NextEra Energy, Inc.

Good day and welcome to the NextEra Energy Inc. Second Quarter 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. Marcus Eidelman, Director of Investor Relations. Please go ahead, sir.

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

Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong second quarter results with adjusted earnings per share increasing 9.4% year over year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.1% year over year. The continued strong financial and operational performance at both FPL and Energy Resources positions our company well to meet its overall objectives for the year. America continues to be at a unique moment, and our industry remains front and center. After decades of stagnant electricity demand, we're now seeing growth across sectors of the U.S. economy. Artificial intelligence and reshoring of manufacturing grabbed most of the headlines, and for good reason. But that doesn't tell the full story. Demand for more electricity is also coming from all sectors. including residential, commercial, industrial, and oil and gas, to name a few. A new study from ICF released this month described demand growth as both sudden and sharp. The report says demand growth over the next decade is expected to exceed the last three decades combined. Just the latest data point putting into perspective how unique this moment truly is. Bottom line, America needs more electricity, not less. Importantly, America needs it now, not just in the future. We are firmly aligned with the administration's goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There's truly no time to wait. We see this every day from our customers who aren't just saying they need power. They're signing contracts with us to build energy infrastructure because we can do it quickly and at a low cost. Again, the need for more electricity is real. We must do more than just plan for what's on our doorstep. We must act. As I've said many times, we're going to need all forms of energy to meet this moment. New gas and nuclear are on the way. and will be critical to meeting demand over the long term. Renewables and storage can bridge the gap and will play an important role in an all of the above future. Storage, in particular, is a game changer. It's low cost, all forms of energy can charge it, and the grid can rely on it for capacity. Storage is also flexible and can utilize excess transmission capacity. That means it can quickly be deployed to where customers need it most. Importantly, renewables and storage are ready now and can provide much needed electricity and capacity. But in order to achieve our objectives, we will need to continue to navigate a challenging regulatory and policy environment. The one big beautiful act was tough but constructive. Providing for a phase out of wind and solar tax credits over time together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders, agency rulemakings, tariffs, and trade actions. While there are risks to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment as we expect a natural pull forward of demand. We are in a constant state of construction. And over the last few years, prior to the enactment of the OBBB, made substantial financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects we plan to place into service through 2029. We have a large pipeline of early and late stage projects. We have a supply chain capability that I believe is the best in the sector, and we are leveraging artificial intelligence across our business, including in customer origination. We have the balance sheet, scale, experience, and technology. While no company is immune from all risk, we have proven time and again what I firmly believe, that there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead than NextEra. As the quintessential all-of-the-above energy company, we build more energy infrastructure than anyone in the United States. From renewables and storage to gas and nuclear, we do it all. And we will continue to build what customers need, including the critical transmission to bring power from plants to communities. At FPL, we are going to continue to do what we have done so well for customers over the past two decades. Florida's longstanding constructive regulatory and legislative environment enables infrastructure investment to serve Florida's growing population. In fact, just last week, the Florida Supreme Court concluded that state regulators properly approved our 2021 settlement agreement by affirming the Florida Public Service Commission's final and supplemental final orders. FPL continues to invest in infrastructure to keep reliability high and bills low. And we continue to operate and invest in the nation's largest gas-fired fleet, along with four nuclear units in Florida, which provides us the flexibility to leverage cost-effective solar and storage to meet the significant demand from our state's growing population. FPL is doubling down on what we've proven benefits our customers, investing in generation to meet growing electricity demand while driving fuel costs out of the bill. FPL plans to add more than 8 gigawatts of reliable, cost-effective solar and battery storage by 2029. It's the perfect complement to our existing natural gas and nuclear fleet in Florida. Together, it's how we serve our customers with a diversified energy mix. This not only further secures Florida's energy independence, it also improves system reliability and resource adequacy by delivering energy when customers need it most. FPL continues to be America's blueprint for utilizing all forms of energy to keep reliability high and electric bills low. Outside of Florida, Energy Resources continues to be the nation's leading energy infrastructure developer. The team originated 3.2 gigawatts of new projects since the last earnings call. including over one gigawatt serving hyperscalers to help enable their AI build out and further drive America's leadership in the space. Our backlog alone now includes approximately six gigawatts of projects intended to serve technology and data center customers. If you include our operating portfolio together with the expected build out of our backlog, we will have over 10 and a half gigawatts serving technology and data center customers across the United States. We continue to make progress toward the potential restart of our Dwayne Arnold nuclear facility while also working to advance new gas fire generation opportunities. And we continue to build what's essentially a standalone rate regulated utility within energy resources through NextEra energy transmission. With our scale, experience, and technology, including our supply chain capability and balance sheet, we are positioned to meet the opportunities that increased power demand will provide. I firmly believe no one has a better team, a better culture, or a better track record of execution than NextEra Energy. With that, I'll turn the call over to Mike to walk you through detailed results from the quarter.

Thank you, John. And good morning, everyone. For the second quarter of 2025, FPL's earnings per share increased by two cents year over year. The principal driver of this performance was FPL's regulatory capital employee growth of nearly 8% year over year. FPL's capital expenditures for approximately $2 billion for the quarter, and we expect FPL's full-year capital investments to be between $8 and $8.8 billion. For the 12 months ending June 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the second quarter, we utilized approximately $19 million of reserve amortization, leaving FPL with a balance of roughly $254 million. FDL's second quarter retail sales increased 1.7% from the prior year comparable period, driven primarily by continued strong customer growth. Overall usage per customer grew by 0.1% year over year, which includes a decline of 0.8% due to milder weather. As a result, FPL grew retail sales in the second quarter by roughly 2.6% on a weather normalized basis. On February 28th, we initiated Florida Power and Lights 2025 base rate proceeding. The four-year base rate plan we have proposed has been designed to support continued investments in cost-effective generation, long-term infrastructure, and advanced technology, which improves reliability and helps keep customer bills low. Today, FPL's typical residential bill remains well below the national average and amongst the lowest of the top 20 investor-owned utilities in the nation. With the proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average. A technical hearing at the Florida Public Service Commission is scheduled next month. We expect a final decision in the fourth quarter. If state regulators approve our plan, a typical FPL residential bill will grow at an annual average rate of just 2.5% from 2025 through 2029. Now let's turn to energy resources, which reported an adjusted earnings per share increase of 11 cents year-over-year. As you'll recall, the prior comparable quarter reflected higher-than-expected and one-time expenses. Contributions from new investments increased 14 cents per share year-over-year, primarily driven by continued growth in our renewable and storage portfolios. Our existing clean energy portfolio decreased 2 cents per share. primarily reflecting weaker wind resource during the quarter. Wind resource for the second quarter of 2025 was approximately 97% of the long-term average versus 104% in the second quarter of 2024. Our customer supply business increased 6 cents per share compared to the second quarter last year, which was impacted by higher depletion expense and certain non-recurring items. All other impacts decreased by $0.07 per share, driven by higher interest costs of $0.06 per share. Energy Resources had a strong quarter of newer renewables and storage origination, adding 3.2 gigawatts to the backlog. With these additions, our backlog now totals nearly 30 gigawatts, after taking into account more than 1.1 gigawatts of new projects placed into service since our last earnings call. We expect the backlog additions will go into service over the next few years and into 2029. This marks the sixth time in the past eight quarters that Energy Resources has added more than three gigawatts to its backlog. We have now originated approximately 12.7 gigawatts of new renewables and battery storage projects over the last 12 months. Roughly 30% of our current backlog comes from storage, which demonstrates our customers' demand for a low-cost, ready-now solution to meet their capacity needs. Turning now to our second quarter 2025 consolidated results. Adjusted earnings from corporate and other decreased by $0.04 per share. Our long-term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025, 2026, and 2027. From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. And we also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026 off our 2024 base. As always, our expectations assume our caveats. That concludes our prepared remarks. And with that, we will open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Steve Fleischman with Wolf Research. Please go ahead.

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

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

Just on the siting permitting

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

One other question. Just you mentioned natural pull forward and maybe could you give any sense on just have you started seeing signs from what have been the reaction of customers from the bill? Have you started seeing any kind of sense of natural pull forward and just your market share expectations and thoughts? given all the different things that have occurred?

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

Great. Thank you.

Thank you, Steve.

The next question will come from Julian Smith with Jefferies. Please go ahead.

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

Yeah, I mean, you know, first I'll start with that last piece, right, which is, you know, as I said in the prepared remarks, I think – you know, the one big, beautiful, you know, bill act, you know, while tough, was constructive. I think it does create some opportunities, you know, for us going forward for some of the reasons that I laid out, you know, with Steve on the EPS, you know, growth point, you know, hold off on that until our, you know, next analyst day, which, you know, will hold, you know, some time. later this year, beginning of next year. But as I think about the waterfall opportunity and that pull forward, you know, that, again, Julian, you know, that you were hitting on, you know, again, you know, the uncertainty that could be created with the 27 placed in service and then you come down to who's safe harbor for 28 and 29 is, obviously that favors large developers like NextEra that planned ahead, right? And if you're in a market where you have folks drop out, right, because they didn't plan ahead, they don't have the ability to get construction financing, they don't have the ability to save harbor, it obviously creates bigger opportunities for us in these natural pull forward points. And I'm going to come back to a point that I think is important for you to make and for investors to understand. I think if you look at our track record over time, not just the last three years, but going back over time, whenever there's a little bit of uncertainty, a little bit of risk, a little bit of complexity, that typically favors our business, right? Because You know, I firmly believe that, you know, we have the capability to navigate and to plan the business, you know, in a way that, you know, helps mitigate, you know, these risks going forward. And look, I mean, no company's immune from everything. But, you know, I think we do, if you look at the track record, have demonstrated an ability to, you know, you know, really, you know, figure out how to mitigate these exposures, you know, on a go-forward basis. And the last piece I'll make is, you know, don't forget if we do see some small developers kind of fall away, there'll be more projects that could potentially, you know, hit the market and come up for sale, creating more, you know, not only on our organic greenfield opportunity set, but you know, perhaps some opportunities to step into projects that other developers have tried to advance but, you know, for whatever reason might struggle, you know, to get it across the finish line given some of the backdrop of some of the challenges that we're addressing in the industry that I think we're best equipped to address.

excellent thanks john just quick follow-up if i can um smaller detail here but not trivial at all um how is progress going on the nuclear contract in front i mean it is certainly the theme of the day you guys have two different bites of the apple potentially it seems dwayne progress just from an engineering perspective just to kind of get a little bit of a sense on where that could land and when and then separately here point beach obviously spoken for but it seems like there could be some opportunity there. I mean, two different bites of the apple seem to be coming ripe here in the medium term.

Yeah, no, thanks for asking the question, Julian. You know, Dwayne Arnold just continues to advance. I mean, I think anytime you have a, you know, there's only three of them in the country, right? You know, between Palisades and the Crane facility in Dwayne. I mean, these are unique opportunities because you don't face the, the new bill costs associated with nuclear. And so these are really unicorn-type opportunities. And so we continue to advance Duane. I'm very pleased with the way things are going on the onsite reviews and some of the engineering analysis that we're doing. But more importantly, we continue to advance discussions with customers. So feel good where we sit now about how things are progressing on the Duane front. And, you know, look with Point Beach, it's not only the Point Beach facility, but also, you know, the opportunity to do some things around SMRs. We have the same opportunity set, you know, at Duane. You know, if we're successful in bringing Duane forward, that obviously creates a hotbed of data center activity, you know, around that facility, the same as what you've seen in Wisconsin with Cloverleaf. and the Fox facility that Microsoft is behind as well. And so I like the potential longer-term options there in addition to just the recommissioning efforts that we potentially have at Duane. And look, I don't want to lose sight of the fact that not only do we have an active gas fire generation development effort at our company, you know, we are also, you know, very active in the development of small module reactors and the potential that nuclear, you know, could provide going forward. And again, that goes back to my comments of being in all of the above energy company. Our goal is to provide the customer with what it wants, when it needs it, at the right price to help address the power demand that we see in this country, and look no further than the PJM capacity auction yesterday. I mean, there's a lot of demand out there, and there are very few companies that have the development capability that we do. A lot of companies that have an existing asset position, very few companies can develop new generation assets or have the skill sets on their teams to do it. That gives us a unique advantage in this market.

Awesome. Thank you. All the best. Speak soon.

Hey, thanks, Julian.

The next question will come from Nick Campanella with Barclays. Please go ahead.

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

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

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

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

All right. Thank you.

The next question will come from Anthony Crawdale with Mizuho. Please go ahead.

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

Sure. It's Brian. On the gas strategy front, listen, we're going to look at new build. We'll look at opportunities in the market. I think what we need to do if we're going to look at the market is obviously the value has to make sense. I think we have to feel very good that we're going to be able to do something with that on the contracting front in the near term. So I don't think we want to just go spec long merchant generation. But we are, you know, we're turning over kind of every rock as we look at that, everything from are there assets that are going to be interesting that fit nicely that we think we can offer back to the market, and we're going to look at greenfield opportunities. So, you know, we're pursuing it on all fronts.

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

That's what I said.

Great. Thank you so much.

The next question will come from Andrew Weissel with Scotiabank. Please go ahead.

Hey, good morning, everybody. First question, I want to follow up a little bit on the big, beautiful bill. How are you thinking about the foreign entities of concern, the fiat clause? Are you confident that you won't face exposure to that given your safe harbor equipment position?

Feel very confident about the fiat provisions. Again, the way they work are as long as you've begun construction by December 31, 2025, you're not subject you know, to those. So with the continuity safe harbor at four years on, you get to the end of the taxable year at 25, that takes you through 29. And then when you start looking at compliance beyond, you know, 2029, we feel very comfortable with our ability to comply with those provisions.

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

Yeah. I mean, that's, You know, obviously pretty far off, but sure. I mean, that is a, you know, you add Dwayne Arnold to the mix, and, you know, that's one of, you know, many ways that, you know, we have to continue to grow the business in the future.

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

Agreed, and thank you for clarifying and framing that up.

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

Thank you very much. Just one last brief one on the quarter. At FPL, the earnings growth was pretty modest, only like less than 3.5%, despite the capital employed growing at your typical 8-ish percent. Can you just talk to the delta there? What was weighing on the earnings growth, and how are you thinking about the rest of this year of the utility?

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

Great, thank you so much.

The next question will come from Jeremy Tonnet with JP Morgan. Please go ahead.

Hi, good morning. Good morning. Not to belabor the point here with the outlook post OP, one beautiful bill, and I guess, you know, tax credits transitioning towards the end of the decade here, but just wondering if you could talk a bit more about the dynamics in the power markets at that point in time, particularly renewable PPA pricing and just see how you think that, you know, shifts at that point and how that, you know, and any impacts on margins for participants across the value chain and maybe what sets me apart from others?

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

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

Yeah, I mean, I think that data point, you know, suggests that, you know, first of all, you look at where new bill gas prices are, you know, in order to build and make them economic. And I think you see the PJM capacity market, you know, reacting to that because don't forget, right, and this is why I keep emphasizing development skills and capabilities and the ability to add new infrastructure to the system. Existing assets are already there to accommodate the demand that exists today, right? And so what you're trying to do with the capacity market is incent generation that does not exist today. Somebody's got to go out and develop and build that. No matter what you do with the existing generation today, it's got to be, if that's going to be used to serve new demand, that generation has to be replaced by something, whether it's renewables, whether it's storage, whether it's gas fire generation, whether it's new nuclear. And so what I would be focused on as well is, you know, who has the development skills and capabilities and who doesn't, because we are going to have to build new generation. There's only so much you can do around existing assets. They already exist today to accommodate the power that exists, demand that exists today. You know, when you look to the future, you've got to start adding incremental generation. We are uniquely advantaged and have a unique capability set in that regard because we're one of the very few companies in this country that have been building for the last two decades. And we have a development team that is up and running in 49 states across this country. So I'd put our development team up against anyone. We need new incremental generation. The existing stuff isn't going to get us there.

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

We've been – you know, we've been – you know, like I said, we have a whole development team on SMRs. We've been advising corporate clients, so I think our knowledge curve is probably higher than most in the market today as a result of that. And, you know, we continue to evaluate – there's 95 OEMs in SMRs, and, you know, really – trying to focus on the technical reviews of who are going to be the winners and losers and how we think about cost structures against competing generation types and then cost sharing, particularly on the first few out of the gate, how we will continue to work with this new administration around supporting nuclear. So it's something that is... a point of emphasis and focus for us and look for us to continue to advance those efforts in that regard on top of what we're doing on gas fire generation development and all the opportunities that we have around renewables and storage and storage being truly a terrific capacity resource for a long, time to come given how quick it can be deployed and given that it doesn't need a gas connection to make it work.

Got it. I'll leave it there. Thank you.

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

Hey, thanks so much. Good morning. I was thinking or I was wondering as you book out, well, I'm curious if you're booking 2029 volumes at this point, and if you are, do you have, you know, contingencies that you're incorporating into contracts for any potential tax credit risk that might arise just depending on the safe harbor provisions and the clarity from Treasury?

Yeah, so first of all, we feel good about, you know, our 29, you know, bills. In all of our contracts, we have... you know, some limited protections around tax and trade measures, you know, as well as we've talked about on some of our prior calls. But, you know, we feel very good about where we stand around our 29 program.

Okay, great. And I guess looking out even farther, I'm just curious if you're, you know, getting, having any discussions on 2030, kind of a no tax credit You know, conversations around pricing, what does demand look like, just any early indications or feedback from your customer base, if they're looking out that far, and any feedback you're getting on what the reduction in tax credits on the renewable side could be.

Yeah, it's still a little too early on 2030. I mean, most of the focus from our customer base is, you know, 29 and in. just given their need for power and electrons right now, that's where the demand is. And, you know, like, you know, you can see that just in our originations, you know, this quarter about, you know, 3.2, you know, gigawatts. So, you know, I think we'll naturally see, you know, 2030 start to become more of a point of focus probably as we move forward over the next, you know, 12 to 24 years. But right now, it's been a lot of attention paid around, you know, 27, but 28 and 29 in particular in terms of the need for new generation.

Got it. Okay, appreciate it. Thanks so much.

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

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

Hey, Carly. It's Brian. So without going into details with regard to the specific customers or the timing, I mean, it is you literally kind of need to go customer by customer, region by region. They all have different needs depending on how they're looking at their demand. When they're trying to bring that on, there is a lot of focus on the next couple years, but there's also folks who are looking to build out at the end. So I'd I hate to say it, but it's kind of a mixed bag of really depends by the customer and where they are. And I guess that's why we're able to spend and do well with them because we can meet the customers kind of with their need. We've got a broad pipeline and portfolio that allows us to give them, you know, a little bit of every flavor that they're interested in. So, you know, there's no kind of common theme other than engaging in dialogue on a national basis over multiple years.

Got it. Okay, great. Thank you for that. And then just back to the comments earlier on the natural pull forward in demand, I guess, are there practical limitations to the degree to which you could accelerate development plans, whether labor, supply chain, or connection that could be pain points on the kind of ability to get projects online by that 29, 2030 timeframe?

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

Great. Thank you for the color.

The next question will come from Ryan Levine with Citi. Please go ahead.

Good morning and thanks for taking my question. Two questions. On the gas generation front, what regions of the United States are you seeing more traction And does the FERC ARIS decision from yesterday impact your outlook and myself?

Yeah, I mean, I think, you know, first of all, we're seeing, you know, gas generation demand really across the country. So if you look at our gas development pipeline, you know, it's not focused, you know, in any one region. I mean, if you're looking at getting gas online quicker, you know, obviously there are There are states that are more accommodating to be able to do that. Texas obviously is, you know, comes to mind, you know, in that regard. When I think about the ERAS decision, you know, yesterday, you know, by MISO, you know, sure, that could create some additional, you know, opportunities, but you're going to have to be able to also monitor through, Where is their gas supply? How long will it take to get the turbine? And more importantly, aside from gas supply and the turbine, the labor, some of the skilled labor constraints that we've seen in that sector, what does that do to timing in terms of being able to bring those assets in line? But certainly something that we are focused on, and that's why I think given the timing of some of those projects, we're going to continue to need and all of the above solution to accommodate the demand that we are seeing in those regions.

Thanks. And then what are the key technical milestones remaining on Dwayne Arnold? And would you expect any ramp in the labor force in the coming months in order to hit the reiterated guidance around execution?

Yeah, I mean, it's the typical work that you would expect on a recommissioning, right? You know, doing... you know, work, you know, across the site, looking at what the condition of the site is in, looking at, you know, containment, you know, in particular, looking at the equipment, all those things we feel good about based on what we have seen, you know, so far. And, you know, things continue to progress well.

Thank you.

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