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Leases
12 Months Ended
Dec. 31, 2018
Leases [Abstract]  
Leases
Leases

During the fourth quarter of 2018, NEE and FPL adopted the new lease standard by recognizing and measuring leases existing at, or entered into after, January 1, 2016. As permitted by the new lease standard, NEE and FPL elected (i) not to reevaluate land easements if they were not previously accounted for as leases, (ii) to apply hindsight when assessing lease term and impairment of the right-of-use (ROU) asset, (iii) not to apply the recognition requirements to short-term leases and (iv) not to separate nonlease components from associated lease components for substantially all classes of underlying assets. Upon adoption of the new lease standard, NEE recorded an increase to retained earnings of approximately $32 million at January 1, 2016 representing the cumulative effect of adopting the new lease standard. Also upon adoption, ROU assets and lease liabilities in connection with operating and finance leases at NEE and FPL, as well as net investments in sales-type leases at NEE, were recorded. ROU assets are included in noncurrent other assets, lease liabilities are included in current and noncurrent other liabilities and net investments in sales-type leases are included in current and noncurrent other assets on NEE’s and FPL's consolidated balance sheets. Operating lease expense is included in O&M expenses, amortization expense is included in depreciation and amortization expense and interest income associated with sales-type leases is included in operating revenues in NEE’s and FPL’s consolidated statements of income. The impact of adopting the new lease standard was not material to NEE’s or FPL’s financial statements for the periods presented.

NEE has operating and finance leases primarily related to buildings, equipment and land use agreements that convey exclusive use of the land during the arrangement for certain of its renewable energy projects and substations. Operating and finance leases primarily have fixed payments with expiration dates ranging from 2019 to 2051, some of which include options to extend the leases from 1 to 20 years and some have options to terminate at NEE's discretion. At December 31, 2018, NEE’s ROU assets and lease liabilities for operating leases totaled approximately $133 million and $141 million, respectively; the respective amounts at December 31, 2017 were $141 million and $150 million. At December 31, 2018, NEE’s ROU assets and lease liabilities for finance leases totaled approximately $68 million and $63 million, respectively; the respective amounts at December 31, 2017 were $75 million and $72 million. NEE’s lease liabilities at December 31, 2018 and 2017 were calculated using a weighted-average incremental borrowing rate at the lease inception of 4.31% and 3.65%, respectively, for operating leases and 2.72% and 2.72%, respectively, for finance leases and a weighted-average remaining lease term of 19 years for operating leases and 10 years for finance leases. At December 31, 2018, expected lease payments over the remaining terms of the leases were approximately $330 million with no one year being material. Operating and finance leases did not have a material impact to NEE’s consolidated statements of income or cash flows.

NEE has sales-type leases primarily related to three natural gas and/or oil electric generation facilities and certain battery storage facilities that sell their electric output under power sales agreements to third parties which provide the customers the ability to dispatch the facilities. Under the new lease standard, the book value of the leased asset is removed from the balance sheet and a net investment in sales-type lease is recognized based on fixed payments under the contract and the residual value of the asset being leased. At December 31, 2018 and 2017, NEE recorded a net investment in sales-type leases of approximately $69 million and $47 million, respectively, and losses at commencement of sales-type leases due to the variable nature of the lease payments of approximately $20 million for the year ended December 31, 2018, which are recorded in losses (gains) on disposal of a business/assets - net in NEE's consolidated statements of income. The power sales agreements have expiration dates from 2020 to 2027 for the natural gas and/or oil generation facilities and 2026 to 2043 for the battery storage facilities. At December 31, 2018, NEE expects to receive approximately $200 million of lease payments over the remaining terms of the power sales agreements with no one year being material.

Upon adoption of the new lease standard, certain of NEE’s renewable power sales agreements that were accounted for under the previous lease guidance are now accounted for under the revenue standard. Revenues recognized related to the power sales agreements are consistent with historical amounts recorded under the previous lease guidance. See Note 2.