Based on the provided financial report articles, the title for the article is: "NextEra Energy, Inc. and Florida Power & Light Company Quarterly Report (Form 10-Q)
NextEra Energy, Inc. and its subsidiary, Florida Power & Light Company, filed their combined Form 10-Q for the quarterly period ended September 30, 2024. The report highlights a net income of $1.4 billion for NextEra Energy, Inc. and a net income of $1.1 billion for Florida Power & Light Company. The companies’ total revenue increased by 10.3% to $6.3 billion, driven by growth in their renewable energy and utility businesses. The report also notes that the companies’ cash and cash equivalents increased by $1.1 billion to $4.4 billion, and their long-term debt decreased by $1.4 billion to $24.4 billion. The companies’ financial performance was driven by strong demand for their renewable energy products and services, as well as their ability to manage their costs and investments effectively.
Financial Performance Overview
NextEra Energy (NEE) reported mixed results for the three and nine months ended September 30, 2024. Net income attributable to NEE increased by $633 million for the three-month period, but decreased by $357 million for the nine-month period.
The increase in net income for the three-month period was driven by higher results at Florida Power & Light (FPL) and NextEra Energy Resources (NEER), partially offset by lower results at the Corporate and Other segment. The decrease in net income for the nine-month period was due to lower results at Corporate and Other, partially offset by higher results at FPL and NEER.
FPL: Steady Growth
FPL’s net income increased for both the three and nine-month periods, primarily due to continued investments in plant and other property, which grew the utility’s average rate base by approximately $6.0 billion and $6.4 billion, respectively, compared to the prior year periods. This growth was driven by additions to solar generation and ongoing transmission and distribution projects.
FPL also completed a 12-month storm restoration charge in 2023 related to Hurricanes Ian and Nicole, which impacted the utility’s service area. In the third quarter of 2024, FPL’s territory was hit by Hurricanes Debby and Helene, resulting in $0.3 billion of recoverable storm restoration costs. An additional $0.8 billion in costs were incurred in October 2024 due to Hurricane Milton.
NEER: Improved Performance
NEER’s results increased significantly for the three-month period, primarily due to the absence of an impairment charge related to the investment in NextEra Energy Partners (NEP) recorded in 2023, favorable non-qualifying hedge activity compared to 2023, and higher earnings from new investments.
For the nine-month period, NEER’s results also increased, reflecting the absence of the NEP impairment charge and higher earnings from new investments, partially offset by less favorable non-qualifying hedge activity compared to 2023.
The increase in new investment earnings was driven by the addition of new wind, solar, and battery storage facilities that entered service during or after the three and nine months ended September 30, 2023. However, results from the customer supply and gas infrastructure businesses decreased for both periods.
Corporate and Other: Unfavorable Hedge Activity
Corporate and Other’s results decreased for both the three and nine-month periods, primarily due to unfavorable non-qualifying hedge activity related to changes in the fair value of interest rate derivative instruments.
Liquidity and Capital Resources
NEE and its subsidiaries require significant funds to support and grow their businesses, which are primarily funded through a combination of cash flows from operations, short- and long-term borrowings, and the issuance of equity securities.
As of September 30, 2024, NEE’s total net available liquidity was approximately $12.0 billion, consisting of $5.3 billion at FPL and $6.8 billion at NEECH (the NextEra Energy Capital Holdings subsidiary).
NEE and its subsidiaries also issue various types of guarantees, letters of credit, and surety bonds to facilitate commercial transactions and financing arrangements. At September 30, 2024, these totaled approximately $6.0 billion, primarily related to obligations under purchased power and acquisition agreements, nuclear-related activities, and customer supply and trading activities.
Outlook and Risks
NEE’s financial performance is exposed to various market risks, including commodity prices, interest rates, and equity prices. The company uses a variety of derivative instruments and risk management strategies to mitigate these exposures.
Commodity price risk is managed through the use of swaps, options, futures, and forward contracts, with NEER’s trading and non-qualifying hedge activities being the primary drivers of this risk. Interest rate risk is managed through monitoring of current rates, use of interest rate contracts, and a mix of fixed and variable rate debt.
Equity price risk is primarily related to NEE’s nuclear decommissioning reserve funds, which include marketable equity securities. A hypothetical 10% decrease in equity prices would result in a $572 million reduction in the fair value of these funds.
Credit risk is also a key consideration, particularly in NEER’s energy marketing and trading operations. NEE manages this risk through established policies, credit limits, and credit enhancements such as letters of credit and collateral. At September 30, 2024, approximately 90% of NEE’s credit exposure in this area was with investment grade counterparties.
Overall, NEE’s financial position remains strong, supported by its regulated utility operations at FPL and the growth of its competitive energy business at NEER. However, the company faces ongoing risks related to weather events, commodity price fluctuations, interest rate movements, and counterparty credit quality, which could impact future financial results.
