Good morning and welcome to the NextEra Energy, Inc. and NextEra Energy Partners Fourth Quarter and Full Year 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jessica Aldridge, Director of Investor Relations. Please go ahead.

Thank you, Jason. Good morning, everyone, and thank you for joining our fourth quarter and full year 2020 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 and 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.

Thanks, Jessica and good morning, everyone. 2020 was a terrific year for both NextEra Energy and NextEra Energy Partners. NextEra Energy’s performance was strong both financially and operationally. We had outstanding execution on our initiatives to continue to drive future growth across the company. Across all of our businesses we successfully executed on the largest capital program in our history, deploying more than $14 billion in 2020 as we lead America’s clean energy transformation. By successfully executing on our plans, NextEra Energy extended its long track record of delivering value for shareholders with adjusted earnings per share of $2.31, up 10.5% from 2019. A key element of our value proposition in NextEra Energy is a culture focused on delivering outstanding results for our shareholders. Over the past ten years, we’ve delivered compound annual growth and adjusted EPS of 8%, which is the highest among all top ten power companies who have achieved on average compound annual growth of less than 3% over the same period. Amid this significant growth, the company has maintained one of the strongest balance sheets and credit positions in the industry. In 2020, we delivered a total shareholder return of approximately 30%, 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 year, three year, five year, seven year and ten year basis. Over the past 15 years, we’ve outperformed all of the other companies in the S&P 500 Utilities Index and 86% of the companies in the S&P 500, while more than tripling the average total shareholder return of both indices. While we are proud of our long-term track record of creating shareholder value, we remain laser-focused on the future and on delivering our commitments. NextEra Energy remains…

Thank you, Jim, and good morning, everyone. Let’s now turn to the detailed results beginning with FPL. For the fourth quarter of 2020, FPL reported net income of $502 million or $0.25 per share, up $0.05 per share year-over-year. For the full year 2020, FPL reported net income of $2.65 billion or $1.35 per share, an increase of $0.15 per share versus 2019. Regulatory capital employed increased by approximately 11% for 2020 and was the principal driver of FPL’s net income growth of more than 13% for the year. FPL’s capital expenditures were approximately $2.2 billion in the fourth quarter bringing its full year capital investments to a total of roughly $6.7 billion. FPL’s reported ROE for regulatory purposes was 11.6% for the twelve months ended December 31, 2020, 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 approximately $100 million of reserve amortization, leaving FPL with a year 2020 balance of $894 million. Approximately, $206 million of reserve amortization was used to offset the restoration costs associated with hurricanes Isaias and Tropical Storm Eta which FPL elected not to recover from customers through a surcharge. FPL’s reserve amortization mechanism under its current settlement agreement, combined with our aggressive cost-cutting measures and the benefits of tax reform provided significant customer benefits including avoided surcharges for approximately $1.7 billion in storm restoration cost since 2017. Our overall capital program at FPL is progressing well. We continue to advance one of the nation’s largest ever solar expansions. During the year, the Florida Public Service Commission approved FPL’s Solar Together program, which is the nation’s largest community solar program that is expected to generate $249 million in total net cost savings for participating and non-participating customers over the…

[Operator Instructions] The first question is from Steve Fleishman from Wolfe Research. Please go ahead.

Yes. Couple questions. Just first – just a clean up on the MVP announcement. Could you just talk about, maybe a little more color on what you need to get that done and when and why?

Sure. Thanks, Steve. And we appreciate the question. First, obviously, the project has taken longer and cost more than what we anticipated. And so the impairment is really related to reflecting not only that value that we have on our books, but really in relation to what we believe is the current fare on valuation for the investment given what we do still have to accomplish. And obviously a lot changed in the fourth quarter including the nationwide 12 permits stay that I mentioned in the prepared remarks, as well as the various things that have happened in January and against a backdrop of obvious changes including the change in the administration, including the change in control of the Senate which happened here in January. So, the impairment does reflects our view of what we still need to accomplish and the associated fair values related to the chances of being able to successfully execute on that. But this was an accounting exercise. There was a lot of due diligence that we needed to evaluate and we think we’ve made the appropriate changes. But it does not change our commitment to work with our partners to put this project into service. So, as I noted in the comments, we do have now a path that we are going to pursue in terms of the outstanding permitting. We work closer with our partners to pursue that path. But we felt it was appropriate and obviously took the actions that we did with respect to the impairment.

Okay. And then, just on the continued higher growth in renewables, could you maybe just touch a little bit on funding plans for that over the period, just high level?

Super high level. As you know, we’ve prided ourselves in a variety of approaches to the capital markets to support our business retaining all of those options as circumstances change is one of the things that I think has been particularly successful for us over a long period of time. One aspect at this point I wouldn’t expect to change, particularly as it relates to financing the projects of energy resources is that we will continue to execute a significant amount of tax equity, given our current position and tax capacity. But I think it’s all of the tools in the toolbox that you would expect us to utilize to finance the business. But our commitment to our strong balance sheet remains unchanged and we will grow both profitably and maintaining a strong balance sheet.

Great. And then, last, maybe, kind of a strategic question, I guess for Jim. Just the – as we see the continued – just dramatic ramp up in renewable growth and the revaluation of the company probably tied to that and what does it mean for some of the statements you’ve made in the past on utility M&A? Does it make it more likely, because you need to balance the mix or less likely because there is just so much opportunity on this other side of the business?

So, Steve, obviously, the relative valuation of the two big businesses has changed over the last several years, right? And that’s just accelerated over – in particular over the last 24 months. I think what that means is it’s changed a bit of our analytic framework of how we think about utility M&A. On the one hand, I continue to believe that there is enormous value creation that we can bring to the table and you only need to look at what we’ve been able to do with Gulf in the last 24.5 months to see how much value creation, bringing our playbook and our operating platform to bear can create, right? So, that is – that I think remains clear and if anything is clear to me. On the other, I think it’s also clear that, probably a sweet spot for us in terms of M&A is, things in the less than $20 billion range that we can pay cash and finance through the normal course. And at that point, if you do that, you are not shifting the mix one way or another all that tremendously and in our set of analytics, we are looking really more at how much value creation we bring to the table when we do this. And so, for example, like at Santee Cooper is a great example of that. That’s a – it’s a roughly $8 billion or $9 billion transaction. And something that we can finance in the normal course and a place where we think we can create enormous value very quickly. And so, that’s the kind of things that we are focused on and – but most importantly, we are focused on running the business and executing, staying financially disciplined as we always have been and executing against the terrific growth prospects we have in energy resources and then executing at FPL as we always have for the benefit of our customers and continuing and for benefit the state. So, that I think is a – just a little different overview of how our current status of our thinking on.

Great. Okay. Thanks so much.

The next question is from Julien Dumoulin-Smith from Bank of America. Please go ahead.

Hey, good morning, team. Thanks for the time. I’ll make it brief. If I can, just coming back to renewable expectations, now redefined upsized expectations over the longer term here, can you talk about a few factors here? First, C&I, you guys haven’t been as involved. It seems like that could be accelerating here. Can you talk about how that’s sheltered into your expectations? Secondly, the new expectations explicitly do not include any future build on transfer. How do you see that is incremental and any heuristics you might offer as to how to think about value creation there? And a third one on that if I can just throw in there is the attach rates on storage. It seems like, the bulk of the storage that you are talking about in the future is probably tied to your solar assets. How do you think about standalone as being incremental to what you talk about already? I’ll leave with that.

Okay Julien, thanks for the questions and you may need to prompt me if I forgot one or more aspects of the multipart question. Let me start with C&I. As I highlighted in the prepared remarks, John and his team across Energy Resources have really cultivated a nice suite of opportunities with C&I customers. And if we look at our core base of other major investor on utilities, our munis and coops and our C&I business, other investor on utilities and muni coops are still large overall, but the opportunity set with C&I customers is definitely growing, not just in your standard PPA, but more in the suite of types of opportunities that I mentioned as one of the pilot projects that John and his team are pursuing, kind of more holistic energy solution provider to these C&I customers. And I think what’s really changed over the last year plus, maybe it’s even two years is the inbound request to C&I has really expanded as they really start to look at their own carbon footprint, their own ESG messaging, how do they source energy to do their business and how do they source that from a cleaner energy solutions has become a higher topic of interest and higher priority for them and therefore terrific opportunity set for us. So I think that that’s a growing opportunity for us that we continue to be really excited about. In terms of build-own transfers, we will continue to present our expectations, both our expectations and our signed contracts consistent in a way that we’ve shown that in the past that there will be some build-own transfer on the Energy Resources pursues, if it is a strict just sell the project to somebody else, we think there is a lot of value creation there,…

Just the standalone piece. I mean, how incremental is that and to what your view?

The standalone storage, as an investment opportunity?

Yes, absolutely.

Yes, over time, Julien, it could be very significant. In the short-term, is it imperative for renewables’ growth, and in certain pockets, yes, broadly speaking, no. But as you start to see what we referenced today, trillions of dollars of renewable deployment over time increasing storage deployment both in the forms of batteries, as well as other forms of long duration storage which we believe includes hydrogen will become not only increasingly important, but a very large capital investment opportunity.

Yes. And just to add, Julien, on what Rebecca said, I mean, Desert Peak, which we announced today 400 megawatts larger standalone project in the world. So, we are actively seeking out standalone opportunities and having the largest solar fleet in North America positions us for storage add-on. So, a tremendous amount of leverage up the operating fleet. And with new origination, I think of attach rates being roughly 60% on all the new stuff that we do. And then, one more comment on C&I, we are positioning the business to be the preferred strategic partner with C&I customers. And we are looking at the business in a holistic way where we can provide clean energy solutions across the board, it’s wind, it’s solar, it’s storage, it’s hydrogen, it’s mobility, the First Student transaction that we just announced today. It’s an energy management services capability. It’s analytics. All the things we’ve done for decades, we can now offer to C&I customers and we’ve got a huge head start.

Great guys. Thank you. I’ll pass it on.

Thanks, Julien.

The next question is from Shar Pourreza from Guggenheim Partners. Please go ahead.

Hey, good morning, guys.

Good morning, Shar.

Just a couple quick questions, on the rate case in particular, obviously, we have a March filing that’s ahead of us. And one of the sort of the big moving piece is the rate base, it’s 11% year-over-year growth for FPL, 24% for Gulf. As we sort of think about like the cap structure improvement especially for Gulf, the ROE add or the capital plan request, how do we sort of think about sort of the filing? Does it kind of relates to your current growth guide as it’s effective well within your current trajectory is like – is the filing consistent with the top end and extends the runway. Is it better? And more importantly, as we sort of think about you rolling forward the plan into 2024 is that kind of a post-GRC decision?

. : From a NextEra Energy perspective, as you would expect, when we provide expectations, we do a variety of scenario planning analysis to feel comfortable with the expectations that we’ve laid out. So, there is not one answer to what do you have in your assumptions that you’ve laid for expectations. There is a range and we feel comfortable today as we’ve obviously reiterated those expectations for the 2021, 2022 and 2023 timeframes. So we look forward to presenting our case to the commission and shareholders. We feel very confident in the decisions that we’ve made in terms of where we’ve been investing, where we plan to invest. And obviously the results, into some measure obviously speaks for themselves in terms of low bills, high reliability, terrific customer service, and a clean energy profile that is substantial and we are obviously looking forward to not only telling that story, but also the Gulf changes over the last couple of years that Jim highlighted. So, we’ll have more as the process unfolds and obviously, when we have – we finally have clarity on the rate case outcome or a potential settlement if we are so fortunate as to reach a constructive agreement with interveners, we’ll provide some updates once we have that information.

Got it. And then, just as we think about rolling the consolidated outlook into 2021, is that a post-GRC decision or settlement?

So, 2021 obviously assumes the current rate agreements, since both for FPL and Gulf, they go to see the 2021 timeframe. And then, 2022 and 2023, again I’ll put in context a variety of scenarios that we assume for both FPL and Energy Resources to support the expectations that we’ve laid out.

Got it. And then, just maybe a quick strategy question for Jim. And Jim obviously, with Santee Cooper in particular, the sales discussions have been steadily growing and interest in the legislator. What do you sort of think will be different in 2021 either from the legislator side or the NEE side? I.e. would you sort of anticipate making a substantially similar bid if the process comes up for sale? And then, just on for transmission, obviously you highlighted the GridLiance acquisition last year. How do you sort of see that opportunity set on the sort of transmission side? How large do you want NextEra Transmission to be as part of the business mix? Do you see any – is there more to come there?

So, first of all on Santee Cooper, well, there is an offer on the table and that offer remains on the table and as does our $25 million deposit, which the state still has. So, the offer is there and we are ready to negotiate whenever the state is ready to get going. And so, we stand ready and are hopeful that the legislator will move forward on that process. And we’ll know more obviously over the next 90 days or so. On NextEra Energy Transmission, I think, Rebecca in her prepared remarks had just a terrific year last year, their best year ever as a company. Remember, we started that business from scratch, little over ten years ago and it’s a business that made over $100 million in net income last year and we think has the ability to grow mid-teens double-digit over the next several years just organically with what they have in front of them without doing any other acquisitions and we are pursuing other acquisitions there, because we think we add an enormous amount of value through our operating model, number one. And then number two, probably the biggest inhibitor to renewable in this country is not consumer demand or it is not interest on the part of the Federal government or state governments to get renewable builds. It’s not that customers don’t want it. It is fundamentally broken processes with the ISOs in terms of how they manage their queues and transmission and just broadly transmission planning in this country. And I think with the Biden administration and a new FERC, there is a new opportunity to fix that. And our transmission business I think is a great example of what FERC Order 1000 can do when you get competition going in the transmission world and it is also, I think every bit of transmission we build in that business is incremental and helpful to the renewable business that we have and that it makes the delivery of lower cost renewable even more fast to come on to the grid than they otherwise would. So, I am very excited about transmission business. We are going to continue to push it and I think it’s got a lot of runway to grow.

Terrific. Thanks for that. And congrats on the results.

The next question is from Michael Lapides from Goldman Sachs. Please go ahead.

Thank you for taking my question. I actually have two. One is, your post-integrate 2020 with EPS growth north of 10%, just curious, do you think you could potentially come in above the high end of your range? So is kind of the 6% to 8% target a very modest target growth when you think about the next couple of years given the runrate you hit this past year?

So, Michael, I appreciate and I appreciate the optimism and the support that that your question might suggest. We are really proud of the results for 2020. There is a couple of things to remind you. One, that does include some incremental contributions from Gulf and obviously we expected Gulf in the deal for our Florida acquisitions and we expect some incremental benefit from that for 2021 as we highlighted in the – when we laid out expectations initially. And then, just recall, we did raised our 2021 expectations late last year and the rebased our 6% to 8% off of that higher base. We are really excited about both the positioning of the regulated utilities, as well as Energy Resources going into 2021. We know what we need to accomplish and the teams are set out to go after and achieve those objectives. And of course, we’ll update you over time as we go through the year. But for today, we have reiterated those expectations of the $2.40 to $2.54 for 2021.

Got it. And then, a follow-up one and it’s more of a policy one and I think it’s more of the state policy one. There is still lots of coal generation in rate base in a lot of states. Not all of which probably is economic. But the owners of that and clearly your Florida utility don’t have exposure to this. The owners of that benefit from having a rate base. How do you, from an earnings perspective, how do you think that dichotomy, Jim, gets resolved over time? And are there lessons that other states can learn from Florida that might be able to haze in the pace of fleet transformation?

So, Michael, I think you are being kind honestly to the regulated coal fleet in this country. There is not a regulated coal plant in this country that is economic today full period and stop when it’s dispatched on any basis, not a single one, okay. And so, why haven’t it – I think you’ve hit on the crux of some of the issues. Obviously, there have been, in certain states, a reluctance to what our utility customers retire the coal plant and then will be able to recover their investment, right? And so, of course, if you run a utility, you don’t want to retire an asset that you are going to then either have to write-off or not be able to earn on, right? I think one of the things that has been really constructive and very smart about the Florida regulatory environment and Florida Commission’s view on a modernizing generation fleet is that they have – we’ve spread that capital recovery over a period of five or ten years. And that has both I think moderated the impact of customer builds on the one hand and also on the other, given us the right incentive to do the right thing by our customers and bring on lower cost generation. So, I think it’s about – the other piece I think that’s going to change is, there is no question this administration through the EPA and other means is going to make the continued operation of coal plants very difficult in this country. And so, there is going to be, I think more pressure, more Federal pressure to accelerate that transition away from coal than there has been, obviously over the last four years where there has been, in fact, the opposite of Federal pressure. But the complete…

Got it. Thank you, Jim. Much appreciated. And maybe one last one for Rebecca. Rebecca you outraced your renewable growth targets materially that implies higher CapEx, but obviously you get the benefit of the tax every year. So you all utilize convertible financing or equity units. Should we assume that as part of your EPS growth guidance that there is continued use of kind of new convertible units in the financing plan and maybe that level grows and scale with the change in the CapEx forecast?

Michael, I appreciate it. And I’ve talking to a couple of comments that we’ve made in the past that I know you know. First, we keep all the tools in the toolkit and we believe that at various times, various tools are more economic than others. But at the end of the day, our commitment to our balance sheet remains very strong and that we will finance it in a way that retains our strong balance sheet. One additional thing I’ll remind you of that over time is certainly been very valuable to you is, not only maintaining the balance in our business, which we’ve talked about frequently. But if the recycling a capital as a source of proceeds to finance that new growth and as NEP grows and our recycling of capital grows to NEP, obviously, that’s also a source of financing from the new investments that Energy Resources is making. But there was one thing that I know at the beginning of the year, we have a financing plan by the end of the year. It ends up being different than what we originally thought. But again, the most important thing to us is no matter what, we will remain committed to that balance sheet and we will finance it in a way that makes sense and it is ultimately profitable for our shareholders as well.

Got it. Thank you, Rebecca. Thank you, Jim.

Thank you very much, Michael.

This concludes our Question-And-Answer Session as well as the conference. Thank you for attending today’s presentation. You may now disconnect.