Good morning, everyone, and welcome to the NextEra Energy and NextEra Energy Partners Q3 2021 Earnings Call. All participants will be in a listen-only mode. Please also note, today's event is being recorded. At this time, I'd like to turn the conference call over to Jessica Aldridge, Director of Investor Relations. Ma'am, please go ahead.

Thank you, Jamie. Good morning, everyone, and thank you for joining our third quarter 2021 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 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. 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. As a reminder, Gulf Power legally merged into Florida Power & Light Company effective on January 1, 2021. Gulf Power will continue as a separate reportable segment within Florida Power & Light and NextEra Energy through 2021, serving its existing customers under separate retail rates. Throughout today's presentation, when we refer to FPL, we are referring to Florida Power & Light, excluding Gulf Power, unless otherwise noted or when using the term combined. With that, I will turn the call over to Rebecca.

Thank you, Jessica, and good morning, everyone. NextEra Energy delivered strong third quarter results with adjusted earnings per share increasing by approximately 12% year-over-year. Both the principal businesses executed well on major initiatives and we continue to advance our opportunity set for new renewables and storage. Building upon the solid progress made in the first half of the year, NextEra Energy is well positioned to meet its overall objectives for 2021 and beyond. Earlier this month, we were honored to be named on Fortune's 2021 Change the World list, the only electric utility in the world to be recognized. This recognition is a testament to NextEra Energy's best-in-class position in the renewable energy sector and our continued commitment to the customers and communities that we serve. At FPL, net income increased approximately 10% versus the prior-year comparable period, reflecting contributions from continued investment in the business. Most notably, during the quarter, we reached what we believe is a fair and constructive long-term settlement agreement with a number of intervenors in our rate case, continuing a long history of negotiated outcomes that benefit both customers and shareholders. We believe the agreement, if approved, should enable us to continue to focus on operating the business efficiently while investing in the future to ensure resilience, reliability, affordability, and clean energy for generations to come in Florida. We expect the Florida Public Service Commission to vote on our agreement at its agenda conference on October 26, and I'll provide more details on the proposed agreement in a few minutes. FPL's major capital initiatives continue to progress well, including what will be the world's largest integrated solar power battery system, the 409-megawatt FPL Manatee Energy Storage Center that is now 75% complete and on track to begin serving customers later this year. Gulf Power also had a great quarter of execution, and its strong year-to-date financial performance is attributable to continued successful implementation of the cost reduction initiatives and smart capital investments that we previously outlined. Gulf Power's year-to-date net income contribution increased approximately 14% versus the prior-year comparable period. And we remain focused on improving Gulf Power's value proposition by providing lower costs, higher reliability, outstanding customer service, and clean energy solutions for the benefit of our customers. At Energy Resources, adjusted earnings for the quarter increased by approximately 12% year-over-year. Our development team had another terrific quarter of new renewables and storage origination, adding approximately 2,160 megawatts to our backlog since the last earnings call, marking the best quarter of overall origination and the best quarter of new wind additions in Energy Resources' history. These backlog additions include approximately 225 megawatts of combined solar and storage projects and a 500-megawatt wind project that is intended to power an adjacent new green hydrogen facility, which I'll provide some additional details on in just a few minutes. We continue to expect that our competitive advantages will drive meaningful growth in renewables and various forms of energy storage at Energy Resources in the coming years, as the trend toward broad decarbonization across many facets of the U.S. economy takes hold. Overall, with three strong quarters complete in 2021, we are pleased with the progress we are making at NextEra Energy, and we are well positioned to achieve the full-year financial expectations that we have previously discussed, subject to our usual caveats. Now, let's look at the detailed results, beginning with FPL. For the third quarter of 2021, FPL reported net income of $836 million or $0.42 per share, which is an increase of $79 million and $0.04 per share, respectively year-over-year. Regulatory capital employed increased by approximately 10.5% over the same quarter last year and was the principal driver of FPL's year-over-year net income growth of approximately 10%. FPL's capital expenditures were approximately $1.5 billion in the third quarter and we expect its full-year capital investments to total between $6.6 billion and $6.8 billion. Our reported ROE for regulatory purposes will be approximately 11.6% for the 12 months ended September 2021. During the quarter, we restored $124 million of reserve amortization, leaving FPL with a balance of $597 million. As you know, much of the East Coast of the U.S. was recently impacted by Hurricane Ida, which made landfall on the Gulf Coast as a Category 4 hurricane and also caused catastrophic flooding across the Northeastern U.S. Our deepest sympathies are with those that have been impacted by Ida's widespread destruction. We value deeply the industry's commitment to mutual assistance and we were fortunate to be in a position to assist other utilities this year. As part of our assistance efforts, we sent more than 1,250 of our employees and contractors, as well as transmission equipment and other supplies, to help rebuild the grid to support the restoration efforts of the impacted utilities. Let me now turn to Gulf Power, which reported third quarter 2021 net income of $91 million or $0.05 per share. Gulf Power's third quarter EPS contribution was flat versus the prior-year comparable quarter. As a reminder, the third quarter of 2020 benefited from the reversal of COVID-19 related expenses that had occurred earlier in that year. During the quarter, Gulf Power's regulatory capital employed grew by approximately 13% year-over-year. Gulf Power's capital expenditures were approximately $200 million during the third quarter and we expect its full-year capital investments to be roughly $800 million. For the full year 2021, we continue to expect Gulf Power's regulatory ROE to be in the upper half of the allowed band of 9.25% to 11.25%. All of our major capital initiatives at Gulf Power are progressing well. Gulf Power anticipates bringing approximately 150 megawatts of cost effective zero emission solar capacity online within the next six months. The North Florida Resiliency Connection, which among other things, will allow customers to benefit from greater diversity in solar output across the two different time zones, is expected to be in service in mid-2022. These continued smart capital investments in renewables and core infrastructure are expected to drive customer benefits for many years to come. During the quarter, Gulf Power was impacted by Tropical Storm Fred, which experienced an unexpected change in path before striking the service territory. Through a restoration workforce of roughly 1,700 personnel, Gulf Power was able to restore its service to essentially all of the approximately 20,000 customers impacted by Fred in Northwest Florida in less than 24 hours. Moreover, the average customer outage was restored in less than 2 hours. Our culture of preparation, including our annual storm drills and the team's focused execution helped ensure an efficient, timely, and safe response to the tropical storm. The economy in Florida continues to grow at a healthy pace and remains among the strongest in the nation. Florida's labor force participation rate has recovered to its highest level in nearly 18 months reflecting the ongoing recovery, following the onset of the COVID-19 pandemic last year. The real estate sector in Florida also continues to grow with a three-month average new housing starts up over 40% year-over-year. In August alone, there were twice as many new housing starts in Florida than in the average over the last 10 years. Florida building permits, a leading indicator of residential new service accounts, are up 47% year-over-year and have outpaced the nation's quarterly growth by 32%. As another indicator of Florida's economic health, Florida's retail sales index is up nearly 60% versus the prior year. During the quarter, FPL's average number of customers increased by approximately 77,500 or 1.5% from the comparable year prior quarter driven by continued solid underlying population growth. FPL's third quarter retail sales decreased 1.4% from the prior-year comparable period. A decline in weather-related usage per customer of approximately 2.7% offset the benefits of customer growth. On a weather-normalized basis, third quarter sales increased 1.3% with continued strong underlying usage contributing favorably. For Gulf Power, the average number of customers grew 1.6% versus the comparable prior-year quarter. And Gulf Power's third quarter retail sales increased 0.6% year-over-year with strong usage from increased customer growth contributing favorably. As a reminder, on March 12th, we initiated Florida Power & Light's 2021 base rate proceeding for rate relief beginning in January of 2022. After months of negotiation, we reached a proposed settlement agreement in early August with a number of intervenors in the proceeding. The Office of Public Counsel, The Florida Retail Federation, The Florida Industrial Power Users Group, The Southern Alliance for Clean Energy, Vote Solar, The CLEO Institute and The Federal Executive Agencies all joined the agreement, reflecting a broad set of constituents across our customer base. The four-year proposed agreement, which begins in January 2022 provides for retail base revenue adjustments as shown on the accompanying slide and allowed regulatory return on equity of 10.6% with a range of 9.7% to 11.7%, and no change to FPL's equity ratio from investor sources for the combined system. Should the average 30-year U.S. Treasury yields be 2.49% or greater over any consecutive six-month period during the term of the agreement, Florida Power & Light's allowed regulatory ROE would increase to 10.8% with a range of 9.8% to 11.8%. Additionally, if federal or state permanent corporate income tax changes become effective during the term of the proposed agreement, Florida Power & Light would be able to prospectively adjust base rates after review of the impacts on base revenue requirements. The proposed agreement also includes flexibility over the four-year term to amortize up to $1.45 billion of depreciation reserve surplus. Consistent with the rate plan filed in March, the proposed settlement agreement would unify the rates and tariffs of FPL and Gulf Power by implementing a five-year transition rider and credit mechanism to address the initial differences in cost of serving the existing FPL and Gulf Power customers. Additionally, the proposed settlement agreement also provides for Solar Base Rate Adjustments or SoBRA, upon reaching commercial operations of up to 894 megawatts annually of new solar generation in each of 2024 and 2025, subject to a cost cap of $1,250 per kilowatt and showing an overall cost effectiveness for FPL's customers. FPL would also be authorized to expand its SolarTogether voluntary community solar program by constructing an additional 1,788 megawatts of solar generation through 2025, which would more than double the size of our current SolarTogether program and is expected to save our customers millions of dollars over the lifetime of the assets. In addition to solar energy, the settlement agreement would support FPL's green hydrogen pilot project in Okeechobee County. This innovative technology could one day unlock 100% carbon-free electricity that's available 24 hours a day. The proposed settlement agreement also introduces several electric vehicle programs and pilots designed to accelerate the growth of electric vehicle adoption and charging infrastructure investment across Florida with a total capital investment of more than $200 million. Under the proposed agreement, FPL would continue to recover prudently incurred storm costs consistent with the framework in the current settlement agreement. Future storm restoration costs would be recoverable on an interim basis beginning 60 days from the filing of a cost recovery petition, but capped at an amount that could produce a surcharge of no more than $4 for every 1,000 kilowatt hour of usage on residential bills in the first 12 months of cost recovery. Any additional costs would be eligible for recovery in subsequent years. If storm restoration costs were to exceed $800 million in any given calendar year, FPL could request an increase to the $4 surcharge. We believe the proposed settlement is fair, balanced, and constructive and supports our continued ability to provide highly reliable, low-cost service for our customers through the end of the decade. FPL's typical resident bill is lower today than it was 15 years ago and is well below the national average. The proposed agreement would keep typical residential bills well below the national average and among the lowest in Florida through 2025. Let me now turn to Energy Resources, which reported third quarter 2021 GAAP losses of $428 million or $0.22 per share. Adjusted earnings for the third quarter were $619 million or $0.31 per share, which is an increase of $68 million and $0.03 per share, respectively year-over-year. The effect of mark-to-market on non-qualifying hedges, which is excluded from adjusted earnings, was the primary driver of the difference between Energy Resources' third quarter GAAP and adjusted earnings results. Contributions from new investments added $0.03 per share relative to the prior year comparable quarter, primarily reflecting continued growth in our contracted renewables and battery storage program. The contribution from existing generation assets increased $0.01 per share year-over-year. Our customer supply and trading business contribution was $0.02 higher year-over-year due to favorable market conditions in our retail supply and power marketing businesses. All other impacts decreased results by $0.03 per share versus 2020, driven primarily by miscellaneous tax items. As I mentioned earlier, Energy Resources' development team had a record quarter of origination success, adding approximately 2,160 megawatts to our backlog. Since our last earnings call, we have added approximately 1,240 megawatts of new wind projects, 515 megawatts of new solar projects, and 345 megawatts of new storage assets to our renewables and storage backlog. In addition, our backlog increased by Energy Resources' share of NextEra Energy Partners' planned acquisition of an approximately 100 megawatt operating wind project that the partnership is announcing today. Through the first three quarters of 2021, we have added more than 5,700 megawatts to our renewables and storage backlog. Energy Resources' backlog of signed contracts now stands at approximately 18,100 megawatts. At this early stage, we have made terrific progress toward our long-term development expectations with more than 7,600 megawatts of projects already in our post-2022 backlog. Our backlog additions for the third quarter include a 500-megawatt wind project, the majority of which is contracted with a hydrogen fuel cell company. The project's customer intends to construct a nearby hydrogen electrolyzer facility that will use the wind energy production to supply up to 100% of the facility's load requirements. The hydrogen manufactured by the facility would enable commercial and industrial end users to replace their current gray hydrogen and fossil fuel purchases with emissions-free green hydrogen, further accelerating the decarbonization of the industrial and transportation sectors. Energy Resources also added nearly 300 megawatts of battery storage projects in California, and we continue to experience significant demand from California-based utilities and commercial and industrial customers for reliable energy storage solutions. We are currently developing nearly 2,400 megawatts of additional co-located and stand-alone battery storage projects in California with the potential to be deployed in 2023 and 2024, to enhance reliability and help meet the state's energy storage capacity requirements and ambitious clean energy goals. For more than 30 years, we have been investing in clean energy in California and are proud to help the state lead the country to a carbon-free sustainable future. Consistent with our focus on growing our rate regulated and long-term contracted business operations, during the third quarter, Energy Resources entered into an agreement to acquire a portfolio of rate regulated water and wastewater utility assets in eight counties near Houston, Texas. The proposed acquisition expands our regulated utility business in an attractive market with significant expected customer growth and furthers our strategy to build a world-class water utility in the coming years. Subject to regulatory approvals, the acquisition is expected to close in 2022. Energy Resources is also currently in construction on an innovative water reuse and reclamation project that would help our customer achieve significant savings on its water supply needs and make its operations more efficient and sustainable while at the same time, delivering attractive returns to Energy Resources. While the roughly $45 million total equity investment for these transactions is small in context of our overall capital program, we are optimistic about the strong growth anticipated in this new market and the potential for clean water solutions to generate additional contracted renewables opportunities going forward. Turning now to the consolidated results for NextEra Energy. For the third quarter of 2021, GAAP net income attributable to NextEra Energy was $447 million or $0.23 per share. NextEra Energy's 2021 third quarter adjusted earnings and adjusted EPS were $1.48 billion and $0.75 per share, respectively. Adjusted results from the corporate and other segment increased by $0.01 year-over-year. Our long-term financial expectations through 2023 remain unchanged. For 2021, NextEra Energy expects adjusted earnings per share to be in the range of $2.40 to $2.54 and we would be disappointed not to be at or near the high end of this range. While we are pleased with our year-to-date results, which have exceeded the top end of our growth rate expectations so far for the year, we expect the fourth quarter results to include impacts from certain liability management activities that we are currently reviewing to take advantage of the low interest rate environment. These initiatives could generate negative adjusted EPS impacts of as much as $0.08 to $0.10 in the fourth quarter before translating to favorable net income contributions in future years and an overall improvement in net present value for our shareholders. Looking further ahead, for 2022 and 2023, NextEra Energy expects to grow 6% to 8% off of the expected 2021 adjusted earnings per share, and we would be disappointed if we are not able to deliver financial results at or near the top-end of these ranges in 2022 and 2023. Our earnings expectations are supported by what we believe is the most attractive organic investment opportunity set in our industry. From 2018 to 2023, we continue to expect that operating cash flow will grow roughly in line with our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% rate per year through at least 2022 off of a 2020 base. As always, our expectations assume normal weather and operating conditions. Let me now turn to NextEra Energy Partners, which performed well and delivered third quarter results generally in line with our expectations. Yesterday, the NextEra Energy Partners Board declared a quarterly distribution of $0.685 per common unit or $2.74 per common unit on an annualized basis, continuing our track record of growing distributions at the top-end of our 12% to 15% per year growth range. Inclusive of this increase, NextEra Energy Partners has now grown its distribution per unit by more than 265% since the IPO. NextEra Energy Partners continues to execute against its growth initiatives during the quarter. Since the last earnings call, NextEra Energy Partners closed on its previously announced acquisitions of approximately 400 megawatts of operating wind projects from a third party and approximately 590 net megawatts of geographically diverse wind and solar projects from Energy Resources. In addition, today, we are announcing an agreement to acquire an approximately 100 megawatt operating wind asset in California from a third party to further expand NextEra Energy Partners portfolio and enhance its long-term growth visibility. The project is located in a strategic market with strong expected growth in renewables demand, and it also offers significant optionality to NextEra Energy Partners in terms of operational savings and long-term value creation. NextEra Energy Partners intends to purchase the asset for a total consideration of approximately $280 million, subject to closing adjustments, which includes the assumption of approximately $150 million in existing project finance debt estimated at the time of closing. NextEra Energy Partners expects to recapitalize this project finance debt in 2022 as it executes on its overall financing plan for the year. We expect to fund the approximately $130 million balance of the purchase price using existing debt capacity. Subject to regulatory approvals, the acquisition is expected to close later this year or in 2022. Following the project debt paydown next year, the asset is expected to contribute adjusted EBITDA and unlevered cash available for distribution of approximately $22 million to $27 million, each on a five-year average run rate basis beginning December 31, 2022. NextEra Energy Partners continues to leverage its competitive advantages to be successful in third-party M&A and extend its long runway of growth. Consistent with our long-term growth prospects, today, we are also introducing year-end 2022 run rate expectations, which are built upon its strong existing portfolio cash generation and continued ability to access low cost capital to acquire accretive renewable energy projects. Overall, we are pleased with the year-to-date execution at NextEra Energy Partners and we believe we are well positioned to continue delivering LP unitholder value going forward. Now, let's look at the detailed results. Third quarter adjusted EBITDA was $334 million, up approximately 7% from the prior year comparable quarter due to growth in the underlying portfolio. New projects, which primarily reflect the asset acquisitions that closed at the end of 2020 and the recently closed acquisition of 391 megawatts of operating wind assets from a third party, contributed $23 million. Existing assets contributed $7 million, primarily driven by the wind repowering that occurred in the fourth quarter of last year and an improvement in wind resource. Wind resource for the third quarter was 101% of the long-term average versus 96% in the third quarter of 2020. These favorable impacts were partially offset by lower solar resource in the third quarter of this year. Cash available for distribution of $158 million for the third quarter declined by $4 million versus the prior year, primarily as a result of lower year-over-year PAYGO payments after a weaker wind resource period in the second quarter of this year. As a reminder, NextEra Energy Partners recapitalized its Genesis Solar project and other existing assets at the end of last year and the impact of this new project-level financing cost versus the prior year was offset by an associated reduction in corporate level interest expense as reflected in our other category. Additional details of our third quarter results are shown on the accompanying slide. On a year-to-date basis versus 2020, adjusted EBITDA and cash available for distribution have increased by roughly 9% and 6%, respectively. And NextEra Energy Partners remains well-positioned to continue to deliver on its outstanding growth objectives. We continue to expect NextEra Energy Partners portfolio to support an annualized rate of fourth quarter 2021 distribution that is payable in February of 2022 to be in the range of $2.76 to $2.83 per common unit. From a base of our fourth quarter 2020 distribution per common unit at an annualized rate of $2.46, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2024. NextEra Energy Partners continues to expect to be in the upper end of our previously disclosed year-end 2021 run rate adjusted EBITDA and cash available for distribution expectation ranges of $1.44 billion to $1.62 billion and $600 million to $680 million, respectively. We expect to achieve our 2022 distribution growth of 12% to 15% while maintaining a trailing 12-month payout ratio in the low 80% range. By year-end 2022, we expect the run rate for adjusted EBITDA to be in the range of $1.775 billion to $1.975 billion and run rate for cash available for distribution to be in the range of $675 million to $765 million. At the midpoint, these revised expectations ranges reflect estimated growth in adjusted EBITDA and cash available for distribution of roughly 23% and 13%, respectively, from the comparable year-end 2021 run rate expectations. These growth rates are supported by our strong execution against our long-term growth objectives in 2021, including opportunistic third-party transactions that were not previously in our plan. As a reminder, all of our expectations are subject to our normal caveats and include the impact of anticipated IDR fees as we treat these as an operating expense. Finally, during the quarter, S&P updated its ratings methodology for NextEra Energy Partners. And in particular, it will now evaluate NextEra Energy Partners debt metrics on a funds from operations or FFO to debt basis with a downgrade threshold of 14% instead of a debt-to-EBITDA basis. We believe that the combination of S&P's updated methodology, its assessment of NextEra Energy Partners improving diversity and its use of less conservative assumptions in the portfolios and renewable generation cash flows will allow for several hundred million dollars more of financing flexibility relative to our previous assumptions, providing the partnership with even greater flexibility going forward to finance accretive acquisitions for the benefit of our unitholders. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have some of the best opportunity sets and execution track records in the industry, and we remain as enthusiastic as ever about our future prospects. That concludes our prepared remarks. And with that, we will open up the line for questions.

And our first question comes from Julien Dumoulin-Smith from Bank of America. Please go ahead with your question.

Good morning, team. Thank you for your time; I appreciate it. The results have been impressive. To begin, could you describe the current environment regarding the various policy measures affecting panel imports and how that impacts your ability to execute? I've noticed it reflected in your comments, but I’d like to discuss it in more detail. Additionally, regarding origination, it has decreased again. How do you view the impact of the high energy prices we are experiencing today? How soon might this lead to renewed demand, and when do you expect that to happen considering the outlook for 2023, 2024, and beyond?

Thank you, Julien. I appreciate the questions, and good morning. As you even prefaced in your set of questions, we're pretty excited about the opportunities for both of the major businesses, both Florida Power & Light and Energy Resources. And specifically on the renewable side and Energy Resources, the team just had an awesome origination quarter, and that's kind of on the heels of other awesome origination quarters going back now for quite some time, setting us up for tremendous growth in the coming years. So in terms of demand backdrop, to kind of answer the second question first, it's terrific, and we're really excited about the value proposition of renewables looking forward, both in terms of being low cost and the ability to decarbonize both the electricity sector and other sectors as we've talked about. It's been an exciting 18 months for our integrated supply chain and engineering construction teams. Lots of opportunities to navigate uncertainties, like those which we and the industry probably haven't seen in quite some time. And it's also in the midst of enormous growth for us, a record year of renewables deployment last year and another terrific capital deployment year this year, so both growth and opportunities to show what we can do. It's good to be us. I mean, we've highlighted that in the past in the sense of being large in this industry, having significant capital dollars to put to work, enables us to have strong relationships and extensive relationships with those in the supply chain to help navigate these uncertainties. We feel good about our ability to navigate them. The plan does get iterated from time to time as the circumstances change, but we feel good about the long-term view for renewables and our ability to deliver on our expectations.

Hey, Julien. Just The only thing I'd add is I think people don't really appreciate the 10-year strip is up $1 since January. It's hugely positive for the renewable business, enormously positive.

Thanks and good morning. Could you please share the name of the counterparty for the green hydrogen project?

Yes, prefer not to, Steve. We're obviously really excited about the opportunity to supply them and provide this energy, and we think it is a great start to the hydrogen economy. But we'll leave that discussion for a later date.

Okay. Just to approach the supply chain question differently, regarding your backlog, did you notice any significant changes in the existing backlog from year to year?

Not meaningfully.

In the backlog?

I appreciate the question. No, nothing that I would consider to be meaningful at all. There's a couple of projects that moved out and a couple of projects that moved in, in terms of time frames, but very much consistent with our expectations. And as I highlighted at a very high level in response to Julien's question, we feel good about our plans of bringing in the projects we expect to bring into service in 2021 and have good line of sight for executing on the development plans thereafter.

Okay. And then last question, just obviously, I have to ask about the DC and the proposed clean energy credits and the reconciliation, etc., maybe just latest thoughts on what's most important to you and the likelihood and path to passage, how you're feeling about it?

So Steve, it's Jim. I would say that we remain cautiously optimistic that progress will be made on that front. As I mentioned earlier, if there is a reconciliation bill, I would be surprised if it doesn't include a long-term extension of the credits. The chances seem reasonably high if the Democrats can reach a consensus on what the bill will contain. It hasn't been easy, as we've observed over the past few weeks, and there are many differing opinions involved. However, I remain cautiously optimistic that there will be a positive outcome. If that happens, we are confident that there will be a long-term extension of the credits and support for other clean energy initiatives such as hydrogen and stand-alone storage ITC, among others. This would be very beneficial for us, as we view it as a crucial part of accelerating the decarbonization of the U.S. economy. As we consider our strategy moving forward, we increasingly see ourselves as a leader not only in the clean energy transformation of the electric grid but also in the broader clean energy and decarbonization efforts within the U.S. economy. The electric grid will be essential for decarbonizing both the transport and industrial sectors. We are positioning ourselves to be at the forefront of this movement, and I feel confident in the supportive policies we have as well as how our business is aligning with these goals.

I'm sorry, I have just one follow-up. Does this wind project for green hydrogen depend on the hydrogen PTC passing, or will it proceed regardless?

No, it's a contract with the customer irrespective of any sort of subsequent policy changes.

Hey, good morning guys.

Good morning, Shar.

I wanted to dive a bit deeper into the backlog. Can you share your insights on the increasing input costs for projects? We've noticed some challenges from developers and manufacturers regarding labor, steel, transportation, and so on. Are you noticing any impacts on project economics, especially for those that are on the margins? Are there any signed contracts where companies might be hesitant to proceed, particularly if the PPA terms allow for flexibility in terms of timing for starting projects? While you may not see it now, do you have any indications that projects might be delayed as buyers await relief on input costs?

Shar, I’m not entirely clear on your question. Are you inquiring about projects that are not ours but might be facing similar challenges? Or are you specifically asking about our projects? I wasn't certain who you were referring to in your question.

Sorry, specifically for your projects.

We are not experiencing anything significant from a buyer perspective. From our customers' viewpoint, we have a contract in place and anticipate fulfilling our obligations under those contracts. Regarding the supply chain, we believe we are well-equipped to manage any uncertainties. As I mentioned, we have a clear vision for bringing the projects we plan to launch in 2021 into service and have solid plans to execute our 2022 development initiatives. Looking further ahead, there are still many factors that could influence conditions in the next couple of years, but we have a strong team and a favorable position in the industry to navigate those challenges. From a customer perspective, we continue to see robust demand for new renewable energy projects, which is evident from the contract signings we announced today. John and his team have an impressive backlog of opportunities yet to be signed, and they are excited about engaging with our customers in the field. This is truly an exciting time for renewables in our industry.

Got it. Thank you for that. Thanks for the elaboration. Maybe just quickly shifting to the regulated utility, just wondering also how much more headroom from incremental O&M efficiencies do you still anticipate from the legacy Gulf asset? And how is that sort of headroom impacted from the recent run-up in commodity costs, mainly natural gas, right? So a bit of an efficiency and bill headroom question embedded there.

Sure, Shar. And obviously, we continue to work diligently at now what's going to be FPL going forward, particularly assuming the settlement agreement is approved next week by the commission, Gulf will be fully incorporated into the broader FPL enterprise. It largely is today, but obviously, from a regulatory standpoint, operates separately at least through the end of this year. We think there are continued opportunities to focus on optimization across the businesses. That's part of what we do as a company, is look for those opportunities to take opportunities to bring efficiencies to the business, and of course, invest capital to take cost out and lower fuel costs over time. One of the great ways that FPL, and that includes Gulf as part of it, will be to continue to deploy solar over the long term, because as you all well know, not only does it have the clean energy benefits, but it has low operating costs and no fuel costs, which will be a great offset in diversification in the state of Florida from our existing generation set. So I think there's continued opportunities. There's still a lot of work to be done. We focus hard on that every day and we think the team is all the cards in the hand to be able to continue executing.

Got it. So I guess, just not to paraphrase, but the recent jump in gas, and obviously, Jim highlighted the move in the forwards, that shouldn't really impact sort of the bill headroom just given the other leverage you have at the business?

Yes. Looking back at our historical investments, we've focused on providing long-term value to our customers. This means delivering lower costs over time, along with higher reliability, greater resilience, and clean energy benefits. It would be unwise to stop investing in opportunities that clearly benefit our customers. We are very aware of customer bills, and this is a priority in all our communications. Our daily focus is on ensuring we offer a strong value proposition, and we will strive to minimize any impacts on those bills over time.

Hey, guys. Thank you for taking my question. I have one or two here. First of all, the water and wastewater utility system acquisitions in Texas, can you talk about just the size and scale of the capital you're employing there for that? And then more long-term, kind of more strategic, how do you think about the opportunity for growth in that business? Is it more organic? Is it more kind of continuing to roll up neighboring systems? Or are you thinking about a national strategy here?

Hey, Michael, and good morning, and thanks for the question. We did include in the prepared remarks, the comment about the $45 million, and that $45 million includes both the acquisition of the regulated utility assets as well as that innovative water reuse and reclamation project that we talked about on the Energy Resources side. So in terms of our capital program, investing $15 billion a year and more over time, it's pretty small. But we referenced it for a good reason, and that's because we're excited about the opportunities. I think it's a lot like transmission in the sense that it will be built slowly over time and create opportunities for us to continue to have that regulated and long-term contracted base of value creation for shareholders. On the other part, the kind of innovative use and reclamation project that we talked about on the Energy Resources side, those also bring clean energy renewable opportunities as we're able to bring this broad suite of clean energy and ESG focused investment opportunities for our commercial and industrial customers. That gives us the opportunity to have a deep relationship with them, not just bring one solution, but bring a portfolio of options to them. So we think it's a terrific opportunity for the Energy Resources team to develop those meaningful relationships with our customers. So it's both an investment and a strategic opportunity from our perspective.

Got it. And then one question on Seabrook, and I know in the grand scheme of its earnings power, Seabrook, while it's a large plant, is nowhere near the biggest contributor of that. But just curious, how should we think about how much you financially hedge Seabrook? I'm just thinking about given the move in forward power prices, and Jim referenced the move in natural gas dollar increase in the strip, how we should think about whether Seabrook actually benefits from that materially or had you already significantly hedged it out prior?

Yes. So we have an ongoing hedging program that we execute ratably over time, executing a percentage of Seabrook's forward generation. So I would characterize it as pretty well hedged in the next couple of years. And then as you get out into the latter part of the 2020s and into the 2030s and beyond, less so. So it obviously would benefit if you mark-to-market that forward position, clearly, there's been some upside with the increase in natural gas prices and some of the congestion you've seen in the Northeast in terms of electricity prices. Whether that lasts in the long term, I think, remains to be seen, but certainly an opportunity for Seabrook. We continue to believe Seabrook is very well placed. It is in a particularly advantageous load zone. It's obviously in a region that values clean energy deeply. And you think about broad decarbonization in any part of the U.S., including the Northeast, well-positioned nuclear assets will be a key part of making that happen. So we very much appreciate our nuclear team and think they do a terrific job every day and Seabrook is a key part of that.

Hey, thanks for taking the question. Two on NEP actually. One on the multiple for the acquisition comes out around 11 times EBITDA versus the 9 times we saw for the prior two acquisitions, so job done. I just want to understand, has that been new normal you're seeing for asset acquisitions or anything specific to these projects? And just the second one on the 2022 CAFD walk, just want to confirm if it includes any repayment for the first BlackRock CEPF closed in 2018. Thanks.

I'll return to the second question. Regarding the transaction, it was a third-party deal, indicating a negotiated outcome. We believe the renewable sector continues to attract significant interest and will remain competitive over time. This transaction, alongside a previous third-party deal we announced and closed earlier this year, showcases specific advantages for NextEra Energy Partners, including our ability to secure favorable financing and leverage our relationship with NextEra Energy Resources to enhance operational value and capitalize on our scale benefits. As for your second question about the 2018 CEPF, we anticipate the conversion will occur in the latter part of this year, with a substantial portion converted into NEP units and the remaining balance paid in cash. We are still assessing the full impacts and financing strategies over time. As we mentioned regarding our run rate expectations, we project that year-end 2022 will align with the ranges we discussed today.

Hey, good morning, team. Thank you for taking my question. I just wanted to go back to the water utility acquisition strategy a bit. Obviously, this is in Texas, but there's obviously a ton of small municipal systems across the country, which are sort of owned by small mom-and-pop type facilities. Just are you going to sort of be more aggressive throughout the country? Or is there something specific about taxes as we think about you sort of competing for these small water utility systems?

Yes, I think it's a great question. As we've mentioned in our prepared remarks, we are really excited about establishing a solid presence in the water business. We believe we have the skills and capabilities, along with our extensive platform, to provide significant value through these acquisitions. However, as you noted, these opportunities tend to be quite small, whether they are privately owned or operated by municipalities. For instance, the example I shared today is part of another project and amounts to $45 million in relation to our $15 billion capital program. I anticipate that we will be active in this area, with some regions of the U.S. seeing more activity in the near term for various reasons. It's not limited to Texas, and we expect this will grow over time. We will keep you updated on our team's success.

Hi, good morning.

Good morning.

Thanks. I would like to focus on hydrogen for a moment. Can you share the timeline for when you anticipate green hydrogen to become competitive? Additionally, how much is NEE currently investing in hydrogen projects, and what are the expectations for increasing that investment over time?

I think it's a great question. I think in the electricity sector, when it's going to be particularly relevant is the latter part of the 2020s into 2030s and beyond. And for the key reason for that being that you really need to have the need for long-duration storage, and it is particularly attractive when you have very, very low cost energy input, and particularly, low cost renewables, which will inevitably have when you have substantial renewable deployment, again, probably in the latter part of the 2020s and beyond. What may be different is in the transportation and industrial sector, where there's already built-in use of gray hydrogen and other fossil fuels that could be supplanted with green hydrogen when it's competitive. The big question mark would be whether or not there's a hydrogen production tax credit ultimately in the final reconciliation bill. Clearly, there's one anticipated today, and at $3 a kilogram production tax credit, that really closes the gap between gray hydrogen and green hydrogen alternatives. And so that's a terrific opportunity to see growth in the near term, and what that would represent is using green hydrogen alternatives to supplant gray hydrogen. From our perspective, that opportunity is clearly to build a lot of renewables and you saw the first step in that direction in our announcement today about a power purchase agreement that we've entered into. But there would be a lot more like that in not just the renewable side, but also an opportunity for us to invest in the actual hydrogen production equipment such as the electrolyzer. So we'll see. We'll know a lot more in January once we've seen the final package, if there is one, as Jim highlighted, and it will develop over time in terms of opportunities. We think it's exceptionally likely. It's really just a matter of timing.

Got it. That's very helpful. Now, turning to transmission, to effectively enhance and maximize renewable deployment in the country, the expansion of transmission infrastructure is essential. However, as you know, it can be challenging and time-consuming to complete. I’m curious about your current thoughts on expectations for transmission expansion and the potential role NEE could play in that process.

Yes. We're really excited about transmission opportunities. Our NextEra Energy Transmission team has built a terrific business over the last decade with a number of organic wins as well as some acquisitions, as we've talked about in the past of, not only Trans Bay Cable, but GridLiance more recently, and we see a ton of opportunities going forward for us to be successful in winning some of those big opportunities to invest, realizing great returns, but also the strategic side of it of ensuring that it happens so that we can continue to realize the substantial renewables build-out that we already are seeing, and we expect to only continue to grow in this opportunity size over time. It may not be imperative today to have new transmission, but it's really, really important to start today because it will be imperative in the next decade and some of the policy considerations that FERC is undertaking today could be helpful to bringing that to reality over time.

It's essential to start addressing the strategic aspects now to ensure we can continue to benefit from the significant expansion of renewables that we are currently experiencing. We anticipate that this opportunity will continue to grow over time. While the need for new transmission may not be urgent right now, it is crucial to begin the process today, as it will become vital in the next decade. Some of the policy considerations that FERC is exploring today could aid in making this a reality in the future.