Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Abstract]

Financial assets and liabilities and other fair value measurements

Recurring Fair Value Measurements - NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:

	September 30, 2012
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	22	$	—		$	—	$	—		$	22
FPL - equity securities	$	1	$	—		$	—	$	—		$	1
Special use funds:
NEE:
Equity securities	$	813	$	1,293	(b)	$	—	$	—		$	2,106
U.S. Government and municipal bonds	$	495	$	169		$	—	$	—		$	664
Corporate debt securities	$	—	$	549		$	—	$	—		$	549
Mortgage-backed securities	$	—	$	594		$	—	$	—		$	594
Other debt securities	$	—	$	47		$	—	$	—		$	47
FPL:
Equity securities	$	150	$	1,142	(b)	$	—	$	—		$	1,292
U.S. Government and municipal bonds	$	442	$	132		$	—	$	—		$	574
Corporate debt securities	$	—	$	381		$	—	$	—		$	381
Mortgage-backed securities	$	—	$	513		$	—	$	—		$	513
Other debt securities	$	—	$	35		$	—	$	—		$	35
Other investments:
NEE:
Equity securities	$	12	$	—		$	—	$	—		$	12
U.S. Government and municipal bonds	$	11	$	—		$	—	$	—		$	11
Corporate debt securities	$	—	$	52		$	—	$	—		$	52
Mortgage-backed securities	$	—	$	47		$	—	$	—		$	47
Other	$	5	$	5		$	—	$	—		$	10
Derivatives:
NEE:
Commodity contracts	$	1,407	$	2,605		$	831	$	(3,512	)	$	1,331	(c)
Interest rate swaps	$	—	$	80		$	—	$	—		$	80	(c)
Foreign currency swaps	$	—	$	15		$	—	$	—		$	15	(c)
FPL - commodity contracts	$	—	$	82		$	5	$	(47	)	$	40	(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,461	$	2,197		$	349	$	(3,392	)	$	615	(c)
Interest rate swaps	$	—	$	391		$	—	$	—		$	391	(c)
Foreign currency swaps	$	—	$	10		$	—	$	—		$	10	(c)
FPL - commodity contracts	$	—	$	114		$	—	$	(47	)	$	67	(c)

————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.

(b) At NEE, approximately $1,217 million ($1,093 million at FPL) are invested in commingled funds whose underlying investments would be Level 1 if those investments were held directly by NEE or FPL.

(c) See Note 2 for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	159	$	—		$	—	$	—		$	159
FPL - equity securities	$	11	$	—		$	—	$	—		$	11
Special use funds:
NEE:
Equity securities	$	709	$	1,206	(b)	$	—	$	—		$	1,915
U.S. Government and municipal bonds	$	508	$	167		$	—	$	—		$	675
Corporate debt securities	$	—	$	516		$	—	$	—		$	516
Mortgage-backed securities	$	—	$	511		$	—	$	—		$	511
Other debt securities	$	—	$	47		$	—	$	—		$	47
FPL:
Equity securities	$	128	$	1,056	(b)	$	—	$	—		$	1,184
U.S. Government and municipal bonds	$	458	$	134		$	—	$	—		$	592
Corporate debt securities	$	—	$	359		$	—	$	—		$	359
Mortgage-backed securities	$	—	$	434		$	—	$	—		$	434
Other debt securities	$	—	$	32		$	—	$	—		$	32
Other investments:
NEE:
Equity securities	$	4	$	—		$	—	$	—		$	4
U.S. Government and municipal bonds	$	8	$	—		$	—	$	—		$	8
Corporate debt securities	$	—	$	43		$	—	$	—		$	43
Mortgage-backed securities	$	—	$	33		$	—	$	—		$	33
Other	$	5	$	5		$	—	$	—		$	10
Derivatives:
NEE:
Commodity contracts	$	2,448	$	3,478		$	1,071	$	(5,477	)	$	1,520	(c)
Interest rate swaps	$	—	$	37		$	—	$	—		$	37	(c)
Foreign currency swaps	$	—	$	27		$	—	$	—		$	27	(c)
FPL - commodity contracts	$	—	$	8		$	6	$	(2	)	$	12	(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	2,588	$	3,582		$	585	$	(5,453	)	$	1,302	(c)
Interest rate swaps	$	—	$	320		$	—	$	—		$	320	(c)
Foreign currency swaps	$	—	$	9		$	—	$	—		$	9	(c)
FPL - commodity contracts	$	—	$	513		$	2	$	(2	)	$	513	(c)

————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.

(b) At NEE, approximately $1,086 million ($979 million at FPL) are invested in commingled funds whose underlying investments would be Level 1 if those investments were held directly by NEE or FPL.

(c) See Note 2 for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

Significant unobservable inputs used in valuation of contracts categorized as Level 3

The significant unobservable inputs used in the valuation of contracts categorized as Level 3 of the fair value hierarchy at September 30, 2012 are as follows:

Transaction Type	Fair Value at September 30, 2012		Valuation Technique(s)	Significant Unobservable Inputs	Range
	Assets	Liabilities
	(millions)
Forward contracts - power	$366	$95	Discounted cash flow	Forward price (per mwh)	$10	–	$141
Options - power	$179	$200	Option models	Implied correlations	12%	—	98%
				Implied volatilities	1%	—	154%
Options - gas	$43	$10	Option models	Implied correlations	12%	—	98%
				Implied volatilities	1%	—	56%
Full requirements and unit contingent contracts	$211	$33	Discounted cash flow	Forward price (per mwh)	$5	—	$127
				Customer migration rate(a)	—%	—	20%

——————————

(a) Applies only to full requirements contracts.

Reconciliation of changes in the fair value of derivatives measured based on significant unobservable inputs

The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:

	Three Months Ended September 30,
	2012						2011
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at June 30	$	575		$	7		$	155		$	5
Realized and unrealized gains (losses):
Included in earnings(a)	(149		)	—			(11		)	—
Included in regulatory assets and liabilities	1			1			—			—
Purchases	40			—			45			—
Settlements	30			(3		)	3			(1		)
Issuances	(21		)	—			(70		)	—
Transfers in(b)	5			—			1			—
Transfers out(b)	1			—			(2		)	—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	482		$	5		$	121		$	4
The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date(c)	$	(171	)	$	—		$	12		$	—

————————————

(a) For the three months ended September 30, 2012 and 2011, $(149) million and $(12) million, respectively, of realized and unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.

(b) For the three months ended September 30, 2012 and 2011, transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data.  NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.

(c) For the three months ended September 30, 2012 and 2011, $(170) million and $12 million, respectively, of unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.

	Nine Months Ended September 30,
	2012						2011
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior year	$	486		$	4		$	296		$	7
Realized and unrealized gains (losses):
Included in earnings(a)	135			—			2			—
Included in regulatory assets and liabilities	7			7			2			2
Purchases	221			—			186			—
Settlements	(152		)	(6		)	(100		)	(5		)
Issuances	(221		)	—			(260		)	—
Transfers in(b)	21			—			3			—
Transfers out(b)	(15		)	—			(8		)	—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	482		$	5		$	121		$	4
The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date(c)	$	41		$	—		$	42		$	—

————————————

(a) For the nine months ended September 30, 2012 and 2011, $132 million and $(11) million, respectively, of realized and unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.

(b) For the nine months ended September 30, 2012 and 2011, transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data.  NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.

(c) For the nine months ended September 30, 2012 and 2011, $41 million and $37 million, respectively, of unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.