Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2013

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, 2013
	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	$	109	$	—		$	—	$	—		$	109
FPL - equity securities	$	4	$	—		$	—	$	—		$	4
Special use funds:
NEE:
Equity securities	$	1,041	$	1,475	^(b)	$	—	$	—		$	2,516
U.S. Government and municipal bonds	$	491	$	156		$	—	$	—		$	647
Corporate debt securities	$	—	$	560		$	—	$	—		$	560
Mortgage-backed securities	$	—	$	510		$	—	$	—		$	510
Other debt securities	$	19	$	42		$	—	$	—		$	61
FPL:
Equity securities	$	217	$	1,330	^(b)	$	—	$	—		$	1,547
U.S. Government and municipal bonds	$	429	$	131		$	—	$	—		$	560
Corporate debt securities	$	—	$	397		$	—	$	—		$	397
Mortgage-backed securities	$	—	$	429		$	—	$	—		$	429
Other debt securities	$	18	$	28		$	—	$	—		$	46
Other investments:
NEE:
Equity securities	$	45	$	—		$	—	$	—		$	45
U.S. Government and municipal bonds	$	11	$	10		$	—	$	—		$	21
Corporate debt securities	$	—	$	56		$	—	$	—		$	56
Mortgage-backed securities	$	—	$	38		$	—	$	—		$	38
Other	$	5	$	5		$	—	$	—		$	10
Derivatives:
NEE:
Commodity contracts	$	1,054	$	1,844		$	937	$	(2,461	)	$	1,374	^(c)
Interest rate contracts	$	—	$	78		$	—	$	—		$	78	^(c)
FPL - commodity contracts	$	—	$	7		$	2	$	(7	)	$	2	^(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,027	$	1,665		$	222	$	(2,283	)	$	631	^(c)
Interest rate contracts	$	—	$	130		$	91	$	—		$	221	^(c)
Foreign currency swaps	$	—	$	117		$	—	$	—		$	117	^(c)
FPL - commodity contracts	$	—	$	69		$	1	$	(7	)	$	63	^(c)

————————————

(a)

Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.


(b)	At NEE, approximately $1,461 million ($1,317 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, 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	$	23	$	—		$	—	$	—		$	23
FPL - equity securities	$	5	$	—		$	—	$	—		$	5
Special use funds:
NEE:
Equity securities	$	914	$	1,240	^(b)	$	—	$	—		$	2,154
U.S. Government and municipal bonds	$	451	$	143		$	—	$	—		$	594
Corporate debt securities	$	—	$	572		$	—	$	—		$	572
Mortgage-backed securities	$	—	$	560		$	—	$	—		$	560
Other debt securities	$	15	$	26		$	—	$	—		$	41
FPL:
Equity securities	$	217	$	1,118	^(b)	$	—	$	—		$	1,335
U.S. Government and municipal bonds	$	390	$	119		$	—	$	—		$	509
Corporate debt securities	$	—	$	397		$	—	$	—		$	397
Mortgage-backed securities	$	—	$	475		$	—	$	—		$	475
Other debt securities	$	16	$	16		$	—	$	—		$	32
Other investments:
NEE:
Equity securities	$	7	$	—		$	—	$	—		$	7
U.S. Government and municipal bonds	$	6	$	—		$	—	$	—		$	6
Corporate debt securities	$	—	$	53		$	—	$	—		$	53
Mortgage-backed securities	$	—	$	47		$	—	$	—		$	47
Other	$	5	$	6		$	—	$	—		$	11
Derivatives:
NEE:
Commodity contracts	$	1,187	$	2,251		$	794	$	(2,871	)	$	1,361	^(c)
Interest rate contracts	$	—	$	76		$	—	$	—		$	76	^(c)
FPL - commodity contracts	$	—	$	14		$	3	$	(12	)	$	5	^(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,240	$	1,844		$	228	$	(2,748	)	$	564	^(c)
Interest rate contracts	$	—	$	387		$	—	$	—		$	387	^(c)
Foreign currency swaps	$	—	$	66		$	—	$	—		$	66	^(c)
FPL - commodity contracts	$	—	$	31		$	1	$	(12	)	$	20	^(c)

————————————

(a)


(b)	At NEE, approximately $1,214 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.

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

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at September 30, 2013 are as follows:



Transaction Type	Fair Value at September 30, 2013				Valuation Technique(s)	Significant Unobservable Inputs	Range
	Assets		Liabilities
	(millions)
Forward contracts - power	$	507	$	67	Discounted cash flow	Forward price (per MWh)	$10	—	$205
Forward contracts - gas	53		12		Discounted cash flow	Forward price (per MMBtu)	$2	—	$4
Forward contracts - other commodity related	12		14		Discounted cash flow	Forward price (various)	$1	—	$245
Options - power	106		63		Option models	Implied correlations	7%	—	96%
						Implied volatilities	1%	—	111%
Options - gas	25		16		Option models	Implied correlations	7%	—	96%
						Implied volatilities	1%	—	36%
Full requirements and unit contingent contracts	234		50		Discounted cash flow	Forward price (per MWh)	$(32)	—	$136
						Customer migration rate^(a)	—%	—	20%
Total	$	937	$	222

——————————


(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,
	2013						2012
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at June 30	$	384		$	(1	)	$	575		$	7
Realized and unrealized gains (losses):
Included in earnings^(a)	243			—			(149		)	—
Included in regulatory assets and liabilities	2			2			1			1
Purchases	19			—			40			—
Settlements	(3		)	—			30			(3		)
Issuances	(16		)	—			(21		)	—
Transfers in^(b)	(2		)	—			5			—
Transfers out^(b)	(3		)	—			1			—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	624		$	1		$	482		$	5
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)	$	188		$	—		$	(171	)	$	—

————————————

(a)

For the three months ended September 30, 2013, realized and unrealized gains of approximately $242 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange. For the three months ended September 30, 2012, realized and unrealized losses of approximately $149 million are reflected in the condensed consolidated statements of income in operating revenues.


(b)	Transfers into Level 3 were a result of decreased observability of market data. 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, 2013, unrealized gains of $188 million are reflected in the condensed consolidated statements of income in operating revenues. For the three months ended September 30, 2012, unrealized losses of approximately $170 million 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,
	2013						2012
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior year	$	566		$	2		$	486		$	4
Realized and unrealized gains (losses):
Included in earnings^(a)	253			—			135			—
Included in regulatory assets and liabilities	—			—			7			7
Purchases	89			—			221			—
Settlements	(59		)	(1		)	(152		)	(6		)
Issuances	(110		)	—			(221		)	—
Transfers in^(b)	(116		)	—			21			—
Transfers out^(b)	1			—			(15		)	—
Fair value of net derivatives based on significant unobservable inputs at September 30	$	624		$	1		$	482		$	5
The amount of gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date^(c)	$	256		$	—		$	41		$	—

————————————

(a)

For the nine months ended September 30, 2013, realized and unrealized gains (losses) of approximately $244 million are reflected in the condensed consolidated statements of income in operating revenues, $11 million in interest expense and the balance is reflected in fuel, purchased power and interchange. For the nine months ended September 30, 2012, realized and unrealized gains of approximately $132 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.


(b)	Transfers into Level 3 were a result of decreased observability of market data and, in 2013, the use of a significant credit valuation adjustment. 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, 2013, unrealized gains of approximately $245 million are reflected in the condensed consolidated statements of income in operating revenues and $11 million in interest expense. For the nine months ended September 30, 2012, unrealized gains of approximately $41 million are reflected in the condensed consolidated statements of income in operating revenues.

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19279-110258

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19190-110258

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a,b,bb)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2C

-URI http://asc.fasb.org/extlink&oid=7578670&loc=SL7498348-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details