Earnings Call Transcript - NEE Q2 2025

Operator, Operator

Good day, and welcome to the NextEra Energy, Inc. Second Quarter 2025 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Mr. Mark Eidelman, Director of Investor Relations. Please go ahead, sir.

Mark Eidelman, Director of Investor Relations

Thank you, Chuck. Good morning, everyone, and thank you for joining our second quarter 2025 financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy; Mike Dunne, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of Florida Power & Light Company; Brian Bolster, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Executive Vice President of NextEra Energy. John will start with opening remarks, and then Mike will provide an overview of our second quarter results. Our executive team will then be available to answer your questions. We will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call in the Risk Factors section of the accompanying presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.nexteraenergy.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to John.

John W. Ketchum, CEO

Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong second quarter results with adjusted earnings per share increasing 9.4% year-over-year. In addition, through the first 6 months of the year, our adjusted earnings per share has increased 9.1% year-over-year. The continued strong financial and operational performance at both FPL and Energy Resources positions our company well to meet its overall objectives for the year. America continues to be at a unique moment, and our industry remains front and center. After decades of stagnant electricity demand, we're now seeing growth across sectors of the U.S. economy. Artificial intelligence and the reshoring of manufacturing grabbed most of the headlines, and for good reason, but that doesn't tell the full story. Demand for more electricity is also coming from all sectors, including residential, commercial, industrial, and oil and gas to name a few. A new study from ICF released this month described demand growth as both sudden and sharp. The report says demand growth over the next decade is expected to exceed the last 3 decades combined, just the latest data point putting into perspective how unique this moment truly is. Bottom line, America needs more electricity, not less. Importantly, America needs it now, not just in the future. We are firmly aligned with the administration's goal to unleash American energy dominance. To do so, we need all of the electrons we can get on the grid. There's truly no time to wait. We see this every day from our customers who aren't just saying they need power; they're signing contracts with us to build energy infrastructure because we can do it quickly and at a low cost. Again, the need for more electricity is real. We must do more than just plan for what's on our doorstep. We must act. As I've said many times, we're going to need all forms of energy to meet this moment. New gas and nuclear are on the way and will be critical to meeting demand over the long term. Renewables and storage can bridge the gap and will play an important role in an all-of-the-above future. Storage, in particular, is a game changer. It’s low cost, all forms of energy can charge it, and the grid can rely on it for capacity. Storage is also flexible and can utilize excess transmission capacity. That means it can quickly be deployed to where customers need it most. Importantly, renewables and storage are ready now and can provide much-needed electricity and capacity. But to achieve our objectives, we will need to continue to navigate a challenging regulatory and policy environment. The One Big Beautiful Bill Act was tough but constructive, providing for a phaseout of wind and solar tax credits over time, together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders, agency rulemakings, tariffs, and trade actions. While there are risks to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment as we expect a natural pull forward of demand. We are in a constant state of construction. Over the last few years, prior to the enactment of the OBBB, we made substantial financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects we plan to place into service through 2029. We have a large pipeline of early and late-stage projects. We have a supply chain capability that I believe is the best in the sector, and we are leveraging artificial intelligence across our business, including in customer origination. We have the balance sheet, scale, experience, and technology. While no company is immune from all risk, we have proven time and again what I firmly believe there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead than NextEra. As the quintessential all-of-the-above energy company, we build more energy infrastructure than anyone in the United States. From renewables and storage to gas and nuclear, we do it all. We will continue to build what customers need, including the critical transmission to bring power from plants to communities. At FPL, we are going to continue to do what we have done so well for customers over the past 2 decades. Florida's long-standing constructive regulatory and legislative environment enables infrastructure investment to serve Florida's growing population. In fact, just last week, the Florida Supreme Court concluded that state regulators properly approved our 2021 settlement agreement by affirming the Florida Public Service Commission's final and supplemental final orders. FPL continues to invest in infrastructure to keep reliability high and bills low, and we continue to operate and invest in the nation's largest gas-fired fleet, along with 4 nuclear units in Florida, which provides us the flexibility to leverage cost-effective solar and storage to meet the significant demand from our state's growing population. FPL is doubling down on what we've proven benefits our customers, investing in generation to meet growing electricity demand while driving fuel costs out of the bill. FPL plans to add more than 8 gigawatts of reliable, cost-effective solar and battery storage by 2029. It's the perfect complement to our existing natural gas and nuclear fleet in Florida. Together, it’s how we serve our customers with a diversified energy mix. This not only further secures Florida's energy independence, it also improves system reliability and resource adequacy by delivering energy when customers need it most. FPL continues to be America's blueprint for utilizing all forms of energy to keep reliability high and electric bills low. Outside of Florida, Energy Resources continues to be the nation's leading energy infrastructure developer. The team originated 3.2 gigawatts of new projects since the last earnings call, including over 1 gigawatt serving hyperscalers to help enable their AI build-out and further drive America's leadership in the space. Our backlog alone now includes approximately 6 gigawatts of projects intended to serve technology and data center customers. If you include our operating portfolio, together with the expected build-out of our backlog, we will have over 10.5 gigawatts serving technology and data center customers across the United States. We continue to make progress towards the potential restart of our Duane Arnold nuclear facility while also working to advance new gas-fired generation opportunities. We continue to build what's essentially a stand-alone, rate-regulated utility within Energy Resources through NextEra Energy Transmission. With our scale, experience, and technology, including our supply chain capability and balance sheet, we are positioned to meet the opportunity set increased power demand will provide. I firmly believe no one has a better team, a better culture, or a better track record of execution than NextEra Energy. With that, I'll turn the call over to Mike to walk you through detailed results from the quarter.

Michael H. Dunne, CFO

Thank you, John, and good morning, everyone. For the second quarter of 2025, FPL's earnings per share increased by $0.02 year-over-year. The principal driver of this performance was FPL's regulatory capital employed growth of nearly 8% year-over-year. FPL's capital expenditures were approximately $2 billion for the quarter, and we expect FPL's full-year capital investments to be between $8 billion and $8.8 billion. For the 12 months ending June 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the second quarter, we utilized approximately $19 million of reserve amortization, leaving FPL with a balance of roughly $254 million. FPL's second-quarter retail sales increased 1.7% from the prior year comparable period, driven primarily by continued strong customer growth. Overall usage per customer grew by 0.1% year-over-year, which includes a decline of 0.8% due to milder weather. As a result, FPL grew retail sales in the second quarter by roughly 2.6% on a weather-normalized basis. On February 28, we initiated Florida Power & Light's 2025 base rate proceeding. The 4-year base rate plan we have proposed has been designed to support continued investments in cost-effective generation, long-term infrastructure, and advanced technology, which improves reliability and helps keep customer bills low. Today, FPL's typical residential bill remains well below the national average and amongst the lowest of the top 20 investor-owned utilities in the nation. With the proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average. A technical hearing at the Florida Public Service Commission is scheduled next month. We expect a final decision in the fourth quarter. If state regulators approve our plan, a typical FPL residential bill will grow at an annual average rate of just 2.5% from 2025 through 2029. Now let's turn to Energy Resources, which reported an adjusted earnings per share increase of $0.11 year-over-year. As you'll recall, the prior comparable quarter reflected higher-than-expected and onetime expenses. Contributions from new investments increased $0.14 per share year-over-year, primarily driven by continued growth in our renewable and storage portfolios. Our existing clean energy portfolio decreased $0.02 per share, primarily reflecting weaker wind resources during the quarter. Wind resource for the second quarter of 2025 was approximately 97% of the long-term average versus 104% in the second quarter of 2024. Our customer supply business increased $0.06 per share compared to the second quarter last year, which was impacted by higher depletion expense and certain nonrecurring items. All other impacts decreased by $0.07 per share, driven by higher interest costs of $0.06 per share. Energy Resources had a strong quarter of new renewables and storage origination, adding 3.2 gigawatts to the backlog. With these additions, our backlog now totals nearly 30 gigawatts after taking into account more than 1.1 gigawatts of new projects placed into service since our last earnings call. We expect the backlog additions will go into service over the next few years and into 2029. This marks the sixth time in the past 8 quarters that Energy Resources has added more than 3 gigawatts to its backlog. We have now originated approximately 12.7 gigawatts of new renewables and battery storage projects over the last 12 months. Roughly 30% of our current backlog comes from storage, which demonstrates our customers' demand for a low-cost, ready-now solution to meet their capacity needs. Turning now to our second quarter 2025 consolidated results. Adjusted earnings from corporate and other decreased by $0.04 per share. Our long-term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025, 2026, and 2027. From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026 off a 2024 base. As always, our expectations assume our caveats. That concludes our prepared remarks. And with that, we will open the line for questions.

Operator, Operator

The first question will come from Steve Fleishman with Wolfe Research.

Steven Isaac Fleishman, Analyst

So I guess, first, just on the OBBB and then also the Trump executive orders. Could you maybe talk to, I guess, the safe harbor start of construction issue and how much OBBB has effectively maybe codified that? And what can really the administration change at this point? And then also just how to think about some of the recent permitting kind of updates that came out and just your exposure to federal lands in your backlog?

John W. Ketchum, CEO

Yes. Thank you, Steve, for your question. This is John. So let me just start with your question around the tax provisions, the safe harbor in particular. I think as most folks know by now, the way the OBBBA was drafted, it basically provides that wind and solar facilities have to be placed in service by December 31, 2027. However, there is a very important exception in that, that says that projects that begin construction before July 4, 2026, are not subject to that placed in service requirement. So the issue is what is meant by begin construction? Our view is pretty simple and pretty straightforward. The begin construction term has been around for well over a decade. It has a settled meaning within the industry. That meaning is informed by long-standing treasury department guidance. It's been relied upon not only by NextEra but the solar and wind industry for years. I start with the fact that as a plain meaning. It's also a term that's defined in the OBBA, in the FEOC provisions and that definition is consistent with the settled meaning and the long-standing treasury guidance that I just spoke about. Importantly, the term beginning construction has certain safe harbors for what actually constitutes starting construction. It also has a 4-year continuity of service safe harbor. When I look at the steps that we've been taking in reliance on the settled meaning and the long-standing guidelines around the term beginning construction, we've made significant financial commitments over the last few years, including in the first half of 2025 to begin construction under these rules that were in effect at the time those commitments were made. In doing so, we believe that we've begun construction on a sufficient number of projects to cover our development expectations through 2029. And of course, while we can't provide any guarantees, this is our interpretation, and this is our belief as to what the statute provides based on our experience in this industry over the last couple of decades.

Steven Isaac Fleishman, Analyst

And just on the siting permitting issues in the federal lands, yes.

John W. Ketchum, CEO

Yes. And on the permitting, for federal lands, there was an Executive Order, and I think a response made by the Department of the Interior a couple of months ago, just articulating that solar and wind projects would not be prioritized. The Executive Order itself that came out on July 7 directed the Department of Interior to come up with new procedures on how it would handle wind and solar permitting to not favor them. They instituted an additional layer that would require Secretary or Deputy Secretary review. It’s new. Obviously, we’re working with the Department of Interior. Let’s just see how it actually gets applied in practice. But again, I think this letter is being responsive to the Executive Order. When I look at it and I look at our backlog, most of our backlog already has secured federal permits. But let’s also just see how this gets applied. I continue to feel comfortable with where we stand in terms of being able to navigate the federal permitting issue.

Steven Isaac Fleishman, Analyst

One other question. You mentioned natural pull forward. Could you give any sense of how customers have reacted to the bill? Have you noticed any signs of natural pull forward and how does that affect your market share expectations given all the different things that have occurred?

John W. Ketchum, CEO

Yes. I think, Steve, customers are still digesting it. They have different levels of understanding of what's come out. Obviously, we spent a lot of time on it. I would expect to see a reaction from customers over time. We will inform them through our origination process. I see some natural breaking points that could create significant opportunities for us around pull forward. I mean, one is, if you break down the statute, certainly with the 2027 placed in service requirement, you could see projects that are accelerated into that year. Then it comes down to who's safe harbor, right? Who safe harbors before the enactment date? It’s hard to know with any precision who did. We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor. You could also look and say, based on that, we would expect to pull forward naturally into '28 and '29 as well, where there might be less competition from folks that have not safe harbored that, which could create bigger opportunities for folks like NextEra that are in a perpetual state of construction and are safe harboring all the time based on the rules that were in effect that could create potentially bigger opportunities for us in those years.

Operator, Operator

The next question will come from Julien Smith with Jefferies.

Julien Patrick Dumoulin-Smith, Analyst

Maybe to follow up on Steve's questions earlier. I mean just to crystallize our understanding under the existing OBBB that was passed here, how do you think about your EPS growth and sort of the waterfall, if you will, of credits and especially given the dynamics you talk about, whether it's the pull forward or otherwise having an opportunity to step in and enable other projects that you might not necessarily have envisioned today. How do you think about sustaining your growth through the decade in as much as now you have visibility that's been effectively crystallized under this legislation, obviously barring changes with the EO or not ready to go there given this backdrop?

John W. Ketchum, CEO

Yes. I'll begin with the last point. As I mentioned earlier, I believe the One Big Beautiful Bill, though challenging, is constructive. It presents us with future opportunities for several reasons I've discussed with Steve. Regarding EPS growth, I'll wait until our next Analyst Day, which will take place later this year or early next year. Thinking about the waterfall opportunity and the pull forward that Julien highlighted, there’s uncertainty with the '27 service placements and who qualifies for safe harbor in '28 and '29. This situation clearly benefits larger developers like NextEra who have planned ahead. In markets where smaller developers may drop out due to lack of planning, inability to secure construction financing, or safe harbor provisions, we have greater opportunities during these pull-forward scenarios. It’s crucial for investors to recognize this. Looking at our long-term track record, not just the past three years, during times of uncertainty, risk, and complexity, our business generally flourishes because we have the capability to navigate and mitigate these risks. No company is completely immune to challenges, but we have consistently shown an ability to address these exposures effectively going forward. Lastly, if smaller developers do start to drop out, there will likely be more projects available for sale, enhancing not just our organic greenfield opportunities, but also allowing us to engage in projects that other developers may have struggled to complete due to various industry challenges that we are well-equipped to tackle.

Julien Patrick Dumoulin-Smith, Analyst

Excellent. Just a quick follow-up, if I can. Smaller detail here, but not trivial at all. How is progress going on the nuclear contracting front? I mean it is certainly the theme of the day. You guys have 2 different bites of the apple potentially, it seems. Duane progress, just from an engineering perspective, just to kind of get a little bit of a sense on where that could land and when? And then separately here, Point Beach, obviously, spoken for, but it seems like there could be some opportunity there. I mean, 2 different bites of the apple seem to be coming ripe here in the medium term.

John W. Ketchum, CEO

Yes, thanks for the question, Julien. Duane Arnold continues to make progress. There are only three facilities of this kind in the country, including Palisades and our crane facility at Duane. These present unique opportunities since they don't involve the costs associated with new nuclear builds. We are making significant advancements at Duane, and I'm pleased with the ongoing site reviews and engineering analyses. More importantly, we're continuing to engage with customers, and I feel optimistic about our progress at Duane. Regarding Point Beach, it’s not just about the facility itself, but also the potential developments around small modular reactors, which we have the same opportunities for at Duane. If we can successfully advance Duane, it could create a hub for data center activity similar to what we’ve seen in Wisconsin with Cloverleaf and the Microsoft-supported Fox facility. I like the long-term potential there, in addition to the recommissioning efforts we may have at Duane. Our company is actively developing gas-fired generation and is also deeply involved in the development of small modular reactors, which could play a crucial role in the future of nuclear. Our goal is to meet customer needs efficiently and affordably to address the power demand in this country. The recent PJM capacity auction shows significant demand out there. Very few companies can develop new generation assets or have the necessary expertise, which gives us a competitive edge in this market.

Operator, Operator

The next question will come from Nick Campanella with Barclays.

Nicholas Joseph Campanella, Analyst

I just wanted to ask maybe just for an update on FPL. We've seen some testimonies in the rate case at this point. You kind of pointed to the fact that hearings will kick off in mid-August. Just is the settlement still on the table in any way? Or are you expecting this to go right to hearings, if you can comment at all?

John W. Ketchum, CEO

Well, that’s a great question. We always prepare like we are going to hearings because we want to be as prepared as possible, and they're about 3 weeks away at this point. It doesn’t mean that there is not the opportunity for discussions that would lead to a settlement. I think the notion should be that those discussions probably can happen at any time. If it makes sense for our customers, that's something that we would obviously move on as we have for the last 3 rate cases. I'm still confident that we have a great rate case to present to the Public Service Commission in the middle of August. That has been my focus really for the last 6 months. If the opportunity pops up, I am going to absolutely make myself available to make sure that we can put our best foot forward for our customers in a settlement.

Nicholas Joseph Campanella, Analyst

Makes a lot of sense. Appreciate that. And I just wanted to take one of Julien's questions a step further, just on the financing side and kind of thinking about the comments about the safe harbor visibility through 2029. As I understand the current plan, '24 through '27, roughly about half of the funding is tax equity and project finance. I'm just wondering, because you have this commentary around safe harbor visibility through '29, is that kind of the same mix that we should be expecting in financing the business through the late decade? Are there other sources of financing that you're thinking about leaning on? What’s been contemplated at this point?

Michael H. Dunne, CFO

Sure. As we look at where we sit today regarding our renewable build, it is a lot more of what we've done over the course of the last 20 years. We’re building good projects that are very attractive to our tax equity providers, very attractive to project finance providers looking at these projects. Over the last 2 years, we have increased our tax equity providers by 50%. Just last week, I was talking to one of our long-term tax equity providers who was asking and mentioned they wanted to increase their exposure to us. So we feel very good about where we sit in terms of both the tax equity and project financing market as a low-cost way for us to finance our renewable and storage facilities.

Operator, Operator

The next question will come from Anthony Crowdell with Mizuho.

Anthony Christopher Crowdell, Analyst

I just have one quick one. You talked about maybe the company's gas strategy going forward. You talked about it on the Development Day. Just curious, you've seen some recent sales in the country already in service gas assets at attractive multiples. Is that an avenue the company would pursue or more of with the GEV partnership and building new gas?

Brian W. Bolster, CEO of NextEra Energy Resources

Sure. It's Brian. On the gas strategy front, listen, we're going to look at new build, we'll also look at opportunities in the market. If we're going to look at the market, obviously, the value has to make sense. We have to feel very good that we're going to be able to contract in the near term. We don’t want to just go spec long on merchant generation. We’re turning over every rock as we look at that, everything from are there assets that are going to be interesting that fit nicely that we think we can offer back to the market, and we’re also looking at greenfield opportunities. We’re pursuing it on all fronts.

Anthony Christopher Crowdell, Analyst

And just a quick clarity. Did John say earlier that maybe an Analyst Day end of the calendar year or beginning of next calendar year, and I apologize if I did not hear that correctly.

John W. Ketchum, CEO

That’s what I said.

Operator, Operator

The next question will come from Andrew Weisel with Scotiabank.

Andrew Marc Weisel, Analyst

First question, I want to follow up a little bit on the Big Beautiful Bill. How are you thinking about the foreign entities of concern, the FEOC clause? Are you confident that you won't face exposure to that given your safe harbor equipment position?

John W. Ketchum, CEO

Feel very confident about the FEOC provisions. The way they work is, as long as you've begun construction by December 31, 2025, you're not subject to those. With the continuity safe harbor, adding 4 years on, you get to the end of the taxable year '25, that takes you through '29. When you start looking at compliance beyond 2029, we feel very comfortable with our ability to comply with those provisions.

Andrew Marc Weisel, Analyst

Great. Next on Duane Arnold, I know there's a lot of ifs and nothing has been decided yet. But if you were to move forward with a potential restart, would I be correct in thinking the timing might be such that the earnings contribution might mitigate or offset the loss of renewable tax credits as they're phased out? Could that be a way to smooth out the earnings and offset a potential cliff in 5 years or so? I know that's far off, but people are already thinking about it today.

John W. Ketchum, CEO

Yes. I mean that’s obviously pretty far off, but sure. I mean that is a way to continue to grow the business in the future.

Michael H. Dunne, CFO

Just the only thing I'd comment because this is a second question, that's kind of got at this concept of a cliff. I want to remind everyone while tax laws may be changing, the demand picture we've been discussing now for 4 or 5 quarters is not. Customer dialogue, whether it's in '27, '28, '29, or '30 is as robust as it's ever been. While the framework may be changing for some of these projects, the overall demand picture is very important to remember. Our job at Energy Resources is to build energy infrastructure for our customers. There's an outrageous amount of need for energy infrastructure in this country that’s going to go well past the end of this decade. We feel well-positioned. Duane would be an example of one of the things that we'll be looking at. So Duane is another example of something that we can bring to bear. Storage is another element that we’re seeing a lot of focus on. There's a view that the One Big Beautiful Bill is creating a sunset and a cliff. The answer is it’s just changing the rule set, and we’ll continue to build the energy infrastructure that this country needs.

John W. Ketchum, CEO

One other point I want to add is don’t forget about storage too, right? Storage is a massive opportunity for this company and for this country given the capacity that it provides. Don’t lose sight of storage in addition to all the other opportunities that we have around the demand picture, the ability to build gas, the ability to build nuclear, the contributions from Duane. There's a lot that goes into that.

Andrew Marc Weisel, Analyst

Agreed. Thank you for clarifying and framing that up. One last one...

John W. Ketchum, CEO

Yes.

Michael H. Dunne, CFO

So if you look at the $0.02 that offset the $0.04 of regulatory capital growth, there are a variety of factors that can move that across. Recall that in 2024, the return on equity was at 11.8%. For this year, it was at 11.6%. That is one factor, and there’s other puts and takes that can drive that $0.02 differential. However, as we look on a go-forward basis, I wouldn’t expect that differential to continue throughout the rest of the year.

Operator, Operator

The next question will come from Jeremy Tonet with JPMorgan.

Jeremy Bryan Tonet, Analyst

Not to dwell on the outlook after One Beautiful Bill and considering tax credits shifting toward the end of the decade, could you elaborate on the dynamics in the power markets during that time, especially regarding renewable PPA pricing? I'm interested in how you foresee that evolving and its potential effects on margins for participants across the value chain and what distinguishes your approach from others.

John W. Ketchum, CEO

Yes. First of all, we've got a large pricing advantage and 2 advantages on renewables. First of all, they’re very fast to build. You can get a renewable project up and built in 12 to 18 months. Don’t forget about our early and late-stage inventory of projects that's very important to keep in mind. When you think about all this demand for power that's here right now, we have a lot of pricing power in the market, and we have a significant cost advantage over other resources that will show up later. We need more capacity from nuclear and gas, just given the development timeline being longer than what you see on renewables. That’s why you’ve seen so much demand for renewables today. We have a lot of renewable projects that continue to roll off of contract. When we’re out in the market and able to recontract renewable purchase agreements that were entered into a decade or more ago into this new higher-priced power market, there's a lot of embedded value in the existing portfolio. You start thinking about layering in not only on top of renewables, the ability to continue to develop around gas-fired generation and then nuclear as it comes along, and our transmission business, where we made comments today about how we’re basically building a rate-regulated utility inside of NextEra. We’ve had an enormous amount of success with our competitive transmission business. A lot of things to feel very good about as we look to the future.

Jeremy Bryan Tonet, Analyst

Got it. That’s helpful there. And then just want to continue, I guess, with the PJM capacity auction results yesterday. How do you think about the current price backdrop now as enough to incent generators at this point? How do you think about NextEra's opportunity set with gas builds at that point, given that data point?

John W. Ketchum, CEO

I believe this data point indicates that you need to consider the current new build gas prices to determine economic viability. The PJM capacity market is responding accordingly, and it's important to highlight our skills in development and our capacity to expand infrastructure. The existing assets can meet current demand, but we need to encourage the development of new generation that is not yet in place. This means we must support the building of new generation to meet future demand, as the current resources alone will not suffice. Our company is in a strong position; we have a unique set of capabilities because we have been active in building for the last 20 years. Our development team operates in all 49 states, and I am confident in their abilities. The focus should be on identifying who has the required skills to add the incremental generation necessary.

Jeremy Bryan Tonet, Analyst

Got it. That’s helpful. And just one last quick one, if I could. You touched on SMRs briefly before. Just wondering any updated thoughts in terms of your assessment of SMRs at this point and timing for when this resource could be widely deployed?

John W. Ketchum, CEO

We have a dedicated development team focused on small modular reactors (SMRs) and have been advising our corporate clients. I believe our expertise in this area is likely greater than most in the market right now. We are assessing the 95 original equipment manufacturers in the SMR space, concentrating on the technical evaluations to identify potential leaders and underperformers and analyzing cost structures in comparison to other generation types. We are exploring cost-sharing for the initial projects. Our objective is to continue progressing these initiatives while also advancing our gas-fired generation development and exploring opportunities in renewables and energy storage, as storage remains an excellent resource given its rapid deployment capabilities.

Operator, Operator

The next question will come from David Arcaro with Morgan Stanley.

David Keith Arcaro, Analyst

I was wondering if you are booking 2029 volumes at this point. If so, do you have contingencies in your contracts for any potential tax credit risks that might arise based on the safe harbor provisions and the clarity from the treasury?

John W. Ketchum, CEO

Yes. First of all, we feel good about our '29 build. In all of our contracts, we have some limited protections around tax and trade measures as we’ve discussed on some of our prior calls. We feel very good about where we stand around our '29 program.

David Keith Arcaro, Analyst

Okay. Great. Looking out even further, I'm curious if you’re having any discussions on 2030 kind of a no tax credit conversations around pricing, what does demand look like? Any feedback from your customer base if they're looking out that far? Any feedback on what the reduction in tax credits could be?

John W. Ketchum, CEO

Yes. It’s still a little too early on 2030. Most of the focus from our customer base is on '29, just given their need for power and electrons right now. You can see that in our originations this quarter about 3.2 gigawatts. I think we’ll naturally see 2030 begin to focus more over the next 12 to 24 months. But right now, it’s been a lot of attention paid around '27, '28, and '29 in particular for the need for new generation.

Operator, Operator

The next question will come from Carly Davenport with Goldman Sachs.

Carly S. Davenport, Analyst

Maybe just on the origination this quarter, you highlighted 1 gigawatt of backlog adds tied to the hyperscalers. Are you able to share any detail on those particular additions in terms of resource mix, timing, or geography, just to get a sense of what's resonating with that customer base?

Brian W. Bolster, CEO of NextEra Energy Resources

Carly, it’s Brian. So without going into details regarding specific customers or timing, there is a lot of focus on the next couple of years. But there's also folks looking to build out at the end. It’s kind of a mixed bag and really depends by the customer and where they are. That’s why we’re able to do well with them because we can meet the customers with their needs. We have a broad pipeline and portfolio that allows us to give them a little bit of every flavor they’re interested in.

Carly S. Davenport, Analyst

Got it. Okay. Great. And then just back to the comments earlier on the natural pull forward in demand. Are there practical limitations to the degree to which you could accelerate development plans, whether labor or supply chain interconnection that could be pain points on your ability to get projects online by that '29, 2030 time frame?

John W. Ketchum, CEO

I think all those things you just listed are actually competitive advantages and why we would do really well in a pull-forward market because we have each of the things that you listed, whether it's sites, interconnects, engineering construction, supply chain, balance sheet, all of those things are massive competitive advantages for us compared to the rest of the industry. I think they create substantial opportunities for us in a pull-forward scenario.

Operator, Operator

The next question will come from Ryan Levine with Citi.

Ryan Michael Levine, Analyst

Two questions. On the gas generation front, what regions of the United States are you seeing more traction? Does the FERC ERAS decision from yesterday impact your outlook?

John W. Ketchum, CEO

We’re seeing gas generation demand really across the country. Our gas development pipeline isn’t focused in any one region. If you’re looking at getting gas online quicker, obviously, there are states that are more accommodating, Texas comes to mind in that regard. When I think about the ERAS decision yesterday by MISO, sure, that could create some additional opportunities, but you’re going to have to monitor where the gas supply is, how long it will take to get the turbine, and labor constraints we've seen in that sector. What does that do timing-wise for your assets? We’re going to need an all-of-the-above solution to accommodate the demand.

Ryan Michael Levine, Analyst

What are the key technical milestones remaining on Duane Arnold? Would you expect any ramp in the labor force in the coming months to hit the reiterated guidance around execution?

John W. Ketchum, CEO

It’s the typical work you would expect on recommissioning, doing work across the site, looking at the site’s condition, containment, in particular, and looking at the equipment. We feel good based on what we’ve seen so far, and things continue to progress well.

Operator, Operator

This will conclude our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.