NEXTERA ENERGY INC - Quarter Report: 2022 September (Form 10-Q)

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 September 30, 2022

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

For the transition period from ________ to ________


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

Securities registered pursuant to Section 12(b) of the Act:

Registrants

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

NextEra Energy, Inc.

Common Stock, $0.01 Par Value

NEE

New York Stock Exchange

5.279% Corporate Units

NEE.PRP

New York Stock Exchange

6.219% Corporate Units

NEE.PRQ

New York Stock Exchange

6.926% Corporate Units

NEE.PRR

New York Stock Exchange

Florida Power & Light Company

None

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 ☑ No ☐ Florida Power & Light Company Yes ☑ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months.

NextEra Energy, Inc. Yes ☑ No ☐ Florida Power & Light Company Yes ☑ No ☐

Indicate by check mark whether the registrants are a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

NextEra Energy, Inc. Large Accelerated Filer ☑ Accelerated Filer ☐ Non-Accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐

Florida Power & Light Company Large Accelerated Filer ☐ Accelerated Filer ☐ Non-Accelerated Filer ☑ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Exchange Act of 1934. ☐

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 ☑

Number of shares of NextEra Energy, Inc. common stock, $0.01 par value, outstanding at September 30, 2022: 1,987,163,652

Number of shares of Florida Power & Light Company common stock, without par value, outstanding at September 30, 2022, 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
2021 rate agreement			December 2021 FPSC final order approving a stipulation and settlement between FPL and several intervenors in FPL's base rate proceeding
AFUDC			allowance for funds used during construction
AFUDC – equity			equity component of AFUDC
AOCI			accumulated other comprehensive income
CSCS agreement			amended and restated cash sweep and credit support agreement
Duane Arnold			Duane Arnold Energy Center
FERC			U.S. Federal Energy Regulatory Commission
Florida Southeast Connection			Florida Southeast Connection, LLC, a wholly owned NextEra Energy Resources subsidiary
FPL			the legal entity, Florida Power & Light Company
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.
ISO			independent system operator
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			an operating segment comprised of NextEra Energy Resources and NEET
NEET			NextEra Energy Transmission, LLC
NEP			NextEra Energy Partners, LP
NEP OpCo			NextEra Energy Operating Partners, LP, a subsidiary of NEP
net generation			net ownership interest in plant(s) generation
NextEra Energy Resources			NextEra Energy Resources, LLC
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
regulatory ROE			return on common equity as determined for regulatory purposes
Sabal Trail			Sabal Trail Transmission, LLC, an entity in which a NextEra Energy Resources' subsidiary has a 42.5% ownership interest
Seabrook			Seabrook Station
SEC			U.S. Securities and Exchange Commission

U.S.			United States of America

NEE, FPL, NEECH, NextEra Energy Resources and NEET each has subsidiaries and affiliates with names that may include NextEra Energy, FPL, NextEra Energy Resources, NextEra Energy Transmission, NextEra, FPL Group, FPL Energy, FPLE, NEP and similar references. For convenience and simplicity, in this report the terms NEE, FPL, NEECH, NextEra Energy Resources, NEET 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.

TABLE OF CONTENTS


		Page No.

Definitions		2
Forward-Looking Statements		4

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	57
Item 1A.	Risk Factors	57
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 5.	Other Information	57
Item 6.	Exhibits	58

Signatures		59

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, 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, operational 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 or modifications to, or the elimination of, governmental incentives or policies that support utility scale renewable energy, including, but not limited to, tax laws, policies and incentives, renewable portfolio standards and feed-in tariffs, or the imposition of additional taxes, tariffs, duties or other assessments on renewable energy or the equipment necessary to generate or deliver it, could result in, among other items, the lack of a satisfactory market for the development and/or financing 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 or regulations or interpretations of these laws and regulations.

•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 and businesses 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, guidance or policies, including but not limited to changes in corporate income tax rates, 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.

Development and 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 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, retail gas distribution system in Florida 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.

•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, cyberattacks, 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 and transmission 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 could result in certain projects becoming 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.

•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, the ability for subsidiaries of NEE, including FPL, 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 have a material adverse effect on the business, financial condition, results of operations and prospects of NEE and FPL.

•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 adversely affected if FPL is unable to maintain, negotiate or renegotiate franchise agreements on acceptable terms with municipalities and counties in Florida.

•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 energy industry.

Nuclear Generation Risks

•The 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 and/or result in reduced revenues.

•The inability to operate any of NEE'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.

•NEE's and FPL's nuclear units are periodically removed from service to accommodate planned 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, among other factors, 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, financial condition 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 condition 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.

•NEP may not be able to access sources of capital on commercially reasonable terms, which would have a material adverse effect on its ability to consummate future acquisitions and on the value of NEE’s limited partner interest in NEP OpCo.

•Disruptions, uncertainty or volatility in the credit and capital markets may exert downward pressure on the market price of NEE's common stock.

•Widespread public health crises and epidemics or pandemics may have material adverse impacts on NEE’s and FPL's business, financial condition, liquidity and results of operations.

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, 2021 (2021 Form 10-K) and Part II, Item 1A. Risk Factors in NEE's and FPL's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022 (March 2022 Form 10-Q), and investors should refer to those sections of the 2021 Form 10-K and the March 2022 Form 10-Q. 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' or affiliates' websites) are not incorporated by reference into this combined Form 10-Q.

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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
OPERATING REVENUES	$	6,719	$	4,370	$	14,792	$	12,023
OPERATING EXPENSES
Fuel, purchased power and interchange	1,933		1,383		4,888		3,393
Other operations and maintenance	1,225		910		3,161		2,764



Depreciation and amortization	1,289		1,230		3,332		2,960
Taxes other than income taxes and other – net	581		481		1,572		1,368
Total operating expenses – net	5,028		4,004		12,953		10,485
GAINS ON DISPOSAL OF BUSINESSES/ASSETS – NET	171		13		196		20
OPERATING INCOME	1,862		379		2,035		1,558
OTHER INCOME (DEDUCTIONS)
Interest expense	(259)		(335)		100		(671)

Equity in earnings of equity method investees	196		109		180		465
Allowance for equity funds used during construction	20		37		88		100


Gains on disposal of investments and other property – net	51		17		83		69
Change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds – net	(141)		(26)		(569)		137
Other net periodic benefit income	70		64		159		193
Other – net	83		32		160		107
Total other income (deductions) – net	20		(102)		201		400
INCOME BEFORE INCOME TAXES	1,882		277		2,236		1,958
INCOME TAX EXPENSE (BENEFIT)	323		(27)		257		84
NET INCOME	1,559		304		1,979		1,874
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	137		143		646		495
NET INCOME ATTRIBUTABLE TO NEE	$	1,696	$	447	$	2,625	$	2,369
Earnings per share attributable to NEE:
Basic	$	0.86	$	0.23	$	1.33	$	1.21
Assuming dilution	$	0.86	$	0.23	$	1.33	$	1.20

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

NEXTERA ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(millions)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
NET INCOME	$	1,559	$	304	$	1,979	$	1,874
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
Reclassification of unrealized losses on cash flow hedges from accumulated other comprehensive income (loss) to net income (net of $0 tax benefit, $0 tax benefit, $2 tax benefit and $1 tax benefit, respectively)	—		—		5		4
Net unrealized gains (losses) on available for sale securities:
Net unrealized losses on securities still held (net of $8 tax benefit, $1 tax benefit, $31 tax benefit and $3 tax benefit, respectively)	(31)		(2)		(91)		(9)
Reclassification from accumulated other comprehensive income (loss) to net income (net of $1 tax benefit, $1 tax expense, $1 tax benefit and $1 tax expense, respectively)	1		(1)		3		(3)
Defined benefit pension and other benefits plans:

Reclassification from accumulated other comprehensive income (loss) to net income (net of $0 tax expense, $1 tax benefit, $0 tax expense and $1 tax benefit, respectively)	—		1		—		3
Net unrealized gains (losses) on foreign currency translation	(49)		(13)		(58)		2
Other comprehensive income related to equity method investees (net of $0 tax expense, $1 tax expense, $0 tax expense and $1 tax expense, respectively)	1		1		1		1
Total other comprehensive loss, net of tax	(78)		(14)		(140)		(2)


COMPREHENSIVE INCOME	1,481		290		1,839		1,872
COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS	160		148		672		495
COMPREHENSIVE INCOME ATTRIBUTABLE TO NEE	$	1,641	$	438	$	2,511	$	2,367

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

NEXTERA ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(millions, except par value)

(unaudited)


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,508	$	639
Customer receivables, net of allowances of $69 and $35, respectively	4,553		3,378
Other receivables	776		730
Materials, supplies and fuel inventory	1,791		1,561
Regulatory assets	620		1,125
Derivatives	1,431		689

Other	1,212		1,166
Total current assets	12,891		9,288
Other assets:
Property, plant and equipment – net ($19,301 and $20,521 related to VIEs, respectively)	108,447		99,348
Special use funds	7,195		8,922
Investment in equity method investees	6,316		6,159
Prepaid benefit costs	2,341		2,243
Regulatory assets	6,939		4,578
Derivatives	2,113		1,135
Goodwill	4,872		4,844
Other	5,295		4,395
Total other assets	143,518		131,624
TOTAL ASSETS	$	156,409	$	140,912
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities:
Commercial paper	$	925	$	1,382
Other short-term debt	1,938		700
Current portion of long-term debt ($60 and $58 related to VIEs, respectively)	7,292		1,785
Accounts payable ($244 and $752 related to VIEs, respectively)	7,149		6,935
Customer deposits	525		485
Accrued interest and taxes	1,279		525
Derivatives	2,969		1,263
Accrued construction-related expenditures	1,891		1,378
Regulatory liabilities	410		289

Other	3,415		2,695
Total current liabilities	27,793		17,437
Other liabilities and deferred credits:
Long-term debt ($1,088 and $1,125 related to VIEs, respectively)	54,670		50,960
Asset retirement obligations	3,196		3,082
Deferred income taxes	8,725		8,310
Regulatory liabilities	9,530		11,273
Derivatives	3,067		1,713

Other	2,682		2,468
Total other liabilities and deferred credits	81,870		77,806
TOTAL LIABILITIES	109,663		95,243
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTERESTS – VIE	—		245
EQUITY
Common stock ($0.01 par value, authorized shares – 3,200; outstanding shares – 1,987 and 1,963, respectively)	20		20
Additional paid-in capital	12,694		11,271
Retained earnings	26,029		25,911
Accumulated other comprehensive loss	(114)		—
Total common shareholders' equity	38,629		37,202
Noncontrolling interests ($8,109 and $8,217 related to VIEs, respectively)	8,117		8,222
TOTAL EQUITY	46,746		45,424
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY	$	156,409	$	140,912

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

NEXTERA ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,979	$	1,874
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	3,332		2,960
Nuclear fuel and other amortization	211		202

Unrealized losses on marked to market derivative contracts – net	1,924		2,250
Unrealized losses (gains) on equity securities held in NEER's nuclear decommissioning funds – net	569		(137)
Foreign currency transaction gains	(162)		(70)
Deferred income taxes	208		140
Cost recovery clauses and franchise fees	(1,295)		(202)


Equity in earnings of equity method investees	(180)		(465)
Distributions of earnings from equity method investees	408		392
Gains on disposal of businesses, assets and investments – net	(279)		(89)
Recoverable storm-related costs	(26)		(171)
Other – net	(29)		(91)
Changes in operating assets and liabilities:
Current assets	(1,238)		(1,227)
Noncurrent assets	(66)		(316)
Current liabilities	1,809		1,138
Noncurrent liabilities	102		48
Net cash provided by operating activities	7,267		6,236
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures of FPL	(6,021)		(5,000)

Independent power and other investments of NEER	(7,252)		(6,799)

Nuclear fuel purchases	(105)		(206)
Other capital expenditures	(451)		—

Sale of independent power and other investments of NEER	575		384
Proceeds from sale or maturity of securities in special use funds and other investments	2,896		3,233
Purchases of securities in special use funds and other investments	(3,496)		(3,498)


Other – net	5		41
Net cash used in investing activities	(13,849)		(11,845)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of long-term debt, including premiums and discounts	11,616		9,614
Retirements of long-term debt	(2,137)		(4,262)
Proceeds from differential membership investors	443		328

Net change in commercial paper	(457)		2,043
Proceeds from other short-term debt	1,725		—
Repayments of other short-term debt	(525)		(258)
Payments from related parties under a cash sweep and credit support agreement – net	8		295
Issuances of common stock/equity units – net	1,458		7

Dividends on common stock	(2,507)		(2,267)
Other – net	(386)		(434)
Net cash provided by financing activities	9,238		5,066
Effects of currency translation on cash, cash equivalents and restricted cash	(5)		1
Net increase (decrease) in cash, cash equivalents and restricted cash	2,651		(542)
Cash, cash equivalents and restricted cash at beginning of period	1,316		1,546
Cash, cash equivalents and restricted cash at end of period	$	3,967	$	1,004
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amount capitalized)	$	828	$	878
Cash received for income taxes – net	$	(36)	$	(21)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued property additions	$	6,079	$	4,664
Decrease in property, plant and equipment – net and contract liabilities (2022 activity, see Note 11)	$	639	$	155

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

NEXTERA ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(millions, except per share amounts)

(unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Common Shareholders' Equity		Non- controlling Interests		Total Equity		Redeemable Non-controlling Interests
Three Months Ended September 30, 2022	Shares	Aggregate Par Value
























Balances, June 30, 2022	1,965	$	20	$	11,309	$	(59)	$	25,169	$	36,439	$	8,115	$	44,554	$	53
Net income (loss)	—	—		—		—		1,696		1,696		(138)				1
Premium on equity units	—	—		(127)		—		—		(127)		—				—
Share-based payment activity	—	—		80		—		—		80		—				—
Dividends on common stock(a)	—	—		—		—		(836)		(836)		—				—
Other comprehensive loss	—	—		—		(55)		—		(55)		(23)				—
Issuances of common stock/equity units – net	22	—		1,446		—		—		1,446		—				—
Disposal of subsidiaries with noncontrolling interests(b)	—	—		—		—		—		—		(147)				—


Other differential membership interests activity	—	—		(13)		—		—		(13)		252				(54)
Other	—	—		(1)		—		—		(1)		58				—
Balances, September 30, 2022	1,987	$	20	$	12,694	$	(114)	$	26,029	$	38,629	$	8,117	$	46,746	$	—

———————————————

(a)Dividends per share were $0.425 for the three months ended September 30, 2022.

(b)See Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests.


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Common Shareholders' Equity		Non- controlling Interests		Total Equity		Redeemable Non-controlling Interests
Nine Months Ended September 30, 2022	Shares	Aggregate Par Value
Balances, December 31, 2021	1,963	$	20	$	11,271	$	—	$	25,911	$	37,202	$	8,222	$	45,424	$	245
Net income (loss)	—	—		—		—		2,625		2,625		(653)				7
Premium on equity units	—	—		(127)		—		—		(127)		—				—
Share-based payment activity	2	—		122		—		—		122		—				—
Dividends on common stock(a)	—	—		—		—		(2,507)		(2,507)		—				—
Other comprehensive loss	—	—		—		(114)		—		(114)		(26)				—
Issuances of common stock/equity units – net	22	—		1,446		—		—		1,446		—				—
Disposal of subsidiaries with noncontrolling interests(b)	—	—		—		—		—		—		(147)				—


Other differential membership interests activity	—	—		(15)		—		—		(15)		542				(251)
Other	—	—		(3)		—		—		(3)		179				(1)
Balances, September 30, 2022	1,987	$	20	$	12,694	$	(114)	$	26,029	$	38,629	$	8,117	$	46,746	$	—

———————————————

(a)Dividends per share were $0.425 for each of the quarterly periods in 2022.

(b)See Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests.

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

NEXTERA ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(millions, except per share amounts)

(unaudited)


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Common Shareholders' Equity		Non- controlling Interests		Total Equity		Redeemable Non-controlling Interests
Three Months Ended September 30, 2021	Shares	Aggregate Par Value
Balances, June 30, 2021	1,962	$	20	$	11,224	$	(85)	$	25,773	$	36,932	$	8,182	$	45,114	$	—
Net income (loss)	—	—		—		—		447		447		(144)				1

Share-based payment activity	—	—		47		—		—		47		—				—
Dividends on common stock(a)	—	—		—		—		(756)		(756)		—				—
Other comprehensive loss	—	—		—		(9)		—		(9)		(5)				—



Other differential membership interests activity	—	—		—		—		—		—		(44)				78
Other	—	—		(12)		—		—		(12)		9				—
Balances, September 30, 2021	1,962	$	20	$	11,259	$	(94)	$	25,464	$	36,649	$	7,998	$	44,647	$	79

———————————————

(a)Dividends per share were $0.385 for the three months ended September 30, 2021.


	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Common Shareholders' Equity		Non- controlling Interests		Total Equity		Redeemable Non-controlling Interests
Nine Months Ended September 30, 2021	Shares	Aggregate Par Value
Balances, December 31, 2020	1,960	$	20	$	11,222	$	(92)	$	25,363	$	36,513	$	8,416	$	44,929	$	—
Net income (loss)	—	—		—		—		2,369		2,369		(496)				1

Share-based payment activity	3	—		70		—		—		70		—				—
Dividends on common stock(a)	—	—		—		—		(2,267)		(2,267)		—				—
Other comprehensive loss	—	—		—		(2)		—		(2)		—				—



Other differential membership interests activity	—	—		—		—		—		—		36				78
Other	(1)	—		(33)		—		(1)		(34)		42				—
Balances, September 30, 2021	1,962	$	20	$	11,259	$	(94)	$	25,464	$	36,649	$	7,998	$	44,647	$	79

_______________________

(a)Dividends per share were $0.385 for each of the quarterly periods in 2021.

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

FLORIDA POWER & LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(millions)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
OPERATING REVENUES	$	5,075	$	4,134	$	13,211	$	10,673
OPERATING EXPENSES
Fuel, purchased power and interchange	1,733		1,218		4,364		2,953
Other operations and maintenance	511		416		1,349		1,211

Depreciation and amortization	829		815		2,006		1,724
Taxes other than income taxes and other – net	495		419		1,340		1,175
Total operating expenses – net	3,568		2,868		9,059		7,063
OPERATING INCOME	1,507		1,266		4,152		3,610
OTHER INCOME (DEDUCTIONS)
Interest expense	(200)		(152)		(554)		(461)
Allowance for equity funds used during construction	19		35		82		93
Other – net	9		8		10		11
Total other deductions – net	(172)		(109)		(462)		(357)
INCOME BEFORE INCOME TAXES	1,335		1,157		3,690		3,253
INCOME TAXES	261		230		751		667
NET INCOME(a)	$	1,074	$	927	$	2,939	$	2,586

_______________________

(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 2021 Form 10-K.

FLORIDA POWER & LIGHT COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(millions, except share amount)

(unaudited)


	September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,218	$	55
Customer receivables, net of allowances of $9 and $11, respectively	2,036		1,297
Other receivables	544		350
Materials, supplies and fuel inventory	1,073		963
Regulatory assets	608		1,111

Other	193		142
Total current assets	5,672		3,918
Other assets:
Electric utility plant and other property – net	62,212		58,227
Special use funds	5,048		6,158
Prepaid benefit costs	1,716		1,657
Regulatory assets	6,690		4,343
Goodwill	2,989		2,989
Other	826		775
Total other assets	79,481		74,149
TOTAL ASSETS	$	85,153	$	78,067
LIABILITIES AND EQUITY
Current liabilities:
Commercial paper	$	—	$	1,382
Other short-term debt	200		200
Current portion of long-term debt	1,546		536
Accounts payable	1,569		1,318
Customer deposits	517		478
Accrued interest and taxes	932		322

Accrued construction-related expenditures	549		601
Regulatory liabilities	401		278
Other	1,792		643
Total current liabilities	7,506		5,758
Other liabilities and deferred credits:
Long-term debt	19,452		17,974
Asset retirement obligations	2,091		2,049
Deferred income taxes	8,150		7,137
Regulatory liabilities	9,294		11,053

Other	428		502
Total other liabilities and deferred credits	39,415		38,715
TOTAL LIABILITIES	46,921		44,473
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock (no par value, 1,000 shares authorized, issued and outstanding)	1,373		1,373
Additional paid-in capital	23,636		19,936
Retained earnings	13,223		12,285

TOTAL EQUITY	38,232		33,594
TOTAL LIABILITIES AND EQUITY	$	85,153	$	78,067

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

FLORIDA POWER & LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(millions)

(unaudited)


	Nine Months Ended September 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,939	$	2,586
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	2,006		1,724
Nuclear fuel and other amortization	135		130
Deferred income taxes	771		488
Cost recovery clauses and franchise fees	(1,295)		(202)

Recoverable storm-related costs	(26)		(171)
Other – net	9		(26)
Changes in operating assets and liabilities:
Current assets	(934)		(312)
Noncurrent assets	(48)		(86)
Current liabilities	899		576
Noncurrent liabilities	94		(7)
Net cash provided by operating activities	4,550		4,700
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(6,021)		(5,000)
Nuclear fuel purchases	(67)		(110)
Proceeds from sale or maturity of securities in special use funds	1,738		2,223
Purchases of securities in special use funds	(1,833)		(2,302)
Other – net	(7)		(8)
Net cash used in investing activities	(6,190)		(5,197)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuances of long-term debt, including premiums and discounts	2,942		1,388
Retirements of long-term debt	(441)		(1,304)
Net change in commercial paper	(1,382)		(852)


Capital contributions from NEE	3,700		1,700
Dividends to NEE	(2,000)		(435)
Other – net	(36)		(21)
Net cash provided by financing activities	2,783		476
Net increase (decrease) in cash, cash equivalents and restricted cash	1,143		(21)
Cash, cash equivalents and restricted cash at beginning of period	108		160
Cash, cash equivalents and restricted cash at end of period	$	1,251	$	139
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest (net of amount capitalized)	$	476	$	410
Cash paid for income taxes – net	$	145	$	44
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Accrued property additions	$	946	$	817

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

FLORIDA POWER & LIGHT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER'S EQUITY

(millions)

(unaudited)


Three Months Ended September 30, 2022	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Shareholder's Equity
Balances, June 30, 2022	$	1,373	$	21,436	$	12,149	$	34,958
Net income	—		—		1,074
Capital contributions from NEE	—		2,200		—


Balances, September 30, 2022	$	1,373	$	23,636	$	13,223	$	38,232


Nine Months Ended September 30, 2022	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Shareholder's Equity
Balances, December 31, 2021	$	1,373	$	19,936	$	12,285	$	33,594
Net income	—		—		2,939
Capital contributions from NEE	—		3,700		—
Dividends to NEE	—		—		(2,000)
Other	—		—		(1)
Balances, September 30, 2022	$	1,373	$	23,636	$	13,223	$	38,232


Three Months Ended September 30, 2021	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Shareholder's Equity
Balances, June 30, 2021	$	1,373	$	19,272	$	10,843	$	31,488
Net income	—		—		927
Capital contributions from NEE	—		665		—

Other	—		(1)		—
Balances, September 30, 2021	$	1,373	$	19,936	$	11,770	$	33,079


Nine Months Ended September 30, 2021	Common Stock		Additional Paid-In Capital		Retained Earnings		Common Shareholder's Equity
Balances, December 31, 2020	$	1,373	$	18,236	$	9,619	$	29,228
Net income	—		—		2,586
Capital contributions from NEE	—		1,700		—
Dividends to NEE	—		—		(435)

Balances, September 30, 2021	$	1,373	$	19,936	$	11,770	$	33,079

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2021 Form 10-K.

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 2021 Form 10-K. In the opinion of NEE and FPL management, all adjustments considered necessary for fair financial statement presentation have been made. All adjustments are normal and recurring unless otherwise noted. 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. Revenue from Contracts with Customers

FPL and NEER generate substantially all of NEE’s operating revenues, which primarily include revenues from contracts with customers, as well as derivative (see Note 2) and lease transactions at NEER. For the vast majority of contracts with customers, NEE believes that the obligation to deliver energy, capacity or transmission is satisfied over time as the customer simultaneously receives and consumes benefits as NEE performs. NEE’s revenue from contracts with customers was approximately $6.4 billion ($5.1 billion at FPL) and $5.4 billion ($4.1 billion at FPL) for the three months ended September 30, 2022 and 2021, respectively, and $17.4 billion ($13.2 billion at FPL) and $14.1 billion ($10.6 billion at FPL) for the nine months ended September 30, 2022 and 2021, respectively. NEE's and FPL's receivables are primarily associated with revenues earned from contracts with customers, as well as derivative and lease transactions at NEER, and consist of both billed and unbilled amounts, which are recorded in customer receivables and other receivables on NEE's and FPL's condensed consolidated balance sheets. Receivables represent unconditional rights to consideration and reflect the differences in timing of revenue recognition and cash collections. For substantially all of NEE's and FPL's receivables, regardless of the type of revenue transaction from which the receivable originated, customer and counterparty credit risk is managed in the same manner and the terms and conditions of payment are similar. During the nine months ended September 30, 2021, NEER did not recognize approximately $180 million of revenue related to reimbursable expenses from a counterparty that were deemed not probable of collection. These reimbursable expenses arose from the impacts of severe prolonged winter weather in Texas in February 2021 (February 2021 weather event). These determinations were made based on assessments of the counterparty's creditworthiness and NEER's ability to collect.

FPL – FPL’s revenues are derived primarily from tariff-based sales that result from providing electricity to retail customers in Florida with no defined contractual term. Electricity sales to retail customers account for approximately 90% of FPL’s operating revenues, the majority of which are to residential customers. FPL's retail customers receive a bill monthly based on the amount of monthly kWh usage with payment due monthly. For these types of sales, FPL recognizes revenue as electricity is delivered and billed to customers, as well as an estimate for electricity delivered and not yet billed. The billed and unbilled amounts represent the value of electricity delivered to the customer. At September 30, 2022 and December 31, 2021, FPL's unbilled revenues amounted to approximately $693 million and $583 million, respectively, and are included in customer receivables on NEE's and FPL's condensed consolidated balance sheets. Certain contracts with customers contain a fixed price which primarily relate to certain power purchase agreements with maturity dates through 2041. As of September 30, 2022, FPL expects to record approximately $400 million of revenues related to the fixed capacity price components of such contracts over the remaining terms of the related contracts as the capacity is provided. These contracts also contain a variable price component for energy usage which FPL recognizes as revenue as the energy is delivered based on rates stipulated in the respective contracts.

NEER – NEER’s revenue from contracts with customers is derived primarily from the sale of energy commodities, electric capacity and electric transmission. For these types of sales, NEER recognizes revenue as energy commodities are delivered and as electric capacity and electric transmission are made available, consistent with the amounts billed to customers based on rates stipulated in the respective contracts as well as an accrual for amounts earned but not yet billed. The amounts billed and accrued represent the value of energy or transmission delivered and/or the capacity of energy or transmission available to the customer. Revenues yet to be earned under these contracts, which have maturity dates ranging from 2022 to 2053, will vary based on the volume of energy or transmission delivered and/or available. NEER’s customers typically receive bills monthly with payment due within 30 days. Certain contracts with customers contain a fixed price which primarily relate to electric capacity sales associated with ISO annual auctions through 2026, certain power purchase agreements with maturity dates through 2034 and capacity sales associated with natural gas transportation through 2062. At September 30, 2022, NEER expects to record approximately $1.2 billion of revenues related to the fixed price components of such contracts over the remaining terms of the related contracts as the capacity is provided.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

2. Derivative Instruments

NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the physical and financial risks 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 expected future debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets. NEE and FPL do not utilize hedge accounting for their cash flow and fair value hedges.

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 fuel 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 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 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 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 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 recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.

For interest rate and foreign currency derivative instruments, all changes in the derivatives' fair value, as well as the transaction gain or loss on foreign denominated debt, are recognized in interest 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. At September 30, 2022, NEE's AOCI included amounts related to discontinued interest rate cash flow hedges with expiration dates through March 2035 and foreign currency cash flow hedges with expiration dates through September 2030. Approximately $3 million of net losses included in AOCI at September 30, 2022 are 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 scheduled principal payments.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Fair Value Measurements of Derivative Instruments – 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 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.

NEE and FPL measure the fair value of commodity contracts using a combination of market and income approaches utilizing 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 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 contracts to mitigate and adjust interest rate and foreign currency exchange exposure related primarily to certain outstanding and expected future 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 an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The tables below present NEE's and FPL's gross derivative positions at September 30, 2022 and December 31, 2021, 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, as well as the location of the net derivative position on the condensed consolidated balance sheets.


	September 30, 2022
	Level 1		Level 2		Level 3		Netting(a)		Total
	(millions)
Assets:
NEE:
Commodity contracts	$	4,477	$	12,281	$	2,280	$	(15,990)	$	3,048
Interest rate contracts	$	—	$	533	$	—	$	(14)	519
Foreign currency contracts	$	—	$	—	$	—	$	(23)	(23)
Total derivative assets									$	3,544

FPL – commodity contracts	$	—	$	13	$	50	$	(9)	$	54

Liabilities:
NEE:
Commodity contracts	$	6,687	$	11,671	$	3,956	$	(16,463)	$	5,851
Interest rate contracts	$	—	$	33	$	—	$	(14)	19
Foreign currency contracts	$	—	$	189	$	—	$	(23)	166
Total derivative liabilities									$	6,036

FPL – commodity contracts	$	—	$	4	$	29	$	(9)	$	24

Net fair value by NEE balance sheet line item:
Current derivative assets(b)									$	1,431
Noncurrent derivative assets(c)									2,113
Total derivative assets									$	3,544
Current derivative liabilities(d)									$	2,969

Noncurrent derivative liabilities(e)									3,067
Total derivative liabilities									$	6,036

Net fair value by FPL balance sheet line item:
Current other assets									$	52
Noncurrent other assets									2
Total derivative assets									$	54
Current other liabilities									$	20
Noncurrent other liabilities									4
Total derivative liabilities									$	24

———————————————

(a)Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of 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)Reflects the netting of approximately $570 million in margin cash collateral received from counterparties.

(c)Reflects the netting of approximately $221 million in margin cash collateral received from counterparties.

(d)Reflects the netting of approximately $6 million in margin cash collateral paid to counterparties.

(e)Reflects the netting of approximately $1,258 million in margin cash collateral paid to counterparties.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


	December 31, 2021
	Level 1		Level 2		Level 3		Netting(a)		Total
	(millions)
Assets:
NEE:
Commodity contracts	$	1,896	$	5,082	$	1,401	$	(6,622)	$	1,757
Interest rate contracts	$	—	$	106	$	—	$	(30)	76
Foreign currency contracts	$	—	$	8	$	—	$	(17)	(9)
Total derivative assets									$	1,824

FPL – commodity contracts	$	—	$	3	$	13	$	(3)	$	13

Liabilities:
NEE:
Commodity contracts	$	2,571	$	4,990	$	1,231	$	(6,594)	$	2,198
Interest rate contracts	$	—	$	739	$	—	$	(30)	709
Foreign currency contracts	$	—	$	86	$	—	$	(17)	69
Total derivative liabilities									$	2,976

FPL – commodity contracts	$	—	$	8	$	5	$	(3)	$	10

Net fair value by NEE balance sheet line item:
Current derivative assets(b)									$	689
Noncurrent derivative assets(c)									1,135
Total derivative assets									$	1,824
Current derivative liabilities(d)									$	1,263

Noncurrent derivative liabilities(e)									1,713
Total derivative liabilities									$	2,976

Net fair value by FPL balance sheet line item:
Current other assets									$	13


Current other liabilities									$	9
Noncurrent other liabilities									1
Total derivative liabilities									$	10

———————————————

(b)Reflects the netting of approximately $150 million in margin cash collateral received from counterparties.

(c)Reflects the netting of approximately $56 million in margin cash collateral received from counterparties.

(d)Reflects the netting of approximately $6 million in margin cash collateral paid to counterparties.

(e)Reflects the netting of approximately $172 million in margin cash collateral paid to counterparties.

At September 30, 2022 and December 31, 2021, NEE had approximately $50 million (none at FPL) and $56 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 September 30, 2022 and December 31, 2021, NEE had approximately $424 million (none at FPL) and $673 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.

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, block-to-hourly price shaping, customer migration rates from full

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at September 30, 2022 are as follows:


	Fair Value at				Valuation	Significant				Weighted-
Transaction Type	September 30, 2022				Technique(s)	Unobservable Inputs	Range			average(a)
	Assets		Liabilities
	(millions)
Forward contracts – power	$	178	$	619	Discounted cash flow	Forward price (per MWh)	$(7)	—	$461	$51
Forward contracts – gas	330		323		Discounted cash flow	Forward price (per MMBtu)	$3	—	$35	$5
Forward contracts – congestion	50		12		Discounted cash flow	Forward price (per MWh)	$(24)	—	$25	$1
Options – power	79		1		Option models	Implied correlations	42%	—	89%	56%
						Implied volatilities	20%	—	225%	57%
Options – primarily gas	1,368		1,271		Option models	Implied correlations	42%	—	89%	56%
						Implied volatilities	24%	—	192%	63%
Full requirements and unit contingent contracts	129		1,583		Discounted cash flow	Forward price (per MWh)	$12	—	$512	$99
						Customer migration rate(b)	—%	—	122%	6%
Forward contracts – other	146		147
Total	$	2,280	$	3,956

———————————————

(a)Unobservable inputs were weighted by volume.

(b)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.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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


	Three Months Ended September 30,
	2022				2021
	NEE		FPL		NEE		FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at June 30	$	(1,594)	$	83	$	584	$	—
Realized and unrealized gains (losses):
Included in operating revenues	(695)		—		(1,138)		—

Included in regulatory assets and liabilities	92		92		1		1
Purchases	90		—		62		—
Settlements	482		(154)		80		(2)
Issuances	(57)		—		(52)		—


Transfers out(a)	6		—		15		—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	(1,676)	$	21	$	(448)	$	(1)
Gains (losses) included in operating revenues attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date	$	(446)	$	—	$	(1,107)	$	—

———————————————

(a)Transfers from Level 3 to Level 2 were a result of increased observability of market data.


	Nine Months Ended September 30,
	2022				2021
	NEE		FPL		NEE		FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period	$	170	$	8	$	1,374	$	(1)
Realized and unrealized gains (losses):
Included in operating revenues	(3,215)		—		(1,795)		—

Included in regulatory assets and liabilities	161		161		2		2
Purchases	469		—		153		—

Settlements	1,043		(148)		(54)		(2)
Issuances	(289)		—		(116)		—

Transfers in(a)	—		—		1		—
Transfers out(a)	(15)		—		(13)		—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	(1,676)	$	21	$	(448)	$	(1)
Gains (losses) included in operating revenues attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date	$	(2,081)	$	—	$	(1,581)	$	—

———————————————

(a)Transfers into Level 3 were a result of decreased observability of market data. Transfers from Level 3 to Level 2 were a result of increased observability of market data.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Income Statement Impact of Derivative Instruments – Gains (losses) related to NEE's derivatives are recorded in NEE's condensed consolidated statements of income as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(millions)

Commodity contracts(a) – operating revenues (including $10 unrealized losses, $1,236 unrealized losses, $2,942 unrealized losses and $2,563 unrealized losses, respectively)	$	(122)	$	(1,291)	$	(3,488)	$	(2,708)

Foreign currency contracts – interest expense (including $32 unrealized losses, $15 unrealized losses, $113 unrealized losses and $69 unrealized losses, respectively)	(36)		(13)		(121)		(69)

Interest rate contracts – interest expense (including $16 unrealized gains, $23 unrealized gains, $1,131 unrealized gains and $382 unrealized gains, respectively)	236		7		1,321		340
Losses reclassified from AOCI to interest expense:
Interest rate contracts	—		(1)		(5)		(4)
Foreign currency contracts	(1)		(1)		(2)		(2)
Total	$	77	$	(1,299)	$	(2,295)	$	(2,443)

———————————————

(a)For the three and nine months ended September 30, 2022, FPL recorded gains of approximately $131 million and $110 million, respectively, related to commodity contracts as regulatory liabilities on its condensed consolidated balance sheets. For the three and nine months ended September 30, 2021, FPL recorded gains of approximately $9 million and $13 million, respectively, related to commodity contracts as regulatory liabilities 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 the related 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:

September 30, 2022

December 31, 2021

Commodity Type

NEE

FPL

NEE

FPL

(millions)

Power

(660)

MWh

—

(103)

MWh

—

Natural gas

(1,467)

MMBtu

151

MMBtu

(1,290)

MMBtu

Oil

(38)

barrels

—

(33)

barrels

—

At September 30, 2022 and December 31, 2021, NEE had interest rate contracts with a notional amount of approximately $8.8 billion and $11.2 billion, respectively, and foreign currency contracts with a notional amount of approximately $1.0 billion and $1.0 billion, respectively. In October 2022, NEECH entered into a forward starting interest rate swap agreement with a notional amount of $10 billion to manage interest rate risk associated with forecasted debt issuances.

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 September 30, 2022 and December 31, 2021, the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $9.0 billion ($21 million for FPL) and $4.1 billion ($12 million for FPL), respectively.

If the credit-risk-related contingent features underlying these derivative agreements 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 derivative 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 three 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 $2,250 million (none at FPL) at September 30, 2022 and $645 million (none at FPL) at December 31, 2021. 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 $5.8 billion ($35 million at FPL) at September 30, 2022 and $2.7 billion ($35 million at FPL) at December 31, 2021. Some derivative 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

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

these provisions were triggered, applicable NEE subsidiaries could be required to post additional collateral of up to approximately $1.3 billion ($355 million at FPL) at September 30, 2022 and $1.0 billion ($145 million at FPL) at December 31, 2021.

Collateral related to derivatives may be posted in the form of cash or credit support in the normal course of business. At September 30, 2022 and December 31, 2021, applicable NEE subsidiaries have posted approximately $8 million (none at FPL) and $84 million (none at FPL), respectively, in cash, and $1.9 billion (none at FPL) and $1.1 billion (none at FPL), respectively, in the form of letters of credit, each of which could be applied toward the collateral requirements described above. FPL and NEECH have capacity under their 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 whereby 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. Non-Derivative Fair Value Measurements

Non-derivative fair value measurements consist of NEE’s and FPL’s cash equivalents and restricted cash equivalents, special use funds and other investments. The fair value of these financial assets is determined by using the valuation techniques and inputs as described in Note 2 – Fair Value Measurements of Derivative Instruments as well as below.

Cash Equivalents and Restricted Cash Equivalents – NEE and FPL hold investments in money market funds. The fair value of these funds is estimated using a market approach based on current observable 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.

Fair Value Measurement Alternative – NEE holds investments in equity securities without readily determinable fair values, which are initially recorded at cost, of approximately $415 million and $72 million at September 30, 2022 and December 31, 2021, respectively, and are included in noncurrent other assets on NEE's condensed consolidated balance sheets. Adjustments to carrying values are recorded as a result of observable price changes in transactions for identical or similar investments of the same issuer.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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


	September 30, 2022
	Level 1		Level 2			Level 3		Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(a)
NEE – equity securities	$	1,816	$	—		$	—	$	1,816
FPL – equity securities	$	1,189	$	—		$	—	$	1,189
Special use funds:(b)
NEE:
Equity securities	$	1,932	$	2,215	(c)	$	—	$	4,147
U.S. Government and municipal bonds	$	642	$	62		$	—	$	704
Corporate debt securities	$	6	$	760		$	—	$	766
Asset-backed securities	$	—	$	608		$	—	$	608
Other debt securities	$	—	$	19		$	—	$	19
FPL:
Equity securities	$	710	$	2,015	(c)	$	—	$	2,725
U.S. Government and municipal bonds	$	520	$	32		$	—	$	552
Corporate debt securities	$	5	$	576		$	—	$	581
Asset-backed securities	$	—	$	475		$	—	$	475
Other debt securities	$	—	$	9		$	—	$	9
Other investments:(d)
NEE:
Equity securities	$	31	$	1		$	—	$	32
Debt securities	$	125	$	191		$	124	$	440
FPL – equity securities	$	10	$	—		$	—	$	10

———————————————

(a)Includes restricted cash equivalents of approximately $55 million ($33 million for FPL) in current other assets on the condensed consolidated balance sheets.

(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 Other than Fair Value 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)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)


	December 31, 2021
	Level 1		Level 2			Level 3		Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(a)
NEE – equity securities	$	176	$	—		$	—	$	176
FPL – equity securities	$	58	$	—		$	—	$	58
Special use funds:(b)
NEE:
Equity securities	$	2,538	$	2,973	(c)	$	—	$	5,511
U.S. Government and municipal bonds	$	770	$	75		$	—	$	845
Corporate debt securities	$	7	$	955		$	—	$	962
Asset-backed securities	$	—	$	663		$	—	$	663
Other debt securities	$	2	$	33		$	—	$	35
FPL:
Equity securities	$	862	$	2,690	(c)	$	—	$	3,552
U.S. Government and municipal bonds	$	624	$	44		$	—	$	668
Corporate debt securities	$	6	$	720		$	—	$	726
Asset-backed securities	$	—	$	515		$	—	$	515
Other debt securities	$	2	$	23		$	—	$	25
Other investments:(d)
NEE:
Equity securities	$	70	$	2		$	—	$	72
Debt securities	$	111	$	162		$	12	$	285
FPL – equity securities	$	13	$	—		$	—	$	13

———————————————

(a)Includes restricted cash equivalents of approximately $56 million ($53 million for FPL) in current other assets on the condensed consolidated balance sheets.

(c)Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.

(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.

Contingent Consideration – At September 30, 2022, NEER had approximately $198 million of contingent consideration liabilities which are included in noncurrent other liabilities on NEE's condensed consolidated balance sheet. The liabilities relate to contingent consideration for the completion of capital expenditures for future development projects in connection with the acquisition of GridLiance Holdco, LP and GridLiance GP, LLC (GridLiance) (see Note 5 – GridLiance). NEECH guarantees the contingent consideration obligations under the GridLiance acquisition agreements. Significant inputs and assumptions used in the fair value measurement, some of which are Level 3 and require judgement, include the projected timing and amount of future cash flows, estimated probability of completing future development projects as well as discount rates.

Fair Value of Financial Instruments Recorded at Other than Fair Value – The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:


	September 30, 2022					December 31, 2021
	Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
	(millions)
NEE:
Special use funds(a)	$	951	$	951		$	906	$	907
Other receivables(b)	$	110	$	110		$	26	$	26
Long-term debt, including current portion	$	61,962	$	57,029	(c)	$	52,745	$	57,290	(c)
FPL:
Special use funds(a)	$	706	$	706		$	672	$	672
Long-term debt, including current portion	$	20,998	$	19,028	(c)	$	18,510	$	21,379	(c)

———————————————

(a)Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis (Level 2).

(b)Included in noncurrent other assets on NEE's condensed consolidated balance sheets (primarily Level 3).

(c)At September 30, 2022 and December 31, 2021, substantially all is Level 2 for NEE and FPL.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Special Use Funds and Other Investments – The special use funds noted above and those carried at fair value (see Recurring Non-Derivative Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately $7,121 million ($4,974 million for FPL) and $8,846 million ($6,082 million for FPL) at September 30, 2022 and December 31, 2021, respectively, and FPL's storm fund assets of $74 million and $76 million at September 30, 2022 and December 31, 2021, respectively. The investments held in the special use funds and other investments consist of equity and available for sale debt securities which are primarily carried at estimated fair value. The amortized cost of debt securities is approximately $2,744 million ($1,853 million for FPL) and $2,438 million ($1,877 million for FPL) at September 30, 2022 and December 31, 2021, respectively. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at September 30, 2022 of approximately eight years at both NEE and FPL. FPL's storm fund primarily consists of debt securities with a weighted-average maturity at September 30, 2022 of approximately one year. Other investments consist of debt securities with a weighted-average maturity at September 30, 2022 of approximately seven years. The cost of securities sold is determined using the specific identification method.

For FPL's special use funds, changes in fair value of debt and equity securities, including any estimated credit losses of debt securities, result in a corresponding adjustment to the related regulatory asset or liability accounts, consistent with regulatory treatment. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for estimated credit losses and unrealized losses on debt securities intended or required to be sold prior to recovery of the amortized cost basis, which are recognized in other – net in NEE's condensed consolidated statements of income. Changes in fair value of equity securities are primarily recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds – net in NEE’s condensed consolidated statements of income.

Unrealized gains (losses) recognized on equity securities held at September 30, 2022 and 2021 are as follows:


	NEE								FPL
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	(millions)
Unrealized gains (losses)	$	(222)	$	(25)	$	(1,317)	$	565	$	(135)	$	(13)	$	(857)	$	375

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


	NEE								FPL
	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	(millions)
Realized gains	$	8	$	17	$	26	$	61	$	6	$	14	$	20	$	46
Realized losses	$	41	$	14	$	100	$	58	$	36	$	11	$	79	$	46
Proceeds from sale or maturity of securities	$	681	$	245	$	1,901	$	1,303	$	324	$	191	$	1,001	$	988

The unrealized gains and unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:


	NEE				FPL
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(millions)
Unrealized gains	$	2	$	76	$	2	$	63
Unrealized losses(a)	$	342	$	19	$	239	$	15
Fair value	$	2,378	$	1,100	$	1,598	$	857

———————————————

(a) Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at September 30, 2022 and December 31, 2021 were not material to NEE or FPL.

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

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

respect to the decommissioning fund for Seabrook, decommissioning fund contributions and withdrawals are also regulated by the New Hampshire 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.

Nonrecurring Fair Value Measurements – NEE tests its equity method investments for impairment whenever events or changes in circumstances indicate that the investment may be impaired. On February 2, 2022, the U.S. Court of Appeals for the Fourth Circuit (the 4th Circuit) vacated and remanded Mountain Valley Pipeline, LLC’s (Mountain Valley Pipeline) Biological Opinion issued by the U.S. Fish and Wildlife Service. While NextEra Energy Resources continues to evaluate options and next steps with its joint venture partners, this event along with the 4th Circuit vacatur and remand of the U.S. Forest Service right-of-way grant on January 25, 2022 caused NextEra Energy Resources to re-evaluate its investment in Mountain Valley Pipeline for further other-than-temporary impairment, which evaluation coincided with the preparation of NEE's December 31, 2021 financial statements. As a result of this evaluation, it was determined that the continued legal and regulatory challenges have resulted in a very low probability of pipeline completion. Accordingly, NextEra Energy Resources performed a fair value analysis based on the market approach to determine the amount of the impairment. The challenges to complete construction and the resulting economic outlook for the pipeline were considered in determining the magnitude of the other-than-temporary impairment. Based on this fair value analysis, NextEra Energy Resources recorded an impairment charge of approximately $0.8 billion ($0.6 billion after tax) during the first quarter of 2022, which is reflected in equity in earnings of equity method investees in NEE’s condensed consolidated statements of income for the nine months ended September 30, 2022. This impairment charge resulted in the complete write off of NextEra Energy Resources’ equity method investment carrying amount of approximately $0.6 billion, as well as the recording of a liability of approximately $0.2 billion which reflects NextEra Energy Resources’ share of estimated future dismantlement costs.

The fair value estimate was based on a probability-weighted earnings before interest, taxes, depreciation and amortization (EBITDA) multiple valuation technique using a market participant view of the potential different outcomes for the investment. As part of the valuation, NextEra Energy Resources used observable inputs where available, including the EBITDA multiples of recent pipeline transactions. Significant unobservable inputs (Level 3), including the probabilities assigned to the different potential outcomes, the forecasts of operating revenues and costs, and the projected capital expenditures to complete the project, were also used in the estimation of fair value. An increase in the revenue forecasts, a decrease in the projected operating or capital expenditures or an increase in the probability assigned to the full pipeline being completed would result in an increased fair market value. Changes in the opposite direction of those unobservable inputs would result in a decreased fair market value.

4. Income Taxes

NEE's effective income tax rate for the three months ended September 30, 2022 and 2021 was approximately 17.2% and (9.7)%, respectively, and for the nine months ended September 30, 2022 and 2021 was approximately 11.5% and 4.3%, respectively. NEE's effective income tax rate is based on the composition of pretax income, and, for the nine months ended September 30, 2022, primarily reflects the impact of favorable changes in the fair value of interest rate derivative instruments, unfavorable changes in the fair value of commodity derivatives and equity securities held in NEER's nuclear decommissioning funds, as well as the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline (see Note 3 – Nonrecurring Fair Value Measurements). NEE's effective income tax rate reflects the impact of unfavorable changes in the fair value of commodity derivatives for the three and nine months ended September 30, 2021.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

A reconciliation between the effective income tax rates and the applicable statutory rate is as follows:


	NEE				FPL				NEE				FPL
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%	21.0	%
Increases (reductions) resulting from:
State income taxes – net of federal income tax benefit	1.7		5.4		4.5		2.9		1.3		1.0		4.4		3.7
Taxes attributable to noncontrolling interests	2.6		15.6		—		—		6.8		6.9		—		—
PTCs and ITCs	(4.7)		(38.9)		(1.9)		(0.7)		(9.4)		(16.4)		(1.1)		(0.7)
Amortization of deferred regulatory credit	(2.9)		(14.1)		(4.1)		(3.5)		(6.7)		(6.2)		(4.0)		(3.5)


Other – net	(0.5)		1.3		0.1		0.2		(1.5)		(2.0)		0.1		—
Effective income tax rate	17.2	%	(9.7)	%	19.6	%	19.9	%	11.5	%	4.3	%	20.4	%	20.5	%

NEE recognizes PTCs as wind and solar 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 expected value of most wind and some solar projects and a fundamental component of such wind and solar projects' results of operations. PTCs, as well as ITCs, can significantly affect NEE's effective income tax rate depending on the amount of pretax income or loss. The amount of PTCs recognized can be significantly affected by wind and solar generation and by the roll off of PTCs after ten years of production absent a retrofitting of the wind and solar projects.

On August 16, 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law which includes: (i) extensions for wind and solar tax credits on facilities that start construction before the later of 2034 or the end of the calendar year following the year in which greenhouse gas emissions from U.S. electric generation are reduced by 75% from 2022 levels; (ii) a new solar PTC and standalone battery ITC; (iii) the ability to transfer renewable energy tax credits to an unrelated transferee; and (iv) a 15% corporate profits minimum tax based on pre-tax income for years after 2022. This legislation does not require NEE or FPL to revalue their deferred income taxes given that there was no change to the corporate tax rate. Pursuant to FPL’s 2021 rate agreement (see Note 11 – Rate Regulation), FPL will prospectively adjust base rates after a review by the FPSC for PTCs related to new solar generation facilities recovered in base rates during the term of the 2021 rate agreement.

5. Acquisitions

Merger of FPL and Gulf Power Company – On January 1, 2021, FPL and Gulf Power Company merged, with FPL as the surviving entity. As a result of the merger, FPL acquired assets of approximately $6.7 billion, primarily relating to property, plant and equipment, net of approximately $4.9 billion and regulatory assets of $1.2 billion, and assumed liabilities of approximately $3.9 billion, including $1.8 billion of debt, primarily long-term debt, $729 million of deferred income taxes and $566 million of regulatory liabilities. Additionally, goodwill of approximately $2.7 billion and purchase accounting adjustments associated with the 2019 Gulf Power Company acquisition by NEE were transferred to FPL from Corporate and Other and, for impairment testing, the goodwill is included in the FPL reporting unit. The assets acquired and liabilities assumed by FPL were at carrying amounts as the merger was between entities under common control.

GridLiance – On March 31, 2021, a wholly owned subsidiary of NEET acquired GridLiance, which owns and operates three FERC-regulated transmission utilities with approximately 700 miles of high-voltage transmission lines across six states, five in the Midwest and Nevada. The purchase price included approximately $502 million in cash consideration, and the assumption of approximately $175 million of debt, excluding post-closing adjustments.

Under the acquisition method, the purchase price was allocated to the assets acquired and liabilities assumed based on their fair value. The approval by the FERC of GridLiance’s rates, which is intended to allow GridLiance to collect total revenues equal to GridLiance's costs for the development, financing, construction, operation and maintenance of GridLiance, including a reasonable rate of return on invested capital, is considered a fundamental input in measuring the fair value of GridLiance's assets and liabilities and, as such, NEE concluded that the carrying values of all assets and liabilities recoverable through rates are representative of their fair values. As a result, NEE acquired assets of approximately $384 million, primarily relating to property, plant and equipment, and assumed liabilities of approximately $210 million, primarily relating to long-term debt. The acquisition agreements are subject to earn-out provisions for additional payments, valued at approximately $264 million at March 31, 2021, to be made upon the completion of capital expenditures for future development projects (see Note 3 – Contingent Consideration). The excess of the purchase price over the fair value of assets acquired and liabilities assumed resulted in

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

approximately $592 million of goodwill which has been recognized on NEE's condensed consolidated balance sheets, of which approximately $586 million is expected to be deductible for tax purposes. Goodwill associated with the GridLiance acquisition is reflected within NEER and, for impairment testing, is included in the rate-regulated transmission reporting unit. The goodwill arising from the transaction represents expected benefits from continued expansion of NEE's regulated businesses.

RNG Acquisition – On October 27, 2022, a wholly owned subsidiary of NextEra Energy Resources entered into several agreements to acquire 100% of a portfolio of renewable energy projects from the owners of Energy Power Partners Fund I, L.P. and North American Sustainable Energy Fund, L.P., as well as the related service provider, for approximately $1.1 billion, subject to closing adjustments, plus the assumption of approximately $37 million of existing project finance debt estimated at the time of closing. The portfolio primarily consists of 31 biogas projects, one of which is an operating renewable natural gas facility and the others of which are primarily operating landfill gas-to-electric facilities. The acquisition is expected to close in early 2023, subject to receipt of required regulatory approvals including approvals from the FERC.

6. Related Party Transactions

NextEra Energy Resources provides operational, management and administrative services as well as transportation and fuel management services to NEP and its subsidiaries under various agreements (service agreements). NextEra Energy Resources is also party to a CSCS agreement with a subsidiary of NEP. At September 30, 2022 and December 31, 2021, the cash sweep amounts (due to NEP and its subsidiaries) held in accounts belonging to NextEra Energy Resources or its subsidiaries were approximately $65 million and $57 million, respectively, and are included in accounts payable. Fee income related to the CSCS agreement and the service agreements totaled approximately $45 million and $38 million for the three months ended September 30, 2022 and 2021, respectively, and $129 million and $108 million for the nine months ended September 30, 2022 and 2021, respectively, and is included in operating revenues in NEE's condensed consolidated statements of income. Amounts due from NEP of approximately $81 million and $113 million are included in other receivables and $38 million and $40 million are included in noncurrent other assets at September 30, 2022 and December 31, 2021, respectively. NEECH or NextEra Energy Resources guaranteed or provided indemnifications, letters of credit or surety bonds totaling approximately $2,513 million at September 30, 2022 primarily related to obligations on behalf of NEP's subsidiaries with maturity dates ranging from 2022 to 2059, including certain project performance obligations, obligations under financing and interconnection agreements and obligations, primarily incurred and future construction payables, associated with the December 2021 sale of projects to NEP (see Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests). Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded on NEE’s condensed consolidated balance sheets at fair value. At September 30, 2022, approximately $51 million related to the fair value of the credit support provided under the CSCS agreement is recorded as noncurrent other liabilities on NEE's condensed consolidated balance sheet.

During 2022 and 2021, certain services, primarily engineering, construction and maintenance services, were provided to subsidiaries of NEE by related parties that NEE accounts for under the equity method of accounting. Charges for these services amounted to approximately $136 million and $161 million for the three months ended September 30, 2022 and 2021, respectively, and $424 million and $464 million for the nine months ended September 30, 2022 and 2021, respectively.

See also Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests for sales to NEP.

7. Variable Interest Entities (VIEs)

NEER – At September 30, 2022, NEE consolidates a number of VIEs within the NEER segment. Subsidiaries within the NEER segment are considered the primary beneficiary of these VIEs since they control the most significant activities of these VIEs, including operations and maintenance, and they have the obligation to absorb expected losses of these VIEs.

Eight indirect subsidiaries of NextEra Energy Resources have an ownership interest ranging from approximately 50% to 67% in entities which own and operate solar generation facilities with the capability of producing a total of approximately 772 MW. Each of the subsidiaries is considered a VIE since the non-managing members have no substantive rights over the managing members, and is consolidated by NextEra Energy Resources. These entities sell their electric output to third parties under power sales contracts with expiration dates ranging from 2035 through 2052. These entities have third-party debt which is secured by liens against the assets of the entities. The debt holders have no recourse to the general credit of NextEra Energy Resources for the repayment of debt. The assets and liabilities of these VIEs were approximately $1,895 million and $1,157 million, respectively, at September 30, 2022, and $1,851 million and $1,258 million, respectively, at December 31, 2021. At September 30, 2022 and December 31, 2021, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and long-term debt.

NEE consolidates a NEET VIE that constructed an approximately 280-mile electric transmission line that went into service during the first quarter of 2022. A NEET subsidiary is the primary beneficiary and controls the most significant activities of the VIE. NEET is entitled to receive 50% of the profits and losses of the entity. The assets and liabilities of the VIE totaled approximately $736 million and $15 million, respectively, at September 30, 2022, and $614 million and $64 million, respectively, at

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

December 31, 2021. At September 30, 2022 and December 31, 2021, the assets of this VIE consisted primarily of property, plant and equipment.

NextEra Energy Resources consolidates a VIE which has a 10% direct ownership interest in wind and solar generation facilities which have the capability of producing approximately 400 MW and 599 MW, respectively. These entities sell their electric output under power sales contracts to third parties with expiration dates ranging from 2025 through 2040. These entities are also considered a VIE because the holders of differential membership interests in these entities do not have substantive rights over the significant activities of these entities. The assets and liabilities of the VIE were approximately $1,507 million and $88 million, respectively, at September 30, 2022, and $1,518 million and $79 million, respectively, at December 31, 2021. At September 30, 2022 and December 31, 2021, the assets of this VIE consisted primarily of property, plant and equipment.

NextEra Energy Resources consolidates 30 VIEs that primarily relate to certain subsidiaries which have sold differential membership interests in entities which own and operate wind generation as well as solar generation and solar generation plus battery storage facilities with the capability of producing a total of approximately 10,502 MW and 791 MW, respectively. These entities sell their electric output either under power sales contracts to third parties with expiration dates ranging from 2024 through 2053 or in the spot market. These entities are considered VIEs because the holders of differential membership interests do not have substantive rights over the significant activities of these entities. NextEra Energy Resources has financing obligations with respect to these entities, including third-party debt which is secured by liens against the generation facilities and the other assets of these entities or by pledges of NextEra Energy Resources' 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 $16,113 million and $1,106 million, respectively, at September 30, 2022. There were 33 of these consolidated VIEs at December 31, 2021, and the assets and liabilities of those VIEs at such date totaled approximately $17,419 million and $1,480 million, respectively. At September 30, 2022 and December 31, 2021, the assets and liabilities of these VIEs consisted primarily of property, plant and equipment and accounts payable. At September 30, 2022, subsidiaries of NEE had guarantees related to certain obligations of one of these consolidated VIEs.

Other – At September 30, 2022 and December 31, 2021, several NEE subsidiaries had investments totaling approximately $3,806 million ($3,143 million at FPL) and $4,559 million ($3,799 million at FPL), respectively, which are included in special use funds and noncurrent other assets on NEE's condensed consolidated balance sheets and in special use funds on FPL's condensed consolidated balance sheets. These investments represented primarily commingled funds and asset-backed securities. NEE subsidiaries, including FPL, are not the primary beneficiaries 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.

Certain subsidiaries of NEE have noncontrolling interests in entities accounted for under the equity method, including NEE's noncontrolling interest in NEP OpCo (see Note 6). These entities are limited partnerships or similar entity structures in which the limited partners or non-managing members do not have substantive rights over the significant activities of these entities, and therefore are considered VIEs. NEE is not the primary beneficiary because it does not have a controlling financial interest in these entities, and therefore does not consolidate any of these entities. NEE’s investment in these entities totaled approximately $4,926 million and $4,214 million at September 30, 2022 and December 31, 2021, respectively. At September 30, 2022 and December 31, 2021, subsidiaries of NEE had guarantees related to certain obligations of one of these entities, as well as commitments to invest an additional approximately $180 million and $110 million, respectively, in several of these entities. See further discussion of such guarantees and commitments in Note 12 – Commitments and – Contracts, respectively.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

8. Employee Retirement Benefits

NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

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


	Pension Benefits				Postretirement Benefits				Pension Benefits				Postretirement Benefits
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	(millions)
Service cost	$	21	$	23	$	—	$	1	$	64	$	68	$	1	$	1
Interest cost	19		16		2		1		58		48		4		3
Expected return on plan assets	(90)		(85)		—		—		(271)		(255)		—		—

Amortization of actuarial loss	—		6		1		1		—		18		2		4
Amortization of prior service benefit	—		—		(1)		(4)		(1)		(1)		(3)		(11)
Special termination benefits(a)	—		—		—		—		52		—		—		—

Net periodic cost (income) at NEE	$	(50)	$	(40)	$	2	$	(1)	$	(98)	$	(122)	$	4	$	(3)
Net periodic cost (income) allocated to FPL	$	(33)	$	(27)	$	1	$	(1)	$	(60)	$	(81)	$	3	$	(3)

———————————————

(a) Reflects enhanced early retirement benefit.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

9. Debt

Significant long-term debt issuances and borrowings during the nine months ended September 30, 2022 were as follows:


	Principal Amount			Interest Rate						Maturity Date
	(millions)
FPL:
First mortgage bonds	$	1,500		2.45				%		2032
Senior unsecured notes	$	1,444		Variable					(a)	2024 – 2072

NEECH:
Debentures	$	5,375		2.94	%	–	5.00	%		2024	–	2062
Debentures	$	400		Variable					(a)	2024


Debentures, related to NEE's equity units	$	2,000		4.60				%		2027
Revolving credit facilities	$	850	(b)	Variable					(a)	2023

———————————————

(a)Variable rate is based on an underlying index plus or minus a specified margin.

(b)The borrowings occurred and were repaid during June 2022.

Subsidiaries of NEE, including FPL, had credit facilities with total capacity at September 30, 2022 of approximately $18.5 billion ($6.0 billion for FPL) which provide for the funding of loans and/or issuance of letters of credit. At September 30, 2022, letters of credit outstanding under these credit facilities totaled approximately $4.1 billion ($3.0 million for FPL). There were no borrowings outstanding under these credit facilities at September 30, 2022.

In August 2022, NEECH completed a remarketing of $1.5 billion aggregate principal amount of its Series J Debentures due September 1, 2024 that were issued in September 2019 as components of equity units issued concurrently by NEE (September 2019 equity units). The debentures are fully and unconditionally guaranteed by NEE. In connection with the remarketing of the debentures, the interest rate on the debentures was reset to 4.255% per year, and interest is payable on March 1 and September 1 of each year, commencing September 1, 2022. In connection with the settlement of the contracts to purchase NEE common stock that were issued as components of the September 2019 equity units, on September 1, 2022, NEE issued 21.6 million shares of common stock in exchange for $1.5 billion.

In September 2022, NEE sold $2.0 billion of equity units (initially consisting of Corporate Units). Each equity unit has a stated amount of $50 and consists of a contract to purchase NEE common stock (stock purchase contract) and, initially, a 5% undivided beneficial ownership interest in a Series M Debenture due September 1, 2027, issued in the principal amount of $1,000 by NEECH. Each stock purchase contract requires the holder to purchase by no later than September 1, 2025 (the final settlement date) for a price of $50 in cash, a number of shares of NEE common stock (subject to antidilution adjustments) based on a price per share range described in the following sentence. If purchased on the final settlement date, as of September 30, 2022, the number of shares issued per equity unit would (subject to antidilution adjustments) range from 0.5626 shares if the applicable market value of a share of NEE common stock is less than or equal to $88.88 (the reference price) to 0.4500 shares if the applicable market value of a share is equal to or greater than $111.10 (the threshold appreciation price), with the applicable market value to be determined using the average closing prices of NEE common stock over a 20-day trading period ending August 27, 2025. Total annual distributions on the equity units are at the rate of 6.926%, consisting of interest on the debentures (4.60% per year) and payments under the stock purchase contracts (2.326% per year). The interest rate on the debentures is expected to be reset on or after March 1, 2025. A holder of an equity unit may satisfy its purchase obligation with proceeds raised from remarketing the NEECH debentures that are part of its equity unit. The undivided beneficial ownership interest in the NEECH debenture that is a component of each Corporate Unit is pledged to NEE to secure the holder's obligation to purchase NEE common stock under the related stock purchase contract. If a successful remarketing does not occur on or before the third business day prior to the final settlement date, and a holder has not notified NEE of its intention to settle the stock purchase contract with cash, the debentures that are components of the Corporate Units will be used to satisfy in full the holders' obligations to purchase NEE common stock under the related stock purchase contracts on the final settlement date. The debentures are fully and unconditionally guaranteed by NEE.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

10. Equity

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(millions, except per share amounts)

Numerator – net income attributable to NEE	$	1,696	$	447	$	2,625	$	2,369



Denominator:
Weighted-average number of common shares outstanding – basic	1,972.5		1,962.7		1,967.5		1,962.2
Equity units, stock options, performance share awards and restricted stock(a)	6.4		10.2		6.1		9.1
Weighted-average number of common shares outstanding – assuming dilution	1,978.9		1,972.9		1,973.6		1,971.3
Earnings per share attributable to NEE:
Basic	$	0.86	$	0.23	$	1.33	$	1.21
Assuming dilution	$	0.86	$	0.23	$	1.33	$	1.20

———————————————

(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 equity units, stock options and/or performance share awards, as well as restricted stock which were not included in the denominator above due to their antidilutive effect were approximately 8.6 million and 1.2 million for the three months ended September 30, 2022 and 2021, respectively, and 42.6 million and 40.4 million for the nine months ended September 30, 2022 and 2021, respectively.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

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 Income Related to Equity Method Investees		Total
	(millions)
Three months ended September 30, 2022
















Balances, June 30, 2022	$	19	$	(53)		$	25	$	(55)	$	5	$	(59)
Other comprehensive income (loss) before reclassifications	—		(31)			—		(49)		1		(79)
Amounts reclassified from AOCI	—		1		(a)	—		—		—		1
Net other comprehensive income (loss)	—		(30)			—		(49)		1		(78)
Less other comprehensive loss attributable to noncontrolling interests	—		—			—		23		—		23
Balances, September 30, 2022	$	19	$	(83)		$	25	$	(81)	$	6	$	(114)
Attributable to noncontrolling interests	$	—	$	—		$	—	$	(21)	$	—	$	(21)


	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 Income Related to Equity Method Investees		Total
	(millions)
Nine months ended September 30, 2022
Balances, December 31, 2021	$	14		$	5		$	25	$	(49)	$	5	$	—
Other comprehensive income (loss) before reclassifications	—			(91)			—		(58)		1		(148)
Amounts reclassified from AOCI	5		(b)	3		(a)	—		—		—		8
Net other comprehensive income (loss)	5			(88)			—		(58)		1		(140)
Less other comprehensive loss attributable to noncontrolling interests	—			—			—		26		—		26
Balances, September 30, 2022	$	19		$	(83)		$	25	$	(81)	$	6	$	(114)
Attributable to noncontrolling interests	$	—		$	—		$	—	$	(21)	$	—	$	(21)

———————————————

(a)Reclassified to gains on disposal of investments and other property – net in NEE's condensed consolidated statements of income.

(b)Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 2 – Income Statement Impact of Derivative Instruments.

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 Income Related to Equity Method Investees		Total
	(millions)
Three Months Ended September 30, 2021
Balances, June 30, 2021	$	12	$	11		$	(73)		$	(39)	$	4	$	(85)
Other comprehensive income (loss) before reclassifications	—		(2)			—			(13)		1		(14)
Amounts reclassified from AOCI	—		(1)		(a)	1		(b)	—		—		—
Net other comprehensive income (loss)	—		(3)			1			(13)		1		(14)
Less other comprehensive loss attributable to noncontrolling interests	—		—			—			5		—		5
Balances, September 30, 2021	$	12	$	8		$	(72)		$	(47)	$	5	$	(94)
Attributable to noncontrolling interests	$	—	$	—		$	—		$	(8)	$	—	$	(8)


	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 Income Related to Equity Method Investees		Total
	(millions)
Nine Months Ended September 30, 2021
Balances, December 31, 2020	$	8		$	20		$	(75)		$	(49)	$	4	$	(92)
Other comprehensive income (loss) before reclassifications	—			(9)			—			2		1		(6)
Amounts reclassified from AOCI	4		(c)	(3)		(a)	3		(b)	—		—		4
Net other comprehensive income (loss)	4			(12)			3			2		1		(2)

Balances, September 30, 2021	$	12		$	8		$	(72)		$	(47)	$	5	$	(94)
Attributable to noncontrolling interests	$	—		$	—		$	—		$	(8)	$	—	$	(8)

———————————————

(a)Reclassified to gains on disposal of investments and other property – net in NEE's condensed consolidated statements of income.

(b)Reclassified to other net periodic benefit income in NEE's condensed consolidated statements of income.

(c)Reclassified to interest expense in NEE's condensed consolidated statements of income. See Note 2 – Income Statement Impact of Derivative Instruments.

11. Summary of Significant Accounting and Reporting Policies

Rate Regulation – FPL's 2021 rate agreement provides that in the event the average 30-year U.S. Treasury rate is 2.49% or greater over a consecutive six-month period, FPL is authorized to increase the regulatory ROE to 10.80% with a range of 9.80% to 11.80%. During August 2022, this provision was triggered and effective September 1, 2022, FPL's authorized regulatory ROE and ROE range were increased. The increase in FPL's authorized regulatory ROE does not impact current base rates.

FPL’s 2021 rate agreement also provides that in the event federal or state permanent corporate income tax changes become effective during the term of the rate agreement, FPL will prospectively adjust base rates after a review by the FPSC. As a result of the enactment of the IRA (see Note 4), FPL is now eligible for PTCs related to solar projects that entered service beginning in 2022, which results in a greater tax benefit, and consequently, greater customer savings. Thus, FPL filed a petition with the FPSC in September 2022 requesting approval for a $25 million refund to customers through a one-time reduction in the capacity cost recovery clause in the month of January 2023 and a decrease in annualized retail base revenues of approximately $70 million beginning January 1, 2023.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Storm Reserve Deficit – In late September 2022, Hurricane Ian, which made landfall on the west coast of Florida near Fort Myers and exited on the east coast of Florida near Melbourne, caused extensive damage particularly in the southwest portion of FPL’s service territory and resulted in approximately 2.1 million customers experiencing electrical outages. As of October 7, 2022, essentially all customers that were able to accept electrical service had their service restored. Damage to FPL property was primarily to the transmission and distribution systems. Although FPL has not finalized its storm restoration costs associated with Hurricane Ian, FPL's preliminary estimate of recoverable storm restoration costs is approximately $1.1 billion. Prior to Hurricane Ian, FPL's storm reserve had a balance of approximately $220 million. At September 30, 2022, the estimated recoverable Hurricane Ian storm restoration costs exceeded the balance of the storm reserve by approximately $900 million. This deficit has been recorded by FPL as a noncurrent regulatory asset on NEE’s and FPL’s September 30, 2022 condensed consolidated balance sheet. Pursuant to FPL's 2021 rate agreement, storm restoration costs, plus an additional approximately $220 million to replenish the storm reserve, are recoverable from customers through a surcharge on an interim basis beginning 60 days from the filing of a cost recovery petition, but capped at an amount that produces a surcharge of no more than $4 for every 1,000 kWh of usage on residential bills during the first 12 months of cost recovery. Any additional costs would be eligible for recovery in subsequent years. If storm restoration costs exceed $800 million in any given calendar year, FPL may request an increase to the $4 surcharge. FPL is currently evaluating the timing and amount of the surcharge. The final storm restoration costs are subject to a prudence review by the FPSC. The unpaid portion of the storm restoration costs at September 30, 2022, of approximately $1.3 billion, including estimated capital costs, is included in other current liabilities on NEE’s and FPL’s condensed consolidated balance sheet.

Restricted Cash – At September 30, 2022 and December 31, 2021, NEE had approximately $1,459 million ($33 million for FPL) and $677 million ($53 million for FPL), respectively, of restricted cash, which is included in current other assets on NEE's and FPL's condensed consolidated balance sheets. Restricted cash is primarily related to debt service payments and margin cash collateral requirements at NEER and bond proceeds held for construction at FPL. In addition, where offsetting positions exist, restricted cash related to margin cash collateral of $261 million is netted against derivative assets and $1,258 million is netted against derivative liabilities at September 30, 2022 and $121 million is netted against derivative assets and $172 million is netted against derivative liabilities at December 31, 2021. See Note 2.

Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests – In September 2022, subsidiaries of NextEra Energy Resources completed the sale to a NEP subsidiary of a 67% controlling ownership interest in a battery storage facility in California with storage capacity of 230 MW, for cash proceeds of approximately $191 million, plus working capital and other adjustments of $3 million (subject to post-closing adjustments). A NextEra Energy Resources affiliate will continue to operate the facility included in the sale. In connection with the sale, a gain of approximately $87 million ($66 million after tax) was recorded in NEE's condensed consolidated statements of income for the three and nine months ended September 30, 2022 and is included in gains on disposal of businesses/assets – net.

In December 2021, subsidiaries of NextEra Energy Resources sold their 100% ownership interest, comprised of a 50% controlling ownership interest to a NEP subsidiary and a 50% noncontrolling ownership interest to a third party, in a portfolio of seven wind generation facilities and six solar generation facilities representing a total generating capacity of 2,520 MW and 115 MW of battery storage capacity, three of which facilities were under construction. In connection with the three facilities that were under construction, approximately $668 million of cash received, which was subject to post-closing adjustments, was recorded as contract liabilities, which was included in current other liabilities on NEE’s condensed consolidated balance sheet at December 31, 2021. The three facilities achieved commercial operations during the first quarter of 2022 and approximately $551 million of contract liabilities were reversed and the sale of those facilities was recognized for accounting purposes. During the three months ended September 30, 2022, the IRA was enacted establishing a solar PTC (see Note 4) which substantially resolved the outstanding contingencies. Approximately $88 million of contract liabilities were reversed and a gain was recorded in NEE's condensed consolidated statements of income for the three and nine months ended September 30, 2022 which is included in gains on disposal of businesses/assets – net. The remaining contingencies are expected to be resolved in the fourth quarter of 2022. In addition, NextEra Energy Resources is responsible to pay for all construction costs related to the portfolio. At September 30, 2022 and December 31, 2021, approximately $142 million and $970 million, respectively, is included in accounts payable on NEE's condensed consolidated balance sheets and represents amounts owed by NextEra Energy Resources to NEP to reimburse NEP for construction costs.

Credit Losses – NEE's credit department monitors current and forward credit exposure to counterparties and their affiliates. Prospective and existing customers are reviewed for creditworthiness based on established standards and credit quality indicators. Credit quality indicators and standards that are closely monitored include credit ratings, certain financial ratios and delinquency trends which are based off the latest available information. Customers not meeting minimum standards provide various credit enhancements or secured payment terms, such as letters of credit, the posting of margin cash collateral or use of master netting arrangements.

For the nine months ended September 30, 2022 and 2021, NEE recorded approximately $85 million and $143 million of bad debt expense, including credit losses, respectively, which are included in O&M expenses in NEE’s condensed consolidated statements of income. The amounts recorded in 2021 primarily relate to credit losses at NEER driven by the operational and energy market impacts of the February 2021 weather event. The estimate for credit losses related to the impacts of the February 2021 weather event was developed based on NEE’s assessment of the ultimate collectability of these receivables under

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

potential workout scenarios. At December 31, 2021, approximately $127 million of allowances were included in noncurrent other assets on NEE's condensed consolidated balance sheets related to the February 2021 weather event. During the three months ended June 30, 2022, the net receivable was settled.

Property Plant and Equipment – Property, plant and equipment consists of the following:


	NEE				FPL
	September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
	(millions)
Electric plant in service and other property	$	121,700	$	112,500	$	72,811	$	67,771
Nuclear fuel	1,569		1,606		1,118		1,170
Construction work in progress	15,961		14,141		6,055		6,326
Property, plant and equipment, gross	139,230		128,247		79,984		75,267
Accumulated depreciation and amortization	(30,783)		(28,899)		(17,772)		(17,040)
Property, plant and equipment – net	$	108,447	$	99,348	$	62,212	$	58,227

During the three months ended September 30, 2022 and 2021, FPL recorded AFUDC of approximately $25 million and $46 million, respectively, including AFUDC – equity of approximately $19 million and $35 million, respectively. During the nine months ended September 30, 2022 and 2021, FPL recorded AFUDC of approximately $106 million and $124 million, respectively, including AFUDC – equity of approximately $82 million and $93 million, respectively. During the three months ended September 30, 2022 and 2021, NEER capitalized interest on construction projects of approximately $46 million and $42 million, respectively. During the nine months ended September 30, 2022 and 2021, NEER capitalized interest on construction projects of approximately $119 million and $104 million, respectively.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

12. 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 of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for development, construction and maintenance of its competitive energy businesses. Also see Note 3 – Contingent Consideration.

At September 30, 2022, estimated capital expenditures, on an accrual basis, for the remainder of 2022 through 2026 were as follows:


	Remainder of 2022		2023		2024		2025		2026		Total
	(millions)
FPL:
Generation:(a)
New(b)	$	985	$	2,350	$	2,180	$	1,010	$	1,045	$	7,570
Existing	770		1,655		1,255		1,330		1,670		6,680
Transmission and distribution(c)	960		4,260		4,150		5,235		5,520		20,125
Nuclear fuel	90		125		160		200		200		775
General and other	290		675		655		615		660		2,895
Total	$	3,095	$	9,065	$	8,400	$	8,390	$	9,095	$	38,045
NEER:(d)
Wind(e)	$	780	$	670	$	375	$	35	$	30	$	1,890
Solar(f)	1,400		2,690		670		5		—		4,765
Battery storage	190		540		—		—		5		735
Nuclear, including nuclear fuel	95		170		215		220		230		930

Rate-regulated transmission	55		150		65		45		10		325
Other	135		390		155		100		85		865
Total	$	2,655	$	4,610	$	1,480	$	405	$	360	$	9,510

———————————————

(a)Includes AFUDC of approximately $20 million, $90 million, $90 million, $45 million and $35 million for the remainder of 2022 through 2026, respectively.

(b)Includes land, generation structures, transmission interconnection and integration and licensing.

(c)Includes AFUDC of approximately $30 million, $60 million, $50 million, $30 million and $0 million for the remainder of 2022 through 2026, respectively.

(d)Represents capital expenditures for which applicable internal approvals and also, if required, regulatory approvals have been received.

(e)Consists of capital expenditures for new wind projects and repowering of existing wind projects totaling approximately 4,034 MW, and related transmission.

(f)Includes capital expenditures for new solar projects (including solar plus battery storage projects) totaling approximately 5,842 MW and related transmission.

The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates. For example, the timing and ultimate cost associated with solar and battery storage capital expenditures may vary due to supply chain disruptions from Southeast Asian locations.

In addition to guarantees noted in Note 6 with regards to NEP, NEECH has guaranteed or provided indemnifications or letters of credit related to third parties, including certain obligations of investments in joint ventures accounted for under the equity method, totaling approximately $502 million at September 30, 2022. These obligations primarily related to guaranteeing the residual value of certain financing leases. Payment guarantees and related contracts with respect to unconsolidated entities for which NEE or one of its subsidiaries are the guarantor are recorded at fair value and are included in noncurrent other liabilities on NEE’s condensed consolidated balance sheets. Management believes that the exposure associated with these guarantees is not material.

Contracts – In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has firm commitments under long-term contracts primarily for the transportation of natural gas with expiration dates through 2042.

At September 30, 2022, NEER has entered into contracts with expiration dates through 2033 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 $3.6 billion of related commitments are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the transportation and storage of natural gas with expiration dates through 2040.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The required capacity and/or minimum payments under contracts, including those discussed above, at September 30, 2022 were estimated as follows:


	Remainder of 2022		2023		2024		2025		2026		Thereafter
	(millions)
FPL(a)	$	270	$	985	$	950	$	925	$	915	$	8,860

NEER(b)(c)(d)	$	1,160	$	2,235	$	585	$	115	$	80	$	545

———————————————

(a)Includes approximately $105 million, $410 million, $410 million, $405 million, $400 million and $5,960 million for the remainder of 2022 through 2026 and thereafter, respectively, of firm commitments related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection. The charges associated with these agreements are recoverable through the fuel clause. For the three and nine months ended September 30, 2022, the charges associated with these agreements totaled approximately $104 million and $314 million, respectively, of which $26 million and $77 million, respectively, were eliminated in consolidation at NEE. For the three and nine months ended September 30, 2021, the charges associated with these agreements totaled approximately $105 million and $314 million, respectively, of which $26 million and $79 million, respectively, were eliminated in consolidation at NEE.

(b)Excludes commitments related to equity contributions and a 20-year natural gas transportation agreement (approximately $70 million per year) with a joint venture, in which NEER has a 31.9% equity investment, that is constructing a natural gas pipeline. These commitments are subject to the completion of construction of the pipeline which has a very low probability of completion. See Note 3 – Nonrecurring Fair Value Measurements.

(c)Includes approximately $230 million of commitments to invest in technology and other investments through 2031. See Note 7 – Other.

(d)Includes approximately $120 million, $710 million, $360 million, $65 million, $0 million and $5 million for the remainder of 2022 through 2026 and thereafter, respectively, of joint obligations of NEECH and NEER.

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 $450 million of private liability insurance per site, which is the maximum obtainable, except at Duane Arnold which obtained an exemption from the NRC and maintains a $100 million private liability insurance limit. Each site, except Duane Arnold, 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 $963 million ($550 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $143 million ($82 million for FPL) per incident per year. NextEra Energy Resources and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook and St. Lucie Unit No. 2, which approximates $16 million and $20 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, except for Duane Arnold which has a limit of $50 million for property damage, decontamination risks and non-nuclear perils. NEE participates in co-insurance of 10% of the first $400 million of losses per site per occurrence, except at Duane Arnold. 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 $158 million ($101 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NextEra Energy Resources 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 $2 million, $2 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 either its transmission and distribution property or natural gas pipeline assets. If FPL's storm restoration costs exceed the storm reserve, such storm restoration costs may be recovered, subject to prudence review by the FPSC, through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.

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, would be borne by NEE and FPL, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.

13. Segment Information

The tables below present information for NEE's two reportable segments, FPL, a rate-regulated utility business, and NEER, which is comprised of competitive energy and rate-regulated transmission businesses. Corporate and Other represents other business activities, includes eliminating entries, and may include the net effect of rounding. Effective January 1, 2022, FPL became regulated as one ratemaking entity with new unified rates and tariffs, and became one reportable segment at NEE. As a result, the previous segments known as the FPL segment and Gulf Power are no longer separate reportable segments. Prior year period amounts for FPL and Corporate and Other were retrospectively adjusted to reflect this segment change.

NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

(unaudited)

NEE's segment information is as follows:


	Three Months Ended September 30,
	2022									2021
	FPL		NEER(a)			Corporate and Other		NEE Consoli- dated		FPL		NEER(a)			Corporate and Other		NEE Consoli- dated
								(millions)
Operating revenues	$	5,075	$	1,652		$	(8)	$	6,719	$	4,134	$	258		$	(22)	$	4,370
Operating expenses – net	$	3,568	$	1,341		$	119	$	5,028	$	2,868	$	1,093		$	43	$	4,004
Gains (losses) on disposal of businesses/assets – net	$	—	$	173		$	(2)	$	171	$	—	$	12		$	1	$	13
Net loss attributable to noncontrolling interests	$	—	$	137		$	—	$	137	$	—	$	143		$	—	$	143
Net income (loss) attributable to NEE	$	1,074	$	655	(b)	$	(33)	$	1,696	$	927	$	(428)	(b)	$	(52)	$	447


	Nine Months Ended September 30,
	2022										2021
	FPL			NEER(a)			Corporate and Other		NEE Consoli- dated		FPL			NEER(a)			Corporate and Other		NEE Consoli- dated
									(millions)
Operating revenues	$	13,211		$	1,627		$	(46)	$	14,792	$	10,673		$	1,420		$	(70)	$	12,023
Operating expenses – net	$	9,060	(c)	$	3,712		$	181	$	12,953	$	7,064	(c)	$	3,289		$	132	$	10,485
Gains (losses) on disposal of businesses/assets – net	$	1		$	208		$	(13)	$	196	$	1		$	25		$	(6)	$	20
Net loss attributable to noncontrolling interests	$	—		$	646		$	—	$	646	$	—		$	495		$	—	$	495
Net income (loss) attributable to NEE	$	2,939		$	(711)	(b)	$	397	$	2,625	$	2,586		$	(252)	(b)	$	35	$	2,369

———————————————

(a)Interest expense allocated from NEECH to NextEra Energy Resources' subsidiaries is based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries. 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.

(c)FPL's income statement line for total operating expenses – net includes gains (losses) on disposal of businesses/assets – net.


	September 30, 2022								December 31, 2021
	FPL		NEER		Corporate and Other		NEE Consoli- dated		FPL		NEER		Corporate and Other		NEE Consoli- dated
							(millions)
Total assets	$	85,153	$	69,854	$	1,402	$	156,409	$	78,067	$	62,113	$	732	$	140,912

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 businesses, FPL, which serves approximately 5.8 million customer accounts in Florida and is one of the largest electric utilities in the U.S., and NEER, which together with affiliated entities is the world's largest generator of renewable energy from the wind and sun based on 2021 MWh produced on a net generation basis. The table below presents net income (loss) attributable to NEE and earnings (loss) per share attributable to NEE, assuming dilution, by reportable segment, FPL and NEER. Corporate and Other is primarily comprised of the operating results of other business activities, as well as other income and expense items, including interest expense, and eliminating entries, and may include the net effect of rounding. See Note 13 for additional segment information, including a discussion of a change in segment reporting. 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 2021 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 periods.


	Net Income (Loss) Attributable to NEE				Earnings (Loss) Per Share Attributable to NEE, Assuming Dilution				Net Income (Loss) Attributable to NEE				Earnings (Loss) Per Share Attributable to NEE, Assuming Dilution
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	(millions)								(millions)
FPL(a)	$	1,074	$	927	$	0.54	$	0.47	$	2,939	$	2,586	$	1.49	$	1.31
NEER(b)	655		(428)		0.33		(0.22)		(711)		(252)		(0.36)		(0.13)
Corporate and Other(a)	(33)		(52)		(0.01)		(0.02)		397		35		0.20		0.02
NEE	$	1,696	$	447	$	0.86	$	0.23	$	2,625	$	2,369	$	1.33	$	1.20

———————————————

(a) FPL's and Corporate and Other's results for 2021 were retrospectively adjusted to reflect a segment change. See Note 13.

(b) NEER’s results reflect an allocation of interest expense from NEECH to NextEra Energy Resources' subsidiaries based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries.

Adjusted Earnings

NEE prepares its financial statements under GAAP. However, management uses earnings adjusted for certain items (adjusted earnings), a non-GAAP financial measure, internally for financial planning, analysis of performance, 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 that adjusted earnings provide a more meaningful representation of NEE's fundamental earnings power. Although these amounts are properly reflected 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.

The following table provides details of the after-tax adjustments to net income considered in computing NEE's adjusted earnings discussed above.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(millions)
Net gains (losses) associated with non-qualifying hedge activity(a)	$	90	$	(941)	$	(974)	$	(1,732)
Differential membership interests-related – NEER	$	(29)	$	(30)	$	(71)	$	(76)
NEP investment gains, net – NEER	$	75	$	(48)	$	(8)	$	(133)

Change in unrealized gains (losses) on NEER's nuclear decommissioning funds and OTTI, net – NEER	$	(99)	$	(17)	$	(403)	$	103


Impairment charges related to investment in Mountain Valley Pipeline – NEER(b)	$	(24)	$	—	$	(650)	$	—

———————————————

(a) For the three months ended September 30, 2022 and 2021, approximately $3 million of gains and $952 million of losses, respectively, and for the nine months ended September 30, 2022 and 2021, $1,619 million and $1,937 million of losses, respectively, are included in NEER's net income; the balance is included in Corporate and Other. The change in non-qualifying hedge activity is primarily attributable to changes in forward power and natural gas prices, interest rates and foreign currency exchange rates, as well as the reversal of previously recognized unrealized mark-to-market gains or losses as the underlying transactions were realized.

(b) See Note 3 – Nonrecurring Fair Value Measurements for a discussion of the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline.

NEE segregates into two categories unrealized mark-to-market gains and losses and timing impacts related to derivative transactions. The first category, referred to as non-qualifying hedges, represents certain energy derivative, interest rate derivative and foreign currency 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 condensed consolidated statements of income, resulting in earnings volatility because the economic offset to certain of the positions are generally 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 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.

RESULTS OF OPERATIONS

Summary

Net income attributable to NEE increased by $1,249 million for the three months ended September 30, 2022 reflecting higher results at NEER, FPL and Corporate and Other. Net income attributable to NEE increased by $256 million for the nine months ended September 30, 2022 reflecting higher results at FPL and Corporate and Other, partly offset by lower results at NEER.

FPL's increase in net income for the three and nine months ended September 30, 2022 was primarily driven by continued investments in plant in service and other property.

NEER's results increased for the three months ended September 30, 2022 primarily reflecting favorable non-qualifying hedge activity compared to 2021, partly offset by unfavorable changes in the fair value of equity securities in NEER's nuclear decommissioning funds. NEER's results decreased for the nine months ended September 30, 2022 primarily reflecting impairment charges on the Mountain Valley Pipeline investment and unfavorable changes in the fair value of equity securities in NEER's nuclear decommissioning funds, partly offset by favorable non-qualifying hedge activity compared to 2021.

Corporate and Other's results increased for the three and nine months ended September 30, 2022 primarily due to favorable non-qualifying hedge activity.

NEE's effective income tax rates for the three months ended September 30, 2022 and 2021 were approximately 17% and (10)%, respectively. NEE's effective income tax rates for the nine months ended September 30, 2022 and 2021 were approximately 12% and 4%, respectively. See Note 4 for a discussion of NEE's and FPL's effective income tax rates.

On August 16, 2022, the IRA was enacted which significantly expanded tax incentives for clean energy. The IRA expanded the PTC to include solar generation facilities and extended the 100% PTC and the 30% ITC to wind and solar generation facilities that start construction before the later of 2034 or the end of the calendar year following the year in which greenhouse gas emissions from U.S. electric generation are reduced by 75% from 2022 levels. Accordingly, owners of utility-scale wind and solar generation facilities placed in service in 2022 or later are eligible to claim a PTC (or an ITC in lieu of the PTC) upon initially achieving commercial operation. In order to qualify for the 100% PTC or 30% ITC rate, a facility must meet certain other requirements or construction must start on the facility before 60 days after guidance on these requirements is issued. In addition, the PTC is increased by 10% and the ITC rate is increased by 10 percentage points for facilities that satisfy certain tax credit enhancement requirements. Retrofitted wind and solar generation facilities may qualify for a PTC or ITC if the cost basis of the new investment is at least 80% of the facility’s total fair value.

In addition, the IRA expanded the 30% ITC to include storage projects placed in service after 2022 (previously, such projects qualified only if they were connected to and charged by a renewable generation facility that claimed the ITC) as well as renewable natural gas facilities that are placed in service after 2022 and begin construction before 2025. The IRA created a PTC of $3/kilogram of green (low emission) hydrogen produced at a facility after 2022 and during the first ten years of commercial operation (or a 30% ITC in lieu of the PTC), provided that construction of the facility begins before 2033. These credits are also subject to certain other requirements. In addition, storage projects and hydrogen facilities claiming an ITC are eligible for a 10 percentage point increase in the ITC rate if the facilities satisfy certain tax credit enhancement requirements. A wind or solar project that provides electricity to a green hydrogen facility may qualify for the PTC or ITC and the hydrogen facility may separately qualify for its own PTC or ITC.

For taxable years beginning after 2022, renewable energy tax credits generated during the taxable year can be transferred to an unrelated transferee.

NEE, including FPL, is monitoring solar supply chain disruptions from Southeast Asian locations and is taking steps intended to mitigate potential risks to their solar project development and construction activities. To date, there has been no material impact

on NEE's or FPL's operations or financial performance as a result of these activities.

FPL: Results of Operations

Investments in plant in service and other property grew FPL's average rate base by approximately $5.6 billion for both the three and nine months ended September 30, 2022 when compared to the same periods in the prior year, reflecting, among other things, the addition of the 1,246 MW Dania Beach Clean Energy Center which was placed in service on May 31, 2022, solar generation additions and ongoing transmission and distribution additions.

The use of reserve amortization for the three and nine months ended September 30, 2022 is permitted by FPL's 2021 rate agreement and, for the prior year periods, a December 2016 FPSC final order approving a stipulation and settlement between FPL and several intervenors in a prior base rate proceeding (2016 rate agreement). In order to earn a targeted regulatory ROE, subject to limitations associated with the 2021 and 2016 rate agreements, 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 and tax expenses. In general, the net impact of these income statement line items must be adjusted, in part, by reserve amortization to earn the targeted regulatory ROE. In certain periods, reserve amortization is reversed so as not to exceed the targeted regulatory ROE. 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 revenue and costs not recoverable from retail customers. During the three months ended September 30, 2022 and 2021, FPL recorded the reversal of reserve amortization of approximately $80 million and $124 million, respectively. During the nine months ended September 30, 2022 and 2021, FPL recorded a one-time reserve amortization adjustment of approximately $114 million, discussed under Depreciation and Amortization Expense below, and recorded reserve amortization of $291 million, respectively. During 2022 and 2021, FPL earned an approximately 11.80% and 11.60% regulatory ROE on its retail rate base, based on a trailing thirteen-month average retail rate base as of September 30, 2022 and September 30, 2021, respectively. See Note 11 – Rate Regulation for a discussion of the increase to FPL's authorized regulatory ROE.

In late September 2022, FPL's service territory was impacted by Hurricane Ian and FPL incurred recoverable storm restoration costs of approximately $1.1 billion. See Note 11 – Storm Reserve Deficit.

Operating Revenues

During the three and nine months ended September 30, 2022, operating revenues increased $941 million and $2,538 million, respectively. The increase for the three and nine months ended September 30, 2022 primarily reflects higher fuel revenues of approximately $500 million and $1,370 million, respectively, primarily related to higher fuel and energy prices. Retail base revenues increased $277 million and $717 million during the three and nine months ended September 30, 2022, respectively, as compared to the prior year period. The increase for the three and nine months ended September 30, 2022 in retail base revenues reflects additional revenues of approximately $180 million and $473 million, respectively, related to new retail base rates under the 2021 rate agreement. Retail base revenues during the three and nine months ended September 30, 2022 were also impacted by an increase of 2.3% and 1.7%, respectively, in the average usage per retail customer, primarily related to favorable weather when compared to the prior year period, and an increase of 1.5% in the average number of customer accounts for both periods. The increase in operating revenues for the three and nine months ended September 30, 2022 also reflects higher other revenues of approximately $164 million and $451 million, respectively, primarily related to increases in cost recovery clause revenue from storm protection plan and environmental, franchise fees and gross receipts taxes.

Although FPL estimates a greater than 10% fuel under-recovery for 2022, FPL does not plan to seek a midcourse correction in 2022. Instead, FPL intends to file a request with the FPSC for the 2022 fuel under-recovery toward the end of 2022 or beginning of 2023. FPL is continuing to assess actual fuel costs and is monitoring the natural gas market conditions before determining the time period over which it will request recovery of the 2022 fuel-under recovery.

Pursuant to FPL’s 2021 rate agreement, FPL will prospectively adjust base rates after a review by the FPSC for PTCs related to new solar generation facilities recovered in base rates during the term of the 2021 rate agreement. See Note 11 – Rate Regulation for a discussion of the impact of the IRA on FPL's revenue.

Fuel, Purchased Power and Interchange Expense

Fuel, purchased power and interchange expense increased $515 million and $1,411 million for the three and nine months ended September 30, 2022, respectively, primarily reflecting higher fuel and energy prices.

Other Operations and Maintenance Expense

O&M expenses increased $95 million for the three months ended September 30, 2022 primarily reflecting higher storm reserve expense used to limit FPL's regulatory ROE to the high end of the authorized range pursuant to the 2021 rate agreement.

Depreciation and Amortization Expense

Depreciation and amortization expense increased $14 million and $282 million during the three and nine months ended September 30, 2022, respectively, primarily reflecting the impact of reserve amortization and additional amortization of the capital recovery regulatory asset balance pursuant to the 2021 rate agreement. During the three months ended September 30, 2022 and 2021, FPL recorded the reversal of reserve amortization of approximately $80 million and $124 million, respectively. During the nine months ended September 30, 2022 and 2021, FPL recorded reserve amortization of approximately $0 million and $291 million, respectively. Reserve amortization, or reversal of such amortization, reflects adjustments to accrued asset removal costs provided under the 2021 and 2016 rate agreements in order to achieve the targeted regulatory ROE. Reserve amortization is recorded as either an increase or decrease to accrued asset removal costs which is reflected in noncurrent regulatory assets on the condensed consolidated balance sheets. At September 30, 2022, approximately $1,450 million of reserve amortization remains available under the 2021 rate agreement. In addition, during the nine months ended September 30, 2022, FPL recorded a one-time reserve amortization adjustment of $114 million as required under the 2021 rate agreement, 50% of which was used to reduce the capital recovery regulatory asset balance and the other 50% to increase the storm reserve regulatory liability.

Taxes other than income taxes and other – net

Taxes other than income taxes and other – net increased $76 million for the three months ended September 30, 2022 primarily due to higher franchise fees and gross receipts taxes, which are pass-through costs and reflect the increase in pass-through cost revenues.

NEER: Results of Operations

NEER’s results increased $1,083 million and decreased $459 million for the three and nine months ended September 30, 2022, respectively. The primary drivers, on an after-tax basis, of the changes are in the following table.


	Increase (Decrease) From Prior Year Period
	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
	(millions)
New investments(a)	$	32	$	44
Existing generation and storage assets(a)	(42)		127
Gas infrastructure(a)	11		(26)
Customer supply and proprietary power and gas trading(b)	127		127

NEET(a)	11		8

Other, including other investment income, interest expense and corporate general and administrative expenses	(28)		(26)
Change in non-qualifying hedge activity(c)	955		318
Change in unrealized gains/losses on equity securities held in nuclear decommissioning funds and OTTI, net(c)	(82)		(506)
NEP investment gains, net(c)	123		125


Impairment charges related to investment in Mountain Valley Pipeline(c)(d)	(24)		(650)
Change in net income (loss) less net loss attributable to noncontrolling interests	$	1,083	$	(459)

———————————————

(a) Reflects after-tax project contributions, including the net effect of deferred income taxes and other benefits associated with PTCs and ITCs for wind, solar, and storage projects, as applicable, but excludes allocation of interest expense or corporate general and administrative expenses. Results from projects, pipelines and rate-regulated transmission facilities and transmission lines are included in new investments during the first twelve months of operation or ownership. Project results, including repowered wind projects, are included in existing generation and storage assets, pipeline results are included in gas infrastructure and rate-regulated transmission facilities and transmission lines are included in NEET beginning with the thirteenth month of operation or ownership.

(b) Excludes allocation of interest expense and corporate general and administrative expenses.

(d) See Note 3 – Nonrecurring Fair Value Measurements for a discussion of the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline.

Customer Supply and Proprietary Power and Gas Trading

Results from customer supply and proprietary power and gas trading increased for the three and nine months ended September 30, 2022 primarily due to higher margins.

Other Factors

Supplemental to the primary drivers of the changes in NEER's results 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 September 30, 2022 increased $1,394 million primarily due to:

•the impact of non-qualifying commodity hedges due primarily to changes in energy prices (approximately $217 million of losses for the three months ended September 30, 2022 compared to $1,268 million of losses for the comparable period in 2021),

•net increases in revenues of $281 million from the customer supply, proprietary power and gas trading, and gas infrastructure businesses as compared to the prior year period primarily due to favorable market conditions, and

•revenues from new investments of $52 million.

Operating revenues for the nine months ended September 30, 2022 increased $207 million primarily due to:

•higher revenues from existing generation and storage assets of approximately $190 million primarily due to higher wind revenues as compared to the prior year period which was impacted by the February 2021 weather event,

•net increases in revenues of $176 million from the customer supply, proprietary power and gas trading, and gas infrastructure businesses as compared to the prior year period, and

•revenues from new investments of $140 million,

partly offset by,

•the impact of non-qualifying commodity hedges due primarily to changes in energy prices (approximately $3,105 million of losses for the nine months ended September 30, 2022 compared to $2,808 million of losses for the comparable period in 2021).

Operating Expenses – net

Operating expenses – net for the three months ended September 30, 2022 increased $248 million primarily due to increases of $146 million in O&M expenses, $42 million in depreciation and amortization and $38 million in fuel, purchased power and interchange expenses. The increases were primarily associated with growth across the NEER businesses.

Operating expenses – net for the nine months ended September 30, 2022 increased $423 million primarily due to increases of $212 million in O&M expenses, $92 million in fuel, purchased power and interchange expenses and $83 million in depreciation and amortization. The increases were primarily associated with growth across the NEER businesses, partly offset by lower bad debt expense associated with the February 2021 weather event (see Note 11 – Credit Losses).

Gains on Disposal of Businesses/Assets – net

For the three and nine months ended September 30, 2022, the changes in gains on disposal of businesses/assets – net primarily relates to the September 2022 sale of a battery storage facility and the resolution of a contingency related to the December 2021 sale of ownership interests in wind and solar projects. See Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests.

Interest Expense

NEER’s interest expense for the nine months ended September 30, 2022 decreased $314 million primarily reflecting approximately $335 million of favorable impacts related to changes in the fair value of interest rate derivative instruments.

Equity in Earnings of Equity Method Investees

NEER recognized $179 million of equity in earnings of equity method investees for the nine months ended September 30, 2022 compared to $465 million of equity in earnings of equity method investees for the prior year period. The change for the nine months ended September 30, 2022 primarily reflects impairment charges related to the investment in Mountain Valley Pipeline of approximately $0.8 billion (see Note 3 – Nonrecurring Fair Value Measurements), partly offset by an increase in equity in earnings of NEP recorded in 2022 primarily due to favorable impacts related to changes in the fair value of interest rate derivative instruments.

Change in Unrealized Gains (Losses) on Equity Securities Held in NEER's Nuclear Decommissioning Funds – net

For the three and nine months ended September 30, 2022, changes in the fair value of equity securities in NEER's nuclear decommissioning funds related to unfavorable market conditions in 2022 compared to the prior year periods.

Tax Credits, Benefits and Expenses

PTCs from wind and solar projects and ITCs from solar, battery storage and certain wind projects are included in NEER’s earnings. PTCs are recognized as wind and solar energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes. A portion of the PTCs and ITCs have been allocated to investors in connection with sales of differential membership interests. Also see Note 4 for a discussion of other income tax impacts.

GridLiance Acquisition

On March 31, 2021, a wholly owned subsidiary of NEET acquired GridLiance, which owns and operates three FERC-regulated transmission utilities with high-voltage transmission lines across six states, five in the Midwest and Nevada. See Note 5 – GridLiance.

RNG Acquisition

On October 27, 2022, a wholly owned subsidiary of NextEra Energy Resources entered into several agreements to acquire 100% of a portfolio of renewable energy projects as well as the related service provider. See Note 5 - RNG Acquisition.

Corporate and Other: Results of Operations

Corporate and Other is primarily comprised of the operating results of other business activities, as well as corporate interest income and expenses. Corporate and Other allocates a portion of NEECH's corporate interest expense to NextEra Energy Resources. Interest expense is allocated based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries.

Corporate and Other's results increased $19 million and $362 million during the three and nine months ended September 30, 2022, respectively. The increases for the three and nine months ended September 30, 2022 primarily reflect favorable after-tax impacts of approximately $76 million and $440 million, respectively, as compared to the prior year periods, which were related to non-qualifying hedge activity as a result of changes in the fair value of interest rate derivative instruments. The increases for the three and nine months ended September 30, 2022 were partly offset by higher interest costs and corporate operating expenses.

LIQUIDITY AND CAPITAL RESOURCES

NEE and its subsidiaries require funds to support and grow their businesses. These funds are used for, among other things, working capital, capital expenditures (see Note 12 – Commitments), investments in or acquisitions of assets and businesses (see Note 5), payment of maturing debt and related derivative obligations (see Note 2) 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 of short- and long-term debt and, from time to time, equity securities, proceeds from differential membership investors and sales of assets to NEP or third parties (see Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests), 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. NEE, 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.

Cash Flows

NEE's sources and uses of cash for the nine months ended September 30, 2022 and 2021 were as follows:


	Nine Months Ended September 30,
	2022		2021
	(millions)
Sources of cash:
Cash flows from operating activities	$	7,267	$	6,236
Issuances of long-term debt, including premiums and discounts	11,616		9,614
Proceeds from differential membership investors	443		328

Sale of independent power and other investments of NEER	575		384


Payments from related parties under the CSCS agreement – net	8		295
Issuances of common stock – net	1,458		7
Net increase in commercial paper and other short-term debt	743		1,785

Other sources – net	5		41
Total sources of cash	22,115		18,690
Uses of cash:
Capital expenditures, independent power and other investments and nuclear fuel purchases	(13,829)		(12,005)
Retirements of long-term debt	(2,137)		(4,262)



Dividends	(2,507)		(2,267)

Other uses – net	(986)		(699)
Total uses of cash	(19,459)		(19,233)
Effects of currency translation on cash, cash equivalents and restricted cash	(5)		1
Net increase (decrease) in cash, cash equivalents and restricted cash	$	2,651	$	(542)

NEE's primary capital requirements are for expanding and enhancing FPL's electric system and generation facilities to continue to provide reliable service to meet customer electricity demands and for funding NEER's investments in independent power and other projects. See Note 12 – Commitments for estimated capital expenditures for the remainder of 2022 through 2026.

The following table provides a summary of capital investments for the nine months ended September 30, 2022 and 2021.


	Nine Months Ended September 30,
	2022		2021
	(millions)
FPL:
Generation:
New	$	955	$	697
Existing	1,065		861
Transmission and distribution	3,505		3,169
Nuclear fuel	67		110
General and other	385		425
Other, primarily change in accrued property additions and the exclusion of AFUDC – equity	111		(152)
Total	6,088		5,110

NEER:
Wind	2,565		3,389
Solar (includes solar plus battery storage projects)	2,114		1,629
Battery storage	488		267
Nuclear, including nuclear fuel	112		173
Natural gas pipelines	189		179
Other gas infrastructure	927		377
Rate-regulated transmission (2021 includes the acquisition of GridLiance, see Note 5 – GridLiance)	390		794
Other	505		87
Total	7,290		6,895
Corporate and Other	451		—
Total capital expenditures, independent power and other investments and nuclear fuel purchases	$	13,829	$	12,005

Liquidity

At September 30, 2022, NEE's total net available liquidity was approximately $14.0 billion. The table below provides the components of FPL's and NEECH's net available liquidity at September 30, 2022.


							Maturity Date
	FPL		NEECH		Total		FPL	NEECH
	(millions)
Syndicated revolving credit facilities(a)	$	3,798	$	5,257	$	9,055	2023 – 2027	2022 – 2027
Issued letters of credit	(3)		(1,692)		(1,695)
	3,795		3,565		7,360

Bilateral revolving credit facilities(b)	2,180		3,025		5,205		2022 – 2025	2022 – 2023
Borrowings	—		—		—
	2,180		3,025		5,205

Letter of credit facilities(c)	—		3,250		3,250			2022 – 2025
Issued letters of credit	—		(2,412)		(2,412)
	—		838		838

Bilateral revolving credit and letter of credit facilities(d)	—		1,000		1,000			2023
Borrowings	—		—		—
Issued letters of credit	—		—		—
	—		1,000		1,000

Subtotal	5,975		8,428		14,403

Cash and cash equivalents	1,218		1,284		2,502
Commercial paper and other short-term borrowings outstanding	(200)		(2,663)		(2,863)
Amounts due to related parties under the CSCS agreement (see Note 6)	—		(65)		(65)
Net available liquidity	$	6,993	$	6,984	$	13,977

———————————————

(a) Provide for the funding of loans up to the amount of the credit facility and the issuance of letters of credit up to $3,175 million ($650 million for FPL and $2,525 million for NEECH). 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 syndicated revolving credit facilities are also available to support the purchase of $1,334 million of pollution control, solid waste disposal and industrial development revenue bonds in the event they are tendered by individual bondholders and not remarketed prior to maturity, as well as the repayment of approximately $1,327 million of floating rate notes in the event an individual noteholder requires repayment at specified dates prior to maturity. Approximately $3,130 million of FPL's and $3,844 million of NEECH's syndicated revolving credit facilities expire in 2027.

(b) Only available for the funding of loans.

(d) Provide for the funding of loans and issuance of letters of credit up to an aggregate total of the amount of each credit facility.

During the nine months ended September 30, 2022, NEE increased its total capacity under its credit facilities by approximately $3.7 billion primarily to provide for additional liquidity to support and grow the business (see Note 2) and, at FPL, to fund fuel and storm restoration costs.

Capital Support

Guarantees, Letters of Credit, Surety Bonds and Indemnifications (Guarantee Arrangements)

Certain subsidiaries of NEE issue guarantees and obtain letters of credit and surety bonds, as well as provide indemnities, to facilitate commercial transactions with third parties and financings. Substantially all of the guarantee arrangements are on behalf of NEE’s consolidated subsidiaries, as discussed in more detail below. See Note 6 regarding guarantees of obligations on behalf of NEP subsidiaries. NEE is not required to recognize liabilities associated with guarantee arrangements issued on behalf of its consolidated subsidiaries unless it becomes probable that they will be required to perform. At September 30, 2022, NEE believes that there is no material exposure related to these guarantee arrangements.

NEE subsidiaries issue guarantees related to equity contribution agreements associated with the development, construction and financing of certain power generation facilities, engineering, procurement and construction agreements and equity contributions associated with a natural gas pipeline project under construction and a related natural gas transportation agreement. Commitments associated with these activities are included and/or disclosed in the contracts table in Note 12.

In addition, at September 30, 2022, NEE subsidiaries had approximately $5.5 billion in guarantees related to obligations under purchased power agreements, nuclear-related activities, payment obligations related to PTCs, support for NEER's retail electricity provider activities, as well as other types of contractual obligations (see Note 3 – Contingent Consideration and Note 12 – Commitments).

In some instances, subsidiaries of NEE elect to issue guarantees instead of posting other forms of collateral required under certain financing arrangements, as well as for other project-level cash management activities. At September 30, 2022, these guarantees totaled approximately $504 million and support, among other things, cash management activities, including those related to debt service and operations and maintenance service agreements, as well as other specific project financing requirements.

Subsidiaries of NEE also issue guarantees to support customer supply and proprietary power and gas trading activities, including the buying and selling of wholesale energy commodities. At September 30, 2022, the estimated mark-to-market exposure (the total amount that these subsidiaries of NEE could be required to fund based on energy commodity market prices at September 30, 2022) plus contract settlement net payables, net of collateral posted for obligations under these guarantees, totaled approximately $3.5 billion.

At September 30, 2022, subsidiaries of NEE also had approximately $5.6 billion of standby letters of credit and approximately $1.0 billion of surety bonds to support certain of the commercial activities discussed above. FPL's and NEECH's credit facilities are available to support substantially all of the standby letters of credit.

In addition, as part of contract negotiations in the normal course of business, certain subsidiaries of NEE have agreed and in the future may agree to make payments to compensate or indemnify other parties, including those associated with asset divestitures, for possible unfavorable financial consequences resulting from specified events. The specified events may include, but are not limited to, an adverse judgment in a lawsuit, or the imposition of additional taxes due to a change in tax law or interpretations of the tax law. NEE is unable to estimate the maximum potential amount of future payments by its subsidiaries 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.

NEECH, a 100% owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL. NEE has fully and unconditionally guaranteed certain payment obligations of NEECH, including most of its debt and all of its debentures registered pursuant to the Securities Act of 1933 and commercial paper issuances, as well as most of its payment guarantees and indemnifications, and NEECH has guaranteed certain debt and other obligations of subsidiaries within the NEER segment. Certain guarantee arrangements described above contain requirements for NEECH and FPL to maintain a specified credit rating.

NEE fully and unconditionally guarantees NEECH debentures pursuant to a guarantee agreement, dated as of June 1, 1999 (1999 guarantee) and NEECH junior subordinated debentures pursuant to an indenture, dated as of September 1, 2006 (2006 guarantee). The 1999 guarantee is an unsecured obligation of NEE and ranks equally and ratably with all other unsecured and unsubordinated indebtedness of NEE. The 2006 guarantee is unsecured and subordinate and junior in right of payment to NEE senior indebtedness (as defined therein). No payment on those junior subordinated debentures may be made under the 2006 guarantee until all NEE senior indebtedness has been paid in full in certain circumstances. NEE’s and NEECH’s ability to meet their financial obligations are primarily dependent on their subsidiaries’ net income, cash flows and their ability to pay upstream dividends or to repay funds to NEE and NEECH. The dividend-paying ability of some of the subsidiaries is limited by contractual restrictions which are contained in outstanding financing agreements.

Summarized financial information of NEE and NEECH is as follows:


	Nine Months Ended September 30, 2022						Year Ended December 31, 2021
	Issuer/Guarantor Combined(a)		NEECH Consolidated(b)		NEE Consolidated(b)		Issuer/Guarantor Combined(a)		NEECH Consolidated(b)		NEE Consolidated(b)
	(millions)
Operating revenues	$	(15)	$	1,711	$	14,792	$	(1)	$	3,139	$	17,069
Operating income (loss)	$	(259)	$	(1,932)	$	2,035	$	(352)	$	(1,317)	$	2,913
Net income (loss)	$	383	$	(961)	$	1,979	$	(275)	$	(395)	$	2,827
Net income (loss) attributable to NEE/NEECH	$	383	$	(315)	$	2,625	$	(275)	$	351	$	3,573


	September 30, 2022						December 31, 2021
	Issuer/Guarantor Combined(a)		NEECH Consolidated(b)		NEE Consolidated(b)		Issuer/Guarantor Combined(a)		NEECH Consolidated(b)		NEE Consolidated(b)
	(millions)
Total current assets	$	99	$	7,641	$	12,891	$	48	$	5,662	$	9,288
Total noncurrent assets	$	2,732	$	64,071	$	143,518	$	2,308	$	57,620	$	131,624
Total current liabilities	$	8,503	$	20,281	$	27,793	$	1,553	$	11,560	$	17,437
Total noncurrent liabilities	$	30,253	$	43,992	$	81,870	$	27,956	$	40,289	$	77,806
Redeemable noncontrolling interests	$	—	$	—	$	—	$	—	$	245	$	245
Noncontrolling interests	$	—	$	8,117	$	8,117	$	—	$	8,222	$	8,222


————————————
(a)			Excludes intercompany transactions, and investments in, and equity in earnings of, subsidiaries.
(b)			Information has been prepared on the same basis of accounting as NEE's condensed consolidated financial statements.

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 physical and financial risks 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 fuel marketing and trading activities to take advantage of expected future favorable price movements. See Note 2.

The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three and nine months ended September 30, 2022 were as follows:


			Hedges on Owned Assets
	Trading		Non- Qualifying		FPL Cost Recovery Clauses		NEE Total
	(millions)
Three Months Ended September 30, 2022
Fair value of contracts outstanding at June 30, 2022	$	1,004	$	(4,301)	$	98	$	(3,199)
Reclassification to realized at settlement of contracts	(93)		174		(198)		(117)
Value of contracts acquired	—		15		—		15
Net option premium purchases (issuances)	14		3		—		17

Changes in fair value excluding reclassification to realized	310		(432)		130		8
Fair value of contracts outstanding at September 30, 2022	1,235		(4,541)		30		(3,276)
Net margin cash collateral paid (received)							473
Total mark-to-market energy contract net assets (liabilities) at September 30, 2022	$	1,235	$	(4,541)	$	30	$	(2,803)


			Hedges on Owned Assets
	Trading		Non- Qualifying		FPL Cost Recovery Clauses		NEE Total
	(millions)
Nine Months Ended September 30, 2022
Fair value of contracts outstanding at December 31, 2021	$	978	$	(1,392)	$	1	$	(413)
Reclassification to realized at settlement of contracts	(273)		691		(188)		230
Value of contracts acquired	(1)		29		—		28
Net option premium purchases (issuances)	142		11		—		153
Changes in fair value excluding reclassification to realized	389		(3,880)		217		(3,274)
Fair value of contracts outstanding at September 30, 2022	1,235		(4,541)		30		(3,276)
Net margin cash collateral paid (received)							473
Total mark-to-market energy contract net assets (liabilities) at September 30, 2022	$	1,235	$	(4,541)	$	30	$	(2,803)

NEE's total mark-to-market energy contract net assets (liabilities) at September 30, 2022 shown above are included on the condensed consolidated balance sheets as follows:


	September 30, 2022
	(millions)
Current derivative assets	$	1,355
Noncurrent derivative assets	1,693
Current derivative liabilities	(2,842)

Noncurrent derivative liabilities	(3,009)
NEE's total mark-to-market energy contract net liabilities	$	(2,803)

The sources of fair value estimates and maturity of energy contract derivative instruments at September 30, 2022 were as follows:


	Maturity
	2022		2023		2024		2025		2026		Thereafter		Total
	(millions)
Trading:
Quoted prices in active markets for identical assets	$	(178)	$	(586)	$	(490)	$	(396)	$	(205)	$	(114)	$	(1,969)
Significant other observable inputs	428		1,736		819		640		405		497		4,525
Significant unobservable inputs	(131)		(838)		(152)		(59)		(38)		(103)		(1,321)
Total	119		312		177		185		162		280		1,235
Owned Assets – Non-Qualifying:
Quoted prices in active markets for identical assets	(6)		(69)		(43)		(36)		(42)		(45)		(241)
Significant other observable inputs	(389)		(1,177)		(839)		(565)		(364)		(590)		(3,924)
Significant unobservable inputs	1		—		(11)		(3)		1		(364)		(376)
Total	(394)		(1,246)		(893)		(604)		(405)		(999)		(4,541)
Owned Assets – FPL Cost Recovery Clauses:
Quoted prices in active markets for identical assets	—		—		—		—		—		—		—
Significant other observable inputs	5		4		—		—		—		—		9
Significant unobservable inputs	8		14		(1)		—		—		—		21
Total	13		18		(1)		—		—		—		30





Total sources of fair value	$	(262)	$	(916)	$	(717)	$	(419)	$	(243)	$	(719)	$	(3,276)

The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three and nine months ended September 30, 2021 were as follows:


			Hedges on Owned Assets
	Trading		Non- Qualifying		FPL Cost Recovery Clauses		NEE Total
	(millions)
Three Months Ended September 30, 2021
Fair value of contracts outstanding at June 30, 2021	$	777	$	(356)	$	5	$	426
Reclassification to realized at settlement of contracts	(44)		79		(6)		29
Value of contracts acquired	(5)		5		—		—
Net option premium purchases (issuances)	6		4		—		10
Changes in fair value excluding reclassification to realized	22		(1,312)		9		(1,281)
Fair value of contracts outstanding at September 30, 2021	756		(1,580)		8		(816)
Net margin cash collateral paid (received)							(351)
Total mark-to-market energy contract net assets (liabilities) at September 30, 2021	$	756	$	(1,580)	$	8	$	(1,167)


			Hedges on Owned Assets
	Trading		Non- Qualifying		FPL Cost Recovery Clauses		NEE Total
	(millions)
Nine Months Ended September 30, 2021
Fair value of contracts outstanding at December 31, 2020	$	706	$	996	$	—	$	1,702
Reclassification to realized at settlement of contracts	49		94		(5)		138
Value of contracts acquired	7		7		—		14
Net option premium purchases (issuances)	19		6		—		25
Changes in fair value excluding reclassification to realized	(25)		(2,683)		13		(2,695)
Fair value of contracts outstanding at September 30, 2021	756		(1,580)		8		(816)
Net margin cash collateral paid (received)							(351)
Total mark-to-market energy contract net assets (liabilities) at September 30, 2021	$	756	$	(1,580)	$	8	$	(1,167)

With respect to commodities, NEE's Exposure Management Committee (EMC), which is comprised 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 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(a)						Non-Qualifying Hedges and Hedges in FPL Cost Recovery Clauses(b)						Total
	FPL		NEER		NEE		FPL		NEER		NEE		FPL		NEER		NEE
									(millions)
December 31, 2021	$	—	$	17	$	17	$	1	$	148	$	148	$	1	$	149	$	149
September 30, 2022	$	—	$	29	$	29	$	6	$	250	$	255	$	6	$	210	$	204
Average for the nine months ended September 30, 2022	$	—	$	24	$	24	$	10	$	295	$	297	$	10	$	277	$	280

———————————————

(a) The VaR figures for the trading portfolio include positions that are marked to market. Taking into consideration offsetting unmarked non-derivative positions, such as physical inventory, the trading VaR figures were approximately $16 million and $9 million at September 30, 2022 and December 31, 2021, respectively.

(b) 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 outstanding and expected future 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.

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


	September 30, 2022				December 31, 2021
	Carrying Amount		Estimated Fair Value(a)		Carrying Amount		Estimated Fair Value(a)
	(millions)
NEE:
Fixed income securities:
Special use funds	$	2,097	$	2,097	$	2,505	$	2,505
Other investments, primarily debt securities	$	550	$	550	$	311	$	311
Long-term debt, including current portion	$	61,962	$	57,029	$	52,745	$	57,290
Interest rate contracts – net unrealized gains (losses)	$	500	$	500	$	(633)	$	(633)
FPL:
Fixed income securities – special use funds	$	1,617	$	1,617	$	1,934	$	1,934
Long-term debt, including current portion	$	20,998	$	19,028	$	18,510	$	21,379

———————————————

(a)See Notes 2 and 3.

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 credit losses, result in a corresponding adjustment to the related regulatory asset or liability accounts based on current regulatory treatment. The changes in fair value for NEE's non-rate regulated operations result in a corresponding adjustment to OCI, except for credit losses and unrealized losses on available for sale securities intended or required to be sold prior to recovery of the amortized cost basis, 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.

At September 30, 2022, NEE had interest rate contracts with a notional amount of approximately $8.8 billion to manage exposure to the variability of cash flows primarily associated with expected future and outstanding debt issuances at NEECH and NEER. In October 2022, NEECH entered into a forward starting interest rate swap agreement with a notional amount of $10 billion to manage interest rate risk associated with forecasted debt issuances. See Note 2.

Based upon a hypothetical 10% decrease in interest rates, the fair value of NEE's net liabilities would increase by approximately $1,833 million ($794 million for FPL) at September 30, 2022.

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 carried at their market value of approximately $4,147 million and $5,511 million ($2,725 million and $3,552 million for FPL) at September 30, 2022 and December 31, 2021, respectively. NEE's and FPL’s investment strategy for equity securities in their nuclear decommissioning reserve funds emphasizes marketable securities which are broadly diversified. At September 30, 2022, a hypothetical 10% decrease in the prices quoted on stock exchanges would result in an approximately $399 million ($261 million for FPL) reduction in fair value. For FPL, a corresponding adjustment would be made to the related regulatory asset or liability accounts based on current regulatory treatment, and for NEE’s non-rate regulated operations, a corresponding amount would be recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds – net in NEE's condensed consolidated statements of income.

Credit Risk

NEE and its subsidiaries, including FPL, 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.

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 noncash 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. At September 30, 2022, NEE's credit risk exposure associated with its energy marketing and trading counterparties, taking into account collateral and contractual netting rights, totaled $3.3 billion ($82 million for FPL), of which approximately 74% (100% for FPL) was with companies that have investment grade credit ratings. With regard to credit risk exposure to counterparties with below investment grade credit ratings, NEE has first lien security positions with respect to approximately 70% of such exposure. For the remaining unsecured positions with counterparties that have below investment grade credit ratings, no one counterparty makes up more than 6% of NEE’s total exposure to below investment grade counterparties. See Notes 1, 2 and 11 – Credit Losses.

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 September 30, 2022, 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 September 30, 2022.

(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

None. With regard to environmental proceedings to which a governmental authority is a party, NEE's and FPL's policy is to disclose any such proceeding if it is reasonably expected to result in monetary sanctions of greater than or equal to $1 million.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the 2021 Form 10-K and the March 2022 Form 10-Q. The factors discussed in Part I, Item 1A. Risk Factors in the 2021 Form 10-K and Part II, Item 1A. Risk Factors in the March 2022 Form 10-Q, 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 2021 Form 10-K and March 2022 Form 10-Q 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

(a)Information regarding purchases made by NEE of its common stock during the three months ended September 30, 2022 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)
7/1/22 – 7/31/22	164	$	80.25	—	180,000,000
8/1/22 – 8/31/22	7,870	$	91.00	—	180,000,000
9/1/22 – 9/30/22	1,554	$	85.50	—	180,000,000
Total	9,588	$	89.92	—

————————————

(a)Includes: (1) in July and August 2022, 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. 2021 Long Term Incentive Plan and the NextEra Energy, Inc. Amended and Restated 2011 Long Term Incentive Plan; and (2) in September 2022, shares of common stock purchased by the trustee of a grantor trust to fund a reinvestment of dividends in connection with NEE's obligation under a February 2006 grant under the NextEra Energy, Inc. Amended and Restated Long-Term Incentive Plan to a former executive officer of deferred retirement share awards.

(b)In May 2017, NEE's Board of Directors authorized repurchases of up to 45 million shares of common stock (180 million shares after giving effect to the 2020 stock split) over an unspecified period.

Item 5. Other Information

(c) Media articles have been published that allege, among other things, campaign finance violations by FPL and certain of its executives. In addition, on October 27, 2022, a complaint referencing these media articles was filed with the Federal Election Commission (FEC) by a non-profit corporation alleging certain violations of the Federal Election Campaign Act by various entities and individuals named as respondents in the complaint. While the complaint does not expressly name FPL or any of its executives as respondents, the complaint identifies FPL as an alleged source of funds to certain Super PACs identified in the complaint.

NEE has engaged outside counsel to conduct a review of potential state and federal campaign finance violations, including the allegations raised in the media articles and the FEC complaint. The review is ongoing and NEE and FPL cannot predict, as of the date of this report, the outcome of the review. These allegations could also result in regulatory, investigative and enforcement inquiries by law enforcement or other governmental authorities and any ultimate findings of violations could result in the imposition of fines, penalties or other sanctions or impacts on NEE or FPL.

Item 6. Exhibits

Exhibit Number

Description

NEE

FPL

*4(a)

Officer's Certificate of NextEra Energy Capital Holdings, Inc., dated September 9, 2019, creating the Series J Debentures due September 1, 2024 (filed as Exhibit 4(e) to Form 10-Q for the quarter ended September 30, 2019, File No.1-8841)

*4(b)

Letter, dated August 5, 2022, from NextEra Energy Capital Holdings, Inc. to The Bank of New York Mellon, as trustee, setting forth certain terms of the Series J Debentures due September 1, 2024 effective August 5, 2022 (filed as Exhibit 4(b) to Form 8-K dated August 5, 2022, File No. 1-8841)

4(c)

Purchase Contract Agreement, dated as of September 1, 2022, between NextEra Energy, Inc. and The Bank of New York Mellon, as Purchase Contract Agent

4(d)

Pledge Agreement, dated as of September 1, 2022, between NextEra Energy, Inc., Deutsche Bank Trust Company Americas, as Collateral Agent, Custodial Agent and Securities Intermediary, and The Bank of New York Mellon, as Purchase Contract Agent

4(e)

Officer's Certificate of NextEra Energy Capital Holdings, Inc., dated September 19, 2022, creating the Series M Debentures due September 1, 2027

Executive Retention Employment Agreement between NextEra Energy, Inc. and T. Kirk Crews II dated as of March 1, 2022

Guaranteed Securities

31(a)

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of NextEra Energy, Inc.

31(b)

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of NextEra Energy, Inc.

31(c)

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Florida Power & Light Company

31(d)

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Florida Power & Light Company

32(a)

Section 1350 Certification of NextEra Energy, Inc.

32(b)

Section 1350 Certification of Florida Power & Light Company

101.INS

XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Schema Document

101.PRE

Inline XBRL Presentation Linkbase Document

101.CAL

Inline XBRL Calculation Linkbase Document

101.LAB

Inline XBRL Label Linkbase Document

101.DEF

Inline XBRL Definition Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

_________________________

* 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.

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: November 2, 2022


NEXTERA ENERGY, INC. (Registrant)


JAMES M. MAY
James M. May Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer)




FLORIDA POWER & LIGHT COMPANY (Registrant)


KEITH FERGUSON
Keith Ferguson Controller (Principal Accounting Officer)