NEE 10-Q Quarterly Report March 31, 2015 | Alphaminr
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NEE 10-Q Quarter ended March 31, 2015

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NEXTERA ENERGY INC
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10-Q 1 nee10q1q2015.htm MARCH 2015 FORM 10-Q NEE.10Q.1Q.2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

Commission
File
Number
Exact name of registrants as specified in their
charters, address of principal executive offices and
registrants' telephone number
IRS Employer
Identification
Number
1-8841
NEXTERA ENERGY, INC.
59-2449419
2-27612
FLORIDA POWER & LIGHT COMPANY
59-0247775
700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000

State or other jurisdiction of incorporation or organization:  Florida

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) have been subject to such filing requirements for the past 90 days.
NextEra Energy, Inc.    Yes þ No ¨ Florida Power & Light Company    Yes þ No ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
NextEra Energy, Inc.    Yes þ No ¨ Florida Power & Light Company    Yes þ No ¨

Indicate by check mark whether the registrants are a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.
NextEra Energy, Inc.
Large Accelerated Filer þ
Accelerated Filer ¨
Non-Accelerated Filer ¨
Smaller Reporting Company ¨
Florida Power & Light Company
Large Accelerated Filer ¨
Accelerated Filer ¨
Non-Accelerated Filer þ
Smaller Reporting Company ¨

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).   Yes ¨ No þ

Number of shares of NextEra Energy, Inc. common stock, $0.01 par value, outstanding as of March 31, 2015 : 444,123,764

Number of shares of Florida Power & Light Company common stock, without par value, outstanding as of March 31, 2015 , all of which were held, beneficially and of record, by NextEra Energy, Inc.: 1,000

This combined Form 10-Q represents separate filings by NextEra Energy, Inc. and Florida Power & Light Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Florida Power & Light Company makes no representations as to the information relating to NextEra Energy, Inc.'s other operations.

Florida Power & Light Company meets the conditions set forth in General Instruction H.(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.


DEFINITIONS

Acronyms and defined terms used in the text include the following:

Term
Meaning
AFUDC
allowance for funds used during construction
AFUDC - debt
debt component of allowance for funds used during construction
AFUDC - equity
equity component of allowance for funds used during construction
AOCI
accumulated other comprehensive income
Duane Arnold
Duane Arnold Energy Center
EPA
U.S. Environmental Protection Agency
FASB
Financial Accounting Standards Board
FERC
U.S. Federal Energy Regulatory Commission
Florida Southeast Connection
Florida Southeast Connection, LLC, a wholly-owned NEECH subsidiary
FPL
Florida Power & Light Company
FPL FiberNet
fiber-optic telecommunications business
FPSC
Florida Public Service Commission
fuel clause
fuel and purchased power cost recovery clause, as established by the FPSC
GAAP
generally accepted accounting principles in the U.S.
ITC
investment tax credit
kWh
kilowatt-hour(s)
Management's Discussion
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
MMBtu
One million British thermal units
MW
megawatt(s)
MWh
megawatt-hour(s)
NEE
NextEra Energy, Inc.
NEECH
NextEra Energy Capital Holdings, Inc.
NEER
NextEra Energy Resources, LLC
NEET
NextEra Energy Transmission, LLC
NEP
NextEra Energy Partners, LP
NEP OpCo
NextEra Energy Operating Partners, LP
Note __
Note __ to condensed consolidated financial statements
NRC
U.S. Nuclear Regulatory Commission
O&M expenses
other operations and maintenance expenses in the condensed consolidated statements of income
OCI
other comprehensive income
OTC
over-the-counter
OTTI
other than temporary impairment
PTC
production tax credit
PV
photovoltaic
Recovery Act
American Recovery and Reinvestment Act of 2009, as amended
regulatory ROE
return on common equity as determined for regulatory purposes
RFP
request for proposal
Sabal Trail
Sabal Trail Transmission, LLC, an entity in which a NEECH subsidiary has a 33% ownership interest
Seabrook
Seabrook Station
SEC
U.S. Securities and Exchange Commission
U.S.
United States of America

NEE, FPL, NEECH and NEER each has subsidiaries and affiliates with names that may include NextEra Energy, FPL, NextEra Energy Resources, NextEra, FPL Group, FPL Group Capital, FPL Energy, FPLE and similar references. For convenience and simplicity, in this report the terms NEE, FPL, NEECH and NEER are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context.

2

TABLE OF CONTENTS





3

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, strategies, future events or performance (often, but not always, through the use of words or phrases such as may result, are expected to, will continue, is anticipated, aim, believe, will, could, should, would, estimated, may, plan, potential, future, projection, goals, target, outlook, predict and intend or words of similar meaning) are not statements of historical facts and may be forward looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on NEE's and/or FPL's operations and financial results, and could cause NEE's and/or FPL's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of NEE and/or FPL in this combined Form 10-Q, in presentations, on their respective websites, in response to questions or otherwise.

Regulatory, Legislative and Legal Risks
•
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected by the extensive regulation of their business.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected if they are unable to recover in a timely manner any significant amount of costs, a return on certain assets or a reasonable return on invested capital through base rates, cost recovery clauses, other regulatory mechanisms or otherwise.
•
Regulatory decisions that are important to NEE and FPL may be materially adversely affected by political, regulatory and economic factors.
•
FPL's use of derivative instruments could be subject to prudence challenges and, if found imprudent, could result in disallowances of cost recovery for such use by the FPSC.
•
Any reductions to, or the elimination of, governmental incentives that support utility scale renewable energy, including, but not limited to, tax incentives, renewable portfolio standards or feed-in tariffs, or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development of new renewable energy projects, NEER abandoning the development of renewable energy projects, a loss of NEER's investments in renewable energy projects and reduced project returns, any of which could have a material adverse effect on NEE's business, financial condition, results of operations and prospects.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected as a result of new or revised laws, regulations or interpretations or other regulatory initiatives.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected if the rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act broaden the scope of its provisions regarding the regulation of OTC financial derivatives and make certain provisions applicable to NEE and FPL.
•
NEE and FPL are subject to numerous environmental laws, regulations and other standards that may result in capital expenditures, increased operating costs and various liabilities, and may require NEE and FPL to limit or eliminate certain operations.
•
NEE's and FPL's business could be negatively affected by federal or state laws or regulations mandating new or additional limits on the production of greenhouse gas emissions.
•
Extensive federal regulation of the operations of NEE and FPL exposes NEE and FPL to significant and increasing compliance costs and may also expose them to substantial monetary penalties and other sanctions for compliance failures.
•
Changes in tax laws, as well as judgments and estimates used in the determination of tax-related asset and liability amounts, could materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
•
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected due to adverse results of litigation.
Operational Risks
•
NEE's and FPL's business, financial condition, results of operations and prospects could suffer if NEE and FPL do not proceed with projects under development or are unable to complete the construction of, or capital improvements to, electric generation, transmission and distribution facilities, gas infrastructure facilities or other facilities on schedule or within budget.
•
NEE and FPL may face risks related to project siting, financing, construction, permitting, governmental approvals and the negotiation of project development agreements that may impede their development and operating activities.
•
The operation and maintenance of NEE's and FPL's electric generation, transmission and distribution facilities, gas infrastructure facilities and other facilities are subject to many operational risks, the consequences of which could have a material adverse effect on NEE's and FPL's business, financial condition, results of operations and prospects.

4

•
NEE's and FPL's business, financial condition, results of operations and prospects may be negatively affected by a lack of growth or slower growth in the number of customers or in customer usage.
•
NEE's and FPL's business, financial condition, results of operations and prospects can be materially adversely affected by weather conditions, including, but not limited to, the impact of severe weather.
•
Threats of terrorism and catastrophic events that could result from terrorism, cyber attacks, or individuals and/or groups attempting to disrupt NEE's and FPL's business, or the businesses of third parties, may materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects.
•
The ability of NEE and FPL to obtain insurance and the terms of any available insurance coverage could be materially adversely affected by international, national, state or local events and company-specific events, as well as the financial condition of insurers. NEE's and FPL's insurance coverage does not provide protection against all significant losses.
•
NEE invests in gas and oil producing assets through NEER’s gas infrastructure business. The gas infrastructure business is exposed to fluctuating market prices of natural gas, natural gas liquids, oil and other energy commodities. A prolonged period of low gas and oil prices could impact NEER’s gas infrastructure business and cause NEER to delay or cancel certain gas infrastructure projects and for certain existing projects to be impaired, which could materially adversely affect NEE's results of operations.
•
If supply costs necessary to provide NEER's full energy and capacity requirement services are not favorable, operating costs could increase and materially adversely affect NEE's business, financial condition, results of operations and prospects.
•
Due to the potential for significant volatility in market prices for fuel, electricity and renewable and other energy commodities, NEER's inability or failure to manage properly or hedge effectively the commodity risks within its portfolios could materially adversely affect NEE's business, financial condition, results of operations and prospects.
•
Sales of power on the spot market or on a short-term contractual basis may cause NEE's results of operations to be volatile.
•
Reductions in the liquidity of energy markets may restrict the ability of NEE to manage its operational risks, which, in turn, could negatively affect NEE's results of operations.
•
NEE's and FPL's hedging and trading procedures and associated risk management tools may not protect against significant losses.
•
If price movements significantly or persistently deviate from historical behavior, NEE's and FPL's risk management tools associated with their hedging and trading procedures may not protect against significant losses.
•
If power transmission or natural gas, nuclear fuel or other commodity transportation facilities are unavailable or disrupted, FPL's and NEER's ability to sell and deliver power or natural gas may be limited.
•
NEE and FPL are subject to credit and performance risk from customers, hedging counterparties and vendors.
•
NEE and FPL could recognize financial losses or a reduction in operating cash flows if a counterparty fails to perform or make payments in accordance with the terms of derivative contracts or if NEE or FPL is required to post margin cash collateral under derivative contracts.
•
NEE and FPL are highly dependent on sensitive and complex information technology systems, and any failure or breach of those systems could have a material adverse effect on their business, financial condition, results of operations and prospects.
•
NEE's and FPL's retail businesses are subject to the risk that sensitive customer data may be compromised, which could result in a material adverse impact to their reputation and/or the results of operations of the retail business.
•
NEE and FPL could recognize financial losses as a result of volatility in the market values of derivative instruments and limited liquidity in OTC markets.
•
NEE and FPL may be materially adversely affected by negative publicity.
•
NEE's and FPL's business, financial condition, results of operations and prospects may be materially adversely affected if FPL is unable to maintain, negotiate or renegotiate franchise agreements on acceptable terms with municipalities and counties in Florida.
•
Increasing costs associated with health care plans may materially adversely affect NEE's and FPL's results of operations.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be negatively affected by the lack of a qualified workforce or the loss or retirement of key employees.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected by work strikes or stoppages and increasing personnel costs.
•
NEE's ability to successfully identify, complete and integrate acquisitions is subject to significant risks, including, but not limited to, the effect of increased competition for acquisitions resulting from the consolidation of the power industry.

5

Nuclear Generation Risks
•
The construction, operation and maintenance of NEE's and FPL's nuclear generation facilities involve environmental, health and financial risks that could result in fines or the closure of the facilities and in increased costs and capital expenditures.
•
In the event of an incident at any nuclear generation facility in the U.S. or at certain nuclear generation facilities in Europe, NEE and FPL could be assessed significant retrospective assessments and/or retrospective insurance premiums as a result of their participation in a secondary financial protection system and nuclear insurance mutual companies.
•
NRC orders or new regulations related to increased security measures and any future safety requirements promulgated by the NRC could require NEE and FPL to incur substantial operating and capital expenditures at their nuclear generation facilities.
•
The inability to operate any of NEER's or FPL's nuclear generation units through the end of their respective operating licenses could have a material adverse effect on NEE's and FPL's business, financial condition, results of operations and prospects.
•
Various hazards posed to nuclear generation facilities, along with increased public attention to and awareness of such hazards, could result in increased nuclear licensing or compliance costs which are difficult or impossible to predict and could have a material adverse effect on NEE's and FPL's business, financial condition, results of operations and prospects.
•
NEE's and FPL's nuclear units are periodically removed from service to accommodate normal refueling and maintenance outages, and for other purposes. If planned outages last longer than anticipated or if there are unplanned outages, NEE's and FPL's results of operations and financial condition could be materially adversely affected.
Liquidity, Capital Requirements and Common Stock Risks
•
Disruptions, uncertainty or volatility in the credit and capital markets may negatively affect NEE's and FPL's ability to fund their liquidity and capital needs and to meet their growth objectives, and can also materially adversely affect the results of operations and financial condition of NEE and FPL.
•
NEE's, NEECH's and FPL's inability to maintain their current credit ratings may materially adversely affect NEE's and FPL's liquidity and results of operations, limit the ability of NEE and FPL to grow their business, and increase interest costs.
•
NEE's and FPL's liquidity may be impaired if their credit providers are unable to fund their credit commitments to the companies or to maintain their current credit ratings.
•
Poor market performance and other economic factors could affect NEE's defined benefit pension plan's funded status, which may materially adversely affect NEE's and FPL's business, financial condition, liquidity and results of operations and prospects.
•
Poor market performance and other economic factors could adversely affect the asset values of NEE's and FPL's nuclear decommissioning funds, which may materially adversely affect NEE's and FPL's liquidity and results of operations.
•
Certain of NEE's investments are subject to changes in market value and other risks, which may materially adversely affect NEE's liquidity, financial results and results of operations.
•
NEE may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if its subsidiaries are unable to pay upstream dividends or repay funds to NEE.
•
NEE may be unable to meet its ongoing and future financial obligations and to pay dividends on its common stock if NEE is required to perform under guarantees of obligations of its subsidiaries.
•
Disruptions, uncertainty or volatility in the credit and capital markets may exert downward pressure on the market price of NEE's common stock.

These factors should be read together with the risk factors included in Part I, Item 1A. Risk Factors in NEE's and FPL's Annual Report on Form 10-K for the year ended December 31, 2014 ( 2014 Form 10-K), and investors should refer to that section of the 2014 Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made, and NEE and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including, but not limited to, unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

Website Access to SEC Filings. NEE and FPL make their SEC filings, including the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, available free of charge on NEE's internet website, www.nexteraenergy.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC. The information and materials available on NEE's website (or any of its subsidiaries' websites) are not incorporated by reference into this combined Form 10-Q. The SEC maintains an internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at www.sec.gov.

6

PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements
NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(millions, except per share amounts)
(unaudited)

Three Months Ended
March 31,
2015
2014
OPERATING REVENUES
$
4,104

$
3,674

OPERATING EXPENSES
Fuel, purchased power and interchange
1,363

1,397

Other operations and maintenance
735

756

Merger-related
4

—

Depreciation and amortization
547

463

Taxes other than income taxes and other
326

320

Total operating expenses
2,975

2,936

OPERATING INCOME
1,129

738

OTHER INCOME (DEDUCTIONS)
Interest expense
(321
)
(319
)
Benefits associated with differential membership interests - net
57

65

Equity in earnings of equity method investees
9

2

Allowance for equity funds used during construction
11

15

Interest income
21

22

Gains on disposal of assets - net
22

44

Gain associated with Maine fossil
—

21

Other - net
8

(5
)
Total other deductions - net
(193
)
(155
)
INCOME BEFORE INCOME TAXES
936

583

INCOME TAXES
286

153

NET INCOME
650

430

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
—


—

NET INCOME ATTRIBUTABLE TO NEE
$
650

$
430

Earnings per share attributable to NEE


Basic
$
1.47

$
0.99

Assuming dilution
$
1.45

$
0.98

Dividends per share of common stock
$
0.770

$
0.725

Weighted-average number of common shares outstanding:


Basic
442.3

433.5

Assuming dilution
448.8

438.2














This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

7



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(unaudited)

Three Months Ended
March 31,
2015
2014
NET INCOME
$
650

$
430

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Net unrealized gains (losses) on cash flow hedges:


Effective portion of net unrealized losses (net of $26 and $11 tax benefit, respectively)
(52
)
(18
)
Reclassification from accumulated other comprehensive income to net income (net of $4 and $5 tax expense, respectively)
18

9

Net unrealized gains (losses) on available for sale securities:


Net unrealized gains on securities still held (net of $9 and $10 tax expense, respectively)
12

13

Reclassification from accumulated other comprehensive income to net income (net of $7 and $15 tax benefit, respectively)
(10
)
(25
)
Defined benefit pension and other benefits plans (net of $10 tax benefit and $3 tax expense, respectively)
(16
)
5

Net unrealized gains (losses) on foreign currency translation (net of $8 tax expense and $8 tax benefit, respectively)
14

(17
)
Other comprehensive loss related to equity method investee (net of $1 and $1 tax benefit, respectively)
(2
)
(2
)
Total other comprehensive loss, net of tax
(36
)
(35
)
COMPREHENSIVE INCOME
614

395

LESS COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
3

—

COMPREHENSIVE INCOME ATTRIBUTABLE TO NEE
$
617

$
395































This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.


8

NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except par value)
(unaudited)
March 31,
2015
December 31,
2014
PROPERTY, PLANT AND EQUIPMENT
Electric plant in service and other property
$
68,691

$
68,042

Nuclear fuel
2,048

2,006

Construction work in progress
3,939

3,591

Less accumulated depreciation and amortization
(18,445
)
(17,934
)
Total property, plant and equipment - net ($6,361 and $6,414 related to VIEs, respectively)
56,233

55,705

CURRENT ASSETS


Cash and cash equivalents
469

577

Customer receivables, net of allowances of $19 and $27, respectively
1,718

1,805

Other receivables
309

354

Materials, supplies and fossil fuel inventory
1,249

1,292

Regulatory assets:
Deferred clause and franchise expenses
181

268

Derivatives
360

364

Other
116

116

Derivatives
802

990

Deferred income taxes
608

739

Other
485

439

Total current assets
6,297

6,944

OTHER ASSETS


Special use funds
5,245

5,166

Other investments
1,527

1,399

Prepaid benefit costs
1,259

1,244

Regulatory assets:


Securitized storm-recovery costs ($172 and $180 related to a VIE, respectively)
279

294

Other
643

657

Derivatives
1,222

1,009

Other
2,224

2,511

Total other assets
12,399

12,280

TOTAL ASSETS
$
74,929

$
74,929

CAPITALIZATION


Common stock ($0.01 par value, authorized shares - 800; outstanding shares - 444 and 443, respectively)
$
4

$
4

Additional paid-in capital
7,222

7,179

Retained earnings
13,082

12,773

Accumulated other comprehensive loss
(73
)
(40
)
Total common shareholders' equity
20,235

19,916

Noncontrolling interests
229

252

Total equity
20,464

20,168

Long-term debt ($1,024 and $1,077 related to VIEs, respectively)
24,264

24,367

Total capitalization
44,728

44,535

CURRENT LIABILITIES


Commercial paper
1,120

1,142

Notes payable
625

—

Current maturities of long-term debt
3,457

3,515

Accounts payable
1,104

1,354

Customer deposits
464

462

Accrued interest and taxes
558

474

Derivatives
1,087

1,289

Accrued construction-related expenditures
448

676

Other
523

751

Total current liabilities
9,386

9,663

OTHER LIABILITIES AND DEFERRED CREDITS


Asset retirement obligations
2,016

1,986

Deferred income taxes
9,337

9,261

Regulatory liabilities:


Accrued asset removal costs
1,838

1,904

Asset retirement obligation regulatory expense difference
2,275

2,257

Other
494

476

Derivatives
557

466

Deferral related to differential membership interests - VIEs
2,649

2,704

Other
1,649

1,677

Total other liabilities and deferred credits
20,815

20,731

COMMITMENTS AND CONTINGENCIES




TOTAL CAPITALIZATION AND LIABILITIES
$
74,929

$
74,929

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

9



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)
Three Months Ended
March 31,
2015
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
650

$
430

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
547

463

Nuclear fuel and other amortization
90

88

Unrealized losses (gains) on marked to market energy contracts
(99
)
124

Deferred income taxes
262

190

Cost recovery clauses and franchise fees
66

4

Benefits associated with differential membership interests - net
(57
)
(65
)
Allowance for equity funds used during construction
(11
)
(15
)
Gains on disposal of assets - net
(22
)
(44
)
Gain associated with Maine fossil
—

(21
)
Other - net
29

43

Changes in operating assets and liabilities:
Customer and other receivables
118

(90
)
Materials, supplies and fossil fuel inventory
43

9

Other current assets
(23
)
(24
)
Other assets
(2
)
(97
)
Accounts payable and customer deposits
(157
)
162

Margin cash collateral
(187
)
(84
)
Income taxes
12

(42
)
Interest and other taxes
105

122

Other current liabilities
(152
)
(161
)
Other liabilities
(31
)
25

Net cash provided by operating activities
1,181

1,017

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures of FPL
(721
)
(999
)
Independent power and other investments of NEER
(649
)
(752
)
Nuclear fuel purchases
(91
)
(91
)
Other capital expenditures and other investments
(105
)
(24
)
Sale of independent power and other investments of NEER
34

53

Change in loan proceeds restricted for construction
2

(28
)
Proceeds from sale or maturity of securities in special use funds and other investments
771

1,451

Purchases of securities in special use funds and other investments
(828
)
(1,481
)
Other - net
23

29

Net cash used in investing activities
(1,564
)
(1,842
)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of long-term debt
194

655

Retirements of long-term debt
(170
)
(717
)
Payments to differential membership investors
(21
)
(22
)
Net change in short-term debt
603

1,179

Issuances of common stock - net
16

25

Dividends on common stock
(341
)
(315
)
Other - net
(6
)
70

Net cash provided by financing activities
275

875

Net increase (decrease) in cash and cash equivalents
(108
)
50

Cash and cash equivalents at beginning of period
577

438

Cash and cash equivalents at end of period
$
469

$
488

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued property additions
$
632

$
802

Changes in property, plant and equipment as a result of a settlement
$
25

$
128






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

10



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(millions)
(unaudited)

Common Stock
Additional
Paid-In
Capital
Unearned
ESOP
Compensation
Accumulated
Other
Comprehensive
Income
(Loss)
Retained
Earnings
Total
Common
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Shares
Aggregate
Par Value
Balances, December 31, 2014
443

$
4

$
7,193

$
(14
)
$
(40
)
$
12,773

$
19,916

$
252

$
20,168

Net income
—

—

—

—

—

650

650

—

Issuances of common stock, net of issuance cost of less than $1
—

—

13

1

—

—

14

—

Exercise of stock options and other incentive plan activity
1

—

2

—

—

—

2

—

Dividends on common stock
—

—

—

—

—

(341
)
(341
)
—

Earned compensation under ESOP
—

—

10

1

—

—

11

—

Other comprehensive loss
—

—

—

—

(33
)
—

(33
)
(3
)
Sale of NEER assets to NEP
—

—

16

—

—

—

16

(11
)

Distributions to noncontrolling interests
—

—

—

—

—

—

—

(4
)
Other changes in noncontrolling interests in subsidiaries
—

—

—

—

—

—

—

(5
)

Balances, March 31, 2015
444

$
4

$
7,234

$
(12
)
$
(73
)
$
13,082

$
20,235

$
229

$
20,464



Common Stock
Additional
Paid-In
Capital
Unearned
ESOP
Compensation
Accumulated
Other
Comprehensive
Income
(Loss)
Retained
Earnings
Total
Common
Shareholders'
Equity
Non-
controlling
Interests
Total
Equity
Shares
Aggregate
Par Value
Balances, December 31, 2013
435

$
4

$
6,437

$
(26
)
$
56

$
11,569

$
18,040

$
—

$
18,040

Net income
—

—

—

—

—

430

430

—

Issuances of common stock, net of issuance cost of less than $1
—

—

13

1

—

—

14

—

Exercise of stock options and other incentive plan activity
1

—

13

—

—

—

13

—

Dividends on common stock
—

—

—

—

—

(315
)
(315
)
—

Earned compensation under ESOP
—

—

11

2

—

—

13

—

Other comprehensive loss
—

—

—

—

(35
)
—

(35
)
—

Balances, March 31, 2014
436

$
4

$
6,474

$
(23
)
$
21

$
11,684

$
18,160

$
—

$
18,160















This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

11



FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(millions)
(unaudited)

Three Months Ended
March 31,
2015
2014
OPERATING REVENUES
$
2,541

$
2,535

OPERATING EXPENSES


Fuel, purchased power and interchange
1,005

1,036

Other operations and maintenance
353

384

Depreciation and amortization
242

209

Taxes other than income taxes and other
274

274

Total operating expenses
1,874

1,903

OPERATING INCOME
667

632

OTHER INCOME (DEDUCTIONS)


Interest expense
(115
)
(102
)
Allowance for equity funds used during construction
10

15

Other - net
1

1

Total other deductions - net
(104
)
(86
)
INCOME BEFORE INCOME TAXES
563

546

INCOME TAXES
204

199

NET INCOME (a)
$
359

$
347

_______________________
(a)
FPL's comprehensive income is the same as reported net income.






























This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

12



FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except share amount)
(unaudited)
March 31,
2015
December 31,
2014
ELECTRIC UTILITY PLANT
Plant in service and other property
$
39,478

$
39,027

Nuclear fuel
1,253

1,217

Construction work in progress
2,002

1,694

Less accumulated depreciation and amortization
(11,484
)
(11,282
)
Total electric utility plant - net
31,249

30,656

CURRENT ASSETS


Cash and cash equivalents
28

14

Customer receivables, net of allowances of $2 and $5, respectively
740

773

Other receivables
112

136

Materials, supplies and fossil fuel inventory
841

848

Regulatory assets:


Deferred clause and franchise expenses
181

268

Derivatives
360

364

Other
113

111

Other
128

120

Total current assets
2,503

2,634

OTHER ASSETS


Special use funds
3,573

3,524

Prepaid benefit costs
1,203

1,189

Regulatory assets:


Securitized storm-recovery costs ($172 and $180 related to a VIE, respectively)
279

294

Other
475

468

Other
271

542

Total other assets
5,801

6,017

TOTAL ASSETS
$
39,553

$
39,307

CAPITALIZATION


Common stock (no par value, 1,000 shares authorized, issued and outstanding)
$
1,373

$
1,373

Additional paid-in capital
6,828

6,279

Retained earnings
5,859

5,499

Total common shareholder's equity
14,060

13,151

Long-term debt ($240 and $273 related to a VIE, respectively)
9,381

9,413

Total capitalization
23,441

22,564

CURRENT LIABILITIES


Commercial paper
420

1,142

Current maturities of long-term debt
62

60

Accounts payable
570

647

Customer deposits
459

458

Accrued interest and taxes
521

245

Derivatives
364

370

Accrued construction-related expenditures
167

233

Other
229

331

Total current liabilities
2,792

3,486

OTHER LIABILITIES AND DEFERRED CREDITS


Asset retirement obligations
1,373

1,355

Deferred income taxes
6,917

6,835

Regulatory liabilities:


Accrued asset removal costs
1,831

1,898

Asset retirement obligation regulatory expense difference
2,275

2,257

Other
494

476

Other
430

436

Total other liabilities and deferred credits
13,320

13,257

COMMITMENTS AND CONTINGENCIES




TOTAL CAPITALIZATION AND LIABILITIES
$
39,553

$
39,307


This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

13

FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)

Three Months Ended
March 31,
2015
2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income
$
359

$
347

Adjustments to reconcile net income to net cash provided by (used in) operating activities:


Depreciation and amortization
242

209

Nuclear fuel and other amortization
54

47

Deferred income taxes
72

168

Cost recovery clauses and franchise fees
66

4

Allowance for equity funds used during construction
(10
)
(15
)
Other - net
20

6

Changes in operating assets and liabilities:


Customer and other receivables
39

68

Materials, supplies and fossil fuel inventory
7

(22
)
Other current assets
(39
)
(18
)
Other assets
(17
)
(69
)
Accounts payable and customer deposits
(30
)
91

Income taxes
157

31

Interest and other taxes
112

95

Other current liabilities
(67
)
(94
)
Other liabilities
(13
)
27

Net cash provided by operating activities
952

875

CASH FLOWS FROM INVESTING ACTIVITIES


Capital expenditures
(721
)
(999
)
Nuclear fuel purchases
(44
)
(68
)
Proceeds from sale or maturity of securities in special use funds
589

1,162

Purchases of securities in special use funds
(606
)
(1,184
)
Other - net
24

22

Net cash used in investing activities
(758
)
(1,067
)
CASH FLOWS FROM FINANCING ACTIVITIES


Retirements of long-term debt
(31
)
(29
)
Net change in short-term debt
(722
)
120

Capital contribution from NEE
550

100

Other - net
23

20

Net cash provided by (used in) financing activities
(180
)
211

Net increase in cash and cash equivalents
14

19

Cash and cash equivalents at beginning of period
14

19

Cash and cash equivalents at end of period
$
28

$
38

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES


Accrued property additions
$
282

$
317






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

14

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The accompanying condensed consolidated financial statements should be read in conjunction with the 2014 Form 10-K. In the opinion of NEE and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. Certain amounts included in the prior year's condensed consolidated financial statements have been reclassified to conform to the current year's presentation. The results of operations for an interim period generally will not give a true indication of results for the year.

1.  Employee Retirement Benefits

NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and has a supplemental executive retirement plan, which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees (collectively, pension benefits). In addition to pension benefits, NEE sponsors a contributory postretirement plan for health care and life insurance benefits (other benefits) for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

The components of net periodic benefit (income) cost for the plans are as follows:

Pension Benefits
Other Benefits
Three Months Ended
March 31,
Three Months Ended
March 31,
2015
2014
2015
2014
(millions)
Service cost
$
18

$
16

$
1

$
1

Interest cost
24

25

3

4

Expected return on plan assets
(63
)
(60
)
—

—

Amortization of prior service cost (benefit)
—

1

—

(1
)
Net periodic benefit (income) cost at NEE
$
(21
)
$
(18
)
$
4

$
4

Net periodic benefit (income) cost at FPL
$
(13
)
$
(11
)
$
3

$
3


2.  Derivative Instruments

NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity, as well as interest rate and foreign currency exchange rate risk associated primarily with outstanding and forecasted debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets.

With respect to commodities related to NEE's competitive energy business, NEER employs risk management procedures to conduct its activities related to optimizing the value of its power generation and gas infrastructure assets, providing full energy and capacity requirements services primarily to distribution utilities, and engaging in power and gas marketing and trading activities to take advantage of expected future favorable price movements and changes in the expected volatility of prices in the energy markets. These risk management activities involve the use of derivative instruments executed within prescribed limits to manage the risk associated with fluctuating commodity prices. Transactions in derivative instruments are executed on recognized exchanges or via the OTC markets, depending on the most favorable credit terms and market execution factors. For NEER's power generation and gas infrastructure assets, derivative instruments are used to hedge the commodity price risk associated with the fuel requirements of the assets, where applicable, as well as to hedge all or a portion of the expected output of these assets. These hedges are designed to reduce the effect of adverse changes in the wholesale forward commodity markets associated with NEER's power generation and gas infrastructure assets. With regard to full energy and capacity requirements services, NEER is required to vary the quantity of energy and related services based on the load demands of the customers served. For this type of transaction, derivative instruments are used to hedge the anticipated electricity quantities required to serve these customers and reduce the effect of unfavorable changes in the forward energy markets. Additionally, NEER takes positions in the energy markets based on differences between actual forward market levels and management's view of fundamental market conditions, including supply/demand imbalances, changes in traditional flows of energy, changes in short- and long-term weather patterns and anticipated regulatory and legislative outcomes. NEER uses derivative instruments to realize value from these market dislocations, subject to strict risk management limits around market, operational and credit exposure.

Derivative instruments, when required to be marked to market, are recorded on NEE's and FPL's condensed consolidated balance sheets as either an asset or liability measured at fair value. At FPL, substantially all changes in the derivatives' fair value are deferred as a regulatory asset or liability until the contracts are settled, and, upon settlement, any gains or losses are passed through the

15
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


fuel clause. For NEE's non-rate regulated operations, predominantly NEER, essentially all changes in the derivatives' fair value for power purchases and sales, fuel sales and trading activities are recognized on a net basis in operating revenues; fuel purchases used in the production of electricity are recognized in fuel, purchased power and interchange expense; and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEE's condensed consolidated statements of income. Settlement gains and losses are included within the line items in the condensed consolidated statements of income to which they relate. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis in the condensed consolidated statements of income. For commodity derivatives, NEE believes that, where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Settlements related to derivative instruments are primarily recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.

While most of NEE's derivatives are entered into for the purpose of managing commodity price risk, optimizing the value of NEER's power generation and gas infrastructure assets, reducing the impact of volatility in interest rates on outstanding and forecasted debt issuances and managing foreign currency risk, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective in offsetting the hedged risk. Additionally, for hedges of forecasted transactions, the forecasted transactions must be probable. For interest rate and foreign currency derivative instruments, generally NEE assesses a hedging instrument's effectiveness by using nonstatistical methods including dollar value comparisons of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item. Hedge effectiveness is tested at the inception of the hedge and on at least a quarterly basis throughout its life. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of OCI and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings or when it becomes probable that a forecasted transaction being hedged would not occur. The ineffective portion of net unrealized gains (losses) on these hedges is reported in earnings in the current period. At March 31, 2015 , NEE's AOCI included amounts related to interest rate cash flow hedges with expiration dates through March 2035 and foreign currency cash flow hedges with expiration dates through September 2030. Approximately $52 million of net losses included in AOCI at March 31, 2015 is expected to be reclassified into earnings within the next 12 months as the principal and/or interest payments are made. Such amounts assume no change in interest rates, currency exchange rates or scheduled principal payments.


16
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Fair Value of Derivative Instruments - The tables below present NEE's and FPL's gross derivative positions at March 31, 2015 and December 31, 2014 , as required by disclosure rules. However, the majority of the underlying contracts are subject to master netting agreements and generally would not be contractually settled on a gross basis. Therefore, the tables below also present the derivative positions on a net basis, which reflect the offsetting of positions of certain transactions within the portfolio, the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral (see Note 3 - Recurring Fair Value Measurements for netting information), as well as the location of the net derivative position on the condensed consolidated balance sheets.

March 31, 2015
Fair Values of Derivatives
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
Total Derivatives Combined -
Net Basis
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
(millions)
NEE:
Commodity contracts
$
—

$
—

$
5,853

$
4,897

$
1,975

$
1,204

Interest rate contracts
46

175

—

127

49

305

Foreign currency swaps
—

135

—

—

—

135

Total fair values
$
46

$
310

$
5,853

$
5,024

$
2,024

$
1,644

FPL:
Commodity contracts
$
—

$
—

$
7

$
378

$
5

$
376

Net fair value by NEE balance sheet line item:
Current derivative assets (a)
$
802

Noncurrent derivative assets (b)
1,222

Current derivative liabilities (c)
$
1,087

Noncurrent derivative liabilities (d)
557

Total derivatives
$
2,024

$
1,644

Net fair value by FPL balance sheet line item:
Current other assets
$
4

Noncurrent other assets
1

Current derivative liabilities
$
364

Noncurrent other liabilities
12

Total derivatives
$
5

$
376

______________________
(a)
Reflects the netting of approximately $147 million in margin cash collateral received from counterparties.
(b)
Reflects the netting of approximately $93 million in margin cash collateral received from counterparties.
(c)
Reflects the netting of approximately $53 million in margin cash collateral paid to counterparties.
(d)
Reflects the netting of approximately $2 million in margin cash collateral paid to counterparties.


17
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


December 31, 2014
Fair Values of Derivatives
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
Total Derivatives Combined -
Net Basis
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
(millions)
NEE:
Commodity contracts
$
—

$
—

$
6,145

$
5,290

$
1,949

$
1,358

Interest rate contracts
35

126

—

125

50

266

Foreign currency swaps
—

131

—

—

—

131

Total fair values
$
35

$
257

$
6,145

$
5,415

$
1,999

$
1,755

FPL:
Commodity contracts
$
—

$
—

$
8

$
371

$
7

$
370

Net fair value by NEE balance sheet line item:
Current derivative assets (a)
$
990

Noncurrent derivative assets (b)
1,009

Current derivative liabilities (c)
$
1,289

Noncurrent derivative liabilities (d)
466

Total derivatives
$
1,999

$
1,755

Net fair value by FPL balance sheet line item:
Current other assets
$
6

Noncurrent other assets
1

Current derivative liabilities
$
370

Total derivatives
$
7

$
370

______________________
(a)
Reflects the netting of approximately $197 million in margin cash collateral received from counterparties.
(b)
Reflects the netting of approximately $97 million in margin cash collateral received from counterparties.
(c)
Reflects the netting of approximately $20 million in margin cash collateral paid to counterparties.
(d)
Reflects the netting of approximately $10 million in margin cash collateral paid to counterparties.

At March 31, 2015 and December 31, 2014 , NEE had approximately $17 million and $60 million ( none at FPL), respectively, in margin cash collateral received from counterparties that was not offset against derivative assets in the above presentation. These amounts are included in current other liabilities on NEE's condensed consolidated balance sheets. Additionally, at March 31, 2015 and December 31, 2014 , NEE had approximately $187 million and $122 million ( none at FPL), respectively, in margin cash collateral paid to counterparties that was not offset against derivative assets or liabilities in the above presentation. These amounts are included in current other assets on NEE's condensed consolidated balance sheets.

Income Statement Impact of Derivative Instruments - Gains (losses) related to NEE's cash flow hedges are recorded in NEE's condensed consolidated financial statements (none at FPL) as follows:

Three Months Ended March 31,
2015
2014
Interest
Rate
Contracts
Foreign
Currency
Swaps
Total
Interest
Rate
Contracts
Foreign
Currency
Swaps
Total
(millions)
Gains (losses) recognized in OCI
$
(70
)
$
(8
)
$
(78
)
$
(27
)
$
(2
)
$
(29
)
Gains (losses) reclassified from AOCI to net income
$
(20
)
(a)
$
(2
)
(b)
$
(22
)
$
(16
)
(a)
$
2

(b)
$
(14
)
————————————
(a)
Included in interest expense.
(b)
For 2015 and 2014, losses of approximately $3 million and $1 million , respectively, are included in interest expense and the balances are included in other - net.

18
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


For the three months ended March 31, 2015 and 2014 , NEE recorded gains of approximately $16 million and $4 million , respectively, on fair value hedges which resulted in a corresponding increase in the related debt.

Gains (losses) related to NEE's derivatives not designated as hedging instruments are recorded in NEE's condensed consolidated statements of income as follows:
Three Months Ended
March 31,
2015
2014
(millions)
Commodity contracts: (a)
Operating revenues
$
237

$
(272
)
Fuel, purchased power and interchange
2

(4
)
Foreign currency swap - other - net
—


5

Interest rate contracts - interest expense
(13
)
(27
)
Total
$
226

$
(298
)
————————————
(a)
For the three months ended March 31, 2015 and 2014 , FPL recorded approximately $86 million of losses and $136 million of gains, respectively, related to commodity contracts as regulatory assets and regulatory liabilities, respectively, on its condensed consolidated balance sheets.

Notional Volumes of Derivative Instruments - The following table represents net notional volumes associated with derivative instruments that are required to be reported at fair value in NEE's and FPL's condensed consolidated financial statements. The table includes significant volumes of transactions that have minimal exposure to commodity price changes because they are variably priced agreements. These volumes are only an indication of the commodity exposure that is managed through the use of derivatives. They do not represent net physical asset positions or non-derivative positions and their hedges, nor do they represent NEE ’ s and FPL ’ s net economic exposure, but only the net notional derivative positions that fully or partially hedge the related asset positions. NEE and FPL had derivative commodity contracts for the following net notional volumes:

March 31, 2015
December 31, 2014
Commodity Type
NEE
FPL
NEE
FPL
(millions)
Power
(103
)
MWh
—

(73
)
MWh
—

Natural gas
1,458

MMBtu
892

MMBtu
1,436

MMBtu
845

MMBtu
Oil
(9
)
barrels
—

(11
)
barrels
—


At March 31, 2015 and December 31, 2014 , NEE had interest rate contracts with notional amounts totaling approximately $7.1 billion and $7.4 billion , respectively, and foreign currency swaps with notional amounts totaling approximately $693 million and $661 million , respectively.

Credit - Risk - Related Contingent Features - Certain derivative instruments contain credit-risk-related contingent features including, among other things, the requirement to maintain an investment grade credit rating from specified credit rating agencies and certain financial ratios, as well as credit-related cross-default and material adverse change triggers. At March 31, 2015 and December 31, 2014 , the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $2.5 billion ( $375 million for FPL) and $2.7 billion ( $369 million for FPL), respectively.

If the credit-risk-related contingent features underlying these agreements and other commodity-related contracts were triggered, certain subsidiaries of NEE, including FPL, could be required to post collateral or settle contracts according to contractual terms which generally allow netting of contracts in offsetting positions. Certain contracts contain multiple types of credit-related triggers. To the extent these contracts contain a credit ratings downgrade trigger, the maximum exposure is included in the following credit ratings collateral posting requirements. If FPL's and NEECH's credit ratings were downgraded to BBB/Baa2 (a two level downgrade for FPL and a one level downgrade for NEECH from the current lowest applicable rating), applicable NEE subsidiaries would be required to post collateral such that the total posted collateral would be approximately $500 million ( $130 million at FPL) as of March 31, 2015 and $700 million ( $130 million at FPL) as of December 31, 2014 . If FPL's and NEECH's credit ratings were downgraded to below investment grade, applicable NEE subsidiaries would be required to post additional collateral such that the total posted collateral would be approximately $2.6 billion ( $0.7 billion at FPL) and $2.8 billion ( $0.7 billion at FPL) as of March 31, 2015 and December 31, 2014 , respectively. Some contracts do not contain credit ratings downgrade triggers, but do contain provisions that require certain financial measures be maintained and/or have credit-related cross-default triggers. In the event these

19
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


provisions were triggered, applicable NEE subsidiaries could be required to post additional collateral of up to approximately $750 million ( $175 million at FPL) and $850 million ( $200 million at FPL) as of March 31, 2015 and December 31, 2014 , respectively.

Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At March 31, 2015 , applicable NEE subsidiaries have posted approximately $118 million ( none at FPL) in cash which could be applied toward the collateral requirements described above. In addition, at March 31, 2015 and December 31, 2014 , applicable NEE subsidiaries have posted approximately $117 million ( none at FPL) and $236 million ( none at FPL), respectively, in the form of letters of credit which could be applied toward the collateral requirements described above. FPL and NEECH have credit facilities generally in excess of the collateral requirements described above that would be available to support, among other things, derivative activities. Under the terms of the credit facilities, maintenance of a specific credit rating is not a condition to drawing on these credit facilities, although there are other conditions to drawing on these credit facilities.

Additionally, some contracts contain certain adequate assurance provisions where a counterparty may demand additional collateral based on subjective events and/or conditions. Due to the subjective nature of these provisions, NEE and FPL are unable to determine an exact value for these items and they are not included in any of the quantitative disclosures above.

3.  Fair Value Measurements

The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEE and FPL use several different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. NEE's and FPL's assessment of the significance of any particular input to the fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value.

Cash Equivalents - Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. NEE primarily holds investments in money market funds. The fair value of these funds is calculated using current market prices.

Special Use Funds and Other Investments - NEE and FPL hold primarily debt and equity securities directly, as well as indirectly through commingled funds. Substantially all directly held equity securities are valued at their quoted market prices. For directly held debt securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validations. A primary price source is identified based on asset type, class or issue of each security. Commingled funds, which are similar to mutual funds, are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives. The fair value of commingled funds is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.

Derivative Instruments - NEE and FPL measure the fair value of commodity contracts using prices observed on commodities exchanges and in the OTC markets, or through the use of industry-standard valuation techniques, such as option modeling or discounted cash flows techniques, incorporating both observable and unobservable valuation inputs. The resulting measurements are the best estimate of fair value as represented by the transfer of the asset or liability through an orderly transaction in the marketplace at the measurement date.

Most exchange-traded derivative assets and liabilities are valued directly using unadjusted quoted prices. For exchange-traded derivative assets and liabilities where the principal market is deemed to be inactive based on average daily volumes and open interest, the measurement is established using settlement prices from the exchanges, and therefore considered to be valued using other observable inputs.

NEE, through its subsidiaries, including FPL, also enters into OTC commodity contract derivatives. The majority of these contracts are transacted at liquid trading points, and the prices for these contracts are verified using quoted prices in active markets from exchanges, brokers or pricing services for similar contracts.

NEE, through NEER, also enters into full requirements contracts, which, in most cases, meet the definition of derivatives and are measured at fair value. These contracts typically have one or more inputs that are not observable and are significant to the valuation of the contract. In addition, certain exchange and non-exchange traded derivative options at NEE have one or more significant inputs that are not observable, and are valued using industry-standard option models.

In all cases where NEE and FPL use significant unobservable inputs for the valuation of a commodity contract, consideration is given to the assumptions that market participants would use in valuing the asset or liability. The primary input to the valuation models

20
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


for commodity contracts is the forward commodity curve for the respective instruments. Other inputs include, but are not limited to, assumptions about market liquidity, volatility, correlation and contract duration as more fully described below in Significant Unobservable Inputs Used in Recurring Fair Value Measurements. In instances where the reference markets are deemed to be inactive or do not have transactions for a similar contract, the derivative assets and liabilities may be valued using significant other observable inputs and potentially significant unobservable inputs. In such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts, or estimated basis adjustments from liquid trading points. NEE and FPL regularly evaluate and validate the inputs used to determine fair value by a number of methods, consisting of various market price verification procedures, including the use of pricing services and multiple broker quotes to support the market price of the various commodities. In all cases where there are assumptions and models used to generate inputs for valuing derivative assets and liabilities, the review and verification of the assumptions, models and changes to the models are undertaken by individuals that are independent of those responsible for estimating fair value.

NEE uses interest rate contracts and foreign currency swaps to mitigate and adjust interest rate and foreign currency exposure related primarily to certain outstanding and forecasted debt issuances and borrowings when deemed appropriate based on market conditions or when required by financing agreements. NEE estimates the fair value of these derivatives using a discounted cash flows valuation technique based on the net amount of estimated future cash inflows and outflows related to the agreements.


21
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Recurring Fair Value Measurements - NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:

March 31, 2015
Level 1
Level 2
Level 3
Netting (a)
Total
(millions)
Assets:
Cash equivalents:
NEE - equity securities
$
18

$
—

$
—

$
18

Special use funds: (b)
NEE:
Equity securities
$
1,231

$
1,441

(c)
$
—

$
2,672

U.S. Government and municipal bonds
$
494

$
212

$
—

$
706

Corporate debt securities
$
—

$
748

$
—

$
748

Mortgage-backed securities
$
—

$
493

$
—

$
493

Other debt securities
$
26

$
42

$
—

$
68

FPL:
Equity securities
$
319

$
1,259

(c)
$
—

$
1,578

U.S. Government and municipal bonds
$
415

$
175

$
—

$
590

Corporate debt securities
$
—

$
539

$
—

$
539

Mortgage-backed securities
$
—

$
423

$
—

$
423

Other debt securities
$
26

$
32

$
—

$
58

Other investments:
NEE:
Equity securities
$
35

$
1

$
—


$
36

Debt securities
$
9

$
176

$
—

$
185

Derivatives:
NEE:
Commodity contracts
$
1,618

$
3,186

$
1,049

$
(3,878
)
$
1,975

(d)
Interest rate contracts
$
—

$
46

$
—

$
3

$
49

(d)
FPL - commodity contracts
$
—

$
3

$
4

$
(2
)
$
5

(d)
Liabilities:
Derivatives:
NEE:
Commodity contracts
$
1,583

$
2,843

$
471

$
(3,693
)
$
1,204

(d)
Interest rate contracts
$
—

$
175

$
127

$
3

$
305

(d)
Foreign currency swaps
$
—

$
135

$
—

$
—

$
135

(d)
FPL - commodity contracts
$
—

$
373

$
5

$
(2
)
$
376

(d)
————————————
(a)
Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at the Carrying Amount below.
(c)
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)
See Note 2 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.


22
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


December 31, 2014
Level 1
Level 2
Level 3
Netting (a)
Total
(millions)
Assets:
Cash equivalents:
NEE - equity securities
$
32

$
—

$
—

$
32

Special use funds: (b)
NEE:
Equity securities
$
1,217

$
1,417

(c)
$
—

$
2,634

U.S. Government and municipal bonds
$
520

$
191

$
—

$
711

Corporate debt securities
$
—

$
704

$
—

$
704

Mortgage-backed securities
$
—

$
493

$
—

$
493

Other debt securities
$
25

$
32

$
—

$
57

FPL:
Equity securities
$
324

$
1,237

(c)
$
—

$
1,561

U.S. Government and municipal bonds
$
435

$
165

$
—

$
600

Corporate debt securities
$
—

$
501

$
—

$
501

Mortgage-backed securities
$
—

$
422

$
—

$
422

Other debt securities
$
25

$
20

$
—

$
45

Other investments:
NEE:
Equity securities
$
35

$
1

$
—

$
36

Debt securities
$
5

$
170

$
—

$
175

Derivatives:
NEE:
Commodity contracts
$
1,801

$
3,177

$
1,167

$
(4,196
)
$
1,949

(d)
Interest rate contracts
$
—

$
35

$
—

$
15

$
50

(d)
FPL - commodity contracts
$
—

$
2

$
6

$
(1
)
$
7

(d)
Liabilities:
Derivatives:
NEE:
Commodity contracts
$
1,720

$
3,150

$
420

$
(3,932
)
$
1,358

(d)
Interest rate contracts
$
—

$
126

$
125

$
15

$
266

(d)
Foreign currency swaps
$
—

$
131

$
—

$
—

$
131

(d)
FPL - commodity contracts
$
—

$
370

$
1

$
(1
)
$
370

(d)
————————————
(a)
Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.
(b)
Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at the Carrying Amount below.
(c)
Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.
(d)
See Note 2 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

Significant Unobservable Inputs Used in Recurring Fair Value Measurements - The valuation of certain commodity contracts requires the use of significant unobservable inputs. All forward price, implied volatility, implied correlation and interest rate inputs used in the valuation of such contracts are directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices, implied volatilities and interest rates used for determining fair value are updated daily to reflect the best available market information. Unobservable inputs which are related to observable inputs, such as illiquid portions of forward price or volatility curves, are updated daily as well, using industry standard techniques such as interpolation and extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Other unobservable inputs, such as implied correlations, customer migration rates from full requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.

23
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



All price, volatility, correlation and customer migration inputs used in valuation are subject to validation by the Trading Risk Management group. The Trading Risk Management group performs a risk management function responsible for assessing credit, market and operational risk impact, reviewing valuation methodology and modeling, confirming transactions, monitoring approval processes and developing and monitoring trading limits. The Trading Risk Management group is separate from the transacting group. For markets where independent third-party data is readily available, validation is conducted daily by directly reviewing this market data against inputs utilized by the transacting group, and indirectly by critically reviewing daily risk reports. For markets where independent third-party data is not readily available, additional analytical reviews are performed on at least a quarterly basis. These analytical reviews are designed to ensure that all price and volatility curves used for fair valuing transactions are adequately validated each quarter, and are reviewed and approved by the Trading Risk Management group. In addition, other valuation assumptions such as implied correlations and customer migration rates are reviewed and approved by the Trading Risk Management group on a periodic basis. Newly created models used in the valuation process are also subject to testing and approval by the Trading Risk Management group prior to use and established models are reviewed annually, or more often as needed, by the Trading Risk Management group.

On a monthly basis, the Exposure Management Committee (EMC), which is comprised of certain members of senior management, meets with representatives from the Trading Risk Management group and the transacting group to discuss NEE's and FPL's energy risk profile and operations, to review risk reports and to discuss fair value issues as necessary. The EMC develops guidelines required for an appropriate risk management control infrastructure, which includes implementation and monitoring of compliance with Trading Risk Management policy. The EMC executes its risk management responsibilities through direct oversight and delegation of its responsibilities to the Trading Risk Management group, as well as to other corporate and business unit personnel.

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at March 31, 2015 are as follows:

Transaction Type
Fair Value at
March 31, 2015
Valuation
Technique(s)
Significant
Unobservable Inputs
Range
Assets
Liabilities
(millions)
Forward contracts - power
$
531

$
159

Discounted cash flow
Forward price (per MWh)
$6
—
$128
Forward contracts - gas
55

61

Discounted cash flow
Forward price (per MMBtu)
$1
—
$7
Forward contracts - other commodity related
22

12

Discounted cash flow
Forward price (various)
$(34)
—
$49
Options - power
147

129

Option models
Implied correlations
(4)%
—
99%
Implied volatilities
1%
—
160%
Options - primarily gas
32

77

Option models
Implied correlations
(4)%
—
99%
Implied volatilities
1%
—
84%
Full requirements and unit contingent contracts
262

33

Discounted cash flow
Forward price (per MWh)
$(20)
—
$158
Customer migration rate (a)
—%
—
20%
Total
$
1,049

$
471

——————————
(a)
Applies only to full requirements contracts.

The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:

Significant Unobservable Input
Position
Impact on
Fair Value Measurement
Forward price
Purchase power/gas
Increase (decrease)
Sell power/gas
Decrease (increase)
Implied correlations
Purchase option
Decrease (increase)
Sell option
Increase (decrease)
Implied volatilities
Purchase option
Increase (decrease)
Sell option
Decrease (increase)
Customer migration rate
Sell power (a)
Decrease (increase)
————————————
(a)  Assumes the contract is in a gain position.


24
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


In addition, the fair value measurement of interest rate swap liabilities related to the solar projects in Spain of approximately $127 million at March 31, 2015 includes a significant credit valuation adjustment. The credit valuation adjustment, considered an unobservable input, reflects management's assessment of non-performance risk of the subsidiaries related to the solar projects in Spain that are party to the swap agreements.

The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:

Three Months Ended March 31,
2015
2014
NEE
FPL
NEE
FPL
(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31
$
622

$
5

$
622

$
—

Realized and unrealized gains (losses):




Included in earnings (a)
30

—

(423
)
—

Included in other comprehensive income
15

—

—

—

Included in regulatory assets and liabilities
(1
)
(1
)
4

4

Purchases
22

—

4

—

Settlements
(187
)
(5
)
266

(1
)
Issuances
(20
)
—

(19
)
—

Transfers in (b)
(19
)
—

7

—

Transfers out (b)
(11
)
—

(1
)
—

Fair value of net derivatives based on significant unobservable inputs at March 31
$
451

$
(1
)
$
460

$
3

The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date (c)
$
38

$
—

$
(249
)
$
—

————————————
(a)
For the three months ended March 31, 2015 , realized and unrealized gains of approximately $47 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense. For the three months ended March 31, 2014 , realized and unrealized losses of approximately $405 million are reflected in the condensed consolidated statements of income in operating revenues, $15 million in interest expense and the balance is reflected in fuel, purchased power and interchange.
(b)
Transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.
(c)
For the three months ended March 31, 2015 , unrealized gains of approximately $55 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense. For the three months ended March 31, 2014 , unrealized losses of approximately $234 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.

Nonrecurring Fair Value Measurements - In March 2013, NEER initiated a plan and received internal authorization to pursue the sale of its ownership interests in oil-fired generating plants located in Maine (Maine fossil), which resulted in the recording of a loss during that period which was reflected within discontinued operations at NEE. In March 2014, NEER decided not to pursue the sale of Maine fossil due to the divergence between the achievable sales price and management's view of the assets' value, which increased as a result of significant market changes. Accordingly, the Maine fossil assets were written-up to management's current estimate of fair value resulting in a gain of approximately $21 million ( $12 million after-tax) which is included as a separate line item in NEE's condensed consolidated statements of income. The fair value measurement (Level 3) was estimated using an income approach based primarily on the updated capacity revenue forecasts.

Fair Value of Financial Instruments Recorded at the Carrying Amount - The carrying amounts of cash equivalents and short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments, excluding those recorded at fair value and disclosed above in Recurring Fair Value Measurements, are as follows:


25
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


March 31, 2015
December 31, 2014
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
(millions)
NEE:
Special use funds (a)
$
558

$
558

$
567

$
567

Other investments - primarily notes receivable
$
527

$
717

(b)
$
525

$
679

(b)
Long-term debt, including current maturities
$
27,716

$
30,544

(c)
$
27,876

$
30,337

(c)
FPL:
Special use funds (a)
$
385

$
385

$
395

$
395

Long-term debt, including current maturities
$
9,443

$
11,435

(c)
$
9,473

$
11,105

(c)
————————————
(a)
Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis.
(b)
Primarily classified as held to maturity. Fair values are primarily estimated using a discounted cash flow valuation technique based on certain observable yield curves and indices considering the credit profile of the borrower (Level 3). Notes receivable bear interest primarily at fixed rates and mature by 2029. Notes receivable are considered impaired and placed in non-accrual status when it becomes probable that all amounts due cannot be collected in accordance with the contractual terms of the agreement. The assessment to place notes receivable in non-accrual status considers various credit indicators, such as credit ratings and market-related information. As of March 31, 2015 and December 31, 2014 , NEE had no notes receivable reported in non-accrual status.
(c)
As of March 31, 2015 and December 31, 2014 , for NEE, $20,296 million and $19,973 million , respectively, is estimated using quoted market prices for the same or similar issues (Level 2); the balance is estimated using a discounted cash flow valuation technique, considering the current credit spread of the debtor (Level 3). For FPL, estimated using quoted market prices for the same or similar issues (Level 2).

Special Use Funds - The special use funds noted above and those carried at fair value (see Recurring Fair Value Measurements above) consist of FPL's storm fund assets of approximately $75 million at both March 31, 2015 and December 31, 2014 and NEE's nuclear decommissioning fund assets of $5,170 million and $5,091 million at March 31, 2015 and December 31, 2014 , respectively ( $3,498 million and $3,449 million , respectively, for FPL). The investments held in the special use funds consist of equity and debt securities which are primarily classified as available for sale and carried at estimated fair value. The amortized cost of debt and equity securities is approximately $1,944 million and $1,388 million , respectively, at March 31, 2015 and $1,906 million and $1,366 million , respectively, at December 31, 2014 ( $1,550 million and $664 million , respectively, at March 31, 2015 and $1,519 million and $664 million , respectively, at December 31, 2014 for FPL). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory liability accounts. For NEE's non-rate regulated operations, changes in fair value result in a corresponding adjustment to OCI, except for unrealized losses associated with marketable securities considered to be other than temporary, including any credit losses, which are recognized as other than temporary impairment losses on securities held in nuclear decommissioning funds and included in other - net in NEE's condensed consolidated statements of income. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at March 31, 2015 of approximately seven years at both NEE and FPL. FPL's storm fund primarily consists of debt securities with a weighted-average maturity at March 31, 2015 of approximately three years. The cost of securities sold is determined using the specific identification method.

Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:

NEE
FPL
Three Months Ended
March 31,
Three Months Ended
March 31,
2015
2014
2015
2014
(millions)
Realized gains
$
98

$
77

$
68

$
32

Realized losses
$
69

$
22

$
61

$
17

Proceeds from sale or maturity of securities
$
729

$
1,401

$
589

$
1,162



26
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Unrealized losses on available for sale debt securities at March 31, 2015 and December 31, 2014 were not material to NEE or FPL. The unrealized gains on available for sale securities are as follows:

NEE
FPL
March 31, 2015
December 31, 2014
March 31, 2015
December 31, 2014
(millions)
Equity securities
$
1,280

$
1,267

$
909

$
896

Debt securities
$
77

$
66

$
64

$
54


Regulations issued by the FERC and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included in the NRC operating licenses for those facilities or in NRC regulations applicable to NRC licensees not in cost-of-service environments. With respect to the decommissioning fund for Seabrook, decommissioning fund contributions and withdrawals are also regulated by the Nuclear Decommissioning Financing Committee pursuant to New Hampshire law.

The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.

4.  Income Taxes

NEE's effective income tax rates for the three months ended March 31, 2015 and 2014 were approximately 31% and 26% , respectively. The rates for both periods reflect the benefit of wind PTCs of approximately $ 38 million and $ 49 million , respectively, related to NEER's wind projects and deferred income tax benefits associated with grants (convertible ITCs) under the Recovery Act, of approximately $ 12 million and $ 12 million , respectively, primarily for certain wind and solar projects expected to be placed in service.

NEE recognizes PTCs as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes, which may differ significantly from amounts computed, on a quarterly basis, using an overall effective income tax rate anticipated for the full year. NEE uses this method of recognizing PTCs for specific reasons, including that PTCs are an integral part of the financial viability of most wind projects and a fundamental component of such wind projects' results of operations. PTCs, as well as deferred income tax benefits associated with convertible ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by the roll off of PTCs after ten years of production (PTC roll off).

5.  Variable Interest Entities (VIEs)

As of March 31, 2015 , NEE has eighteen VIEs which it consolidates and has interests in certain other VIEs which it does not consolidate.

FPL - FPL is considered the primary beneficiary of, and therefore consolidates, a VIE that is a wholly-owned bankruptcy remote special purpose subsidiary that it formed in 2007 for the sole purpose of issuing storm-recovery bonds pursuant to the securitization provisions of the Florida Statutes and a financing order of the FPSC. FPL is considered the primary beneficiary because FPL has the power to direct the significant activities of the VIE, and its equity investment, which is subordinate to the bondholder's interest in the VIE, is at risk. Storm restoration costs incurred by FPL during 2005 and 2004 exceeded the amount in FPL's funded storm and property insurance reserve, resulting in a storm reserve deficiency. In 2007, the VIE issued $ 652 million aggregate principal amount of senior secured bonds (storm-recovery bonds), primarily for the after-tax equivalent of the total of FPL's unrecovered balance of the 2004 storm restoration costs, the 2005 storm restoration costs and to reestablish FPL's storm and property insurance reserve. In connection with this financing, net proceeds, after debt issuance costs, to the VIE (approximately $ 644 million ) were used to acquire the storm-recovery property, which includes the right to impose, collect and receive a storm-recovery charge from all customers receiving electric transmission or distribution service from FPL under rate schedules approved by the FPSC or under special contracts, certain other rights and interests that arise under the financing order issued by the FPSC and certain other collateral pledged by the VIE that issued the bonds. The storm-recovery bonds are payable only from and are secured by the storm-recovery property. The bondholders have no recourse to the general credit of FPL. The assets of the VIE were approximately $ 244 million and $ 279 million at March 31, 2015 and December 31, 2014 , respectively, and consisted primarily of storm-recovery property, which are included in securitized storm-recovery costs on NEE's and FPL's condensed consolidated balance sheets. The liabilities of the VIE were approximately $ 303 million and $ 338 million at March 31, 2015 and December 31, 2014 , respectively, and consisted

27
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


primarily of storm-recovery bonds, which are included in long-term debt on NEE's and FPL's condensed consolidated balance sheets.

FPL entered into a purchased power agreement effective in 1994 with a 250 MW coal-fired qualifying facility and a purchased power agreement effective in 1995 with a 330 MW coal-fired qualifying facility to purchase substantially all of each facility's capacity and electrical output over a substantial portion of their estimated useful life. These facilities are considered VIEs because FPL absorbs a portion of each facility’s variability related to changes in the market price of coal through the price it pays per MWh (energy payment). Since FPL does not control the most significant activities of each facility, including operations and maintenance, FPL is not the primary beneficiary and does not consolidate these VIEs. The energy payments paid by FPL will fluctuate as coal prices change. This fluctuation does not expose FPL to losses since the energy payments paid by FPL to each facility are recovered through the fuel clause as approved by the FPSC. See Note 8 - Contracts for a discussion of FPL's pending purchase of the 250 MW coal-fired facility.

NEER - NEE consolidates seventeen NEER VIEs. NEER is considered the primary beneficiary of these VIEs since NEER controls the most significant activities of these VIEs, including operations and maintenance, and through its 100 % equity ownership has the obligation to absorb expected losses of these VIEs.

A NEER VIE consolidates two entities which own and operate natural gas/oil electric generating facilities with the capability of producing 110 MW. This VIE sells its electric output under power sales contracts to a third party, with expiration dates in 2018 and 2020 . The power sales contracts provide the offtaker the ability to dispatch the facilities and require the offtaker to absorb the cost of fuel. This VIE uses third-party debt and equity to finance its operations. The debt is secured by liens against the generating facilities and the other assets of these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of the VIE were approximately $ 90 million and $ 56 million , respectively, at March 31, 2015 and $ 85 million and $ 55 million , respectively, at December 31, 2014 , and consisted primarily of property, plant and equipment and long-term debt.

The other sixteen NEER VIEs consolidate several entities which own and operate wind electric generating facilities with the capability of producing a total of 4,490 MW. These VIEs sell their electric output either under power sales contracts to third parties with expiration dates ranging from 2018 through 2039 or in the spot market. The VIEs use third-party debt and/or equity to finance their operations. Certain investors that hold no equity interest in the VIEs hold differential membership interests, which give them the right to receive a portion of the economic attributes of the generating facilities, including certain tax attributes. The debt is secured by liens against the generating facilities and the other assets of these entities or by pledges of NEER's ownership interest in these entities. The debt holders have no recourse to the general credit of NEER for the repayment of debt. The assets and liabilities of these VIEs totaled approximately $ 6.6 billion and $ 3.9 billion , respectively, at March 31, 2015 and $ 6.6 billion and $ 4.1 billion , respectively, at December 31, 2014 . At March 31, 2015 and December 31, 2014 , the assets and liabilities of the VIEs consisted primarily of property, plant and equipment, deferral related to differential membership interests and long-term debt.

Other - As of March 31, 2015 and December 31, 2014 , several NEE subsidiaries have investments totaling approximately $ 732 million ($ 622 million at FPL) and $ 716 million ($ 606 million at FPL), respectively, in certain special purpose entities, which consisted primarily of investments in mortgage-backed securities. These investments are included in special use funds and other investments on NEE's condensed consolidated balance sheets and in special use funds on FPL's condensed consolidated balance sheets. As of March 31, 2015 , NEE subsidiaries, including FPL, are not the primary beneficiary and therefore do not consolidate any of these entities because they do not control any of the ongoing activities of these entities, were not involved in the initial design of these entities and do not have a controlling financial interest in these entities.

Amendments to the Consolidation Analysis - In February 2015, the FASB issued a new accounting standard that will modify current consolidation guidance. The standard makes changes to both the variable interest entity model and the voting interest entity model, including modifying the evaluation of whether limited partnerships or similar legal entities are VIEs or voting interest entities and amending the guidance for assessing how relationships of related parties affect the consolidation analysis of VIEs. The standard is effective for NEE and FPL beginning January 1, 2016. NEE and FPL are currently evaluating the effect the adoption of this standard will have, if any, on their consolidated financial statements.


28
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


6.  Common Shareholders' Equity

Earnings Per Share - The reconciliation of NEE's basic and diluted earnings per share attributable to NEE is as follows:

Three Months Ended
March 31,
2015
2014
(millions, except per share amounts)
Numerator - net income attributable to NEE
$
650

$
430

Denominator:


Weighted-average number of common shares outstanding - basic
442.3

433.5

Equity units, performance share awards, options, forward sale agreement and restricted stock (a)
6.5

4.7

Weighted-average number of common shares outstanding - assuming dilution
448.8

438.2

Earnings per share attributable to NEE:
Basic
$
1.47

$
0.99

Assuming dilution
$
1.45

$
0.98

————————————
(a)
Calculated using the treasury stock method. Performance share awards are included in diluted weighted-average number of common shares outstanding based upon what would be issued if the end of the reporting period was the end of the term of the award.

Common shares issuable pursuant to stock options and performance shares awards which were not included in the denominator above due to their antidilutive effect were approximately 0.1 million and 0.1 million for the three months ended March 31, 2015 and 2014 , respectively.

Accumulated Other Comprehensive Income (Loss) - The components of AOCI, net of tax, are as follows:


Accumulated Other Comprehensive Income (Loss)

Net Unrealized Gains (Losses) on Cash Flow Hedges

Net Unrealized Gains (Losses) on Available for Sale Securities

Defined Benefit Pension and Other Benefits Plans

Net Unrealized Gains (Losses) on Foreign Currency Translation

Other Comprehensive Loss Related to Equity Method Investee

Total
(millions)
Three Months Ended March 31, 2015
Balances, December 31, 2014
$
(156
)

$
218


$
(20
)

$
(58
)

$
(24
)

$
(40
)
Other comprehensive income (loss) before reclassifications
(52
)

12


(16
)

14


(2
)

(44
)
Amounts reclassified from AOCI
18

(a)
(10
)
(b)
—


—


—


8

Net other comprehensive income (loss)
(34
)

2


(16
)

14


(2
)

(36
)
Less other comprehensive loss attributable to noncontrolling interests
1

—

—

2

—

3

Balances, March 31, 2015
$
(189
)

$
220


$
(36
)

$
(42
)

$
(26
)

$
(73
)
————————————
(a)
Reclassified to interest expense and other - net in NEE's condensed consolidated statements of income. See Note 2 - Income Statement Impact of Derivative Instruments.
(b)
Reclassified to gains on disposal of assets - net in NEE's condensed consolidated statements of income.


29
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



Accumulated Other Comprehensive Income (Loss)

Net Unrealized Gains (Losses) on Cash Flow Hedges

Net Unrealized Gains (Losses) on Available for Sale Securities

Defined Benefit Pension and Other Benefits Plans

Net Unrealized Gains (Losses) on Foreign Currency Translation

Other Comprehensive Loss Related to Equity Method Investee

Total
(millions)
Three Months Ended March 31, 2014

Balances, December 31, 2013
$
(115
)

$
197


$
23


$
(33
)

$
(16
)

$
56

Other comprehensive income (loss) before reclassifications
(18
)

13


4


(17
)

(2
)

(20
)
Amounts reclassified from AOCI
9

(a)
(25
)
(b)
1


—


—


(15
)
Net other comprehensive income (loss)
(9
)

(12
)

5


(17
)

(2
)

(35
)
Balances, March 31, 2014
$
(124
)

$
185


$
28


$
(50
)

$
(18
)

$
21

————————————
(a)
Reclassified to interest expense and other - net in NEE's condensed consolidated statements of income. See Note 2 - Income Statement Impact of Derivative Instruments.
(b)
Reclassified to gains on disposal of assets - net in NEE's condensed consolidated statements of income.
7.  Debt

Long-term debt issuances and borrowings by subsidiaries of NEE during the three months ended March 31, 2015 were as follows:

Date Issued
Company
Debt Issuances/Borrowings
Interest
Rate
Principal
Amount
Maturity
Date
(millions)
January - March 2015
NEER subsidiary
Canadian revolving credit agreements
Variable
(a)
$
20

Various
January - March 2015
NEER subsidiary
NEP OpCo senior secured revolving credit facility
Variable
(a)
$
122

2019
January - March 2015
NEER subsidiary
Limited-recourse construction and term loan facility
Variable
(a)(b)
$
23

2035
January - March 2015
NEER subsidiary
Cash grant bridge loan facility
Variable
(a)
$
29

2017
————————————
(a)
Variable rate is based on an underlying index plus a margin.
(b)
An interest rate swap has been entered into with respect to this issuance. See Note 2.

In April 2015, an indirect wholly-owned subsidiary of NEER entered into and borrowed approximately C$392 million ( $324 million ) under a Canadian senior secured limited-recourse variable rate term loan agreement maturing in 2033.  Also in April 2015, another indirect wholly-owned subsidiary of NEER entered into and borrowed approximately C$275 million ( $228 million ) under a Canadian senior secured limited-recourse variable rate term loan agreement maturing in 2033. Interest rate swap agreements were entered into with respect to these borrowings.

In April 2015, NEECH entered into and borrowed a total of $450 million under two variable rate term loan agreements both maturing in October 2016.

Presentation of Debt Issuance Costs - In April 2015, the FASB issued a new accounting standard which changes the presentation of debt issuance costs in financial statements. The amendments in this standard require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this standard. The standard is effective for NEE and FPL beginning January 1, 2016. NEE and FPL are currently evaluating the effect the adoption of this standard will have on their consolidated financial statements.

8.  Commitments and Contingencies

Commitments - NEE and its subsidiaries have made commitments in connection with a portion of their projected capital expenditures. Capital expenditures at FPL include, among other things, the cost for construction or acquisition of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities and the procurement of nuclear fuel. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction and development of wind and solar projects and the procurement of nuclear fuel. Capital expenditures for Corporate and Other primarily include NEE's portion of the cost for construction of two natural gas pipeline systems, consisting of three separate pipelines, as well as the cost to meet customer-specific requirements and maintain the fiber-optic network for FPL FiberNet and the cost to maintain existing transmission facilities at NEET.

30
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



At March 31, 2015 , estimated capital expenditures for the remainder of 2015 through 2019 for which applicable internal approvals (and also FPSC approvals for FPL, if required) have been received were as follows:

Remainder of 2015
2016
2017
2018
2019
Total
(millions)
FPL:
Generation: (a)
New (b)(c)
$
495

$
970

$
60

$
5

$
—

$
1,530

Existing
630

555

650

565

440

2,840

Transmission and distribution
1,300

1,970

1,760

1,625

1,680

8,335

Nuclear fuel
170

220

125

150

175

840

General and other
300

225

215

160

135

1,035

Total
$
2,895

$
3,940

$
2,810

$
2,505

$
2,430

$
14,580

NEER:






Wind (d)
$
1,840

$
75

$
20

$
15

$
10

$
1,960

Solar (e)
1,025

535

—

—

—

1,560

Nuclear, including nuclear fuel
250

295

230

260

280

1,315

Other
160

55

50

115

100

480

Total
$
3,275

$
960

$
300

$
390

$
390

$
5,315

Corporate and Other (f)
$
380

$
1,200

$
735

$
455

$
145

$
2,915

————————————
(a)
Includes AFUDC of approximately $ 69 million , $ 71 million and $ 5 million for the remainder of 2015 through 2017, respectively.
(b)
Includes land, generating structures, transmission interconnection and integration and licensing.
(c)
Excludes capital expenditures for costs related to the two additional nuclear units at FPL's Turkey Point site beyond what is required to receive an NRC license for each unit.
(d)
Consists of capital expenditures for new wind projects and related transmission totaling approximately 1,255 MW.
(e)
Consists of capital expenditures for new solar projects and related transmission totaling approximately 670 MW.
(f)
Includes capital expenditures for construction of three natural gas pipelines, including equity contributions associated with equity investments in joint ventures for two pipelines and AFUDC associated with the third pipeline. The natural gas pipelines are subject to certain conditions, including FERC approval. See Contracts below.

The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.

Contracts - In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has commitments under long-term purchased power and fuel contracts. As of March 31, 2015 , FPL is obligated under take-or-pay purchased power contracts with JEA and with subsidiaries of The Southern Company (Southern subsidiaries) to pay for approximately 1,330 MW annually through December 2015 and 375 MW annually thereafter through 2021 . FPL also has various firm pay-for-performance contracts to purchase approximately 705 MW from certain cogenerators and small power producers (qualifying facilities) with expiration dates ranging from 2024 through 2034 . The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. FPL has contracts with expiration dates through 2036 for the purchase and transportation of natural gas and coal, and storage of natural gas. In addition, FPL has entered into 25 -year natural gas transportation agreements with each of Sabal Trail and Florida Southeast Connection, each of which will build, own and operate a pipeline that will be part of a natural gas pipeline system, for a quantity of 400,000 MMBtu/day beginning on May 1, 2017 and increasing to 600,000 MMBtu/day on May 1, 2020. These agreements contain firm commitments that are contingent upon the occurrence of certain events, including FERC approval and completion of construction of the pipeline system to be built by Sabal Trail and Florida Southeast Connection. See Commitments above.

As of March 31, 2015 , NEER has entered into contracts with expiration dates ranging from June 2015 through 2030 primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium and the conversion, enrichment and fabrication of nuclear fuel. Approximately $3.1 billion of commitments under such contracts are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the purchase, transportation and storage of natural gas and firm transmission service with expiration dates ranging from August 2015 through 2033 .


31
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Included in Corporate and Other in the table below is the remaining commitment by NEECH subsidiaries of approximately $2.2 billion for the construction of the natural gas pipelines. Amounts committed for the remainder of 2015 through 2019 are also included in the estimated capital expenditures table in Commitments above.

The required capacity and/or minimum payments under the contracts discussed above as of March 31, 2015 were estimated as follows:

Remainder of 2015
2016
2017
2018
2019
Thereafter
(millions)
FPL:
Capacity charges: (a)
Qualifying facilities
$
215

$
250

$
255

$
260

$
265

$
1,700

JEA and Southern subsidiaries
$
150

$
70

$
50

$
10

$
—

$
—

Minimum charges, at projected prices: (b)






Natural gas, including transportation and storage (c)
$
1,025

$
830

$
780

$
830

$
830

$
13,780

Coal, including transportation
$
85

$
50

$
35

$
—

$
—

$
—

NEER
$
2,225

$
845

$
140

$
135

$
80

$
395

Corporate and Other (d)(e)
$
295

$
1,010

$
545

$
380

$
65

$
20

————————————
(a)
Capacity charges under these contracts, substantially all of which are recoverable through the capacity cost recovery clause, totaled approximately $ 119 million and $ 123 million for the three months ended March 31, 2015 and 2014 , respectively. Energy charges under these contracts, which are recoverable through the fuel clause, totaled approximately $ 44 million and $ 56 million for the three months ended March 31, 2015 and 2014 , respectively.
(b)
Recoverable through the fuel clause.
(c)
Includes approximately $ 200 million , $ 295 million , $ 290 million and $ 8,245 million in 2017, 2018, 2019 and thereafter, respectively, of firm commitments, subject to certain conditions as noted above, related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection.
(d)
Includes an approximately $50 million commitment to invest primarily in clean power and technology businesses through 2021.
(e)
Excludes approximately $935 million in 2015 of joint obligations of NEECH and NEER which are included in the NEER amounts above.

In addition, FPL has entered into a purchase agreement under which it will assume ownership of a 250 MW coal-fired generation facility located in Jacksonville, Florida for a purchase price of approximately $ 521 million , which would thereby enable FPL to terminate its current long-term purchased power agreement for substantially all of the facility’s capacity and energy. The purchase agreement is contingent upon, among other things, FPSC approval. An FPSC decision is expected in September 2015. The remaining minimum payments under the long-term purchased power agreement, which total approximately $ 1,515 million and are included in the table above under qualifying facilities, will cease upon closing of the transaction, which is expected by October 2015.

Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $ 375 million of private liability insurance per site, which is the maximum obtainable, and participates in a secondary financial protection system, which provides up to $ 13.2 billion of liability insurance coverage per incident at any nuclear reactor in the U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $ 1.0 billion ($ 509 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $ 152 million ($ 76 million for FPL) per incident per year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $ 15 million , $ 38 million and $ 19 million , plus any applicable taxes, per incident, respectively.

NEE participates in a nuclear insurance mutual company that provides $ 2.75 billion of limited insurance coverage per occurrence per site for property damage, decontamination and premature decommissioning risks at its nuclear plants and a sublimit of $ 1.5 billion for non-nuclear perils. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. NEE also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service for an extended period of time because of an accident. In the event of an accident at one of NEE's or another participating insured's nuclear plants, NEE could be assessed up to $ 187 million ($ 112 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $ 3 million , $ 5 million and $ 4 million , plus any applicable taxes, respectively.

Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of its transmission and distribution property and has no property insurance coverage for FPL FiberNet's fiber-optic cable. Should FPL's future storm restoration costs exceed the reserve amount established through the issuance of storm-recovery bonds by a VIE in 2007, FPL may recover storm restoration costs, subject to prudence review by the FPSC, either through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.

32
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)



In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of FPL or Lone Star Transmission, LLC, would be borne by NEE and/or FPL and/or their affiliates, as the case may be, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.

Spain Solar Projects - In March 2013 and May 2013, events of default occurred under the project-level financing agreements for the solar thermal facilities in Spain (Spain solar projects) as a result of changes of law that occurred in December 2012 and February 2013. These changes of law negatively affected the projected economics of the projects and caused the project-level financing to be unsupportable by expected future project cash flows. Under the project-level financing, events of default (including those discussed below) provide for, among other things, a right by the lenders (which they have not exercised) to accelerate the payment of the project-level debt. Accordingly, in 2013, the project-level debt and the associated derivative liabilities related to interest rate swaps were classified as current maturities of long-term debt and current derivative liabilities, respectively, on NEE's condensed consolidated balance sheets, and totaled $575 million and $127 million , respectively, as of March 31, 2015 . In July 2013, the Spanish government published a new law that created a new economic framework for the Spanish renewable energy sector. Additional regulatory pronouncements from the Spanish government needed to complete and implement the framework were finalized in June 2014. Based on NEE's assessment, the regulatory pronouncements do not indicate a further impairment of the Spain solar projects. Since the third quarter of 2014, events of default have occurred under the project-level financing agreements related to certain debt service coverage ratio covenants not being met. The project-level subsidiaries have requested the lenders to waive the events of default related to the debt service coverage ratio.

Impairments recorded due to the changes of law caused the project-level subsidiaries in Spain to have a negative net equity position on their balance sheets, which requires them under Spanish law to commence liquidation proceedings if the net equity position is not restored to specified levels. Prior to 2015, Spanish law had provided an exemption applicable to the project-level subsidiaries that enabled the exclusion of asset-related impairments in the equity calculation. Such exemption has not yet been granted for 2015, and therefore, the project-level subsidiaries commenced liquidation on April 23, 2015. Such a mandatory liquidation event could cause the lenders to seek to accelerate the payment of the project-related debt and/or foreclose on the project assets, which they have not done to date. However, as part of a settlement agreement reached in December 2013 between NEECH, NextEra Energy España, S.L. (NEE España), which is the NEER subsidiary in Spain that is the direct shareholder of the project-level subsidiaries, the project-level subsidiaries and the lenders, the future recourse of the lenders under the project-level financing is effectively limited to the letters of credit described below and to the assets of the project-level subsidiaries. Under the settlement agreement, the lenders, among other things, irrevocably waived events of default related to changes of law that existed at the time of the settlement as described above, and NEECH affiliates provided for the project-level subsidiaries to post approximately €37 million (approximately $40 million as of March 31, 2015 ) in letters of credit to fund operating and debt service reserves under the project-level financing. NEE España, the project-level subsidiaries and the lenders will continue to seek to restructure the project-level financing; however, there can be no assurance that the project-level financing will be successfully restructured or that the lenders will not exercise remedies available to them under the project financing agreements for, among other things, current and future events of default, if any, or for the commencement of liquidation by the project-level subsidiaries.

Legal Proceedings - In November 1999, the Attorney General of the United States, on behalf of the EPA, brought an action in the U.S. District Court for the Northern District of Georgia against Georgia Power Company and other subsidiaries of The Southern Company for certain alleged violations of the Prevention of Significant Deterioration (PSD) provisions and the New Source Performance Standards (NSPS) of the Clean Air Act. In May 2001, the EPA amended its complaint to allege, among other things, that Georgia Power Company constructed and is continuing to operate Scherer Unit No. 4, in which FPL owns an interest of approximately 76% , without obtaining a PSD permit, without complying with NSPS requirements, and without applying best available control technology for nitrogen oxides, sulfur dioxides and particulate matter as required by the Clean Air Act. It also alleges that unspecified major modifications have been made at Scherer Unit No. 4 that require its compliance with the aforementioned Clean Air Act provisions. The EPA seeks injunctive relief requiring the installation of best available control technology and civil penalties. Under the EPA's civil penalty rules, the EPA could assess up to $25,000 per day for each violation from an unspecified date after June 1, 1975 through January 30, 1997, up to $27,500 per day for each violation from January 31, 1997 through March 15, 2004, up to $32,500 per day for each violation from March 16, 2004 through January 12, 2009 and up to $37,500 per day for each violation thereafter. Georgia Power Company has answered the amended complaint, asserting that it has complied with all requirements of the Clean Air Act, denying the plaintiff's allegations of liability, denying that the plaintiff is entitled to any of the relief that it seeks and raising various other defenses. In June 2001, a federal district court stayed discovery and administratively closed the case and the EPA has not yet moved to reopen the case. In April 2007, the U.S. Supreme Court in a separate unrelated case rejected an argument that a "major modification" occurs at a plant only when there is a resulting increase in the hourly rate of air emissions. Georgia Power Company has made a similar argument in defense of its case, but has other factual and legal defenses that are unaffected by the U.S. Supreme Court's decision.

In 1995 and 1996, NEE, through an indirect subsidiary, purchased from Adelphia Communications Corporation (Adelphia) 1,091,524 shares of Adelphia common stock and 20,000 shares of Adelphia preferred stock (convertible into 2,358,490 shares of Adelphia

33
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


common stock) for an aggregate price of approximately $35,900,000 . On January 29, 1999, Adelphia repurchased all of these shares for $149,213,130 in cash. In June 2004, Adelphia, Adelphia Cablevision, L.L.C. and the Official Committee of Unsecured Creditors of Adelphia filed a complaint against NEE and its indirect subsidiary in the U.S. Bankruptcy Court, Southern District of New York. The complaint alleges that the repurchase of these shares by Adelphia was a fraudulent transfer, in that at the time of the transaction Adelphia (i) was insolvent or was rendered insolvent, (ii) did not receive reasonably equivalent value in exchange for the cash it paid, and (iii) was engaged or about to engage in a business or transaction for which any property remaining with Adelphia had unreasonably small capital. The complaint seeks the recovery for the benefit of Adelphia's bankruptcy estate of the cash paid for the repurchased shares, plus interest from January 29, 1999. NEE filed an answer to the complaint. NEE believes that the complaint is without merit because, among other reasons, Adelphia will be unable to demonstrate that (i) Adelphia's repurchase of shares from NEE, which repurchase was at the market value for those shares, was not for reasonably equivalent value, (ii) Adelphia was insolvent at the time of the stock repurchase, or (iii) the stock repurchase left Adelphia with unreasonably small capital. The trial was completed in May 2012 and closing arguments were heard in July 2012. In May 2014, the U.S. Bankruptcy Court, Southern District of New York, issued its decision after trial, finding, among other things, that Adelphia was not insolvent, or rendered insolvent, at the time of the stock repurchase. The bankruptcy court further ruled that Adelphia was not left with inadequate capital or equitably insolvent at the time of the stock repurchase. The decision after trial represented proposed findings of fact and conclusions of law which were subject to de novo review by the U.S. District Court for the Southern District of New York. In March 2015, the U.S. District Court issued a final order which effectively affirmed the findings of the U.S. Bankruptcy Court in NEE's favor. In April 2015, Adelphia filed an appeal of the final order to the U.S. Court of Appeals for the Second Circuit.

NEE and FPL are vigorously defending, and believe that they or their affiliates have meritorious defenses to, the lawsuits described above. In addition to the legal proceedings discussed above, NEE and its subsidiaries, including FPL, are involved in other legal and regulatory proceedings, actions and claims in the ordinary course of their businesses. Generating plants in which subsidiaries of NEE, including FPL, have an ownership interest are also involved in legal and regulatory proceedings, actions and claims, the liabilities from which, if any, would be shared by such subsidiary. In the event that NEE and FPL, or their affiliates, do not prevail in the lawsuits described above or these other legal and regulatory proceedings, actions and claims, there may be a material adverse effect on their financial statements. While management is unable to predict with certainty the outcome of the lawsuits described above or these other legal and regulatory proceedings, actions and claims, based on current knowledge it is not expected that their ultimate resolution, individually or collectively, will have a material adverse effect on the financial statements of NEE or FPL.

9.  Segment Information

NEE's reportable segments are FPL, a rate-regulated electric utility, and NEER, a competitive energy business. NEER's segment information includes an allocation of interest expense from NEECH based on a deemed capital structure of 70% debt and allocated shared service costs. Corporate and Other represents other business activities, other segments that are not separately reportable and eliminating entries. NEE's segment information is as follows:
Three Months Ended March 31,
2015
2014
FPL
NEER (a)
Corporate
and Other
NEE
Consoli-
dated
FPL
NEER (a)
Corporate
and Other
NEE
Consoli-
dated
(millions)
Operating revenues
$
2,541

$
1,460

$
103

$
4,104

$
2,535

$
1,034

$
105

$
3,674

Operating expenses
$
1,874

$
1,027

$
74

$
2,975

$
1,903

$
952

$
81

$
2,936

Net income (loss) attributable to NEE
$
359

$
278

(b)
$
13

$
650

$
347

$
86

(b)
$
(3
)
$
430

————————————
(a)
Interest expense allocated from NEECH is based on a deemed capital structure of 70% debt. For this purpose, the deferred credit associated with differential membership interests sold by NEER subsidiaries is included with debt. Residual NEECH corporate interest expense is included in Corporate and Other.
(b)
See Note 4 for a discussion of NEER's tax benefits related to PTCs.
March 31, 2015
December 31, 2014
FPL
NEER
Corporate
and Other
NEE
Consoli-
dated
FPL
NEER
Corporate
and Other
NEE
Consoli-
dated
(millions)
Total assets
$
39,553

$
32,518

$
2,858

$
74,929

$
39,307

$
32,919

$
2,703

$
74,929



34
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


10.  Summarized Financial Information of NEECH

NEECH, a 100% owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL. NEECH’s debentures and junior subordinated debentures that are registered pursuant to the Securities Act of 1933, as amended, are fully and unconditionally guaranteed by NEE. Condensed consolidating financial information is as follows:

Condensed Consolidating Statements of Income

Three Months Ended March 31,
2015
2014
NEE
(Guarantor)
NEECH
Other (a)
NEE
Consoli-
dated
NEE
(Guarantor)
NEECH
Other (a)
NEE
Consoli-
dated
(millions)
Operating revenues
$
—

$
1,567

$
2,537

$
4,104

$
—

$
1,142

$
2,532

$
3,674

Operating expenses
(4
)
(1,095
)
(1,876
)
(2,975
)
(4
)
(1,032
)
(1,900
)
(2,936
)
Interest expense
(1
)
(205
)
(115
)
(321
)
(2
)
(216
)
(101
)
(319
)
Equity in earnings of subsidiaries
645

—

(645
)
—

435

—

(435
)
—

Other income - net
—

117

11

128

1

148

15

164

Income (loss) before income taxes
640

384

(88
)
936

430

42

111

583

Income tax expense (benefit)
(10
)
93

203

286

—

(46
)
199

153

Net income (loss)
650


291


(291
)

650


430


88


(88
)

430

Less net income attributable to noncontrolling interests
—

—

—

—

—

—

—

—

Net income (loss) attributable to NEE
$
650

$
291

$
(291
)
$
650

$
430

$
88

$
(88
)
$
430

————————————
(a)  Represents primarily FPL and consolidating adjustments.
Condensed Consolidating Statements of Comprehensive Income

Three Months Ended March 31,
2015
2014
NEE
(Guarantor)
NEECH
Other (a)
NEE
Consoli-
dated
NEE
(Guarantor)
NEECH
Other (a)
NEE
Consoli-
dated
(millions)
Comprehensive income (loss) attributable to NEE
$
617

$
274

$
(274
)
$
617

$
395

$
48

$
(48
)
$
395

————————————
(a)
Represents primarily FPL and consolidating adjustments.


35
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Condensed Consolidating Balance Sheets

March 31, 2015
December 31, 2014
NEE
(Guaran-
tor)
NEECH
Other (a)
NEE
Consoli-
dated
NEE
(Guaran-
tor)
NEECH
Other (a)
NEE
Consoli-
dated
(millions)
PROPERTY, PLANT AND EQUIPMENT
Electric plant in service and other property
$
27

$
31,918

$
42,733

$
74,678

$
27

$
31,674

$
41,938

$
73,639

Less accumulated depreciation and amortization
(13
)
(6,948
)
(11,484
)
(18,445
)
(12
)
(6,640
)
(11,282
)
(17,934
)
Total property, plant and equipment - net
14

24,970

31,249

56,233

15

25,034

30,656

55,705

CURRENT ASSETS








Cash and cash equivalents
—

441

28

469

—

562

15

577

Receivables
212

1,489

326

2,027

82

1,378

699

2,159

Other
125

2,088

1,588

3,801

19

2,512

1,677

4,208

Total current assets
337

4,018

1,942

6,297

101

4,452

2,391

6,944

OTHER ASSETS








Investment in subsidiaries
19,997

—

(19,997
)
—

19,703

—

(19,703
)
—

Other
660

6,487

5,252

12,399

736

6,066

5,478

12,280

Total other assets
20,657

6,487

(14,745
)
12,399

20,439

6,066

(14,225
)
12,280

TOTAL ASSETS
$
21,008

$
35,475

$
18,446

$
74,929

$
20,555

$
35,552

$
18,822

$
74,929

CAPITALIZATION








Common shareholders' equity
$
20,235

$
5,941

$
(5,941
)
$
20,235

$
19,916

$
6,552

$
(6,552
)
$
19,916

Noncontrolling interests
—

229

—

229

—

252

—

252

Long-term debt
—

14,882

9,382

24,264

—

14,954

9,413

24,367

Total capitalization
20,235

21,052

3,441

44,728

19,916

21,758

2,861

44,535

CURRENT LIABILITIES








Debt due within one year
—

4,720

482

5,202

—

3,455

1,202

4,657

Accounts payable
—

534

570

1,104

—

707

647

1,354

Other
322

1,575

1,183

3,080

182

2,075

1,395

3,652

Total current liabilities
322

6,829

2,235

9,386

182

6,237

3,244

9,663

OTHER LIABILITIES AND DEFERRED CREDITS








Asset retirement obligations
—

642

1,374

2,016

—

631

1,355

1,986

Deferred income taxes
142

2,633

6,562

9,337

149

2,608

6,504

9,261

Other
309

4,319

4,834

9,462

308

4,318

4,858

9,484

Total other liabilities and deferred credits
451

7,594

12,770

20,815

457

7,557

12,717

20,731

COMMITMENTS AND CONTINGENCIES
TOTAL CAPITALIZATION AND LIABILITIES
$
21,008

$
35,475

$
18,446

$
74,929

$
20,555

$
35,552

$
18,822

$
74,929

————————————
(a)
Represents primarily FPL and consolidating adjustments.

36

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)



Condensed Consolidating Statements of Cash Flows

Three Months Ended March 31,
2015
2014
NEE
(Guaran-
tor)

NEECH
Other (a)
NEE
Consoli-
dated
NEE
(Guaran-
tor)

NEECH
Other (a)
NEE
Consoli-
dated
(millions)
NET CASH PROVIDED BY OPERATING ACTIVITIES
$
907

$
225

$
49

$
1,181

$
428

$
147

$
442

$
1,017

CASH FLOWS FROM INVESTING ACTIVITIES









Capital expenditures, independent power and other investments and nuclear fuel purchases
—

(801
)
(765
)
(1,566
)
—

(798
)
(1,068
)
(1,866
)
Capital contribution to FPL
(550
)
—

550

—

(100
)
—

100

—

Change in loan proceeds restricted for construction
—

2

—

2

—

(28
)
—

(28
)
Other - net
(1
)
—

1

—

—

58

(6
)
52

Net cash used in investing activities
(551
)
(799
)
(214
)
(1,564
)
(100
)
(768
)
(974
)
(1,842
)
CASH FLOWS FROM FINANCING ACTIVITIES








Issuances of long-term debt
—

194

—

194

—

655

—

655

Retirements of long-term debt
—

(139
)
(31
)
(170
)
—

(688
)
(29
)
(717
)
Net change in short-term debt
—

1,325

(722
)
603

—

1,059

120

1,179

Dividends on common stock
(341
)
—

—

(341
)
(315
)
—

—

(315
)
Dividends to NEE
—

(902
)
902

—

—

(433
)
433

—

Other - net
(15
)
(25
)
29

(11
)
(8
)
55

26

73

Net cash provided by (used in) financing activities
(356
)
453

178

275

(323
)
648

550

875

Net increase (decrease) in cash and cash equivalents
—

(121
)
13

(108
)
5

27

18

50

Cash and cash equivalents at beginning of period
—

562

15

577

—

418

20

438

Cash and cash equivalents at end of period
$
—

$
441

$
28

$
469

$
5

$
445

$
38

$
488

————————————
(a)
Represents primarily FPL and consolidating adjustments.



37



Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

NEE’s operating performance is driven primarily by the operations of its two principal subsidiaries, FPL, which serves approximately 4.8 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the U.S., and NEER, which together with affiliated entities is the largest generator in North America of renewable energy from the wind and sun. The table below presents net income (loss) attributable to NEE and earnings (loss) per share attributable to NEE by reportable segment, FPL and NEER, and by Corporate and Other, which is primarily comprised of the operating results of NEET, FPL FiberNet and other business activities, as well as other income and expense items, including interest expense, income taxes and eliminating entries ( see Note 9 f or additional segment information). The following discussions should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2014 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussions, all comparisons are with the corresponding items in the prior year period.

Net Income (Loss) Attributable to NEE
Earnings (Loss)
Per Share,
assuming dilution
Three Months Ended
March 31,
Three Months Ended
March 31,
2015
2014
2015
2014
(millions)
FPL
$
359

$
347

$
0.80

$
0.79

NEER (a)
278

86

0.62

0.20

Corporate and Other
13

(3
)
0.03

(0.01
)
NEE
$
650

$
430

$
1.45

$
0.98

______________________
(a)
NEER’s results reflect an allocation of interest expense from NEECH based on a deemed capital structure of 70% debt and allocated shared service costs.


Adjusted Earnings

NEE prepares its financial statements under GAAP. However, management uses earnings excluding certain items (adjusted earnings), a non-GAAP financial measure, internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors and as an input in determining performance-based compensation under NEE’s employee incentive compensation plans. NEE also uses adjusted earnings when communicating its financial results and earnings outlook to analysts and investors. NEE ’s management believes adjusted earnings provides a more meaningful representation of the company’s fundamental earnings power. Although the excluded amounts are properly included in the determination of net income under GAAP, management believes that the amount and/or nature of such items make period to period comparisons of operations difficult and potentially confusing. Adjusted earnings do not represent a substitute for net income, as prepared under GAAP.

Adjusted earnings exclude the unrealized mark-to-market effect of non-qualifying hedges (as described below) and OTTI losses on securities held in NEER’s nuclear decommissioning funds, net of the reversal of previously recognized OTTI losses on securities sold and losses on securities where price recovery was deemed unlikely (collectively, OTTI reversals). However, other adjustments may be made from time to time with the intent to provide more meaningful and comparable results of ongoing operations.

NEE and NEER segregate into two categories unrealized mark-to-market gains and losses on derivative transactions. The first category, referred to as non-qualifying hedges, represents certain energy derivative and interest rate derivative transactions entered into as economic hedges, which do not meet the requirements for hedge accounting, or for which hedge accounting treatment is not elected or has been discontinued. Changes in the fair value of those transactions are marked to market and reported in the consolidated statements of income, resulting in earnings volatility because the economic offset to the positions are not marked to market. As a consequence, NEE's net income reflects only the movement in one part of economically-linked transactions. For example, a gain (loss) in the non-qualifying hedge category for certain energy derivatives is offset by decreases (increases) in the fair value of related physical asset positions in the portfolio or contracts, which are not marked to market under GAAP. For this reason, NEE's management views results expressed excluding the unrealized mark-to-market impact of the non-qualifying hedges as a meaningful measure of current period performance. The second category, referred to as trading activities, which is included in adjusted earnings, represents the net unrealized effect of actively traded positions entered into to take advantage of expected market price movements and all other commodity hedging activities. At FPL, substantially all changes in the fair value of energy derivative transactions are deferred as a regulatory asset or liability until the contracts are settled, and, upon settlement, any gains or losses are passed through the fuel clause. See Note 2.

During the three months ended March 31, 2014 , NEER decided not to pursue the sale of Maine fossil and recorded an after-tax gain of $12 million to increase Maine fossil's carrying value to its estimated fair value. See Note 3 - Nonrecurring Fair Value

38



Measurements. In order to make period to period comparisons more meaningful, adjusted earnings also exclude the after-tax gain associated with Maine fossil, costs incurred in 2015 associated with the proposed merger pursuant to which Hawaiian Electric Company, Inc. will become a wholly-owned subsidiary of NEE and the after-tax operating results associated with the Spain solar projects.

The following table provides details of the adjustments to net income considered in computing NEE's adjusted earnings discussed above.
Three Months Ended
March 31,
2015
2014
(millions)
Net unrealized mark-to-market after-tax gains (losses) from non-qualifying hedge activity (a)
$
27

$
(126
)
Income from OTTI after-tax losses on securities held in NEER's nuclear decommissioning funds, net of OTTI reversals (b)
$
1

$
2

After-tax gain associated with Maine fossil (c)
$
—

$
12

After-tax operating results of NEER's Spain solar projects
$
(5
)
$
(15
)
Merger-related expenses (d)
$
(4
)
$
—

____________________
(a)
For the three months ended March 31, 2015 and 2014 , approximately $22 million of gains and $124 million of losses, respectively, are included in NEER's net income; the balance is included in Corporate and Other.
(b)
For the three months ended March 31, 2015 and 2014 , all of the gains reported are included in NEER's net income.
(c)
For the three months ended March 31, 2014 , the gain is included in NEER's net income.
(d)
For the three months ended March 31, 2015 , the costs are included in Corporate and Other.

The change in unrealized mark-to-market activity from non-qualifying hedges is primarily attributable to changes in forward power and natural gas prices and interest rates, as well as the reversal of previously recognized unrealized mark-to-market gains or losses as the underlying transactions were realized.

RESULTS OF OPERATIONS

Summary

Net income attributable to NEE for the three months ended March 31, 2015 was higher than the prior period by $220 million , reflecting higher results at FPL, NEER and Corporate and Other.

FPL's increase in net income for the three months ended March 31, 2015 was primarily driven by continued investments in plant in service while earning an 11.50% regulatory ROE on its retail rate base.

NEER's results increased $192 million for the three months ended March 31, 2015 reflecting net unrealized gains from non-qualifying hedge activity compared to losses on such hedges in the prior year period, higher customer supply and proprietary power and gas trading results and earnings from new investments, partly offset by lower results from existing assets.

Corporate and Other's results increased f or the three months ended March 31, 2015 primarily d ue to the absence of investment and debt reacquisition losses recorded in 2014, higher results from other business activities and lower corporate operating expenses.

NEE's effective income tax rates for the three months ended March 31, 2015 and 2014 were approximately 31% and 26% , respectively. The rates for both periods reflect the benefit of PTCs for wind projects at NEER and deferred income tax benefits associated with convertible ITCs under the Recovery Act. PTCs and deferred income tax benefits associated with convertible ITCs can significantly affect NEE's effective income tax rate depending on the amount of pretax income. The amount of PTCs recognized can be significantly affected by wind generation and by PTC roll off. PTCs for the three months ended March 31, 2015 and 2014 were approximately $ 38 million and $ 49 million , respectively. Deferred income tax benefits associated with convertible ITCs for both the three months ended March 31, 2015 and 2014 were approximately $ 12 million .

FPL:  Results of Operations

FPL’s net income for the three months ended March 31, 2015 and 2014 was $359 million and $347 million , respectively, representing an increase of $12 million .

The use of reserve amortization is permitted by a January 2013 FPSC final order approving a stipulation and settlement between FPL and several intervenors in FPL's base rate proceeding (2012 rate agreement). In order to earn a targeted regulatory ROE, subject to limitations provided in the 2012 rate agreement, reserve amortization is calculated using a trailing thirteen-month average of retail rate base and capital structure in conjunction with the trailing twelve months regulatory retail base net operating income, which primarily includes the retail base portion of base and other revenues, net of O&M, depreciation and amortization, interest

39



and tax expenses. The drivers of FPL ' s net income not reflected in the reserve amortization calculation typically include wholesale and transmission service revenues and expenses, cost recovery clause revenues and expenses, AFUDC - equity and costs not allowed to be recovered from retail customers by the FPSC. During the three months ended March 31, 2015 and 2014 , FPL recorded reserve amortization of approximately $99 million and $125 million, respectively.

The $12 million increase in FPL's net income for the three months ended March 31, 2015 was primarily driven by:

•
higher earnings on investment in plant in service of approximately $20 million. Investment in plant in service grew FPL's average retail rate base for the three months ended March 31, 2015 by $1.5 billion when compared to the same period last year, reflecting, among other things, the modernized Riviera Beach power plant and ongoing transmission and distribution additions, and
•
growth in wholesale services provided which increased earnings by $6 million,
partly offset by,
•
lower AFUDC-equity of $5 million,
•
higher costs not allowed to be recovered from customers by the FPSC of $4 million,
•
lower cost recovery clause earnings of $2 million, and
•
other miscellaneous deductions attributable primarily to interest cost supporting wholesale services.

FPL's operating revenues consisted of the following:
Three Months Ended
March 31,
2015
2014
(millions)
Retail base
$
1,183

$
1,136

Fuel cost recovery
881

914

Other cost recovery clauses and pass-through costs, net of any deferrals
364

395

Other, primarily wholesale and transmission sales, customer-related fees and pole attachment rentals
113

90

Total
$
2,541

$
2,535


Retail Base

Retail base revenues increased a pproximately $43 million during the three months ended March 31, 2015 rela ted to the modernized Riviera Beach power plant which was placed in service on April 1, 2014.

Retail Customer Usage and Growth
For the three months ended March 31, 2015 , FPL experienced a 1.4% increase in the average number of customer accounts and a 0.5% decrease in average usage per retail customer, which collectively, together with other factors, increased revenues by approximately $4 million. An improvement in the Florida economy contributed to the increased revenues.

Cost Recovery Clauses

Revenues from fuel and other cost recovery clauses and pass-through costs, such as franchise fees, revenue taxes and storm-related surcharges, are largely a pass-through of costs. Such revenues also include a return on investment allowed to be recovered through the cost recovery clauses on certain assets, primarily related to nuclear capacity, solar and environmental projects. The decrease in fuel cost recovery revenues for the three months ended March 31, 2015 is primarily due to lower gas sales associated with an incentive mechanism allowed under the 2012 rate agreement (incentive gas sales) and lower revenues from interchange power sales of approximately $43 million, collectively. The decrease was partly offset by approximately $10 million of increased revenues primarily related to higher retail energy sales for the three months ended March 31, 2015 . C ost recovery clauses contributed approximately $18 million and $20 million to FPL’s net income f or the three months ended March 31, 2015 and 2014 , respectively.

Other

The increase in other revenues for the three months ended March 31, 2015 primarily reflects higher wholesale revenues of approximately $17 million associated with an increase in contracted load served under existing contracts.


40



Other Items Impacting FPL's Condensed Consolidated Statements of Income

Fuel, Purchased Power and Interchange Expense
The major components of FPL's fuel, purchased power and interchange expense are as follows:
Three Months Ended
March 31,
2015
2014
(millions)
Fuel and energy charges during the period
$
776

$
904

Net recognition of deferred retail fuel costs
105

8

Other, primarily capacity charges, net of any capacity deferral
124

124

Total
$
1,005

$
1,036


The decrease in fuel and energy charges for the three months ended March 31, 2015 reflects approximately $137 million of lower fuel and energy prices, partly offset by $30 million related to higher energy sales. Fuel and energy charges also reflect a decrease of $21 million related to lower incentive gas sales for the three months ended March 31, 2015 . In addition, FPL recognized an additional $97 million of deferred retail fuel costs during the three months ended March 31, 2015 .

O&M Expenses
FPL's O&M expenses decreased $31 million for the three months ended March 31, 2015 reflecting lower maintenance costs primarily due to the timing and extent of nuclear and fossil unit outages, as well as lower cost recovery clause costs, which do not have a significant impact on net income.

Depreciation and Amortization Expense
The major components of FPL’s depreciation and amortization expense are as follows:
Three Months Ended
March 31,
2015
2014
(millions)
Reserve amortization recorded under the 2012 rate agreement
$
(99
)
$
(125
)
Other depreciation and amortization recovered under base rates
308

295

Depreciation and amortization recovered under cost recovery clauses and securitized storm-recovery cost amortization
33

39

Total
$
242

$
209


The reserve amortization recorded for both periods presented reflects adjustments to the depreciation and fossil dismantlement reserve provided under the 2012 rate agreement. At March 31, 2015 , approximately $179 million of this reserve remains available for future amortization. Reserve amortization is recorded as a reduction of regulatory liabilities - accrued asset removal costs on the condensed consolidated balance sheets. For the three months ended March 31, 2015 and 2014 , reserve amortization was recorded to achieve the targeted retail regulatory ROE. The increase in other depreciation and amortization expense recovered under base rates for the three months ended March 31, 2015 is due to higher plant in service balances.

Interest Expense
T he increase in interest expense for the three months ended March 31, 2015 reflects higher average debt balances and lower AFUDC - debt. The change in AFUDC - debt is due to the same factors as described below in AFUDC - equity.

AFUDC - Equity
The decrease in AFUDC - equity for the three months ended March 31, 2015 is primarily due to lower AFUDC - equity associated with the Riviera Beach power plant which was placed in service in April 2014, partly offset by additional AFUDC - equity recorded on construction expenditures associated with the Port Everglades modernization project.

Capital Initiatives

For the period 2015 through 2018, FPL expects to invest capital of approximately $13.9 billion to $15.6 billion primarily related to projects that are focused on improving reliability, reducing fuel cost and reducing emissions, as well as maintenance of existing assets.

Natural Gas Reserves Project

In March 2015, FPL began investing in long-term natural gas supplies in the Woodford Shale region in southeastern Oklahoma. In March 2015, the Florida Supreme Court dismissed the State of Florida Office of Public Counsel’s petition requesting that the Florida

41



Supreme Court prohibit the FPSC from ruling on FPL’s proposed guidelines with regard to future natural gas production projects while appeals concerning FPL’s Woodford Shale natural gas reserves project are pending. Also in March 2015, the Florida Supreme Court issued an order relinquishing jurisdiction to the FPSC to rule on FPL’s proposed guidelines.

NEER: Results of Operations

NEER’s net income less net income attributable to noncontrolling interests for the three months ended March 31, 2015 and 2014 was $278 million and $86 million , respectively, representing an increase of $192 million . The primary drivers, on an after-tax basis, of the change are in the following table.
Increase (Decrease)
From Prior Period
Three Months Ended
March 31, 2015
(millions)
New investments (a)
$
42

Existing assets (a)
(76
)
Gas infrastructure (b)
9

Customer supply and proprietary power and gas trading (b)
90

Interest expense, differential membership costs and other
(16
)
Change in unrealized mark-to-market non-qualifying hedge activity (c)(d)
146

Change in OTTI losses on securities held in nuclear decommissioning funds, net of OTTI reversals (d)
(1
)
Maine fossil gain (e)
(12
)
Operating results of the Spain solar projects (d)
10

Increase in net income less net income attributable to noncontrolling interests
$
192

______________________
(a)
Includes PTCs and state ITCs on wind projects and, for new investments, deferred income tax and other benefits associated with convertible ITCs but excludes allocation of interest expense or corporate general and administrative expenses. Results from new projects are included in new investments during the first twelve months of operation. A project's results are included in existing assets beginning with the thirteenth month of operation.
(b)
Excludes allocation of interest expense or corporate general and administrative expenses.
(c)
See Note 2 and Overview - Adjusted Earnings related to derivative instruments.
(d)
See table in Overview - Adjusted Earnings for additional detail. See Note 8 - Spain Solar Projects.
(e)
See Note 3 - Nonrecurring Fair Value Measurements and Overview - Adjusted Earnings for additional information.

New Investments

Results from new investments for the three months ended March 31, 2015 increased primarily due to:

•
the addition of approximately 1,467 MW of wind generation and 545 MW of solar generation during or after the three months ended March 31, 2014 .

Existing Assets

Results from NEER's existing asset portfolio for the three months ended March 31, 2015 decreased primarily due to:

•
lower results from wind assets of approximately $59 million primarily due to weaker wind resource, partly offset by favorable pricing, and
•
lower results from the nuclear assets of $12 million primarily due to lower gains on sales of securities held in NEER's nuclear decommissioning funds.

Gas Infrastructure

The increase in gas infrastructure results for the three months ended March 31, 2015 is primarily due to gains from exiting the hedged positions on a number of future gas production opportunities, partly offset by increased depreciation expense primarily related to higher depletion rates. NEER continues to monitor its oil and gas producing properties for potential impairments due to low prices for oil and natural gas commodity products.

Customer Supply and Proprietary Power and Gas Trading

Results from customer supply and proprietary power and gas trading increased for the three months ended March 31, 2015 primarily due to improved margins and favorable market conditions compared to losses in 2014 due to the impact of extreme winter weather on the full requirements business.


42



Interest Expense, Differential Membership Costs and Other

For the three months ended March 31, 2015 , interest expense, differential membership costs and other reflects higher borrowing and other costs to support the growth of the business.

Other Factors

Supplemental to the primary drivers of the changes in NEER's net income less net income attributable to noncontrolling interests discussed above, the discussion below describes changes in certain line items set forth in NEE's condensed consolidated statements of income as they relate to NEER.

Operating Revenues
Operating revenues for the three months ended March 31, 2015 increased $426 million primarily due to:

•
higher unrealized mark-to-market gains from non-qualifying hedges ($61 million for the three months ended March 31, 2015 compared to $149 million of losses on such hedges for the comparable period in 2014),
•
higher revenues from the customer supply and proprietary power and gas trading business of approximately $181 million reflecting favorable market conditions,
•
higher revenues from new investments of $73 million, and
•
higher revenues from the gas infrastructure business of $48 million reflecting gains recorded upon exiting the hedged positions on a number of future gas production opportunities,
partly offset by,
•
lower revenues from existing assets of $88 million reflecting weaker wind resource, lower contracted revenues at Duane Arnold and unfavorable market conditions at Marcus Hook.

Operating Expenses
Operating expenses for the three months ended March 31, 2015 increased $75 million primarily due to:

•
higher operating expenses associated with new investments of approximately $30 million,
•
higher depreciation associated with the gas infrastructure business of $25 million primarily related to higher depletion rates, and
•
higher other operating expenses and taxes other than income taxes and other.

Interest Expense
N EER’s interest expense for the three months ended March 31, 2015 decreased $5 million reflecting an approximately $13 million unfavorable change in the fair value of interest rate swaps associated with the Spain solar projects compared to a $27 million unfavorable change in 2014, partly offset by higher average interest rates and debt balances.

Benefits Associated with Differential Membership Interests - net
Benefits associated with differential membership interests - net for both periods presented reflect benefits recognized by NEER as third-party investors received their portion of the economic attributes, including income tax attributes, of the underlying wind projects, net of associated costs.

Gains on Disposal of Assets - net
Gains on disposal of assets - net for the three months ended March 31, 2015 and 2014 primarily reflect gains on sales of securities held in NEER ' s nuclear decommissioning funds.

Tax Credits, Benefit s and Expenses
PTCs from NEER’s wind projects are reflected in NEER’s earnings. PTCs are recognized as wind energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes. A portion of the PTCs have been allocated to investors in connection with sales of differential membership interests. Also see Summary above and Note 4 for a discussion of PTCs and deferred income tax benefits associated with convertible ITCs, as well as b enefits associated with differential membership interests - net above .

Capital Initiatives

During the three months ended March 31, 2015 , NEER placed into service approximately 104 MW of new Canadian wind generation. For the period 2015 through 2018, NEER expects to invest capital of approximately $13.4 billion to $14.8 billion primarily for new wind projects with generation totaling 3,000 MW to 3,300 MW (including approximately 104 MW added to date) and new solar projects with generation totaling 1,600 MW to 1,800 MW, as well as natural gas infrastructure investments, nuclear fuel and maintenance of existing assets.


43



Sale of Assets to NEP

In January 2015 and February 2015, indirect subsidiaries of NEER sold a 250 MW wind facility located in Texas and an approximately 20 MW solar facility currently under construction in California, respectively, to indirect subsidiaries of NEP.

On April 28, 2015, an indirect subsidiary of NEER entered into a purchase and sale agreement with an indirect subsidiary of NEP to sell four wind generating facilities with contracted generating capacity totaling approximately 664 MW located in North Dakota, Oklahoma, Washington and Oregon. NEER expects to complete the sale in the second quarter of 2015.

Corporate and Other: Results of Operations

Corporate and Other is primarily comprised of the operating results of NEET, FPL FiberNet and other business activities, as well as corporate interest income and expenses. Corporate and Other allocates a portion of NEECH's corporate interest expense and shared service costs to NEER. Interest expense is allocated based on a deemed capital structure of 70% debt and, for purposes of allocating NEECH's corporate interest expense, the deferred credit associated with differential membership interests sold by NEER's subsidiaries is included with debt. Each subsidiary’s income taxes are calculated based on the "separate return method," except that tax benefits that could not be used on a separate return basis, but are used on the consolidated tax return, are recorded by the subsidiary that generated the tax benefits. Any remaining consolidated income tax benefits or expenses are recorded at Corporate and Other. The major components of Corporate and Other’s results, on an after-tax basis, are as follows:

Three Months Ended
March 31,
2015
2014
(millions)
Interest expense, net of allocations to NEER
$
(21
)
$
(25
)
Interest income
8

8

Federal and state income tax benefits
5

8

Merger-related expenses
(4
)
—

Other
25

6

Net income (loss)
$
13

$
(3
)

The decrease in interest expense, net of allocations to NEER, for the three months ended March 31, 2015 reflects lower average debt balances. The federal and state income tax benefits for both periods presented reflect consolidating income tax adjustments. Other includes all other corporate income and expenses, as well as other business activities. The increase for the three months ended March 31, 2015 primarily reflects the absence of investment and debt reacquisition losses recorded in 2014, the pretax amount of which is reflected in other - net in NEE's condensed consolidated statements of income, as well as higher results from the other business activities and lower corporate operating expenses.

Capital Initiatives

For the period 2015 through 2018, businesses within Corporate and Other expect to invest capital of approximately $2.9 billion to $3.1 billion primarily for infrastructure projects through investments in natural gas pipelines and transmission facilities.

LIQUIDITY AND CAPITAL RESOURCES

NEE and its subsidiaries, including FPL, require funds to support and grow their businesses. These funds are used for, among other things, working capital, capital expenditures, investments in or acquisitions of assets and businesses, payment of maturing debt obligations and, from time to time, redemption or repurchase of outstanding debt or equity securities. It is anticipated that these requirements will be satisfied through a combination of cash flows from operations, short- and long-term borrowings, the issuance, from time to time, of short- and long-term debt and equity securities and proceeds from the sale of differential membership interests and of noncontrolling interests in subsidiaries associated with NEP, consistent with NEE’s and FPL’s objective of maintaining, on a long-term basis, a capital structure that will support a strong investment grade credit rating. NE E, FPL and NEECH rely on access to credit and capital markets as significant sources of liquidity for capital requirements and other operations that are not satisfied by operating cash flows. The inability of NEE, FPL and NEECH to maintain their current credit ratings could affect their ability to raise short- and long-term capital, their cost of capital and the execution of their respective financing strategies, and could require the posting of additional collateral under certain agreements.


44



Cash Flows

Sources and uses of NEE's and FPL's cash for the three months ended March 31, 2015 and 2014 were as follows:

NEE
FPL
Three Months Ended
March 31,
Three Months Ended
March 31,
2015
2014
2015
2014
(millions)
Sources of cash:
Cash flows from operating activities
$
1,181

$
1,017

$
952

$
875

Long-term borrowings
194

655

—

—

Capital contribution from NEE
—

—

550

100

Issuances of common stock - net
16

25

—

—

Net increase in short-term debt
603

1,179

—

120

Other sources - net
59

152

47

42

Total sources of cash
2,053

3,028

1,549

1,137

Uses of cash:
Capital expenditures, independent power and other investments and nuclear fuel purchases
(1,566
)
(1,866
)
(765
)
(1,067
)
Retirements of long-term debt
(170
)
(717
)
(31
)
(29
)
Net decrease in short-term debt
—

—

(722
)
—

Dividends
(341
)
(315
)
—

—

Payments to differential membership investors
(21
)
(22
)
—

—

Other uses - net
(63
)
(58
)
(17
)
(22
)
Total uses of cash
(2,161
)
(2,978
)
(1,535
)
(1,118
)
Net increase (decrease) in cash and cash equivalents
$
(108
)
$
50

$
14

$
19


NEE's primary capital requirements are for expanding and enhancing FPL's electric system and generating facilities to continue to provide reliable service to meet customer electricity demands and for funding NEER's investments in independent power and other projects. The following table provides a summary of the major capital investments for the three months ended March 31, 2015 and 2014 .

Three Months Ended
March 31,
2015
2014
(millions)
FPL:
Generation:
New
$
98

$
290

Existing
128

307

Transmission and distribution
325

288

Nuclear fuel
44

68

General and other
63

30

Other, primarily change in accrued property additions and the exclusion of AFUDC - equity
107

84

Total
765

1,067

NEER:
Wind
317

505

Solar
150

81

Nuclear, including nuclear fuel
76

51

Other
153

138

Total
696

775

Corporate and Other
105

24

Total capital expenditures, independent power and other investments and nuclear fuel purchases
$
1,566

$
1,866


See Note 7 regarding financing activity that occurred in April 2015.

45



Liquidity

At March 31, 2015 , NEE's total net available liquidity was approximately $6.6 billion , of which FPL's portion was approximately $2.8 billion.  The table below provides the components of FPL's and NEECH's ne t available liquidity at March 31, 2015 :

Maturity Date
FPL
NEECH
Total
FPL
NEECH
(millions)
Bank revolving line of credit facilities (a)
$
3,000

$
4,850

$
7,850

(b)
(b)
Less letters of credit
(4
)
(573
)
(577
)
2,996

4,277

7,273

Revolving credit facilities
235

35

270

May 2015
2020
Less borrowings
—

—

—

235

35

270

Letter of credit facilities (c)
—

650

650

2017
Less letters of credit
—

(305
)
(305
)
—

345

345

Subtotal
3,231

4,657

7,888

Cash and cash equivalents
28

441

469

Less short-term debt
(420
)
(1,325
)
(1,745
)
Net available liquidity
$
2,839

$
3,773

$
6,612

_______________________
(a)
Provide for the funding of loans up to $7,850 million ($3,000 million for FPL) and the issuance of letters of credit up to $6,600 million ($2,500 million for FPL). The entire amount of the credit facilities is available for general corporate purposes and to provide additional liquidity in the event of a loss to the companies’ or their subsidiaries’ operating facilities (including, in the case of FPL, a transmission and distribution property loss). FPL’s bank revolving line of credit facilities are also available to support the purchase of $633 million of pollution control, solid waste disposal and industrial development revenue bonds (tax exempt bonds) in the event they are tendered by individual bond holders and not remarketed prior to maturity.
(b)
$500 million of FPL ' s and $750 million of NEECH's bank revolving line of credit facilities expire in 2016; essentially all of the remaining facilities at each of FPL and NEECH expire in 2020.
(c)
Only available for the issuance of letters of credit.

Additionally, an indirect wholly-owned subsidiary of NEER has four variable rate Canadian revolving credit agreements with a capacity totaling C$1,000 million and expiration dates ranging from February 2016 to December 2016. These facilities are available for general corporate purposes; however, the current intent is to use these facilities for the purchase, development, construction and/or operation of Canadian renewable generating assets. In order to borrow or issue letters of credit under the terms of these agreements, among other things, NEE is required to maintain a ratio of funded debt to total capitalization that does not exceed a stated ratio. These agreements also contain certain covenants and default and related acceleration provisions relating to, among other things, failure of NEE to maintain a ratio of funded debt to total capitalization at or below the specified ratio. The payment obligations under these agreements are ultimately guaranteed by NEE. As of March 31, 2015 , approximately $124 million of capacity remained available under these revolving credit agreements.

Also, an indirect wholly-owned subsidiary of NEER, has a $425 million limited-recourse variable rate construction and term loan facility maturing in 2035 and a $154 million variable rate cash grant bridge loan facility maturing in 2017. Proceeds from the borrowings under the construction and term loan facility and the cash grant bridge loan facility (cash grant loans) are available to fund a portion of the costs associated with the construction and development of a 250 MW solar PV project in California, which is expected to be completed by the end of 2016. The financing documents relating to the facilities contain default and related acceleration provisions relating to, among other things, the failure to make required payments or to observe other covenants in the financing documents (including a requirement that the solar PV project must be completed by a certain date). The payment obligations under the cash grant loans are guaranteed by NEECH, which are in turn guaranteed by NEE. Pursuant to the NEECH guarantee, if NEECH’s senior unsecured debt rating falls below a specified threshold, the guaranty shall be replaced by an acceptable guarantee of another person, an acceptable letter of credit, or cash. As of March 31, 2015 , approximately $402 million of the construction and term loan facility remained available.

Also, NEP OpCo, an indirect majority-owned subsidiary of NEER, and NEP OpCo's direct subsidiaries (Loan Parties) has a $250 million variable rate, senior secured revolving credit facility that expires in 2019. The revolving credit facility includes borrowing capacity for letters of credit and incremental commitments to increase the revolving credit facility to up to $1 billion in the aggregate, subject to certain conditions. Borrowings under the revolving credit facility can be used by the Loan Parties to fund working capital and expansion projects, to make acquisitions and for general business purposes. The financing documents related to the revolving credit facility contain default and related acceleration provisions relating to the failure to make required payments or to observe

46



other covenants in the revolving credit facility and related documents. Additionally, NEP OpCo and one of its direct subsidiaries are required to comply with certain financial covenants on a quarterly basis and NEP OpCo's ability to pay cash distributions is subject to certain other restrictions. All borrowings under the revolving credit facility are guaranteed by NEP OpCo and NEP, and must be repaid by the end of the revolving credit term. As of March 31, 2015 , $128 million of capacity remained available under the revolving credit facility.

Capital Support

Letters of Credit, Surety Bonds and Guarantees
Certain subsidiaries of NEE, including FPL, obtain letters of credit and surety bonds and issue guarantees to facilitate commercial transactions with third parties and financings. Letters of credit, surety bonds and guarantees support, among other things, the buying and selling of wholesale energy commodities, debt and related reserves, capital expenditures for NEER's wind and solar development, nuclear activities and other contractual agreements. Substantially all of NEE's and FPL's guarantee arrangements are on behalf of their consolidated subsidiaries for their related payment obligations.

In addition, as part of contract negotiations in the normal course of business, NEE and certain of its subsidiaries, including FPL, may agree to make payments to compensate or indemnify other parties for possible future unfavorable financial consequences resulting from specified events. The specified events may include, but are not limited to, an adverse judgment in a lawsuit, the imposition of additional taxes due to a change in tax law or interpretations of the tax law or the non-receipt of renewable tax credits or proceeds from cash grants under the Recovery Act. NEE and FPL are unable to develop an estimate of the maximum potential amount of future payments under some of these contracts because events that would obligate them to make payments have not yet occurred or, if any such event has occurred, they have not been notified of its occurrence.

In addition, NEE has guaranteed certain payment obligations of NEECH, including most of its debt and all of its debentures and commercial paper issuances, as well as most of its payment guarantees and indemnifications, and NEECH has guaranteed certain debt and other obligations of NEER and its subsidiaries.

At March 31, 2015 , NEE had approximately $1.1 billion of standby letters of credit ($4 million for FPL), $243 million of surety bonds ($63 million for FPL) and $11.2 billion notional amount of guarantees and indemnifications ($25 million for FPL), of which $6.2 billion of letters of credit, guarantees and indemnifications ($3 million for FPL) have expiration dates within the next five years.

Each of NEE and FPL believe it is unlikely that it would be required to make any payments under these letters of credit, surety bonds, guarantees and indemnifications. At March 31, 2015 , NEE and FPL did not have any significant liabilities recorded for these letters of credit, surety bonds, guarantees and indemnifications.

New Accounting Rules and Interpretations

Amendments to the Consolidation Analysis - In February 2015, the FASB issued a new accounting standard that will modify current consolidation guidance. See Note 5 - Amendments to the Consolidation Analysis.

Presentation of Debt Issuance Costs - In April 2015, the FASB issued a new accounting standard which changes the presentation of debt issuance costs in financial statements. See Note 7 - Presentation of Debt Issuance Costs.

ENERGY MARKETING AND TRADING AND MARKET RISK SENSITIVITY

NEE and FPL are exposed to risks associated with adverse changes in commodity prices, interest rates and equity prices. Financial instruments and positions affecting the financial statements of NEE and FPL described below are held primarily for purposes other than trading. Market risk is measured as the potential loss in fair value resulting from hypothetical reasonably possible changes in commodity prices, interest rates or equity prices over the next year. Management has established risk management policies to monitor and manage such market risks, as well as credit risks.

Commodity Price Risk

NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk inherent in the purchase and sale of fuel and electricity. In addition, NEE, through NEER, uses derivatives to optimize the value of its power generation and gas infrastructure assets and engages in power and gas marketing and trading activities to take advantage of expected future favorable price movements. See Note 2.


47



The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2015 were as follows:
Hedges on Owned Assets
Trading
Non-
Qualifying
FPL Cost
Recovery
Clauses
NEE Total
(millions)
Fair value of contracts outstanding at December 31, 2014
$
320

$
898

$
(363
)
$
855

Reclassification to realized at settlement of contracts
(66
)
(66
)
78

(54
)
Inception value of new contracts
5

—

—

5

Net option premium purchases (issuances)
(6
)
3

—

(3
)
Changes in fair value excluding reclassification to realized
96

143

(86
)
153

Fair value of contracts outstanding at March 31, 2015
349

978

(371
)
956

Net margin cash collateral paid (received)
(185
)
Total mark-to-market energy contract net assets (liabilities) at March 31, 2015
$
349

$
978

$
(371
)
$
771

NEE's total mark-to-market energy contract net assets (liabilities) at March 31, 2015 shown above are included on the condensed consolidated balance sheets as follows:
March 31, 2015
(millions)
Current derivative assets
$
774

Noncurrent derivative assets
1,201

Current derivative liabilities
(890
)
Noncurrent derivative liabilities
(314
)
NEE's total mark-to-market energy contract net assets
$
771


The sources of fair value estimates and maturity of energy contract derivative instruments at March 31, 2015 were as follows:

Maturity
2015
2016
2017
2018
2019
Thereafter
Total
(millions)
Trading:
Quoted prices in active markets for identical assets
$
32

$
(11
)
$
1

$
—

$
—

$
—

$
22

Significant other observable inputs
(13
)
64

35

21

6

2

115

Significant unobservable inputs
118

49

46

(7
)
7

(1
)
212

Total
137

102

82

14

13

1

349

Owned Assets - Non-Qualifying:
Quoted prices in active markets for identical assets
11

—

—

1

1

—

13

Significant other observable inputs
145

178

96

53

45

81

598

Significant unobservable inputs
50

40

33

27

21

196

367

Total
206

218

129

81

67

277

978

Owned Assets - FPL Cost Recovery Clauses:
Quoted prices in active markets for identical assets
—

—

—

—

—

—

—

Significant other observable inputs
(355
)
(15
)
—

—

—

—

(370
)
Significant unobservable inputs
—

(1
)
—

—

—

—

(1
)
Total
(355
)
(16
)
—

—

—

—

(371
)
Total sources of fair value
$
(12
)
$
304

$
211

$
95

$
80

$
278

$
956



48



The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2014 were as follows:
Hedges on Owned Assets
Trading
Non-
Qualifying
FPL Cost
Recovery
Clauses
NEE
Total
(millions)
Fair value of contracts outstanding at December 31, 2013
$
301

$
563

$
46

$
910

Reclassification to realized at settlement of contracts
36

119

(62
)
93

Inception value of new contracts
(21
)
—

—

(21
)
Net option premium purchases (issuances)
4

1

—

5

Changes in fair value excluding reclassification to realized
(3
)
(272
)
136

(139
)
Fair value of contracts outstanding at March 31, 2014
317

411

120

848

Net margin cash collateral paid (received)



(241
)
Total mark-to-market energy contract net assets (liabilities) at March 31, 2014
$
317

$
411

$
120

$
607


With respect to commodities, NEE’s EMC, which is compri sed of certain members of senior management, and NEE's chief executive officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The EMC and NEE's chief executive officer receive periodic updates on market positions and related exposures, credit exposures and overall risk management activities.

NEE uses a value-at-risk (VaR) model to measure commodity price market risk in its trading and mark-to-market portfolios. The VaR is the estimated nominal loss of market value based on a one-day holding period at a 95% confidence level using historical simulation methodology. The VaR figures are as follows:
Trading
Non-Qualifying Hedges and
Hedges in FPL Cost Recovery Clauses (a)
Total
FPL
NEER
NEE
FPL
NEER
NEE
FPL
NEER
NEE
(millions)
December 31, 2014
$
—

$
2

$
2

$
65

$
62

$
24

$
65

$
64

$
24

March 31, 2015
$
—

$
1

$
1

$
44

$
38

$
26

$
44

$
37

$
26

Average for the three months ended March 31, 2015
$
—

$
1

$
1

$
53

$
47

$
29

$
53

$
48

$
29

______________________
(a)
Non-qualifying hedges are employed to reduce the market risk exposure to physical assets or contracts which are not marked to market. The VaR figures for the non-qualifying hedges and hedges in FPL cost recovery clauses category do not represent the economic exposure to commodity price movements.

Interest Rate Risk

NEE's and FPL's financial results are exposed to risk resulting from changes in interest rates as a result of their respective issuances of debt, investments in special use funds and other investments. NEE and FPL manage their respective interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed rate and variable rate debt. Interest rate contracts are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements.


49



The following are estimates of the fair value of NEE's and FPL's financial instruments that are exposed to interest rate risk:

March 31, 2015
December 31, 2014
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
(millions)
NEE:
Fixed income securities:
Special use funds
$
2,015

$
2,015

(a)
$
1,965

$
1,965

(a)
Other investments:
Debt securities
$
133

$
133

(a)
$
124

$
124

(a)
Primarily notes receivable
$
527

$
717

(b)
$
525

$
679

(b)
Long-term debt, including current maturities
$
27,716

$
30,544

(c)
$
27,876

$
30,337

(c)
Interest rate contracts - net unrealized losses
$
(256
)
$
(256
)
(d)
$
(216
)
$
(216
)
(d)
FPL:
Fixed income securities - special use funds
$
1,610

$
1,610

(a)
$
1,568

$
1,568

(a)
Long-term debt, including current maturities
$
9,443

$
11,435

(c)
$
9,473

$
11,105

(c)
————————————
(a)
Primarily estimated using quoted market prices for these or similar issues.
(b)
Primarily estimated using a discounted cash flow valuation technique based on certain observable yield curves and indices considering the credit profile of the borrower.
(c)
Estimated using either quoted market prices for the same or similar issues or discounted cash flow valuation technique, considering the current credit spread of the debtor.
(d)
Modeled internally using discounted cash flow valuation technique and applying a credit valuation adjustment.

The special use funds of NEE and FPL consist of restricted funds set aside to cover the cost of storm damage for FPL and for the decommissioning of NEE's and FPL's nuclear power plants. A portion of these funds is invested in fixed income debt securities primarily carried at estimated fair value. At FPL, changes in fair value, including any OTTI losses, result in a corresponding adjustment to the related liability accounts based on current regulatory treatment. The changes in fair value of NEE's non-rate regulated operations result in a corresponding adjustment to OCI, except for impairments deemed to be other than temporary, including any credit losses, which are reported in current period earnings. Because the funds set aside by FPL for storm damage could be needed at any time, the related investments are generally more liquid and, therefore, are less sensitive to changes in interest rates. The nuclear decommissioning funds, in contrast, are generally invested in longer-term securities, as decommissioning activities are not scheduled to begin until at least 2030 (2032 at FPL).

As of March 31, 2015 , NEE had interest rate contracts with a notional amount of approximately $7.1 billion related to long-term debt issuances, of which $2.4 billion are fair value hedges at NEECH that effectively convert fixed-rate debt to a variable-rate instrument. The remaining $4.7 billion of notional amount of interest rate contracts relate to cash flow hedges to manage exposure to the variability of cash flows associated with variable-rate debt instruments, which primarily relate to NEER debt issuances. At March 31, 2015 , the estimated fair value of NEE's fair value hedges and cash flow hedges was approximately $46 million and $(302) million , respectively. See Note 2.

Based upon a hypothetical 10% decrease in interest rates, which is a reasonable near-term market change, the net fair value of NEE's net liabilities would increase by approximately $890 million ($488 million for FPL) at March 31, 2015 .

Equity Price Risk

NEE and FPL are exposed to risk resulting from changes in prices for equity securities. For example, NEE’s nuclear decommissioning reserve funds include marketable equity securities primarily carried at their market value of approximately $2,672 million and $2,634 million ($1,578 million and $1,561 million for FPL) at March 31, 2015 and December 31, 2014 , respectively. At March 31, 2015 , a hypothetical 10% decrease in the prices quoted on stock exchanges, which is a reasonable near-term market change, would result in a $253 million ($150 million for FPL) reduction in fair value. For FPL, a corresponding adjustment would be made to the related liability accounts based on current regulatory treatment, and for NEE’s non-rate regulated operations, a corresponding adjustment would be made to OCI to the extent the market value of the securities exceeded amortized cost and to OTTI loss to the extent the market value is below amortized cost.

Credit Risk

NEE and its subsidiaries are also exposed to credit risk through their energy marketing and trading operations. Credit risk is the risk that a financial loss will be incurred if a counterparty to a transaction does not fulfill its financial obligation. NEE manages counterparty credit risk for its subsidiaries with energy marketing and trading operations through established policies, including counterparty credit limits, and in some cases credit enhancements, such as cash prepayments, letters of credit, cash and other collateral and guarantees.

50




Credit risk is also managed through the use of master netting agreements. NEE’s credit department monitors current and forward credit exposure to counterparties and their affiliates, both on an individual and an aggregate basis. For all derivative and contractual transactions, NEE’s energy marketing and trading operations, which include FPL’s energy marketing and trading division, are exposed to losses in the event of nonperformance by counterparties to these transactions. Some relevant considerations when assessing NEE’s energy marketing and trading operations’ credit risk exposure include the following:

•
Operations are primarily concentrated in the energy industry.
•
Trade receivables and other financial instruments are predominately with energy, utility and financial services related companies, as well as municipalities, cooperatives and other trading companies in the U.S.
•
Overall credit risk is managed through established credit policies and is overseen by the EMC.
•
Prospective and existing customers are reviewed for creditworthiness based upon established standards, with customers not meeting minimum standards providing various credit enhancements or secured payment terms, such as letters of credit or the posting of margin cash collateral.
•
Master netting agreements are used to offset cash and non-cash gains and losses arising from derivative instruments with the same counterparty. NEE’s policy is to have master netting agreements in place with significant counterparties.

Based on NEE’s policies and risk exposures related to credit, NEE and FPL do not anticipate a material adverse effect on their financial statements as a result of counterparty nonperformance. As of March 31, 2015 , approximately 93% of NEE’s and 94% o f FPL’s energy marketing and trading counterparty credit risk exposure is associated with companies that have investment grade credit ratings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See Management's Discussion - Energy Marketing and Trading and Market Risk Sensitivity.

Item 4.  Controls and Procedures

(a)
Evaluation of Disclosure Controls and Procedures

As of March 31, 2015 , each of NEE and FPL had performed an evaluation, under the supervision and with the participation of its management, including NEE's and FPL's chief executive officer and chief financial officer, of the effectiveness of the design and operation of each company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the chief executive officer and the chief financial officer of each of NEE and FPL concluded that the company's disclosure controls and procedures were effective as of March 31, 2015 .

(b)
Changes in Internal Control Over Financial Reporting

NEE and FPL are continuously seeking to improve the efficiency and effectiveness of their operations and of their internal controls. This results in refinements to processes throughout NEE and FPL. However, there has been no change in NEE's or FPL's internal control over financial reporting (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) that occurred during NEE's and FPL's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NEE's or FPL's internal control over financial reporting.


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

NEE and FPL are parties to various legal and regulatory proceedings in the ordinary course of their respective businesses. For information regarding legal proceedings that could have a material effect on NEE or FPL, see Item 3. Legal Proceedings and Note 13 - Legal Proceedings to Consolidated Financial Statements in the 2014 Form 10-K and Note 8 - Legal Proceedings herein. Such descriptions are incorporated herein by reference.


51



Item 1A.  Risk Factors

There have been no material changes from the risk factors disclosed in the 2014 Form 10-K. The factors discussed in Part I, Item 1A. Risk Factors in the 2014 Form 10-K, as well as other information set forth in this report, which could materially adversely affect NEE's and FPL's business, financial condition, results of operations and prospects should be carefully considered. The risks described in the 2014 Form 10-K are not the only risks facing NEE and FPL. Additional risks and uncertainties not currently known to NEE or FPL, or that are currently deemed to be immaterial, also may materially adversely affect NEE's or FPL's business, financial condition, results of operations and prospects.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

(c)
Information regarding purchases made by NEE of its common stock during the three months ended March 31, 2015 is as follows:

Period
Total Number
of Shares Purchased (a)
Average Price Paid
Per Share
Total Number of Shares
Purchased as Part of a
Publicly Announced
Program
Maximum Number of
Shares that May Yet be
Purchased Under the
Program (b)
1/1/15 - 1/31/15
—

$
—

—
13,274,748
2/1/15 - 2/28/15
83,181

$
103.62

—
13,274,748
3/1/15 - 3/31/15
492

$
101.27

—
13,274,748
Total
83,673

$
103.61

—
————————————
(a)
Includes: (1) in February 2015, shares of common stock withheld from employees to pay certain withholding taxes upon the vesting of stock awards granted to such employees under the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan; and (2) in March 2015, shares of common stock purchased as a reinvestment of dividends by the trustee of a grantor trust in connection with NEE's obligation under a February 2006 grant under the NextEra Energy, Inc. Amended and Restated Long-Term Incentive Plan (former LTIP) to an executive officer of deferred retirement share awards.
(b)
In February 2005, NEE's Board of Directors authorized common stock repurchases of up to 20 million shares of common stock over an unspecified period, which authorization was most recently reaffirmed and ratified by the Board of Directors in July 2011.

Item 5. Other Information

(a)
None

(b)
None

(c)
Other events

(i)
Reference is made to Item 1. Business - NEE's Operating Subsidiaries - FPL - FPL System Capability and Load in the 2014 Form 10-K.

FPL indicated in its 2015 Ten Year Site Plan filed with the FPSC that it planned to add additional power resources beginning in June 2019. FPL’s best self-build generation option for 2019 is a new approximately 1,620 MW natural gas-fired combined-cycle unit in Okeechobee County, Florida. In March 2015, FPL issued an RFP inviting other power suppliers to propose power purchase alternatives to FPL’s combined cycle option to meet this generation need. Responses to the RFP will be evaluated against FPL’s combined-cycle option. FPL plans to make a decision regarding the best and most cost-effective option to meet its customers’ needs for 2019 and beyond, before the end of July 2015.

(ii)
Reference is made to Item 1. Business - NEE's Operating Subsidiaries - FPL - FPL Sources of Generation - Fossil Operations (Natural Gas, Coal and Oil) in the 2014 Form 10-K.

In March 2015, FPL announced plans to replace 44 of its 48 gas turbines at its Lauderdale, Port Everglades and Fort Myers facilities, totaling approximately 1,700 MW of capacity, with 7 high efficiency, low-emission combustion turbines at its Lauderdale and Fort Myers facilities, totaling approximately 1,610 MW of capacity, by December 2016. In addition, FPL plans to upgrade 2 additional simple-cycle combustion turbines at its Fort Myers facility, which is expected to add an additional 50 MW of capacity, by December 2016.

(iii)
Reference is made to Item 1. Business - NEE's Operating Subsidiaries - FPL - FPL Sources of Generation - Nuclear Operations - Spent Nuclear Fuel in the 2014 Form 10-K.

In February 2015, the NRC rejected all pending petitions related to the Continued Storage of Spent Nuclear Fuel Rule including the petition to suspend final reactor licensing decisions in all open NRC licensing proceedings. The petitions previously filed with the U.S. Court of Appeals for the District of Columbia Circuit challenging the rule are ongoing and briefs are expected to be filed in the summer of 2015.

52




(iv)
Reference is made to Item 1. Business - NEE's Operating Subsidiaries - FPL - FPL Sources of Generation - Nuclear Operations in the 2014 Form 10-K.

The current operating licenses for FPL’s nuclear units at the Turkey Point site include, among other things, a requirement that the maximum allowed water temperature in the Turkey Point cooling canal system not exceed approximately 104 degrees. In the summer of 2014, numerous factors contributed to higher-than-normal temperatures in the cooling canal system, including high summer temperatures, lack of rainfall, reduced water levels and the existence of an algae bloom. There remains a potential for higher-than-normal temperatures in the cooling canal system through the summer of 2015, with the temperatures expected to decline in mid-fall 2015. Management is in the process of implementing a comprehensive plan to improve conditions in the cooling canal system and has contingency plans if water temperatures approach the maximum permitted level, including temporarily reducing power output at the nuclear units. However, if the water temperature exceeds the maximum permitted level, FPL will be required to commence shut down of the Turkey Point nuclear units within a certain timeframe until the water temperature returns to below the maximum permitted level, unless relief from the maximum temperature requirement is requested by FPL and granted by the NRC.

Item 6.  Exhibits

Exhibit
Number
Description
NEE
FPL
*10(a)
NextEra Energy, Inc. Non-Employee Director Compensation Summary effective January 1, 2015 (filed as Exhibit 10(nn) to Form 10-K for the year ended December 31, 2014, File No.1-8841)
x
12(a)
Computation of Ratios
x
12(b)
Computation of Ratios
x
31(a)
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of NextEra Energy, Inc.
x
31(b)
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of NextEra Energy, Inc.
x
31(c)
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Florida Power & Light Company
x
31(d)
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Florida Power & Light Company
x
32(a)
Section 1350 Certification of NextEra Energy, Inc.
x
32(b)
Section 1350 Certification of Florida Power & Light Company
x
101.INS
XBRL Instance Document
x
x
101.SCH
XBRL Schema Document
x
x
101.PRE
XBRL Presentation Linkbase Document
x
x
101.CAL
XBRL Calculation Linkbase Document
x
x
101.LAB
XBRL Label Linkbase Document
x
x
101.DEF
XBRL Definition Linkbase Document
x
x
_________________________

*Incorporated herein by reference

NEE and FPL agree to furnish to the SEC upon request any instrument with respect to long-term debt that NEE and FPL have not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.

53



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.

Date: April 30, 2015

NEXTERA ENERGY, INC.
(Registrant)
CHRIS N. FROGGATT
Chris N. Froggatt
Vice President, Controller and Chief Accounting Officer
of NextEra Energy, Inc.
(Principal Accounting Officer of NextEra Energy, Inc.)
FLORIDA POWER & LIGHT COMPANY
(Registrant)
KIMBERLY OUSDAHL
Kimberly Ousdahl
Vice President, Controller and Chief Accounting Officer
of Florida Power & Light Company
(Principal Accounting Officer of
Florida Power & Light Company)



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TABLE OF CONTENTS