0001603145-24-000010.txt : 20240423 0001603145-24-000010.hdr.sgml : 20240423 20240423165656 ACCESSION NUMBER: 0001603145-24-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 69 CONFORMED PERIOD OF REPORT: 20240331 FILED AS OF DATE: 20240423 DATE AS OF CHANGE: 20240423 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEXTERA ENERGY PARTNERS, LP CENTRAL INDEX KEY: 0001603145 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] ORGANIZATION NAME: 01 Energy & Transportation IRS NUMBER: 300818558 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36518 FILM NUMBER: 24865548 BUSINESS ADDRESS: STREET 1: 700 UNIVERSE BOULEVARD CITY: JUNO BEACH STATE: FL ZIP: 33408 BUSINESS PHONE: 561-694-4697 MAIL ADDRESS: STREET 1: 700 UNIVERSE BOULEVARD CITY: JUNO BEACH STATE: FL ZIP: 33408 FORMER COMPANY: FORMER CONFORMED NAME: NextEra Energy Partners, LP DATE OF NAME CHANGE: 20140319 10-Q 1 nep-20240331.htm 10-Q nep-20240331
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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 March 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission
File
Number
Exact name of registrant as specified in its
charter, address of principal executive offices and
registrant's telephone number
IRS Employer
Identification
Number
1-36518NEXTERA ENERGY PARTNERS, LP30-0818558


700 Universe Boulevard
Juno Beach, Florida 33408
(561) 694-4000

State or other jurisdiction of incorporation or organization:  Delaware

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading SymbolName of exchange
on which registered
Common unitsNEPNew York Stock Exchange

Indicate by check mark whether the registrant (1) has 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) has been subject to such filing requirements for the past 90 days.   Yes  þ    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.   Yes þ    No 

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

Large Accelerated Filer     þ Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Emerging Growth Company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).   Yes   No 

Number of NextEra Energy Partners, LP common units outstanding at March 31, 2024:  93,539,258



DEFINITIONS

Acronyms and defined terms used in the text include the following:
TermMeaning
2020 convertible notessenior unsecured convertible notes issued in 2020
2021 convertible notessenior unsecured convertible notes issued in 2021
2022 convertible notessenior unsecured convertible notes issued in 2022
2023 Form 10-KNEP's Annual Report on Form 10-K for the year ended December 31, 2023
ASAadministrative services agreement
BLMU.S. Bureau of Land Management
CSCS agreementamended and restated cash sweep and credit support agreement
Genesis HoldingsGenesis Solar Holdings, LLC
IDR feecertain payments from NEP OpCo to NEE Management as a component of the MSA which are based on the achievement by NEP OpCo of certain target quarterly distribution levels to its unitholders
IPPindependent power producer
limited partner interest in NEP OpCo
limited partner interest in NEP OpCo's common units
Management's DiscussionItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
MSAFourth Amended and Restated Management Services Agreement among NEP, NEE Management, NEP OpCo and NEP OpCo GP
MWmegawatt(s)
MWhmegawatt-hour(s)
NEENextEra Energy, Inc.
NEECHNextEra Energy Capital Holdings, Inc.
NEE EquityNextEra Energy Equity Partners, LP
NEE ManagementNextEra Energy Management Partners, LP
NEERNextEra Energy Resources, LLC
NEPNextEra Energy Partners, LP
NEP GPNextEra Energy Partners GP, Inc.
NEP OpCoNextEra Energy Operating Partners, LP
NEP OpCo credit facilitysenior secured revolving credit facility of NEP OpCo and its direct subsidiary
NEP OpCo GPNextEra Energy Operating Partners GP, LLC
NEP PipelinesNextEra Energy Partners Pipelines, LLC
NEP Renewables IINEP Renewables II, LLC
NEP Renewables IIINEP Renewables III, LLC
NEP Renewables IVNEP Renewables IV, LLC
NOLsnet operating losses
Note __Note __ to condensed consolidated financial statements
O&Moperations and maintenance
PPApower purchase agreement
PTCproduction tax credit
SECU.S. Securities and Exchange Commission
Silver StateSilver State South Solar, LLC
Texas pipelinesnatural gas pipeline assets located in Texas
U.S.United States of America
VIEvariable interest entity

Each of NEP and NEP OpCo has subsidiaries and affiliates with names that may include NextEra Energy, NextEra Energy Partners and similar references. For convenience and simplicity, in this report, the terms NEP and NEP OpCo are sometimes used as abbreviated references to specific subsidiaries, affiliates or groups of subsidiaries or affiliates. The precise meaning depends on the context. Discussions of NEP's ownership of subsidiaries and projects refers to its controlling interest in the general partner of NEP OpCo and NEP's indirect interest in and control over the subsidiaries of NEP OpCo. See Note 7 for a description of the noncontrolling interest in NEP OpCo. References to NEP's projects generally include NEP's consolidated subsidiaries and the projects in which NEP has equity method investments. References to NEP's pipeline investment refers to its equity method investment in contracted natural gas assets.

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


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FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of the federal securities laws. 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, anticipate, 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 NEP's operations and financial results, and could cause NEP's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of NEP in this Form 10-Q, in presentations, on its website, in response to questions or otherwise.

Performance Risks
NEP's ability to make cash distributions to its unitholders is affected by the performance of its renewable energy projects which could be impacted by wind and solar conditions and in certain circumstances by market prices.
Operation and maintenance of renewable energy projects and pipelines involve significant risks that could result in unplanned power outages, reduced output or capacity, property damage, personal injury or loss of life.
NEP's business, financial condition, results of operations and prospects can be materially adversely affected by weather conditions and related impacts, including, but not limited to, the impact of severe weather.
NEP depends on certain of the renewable energy projects and the investment in pipeline assets in its portfolio for a substantial portion of its anticipated cash flows.
The repowering of renewable energy projects requires up-front capital expenditures and could expose NEP to project development risks.
Geopolitical factors, terrorist acts, cyberattacks or other similar events could impact NEP's projects, pipeline investment or surrounding areas and adversely affect its business.
The ability of NEP 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. NEP's insurance coverage does not provide protection against all significant losses.
NEP relies on interconnection and transmission and other pipeline facilities of third parties to deliver energy from its renewable energy projects and to transport natural gas to and from its pipeline investment. If these facilities become unavailable, NEP's projects and pipeline investment may not be able to operate or deliver energy or may become partially or fully unavailable to transport natural gas.
NEP's business is subject to liabilities and operating restrictions arising from environmental, health and safety laws and regulations, compliance with which may require significant capital expenditures, increase NEP's cost of operations and affect or limit its business plans.
NEP's renewable energy projects and pipeline investment may be adversely affected by new or revised laws or regulations, interpretations of these laws and regulations or a failure to comply with current applicable energy and pipeline regulations.
NEP does not own all of the land on which the projects in its portfolio are located and its use and enjoyment of the property may be adversely affected to the extent that there are any lienholders or land rights holders that have rights that are superior to NEP's rights or the BLM suspends its federal rights-of-way grants.
NEP is subject to risks associated with litigation or administrative proceedings.
NEP is subject to risks associated with its ownership interests in projects that it identifies for repowering, which could result in its inability to complete construction at those projects on time or at all, and make those projects too expensive to complete or cause the return on an investment to be less than expected.

Contract Risks
NEP relies on a limited number of customers and is exposed to the risk that they may be unwilling or unable to fulfill their contractual obligations to NEP or that they otherwise terminate their agreements with NEP.
NEP or its pipeline investment may not be able to extend, renew or replace expiring or terminated PPAs, natural gas transportation agreements or other customer contracts at favorable rates or on a long-term basis.
If the energy production by or availability of NEP's renewable energy projects is less than expected, they may not be able to satisfy minimum production or availability obligations under their PPAs.

Acquisition Risks
NEP's ability to acquire assets involves risks.
Reductions in demand for natural gas in the U.S. and low market prices of natural gas could materially adversely affect NEP's pipeline investment's operations and cash flows.
Government laws, regulations and policies providing incentives and subsidies for clean energy could be changed, reduced or eliminated at any time and such changes may negatively impact NEP and its ability to make acquisitions.
NEP's ability to acquire projects depends on the availability of projects developed by NEE and third parties, which face risks related to project siting, financing, construction, permitting, the environment, governmental approvals and the negotiation of project development agreements.
Acquisitions of existing clean energy projects involve numerous risks.
4

NEP may acquire assets that use other renewable energy technologies and may acquire other types of assets. Any such acquisition may present unforeseen challenges and result in a competitive disadvantage relative to NEP's more-established competitors.
Certain agreements which NEP or its subsidiaries are parties to have provisions which may preclude NEP from engaging in specified change of control and similar transactions.
NEP faces substantial competition primarily from regulated utility holding companies, developers, IPPs, pension funds and private equity funds for opportunities in North America.
The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's pipeline investment.

Risks Related to NEP's Financial Activities
NEP may not be able to access sources of capital on commercially reasonable terms.
Restrictions in NEP and its subsidiaries' financing agreements could adversely affect NEP's business, financial condition, results of operations and ability to make cash distributions to its unitholders.
NEP may be unable to maintain its current credit ratings.
NEP's cash distributions to its unitholders may be reduced as a result of restrictions on NEP's subsidiaries’ cash distributions to NEP under the terms of their indebtedness or other financing agreements or otherwise to address alternative business purposes.
NEP's and its subsidiaries’ substantial amount of indebtedness may adversely affect NEP's ability to operate its business, and its failure to comply with the terms of its subsidiaries' indebtedness or refinance, extend or repay the indebtedness could have a material adverse effect on NEP's financial condition.
NEP is exposed to risks inherent in its use of interest rate swaps.
Widespread public health crises and epidemics or pandemics may have material adverse impacts on NEP’s business, financial condition, liquidity, results of operations and ability to grow its business and make cash distributions to its unitholders.

Risks Related to NEP's Relationship with NEE
NEE has influence over NEP.
Under the CSCS agreement, NEP receives credit support from NEE and its affiliates. NEP's subsidiaries may default under contracts or become subject to cash sweeps if credit support is terminated, if NEE or its affiliates fail to honor their obligations under credit support arrangements, or if NEE or another credit support provider ceases to satisfy creditworthiness requirements, and NEP will be required in certain circumstances to reimburse NEE for draws that are made on credit support.
NEER and certain of its affiliates are permitted to borrow funds received by NEP OpCo or its subsidiaries and is obligated to return these funds only as needed to cover project costs and distributions or as demanded by NEP OpCo. NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a portion of these funds.
NEER's right of first refusal may adversely affect NEP's ability to consummate future sales or to obtain favorable sale terms.
NEP GP and its affiliates may have conflicts of interest with NEP and have limited duties to NEP and its unitholders.
NEP GP and its affiliates and the directors and officers of NEP are not restricted in their ability to compete with NEP, whose business is subject to certain restrictions.
NEP may only terminate the MSA under certain limited circumstances.
If certain agreements with NEE Management or NEER are terminated, NEP may be unable to contract with a substitute service provider on similar terms.
NEP's arrangements with NEE limit NEE's potential liability, and NEP has agreed to indemnify NEE against claims that it may face in connection with such arrangements, which may lead NEE to assume greater risks when making decisions relating to NEP than it otherwise would if acting solely for its own account.

Risks Related to Ownership of NEP's Units
NEP's ability to make distributions to its unitholders depends on the ability of NEP OpCo to make cash distributions to its limited partners.
If NEP incurs material tax liabilities, NEP's distributions to its unitholders may be reduced, without any corresponding reduction in the amount of the IDR fee, which is currently suspended.
Holders of NEP's units may be subject to voting restrictions.
NEP's partnership agreement replaces the fiduciary duties that NEP GP and NEP's directors and officers might have to holders of its common units with contractual standards governing their duties and the New York Stock Exchange does not require a publicly traded limited partnership like NEP to comply with certain of its corporate governance requirements.
NEP's partnership agreement restricts the remedies available to holders of NEP's common units for actions taken by NEP's directors or NEP GP that might otherwise constitute breaches of fiduciary duties.
Certain of NEP's actions require the consent of NEP GP.
Holders of NEP's common units currently cannot remove NEP GP without NEE's consent and provisions in NEP's partnership agreement may discourage or delay an acquisition of NEP that NEP unitholders may consider favorable.
NEE's interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent.
5

Reimbursements and fees owed to NEP GP and its affiliates for services provided to NEP or on NEP's behalf will reduce cash distributions from NEP OpCo and from NEP to NEP's unitholders, and there are no limits on the amount that NEP OpCo may be required to pay.
Increases in interest rates could adversely impact the price of NEP's common units, NEP's ability to issue equity or incur debt for acquisitions or other purposes and NEP's ability to make cash distributions to its unitholders.
The liability of holders of NEP's units, which represent limited partnership interests in NEP, may not be limited if a court finds that unitholder action constitutes control of NEP's business.
Unitholders may have liability to repay distributions that were wrongfully distributed to them.
The issuance of common units, or other limited partnership interests, or securities convertible into, or settleable with, common units, and any subsequent conversion or settlement, will dilute common unitholders’ ownership in NEP, may decrease the amount of cash available for distribution for each common unit, will impact the relative voting strength of outstanding NEP common units and issuance of such securities, or the possibility of issuance of such securities, as well as the resale, or possible resale following conversion or settlement, may result in a decline in the market price for NEP's common units.

Taxation Risks
NEP's future tax liability may be greater than expected if NEP does not generate NOLs sufficient to offset taxable income or if tax authorities challenge certain of NEP's tax positions.
NEP's ability to use NOLs to offset future income may be limited.
NEP will not have complete control over NEP's tax decisions.
Distributions to unitholders may be taxable as dividends.

These factors should be read together with the risk factors included in Part I, Item 1A. Risk Factors in the 2023 Form 10-K and investors should refer to that section of the 2023 Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made, and NEP undertakes no obligation to update any forward-looking statement to reflect events or circumstances, including, but not limited to, unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

Website Access to U.S. Securities and Exchange Commission (SEC) Filings. NEP makes its 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 NEP's internet website, www.nexteraenergypartners.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC. The information and materials available on NEP's website are not incorporated by reference into this Form 10-Q.

6

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

NEXTERA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(millions, except per unit amounts)
(unaudited)
Three Months Ended 
 March 31,
20242023
OPERATING REVENUES(a)
$257 $245 
OPERATING EXPENSES
Operations and maintenance(b)
123 146 
Depreciation and amortization136 123 
Taxes other than income taxes and other19 11 
Total operating expenses – net278 280 
OPERATING LOSS(21)(35)
OTHER INCOME (DEDUCTIONS)
Interest expense(13)(206)
Equity in earnings of equity method investees30 28 
Equity in earnings (losses) of non-economic ownership interests4 (8)
Other – net22 3 
Total other income (deductions) – net43 (183)
INCOME (LOSS) BEFORE INCOME TAXES22 (218)
INCOME TAX BENEFIT(13)(36)
INCOME (LOSS) FROM CONTINUING OPERATIONS35 (182)
INCOME FROM DISCONTINUED OPERATIONS, net of tax expense of $2 million
 31 
NET INCOME (LOSS)(c)
35 (151)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS35 137 
NET INCOME (LOSS) ATTRIBUTABLE TO NEP
$70 $(14)
Earnings (loss) per common unit attributable to NEP – basic and assuming dilution:
From continuing operations$0.75 $(0.23)
From discontinued operations 0.06 
Earnings (loss) per common unit attributable to NEP – basic and assuming dilution
$0.75 $(0.17)
____________________
(a)    Includes related party revenues of approximately $3 million and $(10) million for the three months ended March 31, 2024 and 2023, respectively.
(b)    Total O&M expenses presented include related party amounts of approximately $15 million and $61 million for the three months ended March 31, 2024 and 2023, respectively.
(c)    For the three months ended March 31, 2024, NEP recognized less than $1 million of other comprehensive income related to equity method investees, which was primarily attributable to noncontrolling interests. For the three months ended March 31, 2023, NEP recognized less than $1 million of other comprehensive income related to equity method investees, which was primarily attributable to noncontrolling interests.

















This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K.
7

NEXTERA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(millions)
(unaudited)
March 31, 2024December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents$245 $274 
Accounts receivable133 114 
Other receivables70 64 
Due from related parties1,506 1,575 
Inventory88 82 
Other141 107 
Total current assets2,183 2,216 
Other assets:
Property, plant and equipment – net14,732 14,837 
Intangible assets – PPAs – net1,945 1,987 
Goodwill833 833 
Investments in equity method investees1,840 1,853 
Other803 785 
Total other assets20,153 20,295 
TOTAL ASSETS$22,336 $22,511 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued expenses$72 $72 
Due to related parties61 87 
Current portion of long-term debt1,349 1,348 
Accrued interest45 38 
Accrued property taxes22 43 
Other55 83 
Total current liabilities1,604 1,671 
Other liabilities and deferred credits:
Long-term debt4,942 4,941 
Asset retirement obligations335 331 
Due to related parties55 53 
Intangible liabilities – PPAs – net
1,186 1,210 
Other236 248 
Total other liabilities and deferred credits6,754 6,783 
TOTAL LIABILITIES8,358 8,454
COMMITMENTS AND CONTINGENCIES
EQUITY
Common units (93.5 and 93.4 units issued and outstanding, respectively)
3,564 3,576 
Accumulated other comprehensive loss(7)(7)
Noncontrolling interests10,421 10,488 
TOTAL EQUITY13,978 14,057 
TOTAL LIABILITIES AND EQUITY$22,336 $22,511 









This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K.
8

NEXTERA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(millions)
(unaudited)
Three Months Ended March 31,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$35 $(151)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
136 132 
Intangible amortization – PPAs21 20 
Change in value of derivative contracts
(51)164 
Deferred income taxes
11 (34)
Equity in earnings of equity method investees, net of distributions received14 13 
Equity in losses (earnings) of non-economic ownership interests(4)8 
Other – net
5 6 
Changes in operating assets and liabilities:
Current assets(45)(4)
Noncurrent assets
(11)(6)
Current liabilities
(33)(66)
Net cash provided by operating activities
78 82 
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of membership interests in subsidiaries – net (84)
Capital expenditures and other investments
(64)(401)
Proceeds from sale of a business 51 
Payments from related parties under CSCS agreement – net68 277 
Reimbursements from related parties for capital expenditures34 356 
    Other – net4  
Net cash provided by investing activities42 199 
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common units – net3 154 
Issuances of long-term debt, including premiums and discounts
24 63 
Retirements of long-term debt
(25)(9)
Debt issuance costs(2)(2)
Partner contributions
29  
Partner distributions
(188)(169)
Payments to Class B noncontrolling interest investors(18)(70)
Buyout of Class B noncontrolling interest investors (196)
Proceeds on sale of differential membership interests 92 
Proceeds from differential membership investors
75 61 
Payments to differential membership investors
(11)(202)
Other – net 2 
Net cash used in financing activities(113)(276)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH7 5 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – BEGINNING OF PERIOD294 284 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH – END OF PERIOD$301 $289 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized$50 $47 
Cash received for income taxes$(24)$ 
Accrued property additions$42 $735 









This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K.
9

NEXTERA ENERGY PARTNERS, LP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(millions)
(unaudited)



Common Units
Three Months Ended March 31, 2024UnitsAmountAccumulated Other Comprehensive LossNoncontrolling
Interests
Total Equity
Balances, December 31, 202393.4 $3,576 $(7)$10,488 $14,057 
Issuance of common units – net
0.1 1 — — 1 
Net income (loss)— 70 — (35)35 
Related party note receivable— — — 2 2 
Related party contributions
— — — 26 26 
Distributions, primarily to related parties— — — (106)(106)
Other differential membership investment activity— — — 64 64 
Payments to Class B noncontrolling interest investors— — — (18)(18)
Distributions to unitholders(a)
— (82)— — (82)
Other – net— (1)— — (1)
Balances, March 31, 202493.5 $3,564 $(7)$10,421 $13,978 
_________________________
(a)    Distributions per common unit of $0.8800 were paid during the three months ended March 31, 2024.     
Common Units
Three Months Ended March 31, 2023UnitsAmountAccumulated Other Comprehensive LossNoncontrolling
Interests
Total
Equity
Redeemable Non-controlling Interests
Balances, December 31, 2022
86.5 $3,332 $(7)$11,346 $14,671 $101 
Issuance of common units – net(a)
2.4 167 — — 167 — 
Acquisition of subsidiary with noncontrolling ownership interest— — — 72 72 — 
Net income (loss)— (14)— (139)(153)2 
Distributions, primarily to related parties— — — (98)(98)— 
Changes in non-economic ownership interests— — — 11 11 — 
Other differential membership investment activity— — — 142 142  
Payments to Class B noncontrolling interest investors— — — (70)(70)— 
Distributions to unitholders(b)
— (70)— — (70)— 
Buyout of Class B noncontrolling interest investors— — — (196)(196)— 
Other – net— (1)— 1  — 
Balances, March 31, 202388.9 $3,414 $(7)$11,069 $14,476 $103 
_____________________________
(a)    See Note 9 – ATM Program for further discussion. Includes deferred tax impact of approximately $15 million.
(b)    Distributions per common unit of $0.8125 were paid during the three months ended March 31, 2023.

















This report should be read in conjunction with the Notes herein and the Notes to Consolidated Financial Statements appearing in the 2023 Form 10-K.
10


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The accompanying condensed consolidated financial statements should be read in conjunction with the 2023 Form 10-K. In the opinion of NEP management, all adjustments considered necessary for fair financial statement presentation have been made. All adjustments are normal and recurring unless otherwise noted. Certain amounts included in the prior year's condensed consolidated financial statements have been reclassified to conform to the current year's presentation, including presentation of discontinued operations as discussed in Note 2. The results of operations for an interim period generally will not give a true indication of results for the year.

1. Acquisitions

In June 2023, an indirect subsidiary of NEP acquired from indirect subsidiaries of NEER ownership interests (2023 acquisition) in a portfolio of four wind and three solar generation facilities with a combined generating capacity totaling approximately 688 MW located in various states across the U.S.

Supplemental Unaudited Pro forma Results of Operations

NEP’s pro forma results of operations in the combined entity had the 2023 acquisition been completed on January 1, 2022 are as follows:
Three Months Ended 
 March 31, 2023
(millions)
Unaudited pro forma results of operations:
Pro forma revenues$264 
Pro forma operating loss$(27)
Pro forma net loss$(153)
Pro forma net loss attributable to NEP$(10)

The unaudited pro forma condensed consolidated results of operations include adjustments to:

reflect the historical results of the business acquired had the 2023 acquisition been completed on January 1, 2022 assuming consistent operating performance over all periods;
reflect the estimated depreciation and amortization expense based on the estimated fair value of property, plant and equipment – net, intangible assets – PPAs – net and intangible liabilities – PPAs – net;
reflect assumed interest expense related to funding the acquisition; and
reflect related income tax effects.

The unaudited pro forma information is not necessarily indicative of the results of operations that would have occurred had the transaction been made at the beginning of the period presented or the future results of the condensed consolidated operations.

2. Discontinued Operations

In December 2023, a subsidiary of NEP completed the sale of its ownership interests in the Texas pipelines. NEP's results of operations for the Texas pipelines are presented as income from discontinued operations on its condensed consolidated statement of income (loss) for the three months ended March 31, 2023.

11


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The table below presents the financial results of the Texas pipelines included in income from discontinued operations:

Three Months Ended March 31, 2023
(millions)
OPERATING REVENUES(a)
$56 
OPERATING EXPENSES
Operations and maintenance(b)
8 
Depreciation and amortization
9 
Taxes other than income taxes and other
1 
Total operating expenses – net
18 
OPERATING INCOME38 
OTHER DEDUCTIONS
Interest expense(4)
Other – net(1)
Total other deductions – net(5)
INCOME BEFORE INCOME TAXES33 
INCOME TAXES2 
INCOME FROM DISCONTINUED OPERATIONS(c)
$31 
_____________________________
(a)    Represents service revenues earned under gas transportation agreements. Includes related party revenues of approximately $7 million.
(b)    Includes related party amounts of approximately $5 million.
(c)    Includes net income attributable to noncontrolling interests of approximately $25 million. Income tax expense attributable to noncontrolling interests is less than $1 million.

NEP has elected not to separately disclose discontinued operations on its condensed consolidated statement of cash flows. The table below presents cash flows from discontinued operations for major captions on the condensed consolidated statement of cash flows related to the Texas pipelines:
Three Months Ended March 31, 2023
(millions)
Depreciation and amortization$9 
Change in value of derivative contracts$2 
Deferred income taxes$2 
Capital expenditures and other investments$(25)

3. Revenue

Revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. NEP's operating revenues are generated primarily from various non-affiliated parties under PPAs and, in 2023, natural gas transportation agreements (see Note 2 regarding sale of the Texas pipelines). NEP's operating revenues from contracts with customers are partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Revenue is recognized as energy and any related renewable energy attributes are delivered, based on rates stipulated in the respective PPAs, or natural gas transportation services are performed. NEP believes that the obligation to deliver energy and provide the natural gas transportation services is satisfied over time as the customer simultaneously receives and consumes benefits provided by NEP. In addition, NEP believes that the obligation to deliver renewable energy attributes is satisfied at multiple points in time, with the control of the renewable energy attribute being transferred at the same time the related energy is delivered. NEP’s operating revenues for the three months ended March 31, 2024 are revenue from contracts with customers for renewable energy sales of approximately $242 million. NEP’s operating revenues for the three months ended March 31, 2023 are revenue from contracts with customers for renewable energy sales of approximately $245 million and revenue from contracts with customers for natural gas transportation services, all of which is included in discontinued operation, of $56 million. NEP's accounts receivable are associated with revenues earned from contracts with customers. Receivables represent unconditional rights to consideration and reflect the differences in timing of revenue recognition and cash collections. For substantially all of NEP's receivables, customer and counterparty credit risk is managed in the same manner and the terms and conditions of payment are similar.
NEP recognizes revenues as energy and any related renewable energy attributes are delivered or natural gas transportation services are performed, consistent with the amounts billed to customers based on rates stipulated in the respective agreements.
12


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NEP considers the amount billed to represent the value of energy delivered or services provided to the customer. NEP’s customers typically receive bills monthly with payment due within 30 days.
Revenues yet to be earned under contracts with customers to deliver energy and any related energy attributes, which have maturity dates ranging from 2025 to 2051, will vary based on the volume of energy delivered. At March 31, 2024, NEP expects to record approximately $166 million of revenues related to the fixed price components of one PPA through 2039 as the energy is delivered.

4. Derivative Instruments and Hedging Activity

NEP uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings and to manage the physical and financial risks inherent in the sale of electricity. NEP records all derivative instruments that are required to be marked to market as either assets or liabilities on its condensed consolidated balance sheets and measures them at fair value each reporting period. NEP does not utilize hedge accounting for its derivative instruments. All changes in the interest rate contract derivatives' fair value are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings of equity method investees in NEP's condensed consolidated statements of income (loss). At March 31, 2024 and December 31, 2023, the net notional amounts of the interest rate contracts were approximately $3.1 billion and $3.1 billion, respectively. All changes in commodity contract derivatives' fair value are recognized in operating revenues in NEP's condensed consolidated statements of income (loss). At March 31, 2024 and December 31, 2023, NEP had derivative commodity contracts for power with net notional volumes of approximately 3.8 million and 4.6 million MW hours, respectively. Cash flows from the interest rate and commodity contracts are reported in cash flows from operating activities in NEP's condensed consolidated statements of cash flows.

Fair Value Measurement of Derivative Instruments – The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or other observable inputs (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEP uses different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or similar assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value. Transfers between fair value hierarchy levels occur at the beginning of the period in which the transfer occurred.

NEP estimates the fair value of its derivative instruments using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements. The primary inputs used in the fair value measurements include the contractual terms of the derivative agreements, current interest rates and credit profiles. The significant inputs for the resulting fair value measurement of interest rate contracts are market-observable inputs and the measurements are reported as Level 2 in the fair value hierarchy.

13


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
The tables below present NEP's gross derivative positions, based on the total fair value of each derivative instrument, at March 31, 2024 and December 31, 2023, as required by disclosure rules, as well as the location of the net derivative positions, based on the expected timing of future payments, on NEP's condensed consolidated balance sheets.

March 31, 2024
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
Interest rate contracts$ $225 $ $ $225 
Commodity contracts$ $ $4 $(3)1 
Total derivative assets$226 
Liabilities:
Interest rate contracts$ $10 $ $ $10 
Commodity contracts$ $ $24 $(3)21 
Total derivative liabilities$31 
Net fair value by balance sheet line item:
Current other assets
$64 
Noncurrent other assets
162 
Total derivative assets$226 
Current other liabilities$8 
Noncurrent other liabilities23 
Total derivative liabilities$31 
____________________
(a)    Includes the effect of the contractual ability to settle contracts under master netting arrangements.

December 31, 2023
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
Interest rate contracts$ $195 $ $4 $199 
Commodity contracts$ $ $1 $ 1 
Total derivative assets$200 
Liabilities:
Interest rate contracts$ $30 $ $4 $34 
Commodity contracts$ $ $21 $ 21 
Total derivative liabilities$55 
Net fair value by balance sheet line item:
Current other assets
$61 
Noncurrent other assets
139 
Total derivative assets$200 
Current other liabilities$18 
Noncurrent other liabilities37 
Total derivative liabilities$55 
____________________
(a)    Includes the effect of the contractual ability to settle contracts under master netting arrangements.

14


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Financial Statement Impact of Derivative InstrumentsGains (losses) related to NEP's derivatives are recorded in NEP's condensed consolidated financial statements as follows:
Three Months Ended March 31,
20242023
(millions)
Interest rate contracts – interest expense$69 $(149)
Interest rate contracts – income from discontinued operations$ $(1)
Commodity contracts – operating revenues$ $(2)

Credit-Risk-Related Contingent Features – Certain of NEP's derivative instruments contain credit-related cross-default and material adverse change triggers, none of which contain requirements to maintain certain credit ratings or financial ratios. At March 31, 2024 and December 31, 2023, the aggregate fair value of NEP's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $9 million and $30 million, respectively.

5. Non-Derivative Fair Value Measurements

Non-derivative fair value measurements consist of NEP's cash equivalents. The fair value of these financial assets is determined using the valuation techniques and inputs as described in Note 4 – Fair Value Measurement of Derivative Instruments. The fair value of money market funds that are included in cash and cash equivalents, current other assets and noncurrent other assets on NEP's condensed consolidated balance sheets is estimated using a market approach based on current observable market prices.
Financial Instruments Recorded at Other than Fair Value – The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:
March 31, 2024December 31, 2023
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
(millions)
Long-term debt, including current maturities(a)
$6,291 $6,114 $6,289 $6,136 
____________________
(a)    At March 31, 2024 and December 31, 2023, approximately $6,097 million and $6,120 million, respectively, of the fair value is estimated using a market approach based on quoted market prices for the same or similar issues (Level 2); the balance is estimated using an income approach utilizing a discounted cash flow valuation technique, considering the current credit profile of the debtor (Level 3). At March 31, 2024 and December 31, 2023, approximately $1,469 million and $1,446 million, respectively, of the fair value relates to the 2020 convertible notes, the 2021 convertible notes and the 2022 convertible notes and is Level 2.

6. Income Taxes

Income taxes are calculated for NEP as a single taxpaying corporation for U.S. federal and state income taxes (based on NEP's election to be taxed as a corporation). NEP recognizes in income its applicable ownership share of U.S. income taxes due to the disregarded/partnership tax status of substantially all of the U.S. projects under NEP OpCo. Net income or loss attributable to noncontrolling interests includes minimal U.S. taxes.

The effective tax rate for continuing operations for the three months ended March 31, 2024 and 2023 was approximately (59)% and 17%, respectively. The effective tax rate for continuing operations is below the U.S. statutory rate of 21% primarily due to tax benefit attributable to noncontrolling interests of approximately $11 million and tax benefit attributable to PTCs of $8 million for the three months ended March 31, 2024. The effective tax rate for continuing operations is below the U.S. statutory rate of 21% primarily due to tax expense attributable to noncontrolling interests of approximately $22 million for the three months ended March 31, 2023.

7. Variable Interest Entities

NEP has identified NEP OpCo, a limited partnership with a general partner and limited partners, as a VIE. NEP has consolidated the results of NEP OpCo and its subsidiaries because of its controlling interest in the general partner of NEP OpCo. At March 31, 2024, NEP owned an approximately 48.6% limited partner interest in NEP OpCo and NEE Equity owned a noncontrolling 51.4% limited partner interest in NEP OpCo. The assets and liabilities of NEP OpCo as well as the operations of NEP OpCo represent substantially all of NEP's assets and liabilities and its operations.

In addition, at March 31, 2024 and December 31, 2023, NEP OpCo consolidated 20 VIEs related to certain subsidiaries which have sold differential membership interests (see Note 11 – Noncontrolling Interests) in entities which own and operate 40 wind
15


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
generation facilities as well as eight solar projects, including related battery storage facilities, and one stand-alone battery storage facility. These entities are considered VIEs because the holders of the differential membership interests do not have substantive rights over the significant activities of these entities. The assets, primarily property, plant and equipment – net, and liabilities, primarily accounts payable and accrued expenses and asset retirement obligations, of the VIEs, totaled approximately $11,374 million and $535 million, respectively, at March 31, 2024 and $11,453 million and $552 million, respectively, at December 31, 2023.

At March 31, 2024 and December 31, 2023, NEP OpCo also consolidated five VIEs related to the sales of noncontrolling Class B interests in certain NEP subsidiaries (see Note 11 – Noncontrolling Interests) which have ownership interests in and operate wind and solar facilities with a combined net generating capacity of approximately 5,560 MW and battery storage capacity of 120 MW, as well as ownership interests in natural gas pipeline assets (Class B VIEs). These entities are considered VIEs because the holders of the noncontrolling Class B membership interests do not have substantive rights over the significant activities of the entities. The assets, primarily property, plant and equipment – net, intangible assets – PPAs and investments in equity method investees, and the liabilities, primarily accounts payable and accrued expenses, long-term debt, intangible liabilities – PPAs, noncurrent other liabilities and asset retirement obligations, of the VIEs totaled approximately $13,473 million and $2,642 million, respectively, at March 31, 2024 and $13,576 million and $2,693 million, respectively, at December 31, 2023. Certain of the Class B VIEs include six other VIEs related to NEP's ownership interests in Rosmar Holdings, LLC, Silver State, Meade Pipeline Co LLC, Pine Brooke Class A Holdings, LLC, Star Moon Holdings, LLC (Star Moon Holdings) and Emerald Breeze Holdings, LLC (Emerald Breeze). In addition, certain of the Class B VIEs contain entities which have sold differential membership interests and approximately $7,566 million and $7,640 million of assets and $417 million and $437 million of liabilities at March 31, 2024 and December 31, 2023, respectively, are also included in the disclosure of the VIEs related to differential membership interests above.

At March 31, 2024 and December 31, 2023, NEP OpCo consolidated Sunlight Renewables Holdings, LLC (Sunlight Renewables Holdings) which is a VIE. The assets, primarily property, plant and equipment – net, and the liabilities, primarily accounts payable and accrued expenses, asset retirement obligation and noncurrent other liabilities, of the VIE totaled approximately $437 million and $10 million, respectively, at March 31, 2024 and $440 million and $10 million, respectively, at December 31, 2023. This VIE contains entities which have sold differential membership interests and approximately $351 million and $353 million of assets and $10 million and $10 million of liabilities at March 31, 2024 and December 31, 2023, respectively, are also included in the disclosure of VIEs related to differential membership interests above.

Certain subsidiaries of NEP OpCo have noncontrolling interests in entities accounted for under the equity method that are considered VIEs.

NEP has an indirect equity method investment in three NEER solar projects with a total generating capacity of 277 MW and battery storage capacity of 230 MW. Through a series of transactions, a subsidiary of NEP issued 1,000,000 NEP OpCo Class B Units, Series 1 and 1,000,000 NEP OpCo Class B Units, Series 2, to NEER for approximately 50% of the ownership interests in the three solar projects (non-economic ownership interests). NEER, as holder of the NEP OpCo Class B Units, will retain 100% of the economic rights in the projects to which the respective Class B Units relate, including the right to all distributions paid by the project subsidiaries that own the projects to NEP OpCo. NEER has agreed to indemnify NEP against all risks relating to NEP’s ownership of the projects until NEER offers to sell economic interests to NEP and NEP accepts such offer, if NEP chooses to do so. NEER has also agreed to continue to manage the operation of the projects at its own cost, and to contribute to the projects any capital necessary for the operation of the projects, until NEER offers to sell economic interests to NEP and NEP accepts such offer. At March 31, 2024 and December 31, 2023, NEP's equity method investment related to the non-economic ownership interests of approximately $115 million and $111 million, respectively, is reflected as noncurrent other assets on NEP's condensed consolidated balance sheets. All equity in earnings (losses) of the non-economic ownership interests is allocated to net income (loss) attributable to noncontrolling interests. NEP is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have a controlling interest in these entities.

8. Debt

Long-term debt issuances and borrowings by subsidiaries of NEP during the three months ended March 31, 2024 were as follows:
Date Issued/Borrowed
Debt Issuances/BorrowingsInterest
Rate
Principal
Amount
Maturity
Date
(millions)
February 2024
Other long-term debt
Fixed(a)
$24 

(a)
————————————
(a)See Note 10 – Related Party Long-Term Debt.

16


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
In February 2024, the loan parties extended the maturity date from February 2028 to February 2029 for substantially all of the NEP OpCo credit facility.

NEP OpCo and its subsidiaries' secured long-term debt agreements are secured by liens on certain assets and contain provisions which, under certain conditions, could restrict the payment of distributions or related party fee payments. At March 31, 2024, NEP and its subsidiaries were in compliance with all financial debt covenants under their financings.

9. Equity

Distributions – On April 22, 2024, the board of directors of NEP authorized a distribution of $0.8925 per common unit payable on May 15, 2024 to its common unitholders of record on May 7, 2024. NEP anticipates that an adjustment will be made to the conversion ratios for each of the 2022 convertible notes and the 2021 convertible notes under the related indentures on the ex-distribution date for such distribution, which will be computed using the last reported sale price of NEP's units on the day before the ex-distribution date, subject to certain carryforward provisions in the related indentures.

Earnings (Loss) Per Unit – Diluted earnings per unit is calculated based on the weighted-average number of common units and potential common units outstanding during the period, including the dilutive effect of convertible notes and, in 2023, common units issuable pursuant to an exchange notice (see Common Unit Issuance below). During the periods with dilution, the dilutive effect of the 2022 convertible notes, the 2021 convertible notes and the 2020 convertible notes is calculated using the if-converted method and common units issuable pursuant to the exchange notice is calculated using the treasury stock method.

The reconciliation of NEP's basic and diluted earnings (loss) per unit for the three months ended March 31, 2024 and 2023 is as follows:
Three Months Ended March 31,
20242023
(millions, except per unit amounts)
Numerator – Net income (loss) attributable to NEP:
From continuing operations – basic and assuming dilution$70 $(20)
From discontinued operations – basic and assuming dilution 6 
Net income (loss) attributable to NEP$70 $(14)
Denominator:
Weighted-average number of common units outstanding – basic93.5 87.3 
Dilutive effect of common units issuable and convertible notes(a)
 0.6 
Weighted-average number of common units outstanding – assuming dilution93.5 87.9 
Earnings (loss) per common unit attributable to NEP – basic and assuming dilution:
From continuing operations$0.75 $(0.23)
From discontinued operations 0.06 
Earnings (loss) per common unit attributable to NEP – basic and assuming dilution$0.75 $(0.17)
————————————
(a)During the three months ended March 31, 2024 and 2023, the 2022 convertible notes, the 2021 convertible notes and the 2020 convertible notes were antidilutive and as such were not included in the calculation of diluted earnings per unit.

ATM Program – During the three months ended March 31, 2024, NEP did not issue any common units under its at-the-market equity issuance program (ATM program). During the three months ended March 31, 2023, NEP issued approximately 2.3 million common units under the ATM program for net proceeds of approximately $152 million. Fees related to the ATM program were approximately $1 million for the three months ended March 31, 2023.

Common Unit Issuance – In January 2023, NEE Equity delivered notice to NEP OpCo of its election to exchange 0.9 million NEP OpCo common units for NEP common units on a one-for-one basis and in April 2023, NEP issued 0.9 million NEP common units to consummate the exchange.

17


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Accumulated Other Comprehensive Income (Loss) – During the three months ended March 31, 2024, NEP recognized less than $1 million of other comprehensive income related to equity method investee. During the three months ended March 31, 2023, NEP recognized less than $1 million of other comprehensive income related to equity method investee. At March 31, 2024 and 2023, NEP's accumulated other comprehensive loss totaled approximately $14 million and $16 million, respectively, of which $7 million and $9 million, respectively, was attributable to noncontrolling interest and $7 million and $7 million, respectively, was attributable to NEP.

10. Related Party Transactions

Each project entered into O&M agreements and ASAs with subsidiaries of NEER whereby the projects pay a certain annual fee plus actual costs incurred in connection with certain O&M and administrative services performed under these agreements. These services are reflected as operations and maintenance in NEP's condensed consolidated statements of income (loss). Additionally, certain NEP subsidiaries pay affiliates for transmission and retail power services which are reflected as operations and maintenance in NEP's condensed consolidated statements of income (loss). Certain projects have also entered into various types of agreements including those related to shared facilities and transmission lines, transmission line easements, technical support and construction coordination with subsidiaries of NEER whereby certain fees or cost reimbursements are paid to, or received by, certain subsidiaries of NEER.

Management Services Agreement – Under the MSA, an indirect wholly owned subsidiary of NEE provides operational, management and administrative services to NEP, including managing NEP’s day-to-day affairs and providing individuals to act as NEP’s executive officers and directors, in addition to those services that are provided under the existing O&M agreements and ASAs described above between NEER subsidiaries and NEP subsidiaries. NEP OpCo pays NEE an annual management fee equal to the greater of 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the most recently ended fiscal year and $4 million (as adjusted for inflation beginning in 2016), which is paid in quarterly installments with an additional payment each January to the extent 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the preceding fiscal year exceeds $4 million (as adjusted for inflation beginning in 2016). NEP OpCo also made certain payments to NEE based on the achievement by NEP OpCo of certain target quarterly distribution levels to its unitholders. In May 2023, the MSA was amended to suspend these payments to be paid by NEP OpCo in respect to each calendar quarter beginning with the payment related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026. NEP’s O&M expenses for the three months ended March 31, 2024 include approximately $1 million and for the three months ended March 31, 2023 include approximately $41 million related to the MSA.

Cash Sweep and Credit Support Agreement – NEP OpCo is a party to the CSCS agreement with NEER under which NEER and certain of its affiliates provide credit support in the form of letters of credit and guarantees to satisfy NEP’s subsidiaries’ contractual obligations. NEP OpCo pays NEER an annual credit support fee based on the level and cost of the credit support provided, payable in quarterly installments. NEP’s O&M expenses for the three months ended March 31, 2024 include approximately $2 million and for the three months ended March 31, 2023 include approximately $2 million related to the CSCS agreement.

NEER and certain of its affiliates may withdraw funds (Project Sweeps) from NEP OpCo under the CSCS agreement or NEP OpCo's subsidiaries in connection with certain long-term debt agreements, and hold those funds in accounts belonging to NEER or its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by NEP's subsidiaries. NEER and its affiliates may keep the funds until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or NEP OpCo otherwise demands the return of such funds. If NEER or its affiliates fail to return withdrawn funds when required by NEP OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER or its affiliates in the amount of such withdrawn funds. If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings, and will not pay interest on the withdrawn funds except as otherwise agreed upon with NEP OpCo. At March 31, 2024 and December 31, 2023, the cash sweep amounts held in accounts belonging to NEER or its affiliates were approximately $1,443 million and $1,511 million, respectively, and are included in due from related parties on NEP's condensed consolidated balance sheets. During the three months ended March 31, 2024, NEP recorded interest income of approximately $18 million due from NEER for cash sweep amounts held relating to proceeds from the sale of the Texas pipelines (see Note 2), which is reflected in other – net on the condensed consolidated statement of income and is included in due from related parties on NEP's condensed consolidated balance sheet at March 31, 2024.

Guarantees and Letters of Credit Entered into by Related Parties – Certain PPAs include requirements of the project entities to meet certain performance obligations. NEECH or NEER has provided letters of credit or guarantees for certain of these performance obligations and payment of any obligations from the transactions contemplated by the PPAs. In addition, certain financing agreements require cash and cash equivalents to be reserved for various purposes. In accordance with the terms of these financing agreements, guarantees from NEECH have been substituted in place of these cash and cash equivalents
18


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
reserve requirements. Also, under certain financing agreements, indemnifications have been provided by NEECH. In addition, certain interconnection agreements and site certificates require letters of credit or a surety bond to secure certain payment or restoration obligations related to those agreements. NEECH also guarantees the Project Sweep amounts held in accounts belonging to NEER, as described above. At March 31, 2024, NEECH or NEER guaranteed or provided indemnifications, letters of credit or surety bonds totaling approximately $2.0 billion related to these obligations.

Related Party Long-Term Debt – In connection with the December 2022 acquisition from NEER of Emerald Breeze, a subsidiary of NEP acquired a note payable from a subsidiary of NEER relating to restricted cash reserve funds put in place for certain operational costs at the project based on a requirement of the differential membership investor. At March 31, 2024 and December 31, 2023, the note payable was approximately $85 million and $62 million, respectively and is included in long-term debt on NEP's condensed consolidated balance sheets. The note payable does not bear interest and does not have a maturity date.

Due to Related Parties – Noncurrent amounts due to related parties on NEP's condensed consolidated balance sheets primarily represent amounts owed by certain of NEP's wind projects to NEER to refund NEER for certain transmission costs paid on behalf of the wind projects. Amounts will be paid to NEER as the wind projects receive payments from third parties for related notes receivable recorded in noncurrent other assets on NEP's condensed consolidated balance sheets.

Transportation and Fuel Management Agreements – In connection with the Texas pipelines (see Note 2), a subsidiary of NEP assigned to a subsidiary of NEER certain gas commodity agreements in exchange for entering into transportation agreements and a fuel management agreement whereby the benefits of the gas commodity agreements (net of transportation paid to the NEP subsidiary) were passed back to the NEP subsidiary. During the three months ended March 31, 2023, NEP recognized approximately $2 million in revenues related to the transportation and fuel management agreements which are reflected in income from discontinued operations on the condensed consolidated statements of income.

Tax Allocations – In March 2024, NEE Equity, as holder of the Class P units, was allocated for the 2023 tax year taxable gains for U.S. federal income tax purposes of approximately $154 million from the transaction specified in the limited partnership agreement of NEP OpCo, which will decrease each of NEP's deferred tax liabilities investment in partnership and deferred tax assets net operating loss carryforwards by $26 million. See Note 2.

11. Summary of Significant Accounting and Reporting Policies

Restricted Cash – At March 31, 2024 and December 31, 2023, NEP had approximately $56 million and $20 million, respectively, of restricted cash included in current other assets on NEP's condensed consolidated balance sheets. Restricted cash at March 31, 2024 and December 31, 2023 is primarily related to an operating cash reserve. Restricted cash reported as current assets are recorded as such based on the anticipated use of these funds.

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

March 31, 2024December 31, 2023
(millions)
Property, plant and equipment, gross$17,325 $17,299 
Accumulated depreciation(2,593)(2,462)
Property, plant and equipment – net$14,732 $14,837 

Noncontrolling Interests – At March 31, 2024, noncontrolling interests on NEP's condensed consolidated balance sheets primarily reflect the Class B noncontrolling ownership interests (the Class B noncontrolling ownership interests in NEP Renewables II, NEP Pipelines, Genesis Holdings, NEP Renewables III and NEP Renewables IV owned by third parties), the differential membership interests, NEE Equity's approximately 51.4% noncontrolling interest in NEP OpCo, NEER's 50% noncontrolling ownership interest in Silver State, NEER's 33% noncontrolling interest in Sunlight Renewables Holdings, NEER's 51% noncontrolling interest in Emerald Breeze, a third-party's 50% interest in Star Moon Holdings and the non-economic ownership interests. The impact of the net income (loss) attributable to the differential membership interests and the Class B noncontrolling ownership interests are allocated to NEE Equity's noncontrolling ownership interest and the net income attributable to NEP based on the respective ownership percentage of NEP OpCo.

19


NEXTERA ENERGY PARTNERS, LP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Concluded)
(unaudited)
Details of the activity in noncontrolling interests are below:


 Class B Noncontrolling Ownership Interests
Differential Membership Interests
NEE's Indirect Noncontrolling Ownership Interests(a)
Other Noncontrolling Ownership InterestsTotal Noncontrolling
Interests
Three months ended March 31, 2024(millions)
Balances, December 31, 2023$4,417 $4,143 $899 $1,029 $10,488 
Related party note receivable— — 2 — 2 
Net income (loss) attributable to noncontrolling interests77 (203)73 18 (35)
Related party contributions
— — 26 — 26 
Distributions, primarily to related parties— — (94)(12)(106)
Differential membership investment contributions, net of distributions— 64 — — 64 
Payments to Class B noncontrolling interest investors
(18)— — — (18)
Balances, March 31, 2024$4,476 $4,004 $906 $1,035 $10,421 
————————————
(a)Primarily reflects NEE Equity's noncontrolling interest in NEP OpCo and NEER's noncontrolling interests in Silver State, Sunlight Renewables Holdings and Emerald Breeze.


 Class B Noncontrolling Ownership InterestsDifferential Membership Interests
NEE's Indirect Noncontrolling Ownership Interests(a)
Other Noncontrolling Ownership InterestsTotal Noncontrolling
Interests
Three months ended March 31, 2023(millions)
Balances, December 31, 2022
$5,031 $4,359 $891 $1,065 $11,346 
Acquisition of subsidiary with noncontrolling interest— — 72 — 72 
Net income (loss) attributable to noncontrolling interests88 (193)(49)15 (139)
Distributions, primarily to related parties— — (88)(10)(98)
Changes in non-economic ownership interests
— — — 11 11 
Differential membership investment contributions, net of distributions
— 50 — — 50 
Payments to Class B noncontrolling interest investors(70)— — — (70)
Sale of differential membership interest— 92 — — 92 
Buyout of Class B noncontrolling interest investors(196)— — — (196)
Other – net
— (1)1 1 1 
Balances, March 31, 2023$4,853 $4,307 $827 $1,082 $11,069 
————————————
(a)Primarily reflects NEE Equity's noncontrolling interest in NEP OpCo and NEER's noncontrolling interests in Silver State, Sunlight Renewables Holdings and Emerald Breeze.

Disposal of Wind Project – In January 2023, a subsidiary of NEP completed the sale of a 62 MW wind project located in Barnes County, North Dakota for approximately $50 million. Approximately $45 million of the cash proceeds from the sale were distributed to the third-party owner of Class B membership interests in NEP Renewables II.

20


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

NEP is a growth-oriented limited partnership with a strategy that emphasizes acquiring, managing and owning contracted clean energy assets with stable long-term cash flows with a focus on renewable energy projects. NEP consolidates the results of NEP OpCo and its subsidiaries through its controlling interest in the general partner of NEP OpCo. At March 31, 2024, NEP owned an approximately 48.6% limited partner interest in NEP OpCo and NEE Equity owned a noncontrolling 51.4% limited partner interest in NEP OpCo. Through NEP OpCo, NEP owns, or has partial ownership interest in, a portfolio of contracted renewable energy assets consisting of wind, solar and solar-plus-storage projects and a stand-alone battery storage project, as well as a pipeline investment. NEP's financial results are shown on a consolidated basis with financial results attributable to NEE Equity reflected in noncontrolling interests.

This discussion should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2023 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussions, all comparisons are with the corresponding items in the prior year period.

In January 2023, NEP completed the sale of a 62 MW wind project located in North Dakota. See Note 11 – Disposal of Wind Project. In March 2023, in connection with the December 2022 acquisition from NEER, a wind generation facility with a net generating capacity of approximately 54 MW was transferred to a subsidiary of NEP. In June 2023, an indirect subsidiary of NEP completed the acquisition of ownership interests in a portfolio of wind and solar generation facilities with a combined net generating capacity totaling approximately 688 MW from NEER (see Note 1). In July 2023, Yellow Pine Solar, a 125 MW solar generation and 65 MW storage facility in Nevada, which was part of the December 2022 acquisition from NEER, achieved commercial operations. In December 2023, NEP sold its Texas pipelines which has been presented as discontinued operations (see Note 2).

Results of Operations
Three Months Ended 
 March 31,
20242023
(millions)
OPERATING REVENUES
$257 $245 
OPERATING EXPENSES
Operations and maintenance123 146 
Depreciation and amortization136 123 
Taxes other than income taxes and other19 11 
Total operating expenses – net278 280 
OPERATING LOSS(21)(35)
OTHER INCOME (DEDUCTIONS)
Interest expense(13)(206)
Equity in earnings of equity method investees30 28 
Equity in earnings (losses) of non-economic ownership interests(8)
Other – net22 
Total other income (deductions) – net43 (183)
INCOME (LOSS) BEFORE INCOME TAXES22 (218)
INCOME TAX BENEFIT(13)(36)
INCOME (LOSS) FROM CONTINUING OPERATIONS35 (182)
INCOME FROM DISCONTINUED OPERATIONS, net of tax expense of $2 million— 31 
NET INCOME (LOSS)35 (151)
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS35 137 
NET INCOME (LOSS) ATTRIBUTABLE TO NEP
$70 $(14)

21


Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

Operating Revenues

Operating revenues primarily consist of income from the sale of energy under NEP's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Wind resource levels, weather conditions and the performance of NEP's renewable energy portfolio represent significant factors that could affect its operating results because these variables impact energy sales. NEP utilizes the wind production index to determine the favorability of wind resource levels. The wind production index represents a measure of the actual wind speeds available for energy production for a stated period relative to long-term average wind speeds. NEP compares the actual wind speeds observed at each wind facility applied to turbine-specific power curves to produce the estimated MWh production for a stated period to the estimated long-term average wind speeds at each wind facility applied to the same turbine-specific power curves to produce the long-term average MWh production which results in the current period wind production index to determine the favorability of wind resource for the stated period.

Operating revenues increased $12 million for the three months ended March 31, 2024. The increase primarily reflects higher revenues of approximately $22 million associated with the renewable energy projects acquired or placed in service in 2023, partly offset by lower revenues of $10 million primarily due to unfavorable wind resource (97% of long-term average wind speeds in 2024 compared to 102% in 2023).

Operating Expenses

Operations and Maintenance
O&M expenses decreased $23 million during the three months ended March 31, 2024 primarily reflecting lower corporate operating expenses of approximately $44 million primarily relating to the suspension of the IDR fee in May 2023, partly offset by higher net operating expenses at the existing NEP projects of $14 million and higher O&M expenses of $6 million associated with the renewable energy projects acquired in 2023.

Depreciation and Amortization
Depreciation and amortization expense increased $13 million during the three months ended March 31, 2024 primarily reflecting depreciation and amortization associated with the renewable energy projects acquired in 2023.

Other Income (Deductions)

Interest Expense
The decrease in interest expense of $193 million during the three months ended March 31, 2024 primarily reflects approximately $212 million of favorable mark-to-market activity ($51 million of gains recorded in 2024 compared to $161 million of losses in 2023).

Equity in Earnings (Losses) of Non-Economic Ownership Interests
Equity in earnings (losses) of non-economic ownership interests increased $12 million during the three months ended March 31, 2024 primarily reflecting favorable mark-to-market activity on interest rate swaps in 2024.

Income Taxes

For the three months ended March 31, 2024, NEP recorded income tax benefit of $13 million on income from continuing operations before income taxes of $22 million, resulting in an effective tax rate of (59)%. The tax benefit is comprised primarily of income tax benefit of approximately $11 million attributable to noncontrolling interests and $8 million attributable to PTCs, partly offset by income tax expense of $5 million at the statutory rate of 21%.

For the three months ended March 31, 2023, NEP recorded income tax benefit of $36 million on loss from continuing operations before income taxes of $218 million, resulting in an effective tax rate of 17%. The tax benefit is comprised primarily of income tax benefit of approximately $46 million at the statutory rate of 21%, $7 million attributable to PTCs and $6 million of state taxes, partly offset by income tax expense of $22 million attributable to noncontrolling interests.

Income from Discontinued Operations

Income from discontinued operations reflects the operations of the Texas pipelines prior to the sale in December 2023. See Note 2.

Net Loss Attributable to Noncontrolling Interests

For the three months ended March 31, 2024, the change in net loss attributable to noncontrolling interests primarily reflects a higher net income allocation of approximately $122 million to NEE Equity's noncontrolling interest in 2024 compared to 2023, partly offset by $11 million of lower net income allocation to Class B noncontrolling interest investors due to buyouts in 2023 and $10 million higher net loss allocation to differential membership investors resulting from the renewable energy projects acquired in 2023. See Note 11 – Noncontrolling Interests.
22



Liquidity and Capital Resources

NEP’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 10, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 8 and Note 4), distributions to common unitholders and distributions to the holders of noncontrolling interests. NEP expects to satisfy these requirements primarily with cash on hand and cash generated from operations. In addition, as a growth-oriented limited partnership, NEP expects from time to time to make acquisitions (see Note 1), including in connection with the exercise of buyout rights (see Note 11 – Noncontrolling Interests), and other investments. These acquisitions and investments are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness, issuances of additional NEP common units, including under its ATM program, or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures (see Note 2). NEP may also utilize non-voting common units (convertible into common units) to fund the payment of specified portions of the purchase price payable in connection with the exercise of certain buyout rights (see Note 11 – Noncontrolling Interests). In addition, NEP expects to fund debt maturities through refinancing. NEP may, but does not expect to, issue common units to satisfy NEP's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion.

These sources of funds are expected to be adequate to provide for NEP's short-term and long-term liquidity and capital needs, although its ability to make future acquisitions, fund repowering of existing projects, fund the purchase price payable in connection with the exercise of buyout rights, refinance debt maturities and maintain and increase its distributions to common unitholders will depend on its ability to access capital on acceptable terms.

As a normal part of its business, depending on market conditions, NEP expects from time to time to consider opportunities to repay, redeem, repurchase or refinance its indebtedness or equity arrangements. In addition, NEP expects from time to time to consider potential investments in new acquisitions and the repowering of existing projects. These events may cause NEP to seek additional debt or equity financing, which may not be available on acceptable terms or at all. If available, additional debt financing, including refinancing, could impose operating restrictions, additional cash payment obligations and additional covenants, including limitations on distributions to common unitholders.

NEP OpCo has agreed to allow NEER or one of its affiliates to withdraw funds received by NEP OpCo or its subsidiaries and to hold those funds in accounts of NEER or one of its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by NEP's subsidiaries, until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs. NEP OpCo will have a claim for any funds that NEER fails to return:

•    when required by its subsidiaries’ financings;
•    when its subsidiaries’ financings otherwise permit distributions to be made to NEP OpCo;
•    when funds are required to be returned to NEP OpCo; or
•    when otherwise demanded by NEP OpCo.

In addition, NEER and certain of its affiliates may withdraw funds in connection with certain long-term debt agreements and hold those funds in accounts belonging to NEER or its affiliates and provide credit support in the amount of such withdrawn funds. If NEER fails to return withdrawn funds when required by NEP OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER in the amount of such withdrawn funds.

If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings, and will not pay interest on the withdrawn funds except as otherwise agreed upon with NEP OpCo.

Liquidity Position

At March 31, 2024, NEP's liquidity position was approximately $4,138 million. The table below provides the components of NEP’s liquidity position:
March 31, 2024Maturity Date
(millions)
Cash and cash equivalents
$245 
Amounts due under the CSCS agreement
1,443 
Revolving credit facility(a)
2,500 2029
Less issued letters of credit(50)
Total$4,138 
____________________
(a)    Approximately $50 million of the NEP OpCo credit facility expires in 2025 and an additional $50 million expires in 2028.

Management believes that NEP's liquidity position and cash flows from operations will be adequate to finance O&M expenses, maintenance capital expenditures, distributions to its unitholders and to the holders of noncontrolling interests and liquidity commitments. Management continues to regularly monitor NEP's financing needs consistent with prudent balance sheet management.
23



Financing Arrangements

NEP OpCo and its direct subsidiary are parties to the $2,500 million NEP OpCo credit facility. See Note 8.

NEP OpCo and certain indirect subsidiaries are subject to financings that contain financial covenants and distribution tests, including debt service coverage ratios. In general, these financings contain covenants customary for these types of financings, including limitations on investments and restricted payments. Certain of NEP's financings provide for interest payable at a fixed interest rate. However, certain of NEP's financings accrue interest at variable rates based on an underlying index plus a margin. Interest rate contracts were entered into for certain of these financings to hedge against interest rate movements with respect to interest payments on the related borrowings. In addition, under the project-level financing structures, each project or group of projects will be permitted to pay distributions out of available cash so long as certain conditions are satisfied, including that reserves are funded with cash or credit support, no default or event of default under the applicable financing has occurred and is continuing at the time of such distribution or would result therefrom, and each project or group of projects is otherwise in compliance with the related covenants. For substantially all of the project-level financing structures, minimum debt service coverage ratios must be satisfied in order to make a distribution. For one project-level financing, the project must maintain a leverage ratio and an interest coverage ratio in order to make a distribution. At March 31, 2024, NEP's subsidiaries were in compliance with all financial debt covenants under their financings.

Capital Expenditures

Annual capital spending plans are developed based on projected requirements for the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including construction expenditures that are expected to increase NEP OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the three months ended March 31, 2024 and 2023, NEP had capital expenditures of approximately $64 million and $401 million, respectively. The 2023 capital expenditures primarily relate to the assets acquired from NEER in December 2022 which were acquired under construction or had recently been placed in service. Such expenditures were reimbursed by NEER as contemplated in the acquisition. Estimates of planned capital expenditures, including those relating to expected wind turbine repowerings, are subject to continuing review and adjustments and actual capital expenditures may vary significantly from these estimates.

Cash Distributions to Unitholders

During the three months ended March 31, 2024, NEP distributed approximately $82 million to its common unitholders. On April 22, 2024, the board of directors of NEP authorized a distribution of $0.8925 per common unit payable on May 15, 2024 to its common unitholders of record on May 7, 2024.

Cash Flows

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

The following table reflects the changes in cash flows for the comparative periods:
Three Months Ended March 31,
20242023Change
(millions)
Net cash provided by operating activities
$78 $82 $(4)
Net cash provided by investing activities$42 $199 $(157)
Net cash used in financing activities$(113)$(276)$163 

Net Cash Provided by Operating Activities

The decrease in net cash provided by operating activities was primarily driven by the timing of transactions impacting working capital, partly offset by higher operating cash flows from new projects and lower corporate O&M expenses due to the suspension of the IDR fee.

24


Net Cash Provided by Investing Activities
Three Months Ended March 31,
20242023
(millions)
Acquisition of membership interests in subsidiaries – net$— $(84)
Capital expenditures and other investments(64)(401)
Proceeds from sale of a business— 51 
Payments from related parties under CSCS agreement – net68 277 
Reimbursements from related parties for capital expenditures34 356 
Other – net
— 
Net cash provided by investing activities$42 $199 

The change in net cash provided by investing activities was primarily driven by lower payments received from NEER subsidiaries (net of amounts paid) under the CSCS agreement, partly offset by the absence of payments to acquire membership interests in subsidiaries.

Net Cash Used in Financing Activities
Three Months Ended March 31,
20242023
(millions)
Proceeds from issuance of common units – net$$154 
Issuances (retirements) of long-term debt – net(1)54 
Partner contributions29 — 
Partner distributions(188)(169)
Proceeds (payments) related to differential membership interests – net
64 (49)
Payments related to Class B noncontrolling interests – net
(18)(70)
Buyout of Class B noncontrolling interest investors— (196)
Other – net(2)— 
Net cash used in financing activities$(113)$(276)

The change in net cash used in financing activities primarily reflects the absence of buyouts of Class B noncontrolling interests (see Note 11 – Noncontrolling Interests), higher proceeds related to differential membership interests and lower payments to Class B noncontrolling interests, partly offset by lower proceeds related to the issuance of common units net and lower proceeds from issuances of long-term debt – net.

Quantitative and Qualitative Disclosures about Market Risk

NEP is exposed to market risks in its normal business activities. Market risk is measured as the potential loss that may result from hypothetical reasonably possible market changes associated with its business over the next year. The types of market risks include interest rate and counterparty credit risks.

Interest Rate Risk

NEP is exposed to risk resulting from changes in interest rates associated with outstanding and expected future debt issuances and borrowings. NEP manages interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed rate and variable rate debt. Interest rate swaps are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements (see Note 4).

NEP has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At March 31, 2024, approximately 99% of the long-term debt, including current maturities, was not exposed to fluctuations in interest expense as it was either fixed rate debt or financially hedged. At March 31, 2024, the estimated fair value of NEP's long-term debt was approximately $6.1 billion and the carrying value of the long-term debt was $6.3 billion. See Note 5 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of NEP's long-term debt would increase by approximately $55 million at March 31, 2024.

At March 31, 2024, NEP had interest rate contracts with a net notional amount of approximately $3.1 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, NEP’s net derivative assets at March 31, 2024 would decrease by approximately $57 million.

25


Counterparty Credit Risk

Risks surrounding counterparty performance and credit risk could ultimately impact the amount and timing of expected cash flows. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties under the terms of their contractual obligations. NEP monitors and manages credit risk through credit policies that include a credit approval process and the use of credit mitigation measures such as prepayment arrangements in certain circumstances. NEP also seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

See Management's Discussion – Quantitative and Qualitative Disclosures About Market Risk.

Item 4.  Controls and Procedures

(a)    Evaluation of Disclosure Controls and Procedures

As of March 31, 2024, NEP had performed an evaluation, under the supervision and with the participation of its management, including its chief executive officer and chief financial officer, of the effectiveness of the design and operation of NEP's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the chief executive officer and the chief financial officer of NEP concluded that NEP's disclosure controls and procedures were effective as of March 31, 2024.

(b)    Changes in Internal Control Over Financial Reporting

NEP is continuously seeking to improve the efficiency and effectiveness of its operations and of its internal controls. This results in refinements to processes throughout NEP. However, there has been no change in NEP's internal control over financial reporting (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) that occurred during NEP's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NEP's internal control over financial reporting.

26


PART II – OTHER INFORMATION
Item 1. Legal Proceedings

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

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in the 2023 Form 10-K. The factors discussed in Part I, Item 1A. Risk Factors in the 2023 Form 10-K, as well as other information set forth in this report, which could materially adversely affect NEP's business, financial condition, liquidity, results of operations and ability to grow its business and make cash distributions to its unitholders, should be carefully considered. The risks described in the 2023 Form 10-K are not the only risks facing NEP. Additional risks and uncertainties not currently known to NEP, or that are currently deemed to be immaterial, also may materially adversely affect NEP's business, financial condition, liquidity, results of operations and ability to grow its business and make cash distributions to its unitholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)Information regarding purchases made by NEP of its common units during the three months ended March 31, 2024 is as follows:
Period
Total Number
of Units Purchased(a)
Average Price Paid
Per Unit
Total Number of Units
Purchased as Part of a
Publicly Announced
Program
Maximum Number of
Units that May Yet be
Purchased Under the
Program
1/1/24 – 1/31/24— — 
2/1/24 – 2/29/2414,016$28.37 
3/1/24 – 3/31/24— 
Total14,016$28.37 
____________________
(a)    In February 2024, shares of common units were withheld from recipients to pay certain withholding taxes upon the vesting of stock awards granted to such recipients under the NextEra Energy Partners, LP 2014 Long Term Incentive Plan.

Item 5. Other Information

(a)    NEP held its 2024 Annual Meeting of Unitholders (2024 Annual Meeting) on April 22, 2024. At the 2024 Annual Meeting, NEP's unitholders elected all of NEP’s nominees for director and approved three proposals. The proposals are described in detail in NEP's definitive proxy statement on Schedule 14A for the 2024 Annual Meeting (Proxy Statement), filed with the SEC on March 5, 2024. The voting results below reflect any applicable voting limitations and cutbacks as described in the Proxy Statement.

The final voting results with respect to each proposal voted upon at the 2024 Annual Meeting are set forth below.

Proposal 1

NEP's unitholders elected each of the four nominees to the board of directors of NEP until the next annual meeting of unitholders by a majority of the votes cast, as set forth below:
FOR
% VOTES
CAST FOR
AGAINSTABSTENTIONS
BROKER
NON-VOTES
Susan D. Austin54,632,90095.3%2,714,775193,66224,209,168
Robert J. Byrne54,127,26194.4%3,200,881213,19524,209,168
John W. Ketchum42,039,77673.3%15,320,663180,89824,209,168
Peter H. Kind53,965,01894.3%3,260,752315,56724,209,168
Without giving effect to the voting limitation and cutbacks that apply to the election of directors as described in the Proxy Statement, the percent of the votes cast FOR Ms. Austin would have been 98.3%, FOR Messrs. Byrne and Kind would have been 98.0% and FOR Mr. Ketchum would have been 90.6%.
27



Proposal 2

NEP's unitholders ratified the appointment of Deloitte & Touche LLP as NEP's independent registered public accounting firm for 2024, as set forth below:
FOR
% VOTES
CAST FOR
AGAINSTABSTENTIONS
BROKER
NON-VOTES
170,608,89299.6%727,827197,445
Proposal 3

NEP's unitholders approved, by non-binding advisory vote, NEP's compensation of its named executive officers as disclosed in the Proxy Statement, as set forth below:
FOR
% VOTES
CAST FOR
AGAINSTABSTENTIONS
BROKER
NON-VOTES
126,046,90385.8%20,815,199462,89424,209,168
Proposal 4
NEP’s unitholders approved the NextEra Energy Partners, LP 2024 Long Term Incentive Plan, as set forth below:
FOR
% VOTES
CAST FOR
AGAINST
ABSTENTIONS
BROKER
NON-VOTES
144,975,14798.7%1,940,538409,31124,209,168
(c)    During the three months ended March 31, 2024, no director or officer of NEP adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits
Exhibit
Number
Description
10.1*
10.2*
10.3*
10.4
10.5
31(a)
31(b)
32
101.INSXBRL Instance Document – XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document
101.SCHXBRL Schema Document
101.PREXBRL Presentation Linkbase Document
101.CALXBRL Calculation Linkbase Document
101.LABXBRL Label Linkbase Document
101.DEFXBRL Definition Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________________________
* Incorporated herein by reference

NEP agrees to furnish to the SEC upon request any instrument with respect to long-term debt that NEP has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.
28


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:  April 23, 2024
NEXTERA ENERGY PARTNERS, LP
(Registrant)
JAMES M. MAY
James M. May
Controller and Chief Accounting Officer
(Principal Accounting Officer)

29
EX-10.4 2 nep-q12024xex104.htm EX-10.4 Document

Exhibit 10.4









NextEra Energy Partners, LP
2024 LONG TERM INCENTIVE PLAN


NextEra Energy Partners, LP, a limited partnership (the "Partnership"), sets forth herein the terms of its 2024 Long Term Incentive Plan (the "Plan"), as follows:

1.    PURPOSE

The Plan is intended to (1) provide participants with an incentive to contribute to the Partnership's success and to manage the Partnership's business in a manner that will provide for the Partnership's long-term growth and profitability to benefit its unitholders and other important stakeholders, including its employees and customers, and (2) provide a means of obtaining, rewarding and retaining key personnel.

2.    DEFINITIONS


For purposes of interpreting the Plan documents (including the Plan and Award Agreements), the following definitions shall apply:

2.1    "Affiliate" of the Partnership means any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the Person in question. As used herein, the term "Control" means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

2.2    "Applicable Laws" means the legal requirements relating to the Plan and the Awards under (a) applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders of any jurisdiction applicable to Awards granted to residents therein and (b) the rules of any Stock Exchange on which the Units are listed.

2.3    "Award" means a grant under the Plan of an Option, a Unit Appreciation Right, Restricted Units, Deferred Units, Unrestricted Units, a Performance Unit or other Performance-Based Award, or an Other Equity-Based Award.

2.4    "Award Agreement" means the agreement between the Partnership and a Grantee that evidences and sets out the terms and conditions of an Award.

2.5    "Board" means the Board of Directors of the General Partner.

2.6    "Cause" means, with respect to any Grantee, as determined by the Committee and unless otherwise provided in an applicable agreement between such Grantee and the Partnership or an Affiliate, (a) repeated violations by such Grantee of such Grantee's obligations to the Partnership or such Affiliate (other than as a result of incapacity due to physical or mental illness) which are demonstrably








willful and deliberate on such Grantee's part, which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Partnership or such Affiliate and which are not remedied within a reasonable period of time after such Grantee's receipt of written notice from the Partnership specifying such violations, (b) the conviction of such Grantee of a felony involving an act of dishonesty intended to result in substantial personal enrichment of such Grantee at the expense of the Partnership or an Affiliate, or
(c) prior to a Change in Control, such other events as shall be determined by the Committee in its sole discretion. Any determination by the Committee whether an event constituting Cause shall have occurred shall be final, binding and conclusive.

2.7    "Change in Control" means the occurrence of any Person, other than a Person approved by the General Partner, becoming the general partner of the Partnership.

2.8    "Code" means the Internal Revenue Code of 1986, as amended, as now in effect or as hereafter amended, and any successor thereto.

2.9    "Committee" means a committee of, and designated from time to time by resolution of, the Board.

2.10    "Deferred Unit" means a bookkeeping entry representing the equivalent of one (1) Unit awarded to a Grantee pursuant to Section 10 that (a) is not subject to vesting, or (b) is subject to time-based vesting, but not to performance-based vesting.

2.11    "Determination Date" means the Grant Date or such other date as of which the Fair Market Value of a Unit is required to be established for purposes of the Plan.

2.12    "Disability" means any condition as a result of which a Grantee is determined to be totally disabled for purposes of (a) the Partnership's executive long-term disability plan, for Grantees who participate in such plan, or (b) the Partnership's long-term disability plan, for Grantees who do not participate in the Partnership's executive long-term disability plan.
    
2.13    "Employee" means, as of any date of determination, an employee (including an officer) of the Partnership or an Affiliate.    

2.14    "Effective Date" shall have the meaning set forth in Section 5.1.

2.15    "Exchange Act" means the Securities Exchange Act of 1934, as amended, as now in effect or as hereafter amended.

2.16    "Fair Market Value" means the fair market value of a Unit for purposes of the Plan, which shall be determined as of any Determination Date as follows:

(a)    If on such Determination Date the Units are listed on a Stock Exchange, or are publicly traded on another established securities market (a "Securities Market"), the Fair Market Value of a Units shall be the closing price of the Unit on the trading day immediately preceding such Determination Date as reported on such Stock Exchange or such Securities Market (provided that, if there is more than one such Stock Exchange or Securities Market, the Committee shall designate the appropriate Stock Exchange or Securities Market for purposes of the Fair Market Value determination). If there is no such reported closing price on the trading day immediately preceding such Determination Date,






the Fair Market Value of a Unit shall be the closing price of the Unit on the next preceding day on which any sale of Units shall have been reported on such Stock Exchange or such Securities Market.

(b)    If on such Determination Date the Units are not listed on a Stock Exchange or publicly traded on a Securities Market, the Fair Market Value of a Unit shall be the value of the Unit on such Determination Date as determined by the Committee by the reasonable application of a reasonable valuation method, in a manner consistent with Code Section 409A.

2.17    "General Partner" means NextEra Energy Partners GP, Inc.

2.18    "Grant Date" means, as determined by the Committee, (a) the date as of which the Committee completes the corporate action constituting the Award or (b) such date subsequent to the date specified in clause (a) above as may be specified by the Committee.

2.19    "Grantee" means a person who receives or holds an Award under the Plan.

2.20    "Option" means an option to purchase one or more Units pursuant to the Plan, which will be non-qualified options (i.e. options that do not meet the requirements of section 422 of the Code).

2.21    "Option Price" means the exercise price for each Unit subject to an Option.

2.22    "Outside Director" means a member of the Board who is not an Employee.

2.23    "Other Equity-Based Award" means an Award representing a right or other interest that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Units, other than an Option, a Unit Appreciation Right, Restricted Units, a Deferred Unit or Unrestricted Units.

2.24    "Partnership" means NextEra Energy Partners, LP.

2.25    "Performance-Based Award" means an Award of Options, Unit Appreciation Rights, Restricted Units, Deferred Units, Performance Units or Other Equity-Based Awards made subject to the achievement of performance goals (as provided in Section 14) over a performance period specified by the Committee.

2.26    "Plan" means this NextEra Energy Partners, LP. 2024 Long Term Incentive Plan.

2.27    "Person" means "person", as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act (or any successor section thereto).

2.28    “Prior Plan” means the NextEra Energy Partners, LP. 2014 Long Term Incentive Plan.

2.29    "Restricted Period" shall have the meaning set forth in Section 10.2.

2.30    "Restricted Units" means Units awarded to a Grantee pursuant to Section 10.

2.31    "Securities Act" means the Securities Act of 1933, as amended, as now in effect or as hereafter amended.







2.32    "Service" means service of a Grantee as an Employee or service of such Grantee as a member of the Board or of the board of directors or similar governing body of any Affiliate. Unless otherwise provided in the applicable Award Agreement, in another agreement with the Grantee or otherwise in writing, such Grantee's change in position or duties with the Partnership or any Affiliate shall not result in interrupted or terminated Service, so long as the Grantee continues to be an Employee or continues to serve as a member of the Board or of the board of directors or similar governing body of any Affiliate. Any determination by the Committee whether a termination of Service shall have occurred for purposes of the Plan shall be final, binding and conclusive. A Grantee shall not be considered to have terminated Service with the Partnership or any of its Affiliates for purposes of any payments under this Plan which are subject to Section 409A of the Code until the Grantee has incurred a “separation from service” from the Partnership or such Affiliate within the meaning of Section 409A of the Code.

2.33    "Stock Exchange" means the New York Stock Exchange or another established national or regional stock exchange.

2.34    "Substitute Award" means an Award granted upon assumption of, or in substitution for, outstanding awards previously granted under a compensatory plan by a business entity acquired or to be acquired by the Partnership or an Affiliate or with which the Partnership or an Affiliate has combined or will combine.

2.35    "Units" means the common units, par value $0.01 per unit, of the Partnership, or any security which units may be changed into or for which units may be exchanged.

2.36    "Unit Appreciation Right" or "UAR" means a right granted to a Grantee pursuant to Section 9.

2.37    "UAR Price" shall have the meaning set forth in Section 9.1

2.38    "Unrestricted Units" shall have the meaning set forth in Section 11.


Unless the context otherwise requires, all references in the Plan to "including" shall mean "including without limitation."

References in the Plan to any Code Section shall be deemed to include, as applicable, regulations promulgated under such Code Section.

3.    ADMINISTRATION OF THE PLAN

3.1    Committee.

3.1.1    Powers and Authorities.

The Committee shall administer the Plan and shall have such powers and authorities related to the administration of the Plan. Without limiting the generality of the foregoing, the Committee shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, any Award or any Award Agreement, and shall have full power and authority to take all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of the Plan which the Committee deems to be necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All such actions and determinations shall be made by (a) the affirmative







vote of a majority of the members of the Committee present at a meeting at which a quorum is present (a majority of the Committee shall constitute a quorum), or (b) the unanimous consent of the members of the Committee executed in writing in accordance with the Partnership's partnership agreement and bylaws and Applicable Laws. Unless otherwise expressly determined by the Board, the Committee shall have the authority to interpret and construe all provisions of the Plan, any Award and any Award Agreement, and any such interpretation or construction, and any other determination contemplated to be made under the Plan or any Award Agreement, by the Committee shall be final, binding and conclusive whether or not expressly provided for in any provision of the Plan, such Award or such Award Agreement. In the event that the Plan, any Award or any Award Agreement provides for any action to be taken by the Board or any determination to be made by the Board, such action may be taken or such determination may be made by the Committee constituted in accordance with this Section 3.1 if the Board has delegated the power and authority to do so to such Committee

3.1.2    Composition of Committee.

The Committee shall be a committee composed of not fewer than two directors of the General Partner designated by the Board to administer the Plan and such committee members shall satisfy any independence standards required by Applicable Law or Stock Exchange. The Committee may delegate the authority to grant Awards under the Plan to any employee or group of employees of the Partnership or any Affiliate provided that such delegation and grants are consistent with Applicable Law.

3.2    Board.

The Board from time to time may exercise any or all of the powers and authorities related to the administration and implementation of the Plan, as set forth in Section 3.1 and other applicable provisions of the Plan, as the Board shall determine, consistent with the Partnership's partnership agreement and bylaws and Applicable Laws.

3.3    Terms of Awards.

3.3.1    Committee Authority.


Subject to the other terms and conditions of the Plan, the Committee shall have full and final authority to:

(a)    designate Grantees;
(b)    determine the type or types of Awards to be made to a Grantee;
(c)    determine the number of Units to be subject to an Award;

(d)    establish the terms and conditions of each Award (including the Option Price of any Option), the nature and duration of any restriction or condition (or provision for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or Units subject thereto, and the treatment of an Award in the event of a Change in Control (subject to applicable agreements);
(e)    prescribe the form of each Award Agreement evidencing an Award; and
















(f)    subject to the limitation on repricing in Section 3.4, amend, modify or supplement the terms of any outstanding Award, which authority shall include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to modify outstanding Awards made to eligible natural persons who are foreign nationals or are natural persons who are employed outside the United States to reflect differences in local law, tax policy, or custom, provided that, notwithstanding the foregoing, no amendment, modification or supplement of the terms of any outstanding Award shall, without the consent of the Grantee thereof, impair the Grantee's rights under such Award.

3.3.2    Forfeiture; Recoupment.

The Committee may reserve the right in an Award Agreement to cause a forfeiture of the gain realized by a Grantee with respect to an Award thereunder on account of actions taken by, or failed to be taken by, such Grantee in violation or breach of or in conflict with any (a) employment agreement, (b) non-competition agreement, (c) agreement prohibiting solicitation of Employees or clients of the Partnership or any Affiliate, (d) confidentiality obligation with respect to the Partnership or any Affiliate, (e) Partnership policy or procedure, (f) other agreement or (g) any other obligation of such Grantee to the Partnership or any Affiliate, as and to the extent specified in such Award Agreement. The Committee may annul an outstanding Award if the Grantee thereof is an Employee and is terminated for Cause as defined in the Plan or the applicable Award Agreement or for "cause" as defined in any other agreement between the Partnership or such Affiliate and such Grantee, as applicable. Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Grantee to the Partnership to the extent the Grantee is, or in the future becomes, subject to (a) any Partnership "clawback" or recoupment policy that is adopted to comply with the requirements of any applicable law, rule or regulation, or otherwise, or (b) any law, rule or regulation which imposes mandatory recoupment under circumstances set forth in such law, rule or regulation.

3.4    No Repricing.

Except in connection with a transaction involving the Partnership (including, without limitation, any distribution (whether in the form of cash, Units, other securities or other property), unit split, extraordinary cash distribution, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Units or other securities or similar transaction), the Partnership may not, without obtaining unitholder approval: (a) amend the terms of outstanding Options or UARs to reduce the exercise price of such outstanding Options or UARs; (b) cancel outstanding Options or UARs in exchange for Options or UARs with an exercise price that is less than the exercise price of the original Options or UARs; or (c) cancel outstanding Options or UARs with an exercise price above the current unit price in exchange for cash or other securities.

3.5    Deferral Arrangement.

The Committee may permit or require the deferral of any payment pursuant to any Award into a deferred compensation arrangement, subject to such rules and procedures as it may establish. Any such deferrals shall be made in a manner that complies with Code Section 409A.

3.6    No Liability.

No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award or Award Agreement.







3.7    Registration; Units Certificates.

Notwithstanding any provision of the Plan to the contrary, the ownership of the Units issued under the Plan may be evidenced in such a manner as the Committee, in its sole discretion, deems appropriate.

4.    UNITS SUBJECT TO THE PLAN

4.1    Number of Units Available for Awards.

Subject to such additional Units as shall be available for issuance under the Plan pursuant to Section 4.2, and subject to adjustment pursuant to Sections 4.2 and 16, the maximum number of Units available for issuance under the Plan shall be equal to 1,100,000 Units, plus the number of Units subject to awards outstanding under the Prior Plan as of the Effective Date which thereafter terminate by expiration, forfeiture, cancellation or otherwise without the issuance of such Units.

4.2    Adjustments in Authorized Units.

In the event of any change in the outstanding Units by reason of any Unit distribution or split, reorganization, recapitalization, merger, consolidation, spin-off, combination, combination or transaction or exchange of Units or other corporate exchange, or any distribution to holders of Units other than regular cash distributions or any transaction similar to the foregoing, the Committee in its sole discretion and without liability to any person shall make such substitution or adjustment, if any, as it deems to be equitable, as to (i) the number or kind of Units or other securities issued or reserved for issuance pursuant to the Plan or pursuant to outstanding Awards, (ii) the Option Price or exercise price of any Unit Appreciation Right and/or (iii) any other affected terms of such Awards.

4.3    Units Usage.

(a)    Units subject to an Award shall be counted as used as of the Grant Date.

(b)    Any Units that are subject to Awards, shall be counted against the Units issuance limit set forth in Section 4.1 as one (1) Unit for every one (1) Unit subject to an Award. With respect to UARs, the number of Units subject to an Award of UARs will be counted against the aggregate number of Units available for issuance under the Plan regardless of the number of Units actually issued to settle the UAR upon exercise. The target number of Units issuable under a Performance Units grant shall be counted against the Units issuance limit set forth in Section 4.1 as of the Grant Date, but such number shall be adjusted to equal the actual number of Units issued upon settlement of the Performance Units to the extent different from such target number of Units.

(c)    Notwithstanding anything to the contrary in Section 4.3(a) or Section 4.3(b), any Units subject to Awards under the Plan which thereafter terminate by expiration, forfeiture, cancellation, or otherwise, without the issuance of such Units, shall be available again for issuance under the Plan.

(d)    Notwithstanding anything to the contrary in this Section 4, the number of Units (i) tendered or withheld or subject to an Award surrendered in connection with the purchase of Units upon exercise of an Option as provided in Section 12.2, (ii) deduct