Good morning, and welcome to the NextEra Energy Inc. and NextEra Energy Partners LP Q4 and Full Year 2018 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. And now, I would now like to turn the conference over to Matt Roskot, Director of Investor Relations. Please go ahead.

Thank you, Kathy. Good morning, everyone, and thank you for joining our fourth quarter and full year 2018 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. Jim will provide some opening remarks and we will then turn the call over to John for a review of our fourth quarter and full year results. 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 and the comments made during this conference call, in the Risk Factors section of the accompanying presentation, on 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

Thanks, Matt, and good morning, everyone. As John will detail later in the call, 2018 was a terrific year for both NextEra Energy and NextEra Energy Partners. By successfully executing on our plans at both FPL and Energy Resources, NextEra Energy was able to achieve our target 2018 adjusted EPS of $7.70, an increase of approximately 15% over our 2017 results. Dating back to 2005, we’ve now delivered compound annual growth and adjusted EPS of over 8.5% which is the highest among all top ten power companies who have achieved on average compound annual growth of roughly 3% over the same period. We delivered a total shareholder return of over 14% in 2018, outperforming the S&P 500 by nearly 19% and the S&P 500 Utilities Index by more than 10%. Since 2005, we have outperformed 86% of the S&P 500 and 100% of the other companies in the S&P 500 Utilities Index while continuing to outperform both indices in terms of total shareholder return on a one, three, five, seven and ten year basis. We are once again honored to be named for the 12th time in 13 years number one in the Electric and Gas Utilities Industry on Fortune’s list of world’s most admired companies and to be among the top 25 of Fortune’s 2018 Change The World list. During 2018, FPL successfully executed on its ongoing capital plan including the continuation of one of the largest solar expansions ever in the U.S. and achieved its O&M efficiency targets to further improve its already best-in-class customer value proposition. As a result of continued smart investments to benefit our customers, FPL’s typical residential bill is more than 30% below the national average, the lowest of all 54 electric providers in the State of Florida and nearly 10% below the level…

Thank you, Jim. First I want to thank Jim for providing me the opportunity to lead Energy Resources for the last seven-and-a half years and I want to thank those of you on the phone today who I have had the privilege of meeting and interacting with since I began at NextEra Energy in 2008. I thank you for the interactive dialogue and the opportunity to continue to tell our story and today there is no doubt that Energy Resources is not only the largest developer, operator and owner of renewable energy in the world, but also it’s most profitable and innovative. And as I tell our employees and customers, I believe we are just getting started. I strongly believe that the renewable energy opportunity is actually just beginning. The combination of energy storage with wind and solar is a revolution which will expand the opportunities for renewable and is very exciting. I am profoundly comfortable in the continued success of Energy Resources, NextEra Energy Partners and NextEra Energy. I want to thank all of our employees at NextEra Energy for providing me the opportunity to work alongside them. I have learned and lacked much over the years and will miss the innovative, fast-pace environment in which we work. I have no concrete plans as of now, but I am excited about pursuing new adventures and honing old skills. At the very least retirement will allow me to pursue one of my great passions, fishing. Thanks again to all of you who have helped guide me and our company successfully over the years. Our company is in terrific shape and I congratulate and applaud John and Rebecca on their new roles, well deserved. I will now turn the call over to John.

Thank you, Armando and Jim. Let’s now turn to the detailed results beginning with FPL. For the fourth quarter of 2018, FPL reported net income of $407 million or $0.85 per share, up $0.01 per share, compared to FPL’s adjusted earnings in the prior year period. For the full year 2018, FPL reported net income of $2.2 billion or $4.55 per share, an increase of $0.46 per share versus FPL’s adjusted earnings in 2017. Regulatory capital employed increased by approximately 12.4% for 2018 and was a principal driver of FPL's adjusted net income growth of 12.5% for the full year. FPL's capital expenditures were approximately $1.5 billion in the fourth quarter bringing its full year investments to a total of roughly $5.1 billion. FPL’s reported ROE for regulatory purposes was 11.6% for the twelve months ended December 31, 2018, 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 restored an additional $240 million of reserve amortization leaving FPL with a year-end 2018 balance of $541 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 up to two additional years creating further customer benefits by potentially avoiding a base rate increase in 2021 and perhaps 2022. Before moving on, let me now take a moment to update you on some of our key capital initiatives at FPL. During 2018, FPL completed construction on schedule and on budget for the first eight 74.5 megawatt solar energy centers developed under the solar base rate adjustment or SoBRA mechanism of the rate case settlement agreement. In 2018, we also deployed the first two projects under FPL’s 50 megawatt battery storage pilot program…

[Operator Instructions] And we will go first to Stephen Byrd of Morgan Stanley.

Hi, good morning.

Hi, good morning, Stephen.

Armando, congratulations on your retirement and John and Rebecca, congratulations on your new role. All very well deserved.

Thank you, Stephen.

I wanted to just talk, as you can imagine about California for a minute. If all of the project that essentially withheld cash to the – arguably to the extent that they would be permitted I wanted to make sure I was clear, how much CAFD would be restricted? You mentioned 18% related to several projects. But I wanted to check if every single piece of debt relating to PG&E sort of exercise their cash, cash strap right, what amount of CAFD would be impacted?

Yes, so, again it would comprise roughly 18% of our runrate CAFD for 2019. We have included a page in our investor material that – Page 41 that details the CAFD from each of these projects totals about $90 million.

Understood.

So, let’s go back though, to what I just said, which is that, first of all, even if all of that cash is trapped, we expect to be able to meet our financial expectations 12% to 15% growth in distributions per unit through 2023, we expect we will not have a need to issue common equity until 2020 at the earliest. So our financial expectations are not impacted by any means. The second, the impact of PG&E and SCE cash flows is going to diminish over time. So by the time, we get to the end of the period of our financial expectations, the cash flows from these projects is not going to be significant contributor to the overall CAFD. And then, I think you have to take a look too, Stephen at what is happening in California. I mean, obviously we are not going to sit on our heels. We are going to pursue all avenues with our noteholders to try to free up that cash and we will work vigorously to do that as I said in the prepared remarks.

That all makes sense. And John, in terms of any exposure to other California utilities, I am thinking of Edison International and Sempra, just wanted to check both at NEP and NextEra would you mind just speaking briefly to your other California exposure?

Yes. So, on our other California exposure with SE, I mean right now, we don’t have any, because there is, none of those finances are in default other than the SCE contract that I mentioned which is about 250 megawatts on Desert Sunlight because that’s part of a portfolio financing. But again, the impacts of that are included in the numbers that I gave you earlier. So, the 250 impact is included in the $0.13 to $0.15 at NextEra Energy, it is also included in the roughly 18% of total CAFD for 2019.

Okay. But do you have any CAFD exposure not in default, but does – where the offtaker is a subsidiary of either Edison International or Sempra?

No, zero.

At NEP

At NEP

Okay, great. Just wanted to check.

Zero.

At NEP, okay. And at NextEra, is that significant or is it relatively small?

It’s relatively small. I mean, the contributions that we would have from SCE contracts are roughly $0.08 and that includes the Desert Sunlight 250. So, without it it’s about $0.06. So small.

Understood. Sorry for all the questions on California, maybe just one last one. You filed at FERC to sort of secure your legal rights under the contracts. Would you mind just to kind of briefly talking through your legal arguments around ensuring to protect your rights under your contract?

Yes, I mean, the bottom-line is, we think the majority of those contracts have Mobile-Sierra provisions and that these contracts are in the public interest and that the federal power act preempts what the bankruptcy court can do and the FERC has the final say assumption or rejection.

That’s very good. That’s all I have. Thank you very much.

We will now go to our next question and that will come from Steve Fleishman of Wolfe Research.

Yes, good morning. So, just first on the NEP plan. I assume your – embedded in there you are assuming that you can continue to get financing other than equity, I assume including some of the – like private financing, converts and such that you gotten in the past. How do you feel about the ability to get those with this California uncertainty?

First of all on the financings like the Blackrock financing, still feel good about our ability to be able to execute against those types of financings and again, we also have a lot of debt capacity at NEP that we can always fall back on as well.

Okay. And then, just separate question off-topic, could you update your interest in – thoughts and interest in Santee Cooper?

Yes, thanks, Steve. This is Jim. We did put a proposal in to acquire Santee Cooper. I think I've been very clear that we have been interested in pursuing Santee Cooper over the last 18 months or so and we did put a proposal in to acquire it and we look forward to the next steps of the process that the committee is going to be going through.

Do you have any idea when you will get an answer?

I think this is a process that ultimately have to – if the legislature decides to sell Santee Cooper, it's going to have to actually pass a law to do so essentially and the legislative session ends at the end of May or June in that time period. So, it’s going to play out over the next several months. That’s the bottom-line, Steve.

Okay, Armando, best to you. Thank you.

Thanks, Steve.

And now we will go to Julien Dumoulin-Smith of Bank of America Merrill Lynch.

Hey good morning. Congrats Armando. Can you hear me?

Yes, thanks, Julien.

Good. Well, just one quick clarification on the FERC strategy on NEP and then move away from it. But, just if there is indeed some kind of stay, how does that impact the [technical faults] [ph] and the possibility of distribution. Just want to clarify that. Or cash from PG&E for that matter.

Yes, from a FERC standpoint, if there were a FERC – well, first of all, FERC were to ramp the relief that we are seeking by the end of the week. I mean, I think it just would grant FERC the final say and what happens to the contract. So I don’t think it really has any impact on the status of the existing financings.

Got it. Okay, fair enough. Excellent. And then, just want to turn back to FPL real quickly. Specifically, on the last call, you talked about having – shall we say, adequate reserve amortization. You also talk about usage trends et cetera and the ability to potentially avoid base rate increases in 2021 and 2022. Where does that stand now? How if at all is that impacted by some of the latest events? Just curious on how you are positioning FPL into the longer term here?

Yes, I don’t think it’s impacted by any of the current events. We feel very good about our position in front of the OPC if that was – Julien, is what you are referring to as other events. We’ve ended the year…

More specific, quite a bit, what are you expecting to tell something more formal about a further rate stay out?

Well, here is where we are right now. We have $540 million of surplus ending the year. We have – we believe and expect to have enough surplus to potentially stay out of rate case for 2021 and 2022. We will make those strategic rate case decisions later, but we have a lot of flexibility and that flexibility is very good for Florida customers, because the longer we are able to stay out, the longer period of time that build stay where they are, and then I’ll see a bill impact from another rate case.

Julien, this is Jim. I think you can expect us to give you all - some more thoughts on that fronts in the June investor conference.

Excellent. And then, maybe, Jim, this is a quick question, your direction, but as you think kind of conceptually, first you’ve given the commitments from the last Analyst Day around midstream, potentially some of the latest developments you’ve already alluded to around renewable especially some of the RPS expansions that might be coming in the next six months prior to the June Analyst Day. Could you give us a little bit of your latest thought process around your future investment prospects just a little bit more holistically?

Yes, sure. I mean, when you look at our capital investment plans, I think they are over $12 billion this year. When you look at what we are doing at FPL Gulf and Energy Resources combines, something in that range, we are as of the year before last. We don’t have the details yet on last year. We were the fourth largest investor of capital in the United States in any industry, only AT&T, Verizon, and Amazon invested more in this country than we did in terms of capital investment. And we are going to continue to do what we have done for more than a decade which is invest smart capital at FPL to improve the value proposition for customers and we are going to – we are very excited about and we will have more to say about what we are doing at Gulf at our June meeting. But we have hit the ground running. Very excited about what we are doing in terms of what investment prospects are on the Gulf front and we are moving aggressively forward on that pretty much on day one. And at Energy Resources, it is the best renewable environment that we have ever seen and we are going to continue to invest in renewable going forward and as we see pipeline opportunities - contracted pipeline opportunities we will continue invest in those as well. So, I don’t think you should expect a big change in our thinking in June. I think you will just see us frankly go forward our vision through the amount of investment and the amount of customer improvement that we are going to bring to our customers as well as the amount of what we are going to do in terms of earnings going forward.

I’ll leave it there. Thank you very much.

Thanks, Julien.

We will now go to Greg Gordon of Evercore ISI.

Yes, congratulations to all three of you, it goes without saying you're all terrific at your jobs. And Armando, someone asked me to ask you, if you could get circle back to people and tell us where you’d like to fish that would be good now that you are going to have lot of time.

That’s common.

Couple questions. Can you just go back over what you said about the levelized cost of energy for battery with storage and what I am particularly interested other than just a restatement of that is what delivery year you see that crossover happening on sort of a large enough scale to tip this sort of disruptive transition that you are talking about?

Yes, so, what we covered in Jim’s remarks, we will start with the wind. So, wind, we are expecting to be right around $20, $25 a megawatt hour. I would kind of put that we have some PTC helping there, this is a no incentive look. So call it, when those incentives expire more towards the middle of the decade that 2024 timeframe. So, $20, $25 a megawatt for wind and we think batteries are going to be about $0.05 to 7.5 cent adder. And so, that’s how we were able to – I am sorry, per megawatt, that’s how we are able to get to the ranges that Jim provided for wind. So just take the 20, 25 add on 5 to 7 for battery storage. For solar, don’t forget, we have the solar ITCs at 30% through the end of 2023. And so, when those ITCs go away and they don’t ever go away, right. They go from 30% to 10%, we are expecting that solar given how quickly panel costs are coming down, balance of panel costs are coming down, solar is a product we are going to be selling in the $25 to $30 a megawatt hour range and then the same adders for batteries is how you get to the math that we are in Jim’s remarks and those are the expectations we have. And the solar pricing isn’t really all that far off from what we are doing in the day. So that’s not much of a leap per se.

Okay. That makes sense. I appreciate it and last question, you didn’t mention it explicitly anywhere in your comments, but the balance sheet capacity of $5 billion to $7 billion, I mean your credit metrics and the position on the balance sheet seems unchanged from last quarter. So I would assume that you still feel like that balance sheet capacity is in place?

Yes, and Gordon – Greg, one of the things that we said there is that, we had 5 to 7, right. We bought Trans Bay, that was $1 billion. So we took that down, call it 4 to 6 and we are earmarking probably another $2 billion of CapEx opportunities for FPL. We’ll update what – where exactly that will be used at our June conference. But certainly some of that money is going to go the 30-by-30 initiative that we already announced earlier last week.

Got you. Great update. Thank you guys.

We now will go to Michael Lapides of Goldman Sachs

Hey guys. Armando, congrats on your announcement and to the rest of the team to John, Rebecca, as well. Great to see people move around and get new opportunity. One question about Florida ballet initiative that is being pushed right now. Can you just talk about what is actually in that ballet initiative? What it would mean if it would have garnered the votes and what’s the process from here?

Yes. I am going to turn that question over to Eric.

Hey, Michael. How are you doing today?

I am great, Eric. Thanks for taken the question.

Yes, no problem. The ballet initiative, it’s being primus about helping Florida customers, but it’s not about it all. When you look at it it’s really about furthering the business interest of the few folks including a retail electric provider that’s located and based out of Gainesville, that markets power currently outside of Florida. This is a group, they have tried unsuccessfully to get this proposal in front of voters through the Constitutional Revision Commission and also through the – unsuccessfully they tried through legislation in Tallahassee. Their efforts have been unsuccessful in the past because, frankly, Florida's regulated electricity market works really well. When you look at the state, the power prices are among the lowest in the nation with electricity that’s among the cleanest and most reliable in the country. As an example, Florida Power & Light offers our customers bills that are more than 30% lower than the national average. Lower than bills in 45 states. And, as John said earlier, we are just recognized third time in four years as t he most reliable electric provider in the country which is you could appreciate in a state like this is important when our customers need us most particularly during times of storms and hurricanes. So playing simply, it’s a proposal that just – it actually will lead to increases in electric rates across a state, reduced reliability, particularly during periods of storms, hurricanes, things of that nature. And I think it’s going to compromise the clean energy goals that have been announced including the one we just did on FPL’s 30-by-30 initiative as the unregulated star producers would, they’d have no restrictions on the type of generation that would build. Also, I think it’s important to understand on these type of things that consumer protections are…

Got it. Thank you, Eric. I appreciate that. I have one other for either, Jim, John or Armando and this is more longer term. When you are watching what's happening in California with PG&E with that is an international or SoCal Ed and put California in the context of being the nation’s largest renewable market and with the most aggressive renewable target. How do you think this impacts the broader U.S. development of renewable if one of t he largest markets is going through some turmoil? And how do you think about that kind of longer term?

So, great question, Michael. I think, one of – the first thing I would say is, California has some very aggressive renewable targets and some very aggressive climate change goals. The turmoil around the credit of the most important counterparties in the state is, to say at least does not conducive to continued capital investment to continue to further those goals. And so, I think it’s a very – from an energy policy standpoint in the State of California, it’s going to be very important for the state to recognize that and to recognize that there has been significant capital investment by companies from around the world to make that happen and to the extent that that investment is somehow diminished by these credit issues. I think that's going to have a real impact on their market going forward and I think the state understands that and it’s one of the elements of the things that they are grappling with now as they deal with the fallout from the tragic fires as well as some of the other issues that they have been facing. So, the good news from a market standpoint is, California was obviously the biggest market in the country ten years ago in the renewable business. It isn’t any more. It’s an important market, but it’s no longer the most important market in the country and with the cost declines in renewable, nearly every state in the country is in the – we have an opportunity to do business and I mean, we have – my last count, we have development going on in 48 states right now. We don’t have operating projects in 48 states, but we have development going on in 48 states. So, while I think it’s very important for the state to address these issues from a climate change standpoint going forward, I think the renewable market is going to be robust going forward because it is just gotten so big and the cost declines have expanded the market to such a dramatic fashion.

And with that, we'll go now to Jonathan Arnold of Deutsche Bank.

Yes, good morning guys. Thanks for taking my question.

Hey, good morning, Jonathan.

A quick question on – this is how I think about you talked about managing through the situation at NEP in context of the growth rate. So, as we think about things you might do that would fall under that header, you mentioned pushing to have the cash released. And I guess you could drop down other assets more quickly, you could let the dividend, thrift down in the range and still be within 12 to 15. Is there anything else I am missing? And which of those kind of alternatives would you either be planning to use or not use?

Yes, I think I’d go first of all back to the prior – one of the prior questions about are there other attractive financing vehicles available? One, yes, we think they are. But, two, even if we had to finance additional drops to meet our financial expectations with existing debt capacity that we have, we can do that. We're fine. And so, really the way I would answer that question is that, obviously we’ll vigorously try to put it to negotiate something what the holders that would allow us to end the DOE. Don’t forget the DOE is in these projects that will allow us to free up the cash, we can’t do that. We have debt capacity, plenty of debt capacity at NEP. Energy Resources is coming off with a best development year in its history. We have very clear visibility to growth prospects going forward and there are many levers in the vehicle. So, we are comfortable in our ability to manage through even a worst case scenario, which would be where the cash is trapped until a final call is made on the contracts.

Okay. So, John, I think, to be clear, you said that in some of them the cash is trapped just by virtue of PG&E saying that it may file. Is t hat correct? And I am curious.

Yes. But not to get into the technicalities, but the – one of the financings has a provision that basically just says that there is corporate action taken in further and so the bankruptcy which are largely the filing of the 8-K to be that would constitute - potentially constitute an event of default.

So that was just on one of them?

That’s on the Genesis financing.

Okay. And then what would it …

It’s on some of the other need financing, but the need financings are small. It’s a series of four five projects that don’t have any meaningful contribution earnings.

So, that would be a sort of a judgment as to what would definitively constitute that not occurring presumably?

Yes, I mean, it doesn’t happen and I think it’s back to its business as usual.

Jonathan, let me just add, let me add something. I mean, obviously I think it’s appropriate for the focus on the PG&E assets and the cash flows. But we still have at both at NextEra Energy Resources and at NextEra Energy Partners, we still have a lot of projects that are not PG&E and Southern California Edison projects. It have significant cash flows and there are still many parties that are interested in attractive financings, attractive for us and presumably for them that we are talking to. And it's not necessarily about what’s the risk of PG&E and Southern California Edison. It’s about, hey, what other assets are available for us to be able enter into those types of financing. So, I think, while it’s appropriate to have some focus on what’s going on with PG&E, we got to remember that NextEra Energy Resources has had its – we have 6600 megawatts of origination this year which is a record year and that’s twice the amount we had last year which was a record year and I got to tell you, we feel at least internally, very comfortable, as John said, that even if these PG&E cash flows are tied up in these debt financings, that we can meet our current expectations and one of the reasons that we feel that way is because we are talking to the market, and two, origination is going very well in Energy Resources.

Great. That’s helpful perspective. Thank you, Armando. And then, could I just one other thing. With the Gulf and Florida acquisitions having closed, sooner, I think than maybe you thought, is there – but you're not talking of any accretion in 2019. It would just sort of help us sort of understand the bump in 2020, what’s driving that and why nothing this year?

So, Jonathan, obviously, we got to done it little earlier than we thought, but we also always assume that we have some cost to achieve t his year to get there. So, we are being conservative as we always are and we feel very good about our plans at Gulf and you can bet I am pushing the team very hard to get things done even faster than we’ve laid out. And so, I am really optimistic about the future for Gulf in this company and in our ability to bring real value to their customers and real value to shareholders. So, very excited about it. We will have more to talk about it in June. But, remember we don’t have any cost to achieve in any of these numbers in 2019, so.

Thank you very much.

And with that, ladies and gentlemen, that does conclude today’s conference. We want to thank you again for attending today’s presentation.