Earnings Call Transcript - NEE Q4 2022

Operator, Operator

Good morning, and welcome to the NextEra Energy and NextEra Energy Partners Fourth Quarter 2022 Earnings Call. All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Jessica Geoffroy, Director of Investor Relations. Please go ahead.

Jessica Geoffroy, Director of Investor Relations

Thank you, Jason. Good morning everyone, and thank you for joining our fourth quarter and full-year 2022 combined earnings conference call for NextEra Energy and NextEra Energy Partners. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy; Kirk Crews, Executive Vice President and Chief Financial Officer of NextEra Energy; Rebecca Kujawa, 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, Chairman, President and Chief Executive Officer of Florida Power & Light Company. John will provide some opening remarks and will then turn the call over to Kirk 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, in 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. As a reminder, Florida Power & Light completed the regulatory integration of Gulf Power under its 2021 base rate settlement agreement and began serving customers under unified rates on January 1, 2022. As a result, Gulf Power is no longer a separate reporting segment within Florida Power & Light and NextEra Energy. For 2022 and beyond, FPL has one reporting segment and therefore 2021 financial results and other operational metrics have been restated for comparative purposes. With that, I will turn the call over to John.

John Ketchum, Chairman, President and CEO

Thank you, Jessica, and good morning everyone. Before discussing our financial results and future growth prospects, I want to address the status of our review. Last quarter, we reported that we were examining allegations of violations of Florida state and federal campaign finance laws mentioned in media articles and a related complaint filed with the Federal Election Commission in October. Our review of the available information is now largely complete. Concerning the Florida allegations, we believe that FPL would not be found liable for any violations as alleged in the media. Regarding the FEC complaint, which was filed by a special interest group and relies on media allegations of violations by various parties, including FPL, the FEC process is confidential and begins only if the FEC votes to investigate. We plan to file our response, seeking dismissal of the complaint in the coming weeks and do not think it should proceed. The total contributions mentioned in the complaint are under $1.3 million, and we do not expect the allegations to have a material impact on us. Moving forward, I want to discuss our fourth quarter and full-year 2022 financial results and future growth prospects. NextEra Energy and NextEra Energy Partners had an outstanding year in 2022 and are well-positioned for the future. The cost and efficiency of new renewables have improved significantly over the past two decades, while natural gas prices have risen this past year and are likely to remain volatile. Additionally, landmark renewables legislation was enacted last fall. After the Inflation Reduction Act, we emphasized its transformative impact on our industry. Before the IRA, our qualifications for federal incentives were primarily limited to wind production tax credits and solar investment tax credits, making business planning challenging due to the uncertainty of whether these incentives would be extended or allowed to expire. Today, the incentives are clearer and cover a broader range of renewable technologies, are in effect for a longer duration, and promote a domestic supply chain that reduces the cost of U.S.-made renewables and creates jobs. We believe the IRA offers growth visibility for a wide range of low-cost clean energy solutions in a predictable manner over the long term. In this environment, low-cost renewables will enable NextEra Energy and NextEra Energy Partners to continue delivering long-term value for our customers and shareholders. Hence, I am excited to announce that we are extending our financial expectations for another year at both NextEra Energy and NextEra Energy Partners. I'll share more details on these expectations shortly. In 2022, NextEra Energy maintained its strong track record of excellent execution, achieving full-year adjusted earnings per share of $2.90, an increase of nearly 14% from 2021. Strong operational and financial performance at both FPL and Energy Resources allowed us to meet the high end of our EPS expectations. Over the last decade, we have provided approximately 10% compound annual growth in adjusted EPS for our shareholders, the highest among the top 10 power companies. NextEra Energy outperformed the S&P 500 Index by almost 10% in 2022, despite a challenging financial market. Regarding total shareholder return, we have outperformed both the S&P 500 Index and the S&P 500 Utilities Index over three, five, ten, and fifteen-year periods. In the last 15 years, we outperformed nearly all other companies in the S&P 500 Utilities Index, more than tripling its average total shareholder return. During the same time, we exceeded 75% of S&P 500 companies while nearly tripling the index's average total shareholder return. We take pride in our long history of creating shareholder value and remain focused on executing at both FPL and Energy Resources. Despite periods of uncertainty and disruption, 2022 was no exception; we invested over $19 billion in American energy infrastructure while maintaining a strong balance sheet and credit ratings. We managed to construct and commission approximately 5,000 megawatts of new renewables and storage projects, showcasing our team's expertise and advantages. Despite short-term disruptions, we maintained a focus on delivering nearly 14% adjusted EPS growth in 2022. FPL successfully executed its strategic initiatives, providing what we believe is the best customer value proposition in America. While facing inflationary pressures, we managed to reduce our leading non-fuel O&M costs per megawatt-hour by around 8.6% compared to 2021. Our continued investments in solar generation are aimed at reducing the variable fuel component of our customer bills. In 2022, we placed about 450 megawatts of cost-effective solar into service, and we expect to commission around 1,200 megawatts of low-cost solar in 2023, increasing our total solar deployment to roughly 1.7 gigawatts within the first two years of our current rate agreement. Our commitment to productivity and smart capital investments has helped keep our typical 1,000 kWh residential customer bills among the lowest for Florida investor-owned utilities and over 30% below the national average. FPL has also maintained exceptional service reliability and has been recognized as the most reliable electric utility in the nation for seven out of the last eight years. Our team's response during hurricanes Ian and Nicole was commendable. In a year marked by high inflation and natural gas prices, FPL utilized its strong balance sheet to provide relief for customers. Looking ahead, we are committed to offering clean, affordable, and reliable service for many years to come. Energy Resources also performed exceptionally in 2022, recording adjusted earnings growth of nearly 11% from the previous year. With strong economics driving demand for renewables, Energy Resources achieved a record year in new renewables and storage creation, adding over 8,000 megawatts to our backlog as we leverage the ongoing clean energy transition throughout the United States. With recent net additions, our renewables and storage backlog stands at a record approximately 19 gigawatts, net of projects placed into service, offering strong visibility for future growth. Our ongoing execution, combined with long-term visibility into clean energy incentives and a favorable market for low-cost renewables, strengthens our long-term outlook for NextEra Energy. Last June, we shared our vision and strategy for decarbonizing both our company and the broader U.S. economy. The IRA has provided unprecedented certainty and flexibility for planning growth. Over the next 20 years, we believe we can continue creating long-term value for shareholders through further investments in renewables and storage, expanding into new markets and products that facilitate additional renewables, and optimizing our existing fleet through asset repowering and co-locating storage. At FPL, our goal is to lower costs for customers by strategically investing in low-cost solar, storage, and eventually hydrogen. By transforming our generation fleet and persisting with our fuel-switching strategy, we will not only help customers maintain low bills but also assist Florida in achieving energy independence. Our customers are already experiencing the positive effects of the IRA on their bills. We estimate that solar production tax credits could save customers around $400 million over the duration of our current rate agreement. Earlier this month, these savings began with a one-time $36 million refund on customer bills related to our completed solar projects in 2022. As solar currently represents about 5% of FPL's generation mix, we are still in the early stages of expanding our low-cost solar portfolio. In April, FPL plans to file its Ten-Year Site Plan, outlining our generation resource plan through 2032. Last year's plan featured about 9,400 megawatts of new solar capacity through 2031, including around 4,600 megawatts of additional solar after 2025. With the benefits of the IRA in mind, we expect this year’s post-2025 new solar capacity target to more than double last year's proposal. We believe low-cost solar will provide a valuable hedge for our customers against future rising natural gas prices. Energy Resources' strategy aims to serve utilities and commercial and industrial customers with comprehensive clean energy solutions, fueled by the combination of low-cost renewables, rising natural gas prices, and the broader push for decarbonization in the economy. These solutions can be complex, often including renewable fuels, hydrogen, and behind-the-meter projects, which we anticipate will generate greater demand for renewables. Customers are seeking long-term partnerships and tailored solutions on an unprecedented scale, and we believe Energy Resources is uniquely positioned to meet these complex needs while helping customers save on energy bills and achieve emissions reduction goals. We are particularly enthusiastic about the potential for green hydrogen as a cost-effective solution for commercial and industrial customers. We are developing algorithms and tools to identify the best green hydrogen sites nationwide and capitalize on our significant interconnection and land inventory. Our decades of experience in the renewables sector supports our participation in emerging clean hydrogen markets, and we are already seeing early successes. Last week, we signed a term sheet for about 800 megawatts of new solar generation, which is not yet in our backlog, expected to achieve commercial operation in 2026 and support a developing green hydrogen-related facility in the Central United States. Additionally, Energy Resources is involved in the development of hydrogen hubs in the Southwest and Southeast. Earlier this month, these hubs were encouraged to submit full applications for federal funding under the Department of Energy's $8 billion program to establish hydrogen producer-consumer networks and local infrastructure for hydrogen use. Our plan in the Southeast includes supporting a 140 tons-per-day clean hydrogen facility at our Gulf Clean Energy Center, powered by FPL solar projects. In the Southwest, we intend to build a 120 tons per day electrolysis-based hydrogen project in Arizona in partnership with Linde, the largest industrial gases company and liquid hydrogen producer in the U.S., with whom we have signed a Memorandum of Understanding. These hydrogen opportunities reflect just some of the initiatives our team is actively pursuing. We are collaborating with various partners on hydrogen solutions and are excited about the quantity and scale of opportunities before us. At our investor conference last June, we announced expectations for Energy Resources to develop approximately 28 to 37 gigawatts of new renewables and storage through 2025. In setting those expectations, we accounted for the expiration and phase-down of tax credits as per existing tax law. Typically, demand spikes in the years immediately before tax credits are set to expire, followed by a lull after extensions. Despite the IRA extending tax credits, we are seeing strong ongoing demand for new renewables. Given the robust demand and our distinctive competitive advantages, we are extending our development expectations at Energy Resources through 2026. We now anticipate placing approximately 32,700 to 41,800 megawatts of new renewables and storage projects in service from 2023 to the end of 2026. Comparing midpoint to midpoint, these new four-year expectations are about 15% higher than our prior development expectations announced last year. Executing at the low end of these new expectations would more than double our current renewables and storage operating portfolio, which took over 20 years to build. With long-term visibility into clean energy incentives and significant growth opportunities at both FPL and Energy Resources, I am pleased to announce we are extending our adjusted earnings per share growth expectations for NextEra Energy by an additional year through 2026. For 2023 and 2024, we foresee our adjusted earnings per share ranging from $2.98 to $3.13 and $3.23 to $3.43 respectively. For 2025 and 2026, we expect to grow by 6% to 8% off the 2024 adjusted EPS range, corresponding to $3.45 to $3.70 for 2025 and $3.63 to $4 for 2026. We would be disappointed if we are unable to achieve financial results at or near the top of our adjusted earnings per share expectations in each of 2023, 2024, 2025, and 2026, while also fostering a strong balance sheet and credit ratings. Our expectations consider our usual cautions, including typical weather and operating conditions. Now, let me address NextEra Energy Partners, which had another excellent year while fulfilling its commitments to unitholders. In 2022, NextEra Energy Partners increased its LP distributions per unit by roughly 15% year-over-year and reported over 20% growth in adjusted EBITDA, demonstrating the strength of its operating portfolio. This growth is supported by an impressive portfolio of clean energy assets, further diversified in 2022. During the year, NextEra Energy Partners acquired interests in around 1,200 net megawatts of long-term contracted renewables and storage assets from Energy Resources. Our confidence in NextEra Energy Partners’ growth potential has been reinforced by the IRA. We expect robust opportunities for acquiring renewables from both Energy Resources and third parties in the coming years, given the anticipated two decades of clean energy incentives ahead. The organic growth prospects for NextEra Energy Partners have also expanded significantly, as we are evaluating repowering investments for about 1.3 gigawatts of wind assets for 2024 through 2026. Earlier this month, NextEra Energy Partners leveraged its capital advantages to execute early buyouts of tax equity interests on two existing asset portfolios for about $190 million. These transactions position NextEra Energy Partners to benefit from the IRA's transferability provisions, allowing tax credits to be sold to third parties. The buyouts and subsequent transfer of tax credits enable NextEra Energy Partners to access two revenue streams for unitholders: project cash flows and cash flow from the transfer of PTCs. Together, these early tax equity investor buyouts are expected to yield an attractive cash distribution for unitholders. The support provided by the IRA, combined with the future outlook for renewables from Energy Resources and NextEra Energy Partners' opportunities for both third-party M&A and organic growth, alongside the ongoing ability to raise low-cost capital even in a tight market, gives us robust long-term growth prospects. Therefore, we are pleased to extend our financial expectations for NextEra Energy Partners by another year. We now expect annual growth in per unit distributions of 12% to 15% through at least 2026. We believe NextEra Energy Partners’ distribution growth expectations are unparalleled among similar companies in the market and that its combination of clean energy assets, growth visibility, and financing flexibility presents a uniquely appealing value proposition for unitholders. In conclusion, both NextEra Energy and NextEra Energy Partners are in a strong position. We expect significant acceleration in renewables and storage deployment across the U.S., especially in the latter half of the decade due to the IRA. We believe our competitive advantages will enable us to continue delivering value to shareholders and unitholders for years to come. Before I hand the call over to Kirk, I want to mention some important organizational changes announced today. After 20 years with NextEra Energy, Eric Silagy has decided to retire from FPL, where he has led the team for 11 years. Eric has been a dedicated advocate for continuous improvement, and under his leadership, FPL has become the nation's largest and most reliable electric utility. For the last decade, Eric has spearheaded the modernization of FPL's generating fleet, ensuring it is among the cleanest, lowest-cost, and most fuel-efficient in the country. His commitment to prioritizing customers is evident in FPL's award-winning service, significantly lower bills than the national average, and top reliability ratings. Last year during hurricanes Ian and Nicole, I witnessed Eric's dedication and compassion as he guided the FPL team to swiftly restore power and support our community. Over his two decades of service, Eric has also been a strong supporter of the communities in which we operate, promoting Florida's economic growth, enhancing our state university system, and cultivating the next generation of Florida leaders. I want to thank Eric for his contributions and wish him and his family the best in this new chapter. With Eric's departure, we are pleased to welcome Armando Pimentel back to NextEra Energy as FPL's President and CEO. Armando previously served as NextEra Energy's and FPL's CFO and the President and CEO of NextEra Energy Resources. As a lifelong Floridian, he is a proven leader focused on customer service. He is a valued friend and colleague, and I am confident that under Armando's leadership, FPL will maintain its strong performance for customers. Let me now turn the call over to Eric for some personal remarks.

Eric Silagy, CEO of Florida Power & Light Company

Thank you, John. I want to start by saying what an honor and a privilege it has been to work for NextEra Energy. This company's performance has been unprecedented in our industry and I couldn't be more proud of the results that we have delivered for our customers, our shareholders and our employees. When I joined NextEra Energy in 2003, FPL relied more on foreign oil to generate electricity than any other utility in America. We knew that we needed to modernize our generation portfolio and we recognized that building a clean, low-cost and fuel-efficient fleet was a great decision for our customers as it would save them money on their fuel bill. Today, that long-term vision has saved FPL customers a cumulative $14 billion over the last 20 years. That's $14 billion that never came out of our customers' pockets and helped them to pay for their kids' education, take their families on a vacation or pay for other family expenses. These efforts began by thinking of ourselves more as a technology company than a utility, finding new and innovative ways to run the grid. And it led to improved reliability, reduced operating costs and a totally different way to approach hurricane restorations. Ultimately, this new way of thinking led to faster restoration times, which has saved the State of Florida billions of dollars. These are just a few examples of how we have transformed FPL into one of America's cleanest, most affordable and most reliable energy companies. While saying goodbye to such a great organization is always difficult, I know that now is the right time for me to hand over the reins of FPL. The last year has been one of the most challenging of my career given a number of distractions, including two hurricanes and significant supply chain and inflationary pressures, to name just a few. When John became CEO of NextEra Energy last year, I committed to him that I would stay in my role for at least one more year and I've now satisfied that commitment. In April I will mark my 20th anniversary with NextEra Energy at which point I will have led the FPL team for going on 12 years, which is well beyond the tenure of most CEOs. We have two more years of execution before our next rate-setting proceeding, which as all of you know is an all-consuming process and that I just wasn't sure that I could fully commit to. So, I feel it's best for the transition to take place now and for new leadership to take the helm of FPL to ensure consistent management heading into a very busy next couple of years. It has been the greatest honor of my career to lead the FPL team, and I cannot thank our nearly 10,000 FPL employees and thousands more of our retirees enough for their hard work, for their dedication and for always putting our customers first. They have served our communities and our state with distinction and always challenged themselves to get better every single day. In my opinion, and I'm a little biased, FPL is the best utility in the world. I am so proud of what our team has accomplished, and it is extremely well positioned to continue to deliver exceptional value to both customers, shareholders and to the state. I wish John, Armando and the entire FPL team all the best in their future endeavors. And now let me turn the call over to Kirk for more details.

Kirk Crews, CFO

Thank you, Eric, and good morning everyone. Let's now turn to the detailed results, beginning with FPL. For the fourth quarter of 2022, FPL reported net income of $763 million, or $0.38 per share, up $0.07 per share year-over-year. For the full-year 2022, FPL reported net income of $3.7 billion, or $1.87 per share, an increase of $0.24 per share versus 2021. Regulatory capital employed increased by approximately 11.4% for 2022. We continue to expect FPL's average annual growth in regulatory capital employed to be roughly 9% over the four-year term of our current rate agreement. FPL's capital expenditures were approximately $3.1 billion in the fourth quarter, bringing its full-year capital investments to a total of roughly $9.2 billion. For the fourth quarter, FPL's net income was impacted by a number of factors, including favorable weather as well as an approximately $40 million pre-tax contribution to charitable foundations that will allow us to continue to support the communities that we serve. For the full-year 2022, FPL's year-over-year net income growth of nearly $500 million was aided by favorable weather, increased customer growth, and effective cost management that supported our ability to continue to deploy smart capital for the benefit of customers. FPL's reported ROE for regulatory purposes is expected to be 11.74% for the twelve months ended December 31, 2022. During the fourth quarter, we did not use any reserve amortization, leaving FPL with a year-end 2022 balance of $1.45 billion. Our overall capital program at FPL is progressing well. We continue to advance one of the nation's largest solar expansions and successfully met our solar deployment objectives at FPL in 2022. Beyond solar, construction on our green hydrogen pilot at the Okeechobee Clean Energy Center remains on schedule as it continues to advance towards its projected commercial operation date later this year. Earlier this week, FPL filed with the Florida Public Service Commission its proposed plan to recover approximately $2.1 billion of incremental fuel costs incurred in 2022. Under our proposed plan, FPL will utilize its strong balance sheet to spread these unrecovered 2022 fuel costs over a 21-month period beginning in April 2023. Additionally, FPL's proposed plan would further benefit customers by offsetting the 2022 fuel cost recovery by approximately $1 billion this year based on the recent drop in projected natural gas prices compared to FPL's original 2023 projections made in the third quarter of 2022. We believe this proposal is a reflection of FPL's customer-centric strategy to navigate challenging environments for the benefit of customers. Separately, FPL is also seeking recovery of approximately $1.3 billion of storm costs incurred in 2022. Under FPL's proposal, the storm costs would be recovered over a 12-month period starting in April 2023 to reduce the potential customer bill impacts that could result from the simultaneous recovery of charges related to future storms. Taking both proposals together, we anticipate that FPL's typical 1,000 kilowatt hour residential customer bills as of April 2023 will remain well below the projected national average and the projected average for Florida investor-owned utilities. The Florida economy remains strong. Over the last 10 years, Florida's GDP has grown at a roughly 6% compound annual growth rate. The GDP of Florida is roughly $1.4 trillion, which is up approximately 10% from 2021. At the same time, Florida's population continues to grow at one of the fastest rates in the nation. Over the past year, Florida has created roughly 600,000 new private sector jobs, and Florida's labor force participation rate continues to improve at a faster rate than the rest of the country. Although we have seen the growth rate stabilize, three-month average Florida building permits, a leading indicator of residential new service accounts, have outpaced the nation's quarterly growth in new building permits by roughly 6%. Other measures of confidence in the Florida economy have meaningfully improved versus the prior-year, including an 11% improvement in Florida's retail sales index and a roughly 2% decline in mortgage delinquencies. During the quarter, FPL's average customer growth was strong, increasing by nearly 74,000 from the comparable prior-year quarter. FPL's fourth quarter retail sales were up 2.1% versus the prior-year period, primarily driven by a favorable weather comparison. For 2022, FPL's retail sales increased 1% from the prior year on a weather-normalized basis, driven primarily by continued strong customer growth. Energy Resources reported fourth quarter 2022 GAAP net income of $996 million, or $0.50 per share. Adjusted earnings for the fourth quarter were $402 million, or $0.20 per share. For the full-year, Energy Resources reported GAAP earnings of $285 million, or $0.40 per share, and adjusted earnings of approximately $2.44 billion, or $1.23 per share. The effect of the mark-to-market on nonqualifying hedges, which is excluded from adjusted earnings, was the primary driver of the difference between Energy Resources full-year GAAP and adjusted earnings results. Energy Resources' full-year adjusted earnings per share contribution increased by $0.11 versus 2021. Contributions from new investments increased by $0.04 per share due to continued growth in our renewables and storage portfolio. As we previously highlighted, the Commerce Department's decision to investigate circumvention claims led to delays in the development of renewables, which effectively pushed out the completion of certain projects that we previously anticipated in 2022. As a result, contributions from new investments were negatively impacted in 2022. We anticipate that Energy Resources' adjusted earnings per share contributions from new investments will be much stronger in 2023 when we expect many of these delayed projects will be completed. Our customer supply and trading business increased results by $0.12 versus 2021, primarily due to higher margins in our customer-facing businesses and the absence of Winter Storm Uri impacts. Our existing clean energy assets also increased results by $0.02 per share year-over-year. All other net impacts decreased results by $0.07 year-over-year, driven primarily by higher debt balances reflecting growth in the business. Additional details of our full-year 2022 results at Energy Resources are shown on the accompanying slide. As John mentioned, Energy Resources delivered our best year ever for origination, signing approximately 8,030 megawatts of new renewables and battery storage projects. Since the last call, we have originated approximately 1,700 megawatts of renewables and storage projects, including approximately 300 megawatts of wind, 730 megawatts of solar and 670 megawatts of battery storage. Our origination performance in 2022 reflects continued high demand among all customer classes for clean energy solutions that not only help achieve their renewable energy goals but, perhaps more importantly, allow our customers to save on energy costs by switching to lower-cost forms of generation like wind, solar, and solar-plus-storage. Today, we are extending our renewables development expectations through 2026 as a result of our tremendous progress in 2022, strong continued origination success and the strong market demand for low-cost renewables driven in part by the IRA. Our revised expectations are by far the largest expected four-year development program in our history and reflect our high level of confidence in Energy Resources' ongoing leadership position and the continued acceleration of renewables penetration across the country. The accompanying slide provides additional details on our new expectations and where our development program at Energy Resources now stands. As you know, the industry has faced significant supply chain challenges and disruption over the past year and yet our integrated supply chain and engineering and construction teams demonstrated their resiliency by continuing to execute for our customers, and we have been working for over a year with our suppliers to manufacture wafers outside of China. We believe the Commerce Department's preliminary determination on circumvention of anti-dumping and countervailing duties late last year clarified that solar panels manufactured in Southeast Asia using wafers and cells produced outside of China are not circumventing anti-dumping and countervailing duty laws. We are confident that we can source panels consistent with these guidelines by the end of the two-year waiver period. Finally, we continue to advance discussions to support the domestic production of solar panels. Turning now to the consolidated results for NextEra Energy. For the fourth quarter of 2022, GAAP net income attributable to NextEra Energy was $1.52 billion, or $0.76 per share. NextEra Energy's 2022 fourth quarter adjusted earnings and adjusted EPS were approximately $1 billion, or $0.51 per share, respectively. For the full-year 2022, GAAP net income attributable to NextEra Energy was $4.15 billion, or $2.10 per share. Adjusted earnings were $5.74 billion or $2.90 per share. For the Corporate & Other segment, adjusted earnings for the full-year were roughly flat compared to the prior year. As John mentioned, we invested more than $19 billion in our businesses in 2022, which we expect will again place NextEra Energy among the top capital investors in the U.S. across all sectors. Capital recycling remains an important part of our financing strategy and this year, we recycled more than $5 billion of capital through asset sales and tax equity financings. Additionally, as we have often highlighted, our underlying businesses generate significant cash flow and in 2022, our operating cash flow grew more than 9% year-over-year, despite FPL being under-recovered for fuel costs and incurring restoration costs for hurricanes Ian and Nicole. As a result of this strong cash generation, we proactively paid down nearly $3 billion in 2023 maturities. Finally, we ended the year with $15 billion of interest rate swaps to manage interest rate exposure on future debt issuances. As a reminder, the current interest rate environment is taken into account in our financial expectations. As John discussed, today we are reaffirming our adjusted earnings per share expectations for 2023 through 2025 and introducing expectations for 2026. Details of our new financial expectations are included in the accompanying slide. We will be disappointed if we are not able to deliver financial results at or near the top end of these ranges. From 2021 to 2026, we expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2024, off a 2022 base. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Let me now turn to the detailed financial results for NextEra Energy Partners. Fourth quarter adjusted EBITDA was $360 million, up approximately 12% year-over-year. Adjusted EBITDA growth versus the prior-year comparable quarter was primarily due to new asset additions. Fourth quarter cash available for distribution was $74 million. As a reminder, NextEra Energy Partners' operating expenses and interest expense on project debt are typically higher in the fourth quarter versus the first three quarters of the year. For the full-year 2022, adjusted EBITDA was approximately $1.65 billion, up 21% year-over-year, and was primarily driven by the full contribution from new projects acquired in late 2021. Existing projects added approximately $13 million of adjusted EBITDA year-over-year, with the benefits of higher net generation for both wind and solar partially offset by relatively higher operating and maintenance costs versus 2021. NextEra Energy Partners' cash available for distribution was $634 million for the full-year. Relative to the growth in NextEra Energy Partners' full-year adjusted EBITDA, its cash available for distribution from existing projects was also impacted by relatively higher allocation of production tax credits to investors due to favorable wind resource versus 2021. Over the past five years, NextEra Energy Partners' cash available for distribution has grown at a compound annual growth rate of more than 20%. As a reminder, these results include the impact of IDR fees, which we treat as an operating expense. Additional details are shown on the accompanying slide. Yesterday, the NextEra Energy Partners Board declared a quarterly distribution of $0.8125 per common unit, or $3.25 per unit on an annualized basis, up approximately 15% year-over-year and at the top end of the range we discussed going into 2022. Inclusive of this increase, NextEra Energy Partners has grown its distribution per unit by more than 330% since the IPO. During 2022, NextEra Energy Partners executed several low-cost financings continuing its successful track record of accessing attractive sources of capital to support growth for unitholders. During the fourth quarter, NextEra Energy Partners entered into a new convertible equity portfolio financing for approximately $900 million with a low implied cash coupon of roughly 2.8% for up to 10 years, to be funded by the investor's share of ongoing portfolio cash flows. In December, NextEra Energy Partners raised approximately $500 million in new convertible notes with a 2.5% coupon, which along with the capped call entered into at the time of the financing provides unitholders with dilution protection for up to 50% accretion versus the NEP unit price at the time of issuance. The implied total cost of the convertible notes represents the most favorable spread to an alternative debt issuance in our history. These transactions executed during the fourth quarter were a continuation of NextEra Energy Partners' successful financing execution throughout 2022. In May 2022, NextEra Energy Partners increased the size of its revolving credit facility to approximately $2.5 billion, nearly all of which is currently available. With this available revolving credit capacity and the final funding of approximately $180 million expected from the 2022 convertible equity portfolio financing, NextEra Energy Partners enters 2023 with significant financing capacity to fund future growth. Additionally, NextEra Energy Partners still has $6 billion of Forward Starting Interest Rate Swaps, which is more than enough to cover its corporate maturities through 2027 and will help mitigate the impact of higher interest rates on future debt issuances, whether for maturities or net new issuances. Taken together, we believe that NextEra Energy Partners is extremely well positioned with significant interest rate protection and ample liquidity to finance future growth and to capture a meaningful share of the long-term opportunity set which has expanded as a result of the IRA. This significant opportunity set and NextEra Energy Partners' meaningful financing flexibility provides us with confidence in our ability to continue to deliver long-term value for unitholders over the coming years. From an updated base of our fourth quarter 2022 distribution per common unit at an annualized rate of $3.25, we now see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2026, which is an additional year beyond our prior expectations, driven by the partnership's tremendous long-term growth visibility. We expect the annualized rate of the fourth quarter 2023 distribution that is payable in February 2024 to be in a range of $3.64 to $3.74 per common unit. NextEra Energy Partners' run rate expectations for adjusted EBITDA and cash available for distribution at December 31, 2023 remain unchanged. Year-end 2023 run-rate adjusted EBITDA expectations are $2.22 billion to $2.42 billion and cash available for distribution of $770 million to $860 million, respectively, reflecting calendar year 2024 contributions expected from the forecasted portfolio at year-end 2023. As a reminder, all our expectations are subject to our normal caveats and include the impact of anticipated IDR fees, as we treat these as operating expenses. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners have excellent prospects for growth both in the near-term and long-term. Near-term, the progress we made in 2022 reinforces our growth outlook and sets the foundation for continuing to deliver on our financial expectations. Long-term, we believe that the low cost of renewables combined with other clean energy solutions enabled in part by the IRA provides us with unprecedented visibility to extend our track record of delivering long-term growth for our shareholders and unitholders, and we could not be more excited about our future. That concludes our prepared remarks and with that we will open the line for questions.

Operator, Operator

Thank you. We will now begin the question-and-answer session. Our first question comes from Steve Fleishman from Wolfe Research. Please go ahead.

Steve Fleishman, Analyst

Yes, good morning. I have a couple of questions regarding the management changes. It seems there is no connection between the investigation and Eric's retirement. Can you confirm if that is accurate? Additionally, I would like your thoughts on the idea of promoting someone internally, like bringing back Armando, as opposed to choosing an internal candidate. Thank you.

John Ketchum, Chairman, President and CEO

Thank you, Steve. To address your first question about the connection, I want to clarify that there is no connection. When I was appointed to succeed Jim, Eric and I discussed that he would commit to staying for one year, and we would reassess at the end of that period. Eric fulfilled that commitment. The past year, 2022, presented numerous challenges, as Eric highlighted in his remarks. He faced significant difficulties, including hurricanes, high natural gas prices, inflation, supply chain issues, and media allegations, which I believe affected him and prompted his retirement notice. I see this decision as coming slightly earlier than he would have preferred. Now, regarding your second question, FPL has a strong team that can fill Eric's role. Specifically, we are promoting Christopher Chapel to Chief Operating Officer during this transition. Additionally, we're bringing Armando back, someone I have a great deal of respect for and who has been a wonderful friend to me over the years. I believe he will effectively mentor Christopher, who I view as a future outstanding CEO for FPL. Christopher has been leading customer service and will gain valuable experience in operations and regulatory matters while preparing for the upcoming rate case. The collaboration between Armando and Christopher will form a powerful team, and they will excel in their efforts for FPL. Christopher has a very promising future with our company, and I look forward to everyone meeting him soon.

Steve Fleishman, Analyst

Yes, definitely. Thanks.

John Ketchum, Chairman, President and CEO

Yes. And Steve, I want to just to Eric to say a few words as well.

Eric Silagy, CEO of Florida Power & Light Company

Steve, I want to provide some context. These decisions are always challenging, and there's never an ideal moment. As John mentioned regarding last year's leadership transition, I assured him I'd be here for at least a year. While I didn't set a strict timeline, I've been in this role for 11 years and will soon enter my 12th. My predecessor served for 10 years, just as Jim and Lew did before him. Looking ahead, this position requires forward planning, especially as we approach another rate case cycle, which is a long-term process. Committing longer means extending my tenure until 2026. There are numerous factors to consider. John highlighted the obstacles we faced in 2022, and I'm very proud of how our team dealt with them. This role demands full-time dedication, and while we successfully navigated many challenges, making this decision isn’t easy. However, I feel confident moving forward now that the company is in its strongest financial and operational position ever, with an excellent leadership team in place. I believe this is the right time for the transition.

Steve Fleishman, Analyst

I appreciate that insight. That's the primary question we've received from people. Additionally, regarding the backlog, there appears to be a significant increase in wind expectations for the next four years, which seems to be the main factor contributing to the higher backlog. Could you provide more details on what is driving this? Is it simply the extension of the credits, or are there other factors leading to increased wind expectations through 2026?

Rebecca Kujawa, President and CEO of NextEra Energy Resources

Good morning, Steve. It's Rebecca and I'll chime in on that. It is exactly what John and Kirk highlighted and what we've been talking about for the last couple of months following IRA. With IRA provisions, we now have extensions of incentives now through the end of the decades well decade plus, but just looking into visibility, it's exceptional now through the end of the decade and likely well beyond that. And it is a big change specifically for wind in this timeframe adding the 100% production tax credit now, obviously through this expectation, windows through it fully. And it's also supported by the backdrop of what I also have highlighted to you all. And John talked about in his remarks about all of the positive follow on effects from strong incentives on renewables and through the introduction of a hydrogen production tax credit. We're starting to see substantial demand and positive engagement around renewables to create green hydrogen and hydrogen related products thereafter. So our development team is busy having the types of conversations we've never had before, and we can't be more excited about what's ahead. And that's for wind solar storage and the hydrogen products that we're talking about.

Steve Fleishman, Analyst

Great. Thank you very much.

Rebecca Kujawa, President and CEO of NextEra Energy Resources

Thanks, Steve.

Operator, Operator

Our next question comes from Julien Dumoulin-Smith from Bank of America/Merrill Lynch. Please go ahead.

Julien Dumoulin-Smith, Analyst

Hey, good morning team, and congrats, Eric on your stellar career. Armando, welcome back. Feels a little bit like when Maury came back in 2009 here, I must admit. Maybe just related to some of the changes here, just to follow-up on that super quick. First off is Armando committing to the full process here, as you alluded to the rate case cycle being a little bit protracted. And then related to that what is the final timing in terms of this internal process that you guys had underway per the 8-K and is that impacted at all by this pending FEC process that you allude to taking upwards of the balance of the year here?

John Ketchum, Chairman, President and CEO

Yes, I will address those points, Julien. This is John. First, regarding Armando, he is committed to returning as our CEO and President of FPL. I want to emphasize that. Additionally, he is inheriting an exceptional team, which I believe is the best in the industry, thanks to Eric's outstanding work in building it. Armando is fortunate to lead such a strong organization. With Christopher Chapel stepping into the Chief Operating Officer role, I believe we have a powerful combination at FPL, along with our existing talent. Also, Eric will remain with us until mid-May, ensuring a smooth transition for both Armando and Christopher. Eric will effectively manage the transition and maintain all the necessary relationships. Now, concerning the internal process and timing, let me reiterate that we are almost finished. Regarding the Florida situation, we do not anticipate that FPL would be liable for any federal campaign finance violations, based on our findings. As for the FEC process, I want to clarify what it entails. The Federal Election Commission has civil enforcement authority, and anyone in the U.S. can file a claim with the FEC. Given the current political climate, I expect there may be an increase in claims. A complaint has indeed been filed by a citizen or special interest group, but there are no formal legal proceedings with the FEC at this time. The FEC will take about 12 to 18 months to determine if further investigation is warranted, and we plan to file a motion for dismissal. We believe that claims based solely on media reports and allegations should not be pursued by the FEC. The complaint outlines five scenarios, and the total contributions in these cases do not exceed $1.3 million. Overall, we do not expect the federal allegations to materially impact our business.

Julien Dumoulin-Smith, Analyst

Got it. And then just super quickly, if I can, just with respect to the originations here, the 1.7 since the third quarter call, this seems a little bit down from the last quarterly call update in the slides. Can you comment a little bit about the trends? Obviously, I'm cognizant of the comments you made about the overall expectations through '26. How do you think about that materializing the pace and just what customer feedback is in putting in orders, now versus in subsequent period?

John Ketchum, Chairman, President and CEO

Yes, let me take that, Julien. The first thing I would say is the demand for renewables is as strong as ever. When I look at the opportunities that the development organization has right now, they are significant. I mentioned in my remarks the term sheet we signed on the 800-megawatt facility in the Central part of the U.S. for a green hydrogen facility that we didn't even count, for example. And we have a lot of interest around hydrogen right now that's going to fuel a lot of renewable opportunities. The C&I market is extremely strong. We're just seeing a lot of demand across the board. And so I think that's why you see with the revised development expectations, 42 gigawatts on the high end, oh my gosh, I think those of you that have been following the company for a long time, 42 gigs, that's a 15% uptick on the last four-year set that we had, I mean, just to put it in perspective, I mean, FPL's total generation fleet is 27 gigawatts, so to 42 gigs over a four-year period, hopefully that provides a little color and context.

Julien Dumoulin-Smith, Analyst

Yes, absolutely. Thank you guys.

Operator, Operator

The next question comes from Shahriar Pourreza from Guggenheim Partners. Please go ahead.

Constantine Lednev, Analyst

Good morning, team. It's actually Constantine here for Shar and congrats on a great quarter, and just wanted to wish Eric the best in the next steps. Certainly, appreciate that.

Eric Silagy, CEO of Florida Power & Light Company

Thanks, Shar.

Constantine Lednev, Analyst

Maybe as a quick follow-up to Julien's question, could you provide more details on how the IRA has influenced demand for renewables, specifically regarding the timing of the growth to meet the 2026 targets? Is it front-loaded, back-loaded, or something else?

Rebecca Kujawa, President and CEO of NextEra Energy Resources

Yes, hi, Constantine. It's Rebecca. I think the best place to point you to is the development expectations slide that Kirk went through. It's Slide 12 in the materials, and it lays out the ranges by technology for '23 and '24, and then '25 and '26. And obviously there's a significant increase in going into '25 and '26 really for all the things that we're talking about, the significant momentum, also a lot of resolution over the last couple of months and clarity around some of the supply chain disruption that we've seen on the solar side. So it is building and the momentum as John highlighted so well remains exceptionally strong on the development and origination side. So I'm really excited about everything that we see in our traditional businesses as well as the commercial and industrial sector. And then of course, the burgeoning opportunities that we see on the green hydrogen and related products side.

Constantine Lednev, Analyst

Excellent. And on a related note on the kind of upside from repowering opportunities, do you have any thoughts on kind of solar and storage type of repowering? I know that wind is starting to make it into the plan. Just curious on the other side.

Rebecca Kujawa, President and CEO of NextEra Energy Resources

Yes, we're looking at it and there's, we think there's opportunities over time to repower both battery storage projects as well as on the solar side, they can be a little bit more complex. And we're certainly looking for some guidance as we go through this year from treasury on this point, as well as others that will be helpful in giving us context. But some of this is also timing. So as you get more mature projects, obviously 10 years on the wind side, five plus years on the solar side will be opportunities then really to expand the horizon for repowering. But as I've talked to our team, every day we're looking at our existing generation portfolio, and I see more opportunities today to enhance the value of our existing portfolio than we've ever seen before. That of course includes repowering, it includes adding battery storage, it includes thinking differently because of the exciting opportunities around green hydrogen about even citing some of those load opportunities, the electrolysis equipment to produce that hydrogen at existing assets. And we're also making investments in transmission across a variety of the integrated system operation markets to be able to add transmission to increase the value of the existing portfolio. So we think there's tons of opportunities and so much more certainty looking forward than we've ever had before because of the clarity around the incentives.

Constantine Lednev, Analyst

Excellent, thanks so much. Yes, we're running a little bit late, so I'll jump back in the queue.

Rebecca Kujawa, President and CEO of NextEra Energy Resources

Thanks.

Operator, Operator

Sorry, the next question comes from David Arcaro from Morgan Stanley. Please go ahead.

David Arcaro, Analyst

Hi, thanks so much for taking my question. I was wondering if you could comment on just your latest experience with access to solar panel supply whether there's any risks that you see for executing on this year's development plan and how the UFLPA law has been impacting projects?

Kirk Crews, CFO

Sure. Hi, Dave. This is Kirk, and I'll take that. The last time we spoke was during the third quarter earnings call, where we discussed the challenges our integrated supply chain team faced in 2022. Despite those challenges, they did a commendable job, managing to put 5,000 megawatts into service, which demonstrates their ability to navigate disruptions. One of the significant challenges was related to the ports, where panels had been detained. Since the third quarter, we have seen positive improvements, with some of the detained panels being released. I would describe this as positive movement. Each day shows some improvement, and we continue to monitor the situation closely. The team is actively collaborating with our suppliers and keeping a close watch on developments. Compared to the third quarter, we are cautiously optimistic about the progress and believe we can manage these issues while continuing to deliver for our customers.

David Arcaro, Analyst

Okay, great. Thanks for that color. And on the renewables development program, I was wondering if green hydrogen is starting to have an impact on the back end of the plan in terms of influencing the renewables demand outlook yet, like in 2026, are you starting to kind of weave in expected demand on renewables from green hydrogen at that point?

Rebecca Kujawa, President and CEO of NextEra Energy Resources

It's certainly something, it's Rebecca. It's obviously something that we considered when we are setting the development expectations and what we laid out today for you all. I can tell you from a practical standpoint, it very much is starting to show up in the conversations that we're looking at including the 800 megawatt term sheet that we signed in recent weeks for a project that would be expected to COD in 2026. At this point, I think there are a number of folks and ourselves included working hard to put the right development opportunities together. But it is a very active market. We're really excited about opportunities to partner with key folks, Linde among them, as we talked about in the call, but others as well to put forward terrific projects and really bring forward the promise of this technology that we've now been talking about. But it's really coming to reality. I think '26 is probably on the earlier side of what we ultimately will see as a significant ramp-up going into the end of the decade where there's more opportunity to have supply ramp-up for electrolyzers as well as other related equipment for some of those green hydrogen related products as well as working through the development opportunities and establishing the ultimate customers for these products. But everything I see is really exciting and really starting to take shape just now a number of months after the IRA provisions were ultimately passed into law.

David Arcaro, Analyst

Okay, great. That makes sense. Thanks so much.

Operator, Operator

This concludes our question-and-answer session. And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.