costs below), storm recovery amortization and amortization of pre-construction costs associated with planned nuclear units recovered through a cost recovery clause. For substantially all of FPL's property, depreciation studies are typically performed and filed with the FPSC every
four
years. In accordance with the 2012 rate agreement, FPL was not required to file depreciation studies during the effective period of the agreement; therefore, previously approved depreciation rates which became effective January 1, 2010 remained in effect through December 2016. As discussed in Revenues and Rates above, the use of reserve amortization was permitted under the 2012 rate agreement. In accordance with the 2012 rate agreement, FPL recorded reserve amortization (reversal) of approximately
$13 million
,
$(15) million
and
$(33) million
in
2016, 2015 and 2014
, respectively. The reserve is amortized as a reduction of (or reversed as an increase to) accrued asset removal costs which is reflected in noncurrent regulatory liabilities on NEE's and FPL's consolidated balance sheets. The weighted annual composite depreciation and amortization rate for FPL's electric utility plant in service, including capitalized software, but excluding the effects of decommissioning, dismantlement and the depreciation adjustments discussed above, was approximately
3.4%
,
3.3%
and
3.3%
for
2016, 2015 and 2014
, respectively. As part of the 2016 rate agreement, the FPSC approved new depreciation rates which became effective January 1, 2017. These new rates are expected to increase depreciation expense. The 2016 rate agreement also permits reserve amortization during the term of the agreement. See Revenues and Rates above. FPL files a twelve-month forecast with the FPSC each year which contains a regulatory ROE intended to be earned based on the best information FPL has at that time assuming normal weather. This forecast establishes a fixed targeted regulatory ROE. In order to earn the targeted regulatory ROE in each reporting period under the effective rate agreement, reserve amortization is calculated using a trailing thirteen-month average of retail rate base and capital structure in conjunction with the trailing twelve months regulatory retail base net operating income, which primarily includes the retail base portion of base and other revenues net of O&M, depreciation and amortization, interest and tax expenses. In general, the net impact of these income statement line items is adjusted, in part, by reserve amortization or its reversal to earn the targeted regulatory ROE.
NEER's electric plant in service less salvage value, if any, are depreciated primarily using the straight-line method over their estimated useful lives. At
December 31, 2016 and 2015
, wind, nuclear, natural gas and solar plants represented approximately
62%
and
62%
,
10%
and
11%
, less than
1%
and
3%
, and
14%
and
9%
, respectively, of NEER's depreciable electric plant in service and other property. The estimated useful lives of NEER's plants range primarily from
25
to
30
years for wind, natural gas and solar plants and from
25
to
47
years for nuclear plants. NEER reviews the estimated useful lives of its fixed assets on an ongoing basis. NEER's oil and gas production assets, representing approximately
8%
and
7%
, respectively, of NEER's depreciable electric plant in service and other property at
December 31, 2016 and 2015
, are accounted for under the successful efforts method. Depletion expenses for the acquisition of reserve rights and development costs are recognized using the unit of production method.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Nuclear Fuel
- FPL and NEER have several contracts for the supply of uranium and the conversion, enrichment and fabrication of nuclear fuel. See Note 13 - Contracts. FPL's and NEER's nuclear fuel costs are charged to fuel expense on a unit of production method.
Construction Activity
- Allowance for funds used during construction (AFUDC) is a non-cash item which represents the allowed cost of capital, including an ROE, used to finance construction projects. The portion of AFUDC attributable to borrowed funds is recorded as a reduction of interest expense and the remainder is recorded as other income. For FPL, FPSC rules limit the recording of AFUDC to projects that have an estimated cost in excess of
0.5%
of a utility's plant in service balance and require more than one year to complete. FPSC rules allow construction projects below the
0.5%
threshold as a component of rate base. During each of
2016, 2015 and 2014
, FPL capitalized AFUDC at a rate of
6.34%
, which amounted to approximately
$97 million
,
$88 million
and
$50 million
, respectively. See Note 13 - Commitments.
FPL's construction work in progress includes construction materials, progress payments on major equipment contracts, engineering costs, AFUDC and other costs directly associated with the construction of various projects. Upon completion of the projects, these costs are transferred to electric utility plant in service and other property. Capitalized costs associated with construction activities are charged to O&M expenses when recoverability is no longer probable.
NEER capitalizes project development costs once it is probable that such costs will be realized through the ultimate construction of a power plant or sale of development rights. At
December 31, 2016 and 2015
, NEER's capitalized development costs totaled approximately
$193 million
and
$133 million
, respectively, which are included in noncurrent other assets on NEE's consolidated balance sheets. These costs include land rights and other third-party costs directly associated with the development of a new project. Upon commencement of construction, these costs either are transferred to construction work in progress or remain in other assets, depending upon the nature of the cost. Capitalized development costs are charged to O&M expenses when it is no longer probable that these costs will be realized.
NEER's construction work in progress includes construction materials, progress payments on major equipment contracts, third-party engineering costs, capitalized interest and other costs directly associated with the construction and development of various projects. Interest capitalized on construction projects amounted to approximately
$107 million
,
$100 million
and
$104 million
during
2016, 2015 and 2014
, respectively. Interest expense allocated from NextEra Energy Capital Holdings, Inc. (NEECH) to NEER is based on a deemed capital structure of
70%
debt. Upon commencement of plant operation, costs associated with construction work in progress are transferred to electric plant in service and other property.
Asset Retirement Obligations
- NEE and FPL each account for asset retirement obligations and conditional asset retirement obligations (collectively, AROs) under accounting guidance that requires a liability for the fair value of an ARO to be recognized in the period in which it is incurred if it can be reasonably estimated, with the offsetting associated asset retirement costs capitalized as part of the carrying amount of the long-lived assets. The asset retirement cost is subsequently allocated to expense, for NEE's non-rate regulated operations, and regulatory liability, for FPL, using a systematic and rational method over the asset’s estimated useful life. Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense, which is included in depreciation and amortization expense in the consolidated statements of income for NEE's non-rate regulated operations, and ARO and regulatory liability, in the case of FPL. Changes resulting from revisions to the timing or amount of the original estimate of cash flows are recognized as an increase or a decrease in the asset retirement cost, or income when asset retirement cost is depleted, in the case of NEE's non-rate regulated operations, and ARO and regulatory liability, in the case of FPL. See Decommissioning of Nuclear Plants, Dismantlement of Plants and Other Accrued Asset Removal Costs below and Note 12.
Decommissioning of Nuclear Plants, Dismantlement of Plants and Other Accrued Asset Removal Costs
- For ratemaking purposes, FPL accrues for the cost of end of life retirement and disposal of its nuclear, fossil and solar plants over the expected service life of each unit based on nuclear decommissioning and fossil and solar dismantlement studies periodically filed with the FPSC. In addition, FPL accrues for interim removal costs over the life of the related assets based on depreciation studies approved by the FPSC. As approved by the FPSC, FPL previously suspended its annual decommissioning accrual. For financial reporting purposes, FPL recognizes decommissioning and dismantlement liabilities in accordance with accounting guidance that requires a liability for the fair value of an ARO to be recognized in the period in which it is incurred. Any differences between expense recognized for financial reporting purposes and the amount recovered through rates are reported as a regulatory liability in accordance with regulatory accounting. See Revenues and Rates, Electric Plant, Depreciation and Amortization, Asset Retirement Obligations above and Note 12.
Nuclear decommissioning studies are performed at least every
five
years and are submitted to the FPSC for approval. FPL filed updated nuclear decommissioning studies with the FPSC in December 2015. These studies reflect FPL's current plans, under the operating licenses, for prompt dismantlement of Turkey Point Units Nos. 3 and 4 following the end of plant operation with decommissioning activities commencing in 2032 and 2033, respectively, and provide for St. Lucie Unit No. 1 to be mothballed beginning in 2036 with decommissioning activities to be integrated with the prompt dismantlement of St. Lucie Unit No. 2 in 2043. These studies also assume that FPL will be storing spent fuel on site pending removal to a United States (U.S.) government facility. The studies indicate FPL's portion of the ultimate costs of decommissioning its
four
nuclear units, including costs associated with
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
spent fuel storage above what is expected to be refunded by the U.S. Department of Energy (DOE) under a spent fuel settlement agreement, to be approximately
$7.5 billion
, or
$3.0 billion
expressed in
2016
dollars.
Restricted funds for the payment of future expenditures to decommission FPL's nuclear units are included in nuclear decommissioning reserve funds, which are included in special use funds on NEE's and FPL's consolidated balance sheets. Marketable securities held in the decommissioning funds are primarily classified as available for sale and carried at fair value. See Note 4. Fund earnings, consisting of dividends, interest and realized gains and losses, net of taxes, are reinvested in the funds. Fund earnings, as well as any changes in unrealized gains and losses, are not recognized in income and are reflected as a corresponding offset in the related regulatory liability accounts. FPL does not currently make contributions to the decommissioning funds, other than the reinvestment of fund earnings. During
2016
,
2015
and
2014
fund earnings on decommissioning funds were approximately
$102 million
,
$96 million
and
$91 million
, respectively. The tax effects of amounts not yet recognized for tax purposes are included in deferred income taxes.
Fossil and solar plant dismantlement studies are typically performed at least every
four
years and are submitted to the FPSC for approval. In accordance with the 2012 rate agreement, FPL was not required to file fossil and solar dismantlement studies during the effective period of the agreement; therefore, previously approved studies which became effective January 1, 2010 remained in effect through December 2016 and resulted in an annual expense of
$18 million
which is recorded in depreciation and amortization expense in NEE's and FPL's consolidated statements of income. As part of the 2016 rate agreement, the FPSC approved a new annual expense of
$26 million
based on FPL's 2016 fossil and solar dismantlement studies which became effective January 1, 2017. At
December 31, 2016
, FPL's portion of the ultimate cost to dismantle its fossil and solar units is approximately
$1.3 billion
, or
$480 million
expressed in
2016
dollars.
NEER records nuclear decommissioning liabilities for Seabrook Station (Seabrook), Duane Arnold Energy Center (Duane Arnold) and Point Beach Nuclear Power Plant (Point Beach) and dismantlement liabilities for its wind and solar facilities, when required in accordance with accounting guidance that requires a liability for the fair value of an ARO to be recognized in the period in which it is incurred. The liabilities are being accreted using the interest method through the date decommissioning or dismantlement activities are expected to be complete. See Note 12. At
December 31, 2016 and 2015
, NEER's ARO, which is primarily related to nuclear decommissioning and wind and solar dismantlement, was approximately
$817 million
and
$647 million
, respectively, and was primarily determined using various internal and external data and applying a probability percentage to a variety of scenarios regarding the life of the plant and timing of decommissioning or dismantlement. NEER's portion of the ultimate cost of decommissioning its nuclear plants, including costs associated with spent fuel storage above what is expected to be refunded by the DOE under a spent fuel settlement agreement, is estimated to be approximately
$11.8 billion
, or
$2.0 billion
expressed in
2016
dollars. The
ultimate cost to dismantle NEER's wind and solar facilities is estimated to be approximately
$1.8 billion
.
Seabrook files a comprehensive nuclear decommissioning study with the New Hampshire Nuclear Decommissioning Financing Committee (NDFC) every
four
years; the most recent study was filed in 2015. Seabrook's decommissioning funding plan is also subject to annual review by the NDFC. Currently, there are no ongoing decommissioning funding requirements for Seabrook, Duane Arnold and Point Beach, however, the U.S. Nuclear Regulatory Commission (NRC), and in the case of Seabrook, the NDFC, has the authority to require additional funding in the future. NEER's portion of Seabrook's, Duane Arnold's and Point Beach's restricted funds for the payment of future expenditures to decommission these plants is included in nuclear decommissioning reserve funds, which are included in special use funds on NEE's consolidated balance sheets. Marketable securities held in the decommissioning funds are primarily classified as available for sale and carried at fair value. Market adjustments result in a corresponding adjustment to other comprehensive income (OCI), except for unrealized losses associated with marketable securities considered to be other than temporary, including any credit losses, which are recognized as other than temporary impairment losses on securities held in nuclear decommissioning funds in NEE's consolidated statements of income. Fund earnings are recognized in income and are reinvested in the funds. See Note 4. The tax effects of amounts not yet recognized for tax purposes are included in deferred income taxes.
Major Maintenance Costs
- FPL recognizes costs associated with planned major nuclear maintenance in accordance with regulatory treatment and records the related accrual as a regulatory liability. FPL expenses costs associated with planned fossil maintenance as incurred. FPL's estimated nuclear maintenance costs for each nuclear unit's next planned outage are accrued over the period from the end of the last outage to the end of the next planned outage. Any difference between the estimated and actual costs is included in O&M expenses when known. The accrued liability for nuclear maintenance costs at
December 31, 2016 and 2015
totaled approximately
$65 million
and
$48 million
, respectively, and is included in noncurrent regulatory liabilities on NEE's and FPL's consolidated balance sheets. For the years ended
December 31, 2016, 2015 and 2014
, FPL recognized approximately
$89 million
,
$90 million
and
$76 million
, respectively, in nuclear maintenance costs which are primarily included in O&M expenses in NEE's and FPL's consolidated statements of income.
NEER uses the deferral method to account for certain planned major maintenance costs. NEER's major maintenance costs for its nuclear generation units and combustion turbines are capitalized and amortized on a unit of production method over the period from the end of the last outage to the beginning of the next planned outage. NEER's capitalized major maintenance costs, net of accumulated amortization, totaled approximately
$69 million
and
$97 million
at
December 31, 2016 and 2015
, respectively, and are included in noncurrent other assets on NEE's consolidated balance sheets. For the years ended
December 31, 2016, 2015 and
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2014
, NEER amortized approximately
$74 million
,
$79 million
and
$81 million
in major maintenance costs which are included in O&M expenses in NEE's consolidated statements of income.
Cash Equivalents
- Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less.
Restricted Cash
- At
December 31, 2016 and 2015
, NEE had approximately
$311 million
(
$120 million
for FPL) and
$244 million
($
75 million
for FPL), respectively, of restricted cash included in other current assets on NEE's and FPL's consolidated balance sheets, which was primarily related to margin cash collateral requirements, debt service payments and bond proceeds held for construction at FPL. Where offsetting positions exist, restricted cash related to margin cash collateral is netted against derivative instruments. See Note 3.
Allowance for Doubtful Accounts
- FPL maintains an accumulated provision for uncollectible customer accounts receivable that is estimated using a percentage, derived from historical revenue and write-off trends, of the previous five months of revenue. Additional amounts are included in the provision to address specific items that are not considered in the calculation described above. NEER regularly reviews collectibility of its receivables and establishes a provision for losses estimated as a percentage of accounts receivable based on the historical bad debt write-off trends for its retail electricity provider operations and, when necessary, using the specific identification method for all other receivables.
Inventory
- FPL values materials, supplies and fossil fuel inventory using a weighted-average cost method. NEER's materials, supplies and fossil fuel inventories are carried at the lower of weighted-average cost or market, unless evidence indicates that the weighted-average cost (even if in excess of market) will be recovered with a normal profit upon sale in the ordinary course of business.
Energy Trading
- NEE provides full energy and capacity requirements services primarily to distribution utilities, which include load-following services and various ancillary services, in certain markets and engages in power and gas marketing and trading activities to optimize the value of electricity and fuel contracts, generation facilities and gas infrastructure assets, as well as to take advantage of projected favorable commodity price movements. Trading contracts that meet the definition of a derivative are accounted for at fair value and realized gains and losses from all trading contracts, including those where physical delivery is required, are recorded net for all periods presented. See Note 3.
Securitized Storm-Recovery Costs, Storm Fund and Storm Reserve
- In connection with the 2007 storm-recovery bond financing (see Note 8 - FPL), the net proceeds to FPL from the sale of the storm-recovery property were used primarily to reimburse FPL for its estimated net of tax deficiency in its storm and property insurance reserve (storm reserve) and provide for a storm and property insurance reserve fund (storm fund). Upon the issuance of the storm-recovery bonds, the storm reserve deficiency was reclassified to securitized storm-recovery costs which is recorded as a current and noncurrent regulatory asset on NEE's and FPL's consolidated balance sheets. As storm-recovery charges are billed to customers (which are included in operating revenues), the securitized storm-recovery costs are amortized and included in depreciation and amortization expense in NEE's and FPL's consolidated statements of income. Marketable securities held in the storm fund are classified as available for sale and are carried at fair value. See Note 4. Fund earnings, consisting of dividends, interest and realized gains and losses, net of taxes, are reinvested in the fund. Fund earnings, as well as any changes in unrealized gains and losses, are not recognized in income and are reflected as a corresponding adjustment to the storm reserve. The tax effects of amounts not yet recognized for tax purposes are included in deferred income taxes. The storm fund is included in special use funds on NEE's and FPL's consolidated balance sheets and was approximately
$74 million
at
December 31, 2015
. During the fourth quarter of 2016, all available funds were withdrawn from the storm fund to pay for the storm restoration costs associated with Hurricane Hermine and Hurricane Matthew (see below regarding Hurricane Hermine and Hurricane Matthew).
FPL was impacted by Hurricane Hermine in September 2016 and Hurricane Matthew in October 2016. Hurricane Matthew resulted in damage in much of FPL's service territory and caused approximately
1.2 million
of FPL's customers to lose electrical service. Damage to FPL property was primarily limited to the transmission and distribution systems. Storm restoration costs eligible for recovery for both events totaled approximately
$315 million
, the majority of which relates to Hurricane Matthew. Prior to these storms, FPL's storm and property insurance reserve had the capacity to absorb approximately
$112 million
in additional storm restoration costs (
$20 million
of which was absorbed by Hurricane Hermine). At December 31, 2016, FPL's storm and property insurance reserve was fully depleted and storm restoration costs expected to be recoverable from customers exceeded the balance of the storm reserve by approximately
$203 million
. This deficiency has been deferred and recorded as a regulatory asset on NEE's and FPL's consolidated balance sheets. In February 2017, the FPSC approved FPL’s request to begin recovering eligible storm restoration costs over the reserve amount, plus approximately
$117 million
to replenish the reserve to the level authorized by the 2012 rate agreement. The recovery will take place through an interim surcharge that applies for a 12-month period starting March 1, 2017, with the amount collected subject to refund based on an FPSC prudence review.
The replenished reserve will not initially be reflected on NEE’s and FPL’s consolidated balance sheets because the associated regulatory asset does not meet the specific recognition criteria under the accounting guidance for certain regulated entities. As a result, as the storm surcharge is billed to customers (which is recorded as operating revenues), the storm reserve will be recognized
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
as a regulatory liability and charged to depreciation and amortization expense in NEE’s and FPL’s consolidated statements of income.
Impairment of Long-Lived Assets
-
NEE evaluates long-lived assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset. The impairment loss to be recognized is the amount by which the carrying value of the long-lived asset exceeds the asset's fair value. In most instances, the fair value is determined by discounting estimated future cash flows using an appropriate interest rate.
Goodwill and Other Intangible Assets
- NEE's goodwill and other intangible assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-
Average
Useful Lives
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
|
(years)
|
|
(millions)
|
|
Goodwill (by reporting unit):
|
|
|
|
|
|
|
NEER segment:
|
|
|
|
|
|
|
Gas infrastructure, primarily Texas pipelines
|
|
|
$
|
641
|
|
|
$
|
635
|
|
|
Customer supply
|
|
|
72
|
|
|
72
|
|
|
Generation assets
|
|
|
38
|
|
|
43
|
|
|
Other
|
|
|
28
|
|
|
28
|
|
|
Total goodwill
|
|
|
$
|
779
|
|
|
$
|
778
|
|
|
Other intangible assets not subject to amortization, primarily land easements
|
|
|
$
|
143
|
|
|
$
|
143
|
|
|
Other intangible assets subject to amortization:
|
|
|
|
|
|
|
Customer relationships associated with gas infrastructure
|
41
|
|
$
|
700
|
|
|
$
|
720
|
|
|
Purchased power agreements
|
22
|
|
444
|
|
|
328
|
|
|
Other, primarily transmission and development rights and customer lists
|
19
|
|
81
|
|
|
136
|
|
|
Total
|
|
|
1,225
|
|
|
1,184
|
|
|
Accumulated amortization
|
|
|
(115
|
)
|
|
(120
|
)
|
|
Total other intangible assets subject to amortization - net
|
|
|
$
|
1,110
|
|
|
$
|
1,064
|
|
NEE's goodwill relates to various acquisitions which were accounted for using the purchase method of accounting. Other intangible assets subject to amortization are amortized, primarily on a straight-line basis, over their estimated useful lives. Amortization expense was approximately
$35 million
,
$17 million
and
$15 million
for the years ended
December 31, 2016, 2015 and 2014
, respectively, and is expected to be approximately $
31 million
,
$46 million
,
$39 million
,
$26 million
and
$19 million
for 2017, 2018, 2019, 2020 and 2021, respectively.
Goodwill and other intangible assets are primarily included in noncurrent other assets on NEE's consolidated balance sheets. Goodwill and other intangible assets not subject to amortization are assessed for impairment at least annually by applying a fair value-based analysis. Other intangible assets subject to amortization are periodically reviewed when impairment indicators are present to assess recoverability from future operations using undiscounted future cash flows.
Pension Plan
- NEE allocates net periodic pension income to its subsidiaries based on the pensionable earnings of the subsidiaries' employees. Accounting guidance requires recognition of the funded status of the pension plan in the balance sheet, with changes in the funded status recognized in other comprehensive income within shareholders' equity in the year in which the changes occur. Since NEE is the plan sponsor, and its subsidiaries do not have separate rights to the plan assets or direct obligations to their employees, this accounting guidance is reflected at NEE and not allocated to the subsidiaries. The portion of previously unrecognized actuarial gains and losses and prior service costs or credits that are estimated to be allocable to FPL as net periodic (income) cost in future periods and that otherwise would be recorded in accumulated other comprehensive income (AOCI) are classified as regulatory assets and liabilities at NEE in accordance with regulatory treatment.
Stock-Based Compensation
- NEE accounts for stock-based payment transactions based on grant-date fair value. Compensation costs for awards with graded vesting are recognized on a straight-line basis over the requisite service period for the entire award. See Note 10 - Stock-Based Compensation.
Income Taxes
- Deferred income taxes are recognized on all significant temporary differences between the financial statement and tax bases of assets and liabilities, and are presented as noncurrent on NEE's and FPL's consolidated balance sheets. In connection with the tax sharing agreement between NEE and certain of its subsidiaries, the income tax provision at each applicable subsidiary reflects the use of the "separate return method," except that tax benefits that could not be used on a separate return basis, but are used on the consolidated tax return, are recorded by the subsidiary that generated the tax benefits. Any remaining consolidated
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
income tax benefits or expenses are recorded at the corporate level. Included in other regulatory assets and other regulatory liabilities on NEE's and FPL's consolidated balance sheets is the revenue equivalent of the difference in deferred income taxes computed under accounting rules, as compared to regulatory accounting rules. The net regulatory asset totaled $
289 million
(
$266 million
for FPL) and $
283 million
(
$268 million
for FPL) at
December 31, 2016
and
2015
, respectively, and is being amortized in accordance with the regulatory treatment over the estimated lives of the assets or liabilities for which the deferred tax amount was initially recognized.
Production tax credits (PTCs) are recognized as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes and are recorded as a reduction of current income taxes payable, unless limited by tax law in which instance they are recorded as deferred tax assets. NEER recognizes ITCs as a reduction to income tax expense when the related energy property is placed into service. FPL recognizes ITCs as a reduction to income tax expense over the depreciable life of the related energy property. At
December 31, 2016 and 2015
, FPL’s accumulated deferred ITCs were approximately $
123 million
and $
3 million
, respectively, and are included in noncurrent regulatory liabilities on NEE's and FPL's consolidated balance sheets. NEE and FPL record a deferred income tax benefit created by the convertible ITCs on the difference between the financial statement and tax bases of renewable property. For NEER, this deferred income tax benefit is recorded in income tax expense in the year that the renewable property is placed in service. For FPL, this deferred income tax benefit is offset by a regulatory liability, which is amortized as a reduction of depreciation expense over the approximate lives of the related renewable property in accordance with the regulatory treatment. At
December 31, 2016
and
2015
, the net deferred income tax benefits associated with FPL's convertible ITCs were approximately $
46 million
and $
48 million
, respectively, and are included in noncurrent regulatory assets and noncurrent regulatory liabilities on NEE's and FPL's consolidated balance sheets.
A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets when it is more likely than not that such assets will not be realized. NEE recognizes interest income (expense) related to unrecognized tax benefits (liabilities) in interest income and interest expense, respectively, net of the amount deferred at FPL. At FPL, the offset to accrued interest receivable (payable) on income taxes is classified as a regulatory liability (regulatory asset) which will be amortized to income (expense) over a five-year period upon settlement in accordance with regulatory treatment. All tax positions taken by NEE in its income tax returns that are recognized in the financial statements must satisfy a more-likely-than-not threshold. NEE and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states, the most significant of which is Florida, and certain foreign jurisdictions. Federal tax liabilities, with the exception of certain refund claims, are effectively settled for all years prior to 2013. State and foreign tax liabilities, which have varied statutes of limitations regarding additional assessments, are generally effectively settled for years prior to 2009. At
December 31, 2016
, NEE had unrecognized tax benefits of approximately $
40 million
that, if disallowed, could impact the annual effective income tax rate. The amounts of unrecognized tax benefits and related interest accruals may change within the next 12 months; however, NEE and FPL do not expect these changes to have a significant impact on NEE’s or FPL’s financial statements. See Note 5.
Sale of Differential Membership Interests
- Certain subsidiaries of NEER sold their Class B membership interest in entities that have ownership interests in wind and solar facilities, with generating capacity totaling approximately
6,847
MW and
374
MW, respectively, at
December 31, 2016
, to third-party investors. In exchange for the cash received, the holders of the Class B membership interests will receive a portion of the economic attributes of the facilities, including income tax attributes, for variable periods. The transactions are not treated as a sale under the accounting rules and the proceeds received are deferred and recorded as a liability in deferral related to differential membership interests - VIEs on NEE's consolidated balance sheets. The deferred amount is being recognized in benefits associated with differential membership interests - net in NEE's consolidated statements of income as the Class B members receive their portion of the economic attributes. NEE continues to operate and manage the wind and solar facilities, and consolidates the entities that own the wind and solar facilities.
Variable Interest Entities (VIEs)
- An entity is considered to be a VIE when its total equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support, or its equity investors, as a group, lack the characteristics of having a controlling financial interest. A reporting company is required to consolidate a VIE as its primary beneficiary when it has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. NEE and FPL evaluate whether an entity is a VIE whenever reconsideration events as defined by the accounting guidance occur. See Note 8.
Leases
- In February 2016, the FASB issued an accounting standards update which requires, among other things, that lessees recognize a lease liability, initially measured at the present value of the future lease payments; and a right-of-use asset for all leases (with the exception of short-term leases). The standards update will be effective for NEE and FPL beginning January 1, 2019. Early adoption is permitted. Lessees and lessors must apply a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. NEE and FPL are currently reviewing their portfolio of contracts and are in the process of determining the proper application of the standards update to these contracts in order to determine the impact the adoption will have on their consolidated financial statements, including timing of adoption.
Merger Termination
- In 2014, NEE and Hawaiian Electric Industries, Inc. (HEI) entered into an Agreement and Plan of Merger (the HEI merger agreement) pursuant to which Hawaiian Electric Company, Inc. (HECO), HEI's wholly owned electric utility subsidiary, was to become a wholly owned subsidiary of NEE. In July 2016, the Hawaii Public Utilities Commission issued an order dismissing
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NEE's and HECO's merger application and, as a result, NEE terminated the HEI merger agreement. Pursuant to the terms of the HEI merger agreement, NEE paid HEI a termination fee of
$90 million
plus reimbursement to HEI for out-of-pocket expenses incurred in connection with the HEI merger agreement of
$5 million
, which is included in merger-related expenses in NEE's consolidated statements of income for the year ended December 31, 2016.
Assets and Liabilities Associated with Assets Held for Sale -
In April 2016, a subsidiary of NEER completed the sale of its ownership interest in merchant natural gas generation facilities located in Texas with a total generating capacity of
2,884
MW for net cash proceeds of approximately
$456 million
, after transaction costs and working capital adjustments. A NEER affiliate continued to operate the facilities included in the sale through September 2016. In connection with the sale and the related consolidating state income tax effects, a gain of approximately
$254 million
(
$106 million
after tax) was recorded in NEE's consolidated statements of income for the year ended
December 31, 2016
and is included in losses (gains) on disposal of assets - net. The carrying amounts of the major classes of assets and liabilities related to the facilities that were classified as held for sale on NEE's consolidated balance sheets as of
December 31, 2015
primarily represent property, plant and equipment and the related long-term debt.
In 2016, a subsidiary of NEER initiated a plan, received internal authorization and completed the sale of its ownership interest in natural gas generation facilities located primarily in Pennsylvania with a total generating capacity of
840
MW for net cash proceeds of approximately
$260 million
, after transaction costs and working capital adjustments. In connection with the sale and the related consolidating state income tax effects, a gain of approximately
$191 million
($
113 million
after tax) was recorded in NEE's consolidated statements of income for the year ended
December 31, 2016
and is included in losses (gains) on disposal of assets - net.
In January 2017, an indirect wholly owned subsidiary of NEE completed the sale of its membership interests in its fiber-optic telecommunications business (FPL FiberNet) for net cash proceeds of approximately
$1.1 billion
, after repayment of
$370 million
of related long-term debt. In connection with the sale and the related consolidating state income tax effects, a gain of approximately
$1.1 billion
(approximately
$700 million
after tax) will be recorded in NEE's consolidated statements of income during the three-months ended March 31, 2017. The carrying amounts of the major classes of assets and liabilities related to FPL FiberNet that were classified as held for sale on NEE's consolidated balance sheets as of
December 31, 2016
primarily represent property, plant and equipment and the related long-term debt.
2. Employee Retirement Benefits
Employee Pension Plan and Other Benefits Plans
- NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries. NEE also has a supplemental executive retirement plan (SERP), which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees, and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements. The total accrued benefit cost of the SERP and postretirement plans is approximately
$325 million
(
$222 million
for FPL) and
$321 million
(
$230 million
for FPL) at
December 31, 2016 and 2015
, respectively.
Pension Plan Assets, Benefit Obligations and Funded Status - The changes in assets, benefit obligations and the funded status of the pension plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Change in pension plan assets:
|
|
|
|
|
Fair value of plan assets at January 1
|
$
|
3,563
|
|
|
$
|
3,698
|
|
|
Actual return on plan assets
|
217
|
|
|
(8
|
)
|
|
Benefit payments
|
(129
|
)
|
|
(127
|
)
|
|
Fair value of plan assets at December 31
|
$
|
3,651
|
|
|
$
|
3,563
|
|
|
Change in pension benefit obligation:
|
|
|
|
|
|
|
Obligation at January 1
|
$
|
2,408
|
|
|
$
|
2,454
|
|
|
Service cost
|
62
|
|
|
70
|
|
|
Interest cost
|
105
|
|
|
97
|
|
|
Plan amendments
|
(19
|
)
|
|
—
|
|
|
Actuarial losses (gains) - net
|
47
|
|
|
(86
|
)
|
|
Benefit payments
|
(129
|
)
|
|
(127
|
)
|
|
Obligation at December 31
(a)
|
$
|
2,474
|
|
|
$
|
2,408
|
|
|
Funded status:
|
|
|
|
|
|
|
Prepaid pension benefit costs at NEE at December 31
|
$
|
1,177
|
|
|
$
|
1,155
|
|
|
Prepaid pension benefit costs at FPL at December 31
|
$
|
1,301
|
|
|
$
|
1,243
|
|
_________________________
|
|
|
|
(a)
|
NEE's accumulated pension benefit obligation, which includes no assumption about future salary levels, at
December 31, 2016
and
2015
was approximately $
2,439 million
and $
2,366 million
, respectively.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NEE's unrecognized amounts included in accumulated other comprehensive income (loss) yet to be recognized as components of prepaid pension benefit costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Unrecognized prior service benefit (cost) (net of $2 tax expense and $1 tax benefit, respectively)
|
$
|
3
|
|
|
$
|
(2
|
)
|
|
Unrecognized losses (net of $55 and $38 tax benefit, respectively)
|
(87
|
)
|
|
(60
|
)
|
|
Total
|
$
|
(84
|
)
|
|
$
|
(62
|
)
|
NEE's unrecognized amounts included in regulatory assets yet to be recognized as components of net prepaid pension benefit costs are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Unrecognized prior service cost (benefit)
|
$
|
(4
|
)
|
|
$
|
9
|
|
|
Unrecognized losses
|
280
|
|
|
232
|
|
|
Total
|
$
|
276
|
|
|
$
|
241
|
|
The following table provides the assumptions used to determine the benefit obligation for the pension plan. These rates are used in determining net periodic income in the following year.
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Discount rate
(a)
|
4.09
|
%
|
|
4.35
|
%
|
|
Salary increase
|
4.10
|
%
|
|
4.10
|
%
|
_________________________
|
|
|
|
(a)
|
Beginning in 2017, NEE changed its method of estimating the interest cost component of net periodic benefit costs and will use a full yield curve approach by applying a specific spot rate along the yield curve rather than a single weighted-average discount rate. Such change is not expected to have a material impact on the pension and postretirement plans' net periodic benefit costs.
|
NEE's investment policy for the pension plan recognizes the benefit of protecting the plan's funded status, thereby avoiding the necessity of future employer contributions. Its broad objectives are to achieve a high rate of total return with a prudent level of risk taking while maintaining sufficient liquidity and diversification to avoid large losses and preserve capital over the long term.
The NEE pension plan fund's current target asset allocation, which is expected to be reached over time, is
45%
equity investments,
32%
fixed income investments,
13%
alternative investments and
10%
convertible securities. The pension fund's investment strategy emphasizes traditional investments, broadly diversified across the global equity and fixed income markets, using a combination of different investment styles and vehicles. The pension fund's equity and fixed income holdings consist of both directly held securities as well as commingled investment arrangements such as common and collective trusts, pooled separate accounts, registered investment companies and limited partnerships. The pension fund's convertible security assets are principally direct holdings of convertible securities and include a convertible security oriented limited partnership. The pension fund's alternative investments consist primarily of private equity and real estate oriented investments in limited partnerships as well as absolute return oriented limited partnerships that use a broad range of investment strategies on a global basis.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The fair value measurements of NEE's pension plan assets by fair value hierarchy level are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
(a)
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
|
(millions)
|
|
Equity securities
(b)
|
$
|
879
|
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
898
|
|
|
Equity commingled vehicles
(c)
|
—
|
|
|
845
|
|
|
—
|
|
|
845
|
|
|
U.S. Government and municipal bonds
|
143
|
|
|
12
|
|
|
—
|
|
|
155
|
|
|
Corporate debt securities
(d)
|
3
|
|
|
246
|
|
|
1
|
|
|
250
|
|
|
Asset-backed securities
|
—
|
|
|
124
|
|
|
—
|
|
|
124
|
|
|
Debt security commingled vehicles
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
Convertible securities
(e)
|
21
|
|
|
277
|
|
|
—
|
|
|
298
|
|
|
Total investments in the fair value hierarchy
|
$
|
1,046
|
|
|
$
|
1,542
|
|
|
$
|
4
|
|
|
2,592
|
|
|
Total investments measured at net asset value
(f)
|
|
|
|
|
|
|
1,059
|
|
|
Total fair value of plan assets
|
|
|
|
|
|
|
$
|
3,651
|
|
______________________
|
|
|
|
(a)
|
See Note 4 for discussion of fair value measurement techniques and inputs.
|
|
|
|
|
(b)
|
Includes foreign investments of $
370 million
.
|
|
|
|
|
(c)
|
Includes foreign investments of $
261 million
.
|
|
|
|
|
(d)
|
Includes foreign investments of $
67 million
.
|
|
|
|
|
(e)
|
Includes foreign investments of $
31 million
.
|
|
|
|
|
(f)
|
Includes foreign investments of $
282 million
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
(a)
|
|
|
Quoted Prices
in Active
Markets for
Identical Assets
or Liabilities
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
|
|
(millions)
|
|
Equity securities
(b)
|
$
|
910
|
|
|
$
|
21
|
|
|
$
|
1
|
|
|
$
|
932
|
|
|
Equity commingled vehicles
(c)
|
—
|
|
|
792
|
|
|
—
|
|
|
792
|
|
|
U.S. Government and municipal bonds
|
110
|
|
|
13
|
|
|
—
|
|
|
123
|
|
|
Corporate debt securities
(d)
|
2
|
|
|
277
|
|
|
1
|
|
|
280
|
|
|
Asset-backed securities
|
—
|
|
|
167
|
|
|
—
|
|
|
167
|
|
|
Debt security commingled vehicles
|
—
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
Convertible securities
(e)
|
16
|
|
|
258
|
|
|
—
|
|
|
274
|
|
|
Total investments in the fair value hierarchy
|
$
|
1,038
|
|
|
$
|
1,549
|
|
|
$
|
2
|
|
|
2,589
|
|
|
Total investments measured at net asset value
(f)
|
|
|
|
|
|
|
974
|
|
|
Total fair value of plan assets
|
|
|
|
|
|
|
$
|
3,563
|
|
______________________
|
|
|
|
(a)
|
See Note 4 for discussion of fair value measurement techniques and inputs.
|
|
|
|
|
(b)
|
Includes foreign investments of $
384 million
.
|
|
|
|
|
(c)
|
Includes foreign investments of $
249 million
.
|
|
|
|
|
(d)
|
Includes foreign investments of $
68 million
.
|
|
|
|
|
(e)
|
Includes foreign investments of $
23 million
.
|
|
|
|
|
(f)
|
Includes foreign investments of $
283 million
.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Expected Cash Flows - The following table provides information about benefit payments expected to be paid by the pension plan for each of the following calendar years (in millions):
|
|
|
|
|
|
|
|
2017
|
$
|
155
|
|
|
2018
|
$
|
156
|
|
|
2019
|
$
|
160
|
|
|
2020
|
$
|
163
|
|
|
2021
|
$
|
170
|
|
|
2022 - 2026
|
$
|
879
|
|
Net Periodic (Income) Cost - The components of net periodic (income) cost for the plans are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
|
|
|
(millions)
|
|
|
|
Service cost
|
$
|
62
|
|
|
$
|
70
|
|
|
$
|
61
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
Interest cost
|
105
|
|
|
97
|
|
|
101
|
|
|
13
|
|
|
13
|
|
|
16
|
|
|
Expected return on plan assets
|
(260
|
)
|
|
(253
|
)
|
|
(241
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
Amortization of prior service cost (benefit)
|
1
|
|
|
1
|
|
|
5
|
|
|
(2
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
Amortization of losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
Net periodic (income) cost at NEE
|
$
|
(92
|
)
|
|
$
|
(85
|
)
|
|
$
|
(74
|
)
|
|
$
|
12
|
|
|
$
|
14
|
|
|
$
|
15
|
|
|
Net periodic (income) cost at FPL
|
$
|
(58
|
)
|
|
$
|
(55
|
)
|
|
$
|
(47
|
)
|
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Other Comprehensive Income - The components of net periodic income (cost) recognized in OCI for the pension plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Prior service benefit (net of $3 and $3 tax expense, respectively)
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
Net losses (net of $16, $27 and $29 tax benefit, respectively)
|
(26
|
)
|
|
(44
|
)
|
|
(45
|
)
|
|
Amortization of prior service benefit
|
—
|
|
|
—
|
|
|
1
|
|
|
Total
|
$
|
(22
|
)
|
|
$
|
(44
|
)
|
|
$
|
(40
|
)
|
Regulatory Assets (Liabilities) - The components of net periodic (income) cost recognized during the year in regulatory assets (liabilities) for the pension plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Prior service benefit
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
Unrecognized losses
|
48
|
|
|
104
|
|
|
Amortization of prior service benefit
|
(1
|
)
|
|
(1
|
)
|
|
Total
|
$
|
35
|
|
|
$
|
103
|
|
The assumptions used to determine net periodic income for the pension plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Discount rate
|
4.35
|
%
|
|
3.95
|
%
|
|
4.80
|
%
|
|
Salary increase
|
4.10
|
%
|
|
4.10
|
%
|
|
4.00
|
%
|
|
Expected long-term rate of return
(a)(b)
|
7.35
|
%
|
|
7.35
|
%
|
|
7.75
|
%
|
______________________
|
|
|
|
(a)
|
In developing the expected long-term rate of return on assets assumption for its pension plan, NEE evaluated input, including other qualitative and quantitative factors, from its actuaries and consultants, as well as information available in the marketplace. NEE considered different models, capital market return assumptions and historical returns for a portfolio with an equity/bond asset mix similar to its pension fund. NEE also considered its pension fund's historical compounded returns.
|
|
|
|
|
(b)
|
In 2016 and 2015, an expected long-term rate of return of
7.75%
is presented net of investment management fees.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Employee Contribution Plan
- NEE offers an employee retirement savings plan which allows eligible participants to contribute a percentage of qualified compensation through payroll deductions. NEE makes matching contributions to participants' accounts. Defined contribution expense pursuant to this plan was approximately $
52 million
, $
63 million
and $
59 million
for NEE ($
32 million
, $
40 million
and $
37 million
for FPL) for the years ended
December 31, 2016
,
2015
and
2014
, respectively.
3. Derivative Instruments
NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity, as well as interest rate and foreign currency exchange rate risk associated primarily with outstanding and expected future debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets.
With respect to commodities related to NEE's competitive energy business, NEER employs risk management procedures to conduct its activities related to optimizing the value of its power generation and gas infrastructure assets, providing full energy and capacity requirements services primarily to distribution utilities, and engaging in power and gas marketing and trading activities to take advantage of expected future favorable price movements and changes in the expected volatility of prices in the energy markets. These risk management activities involve the use of derivative instruments executed within prescribed limits to manage the risk associated with fluctuating commodity prices. Transactions in derivative instruments are executed on recognized exchanges or via the over-the-counter (OTC) markets, depending on the most favorable credit terms and market execution factors. For NEER's power generation and gas infrastructure assets, derivative instruments are used to hedge all or a portion of the expected output of these assets. These hedges are designed to reduce the effect of adverse changes in the wholesale forward commodity markets associated with NEER's power generation and gas infrastructure assets. With regard to full energy and capacity requirements services, NEER is required to vary the quantity of energy and related services based on the load demands of the customers served. For this type of transaction, derivative instruments are used to hedge the anticipated electricity quantities required to serve these customers and reduce the effect of unfavorable changes in the forward energy markets. Additionally, NEER takes positions in energy markets based on differences between actual forward market levels and management's view of fundamental market conditions, including supply/demand imbalances, changes in traditional flows of energy, changes in short- and long-term weather patterns and anticipated regulatory and legislative outcomes. NEER uses derivative instruments to realize value from these market dislocations, subject to strict risk management limits around market, operational and credit exposure.
Derivative instruments, when required to be marked to market, are recorded on NEE's and FPL's consolidated balance sheets as either an asset or liability measured at fair value. At FPL, substantially all changes in the derivatives' fair value are deferred as a regulatory asset or liability until the contracts are settled, and, upon settlement, any gains or losses are passed through the fuel and purchased power cost recovery clause (fuel clause). For NEE's non-rate regulated operations, predominantly NEER, essentially all changes in the derivatives' fair value for power purchases and sales, fuel sales and trading activities are recognized on a net basis in operating revenues; fuel purchases used in the production of electricity are recognized in fuel, purchased power and interchange expense; and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEE's consolidated statements of income. Settlement gains and losses are included within the line items in the consolidated statements of income to which they relate. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis in the consolidated statements of income. For commodity derivatives, NEE believes that, where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Settlements related to derivative instruments are primarily recognized in net cash provided by operating activities in NEE's and FPL's consolidated statements of cash flows.
In January 2016, NEE discontinued hedge accounting for its cash flow and fair value hedges related to interest rate and foreign currency derivative instruments and, therefore, all changes in the derivatives' fair value, as well as the transaction gain or loss on foreign denominated debt, are recognized in interest expense in NEE's consolidated statements of income. In addition, for the year ended
December 31, 2016
, NEE reclassified approximately
$18 million
(
$11 million
after tax), respectively, from AOCI to interest expense primarily because it became probable that a related future transaction being hedged would not occur. At
December 31, 2016
, NEE's AOCI included amounts related to the discontinued interest rate cash flow hedges with expiration dates through
March 2035
and foreign currency cash flow hedges with expiration dates through
September 2030
. Approximately
$80 million
of net losses included in AOCI at
December 31, 2016
is expected to be reclassified into earnings within the next 12 months as the principal and/or interest payments are made. Such amounts assume no change in scheduled principal payments.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value of Derivative Instruments
- The tables below present NEE's and FPL's gross derivative positions at
December 31, 2016
and
December 31, 2015
, as required by disclosure rules. However, the majority of the underlying contracts are subject to master netting agreements and generally would not be contractually settled on a gross basis. Therefore, the tables below also present the derivative positions on a net basis, which reflect the offsetting of positions of certain transactions within the portfolio, the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral (see Note 4 - Recurring Fair Value Measurements for netting information), as well as the location of the net derivative position on the consolidated balance sheets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
|
|
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Net Basis
|
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
|
(millions)
|
|
NEE:
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
4,590
|
|
|
$
|
2,968
|
|
|
$
|
1,938
|
|
|
$
|
483
|
|
|
Interest rate contracts
|
288
|
|
|
284
|
|
|
296
|
|
|
292
|
|
|
Foreign currency contracts
|
1
|
|
|
106
|
|
|
1
|
|
|
106
|
|
|
Total fair values
|
$
|
4,879
|
|
|
$
|
3,358
|
|
|
$
|
2,235
|
|
|
$
|
881
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
212
|
|
|
$
|
4
|
|
|
$
|
209
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
|
Current derivative assets
(a)
|
|
|
|
|
$
|
885
|
|
|
|
|
Noncurrent derivative assets
(b)
|
|
|
|
|
1,350
|
|
|
|
|
Current derivative liabilities
|
|
|
|
|
|
|
|
$
|
404
|
|
|
Noncurrent derivative liabilities
|
|
|
|
|
|
|
|
477
|
|
|
Total derivatives
|
|
|
|
|
$
|
2,235
|
|
|
$
|
881
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
|
Current derivative assets
|
|
|
|
|
$
|
209
|
|
|
|
|
Current derivative liabilities
|
|
|
|
|
|
|
$
|
1
|
|
|
Total derivatives
|
|
|
|
|
$
|
209
|
|
|
$
|
1
|
|
______________________
|
|
|
|
(a)
|
Reflects the netting of approximately
$96 million
in margin cash collateral received from counterparties.
|
|
|
|
|
(b)
|
Reflects the netting of approximately
$71 million
in margin cash collateral received from counterparties.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
Fair Values of Derivatives
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
|
|
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
|
|
Total Derivatives Combined -
Net Basis
|
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
|
|
(millions)
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,906
|
|
|
$
|
4,580
|
|
|
$
|
1,937
|
|
|
$
|
982
|
|
|
Interest rate contracts
|
33
|
|
|
155
|
|
|
2
|
|
|
160
|
|
|
34
|
|
|
319
|
|
|
Foreign currency contracts
|
—
|
|
|
132
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
|
Total fair values
|
$
|
33
|
|
|
$
|
287
|
|
|
$
|
5,908
|
|
|
$
|
4,740
|
|
|
$
|
1,971
|
|
|
$
|
1,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
225
|
|
|
$
|
4
|
|
|
$
|
222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by NEE balance sheet line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current derivative assets
(a)
|
|
|
|
|
|
|
|
|
$
|
712
|
|
|
|
|
Assets held for sale
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
Noncurrent derivative assets
(b)
|
|
|
|
|
|
|
|
|
1,202
|
|
|
|
|
Current derivative liabilities
(c)
|
|
|
|
|
|
|
|
|
|
|
$
|
882
|
|
|
Liabilities associated with assets held for sale
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
Noncurrent derivative liabilities
(d)
|
|
|
|
|
|
|
|
|
|
|
530
|
|
|
Total derivatives
|
|
|
|
|
|
|
|
|
$
|
1,971
|
|
|
$
|
1,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net fair value by FPL balance sheet line item:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current derivative assets
|
|
|
|
|
|
|
|
|
$
|
3
|
|
|
|
|
Noncurrent other assets
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
Current derivative liabilities
|
|
|
|
|
|
|
|
|
|
|
$
|
222
|
|
|
Total derivatives
|
|
|
|
|
|
|
|
|
$
|
4
|
|
|
$
|
222
|
|
______________________
|
|
|
|
(a)
|
Reflects the netting of approximately
$279 million
in margin cash collateral received from counterparties.
|
|
|
|
|
(b)
|
Reflects the netting of approximately
$151 million
in margin cash collateral received from counterparties.
|
|
|
|
|
(c)
|
Reflects the netting of approximately
$46 million
in margin cash collateral paid to counterparties.
|
|
|
|
|
(d)
|
Reflects the netting of approximately
$13 million
in margin cash collateral paid to counterparties.
|
At
December 31, 2016 and 2015
, NEE had approximately
$5 million
and
$27 million
(none at FPL), respectively, in margin cash collateral received from counterparties that was not offset against derivative assets in the above presentation. These amounts are included in current other liabilities on NEE's consolidated balance sheets. Additionally, at
December 31, 2016 and 2015
, NEE had approximately
$129 million
and
$116 million
(none at FPL), respectively, in margin cash collateral paid to counterparties that was not offset against derivative assets or liabilities in the above presentation. These amounts are included in current other assets on NEE's consolidated balance sheets.
Income Statement Impact of Derivative Instruments
- Losses related to NEE's cash flow hedges, which were previously designated as hedging instruments, are recorded in NEE's consolidated financial statements (none at FPL) as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
|
Interest
Rate
Contracts
|
|
Foreign
Currency
Contracts
|
|
Total
|
|
Interest
Rate
Contracts
|
|
Foreign
Currency
Contracts
|
|
Total
|
|
|
|
|
Losses recognized in OCI
|
$
|
(113
|
)
|
|
$
|
(12
|
)
|
|
$
|
(125
|
)
|
|
$
|
(132
|
)
|
|
$
|
(89
|
)
|
|
$
|
(221
|
)
|
|
Losses reclassified from AOCI to net income
|
$
|
(73
|
)
|
(a)
|
$
|
(15
|
)
|
(b)
|
$
|
(88
|
)
|
|
$
|
(77
|
)
|
(a)
|
$
|
(78
|
)
|
(b)
|
$
|
(155
|
)
|
______________________
|
|
|
|
(a)
|
Included in interest expense.
|
|
|
|
|
(b)
|
For 2015 and 2014, losses of approximately
$11 million
and
$8 million
, respectively, are included in interest expense and the balances are included in other - net.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Gains (losses) related to NEE's derivatives not designated as hedging instruments are recorded in NEE's consolidated statements of income as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Commodity contracts:
(a)
|
|
|
|
|
|
|
Operating revenues
|
$
|
459
|
|
|
$
|
932
|
|
|
$
|
420
|
|
|
Fuel, purchased power and interchange
|
(1
|
)
|
|
8
|
|
|
1
|
|
|
Foreign currency contracts - interest expense
|
14
|
|
|
—
|
|
|
—
|
|
|
Foreign currency contracts - other - net
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
Interest rate contracts - interest expense
|
181
|
|
|
8
|
|
|
(64
|
)
|
|
Losses reclassified from AOCI to interest expense:
|
|
|
|
|
|
|
Interest rate contracts
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
Foreign currency contracts
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
551
|
|
|
$
|
948
|
|
|
$
|
356
|
|
______________________
|
|
|
|
(a)
|
For the years ended
December 31, 2016
,
2015
and
2014
, FPL recorded gains (losses) of approximately
$203 million
,
$(326) million
and
$(289) million
, respectively, related to commodity contracts as regulatory liabilities (assets) on its consolidated balance sheets.
|
Notional Volumes of Derivative Instruments
- The following table represents net notional volumes associated with derivative instruments that are required to be reported at fair value in NEE's and FPL's consolidated financial statements. The table includes significant volumes of transactions that have minimal exposure to commodity price changes because they are variably priced agreements. These volumes are only an indication of the commodity exposure that is managed through the use of derivatives. They do not represent net physical asset positions or non-derivative positions and their hedges, nor do they represent NEE's and FPL's net economic exposure, but only the net notional derivative positions that fully or partially hedge the related asset positions. NEE and FPL had derivative commodity contracts for the following net notional volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
Commodity Type
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
|
|
(millions)
|
|
Power
|
|
(84
|
)
|
|
MWh
(a)
|
|
—
|
|
|
|
|
(112
|
)
|
|
MWh
(a)
|
|
—
|
|
|
|
|
Natural gas
|
|
1,002
|
|
|
MMBtu
(b)
|
|
618
|
|
|
MMBtu
(b)
|
|
1,321
|
|
|
MMBtu
(b)
|
|
833
|
|
|
MMBtu
(b)
|
|
Oil
|
|
(7
|
)
|
|
barrels
|
|
—
|
|
|
|
|
(9
|
)
|
|
barrels
|
|
—
|
|
|
|
______________________
|
|
|
|
(b)
|
One million British thermal units
|
At
December 31, 2016
and
2015
, NEE had interest rate contracts with notional amounts totaling approximately
$15.1 billion
and
$8.3 billion
, respectively, and foreign currency contracts with notional amounts totaling approximately
$705 million
and
$715 million
, respectively.
Credit-Risk-Related Contingent Features
- Certain derivative instruments contain credit-risk-related contingent features including, among other things, the requirement to maintain an investment grade credit rating from specified credit rating agencies and certain financial ratios, as well as credit-related cross-default and material adverse change triggers. At
December 31, 2016
and
2015
, the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately
$1.3 billion
(
$5 million
for FPL) and
$2.2 billion
(
$224 million
for FPL), respectively.
If the credit-risk-related contingent features underlying these derivative agreements were triggered, certain subsidiaries of NEE, including FPL, could be required to post collateral or settle contracts according to contractual terms which generally allow netting of contracts in offsetting positions. Certain derivative contracts contain multiple types of credit-related triggers. To the extent these contracts contain a credit ratings downgrade trigger, the maximum exposure is included in the following credit ratings collateral posting requirements. If FPL's and NEECH's credit ratings were downgraded to BBB/Baa2 (a two level downgrade for FPL and a one level downgrade for NEECH from the current lowest applicable rating), applicable NEE subsidiaries would be required to post collateral such that the total posted collateral would be approximately
$110 million
(
none
at FPL) and
$165 million
(
$20 million
at FPL) as of
December 31, 2016
and
2015
, respectively. If FPL's and NEECH's credit ratings were downgraded to below investment grade, applicable NEE subsidiaries would be required to post additional collateral such that the total posted collateral would be approximately
$990 million
(
$10 million
at FPL) and
$1.4 billion
(
$185 million
at FPL) as of
December 31, 2016
and
2015
, respectively. Some derivative contracts do not contain credit ratings downgrade triggers, but do contain provisions that require certain financial measures be maintained and/or have credit-related cross-default triggers. In the event these provisions were triggered, applicable
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NEE subsidiaries could be required to post additional collateral of up to approximately
$225 million
(
$115 million
at FPL) and
$270 million
(
$120 million
at FPL) as of
December 31, 2016
and
2015
, respectively.
Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At
December 31, 2016
, applicable NEE subsidiaries have posted approximately
$1 million
(
none
at FPL) in cash and
$30 million
(
none
at FPL) in the form of letters of credit which could be applied toward the collateral requirements described above. At
December 31, 2015
, applicable NEE subsidiaries have posted approximately
$123 million
(
$3 million
at FPL) in the form of letters of credit which could be applied toward the collateral requirements described above. FPL and NEECH have credit facilities generally in excess of the collateral requirements described above that would be available to support, among other things, derivative activities. Under the terms of the credit facilities, maintenance of a specific credit rating is not a condition to drawing on these credit facilities, although there are other conditions to drawing on these credit facilities.
Additionally, some contracts contain certain adequate assurance provisions where a counterparty may demand additional collateral based on subjective events and/or conditions. Due to the subjective nature of these provisions, NEE and FPL are unable to determine an exact value for these items and they are not included in any of the quantitative disclosures above.
4. Fair Value Measurements
The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEE and FPL use several different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. NEE's and FPL's assessment of the significance of any particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value.
Cash Equivalents
and Restricted Cash
- NEE primarily holds investments in money market funds. The fair value of these funds is estimated using a market approach based on current observable market prices.
Special Use Funds and Other Investments -
NEE and FPL hold primarily debt and equity securities directly, as well as indirectly through commingled funds. Substantially all directly held equity securities are valued at their quoted market prices. For directly held debt securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validations. A primary price source is identified based on asset type, class or issue of each security. Commingled funds, which are similar to mutual funds, are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives. The fair value of commingled funds is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.
Derivative Instruments
- NEE and FPL measure the fair value of commodity contracts using a combination of market and income approaches utilizing prices observed on commodities exchanges and in the OTC markets, or through the use of industry-standard valuation techniques, such as option modeling or discounted cash flows techniques, incorporating both observable and unobservable valuation inputs. The resulting measurements are the best estimate of fair value as represented by the transfer of the asset or liability through an orderly transaction in the marketplace at the measurement date.
Most exchange-traded derivative assets and liabilities are valued directly using unadjusted quoted prices. For exchange-traded derivative assets and liabilities where the principal market is deemed to be inactive based on average daily volumes and open interest, the measurement is established using settlement prices from the exchanges, and therefore considered to be valued using other observable inputs.
NEE, through its subsidiaries, including FPL, also enters into OTC commodity contract derivatives. The majority of these contracts are transacted at liquid trading points, and the prices for these contracts are verified using quoted prices in active markets from exchanges, brokers or pricing services for similar contracts.
NEE, through NEER, also enters into full requirements contracts, which, in most cases, meet the definition of derivatives and are measured at fair value. These contracts typically have one or more inputs that are not observable and are significant to the valuation of the contract. In addition, certain exchange and non-exchange traded derivative options at NEE have one or more significant inputs that are not observable, and are valued using industry-standard option models.
In all cases where NEE and FPL use significant unobservable inputs for the valuation of a commodity contract, consideration is given to the assumptions that market participants would use in valuing the asset or liability. The primary input to the valuation models for commodity contracts is the forward commodity curve for the respective instruments. Other inputs include, but are not limited to, assumptions about market liquidity, volatility, correlation and contract duration as more fully described below in Significant Unobservable Inputs Used in Recurring Fair Value Measurements. In instances where the reference markets are deemed to be inactive or do not have transactions for a similar contract, the derivative assets and liabilities may be valued using significant other
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
observable inputs and potentially significant unobservable inputs. In such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts, or estimated basis adjustments from liquid trading points. NEE and FPL regularly evaluate and validate the inputs used to determine fair value by a number of methods, consisting of various market price verification procedures, including the use of pricing services and multiple broker quotes to support the market price of the various commodities. In all cases where there are assumptions and models used to generate inputs for valuing derivative assets and liabilities, the review and verification of the assumptions, models and changes to the models are undertaken by individuals that are independent of those responsible for estimating fair value.
NEE uses interest rate contracts and foreign currency contracts to mitigate and adjust interest rate and foreign currency exchange exposure related primarily to certain outstanding and expected future debt issuances and borrowings when deemed appropriate based on market conditions or when required by financing agreements. NEE estimates the fair value of these derivatives using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements.
Recurring Fair Value Measurements
- NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
Total
|
|
|
|
(millions)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
982
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
982
|
|
|
|
FPL - equity securities
|
$
|
120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
120
|
|
|
|
Special use funds:
(c)
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
1,410
|
|
|
$
|
1,503
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
2,913
|
|
|
|
U.S. Government and municipal bonds
|
$
|
296
|
|
|
$
|
170
|
|
|
$
|
—
|
|
|
|
|
$
|
466
|
|
|
|
Corporate debt securities
|
$
|
1
|
|
|
$
|
763
|
|
|
$
|
—
|
|
|
|
|
$
|
764
|
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
—
|
|
|
|
|
$
|
498
|
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
81
|
|
|
$
|
—
|
|
|
|
|
$
|
81
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
373
|
|
|
$
|
1,372
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
1,745
|
|
|
|
U.S. Government and municipal bonds
|
$
|
221
|
|
|
$
|
141
|
|
|
$
|
—
|
|
|
|
|
$
|
362
|
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
547
|
|
|
$
|
—
|
|
|
|
|
$
|
547
|
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
384
|
|
|
$
|
—
|
|
|
|
|
$
|
384
|
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
—
|
|
|
|
|
$
|
70
|
|
|
|
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
26
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
|
$
|
35
|
|
|
|
Debt securities
|
$
|
8
|
|
|
$
|
153
|
|
|
$
|
—
|
|
|
|
|
$
|
161
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
1,563
|
|
|
$
|
1,827
|
|
|
$
|
1,200
|
|
|
$
|
(2,652
|
)
|
|
$
|
1,938
|
|
(e)
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
285
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
296
|
|
(e)
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
(e)
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
208
|
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
209
|
|
(e)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
1,476
|
|
|
$
|
980
|
|
|
$
|
512
|
|
|
$
|
(2,485
|
)
|
|
$
|
483
|
|
(e)
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
171
|
|
|
$
|
113
|
|
|
$
|
8
|
|
|
$
|
292
|
|
(e)
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
106
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
106
|
|
(e)
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
1
|
|
(e)
|
______________________
|
|
|
|
(a)
|
Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
|
|
|
|
|
(b)
|
Includes restricted cash of approximately
$164 million
(
$120 million
for FPL) in other current assets on the consolidated balance sheets.
|
|
|
|
|
(c)
|
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
|
|
|
|
|
(d)
|
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
|
|
|
|
|
(e)
|
See Note 3 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's consolidated balance sheets.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Netting
(a)
|
|
Total
|
|
|
|
(millions)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and restricted cash:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
NEE - equity securities
|
$
|
312
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
312
|
|
|
|
FPL - equity securities
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
36
|
|
|
|
Special use funds:
(c)
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
1,320
|
|
|
$
|
1,354
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
2,674
|
|
|
|
U.S. Government and municipal bonds
|
$
|
446
|
|
|
$
|
166
|
|
|
$
|
—
|
|
|
|
|
$
|
612
|
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
713
|
|
|
$
|
—
|
|
|
|
|
$
|
713
|
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
412
|
|
|
$
|
—
|
|
|
|
|
$
|
412
|
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
|
|
$
|
52
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
364
|
|
|
$
|
1,234
|
|
(d)
|
$
|
—
|
|
|
|
|
$
|
1,598
|
|
|
|
U.S. Government and municipal bonds
|
$
|
335
|
|
|
$
|
145
|
|
|
$
|
—
|
|
|
|
|
$
|
480
|
|
|
|
Corporate debt securities
|
$
|
—
|
|
|
$
|
531
|
|
|
$
|
—
|
|
|
|
|
$
|
531
|
|
|
|
Mortgage-backed securities
|
$
|
—
|
|
|
$
|
327
|
|
|
$
|
—
|
|
|
|
|
$
|
327
|
|
|
|
Other debt securities
|
$
|
—
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
|
|
$
|
40
|
|
|
|
Other investments:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities
|
$
|
30
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
|
|
$
|
40
|
|
|
|
Debt securities
|
$
|
39
|
|
|
$
|
132
|
|
|
$
|
—
|
|
|
|
|
$
|
171
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
2,187
|
|
|
$
|
2,540
|
|
|
$
|
1,179
|
|
|
$
|
(3,969
|
)
|
|
$
|
1,937
|
|
(e)
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
34
|
|
(e)
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
6
|
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
(e)
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
NEE:
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts
|
$
|
2,153
|
|
|
$
|
1,887
|
|
|
$
|
540
|
|
|
$
|
(3,598
|
)
|
|
$
|
982
|
|
(e)
|
|
Interest rate contracts
|
$
|
—
|
|
|
$
|
214
|
|
|
$
|
101
|
|
|
$
|
4
|
|
|
$
|
319
|
|
(e)
|
|
Foreign currency contracts
|
$
|
—
|
|
|
$
|
132
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
127
|
|
(e)
|
|
FPL - commodity contracts
|
$
|
—
|
|
|
$
|
219
|
|
|
$
|
6
|
|
|
$
|
(3
|
)
|
|
$
|
222
|
|
(e)
|
______________________
|
|
|
|
(a)
|
Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
|
|
|
|
|
(b)
|
Includes restricted cash of approximately
$61 million
(
$36 million
for FPL) in other current assets on the consolidated balance sheets.
|
|
|
|
|
(c)
|
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.
|
|
|
|
|
(d)
|
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
|
|
|
|
|
(e)
|
See Note 3 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's consolidated balance sheets.
|
Significant Unobservable Inputs Used in Recurring Fair Value Measurements
- The valuation of certain commodity contracts requires the use of significant unobservable inputs. All forward price, implied volatility, implied correlation and interest rate inputs used in the valuation of such contracts are directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices, implied volatilities and interest rates used for determining fair value are updated daily to reflect the best available market information. Unobservable inputs which are related to observable inputs, such as illiquid portions of forward price or volatility curves, are updated daily as well, using industry standard techniques such as interpolation and extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Other unobservable inputs, such as implied correlations, customer migration rates from full requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.
All price, volatility, correlation and customer migration inputs used in valuation are subject to validation by the Trading Risk Management group. The Trading Risk Management group performs a risk management function responsible for assessing credit, market and operational risk impact, reviewing valuation methodology and modeling, confirming transactions, monitoring approval processes and developing and monitoring trading limits. The Trading Risk Management group is separate from the transacting group. For markets where independent third-party data is readily available, validation is conducted daily by directly reviewing this
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
market data against inputs utilized by the transacting group, and indirectly by reviewing daily risk reports. For markets where independent third-party data is not readily available, additional analytical reviews are performed on at least a quarterly basis. These analytical reviews are designed to ensure that all price and volatility curves used for fair valuing transactions are adequately validated each quarter, and are reviewed and approved by the Trading Risk Management group. In addition, other valuation assumptions such as implied correlations and customer migration rates are reviewed and approved by the Trading Risk Management group on a periodic basis. Newly created models used in the valuation process are also subject to testing and approval by the Trading Risk Management group prior to use and established models are reviewed annually, or more often as needed, by the Trading Risk Management group.
On a monthly basis, the Exposure Management Committee (EMC), which is comprised of certain members of senior management, meets with representatives from the Trading Risk Management group and the transacting group to discuss NEE's and FPL's energy risk profile and operations, to review risk reports and to discuss fair value issues as necessary. The EMC develops guidelines required for an appropriate risk management control infrastructure, which includes implementation and monitoring of compliance with Trading Risk Management policy. The EMC executes its risk management responsibilities through direct oversight and delegation of its responsibilities to the Trading Risk Management group, as well as to other corporate and business unit personnel.
The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at
December 31, 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction Type
|
|
Fair Value at
December 31, 2016
|
|
Valuation
Technique(s)
|
|
Significant
Unobservable Inputs
|
|
Range
|
|
|
|
Assets
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
Forward contracts - power
|
|
$
|
621
|
|
|
$
|
206
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$—
|
—
|
$91
|
|
Forward contracts - gas
|
|
27
|
|
|
10
|
|
|
Discounted cash flow
|
|
Forward price (per MMBtu)
|
|
$2
|
—
|
$11
|
|
Forward contracts - other commodity related
|
|
7
|
|
|
1
|
|
|
Discounted cash flow
|
|
Forward price (various)
|
|
$(17)
|
—
|
$57
|
|
Options - power
|
|
43
|
|
|
10
|
|
|
Option models
|
|
Implied correlations
|
|
1%
|
—
|
100%
|
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
9%
|
—
|
296%
|
|
Options - primarily gas
|
|
223
|
|
|
230
|
|
|
Option models
|
|
Implied correlations
|
|
1%
|
—
|
100%
|
|
|
|
|
|
|
|
|
|
Implied volatilities
|
|
1%
|
—
|
260%
|
|
Full requirements and unit contingent contracts
|
|
279
|
|
|
55
|
|
|
Discounted cash flow
|
|
Forward price (per MWh)
|
|
$(20)
|
—
|
$220
|
|
|
|
|
|
|
|
|
|
Customer migration rate
(a)
|
|
—%
|
—
|
20%
|
|
Total
|
|
$
|
1,200
|
|
|
$
|
512
|
|
|
|
|
|
|
|
|
|
______________________
|
|
|
|
(a)
|
Applies only to full requirements contracts.
|
The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:
|
|
|
|
|
|
|
|
|
Significant Unobservable Input
|
|
Position
|
|
Impact on
Fair Value Measurement
|
|
Forward price
|
|
Purchase power/gas
|
|
Increase (decrease)
|
|
|
|
Sell power/gas
|
|
Decrease (increase)
|
|
Implied correlations
|
|
Purchase option
|
|
Decrease (increase)
|
|
|
|
Sell option
|
|
Increase (decrease)
|
|
Implied volatilities
|
|
Purchase option
|
|
Increase (decrease)
|
|
|
|
Sell option
|
|
Decrease (increase)
|
|
Customer migration rate
|
|
Sell power
(a)
|
|
Decrease (increase)
|
————————————
|
|
|
|
(a)
|
Assumes the contract is in a gain position.
|
In addition, the fair value measurement of interest rate contract net liabilities related to the solar projects in Spain of approximately
$110 million
at
December 31, 2016
includes a significant credit valuation adjustment. The credit valuation adjustment, considered an unobservable input, reflects management's assessment of non-performance risk of the subsidiaries related to the solar projects in Spain that are party to the contracts. See Note 11 - Spain Solar Projects Debt Restructuring for further discussion.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
NEE
|
|
FPL
|
|
|
(millions)
|
|
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior year
|
$
|
538
|
|
|
$
|
—
|
|
|
$
|
622
|
|
|
$
|
5
|
|
|
$
|
622
|
|
|
$
|
—
|
|
|
Realized and unrealized gains (losses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings
(a)
|
333
|
|
|
—
|
|
|
451
|
|
|
—
|
|
|
(77
|
)
|
|
—
|
|
|
Included in other comprehensive income
|
8
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
Included in regulatory assets and liabilities
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
|
7
|
|
|
7
|
|
|
Purchases
|
261
|
|
|
—
|
|
|
180
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
Settlements
|
(390
|
)
|
|
—
|
|
|
(473
|
)
|
|
(8
|
)
|
|
194
|
|
|
(2
|
)
|
|
Issuances
|
(195
|
)
|
|
—
|
|
|
(202
|
)
|
|
—
|
|
|
(122
|
)
|
|
—
|
|
|
Transfers in
(b)
|
19
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
80
|
|
|
—
|
|
|
Transfers out
(b)
|
3
|
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(155
|
)
|
|
—
|
|
|
Fair value of net derivatives based on significant unobservable inputs at December 31
|
$
|
578
|
|
|
$
|
1
|
|
|
$
|
538
|
|
|
$
|
—
|
|
|
$
|
622
|
|
|
$
|
5
|
|
|
The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date
(c)
|
$
|
219
|
|
|
$
|
—
|
|
|
$
|
277
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
—
|
|
______________________
|
|
|
|
(a)
|
For the year ended
December 31, 2016
,
$397 million
of realized and unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is reflected in interest expense. For the year ended
December 31, 2015
,
$462 million
of realized and unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is primarily reflected in interest expense. For the year
December 31, 2014
,
$79 million
of realized and unrealized losses are reflected in the consolidated statements of income in interest expense and the balance is primarily reflected in operating revenues.
|
|
|
|
|
(b)
|
Transfers into Level 3 were a result of decreased observability of market data. Transfers from Level 3 to Level 2 were a result of increased observability of market data and, in 2016, a favorable change to a credit valuation adjustment. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.
|
|
|
|
|
(c)
|
For the years ended
December 31, 2016
,
2015
and
2014
,
$283 million
,
$289 million
, and
$328 million
of unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is reflected in interest expense.
|
Contingent Consideration
- NEE recorded a liability related to a contingent holdback as part of the 2015 acquisition of a portfolio of seven long-term contracted natural gas pipeline assets located in Texas (Texas pipelines). See Note 7 - Texas Pipeline Business.
Nonrecurring Fair Value Measurements -
In 2013, NEER initiated a plan and received internal authorization to pursue the sale of its ownership interests in oil-fired generation plants located in Maine (Maine fossil), which resulted in the recording of a loss during that period which was reflected within discontinued operations at NEE. In 2014, NEER decided not to pursue the sale of Maine fossil due to the divergence between the achievable sales price and management's view of the assets' value, which increased as a result of significant market changes. Accordingly, the Maine fossil assets were written-up to management's current estimate of fair value resulting in a gain of approximately $
21 million
($
12 million
after tax) which is included as a separate line item in NEE's consolidated statements of income. The fair value measurement (Level 3) was estimated using an income approach based primarily on the updated capacity revenue forecasts.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fair Value of Financial Instruments Recorded at Other than Fair Value
- The carrying amounts of cash equivalents, commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
Carrying
Amount
|
|
Estimated
Fair Value
|
|
|
|
(millions)
|
|
|
NEE:
|
|
|
|
Special use funds
(a)
|
$
|
712
|
|
|
$
|
712
|
|
|
$
|
675
|
|
|
$
|
675
|
|
|
|
Other investments - primarily notes receivable
|
$
|
526
|
|
|
$
|
668
|
|
(b)
|
$
|
512
|
|
|
$
|
722
|
|
(b)
|
|
Long-term debt, including current maturities
(c)
|
$
|
30,418
|
|
|
$
|
31,623
|
|
(d)
|
$
|
28,897
|
|
|
$
|
30,412
|
|
(d)
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
Special use funds
(a)
|
$
|
557
|
|
|
$
|
557
|
|
|
$
|
528
|
|
|
$
|
528
|
|
|
|
Long-term debt, including current maturities
|
$
|
10,072
|
|
|
$
|
11,211
|
|
(d)
|
$
|
10,020
|
|
|
$
|
11,028
|
|
(d)
|
______________________
|
|
|
|
(a)
|
Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis.
|
|
|
|
|
(b)
|
Primarily classified as held to maturity. Fair values are primarily estimated using an income approach utilizing a discounted cash flow valuation technique based on certain observable yield curves and indices considering the credit profile of the borrower (Level 3). Notes receivable bear interest primarily at fixed rates and mature by
2029
. Notes receivable are considered impaired and placed in non-accrual status when it becomes probable that all amounts due cannot be collected in accordance with the contractual terms of the agreement. The assessment to place notes receivable in non-accrual status considers various credit indicators, such as credit ratings and market-related information.
|
|
|
|
|
(c)
|
Excludes debt totaling
$373 million
and
$938 million
, respectively, reflected in liabilities associated with assets held for sale on NEE's consolidated balance sheets for which the carrying amount approximates fair value. See Note 1 - Assets and Liabilities Associated with Assets Held for Sale.
|
|
|
|
|
(d)
|
As of
December 31, 2016 and 2015
, for NEE, approximately
$29,804 million
and
$18,031 million
, respectively, is estimated using a market approach based on quoted market prices for the same or similar issues (Level 2); the balance is estimated using an income approach utilizing a discounted cash flow valuation technique, considering the current credit profile of the debtor (Level 3). For FPL, primarily estimated using quoted market prices for the same or similar issues (Level 2).
|
Special Use Funds
- The special use funds noted above and those carried at fair value (see Recurring Fair Value Measurements above) consist of NEE's and FPL's nuclear decommissioning fund assets of
$5,434 million
and
$5,064 million
at
December 31, 2016 and 2015
, respectively, (
$3,665 million
and
$3,430 million
, respectively, for FPL) and, in 2015, FPL's storm fund assets of
$74 million
. The investments held in the special use funds consist of equity and debt securities which are primarily classified as available for sale and carried at estimated fair value. The amortized cost of debt and equity securities is approximately $
1,820 million
and $
1,543 million
, respectively, at
December 31, 2016
and $
1,823 million
and $
1,505 million
, respectively, at
December 31, 2015
($
1,373 million
and $
764 million
, respectively, at
December 31, 2016
and $
1,409 million
and $
732 million
, respectively, at
December 31, 2015
for FPL). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory liability accounts. For NEE's non-rate regulated operations, changes in fair value result in a corresponding adjustment to OCI, except for unrealized losses associated with marketable securities considered to be other than temporary, including any credit losses, which are recognized as other than temporary impairment losses on securities held in nuclear decommissioning funds in NEE's consolidated statements of income. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at
December 31, 2016
of approximately
nine
years at both NEE and FPL. The cost of securities sold is determined using the specific identification method.
Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Realized gains
|
$
|
116
|
|
|
$
|
194
|
|
|
$
|
211
|
|
|
$
|
53
|
|
|
$
|
70
|
|
|
$
|
120
|
|
|
Realized losses
|
$
|
76
|
|
|
$
|
87
|
|
|
$
|
115
|
|
|
$
|
44
|
|
|
$
|
43
|
|
|
$
|
94
|
|
|
Proceeds from sale or maturity of securities
|
$
|
3,400
|
|
|
$
|
4,643
|
|
|
$
|
4,092
|
|
|
$
|
2,442
|
|
|
$
|
3,724
|
|
|
$
|
3,349
|
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The unrealized gains on available for sale securities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
December 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(millions)
|
|
|
|
Equity securities
|
$
|
1,396
|
|
|
$
|
1,166
|
|
|
$
|
1,007
|
|
|
$
|
863
|
|
|
Debt securities
|
$
|
22
|
|
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
14
|
|
The unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
December 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(millions)
|
|
|
|
Unrealized losses
(a)
|
$
|
34
|
|
|
$
|
51
|
|
|
$
|
28
|
|
|
$
|
45
|
|
|
Fair value
|
$
|
959
|
|
|
$
|
1,129
|
|
|
$
|
722
|
|
|
$
|
861
|
|
______________________
|
|
|
|
(a)
|
Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at
December 31, 2016 and 2015
were not material to NEE or FPL.
|
Regulations issued by the FERC and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included in the NRC operating licenses for those facilities or in NRC regulations applicable to NRC licensees not in cost-of-service environments. With respect to the decommissioning fund for Seabrook, decommissioning fund contributions and withdrawals are also regulated by the NDFC pursuant to New Hampshire law.
The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.
Financial Instruments Accounting Standards Update
- In January 2016, the FASB issued an accounting standards update which modifies current guidance for financial instruments. The standards update requires that equity investments (except investments accounted for under the equity method and investments that are consolidated) be measured at fair value with changes in fair value recognized in net income and provides an option for those equity investments that do not have readily determinable fair values to be measured at cost minus impairment (plus or minus changes resulting from observable price changes). The standards update also makes certain changes to presentation and disclosure requirements of financial instruments. The standards update is effective for NEE and FPL beginning January 1, 2018 and will be applied retrospectively with the cumulative effect recognized as of the date of initial application. NEE and FPL are currently evaluating the effect the adoption of this standards update will have, if any, on their consolidated financial statements.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Income Taxes
The components of income taxes are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
|
(millions)
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
$
|
72
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
423
|
|
|
$
|
240
|
|
|
Deferred
|
1,075
|
|
|
1,194
|
|
|
1,077
|
|
|
830
|
|
|
399
|
|
|
542
|
|
|
Total federal
|
1,147
|
|
|
1,204
|
|
|
1,077
|
|
|
902
|
|
|
822
|
|
|
782
|
|
|
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
76
|
|
|
31
|
|
|
(29
|
)
|
|
57
|
|
|
58
|
|
|
68
|
|
|
Deferred
|
160
|
|
|
(7
|
)
|
|
128
|
|
|
92
|
|
|
77
|
|
|
60
|
|
|
Total state
|
236
|
|
|
24
|
|
|
99
|
|
|
149
|
|
|
135
|
|
|
128
|
|
|
Total income taxes
|
$
|
1,383
|
|
|
$
|
1,228
|
|
|
$
|
1,176
|
|
|
$
|
1,051
|
|
|
$
|
957
|
|
|
$
|
910
|
|
A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
Years Ended December 31,
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|
2014
|
|
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
Increases (reductions) resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State income taxes - net of federal income tax benefit
|
3.5
|
|
|
0.4
|
|
|
1.8
|
|
|
3.5
|
|
|
3.4
|
|
|
3.4
|
|
|
PTCs and ITCs - NEER
|
(3.9
|
)
|
|
(4.1
|
)
|
|
(5.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Convertible ITCs - NEER
|
(1.7
|
)
|
|
(0.8
|
)
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjustments associated with Canadian assets
|
(0.7
|
)
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Other - net
|
(0.7
|
)
|
|
0.3
|
|
|
0.7
|
|
|
(0.7
|
)
|
|
(1.7
|
)
|
|
(0.9
|
)
|
|
Effective income tax rate
|
31.5
|
%
|
|
30.8
|
%
|
|
32.3
|
%
|
|
37.8
|
%
|
|
36.7
|
%
|
|
37.5
|
%
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The income tax effects of temporary differences giving rise to consolidated deferred income tax liabilities and assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
December 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Property-related
|
$
|
13,094
|
|
|
$
|
12,204
|
|
|
$
|
8,882
|
|
|
$
|
8,040
|
|
|
Pension
|
454
|
|
|
455
|
|
|
502
|
|
|
480
|
|
|
Nuclear decommissioning trusts
|
253
|
|
|
219
|
|
|
—
|
|
|
—
|
|
|
Net unrealized gains on derivatives
|
581
|
|
|
528
|
|
|
—
|
|
|
—
|
|
|
Investments in partnerships and joint ventures
|
603
|
|
|
403
|
|
|
—
|
|
|
—
|
|
|
Other
|
1,272
|
|
|
1,196
|
|
|
796
|
|
|
695
|
|
|
Total deferred tax liabilities
|
16,257
|
|
|
15,005
|
|
|
10,180
|
|
|
9,215
|
|
|
Deferred tax assets and valuation allowance:
|
|
|
|
|
|
|
|
|
Decommissioning reserves
|
454
|
|
|
438
|
|
|
401
|
|
|
386
|
|
|
Postretirement benefits
|
145
|
|
|
141
|
|
|
93
|
|
|
95
|
|
|
Net operating loss carryforwards
|
427
|
|
|
604
|
|
|
3
|
|
|
4
|
|
|
Tax credit carryforwards
|
3,059
|
|
|
2,916
|
|
|
—
|
|
|
—
|
|
|
ARO and accrued asset removal costs
|
777
|
|
|
759
|
|
|
699
|
|
|
697
|
|
|
Other
|
1,024
|
|
|
836
|
|
|
443
|
|
|
303
|
|
|
Valuation allowance
(a)
|
(269
|
)
|
|
(223
|
)
|
|
—
|
|
|
—
|
|
|
Net deferred tax assets
|
5,617
|
|
|
5,471
|
|
|
1,639
|
|
|
1,485
|
|
|
Net deferred income taxes
|
$
|
10,640
|
|
|
$
|
9,534
|
|
|
$
|
8,541
|
|
|
$
|
7,730
|
|
______________________
|
|
|
|
(a)
|
Amount relates to a valuation allowance related to the solar projects in Spain, deferred state tax credits and state operating loss carryforwards.
|
Deferred tax assets and liabilities are included on the consolidated balance sheets as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEE
|
|
FPL
|
|
|
December 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
(millions)
|
|
|
|
Noncurrent other assets
|
$
|
461
|
|
|
$
|
293
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Deferred income taxes - noncurrent liabilities
|
(11,101
|
)
|
|
(9,827
|
)
|
|
(8,541
|
)
|
|
(7,730
|
)
|
|
Net deferred income taxes
|
$
|
(10,640
|
)
|
|
$
|
(9,534
|
)
|
|
$
|
(8,541
|
)
|
|
$
|
(7,730
|
)
|
The components of NEE's deferred tax assets relating to net operating loss carryforwards and tax credit carryforwards at
December 31, 2016
are as follows:
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
Expiration
Dates
|
|
|
(millions)
|
|
|
|
Net operating loss carryforwards:
|
|
|
|
|
Federal
|
$
|
165
|
|
|
2026-2036
|
|
State
|
174
|
|
|
2017-2036
|
|
Foreign
|
88
|
|
(a)
|
2017-2036
|
|
Net operating loss carryforwards
|
$
|
427
|
|
|
|
|
Tax credit carryforwards:
|
|
|
|
|
Federal
|
$
|
2,697
|
|
|
2022-2036
|
|
State
|
362
|
|
(b)
|
2017-2044
|
|
Tax credit carryforwards
|
$
|
3,059
|
|
|
|
______________________
|
|
|
|
(a)
|
Includes $
60 million
of net operating loss carryforwards with an indefinite expiration period.
|
|
|
|
|
(b)
|
Includes $
188 million
of ITC carryforwards with an indefinite expiration period.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Jointly-Owned Electric Plants
Certain NEE subsidiaries own undivided interests in the jointly-owned facilities described below, and are entitled to a proportionate share of the output from those facilities. The subsidiaries are responsible for their share of the operating costs, as well as providing their own financing. Accordingly, each subsidiary's proportionate share of the facilities and related revenues and expenses is included in the appropriate balance sheet and statement of income captions. NEE's and FPL's respective shares of direct expenses for these facilities are included in fuel, purchased power and interchange expense, O&M expenses, depreciation and amortization expense and taxes other than income taxes and other - net in NEE's and FPL's consolidated statements of income.
NEE's and FPL's proportionate ownership interest in jointly-owned facilities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Ownership
Interest
|
|
Gross
Investment
(a)
|
|
Accumulated
Depreciation
(a)
|
|
Construction
Work
in Progress
|
|
|
|
|
(millions)
|
|
FPL:
|
|
|
|
|
|
|
|
|
St. Lucie Unit No. 2
|
85
|
%
|
|
$
|
2,172
|
|
|
$
|
815
|
|
|
$
|
33
|
|
|
St. Johns River Power Park units and coal terminal
|
20
|
%
|
|
$
|
393
|
|
|
$
|
208
|
|
|
$
|
—
|
|
|
Scherer Unit No. 4
|
76
|
%
|
|
$
|
1,138
|
|
|
$
|
395
|
|
|
$
|
3
|
|
|
NEER:
|
|
|
|
|
|
|
|
|
Duane Arnold
|
70
|
%
|
|
$
|
466
|
|
|
$
|
146
|
|
|
$
|
16
|
|
|
Seabrook
|
88.23
|
%
|
|
$
|
1,138
|
|
|
$
|
271
|
|
|
$
|
77
|
|
|
Wyman Station Unit No. 4
|
84.35
|
%
|
|
$
|
25
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
Corporate and Other:
|
|
|
|
|
|
|
|
|
Transmission substation assets located in Seabrook, New Hampshire
|
88.23
|
%
|
|
$
|
76
|
|
|
$
|
17
|
|
|
$
|
3
|
|
______________________
|
|
|
|
(a)
|
Excludes nuclear fuel.
|
7. Business Acquisitions
Texas Pipeline Business -
On October 1, 2015, a subsidiary of NEP acquired
100%
of the membership interests in NET Holdings Management, LLC (Texas pipeline business), a developer, owner and operator of the Texas pipelines. One of the acquired pipelines is subject to a
10%
noncontrolling interest. The aggregate purchase price of approximately
$2 billion
included approximately
$934 million
in cash consideration and the assumption of approximately
$706 million
in existing debt of the Texas pipeline business and its subsidiaries at closing and excluded post-closing working capital adjustments of approximately
$2 million
. The purchase price is subject to (i) a
$200 million
holdback payable, in whole or in part, upon satisfaction of financial performance and capital expenditure thresholds relating to planned expansion projects (contingent holdback) and (ii) a
$200 million
holdback retained to satisfy any indemnification obligations of the sellers through April 2017. NEP incurred approximately
$13 million
in acquisition-related costs during the year ended December 31, 2015, which are reflected in O&M expenses in NEE's consolidated statements of income.
Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed on October 1, 2015 based on their estimated fair value. All fair value measurements of assets acquired and liabilities assumed, including the noncontrolling interest, were based on significant estimates and assumptions, including Level 3 inputs, which require judgment. Estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting risk inherent in future cash flows and future market prices. The excess of the purchase price over the estimated fair value of assets acquired and liabilities assumed was recognized as goodwill at the acquisition date. The goodwill arising from the acquisition consists largely of growth opportunities from the Texas pipeline business. Approximately
$380 million
of the goodwill is expected to be deductible for income tax purposes over a
15
year period. A liability of approximately
$186 million
was recognized as of the acquisition date for each of the contingent holdback and the indemnity holdback, reflecting the fair value of the expected future payments. NEE determined this fair value measurement based on management's probability assessment. The significant inputs and assumptions used in the fair value measurement included the estimated probability of executing contracts related to financial performance and capital expenditure thresholds as well as the appropriate discount rate. In 2016, NEE recorded fair value adjustments to eliminate the entire contingent holdback as the contracts contemplated in the acquisition were not executed by
December 31, 2016
. The fair value adjustments are reflected as revaluation of contingent consideration in NEE's consolidated statements of income. At
December 31, 2016
, the carrying amount of the indemnity holdback was approximately $
199 million
. The indemnity holdback is included in current other liabilities at
December 31, 2016
and the contingent and indemnity holdbacks are included in noncurrent other liabilities at December 31, 2015 on NEE's consolidated balance sheets.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the estimated fair value of assets acquired and liabilities assumed for the acquisition of the Texas pipeline business:
|
|
|
|
|
|
|
|
|
Amounts Recognized
as of October 1, 2015
|
|
|
(millions)
|
|
Assets:
|
|
|
Property, plant and equipment
|
$
|
806
|
|
|
Cash
|
1
|
|
|
Other receivables and current other assets
|
21
|
|
|
Noncurrent other assets (other intangible assets, see Note 1 - Goodwill and Other Intangible Assets)
|
720
|
|
|
Noncurrent other assets (goodwill, see Note 1 - Goodwill and Other Intangible Assets)
|
622
|
|
|
Total assets
|
$
|
2,170
|
|
|
|
|
|
Liabilities:
|
|
|
Long-term debt, including current portion
|
$
|
706
|
|
|
Accounts payable and current other liabilities
|
46
|
|
|
Noncurrent other liabilities, primarily acquisition holdbacks
|
415
|
|
|
Total liabilities
|
1,167
|
|
|
Less noncontrolling interest at fair value
|
69
|
|
|
Total cash consideration
|
$
|
934
|
|
Pending Oncor-Related Transactions
- In July 2016, NEE, EFH Merger Co., LLC (Merger Sub), a direct wholly owned subsidiary of NEE, Energy Future Holdings Corp. (EFH Corp.) and Energy Future Intermediate Holding Company LLC (EFIH), a direct wholly owned subsidiary of EFH Corp., entered into an agreement and plan of merger (EFH merger agreement). Pursuant to the EFH merger agreement and after the reorganization of EFH Corp. (reorganized EFH) under the United States Bankruptcy Code, Merger Sub will acquire
100%
of the equity of reorganized EFH Corp. and certain of its direct and indirect subsidiaries, including its indirect ownership of
80.03%
of the outstanding equity interests of Oncor Electric Delivery Company LLC (Oncor), a regulated electric distribution and transmission business that operates the largest distribution and transmission system in Texas. The EFH merger agreement, as amended in September 2016, provides that the consideration for the transaction funded by NEE will be
$9.796 billion
, which will be paid almost all in cash, with the balance in shares of NEE common stock. The amount of consideration will be subject to adjustment as provided in the EFH merger agreement. On February 17, 2017, the U.S. Bankruptcy Court for the District of Delaware confirmed EFH Corp.'s Eighth Amended Joint Plan of Reorganization. Completion of the merger and the actual closing date remain subject to, among other things, approval by the Public Utility Commission of Texas (PUCT) and receipt of a supplemental private letter ruling from the Internal Revenue Service. NEE, Merger Sub, EFH Corp. and EFIH have certain specified termination rights under the EFH merger agreement. In October 2016, NEE and Oncor filed a joint application with the PUCT requesting the approval of the EFH Corp. merger, as well as the TTHC merger described below. The PUCT hearings regarding the merger transactions were conducted the week of February 20, 2017.
In October 2016, NEE and its direct wholly owned subsidiary WSS Acquisition Company (TTHC Merger Sub) entered into an agreement (TTHC merger agreement) with Texas Transmission Holdings Corporation (TTHC) and certain stockholders of TTHC, Cheyne Walk Investment Pte Ltd, Borealis Power Holdings Inc. and BPC Health Corporation (together, the Primary Holders). Pursuant to the TTHC merger agreement, TTHC Merger Sub would merge with TTHC for a total cash merger consideration to be paid by NEE of approximately
$2.410 billion
, subject to adjustment as provided in the TTHC merger agreement. TTHC, through Texas Transmission Investment LLC (TTI), a wholly owned subsidiary, owns an approximately
20%
interest in Oncor. Completion of the TTHC merger and actual closing date remain subject to, among other things, approval by the PUCT. NEE, TTHC Merger Sub, TTHC and the Primary Holders have certain specified termination rights under the TTHC merger agreement.
In October 2016, T & D Equity Acquisition, LLC (OMI purchaser), a direct wholly owned subsidiary of NEE, Oncor Management Investment LLC (OMI) and Oncor entered into an agreement for the OMI purchaser to purchase OMI's
0.22%
interest in Oncor for approximately
$27 million
. This transaction is subject to NEE closing its agreement to acquire EFH Corp. described above.
The TTHC and OMI transactions, when combined with NEE’s agreement to acquire EFH Corp. described above, if completed, would result in NEE owning
100%
of Oncor. NEE expects the EFH Corp. merger and the other Oncor-related transactions to be completed in the first half of 2017.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Variable Interest Entities (VIEs)
In February 2015, the FASB issued an accounting standards update that modified consolidation guidance. The standards update makes changes to both the variable interest entity model and the voting interest entity model, including modifying the evaluation of whether limited partnerships or similar legal entities are VIEs or voting interest entities and amending the guidance for assessing how relationships of related parties affect the consolidation analysis of VIEs. The standards update was effective for NEE and FPL beginning January 1, 2016, and the modified retrospective approach was adopted. The adoption of the standards update did not result in any changes to the previous consolidation conclusions; however, it did result in a limited number of entities being considered VIEs and the related disclosure was provided for the current period.
As of
December 31, 2016
, NEE has
thirty-three
VIEs which it consolidates and has interests in certain other VIEs which it does not consolidate.
FPL
- FPL is considered the primary beneficiary of, and therefore consolidates, a VIE that is a wholly owned bankruptcy remote special purpose subsidiary that it formed in 2007 for the sole purpose of issuing storm-recovery bonds pursuant to the securitization provisions of the Florida Statutes and a financing order of the FPSC. FPL is considered the primary beneficiary because FPL has the power to direct the significant activities of the VIE, and its equity investment, which is subordinate to the bondholder's interest in the VIE, is at risk. Storm restoration costs incurred by FPL during 2005 and 2004 exceeded the amount in FPL's funded storm and property insurance reserve, resulting in a storm reserve deficiency. In 2007, the VIE issued $
652 million
aggregate principal amount of senior secured bonds (storm-recovery bonds), primarily for the after-tax equivalent of the total of FPL's unrecovered balance of the 2004 storm restoration costs, the 2005 storm restoration costs and to reestablish FPL's storm and property insurance reserve. In connection with this financing, net proceeds, after debt issuance costs, to the VIE (approximately $
644 million
) were used to acquire the storm-recovery property, which includes the right to impose, collect and receive a storm-recovery charge from all customers receiving electric transmission or distribution service from FPL under rate schedules approved by the FPSC or under special contracts, certain other rights and interests that arise under the financing order issued by the FPSC and certain other collateral pledged by the VIE that issued the bonds. The storm-recovery bonds are payable only from and are secured by the storm-recovery property. The bondholders have no recourse to the general credit of FPL. The assets of the VIE were approximately $
216 million
and $
230 million
at
December 31, 2016
and
2015
, respectively, and consisted primarily of storm-recovery property, which are included in both current and noncurrent regulatory assets on NEE's and FPL's consolidated balance sheets. The liabilities of the VIE were approximately $
214 million
and $
278 million
at
December 31, 2016
and
2015
, respectively, and consisted primarily of storm-recovery bonds, which are included in long-term debt on NEE's and FPL's consolidated balance sheets.
FPL entered into a purchased power agreement effective in 1995 with a
330
MW coal-fired facility to purchase substantially all of the facility's capacity and electrical output over a substantial portion of its estimated useful life. The facility is considered a VIE because FPL absorbs a portion of the facility's variability related to changes in the market price of coal through the price it pays per MWh (energy payment). Since FPL does not control the most significant activities of the facility, including operations and maintenance, FPL is not the primary beneficiary and does not consolidate this VIE. The energy payments paid by FPL will fluctuate as coal prices change. This fluctuation does not expose FPL to losses since the energy payments paid by FPL to the facility are recovered through the fuel clause as approved by the FPSC. See Note 13 - Contracts for a discussion of FPL's purchase of the 330 MW coal-fired facility.
NEER
- NEE consolidates
thirty-two
NEER VIEs. NEER is considered the primary beneficiary of these VIEs since NEER controls the most significant activities of these VIEs, including operations and maintenance, as well as construction, and has the obligation to absorb expected losses of these VIEs.
A
subsidiary of NEER is the primary beneficiary of, and therefore consolidates, NEP, which consolidates NEP OpCo because of NEP’s controlling interest in the general partner of NEP OpCo. NEP is a limited partnership formed to acquire, manage and own contracted clean energy projects with stable, long-term cash flows through a limited partner interest in NEP OpCo. NEE owns a controlling non-economic general partner interest in NEP and a limited partner interest in NEP OpCo, and presents NEP's limited partner interest as a noncontrolling interest in NEE's consolidated financial statements. At
December 31, 2016
, NEE owns common units of NEP OpCo representing noncontrolling interest in NEP’s operating projects of approximately
65.2%
. The assets and liabilities of NEP were approximately $
7.2 billion
and $
5.0 billion
, respectively, at
December 31, 2016
, and primarily consisted of property, plant and equipment and long-term debt.
A
NEER VIE consolidates two entities which own and operate natural gas/oil electric generation facilities with the capability of producing
110
MW. These entities sell their electric output under power sales contracts to a third party, with expiration dates in
2018
and
2020
. The power sales contracts provide the offtaker the ability to dispatch the facilities and require the offtaker to absorb the cost of fuel. The entities have third-party debt which is secured by liens against the generation facilities and the other assets of these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of the VIE were approximately $
95 million
and $
42 million
, respectively, at
December 31, 2016
and $
84 million
and $
47 million
, respectively, at
December 31, 2015
, and consisted primarily of property, plant and equipment and long-term debt.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Two
indirect subsidiaries of NEER each contributed, to a NEP subsidiary, an approximately
50
% ownership interest in three entities which own and operate solar PV facilities with the capability of producing a total of approximately
277
MW. Each of the two indirect subsidiaries of NEER is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NEER. These three entities sell their electric output to third parties under power sales contracts with expiration dates in 2035 and
2036
. The three entities have third-party debt which is secured by liens against the assets of the entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs were approximately $
571 million
and $
487 million
, respectively, at
December 31, 2016
and $
657 million
and $
626 million
, respectively, at
December 31, 2015
, and consisted primarily of property, plant and equipment and long-term debt.
NEER consolidates a special purpose entity that has insufficient equity at risk and is considered a VIE. The entity provided a loan in the form of a note receivable (see Note 4 - Fair Value of Financial Instruments Recorded at Other than Fair Value) to an unrelated third party, and also issued senior secured bonds which are collateralized by the note receivable. The assets and liabilities of the VIE were approximately
$502 million
and
$511 million
, respectively, at
December 31, 2016
, and consisted primarily of notes receivables (included in other investments) and long-term debt.
The other
twenty-seven
NEER VIEs that are consolidated relate to certain subsidiaries which have sold differential membership interests in entities which own and operate wind electric generation and solar
PV
facilities with the capability of producing a total of approximately
6,847
MW and
374
MW, respectively. These entities sell their electric output either under power sales contracts to third parties with expiration dates ranging from
2018
through
2046
or in the spot market. Certain investors that have no equity at risk in the VIEs hold differential membership interests, which give them the right to receive a portion of the economic attributes of the generation facilities, including certain tax attributes. Certain entities have third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NEER's ownership interest in these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs totaled approximately $
10.9 billion
and $
6.9 billion
, respectively, at
December 31, 2016
.
Twenty
of the
twenty-seven
were VIEs at December 31, 2015 and were consolidated; the assets and liabilities of those VIEs totaled approximately $
7.6 billion
and $
5.0 billion
, respectively, at
December 31, 2015
. At
December 31, 2016
and
2015
, the assets and liabilities of the VIEs consisted primarily of property, plant and equipment, deferral related to differential membership interests and long-term debt.
Other
- As of
December 31, 2016
and
2015
, several NEE subsidiaries have investments totaling approximately $
2,505 million
($
2,049 million
at FPL) and $
602 million
($
476 million
at FPL), respectively, which are included in special use funds and other investments on NEE's consolidated balance sheets and in special use funds on FPL's consolidated balance sheets. At
December 31, 2016
, these investments represented primarily commingled funds, and at
December 31, 2015
, mortgage-backed securities. NEE subsidiaries, including FPL, are not the primary beneficiary and therefore do not consolidate any of these entities because they do not control any of the ongoing activities of these entities, were not involved in the initial design of these entities and do not have a controlling financial interest in these entities.
Certain subsidiaries of NEE have noncontrolling interests in entities accounted for under the equity method. These entities are limited partnerships or similar entity structures in which the limited partners or nonmanaging members do not have substantive rights, and therefore are considered VIEs. NEE is not the primary beneficiary because it does not have a controlling financial interest in these entities, and therefore does not consolidate any of these entities. NEE’s investment in these entities totaled approximately $
234 million
at
December 31, 2016
, which are included in other investments on NEE’s consolidated balance sheets. Subsidiaries of NEE have committed to invest an additional approximately $
30 million
in
two
of the entities.
9. Investments in Partnerships and Joint Ventures
Certain subsidiaries of NEE, primarily NEER, have noncontrolling non-majority owned interests in various partnerships and joint ventures, essentially all of which are in the process of developing or constructing natural gas pipelines or own electric generation facilities. At
December 31, 2016
and
2015
, NEE's investments in partnerships and joint ventures totaled approximately
$1,767 million
and
$1,063 million
, respectively, which are included in other investments on NEE's consolidated balance sheets. NEER's interest in these partnerships and joint ventures primarily range from approximately
31%
to
50%
. At
December 31, 2016
and 2015, the principal entities included in NEER's investments in partnerships and joint ventures were Sabal Trail Transmission, LLC, Desert Sunlight Investment Holdings, LLC, Northeast Energy, LP and Cedar Point II Wind, LP.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Summarized combined information for these principal entities is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
(millions)
|
|
Net income
|
$
|
264
|
|
|
$
|
213
|
|
|
Total assets
|
$
|
4,502
|
|
|
$
|
3,339
|
|
|
Total liabilities
|
$
|
1,364
|
|
|
$
|
1,307
|
|
|
Partners'/members' equity
|
$
|
3,138
|
|
|
$
|
2,032
|
|
|
|
|
|
|
|
NEER's share of underlying equity in the principal entities
|
$
|
1,423
|
|
|
$
|
874
|
|
|
Difference between investment carrying amount and underlying equity in net assets
(a)
|
65
|
|
|
(3
|
)
|
|
NEER's investment carrying amount for the principal entities
|
$
|
1,488
|
|
|
$
|
871
|
|
______________________
|
|
|
|
(a)
|
Substantially all of the difference between the investment carrying amount and the underlying equity in net assets is being amortized over a 25-year period.
|
In 2004, a trust created by NEE sold $
300 million
of 5 7/8% preferred trust securities to the public and $
9 million
of common trust securities to NEE. The trust is an unconsolidated
100%
-owned finance subsidiary. The proceeds from the sale of the preferred and common trust securities were used to buy 5 7/8% junior subordinated debentures maturing in March 2044 from NEECH. NEE has fully and unconditionally guaranteed the preferred trust securities and the junior subordinated debentures.
10. Common Shareholders' Equity
Stock-Based Compensation
- On March 30, 2016, the FASB issued an accounting standards update related to the accounting for employee share-based payment awards including simplification in areas such as (i) income tax consequences; (ii) classification of awards as either equity or liabilities; and (iii) classification on the statement of cash flows. The standards update was effective for NEE beginning January 1, 2017, however, NEE early adopted the provisions of the standards update during the three months ended June 30, 2016 with an effective date of January 1, 2016. Upon adoption, NEE recorded approximately
$18 million
primarily related to previously unrecognized excess tax benefits in deferred income taxes with a resulting increase to retained earnings as of January 1, 2016. For the year ended December 31, 2016, the impact of the standards update resulted in approximately
$30 million
of excess tax benefits being recorded in NEE's consolidated statements of income. All other provisions of the standards update did not have a material impact to NEE's consolidated financial statements. The standards update had no effect on FPL.
Earnings Per Share
- The reconciliation of NEE's basic and diluted earnings per share attributable to NEE is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
(millions, except per share amounts)
|
|
Numerator - net income attributable to NEE
|
$
|
2,912
|
|
|
$
|
2,752
|
|
|
$
|
2,465
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
Weighted-average number of common shares outstanding - basic
|
463.1
|
|
|
450.5
|
|
|
434.4
|
|
|
Equity units, performance share awards, stock options, forward sale agreement and restricted stock
(a)
|
2.7
|
|
|
3.5
|
|
|
5.7
|
|
|
Weighted-average number of common shares outstanding - assuming dilution
|
465.8
|
|
|
454.0
|
|
|
440.1
|
|
|
Earnings per share attributable to NEE:
|
|
|
|
|
|
|
|
|
Basic
|
$
|
6.29
|
|
|
$
|
6.11
|
|
|
$
|
5.67
|
|
|
Assuming dilution
|
$
|
6.25
|
|
|
$
|
6.06
|
|
|
$
|
5.60
|
|
______________________
|
|
|
|
(a)
|
Calculated using the treasury stock method. Performance share awards are included in diluted weighted-average number of common shares outstanding based upon what would be issued if the end of the reporting period was the end of the term of the award.
|
Common shares issuable pursuant to equity units, performance share awards, stock options and forward sale agreements and restricted stock which were not included in the denominator above due to their antidilutive effect were approximately
7.9 million
,
3.5 million
and
2.6 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Issuance of Common Stock and Forward Sale Agreement
- In November 2013, NEE sold
4.5 million
shares of its common stock at a price of
$88.03
per share, and a forward counterparty borrowed and sold
6.6 million
shares of NEE's common stock in connection with a forward sale agreement. In December 2014, NEE physically settled the forward sale agreement by delivering
6.6 million
shares of its common stock to the forward counterparty in exchange for cash proceeds of approximately
$552 million
. The forward sale price used to determine the cash proceeds received by NEE was calculated based on the initial forward sale price of
$88.03
per share less certain adjustments as specified in the forward sale agreement. Prior to the settlement date, the forward sale agreement had a dilutive effect on NEE’s earnings per share when the average market price per share of NEE’s common stock was above the adjusted forward sale price per share.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Forward Sale Agreements
- In November 2016, NEE entered into forward sale agreements with several forward counterparties to be settled on a date or dates to be specified at NEE’s direction, no later than November 1, 2017. NEE may elect physical settlement, cash settlement or net share settlement for all or a portion of its obligations under the forward sale agreements. If NEE physically settles, it will deliver the shares of its common stock to the applicable forward counterparty in exchange for cash proceeds at the then applicable forward sale price, which represents the initial forward sale price of
$124.00
per share, less certain adjustments as specified in the forward sale agreements. The forward sale transactions are classified as equity transactions because they are indexed to NEE's common stock and physical settlement is within NEE's control. At December 31, 2016, if NEE had settled the forward sale agreements by delivery of
12 million
shares of its common stock to the forward counterparties, NEE would have received net proceeds of approximately
$1.5 billion
. Prior to the settlement date, the forward sale agreements will have a dilutive effect on NEE's earnings per share when the average market price per share of NEE's common stock is above the adjusted forward sale price per share. As of December 31, 2016, the adjusted forward sale price per share was greater than the average market price per share of NEE's common stock; accordingly the
12 million
shares were antidilutive.
Common Stock Dividend Restrictions
- NEE's charter does not limit the dividends that may be paid on its common stock. FPL's mortgage securing FPL's first mortgage bonds contains provisions which, under certain conditions, restrict the payment of dividends and other distributions to NEE. These restrictions do not currently limit FPL's ability to pay dividends to NEE.
Stock-Based Compensation
- Net income for the years ended December 31,
2016
,
2015
and
2014
includes approximately $
77 million
, $
60 million
and $
60 million
, respectively, of compensation costs and $
30 million
, $
23 million
and $
23 million
, respectively, of income tax benefits related to stock-based compensation arrangements. Compensation cost capitalized for the years ended December 31,
2016
,
2015
and
2014
was not material. As of December 31,
2016
, there were approximately $
78 million
of unrecognized compensation costs related to nonvested/nonexercisable stock-based compensation arrangements. These costs are expected to be recognized over a weighted-average period of
1.8
years.
At December 31,
2016
, approximately
16 million
shares of common stock were authorized for awards to officers, employees and non-employee directors of NEE and its subsidiaries under NEE's: (a) Amended and Restated 2011 Long Term Incentive Plan, (b) 2007 Non-Employee Directors Stock Plan and (c) earlier equity compensation plans under which shares are reserved for issuance under existing grants, but no additional shares are available for grant under the earlier plans. NEE satisfies restricted stock and performance share awards by issuing new shares of its common stock or by purchasing shares of its common stock in the open market. NEE satisfies stock option exercises by issuing new shares of its common stock. NEE generally grants most of its stock-based compensation awards in the first quarter of each year.
Restricted Stock and Performance Share Awards
- Restricted stock typically vests within
three
years after the date of grant and is subject to, among other things, restrictions on transferability prior to vesting. The fair value of restricted stock is measured based upon the closing market price of NEE common stock as of the date of grant. Performance share awards are typically payable at the end of a
three
-year performance period if the specified performance criteria are met. The fair value of performance share awards is estimated primarily based upon the closing market price of NEE common stock as of the date of grant less the present value of expected dividends, multiplied by an estimated performance multiple which is subsequently trued up based on actual performance.
The activity in restricted stock and performance share awards for the year ended December 31,
2016
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-
Average
Grant Date
Fair Value
Per Share
|
|
Restricted Stock:
|
|
|
|
|
Nonvested balance, January 1, 2016
|
563,660
|
|
|
$
|
89.60
|
|
|
Granted
|
291,422
|
|
|
$
|
112.86
|
|
|
Vested
|
(274,144
|
)
|
|
$
|
85.62
|
|
|
Forfeited
|
(24,290
|
)
|
|
$
|
100.78
|
|
|
Nonvested balance, December 31, 2016
|
556,648
|
|
|
$
|
103.26
|
|
|
Performance Share Awards:
|
|
|
|
|
Nonvested balance, January 1, 2016
|
915,199
|
|
|
$
|
81.90
|
|
|
Granted
|
604,686
|
|
|
$
|
89.23
|
|
|
Vested
|
(630,773
|
)
|
|
$
|
69.40
|
|
|
Forfeited
|
(54,679
|
)
|
|
$
|
95.62
|
|
|
Nonvested balance, December 31, 2016
|
834,433
|
|
|
$
|
95.76
|
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The weighted-average grant date fair value per share of restricted stock granted for the years ended
December 31, 2015
and
2014
was $
103.58
and $
93.46
respectively. The weighted-average grant date fair value per share of performance share awards granted for the years ended
December 31, 2015
and
2014
was $
77.12
and $
71.52
, respectively.
The total fair value of restricted stock and performance share awards vested was $
99 million
, $
108 million
and $
85 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Options - Options typically vest within
three
years after the date of grant and have a maximum term of
ten
years. The exercise price of each option granted equals the closing market price of NEE common stock on the date of grant. The fair value of the options is estimated on the date of the grant using the Black-Scholes option-pricing model and based on the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
Expected volatility
(a)
|
16.37%
|
|
18.91%
|
|
20.32%
|
|
Expected dividends
|
3.16%
|
|
3.11%
|
|
3.11%
|
|
Expected term (years)
(b)
|
7.0
|
|
7.0
|
|
7.0
|
|
Risk-free rate
|
1.50%
|
|
1.84%
|
|
2.17%
|
______________________
|
|
|
|
(a)
|
Based on historical experience.
|
|
|
|
|
(b)
|
Based on historical exercise and post-vesting cancellation experience adjusted for outstanding awards.
|
Option activity for the year ended December 31,
2016
was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
Underlying
Options
|
|
Weighted-
Average
Exercise
Price
Per Share
|
|
Weighted-
Average
Remaining
Contractual
Term
(years)
|
|
Aggregate
Intrinsic
Value
(millions)
|
|
Balance, January 1, 2016
|
2,866,501
|
|
|
$
|
63.39
|
|
|
|
|
|
|
Granted
|
294,889
|
|
|
$
|
111.67
|
|
|
|
|
|
|
Exercised
|
(651,492
|
)
|
|
$
|
55.37
|
|
|
|
|
|
|
Forfeited
|
(4,690
|
)
|
|
$
|
106.64
|
|
|
|
|
|
|
Balance, December 31, 2016
|
2,505,208
|
|
|
$
|
71.08
|
|
|
5.4
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2016
|
2,043,899
|
|
|
$
|
62.90
|
|
|
4.7
|
|
$
|
116
|
|
The weighted-average grant date fair value of options granted was $
11.74
, $
13.62
and $
14.09
per share for the years ended December 31,
2016
,
2015
and
2014
, respectively. The total intrinsic value of stock options exercised was approximately $
42 million
, $
11 million
and $
30 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Cash received from option exercises was approximately $
36 million
, $
9 million
and $
26 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively. The tax benefits realized from options exercised were approximately
$16 million
, $
4 million
and $
11 million
for the years ended December 31,
2016
,
2015
and
2014
, respectively.
Preferred Stock
- NEE's charter authorizes the issuance of
100 million
shares of serial preferred stock, $
0.01
par value,
none
of which are outstanding. FPL's charter authorizes the issuance of
10,414,100
shares of preferred stock, $
100
par value,
5 million
shares of subordinated preferred stock,
no
par value, and
5 million
shares of preferred stock,
no
par value,
none
of which are outstanding.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accumulated Other Comprehensive Income (Loss)
- The components of AOCI, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
Net Unrealized
Gains (Losses)
on Cash Flow
Hedges
|
|
Net Unrealized
Gains (Losses)
on Available for
Sale Securities
|
|
Defined Benefit
Pension and
Other Benefits
Plans
|
|
Net Unrealized
Losses
on Foreign
Currency
Translation
|
|
Other
Comprehensive
Income (Loss)
Related to Equity
Method Investee
|
|
Total
|
|
|
(millions)
|
|
Balances, December 31, 2013
|
$
|
(115
|
)
|
|
$
|
197
|
|
|
$
|
23
|
|
|
$
|
(33
|
)
|
|
$
|
(16
|
)
|
|
$
|
56
|
|
|
Other comprehensive income (loss) before reclassifications
|
(141
|
)
|
|
62
|
|
|
(44
|
)
|
|
(25
|
)
|
|
(8
|
)
|
|
(156
|
)
|
|
Amounts reclassified from AOCI
|
98
|
|
(a)
|
(41
|
)
|
(b)
|
1
|
|
|
—
|
|
|
—
|
|
|
58
|
|
|
Net other comprehensive income (loss)
|
(43
|
)
|
|
21
|
|
|
(43
|
)
|
|
(25
|
)
|
|
(8
|
)
|
|
(98
|
)
|
|
Less other comprehensive loss attributable to noncontrolling interests
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
Balances, December 31, 2014
|
(156
|
)
|
|
218
|
|
|
(20
|
)
|
|
(58
|
)
|
|
(24
|
)
|
|
(40
|
)
|
|
Other comprehensive loss before reclassifications
|
(88
|
)
|
|
(7
|
)
|
|
(42
|
)
|
|
(27
|
)
|
|
—
|
|
|
(164
|
)
|
|
Amounts reclassified from AOCI
|
63
|
|
(a)
|
(37
|
)
|
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
Net other comprehensive loss
|
(25
|
)
|
|
(44
|
)
|
|
(42
|
)
|
|
(27
|
)
|
|
—
|
|
|
(138
|
)
|
|
Less other comprehensive loss attributable to noncontrolling interests
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|
Balances, December 31, 2015
|
(170
|
)
|
|
174
|
|
|
(62
|
)
|
|
(85
|
)
|
|
(24
|
)
|
|
(167
|
)
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
69
|
|
|
(21
|
)
|
|
(5
|
)
|
|
2
|
|
|
45
|
|
|
Amounts reclassified from AOCI
|
70
|
|
(a)
|
(18
|
)
|
(b)
|
—
|
|
|
—
|
|
|
—
|
|
|
52
|
|
|
Net other comprehensive income (loss)
|
70
|
|
|
51
|
|
|
(21
|
)
|
|
(5
|
)
|
|
2
|
|
|
97
|
|
|
Less other comprehensive income attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Balances, December 31, 2016
|
$
|
(100
|
)
|
|
$
|
225
|
|
|
$
|
(83
|
)
|
|
$
|
(90
|
)
|
|
$
|
(22
|
)
|
|
$
|
(70
|
)
|
————————————
|
|
|
|
(a)
|
Reclassified to interest expense and also to other - net in 2014 and 2015 in NEE's consolidated statements of income. See Note 3 - Income Statement Impact of Derivative Instruments.
|
|
|
|
|
(b)
|
Reclassified to gains on disposal of investments and other property - net in NEE's consolidated statements of income.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
2016
|
|
2015
|
|
|
Maturity
Date
|
|
Balance
|
|
Weighted-
Average
Interest Rate
|
|
Balance
|
|
Weighted-
Average
Interest Rate
|
|
|
|
|
(millions)
|
|
|
|
(millions)
|
|
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
First mortgage bonds - fixed
|
2017 - 2044
|
|
$
|
8,690
|
|
|
4.78
|
%
|
|
$
|
8,690
|
|
|
4.77
|
%
|
|
Storm-recovery bonds - fixed
(a)
|
2021
|
|
210
|
|
|
5.26
|
%
|
|
273
|
|
|
5.26
|
%
|
|
Pollution control, solid waste disposal and industrial development revenue bonds - variable
(b)
|
2020 - 2046
|
|
778
|
|
|
0.77
|
%
|
|
718
|
|
|
0.04
|
%
|
|
Other long-term debt - variable
(c)
|
2018 - 2019
|
|
450
|
|
|
1.66
|
%
|
|
400
|
|
|
1.11
|
%
|
|
Other long-term debt - fixed
|
2016 - 2040
|
|
52
|
|
|
5.09
|
%
|
|
53
|
|
|
5.06
|
%
|
|
Unamortized debt issuance costs and discount
|
|
|
(108
|
)
|
|
|
|
(114
|
)
|
|
|
|
Total long-term debt of FPL
|
|
|
10,072
|
|
|
|
|
10,020
|
|
|
|
|
Less current maturities of long-term debt
|
|
|
367
|
|
|
|
|
64
|
|
|
|
|
Long-term debt of FPL, excluding current maturities
|
|
|
9,705
|
|
|
|
|
9,956
|
|
|
|
|
NEECH:
|
|
|
|
|
|
|
|
|
|
|
|
Debentures - fixed
(d)
|
2017 - 2023
|
|
4,100
|
|
|
2.87
|
%
|
|
3,100
|
|
|
3.15
|
%
|
|
Debentures, related to NEE's equity units - fixed
|
2018 - 2021
|
|
2,200
|
|
|
1.88
|
%
|
|
1,200
|
|
|
1.98
|
%
|
|
Junior subordinated debentures - primarily fixed
(d)
|
2044 - 2076
|
|
3,460
|
|
|
5.40
|
%
|
|
2,978
|
|
|
5.84
|
%
|
|
Japanese yen denominated senior notes - fixed
(d)
|
2030
|
|
85
|
|
|
5.13
|
%
|
|
83
|
|
|
5.13
|
%
|
|
Japanese yen denominated term loans - variable
(c)(d)
|
2017
|
|
470
|
|
|
1.83
|
%
|
|
456
|
|
|
1.83
|
%
|
|
Other long-term debt - fixed
|
2016 - 2044
|
|
924
|
|
|
2.45
|
%
|
|
1,307
|
|
|
4.55
|
%
|
|
Other long-term debt - variable
(c)
|
2016 - 2019
|
|
60
|
|
(e)
|
1.77
|
%
|
|
1,513
|
|
|
1.81
|
%
|
|
Fair value hedge adjustment
|
|
|
8
|
|
|
|
|
24
|
|
|
|
|
Unamortized debt issuance costs and discount
|
|
|
(101
|
)
|
|
|
|
(94
|
)
|
|
|
|
Total long-term debt of NEECH
|
|
|
11,206
|
|
|
|
|
10,567
|
|
|
|
|
Less current maturities of long-term debt
|
|
|
1,724
|
|
|
|
|
667
|
|
|
|
|
Long-term debt of NEECH, excluding current maturities
|
|
|
9,482
|
|
|
|
|
9,900
|
|
|
|
|
NEER:
|
|
|
|
|
|
|
|
|
|
|
|
Senior secured limited-recourse bonds and notes - fixed
|
2017 - 2038
|
|
2,091
|
|
(f)
|
6.00
|
%
|
|
2,203
|
|
|
5.88
|
%
|
|
Senior secured limited-recourse term loans - primarily variable
(c)(d)
|
2016 - 2035
|
|
4,959
|
|
|
2.78
|
%
|
|
3,969
|
|
(g)
|
2.51
|
%
|
|
Other long-term debt - primarily variable
(c)(d)
|
2016 - 2040
|
|
2,262
|
|
|
2.97
|
%
|
|
2,273
|
|
|
2.72
|
%
|
|
Unamortized debt issuance costs and premium - net
|
|
|
(168
|
)
|
|
|
|
(131
|
)
|
|
|
|
Total long-term debt of NEER
|
|
|
9,144
|
|
|
|
|
8,314
|
|
|
|
|
Less current maturities of long-term debt
|
|
|
513
|
|
|
|
|
1,489
|
|
(h)
|
|
|
Long-term debt of NEER, excluding current maturities
|
|
|
8,631
|
|
|
|
|
6,825
|
|
|
|
|
Total long-term debt
|
|
|
$
|
27,818
|
|
|
|
|
$
|
26,681
|
|
|
|
______________________
|
|
|
|
(a)
|
Principal on the storm-recovery bonds is due on the final maturity date (the date by which the principal must be repaid to prevent a default) for each tranche, however, it is being paid semiannually and sequentially.
|
|
|
|
|
(b)
|
Tax exempt bonds that permit individual bond holders to tender the bonds for purchase at any time prior to maturity. In the event bonds are tendered for purchase, they would be remarketed by a designated remarketing agent in accordance with the related indenture. If the remarketing is unsuccessful, FPL would be required to purchase the tax exempt bonds. As of
December 31, 2016
, all tax exempt bonds tendered for purchase have been successfully remarketed. FPL's bank revolving line of credit facilities are available to support the purchase of tax exempt bonds. Variable interest rate is established at various intervals by the remarketing agent.
|
|
|
|
|
(c)
|
Variable rate is based on an underlying index plus a margin.
|
|
|
|
|
(d)
|
Interest rate contracts, primarily swaps, have been entered into with respect to certain of these debt issuances. Additionally, a foreign currency swap has been entered into with respect to the Japanese yen denominated term loans - variable. See Note 3.
|
|
|
|
|
(e)
|
Excludes debt totaling
$373 million
reflected in liabilities associated with assets held for sale on NEE's consolidated balance sheets.
|
|
|
|
|
(f)
|
Includes approximately
$490 million
of debt held by a wholly owned subsidiary of NEER and collateralized by a third-party note receivable held by that subsidiary. See Note 8 - NEER.
|
|
|
|
|
(g)
|
Excludes debt totaling
$938 million
reflected in liabilities associated with assets held for sale on NEE's consolidated balance sheets. See Note 1 - Assets and Liabilities Associated with Assets Held for Sale.
|
|
|
|
|
(h)
|
See Spain Solar Projects Debt Restructuring below.
|
Minimum annual maturities of long
-
term debt for NEE are approximately
$2,604 million
,
$2,118 million
,
$2,606 million
,
$1,842 million
and
$2,712 million
for
2017
,
2018
,
2019
,
2020
and
2021
, respectively. The respective amounts for FPL are approximately
$367 million
,
$347 million
,
$251 million
,
$10 million
and
$47 million
.
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At
December 31, 2016 and 2015
, short-term borrowings had a weighted-average interest rate of
1.07%
(
1.07%
for FPL) and
2.10%
(
0.83%
for FPL), respectively. Subsidiaries of NEE, including FPL, had credit facilities with available capacity as of December 31, 2016 of approximately
$10.2 billion
(
$3.6 billion
for FPL), of which approximately
$9.8 billion
(
$3.6 billion
for FPL) relate to revolving line of credit facilities and
$0.4 billion
(
none
for FPL) relate to letter of credit facilities. Certain of the revolving line of credit facilities provide for the issuance of letters of credit of up to approximately
$3.4 billion
(
$0.7 billion
for FPL). The issuance of letters of credit under certain revolving line of credit facilities is subject to the aggregate commitment of the relevant banks to issue letters of credit under the applicable facility.
In February 2017, NEECH entered into two variable rate bi-lateral term loan agreements each providing for a
$3.75 billion
short-term, non-revolving term loan facility, for a total of
$7.5 billion
. The obligation to make loans pursuant to these bi-lateral term loan agreements terminates in August 2017 and each loan agreement expires in February 2018. There are currently no amounts outstanding under these facilities.
NEE has guaranteed certain payment obligations of NEECH, including most of those under NEECH's debt, including all of its debentures and commercial paper issuances, as well as most of its payment guarantees and indemnifications. NEECH has guaranteed certain debt and other obligations of NEER and its subsidiaries.
In May 2015, NEECH completed a remarketing of
$600 million
aggregate principal amount of its Series E Debentures due June 1, 2017 (Debentures) that were issued in May 2012 as components of equity units issued concurrently by NEE (May 2012 equity units). The Debentures are fully and unconditionally guaranteed by NEE. In connection with the remarketing of the Debentures, the interest rate on the Debentures was reset to
1.586%
per year, and interest is payable on June 1 and December 1 of each year, commencing June 1, 2015. In connection with the settlement of the contracts to purchase NEE common stock that were issued as components of the May 2012 equity units, on June 1, 2015, NEE issued
7,860,000
shares of common stock in exchange for
$600 million
.
In August 2015, NEECH completed a remarketing of approximately
$650 million
aggregate principal amount of its Series F Debentures due September 1, 2017, which constitutes a portion of the
$650 million
aggregate principal amount of such debentures (Debentures) that were issued in September 2012 as components of equity units issued concurrently by NEE (September 2012 equity units). The Debentures are fully and unconditionally guaranteed by NEE. In connection with the remarketing of the Debentures, the interest rate on all of the Debentures was reset to
2.056%
per year and interest is payable on March 1 and September 1 of each year, commencing September 1, 2015. In connection with the settlement of the contracts to purchase NEE common stock that were issued as components of the September 2012 equity units, in August and September 2015, NEE issued a total of
8,173,099
shares of common stock in exchange for
$650 million
.
In September 2015, NEE sold
$700 million
of equity units (initially consisting of Corporate Units). Each equity unit has a stated amount of
$50
and consists of a contract to purchase NEE common stock (stock purchase contract) and, initially, a
5%
undivided beneficial ownership interest in a Series H Debenture due September 1, 2020 issued in the principal amount of
$1,000
by NEECH. Each stock purchase contract requires the holder to purchase by no later than September 1, 2018 (the final settlement date) for a price of
$50
in cash, a number of shares of NEE common stock (subject to antidilution adjustments) based on a price per share range of
$95.35
to
$114.42
. If purchased on the final settlement date, as of
December 31, 2016
, the number of shares issued would (subject to antidilution adjustments) range from
0.5261
shares if the applicable market value of a share of common stock is less than or equal to
$95.35
to
0.4385
shares if the applicable market value of a share is equal to or greater than
$114.42
, with applicable market value to be determined using the average closing prices of NEE common stock over a
20
-day trading period ending August 29, 2018. Total annual distributions on the equity units will be at the rate of
6.371%
, consisting of interest on the debentures (
2.36%
per year) and payments under the stock purchase contracts (
4.011%
per year). The interest rate on the debentures is expected to be reset on or after March 1, 2018. A holder of an equity unit may satisfy its purchase obligation with proceeds raised from remarketing the NEECH debentures that are part of its equity unit. The undivided beneficial ownership interest in the NEECH debenture that is a component of each Corporate Unit is pledged to NEE to secure the holder's obligation to purchase NEE common stock under the related stock purchase contract. If a successful remarketing does not occur on or before the third business day prior to the final settlement date, and a holder has not notified NEE of its intention to settle the stock purchase contract with cash, the debentures that are components of the Corporate Units will be used to satisfy in full the holders' obligations to purchase NEE common stock under the related stock purchase contracts on the final settlement date. The debentures are fully and unconditionally guaranteed by NEE.
In August 2016, NEE sold
$1.5 billion
of equity units (initially consisting of Corporate Units). Each equity unit has a stated amount of
$50
and consists of a contract to purchase NEE common stock (stock purchase contract) and, initially, a
5%
undivided beneficial ownership interest in a Series I Debenture due September 1, 2021 issued in the principal amount of
$1,000
by NEECH. Each stock purchase contract requires the holder to purchase by no later than September 1, 2019 (the final settlement date) for a price of
$50
in cash, a number of shares of NEE common stock (subject to antidilution adjustments) based on a price per share range of
$127.63
to
$159.54
. If purchased on the final settlement date, as of
December 31, 2016
, the number of shares issued would (subject to antidilution adjustments) range from
0.3918
shares if the applicable market value of a share of common stock is less than or equal to
$127.63
to
0.3134
shares if the applicable market value of a share is equal to or greater than
$159.54
, with applicable market value to be determined using the average closing prices of NEE common stock over a
20
-day trading period ending August 28, 2019. Total annual distributions on the equity units will be at the rate of
6.123%
, consisting of interest on the debentures (
1.65%
per year) and payments under the stock purchase contracts (
4.473%
per year). The interest rate on the debentures is expected to
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
be reset on or after March 1, 2019. A holder of an equity unit may satisfy its purchase obligation with proceeds raised from remarketing the NEECH debentures that are part of its equity unit. The undivided beneficial ownership interest in the NEECH debenture that is a component of each Corporate Unit is pledged to NEE to secure the holder's obligation to purchase NEE common stock under the related stock purchase contract. If a successful remarketing does not occur on or before the third business day prior to the final settlement date, and a holder has not notified NEE of its intention to settle the stock purchase contract with cash, the debentures that are components of the Corporate Units will be used to satisfy in full the holders' obligations to purchase NEE common stock under the related stock purchase contracts on the final settlement date. The debentures are fully and unconditionally guaranteed by NEE.
In September 2016, NEECH completed a remarketing of
$500 million
aggregate principal amount of its Series G Debentures due September 1, 2018 (Debentures) that were issued in September 2013 as components of equity units issued concurrently by NEE (September 2013 equity units). The Debentures are fully and unconditionally guaranteed by NEE. In connection with the remarketing of the Debentures, the interest rate on the Debentures was reset to
1.649%
per year, and interest is payable on March 1 and September 1 of each year, commencing March 1, 2017. In connection with the settlement of the contracts to purchase NEE common stock that were issued as components of the September 2013 equity units, on September 1, 2016, NEE issued
5,101,000
shares of common stock in exchange for
$500 million
.
Prior to the issuance of NEE’s common stock, the stock purchase contracts, if dilutive, will be reflected in NEE’s diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of NEE common stock used in calculating diluted earnings per share is deemed to be increased by the excess, if any, of the number of shares that would be issued upon settlement of the stock purchase contracts over the number of shares that could be purchased by NEE in the market, at the average market price during the period, using the proceeds receivable upon settlement.
Spain Solar Projects Debt Restructuring
- In August 2016, NextEra Energy España, S.L., the NEER subsidiary in Spain that is the direct shareholder of the subsidiaries that own the solar projects in Spain (project-level subsidiaries), and the project-level subsidiaries entered into an agreement with the lenders to restructure the project-level debt, which included, among other things, a re-amortization of the debt, including extending the maturity date from 2030 to 2037, and reducing the original interest rate under the project-level financing agreements. At closing, the NEECH affiliates' remaining letter of credit posting obligation on behalf of the project-level subsidiaries of approximately
€23 million
(approximately $
26 million
) was used primarily to make a prepayment of the restructured project-level debt. The noncurrent portions of the restructured project-level debt, net of unamortized debt issuance costs, and associated derivative liabilities related to the interest rate swaps were both reclassified from current to long-term debt and noncurrent derivative liabilities, respectively, on NEE's consolidated balance sheets as of
December 31, 2016
and totaled approximately $
498 million
and $
122 million
, respectively, at that date. The restructured debt is secured solely by the assets of the project-level subsidiaries.
12. Asset Retirement Obligations
FPL's AROs relate primarily to the nuclear decommissioning obligations of its nuclear units. FPL's AROs other than nuclear decommissioning obligations are not significant. The accounting provisions result in timing differences in the recognition of legal asset retirement costs for financial reporting purposes and the method the FPSC allows FPL to recover in rates. NEER's AROs relate primarily to the nuclear decommissioning obligations of its nuclear plants and obligations for the dismantlement of certain of its wind and solar facilities. See Note 1 - Decommissioning of Nuclear Plants, Dismantlement of Plants and Other Accrued Asset Removal Costs.
A rollforward of NEE's and FPL's AROs is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
|
|
NEER
|
|
NEE
|
|
|
|
|
(millions)
|
|
|
|
Balances, December 31, 2014
|
$
|
1,355
|
|
|
$
|
631
|
|
|
$
|
1,986
|
|
|
Liabilities incurred
|
5
|
|
|
46
|
|
|
51
|
|
|
Accretion expense
|
73
|
|
|
43
|
|
|
116
|
|
|
Liabilities settled
|
(20
|
)
|
|
(2
|
)
|
|
(22
|
)
|
|
Revision in estimated cash flows - net
|
409
|
|
(a)
|
(71
|
)
|
(b)
|
338
|
|
|
Balances, December 31, 2015
|
1,822
|
|
|
647
|
|
|
2,469
|
|
|
Liabilities incurred
|
1
|
|
|
56
|
|
|
57
|
|
|
Accretion expense
|
91
|
|
|
47
|
|
|
138
|
|
|
Liabilities settled
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
|
Revision in estimated cash flows - net
|
5
|
|
|
69
|
|
(c)
|
74
|
|
|
Balances, December 31, 2016
|
$
|
1,919
|
|
|
$
|
817
|
|
|
$
|
2,736
|
|
______________________
|
|
|
|
(a)
|
Primarily reflects the effect of revised cost estimates for decommissioning FPL's nuclear units consistent with the updated nuclear decommissioning studies approved by the FPSC.
|
|
|
|
|
(b)
|
Primarily reflects the effect of revised cost estimates for decommissioning NEER’s nuclear units and a change in assumptions relating to spent fuel costs, partly offset by increased escalation rates.
|
|
|
|
|
(c)
|
Primarily reflects the effect of revised cost estimates to dismantle certain of NEER’s wind and solar facilities.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Restricted funds for the payment of future expenditures to decommission NEE's and FPL's nuclear units included in special use funds on NEE's and FPL's consolidated balance sheets are as follows (see Note 4 - Special Use Funds):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FPL
|
|
NEER
|
|
NEE
|
|
|
|
|
(millions)
|
|
|
|
Balances, December 31, 2016
|
$
|
3,665
|
|
|
$
|
1,769
|
|
|
$
|
5,434
|
|
|
Balances, December 31, 2015
|
$
|
3,430
|
|
|
$
|
1,634
|
|
|
$
|
5,064
|
|
NEE and FPL have identified but not recognized ARO liabilities related to electric transmission and distribution and telecommunications assets resulting from easements over property not owned by NEE or FPL. These easements are generally perpetual and only require retirement action upon abandonment or cessation of use of the property or facility for its specified purpose. The ARO liability is not estimable for such easements as NEE and FPL intend to use these properties indefinitely. In the event NEE and FPL decide to abandon or cease the use of a particular easement, an ARO liability would be recorded at that time.
13. Commitments and Contingencies
Commitments
- NEE and its subsidiaries have made commitments in connection with a portion of their projected capital expenditures. Capital expenditures at FPL include, among other things, the cost for construction or acquisition of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities and the procurement of nuclear fuel. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction and development of wind and solar projects and the procurement of nuclear fuel, as well as the investment in the development and construction of its natural gas pipeline assets. Capital expenditures for Corporate and Other primarily include the cost to maintain existing transmission facilities at NextEra Energy Transmission, LLC
.
At
December 31, 2016
, estimated capital expenditures for
2017
through
2021
for which applicable internal approvals (and also, if required, FPSC approvals for FPL or regulatory approvals for acquisitions) have been received were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Total
|
|
|
(millions)
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
Generation:
(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
New
(b)
|
$
|
1,385
|
|
|
$
|
655
|
|
|
$
|
485
|
|
|
$
|
35
|
|
|
$
|
5
|
|
|
$
|
2,565
|
|
|
Existing
|
1,240
|
|
|
635
|
|
|
680
|
|
|
645
|
|
|
600
|
|
|
3,800
|
|
|
Transmission and distribution
|
2,190
|
|
|
2,010
|
|
|
2,860
|
|
|
2,475
|
|
|
2,945
|
|
|
12,480
|
|
|
Nuclear fuel
|
125
|
|
|
190
|
|
|
170
|
|
|
210
|
|
|
120
|
|
|
815
|
|
|
General and other
|
440
|
|
|
275
|
|
|
285
|
|
|
220
|
|
|
330
|
|
|
1,550
|
|
|
Total
|
$
|
5,380
|
|
|
$
|
3,765
|
|
|
$
|
4,480
|
|
|
$
|
3,585
|
|
|
$
|
4,000
|
|
|
$
|
21,210
|
|
|
NEER:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wind
(c)
|
$
|
570
|
|
|
$
|
955
|
|
|
$
|
705
|
|
|
$
|
75
|
|
|
$
|
25
|
|
|
$
|
2,330
|
|
|
Solar
(d)
|
80
|
|
|
75
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
Nuclear, including nuclear fuel
|
240
|
|
|
250
|
|
|
230
|
|
|
225
|
|
|
245
|
|
|
1,190
|
|
|
Natural gas pipelines
(e)
|
890
|
|
|
845
|
|
|
50
|
|
|
20
|
|
|
10
|
|
|
1,815
|
|
|
Other
|
335
|
|
|
55
|
|
|
40
|
|
|
40
|
|
|
35
|
|
|
505
|
|
|
Total
|
$
|
2,115
|
|
|
$
|
2,180
|
|
|
$
|
1,040
|
|
|
$
|
360
|
|
|
$
|
315
|
|
|
$
|
6,010
|
|
|
Corporate and Other
|
$
|
45
|
|
|
$
|
30
|
|
|
$
|
85
|
|
|
$
|
55
|
|
|
$
|
35
|
|
|
$
|
250
|
|
______________________
|
|
|
|
(a)
|
Includes AFUDC of approximately $
81 million
, $
79 million
,
$46 million
and
$6 million
for 2017 through 2020, respectively.
|
|
|
|
|
(b)
|
Includes land, generation structures, transmission interconnection and integration and licensing.
|
|
|
|
|
(c)
|
Consists of capital expenditures for new wind projects, repowering of existing wind projects and related transmission totaling approximately
2,760
MW.
|
|
|
|
|
(d)
|
Includes capital expenditures for new solar projects and related transmission totaling approximately
225
MW.
|
|
|
|
|
(e)
|
Includes capital expenditures for construction of three natural gas pipelines, including equity contributions associated with equity investments in joint ventures for two pipelines and AFUDC associated with the third pipeline. The natural gas pipelines are subject to certain conditions. See Contracts below.
|
The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.
Contracts
- In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has commitments under long-term purchased power and fuel contracts. As of
December 31, 2016
, FPL is obligated under a take-or-pay purchased power contract to pay for
375
MW annually
through 2021
. FPL also has various firm pay-for-performance contracts to purchase approximately
114
MW from certain cogenerators and small power producers with expiration dates ranging from
2026
through
2034
. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
are subject to the facilities meeting certain contract conditions. FPL has contracts with expiration dates
through 2036
for the purchase and transportation of natural gas and coal, and storage of natural gas. In addition, FPL has entered into
25
-year natural gas transportation agreements with each of Sabal Trail Transmission, LLC (Sabal Trail, an entity in which a wholly owned NEER subsidiary has a
42.5%
ownership interest) and Florida Southeast Connection, LLC (Florida Southeast Connection, a wholly owned NEER subsidiary), each of which will build, own and operate a pipeline that will be part of a natural gas pipeline system, for a quantity of
400,000
MMBtu/day beginning mid-2017 and increasing to
600,000
MMBtu/day in mid-2020. These agreements contain firm commitments that are contingent upon the occurrence of certain events, including the completion of construction of the pipeline system to be built by Sabal Trail and Florida Southeast Connection. See Commitments above.
As of
December 31, 2016
, NEER has entered into contracts with expiration dates ranging from
late February 2017
through
2032
primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium, and the conversion, enrichment and fabrication of nuclear fuel and has made commitments for the construction of the natural gas pipelines. Approximately
$3.1 billion
of related commitments are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the purchase, transportation and storage of natural gas with expiration dates ranging from
March 2017
through
2019
.
The required capacity and/or minimum payments under the contracts discussed above as of
December 31, 2016
were estimated as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
|
(millions)
|
|
FPL:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capacity charges
(a)
|
$
|
75
|
|
|
$
|
65
|
|
|
$
|
50
|
|
|
$
|
20
|
|
|
$
|
20
|
|
|
$
|
250
|
|
|
Minimum charges, at projected prices:
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas, including transportation and storage
(c)
|
$
|
1,305
|
|
|
$
|
900
|
|
|
$
|
900
|
|
|
$
|
910
|
|
|
$
|
905
|
|
|
$
|
12,065
|
|
|
Coal, including transportation
|
$
|
125
|
|
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
NEER
|
$
|
1,385
|
|
|
$
|
1,380
|
|
|
$
|
140
|
|
|
$
|
90
|
|
|
$
|
75
|
|
|
$
|
285
|
|
|
Corporate and Other
(d)(e)
|
$
|
45
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
______________________
|
|
|
|
(a)
|
Capacity charges, substantially all of which are recoverable through the capacity clause, totaled approximately $
175 million
, $
434 million
and $
485 million
for the years ended
December 31, 2016, 2015 and 2014
, respectively. Energy charges, which are recoverable through the fuel clause, totaled approximately $
126 million
, $
262 million
and $
299 million
for the years ended
December 31, 2016, 2015 and 2014
, respectively.
|
|
|
|
|
(b)
|
Recoverable through the fuel clause.
|
|
|
|
|
(c)
|
Includes approximately $
200 million
, $
295 million
, $
290 million
,
$360 million
,
$390 million
and $
7,495 million
in 2017, 2018, 2019, 2020, 2021 and thereafter, respectively, of firm commitments, subject to certain conditions as noted above, related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection.
|
|
|
|
|
(d)
|
Includes an approximately
$30 million
commitment to invest in clean power and technology businesses primarily in 2017.
|
|
|
|
|
(e)
|
Excludes approximately
$263 million
and
$148 million
in
2017
and 2018, respectively, of joint obligations of NEECH and NEER which are included in the NEER amounts above.
|
In January 2017, FPL assumed ownership of a
330 MW
coal-fired generation facility located in Indiantown, Florida for a purchase price of
$451 million
(including existing debt of approximately
$218 million
). FPL will record a regulatory asset for approximately
$451 million
, which will be amortized over
nine years
and recovered through the capacity clause with a return on the portion of the unamortized balance of the regulatory asset. Prior to assuming ownership of this facility, FPL had a long-term purchased power agreement with this facility for substantially all of its capacity and energy. FPL expects to reduce the plant’s operations with the intention of eventually phasing the plant out of service. FPL will recover the fuel costs of the facility through the fuel clause and operating costs through the capacity clause until FPL's next base rate filing where non-fuel cost recovery will be through base rates.
Insurance
- Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $
450 million
of private liability insurance per site, which is the maximum obtainable, and participates in a secondary financial protection system, which provides up to $
13.0 billion
of liability insurance coverage per incident at any nuclear reactor in the U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $
1.0 billion
($
509 million
for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $
152 million
($
76 million
for FPL) per incident per year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $
15 million
, $
38 million
and $
19 million
, plus any applicable taxes, per incident, respectively.
NEE participates in a nuclear insurance mutual company that provides $
2.75 billion
of limited insurance coverage per occurrence per site for property damage, decontamination and premature decommissioning risks at its nuclear plants and a sublimit of
$1.5 billion
for non-nuclear perils. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. NEE also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service for an extended period of time because of an accident. In the event of an accident at one of NEE's or another participating insured's nuclear plants, NEE could be assessed up to $
186 million
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
($
112 million
for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $
3 million
, $
5 million
and $
4 million
, plus any applicable taxes, respectively.
Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of either its transmission and distribution property or natural gas pipeline assets. Should FPL's future storm restoration costs exceed the reserve amount established through the issuance of storm-recovery bonds by a VIE in 2007, FPL may recover storm restoration costs, subject to prudence review by the FPSC, either through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law. In February 2017, the FPSC approved FPL's request to recover through an interim surcharge the 2016 eligible storm restoration costs that exceeded the reserve amount. See Note 1 - Securitized Storm-Recovery Costs, Storm Fund and Storm Reserve.
In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of FPL, would be borne by NEE and FPL and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.
14. Segment Information
NEE's reportable segments are FPL, a rate-regulated electric utility, and NEER, a competitive energy business. Corporate and Other represents other business activities and eliminating entries. NEE's operating revenues derived from the sale of electricity represented approximately
90%
,
92%
and
91%
of NEE's operating revenues for the years ended December 31,
2016
,
2015
and
2014
, respectively. Approximately
2%
of operating revenues were from foreign sources for each of the years ended December 31,
2016
,
2015
and
2014
. At each of December 31,
2016
and
2015
, approximately
3%
of long-lived assets were located in foreign countries.
NEE's segment information is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
2014
|
|
|
FPL
|
|
NEER
(a)
|
|
Corp.
and
Other
|
|
NEE
Consoli-
dated
|
|
FPL
|
|
NEER
(a)
|
|
Corp.
and
Other
|
|
NEE
Consoli-
dated
|
|
FPL
|
|
NEER
(a)
|
|
Corp.
and
Other
|
|
NEE
Consoli-
dated
|
|
|
|
|
|
|
|
|
|
|
(millions)
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
$
|
10,895
|
|
|
$
|
4,893
|
|
|
$
|
367
|
|
|
$
|
16,155
|
|
|
$
|
11,651
|
|
|
$
|
5,444
|
|
|
$
|
391
|
|
|
$
|
17,486
|
|
|
$
|
11,421
|
|
|
$
|
5,196
|
|
|
$
|
404
|
|
|
$
|
17,021
|
|
|
Operating expenses - net
|
$
|
7,737
|
|
|
$
|
3,419
|
|
|
$
|
391
|
|
|
$
|
11,547
|
|
|
$
|
8,674
|
|
|
$
|
3,865
|
|
|
$
|
315
|
|
|
$
|
12,854
|
|
|
$
|
8,593
|
|
|
$
|
3,727
|
|
|
$
|
317
|
|
|
$
|
12,637
|
|
|
Interest expense
|
$
|
456
|
|
|
$
|
732
|
|
|
$
|
(95
|
)
|
|
$
|
1,093
|
|
|
$
|
445
|
|
|
$
|
625
|
|
|
$
|
141
|
|
|
$
|
1,211
|
|
|
$
|
439
|
|
|
$
|
667
|
|
|
$
|
155
|
|
|
$
|
1,261
|
|
|
Interest income
|
$
|
2
|
|
|
$
|
34
|
|
|
$
|
46
|
|
|
$
|
82
|
|
|
$
|
7
|
|
|
$
|
28
|
|
|
$
|
51
|
|
|
$
|
86
|
|
|
$
|
3
|
|
|
$
|
26
|
|
|
$
|
51
|
|
|
$
|
80
|
|
|
Depreciation and amortization
|
$
|
1,651
|
|
|
$
|
1,366
|
|
|
$
|
60
|
|
|
$
|
3,077
|
|
|
$
|
1,576
|
|
|
$
|
1,183
|
|
|
$
|
72
|
|
|
$
|
2,831
|
|
|
$
|
1,432
|
|
|
$
|
1,051
|
|
|
$
|
68
|
|
|
$
|
2,551
|
|
|
Equity in earnings (losses) of equity method investees
|
$
|
—
|
|
|
$
|
119
|
|
|
$
|
29
|
|
|
$
|
148
|
|
|
$
|
—
|
|
|
$
|
103
|
|
|
$
|
4
|
|
|
$
|
107
|
|
|
$
|
—
|
|
|
$
|
95
|
|
|
$
|
(2
|
)
|
|
$
|
93
|
|
|
Income tax expense (benefit)
(b)
|
$
|
1,051
|
|
|
$
|
242
|
|
|
$
|
90
|
|
|
$
|
1,383
|
|
|
$
|
957
|
|
|
$
|
289
|
|
|
$
|
(18
|
)
|
|
$
|
1,228
|
|
|
$
|
910
|
|
|
$
|
283
|
|
|
$
|
(17
|
)
|
|
$
|
1,176
|
|
|
Net income (loss)
|
$
|
1,727
|
|
|
$
|
1,218
|
|
|
$
|
60
|
|
|
$
|
3,005
|
|
|
$
|
1,648
|
|
|
$
|
1,102
|
|
|
$
|
12
|
|
|
$
|
2,762
|
|
|
$
|
1,517
|
|
|
$
|
993
|
|
|
$
|
(41
|
)
|
|
$
|
2,469
|
|
|
Net income (loss) attributable to NEE
|
$
|
1,727
|
|
|
$
|
1,125
|
|
|
$
|
60
|
|
|
$
|
2,912
|
|
|
$
|
1,648
|
|
|
$
|
1,092
|
|
|
$
|
12
|
|
|
$
|
2,752
|
|
|
$
|
1,517
|
|
|
$
|
989
|
|
|
$
|
(41
|
)
|
|
$
|
2,465
|
|
|
Capital expenditures, independent power and other investments and nuclear fuel purchases
|
$
|
3,934
|
|
|
$
|
5,521
|
|
|
$
|
181
|
|
|
$
|
9,636
|
|
|
$
|
3,633
|
|
|
$
|
4,661
|
|
|
$
|
83
|
|
|
$
|
8,377
|
|
|
$
|
3,241
|
|
|
$
|
3,701
|
|
|
$
|
75
|
|
|
$
|
7,017
|
|
|
Property, plant and equipment
|
$
|
48,313
|
|
|
$
|
37,644
|
|
|
$
|
1,056
|
|
|
$
|
87,013
|
|
|
$
|
45,383
|
|
|
$
|
33,340
|
|
|
$
|
1,607
|
|
|
$
|
80,330
|
|
|
$
|
41,938
|
|
|
$
|
30,178
|
|
|
$
|
1,523
|
|
|
$
|
73,639
|
|
|
Accumulated depreciation and amortization
|
$
|
12,304
|
|
|
$
|
7,655
|
|
|
$
|
142
|
|
|
$
|
20,101
|
|
|
$
|
11,862
|
|
|
$
|
6,640
|
|
|
$
|
442
|
|
|
$
|
18,944
|
|
|
$
|
11,282
|
|
|
$
|
6,268
|
|
|
$
|
384
|
|
|
$
|
17,934
|
|
|
Total assets
|
$
|
45,501
|
|
|
$
|
41,743
|
|
|
$
|
2,749
|
|
|
$
|
89,993
|
|
|
$
|
42,523
|
|
|
$
|
37,647
|
|
|
$
|
2,309
|
|
|
$
|
82,479
|
|
|
$
|
39,222
|
|
|
$
|
32,896
|
|
|
$
|
2,487
|
|
|
$
|
74,605
|
|
|
Investment in equity method investees
|
$
|
—
|
|
|
$
|
1,661
|
|
|
$
|
106
|
|
|
$
|
1,767
|
|
|
$
|
—
|
|
|
$
|
983
|
|
|
$
|
80
|
|
|
$
|
1,063
|
|
|
$
|
—
|
|
|
$
|
617
|
|
|
$
|
46
|
|
|
$
|
663
|
|
_________________________
|
|
|
|
(a)
|
Interest expense allocated from NEECH is based on a deemed capital structure of
70%
debt. For this purpose, the deferred credit associated with differential membership interests sold by NEER subsidiaries is included with debt. Residual NEECH corporate interest expense is included in Corporate and Other.
|
|
|
|
|
(b)
|
NEER includes PTCs that were recognized based on its tax sharing agreement with NEE. See Note 1 - Income Taxes.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. Summarized Financial Information of NEECH
NEECH, a
100%
owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL. NEECH’s debentures and junior subordinated debentures including those that were registered pursuant to the Securities Act of 1933, as amended, are fully and unconditionally guaranteed by NEE. Condensed consolidating financial information is as follows:
Condensed Consolidating Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2016
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
|
(millions)
|
|
Operating revenues
|
$
|
—
|
|
|
$
|
5,283
|
|
|
$
|
10,872
|
|
|
$
|
16,155
|
|
|
$
|
—
|
|
|
$
|
5,849
|
|
|
$
|
11,637
|
|
|
$
|
17,486
|
|
|
$
|
—
|
|
|
$
|
5,614
|
|
|
$
|
11,407
|
|
|
$
|
17,021
|
|
|
Operating expenses - net
|
(20
|
)
|
|
(3,663
|
)
|
|
(7,864
|
)
|
|
(11,547
|
)
|
|
(17
|
)
|
|
(4,142
|
)
|
|
(8,695
|
)
|
|
(12,854
|
)
|
|
(19
|
)
|
|
(4,039
|
)
|
|
(8,579
|
)
|
|
(12,637
|
)
|
|
Interest expense
|
(1
|
)
|
|
(636
|
)
|
|
(456
|
)
|
|
(1,093
|
)
|
|
(4
|
)
|
|
(764
|
)
|
|
(443
|
)
|
|
(1,211
|
)
|
|
(6
|
)
|
|
(819
|
)
|
|
(436
|
)
|
|
(1,261
|
)
|
|
Equity in earnings of subsidiaries
|
2,956
|
|
|
—
|
|
|
(2,956
|
)
|
|
—
|
|
|
2,754
|
|
|
—
|
|
|
(2,754
|
)
|
|
—
|
|
|
2,494
|
|
|
—
|
|
|
(2,494
|
)
|
|
—
|
|
|
Other income - net
|
5
|
|
|
793
|
|
|
75
|
|
|
873
|
|
|
1
|
|
|
498
|
|
|
70
|
|
|
569
|
|
|
1
|
|
|
487
|
|
|
34
|
|
|
522
|
|
|
Income (loss) before income taxes
|
2,940
|
|
|
1,777
|
|
|
(329
|
)
|
|
4,388
|
|
|
2,734
|
|
|
1,441
|
|
|
(185
|
)
|
|
3,990
|
|
|
2,470
|
|
|
1,243
|
|
|
(68
|
)
|
|
3,645
|
|
|
Income tax expense (benefit)
|
28
|
|
|
354
|
|
|
1,001
|
|
|
1,383
|
|
|
(18
|
)
|
|
299
|
|
|
947
|
|
|
1,228
|
|
|
5
|
|
|
262
|
|
|
909
|
|
|
1,176
|
|
|
Net income (loss)
|
2,912
|
|
|
1,423
|
|
|
(1,330
|
)
|
|
3,005
|
|
|
2,752
|
|
|
1,142
|
|
|
(1,132
|
)
|
|
2,762
|
|
|
2,465
|
|
|
981
|
|
|
(977
|
)
|
|
2,469
|
|
|
Less net income attributable to noncontrolling interests
|
—
|
|
|
93
|
|
|
—
|
|
|
93
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|
Net income (loss) attributable to NEE
|
$
|
2,912
|
|
|
$
|
1,330
|
|
|
$
|
(1,330
|
)
|
|
$
|
2,912
|
|
|
$
|
2,752
|
|
|
$
|
1,132
|
|
|
$
|
(1,132
|
)
|
|
$
|
2,752
|
|
|
$
|
2,465
|
|
|
$
|
977
|
|
|
$
|
(977
|
)
|
|
$
|
2,465
|
|
______________________
|
|
|
|
(a)
|
Represents primarily FPL and consolidating adjustments.
|
Condensed Consolidating Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2016
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
|
(millions)
|
|
Comprehensive income (loss) attributable to NEE
|
$
|
3,009
|
|
|
$
|
1,448
|
|
|
$
|
(1,448
|
)
|
|
$
|
3,009
|
|
|
$
|
2,625
|
|
|
$
|
1,049
|
|
|
$
|
(1,049
|
)
|
|
$
|
2,625
|
|
|
$
|
2,369
|
|
|
$
|
924
|
|
|
$
|
(924
|
)
|
|
$
|
2,369
|
|
______________________
|
|
|
|
(a)
|
Represents primarily FPL and consolidating adjustments.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Condensed Consolidating Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guaran-
tor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
|
(millions)
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric plant in service and other property
|
$
|
28
|
|
|
$
|
38,671
|
|
|
$
|
48,314
|
|
|
$
|
87,013
|
|
|
$
|
27
|
|
|
$
|
34,921
|
|
|
$
|
45,382
|
|
|
$
|
80,330
|
|
|
Accumulated depreciation and amortization
|
(18
|
)
|
|
(7,778
|
)
|
|
(12,305
|
)
|
|
(20,101
|
)
|
|
(16
|
)
|
|
(7,067
|
)
|
|
(11,861
|
)
|
|
(18,944
|
)
|
|
Total property, plant and equipment - net
|
10
|
|
|
30,893
|
|
|
36,009
|
|
|
66,912
|
|
|
11
|
|
|
27,854
|
|
|
33,521
|
|
|
61,386
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
1
|
|
|
1,258
|
|
|
33
|
|
|
1,292
|
|
|
—
|
|
|
546
|
|
|
25
|
|
|
571
|
|
|
Receivables
|
88
|
|
|
1,615
|
|
|
736
|
|
|
2,439
|
|
|
90
|
|
|
1,510
|
|
|
665
|
|
|
2,265
|
|
|
Other
|
2
|
|
|
1,877
|
|
|
1,799
|
|
|
3,678
|
|
|
4
|
|
|
2,443
|
|
|
1,512
|
|
|
3,959
|
|
|
Total current assets
|
91
|
|
|
4,750
|
|
|
2,568
|
|
|
7,409
|
|
|
94
|
|
|
4,499
|
|
|
2,202
|
|
|
6,795
|
|
|
OTHER ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiaries
|
24,323
|
|
|
—
|
|
|
(24,323
|
)
|
|
—
|
|
|
22,544
|
|
|
—
|
|
|
(22,544
|
)
|
|
—
|
|
|
Other
|
867
|
|
|
8,992
|
|
|
5,813
|
|
|
15,672
|
|
|
823
|
|
|
7,790
|
|
|
5,685
|
|
|
14,298
|
|
|
Total other assets
|
25,190
|
|
|
8,992
|
|
|
(18,510
|
)
|
|
15,672
|
|
|
23,367
|
|
|
7,790
|
|
|
(16,859
|
)
|
|
14,298
|
|
|
TOTAL ASSETS
|
$
|
25,291
|
|
|
$
|
44,635
|
|
|
$
|
20,067
|
|
|
$
|
89,993
|
|
|
$
|
23,472
|
|
|
$
|
40,143
|
|
|
$
|
18,864
|
|
|
$
|
82,479
|
|
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shareholders' equity
|
$
|
24,341
|
|
|
$
|
7,699
|
|
|
$
|
(7,699
|
)
|
|
$
|
24,341
|
|
|
$
|
22,574
|
|
|
$
|
6,990
|
|
|
$
|
(6,990
|
)
|
|
$
|
22,574
|
|
|
Noncontrolling interests
|
—
|
|
|
990
|
|
|
—
|
|
|
990
|
|
|
—
|
|
|
538
|
|
|
—
|
|
|
538
|
|
|
Long-term debt
|
—
|
|
|
18,112
|
|
|
9,706
|
|
|
27,818
|
|
|
—
|
|
|
16,725
|
|
|
9,956
|
|
|
26,681
|
|
|
Total capitalization
|
24,341
|
|
|
26,801
|
|
|
2,007
|
|
|
53,149
|
|
|
22,574
|
|
|
24,253
|
|
|
2,966
|
|
|
49,793
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt due within one year
|
—
|
|
|
2,237
|
|
|
785
|
|
|
3,022
|
|
|
—
|
|
|
2,786
|
|
|
220
|
|
|
3,006
|
|
|
Accounts payable
|
1
|
|
|
2,668
|
|
|
778
|
|
|
3,447
|
|
|
4
|
|
|
1,919
|
|
|
606
|
|
|
2,529
|
|
|
Other
|
231
|
|
|
2,624
|
|
|
1,595
|
|
|
4,450
|
|
|
252
|
|
|
3,003
|
|
|
1,317
|
|
|
4,572
|
|
|
Total current liabilities
|
232
|
|
|
7,529
|
|
|
3,158
|
|
|
10,919
|
|
|
256
|
|
|
7,708
|
|
|
2,143
|
|
|
10,107
|
|
|
OTHER LIABILITIES AND DEFERRED CREDITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset retirement obligations
|
—
|
|
|
816
|
|
|
1,920
|
|
|
2,736
|
|
|
—
|
|
|
647
|
|
|
1,822
|
|
|
2,469
|
|
|
Deferred income taxes
|
82
|
|
|
3,002
|
|
|
8,017
|
|
|
11,101
|
|
|
157
|
|
|
2,396
|
|
|
7,274
|
|
|
9,827
|
|
|
Other
|
636
|
|
|
6,487
|
|
|
4,965
|
|
|
12,088
|
|
|
485
|
|
|
5,139
|
|
|
4,659
|
|
|
10,283
|
|
|
Total other liabilities and deferred credits
|
718
|
|
|
10,305
|
|
|
14,902
|
|
|
25,925
|
|
|
642
|
|
|
8,182
|
|
|
13,755
|
|
|
22,579
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CAPITALIZATION AND LIABILITIES
|
$
|
25,291
|
|
|
$
|
44,635
|
|
|
$
|
20,067
|
|
|
$
|
89,993
|
|
|
$
|
23,472
|
|
|
$
|
40,143
|
|
|
$
|
18,864
|
|
|
$
|
82,479
|
|
______________________
|
|
|
|
(a)
|
Represents primarily FPL and consolidating adjustments.
|
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Condensed Consolidating Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31, 2016
|
|
Year Ended
December 31, 2015
|
|
Year Ended
December 31, 2014
|
|
|
NEE
(Guar-
antor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guar-
antor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
NEE
(Guar-
antor)
|
|
NEECH
|
|
Other
(a)
|
|
NEE
Consoli-
dated
|
|
|
(millions)
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
$
|
1,897
|
|
|
$
|
2,171
|
|
|
$
|
2,268
|
|
|
$
|
6,336
|
|
|
$
|
1,659
|
|
|
$
|
2,488
|
|
|
$
|
1,969
|
|
|
$
|
6,116
|
|
|
$
|
1,615
|
|
|
$
|
1,976
|
|
|
$
|
1,909
|
|
|
$
|
5,500
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, independent power and other investments and nuclear fuel purchases
|
(1
|
)
|
|
(5,701
|
)
|
|
(3,934
|
)
|
|
(9,636
|
)
|
|
—
|
|
|
(4,744
|
)
|
|
(3,633
|
)
|
|
(8,377
|
)
|
|
(1
|
)
|
|
(3,741
|
)
|
|
(3,275
|
)
|
|
(7,017
|
)
|
|
Capital contributions from NEE
|
(745
|
)
|
|
—
|
|
|
745
|
|
|
—
|
|
|
(1,480
|
)
|
|
—
|
|
|
1,480
|
|
|
—
|
|
|
(912
|
)
|
|
—
|
|
|
912
|
|
|
—
|
|
|
Cash grants under the Recovery Act
|
—
|
|
|
335
|
|
|
—
|
|
|
335
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
343
|
|
|
—
|
|
|
343
|
|
|
Sale of independent power and other investments of NEER
|
—
|
|
|
658
|
|
|
—
|
|
|
658
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
307
|
|
|
—
|
|
|
307
|
|
|
Proceeds from sale or maturity of securities in special use funds and other investments
|
—
|
|
|
1,281
|
|
|
2,495
|
|
|
3,776
|
|
|
—
|
|
|
1,120
|
|
|
3,731
|
|
|
4,851
|
|
|
—
|
|
|
1,272
|
|
|
3,349
|
|
|
4,621
|
|
|
Purchases of securities in special use funds and other investments
|
—
|
|
|
(1,323
|
)
|
|
(2,506
|
)
|
|
(3,829
|
)
|
|
—
|
|
|
(1,190
|
)
|
|
(3,792
|
)
|
|
(4,982
|
)
|
|
—
|
|
|
(1,321
|
)
|
|
(3,446
|
)
|
|
(4,767
|
)
|
|
Proceeds from the sale of a noncontrolling interest in subsidiaries
|
—
|
|
|
645
|
|
|
—
|
|
|
645
|
|
|
—
|
|
|
345
|
|
|
—
|
|
|
345
|
|
|
—
|
|
|
438
|
|
|
—
|
|
|
438
|
|
|
Other - net
|
—
|
|
|
(40
|
)
|
|
(19
|
)
|
|
(59
|
)
|
|
—
|
|
|
106
|
|
|
(8
|
)
|
|
98
|
|
|
10
|
|
|
(64
|
)
|
|
(232
|
)
|
|
(286
|
)
|
|
Net cash used in investing activities
|
(746
|
)
|
|
(4,145
|
)
|
|
(3,219
|
)
|
|
(8,110
|
)
|
|
(1,480
|
)
|
|
(4,303
|
)
|
|
(2,222
|
)
|
|
(8,005
|
)
|
|
(903
|
)
|
|
(2,766
|
)
|
|
(2,692
|
)
|
|
(6,361
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances of long-term debt
|
—
|
|
|
5,349
|
|
|
308
|
|
|
5,657
|
|
|
—
|
|
|
4,689
|
|
|
1,083
|
|
|
5,772
|
|
|
—
|
|
|
4,057
|
|
|
997
|
|
|
5,054
|
|
|
Retirements of long-term debt
|
—
|
|
|
(3,048
|
)
|
|
(262
|
)
|
|
(3,310
|
)
|
|
—
|
|
|
(3,421
|
)
|
|
(551
|
)
|
|
(3,972
|
)
|
|
—
|
|
|
(4,395
|
)
|
|
(355
|
)
|
|
(4,750
|
)
|
|
Proceeds from differential membership investors
|
—
|
|
|
1,859
|
|
|
—
|
|
|
1,859
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
761
|
|
|
—
|
|
|
978
|
|
|
—
|
|
|
978
|
|
|
Proceeds from other short-term debt
|
—
|
|
|
—
|
|
|
500
|
|
|
500
|
|
|
—
|
|
|
1,125
|
|
|
100
|
|
|
1,225
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
500
|
|
|
Repayments of other short-term debt
|
—
|
|
|
(212
|
)
|
|
(450
|
)
|
|
(662
|
)
|
|
—
|
|
|
(813
|
)
|
|
—
|
|
|
(813
|
)
|
|
—
|
|
|
(500
|
)
|
|
—
|
|
|
(500
|
)
|
|
Net change in commercial paper
|
—
|
|
|
(318
|
)
|
|
212
|
|
|
(106
|
)
|
|
—
|
|
|
318
|
|
|
(1,086
|
)
|
|
(768
|
)
|
|
—
|
|
|
(487
|
)
|
|
938
|
|
|
451
|
|
|
Issuances of common stock - net
|
537
|
|
|
—
|
|
|
—
|
|
|
537
|
|
|
1,298
|
|
|
—
|
|
|
—
|
|
|
1,298
|
|
|
633
|
|
|
—
|
|
|
—
|
|
|
633
|
|
|
Dividends on common stock
|
(1,612
|
)
|
|
—
|
|
|
—
|
|
|
(1,612
|
)
|
|
(1,385
|
)
|
|
—
|
|
|
—
|
|
|
(1,385
|
)
|
|
(1,261
|
)
|
|
—
|
|
|
—
|
|
|
(1,261
|
)
|
|
Dividends to NEE
|
—
|
|
|
(650
|
)
|
|
650
|
|
|
—
|
|
|
—
|
|
|
(698
|
)
|
|