NextEra Energy (NEE) Q2 2025 Earnings Transcript

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DATE

Wednesday, July 23, 2025 at 9 a.m. ET

CALL PARTICIPANTS

Chairman, President, and Chief Executive Officer — John Ketchum

Executive Vice President and Chief Financial Officer — Mike Dunne

President and Chief Executive Officer, Florida Power & Light Company — Armando Pimentel

President and Chief Executive Officer, NextEra Energy Resources — Brian Bolster

Director, Investor Relations — Mark Eidelman

Executive Vice President — Mark Hickson

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TAKEAWAYS

Adjusted Earnings Per Share Growth: Adjusted earnings per share increased 9.4% year over year in the second quarter of 2025. Adjusted earnings per share rose 9.1% year over year for the first six months of 2025.

FPL Earnings Per Share: Rose $0.02 year over year in Q2 2025, driven primarily by nearly 8% year-over-year growth in regulatory capital employed.

FPL Capital Expenditures: Approximately $2 billion in the second quarter of 2025. Full-year expected investment is $8 billion to $8.8 billion for 2025.

FPL Reported Return on Equity: Expected to be approximately 11.6% (reported, for regulatory purposes) for the twelve months ending June 2025.

Reserve Amortization at FPL: Utilized approximately $19 million of reserve amortization in Q2 2025, leaving a balance of roughly $254 million.

FPL Retail Sales: FPL's retail sales increased 1.7% in the second quarter of 2025 from the prior year comparable period, driven largely by customer growth; Weather-normalized retail sales rose approximately 2.6%.

FPL Usage per Customer: FPL usage per customer declined by 0.8% due to milder weather.

Base Rate Case Expectations: If approved, typical FPL residential bill would grow at an average of 2.5% annually from 2025 to 2029 and is expected to be approximately 20% below the projected national average.

Energy Resources Adjusted Earnings Per Share: Adjusted earnings per share increased by $0.11 year over year in the second quarter of 2025. Contributions from new investments increased $0.14 per share year over year. There was a $0.02 per share decline from the existing clean energy portfolio (primarily due to weaker wind resource).

Wind Resource: For Q2 2025, wind resource was approximately 97% of the long-term average, compared to 104% in 2024's second quarter.

Customer Supply Business: Earnings contribution increased $0.06 per share year over year in Q2 2025, driven by normalization from prior higher depletion expense and non-recurring items compared to Q2 2024.

Interest Costs (Energy Resources): Higher interest costs of $0.06 per share in the second quarter of 2025, reducing overall earnings.

New Renewables and Storage Origination: Added 3.2 gigawatts to backlog in Q2 2025, The backlog now totals nearly 30 gigawatts after 1.1 gigawatts were placed into service.

Backlog Mix: Approximately 30% of the current backlog consists of storage projects.

Customer Segments: The backlog now includes approximately six gigawatts of projects intended to serve technology and data center customers. One gigawatt was added in Q2 2025 for hyperscalers.

Dividend Growth Target: Company continues to target dividend per share growth of approximately 10% per year through at least 2026, off the 2024 base.

Tax Equity Providers: The base of tax equity providers has grown by 50% over the last two years, with further interest in expanding exposure.

Duane Arnold Nuclear Facility: Progress continues on recommissioning efforts and customer discussions, with potential to support growth if restarted.

Safe Harbor Strategy: Management believes it has begun construction on enough projects to cover development through 2029, relying on settled industry definitions and Treasury guidance.

Federal Land Permitting: The backlog is largely already permitted at the federal level, though management is monitoring recent executive orders introducing additional review layers.

SUMMARY

Management emphasized increased origination activity, noting that 3.2 gigawatts were added to the renewable and storage project backlog in Q2 2025, driven by strong demand from technology and data center customers. Discussions indicated the company’s advantage in competitive pull-forward scenarios, citing supply chain capability, balance sheet strength, and engineering resources as key differentiators. Plans for expanding the nuclear generation portfolio, including continued progress on the Duane Arnold recommissioning and opportunities at Point Beach, were highlighted as options to offset future declines in renewable tax credits. Regulatory processes were addressed, with management confident in their base rate case approach while remaining open to settlement and reemphasizing Florida’s supportive environment for infrastructure investment. Management reiterated their expectation to deliver financial results at or near the top end of adjusted earnings per share guidance for 2025, 2026, and 2027, with projected growth in operating cash flow at or above the EPS CAGR, and sustained dividend growth targeted at approximately 10% per year through at least 2026, based on the 2024 base.

John Ketchum asserted, We have a large pipeline of early and late stage projects

Brian Bolster pointed out that Approximately 30% of the renewable backlog is now composed of storage, reflecting shifting customer demand for capacity solutions.

Mike Dunne stated that All other impacts decreased by $0.07 per share in Q2 2025, driven by higher interest costs of $0.06 per share.

The executive team affirmed ongoing customer outreach and readiness to accelerate project delivery, targeting a perpetual state of construction

INDUSTRY GLOSSARY

Safe Harbor: In renewable energy project finance, this refers to provisions that allow a project to qualify for certain tax credits if specific actions — such as commencing construction or incurring certain costs — are completed before set deadlines, as defined by long-standing Treasury guidance.

Hyperscaler: A company operating large-scale data centers for cloud computing, typically requiring massive and rapidly growing electricity demand.

OBBB (One Big Beautiful Bill Act): Recent U.S. federal legislation referenced in the call, affecting phase-out schedules for renewable energy tax credits, nuclear incentives, and regulatory requirements.

SMR (Small Modular Reactor): A new generation of advanced, modular nuclear reactor technologies often considered for rapid deployment and grid-scale clean energy applications.

Full Conference Call Transcript

Operator: Good day, and welcome to the NextEra Energy, Inc. Second Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Eidelman, Director of Investor Relations. Please go ahead, sir.

Mark Eidelman: Good morning, everyone, and thank you for joining our second quarter 2025 financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President, and Chief Executive Officer of NextEra Energy; Mike Dunne, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of Florida Power and Light Company; Brian Bolster, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Executive Vice President of NextEra Energy. John will start with opening remarks, and then Mike will provide an overview of our second quarter results. Our executive team will then be available to answer your questions.

We will be making forward-looking statements during this call based on current expectations and assumptions which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because of other factors discussed in today's earnings news release and the comments made during this conference call, and the Risk Factors section of the accompanying presentation or in our latest reports and filings with the Securities and Exchange Commission. Each of which can be found on our website, www.nexteraenergy.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures.

You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to John.

John Ketchum: Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong second quarter results with adjusted earnings per share increasing 9.4% year over year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.1% year over year. The continued strong financial and operational performance at both FPL Energy Resources positions our company well to meet its overall objectives for the year. America continues to be at a unique moment. And our industry remains front and center. After decades of stagnant electricity demand, we're now seeing growth across sectors of the U.S. Economy. Artificial intelligence and reshoring of manufacturing grabbed most of the headlines. And for good reason.

But that doesn't tell the full story. Demand for more electricity is also coming from all sectors. Including residential, commercial, industrial, and oil and gas to name a few. A new study from ICF released this month described demand growth as both sudden and sharp. The report says demand growth over the next decade is expected to exceed the last three decades combined. Just the latest data point putting into perspective how unique this moment truly is. Bottom line, America needs more electricity, not less. Importantly, America needs it now, not just in the future.

We are firmly aligned with the administration's goal to unleash American energy dominance and to do so we need all of the electrons we can get on the grid. There's truly no time to wait. We see this every day from our customers who aren't just saying they need power. They're signing contracts with us to build energy infrastructure because we can do it quickly, and at a low cost. Again, the need for more electricity is real. We must do more than just plan for what's on our doorstep We must act. As I've said many times, we're going to need all forms of energy to meet this moment.

New gas and nuclear are on the way and will be critical to meeting demand over the long term. Renewables and storage can bridge the gap and will play an important role in all of the above future. Storage in particular is a game changer. It's low cost, all forms of energy can charge it, and the grid can rely on it for capacity. Storage is also flexible and can utilize excess transmission capacity. That means it can quickly be deployed to where customers need it most. Importantly, renewables and storage are ready now and can provide much needed electricity in capacity.

But in order to achieve our objectives, we will need to continue to navigate a challenging regulatory and policy environment. The one big beautiful act was tough but constructive. Providing for a phase out of wind and solar tax credits over time together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders agency rulemakings, tariffs and trade actions. While there are risks to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment as we expect a natural pull forward of demand.

We are in a constant state of construction. And over the last few years prior to the enactment of the OBBB, made substantial financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects we plan to place into service through 2029. We have a large pipeline of early and late stage projects We have a supply chain capability that I believe is the best in the sector and we are leveraging artificial intelligence across our business including in customer origination. We have the balance sheet scale experience and technology.

While no company is immune from all risk, we've proven time and again what I firmly believe that there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead. Than NextEra. As the quintessential all of the above energy company, we believe more energy infrastructure than anyone. We build more energy infrastructure than anyone in The United States. From renewables and storage to gas and nuclear, we do it all. And we will continue to build what customers need, including the critical transmission to bring power from plants to communities.

At FPL, we are going to continue to do what we have done so well for customers over the past two decades. Florida's long standing constructive regulatory and legislative environment enables infrastructure investment to serve Florida's growing population. In fact, just last week, the Florida Supreme Court concluded that state regulators properly approved our 2021 settlement agreement by affirming the Florida Public Service Commission's final and supplemental final orders. FPL continues to invest in infrastructure to keep reliability high and bills low.

And we continue to operate and invest in the nation's largest gas fired fleet along with four nuclear units in Florida, which provides us the flexibility to leverage cost effective solar and storage to meet the significant demand from our states growing population. FPL is doubling down on what we've proven benefits our investing in generation to meet growing electricity demand while driving fuel cost out of the bill. FPL plans to add more than eight gigawatts of reliable cost effective solar and battery storage by 2029. It's the perfect complement to our existing natural gas and nuclear fleet in Florida. Together, it's how we serve our customers with a diversified energy mix.

This not only further secures Florida's energy independence, it also improves system reliability and resource adequacy by delivering energy when customers need it most. FPL continues to be America's blueprint for utilizing all forms of energy to keep reliability high and electric bills low. Outside of Florida, Energy Resources continues to be the nation's leading energy infrastructure developer. The team originated 3.2 gigawatts of new projects since the last earnings call, including over one gigawatt serving hyper scalers, to help enable their AI build out and further drive America's leadership in the space. Our backlog alone now includes approximately six gigawatts of projects intended to serve technology and data center customers.

If you include our operating portfolio together with the expected build out of our backlog, we will have over 10.5 gigawatts serving technology and data center customers across The United States. We continue to make progress towards the potential restart of our Duane Arnold nuclear facility while also working to advance new gas fired generation opportunities. And we continue to build what's essentially a standalone rate regulated utility within Energy Resources through NextEra Energy Transmission. With our scale, experience and technology, including our supply chain capability and balance sheet, we are positioned to meet the opportunities set increased power demand will provide.

I firmly believe no one has a better team a better culture, or a better track record of execution than NextEra Energy. With that, I'll turn the call over to Mike to walk you through detailed results from the quarter.

Mike Dunne: Thank you, John. And good morning, everyone. For the second quarter of 2025, FPL's earnings per share increased by $0.02 year over year. The principal driver of this performance was FPL's regulatory capital employed growth of nearly 8% year over year. FPL's capital expenditures were approximately $2 billion for the quarter. And we expect FPL's full year capital investments to be between $8 and $8.8 billion. For the twelve months ending June 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the second quarter, we utilized approximately $19 million of reserve amortization. Leaving FPL with a balance of roughly $254 million. FPL's second quarter retail sales increased 1.7% from the prior year comparable period.

Driven primarily by continued strong customer growth. Overall usage per customer grew by 0.1% year over year. Which includes a decline of 0.8% due to milder weather. As a result, FPL grew retail sales in the second quarter by roughly 2.6% on a weather normalized basis. On February 28, we initiated Florida Power and Lights 2025 base rate proceeding. The four year base rate plan we have proposed has been designed to support continued investments in cost effective generation long term infrastructure and advanced technology. Which improves reliability and helps keep customer bills low. Today, FPL's typical residential bill remains well below the national average and amongst the lowest of the top 20 investor owned utilities in the nation.

With the proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average. A technical hearing at the Florida Public Service Commission is scheduled next month. We expect a final decision in the fourth quarter. If state regulators approve our plan, a typical FPL residential bill will grow at an annual average rate of just 2.5% from 2025 to 2029. Now let's turn to energy resources. Which reported an adjusted earnings per share increase of $0.11 year over year. As you'll recall, the prior comparable quarter reflected higher than expected and one time expenses.

Contributions from new investments increased $0.14 per share year over year. Primarily driven by continued growth in our renewable and storage portfolios. Our existing clean energy portfolio decreased $0.02 per share. Primarily reflecting weaker wind resource during the quarter. Wind resource for the 2025 was approximately 97% of the long term average. Versus 104% in the second quarter of 2024. Our customer supply business increased $0.06 per share compared to the second quarter last year which was impacted by higher depletion expense and certain non-recurring items. All other impacts decreased by $0.07 per share driven by higher interest costs of $0.06 per share. Energy Resources had a strong quarter of newer renewables and storage origination.

Adding 3.2 gigawatts to the backlog. With these additions, our backlog now totals nearly 30 gigawatts after taking into account more than 1.1 gigawatts of new projects placed into service since our last earnings call. We expect the backlog additions will go into service over the next few years and into 2029. This marks the sixth time in the past eight quarters that Energy Resources has added more than three gigawatts to its backlog. We have now originated approximately 12.7 gigawatts of new renewables and battery storage projects over the last twelve months. Roughly 30% of our current backlog comes from storage which demonstrates our customers' demand for a low cost, ready now solution to meet their capacity needs.

Turning now to our second quarter 2025 consolidated results. Adjusted earnings from Corporate and Other decreased by $0.04 per share. Our long term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025, 2026, and 2027. From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. And we also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026. Of our 2024 base.

As always, our expectations assume our caveats. That concludes our prepared remarks. And with that, will open the line for questions.

Operator: We will now begin the question and answer session. To ask a question, If at any time your question has been addressed and you would like to withdraw your question, And the first question will come from Steve Fleishman with Wolfe Research. Please go ahead.

Steve Fleishman: Yes. Hi, good morning. Thanks. So I guess first just on the OBBB and then also the Trump executive orders. Could you maybe talk to I guess, the Safe Harbor start of construction issue and how much OBBB is effectively maybe codified that and what can really the administration change at this point? And then also just how to think about some of the recent permitting kind of updates that came out and just your exposure to federal lands in your backlog? Thanks.

John Ketchum: Yes. Thank you, Steve, for your question. This is John. So let me just start with your question around the tax provisions the safe harbor in particular. I think as most folks know by now, the way the OBBBA was drafted it basically provides that wind and solar facilities have to be placed in service by 12/31/2027. However, there's a there's a very important exception in that says that you know, projects that begin construction before 07/04/2026. Are not subject to that placed in service requirement. So the issue is what is meant by begin construction and our view is pretty simple and pretty straightforward. The begin construction term has been around for well over a decade.

It has a settled you know, meeting meaning within the industry. That meaning is informed by long standing treasury department guidance. It's been relied upon. Not only by NextEra, but the solar and wind industry for years. So I start with the fact that as a plane, meaning it's also a term that's defined in the OBBA in the in the FIOQ provisions and that definition is consistent with you know, the settled meeting and the long standing treasury guidance that I just spoke about. And importantly, the term beginning construction has certain safe harbors for what actually constitutes starting construction. And it also has a four year continuity of service safe harbor.

So when I look at you know, the steps that we've been taking in Reliance on the settle meeting and the long standing guidelines around the term beginning construction We've made significant financial commitments over the last few years, you know, in the 2025 to begin construction. Under these rules that were in effect at the time those commitments were made. And doing so, we believe that we've begun construction on a sufficient number of projects to cover our development expectations through 2029. And of course, look, while we can't provide any guarantee this is our interpretation, and this is our belief.

As to what the statute provides based on our experience in this industry over the last couple of decades.

Steve Fleishman: Just on the siting permitting issue in the federal lands, yes.

John Ketchum: Yes. And on the permitting, on federal land first of all, I'll say there was an EO and I think a response made by the Department of Interior a couple of months ago just you know, articulating that, you know, solar and wind projects would not be prioritized. The executive order itself that came out on July 7 directed the Department of Interior to come up with new procedures on, you know, on how it would handle wind and solar permitting to not favor them. And so they instituted an additional layer that would require secretary or the deputy secretary review. It's new. Obviously, we're working with the Department of Interior.

Let's just see how it actually is applied in practice. But again, I think this letter is being responsive to the CEO. You know, when I look at it and I look at our backlog, most of our backlog already, you know, has secured federal permits. But let's let's also just see how this gets applied and know, I continue to feel you know, comfortable with where we stand in terms of being able to navigate the federal permitting issue.

Steve Fleishman: One other question. Just you mentioned natural pull forward and maybe could you give any sense on just have you started seeing signs from what have been the reaction of customers from the bill? Have you started seeing any kind of sense of natural pull forward and just your market share expectations and thoughts given all the different things that have occurred?

John Ketchum: Yeah. I think, Steve, you know, customers are still digesting They have different levels of understanding of what's come out. Obviously, you know, we spend a lot of time on it. And so I would expect to see a reaction from customers over time. Obviously, we'll inform them through our origination process. But I see some natural you know, breaking points that could create significant opportunities for us to ramp pull forward. I mean, one is, if you break down the statute, certainly, with the 2027 placed in service requirement, you see projects that are accelerated into that year. Then it comes down to who's safe harbored, right, who's safe harbored before the enactment date?

It's hard to know with any precision who did. We know we compete against a lot of really small developers who don't have the balance sheet, the construction financing to do things around safe harbor. And so, you know, you could also look and say based on that, we would expect a pull forward naturally in the '28 and '29, you know, as well where there might be less competition.

From folks that have not safe harbored that could create bigger opportunities for folks like NextEra that are in a perpetual state of construction and are safe harboring all the time based on the rules that we're in effect that could create, you know, potentially bigger opportunities for us you know, in those years.

Steve Fleishman: Great. Thank you.

Operator: Thank you, Steve. The next question will come from Julien Dumoulin-Smith with Jefferies. Please go ahead.

Julien Dumoulin-Smith: Hey, good morning, team. Thank you guys very much for the time. I appreciate it. Maybe to follow-up on Steve's questions earlier. I mean, just to crystallize our understanding under the existing O triple b that was passed here, how do you think about your EPS growth and sort of the waterfall, if you will, of credits? And especially given the dynamics you talk about, whether it's the pull forward or otherwise, having an opportunity to step in and, enable other projects. That you might not necessarily have envisioned today, how do you think about the ability to just sustain your growth through the decade and as much as now you have visibility that's been effectively crystallized under this legislation.

Like, obviously, barring changes with the EO, we're not ready to go there given this backdrop.

John Ketchum: Yeah. I mean, you know, first, I'll start with that last piece. Right, which is, you know, as I said in the prepared remarks, I think you know, the one big beautiful, you know, Bill Act, what know, while tough, what's constructive, I think it does create some opportunities, you know, for us going forward for some of the reasons that I laid out. You know, with Steve. On the EPS, you know, growth, point, you know, hold off on that until our, you know, next analyst day, which, you know, will hold, you know, sometime later this year beginning at of next year.

But as I think about the waterfall opportunity and that pull forward that, again, Julien, that you were hitting on, You know, again, you know, the uncertainty that could be created with the 27 placed in service and then you come down to who's safe harbor for '28 and 29. You know, obviously, that favors large developers like NextEra that planned ahead. Right? And if you're in a market where you have folks drop out, right, because they didn't plan ahead, they don't have the ability to get construction financing. They don't have the ability to safe harbor. It obviously, you know, creates bigger opportunities for us in these natural pull forward points.

And I'm going to come back to a point that I think is important for you know, to make and for investors to understand. I think if you look at our track record, over time, not just the last three years, but going back over time, Whenever there's a little bit of uncertainty, a little bit of risk, a little bit of complexity, that typically favors our business. Right? Because, you know, I firmly believe that, you know, we have the capability to navigate and to plan the business, you know, in a way that, you know, helps mitigate these risks going forward. And look, I mean, no company is immune from everything.

But, you know, I think we do if you look at the track record, have demonstrated an ability to you know, really, you know, figure out how to mitigate these exposures, you know, on a go forward basis. And the last piece I'll make is you know, don't forget if we do see some small developers kinda fall away, there'll be more projects that could potentially, you know, hit the market and come up for sale. Creating more, you know, not only on our organic greenfield, opportunity set, but you know, perhaps some opportunities to step into projects that other developers have tried to advance, but you know, for whatever reason, might struggle to get it across the finish line.

Given some of the backdrop of some of the challenges that were we're addressing in the industry that I think we're best equipped to address.

Julien Dumoulin-Smith: Excellent. Thanks, John. Just quick follow-up if I can. Smaller detail here, not trivial at all. How is progress going on the nuclear contracting front? I mean, it is it is certainly the theme of the day. You guys have two different bites of the apple potentially, it seems, Duane, progress, just from an engineering perspective, just to kinda get a little bit of a sense on where that could land and when? And then separately here, Point Beach, obviously, spoken for, but seems like there could be some opportunity there. I mean, two different bites of the apple seem to be coming right here in the medium term.

John Ketchum: Yeah. No. Thanks for asking the question, Julien. You know, Dwayne Arnold just continues to advance mean, I think anytime you have a you know, there's only three of them in the country. Right? You know, between Palisades and the crane facility in Duane. I mean, these are unique opportunities because you don't face the new build cost associated with nuclear. And so these are really unicorn type opportunities. And so we continue to advance Duane. I'm very pleased with the way things are going on the on-site reviews and some of the engineering analysis that we've done. But more importantly, we continue to advance discussions with customers.

So feel good where we sit now about how things are progressing on the Duane front. And look with Point Beach, it's not only the Point Beach facility, but also you know, the opportunity to do some things around SMRs. We have the same opportunity set you know, at Duane. You know, if we're successful in bringing Duane forward, that obviously creates a hotbed of data center activity you know, around that facility, the same as what you've seen in Wisconsin with Cloverleaf. Leach and the Fox you know, facility that, you know, Microsoft is behind as well.

And so I like the potential, you know, longer term options there in addition to just the recommission efforts that we potentially have at Duane. And look, we have a I don't want to lose sight of the fact that not only do we have an active gas fired generation development effort, at our company. You know, we are also, you know, very active in the development of small modular reactors and the potential that nuclear could provide going forward. And, again, that goes back to my comments of being, in all of the above. Energy company.

Our goal is to provide the customer with what it wants when it needs it, at the right price, to help address the power demand that we see in this country. And look no further than the PJM capacity option. Auction yesterday. I mean, there's a lot of demand out there. And there are very few companies that have the development capability that we do. A lot of companies that have an existing asset position very few companies can develop new generation assets or have the skill sets with, you know, on their teams to do it. And that gives us a unique advantage in this market.

Julien Dumoulin-Smith: Awesome. Thank you. All the best. Alright. Speak soon.

Operator: Hey. Thanks, Julien. The next question will come from Nick Campanella with Barclays. Please go ahead.

Nick Campanella: Hey, good morning. Thanks for all the updates. Hey. I just wanted to, ask maybe just for an update on FPL. You know, we seen some testimonies in the rate case at this point. You kind of pointed to the fact that hearings will kick off in mid August. Just you know, is a settlement still on the table in any way, or are you expecting this to go right to hearings? If you can comment at all. Thanks.

John Ketchum: Well, that's a great question. We always prepare like we are going to hearings. Because we want to be as prepared as possible and they're about three weeks away at this point. It doesn't mean that there is not the opportunity for discussions that would lead to a settlement. I think the notion should be that those discussions probably can at any time. And if it makes from our perspective, if it makes sense for our customers, that's something that we would obviously move, move on as we have for the last three rate cases. So I'm still confident that we have a great rate case to present to the Public Service Commission in the August.

That has been my focus. Really for the last six months If there is the opportunity, if the opportunity pops up, I am going to absolutely make myself available to make sure that we can put our best foot forward for our customers in a settlement.

Nick Campanella: Makes a lot of sense. Appreciate that. I just wanted to take one of Julian's questions a step further just on the on the financing side and kind of thinking about the comments about the safe harbor visibility through 2029, You know, as I understand the current plan, '24 through '27, you know, roughly about half of the funding is tax equity and project finance. I'm just wondering, you know, because you have these comment this commentary around safe harbor visibility through '29, is that kind of the same mix that we should be expecting in financing the business? Through the late decade? Are there other sources of finance that you're thinking about leaning on?

And I guess maybe you can kind talk about what's been contemplated at this point.

Mike Dunne: Sure. So as we look at where we sit today and as we look at what our renewable build looks like, it is a lot more of what we've done over the course of the last twenty years. And that has been building good projects that are very attractive to our tax equity providers. That are very attractive to our project finance providers. And those parties, looking at the quality of those projects, and providing the financing for them. As we look today and over the last two years, we have increased our tax equity providers by 50%.

Just last week, I was talking to one of our long term tax equity providers who was asking and mentioned they wanted to increase their exposure to us. So we feel very good about where we sit in terms of accessing both the tax equity and the project financing market. As a attractive low cost way for us to finance our renewable and storage facilities. Alright. Thank you.

Operator: The next question will come from Anthony Crowdell with Mizuho. Please go ahead.

Anthony Crowdell: I just have one quick one. You talked about maybe the company's gas strategy going forward. You talked about it on the development day. Just curious, you've seen some recent sales the country already in service. Gas assets at attractive multiples. Just is that an avenue the company would pursue or more of with the GEV partnership in building you know, new build, yes?

Brian Bolster: Sure. It's Brian. On the gas strategy front, listen, we're gonna look at new build. We'll look at opportunities in the market. Think what we need to do if we're gonna look at the market is obviously the value has to make sense. I think we have to feel very good that we're gonna be able to do something with that on the contracting front in the near term. So I don't think we wanna just go spec long, merchant generation.

So but we are you know, we're turning over kinda every rock as we look at that Everything from are there assets that are gonna be interesting to fit nicely that we think we can offer back to the market, and we're gonna look at greenfield opportunities. So we're we're pursuing it on all fronts.

Anthony Crowdell: Great. And just a quick clarity, did John say earlier that maybe in Analyst Day, end of calendar year or beginning of next calendar year? And I apologize if I did not hear that correctly.

John Ketchum: That's what I said.

Operator: Great. Thank you so much. The next question will come from Andrew Weisel with Scotiabank. Please go ahead.

Andrew Weisel: Hey, good morning everybody. First question, I want to follow-up a little bit on the big beautiful bill. How are you thinking about foreign entities of concern, the fiat clause? Are you confident that you won't face exposure to that given your safe harbored equipment position?

John Ketchum: Feel very confident about the fiat provisions. Again, the way they work are as long as you've begun construction by 12/31/2025, you're not subject to those. So with the continuity safe harbor, add four years on, you get to the end of the taxable year '25, that takes you through '29. And then when you start looking at compliance beyond you know, 2029, we feel very comfortable with our ability to comply with those provisions.

Andrew Weisel: Great. Thanks for clarifying. Next on Duane Arnold, I know there's a lot of ifs and nothing has been decided yet. But if you were to move forward with a potential restart, would I be correct in thinking the timing might be such that the earnings contribution would maybe mitigate or offset the loss of renewable tax credit to their phased out? Could that be a way to smooth out the earnings and offset a potential cliff in five years or so? I know that's far off, but people are already thinking about it today.

John Ketchum: Yeah. I mean, that's, you know, obviously pretty far off. But sure. I mean that is a you add Duane Arnold to the mix, and, you know, that's that's one of, you know, many ways that, you know, we have to continue to grow the business in the future.

Brian Bolster: Just the only thing I'd comment because this is second question. It's kinda got this concept of a cliff. And I just want to remind everyone while the tax laws may be changing, the demand picks that we've been talking about now going on four or five quarters is not. The customer dialogue, whether it's in '27, '28, '29, or '30, is as robust as it's ever been. And so, you know, while the framework may be changing for some of these projects, the overall demand picture is very important to remember. You know, our job at Energy is to build energy infrastructure for our customers.

There is an outrageous amount of need for energy infrastructure in this country that's gonna go well past the end of this decade. And so we feel well positioned. Duane would be an example of one of the things that we'll we'll be looking at. So you know, Duane is another example of one of the things that we can bring to bear Storage is another element of something that we're seeing a lot of focus on.

So you know, I just know, I think there's this view that the one big beautiful bill is creating a sunset in a cliff, and I think the answer is it's just changing the rule set, and we'll continue to build the energy and infrastructure that this country needs.

Andrew Weisel: Agreed. And thank you for clarifying and framing that up. One last one other point I wanna add on to that too is you know, don't forget about storage. Too. Right? I mean, storage is a massive opportunity for this for this company and for this country. Given the capacity that it provides. So don't lose sight of storage in addition to all the other opportunities that we have around the demand picture the ability to build gas, the ability to build nuclear, the contribution from Duane. There's a lot that goes into that.

Andrew Weisel: Thank you very much. Just one last brief one on the quarter. At FPL, the earnings growth was pretty modest. Only like less than 3.5% despite the capital employed growing at your typical eight ish percent. Can you just talk to the delta there? What was weighing on the earnings growth? And how are you about the rest of this year of utility?

Mike Dunne: So if you look at the $0.02 that offset the $0.04 of regulatory capital growth, There's a variety of factors that can move that across. Recall that in 2024, the return on equity was at 11.8%. And for this year it was at 11.6%. So that is one factor and there's other puts and takes that can you know, drive that $0.02 differential. However, as we look on a go forward basis, I wouldn't expect that to that differential to continue throughout the rest of the year.

Andrew Weisel: Great. Thank you so much.

Operator: The next question will come from Jeremy Tonet with JPMorgan. Please go ahead.

Jeremy Tonet: Good morning. Not to belabor the point here with outlook post OP one beautiful bill, and I guess tax credits transitioning towards the end of the decade here. Just wondering if you could talk a bit more about the dynamics in the power markets at that point in time, particularly renewable PPA pricing and just see how you think that shifts at that point and how that any impacts on margins for participants across the value chain and maybe what sets, knee apart from others?

John Ketchum: Yeah. I mean, you know, first of all, you know, we've got a large pricing, you know, advantage and two advantages on renewables. You know, first of all, they're very fast to build. Right? I mean, you can get renewable project, you know, up and built twelve to eighteen months. Don't forget about our early and late stage inventory of projects. That's very important to keep in mind. And so when you think about all this demand for power that's here right now, we have a lot of pricing power. Right? In the market, and we have a significant cost advantage over other resources that will show up later and we need more capacity from nuclear and gas.

It's just given the development pipeline being pipeline you know, timeline being, you know, a little bit longer than what you see on renewables. That's why, you know, you've seen so much demand for renewables you know, today. And so and then don't forget too, we have a lot of renewable projects that continue to roll off of contract, right? And not a whole lot of attention gets paid to that. But when we're out in the market and able to recontract power purchase agreements that were entered into you know, a decade or more ago into this new higher pros price, you know, power market. There's a lot of embedded value in the existing portfolio.

And then you start thinking about layering in not only on top of renewables, the ability to continue to develop around gas fire generation, and then nuclear, you know, as it comes along. And our transmission business, right, where we you know, made some comments today about how we're basically building a rate regulated utility inside of NextEra. We've had an enormous amount of success around the competitive transmission business. So a lot of things to feel very good about as we look to the future.

Jeremy Tonet: Got it. That's helpful there. And then just want to continue, I guess, with the PGM capacity auction results yesterday. How do you think about the current price backdrop now as enough to incent generators at this point? How do think about NextEra's opportunity set with gas bills at that point, given that data point?

John Ketchum: Yeah. I mean, I think that data point, you know, suggests that you know, first of all, you look at where new build gas prices are, you know, in order to build to make them economic. And I think you see the PJM capacity market reacting to that because don't forget, right, and this is why I keep emphasizing development skills and capabilities and the ability to add new infrastructure to the system. Existing assets are already there to accommodate the demand that exists today. Right? And so you're trying to do with the capacity market is incent generation that does not exist today. 's gotta go out and develop and build that.

Matter what you do with the existing generation today, it's gotta be if that's going to be used to serve new demand, that generation has to be replaced by something whether it's renewables, whether it's storage, whether it's gas fired generation, whether it's new nuclear. And so what I would be focused on as well is the you know, who has the development skills and capabilities and who doesn't because we're going to have to build new generation. There's only so much you can do around existing assets They already exist today to accommodate the power that exist demand that exist today.

You know, when you look to the future, you've gotta you've gotta start adding incremental generation We are uniquely advantaged and have a unique capability set in that regard because we're one of the very few companies in this country that have been building for the last two decades. And we have a you know, a development know, team that is up and running in 49 states across this country. So I put our development team up against anyone. We need new incremental generation, the existing stuff. Isn't isn't gonna get us there.

Jeremy Tonet: Got it. That's helpful. And just one last quick one if I could. You touched on SMRs briefly before. Just wondering any updated thoughts in terms of your assessment of SMRs at this point in timing for when this resource could be widely deployed?

John Ketchum: We've been, you know, we've been, you know, like I said, we have a whole development team on SMRs. We've been advising corporate clients. So I think our knowledge curve is probably higher than most in the market today as a result of that. And, you know, we continue to evaluate.

There's 95 OEMs in us SMRs and, you know, really trying to, you know, focus on the technical reviews who are gonna be the winners and losers, and how we think about cost structures against, you know, competing generation types and, you know, and then cost sharing particularly on the first few out of the gate, how we how we will continue to work with this new administration around supporting nuclear. So it's something that is a point of emphasis and focus for us. And you know, look to us look for us to continue to advance those efforts, you know, in that regard on top of what we're doing.

On gas fired generation development and all the opportunities that we have around renewables and storage and storage being, you know, truly a, you know, terrific capacity resource for a long time to come given how quick it could be deployed and, given that you know, it doesn't need a, you know, a gas connection to make it to make it work.

Jeremy Tonet: Got it. I'll leave it there. Thank you.

Operator: The next question will come from David Arcaro with Morgan Stanley. Please go ahead.

David Arcaro: Hey, thanks so much. Good morning. I was thinking or I was wondering as you book out well, I'm curious if you're booking twenty 29 at this point. And if you are, do you have contingencies that you're incorporating into contracts for any potential tax credit risk that might arise just depending on the safe harbor provisions and the clarity from treasury?

John Ketchum: Yes. So first of all, we feel good about, you know, our 29 build and all of our contracts we have some limited protections around tax. And trade measures as well as we've talked about on some of our prior calls. But, you know, we feel we feel very good about where we stand around our, 29 program.

David Arcaro: Okay. Great. And, I guess looking out even further, I'm just curious if you're, you know, getting having any discussions on 2030 kind of a no tax credit? Conversations around pricing, what does demand look like? Just any early indications or feedback from your customer base, if they're looking out that far? And any feedback you're getting on what the reduction in tax credits on renewable side could be?

John Ketchum: Yes. It's still a little too early on 02/1930. I mean, most of the focus from our customer base is, you know, '29 and in. Just given their need for power and electrons right now. That's where the demand is. And, you know, like, you know, you can see that just in our originations, you know, this quarter about, you know, 3.2 gigawatts. So I think we'll naturally see you know, 2,030 start to become more a point of focus probably as we move forward over the next you know, twelve to twenty four months.

But right now, it's been a lot of attention paid around you know, '27, but '28, '29 in particular in terms of the need for new generation

David Arcaro: Got it. Okay. Appreciate it. Thanks so much.

Operator: The next question will come from Carly Davenport. With Goldman Sachs. Please go ahead.

Carly Davenport: Hey, good morning. Thanks so much for taking the questions. Maybe just on the origination this quarter, you highlighted one gigawatt of backlog adds tied to the hyperscalers. Are you able to share any detail on those particular additions in terms of resource mix, timing or geography, just to get a sense of what's resonating that customer base?

Brian Bolster: Hey, Carly, it's Brian. So without going into details with regard to the specific customers or the timing, I mean, it is you literally kind of need to go customer by customer, region by region. They all have different needs depending on how they're looking at their at their demand when they're when they're trying to bring that on. There is a lot of focus on the next couple of years and then also folks who are looking to build out at the end.

So I'd I hate to say it, but it's kind of a mixed bag of really depends by the customer and where they are, and I guess that's why we're we're able to spend and do well with them because we can meet the customers kinda with their need. We've got a broad pipeline and portfolio allows us to give them a, you know, a little bit of every flavor that they're interested in. So you know, it is it is a, there's no kind of common theme other than, engaging in dialogue and on a national basis over years.

Carly Davenport: Got it. Okay. Great. Thank you for that. And then just back to the comments earlier on the natural pull forward in demand, I guess, are there practical limitations to the degree to which you could accelerate development plans, whether labor, supply chain or a connection that could be pain points on the kind of ability to get projects online by that twenty nine, two thousand thirty timeframe?

John Ketchum: I think all those things you just listed are actually competitive advantages and why we would do really well in a pull forward market because we have each of the things that you listed, whether it's sites, interconnects, engineering, construction, supply chain, balance sheet, all of those things are you know, massive competitive advantages, you know, for us for the you know, compared to the rest of the industry. And, you know, I think creates substantial, you know, opportunities for us in a pulse pull forward scenario.

Carly Davenport: Great. Thank you for the color.

Operator: The next question will come from Ryan Levine with Citi. Please go ahead.

Ryan Levine: Good morning and thanks for taking my question. Two questions on the gas generation front. What regions of The United States are you seeing more traction? And does the FERC Harris decision from yesterday impact your outlook in myself?

John Ketchum: Yeah. I mean, think, you know, first of all, we're seeing gas generation demand really across country. So if you look at our gas development pipeline, it's not focused, you know, in any one region. I mean, if you're looking at getting gas online quicker, you know, obviously, they're there are states that are more accommodating to be able to do that. Texas obviously, is a is, you know, you know, comes to mind, you know, in that regard.

When I think about the ERAZ decision yesterday, you know, by MISO, you know, sure, that could create some additional, you know, opportunities, but you're gonna have to be able to also monitor through where is their gas supply, you know, how long it will take to get the turbine. And more importantly, aside from gas supply and the turbine, the labor some of the skilled labor constraints that we've seen in that sector, what does that do to timing in terms of being able to bring those assets in line, but certainly something that we are focused on.

And that's why I think given the timing of some of those projects, we're gonna continue to need an all of the above solution to accommodate demand that we are seeing in those regions.

Ryan Levine: Thanks. And then what are the key technical miles milestones remaining on Duane Arnold? And would you expect any ramp in the labor force in the coming months in order to hit the reiterated guidance around execution?

John Ketchum: Yeah. I mean, it's the typical work that you would expect on a recommissioning, right? You know, doing work across the site, looking at the condition of the site is in, looking at you know, containment, you know, in particular, looking at the equipment. All those things we feel good about based on what we've what we have seen you know, so far. And things continue to progress well.

Ryan Levine: Thank you.

Operator: This will conclude our question and answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.

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