FPL Group’s earnings were $364 million, or $0.90 per share, compared with $305 million, or $0.76 per share, in the first quarter of 2008. Adjusted earnings exclude the mark-to-market effects of non-qualifying hedges and the net effect of other than temporary impairments (OTTI) on certain investments, both of which relate to NextEra Energy Resources.
FPL Group management uses adjusted earnings, internally for financial planning, for analysis of performance, for reporting of results to the board of directors and as input in determining whether certain performance targets are met for performance-based compensation under the company’s employee incentive compensation plans. FPL Group also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. FPL Group management believes that adjusted earnings provide a more meaningful representation of FPL Group’s fundamental earnings power.
“FPL Group had a very good first quarter, with adjusted earnings per share rising 18 % year over year, largely as a result of strong results from our NextEra Energy Resources subsidiary. At Florida Power & Light, we announced proposed investments that will significantly improve the electrical system for our customers – specifically, a large-scale deployment of ‘smart grid’ technology in Miami, and a new natural gas pipeline to provide increased energy security. As pleased as we are with FPL Group’s current results, we are even more optimistic about the future. The reason is simple: We believe that the policy climate in the nation is trending in a direction highly favorable to power companies with low emissions profiles and significant clean-energy fleets,” said FPL chairman and chief executive officer Lew Hay.
Florida Power & Light Company
FPL Group’s rate-regulated utility subsidiary, Florida Power & Light Company, reported first quarter net income of $127 million, or $0.31 per share, compared with $108 million, or $0.27 per share, for the prior-year quarter. The weak economy, however, continued to have a negative impact on FPL. Sales declined for the quarter on a year-over-year basis, as did the average number of customers and usage per customer.
FPL’s improved results were driven by a 10% reduction in operations and maintenance expenses compared to last year’s first quarter, with much of that reduction attributable to timing of expenses in 2009. In addition, in March 2009, FPL, along with certain NextEra Energy Resources subsidiaries, signed a settlement agreement with the US government dismissing lawsuits related to spent nuclear fuel disposal. The total settlement helped FPL Group’s net income by about 4 cents per share, half of which was at FPL.
Other key developments:
In March, FPL filed a rate proposal with the Florida Public Service Commission (PSC) that would support investment in improving fuel efficiency, generating cleaner energy and enhancing system reliability, while keeping customer bills low. Under the company’s proposal, the typical 1,000 kilowatt-hour residential customer bill would decrease by an estimated $4.92 monthly, or 4.5%, from $109.55 to $104.63 on January 1, 2010. This bill estimate reflects an increase in base rates that would be more than offset by reductions in the cost of fuel based on Febuary 9, 2009 fuel price projections for 2010 as well as improvements in fuel efficiency.
In April, FPL filed a proposal with the PSC for the construction of a new underground natural gas pipeline in Florida to meet increasing demand for natural gas as a clean fuel for generating electricity while helping to diversify and secure the state’s access to natural gas supplies. The pipeline, about 300 miles long, is proposed for construction in the eastern portion of the state from Palm Beach County in the south to Bradford County in the north.
Also in April 2009, FPL announced its “Energy Smart Miami” initiative. The initiative has the potential to be the most extensive and holistic smart grid implementation in the country. The backbone will be the deployment of more than 1 million advanced wireless “smart meters” to every home and most businesses in Miami-Dade County, which will be connected by a two-way wireless network, along with expected pilot programs involving renewable energy integration, deployment of plug-in hybrid electric vehicles and consumer technology trials of in-home energy displays and home energy controllers.
NextEra Energy Resources
NextEra Energy Resources, the competitive energy business of FPL Group with generating facilities in 25 states and Canada, reported first quarter net income on a GAAP basis of $252 million, or $0.62 per share, compared with $164 million, or $0.41 per share, in the prior-year quarter. On an adjusted basis, NextEra Energy Resources’ earnings were $252 million, or $0.62 per share, compared with $220 million, or $0.55 per share, in the first quarter of 2008.
NextEra Energy Resources’ first quarter adjusted earnings per share contribution rose by 13% over the prior-year quarter. These results were driven primarily by new investments, specifically new wind generation facilities. Included in this category are the favorable impacts of state investment tax incentives and the American Recovery and Reinvestment Act of 2009.
Adjusted earnings from the existing portfolio, which includes both the contracted and merchant segments, declined versus the year ago quarter. The contracted segment was down due primarily to a refueling outage at one of our nuclear plants this year and lower earnings at one of the company’s natural gas-fired facilities in the Northeast. Earnings from the merchant assets in the Electric Reliability Council of Texas (ERCOT) were down due to softer market conditions, partially offset by incremental contributions from the company’s retail provider, Gexa. The merchant assets in the New England Power Pool (NEPOOL) were up 3 cents owing to the absence of an unplanned outage that occurred during last year’s first quarter. The existing wind portfolio was down compared to last year’s first quarter primarily reflecting a weaker wind resource. NextEra Energy Resources’ results also benefited from an additional equity investment made in its Canadian operations that allowed the company to reduce previously deferred taxes.
In late January, the Public Utility Commission of Texas (PUCT) approved the state’s Competitive Renewable Energy Zone initiative, a collaborative effort by the PUCT, ERCOT and interested stakeholders to deliver more renewable wind energy to customers in the state. The PUCT voted to implement an about $5 billion transmission build-out, awarding 11% of the total, or about $565 million, to Lone Star Transmission, an FPL Group subsidiary. Lone Star is expected to add about 250 miles of 345 kilovolt lines capable of transporting a significant amount of renewable energy from West Texas to the Dallas-Ft. Worth area.
