Good day, everyone, and welcome to the NextEra Energy and NextEra Energy Partners Fourth Quarter and Full Year 2016 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks, I would like to turn the conference over to Amanda Finnis, Director of Investor Relations. Please go ahead.

Thank you, Audra. Good morning, everyone, and thank you for joining our fourth quarter and full year 2016 combined earnings conference call for NextEra Energy and NextEra Energy Partners. With me this morning are: Jim Robo, Chairman and Chief Executive Officer of NextEra Energy; John Ketchum, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Executive Vice President of NextEra Energy, all of whom are also officers of NextEra Energy Partners; as well as Eric Silagy, President and Chief Executive Officer of Florida Power & Light Company. John will provide an overview of our results and then turn the call over to Jim for closing remarks. 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 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 on our websites, nexteraenergy.com and nexteraenergypartners.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 certain non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to John.

Thank you, Amanda, and good morning, everyone. Both NextEra Energy and NextEra Energy Partners were very successful in executing the initiatives we discussed for 2016 and ended the year with excellent results. NextEra Energy extended its long track record of delivering value for shareholders with adjusted earnings per share of $6.19, up 8.4% from 2015. And the team made significant progress in opportunities to continue to drive growth. NextEra Energy Partners grew distributions to $1.41 per unit on an annualized basis, up 15% from the comparable quarterly distribution a year earlier, which was the top end of the range we discussed going into 2016. Let me now take a few moments to summarize additional highlights for 2016 before taking you through the detailed results. At FPL, we were very pleased to reach a fair and balanced outcome in our base rate case while continuing to deliver on our customer value proposition. We were honored to be recognized by Edison Electric Institute for our outstanding leadership in restoring power safely and quickly following Hurricanes Matthew and Hermine. During the year, the Port Everglades Next Generation Clean Energy Center was completed on budget and 2 months ahead of schedule. Roughly 1,600 megawatts of peaking capacity was upgraded with more efficient, advanced combustion turbines. And FPL solar capacity was roughly tripled with the addition of over 1 million newer -- new solar panels that make up approximately 225 megawatts of universal solar. FPL built upon key successes from 2015, delivering its best-ever service reliability performance and was again recognized as being the most reliable electric utility in the nation. At the same time, FPL's typical customer bill has remained well below both state and national averages. We remain committed to our long-standing focus at FPL on operating the business efficiently and reliably for…

Thanks, John, and good morning, everyone. Our strong performance in 2016 reinforces the overall strength and diversity of our growth prospects. And I remain as enthusiastic as ever about our future. Before providing additional updates on our outstanding long-term outlook at NextEra Energy, I'd like to take a moment to discuss an agreement reached between NextEra Energy and NextEra Energy Partners for a structural modification to NEP's IDR fees. Since the time of its launch, NEP has diversified its portfolio by roughly tripling its renewables capacity and adding 7 natural gas pipeline assets with the acquisition of the Texas pipelines in 2015. NEP has built a high-quality portfolio with high-quality cash flows backed by assets with an average remaining contract life of 18 years and average counterparty credit rating of A3. NEP's most recently declared distribution at an annualized rate of $1.41 per unit reflects cumulative growth of 88% since its 2014 IPO. This exceeds the expectations for growth that we discussed initially in mid-2014 and reflects solid execution in a difficult capital markets environment. NEE offers NEP and its investors high visibility into a large portfolio of attractive long-term contracted assets operated by a best-in-class sponsor and supported by the development capabilities of North America's largest and best renewables developer. We continue to believe that the scale, financial strength, experience and track record of its sponsor are what set NEP apart from other infrastructure alternatives. Conversely, NEP offers NEE the opportunity to highlight the value of Energy Resources' long-term contracted portfolio of assets, while enabling NEE to recycle capital back into its development projects and optimize its tax position by monetizing its deferred tax asset balance against tax gains generated from the sale of assets to NEP. Notwithstanding all of these positives, we believe there's a disconnect right now…

[Operator Instructions] We'll go first to Julien Dumoulin-Smith at UBS.

So well done, very well done. Perhaps just a quick clarification on everything you just said. On 2018, the long-term EPS growth, to what extent is it predicated on the Oncor transaction following through both in the 2018 but also beyond period? And if it's not reflected, can you just preliminarily provide some sense as to how you would think about the increment?

Yes, so what we have said is in extending the guidance through 2020 at 6% to 8%, we're setting aside the accretion from Oncor. Jim just went through a number of sensitivities in terms of our view regarding our expectations. Just to be clear, one of those sensitivities was around tax reform. And he outlined the administration's plan and then the blueprint scenario. And then the other was a renewable downside case. where 50% of the expected renewable demand fell away. If you combine those 2 things, we would still expect to be at the midpoint of our range through 2020. And then, obviously, as Jim ended the call, his expectation would be for us to finish near the top end of the range. And there are a number of factors that could allow us to do that, Oncor being one of them.

Julien, the only thing I would add is that -- and I've said this publicly about the Oncor transaction, obviously, we remain as committed as ever to getting it done. We -- I said earlier when we announced it that it would help us grow at the top end of the range through 2018. And I also said that we have a lot of growth levers, and I would be disappointed if we weren't able to grow at the top end of the range even if we can't close Oncor. And I remain that. And I -- just to address a couple other questions that we've gotten on the Oncor transaction, we've been asked over the last several weeks by investors what were our reactions to the testimony filed in the Oncor proceeding. And I just wanted to address -- take a chance to address that as well here. Over -- almost over the last nearly 2 decades, we've invested an awful lot in Texas, about $8 billion. And NextEra has one of the strongest balance sheets in the sector. And as I said before, we are unwilling to compromise our A- corporate credit rating as a result of any transaction, including the Oncor transactions. We've structured that transaction to save Oncor customers hundreds of millions of dollars by removing the debt that hangs over Oncor right now. And that is going to allow Oncor to operate at NextEra Energy's credit rating of A-, which, of course, is an upgrade for Oncor. Unfortunately, for example, there's -- there are requests in the testimony filed by outside consultants for certain of the interveners would result in NextEra being immediately downgraded once that debt is moved by either prohibiting NextEra from appointing a majority of the Oncor board or placing restrictions on dividends and approval of capital and operating budgets. And we need to address these issues in order to be -- avoid being downgraded, so we can close the transaction. And if we can't address those issues, otherwise -- unfortunately, we wouldn't be able to close. Texas has been a terrific state in most business in investment. And we're confident that the commission is going to give our filing a full and fair review and that we can demonstrate that this transaction makes sense for Oncor, its customers and for Texas.

We'll move next to Greg Gordon at Evercore ISI.

Not to beat a dead horse guys, but I just want to be clear that your pro formas and the guidance for this year and next year completely exclude any assumption that Oncor's integrated into the NextEra family, correct?

Yes, again our guidance through 2020 sets aside the accretion from Oncor.

Okay, fair enough. In your house blueprint scenario, with the 20% tax rate, loss of interest deductibility, that also includes 100% expensing so you would include the headwind to rate base growth off of your 8% base case in that scenario?

That's correct.

Okay. And then are you assuming interest deductibility as only loss on prospective issuance or that it impacts current balances?

Everything.

Okay. So not just prospective but prospective and on current balances?

That's correct. We have not assumed a phasedown.

Okay. Can you tell us whether or not there's been a significant change in the pace or scale of your ongoing developing opportunities in the wind or solar business, post the election? In other words, as you think about how your book-to-bill is growing over the course of -- how that's grown over the course of the last several months now, it's going to grow over the course of next year, have you had to reevaluate the pace of growth, given the tenor of negotiations given the change in the White House?

I will turn that over to Armando. But I think just the results that we've shown today with the 640 megawatts in this call and 3,500 from last year, we're certainly not seeing a falloff in customer demand. But I'll let Armando fill in with more detail.

Hey, John, that's right. I mean, we haven't seen anything come off the table. And it's still a steady state of RFP and bilateral opportunities coming in. And at least my expectation, we're still having a lot of discussions with customers, and they're not really focused on it, honestly. There's a little bit of talk about, "Hey, let's try to get something done in the earlier years." But I fully expect '17 and '18 to be really good origination years for renewables.

Our next question comes from Stephen Byrd at Morgan Stanley.

Just thinking through the interest deductibility, the guidance that you provided is very helpful. I've been trying to think through interest deductibility for your renewables development business. Assuming that, that were to be eliminated, is this something that essentially gets worked into future PPAs? In other words, wouldn't necessarily have a huge impact in your financing decisions, but it's just something that naturally gets worked into the overall economics of your projects?

Yes, it naturally gets worked into the overall economics of the projects. And remember, what we have to do is maintain our relative competitive advantages. And so to the extent it's an impact on us, it's also an impact on everybody else. And so we feel very good about our ability to maintain the competitive advantages that we've shared with investors over the past, even if that were to occur.

Stephen, the other thing I would add is remember, much of the renewable financing we do is tax equity financing and isn't impacted at all by the loss of interest rate deductibility -- of interest deductibility.

All good points, thank you. And then just thinking about the cost savings, it's a fairly impressive program that you're embarked on. When we think about achievability and factoring this into guidance, Jim, it sounded like you're quite encouraged by what you're seeing. But could you just talk a little bit more in terms of how achievable you see that? How much is factored into guidance? How much we should be thinking about that in terms of risk to achieving your target?

Yes, I feel very good about our team's ability to execute against what we've seen so far. And I think just like Project Momentum, the achievability is going to be high. And it's one of the initiatives that we have going on that makes me able to say that I'll be disappointed if we can't grow at the top end of the range through 2020.

We'll go next to Paul Ridzon at KeyBanc.

Had just a detailed question. At FPL in the fourth quarter, you had some pretty poor weather. You had a hurricane, yet you still were able to reverse some reserve amortization and maintain the 11.5% trailing 12% ROE. Kind of what happened there?

Well, we had a balance of $230 million in reserve amortization going into the year. And the weather, against our expectations in terms of surplus amortization, was a bit better, which allowed us to add another $20 million in the fourth quarter from $230 million to $250 million. And we had very good O&M management during the quarter as well.

So O&M was a big help.

Thank you.

And are you going to do an Analyst Day this year?

We are. We are still planning to do an Analyst Day in the spring but want to get through the Oncor proceedings first.

So it'll be after the Oncor order comes out?

It would, that's correct.

We'll go next to Michael Lapides at Goldman Sachs.

Two questions on the near side. First, can you talk a little bit about how much or how significant the PTC roll-off will be? And what 's embedded in your 2017 and 2018 guidance? That's the first question. Second, can you talk about the opportunity set? And I know this will be a little bit longer term for incremental midstream or pipeline development, outside of what you're already undertaking with Sabal Trail, Mountain Valley and others.

So I think that I'm going to get a better number here soon, but I think the PTC roll-off here for the next couple of years is in the $30 million to $40 million category. And yes, so that's a good number, I'm hearing. On the midstream and pipeline development opportunities, Michael, I mean there's still a bunch of opportunities out there. We've talked about this before. We're the -- I don't know that we're the new kid on the block, but we are the newer kid on the block. We've been fairly successful, including the MVP development, which is going quite well, by the way. We've got a couple of others that we're working on right now. There's certainly not a shortage of opportunities. But whether those opportunities make long-term sense for us remains to be seen. At least one of the opportunities I feel pretty good about. So we've said before that we would be disappointed if we did not have another significant investment opportunity to announce in the pipeline space by 2020; that remains to be the case. We have certainly poured some significant G&A into greenfield development there. And I expected that we'll get something that's beneficial for all of us.

We'll take our next question from Alex Kania at Wolfe Research.

This is -- this happened recently, I guess, last night. But just any takes on the changes at FERC with Bay leaving? And any impact to you on kind of any important proceedings you might have on pipeline approvals, MVP or other things?

So Alex, this is Jim. I actually got a note from Joe Kelliher, who's on our team, about this last night. And while FERC won't have a quorum, that won't prevent them from issuing orders with 2 commissioners. So we don't see any impact from only having 2 commissioners right now. I would expect that to get addressed relatively soon by the new administration as well.

And our next question comes from Shar Pourreza at Guggenheim Partners.

Jim, can you comment on whether NextEra and some peers are seeking some sort of a utility carve-out under a potential new tax regime?

Yes, I think -- Shar, I think what I can say is obviously the industry understands the importance of tax reform for both the U.S. economy as well as for our industry, and it's important to get it right. And we're working very hard to make sure that our voice is heard and that whatever happens with tax reform is both great for the U.S. economy and also doesn't impact customer -- our customer bills and in our industries. So I think that's all I can say about it. It's very early right now, as I said in the prepared remarks. And there's still a long way to go on this, and we'll be updating. We'll continue to keep everyone informed. I know it's a very important issue to investors, the impacts of tax reforms. It's a very important issue for us. And I can also tell you that I'm very engaged on it.

Okay, got it. That's helpful. And then just on the lower corporate taxes, whether it's the Republican plan or the Trump plan, just from a mechanical standpoint of that P&L, is there -- in your scenario now, so you're assuming that the higher deferred tax liabilities are sort of paid off to the life of the assets? Or is there a scenario where you could sort of think that your -- you can use short-term borrowings and sort of finance the liabilities under a quicker scenario and paying back sooner, and obviously, boost your rate base?

I think a reasonable way to think about it right now and the way we've been thinking about it is that would be flowed back to customers over the remaining useful economic life of the assets.

Okay. So no use of short-term borrowings to finance it under a quicker scenario.

I don't think so.

And we'll go next to Andrew Hughes at Credit Suisse.

As you've worked through some of the implications of tax reform, curious if you've considered some of the impacts to renewable project cash flows? And if that, at all, changes how you think about the drop-down schedule at NEP, either geographically or mix of wind or solar or gas, particularly as you kind of look out on the distribution growth pathway?

No, it really has not changed the way we think about NEP. We still believe that we'll be able to secure tax equity financing. And in terms of tax equity financing, our view is that we'll continue to get first allocation on it. And even if there is some impact from tax reform on the banks, their tax base will still be high, they'll still need tax equity. If anybody is impacted from a decline in the supply of tax equity, it's going to be the resi solar folks first. And then it's going to be the smaller wind developers second. So in some ways, I could see it creating a bit of a competitive advantage, but we have ways to manage around tax equity and don't really view it as being a big impact to our business going forward.

That's helpful. And then just quickly on the repowering front. Among the 1.6 gigawatts, do any of those -- are those still primarily for projects with hedges for off-take contracts? Have you been able to find the opportunities for PPA projects? And if not, just maybe you could discuss some of the challenges there and your expectations to overcome them going forward?

It's Armando. The 1.6 that we've announced is really just hedged projects. But in the last 3 months, we've made some, I'd say, pretty good development in engaging our PPA counterparties and amending or trying to amend those PPAs. I feel pretty good about it. I mean if we didn't feel pretty good about it, we wouldn't have said that we still -- we would expect $2 billion to $2.5 billion from this program. To get up to that $2 billion to $2.5 billion of investment, you're going to have to amend some of the current power purchase agreements that are out there. And I will tell you that all of the counterparties -- we have not spoken to all the counterparties obviously at this point. But all of the counterparties that we have spoken with are very interested in taking on repowered projects.

And we'll go next to Colin Rusch at Oppenheimer Company.

This is Shivani Sood on for Colin Rusch. Two questions for us. We're seeing a rapid evolution of microgrid technology performance and cost. Can you just kind of talk about how you see the corporate, university, military microgrids fitting into your development plans?

This is Eric. We don't see a lot of penetration right now and/or interest on microgrids. Obviously, there're still folks who are pursuing that in different parts of the country. In Florida, the value proposition that we provide folks really has just focused on, if anything, I guess, a little bit more towards the energy efficiency. But that's really driven more by building codes here. So on the microgrid side, I wouldn't say there's been a lot of movement on it. Obviously, technology is something that's driven our business quite a bit. We've adopted a lot on the smart grid technology. That's helped us take costs out of the business and improve the liability. And that's something that we passed on to customers through lower bills and better performance.

Great. And then just as you look at your solar development portfolio and the ongoing cost declines in equipment prices, how much incremental profitability are you seeing in your solar development portfolio?

Possibility in terms of cost reductions? Or development opportunities? Cost reductions?

Yes.

So cost reductions, I mean we're still expecting on a $1 per kW basis for solar to get down to probably pretty close to $1,000 kW by the end of 2020. That's built into all of our expectations at Energy Resources as to what could get done. And that's built into the expectations that Jim talked about during the prepared remarks where he said by the end of 2020 or early in the next decade, you've got PPA prices that are probably close to $0.03 to $0.04.

And that concludes today's question-and-answer session and today's conference. Thank you for your participation. You may now disconnect.