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, 2015

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

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 þ    No ¨                                                                     Florida Power & Light Company    Yes þ    No ¨

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.
NextEra Energy, Inc.    Yes þ    No ¨                                                                     Florida Power & Light Company    Yes þ    No ¨

Indicate by check mark whether the registrants are a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.
NextEra Energy, Inc.
Large Accelerated Filer þ
Accelerated Filer ¨
Non-Accelerated Filer ¨
Smaller Reporting Company ¨
Florida Power & Light Company
Large Accelerated Filer ¨
Accelerated Filer ¨
Non-Accelerated Filer þ
Smaller Reporting Company ¨

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 þ

Number of shares of NextEra Energy, Inc. common stock, $0.01 par value, outstanding as of September 30, 2015: 460,535,906

Number of shares of Florida Power & Light Company common stock, without par value, outstanding as of September 30, 2015, 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
AFUDC
allowance for funds used during construction
AFUDC - equity
equity component of AFUDC
AOCI
accumulated other comprehensive income
Duane Arnold
Duane Arnold Energy Center
EPA
U.S. Environmental Protection Agency
FASB
Financial Accounting Standards Board
FERC
U.S. Federal Energy Regulatory Commission
Florida Southeast Connection
Florida Southeast Connection, LLC, a wholly-owned NEECH subsidiary
FPL
Florida Power & Light Company
FPL FiberNet
fiber-optic telecommunications business
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.
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
NextEra Energy Resources, LLC
NEET
NextEra Energy Transmission, LLC
NEP
NextEra Energy Partners, LP
NEP OpCo
NextEra Energy Operating Partners, LP
NET Midstream
NET Holdings Management, 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
Office of Public Counsel
State of Florida Office of Public Counsel
OTC
over-the-counter
OTTI
other than temporary impairment
Point Beach
Point Beach Nuclear Power Plant
PTC
production tax credit
PV
photovoltaic
Recovery Act
American Recovery and Reinvestment Act of 2009, as amended
regulatory ROE
return on common equity as determined for regulatory purposes
Sabal Trail
Sabal Trail Transmission, LLC, an entity in which a NEECH subsidiary has a 33% ownership interest
Seabrook
Seabrook Station
SEC
U.S. Securities and Exchange Commission
U.S.
United States of America

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

2

TABLE OF CONTENTS


 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



3

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, aim, 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 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 to, or the elimination of, governmental incentives that support utility scale renewable energy, including, but not limited to, tax incentives, renewable portfolio standards or feed-in tariffs, or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development 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, regulations or interpretations or other regulatory initiatives.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be materially adversely affected if the rules implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act broaden the scope of its provisions regarding the regulation of OTC financial derivatives and make certain provisions applicable to NEE and FPL.
•
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 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, 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.
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 may 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 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.

4

•
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, cyber attacks, 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 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 for certain existing projects to be 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.
•
Sales of power on the spot market or on a short-term contractual basis may cause NEE's results of operations to be volatile.
•
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, FPL's and NEER's ability 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 the results of operations of the retail business.
•
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 materially adversely affected if FPL is unable to maintain, negotiate or renegotiate franchise agreements on acceptable terms with municipalities and counties in Florida.
•
Increasing costs associated with health care plans may materially adversely affect NEE's and FPL's results of operations.
•
NEE's and FPL's business, financial condition, results of operations and prospects could be negatively affected by the lack of a qualified workforce or the loss or retirement of key employees.
•
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 power industry.

5

•
Acquisitions by NEP may not be completed and, even if completed, NEE may not realize the anticipated benefits of any acquisitions, which could materially adversely affect NEE’s business, financial condition, results of operations and prospects.
Nuclear Generation Risks
•
The construction, 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.
•
The inability to operate any of NEER'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.
•
Various hazards posed to nuclear generation facilities, along with increased public attention to and awareness of such hazards, could result in increased nuclear licensing or compliance costs which are difficult or impossible to predict and 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 normal 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 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 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 results 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.
•
Disruptions, uncertainty or volatility in the credit and capital markets may exert downward pressure on the market price of NEE's common stock.

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, 2014 (2014 Form 10-K) and in Part II, Item 1A. Risk Factors in NEE's and FPL's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 (June 2015 Form 10-Q), and investors should refer to those sections of the 2014 Form 10-K and the June 2015 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.


6

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' websites) are not incorporated by reference into this combined Form 10-Q. The SEC maintains an internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC at www.sec.gov.

7

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,
 
 
2015
 
2014
 
2015
 
2014
OPERATING REVENUES
 
$
4,954

 
$
4,654

 
$
13,417

 
$
12,357

OPERATING EXPENSES
 
 
 
 
 
 
 
 
Fuel, purchased power and interchange
 
1,472

 
1,566

 
4,151

 
4,337

Other operations and maintenance
 
819

 
772

 
2,353

 
2,296

Merger-related
 
7

 
—

 
20

 
—

Depreciation and amortization
 
798

 
782

 
2,082

 
1,859

Taxes other than income taxes and other
 
377

 
371

 
1,054

 
1,012

Total operating expenses
 
3,473

 
3,491

 
9,660

 
9,504

OPERATING INCOME
 
1,481

 
1,163

 
3,757

 
2,853

OTHER INCOME (DEDUCTIONS)
 
 
 
 
 
 
 
 
Interest expense
 
(311
)
 
(316
)
 
(912
)
 
(940
)
Benefits associated with differential membership interests - net
 
40

 
23

 
151

 
146

Equity in earnings of equity method investees
 
51

 
38

 
87

 
60

Allowance for equity funds used during construction
 
20

 
7

 
48

 
28

Interest income
 
22

 
18

 
65

 
60

Gains on disposal of assets - net
 
15

 
12

 
42

 
89

Gain associated with Maine fossil
 
—

 
—

 
—

 
21

Other than temporary impairment losses on securities held in nuclear decommissioning funds
 
(24
)
 
(4
)
 
(32
)
 
(8
)
Other - net
 
8

 
2

 
27

 
(1
)
Total other deductions - net
 
(179
)
 
(220
)
 
(524
)
 
(545
)
INCOME BEFORE INCOME TAXES
 
1,302

 
943

 
3,233

 
2,308

INCOME TAXES
 
421

 
279

 
981

 
723

NET INCOME
 
881

 
664

 
2,252

 
1,585

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
 
(2
)

(4
)

(7
)

(4
)
NET INCOME ATTRIBUTABLE TO NEE
 
$
879

 
$
660

 
$
2,245


$
1,581

Earnings per share attributable to NEE
 
 

 
 

 
 

 
 

Basic
 
$
1.94

 
$
1.52

 
$
5.02

 
$
3.64

Assuming dilution
 
$
1.93

 
$
1.50

 
$
4.97

 
$
3.60

Dividends per share of common stock
 
$
0.770

 
$
0.725

 
$
2.31

 
$
2.175

Weighted-average number of common shares outstanding:
 
 

 
 

 
 

 
 

Basic
 
454.1

 
434.5

 
447.3

 
434.0

Assuming dilution
 
456.0

 
440.5

 
451.3

 
439.6













This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

8



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
(unaudited)

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
NET INCOME
$
881

 
$
664

 
$
2,252

 
$
1,585

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
 
 
 
 
 
 
 
Net unrealized gains (losses) on cash flow hedges:
 

 
 

 
 

 
 

Effective portion of net unrealized losses (net of $55, $18, $55 and $36 tax benefit, respectively)
(97
)
 
(33
)
 
(107
)
 
(64
)
Reclassification from accumulated other comprehensive loss to net income (net of less than $1, $26, $16 and $32 tax expense, respectively)
11

 
45

 
50

 
56

Net unrealized gains (losses) on available for sale securities:
 

 
 

 
 

 
 

Net unrealized gains (losses) on securities still held (net of $30, $1, $26 tax benefit and $30 tax expense, respectively)
(38
)
 
(12
)
 
(33
)
 
40

Reclassification from accumulated other comprehensive loss to net income (net of $7, $4, $16 and $23 tax benefit, respectively)
(8
)
 
(6
)
 
(21
)
 
(35
)
Defined benefit pension and other benefits plans (net of $10 tax benefit and $3 tax expense, respectively)
—

 
—

 
(16
)
 
5

Net unrealized losses on foreign currency translation (net of $21, $3, $4 and $3 tax benefit, respectively)
(33
)
 
(6
)
 
(5
)
 
(6
)
Other comprehensive loss related to equity method investee (net of $2, $1 and $3 tax benefit, respectively)
(3
)
 
—

 
(2
)
 
(5
)
Total other comprehensive loss, net of tax
(168
)
 
(12
)
 
(134
)
 
(9
)
COMPREHENSIVE INCOME
713

 
652

 
2,118

 
1,576

LESS COMPREHENSIVE LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
1

 
(4
)
 
(1
)
 
(4
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO NEE
$
714

 
$
648

 
$
2,117

 
$
1,572
























This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.


9

NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except par value)
(unaudited)
 
 
September 30,
2015
 
December 31,
2014
PROPERTY, PLANT AND EQUIPMENT
 
 
 
 
Electric plant in service and other property
 
$
70,756

 
$
68,042

Nuclear fuel
 
2,231

 
2,006

Construction work in progress
 
6,218

 
3,591

Less accumulated depreciation and amortization
 
(19,370
)
 
(17,934
)
Total property, plant and equipment - net ($6,657 and $6,414 related to VIEs, respectively)
 
59,835

 
55,705

CURRENT ASSETS
 
 

 
 

Cash and cash equivalents
 
1,181

 
577

Customer receivables, net of allowances of $13 and $27, respectively
 
1,961

 
1,805

Other receivables
 
349

 
354

Materials, supplies and fossil fuel inventory
 
1,344

 
1,292

Regulatory assets:
 
 
 
 
Deferred clause and franchise expenses
 
135

 
268

Derivatives
 
212

 
364

Other
 
209

 
116

Derivatives
 
654

 
990

Deferred income taxes
 
10

 
739

Other
 
602

 
439

Total current assets
 
6,657

 
6,944

OTHER ASSETS
 
 

 
 

Special use funds
 
5,024

 
5,166

Other investments
 
1,781

 
1,399

Prepaid benefit costs
 
1,303

 
1,244

Regulatory assets:
 
 

 
 

Purchased power agreement termination
 
749

 
—

Securitized storm-recovery costs ($138 and $180 related to a VIE, respectively)
 
225

 
294

Other
 
752

 
657

Derivatives
 
1,304

 
1,009

Other
 
2,333

 
2,511

Total other assets
 
13,471

 
12,280

TOTAL ASSETS
 
$
79,963

 
$
74,929

CAPITALIZATION
 
 

 
 

Common stock ($0.01 par value, authorized shares - 800; outstanding shares - 461 and 443, respectively)
 
$
5

 
$
4

Additional paid-in capital
 
8,494

 
7,179

Retained earnings
 
13,987

 
12,773

Accumulated other comprehensive loss
 
(168
)
 
(40
)
Total common shareholders' equity
 
22,318

 
19,916

Noncontrolling interests
 
508

 
252

Total equity
 
22,826

 
20,168

Long-term debt ($1,197 and $1,077 related to VIEs, respectively)
 
25,604

 
24,367

Total capitalization
 
48,430

 
44,535

CURRENT LIABILITIES
 
 

 
 

Commercial paper
 
1,026

 
1,142

Notes payable
 
1,137

 
—

Current maturities of long-term debt
 
2,497

 
3,515

Accounts payable
 
1,870

 
1,354

Customer deposits
 
468

 
462

Accrued interest and taxes
 
883

 
474

Derivatives
 
734

 
1,289

Accrued construction-related expenditures
 
929

 
676

Other
 
827

 
751

Total current liabilities
 
10,371

 
9,663

OTHER LIABILITIES AND DEFERRED CREDITS
 
 

 
 

Asset retirement obligations
 
2,101

 
1,986

Deferred income taxes
 
9,567

 
9,261

Regulatory liabilities:
 
 

 
 

Accrued asset removal costs
 
2,005

 
1,904

Asset retirement obligation regulatory expense difference
 
2,131

 
2,257

Other
 
502

 
476

Derivatives
 
609

 
466

Deferral related to differential membership interests - VIEs
 
2,537

 
2,704

Other
 
1,710

 
1,677

Total other liabilities and deferred credits
 
21,162

 
20,731

COMMITMENTS AND CONTINGENCIES
 


 


TOTAL CAPITALIZATION AND LIABILITIES
 
$
79,963

 
$
74,929

This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

10



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)
 
 
Nine Months Ended 
 September 30,
 
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
2,252

 
$
1,585

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
 
Depreciation and amortization
 
2,082

 
1,859

Nuclear fuel and other amortization
 
280

 
259

Unrealized losses (gains) on marked to market energy contracts
 
(393
)
 
281

Deferred income taxes
 
848

 
716

Cost recovery clauses and franchise fees
 
114

 
(93
)
Purchased power agreement termination
 
(521
)
 
—

Benefits associated with differential membership interests - net
 
(151
)
 
(146
)
Allowance for equity funds used during construction
 
(48
)
 
(28
)
Gains on disposal of assets - net
 
(39
)
 
(89
)
Gain associated with Maine fossil
 
—

 
(21
)
Other - net
 
133

 
259

Changes in operating assets and liabilities:
 
 
 
 
Customer and other receivables
 
(123
)
 
(263
)
Materials, supplies and fossil fuel inventory
 
(52
)
 
(112
)
Other current assets
 
(56
)
 
(65
)
Other assets
 
(28
)
 
(182
)
Accounts payable and customer deposits
 
(131
)
 
147

Margin cash collateral
 
(79
)
 
(321
)
Income taxes
 
45

 
(30
)
Interest and other taxes
 
386

 
378

Other current liabilities
 
83

 
(149
)
Other liabilities
 
(89
)
 
(17
)
Net cash provided by operating activities
 
4,513

 
3,968

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
Capital expenditures of FPL
 
(2,440
)
 
(2,235
)
Independent power and other investments of NEER
 
(2,693
)
 
(2,471
)
Cash grants under the American Recovery and Reinvestment Act of 2009
 
6

 
321

Nuclear fuel purchases
 
(310
)
 
(237
)
Other capital expenditures and other investments
 
(233
)
 
(115
)
Sale of independent power and other investments of NEER
 
34

 
307

Proceeds from sale or maturity of securities in special use funds and other investments
 
3,751

 
3,579

Purchases of securities in special use funds and other investments
 
(3,872
)
 
(3,701
)
Proceeds from the sale of a noncontrolling interest in subsidiaries
 
319

 
438

Other - net
 
(39
)
 
36

Net cash used in investing activities
 
(5,477
)
 
(4,078
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
Issuances of long-term debt
 
3,462

 
4,244

Retirements of long-term debt
 
(3,097
)
 
(3,688
)
Proceeds from notes payable
 
1,450

 
501

Repayments of notes payable
 
(313
)
 
—

Net change in commercial paper
 
(116
)
 
(6
)
Issuances of common stock - net
 
1,274

 
57

Dividends on common stock
 
(1,031
)
 
(945
)
Other - net
 
(61
)
 
(6
)
Net cash provided by financing activities
 
1,568

 
157

Net increase in cash and cash equivalents
 
604

 
47

Cash and cash equivalents at beginning of period
 
577

 
438

Cash and cash equivalents at end of period
 
$
1,181

 
$
485

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
 
 
 
Accrued property additions
 
$
1,840

 
$
1,163

Decrease (increase) in property, plant and equipment as a result of a settlement
 
$
(5
)
 
$
113



This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

11



NEXTERA ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(millions)
(unaudited)

 
Common Stock
 
Additional
Paid-In
Capital
 
Unearned
ESOP
Compensation
 
Accumulated
Other
Comprehensive
Income
(Loss)
 
Retained
Earnings
 
Total
Common
Shareholders'
Equity
 
Non-
controlling
Interests
 
Total
Equity
 
Shares
 
Aggregate
Par Value
 
Balances, December 31, 2014
443

 
$
4

 
$
7,193

 
$
(14
)
 
$
(40
)
 
$
12,773

 
$
19,916

 
$
252

 
$
20,168

Net income
—

 
—

 
—

 
—

 
—

 
2,245

 
2,245

 
7

 
 
Issuances of common stock, net of issuance cost of less than $1
17

 
1

 
1,289

 
3

 
—

 
—

 
1,293

 
—

 
 
Exercise of stock options and other incentive plan activity
1

 
—

 
58

 
—

 
—

 
—

 
58

 
—

 
 
Dividends on common stock
—

 
—

 
—

 
—

 
—

 
(1,031
)
 
(1,031
)
 
—

 
 
Earned compensation under ESOP
—

 
—

 
31

 
5

 
—

 
—

 
36

 
—

 
 
Premium on equity units
—

 
—

 
(80
)
 
—

 
—

 
—

 
(80
)
 
—

 
 
Other comprehensive loss
—

 
—

 
—

 
—

 
(128
)
 
—

 
(128
)
 
(6
)
 
 
Issuance costs of equity units
—

 
—

 
(25
)
 
—

 
—

 
—

 
(25
)
 
—

 
 
Sale of NEER assets to NEP
—

 
—

 
34

 
—

 
—

 
—

 
34

 
261

 

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(13
)
 
 
Other changes in noncontrolling interests in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
7

 

Balances, September 30, 2015
461

 
$
5

 
$
8,500

 
$
(6
)
 
$
(168
)
 
$
13,987

 
$
22,318

 
$
508

 
$
22,826



 
Common Stock
 
Additional
Paid-In
Capital
 
Unearned
ESOP
Compensation
 
Accumulated
Other
Comprehensive
Income
(Loss)
 
Retained
Earnings
 
Total
Common
Shareholders'
Equity
 
Non-
controlling
Interests
 
Total
Equity
 
Shares
 
Aggregate
Par Value
 
Balances, December 31, 2013
435

 
$
4

 
$
6,437

 
$
(26
)
 
$
56

 
$
11,569

 
$
18,040

 
$
—

 
$
18,040

Net income
—

 
—

 
—

 
—

 
—

 
1,581

 
1,581

 
4

 
 
Issuances of common stock, net of issuance cost of less than $1
—

 
—

 
39

 
3

 
—

 
—

 
42

 
—

 
 
Exercise of stock options and other incentive plan activity
1

 
—

 
66

 
—

 
—

 
—

 
66

 
—

 
 
Dividends on common stock
—

 
—

 
—

 
—

 
—

 
(945
)
 
(945
)
 
—

 
 
Earned compensation under ESOP
—

 
—

 
31

 
5

 
—

 
—

 
36

 
—

 
 
Other comprehensive loss
—

 
—

 
—

 
—

 
(9
)
 
—

 
(9
)
 
—

 
 
NEP acquisition of limited partnership interest in NEP OpCo
—

 
—

 
—

 
—

 
—

 
—

 
—

 
232

 

Other changes in noncontrolling interests in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
98

 

Other
—

 
—

 
—

 
—

 
—

 
(1
)
 
(1
)
 
—

 
 
Balances, September 30, 2014
436

 
$
4

 
$
6,573

 
$
(18
)
 
$
47

 
$
12,204

 
$
18,810

 
$
334

 
$
19,144






This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

12



FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(millions)
(unaudited)

 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
 
2015
 
2014
 
2015
 
2014
OPERATING REVENUES
 
$
3,274

 
$
3,315

 
$
8,812

 
$
8,739

OPERATING EXPENSES
 
 

 
 

 
 

 
 

Fuel, purchased power and interchange
 
1,195

 
1,255

 
3,298

 
3,367

Other operations and maintenance
 
410

 
414

 
1,147

 
1,186

Depreciation and amortization
 
485

 
489

 
1,154

 
1,046

Taxes other than income taxes and other
 
329

 
323

 
910

 
892

Total operating expenses
 
2,419

 
2,481

 
6,509

 
6,491

OPERATING INCOME
 
855

 
834

 
2,303

 
2,248

OTHER INCOME (DEDUCTIONS)
 
 

 
 

 
 

 
 

Interest expense
 
(110
)
 
(112
)
 
(337
)
 
(325
)
Allowance for equity funds used during construction
 
20

 
7

 
46

 
27

Other - net
 
(2
)
 
—

 
(1
)
 
1

Total other deductions - net
 
(92
)
 
(105
)
 
(292
)
 
(297
)
INCOME BEFORE INCOME TAXES
 
763

 
729

 
2,011

 
1,951

INCOME TAXES
 
274

 
267

 
728

 
720

NET INCOME(a)
 
$
489

 
$
462

 
$
1,283

 
$
1,231

_______________________
(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 2014 Form 10-K.

13



FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions, except share amount)
(unaudited)
 
 
September 30,
2015
 
December 31,
2014
ELECTRIC UTILITY PLANT
 
 
 
 
Plant in service and other property
 
$
40,217

 
$
39,027

Nuclear fuel
 
1,352

 
1,217

Construction work in progress
 
2,685

 
1,694

Less accumulated depreciation and amortization
 
(11,734
)
 
(11,282
)
Total electric utility plant - net
 
32,520

 
30,656

CURRENT ASSETS
 
 

 
 

Cash and cash equivalents
 
30

 
14

Customer receivables, net of allowances of $6 and $5, respectively
 
1,027

 
773

Other receivables
 
112

 
136

Materials, supplies and fossil fuel inventory
 
887

 
848

Regulatory assets:
 
 

 
 

Deferred clause and franchise expenses
 
135

 
268

Derivatives
 
212

 
364

Other
 
208

 
111

Other
 
199

 
120

Total current assets
 
2,810

 
2,634

OTHER ASSETS
 
 

 
 

Special use funds
 
3,435

 
3,524

Prepaid benefit costs
 
1,230

 
1,189

Regulatory assets:
 
 

 
 

Purchased power agreement termination
 
749

 
—

Securitized storm-recovery costs ($138 and $180 related to a VIE, respectively)
 
225

 
294

Other
 
584

 
468

Other
 
349

 
542

Total other assets
 
6,572

 
6,017

TOTAL ASSETS
 
$
41,902

 
$
39,307

CAPITALIZATION
 
 

 
 

Common stock (no par value, 1,000 shares authorized, issued and outstanding)
 
$
1,373

 
$
1,373

Additional paid-in capital
 
7,732

 
6,279

Retained earnings
 
6,783

 
5,499

Total common shareholder's equity
 
15,888

 
13,151

Long-term debt ($210 and $273 related to a VIE, respectively)
 
9,037

 
9,413

Total capitalization
 
24,925

 
22,564

CURRENT LIABILITIES
 
 

 
 

Commercial paper
 
246

 
1,142

Current maturities of long-term debt
 
62

 
60

Accounts payable
 
719

 
647

Customer deposits
 
464

 
458

Accrued interest and taxes
 
975

 
245

Derivatives
 
216

 
370

Accrued construction-related expenditures
 
183

 
233

Other
 
350

 
331

Total current liabilities
 
3,215

 
3,486

OTHER LIABILITIES AND DEFERRED CREDITS
 
 

 
 

Asset retirement obligations
 
1,415

 
1,355

Deferred income taxes
 
7,276

 
6,835

Regulatory liabilities:
 
 

 
 

Accrued asset removal costs
 
1,996

 
1,898

Asset retirement obligation regulatory expense difference
 
2,131

 
2,257

Other
 
502

 
476

Other
 
442

 
436

Total other liabilities and deferred credits
 
13,762

 
13,257

COMMITMENTS AND CONTINGENCIES
 


 


TOTAL CAPITALIZATION AND LIABILITIES
 
$
41,902

 
$
39,307


This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

14

FLORIDA POWER & LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)

 
 
Nine Months Ended 
 September 30,
 
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
Net income
 
$
1,283

 
$
1,231

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 

 
 

Depreciation and amortization
 
1,154

 
1,046

Nuclear fuel and other amortization
 
160

 
149

Deferred income taxes
 
107

 
249

Cost recovery clauses and franchise fees
 
114

 
(93
)
Purchased power agreement termination
 
(521
)
 
—

Allowance for equity funds used during construction
 
(46
)
 
(27
)
Other - net
 
54

 
114

Changes in operating assets and liabilities:
 
 

 
 

Customer and other receivables
 
(250
)
 
(288
)
Materials, supplies and fossil fuel inventory
 
(39
)
 
(92
)
Other current assets
 
(49
)
 
(33
)
Other assets
 
(41
)
 
(92
)
Accounts payable and customer deposits
 
32

 
90

Income taxes
 
366

 
391

Interest and other taxes
 
357

 
343

Other current liabilities
 
28

 
(92
)
Other liabilities
 
(41
)
 
(27
)
Net cash provided by operating activities
 
2,668

 
2,869

CASH FLOWS FROM INVESTING ACTIVITIES
 
 

 
 

Capital expenditures
 
(2,440
)
 
(2,235
)
Nuclear fuel purchases
 
(178
)
 
(129
)
Proceeds from sale or maturity of securities in special use funds
 
3,099

 
2,530

Purchases of securities in special use funds
 
(3,149
)
 
(2,578
)
Other - net
 
(86
)
 
36

Net cash used in investing activities
 
(2,754
)
 
(2,376
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

Issuances of long-term debt
 
85

 
998

Retirements of long-term debt
 
(550
)
 
(355
)
Net change in commercial paper
 
(896
)
 
76

Capital contribution from NEE
 
1,454

 
100

Dividends to NEE
 
—

 
(1,300
)
Other - net
 
9

 
(2
)
Net cash provided by (used in) financing activities
 
102

 
(483
)
Net increase in cash and cash equivalents
 
16

 
10

Cash and cash equivalents at beginning of period
 
14

 
19

Cash and cash equivalents at end of period
 
$
30

 
$
29

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
 
 

 
 

Accrued property additions
 
$
355

 
$
354




This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2014 Form 10-K.

15

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 2014 Form 10-K. In the opinion of NEE and FPL management, all adjustments (consisting of normal recurring accruals) considered necessary for fair financial statement presentation have been made. 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.  Employee Retirement Benefits

NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries and has a supplemental executive retirement plan, which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees (collectively, pension benefits). In addition to pension benefits, NEE sponsors a contributory postretirement plan for health care and life insurance benefits (other benefits) for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

The components of net periodic benefit (income) cost for the plans are as follows:
 
Pension Benefits
 
Other Benefits
 
Pension Benefits
 
Other Benefits
 
Three Months Ended 
 September 30,
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
2015
 
2014
 
(millions)
Service cost
$
18

 
$
15

 
$
1

 
$
—

 
$
54

 
$
47

 
$
2

 
$
2

Interest cost
24

 
25

 
3

 
4

 
73

 
76

 
10

 
12

Expected return on plan assets
(63
)
 
(60
)
 
—

 
—

 
(190
)
 
(180
)
 
(1
)
 
(1
)
Amortization of prior service cost (benefit)
—

 
3

 
(1
)
 
(1
)
 
1

 
4

 
(2
)
 
(2
)
Amortization of losses
—

 
—

 
1

 
—

 
—

 
—

 
2

 
—

Net periodic benefit (income) cost at NEE
$
(21
)
 
$
(17
)
 
$
4

 
$
3

 
$
(62
)
 
$
(53
)
 
$
11

 
$
11

Net periodic benefit (income) cost at FPL
$
(13
)
 
$
(11
)
 
$
3

 
$
2

 
$
(40
)
 
$
(34
)
 
$
8

 
$
8


2.  Derivative Instruments

NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the commodity price risk 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 forecasted debt issuances and borrowings, and to optimize the value of NEER's power generation and gas infrastructure assets.

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 gas 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 the commodity price risk associated with the fuel requirements of the assets, where applicable, as well as 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 the 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

16
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


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; fuel purchases used in the production of electricity are recognized in fuel, purchased power and interchange 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. 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 primarily recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.

While most of NEE's derivatives are entered into for the purpose of managing commodity price risk, optimizing the value of NEER's power generation and gas infrastructure assets, reducing the impact of volatility in interest rates on outstanding and forecasted debt issuances and managing foreign currency risk, hedge accounting is only applied where specific criteria are met and it is practicable to do so. In order to apply hedge accounting, the transaction must be designated as a hedge and it must be highly effective in offsetting the hedged risk. Additionally, for hedges of forecasted transactions, the forecasted transactions must be probable. For interest rate and foreign currency derivative instruments, generally NEE assesses a hedging instrument's effectiveness by using nonstatistical methods including dollar value comparisons of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item. Hedge effectiveness is tested at the inception of the hedge and on at least a quarterly basis throughout its life. The effective portion of the gain or loss on a derivative instrument designated as a cash flow hedge is reported as a component of OCI and is reclassified into earnings in the period(s) during which the transaction being hedged affects earnings or when it becomes probable that a forecasted transaction being hedged would not occur. The ineffective portion of net unrealized gains (losses) on these hedges is reported in earnings in the current period. At September 30, 2015, NEE's AOCI included amounts related to interest rate cash flow hedges with expiration dates through October 2036 and foreign currency cash flow hedges with expiration dates through September 2030. Approximately $58 million of net losses included in AOCI at September 30, 2015 is 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 interest rates, currency exchange rates or scheduled principal payments.


17
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


Fair Value of Derivative Instruments - The tables below present NEE's and FPL's gross derivative positions at September 30, 2015 and December 31, 2014, 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 (see Note 3 - Recurring Fair Value Measurements for netting information), as well as the location of the net derivative position on the condensed consolidated balance sheets.

 
September 30, 2015
 
Fair Values of Derivatives
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
 
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
 
Total Derivatives Combined -
Net Basis
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
(millions)
NEE:
 
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
—

 
$
—

 
$
5,710

 
$
4,348

 
$
1,903

 
$
866

Interest rate contracts
53

 
223

 
—

 
115

 
55

 
340

Foreign currency swaps
—

 
137

 
—

 
—

 
—

 
137

Total fair values
$
53

 
$
360

 
$
5,710

 
$
4,463

 
$
1,958

 
$
1,343

 
 
 
 
 
 
 
 
 
 
 
 
FPL:
 
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
—

 
$
—

 
$
6

 
$
236

 
$
5

 
$
235

 
 
 
 
 
 
 
 
 
 
 
 
Net fair value by NEE balance sheet line item:
 
 
 
 
 
 
 
 
 
 
 
Current derivative assets(a)
 
 
 
 
 
 
 
 
$
654

 
 
Noncurrent derivative assets(b)
 
 
 
 
 
 
 
 
1,304

 
 
Current derivative liabilities(c)
 
 
 
 
 
 
 
 
 
 
$
734

Noncurrent derivative liabilities(d)
 
 
 
 
 
 
 
 
 
 
609

Total derivatives
 
 
 
 
 
 
 
 
$
1,958

 
$
1,343

 
 
 
 
 
 
 
 
 
 
 
 
Net fair value by FPL balance sheet line item:
 
 
 
 
 
 
 
 
 
 
 
Current other assets
 
 
 
 
 
 
 
 
$
4

 
 
Noncurrent other assets
 
 
 
 
 
 
 
 
1

 
 
Current derivative liabilities
 
 
 
 
 
 
 
 
 
 
$
216

Noncurrent other liabilities
 
 
 
 
 
 
 
 
 
 
19

Total derivatives
 
 
 
 
 
 
 
 
$
5

 
$
235

______________________
(a)
Reflects the netting of approximately $231 million in margin cash collateral received from counterparties.
(b)
Reflects the netting of approximately $173 million in margin cash collateral received from counterparties.
(c)
Reflects the netting of approximately $65 million in margin cash collateral paid to counterparties.
(d)
Reflects the netting of approximately $14 million in margin cash collateral paid to counterparties.


18
NEXTERA ENERGY, INC. AND FLORIDA POWER & LIGHT COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


 
December 31, 2014
 
Fair Values of Derivatives
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
 
Fair Values of Derivatives Not
Designated as Hedging
Instruments for Accounting
Purposes - Gross Basis
 
Total Derivatives Combined -
Net Basis
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
Assets
 
Liabilities
 
(millions)
NEE:
 
 
 
 
 
 
 
 
 
 
 
Commodity contracts
$
—

 
$
—

 
$
6,145

 
$
5,290

 
$
1,949

 
$
1,358

Interest rate contracts
35

 
126

 
—

 
125

 
50

 
266

Foreign currency swaps
—

 
131

 
—

 
—

 
—

 
131

Total fair values
$
35

 
$
257

 
$
6,145

 
$
5,415

 
$
1,999

 
$
1,755