2. Employee Retirement Benefits

Employee Benefit Plans and Other Postretirement Plan - NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries. NEE also has a SERP, which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees. The impact of this SERP component is included within pension benefits in the following tables, and was not material to NEE's financial statements for the years ended December 31, 2013, 2012 and 2011. In addition to pension benefits, NEE sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

Plan Assets, Benefit Obligations and Funded Status - The changes in assets and benefit obligations of the plans and the plans' funded status are as follows:



	Pension Benefits						Other Benefits
	2013			2012			2013			2012
	(millions)
Change in plan assets:
Fair value of plan assets at January 1	$	3,385		$	3,122		$	26		$	28
Actual return on plan assets	455			362			2			1
Employer contributions^(a)	1			9			28			29
Participant contributions	—			—			5			6
Benefit payments^(a)	(149		)	(108		)	(35		)	(38		)
Fair value of plan assets at December 31	$	3,692		$	3,385		$	26		$	26
Change in benefit obligation:
Obligation at January 1	$	2,372		$	2,123		$	397		$	427
Service cost	73			65			4			5
Interest cost	95			98			14			18
Participant contributions	—			—			5			6
Plan amendments^(b)	—			26			—			(42		)
Special termination benefits^(c)	46			—			—			—
Actuarial losses (gains) - net	(183		)	168			(31		)	21
Benefit payments^(a)	(149		)	(108		)	(35		)	(38		)
Obligation at December 31^(d)	$	2,254		$	2,372		$	354		$	397
Funded status:
Prepaid (accrued) benefit cost at NEE at December 31	$	1,438		$	1,013		$	(328	)	$	(371	)
Prepaid (accrued) benefit cost at FPL at December 31	$	1,139		$	1,132		$	(249	)	$	(261	)

______________________


(a)	Employer contributions and benefit payments include only those amounts contributed directly to, or paid directly from, plan assets. FPL's portion of contributions related to SERP benefits was less than $1 million and $7 million for 2013 and 2012, respectively. FPL's portion of contributions related to other benefits was $25 million and $27 million for 2013 and 2012, respectively.


(b)	In 2012, certain active plan participants in the postretirement plan in other benefits elected a pension credit in lieu of retiree life insurance benefits.


(c)	Reflects an enhanced early retirement program offered in 2013 as part of an enterprise-wide cost savings initiative.


(d)	NEE's accumulated pension benefit obligation, which includes no assumption about future salary levels, for its pension plans at December 31, 2013 and 2012 was $2,197 million and $2,305 million, respectively.

NEE's and FPL's prepaid (accrued) benefit cost shown above are included on the consolidated balance sheets as follows:



	NEE												FPL
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	2013			2012			2013			2012			2013			2012			2013			2012
										(millions)
Prepaid benefit costs	$	1,456		$	1,031		$	—		$	—		$	1,142		$	1,135		$	—		$	—
Accrued benefit cost included in other current liabilities	(5		)	(2		)	(26		)	(28		)	(2		)	(2		)	(22		)	(23		)
Accrued benefit cost included in other liabilities	(13		)	(16		)	(302		)	(343		)	(1		)	(1		)	(227		)	(238		)
Prepaid (accrued) benefit cost at December 31	$	1,438		$	1,013		$	(328	)	$	(371	)	$	1,139		$	1,132		$	(249	)	$	(261	)

NEE's unrecognized amounts included in accumulated other comprehensive income (loss) yet to be recognized as components of prepaid (accrued) benefit cost are as follows:



	Pension Benefits						Other Benefits
	2013			2012			2013			2012
				(millions)
Components of AOCI:
Unrecognized prior service benefit (cost) (net of $4 tax benefit, $5 tax benefit, $2 tax expense and $3 tax expense, respectively)	$	(8	)	$	(9	)	$	4		$	4
Unrecognized gain (loss) (net of $18 tax expense, $39 tax benefit, $3 tax benefit and $6 tax benefit, respectively)	30			(63		)	(3		)	(6		)
Total	$	22		$	(72	)	$	1		$	(2	)

NEE's unrecognized amounts included in regulatory assets (liabilities) yet to be recognized as components of net prepaid (accrued) benefit cost are as follows:



	Regulatory Assets (Liabilities) (Pension)					Regulatory Assets (Liabilities) (SERP and Other)
	2013			2012		2013			2012
	(millions)
Unrecognized prior service cost (benefit)	$	25		$	30	$	(14	)	$	(16	)
Unrecognized losses (gains)	(98		)	154		29			58
Total	$	(73	)	$	184	$	15		$	42

The following table provides the weighted-average assumptions used to determine benefit obligations for the plans. These rates are used in determining net periodic benefit cost in the following year.



	Pension Benefits				Other Benefits
	2013		2012		2013		2012
Discount rate	4.80	%	4.00	%	4.60	%	3.75	%
Salary increase	4.00	%	4.00	%	4.00	%	4.00	%

With regard to the other benefits plan, currently the retiree cost sharing structure largely insulates NEE and FPL from the effects of any future increase in health care costs. An increase or decrease of one percentage point in assumed health care cost trend rates would have a corresponding effect on the other benefits accumulated obligation of approximately $2 million at December 31, 2013.

NEE's investment policy for the pension plan recognizes the benefit of protecting the plan's funded status, thereby avoiding the necessity of future employer contributions. Its broad objectives are to achieve a high rate of total return with a prudent level of risk taking while maintaining sufficient liquidity and diversification to avoid large losses and preserve capital over the long term.

The NEE pension plan fund's current target asset allocation, which is expected to be reached over time, is 45% equity investments, 32% fixed income investments, 13% alternative investments and 10% convertible securities. The pension fund's investment strategy emphasizes traditional investments, broadly diversified across the global equity and fixed income markets, using a combination of different investment styles and vehicles. The pension fund's equity and fixed income holdings consist of both directly held securities as well as commingled investment arrangements such as common and collective trusts, pooled separate accounts, registered investment companies and limited partnerships. The pension fund's convertible security assets are principally direct holdings of convertible securities and includes a convertible security oriented limited partnership. The pension fund's alternative investment holdings are primarily absolute return oriented limited partnerships that use a broad range of investment strategies on a global basis.

The fair value measurements of NEE's pension plan assets by fair value hierarchy level are as follows:



	December 31, 2013^(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities^(b)	$	1,028	$	—	$	—	$	1,028
Equity commingled vehicles^(c)	—		656		—		656
U.S. Government and municipal bonds	115		35		—		150
Corporate debt securities^(d)	—		348		—		348
Asset-backed securities	—		249		—		249
Debt security commingled vehicles^(e)	—		526		—		526
Convertible securities	46		236		—		282
Limited partnerships^(f)	—		226		227		453
Total	$	1,189	$	2,276	$	227	$	3,692

______________________


(a)	See Note 4 for discussion of fair value measurement techniques and inputs.


(b)	Includes foreign investments of $337 million.


(c)	Includes foreign investments of $234 million.


(d)	Includes foreign investments of $67 million.


(e)	Includes foreign investments of $54 million and $145 million of short-term commingled vehicles.

(f)

Includes foreign investments of $104 million. Also includes fixed income oriented commingled investment arrangements of $244 million, convertible security oriented limited partnerships of $80 million and alternative investments of $129 million. Fair values have been estimated using net asset value (NAV) per share of the investments. Those investments subject to certain restrictions have been classified as Level 3.



	December 31, 2012^(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities^(b)	$	833	$	—	$	—	$	833
Equity commingled vehicles^(c)	—		590		—		590
U.S. Government and municipal bonds	166		50		—		216
Corporate debt securities^(d)	—		349		—		349
Asset-backed securities	—		273		—		273
Debt security commingled vehicles^(e)	—		589		—		589
Convertible securities	—		261		—		261
Limited partnerships^(f)	—		134		140		274
Total	$	999	$	2,246	$	140	$	3,385

______________________


(a)	See Note 4 for discussion of fair value measurement techniques and inputs.


(b)	Includes foreign investments of $308 million.


(c)	Includes foreign investments of $204 million.


(d)	Includes foreign investments of $66 million.


(e)	Includes foreign investments of $60 million and $135 million of short-term commingled vehicles.


(f)	Includes foreign investments of $39 million. Also, includes fixed income oriented commingled investment arrangements of $90 million, convertible security oriented limited partnerships of $77 million and alternative investments of $107 million. Fair values have been estimated using NAV per share of the investments. Those investments subject to certain restrictions have been classified as Level 3.

With regard to its other benefits plan, NEE's policy is to fund claims as incurred during the year through NEE contributions, participant contributions and plan assets. The other benefits plan's assets are invested with a focus on assuring the availability of funds to pay benefits while maintaining sufficient diversification to avoid large losses and preserve capital. The other benefits plan's fund has a strategic asset allocation that targets a mix of 60% equity investments and 40% fixed income investments. The fund's investment strategy consists of traditional investments, diversified across the global equity and fixed income markets. The fund's equity and fixed income investments are comprised of assets classified as commingled vehicles such as common and collective trusts, pooled separate accounts, registered investment companies or other forms of pooled investment arrangements.

The fair value measurements of NEE's other benefits plan assets at December 31, 2013 and 2012 are substantially all Level 2 and include approximately $18 million and $18 million of equity commingled vehicles (of which $5 million and $4 million were foreign investments) and $6 million and $7 million of debt security commingled vehicles, respectively.

Expected Cash Flows - NEE anticipates paying approximately $26 million for eligible retiree medical expenses on behalf of the other benefits plan during 2014.

The following table provides information about benefit payments expected to be paid by the plans, net of government drug subsidy, for each of the following calendar years:



	Pension Benefits		Other Benefits
	(millions)
2014	$	275	$	34
2015	$	139	$	31
2016	$	146	$	29
2017	$	150	$	30
2018	$	155	$	29
2019 - 2023	$	817	$	132

Net Periodic Cost - The components of net periodic benefit (income) cost for the plans are as follows:



	Pension Benefits									Other Benefits
	2013			2012			2011			2013			2012			2011
							(millions)
Service cost	$	73		$	65		$	64		$	4		$	5		$	6
Interest cost	95			98			98			14			18			21
Expected return on plan assets	(237		)	(238		)	(238		)	(1		)	(2		)	(2		)
Amortization of transition obligation	—			—			—			—			1			3
Amortization of prior service cost (benefit)	7			5			(3		)	(2		)	(1		)	—
Amortization of losses	2			—			—			2			—			—
SERP settlements	—			3			—			—			—			—
Special termination benefits	46			—			—			—			—			—
Net periodic benefit (income) cost at NEE	$	(14	)	$	(67	)	$	(79	)	$	17		$	21		$	28
Net periodic benefit (income) cost at FPL	$	(5	)	$	(43	)	$	(51	)	$	13		$	16		$	21

Other Comprehensive Income - The components of net periodic benefit income (cost) recognized in OCI for the plans are as follows:



	Pension Benefits								Other Benefits
	2013		2012			2011			2013		2012			2011
						(millions)
Prior service benefit (cost) (net of $3 tax benefit, $4 tax expense and $2 tax benefit, respectively)	$	—	$	(6	)	$	—		$	—	$	7		$	(3	)
Net gains (losses) (net of $58 tax expense, $16 tax benefit, $32 tax benefit, $3 tax expense, $3 tax benefit, and $2 tax expense, respectively)	91		(25		)	(45		)	4		(5		)	3
Amortization of prior service benefit (cost)	2		1			(1		)	—		—			—
Amortization of transition obligation	—		—			—			—		—			1
Total	$	93	$	(30	)	$	(46	)	$	4	$	2		$	1

Regulatory Assets (Liabilities) - The components of net periodic benefit (income) cost recognized during the year in regulatory assets (liabilities) for the plans are as follows:



	Regulatory Assets (Liabilities) (Pension)						Regulatory Assets (Liabilities) (SERP and Other)
	2013			2012			2013			2012
	(millions)
Prior service cost (benefit)	$	—		$	17		$	—		$	(29	)
Unrecognized losses (gains)	(252		)	1			(26		)	16
Amortization of prior service cost (benefit)	(4		)	(3		)	1			—
Amortization of transition obligation	—			—			—			(1		)
Amortization of unrecognized losses	(1		)	—			(2		)	(3		)
Total	$	(257	)	$	15		$	(27	)	$	(17	)

The weighted-average assumptions used to determine net periodic benefit (income) cost for the plans are as follows:



	Pension Benefits						Other Benefits
	2013		2012		2011		2013		2012			2011
Discount rate	4.00	%	4.65	%	5.00	%	3.75	%	4.53	%	^(a)	5.25	%
Salary increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%		4.00	%
Expected long-term rate of return^(b)	7.75	%	7.75	%	7.75	%	7.75	%	8.00	%		8.00	%

______________________


(a)	Reflects a mid-year rate change due to cost remeasurement resulting from a plan amendment.

(b)

In developing the expected long-term rate of return on assets assumption for its plans, NEE evaluated input, including other qualitative and quantitative factors, from its actuaries and consultants, as well as information available in the marketplace. NEE considered different models, capital market return assumptions and historical returns for a portfolio with an equity/bond asset mix similar to its funds. NEE also considered its funds' historical compounded returns.

Employee Contribution Plans - NEE offers employee retirement savings plans which allow eligible participants to contribute a percentage of qualified compensation through payroll deductions. NEE makes matching contributions to participants' accounts. Defined contribution expense pursuant to these plans was approximately $46 million, $44 million and $42 million for NEE ($30 million, $29 million and $28 million for FPL) for the years ended December 31, 2013, 2012 and 2011, respectively. See Note 10 - Employee Stock Ownership Plan.