Summary of Significant Accounting and Reporting Policies

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting and Reporting Policies

Rate Regulation – On September 28, 2023, the Florida Supreme Court ruled on the appeal of the FPSC’s final order regarding FPL’s 2021 rate agreement by Floridians Against Increased Rates, Inc. and, as a group, Florida Rising, Inc., Environmental Confederation of Southwest Florida, Inc. and League of United Latin American Citizens of Florida. The ruling remands the FPSC's order back to the FPSC. While management is unable to predict with certainty the eventual outcome, FPL believes the FPSC will maintain its determination in its revised order that the 2021 rate agreement is in the public interest and should remain intact.

In March 2023, the FPSC approved FPL’s January 2023 request to recover its 2022 fuel under-recovery of approximately $2.1 billion over 21 months effective April 2023 and its request for a $1.0 billion mid-course correction to reduce the 2023 levelized fuel charges to customers over 9 months effective April 2023. Due to further declines in the natural gas forward curve, the FPSC approved FPL’s March 2023 request for a second mid-course correction to reduce its 2023 levelized fuel charges by an additional $379 million over 8 months effective May 2023 and FPL's May 2023 request for a third mid-course correction to reduce its 2023 levelized fuel charges by an additional $256 million over 6 months effective July 2023.

Storm Cost Recovery – In March 2023, the FPSC approved FPL's request to begin recovering eligible storm costs, which are currently estimated at approximately $1.3 billion, primarily related to the surcharge for Hurricanes Ian and Nicole. The amount will be collected through an interim surcharge that will apply for a 12-month period that began April 2023 and will be subject to refund based on an FPSC prudence review.

Restricted Cash – At September 30, 2023 and December 31, 2022, NEE had approximately $1,210 million ($18 million for FPL) and $1,840 million ($33 million for FPL), respectively, of restricted cash, which is included in current other assets on NEE's and FPL's condensed consolidated balance sheets. Restricted cash is primarily related to debt service payments and margin cash collateral requirements at NEER and bond proceeds held for construction at FPL. In addition, where offsetting positions exist, restricted cash related to margin cash collateral of $1,056 million is netted against derivative liabilities at September 30, 2023 and $7 million is netted against derivative assets and $1,541 million is netted against derivative liabilities at December 31, 2022. See Note 2.

Disposal of Businesses/Assets – On September 26, 2023, FPL entered into an agreement to sell its ownership interests in its Florida City Gas business (FCG) for a cash purchase price of approximately $923 million, subject to working capital and other adjustments. The transaction is expected to be completed over the next several months, pending the satisfaction of customary closing conditions. FPL anticipates recording a gain of approximately $0.4 billion ($0.3 billion after tax) when the transaction closes. The carrying amounts of the major classes of assets related to FCG classified as held for sale, which are included in current other assets on NEE’s and FPL’s condensed consolidated balance sheets, were approximately $616 million at September 30, 2023 and primarily represent property, plant and equipment. Liabilities associated with assets classified as held for sale, which are included in current other liabilities on NEE’s and FPL’s condensed consolidated balance sheets, were approximately $113 million at September 30, 2023 and primarily represent regulatory liabilities and finance lease liabilities.

In June 2023, subsidiaries of NextEra Energy Resources completed the sale to a NEP subsidiary of their 100% ownership interests in five wind generation facilities and three solar generation facilities located in geographically diverse locations throughout the U.S. with a total generating capacity of 688 MW for cash proceeds of approximately $566 million, plus working capital of $32 million.

In December 2022, subsidiaries of NextEra Energy Resources sold (i) a 49% controlling ownership interest in three wind generation facilities and one solar plus battery facility located in geographically diverse locations throughout the U.S. with a total generating capacity of 1,437 MW and 65 MW of battery storage capacity, two of which facilities were under construction with expected in service dates in 2023, and (ii) their 100% ownership interest in three wind generation facilities located in the Midwest region of the U.S. with a total generating capacity of 347 MW to a NEP subsidiary for cash proceeds of approximately $805 million, plus working capital and other adjustments of $8 million (subject to post-closing adjustments). NEER continued to consolidate one of the projects under construction for accounting purposes through March 2023 and the second project under construction through July 2023. A NextEra Energy Resources affiliate will continue to operate the facilities included in the sale. In connection with the two facilities under construction, approximately $251 million of cash received was recorded as contract liabilities, which is included in current other liabilities on NEE's condensed consolidated balance sheet at December 31, 2022. In 2023, the two facilities achieved commercial operations and approximately $251 million of contract liabilities were reversed and the sale of those facilities was recognized for accounting purposes. In addition, NextEra Energy Resources is responsible to pay for all construction costs related to the portfolio. At September 30, 2023 and December 31, 2022, approximately $196 million and $810 million, respectively, are included in accounts payable on NEE's condensed consolidated balance sheets and represent amounts owed by NextEra Energy Resources to NEP to reimburse NEP for construction costs.

In September 2022, subsidiaries of NextEra Energy Resources sold to a NEP subsidiary a 67% controlling ownership interest in a battery storage facility in California with storage capacity of 230 MW, for cash proceeds of approximately $191 million, plus working capital and other adjustments of $2 million. A NextEra Energy Resources affiliate will continue to operate the facility included in the sale. In connection with the sale, a gain of approximately $87 million ($66 million after tax) was recorded in NEE's condensed consolidated statements of income for the three and nine months ended September 30, 2022 and is included in gains on disposal of businesses/assets – net.

Property Plant and Equipment – Property, plant and equipment consists of the following:


	NEE				FPL
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
	(millions)
Electric plant in service and other property	$	133,184	$	124,963	$	78,282	$	74,353
Nuclear fuel	1,497		1,684		1,069		1,190
Construction work in progress	18,899		15,675		7,801		7,026
Property, plant and equipment, gross	153,580		142,322		87,152		82,569
Accumulated depreciation and amortization	(32,697)		(31,263)		(18,298)		(17,876)
Property, plant and equipment – net	$	120,883	$	111,059	$	68,854	$	64,693

During the three months ended September 30, 2023 and 2022, FPL recorded AFUDC of approximately $49 million and $25 million, respectively, including AFUDC – equity of approximately $40 million and $19 million, respectively. During the nine months ended September 30, 2023 and 2022, FPL recorded AFUDC of approximately $123 million and $106 million, respectively, including AFUDC – equity of approximately $100 million and $82 million, respectively. During the three months ended September 30, 2023 and 2022, NEER capitalized interest on construction projects of approximately $88 million and $46 million, respectively. During the nine months ended September 30, 2023 and 2022, NEER capitalized interest on construction projects of approximately $220 million and $119 million, respectively.

Structured Payables – Under NEE's structured payables program, subsidiaries of NEE issue negotiable drafts, backed by NEECH guarantees, to settle invoices with suppliers with payment terms that extend the original invoice due date (typically 30 days) to less than one year and include a service fee. At their discretion, the suppliers may assign the negotiable drafts and the rights under the NEECH guarantees to financial institutions. NEE and its subsidiaries are not party to any contractual agreements between their suppliers and the applicable financial institutions.

At September 30, 2023 and December 31, 2022, NEE's outstanding obligations under its structured payables program were approximately $4.2 billion and $3.7 billion, respectively, substantially all of which is included in accounts payable on NEE's condensed consolidated balance sheets.

Income Taxes – For taxable years beginning after 2022, renewable energy tax credits generated during the taxable year can be transferred to an unrelated transferee for cash. Any tax credits transferred will be accounted for under Accounting Standards Codification 740 – Income Taxes. Proceeds resulting from the sales of PTCs and ITCs on NEE’s tax return will be reported in

cash paid (received) for income taxes – net within the supplemental disclosures of cash flow information on NEE’s consolidated statements of cash flows. During September and October 2023, NEECH has entered into agreements to sell tax credits for approximately $337 million in cash proceeds in the fourth quarter of 2023.