FPL, along with certain NextEra Energy Resources subsidiaries, signed a settlement agreement with the U.S. government dismissing lawsuits related to spent nuclear fuel disposal
- By Linton Levy -
FPL Group, Inc. today reported 2009 first quarter net income on a GAAP basis of $364 million, or $0.90 per share, compared with $249 million, or $0.62 per share, in the first quarter of 2008. On an adjusted basis, 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, which is a non-GAAP financial measure, 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. The attachments to this news release include a reconciliation of historical adjusted earnings to net income, which is the most directly comparable GAAP measure.
“FPL Group had a very good first quarter, with adjusted earnings per share rising 18 percent 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 Group Chairman and CEO 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 percent 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 of this year, FPL, along with certain NextEra Energy Resources subsidiaries, signed a settlement agreement with the U.S. 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 percent, from $109.55 to $104.63 on Jan. 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 Feb. 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, approximately 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, 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 percent 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 approximately $5 billion transmission build-out, awarding 11 percent of the total, or approximately $565 million, to Lone Star Transmission, an FPL Group subsidiary. Lone Star is expected to add approximately 250 miles of 345 kilovolt lines capable of transporting a significant amount of renewable energy from West Texas to the Dallas-Ft. Worth area.
Corporate and Other
The loss in Corporate and Other declined to $15 million in the first quarter of 2009 from $23 million in the first quarter of 2008.
Outlook
FPL Group believes it is well positioned for earnings growth and now believes the company will deliver adjusted earnings per share for 2009 and 2010 in a higher range than previously announced. For 2009, the new adjusted earnings per share range is $4.20 to $4.40 and for 2010 the new range is $4.65 to $5.05. Please see the accompanying cautionary statements for a list of risk factors that may affect future earnings.
As always, FPL Group’s adjusted earnings expectations assume, among other things, normal weather and operating conditions, no further decline in the national or Florida economy, a reasonable capital markets atmosphere, and exclude the mark-to-market effect of non-qualifying hedges, OTTI, and the cumulative effect of adopting new accounting standards, if any, none of which can be determined at this time.
As previously announced, FPL Group’s first-quarter earnings conference call is scheduled for 9 a.m. EDT on Tuesday, April 28, 2009. The webcast is available on FPL Group’s Web site by accessing the following link, http://www.FPLGroup.com/investor/contents/investor_index.shtml. The slides and earnings release accompanying the presentation may be downloaded at www.FPLGroup.com beginning at 7:30 a.m. EDT today. For people unable to listen to the live webcast, a replay will be available for 90 days by accessing the same link as listed above.
This press release should be read in conjunction with the attached unaudited financial information.
FPL Group: Energy Solutions for the Next Era
FPL Group, Inc. (NYSE: FPL) is a leading clean energy company with 2008 revenues of more than $16 billion, approximately 39,000 megawatts of generating capacity, and more than 15,000 employees in 27 states and Canada. Headquartered in Juno Beach, Fla., FPL Group’s principal subsidiaries are NextEra Energy Resources, LLC, the largest generator in North America of renewable energy from the wind and sun, and Florida Power & Light Company, which serves 4.5 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the country. Through its subsidiaries, FPL Group collectively operates the third largest U.S. nuclear power generation fleet. For more information about FPL Group companies, visit these Web sites: www.FPLGroup.com, www.NextEraEnergyResources.com, www.FPL.com.