Commitments and Contingencies

Commitments - NEE and its subsidiaries have made commitments in connection with a portion of their projected capital expenditures. Capital expenditures at FPL include, among other things, the cost for construction or acquisition of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities and the procurement of nuclear fuel. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction and development of wind and solar projects and the procurement of nuclear fuel, as well as the investment in the development and construction of its natural gas pipeline assets. Capital expenditures for Corporate and Other primarily include the cost to meet customer-specific requirements and maintain the fiber-optic network for FPL FiberNet and the cost to maintain existing transmission facilities at NEET.

At September 30, 2016, estimated capital expenditures for the remainder of 2016 through 2020 for which applicable internal approvals (and also, if required, FPSC approvals for FPL or regulatory approvals for acquisitions) have been received were as follows:



	Remainder of 2016		2017		2018		2019		2020		Total
	(millions)
FPL:
Generation:^(a)
New^(b)(c)	$	155	$	510	$	260	$	135	$	10	$	1,070
Existing	245		955		680		525		540		2,945
Transmission and distribution	465		1,995		1,985		2,485		2,335		9,265
Nuclear fuel	45		125		190		170		210		740
General and other	115		265		240		185		185		990
Total	$	1,025	$	3,850	$	3,355	$	3,500	$	3,280	$	15,010
NEER:
Wind^(d)	$	585	$	860	$	475	$	25	$	25	$	1,970
Solar^(e)	100		15		—		—		—		115
Nuclear, including nuclear fuel	115		235		265		255		250		1,120
Natural gas pipelines^(f)	490		750		815		30		15		2,100
Other	120		45		40		40		40		285
Total	$	1,410	$	1,905	$	1,595	$	350	$	330	$	5,590
Corporate and Other	$	50	$	250	$	210	$	215	$	145	$	870

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(a)	Includes AFUDC of approximately $19 million, $47 million, $66 million and $29 million for the remainder of 2016 through 2019, respectively.


(b)	Includes land, generation structures, transmission interconnection and integration and licensing.


(c)	Excludes capital expenditures for the construction costs for the two additional nuclear units at FPL's Turkey Point site beyond what is required to receive and maintain an NRC license for each unit.


(d)	Consists of capital expenditures for new wind projects, repowering of existing wind projects and related transmission totaling approximately 3,375 MW, including 660 MW that received applicable internal approvals in October 2016.


(e)	Includes capital expenditures for new solar projects and related transmission totaling approximately 470 MW.


(f)	Includes capital expenditures for construction of three natural gas pipelines, including equity contributions associated with equity investments in joint ventures for two pipelines and AFUDC associated with the third pipeline. The natural gas pipelines are subject to certain conditions. See Contracts below.

The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.

Contracts - In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has commitments under long-term purchased power and fuel contracts. As of September 30, 2016, FPL is obligated under a take-or-pay purchased power contract to pay for 375 MW annually through 2021. FPL also has various firm pay-for-performance contracts to purchase approximately 444 MW from certain cogenerators and small power producers with expiration dates ranging from 2025 through 2034. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the facilities meeting certain contract conditions. FPL has contracts with expiration dates through 2036 for the purchase and transportation of natural gas and coal, and storage of natural gas. In addition, FPL has entered into 25-year natural gas transportation agreements with each of Sabal Trail and Florida Southeast Connection, each of which will build, own and operate a pipeline that will be part of a natural gas pipeline system, for a quantity of 400,000 MMBtu/day beginning on May 1, 2017 and increasing to 600,000 MMBtu/day on May 1, 2020. These agreements contain firm commitments that are contingent upon the occurrence of certain events, including the completion of construction of the pipeline system to be built by Sabal Trail and Florida Southeast Connection. On April 1, 2016, a wholly owned NEER subsidiary purchased an additional 9.5% interest in Sabal Trail, resulting in a 42.5% total ownership interest. See Commitments above.

As of September 30, 2016, NEER has entered into contracts with expiration dates ranging from November 2016 through 2032 primarily for the purchase of wind turbines, wind towers and solar modules and related construction and development activities, as well as for the supply of uranium, conversion, enrichment and fabrication of nuclear fuel and has made commitments for the construction of the natural gas pipelines. Approximately $3.8 billion of related commitments are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the purchase, transportation and storage of natural gas and firm transmission service with expiration dates ranging from December 2016 through 2019.

The required capacity and/or minimum payments under the contracts discussed above as of September 30, 2016 were estimated as follows:



	Remainder of 2016		2017		2018		2019		2020		Thereafter
	(millions)
FPL:
Capacity charges^(a)	$	45	$	165	$	155	$	135	$	110	$	690
Minimum charges, at projected prices:^(b)
Natural gas, including transportation and storage^(c)	$	320	$	1,065	$	870	$	860	$	910	$	12,970
Coal, including transportation	$	25	$	120	$	5	$	5	$	—	$	—
NEER	$	1,235	$	1,345	$	985	$	125	$	95	$	370
Corporate and Other^(d)(e)	$	35	$	25	$	5	$	—	$	5	$	—

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(a)

Capacity charges under these contracts, substantially all of which are recoverable through the capacity clause, totaled approximately $41 million and $112 million for the three months ended September 30, 2016 and 2015, respectively, and approximately $134 million and $349 million for the nine months ended September 30, 2016 and 2015, respectively. Energy charges under these contracts, which are recoverable through the fuel clause, totaled approximately $57 million and $99 million for the three months ended September 30, 2016 and 2015, respectively, and approximately $103 million and $221 million for the nine months ended September 30, 2016 and 2015, respectively.


(b)	Recoverable through the fuel clause.


(c)	Includes approximately $200 million, $295 million, $290 million, $360 million and $7,885 million in 2017, 2018, 2019, 2020 and thereafter, respectively, of firm commitments, subject to certain conditions as noted above, related to the natural gas transportation agreements with Sabal Trail and Florida Southeast Connection.


(d)	Includes an approximately $30 million commitment to invest primarily in clean power and technology businesses through 2021.


(e)	Excludes approximately $215 million, $190 million and $30 million in 2016, 2017 and 2018, respectively, of joint obligations of NEECH and NEER which are included in the NEER amounts above.

In addition, FPL has entered into, and the FPSC and the FERC have approved, a purchase agreement under which FPL will assume ownership of a 330 MW coal-fired generation facility located in Indiantown, Florida for a purchase price of $451 million (including existing debt of approximately $218 million). FPL currently has a long-term purchased power agreement with this facility for substantially all of its capacity and energy. The remaining payments under the long-term purchased power agreement, which total approximately $810 million (including $23 million for the remainder of 2016) are included in the table above under capacity charges. Upon taking ownership of this facility, which is expected to occur in January 2017, FPL expects to reduce the plant’s operations with the intention of eventually phasing the plant out of service. FPL will also record a regulatory asset for approximately $451 million, which will be amortized over nine years and recovered through the capacity clause with a return on the portion of the unamortized balance of the regulatory asset. Until the plant is phased out of service, FPL will recover the operating costs and fuel costs of the facility through the capacity clause and the fuel clause, respectively.

In October 2015, a subsidiary of NEP completed the acquisition of the Texas pipelines. The purchase price is subject to (i) a $200 million holdback payable, in whole or in part, upon satisfaction of financial performance and capital expenditure thresholds relating to planned expansion projects (contingent holdback) and (ii) a $200 million holdback retained to satisfy any indemnification obligations of the sellers through April 2017 (indemnity holdback). Contingent consideration is required to be reported at fair value at each reporting date. NEE determined this fair value measurement based on management's probability assessment. The significant inputs and assumptions used in the fair value measurement included the estimated probability of executing contracts related to financial performance and capital expenditure thresholds as well as the appropriate discount rate. During the three and nine months ended September 30, 2016, NEE recorded approximately $101 million and $118 million, respectively, of fair value adjustments to decrease the contingent holdback based on updated estimates associated with management's probability assessment. The fair value adjustments are included in revaluation of contingent consideration in NEE's condensed consolidated statements of income. At September 30, 2016 and December 31, 2015, the estimated fair value of the contingent holdback was approximately $70 million and $186 million, respectively, and the carrying amount of the indemnity holdback was approximately $197 million and $188 million, respectively. The contingent and indemnity holdbacks are included in current other liabilities at September 30, 2016 and in noncurrent other liabilities at December 31, 2015 on NEE's condensed consolidated balance sheets.

Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $375 million of private liability insurance per site, which is the maximum obtainable, and participates in a secondary financial protection system, which provides up to $13.0 billion of liability insurance coverage per incident at any nuclear reactor in the U.S. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $1.0 billion ($509 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the U.S., payable at a rate not to exceed $152 million ($76 million for FPL) per incident per year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $15 million, $38 million and $19 million, plus any applicable taxes, per incident, respectively.

NEE participates in a nuclear insurance mutual company that provides $2.75 billion of limited insurance coverage per occurrence per site for property damage, decontamination and premature decommissioning risks at its nuclear plants and a sublimit of $1.5 billion for non-nuclear perils. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. NEE also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service for an extended period of time because of an accident. In the event of an accident at one of NEE's or another participating insured's nuclear plants, NEE could be assessed up to $187 million ($113 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $3 million, $5 million and $4 million, plus any applicable taxes, respectively.

Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of either its transmission and distribution property or natural gas pipeline assets, and has no property insurance coverage for FPL FiberNet's fiber-optic cable. Should FPL's future storm restoration costs exceed the reserve amount established through the issuance of storm-recovery bonds by a VIE in 2007, FPL may recover storm restoration costs, subject to prudence review by the FPSC, either through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law. FPL expects to file a petition with the FPSC in the fourth quarter of 2016 to seek interim recovery of storm restoration costs associated with Hurricane Hermine in September 2016 and Hurricane Matthew in October 2016 that exceed the reserve amount, as well as to replenish the reserve.

In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of FPL or Lone Star Transmission, LLC, would be borne by NEE and/or FPL and/or their affiliates, as the case may be, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.

Spain Solar Projects - Since 2013, various events of default had occurred under the project-level financing agreements for the solar thermal facilities in Spain (Spain solar projects) as a result of changes of law that occurred in December 2012 and February 2013. Because the lenders had the right to accelerate payment of the project-level debt as a result of the events of default, such debt and the associated derivative liabilities related to interest rate swaps were classified as current maturities of long-term debt and current derivative liabilities, respectively. Additionally, impairments recorded in 2013 due to the changes of law caused the project-level subsidiaries in Spain to have a negative net equity position on their balance sheets, which required them under Spanish law to commence liquidation proceedings if the net equity position was not restored to specified levels.

In August 2016, NextEra Energy España, S.L., the NEER subsidiary in Spain that is the direct shareholder of the project-level subsidiaries, and the project-level subsidiaries entered into an agreement with the lenders to restructure the project-level debt, which included, among other things, a re-amortization of the debt, including extending the maturity date from 2030 to 2037, and reducing the original interest rate under the project-level financing agreements. At closing, the NEECH affiliates’ remaining letter of credit posting obligation on behalf of the project-level subsidiaries of approximately €23 million (approximately $26 million) was used primarily to make a prepayment of the restructured project-level debt. The noncurrent portions of the restructured project-level debt, net of unamortized debt issuance costs, and associated derivative liabilities related to the interest rate swaps were reclassified as long-term debt and noncurrent derivative liabilities, respectively, on NEE’s condensed consolidated balance sheet as of September 30, 2016 and totaled approximately $537 million and $155 million, respectively, at that date. The debt restructuring allowed the negative net equity position of the project-level subsidiaries to be restored to a level above that which is required by Spanish law and the liquidation process was rescinded. The restructured debt is secured solely by the assets of the project-level subsidiaries.