4. Financial Instruments

The carrying amounts of cash equivalents and commercial paper approximate their fair values. At September 30, 2012 and December 31, 2011, other investments of NEE, not included in the table below, included financial instruments of approximately $41 million and $35 million ($8 million and $4 million at FPL), respectively, which primarily consist of notes receivable that are carried at estimated fair value or cost, which approximates fair value.

The following estimates of the fair value of financial instruments have been made primarily using available market information. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.



	September 30, 2012								December 31, 2011
	Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
	(millions)
NEE:
Special use funds	$	4,223		^(a)	$	4,223		^(a)	$	3,867		^(a)	$	3,867		^(a)
Other investments:
Notes receivable	$	500			$	681		^(b)	$	503			$	535		^(b)
Debt securities	$	115		^(c)	$	115		^(d)	$	89		^(c)	$	89		^(d)
Equity securities	$	61			$	75		^(e)	$	80			$	159		^(e)
Long-term debt, including current maturities	$	24,769			$	27,674		^(f)	$	21,614			$	23,699		^(f)
Interest rate swaps - net unrealized losses	$	(311	)		$	(311	)	^(d)	$	(283	)		$	(283	)	^(d)
Foreign currency swaps - net unrealized gains	$	5			$	5		^(d)	$	18			$	18		^(d)
FPL:
Special use funds	$	2,967		^(a)	$	2,967		^(a)	$	2,737		^(a)	$	2,737		^(a)
Long-term debt, including current maturities	$	8,084			$	9,984		^(f)	$	7,533			$	9,078		^(f)

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(a)

At September 30, 2012, includes $229 million of investments accounted for under the equity method and $34 million of loans not measured at fair value on a recurring basis ($144 million and $28 million, respectively, for FPL). At December 31, 2011, includes $164 million of investments accounted for under the equity method and $39 million of loans not measured at fair value on a recurring basis ($112 million and $24 million, respectively, for FPL). For the remaining balances, see Note 3 for classification by major security type and hierarchy level. The amortized cost of debt and equity securities is $1,753 million and $1,437 million, respectively, at September 30, 2012 and $1,638 million and $1,425 million, respectively, at December 31, 2011 ($1,417 million and $791 million, respectively, at September 30, 2012 and $1,321 million and $864 million, respectively, at December 31, 2011 for FPL).

(b)

Classified as held to maturity. Estimated using a discounted cash flow valuation technique based on certain observable yield curves and indices considering the credit profile of the borrower (Level 3). Notes receivable bear interest primarily at fixed rates and mature by 2029. Notes receivable are considered impaired and placed in non-accrual status when it becomes probable that all amounts due cannot be collected in accordance with the contractual terms of the agreement. The assessment to place notes receivable in non-accrual status considers various credit indicators, such as credit standings and ratings and market-related information. As of September 30, 2012, NEE had no notes receivable reported in non-accrual status.


(c)	Classified as trading securities.


(d)	See Note 3.


(e)	Primarily modeled internally based on recent market information including, among other things, private offerings of the securities (Level 3).

(f)

As of September 30, 2012 and December 31, 2011, $15,873 million and $15,035 million, respectively, is estimated using quoted market prices for the same or similar issues (Level 2); the balance is estimated using a discounted cash flow valuation technique, considering the current credit spread of the debtor (Level 3). For FPL, estimated using quoted market prices for the same or similar issues (Level 2).

Special Use Funds - The special use funds consist of FPL's storm fund assets of $127 million and NEE's and FPL's nuclear decommissioning fund assets of $4,096 million and $2,840 million, respectively, at September 30, 2012. The investments held in the special use funds consist of equity and debt securities which are primarily classified as available for sale and carried at estimated fair value (see Note 3). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory liability accounts. For NEE's non-rate regulated operations, changes in fair value result in a corresponding adjustment to OCI, except for unrealized losses associated with marketable securities considered to be other than temporary, including any credit losses, which are recognized as other than temporary impairment losses on securities held in nuclear decommissioning funds and included in other - net in NEE's condensed consolidated statements of income. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at September 30, 2012 of approximately six years at both NEE and FPL. FPL's storm fund primarily consists of debt securities with a weighted-average maturity at September 30, 2012 of approximately three years. The cost of securities sold is determined using the specific identification method.

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



	NEE				FPL				NEE				FPL
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011		2012		2011		2012		2011
	(millions)
Realized gains	$	75	$	69	$	20	$	22	$	206	$	156	$	81	$	60
Realized losses	$	16	$	27	$	12	$	17	$	48	$	70	$	34	$	51
Proceeds from sale or maturity of securities	$	953	$	992	$	592	$	675	$	3,890	$	3,567	$	2,949	$	2,483

Unrealized losses on available for sale debt securities at September 30, 2012 and December 31, 2011 were not material to NEE or FPL. The unrealized gains on available for sale securities are as follows:



	NEE				FPL
	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
	(millions)
Equity securities	$	694	$	546	$	526	$	376
U.S. Government and municipal bonds	$	32	$	46	$	29	$	43
Corporate debt securities	$	43	$	31	$	32	$	24
Mortgage-backed securities	$	25	$	27	$	22	$	24
Other debt securities	$	2	$	3	$	2	$	3

Regulations issued by the Federal Energy Regulatory Commission (FERC) and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included in the NRC operating licenses for those facilities or in NRC regulations applicable to NRC licensees not in cost-of-service environments. With respect to the decommissioning fund for NEER's Seabrook Station (Seabrook), decommissioning fund contributions and withdrawals are also regulated by the Nuclear Decommissioning Financing Committee pursuant to New Hampshire law.

The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.

Interest Rate and Foreign Currency Swaps - NEE and its subsidiaries use a combination of fixed rate and variable rate debt to manage interest rate exposure. 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. In addition, with respect to certain debt issuances and borrowings, NEECH has two cross currency swaps to hedge against currency movements with respect to both interest and principal payments. See Note 2.