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<span style="font-weight: 400">The world’s biggest utility company by market cap has invested some $100 billion in clean energy infrastructure over the past decade, including more than $14 billion in 2020. In Florida, its home state, NextEra has closed its last coal-fired plant; it began work this year on what will be the world’s largest solar-powered battery facility, capable of storing enough energy to run Disney World for seven hours.</span>

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A 100-year-old company that started out as Florida Power &amp; Light, NextEra Energy has grown into one of the largest energy infrastructure development companies in the U.S. NextEra provides a diverse mix of power generation, including natural gas, nuclear, renewable energy, and battery storage. Its legacy FPL subsidiary remains the nation’s largest electric utility with 12 million Florida customers. But the businesses for wind, solar, and batteries have expanded to nearly 45 states and Canada with projects either in operation or under development.

Q2 2025

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NextEra Energy (NEE): Company Profile, Stock Price, News, Rankings

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NextEra Energy

nextera energy

Good day, and welcome to the NextEra Energy, Inc. Second Quarter twenty twenty five Earnings Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Mr. Marcus Eidlman, Director of Investor Relations. Please go ahead, sir.

Thank you, Chuck. Good morning, everyone, and thank you for joining our second quarter twenty twenty five financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy Mike Dunn, Executive Vice President and Chief Financial Officer of NextEra Energy Armando Pimentel, President and Chief Executive Officer of Florida Power and Light Company Brian Bolster, President and Chief Executive Officer of NextEra Energy Resources and Mark Hickson, Executive Vice President of NextEra Energy. John will start with opening remarks and then Mike will provide an overview of our second quarter results. Our executive team will then be available to answer your questions.

We will be making forward looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call and the Risk Factors section of the company presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.nexteraenergy.com. We We do not undertake any duty to update any forward looking statements. Today's presentation also includes references to non GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to John.

Thanks, Mark, and good morning, everyone. NextEra Energy delivered strong second quarter results with adjusted earnings per share increasing 9.4% year over year. In addition, through the first six months of the year, our adjusted earnings per share has increased 9.1% year over year. The continued strong financial and operational performance at both FPL and Energy Resources positions our company well to meet its overall objectives for the year. America continues to be at a unique moment and our industry remains front and center.

After decades of stagnant electricity demand, we're now seeing growth across sectors of The U. S. Economy. Artificial intelligence and reshoring of manufacturing grabbed most of the headlines and for good reason. But that doesn't tell the full story.

Demand for more electricity is also coming from all sectors, including residential, commercial, industrial and oil and gas to name a few. A new study from ICF released this month described demand growth as both sudden and sharp. The report says demand growth over the next decade is expected to exceed the last three decades combined. Just the latest data point putting into perspective how unique this moment truly is. Bottom line, America needs more electricity, not less.

Importantly, America needs it now, not just in the future. We are firmly aligned with the administration's goal to unleash American energy dominance and to do so, we need all of the electrons we can get on the grid. There's truly no time to wait. We see this every day from our customers who aren't just saying they need power, they're signing contracts with us to build energy infrastructure because we can do it quickly and at a low cost. Again, the need for more electricity is real.

We must do more than just plan for what's on our doorstep, we must act. As I've said many times, we're going to need all forms of energy to meet this moment. New gas and nuclear are on the way and will be critical to meeting demand over the long term. Renewables and storage can bridge the gap and will play an important role in an all of the above future. Storage in particular is a game changer.

It's low cost, all forms of energy can charge it and the grid can rely on it for capacity. Storage is also flexible and can utilize excess transmission capacity. That means it can quickly be deployed to where customers need it most. Importantly, renewables and storage are ready now and can provide much needed electricity and capacity. But in order to achieve our objectives, we will need to continue to navigate a challenging regulatory and policy environment.

The one big beautiful act was tough, but constructive, providing for a phase out of wind and solar tax credits over time together with a longer runway for nuclear and storage. Although there is more certainty with the passage of the bill, we will need to manage that against the backdrop of executive orders, agency rule makings, tariffs and trade actions. While there are risks to be managed, we believe there are also significant opportunities given the steps we've taken to prepare for this moment as we expect a natural pull forward of demand. We are in a constant state of construction. And over the last few years, prior to the enactment of the OBBB, made substantial financial commitments to begin construction on renewable projects that we believe are sufficient to cover the projects we plan to place into service through 2029.

We have a large pipeline of early and late stage projects. We have a supply chain capability that I believe is the best in the sector and we are leveraging artificial intelligence across our business including in customer origination. We have the balance sheet, scale, experience and technology. While no company is immune from all risk, we've proven time and again what I firmly believe that there is no company in our sector better positioned to execute through the challenges and capitalize on the opportunities that lie ahead than NextEra. As the quintessential all of the above energy company, we believe more energy infrastructure than anyone we build more energy infrastructure than anyone in The United States.

From renewables and storage to gas and nuclear, we do it all. And we will continue to build what customers need, including the transmission to bring power from plants to communities. At FPL, we are going to continue to do what we have done so well for customers over the past two decades. Florida's long standing constructive regulatory and legislative environment enables infrastructure investment to serve Florida's growing population. In fact, just last week, the Florida Supreme Court concluded that state regulators properly approved our 2021 settlement agreement by affirming the Florida Public Service Commission's final and supplemental final orders.

FPL continues to invest in infrastructure to keep reliability high and bills low. We continue to operate and invest in the nation's largest gas fired fleet along with four nuclear units in Florida, which provides us the flexibility to leverage cost effective solar and storage to meet the significant demand from our state's growing population. FPL is doubling down on what we've proven benefits our customers, investing in generation to meet growing electricity demand, while driving fuel costs out of the bill. FPL plans to add more than eight gigawatts of reliable cost effective solar and battery storage by 2029. It's the perfect complement to our existing natural gas and nuclear fleet in Florida.

Together, it's how we serve our customers with a diversified energy mix. This not only further secures Florida's energy independence, it also improves system reliability and resource adequacy by delivering energy when customers need it most. FPL continues to be America's blueprint for utilizing all forms of energy to keep reliability high and electric bills low. Outside of Florida, Energy Resources continues to be the nation's leading energy infrastructure developer. The team originated 3.2 gigawatts of new projects since the last earnings call, including over one gigawatt serving hyperscalers to help enable their AI build out and further drive America's leadership in the space.

Our backlog alone now includes approximately six gigawatts of projects intended to serve technology and data center customers. If you include our operating portfolio together with the expected build out of our backlog, we will have over 10.5 gigawatts serving technology and data center customers across The United States. We continue to make progress towards the potential restart of our Duane Arnold nuclear facility, while also working to advance new gas fired generation opportunities. And we continue to build what's essentially a standalone rate regulated utility within energy resources through NextEra Energy Transmission. With our scale, experience and technology, including our supply chain capability and balance sheet, we are positioned to meet the opportunities that increased power demand will provide.

I firmly believe no one has a better team, a better culture or a better track record of execution than NextEra Energy. With that, I'll turn the call over to Mike to walk you through detailed results from the quarter.

Thank you, John, and good morning, everyone. For the second quarter of twenty twenty five, FPL's earnings per share increased by $02 year over year. The principal driver of this performance was FPL's regulatory capital employed growth of nearly 8% year over year. FPL's capital expenditures were approximately $2,000,000,000 for the quarter, and we expect FPL's full year capital investment to be between $8,000,000,000 and $8,800,000,000 For the twelve months ending June 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the second quarter, we utilized approximately $19,000,000 of reserve amortization, leaving FPL with a balance of roughly $254,000,000 FPL's second quarter retail sales increased 1.7% from the prior year comparable period, driven primarily by continued strong customer growth.

Overall usage per customer grew by 0.1% year over year, which includes a decline of 0.8% due to milder weather. As a result, FPL grew retail sales in the second quarter by roughly 2.6% on a weather normalized basis. On February 28, we initiated Florida Power and Light's 2025 base rate proceeding. The four year base rate plan we have proposed has been designed to support continued investments in cost effective generation, long term infrastructure and advanced technology, which improves reliability and helps keep customer bills low. Today, FPL's typical residential bill remains well below the national average and amongst the lowest of the top 20 investor owned utilities in the nation.

With the proposed base rate adjustments and current projections for fuel and other costs, FPL's typical residential bill is expected to be approximately 20% below the projected national average. A technical hearing at the Florida Public Service Commission is scheduled next month. We expect a final decision in the fourth quarter. If state regulators approve our plan, a typical FPL residential bill will grow at an annual average rate of just 2.5% from 2025 through 2029. Now let's turn to Energy Resources, which reported an adjusted earnings per share increase of $0.11 year over year.

As you'll recall, the prior comparable quarter reflected higher than expected and one time expenses. Contributions from new investments increased $0.14 per share year over year, primarily driven by continued growth in our renewable and storage portfolios. Our existing clean energy portfolio decreased zero two dollars per share, primarily reflecting weaker wind resource during the quarter. Wind resource for the 2025 was approximately 97% of the long term average versus 104% in the second quarter of twenty twenty four. Our customer supply business increased $06 per share compared to the second quarter last year, which was impacted by higher depletion expense and certain non recurring items.

All other impacts decreased by $07 per share, driven by higher interest costs of $06 per share. Energy Resources had a strong quarter of newer renewables and storage origination, adding 3.2 gigawatts to the backlog. With these additions, our backlog now totals nearly 30 gigawatts after taking into account more than 1.1 gigawatts of new projects placed into service since our last earnings call. We expect the backlog additions will go into service over the next few years and into 2029. This marks the sixth time in the past eight quarters that Energy Resources has added more than three gigawatts to its backlog.

We have now originated approximately 12.7 gigawatts of new renewables and battery storage projects over the last twelve months. Roughly 30% of our current backlog comes from storage, which demonstrates our customers' demand for a low cost ready now solution to meet their capacity needs. Turning now to our second quarter twenty twenty five consolidated results. Adjusted earnings from Corporate and Other decreased by $04 per share. Our long term financial expectations remain unchanged.

We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectation ranges in 2025, 2026 and 2027. From 2023 to 2027, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted earnings per share compound annual growth rate range. And we also continue to expect to grow our dividends per share at roughly 10% per year through at least 2026 off a 2024 base. As always, our expectations assume our caveats. That concludes our prepared remarks.

And with that, we will open the line for questions.

We will now begin the question and answer session. And the first question will come from Steve Fleishman with Wolfe Research. Please go ahead.

Yes. Hi. Good morning. Thanks. So I guess first just on the OBBB and then also the Trump executive orders.

Could you maybe talk to, I guess, the safe harbor start of construction issue and how much OBBB has effectively maybe codified that? And what can really the administration change at this point? And then also just how to think about some of the recent permitting kind of updates that came out and just your exposure to federal lands in your backlog? Thanks.

Yes. Thank you, Steve for your question. This is John. So let me just start with your question around the tax provisions, the Safe Harbor in particular. I think as most folks know by now, the way the OBBBA was drafted, it basically provides that wind and solar facilities have to be placed in service by 12/31/2027.

However, there is a very important exception in that that says that projects that begin construction before 07/04/2026 are not subject to that placed in service requirement. So the issue is what is meant by begin construction. And our view is pretty simple and pretty straightforward. The begin construction term has been around for well over a decade. It has a settled meaning within the industry.

That meaning is informed by long standing Treasury Department guidance. It's been relied upon not only by NextEra, but the solar and wind industry for years. So I start with the fact that as a plain meaning, it's also a term that's defined in the OBBA, in the FIOQ provisions and that definition is consistent with the settled meeting and the long standing treasury guidance that I just spoke about. And importantly, the term beginning construction has certain safe harbors for what actually constitutes starting construction and it also has a four year continuity of service safe harbor. So when I look at the steps that we've been taking in reliance on the settle meeting and the longstanding guidelines around the term beginning construction, We've made significant financial commitments over the last few years, including in the 2025 to begin construction under these rules that were in effect at the time those commitments were made.

And doing so, we believe that we've begun construction on a sufficient number of projects to cover our development expectations through 2029. And of course, look, while we can't provide any guarantees, this is our interpretation and this is our belief as to what the statute provides based on our experience in this industry over the last couple of decades.

Just on the citing permitting issue Yes. In the federal

And on the permitting on federal lands, first of all, I'll say, there was an EO and I think a response made by the Department of Interior a couple of months ago just articulating that solar and wind projects would not be prioritized. The executive order itself that came out on July 7 directed the Department of Interior to come up with new procedures on how it would handle wind and solar permitting to not favor them. And so they instituted an additional layer that would require Secretary or Deputy Secretary review. It's new. Obviously, we're working with the Department of Interior.

Let's just see how it actually is applied in practice. But again, I think this letter is being responsive to the CEO. When I look at it and I look at our backlog, most of our backlog already has secured federal permits. But let's also just see how this gets applied. And I continue to feel comfortable with where we stand in terms of being able to navigate the federal permitting issue.

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

Yes. I think, Steve, customers are still digesting. They have different levels of understanding of what's come out. Obviously, we spent a lot of time on it. And so I would expect to see a reaction from customers over time.

Obviously, we'll inform them through our origination process. But I see some natural breaking points that could create significant opportunities for us to ramp pull forward. I mean, one is, if you break down the statute, certainly with the 2027 placed in service requirement, you see projects that are accelerated into that year. Then it comes down to who safe harbored, right, who safe harbored before the enactment date. It's hard to know with any precision who did.

We know we compete against a lot of really small developers who don't have the balance sheet, the construction financing to do things around safe harbor. And so you could also look and say based on that, we would expect to pull forward naturally in the '28 and '29 as well where there might be less competition from folks that have not safe harbored that could create bigger opportunities for folks like NextEra that are in a perpetual state of construction and are safe harboring all the time based on the rules that were in effect that could create potentially bigger opportunities for us in those years.

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

Hey, good morning team. Thank you guys very much for the time. I appreciate it. Maybe to follow-up on Steve's questions earlier. I mean, to crystallize our understanding under the existing O BBB that was passed here, how do you think about your EPS growth and sort of the waterfall, if you will, of credits and especially given the dynamics you talk about, whether it's the pull forward or otherwise having an opportunity to step in and enable other projects that you might not necessarily have envisioned today.

How do you think about the ability to sustain your growth through the decade and as much as now you have visibility that's been effectively crystallized under this legislation? Obviously, changes with the EO, we're not ready to go there given this backdrop.

Yes. I mean, first I'll start with that last piece, right, which is as I said in the prepared remarks, think the one big beautiful Bill Act, while tough was constructive, I think it does create some opportunities for us going forward for some of the reasons that I laid out with Steve. On the EPS growth point, hold off on that until our next Analyst Day, which will hold sometime later this year beginning of next year. But as I think about the waterfall opportunity and that pull forward that again, Julian, that you were hitting on, again, uncertainty that could be created with the 27 placed in service and then you come down to who's safe harbor for '28 and '29, obviously that favors large developers like NextEra that planned ahead, right? And if you're in a market where you have folks drop out, right, because they didn't plan ahead, they don't have the ability to get construction financing, they don't have the ability to safe harbor, it obviously creates bigger opportunities for in these natural pull forward points.

And I'm going to come back to a point that I think is important for to make and for investors to understand. I think if you look at our track record over time, not just the last three years, but going back over time, whenever there's a little bit of uncertainty, a little bit of risk, a little bit of complexity, that typically favors our business, right, because I firmly believe that we have the capability to navigate and to plan the business in a way that helps mitigate these risks going forward. And look, I mean, no company is immune from everything. But I think we do if you look at the track record, have demonstrated an ability to really figure out how to mitigate these exposures on a go forward basis. And the last piece I'll make is, don't forget if we do see some small developers kind of fall away, there'll be more projects that could potentially hit the market and come up for sale creating more not only on our organic greenfield opportunity set, but perhaps some opportunities to step into projects that other developers have tried to advance, but for whatever reason might struggle to get it across the finish line given some of the backdrop of some of the challenges that we're addressing in the industry that I think we're best equipped to address.

Excellent. Thanks, John. Just quick follow-up if I can. Smaller detail here, not trivial at all. How is progress going on the nuclear contracting front?

I mean, it is certainly the theme of the day. You guys have two different bites of the apple potentially it seems. Duane, progress just from an engineering perspective just to kind of get a little bit of a sense on where that could land and when? And then separately here, Point Beach obviously spoken for, but it seems like there could be some opportunity there. I mean, two different bites of the apple seem to be coming right here in the medium term.

Yes. No, thanks for asking the question, Julien. Duane Arnold just continues to advance. I mean, I think anytime you have a there's only three of them in the country, right, between Palisades and the Crane facility in Duane. I mean, these are unique opportunities because you don't face the new build costs associated with nuclear.

And so these are really unicorn type opportunities. And so we continue to advance Duane. I'm very pleased with the way things are going on the on-site reviews and some of the engineering analysis that we're doing. But more importantly, we continue to advance discussions with customers. So feel good where we sit now about how things are progressing on the Duane front.

And look with Point Beach, it's not only the Point Beach facility, but also the opportunity to do some things around SMRs. We have the same opportunity set at Duane. If we're successful in bringing Duane forward that obviously creates a hotbed of data center activity around that facility, the same as what you've seen in Wisconsin with Cloverleaf the Fox facility that Microsoft is behind as well. And so I like the potential longer term options there in addition to just the recommissioning efforts that we potentially have at Duane. And look, we have a I don't want to lose sight of the fact that not only do we have an active gas fired generation development effort at our company.

We are also very active in the development of small modular reactors and the potential that nuclear could provide going forward. And again, that goes back to my comments of being an all of the above energy company. Our goal is to provide the customer with what it wants, when it needs it, at the right price to help address the power demand that we see in this country. And look no further than the PJM capacity auction yesterday. I mean, there's a lot of demand out there.

And there are very few companies that have the development capability that we do. A lot of companies that have an existing asset position, very few companies can develop new generation assets or have the skill sets with on their teams to do it. And that gives us a unique advantage in this market.

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

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

Hey, good morning. Thanks for all the updates. Hey, I just wanted to ask maybe just for an update on FPL. We've seen some testimonies in the rate case at this point. You kind of pointed to the fact that hearings will kick off in mid August.

Just is a settlement still on the table in any way? Or are you expecting this to go right to hearings, if you can comment at all? Thanks.

Well, that's a great question. We always prepare like we are going to hearings, because we want to be as prepared as possible. And they're about three weeks away at this point. It doesn't mean that there is not the opportunity for discussions that would lead to a settlement. I think the notion should be that those discussions probably can happen at any time.

And if it makes from our perspective, if it makes sense for our customers, that's something that we would obviously move on as we have for the last three rate cases. So I'm still confident that we have a great rate case to present to the Public Service Commission in the August. That has been my focus really for the last six months. If there is the opportunity, if the opportunity pops up, I am going to absolutely make myself available to make sure that we can put our best foot forward for our customers in a settlement.

Makes a lot of sense. Appreciate that. And I just wanted to take one of Julien's questions a step further, just on the financing side and kind of thinking about the comments about the safe harbor visibility through 2029. As I understand the current plan, '24 through 2027, roughly about half of the funding is tax equity and project finance. And I'm just wondering, because you have this commentary around safe harbor visibility through 2029, Is that kind of the same mix that we should be expecting in financing the business through the late decade?

Are there other sources of financing that you're thinking about leaning on? And I guess maybe you can kind of talk about what's been contemplated at this point?

Sure. So as we look at where we sit today and as we look at what our renewable build looks like, it is a lot more of what we've done over the course of the last twenty years. And that has been building good projects that are very attractive to our tax equity providers, that are very attractive to our project finance providers. And those parties looking at the quality of those projects and providing the financing for them. As we look today and if we look over the last two years, we have increased our tax equity providers by 50%.

Just last week, I was talking to one of our long term tax equity providers who was asking and mentioned they wanted to increase their exposure to us. So we feel very good about where we sit in terms of accessing both the tax equity and the project financing market as an attractive low cost way for us to finance our renewable and storage facilities.

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

Hey, good morning, team. I just have one quick one. You talked about maybe the company's gas strategy going forward. You talked about it on the Development Day. Just curious, you've seen some recent sales in the country already in service gas assets at attractive multiples.

Just is that an avenue the company would pursue or more of with the GEV partnership in building new build gas?

Sure. It's Brian. On the gas strategy front, listen, we're going to look at new build, we'll look at opportunities in the market. I think what we need to do if we're going to look at the market is obviously the value has to make sense. I think we have to feel very good that we're going to be able to do something with that on the contracting front in the near term.

So I don't think we want to just go spec long merchant generation. So but we are we're turning over kind of every rock as we look at that everything from other assets that are going to be interesting to fit nicely that we think we can offer back to the market and we're going to look at greenfield opportunities. So we're pursuing it on all fronts.

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

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

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

Feel very confident about the FIAC provisions. Again, the way they work are as long as you've begun construction by 12/31/2025, you're not subject to those. So with the continuity safe harbor, add four years on, you get to the end of the taxable year 2025 that takes you through 2029. And then when you start looking at compliance beyond 2029, we feel very comfortable with our ability to comply with those provisions.

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

I know that's far off, but people are already thinking about it today.

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

The only thing I'd comment because this is the second question that's kind of got at this concept of a cliff. And I just want to remind everyone, while the tax laws may be changing, the demand picture that we've been talking about now going on four or five quarters is not. The customer dialogue, whether it's in 2027, 2028, 2029 or '30 is as robust as it's ever been. And so while the framework may be changing for some of these projects, the overall demand picture is very important to remember. Our job at Energy Resources is to build energy infrastructure for our customers.

There is an outrageous amount of need for energy infrastructure in this country that's going to go well past the end of this decade. And so we feel well positioned. Duane would be an example of one of the things that we'll be looking at. So Duane is another example of one of the things that we can bring to bear. Storage is another element of something that we're seeing a lot of focus on.

So I just I think there's this view that the one big beautiful bill is creating a sunset in a cliff. And I think the answer is it's just changing the rule set and we'll continue to build the energy infrastructure that this country needs.

Agreed. And thank you for clarifying and framing that up. One last

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

Thank you very much. Just one last brief one on the quarter. At FPL, the earnings growth was pretty modest, only like less than 3.5% despite the capital employed growing at your typical eight ish percent. Can you just talk to the delta there? What was weighing on the earnings growth?

And how are you thinking about the rest of this year of utility?

So if you look at the $02 that offset $04 of regulatory capital growth, There's a variety of factors that can move that across. Recall that in 2024, the return on equity was at 11.8% and for this year was at 11.6%. So that is one factor and there's other puts and takes that can drive that $02 differential. However, as we look on a go forward basis, I wouldn't expect that to that differential to continue throughout the rest of the year.

The next question will come from Jeremy Tonet with JPMorgan. Please go ahead.

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

Yes. I mean, first of all, we've got a large pricing advantage and two advantages on renewables. First of all, they're very fast to build, right? I mean, you can get a renewable project up and built twelve to eighteen months. Don't forget about our early and late stage inventory of projects.

That's very important to keep in mind. And so when you think about all this demand for power that's here right now, we have a lot of pricing power, right, in the market and we have a significant cost advantage over other resources that will show up later and we need more capacity from nuclear and gas. It's just given the development pipeline being pipeline timeline being a little bit longer than what you see on renewables. That's why you've seen so much demand for renewables today. And so and then don't forget too, we have a lot of renewable projects that continue to roll off of contract, right?

And not a whole lot of attention gets paid to that. But when we're out in the market and able to recontract power purchase agreements that were entered into a decade or more ago into this new higher priced power market. There's a lot of embedded value in the existing portfolio. And then you start thinking about layering in not only on top of renewables, the ability that continue to develop around gas, fire generation and then nuclear as it comes along. And our transmission business, right, where we made some comments today about how we're basically building a rate regulated utility inside NextEra.

We've had an enormous amount of success around the competitive transmission business. So a lot of things to feel very good about as we look to the future.

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

Yes. I mean, I think that data point suggests that first of all, look at where newbuild gas prices are in order to build to make them economic. And I think you see the PJM capacity market reacting to that because don't forget, right, and this is why I keep emphasizing development skills and capabilities and the ability to add new infrastructure to the system. Existing assets are already there to accommodate the demand that exists today, right? And so what you're trying to do with the capacity market is incent generation that does not exist today.

Somebody has got to go out and develop and build that. No matter what you do with the existing generation today, it's got to be if that's going to be used to serve new demand, that generation has to be replaced by something, whether it's renewables, whether it's storage, whether it's gas fired generation, whether it's new nuclear. And so what I would be focused on as well is who has the development skills and capabilities and who doesn't, because we are going to have to build new generation. There's only so much you can do around existing assets. They already exist today to accommodate the power that exists demand that exists today.

When you look to the future, you've got to start adding incremental generation. We are uniquely advantaged and have a unique capability set in that regard, because we're one of the very few companies in this country that have been building for the last two decades. And we have a development team that is up and running in 49 states across this country. So I put our development team up against anyone. We need new incremental generation. The existing stuff isn't going to get us there.

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

NextEra Energy Q2 2025 Earnings Call Transcript | Fortune

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