Conference Transcript - NEE 2026-10-01

Operator

uh next up uh we've got next era uh ceo john ketchum john's got uh some comments and slides he's kind enough to let me eat some lunch and watch him and then we'll have unfair steve unfair um don't go too fast not too fast uh and then we'll uh we'll have a discussion after so john i'll turn it to you okay terrific hey great to be here steve thank you again for uh inviting us just a terrific conference you put on every year.

John W. Ketchum, CEO

Typical cautionaries you are all familiar with. I won't spend a lot of time with that. One of the things I want to talk about, and I'm sure Steve and I will spend a lot of time on this today, is if we all go back to December, and really October, When I was up here last year, I said 2026 would be the year of execution for NextEra, and it has been. I'm proud to say we've really delivered against it. I'm going to talk a little bit about the 12 ways to grow that we put up at this conference last year. We talked a lot about it in December. But this slide really just deals with what we've been able to accomplish in the last 60 days. This is 60 days of performance. So since the Q2 call, we have 16 gigawatts now of federal hub opportunities, right? 10 gigawatts with the Japanese fund, and we already have $3.3 billion of capital in the door on those first 10 gigawatts. That's since the Q2 call. We just announced yesterday, I was up in Washington in the Oval Office with the president and his cabinet, we announced a 6.5 gigawatt opportunity that we're calling project star the first project done uh with korea and with the department of commerce so that brings us to 16 gigawatts i'm going to talk more about the federal hubs in a minute and i think some of the misconceptions that i see out there in the marketplace we also since the q2 call announced 4.6 gigawatts at paducah with the department of energy, so that puts us at 20.5 gigawatts. Half of that Paducah opportunity is gas, and the other half is storage. So if you add up the tally on the gas build, 18 gigawatts, right? To put that in perspective, the installed gas build at FPL today, which has the largest gas fire generation in the United States, is 24 gigawatts, right? So in 60 days, we put up 18 gigawatts of gas opportunities with the federal government. Obviously, we have a very large pipeline behind that 40 gigawatts of i mean 40 data center hubs which we'll talk more about later uh we also were able to recontract point beach in a very attractive you know contract for us there you can see the eps contribution which is very strong obtained a two billion dollar loan from the department of energy for the recommissioning of duane arnold which is going very well i'm sure We'll talk more about that today as well. As you all know, we're recommissioning that plant. Google is the offtaker there on that facility that will pay for 100 percent of the power generation. And we also announced 49 percent interest in a gas pipeline that's being built in Florida by Chesapeake. So that's just 60 days of hard work by the NextEra team. And this is really tying out some of the accomplishments that we've seen since December. When you look over the last nine months, in addition to what I just mentioned, Florida Power and Light is executing on all cylinders. We had a very favorable rate settlement agreement that came out at the end of last year. We've had 9.3 percent regulatory capital employed growth at FPL. We've taken the large load growth estimate up in Florida from 6 gigawatts to 8 gigawatts. We continue to say that we'd be disappointed not to be announcing a large load deal in Florida by the end of the year. We've had a lot of success, too, on the linear infrastructure program. So I mentioned the gas pipeline opportunity, but we've also brought forward two major transmission projects. So the CAGR that we had on the linear infrastructure, whether it's electric transmission or gas fire or the gas pipeline business, was a 20 percent CAGR a year. Just in the first nine months, we were already at a 25 percent CAGR for that business. The renewable business continues to perform very well. We've already had roughly 7.5 gigawatts of renewables and storage. The demand we see in the market, extremely strong going forward. We've been able to recontract roughly 2 gigawatts of PPAs. We have an 8 gigawatt target as we look through 2032, making excellent progress there. Being able to recontract into a much higher price market across the board. and the customer supply business continues to execute well through our acquisition of symmetry. We're now third largest gas marketer in the United States, third largest power marketer in the U.S. Those are skill sets that are really, really important when we think about meeting the demands of hyperscalers and we've had tremendous success on the artificial or super intelligence front across the board and an extremely successful effort that we just had on our rewire initiative on how to leverage technology in a way unlike any company in this sector and to continue to design products that can be used by the utility industry across the board through our partnership with Google, which remains very strong, and that relationship has been terrific. I said I wanted to spend a little bit of time on federal hubs just to address some misconceptions out there. So the message I want you to walk away with is this. We do not have to put one cent into these projects, not one penny. These projects are owned by the federal government and the countries of Japan or the countries of Korea, right? Not NextEra. But we get fee income streams back. That fee income stream is roughly 50% of the adjusted EPS that we would earn if we built the gas plant on our own balance sheet. So we don't put not one penny of equity or capital goes into these projects. We get 50% of the EPS profile that we would get if we built these on our own. So if we do the simple math on that and we say we have 16 gigawatts of federal hubs now secured, and we cut that in half based on the EPS contribution to 8 gigawatts, what I told you was our expectations back in December were 4 to 8 gigs of gas. We're already at the high end of that for 2032. If you add on the 2 gigawatts of gas for Paducah, that takes us to 10 gigawatts we're already chipping away at 2033, and we've done that in just a short number of months. I would expect that there could be more opportunities to follow on the Department of Commerce and Department of Energy front as we look to the future. and like I said before, we've had $3.3 billion of capital come in on the Japanese project, the first 10 gigawatts. We just got funded today, $2.4 billion on Project Star, which we announced yesterday. So these projects are moving forward. I know there's a lot of focus from investors on, well, when are you going to get contracts on these? The way the federal government's looking at them is, we're going to build these projects. The contracts will come. Project Star One of our partners is a leading DCO in the related companies. And that project is being built on Rod Lewis's land, who has been a partner of ours on the upstream side. So it's all on private land. That's where the data center will be built. That's also where the power generation will be built, right over an existing gas field. and the Anderson project right outside of Dallas, 5.2 gigawatts. Our partners are one of our relationships there is with Comstock, who will provide the gas supply for that facility as well. So those projects are in good hands and are moving forward as we speak. One of the things that we have not talked about, this is new news, is all these federal hubs, so these 16 gigawatts of federal hubs, we have all the rights to build the battery storage capacity that will serve these three hubs. These are not in our financial expectations. So there's a 6 to 11 gigawatt incremental battery storage build opportunity that is an upside to the existing forecast expectations that we have laid out for investors. It's a bit of a busy slide. This is our 12 ways to grow. I've covered most of this. Your takeaway should be that we said we grow in 12 ways. We are growing in 12 ways, and we have made substantial progress against each of these metrics and targets that feed into our financial expectations as communicated back in December. I want to switch gears and just talk a little bit about affordability. I know affordability is top of mind across the country, and we take great pride in driving very strong affordability for our customers, which is a message that we're bringing forward as part of the Virginia, South Carolina, and North Carolina messaging around the Dominion combination. So if you look at our bills in Florida, we've been accommodating growth for 20 years in the state, one of the fastest growing states in the country, 14th largest economy in the free world if Florida were a country. Our bill today is actually 20 percent less than it was 20 years ago in real dollars, our bill's 37% lower than the national average. Our liability's 60% better than the national average. Our O&M on a dollar per megawatt hour basis, 70% lower than the industry average. And our O&M is 50% better than second best in the industry. And our customer service under J.D. Powers 2025 study is top desk style. So we don't cut corners. We deliver on affordability. We know how to leverage scale benefits. We know how to deliver affordability and reliability to customers. And we're doing it not only in Florida. We're not only doing it across all 50 states. We're going to do it in Virginia. We're going to do it in South Carolina. We're going to do it in North Carolina. And with the combination, you know, I think it's just a great story, moving from 110 gigawatts to roughly 240 gigawatts by 2032 is the expectation, doubling the size, more than doubling the size of the company with regulatory capital employee growth of roughly 11 percent, 9 percent plus adjusted EPS growth going forward as filed in our S4. So as I look back at what we said to investors in December, I fast forward to today, we are really performing and executing across the board on the 12 ways to grow, And we've added a combination that's day one accretive to shareholders on top of that. And with that, Steve, I'll take your questions.

Operator

All right. Okay. Thanks, John. That was a great intro. And so maybe just with the new news on the projects with the gas projects and the scale of those projects, You could talk a little bit more about the, you know, so the earnings are basically kind of half of what you'd get. But is the cash flow maybe even better just because, or is the cash flow, because you're not adding any debt, so then cash flow to debt and just the overall balance sheet of the company in that context?

John W. Ketchum, CEO

Yeah, no, that's right. Right. I mean, it endures to FFO. We don't have the financing cost. The resources that we put up against supporting these projects are paid for dollar for dollar under the structure of the transaction. And so, you know, from a cash flow standpoint, you know, very strong contribution. And the way to think about it is, you know, we get, you know, development fees, milestone fees for meeting certain requirements as we build. and then two pieces of operating fees once we go COD, one that's fixed, one that's variable.

Operator

And just as, you know, compared to building plants yourself and the like, what risks do you take on, if any, in terms of these deals?

John W. Ketchum, CEO

Yeah, I mean, you know, these are not our projects, right? These are projects for the federal government and for the country of Japan and Korea. So our obligation is to get them built, you know, the response, you know, we put some of our fees, you know, at risk in terms of meeting milestones and certain operating requirements. But they're things that we're quite comfortable in our capability of achieving.

Operator

And then I'll get to you in a minute. And then how did you, how did you, you know, you know, what's your sense on kind of how you got chosen to do these? Just what drove that?

John W. Ketchum, CEO

I think it's really reputational. And so when you look at the market today, I think one of the things that's really unusual about NextEra and where power demand is headed in this country is it requires more than ever a company that can participate and contribute and has experience in every part of the energy value chain. because the requirements to provide solutions for customers at scale is different by customer, it's different by location, it's different by profile, you know, of what they want to achieve. Some examples are, I mean, a lot of customers we talk to, they have a speed to power need, right? And a way to get them up and running very quickly is with solar and storage. And then once they're up and running in solar and storage, bring gas in behind it. But depending on where we're located, we might have to bring a gas pipeline in or build new transmission. They mean if it's a toll, we may need gas marketing capability. We need to understand gas flows on where to locate. Power marketing may be required for certain hedging requirements. Battery storage optimization with the software capabilities that we have and the edge that we have developed there really, really important. All these combinations of skills are really critical to being able to deliver cost-effective solutions for hyperscalers. And the other thing I would mention is if you look at the FERC show cause order and you look at kind of where we are today, I think a lot of the way the market has evolved is if we look four, three or four years ago, there was a lot of excess capacity on the system. That's gone, right? That's been spoken for. And so now what you're seeing is what the FERC show cause order and the focus and the doubling down by ISOs is, show me if you're going to build load, pair it with generation, right? And I'll look at the SPP model, right? And those have to be two substations away. That's already been approved by FERC. If that's kind of the model or some subset of that structure that goes forward, it's going to become critically important that load and generation are working together early on. The opportunity cost has never been higher on being wrong, right? So if you're a hyperscaler and you're making a hundred billion dollar bet on chips if you're wrong because you chose the wrong power supplier you're wrong because you chose the wrong location to build in you're wrong because you didn't select somebody who has the supply chain capability and the ability to execute deliver power where and when it's needed on time on schedule on budget you're in trouble I mean the opportunity cost is massive and so what we're now seeing too in our dialogue with hyperscalers is hey and a lot of lessons learned is look a real willingness to work together early on and so you know we have really strong relationships you know across the board that's where i'm heading right after this meeting is out to the west coast to spend a lot of time with with one of our customers out there and uh it's it's just never been more important and i think that's why we were picked by the by the government you know I was there, you know, in the Oval Office with all three Capit secretaries yesterday, Secretary Ludnick, Secretary Wright, Secretary Bergen, and they just all have a lot of confidence in NextEra and our capability to build and to deliver.

Operator

And then I think you kind of said there that there might be more of these. Any sense on kind of how much more there could be of these or similar type?

John W. Ketchum, CEO

Yeah, I don't want to put a number on it, Steve, but, you know, I think, look, we need super intelligence, you know, in this country, and power is a limiting factor. We have a supply, demand, and balance, and that's what the Trump administration is trying to address, is to make sure that we have the supply to meet the demand. And so I do think there's the potential for more opportunities here to partner together. And, you know, our whole strategy, if you look back 18 or 24 months ago, is we knew this was where this was heading. Our bet was this was going to be a bring-your-own-generation rather than a recontracting market because you can't recontract low-cost generation because somebody pays for that, right? And that's the residential customer. So we didn't think that would work long term. And so our focus was bring your own generation, get land positions, get, you know, hubs up and running as quickly as we could in the right locations where we think hyperscovers will want to be based on the artificial intelligence tools, super intelligence tools that we've developed across the board at NextEra. many of which you've all seen, you know, in practice during some of the investor events we've had on campus in Florida.

Operator

I guess last question on this topic is just, you know, there's a history of new presidents coming in and including the current one and not liking the stuff that the prior president did and was involved in administrations or just how are you kind of dealing with the risk of that happening in the future? Because I assume these will still be getting built during that time?

John W. Ketchum, CEO

These are going to be fast-moving projects that are going to get, I think, funded rather quickly. I mean, you look at already on the Japan projects at almost three and a half billion of capital. Those are just the first two capital calls. It could be more as we get through the year. So the capital is already coming in at a pretty brisk pace. We already have a 10% funding on the Korean project today that's sitting in the bank account for two and a half billion dollars for us to get going you know on supply chain commitment so um these are moving and they're going to move quickly and um capital is going to be committed you know in a way that we get these projects up and running fast so i'm not too concerned about that well we're not at risk i mean it this isn't my project at the end of the day hey, we're taking the capital and we're buying equipment or we're going engaged in services. We're not putting our balance sheet at risk for that. So the exposure that we're taking on is tied directly to the capital that flows into the door. And so we're never overextended or overcommitted to a supplier of equipment or to a supplier of services on the EPC side. We take no risk in this.

Operator

So it'd be basically our government and the other, yeah, the other governments.

John W. Ketchum, CEO

They have the owner risk on this. But it's our job, too, to make sure that we advise them and that we make smart moves on how we structure these contracts. But this is what we do every day. This is nothing new for us. I mean, you know, we are very comfortable structuring milestone payments to equipment suppliers and to EPC contractors in a risk-mitigated way to where we never are, you know, out in front of our skis, so to speak.

Operator

And then, actually, I lied. One more question on this. The behind the meter, front of the meter, I think a lot of these start behind the meter and then move front of the meter and then add front of the meter. Maybe you could just talk, too.

John W. Ketchum, CEO

Yeah, I mean, I think, you know, when you look at these projects, I mean, we're very comfortable with them starting behind the meter. We're able to show a front of the meter, you know, opportunity going forward. But it doesn't have to be one for one, either. We can rely on the way we've designed and built these projects in a way where you don't have to have perfect redundancy on load interconnects to be able to supply, to get a load interconnect to be able to cover a six and a half gigawatt project you're not going to get, right? But having enough in an emergency situation with enough redundancy in the build and the structure and the engineering of the underlying project is what's critically important. And, you know, I look for battery storage too, Steve, to play, you know, a bigger role. It's not only in terms of backup generation capability as a diesel substitute, but, you know, I would also look for the battery storage market to move not only from a capacity opportunity, but to a voltage regulation compliance market opportunity as well. because you've seen some impacts from voltage fluctuations that have been attributed to some data centers. And battery storage can play a critical role in that, and we're very, very focused on that as a huge, huge business opportunity for us.

Operator

And then maybe just on when we think about these announcements, that list of things on the page there relative to the growth rate and plan that you had out there, What would you say is already kind of embedded in some way, and what would be an upside to that?

John W. Ketchum, CEO

Well, if you look at our S4, we had one federal hub, you know, in our S4. We've got three now. I mentioned the battery storage opportunity now being 6 to 11 gigawatts, not even in our development, you know, expectations. So we reserve for, you know, our own build opportunity. And what I remind the team of is every time we build a gas project across the country, that comes also with a couple of opportunities. I mean, the first one is a storage opportunity, whether that's on the compliance side or that's on, you know, the backup generation side. It also comes with the CFE, you know, element, you know, as well in combining technologies, you know, together. And, you know, that's one of the things that when I look at kind of how we're positioned today, not only across the supply chain, but strategically with the vertical integration and the participation across the value chain with the different capabilities that we have at NextEra, it positions us in a way unlike any other company to be able to combine different resources together, which is critically important because there is one conversation that we're having with a major hyperscaler. at scale that is just a one-size-fits-all. Well, just build me gas, just build me an SMR, just build me solar and storage. It's always a conversation about, well, what if we start out at one gig of compute capacity and we move to three or four or five? What does that look like? What does that look like in terms of my storage needs? What does that look like in terms of available transmission capacity, the load interconnect? All the things and tools we've designed, you know, over the last three to five years where we have a massive data and super intelligence advantage over this industry. And then the products that we're developing in partnership with Google to really go after being able to even further distance our competitive advantage by driving technology solutions.

Operator

Two other questions for me, then I'm going to open it up. The Florida, and I think you talked about getting a data center announcement there by the end of this year. How are you feeling about hitting that? And just is the election there kind of having any impact on data center demand and interest?

John W. Ketchum, CEO

Yeah. Yeah. You know, so so the so the first part of that, you know, we took our forecast up from six to eight gigawatts here recently on large load opportunities. So we feel bullish about large load opportunities in Florida. You know, we'll continue to be disappointed not to have announced something by by the by the end of the year, you know, on that front. You know, when I think about the election going, you know, going forward, look, you know, at the end of the day, this is good for Florida. I mean, this is going to create good paying jobs. It's going to, you know, stimulate, you know, local economies, but it's got to be done in the right way. I mean, one of the things I spent a lot of time talking to the leaders of the hyperscalers about is, you know, kind of our track record over the last 20 years developing in communities. And, you know, you have to go in and, you know, we have a really stringent large load tariff in Florida, one of the most customer protective in the country. We make sure that residential customers don't shoulder the burden of the bill that we have on serving hyperscalers. That's the first piece. Second piece is going in and making sure the hyperscaler is going to pay their property taxes. Third is they're not going to use the water, right? They're going to use closed-loop cooling. They're going to use water from water treatment facilities. The fourth piece is the aesthetics. How hard is it to build, like, you know, a facade that makes a facility look like an office building? Like when I go to northern Virginia, a lot of the data centers have windows around it. You wouldn't even know if it was an office building, data center, or warehouse. You'd have no idea, right? But how hard is it to make an investment in aesthetics and vegetation? And give something back to the community. What's in it for them? Get behind workforce training, job training. One of the things we're supporting with Meta, with Dina Powell McCormick, I have a very good relationship with, is the American Workforce Academy, taking folks coming out of that academy and repurpose them in the EPC jobs and putting them into roles in energy infrastructure, which is what we're doing. We've already committed to take 1,000 workers out of the AWA program, giving bonuses to teachers like Meta's done with the $50,000 bonuses to teachers in the parish in Louisiana. I mean, there are really smart things that we can do around being a responsible community citizen, giving back to first responders. Be a good corporate citizen. And be a job creator in those communities. Give back the workforce development. There's a right way to do it, and there's a wrong way to do it. And we're trying to do it the right way, and we're trying to partner with people that are doing it the right way. Last for me, and I'll open up, Dominion Deal. We haven't talked about that.

Operator

I don't know if that was because something has changed or just you're trying to remind people that you've got a lot of growth on your own. But just how are you feeling about Dominion deal in terms of getting it done and then opportunity once you do?

John W. Ketchum, CEO

Feeling really good about it. You know, first of all, one of the things that we've really tried to do is listen, right, and take feedback. And so we've had hundreds of stakeholder meetings in Virginia. And we wanted to make sure that we were putting our best foot forward and that we were really listening to the community on what was important. And what's been really clear are, you know, three things that have come out of that. You know, one is jobs, two is affordability, and three is clean energy. And not necessarily in that order. But on the affordability side, we were able to, you know, work with the data center community. Amazon actually filed right before we filed our additional commitments on the Friday before that they were willing to give up their credits, right? And they were getting most of the large load credits in Virginia and reallocate those over residential. And then we topped that off with another $85 million, you know, commitment. But that took residential credits from two years to four years. We put $100 million behind the low-income bill assistance program that they have in Virginia, which gets paid out through 2038. We put $100 million behind workforce development. We committed to 1,000 jobs, 600 coming from NextEra, which is doubling in size anyways, and then 400 new jobs coming from suppliers. building a new office tower to be able to house those folks in Richmond, which, you know, in Richmond's been was hit hard by the banking community, you know, having moved to Charlotte, to Charlotte. And, you know, it's now a chance by creating an ecosystem around Virginia for Virginia already leads in tech. They lead in defense. When you put these two companies together, you have the global leader in power. and it's a chance to have a co-headquarters of the global leader in power. And so suppliers want to be there. And by creating a workforce development and a supplier support program, too, where we're committing to spend a billion dollars a year in Virginia for suppliers doing business in Virginia, this creates that ecosystem for natural growth around the state. And so I feel like we've really put our best foot forward, and that's why I answered the question the way I did. And in South Carolina, you know, we're committing to make investments in generation and transmission, just like in Virginia, generation and transmission. It's important for Virginia to become more energy independent, less reliant on expensive imports from PJM. And, you know, we think we can get that done. They have 20 gigawatts of storage that has to be built under statutory mandate by 2044. Well, who better to do that than the world's leader in batteries? A lot of the 600 jobs that we would be bringing to Virginia around renewables, around battery storage, battery storage excellence center, SMRs, AI, cybersecurity, we think it's a really good fit. If the focus is on jobs, affordability, and clean energy, I can't think of a better match for Virginia than NextEra combining with Dominion.

Operator

All right, let me open it up to the audience.

John W. Ketchum, CEO

Yeah, I mean, without getting into too many of the details, because it is sensitive in terms of what we can talk about, what we can't talk about. The way it's set up is that just like any energy infrastructure project, right, there are certain milestone payments that you have to make along the way, right? You've got to reserve turbine slots. You've got to make milestone payments to your EPC contractor to get the labor commitment, you know, up front to build. And those payments have to be made over time. This is being, you know, structured through a special purpose vehicle, private, it's outside the government, infrastructure with funding commitments coming from the Japanese government, the Korean government, who have said, look, instead of facing tariffs with the U.S. government, they now have a chance to earn a return on investments here in the United States. And so the way the milestone payments are structured is such that, you know, we accommodate that build going forward. But from our standpoint, we're not the owner, you know, of the facility. And so we will structure these milestone payments. They're due on certain dates to maintain schedule. This government is this administration is very, very focused on making sure that these projects get up and running as soon as possible because we're desperately short energy generation in this country to accommodate, you know, data center supply.

Operator

Nextera Energy Inc Investor Event Transcript, Oct 1, 2026

Conference Transcript - NEE 2026-10-01