NextEra Energy Inc.

04/23/2026 | Press release | Distributed by Public on 04/23/2026 14:53

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
OVERVIEW
NEE's operating performance is driven primarily by the operations of its two principal businesses, FPL, which serves more than six million customer accounts in Florida and is the largest electric utility in the U.S., and NEER, which together with affiliated entities is one of the largest energy infrastructure developers in the U.S. The table below presents net income (loss) attributable to NEE and earnings (loss) per share attributable to NEE, assuming dilution, by reportable segment, FPL and NEER. Corporate and Other is primarily comprised of the operating results of other business activities, as well as other income and expense items, including interest expense, and eliminating entries, and may include the net effect of rounding. See Note 13 for additional segment information. The following discussion should be read in conjunction with the Notes to Condensed Consolidated Financial Statements contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2025 Form 10-K. The results of operations for an interim period generally will not give a true indication of results for the year. In the following discussion, all comparisons are with the corresponding items in the prior year period.
Net Income (Loss) Attributable to NEE Earnings (Loss)
Per Share Attributable to NEE,
Assuming Dilution
Three Months Ended March 31, Three Months Ended March 31,
2026 2025 2026 2025
(millions)
FPL $ 1,462 $ 1,316 $ 0.70 $ 0.64
NEER(a)
1,019 172 0.49 0.08
Corporate and Other (299) (655) (0.15) (0.32)
NEE $ 2,182 $ 833 $ 1.04 $ 0.40
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(a) NEER's results reflect an allocation of interest expense from NEECH to NextEra Energy Resources based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries.
Adjusted Earnings
NEE prepares its financial statements under GAAP. However, management also uses earnings adjusted for certain items (adjusted earnings), a non-GAAP financial measure, internally for financial planning, analysis of performance, reporting of results to the Board of Directors and as an input in determining performance-based compensation under NEE's employee incentive compensation plans. NEE also uses adjusted earnings when communicating its financial results and earnings outlook to analysts and investors. NEE's management believes that adjusted earnings provide a more meaningful representation of NEE's fundamental earnings power. Although these amounts are properly reflected in the determination of net income under GAAP, management believes that the amount and/or nature of such items make period to period comparisons of operations difficult and potentially confusing. Adjusted earnings do not represent a substitute for net income, as prepared under GAAP.
The following table provides details of the after-tax adjustments to net income considered in computing NEE's adjusted earnings discussed above.
Three Months Ended March 31,
2026 2025
(millions)
Net gains (losses) associated with non-qualifying hedge activity(a)
$ (44) $ (514)
XPLR investment gains, net - NEER(b)
$ (6) $ (642)
Change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds and OTTI, net - NEER $ (43) $ (49)
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(a) For the three months ended March 31, 2026 and 2025, approximately $30 million of gains and $45 million of losses, respectively, are included in NEER's net income; the remaining balance is included in Corporate and Other. The change in non-qualifying hedge activity is primarily attributable to changes in forward power and natural gas prices, interest rates and foreign currency exchange rates, as well as the reversal of previously recognized unrealized mark-to-market gains or losses as the underlying transactions were realized.
(b) The three months ended March 31, 2025 includes an impairment charge related to the investment in XPLR. See Note 3 - Nonrecurring Fair Value Measurements.
NEE segregates into two categories unrealized mark-to-market gains and losses and timing impacts related to derivative transactions. The first category, referred to as non-qualifying hedges, represents certain energy derivative, interest rate derivative and foreign currency transactions entered into as economic hedges, which do not meet the requirements for hedge accounting, or for which hedge accounting treatment is not elected or has been discontinued. Changes in the fair value of those transactions are marked to market and reported in the condensed consolidated statements of income, resulting in earnings volatility because the economic offset to certain of the positions are generally not marked to market. As a consequence, NEE's net income reflects only the movement in one part of economically-linked transactions. For example, a gain (loss) in the non-qualifying hedge category for certain energy derivatives is offset by decreases (increases) in the fair value of related physical asset positions in the portfolio or contracts, which are not marked to market under GAAP. For this reason, NEE's management views results expressed excluding the impact of the non-qualifying hedges as a meaningful measure of current period performance. The second category, referred to as trading activities, which is included in adjusted earnings, represents the net unrealized effect of actively traded positions entered into to take advantage of expected market price movements and all other commodity hedging activities. At FPL, substantially all changes in the fair value of energy derivative transactions 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 or base rates. See Note 2.
RESULTS OF OPERATIONS
Summary
Net income attributable to NEE increased by $1,349 million for the three months ended March 31, 2026 reflecting higher results at FPL, NEER and Corporate and Other.
FPL's increase in net income for the three months ended March 31, 2026 was primarily driven by continued investments in plant in service and other property.
NEER's results increased for the three months ended March 31, 2026 primarily reflecting the absence of an impairment charge related to the investment in XPLR recorded in 2025, gains on the 2026 sale of ownership interests in a transmission asset and higher earnings from new investments, partly offset by lower earnings from the customer supply business.
Corporate and Other's results increased for the three months ended March 31, 2026 primarily due to favorable non-qualifying hedge activity compared to 2025.
NEE's effective income tax rates for the three months ended March 31, 2026 and 2025 were approximately (41)% and 914%, respectively. See Note 4 for a discussion of NEE's and FPL's effective income tax rates.
A number of legislative, executive and administrative activities occurred in 2025 and 2026 that affect NEE and FPL including 1) the enactment of the One Big Beautiful Bill Act (OBBBA) which, among other things, modified tax legislation affecting clean energy tax credits, 2) the issuance of a number of federal executive orders and presidential actions, 3) the imposition of tariffs on a variety of imports and 4) the issuance of guidance by various federal agencies. A number of similar activities remain pending or are in various phases of implementation, such as certain Treasury Department rulemaking authorized by the OBBBA, trade investigations that may lead to additional tariffs or place limitations on imports of certain materials, ordered reviews of, or process or policy changes with respect to, federal permitting and approvals for wind and solar projects and proposals by regional transmission operators regarding the process for interconnecting new generation projects to certain regional transmission grids that have been approved by FERC. There has been no material impact on NEE's or FPL's operations or financial performance as a result of these developments and NEE believes that its current pipeline of wind and solar facilities to be placed in service through 2030 will qualify for clean energy tax credits. NEE will assess any further developments for potential impacts in future periods.
FPL: Results of Operations
FPL's net income increased $146 million for the three months ended March 31, 2026. Investments in plant in service and other property grew FPL's average rate base by approximately $6.3 billion for the three months ended March 31, 2026 when compared to the same period in the prior year, reflecting, among other things, solar generation additions and ongoing transmission and distribution additions.
The use of a RSM for the three months ended March 31, 2026 is permitted by the 2025 rate agreement, and, for the prior year period, the use of reserve amortization was permitted by the 2021 rate agreement. The RSM reserve, which is authorized up to approximately $1.5 billion, after tax, over the term of the 2025 rate agreement, includes ITC amortization for battery storage projects placed in service in 2025, the remaining balance from FPL's previous reserve amortization mechanism as of January 1, 2026 and certain amounts related to deferred tax liabilities.
In order to earn a targeted regulatory ROE in each reporting period, subject to conditions of the effective rate agreement, RSM amortization and reserve amortization, as applicable, are calculated using a trailing thirteen-month average of retail rate base and capital structure in conjunction with the trailing twelve months regulatory retail base net operating income, which primarily includes the retail base portion of base and other revenues, net of O&M, depreciation and amortization, interest and tax expenses. In general, the net impact of these income statement line items is adjusted, in part, by the RSM amortization or reserve amortization, as applicable, to earn the targeted regulatory ROE. In certain periods, the RSM amortization or reserve amortization, as applicable, are reversed so as not to exceed the targeted regulatory ROE. The drivers of FPL's net income not reflected in the RSM amortization and reserve amortization calculation typically include wholesale and transmission service revenues and expenses, cost recovery clause revenues and expenses, AFUDC - equity and revenue and costs not recoverable from retail customers.
During the three months ended March 31, 2026, FPL recorded RSM amortization of approximately $306 million, after tax, reflecting ITC and reserve amortization in accordance with the 2025 rate agreement. During the three months ended March 31, 2025, FPL recorded reserve amortization of approximately $622 million, pre-tax. See Depreciation and Amortization Expense and Income Taxes below. FPL earned a regulatory ROE of approximately 11.70% and 11.60% on its retail rate base, based on a trailing thirteen-month average retail rate base as of March 31, 2026 and March 31, 2025, respectively.
FPL completed a twelve-month storm restoration charge that began in January 2025 for eligible storm restoration costs of approximately $1.2 billion, primarily related to surcharges for Hurricanes Debby, Helene and Milton which impacted FPL's service area in 2024.
In February 2026, the non-signatories challenged the FPSC's final order approving the 2025 rate agreement through a motion for reconsideration with the FPSC and appeals with the Florida Supreme Court. In April 2026, the FPSC denied substantially all of the motion for reconsideration, and the matter remains pending before the Florida Supreme Court. See Note 11 - Rate Regulation.
Operating Revenues
During the three months ended March 31, 2026, operating revenues increased $274 million.
Retail base revenues increased by approximately $284 million reflecting additional revenues of approximately $200 million related to new retail base rates under the 2025 rate agreement. Retail base revenues during the three months ended March 31, 2026 were also impacted by an increase of 1.7% in the average usage per retail customer driven by favorable weather as well as an increase of 1.6% in the number of average customers when compared to the prior year period.
The increase in operating revenues for the three months ended March 31, 2026 also reflects increases in fuel revenues of approximately $70 million, other base revenues of $64 million and storm protection plan cost recovery clause revenues of $62 million. The increase in operating revenues for the three months ended March 31, 2026 was partly offset by a decrease in storm cost recovery revenues of approximately $247 million primarily associated with the completion of surcharges for Hurricanes Debby, Helene and Milton, as discussed above.
Depreciation and Amortization Expense
Depreciation and amortization expense increased $257 million during the three months ended March 31, 2026 primarily reflecting the impact of lower RSM amortization (reserve amortization in 2025) as well as higher plant in service balances. During the three months ended March 31, 2026 and 2025, FPL recorded pre-tax RSM amortization (reserve amortization in 2025) of approximately $209 million and $622 million, respectively. For the three months ended March 31, 2026, in order to achieve the targeted regulatory ROE, the use of RSM amortization is permitted by the 2025 rate agreement, and in the prior-year period, the use of reserve amortization was permitted by the 2021 rate agreement. See Note 11 - Rate Regulation.
The increase in depreciation and amortization expense is partly offset by approximately $248 million of lower amortization of deferred storm costs primarily associated with the completion of the surcharges related to Hurricanes Debby, Helene and Milton, as discussed above.
Income Taxes
During the three months ended March 31, 2026, FPL's income taxes decreased $233 million primarily related to approximately $150 million of ITC amortization, utilized as part of the RSM, as well as higher clean energy tax credits as compared to the prior year period. As of March 31, 2026, approximately $1.225 billion, after tax, of total RSM reserve remains available under the 2025 rate agreement. See Note 11 - Rate Regulation and Note 4.
NEER: Results of Operations
NEER's results increased $847 million for the three months ended March 31, 2026. The primary drivers, on an after-tax basis, of the changes are in the following table.
Increase (Decrease)
From Prior Year Period
Three Months Ended March 31, 2026
(millions)
New investments(a)
$ 92
Existing clean energy(a)
20
Customer supply(b)
(76)
NEET
102
Other, including financing costs, corporate general and administrative expenses, asset recycling, state taxes and other investment income
(8)
Change in non-qualifying hedge activity(c)
75
Change in unrealized gains/losses on equity securities held in nuclear decommissioning funds and OTTI, net(c)
6
XPLR investment gains, net(c)
636
Change in NEER's results
$ 847
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(a) Reflects after-tax project contributions, including the net effect of deferred income taxes and other benefits associated with clean energy tax credits for wind, solar and battery storage projects, as applicable, but excludes allocation of financing costs and corporate general and administrative expenses, except for an allocated credit support charge related to guarantees issued to conduct business activities. Results from projects and regulated gas transmission assets are included in new investments during the first twelve months of operation or ownership. Project results, including repowered wind projects, and regulated gas transmission assets results are included in existing clean energy beginning with the thirteenth month of operation or ownership.
(b) Excludes allocation of financing costs and corporate general and administrative expenses, except for an allocated credit support charge related to guarantees issued to conduct business activities and includes natural gas, natural gas liquids and oil production results.
(c) See Overview - Adjusted Earnings for additional information.
NEET
Results from the NEET business increased for the three months ended March 31, 2026 primarily reflecting a gain related to the sale of ownership interests in a transmission asset. See Note 11 - Disposal of a Business.
New Investments
Results from new investments for the three months ended March 31, 2026 increased primarily due to higher earnings related to new wind and solar generation and battery storage facilities that entered service during or after the three months ended March 31, 2025.
Customer Supply
Results from the customer supply business decreased for the three months ended March 31, 2026 primarily reflecting lower contributions from natural gas and oil production assets than in the comparable prior year period.
Other Factors
Supplemental to the primary drivers of the changes in NEER's results discussed above, the discussion below describes changes in certain line items set forth in NEE's condensed consolidated statements of income as they relate to NEER.
Operating Revenues
Operating revenues for the three months ended March 31, 2026 increased $148 million primarily due to:
•revenues from new investments of approximately $181 million; and
•revenues of $129 million from higher generation at other peak generation facilities, driven by favorable weather;
partly offset by,
•the impact of non-qualifying commodity hedges due primarily to changes in energy prices (approximately $11 million of gains for the three months ended March 31, 2026 compared to $188 million of gains for the comparable period in 2025).
Operating Expenses - net
Operating expenses - net for the three months ended March 31, 2026 increased $340 million primarily due to increases of $211 million in O&M expense and $108 million in fuel, purchased power and interchange expense. The increase was primarily associated with growth across the NEER businesses.
Gains on Disposal of Businesses/Assets - net
Gains on disposal of businesses/assets - net for the three months ended March 31, 2026 increased $223 million primarily as a result of the sale of ownership interests in a transmission asset. See Note 11 - Disposal of a Business.
Interest Expense
NEER's interest expense for the three months ended March 31, 2026 decreased $47 million primarily reflecting approximately $199 million of favorable impacts related to changes in the fair value of interest rate derivative instruments, partly offset by a loss on extinguishment of debt as a result of the sale of ownership interests in a transmission asset (see Note 11 - Disposal of a Business) as well as higher average debt balances.
Equity in Earnings (Losses) of Equity Method Investees
NEER recognized $170 million of equity in earnings of equity method investees for the three months ended March 31, 2026, compared to $646 million of equity in losses of equity method investees for the three months ended March 31, 2025. The change for the three months ended March 31, 2026 primarily reflects the absence of an impairment charge related to the investment in XPLR recorded in 2025 of approximately $0.7 billion ($0.5 billion after tax) (see Note 3 - Nonrecurring Fair Value Measurements).
Income Taxes
PTCs from wind and solar projects and ITCs from solar, battery storage and certain wind projects are included in NEER's earnings. PTCs are recognized as wind and solar energy is generated and sold based on a per kWh rate prescribed in applicable federal and state statutes. NEER's effective income tax rate is primarily based on the composition of pretax income (loss) in the period presented. See Note 4.
Net Loss Attributable to Noncontrolling Interests
The change in net loss attributable to noncontrolling interests primarily reflects higher earnings associated with existing differential membership interest investors, as well as an increase in additional differential membership interests. See Note 11 - Noncontrolling Interests.
Symmetry Acquisition
On January 9, 2026, a wholly owned subsidiary of NextEra Energy Resources acquired a commercial and industrial natural gas business. See Note 5 - Symmetry Acquisition.
Corporate and Other: Results of Operations
Corporate and Other is primarily comprised of the operating results of other business activities, as well as corporate interest income and expenses. Corporate and Other allocates a portion of NEECH's corporate interest expense to NextEra Energy Resources. Interest expense is allocated based on a deemed capital structure of 70% debt and differential membership interests sold by NextEra Energy Resources' subsidiaries.
Corporate and Other's results increased $356 million during the three months ended March 31, 2026 primarily due to favorable after-tax impacts of approximately $395 million, as compared to the prior year period, related to non-qualifying hedge activity as a result of changes in the fair value of interest rate derivative instruments.
LIQUIDITY AND CAPITAL RESOURCES
NEE and its subsidiaries require funds to support and grow their businesses. These funds are used for, among other things, working capital, capital expenditures (see Note 12 - Commitments), investments in or acquisitions of assets and businesses (see Note 5), payment of maturing debt and related derivative obligations (see Note 9 and Note 2) and, from time to time, redemption or repurchase of outstanding debt or equity securities. It is anticipated that these requirements will be satisfied through a combination of cash flows from operations, short- and long-term borrowings, the issuance of short- and long-term debt (see Note 9) and, from time to time, equity securities, proceeds from differential membership investors, sales of clean energy tax credits (see Note 11 - Income Taxes) and sales of ownership interests in assets/businesses (see Note 11 - Disposal of a Business), consistent with NEE's and FPL's objective of maintaining, on a long-term basis, a capital structure that will support a strong investment grade credit rating. NEE, FPL and NEECH rely on access to credit and capital markets as significant sources of liquidity for capital requirements and other operations that are not satisfied by operating cash flows. The inability of NEE, FPL and NEECH to maintain their current credit ratings could affect their ability to raise short- and long-term capital, their cost of capital and the execution of their respective financing strategies, and could require the posting of additional collateral under certain agreements.
Cash Flows
NEE's sources and uses of cash for the three months ended March 31, 2026 and 2025 were as follows:
Three Months Ended March 31,
2026 2025
(millions)
Sources of cash:
Cash flows from operating activities
$ 2,614 $ 2,769
Issuances of long-term debt, including premiums and discounts
8,307 9,840
Sale of independent power and other investments of NEER
340 238
Issuances of common stock/equity units
23 11
Net increase in commercial paper and other short-term debt
4,055 335
Other sources - net
45 15
Total sources of cash
15,384 13,208
Uses of cash:
Capital expenditures, independent power and other investments and nuclear fuel purchases (11,062) (7,942)
Retirements of long-term debt
(3,100) (2,852)
Repayments of cash swept to related parties - net
(2) (45)
Dividends on common stock (1,300) (1,166)
Other uses - net
(448) (55)
Total uses of cash
(15,912) (12,060)
Effects of currency translation on cash, cash equivalents and restricted cash
(3) -
Net increase (decrease) in cash, cash equivalents and restricted cash $ (531) $ 1,148
NEE's primary capital requirements are for expanding and enhancing FPL's electric system and generation facilities to continue to provide reliable service to meet customer electricity demands and for funding NEER's investments in independent power and other projects. See Note 12 - Commitments for estimated capital expenditures for the remainder of 2026 through 2030.
The following table provides a summary of capital investments for the three months ended March 31, 2026 and 2025.
Three Months Ended March 31,
2026 2025
(millions)
FPL:
Generation:
New
$ 1,218 $ 590
Existing
451 297
Transmission and distribution 1,218 1,053
Nuclear fuel 116 51
General and other 194 158
Other, primarily change in accrued property additions and the exclusion of AFUDC - equity
(35) 243
Total
3,162 2,392
NEER:
Wind 1,797 1,676
Solar (includes solar plus battery storage projects) 3,729 2,349
Other clean energy 872 1,074
Nuclear (includes nuclear fuel) 131 139
Customer supply - natural gas and oil production
21 94
Regulated electric and gas transmission
209 120
Other
1,137 91
Total
7,896 5,543
Corporate and Other 4 7
Total capital expenditures, independent power and other investments and nuclear fuel purchases $ 11,062 $ 7,942
Liquidity
As of March 31, 2026, NEE's total net available liquidity was approximately $14.8 billion. The table below provides the components of FPL's and NEECH's net available liquidity as of March 31, 2026.
Maturity Date
FPL NEECH Total FPL NEECH
(millions)
Syndicated revolving credit facilities(a)
$ 4,500 $ 10,500 $ 15,000 2028 - 2031 2027 - 2031
Issued letters of credit - (457) (457)
4,500 10,043 14,543
Bilateral revolving credit facilities(b)
1,080 3,650 4,730 2026 - 2028 2026 - 2029
Borrowings
- (850) (850)
1,080 2,800 3,880
Letter of credit facilities(c)
- 4,904 4,904 2027 - 2029
Issued letters of credit - (4,467) (4,467)
- 437 437
Subtotal
5,580 13,280 18,860
Cash and cash equivalents 70 1,924 1,994
Commercial paper and other short-term borrowings outstanding(d)
(2,439) (3,529) (5,968)
Cash swept from unconsolidated entities
- (117) (117)
Net available liquidity $ 3,211 $ 11,558 $ 14,769
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(a) Provide for the funding of loans up to the amount of the credit facility and the issuance of letters of credit up to $1,450 million ($450 million for FPL and $1,000 million for NEECH). The entire amount of the credit facilities is available for general corporate purposes and to provide additional liquidity in the event of a loss to the companies' or their subsidiaries' operating facilities (including, in the case of FPL, a transmission and distribution property loss). FPL's syndicated revolving credit facilities are also available to support the purchase of $1,566 million of pollution control, solid waste disposal and industrial development revenue bonds in the event they are tendered by individual bondholders and not remarketed prior to maturity, as well as the repayment of approximately $1,973 million of floating rate notes in the event an individual noteholder requires repayment at specified dates prior to maturity. As of March 31, 2026, approximately $3,250 million of NEECH's syndicated revolving credit facilities expire over the next 12 months.
(b) Only available for the funding of loans. As of March 31, 2026, approximately $555 million of FPL's and $2,300 million of NEECH's bilateral revolving credit facilities expire over the next 12 months.
(c) Only available for the issuance of letters of credit. As of March 31, 2026, approximately $79 million of the letter of credit facilities expire over the next 12 months.
(d) Excludes short-term borrowings under NEECH's bilateral revolving credit facilities of $650 million, which are included in borrowings above.
Capital Support
Guarantees, Letters of Credit, Surety Bonds and Indemnifications (Guarantee Arrangements)
Certain subsidiaries of NEE issue guarantees and obtain letters of credit and surety bonds, as well as provide indemnities, to facilitate commercial transactions with third parties and financings. Substantially all of the guarantee arrangements are on behalf of NEE's consolidated subsidiaries, as discussed in more detail below. See Note 6 and Note 12 - Commitments regarding guarantees of obligations on behalf of unconsolidated entities. NEE is not required to recognize liabilities associated with guarantee arrangements issued on behalf of its consolidated subsidiaries unless it becomes probable that they will be required to perform. As of March 31, 2026, NEE believes that there is no material exposure related to these guarantee arrangements.
NEE subsidiaries issue guarantees related to equity contribution agreements and engineering, procurement and construction agreements, associated with the development, construction and financing of certain power generation facilities (see Note 11 - Structured Payables) and a natural gas pipeline project, as well as a natural gas transportation agreement. Commitments associated with these activities are included in the contracts table in Note 12.
In addition, as of March 31, 2026, NEE subsidiaries had approximately $7.4 billion in guarantees related to obligations under PPAs and acquisition agreements, interconnection agreements, nuclear-related activities, support for NEER's retail electricity provider activities, as well as other types of contractual obligations (see Note 12 - Commitments).
In some instances, subsidiaries of NEE elect to issue guarantees instead of posting other forms of collateral required under certain financing arrangements, as well as for other project-level cash management activities. As of March 31, 2026, these guarantees totaled approximately $3.2 billion and support, among other things, cash management activities, including those related to debt service and operations and maintenance service agreements, as well as other specific project financing requirements.
Subsidiaries of NEE also issue guarantees to support customer supply and proprietary power and gas trading activities, including the buying and selling of wholesale energy commodities. As of March 31, 2026, the estimated mark-to-market exposure (the total amount that these subsidiaries of NEE could be required to fund based on energy commodity market prices as of March 31, 2026) plus contract settlement net payables, net of collateral posted for obligations under these guarantees, totaled approximately $1.6 billion.
As of March 31, 2026, subsidiaries of NEE also had approximately $8.1 billion of standby letters of credit and approximately $1.6 billion of surety bonds to support certain of the commercial activities discussed above. FPL's and NEECH's credit facilities are available to support substantially all of the standby letters of credit.
In addition, as part of contract negotiations in the normal course of business, certain subsidiaries of NEE have agreed and in the future may agree to make payments to compensate or indemnify other parties, including those associated with asset divestitures, for possible unfavorable financial consequences resulting from specified events. The specified events may include, but are not limited to, an adverse judgment in a lawsuit, or the imposition of additional taxes due to a change in tax law or interpretations of the tax law. NEE is unable to estimate the maximum potential amount of future payments by its subsidiaries under some of these contracts because events that would obligate them to make payments have not occurred or, if any such event has occurred, they have not been notified of its occurrence.
NEECH, a 100% owned subsidiary of NEE, provides funding for, and holds ownership interests in, NEE's operating subsidiaries other than FPL. NEE has fully and unconditionally guaranteed certain payment obligations of NEECH, including most of its debt and all of its debentures registered pursuant to the Securities Act of 1933 and commercial paper issuances, as well as most of its payment guarantees and indemnifications, and NEECH has guaranteed certain debt and other obligations of subsidiaries within the NEER segment. Certain guarantee arrangements described above contain requirements for NEECH and FPL to maintain a specified credit rating.
NEE fully and unconditionally guarantees NEECH debentures pursuant to a guarantee agreement, dated as of June 1, 1999 (1999 guarantee) and NEECH junior subordinated debentures pursuant to an indenture, dated as of September 1, 2006 (2006 guarantee). The 1999 guarantee is an unsecured obligation of NEE and ranks equally and ratably with all other unsecured and unsubordinated indebtedness of NEE. The 2006 guarantee is unsecured and subordinate and junior in right of payment to NEE senior indebtedness (as defined therein). No payment on those junior subordinated debentures may be made under the 2006 guarantee until all NEE senior indebtedness has been paid in full in certain circumstances. NEE's and NEECH's ability to meet their financial obligations are primarily dependent on their subsidiaries' net income, cash flows and their ability to pay upstream dividends or to repay funds to NEE and NEECH. The dividend-paying ability of some of the subsidiaries is limited by contractual restrictions which are contained in outstanding financing agreements.
Summarized financial information of NEE and NEECH is as follows:
Three Months Ended March 31, 2026 Year Ended December 31, 2025
Issuer/Guarantor Combined(a)
NEECH Consolidated(b)
NEE Consolidated(b)
Issuer/Guarantor Combined(a)
NEECH Consolidated(b)
NEE Consolidated(b)
(millions)
Operating revenues $ - $ 2,440 $ 6,701 $ (8) $ 9,191 $ 27,412
Operating income (loss) $ (105) $ 557 $ 2,208 $ (378) $ 1,765 $ 8,280
Net income (loss) $ (340) $ 213 $ 1,688 $ (1,279) $ 335 $ 5,332
Net income (loss) attributable to NEE/NEECH $ (340) $ 707 $ 2,182 $ (1,279) $ 1,838 $ 6,835
March 31, 2026 December 31, 2025
Issuer/Guarantor Combined(a)
NEECH Consolidated(b)
NEE Consolidated(b)
Issuer/Guarantor Combined(a)
NEECH Consolidated(b)
NEE Consolidated(b)
(millions)
Total current assets $ 1,225 $ 9,507 $ 13,858 $ 1,530 $ 9,422 $ 13,584
Total noncurrent assets $ 2,449 $ 103,795 $ 207,566 $ 2,546 $ 98,902 $ 199,137
Total current liabilities $ 6,944 $ 18,324 $ 25,573 $ 3,887 $ 17,135 $ 22,817
Total noncurrent liabilities $ 50,812 $ 78,072 $ 129,219 $ 44,680 $ 73,236 $ 123,425
Noncontrolling interests $ - $ 11,410 $ 11,410 $ - $ 11,871 $ 11,871
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(a) Excludes intercompany transactions, and investments in, and equity in earnings of, subsidiaries.
(b) Information has been prepared on the same basis of accounting as NEE's condensed consolidated financial statements.
CRITICAL ACCOUNTING ESTIMATES
Critical accounting estimates are those that NEE believes are both most important to the portrayal of its financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make assumptions about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the critical accounting estimates may result in materially different amounts being reported under different conditions or using different assumptions. NEE's significant accounting policies, including those requiring critical accounting estimates, were reported in NEE's 2025 Form 10-K. There have been no material changes regarding these significant accounting policies, including critical accounting estimates.
See Note 3 - Nonrecurring Fair Value Measurements for a discussion of an impairment related to NextEra Energy Resources' equity method investment in XPLR.
ENERGY MARKETING AND TRADING AND MARKET RISK SENSITIVITY
NEE and FPL are exposed to risks associated with adverse changes in commodity prices, interest rates and equity prices. Financial instruments and positions affecting the financial statements of NEE and FPL described below are held primarily for purposes other than trading. Market risk is measured as the potential loss in fair value resulting from hypothetical reasonably possible changes in commodity prices, interest rates or equity prices over the next year. Management has established risk management policies to monitor and manage such market risks, as well as credit risks.
Commodity Price Risk
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. In addition, NEE, through NEER, uses derivatives to optimize the value of its power generation and natural gas and oil production assets and engages in power and fuel marketing and trading activities to take advantage of expected future favorable price movements. See Note 2.
The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2026 were as follows:
Hedges on Owned Assets
Trading Non-
Qualifying
FPL
NEE Total
(millions)
Three Months Ended March 31, 2026
Fair value of contracts outstanding as of December 31, 2025 $ 1,333 $ (1,204) $ 24 $ 153
Reclassification to realized at settlement of contracts (88) 194 (57) 49
Value of contracts acquired 2 126 - 128
Net option premium purchases (issuances) 2 9 - 11
Changes in fair value excluding reclassification to realized 141 (203) 12 (50)
Fair value of contracts outstanding as of March 31, 2026 1,390 (1,078) (21) 291
Net margin cash collateral paid (received) 166
Total mark-to-market energy contract net assets (liabilities) as of March 31, 2026 $ 1,390 $ (1,078) $ (21) $ 457
NEE's total mark-to-market energy contract net assets (liabilities) as of March 31, 2026 shown above are included on the condensed consolidated balance sheets as follows:
March 31, 2026
(millions)
Current derivative assets $ 1,190
Noncurrent derivative assets 1,678
Current derivative liabilities (900)
Noncurrent derivative liabilities (1,511)
NEE's total mark-to-market energy contract net assets $ 457
The sources of fair value estimates and maturity of energy contract derivative instruments as of March 31, 2026 were as follows:
Maturity
2026 2027 2028 2029 2030 Thereafter Total
(millions)
Trading:
Quoted prices in active markets for identical assets $ (162) $ (49) $ (17) $ (33) $ 15 $ (6) $ (252)
Significant other observable inputs 402 299 115 56 6 78 956
Significant unobservable inputs 209 34 46 52 71 274 686
Total 449 284 144 75 92 346 1,390
Owned Assets - Non-Qualifying:
Quoted prices in active markets for identical assets (76) (67) (24) 13 8 2 (144)
Significant other observable inputs (237) (276) (150) (124) (41) (363) (1,191)
Significant unobservable inputs 86 (19) (6) 21 20 155 257
Total (227) (362) (180) (90) (13) (206) (1,078)
Owned Assets - FPL
Quoted prices in active markets for identical assets - - - - - - -
Significant other observable inputs 1 (2) - - - - (1)
Significant unobservable inputs (19) (1) - - - - (20)
Total (18) (3) - - - - (21)
Total sources of fair value $ 204 $ (81) $ (36) $ (15) $ 79 $ 140 $ 291
The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three months ended March 31, 2025 were as follows:
Hedges on Owned Assets
Trading Non-
Qualifying
FPL
NEE Total
(millions)
Three Months Ended March 31, 2025
Fair value of contracts outstanding as of December 31, 2024
$ 1,344 $ (1,524) $ 38 $ (142)
Reclassification to realized at settlement of contracts (329) 195 (8) (142)
Value of contracts acquired 1 - - 1
Net option premium purchases (issuances) 11 2 - 13
Changes in fair value excluding reclassification to realized 261 (107) 32 186
Fair value of contracts outstanding as of March 31, 2025
1,288 (1,434) 62 (84)
Net margin cash collateral paid (received) (299)
Total mark-to-market energy contract net assets (liabilities) as of March 31, 2025
$ 1,288 $ (1,434) $ 62 $ (383)
With respect to commodities, NEE's Exposure Management Committee (EMC), which is comprised of certain members of senior management, and NEE's chief executive officer are responsible for the overall approval of market risk management policies and the delegation of approval and authorization levels. The EMC and NEE's chief executive officer receive periodic updates on market positions and related exposures, credit exposures and overall risk management activities.
NEE uses a value-at-risk (VaR) model to measure commodity price market risk in its trading and mark-to-market portfolios. The VaR is the estimated loss of market value based on a one-day holding period at a 95% confidence level using historical simulation methodology. The VaR figures are as follows:
Trading(a)
Non-Qualifying Hedges
and FPL Hedges(b)
Total
FPL NEE FPL NEE FPL NEE
(millions)
December 31, 2025 $ - $ 14 $ 9 $ 92 $ 9 $ 83
March 31, 2026 $ - $ 6 $ 8 $ 58 $ 8 $ 55
Average for the three months ended March 31, 2026
$ - $ 4 $ 7 $ 77 $ 7 $ 76
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(a) The VaR figures for the trading portfolio include positions that are marked to market. Taking into consideration offsetting unmarked non-derivative positions, such as physical inventory, the trading VaR figures were approximately $4 million and $5 million as of March 31, 2026 and December 31, 2025, respectively.
(b) Non-qualifying hedges are employed to reduce the market risk exposure to physical assets or contracts which are not marked to market. The VaR figures for the non-qualifying hedges and FPL hedges do not represent the economic exposure to commodity price movements.
Interest Rate Risk
NEE's and FPL's financial results are exposed to risk resulting from changes in interest rates as a result of their respective outstanding and expected future issuances of debt, investments in special use funds and other investments. NEE and FPL manage their respective interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed-rate and variable-rate debt. Interest rate contracts are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements.
The following are estimates of the fair value of NEE's and FPL's financial instruments that are exposed to interest rate risk:
March 31, 2026 December 31, 2025
Carrying
Amount
Estimated
Fair Value(a)
Carrying
Amount
Estimated
Fair Value(a)
(millions)
NEE:
Special use funds $ 2,342 $ 2,342 $ 2,453 $ 2,453
Other investments, primarily debt securities $ 2,182 $ 2,182 $ 2,280 $ 2,280
Long-term debt, including current portion $ 97,785 $ 93,722 $ 93,056 $ 91,614
Interest rate contracts - net unrealized losses
$ (96) $ (96) $ (252) $ (252)
FPL:
Special use funds $ 1,795 $ 1,795 $ 1,885 $ 1,885
Long-term debt, including current portion $ 28,545 $ 26,769 $ 28,682 $ 27,354
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(a)See Notes 2 and 3.
The special use funds of NEE and FPL consist of restricted funds set aside to cover the cost of storm damage for FPL and for the decommissioning of NEE's and FPL's nuclear power plants. A portion of these funds is invested in fixed income debt securities primarily carried at estimated fair value. At FPL, changes in fair value, including any credit losses, result in a corresponding adjustment to the related regulatory asset or liability accounts based on current regulatory treatment. The changes in fair value for NEE's non-rate regulated operations result in a corresponding adjustment to OCI, except for credit losses and unrealized losses on available for sale securities intended or required to be sold prior to recovery of the amortized cost basis, which are reported in current period earnings. Because the funds set aside by FPL for storm damage could be needed at any time, the related investments are generally more liquid and, therefore, are less sensitive to changes in interest rates. The nuclear decommissioning funds, in contrast, are generally invested in longer-term securities.
As of March 31, 2026, NEE had interest rate contracts with a net notional amount of approximately $54.1 billion to manage exposure to the variability of cash flows primarily associated with expected future and outstanding debt issuances at NEECH and NEER. See Note 2.
Based upon a hypothetical 10% decrease in interest rates, the fair value of NEE's net liabilities would increase by approximately $5,119 million ($1,344 million for FPL) as of March 31, 2026.
Equity Price Risk
NEE and FPL are exposed to risk resulting from changes in prices for equity securities. For example, NEE's nuclear decommissioning reserve funds include marketable equity securities carried at their market value of approximately $6,856 million and $7,007 million ($4,748 million and $4,840 million for FPL) as of March 31, 2026 and December 31, 2025, respectively. NEE's and FPL's investment strategy for equity securities in their nuclear decommissioning reserve funds emphasizes marketable securities which are broadly diversified. As of March 31, 2026, a hypothetical 10% decrease in the prices quoted on stock exchanges would result in an approximately $632 million ($429 million for FPL) reduction in fair value. For FPL, a corresponding adjustment would be made to the related regulatory asset or liability accounts based on current regulatory treatment, and for NEE's non-rate regulated operations, a corresponding amount would be recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds - net in NEE's condensed consolidated statements of income. See Note 3.
Credit Risk
NEE and its subsidiaries, including FPL, are also exposed to credit risk through their energy marketing and trading operations. Credit risk is the risk that a financial loss will be incurred if a counterparty to a transaction does not fulfill its financial obligation. NEE manages counterparty credit risk for its subsidiaries with energy marketing and trading operations through established policies, including counterparty credit limits, and in some cases credit enhancements, such as cash prepayments, letters of credit, cash and other collateral and guarantees.
Credit risk is also managed through the use of master netting agreements. NEE's credit department monitors current and forward credit exposure to counterparties and their affiliates, both on an individual and an aggregate basis. For all derivative and contractual transactions, NEE's energy marketing and trading operations, which include FPL's energy marketing and trading division, are exposed to losses in the event of nonperformance by counterparties to these transactions. Some relevant considerations when assessing NEE's energy marketing and trading operations' credit risk exposure include the following:
•Operations are primarily concentrated in the energy industry.
•Trade receivables and other financial instruments are predominately with energy, utility and financial services related companies, as well as municipalities, cooperatives and other trading companies in the U.S.
•Overall credit risk is managed through established credit policies and is overseen by the EMC.
•Prospective and existing customers are reviewed for creditworthiness based upon established standards, with customers not meeting minimum standards providing various credit enhancements or secured payment terms, such as letters of credit or the posting of margin cash collateral.
•Master netting agreements are used to offset cash and noncash gains and losses arising from derivative instruments with the same counterparty. NEE's policy is to have master netting agreements in place with significant counterparties.
Based on NEE's policies and risk exposures related to credit, NEE and FPL do not anticipate a material adverse effect on their financial statements as a result of counterparty nonperformance. As of March 31, 2026, NEE's credit risk exposure associated with its energy marketing and trading operations, taking into account collateral and contractual netting rights, totaled approximately $3.2 billion ($117 million for FPL), of which approximately 84% (99% for FPL) was with companies that have investment grade credit ratings. See Note 2.
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