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Derivative Instruments
 6 Months Ended
Jun. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments Derivative Instruments
NEE and FPL use derivative instruments (primarily swaps, options, futures and forwards) to manage the physical and financial risks inherent in the purchase and sale of fuel and electricity, as well as interest rate and foreign currency exchange rate risk associated primarily with outstanding and expected future debt issuances and borrowings, and to optimize the value of NEER's power generation and natural gas and oil production assets. NEE and FPL do not utilize hedge accounting for their cash flow and fair value hedges.

With respect to commodities related to NEE's competitive energy business, NEER employs risk management procedures to conduct its activities related to optimizing the value of its power generation and natural gas and oil production assets, providing full energy and capacity requirements services primarily to distribution utilities, and engaging in power and fuel marketing and trading activities to take advantage of expected future favorable price movements and changes in the expected volatility of prices in the energy markets. These risk management activities involve the use of derivative instruments executed within prescribed limits to manage the risk associated with fluctuating commodity prices. Transactions in derivative instruments are executed on recognized exchanges or via the OTC markets, depending on the most favorable credit terms and market execution factors. For NEER's power generation and natural gas and oil production assets, derivative instruments are used to hedge all or a portion of the expected output of these assets. These hedges are designed to reduce the effect of adverse changes in the wholesale forward commodity markets associated with NEER's power generation and natural gas and oil production assets. With regard to full energy and capacity requirements services, NEER is required to vary the quantity of energy and related services based on the load demands of the customers served. For this type of transaction, derivative instruments are used to hedge the anticipated electricity quantities required to serve these customers and reduce the effect of unfavorable changes in the forward energy markets. Additionally, NEER takes positions in energy markets based on differences between actual forward market levels and management's view of fundamental market conditions, including supply/demand imbalances, changes in traditional flows of energy, changes in short- and long-term weather patterns and anticipated regulatory and legislative outcomes. NEER uses derivative instruments to realize value from these market dislocations, subject to strict risk management limits around market, operational and credit exposure.

Derivative instruments, when required to be marked to market, are recorded on NEE's and FPL's condensed consolidated balance sheets as either an asset or liability measured at fair value. At FPL, substantially all changes in the derivatives' fair value are deferred as a regulatory asset or liability until the contracts are settled, and, upon settlement, any gains or losses are passed through the fuel clause. For NEE's non-rate regulated operations, predominantly NEER, essentially all changes in the derivatives' fair value for power purchases and sales, fuel sales and trading activities are recognized on a net basis in operating revenues and the equity method investees' related activity is recognized in equity in earnings (losses) of equity method investees in NEE's condensed consolidated statements of income. Settlement gains and losses are included within the line items in the condensed consolidated statements of income to which they relate. Transactions for which physical delivery is deemed not to have occurred are presented on a net basis in the condensed consolidated statements of income. For commodity derivatives, NEE believes that, where offsetting positions exist at the same location for the same time, the transactions are considered to have been netted and therefore physical delivery has been deemed not to have occurred for financial reporting purposes. Settlements related to derivative instruments are substantially all recognized in net cash provided by operating activities in NEE's and FPL's condensed consolidated statements of cash flows.

For interest rate and foreign currency derivative instruments, all changes in the derivatives' fair value, as well as the transaction gain or loss on foreign denominated debt, are recognized in interest expense and the equity method investees' related activity is recognized in equity in earnings (losses) of equity method investees in NEE's condensed consolidated statements of income. At June 30, 2025, NEE's AOCI included immaterial amounts related to discontinued interest rate cash flow hedges with expiration dates through October 2033 and foreign currency cash flow hedges with expiration dates through September 2030.
Fair Value Measurements of Derivative Instruments – The fair value of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or other pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. NEE and FPL use different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or similar assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis. NEE's and FPL's assessment of the significance of any particular input to the fair value measurement requires judgment and may affect placement within the fair value hierarchy levels. Non-performance risk, including the consideration of a credit valuation adjustment, is also considered in the determination of fair value for all assets and liabilities measured at fair value.

NEE and FPL measure the fair value of commodity contracts using a combination of market and income approaches utilizing prices observed on commodities exchanges and in the non-exchange traded markets, or through the use of industry-standard valuation techniques, such as option modeling or discounted cash flows techniques, incorporating both observable and unobservable valuation inputs. The resulting measurements are the best estimate of fair value as represented by the transfer of the asset or liability through an orderly transaction in the marketplace at the measurement date.

Exchange-traded derivative assets and liabilities are valued using observable settlement prices from the exchanges and are classified as Level 1 or Level 2, depending on whether positions are in active or inactive markets.

NEE, through its subsidiaries, including FPL, also enters into non-exchange traded commodity derivatives. The majority of the valuation inputs are observable using exchange-quoted prices.

NEE, through NEER, also enters into full requirements contracts, which, in most cases, meet the definition of derivatives and are measured at fair value. These contracts typically have one or more inputs that are not observable and are significant to the valuation of the contract. In addition, certain non-exchange traded derivative options at NEE have one or more significant inputs that are not observable, and are valued using industry-standard option models.

In all cases where NEE and FPL use significant unobservable inputs for the valuation of a commodity contract, consideration is given to the assumptions that market participants would use in valuing the asset or liability. The primary input to the valuation models for commodity contracts is the forward commodity curve for the respective instruments. Other inputs include, but are not limited to, assumptions about market liquidity, volatility, correlation and contract duration as more fully described below in Significant Unobservable Inputs Used in Recurring Fair Value Measurements. In instances where the reference markets are deemed to be inactive or do not have transactions for a similar contract, the derivative assets and liabilities may be valued using significant other observable inputs and potentially significant unobservable inputs. In such instances, the valuation for these contracts is established using techniques including extrapolation from or interpolation between actively traded contracts, or estimated basis adjustments from liquid trading points. NEE and FPL regularly evaluate and validate the inputs used to determine fair value by a number of methods, consisting of various market price verification procedures, including the use of pricing services and broker quotes to support the market price of the various commodities. Where there are assumptions and models used to generate inputs for valuing derivative assets and liabilities, the review and verification of the assumptions and models are undertaken by individuals in an independent control function.

NEE uses interest rate contracts and foreign currency contracts to mitigate and adjust interest rate and foreign currency exchange exposure related primarily to certain outstanding and expected future debt issuances and borrowings when deemed appropriate based on market conditions or when required by financing agreements. NEE estimates the fair value of these derivatives using an income approach based on a discounted cash flows valuation technique utilizing the net amount of estimated future cash inflows and outflows related to the agreements.
The tables below present NEE's and FPL's gross derivative positions at June 30, 2025 and December 31, 2024, as required by disclosure rules. However, the majority of the underlying contracts are subject to master netting agreements and generally would not be contractually settled on a gross basis. Therefore, the tables below also present the derivative positions on a net basis, which reflect the offsetting of positions of certain transactions within the portfolio, the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral, as well as the location of the net derivative position on the condensed consolidated balance sheets.
June 30, 2025
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
NEE:
Commodity contracts$1,928 $3,024 $1,643 $(4,265)$2,330 
Interest rate contracts$— $202 $— $(46)156 
Foreign currency contracts$— $9 $— $(5)4 
Total derivative assets$2,490 
FPL – commodity contracts
$— $2 $28 $(12)$18 
Liabilities:
NEE:
Commodity contracts$2,310 $3,504 $1,086 $(4,252)$2,648 
Interest rate contracts$— $872 $— $(46)826 
Foreign currency contracts$— $86 $— $(5)81 
Total derivative liabilities$3,555 
FPL – commodity contracts
$— $10 $64 $(12)$62 
Net fair value by NEE balance sheet line item:
Current derivative assets(b)
$856 
Noncurrent derivative assets(c)
1,634 
Total derivative assets$2,490 
Current derivative liabilities(d)
$1,262 
Noncurrent derivative liabilities(e)
2,293 
Total derivative liabilities$3,555 
Net fair value by FPL balance sheet line item:
Current other assets$11 
Noncurrent other assets7 
Total derivative assets$18 
Current other liabilities$61 
Noncurrent other liabilities1 
Total derivative liabilities$62 
———————————————
(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 condensed consolidated balance sheets and are recorded in customer receivables – net and accounts payable, respectively.
(b)Reflects the netting of approximately $54 million in margin cash collateral received from counterparties.
(c)Reflects the netting of approximately $48 million in margin cash collateral received from counterparties.
(d)Reflects the netting of approximately $51 million in margin cash collateral paid to counterparties.
(e)Reflects the netting of approximately $38 million in margin cash collateral paid to counterparties.
December 31, 2024
Level 1Level 2Level 3
Netting(a)
Total
(millions)
Assets:
NEE:
Commodity contracts$1,778 $3,040 $1,339 $(4,032)$2,125 
Interest rate contracts$— $577 $— $(44)533 
Foreign currency contracts$— $— $— $(5)(5)
Total derivative assets$2,653 
FPL – commodity contracts
$— $9 $47 $(16)$40 
Liabilities:
NEE:
Commodity contracts$1,983 $3,364 $952 $(3,557)$2,742 
Interest rate contracts$— $284 $— $(44)240 
Foreign currency contracts$— $104 $— $(5)99 
Total derivative liabilities$3,081 
FPL – commodity contracts
$— $5 $13 $(11)$7 
Net fair value by NEE balance sheet line item:
Current derivative assets(b)
$879 
Noncurrent derivative assets(c)
1,774 
Total derivative assets$2,653 
Current derivative liabilities
$1,073 
Noncurrent derivative liabilities
2,008 
Total derivative liabilities$3,081 
Net fair value by FPL balance sheet line item:
Current other assets$31 
Noncurrent other assets9 
Total derivative assets$40 
Current other liabilities$3 
Noncurrent other liabilities4 
Total derivative liabilities$7 
———————————————
(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 condensed consolidated balance sheets and are recorded in customer receivables – net and accounts payable, respectively.
(b)Reflects the netting of approximately $154 million in margin cash collateral received from counterparties.
(c)Reflects the netting of approximately $321 million in margin cash collateral received from counterparties.

At June 30, 2025 and December 31, 2024, NEE had approximately $35 million ($4 million at FPL) and $47 million ($2 million at FPL), respectively, in margin cash collateral received from counterparties that was not offset against derivative assets in the above presentation. These amounts are included in current other liabilities on NEE's condensed consolidated balance sheets. Additionally, at June 30, 2025 and December 31, 2024, NEE had approximately $93 million (none at FPL) and $58 million (none at FPL), respectively, in margin cash collateral paid to counterparties that was not offset against derivative assets or liabilities in the above presentation. These amounts are included in current other assets on NEE's condensed consolidated balance sheets.

Significant Unobservable Inputs Used in Recurring Fair Value Measurements – The valuation of certain commodity contracts requires the use of significant unobservable inputs. All forward price, implied volatility, implied correlation and interest rate inputs used in the valuation of such contracts are directly based on third-party market data, such as broker quotes and exchange settlements, when that data is available. If third-party market data is not available, then industry standard methodologies are used to develop inputs that maximize the use of relevant observable inputs and minimize the use of unobservable inputs. Observable inputs, including some forward prices, implied volatilities and interest rates used for determining fair value are updated daily to reflect the best available market information. Unobservable inputs which are related to observable inputs, such as illiquid portions of forward price or volatility curves, are updated daily as well, using industry standard techniques such as interpolation and extrapolation, combining observable forward inputs supplemented by historical market and other relevant data. Other unobservable inputs, such as implied correlations, block-to-hourly price shaping, customer migration rates from full
requirements contracts and some implied volatility curves, are modeled using proprietary models based on historical data and industry standard techniques.

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at June 30, 2025 are as follows:

Fair Value atValuationSignificantWeighted-
Transaction TypeJune 30, 2025Technique(s)Unobservable InputsRange
average(a)
AssetsLiabilities
(millions)
Forward contracts – power
$518 $400 Discounted cash flowForward price (per MWh)$(4)—$251$53
Forward contracts – gas
330 139 Discounted cash flowForward price (per MMBtu)$1—$13$4
Forward contracts – congestion
40 22 Discounted cash flowForward price (per MWh)$(57)—$20$1
Options – power
21 2 Option modelsImplied correlations69%—81%71%
Implied volatilities37%—358%81%
Options – primarily gas
99 128 Option modelsImplied correlations56%—100%90%
Implied volatilities17%—145%49%
Full requirements and unit contingent contracts
354 144 Discounted cash flowForward price (per MWh)$17—$312$83
Customer migration rate(b)
—%—21%1%
Forward contracts – other
281 251 
Total$1,643 $1,086 
———————————————
(a)Unobservable inputs were weighted by volume.
(b)Applies only to full requirements contracts.

The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:

Significant Unobservable InputPositionImpact on
Fair Value Measurement
Forward pricePurchase power/gasIncrease (decrease)
Sell power/gasDecrease (increase)
Implied correlationsPurchase optionDecrease (increase)
Sell optionIncrease (decrease)
Implied volatilitiesPurchase optionIncrease (decrease)
Sell optionDecrease (increase)
Customer migration rate
Sell power(a)
Decrease (increase)
———————————————
(a)Assumes the contract is in a gain position.
The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:

Three Months Ended June 30,
20252024
NEEFPLNEEFPL
(millions)
Fair value of net derivatives based on significant unobservable inputs at March 31 of prior period$517 $58 $667 $2 
Realized and unrealized gains (losses):    
Included in operating revenues257 — 183 — 
Included in regulatory assets and liabilities
(114)(114)73 73 
Purchases34 — 14 — 
Settlements(119)20 (299)(18)
Issuances(20)— (11)— 
Transfers in(a)
1 — — — 
Transfers out(a)
1 — (1)— 
Fair value of net derivatives based on significant unobservable inputs at June 30$557 $(36)$626 $57 
Gains included in operating revenues attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date
$183 $— $151 $— 
———————————————
(a)Transfers into Level 3 were a result of decreased observability of market data. Transfers from Level 3 to Level 2 were a result of increased observability of market data.
Six Months Ended June 30,
20252024
NEEFPLNEEFPL
(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period$387 $34 $951 $24 
Realized and unrealized gains (losses):    
Included in operating revenues366 — 217 — 
Included in regulatory assets and liabilities
(85)(85)57 57 
Purchases72 — 36 — 
Settlements(130)15 (601)(24)
Issuances(36)— (39)— 
Transfers in(a)
(16)— 5 — 
Transfers out(a)
(1)— — — 
Fair value of net derivatives based on significant unobservable inputs at June 30$557 $(36)$626 $57 
Gains (losses) included in operating revenues attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date$309 $— $(4)$— 
———————————————
(a)Transfers into Level 3 were a result of decreased observability of market data. Transfers from Level 3 to Level 2 were a result of increased observability of market data.
Income Statement Impact of Derivative Instruments – Gains (losses) related to NEE's derivatives are recorded in NEE's condensed consolidated statements of income as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(millions)
Commodity contracts(a) – operating revenues (including $76 unrealized losses, $334 unrealized losses, $64 unrealized losses and $234 unrealized losses, respectively)
$(64)$(228)$91 $(202)
Foreign currency contracts – interest expense (including $27 unrealized gains, $6 unrealized losses, $24 unrealized gains and $23 unrealized losses, respectively)
21 (7)16 (30)
Interest rate contracts – interest expense (including $10 unrealized gains, $182 unrealized losses, $963 unrealized losses and $85 unrealized gains, respectively)
(26)48 (802)625 
Gains (losses) reclassified from AOCI to interest expense:
Interest rate contracts— 1 1 — 
Foreign currency contracts
(1)(1)(1)— 
Total$(70)$(187)$(695)$393 
———————————————
(a)For the three and six months ended June 30, 2025, FPL recorded losses of approximately $137 million and $105 million, respectively, related to commodity contracts as regulatory assets on its condensed consolidated balance sheets. For the three and six months ended June 30, 2024, FPL recorded gains of approximately $72 million and $53 million, respectively, related to commodity contracts as regulatory liabilities on its condensed consolidated balance sheets.

Notional Volumes of Derivative Instruments – The following table represents net notional volumes associated with derivative instruments that are required to be reported at fair value in NEE's and FPL's condensed consolidated financial statements. The table includes significant volumes of transactions that have minimal exposure to commodity price changes because they are variably priced agreements. These volumes are only an indication of the commodity exposure that is managed through the use of derivatives. They do not represent net physical asset positions or non-derivative positions and the related hedges, nor do they represent NEE’s and FPL’s net economic exposure, but only the net notional derivative positions that fully or partially hedge the related asset positions. NEE and FPL had derivative commodity contracts for the following net notional volumes:

June 30, 2025December 31, 2024
Commodity TypeNEEFPLNEEFPL
(millions)
Power(216)MWh— (189)MWh— 
Natural gas(772)MMBtu473 MMBtu(1,131)MMBtu503 MMBtu
Oil(19)barrels— (25)barrels— 

At June 30, 2025 and December 31, 2024, NEE had interest rate contracts with a net notional amount of approximately $45.2 billion and $35.2 billion, respectively, and foreign currency contracts with a notional amount of approximately $3.2 billion and $1.2 billion, respectively.

Credit-Risk-Related Contingent Features – Certain derivative instruments contain credit-risk-related contingent features including, among other things, the requirement to maintain an investment grade credit rating from specified credit rating agencies and certain financial ratios, as well as credit-related cross-default and material adverse change triggers. At June 30, 2025 and December 31, 2024, the aggregate fair value of NEE's derivative instruments with credit-risk-related contingent features that were in a liability position was approximately $4.3 billion ($64 million for FPL) and $3.8 billion ($11 million for FPL), respectively.

If the credit-risk-related contingent features underlying these derivative agreements were triggered, certain subsidiaries of NEE, including FPL, could be required to post collateral or settle contracts according to contractual terms which generally allow netting of contracts in offsetting positions. Certain derivative contracts contain multiple types of credit-related triggers. To the extent these contracts contain a credit ratings downgrade trigger, the maximum exposure is included in the following credit ratings collateral posting requirements. If FPL's and NEECH's credit ratings were downgraded to BBB/Baa2 (a three-level downgrade for FPL and a one level downgrade for NEECH from the current lowest applicable rating), applicable NEE subsidiaries would be required to post collateral such that the total posted collateral would be approximately $395 million ($45 million at FPL) at June 30, 2025 and $500 million (none at FPL) at December 31, 2024. If FPL's and NEECH's credit ratings were downgraded to below investment grade, applicable NEE subsidiaries would be required to post additional collateral such that the total posted collateral would be approximately $2.5 billion ($75 million at FPL) at June 30, 2025 and $2.4 billion ($25 million at FPL) at December 31, 2024. Some derivative contracts do not contain credit ratings downgrade triggers, but do contain provisions that require certain financial measures be maintained and/or have credit-related cross-default triggers. In the event these provisions
were triggered, applicable NEE subsidiaries could be required to post additional collateral of up to approximately $2.0 billion ($105 million at FPL) at June 30, 2025 and $1.4 billion ($70 million at FPL) at December 31, 2024.

Collateral related to derivatives, including amounts posted for margin, current exposures and future performance with exchanges and independent system operators, may be posted in the form of cash or credit support in the normal course of business. At June 30, 2025 and December 31, 2024, applicable NEE subsidiaries have posted approximately $179 million (none at FPL) and $19 million (none at FPL), respectively, in cash, and $1,307 million (none at FPL) and $1,334 million (none at FPL), respectively, in the form of letters of credit and surety bonds, each of which could be applied toward the collateral requirements described above. FPL and NEECH have capacity under their credit facilities generally in excess of the collateral requirements described above that would be available to support, among other things, derivative activities. Under the terms of the credit facilities, maintenance of a specific credit rating is not a condition to drawing on these credit facilities, although there are other conditions to drawing on these credit facilities.

Additionally, some contracts contain certain adequate assurance provisions whereby a counterparty may demand additional collateral based on subjective events and/or conditions. Due to the subjective nature of these provisions, NEE and FPL are unable to determine an exact value for these items and they are not included in any of the quantitative disclosures above.