Good morning everyone and welcome to the NextEra Energy and NextEra Energy Partners conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please also note today’s event is being recorded. At this time, I’d like to turn the conference call over to Mr. Matt Roskot, Director of Investor Relations. Sir, please go ahead.

Thank you Jamie. Good morning everyone and thank you for joining our fourth quarter and full year 2019 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; Rebecca Kujawa, Executive Vice President and Chief Financial Officer of NextEra Energy; John Ketchum, 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. Jim will provide some opening remarks and will then turn the call over to Rebecca for a review of our fourth quarter and full year 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 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 historical non-GAAP measures to the closest GAAP financial measure. With that, I will turn the call over to Jim.

Thank you Matt, and good morning everyone. 2019 was a terrific year for both NextEra Energy and NextEra Energy Partners. NextEra Energy’s performance was strong both financially and operationally, and we had outstanding execution on our initiatives to continue to drive future growth across the company. By successfully executing on our plans, NextEra Energy extended its long track record of delivering value for shareholders with adjusted earnings per share of $8.37, up 8.7% from 2018. Over the past 15 years, we’ve now delivered compound annual growth and adjusted EPS of nearly 8.5%, which is the highest among all top 10 power companies who have achieved on average compound annual growth of less than 4% over the same period. Amidst this significant growth, the company has maintained one of the strongest balance sheets and credit positions in the industry. In 2019, we delivered a total shareholder return of approximately 43%, significantly outperforming both the S&P 500 and the S&P 500 Utilities Index, and continuing to outperform both indices in terms of total shareholder return on a one, three, five, seven, and 10-year basis. Over the past 15 years, we have outperformed all of the other companies in the S&P Utilities Index and 85% of the companies in the S&P 500 while more than tripling the total shareholder return of both indices. Although we are proud of our long-term track record of creating shareholder value, we remain utterly focused on the future and committed to continuing that track record going forward. During 2019, FPL successfully executed on its ongoing capital plan, including placing the highly efficient Okeechobee Clean Energy Center and an additional 300 megawatts of cost effective solar in service on time and on budget. Smart capital investments such as these help FPL improve its already best-in-class customer value proposition despite…

Thank you Jim, and good morning everyone. Let’s now turn to the detailed results, beginning with FPL. For the fourth quarter of 2019, FPL reported net income of $400 million or $0.81 per share, down $0.04 per share year over year. For the full year 2019, FPL reported net income of $2.33 billion or $4.81 per share, an increase of $0.26 per share versus 2018. Regulatory capital employed increased by approximately 8.3% for 2019 and was the principal driver of FPL’s net income growth of roughly 8% for the full year. During the fourth quarter, growth from new investments was offset by a number of factors, including a contribution to our charitable foundation that should fund its operations for the next several years. FPL’s capital expenditures were approximately$2 billion in the fourth quarter, bringing its full-year capital investments to a total of roughly $5.8 billion. FPL’s reported ROE for regulatory purposes was 11.6% for the 12 months ending December 31, 2019, which is at the upper end of the allowed band of 9.6% to 11.6% under our current rate agreement. During the fourth quarter, we utilized a total of $18 million of reserve amortization, including the approximately $260 million that was utilized to offset Hurricane Dorian storm restoration costs, leaving FPL with a year-end 2019 balance of $893 million. We continue to expect that FPL will end 2020 with a sufficient amount of reserve amortization to operate under the current base rate settlement agreement for one additional year, and as a result expect to file a base rate case in the first quarter of 2021 for new rates that are effective in January of 2022. While we have not made a final decision, based on our review we expect that the merging of FPL and Gulf Power and making a…

[Operator instructions] Our first question today comes from Greg Gordon from Evercore ISI. Please go ahead with your question.

Thanks. Congratulations on another very, very consistent year performance.

Thanks Greg, good morning.

A couple questions for you. Based on my back of the envelope math, it doesn’t look like you’ve earned the maximum allowable ROE at Florida Power & Light this year. Can you tell us where you landed on a return on equity basis for fiscal year ’19?

Yes Greg, from a reported regulatory ROE standpoint, so what ultimately goes to the Florida Public Service Commission, we did earn the 11.6% ROE as allowed under our settlement agreement. You are right - we did have some below the line expenses, which is typical, but those below the line expenses are excluded from that regulatory ROE calculation.

Got you, understood. And then when you point out in your slide deck that the majority of your PTCs are now being allocated through tax equity, there’s a very clear slide in the appendix on that. That means that we should be looking at NCI on the balance sheet flowing through the income statement as the way that that’s flowing through earnings now, is that correct?

Yes, that’s correct.

Okay, and the average amortization of a tax equity deal for a wind project is approximately 10 years, is that right?

Yes, the earnings recognition is roughly coincident with the 10-year PTC range for all of our wind projects that are in PTCs.

Right, and for a solar deal, it would be slightly faster?

Yes, it typically relates to the recognition of the ITC period, so for many tax equity structures, that’s over five years. Certain tax equity partners prefer a seven-year structure, and so then it would be over seven years as opposed to five.

Right. As you guys gear up for preparing for the rate case in 2021, are there any milestones this year or will the majority of the activity be happening in early ’21?

Well as you certainly appreciate, there’s a ton of milestones that are largely internal for our teams as they get ready for any rate proceeding, and many of those preparation efforts started well before this year and are ongoing, and we have the incremental work this year of doing all the analysis of thinking about bringing FPL and Gulf together. But as I highlighted in the prepared remarks, based on what we know today, our expectation is that we would file a rate case in early ’21 for the new rates effective in 2022, and you know the first start of that would be the filing of the test year letter, which we would expect to file in early ’21.

Great. My last question is the battery storage backlog is obviously continuing to ramp. Are you buying battery storage--are you buying the product from another vendor or are you buying the components from different OEMs and building your own bespoke battery storage product? In other words, are you using a vendor like Fluence or one of the other total product companies, or are you sourcing components and building your own battery units?

It’s much more the latter, Greg. We see a tremendous amount of value and are being able to have some nimbleness in where we procure the battery packs, but then we also are procuring separately, as you suggested, things like the containers and the other equipment that you would ultimately use to assemble the battery facility. And then also we’re designing our own management systems. We ultimately believe that some of the real value add that we’re going to be able to add to customers, that will likely differentiate us from others is that battery system management because we’ve talked about with you guys and with others over time that there’s probably not one value stream that creates the value for batteries, it’s usually a couple of different applications within the same system, and that management system and optimizing that is going to be part of the secret sauce of batteries. We’ve invested a lot of time and energy in thinking through that not only on the Energy Resources deployments but also for the deployments that we’ve had at FPL, and we’re learned a tremendous amount and we’re really excited as we highlighted in the prepared remarks about batteries as a terrific supplement to further renewable deployment certainly in the middle part of the next decade and thereafter as renewables become a significant component of the generation stack in U.S. power markets.

Thanks a lot.

Thank you.

Our next question comes from Steve Fleishman from Wolfe Research. Please go ahead with your question.

Yes, hi. Good morning. Just a question first if you could update us on the Santee Cooper situation and your interest there; and then secondly, with JEA now gone and stock obviously doing very well, just kind of overall thought process on M&A strategy and opportunities right now. Thanks.

Steve, this is Jim. I’ll take that. Obviously, we’re pretty limited in what we can say about the Santee Cooper situation other than what I’ve said previously, which is we remain very interested in Santee Cooper and we think South Carolina is a terrific place to do business, and that’s probably all I can say about that. On the JEA front, I would say we’re disappointed that the sale process has been terminated. We think we could have brought enormous value to the customers and the citizens of Jacksonville, and we think it’s unfortunate that it’s been terminated, but that is what it is. In terms of future M&A activity, I will repeat what I’ve been pretty consistent in terms of what our strategy is on that front, which is in terms of what we like, we have been very focused. First of all, I don’t think there’s a utility in the country that wouldn’t benefit from the application of our playbook. That said, we have been focused on opportunities in the southeast, in the midwest, as well as FERC regulated opportunities. Those are, from a regulatory standpoint and other opportunities, what we think are the best fit for us and that remains our focus. We continue to be very interested in trying to do something. That said, M&A is always hard and there are a lot of hurdles to get over, and we will, as always, be extraordinarily financially disciplined. You will never see us announce a deal that we say is strategic and has no accretion, so anything that we do will have significant accretion associated with it. So, I think that’s probably the sum total of what I can say on that.

Okay. One quick technical question. Is there a quick and easy way you can quantify the balance sheet capacity available for these FFO to debt metrics at Moody’s and S&P in terms of dollars?

Yes, we’re probably not going to quantify it exactly, Steve. As you’ve heard us say quite a number of times over the years, a strong balance sheet is incredibly important to us. We clearly have some room from our downgrade thresholds, which is certainly terrific and is important to us as we think about how do we make sure that we’re prepared for making investments that we want to make in the future, including especially this year, setting aside the comments that Jim just made on M&A, just for our organic growth prospects alone we have $14 billion of planned capital investment in our business, and having a strong balance sheet as we start to make those investments is incredibly important.

Great, thank you.

Our next question comes from Julien Dumoulin-Smith from Bank of America. Please go ahead with your question.

Good morning, can you hear me?

Good morning, we can hear you just fine.

Excellent. Thanks again for all the commentary. Perhaps kicking if off on the retiring front, would just be curious on your thoughts on the ’24 opportunity now, given the PTC extension. How does that shift your thinking and logic around incremental repowering? I know you provided already some fairly detailed remarks on repowering already, but I want to dig in on that specific opportunity especially given that that’s a year already after the timeline for the solar ITC here, if you can elaborate.

Sure, of course. As we highlighted in our development expectations that we laid out this summer for the 2019 through 2022 time frame, you’ll note that the repowering opportunities that we saw were heavily, and at that time exclusively in the 2019 to 2020 time frame, and we’ve continued to work on opportunities to repower assets at both an 80% PTC and a 60% PTC, so first we’ll focus in the 80% before we even think about the extensions of anything that’s possible in 60%. Remember, there’s always a trade-off in making these investment opportunities. Part of the economic value of that is getting the new set of PTCs, and so there’s a balance of the cost of the investment that you need to make in that equipment and also ensuring that you can meet the IRS test of the 80/20 valuation, and as the PTC value goes down, it gets a little bit harder to justify both of those requirements. Again, we thought it was a terrific program, created a huge amount of shareholder value, really highlights the option value embedded in our portfolio, and we’ll continue to be creative and work towards creating more opportunities like that or things that are analogous to it in the future.

Got it, excellent. Just clarifying the last question a little bit, you mentioned FERC regulated opportunities. Jim, can you elaborate a little bit further on the thought process there? Obviously this transmission ROE question has been lingering across the sector. I just want to make sure we heard you right as to how you’re thinking about the various FERC asset classes.

Yes, so obviously we did the Trans Bay acquisition, that’s not in the midwest or the southeast, and we do on a long term basis like FERC regulated assets, notwithstanding the recent ROE decision on the MISO transmission owners. Listen - I think there’s been--you know, obviously that’s an open docket at FERC right now. I probably can’t comment on what I think the outcomes are going to be there, other than to say I do believe FERC regulation will be constructive in the long term, and we think in the long term it’s a good place for us to deploy capital.

Maybe Jim, if I can, one more quickly on ESG. As you think about establishing targets and becoming, perhaps, more prescriptive and being a leader on this front, how do you think about being more specific on carbon? I know this comes up a little bit, but I’m curious on the thought process there. I know it’s also complicated, too.

Sure. I think we have been pretty specific about what our 2025 goal is, which is--remember, all of these discussions are about percent reductions. We started at an enormously lower level than the rest of the industry on just base CO2 emissions per megawatt hour generated, so any of the goals that we lay out, which our goal is a 67% reduction off our 2005 base by 2025, I think if you went back and you looked at the 2005 U.S. average and compared our NextEra rate in 2025 to that 2005 average, I’m going to give you a number and everyone is going to go check me on it, that would be an 85% or 90% reduction relative to the 2005 U.S. average CO2 emissions rate. We are going to significantly decarbonize our company and our emissions, and I’m really excited about the goals we’ve set. I think they are very doable, and what I’m most excited about is the role that we can play both in Florida and in the rest of the country in terms of leading the way to decarbonize not just the electric sector but the transportation sector. There’s lots more to do, as I said in my prepared remarks. I think the country has a lot more to do, and the great news for the country and the economy is you can be clean and low cost at the same time, and whatever we do will be for the benefit of the customers and it will drive good economics, better GDP growth for the country, lower costs, and obviously a better environmental profile.

Thanks for the time. I appreciate it.

Our next question comes from Shahriar Pourreza from Guggenheim Partners. Please go ahead with your question.

Hey, good morning guys. Just on the near backlog, it’s obviously very strong again, so I’m just trying to get a sense, Rebecca, on how much of that backlog increase, mainly on the wind side, was attributed to a pull forward of projects with the modest PTC extension versus actual incremental opportunities you’re seeing as we think about modeling forward.

Yes, I don’t think it’s very much. I think it’s early--obviously the PTC extension happened very, very late in 2019, so I don’t think we’ve seen any impacts from it whatsoever, coupled with the fact that it’s quite a number of years down the road. It doesn’t affect the profile of the PTC in the next three years, which is really what was driving a lot of our customers’ actions. In terms of overall demand and how that’s reflected, as we’ve said in the past, we thought 2020 was going to be a significant development year - clearly it is for wind, and that 2021 is more likely than not to be roughly comparable with where we were in 2019, and we continue to see really strong interest from our customers about wind in the long term, as they should be. As Jim highlighted, the cost of wind and solar projects out in the mid-2020s, assuming there are not any meaningful extensions of the incentives, which is an assumption at this point that should be checked, but assuming those incentives are not extended, are very competitive versus existing coal and nuclear plants and some less efficient gas-fired plants, so economics should continue to drive decisions for our customers for many, many years to come.

Got it. Then just lastly, thanks for the incremental disclosures around Gulf. Is there anything you can maybe provide directionally on the base assumptions you’re assuming in ’22 as we’re thinking about your EPS guidance, i.e. maybe from a regulatory construct or even addition to spending opportunities, like the extension of SoBRA. Is there anything you can provide directionally on how you’re thinking about this?

Not much beyond what we’ve already talked about in terms of everything that’s built into our expectations for 2020 through 2022, and as you recall from the investor conference materials, we did lay out a lot of the details for both businesses through 2021, and of course more detail for Energy Resources out in ’22. But the fundamentals are very consistent with what we’ve been doing for a long time on the regulated businesses - again, focusing on good capital investment that adds value for our customers and taking cost out of the business to ensure that we have very thoughtful views on customer bills, and in the case of Gulf Power targeting a meaningful decline in the bills out to the mid-2020s. So keep doing what we’re doing, and we couldn’t be more excited about the growth opportunities for all of the businesses that lay out in front of us.

Got it, so stay tuned around the cap structure and the reserve amortization and how you’re thinking about chewing up between the two utilities?

Absolutely.

Okay, great. Congrats guys.

Thank you.

Our next question comes from Michael Weinstein from Credit Suisse. Please go ahead with your question.

Hi, just [indiscernible] on behalf of Mike. Thanks for taking the questions. Just a check on the battery growth you’re talking about, can you talk about these reductions you’re seeing on the battery systems for the projects in the pipe, and would it be possible to quantify the scale of opportunity for retrofits on existing sites, either at NEER or at NEP?

In terms of battery cost, we’ve laid out some of our thoughts and expectations, I think most recently in our EEI investor presentation. We haven’t broken out a lot of the detail between battery back and the rest of the balance of system costs, but everything that we’ve laid out in terms of where we’ve seen the market declines coming from in aggregate has really started to materialize, and whereas two years ago we were surprised at how much faster costs were coming down, we’ve gotten more aggressive with our assumptions and now they’re roughly consistent with what we were thinking. We continue to be very optimistic longer term about batteries, and as the whole industry has talked about, it’s really not about the power sector. It’s being driven much more by the electric vehicle sector, and those drivers appear to be pretty clear for quite a number of years down the road, which is really driving the manufacturing efficiencies and scale that we’re seeing on a battery pack side. So really excited about optimistic about where that business is headed.

Got it. Could you just comment on the retrofit opportunity for either NEER or NEP for batteries, and would it be possible to get the tax credits on adding storage to an existing solar project?

You know, it could obviously be a significant opportunity coincident with the significant deployment of [indiscernible] particularly where the penetration is high, adding batteries to existing solar sites could be very advantageous. To the extent that they’ve elected the ITC and ultimately are being used to charge the battery system, yes, they would qualify for ITCs as long as we meet certain conditions. It’s a terrific opportunity for the team, but it’s really consistent with what we’ve been thinking about for the overall market opportunity and what we’ve been highlighting for quite some time now to investors.

Got it. Just one last question from me, if you could talk about the impact on interest rates on NEP’s ability to execute the convertible refinancings. Thank you.

It’s been terrific. A low interest rate environment is obviously terrific for both of our businesses. We love low cost of capital to be able to deploy these solutions as economically as possible for both our customers on the Energy Resources side, as well as regulated utilities and of course also for NextEra Energy Partners. It’s been terrific.

Thanks.

Ladies and gentlemen, with that we will conclude today’s question and answer session, as well as today’s conference. We do thank you for attending today’s presentation. You may now disconnect your lines.