NEXTERA ENERGY INC

NextEra Energy, Inc. (NEE) is a prominent electric power and energy infrastructure company in North America, operating primarily through two segments: Florida Power & Light Company (FPL) and NextEra Energy Resources, LLC (NEER) [Item 1]. FPL is the largest electric utility in Florida and the U.S., serving over 6 million customer accounts [Item 1]. NEER is one of the largest energy infrastructure developers in the U.S., focusing on long-term contracted generation facilities and regulated electric and gas transmission assets [Item 1]. The company's strategy revolves around meeting customer needs economically and reliably, driving profitable growth in both segments through cost efficiencies and innovation, including advanced technologies like artificial intelligence [Item 1].

FPL's core business model involves the generation, storage, transmission, distribution, and sale of electric energy in Florida, with its primary revenue source being retail customers [Item 1]. Wholesale and industrial electric customers contributed approximately 5% of FPL's total operating revenues in 2025, 2024, and 2023 [Item 1]. FPL operates under a rate-regulated model, where prices are approved by the Florida Public Service Commission (FPSC) for retail customers and the Federal Energy Regulatory Commission (FERC) for wholesale customers, aiming to cover service costs and provide a reasonable return on invested capital [Item 1].

NEER's business model is diversified, encompassing competitive energy and regulated transmission businesses [Item 1]. It develops, constructs, manages, and operates generation facilities (renewables, nuclear, natural gas, battery storage) in wholesale energy markets across the U.S. and Canada, and builds and owns regulated electric and gas transmission assets [Item 1]. NEER primarily sells its capacity and/or energy output through long-term power sales and battery storage tolling agreements with various utilities and commercial customers [Item 1]. Additionally, NEER provides gas and power solutions through its customer supply business, engaging in energy-related commodity marketing and trading activities, and participating in natural gas, natural gas liquids, and oil production [Item 1].

As of December 31, 2025, FPL had 35,963 MW of net generating capacity, approximately 93,000 circuit miles of transmission and distribution lines, and 932 substations [Item 1]. Its generation mix includes 24,314 MW from natural gas, 7,932 MW from 108 solar generation facilities, 3,502 MW from four nuclear units, and 215 MW from a joint ownership interest in a coal unit [Item 1]. FPL also had 991 MW of battery storage capacity [Item 1]. In 2025, FPL added 894 MW of new solar generation and 522 MW of battery storage capacity [Item 1].

NEER, as of December 31, 2025, had approximately 37,505 MW of total net generating capacity, with 37,145 MW in 44 U.S. states and 360 MW in 4 Canadian provinces [Item 1]. Its portfolio includes approximately 22,404 MW of wind, 10,504 MW of solar, 1,584 MW of natural gas generation, and 2,102 MW from nuclear facilities (Seabrook, Point Beach Units 1 and 2) [Item 1]. NEER also had approximately 5,177 MW of battery storage capacity, adding 1,799 MW in 2025 [Item 1]. Its rate-regulated electric transmission assets had a total rate base of $3.2 billion [Item 1]. NEER's regulated gas transmission business had approximately 3.8 Bcf per day gross pipeline capacity, consisting of equity method investments totaling approximately $1.5 billion [Item 1].

For the fiscal year ended December 31, 2025, NEE reported total operating revenues of $27.412 billion [Item 8], operating income of $8.280 billion [Item 8], and net income attributable to NEE of $6.835 billion [Item 8]. Diluted earnings per share attributable to NEE were $3.30 [Item 8]. The company's total assets were $212.721 billion [Item 8], with cash and cash equivalents of $2.812 billion [Item 8]. Total long-term debt, including the current portion, was $93.056 billion [Item 8]. Free cash flow is not explicitly stated as a line item in the provided financial statements.

Comparing 2025 to 2024, NEE's net income attributable to NEE decreased by $111 million, or $0.07 per share, assuming dilution [Item 7]. FPL's net income increased by $469 million, primarily due to investments in plant in service and other property, which grew FPL's average rate base by approximately $5.5 billion in 2025, and a higher earned regulatory ROE of 11.70% in 2025 compared to 11.40% in 2024 [Item 7]. NEER's net income increased by $676 million, reflecting higher earnings from new investments, partly offset by higher financing costs [Item 7]. Corporate and Other's results decreased by $1,256 million, mainly due to unfavorable after-tax impacts of approximately $1,002 million related to non-qualifying hedge activity and higher average debt balances [Item 7].

During 2025, FPL completed a twelve-month interim storm restoration surcharge of approximately $1.2 billion for Hurricanes Debby, Helene, and Milton [Item 7]. FPL received FERC approval for the acquisition of a 660 MW gas-fired peaking facility with dual fuel capability, expected to close in 2027 [Item 1]. In July 2025, a subsidiary of NEET entered into an agreement to sell a 50% equity interest in a joint venture consisting of a rate-regulated electric transmission asset in California, with the sale expected to close in the first quarter of 2026 for approximately $270 million [Item 1]. In January 2026, a wholly owned subsidiary of NextEra Energy Resources acquired Symmetry Energy Solutions, a commercial and industrial natural gas business [Item 1]. NEER also submitted an application to the NRC in December 2025 to reinstate the operating license for Duane Arnold, with an estimated commercial operation date in 2029 [Item 1].

FPL's base rates, effective January 2026 through at least December 2029, were approved by the FPSC in January 2026, establishing new retail base rates and charges that will result in annualized retail base revenue increases of $945 million beginning January 1, 2026, and $705 million beginning January 1, 2027 [Note 1]. FPL's authorized regulatory return on common equity (ROE) is 10.95%, with a range of 9.95% to 11.95% [Note 1].

A significant growth area for FPL is the expansion of solar generation and battery storage projects. FPL will receive base rate increases associated with solar generation projects entering service in 2027, 2028, and 2029, and battery storage projects entering service in 2028 and 2029, through a Solar and Battery Base Rate Adjustment (SoBRA) mechanism [Note 1]. FPL is required to demonstrate either a specified economic or resource/reliability need for these projects [Note 1]. In January 2026, FPL placed 596 MW of solar generating capacity in service and expects to place an additional 298 MW of solar capacity and approximately 1,420 MW of additional battery storage capacity in service over the remainder of 2026 [Item 1]. FPL also expects to close the acquisition of a 660 MW gas-fired peaking facility in 2027 [Item 1].

NEER's growth is centered on the development, construction, and operation of long-term contracted generation facilities, including renewables, nuclear, and natural gas, as well as battery storage facilities [Item 1]. NEER is actively pursuing the restart of the Duane Arnold nuclear generation facility, having submitted an application to the NRC in December 2025 to reinstate its operating license, with an estimated commercial operation date in 2029 [Item 1]. This recommissioning is contingent upon regulatory approvals, including NRC safety and environmental reviews, and permits from state and local agencies [Item 1A]. NEER has also entered into a 25-year PPA for the full capacity of Duane Arnold and agreements to increase its ownership interest to 100% of the plant, subject to regulatory approvals [Item 1].

FPL's operational outlook includes new unified depreciation rates approved by the FPSC, effective January 1, 2026, and a new annual expense of $106 million for other generation plant dismantlement, also effective January 1, 2026 [Note 1]. FPL is authorized to implement a rate stabilization mechanism (RSM) up to approximately $1.5 billion, after tax, over the term of the 2025 rate agreement [Note 1]. This reserve includes certain deferred tax liabilities, the remaining balance from FPL's existing reserve amortization mechanism as of January 1, 2026, and investment tax credit amortization for battery storage projects placed in service in 2025 [Note 1]. FPL can amortize the RSM reserve to maintain its minimum authorized regulatory ROE of 9.95% but cannot amortize any amount that would result in an earned regulatory ROE exceeding its maximum authorized regulatory ROE of 11.95% [Note 1].

Planned capital expenditures for NEE and its subsidiaries for 2026 through 2030 are detailed in Note 15 – Commitments. NEE's capital requirements are primarily for expanding and enhancing FPL's electric system and generation facilities and for funding NEER's investments in independent power and other projects [Item 7]. NEE's Board of Directors authorized repurchases of up to 180 million shares of common stock over an unspecified period [Item 5]. As of December 31, 2025, the dollar value of units that may yet be purchased by NEE under its common unit purchase program for XPLR was $114 million [Item 7]. In February 2026, NEE announced an increase in its quarterly dividend on common stock from $0.5665 per share to $0.6232 per share [Item 5].

Management has explicitly flagged several structural headwinds and execution risks. The ability of NEE and FPL to proceed with projects and complete construction on schedule and within budget may be adversely affected by timely availability of equipment and labor, escalating costs for materials, labor, and regulatory compliance, and the inability to obtain or renew necessary licenses, rights-of-way, permits, or other approvals [Item 1A]. Geopolitical factors, supply chain disruptions, inflation, and rising interest rates are also identified as potential impediments [Item 1A]. For NEER's Duane Arnold restart, failure to obtain necessary regulatory approvals could result in impairment of capitalized amounts, and difficulties in procuring or restoring specialized components could impact the timeline [Item 1A].

Geographic, regulatory, and macro factors identified as constraints include the evolving regulatory environment for AI, which may impose new compliance obligations or restrict certain AI applications, increasing costs [Item 1A]. Changes in federal or state permanent corporate income tax laws during the term of the 2025 rate agreement could lead to prospective adjustments in FPL's base rates after FPSC review [Note 1]. RTO and ISO rules and procedures are being revisited in response to increased power demand from data centers and other large-load customers, and any rule changes could impact interconnection to the grid and interaction with wholesale power markets, creating new risks and opportunities [Item 1].

NEE and FPL face substantial risks across macroeconomic, competitive, regulatory, geopolitical, and operational dimensions. Regulatory decisions, influenced by political and economic factors, could prevent timely recovery of costs or a reasonable return on invested capital, particularly for FPL's rate-regulated operations [Item 1A]. Reductions or modifications to governmental incentives for clean energy, such as tax laws, production tax credits (PTCs), investment tax credits (ITCs), and renewable portfolio standards (RPS), or the imposition of additional taxes or tariffs on clean energy equipment, could significantly increase costs, reduce project returns, or lead to project abandonment [Item 1A]. New or revised laws, regulations, or executive orders, including those affecting commodities trading, emissions, water usage, and environmental permitting, could increase compliance costs and operational challenges [Item 1A]. For example, a federal executive order calls for a pause in federal land leasing, permitting, and approvals for wind development facilities pending a review of federal rules [Item 1]. Violations of environmental laws, such as the Endangered Species Act (ESA), Migratory Bird Treaty Act, and Bald and Golden Eagle Protection Act (BGEPA), could result in fines, penalties, criminal sanctions, or injunctions, as demonstrated by a NextEra Energy Resources subsidiary currently on probation for eagle collisions [Item 1A]. Federal or state laws mandating new greenhouse gas emission limits could create substantial additional costs in the form of taxes or emissions allowances, make some generation units uneconomical, or require significant capital investment [Item 1A]. The operation and maintenance of electric generation, storage, transmission, and distribution facilities, as well as natural gas and oil production and transportation facilities, are subject to operational risks including prolonged outages, equipment failures, and the impact of severe weather events like hurricanes, which could lead to lost revenues, increased expenses, and liability to third parties [Item 1A]. Threats of terrorism, cyberattacks, and other disruptive activities, potentially exacerbated by artificial intelligence advancements, could target NEE's and FPL's infrastructure, leading to decreased revenues, significant additional costs, fines, and reputational damage [Item 1A]. NEE's natural gas and oil production assets are exposed to fluctuating market prices, and prolonged periods of low prices or disrupted production could lead to lower revenues and asset impairments [Item 1A]. The inability to effectively manage or hedge commodity risks due to market volatility and limited liquidity in energy markets could result in significant financial losses [Item 1A]. Furthermore, NEE and FPL are exposed to credit and performance risk from customers, hedging counterparties, and vendors, with potential for material financial losses if contractual obligations are not met [Item 1A]. If FPL's and NEECH's credit ratings were downgraded to BBB/Baa2, applicable NEE subsidiaries would be required to post approximately $650 million ($30 million at FPL) and $500 million (none at FPL) in collateral as of December 31, 2025 and 2024, respectively [Note 3]. A downgrade to below investment grade would require approximately $3.2 billion ($65 million at FPL) and $2.4 billion ($25 million at FPL) in additional collateral as of December 31, 2025 and 2024, respectively [Note 3].

Management's message to shareholders emphasizes a strategy focused on profitable growth in both FPL and NEER by meeting customer needs more economically and reliably than competitors, leveraging cost efficiencies and innovative ideas, including advanced technologies like artificial intelligence [Item 1]. For FPL, the strategic priorities include investing in generation, storage, transmission, and distribution facilities to deliver low customer bills, high reliability, outstanding customer service, and energy from diverse generation sources [Item 1]. For NEER, the focus is on the development, construction, and operation of long-term contracted generation facilities, including renewables, nuclear, and natural gas, as well as battery storage facilities, alongside building and owning regulated electric and gas transmission assets [Item 1]. Management also highlights the importance of providing cost-effective differentiated solutions to customers, including emerging large-load opportunities, and lowering costs and driving growth through advanced technologies [Item 1]. In February 2026, NEE announced an increase in its quarterly dividend on its common stock from $0.5665 per share to $0.6232 per share [Item 5].