Good morning, and welcome to the NextEra Energy Inc. and NextEra Energy Partners LP Q1 2019 Earnings Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Matt Roskot, Director of Investor Relations. Please go ahead, sir.

Thank you, Dorie [ph]. Good morning, everyone, and thank you for joining our first quarter 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. Rebecca will provide an overview of our results and our executive team will then be able 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 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 Rebecca

Thank you, Matt, and good morning everyone. NextEra Energy delivered strong first quarter results and is well positioned to meet its overall objectives for the year. Adjusted earnings per share increased approximately 12% year-over-year reflecting successful performance across all of our businesses. FPL increased earnings per share $0.20 from the prior year comparable period, which was driven by continued investments in the business for the benefit of our customers. The roughly 1,750-megawatt Okeechobee Clean Energy Center, which is among the cleanest and most fuel efficient power plants of its kind in the world, entered service at the end of the first quarter on budget and ahead of schedule. During the quarter, FPL also successfully completed the construction on schedule and on budget of nearly 300 megawatts of cost effective solar projects built under the Solar Base Rate Adjustment or SoBRA, mechanism of our settlement agreement. By executing on smart capital investments such as these, FPL is able to maintain our best-in-class customer value proposition of clean energy, low bills, high reliability and outstanding customer service. FPL’s typical residential bill remains nearly 30% below the national average and below the level it was in 2006, while our service reliability has never been higher. The integration of Gulf Power, which we closed on at the start of the first quarter, continues to progress smoothly. We are now focused on ensuring we successfully execute on key systems and capital initiatives. We have already begun to see significant benefits from our focus on operational cost effectiveness with base retail O&M cost down nearly 5% year-over-year. Consistent with our focus at FPL, we are also identifying smart capital investments to further reduce costs and improve overall customer value proposition. By executing on this strategy, we expect the acquisition to benefit customers, shareholders and the Florida…

[Operator Instructions] At this time we'll pause momentarily to assemble our roster. And we will take our first question from Stephen Byrd at Morgan Stanley. Please go ahead.

Hi, good morning.

Good morning, Stephen.

Wanted to talk about Resources, you continue to put up impressive growth numbers there. I noticed BOT build-own-transfer continues to show up. Would you mind just talking at a high level in terms of trends, with respect to BOT, do you see a trend in that direction, is this more just what you expected it's going to be a part of the mix, but not a not a growing trend? What are you seeing in terms of the BOT side of the market?

Stephen, as you know, we've seen the tremendous growth in our renewables opportunities across the board, and we have historically benefited from sales to IOU customers, munis and co-ops, as well as a growing demand from C&I customers. Two of those groups, the munis and co-ops, as well as the C&I customers, generally are not that interested in build-own-transfers or owning the renewable assets. They are very happy to take advantage of all of the advantages that we bring to the table, including of our cost of capital, our scale, our ability to construct and deliver these projects, and ultimately operate them over the long-term at a low price. Our IOU customers are increasingly building renewables and wanting to procure and incorporate more into their portfolios. So, as the pie has gotten bigger, there is probably a nominal number of megawatts that are increasing in terms of build-own-transfers, and our team has been able to successfully offer to our customers a multitude of benefits to them of bringing a very -- all of the advantages that we bring to them and sell, part of it is build-own-transfer, and typically part of it is a PPA to them, bringing a total package that is very valuable to our customers. So, it's increasing, but very positive addition to our portfolio. John might add some more.

Yes, Steven this is John. What I would add to that is the way I look at BOT is it enables more contracts. So the BOT that you saw this quarter was the Portland General transaction, where we had you know a trifecta of wind and solar with battery storage and the BOT was part of the wind facility that we actually ended up building, but we got a contract back for the other piece of it. And that's typically the type of BOT transaction that you'll see us enter into. But it is -- it is a part of the business and it's an enablement for more contracted origination around the renewable portfolio.

Understood. So it's a two on two kit. You earn good returns on an as part of the solution you offered to some customers, so I understood. And wanted to shift over to SolarTogether. This is a really interesting model and Rebecca you mentioned briefly to the savings to customers, would you mind just speaking a little bit to this? It does seem like a like a nice model to offer Solar to your customers. I just want to make sure I understood the, what you had mentioned I think on the $1.8 billion cost. I think you mentioned $139 million of savings. Could you just talk through that a little bit more in terms of the benefits to customers from SolarTogether?

Yes. So as you might expect, we've long been excited about deploying more solar in Florida. It is the Sunshine State and as solar has gotten to be more cost effective, we're very excited about bringing it to our -- across our entire portfolio. And there's certain amount of interest from our C&I customers who don't necessarily want to take on the ownership and construction responsibility particularly when it's not at scale and not as cost competitive as what we can build. And so when we went out and offered up this idea of a community solar program, we got a significant amount of interest from our large C&I customers, which is primarily the group that we went out to talk to you and that was the 1,100 megawatts of initial demand for this pre-registration period that we offered up. And so then we sized our program to be around 1,500 megawatts. So in the layout of the program, customers that sign up for this, the voluntary participation will pay a certain amount on their bill in the near term and over the long term will receive credits against their bill, but about 25%, 20%, 25% of the savings. The net savings to the overall system are actually going to be retained by the non-participating customers. So FPL’s existing customers will get a benefit from this program as well.

That's helpful. Thanks so much.

And we'll take our next question from Steve Fleishman at Wolfe Research. Please go ahead.

Yes, hi good morning. Hopefully you can hear me. Okay.

We can hear you fine, Steve. Good morning.

Okay, great. So just could you maybe give a little more color on the MVP comments with respect to just more color and also what would be driving an update soon as opposed to like now for the Analyst Day?

So as I mentioned in the in the prepared remarks, we along with everybody else were certainly disappointed by the Circuit Court not taking up the en banc review. And as soon as you know the initial adverse decision was made, we started working closely with our partners on a variety of different options whether it's legislative administrative etcetera to resolve the issues so that we can continue to build and ultimately bring online MVP. And we remain confident that you know one of those many options will ultimately come together so that we can put MVP into service, which at this point we think will be even more valuable than what we originally thought just because of the challenges that building pipelines in this area has proven to be. But at this point, looking at what we previously targeted for our in-service date of year-end 2019 that's challenging. So we're still working on what exactly the path forward is and the timing for COD. We are going to resume construction. As you know we temporarily you know paused construction during kind of tone down construction during the winter period just for the overall conditions, as we're starting to get to the spring, we’ll resume construction where we can. And then as we firm up plans, it's clear which of these options will come to fruition and we'll give you more specifications in terms of timing and ultimate cost.

Steve, this is Jim. We certainly have both a date and a cost for you at the listing.

Okay. And then also could you talk a little bit more about the underground in legislation and just what the investment opportunity and customer benefit is there?

Sure. I'll start and I'll probably hand it over to Eric to add some more details. As everyone is well aware after the devastating impacts in our service territory from Irma, and then broader in Florida from Michael and other hurricanes. It became clear to a lot of critical stakeholders about how important it is to have continuous service for our customers. As you probably know, Florida is now a trillion dollar annual economy. So I think it's something like the 16th largest economy in the world if we were our own economy. So every day that we’re off line is a significant harm to our state. And so there's an appreciation from critical stakeholders in the legislature and other communities about the value of resiliency in our grid. And one of the ways that we can you know improve the resiliency is through some undergrounding. So there's some legislation going through the current session in Florida for the possibility of setting up a separate clause that ultimately we could recover investments and earn a return on for undergrounding our service territory through a clause mechanism.

Hi Steve, this is Eric Silagy. I guess the only thing I’ll add on this is that the legislation has progressed through both the Senate and the House pretty well, it's gone through six different committees, three in the House, three in the Senate, it's passed out of all those committees unanimously. So to date, there hasn't been a single no vote against it, in either body. There are some slight differences in the versions, so those have to be reconciled. It's not really subsidize [ph] and it's more of a verbiage, but we expect it to be taken up by the full House, the full Senate in the coming next week or so two weeks to the most, till the end of the session. And if it passes, then indications are that the government will be supportive as well. And there is a huge focus on resiliency in the state as Rebecca talked about, and frankly we've worked very hard over the past couple of years, with a couple of pilot programs to look at how do we get costs out of underground. And we've gotten it now to the point where and particularly under a programmatic approach, we'd be able to get the cost to be equal if not even a little better than some of the hardening efforts that we do aboveground. That's a real win for customers, both financially as well as obviously resiliency.

Thank you.

[Operator Instructions] We'll take our next question from Shahriar Pourreza at Guggenheim Partners. Please go ahead.

Hey good morning guys.

Good morning.

So just let me, just ask a quick question a couple here, but around Santee Cooper. There's obviously a lot of mixed data points we're seeing with lawmakers. The town hall meetings seem to be a little bit noisy and we kind of still have two competing bills. And then on the other hand, the process seems to be much more competitive than we all thought, so maybe a quick status update regarding the process. Are we still expecting some sort of closure in a decision by the June timeframe?

So maybe I'll start off with the typical caveats that I think are an appropriate response to the question. And if maybe Jim wants to add something specific, I’ll toss it to him. But as you know, we typically don't comment on M&A activity other than very general comments that we look for opportunities where there's a constructive regulatory environment. It's accretive. And ultimately there's a good fit from our business perspective including opportunity to deploy the Florida Playbook, and being able to improve customer value proposition for our customers. I don’t know Jim if you want add some specific comments.

So obviously we've confirmed that we put a bid in for Santee. And there is a process going on. I would expect it to come to conclusion here by June. And we will see how it plays out. I think, I think the state realizes that they know that Santee has upwards of $4 billion to $5 billion of debt for you know on asset there you know the nuclear plant that is never going to generate any income. And so, it's an issue for the state that they need to address. And I think the vast majority of folks in the state understand that they need to address it. And the key stakeholders are I think working hard to come to a conclusion about how the process is going to move forward. So you know we're cautiously optimistic that they bring you know that the legislature passes something to lay out what the process will be and then then we'll see. As I said, we did confirm in the last call that we put a bid in, and you can imagine that we'll continue to play in the process. And it's someplace where we think we can, we can add a lot of value and bring value to customers and bring value to economic development in the state.

Got it. Got it. And just a quick update on Gulf Power, you're sort of five months into it. It seems like you're still kind of reiterating the $0.15 to $0.20 of accretion despite Gulf already contributing $0.08 in the quarter. Are you starting to see some incremental near-term opportunities to your prior stated accretion guide or is there something you'll update at the Analyst Day?

Well, a couple of comments on Gulf. First, a high level maybe taking more of the second part of your question, first. We obviously closed at the very beginning of this year and we are as enthusiastic as ever about the opportunities with Gulf as we were prior to closing the acquisition. I personally spent time up there I know many of the other folks on the senior team and obviously we have a terrific team at Gulf now executing, and that's both taking cost out of the business as well as identifying the smart capital investments, which will ultimately deliver on the value proposition that we've been targeting with FPL, which is low bills, high reliability, terrific customer services and clean energy. So very optimistic and excited about it. More specifically to the numbers. Yes, you're correct on the $0.08, but as you know we're going to highlight the Gulf contributions as its own entity, and then for the financing costs, the financing costs to close the acquisition are showing up at CNL. So you might want to think about those two together. We do have opportunities to further improve the cost position through the balance of the year. We'll also start to ramp up the capital investments. Now as I talked about, we're planning to deploy a total of $700 million for the full year at Gulf and then obviously there's some ROE improvement that I talked about in the prepared remarks as well. Our guidance expectations remained from the overall company perspective as we talked about of our 6% to 8% growth from our 2018 adjusted EPS of $7.70 in 2019. And then we expect to have the incremental accretion on top of that growth rate of $0.15 in 2020 and $0.20 in 2021.

Got it. And then lastly, Rebecca just you mentioned administrative options with MVP. Can you confirm if you're working with the ACP owners around this option? Like what stated -- obviously they are completely different projects, but what how much collaborating are you doing with the ACP owners like Dominion, especially when...

I don't want to talk through really the details of that. As we've -- as I talked about a couple of minutes ago, we worked very closely with our partners to develop different options and we do believe there are various options in order to complete it, but we don't really think that it's to our advantage to get through a lot of the details of that out publicly. So, we're working on it very hard. We remain confident in our ability to ultimately construct and bring it into service.

Great. Thanks, guys.

Thank you.

And we will take our next question from Julien Dumoulin-Smith with Bank of America Merrill Lynch. Please go ahead, sir.

Hey, good morning. Can you hear me?

Good morning, Julien. We can hear you fine.

Excellent. All right. So at this point, I think perhaps a couple of clarifications. Perhaps starting with the last question, on Gulf, just to go back to what you were saying about your expectations on earned ROEs already pretty healthy, how do you think about the timeline to go back in for a formal rate case? And then also perhaps the prospects of getting an amortization type mechanism eventually. I mean, certainly that would be one of the multiple priorities, I would imagine in contemplating any kind of rate recovery. But at the same time, given the ability to earn within the band clearly the upper end already, how do you think that timeline?

So we're still at the early stages, Julien. We closed it a couple of months ago. And right now the teams head is very much into identifying the cost, saving the opportunities putting the -- dot the I's and crossing the T's on the capital initiatives that we can make, and we're putting those plans together. For now I'd like to limit it to the comments that we made in the script and the prepared remarks that we expect to be at the upper half of the ROE band, and we expect to target the capital investment opportunities of a total of $700 million in 2019. And then to the extent that we can put more detail around that, particularly around the capital initiatives, we'll highlight more of those at the June Investor Conference.

Totally appreciated. And then secondly, if you can just coming back to you started the Q&A on the backlog here, it seems like another shift in backlog seems to be longer-dated beyond the 2020 period. If you look at what was added, it seems like the bulk of it for this quarter was added and the bulk of it -- that was solar. Can you comment a little bit about the economics of solar in the backlog as you move through time in 2019 and 2020 versus the 2020 onwards type projects? And then perhaps any other nuances you might see in terms of safe harboring or otherwise in the 2020 onwards type time frame?

I think there are a couple of comments in there, Julien. So you'll have to correct me if I don't hit all of them. But in terms of the timing of the backlog, as you know, we set out expectations at our last Investor Conference for the full 2017 through 2020 time frame. We're now healthily in those ranges, which sets us up very well to deliver on the expectations that we've long talked to you all about. And as we highlighted in the script today, we now have the 2,700 megawatts of projects that are beyond 2020. I mean that's actually building up over time and there is actually one or two projects that moved from the -- before 2021 time frame into 2021. We're starting to see customers shift, their focus to beyond 2020. I wouldn't say that the team has stopped the efforts to sign contracts for 2020 COD, and in fact, I'm sure John will tell you that he is pushing his team hard and no doubt customers continue to be interested in signing up wind projects before the end of 2020. But of course, with solar still having the technical benefits, tax incentives into the early 2020s, customers are certainly focusing on that as well. To answer the return question, our returns as we long talked about has generally remained consistent on a levered basis over time. And that hasn't changed materially in recent weeks or months.

Right. All right. Excellent. Well, we can leave it there. Thank you very much again.

Hey, Julien. This is Jim. The only other thing I would add to your -- as you can imagine we are safe harboring for 2021 and beyond. So we're not taking advantage of that opportunity.

Right. You should assume everything safe harbored.

Correct.

Exactly. All right. Excellent.

[Operator Instructions] And we'll take our next question from Jonathan Arnold at Deutsche Bank. Please go ahead.

Good morning, guys, and thank you.

Good morning.

Could I just ask on the -- the subject of BOT and the backlog, and it just seem you've had situations where you are adding BOT to the backlog, and then others where you -- including last quarter where you didn't. What's the trigger to determine whether BOT is shown in backlog or not?

Yes, typically if there are some sort of operating agreement, whether it is ongoing economic value to us then we have decided to include it in our backlog, where the transaction is really focused more on a build and to resale and then the operations and all ongoing economics or to the customers benefit, we've excluded it.

Okay. And so...

Yes. So, Jonathan, this is John. So the contracts that's BOT this quarter again is related to Portland General. So 300-megawatt wind facility, 100 megawatts BOT, 200-megawatt is the balance that we will own under a contract. And so that facility is going to be -- the whole 300 megawatts is going to be operated by us, I'm sorry, got that backwards 200 megawatts is the piece, that's the BOT, and 100 megawatt is piece that we take back.

Okay. So that makes sense. But then, for example, say the 200 megawatts BOT project that you announced on the fourth quarter call, was that something different? And then would that -- is that we shouldn't anticipate that would end up in backlog or should we?

No, no. That would not be in backlog. And just to clarify, we got 100 megawatts of BOT, and right with Portland General, 200 megawatts under contract.

Yes, this is all that Wheatridge, correct, to see that in the...

That's all Wheatridge.

And then there's the solar piece as well.

There's the solar piece as well and the battery storage.

The storage piece. Yeah, Okay, I got it. Thank you for that. And then just on one -- an another topic. And if we -- as we're thinking about what to anticipate at the Analyst Day, and then we talked about at some point you might sort of start talking more around profitability metrics on backlog and as opposed to just megawatts. Is that something that you think might be part of the update or is still work in progress?

Jonathan, it is very much a work in progress. I think the general outline should be somewhat consistent with what we've talked about in the past, which is overviews of our -- basically putting meat to the bone, you're helping you understand with the growth opportunities are for each of our businesses. Obviously for the first time at Gulf Power, we detailed plans on how we're looking at the business and what the opportunities are. At Energy Resources, we certainly -- it's likely we will put together an overview of the renewables marketed as we see it today, to help you see some of the details of why our team continues to be excited about renewable economics, and ultimately demand from our customers that will enable us to continue to grow our business.

Okay, great. Thank you.

And we will take our final question from Michael Lapides at Goldman Sachs. Please go ahead.

Hey guys, thank you for taking my questions. Just curious, a lot going on in Florida these days, and this maybe one for Eric. How are you guys thinking about a handful of items, one is the outstanding petition or complaint regarding tax reform implementation in the last FP&L kind of rate review? The other is I think, there's still some litigation outstanding or challenge regarding implementation of the SoBRA mechanism. And then finally, just curious is there anything that has to happen or anything that could happen that could derail the two-year extension of the existing rate agreement you have?

Yes. Hey, Michael, it's Eric. So, let me start with the tax reform docket. We've had -- we recently had hearings over it and filed testimony, there's going to be additional hearings that take place in mid-May. Look, we feel very good about our position, and how it fits within our rate agreement. Our arguments are solid and sound. It's a proceeding, we will go through it. But I feel very good about where we stand overall from the tax reform position. Other areas, obviously as you know we've got -- the Irma docket is still out there too, that's going to be in mid-June. Again feel very good about that. That was a storm that we actually restored more people faster than anybody in history, and we paid for using our tax savings to reserve amortization. So, I feel very good about our positions in Florida Public Service Commission. I can't predict who's going to oppose what and when they're going to file for hearings. But right now, the arguments have been strong and the hearings have gone well so far.

Got it. Thanks, Eric.

And Michael, I shall add to Eric's comments as you referenced to the -- you're going in for a rate case. As we talked about both in the script, and obviously in prior comments, tax reform enabled us to potentially have a two-year extension of our settlement agreement, and that obviously the benefit of delaying any amount of time is further delaying the time where we'd need a base rate increase from our customers, so hopefully saving the customers some money. But it's up to two years, and we'll have to go through the thought process as we typically do about when is the best time to go in and looking at all of our costs and our forecast about when do we need some incremental revenues.

Got it. But there's nothing mandating you to come in at any point in time. It's up to -- it's kind of an FP&L or NextEra decision on when to come in?

Well as you know, under the settlement agreement, we need to notify the commission in March of 2020, if we intend to come in within the next year time frame after that.

Right. So Michael, the settlement takes us through 2020, through the end of 2020, we have to notify if we choose to extend, but it is our choice to unilateral decision, and we'll do that by March of 2020, and as Rebecca said, it could be up to two years is what we've been saying.

Got it. Thank you, Eric and Rebecca. Much appreciated.

This will conclude today's conference call. Thank you for your participation. You may now disconnect.