NextEra Energy, Inc. (NEE)

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NextEra Energy, Inc. (NEE)

Q2 2010 Earnings Call

July 23, 2010 9:00 am ET


Rebecca Kujawa - IR

Lew Hay - CEO

Armando Pimentel - CFO

Jim Robo - President and COO

Armando Olivera - President and CEO, Florida Power & Light Company

Mitch Davidson - President and CEO, NextEra Energy Resources


Dan Eggers - Credit Suisse

Paul Patterson - Glenrock Associates

Jonathan Arnold - Deutsche Bank

Steve Fleishman - Bank of America

Greg Gordon - Morgan Stanley

Brian Chin - Citi

Jay Dobson - Wunderlich Securities

Angie Storozynski - Macquarie



Good day, everyone, and welcome to the NextEra Energy second quarter 2010 earnings release conference call. At this time for opening remarks, I would like to turn the conference over to Mr. Rebecca Kujawa.

Rebecca Kujawa

Good morning, everyone, and welcome to our second quarter 2010 earnings conference call. Lew Hay, NextEra Energy's Chairman and Chief Executive Officer, will provide an overview of NextEra Energy's performance and recent accomplishments. Lew will be followed by Armando Pimentel, our Chief Financial Officer, who will discuss the specifics of our financial results.

Also joining us this morning are Jim Robo, President and Chief Operating Officer of NextEra Energy; Armando Olivera, President and Chief Executive Officer of Florida Power & Light Company; and Mitch Davidson, President and Chief Executive Officer of NextEra Energy Resources, which we will refer to as Energy Resources during this presentation. Following our prepared remarks, our senior management team will be available to take your questions.

We will be making statements during this call that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release, in the comments made during this conference call, in 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 in the Investors section of our website, We do not undertake any duty to update any forward-looking statements.

Please also note that today's presentation includes references to adjusted earnings, which is a non-GAAP financial measure. You should refer to the information contained in the slides accompanying this presentation for definitional information and reconciliations of the non-GAAP measure to the closest GAAP financial measure.

With that, I will turn the call over to Lew Hay.

Lew Hay

Thank you, Rebecca, and good morning everyone. I'm pleased to report that NextEra Energy grew adjusted earnings per share by 12% over the prior-year quarter from $0.99 to $1.11.

Now, it's important to note that some of this growth is due to the positive effects of weather on our portfolio. The wind resource at Energy Resources was 96% of normal, and we experienced record warm temperatures in Florida. In fact, as measured by cooling degree hours, June was the third hottest month in 60 years in Florida Power & Light's service territory.

However, beyond favorable weather, our strategy of investing in clean, renewable and efficient generation continued to bear fruit. In fact, on a weather-normalized basis, we have achieved a 7% year-to-date increase in adjusted earnings per share compared to the period last year. One example of this strategy at work is our West County Energy Center in Palm Beach County where our new Units 1 and 2 helped second quarter earnings while delivering lower fuel costs and cleaner air for customers.

We have similarly compelling investment opportunities as we look to the future. For example, we announced our decision to invest approximately $2 billion on the modernizations of our Cape Canaveral and Riviera power plants. We estimate these new units will save customers $850 million to $950 million over the life of the plants compared with keeping the existing facilities in the fleet. And they will improve air quality by reducing particulate emissions by an estimated 88% at these sites and improve the plants' carbon dioxide emission rates by roughly 50%.

At Energy Resources, we have approximately 540 megawatts of new wind already in service or under construction and likely to be commissioned in 2010.

In addition to building new wind projects, we continued to make progress in the quarter on signing long-term power purchase agreements for our existing wind projects, which we expect will continue to improve our earnings risk profile in this part of the business. We also announced that we would invest in 100 megawatts of solar thermal generation in Spain. In a few minutes, Armando will bring you up to speed regarding some of the positive recent developments on this project.

As some of you know, I had the privilege of being at the New York Stock Exchange last month to mark the change of our stock ticker symbol to NEE. That was the final step in the process of changing our name from FPL Group to NextEra Energy, which better reflects our scope as one of the largest and cleanest power companies in the industry.

On the national front, the Environmental Protection Agency's proposed new rule governing the emissions of sulfur dioxide and nitrogen oxides has the potential to reshape our sector over the next several years. Those of you who have been listening to these calls for any length of time have heard me say that NextEra Energy is very well positioned for a world where carbon is priced. What sometimes gets lost is that we are also very well positioned for a world where carbon is not priced.

With or without legislation to address climate change, the EPA is moving to strengthen environmental protections in multiple ways that will have a significant impact on the electric power sector. This extends well beyond the agency's recently issued replacement for the Clean Air Interstate Rule. It includes new rules regulating hazardous air pollutants such as mercury, tighter controls on coal ash and of course the EPA's own efforts to regulate carbon emissions.

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