NextEra Energy Earnings Call Nuggets: Wind Aspects and Earnings Outlook

NextEra Energy (NYSE:NEE) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Wind Aspects

Daniel Eggers – Credit Suisse: Just turning to the wind conversation a little bit, with the range now, they’re 500 to 1,500 for the next two years. Is that 1,500 megawatt top end number? Is that a reflection of kind of the logistical limitations of you guys building that much wind in a short amount of time, or do you think there’s the ability at some point to maybe surpass that, given the compelling economics of wind with the tax credit still sitting out there?

Moray P. Dewhurst – Vice Chairman and CFO: Well, Dan, I would say that the whole range is based on our total assessment of what’s realistic over this period, including both the customer dimension and the supply-chain dimension. So, while I would never say never, I think that based on what we see today, 1,500 is a good upper end for the U.S. wind program.

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Daniel Eggers – Credit Suisse: And then have you thought about kind of the way the IRS interpretation? I mean it looks like there’s maybe some ability to even go beyond 2014 from a development perspective. Do you guys see a window where this could expand into 2015?

Moray P. Dewhurst – Vice Chairman and CFO: I think that right on to that is just to say that we are very focused on our 2013-2014 program.

Daniel Eggers – Credit Suisse: And then on solar, obviously, you guys kind of rescaled the Blythe project which was expected. But when do you think we could start to see movement on some PPAs being announced on the solar front? Is that a 2013 announcement prospect? And what should we be watching maybe to see some of these projects move forward?

Moray P. Dewhurst – Vice Chairman and CFO: I guess I would just divide the solar pipeline into two parts. I think, obviously, we’re just announcing two small projects here, I think there could be several more of those. We previously noted that there’s probably not more than one more large scale project to come that could – certainly we could have success on that in this year or not. So, I mean it’s a little difficult to say exactly what is going to happen. Armando, do you have any other comments? Armando is shaking his head, so…

Daniel Eggers – Credit Suisse: Just the last one, again, I guess it looks like we had a light performance here from wind utilization perspective. A, how far off were you guys versus normal, because I didn’t see it in the slides? And then, B, is there is a time when we need to reevaluate kind of the growth rate or baseline expectations given the fact that there seems to be a fairly regular underperformance from wind relative to the model?

Moray P. Dewhurst – Vice Chairman and CFO: I guess there’s two parts of the answer to that question. First, on the wind resource, just numerically in the first quarter, we were about 97%. It’s quite clear looking at the data over the last few years that the wind resource available to the portfolio in aggregate has been on average below the longer term averages. So, I don’t think there’s any question about that. The second part of the answer, however, is that we are right in the midst of essentially recalibrating all our wind models, and the reason that I pulled the wind resource slide from the release this time is that while we have a new set of numbers, they are not directly comparable to the ones that we have been presenting. So, I was a little concerned that people would compare one with the other and come to a misleading conclusion. So we will be putting those back out once we have a better basis for comparisons on that. So, we are doing some recalibration. But I would just estimate – underline that the wind resource like any other sort of climate-related variable can go through quite significant cycle. So we can have several years in a row where you are below average and that is statistically perfectly normal.

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Earnings Outlook

Paul Ridzon – KeyBanc: Moray, I had to jump off for a second, but did you say that you expect near to be slightly improved versus ’12?

Moray P. Dewhurst – Vice Chairman and CFO: I think you may have been picking up the reference to corporate and other, which we have previously said for ’13, we expected to be a little bit up over 2012. We certainly expect Energy Resources to be up as well in ’13…

Paul Ridzon – KeyBanc: And I think you filed with Florida that you expected to earn 11.25%. Is that still reasonable?

Moray P. Dewhurst – Vice Chairman and CFO: The forecasted surveillance report for the remainder of the year is – comes in at about 11.25%, so, yes, that’s roughly what we are thinking at the moment based on what we see.

Paul Ridzon – KeyBanc: And then lastly, have you initiated discussions in Spain, and what’s the outlook for resolution here aside from walking away?

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Moray P. Dewhurst – Vice Chairman and CFO: I think it’s a practical matter, it’s going to take some time to resolve the situation. We are in active discussion with our bank group, but for commercial reasons I don’t think it would appropriate for me to say more.

Paul Ridzon – KeyBanc: And I guess, from our current position the way you’ve characterized Spain, there is nothing but upside from here, is that fair?

Moray P. Dewhurst – Vice Chairman and CFO: I can’t absolutely say that there’s nothing but upside. But as I said in the prepared remarks, we continue to believe that our exposure is limited to the equity contribution, which is roughly $270 million based on today’s exchange rate.