Good day, everyone, and welcome to the NextEra Energy and NextEra Energy Partners 2016 Third Quarter Earnings Release Conference Call. Today's conference is being recorded. At this time for opening remarks, I would like to turn the call over to Ms. Amanda Finnis. Please go ahead, ma'am.

Thank you, Amelia. Good morning everyone and thank you for joining our third quarter 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, Senior 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 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 factor 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 website, www.nexteraenergy.com and www.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 will turn the call over to John.

Thank you, Amanda, and good morning, everyone. Before I begin my remarks on our third quarter results, I would like to say a few words about Hurricane Matthew. As you know residents of the Caribbean and South-Eastern US were recently impacted by the severe effects of this dangerous and deadly storm. Our deepest sympathies are with those who have been impacted by Hurricane Matthew's widespread destruction. Since 2006, FPL has invested more than $2 billion to build a stronger, smarter and more storm-resilient energy grid. Earlier this month when Hurricane Matthew affected FPL's service territory along Florida's East Coast, these investments benefited customers by resulting in fewer outages and faster restoration. In response to the hurricane, FPL deployed more resources pre-storm than ever before, which, together with its grid investments, enabled the company to restore service to 98.7% of the 1.2 million affected customers by the end of the second full day after the storm left our service territory. At the height of restoration, FPL's workforce numbered 15,000, including our own employees along with workers from contracting companies and our partner utilities across the country. I would like to personally thank each member of this team for their dedicated service during this critical period for our customers. In addition, earlier today NextEra Energy announced it has reached an agreement for an affiliate to merge with Texas Transmission Holdings Corporation, including TTHC’s approximately 20% indirect interest in Oncor Electric Delivery for total cash consideration of approximately $2.4 billion. In addition, we have reached agreement to acquire the remaining 0.22% interest in Oncor that is owned by Oncor Management Investment, LLC for total cash consideration of approximately $27 million. If approved, these transactions, when combined with NextEra Energy’s previously announced merger with Energy Future Holdings for its 80% interest in Oncor, would…

[Operator Instructions] And we will take our first question from Stephen Byrd with Morgan Stanley.

Hi, good morning. So I wanted to touch on what you, John had mentioned about repowering opportunities, very pleased to see the magnitude of that. I just wanted to make sure I understood your commentary correctly. You were indicating that essentially the capital costs would be lower than the new build which certainly makes sense, but the return would be essentially, as if we are at new build investment levels, so therefore it looks like a relatively attractive return on capital, did I get that right?

You got that right, so the CapEx is roughly half of the new build and the return is superior to new build transaction.

Okay, great. And in terms of just the kinds of steps you need to go through to actually get these repowerings done, how should we think about execution risk, counterparty negotiations, how much is required in terms of counterparty negotiations, what sort of things we would be thinking about in terms of execution risk?

Well, on the execution side, we have to negotiate with our counterparties. Some of those counterparty negotiations will include a blend and extend of the existing agreement, but given that the CapEx is again roughly half of the CapEx for new build, and returns are a bit higher, there is a little bit of room for those negotiation with counterparties. That's one of the main execution risks that we have. We also have to study the interconnection agreements to make sure that to the extent we’re providing additional capacity that we have the ability to put that additional capacity online. Those are the main execution risks around the repowering opportunities.

Okay, understood. And you’re laying out 2 billion to 2.5 billion of capital deployment opportunities, so we can sort of do the math to look at the total megawatts involved then I guess?

That's correct.

Okay. Sorry, and just one last question, and then I’ll get back in the queue. We've seen a number of companies announce their interest in becoming big in wind, we saw one company this morning lay that out. I'm just curious if you could, at a high-level, speak to competitive trends you’re seeing, the kinds of barriers to entry that you see from your perspective, given you’ve been one of the biggest players in wind for a very long time, I'm interested in your perspective on that?

Sure, Stephen. I'm going to turn that question over to Jim.

So, Stephen, we've had competitors in this business for 15 years. They've come, they've gone, there is no one in this industry that has the greenfield capabilities that we do, plenty of folks who have -- plenty of folks lay out the fact that they want to be in the wind business and really what they’re in is they are in the wind development project acquisition business at COD, which is frankly not really being in the wind business. Being in the wind business 70% or 80% of the value creation is in the organic development, the Greenfield development of those projects, and there is no one in the industry that has the pipeline that we do, that has the team that we do and the year in and year out track record. I don't, I worry about a lot of things, that's one of the, that’s like very, very low in my list of things that I worry about.

That's great. Thank you very much.

And we’ll take our next question from Matt Tucker from KeyBanc Capital Markets.

Good morning and thanks for taking my questions. Wanted to ask a few questions about the holdco debt capacity at NEP. I guess first, just curious what kind of changed since you provided an estimate. I think when you announced Desert Sunlight, that was about 75 million lower. I appreciate the math illustration you provided in the slides, but just wasn't clear what changed there. And then just how should we be thinking about how you’re going to look to utilize this debt capacity. Is the target something that you’d look to reach over the next 12 to 18 months, over the next few transactions or how much cushion would you like to kind of leave there for potential periods where you really don't feel like you can access equity and want to continue to make acquisitions?

Yes. So a few things. On the holdco debt capacity, remember that we’ve financed our July dropdown with largely debt. We then went ahead and equitized the September drop. The cash purchase price for Desert Sunlight was $218 million. We raised about $341 million in equity, which allowed us to pay down our revolver. That really was the main contribution to the additional holdco debt capacity to get us to 450 to 550. In terms of the cushion on debt capacity, I really think that puts us in an opportunistic and flexible position as to how we time future dropdown opportunities and as to how we finance those opportunities. So we will see how things progress in terms of the capital markets going forward, but that does give us flexibility. Also, you got to remember with wind assets, when we drop the wind assets in, you can think the leverage, about the leverage from tax equity being right around 45% to 55%. So we are dropping those out, so it’s down, they’re naturally creating additional holdco debt capacity at the NEP level.

Thanks, that's very helpful. And then lastly just your thoughts on the current wind outlook, are we completely past El Nino, are we seeing La Nina, just what you’re kind of seeing over the next 6 to 12 months or however far your outlook is?

Well, it's tough to look out 12 months and really come up with what an accurate forecast might look like, but certainly we saw return to normal with our third quarter results. So we will see how the fourth quarter progresses.

Thanks, guys.

[Operator Instructions] And we’ll take our next question from Jonathan Arnold with Deutsche Bank.

Good morning, guys. Two quick questions. One on the new contracted wind that is not repowerings, I noticed the 100 megawatts in ‘17 and ‘18, and then 500 is post ‘18, should we anticipate that most of what you do on the backlog is going to be longer dated going forward here or is that just -- these are the nature of some of these deals you signed this quarter, because I know you talked about being unsure whether tax credit extensions were going to push things a little bit out?

Hi, Jonathan. It’s Armando. I wouldn't read too much into that. It is just really the pace of negotiations. What I can say is that there is a lot of activity going on right now for both ‘17 and ‘18 and ‘19 and ‘20 in the contracting market. These two came in kind of at the right time for 2019. But I wouldn't read too much into that other than just timing.

There you’ve got things, irons in the fire still for ’17 and ’18?

Yes, absolutely. We still feel comfortable with the guidance for the expectations that we have provided to you and we reaffirmed today for ‘17, ‘18.

Great. And then just, you obviously had a strong third quarter. Last time you spoke publicly, I think you were talking down the second half a little bit versus the first half in terms of growth, and we have you at about 617 trailing 12 earnings. And I was curious why the guidance range, you didn’t take up the low end or is -- are there some challenges in Q4 that we should be thinking about or it feels like you’re tracking pretty well on the year?

Yes. Jonathan, we did have a good third quarter, but with the fourth quarter, we still do expect the growth to drop off a bit compared to what we saw with 2015 and we are targeting again to be at the upper end of our 6% to 8% range is the way to think about how we will finish the fourth quarter and the full year.

Okay. So you talked about some tax timing issues in the second half, is that more a Q4 item there or is that still?

There were some tax timing issues that had benefited the earlier part of the year. That's a part of it. There are some other smaller things as well, not any one thing worth calling out or mentioning.

All right. Thank you.

And we will take our next question from Colin Rusch with Oppenheimer.

Thanks so much. I've got two questions. Can you just give us a bit more detail on what's in, the receivable do from a related party at NEP? And then secondly, with the wind repowering opportunity, given the pretty dramatic price declines and battery storage with companies like LG and Tesla offering insulations below $400 a kilowatt hour now, how are you seeing that opportunity change and is there a meaningful [indiscernible] opportunity that you guys are seeing right now.

Yes. On the dual formulated party for NEP, recall that NextEra Energy provides credit support to NEP, but as part of that credit support arrangement, NextEra energy has the right to benefit from the cache sweeps by taking cash out of those accounts, which it has an obligation to put back in for the benefit of NEP. So that's what the dual formulated parties is. On the battery question, I will defer to Armando.

So we've been talking about batteries now I think for a couple of years and we keep saying that we would expect batteries to be a significant investment opportunity for us sometime earlier in the next decade and it’s tracking based on where we thought our expectations would be. We have roughly currently, well, I’m going to say, about 10 projects, 10 battery projects across the US and Canada, a little bit different technology in each one, but these are fairly small investments that we are making in battery storage, somewhere in the neighborhood of $6 million to $15 million is a potential average for each one of those investments. Whether it’s Teslo as you mentioned or whether it’s other estimates that you and us have seen, I mean battery storage will continue to come down significantly through this decade and we continue to believe that at some point in the next decade, I don’t know whether it will be earlier or whether it will be later, but battery storage will be commercially viable. The costs will come down enough and you will be able to strap it on with renewable technology, whether it’s wind or more likely solar and have a very competitive project in the renewable energy space.

And we’ll take our next question from Angie Storozynski with Macquarie.

Thank you. So I had one follow-up on the repowerings, so how does the 50% reduction of CapEx versus new build reconcile with the IRS requirement that is an 80% increase in the value of the turbine?

You can't do that reconciliation, Angie. It’s Armando, the way that the 80-20 works is obviously for others on the phone, if you were to go out and completely tear down a wind project and start over, you’d get PTCs on the new investment. Well, the IRS guidance allows you to do a whole bunch of work on those wind projects and 80% of the value that you are putting in. If you meet the 80% test, the entire investment qualifies as new production tax credits. It's based on a fair value method though, not based on a cost method. So when John answered the question before that it’s a lot less capital for repowering opportunities and the economic returns are just as good or better, he was talking about the costs that was going into the wind project, not about the 80-20 test.

So, Angie, this is Jim. Simply said, it's not 80% of the new build cost, it's 80% of the, whatever you think the value of the existing asset is, and the existing has been typically depreciated by 10 or 11 or 12 years. So it's -- what you’re trying to do is apples and oranges.

Okay. And then all of the purchases that are going to be repowered or considered repowering targets have PPA, so there would be no merchant repowering?

Actually, Angie, all of the projects that we announced today that we’re moving forward on, on the repowering side are all projects that we have long-term hedges on. We have not announced any repowering of projects that have power purchase agreements. So when John mentioned that our expectation that this could be a $2 billion to $2.5 billion program, virtually all of the remaining opportunities that we’re looking at are under power purchase agreements and therefore we would have to have discussions with the counterparty as John mentioned earlier to make sure that we can move forward on those. I feel comfortable that we would move forward on a vast majority of those and that's why we gave CapEx guidance on the total program today.

Okay, thank you. And the last question on NEP, so I understand that you have the corporate debt capacity you can use to finance growth, but as you -- you’re the only one really with active IDRs among yield co and those IDRs require simply more and more assets to be dropped down in order to meet this 12% to 15% growth in distribution per share for LP holders and as such basically your funding requirements are growing quite considerably, as you move to high spreads. Would you consider doing away with IDRs in case there is no recovery in the liquidity in the yield co market on the equity side or do you feel like between co-financing via NextEra or private placements, you can actually price that asset to achieve the growth and pay IDRs?

Angie, the way we look at it, I think the first thing to look at when you’re dealing with a yield co like ours, with a strong sponsor is how many projects, I mean, what's the pipeline at the sponsor to be able to drop down projects, do you have a long pipeline of opportunities to be able to drop down into in this case, NextEra Energy partners, because if you have that, the current economics certainly work. There are, you talked about holdco debt capacity at the beginning of your discussion. I hope it’s clear, I think we've made it clear that we will not be reaching at least our preliminary holdco debt capacity target in 2017. We are slowly increasing the debt capacity at NextEra Energy Partners, so by the end of 2018, at least preliminarily, we believe that we would get to the holdco debt capacity, which gives us, in this market, a tremendous amount of flexibility as to when to be able to raise equity and when to be able to raise additional holdco debt capacity. I think it's just too early in the life of NextEra Energy Partners to really start talking about what we’re going to do in the future with IDRs. We feel comfortable with the way NextEra Energy Partners is working right now, it brings a lot of benefits to NextEra Energy. We’re certainly not comfortable with where it’s trading. I don't think any management team is ever comfortable with where their units are trading, but we feel confident that we, at NextEra Energy, will be able to have a sufficient number of projects for a sufficient number of time in order for NextEra Energy Partners to be successful long-term.

And we will take our last question from Stephen Byrd with Morgan Stanley.

Yes. I just had one follow-up, in terms of the market for tax equity tax appetite, I wondered if you could just give a commentary in terms of high-level overall access, your position there, just your take on the state of monetizing tax attributes?

Yes. We have seen the tax equity market for our projects continue to hang in there, Stephen. We've seen no issues. I mean of the things that we try to do going into any one year is estimate the amount of tax equity needs that we will have and then we allocate those to our tax equity providers going into the year. So really, it has not been an issue for us with regard to our projects.

And with no further questions in the queue, that does conclude today's presentation. Thank you for your participation. You may now disconnect.