Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2015

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:



	December 31, 2015
	Level 1		Level 2			Level 3		Netting^(a)			Total
	(millions)
Assets:
Cash equivalents and restricted cash:^(b)
NEE - equity securities	$	312	$	—		$	—				$	312
FPL - equity securities	$	36	$	—		$	—				$	36
Special use funds:^(c)
NEE:
Equity securities	$	1,320	$	1,354	^(d)	$	—				$	2,674
U.S. Government and municipal bonds	$	446	$	166		$	—				$	612
Corporate debt securities	$	—	$	713		$	—				$	713
Mortgage-backed securities	$	—	$	412		$	—				$	412
Other debt securities	$	—	$	52		$	—				$	52
FPL:
Equity securities	$	364	$	1,234	^(d)	$	—				$	1,598
U.S. Government and municipal bonds	$	335	$	145		$	—				$	480
Corporate debt securities	$	—	$	531		$	—				$	531
Mortgage-backed securities	$	—	$	327		$	—				$	327
Other debt securities	$	—	$	40		$	—				$	40
Other investments:
NEE:
Equity securities	$	30	$	10		$	—				$	40
Debt securities	$	39	$	132		$	—				$	171
Derivatives:
NEE:
Commodity contracts	$	2,187	$	2,540		$	1,179	$	(3,969	)	$	1,937	^(e)
Interest rate contracts	$	—	$	35		$	—	$	(1	)	$	34	^(e)
FPL - commodity contracts	$	—	$	1		$	6	$	(3	)	$	4	^(e)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	2,153	$	1,887		$	540	$	(3,598	)	$	982	^(e)
Interest rate contracts	$	—	$	214		$	101	$	4		$	319	^(e)
Foreign currency swaps	$	—	$	132		$	—	$	(5	)	$	127	^(e)
FPL - commodity contracts	$	—	$	219		$	6	$	(3	)	$	222	^(e)

______________________

(a)

Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of 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 consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.


(b)	Includes restricted cash of approximately $61 million ($36 million for FPL) in other current assets on the consolidated balance sheets.


(c)	Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at the Carrying Amount below.


(d)	Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.


(e)	See Note 3 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's consolidated balance sheets.



	December 31, 2014
	Level 1		Level 2			Level 3		Netting^(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	32	$	—		$	—				$	32
Special use funds:^(b)
NEE:
Equity securities	$	1,217	$	1,417	^(c)	$	—				$	2,634
U.S. Government and municipal bonds	$	520	$	191		$	—				$	711
Corporate debt securities	$	—	$	704		$	—				$	704
Mortgage-backed securities	$	—	$	493		$	—				$	493
Other debt securities	$	25	$	32		$	—				$	57
FPL:
Equity securities	$	324	$	1,237	^(c)	$	—				$	1,561
U.S. Government and municipal bonds	$	435	$	165		$	—				$	600
Corporate debt securities	$	—	$	501		$	—				$	501
Mortgage-backed securities	$	—	$	422		$	—				$	422
Other debt securities	$	25	$	20		$	—				$	45
Other investments:
NEE:
Equity securities	$	35	$	1		$	—				$	36
Debt securities	$	5	$	170		$	—				$	175
Derivatives:
NEE:
Commodity contracts	$	1,801	$	3,177		$	1,167	$	(4,196	)	$	1,949	^(d)
Interest rate contracts	$	—	$	35		$	—	$	15		$	50	^(d)
FPL - commodity contracts	$	—	$	2		$	6	$	(1	)	$	7	^(d)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,720	$	3,150		$	420	$	(3,932	)	$	1,358	^(d)
Interest rate contracts	$	—	$	126		$	125	$	15		$	266	^(d)
Foreign currency swaps	$	—	$	131		$	—	$	—		$	131	^(d)
FPL - commodity contracts	$	—	$	370		$	1	$	(1	)	$	370	^(d)

______________________

(a)


(b)	Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at the Carrying Amount below.


(c)	Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.


(d)	See Note 3 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's consolidated balance sheets.

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:



	Years Ended December 31,
	2015						2014						2013
	NEE			FPL			NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior year	$	622		$	5		$	622		$	—		$	566		$	2
Realized and unrealized gains (losses):
Included in earnings^(a)	451			—			(77		)	—			299			—
Included in other comprehensive income	11			—			18			—			—			—
Included in regulatory assets and liabilities	3			3			7			7			—			—
Purchases	180			—			55			—			101			—
Settlements	(473		)	(8		)	194			(2		)	(55		)	(2		)
Issuances	(202		)	—			(122		)	—			(173		)	—
Transfers in^(b)	(13		)	—			80			—			(120		)	—
Transfers out^(b)	(41		)	—			(155		)	—			4			—
Fair value of net derivatives based on significant unobservable inputs at December 31	$	538		$	—		$	622		$	5		$	622		$	—
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)	$	277		$	—		$	248		$	—		$	329		$	—

______________________

(a)

For the year ended December 31, 2015, $462 million of realized and unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is primarily reflected in interest expense. For the year December 31, 2014, $79 million of realized and unrealized losses are reflected in the consolidated statements of income in interest expense and the balance is primarily reflected in operating revenues. For the year ended December 31, 2013, $302 million of realized and unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is primarily reflected in interest expense.


(b)	Transfers into Level 3 were a result of decreased observability of market data and, in 2013, 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 years ended December 31, 2015, 2014, and 2013, $289 million, $328 million, and $330 million of unrealized gains are reflected in the consolidated statements of income in operating revenues and the balance is reflected in interest expense.

Fair Value Inputs, Assets, Quantitative Information

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at December 31, 2015 are as follows:



Transaction Type	Fair Value at December 31, 2015				Valuation Technique(s)	Significant Unobservable Inputs	Range
	Assets		Liabilities
	(millions)
Forward contracts - power	$	636	$	252	Discounted cash flow	Forward price (per MWh)	$6	—	$113
Forward contracts - gas	24		25		Discounted cash flow	Forward price (per MMBtu)	$1	—	$6
Forward contracts - other commodity related	16		6		Discounted cash flow	Forward price (various)	$(18)	—	$55
Options - power	68		58		Option models	Implied correlations	(5)%	—	99%
						Implied volatilities	1%	—	308%
Options - primarily gas	105		164		Option models	Implied correlations	(5)%	—	99%
						Implied volatilities	1%	—	195%
Full requirements and unit contingent contracts	330		35		Discounted cash flow	Forward price (per MWh)	$(20)	—	$239
						Customer migration rate^(a)	—%	—	20%
Total	$	1,179	$	540

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(a)	Applies only to full requirements contracts.

Fair Value, by Balance Sheet Grouping

Fair Value of Financial Instruments Recorded at the Carrying Amount - The carrying amounts of cash equivalents, commercial paper and notes payable approximate their fair values. The carrying amounts and estimated fair values of other financial instruments, excluding those recorded at fair value and disclosed above in Recurring Fair Value Measurements, are as follows:



	December 31, 2015						December 31, 2014
	Carrying Amount			Estimated Fair Value			Carrying Amount		Estimated Fair Value
	(millions)
NEE:
Special use funds^(a)	$	675		$	675		$	567	$	567
Other investments - primarily notes receivable	$	512		$	722	^(b)	$	525	$	679	^(b)
Long-term debt, including current maturities	$	28,897	^(c)	$	30,412	^(d)	$	27,552	$	30,013	^(d)
FPL:
Special use funds^(a)	$	528		$	528		$	395	$	395
Long-term debt, including current maturities	$	10,020		$	11,028	^(d)	$	9,388	$	11,020	^(d)

______________________


(a)	Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis.

(b)

Primarily classified as held to maturity. Fair values are primarily 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 ratings and market-related information. As of December 31, 2015 and 2014, NEE had no notes receivable reported in non-accrual status.


(c)	Excludes debt totaling $938 million reflected in liabilities associated with assets held for sale on NEE's consolidated balance sheet for which the carrying amount approximates fair value. See Note 1 - Assets and Liabilities Associated with Assets Held for Sale.

(d)

As of December 31, 2015 and 2014, for NEE, approximately $18,031 million and $19,973 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, primarily estimated using quoted market prices for the same or similar issues (Level 2).

Available-for-sale Securities

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



	NEE						FPL
	Years Ended December 31,						Years Ended December 31,
	2015		2014		2013		2015		2014		2013
	(millions)
Realized gains	$	194	$	211	$	246	$	70	$	120	$	182
Realized losses	$	87	$	115	$	88	$	43	$	94	$	59
Proceeds from sale or maturity of securities	$	4,643	$	4,092	$	4,190	$	3,724	$	3,349	$	3,342

The unrealized gains on available for sale securities are as follows:



	NEE				FPL
	December 31,				December 31,
	2015		2014		2015		2014
			(millions)
Equity securities	$	1,166	$	1,267	$	863	$	896
Debt securities	$	17	$	66	$	14	$	54

The unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:



	NEE				FPL
	December 31,				December 31,
	2015		2014		2015		2014
			(millions)
Unrealized losses^(a)	$	51	$	7	$	45	$	5
Fair value	$	1,129	$	542	$	861	$	434

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(a)	Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at December 31, 2015 and 2014 were not material to NEE or FPL.

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

+ References + Details