Item 2. 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 approximately 5.8 million customer accounts in Florida and is one of the largest electric utilities in the U.S., and NEER, which together with affiliated entities is the world's largest generator of renewable energy from the wind and sun based on 2021 MWh produced on a net generation basis. 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, including a discussion of a change in segment reporting. The following discussions should be read in conjunction with the Notes contained herein and Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in the 2021 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 discussions, all comparisons are with the corresponding items in the prior year periods.

			Net Income (Loss) Attributable to NEE												Earnings (Loss) Per Share Attributable to NEE, Assuming Dilution												Net Income (Loss) Attributable to NEE												Earnings (Loss) Per Share Attributable to NEE, Assuming Dilution
			Three Months Ended September 30,												Three Months Ended September 30,												Nine Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021						2022						2021						2022						2021
			(millions)																								(millions)
FPL(a)			$	1,074					$	927					$	0.54					$	0.47					$	2,939					$	2,586					$	1.49					$	1.31
NEER(b)			655						(428)						0.33						(0.22)						(711)						(252)						(0.36)						(0.13)
Corporate and Other(a)			(33)						(52)						(0.01)						(0.02)						397						35						0.20						0.02
NEE			$	1,696					$	447					$	0.86					$	0.23					$	2,625					$	2,369					$	1.33					$	1.20

———————————————

(a) FPL's and Corporate and Other's results for 2021 were retrospectively adjusted to reflect a segment change. See Note 13.

(b) NEER’s results reflect an allocation of interest expense from NEECH to NextEra Energy Resources' subsidiaries 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 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 September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
			(millions)
Net gains (losses) associated with non-qualifying hedge activity(a)			$	90					$	(941)					$	(974)					$	(1,732)
Differential membership interests-related – NEER			$	(29)					$	(30)					$	(71)					$	(76)
NEP investment gains, net – NEER			$	75					$	(48)					$	(8)					$	(133)
Change in unrealized gains (losses) on NEER's nuclear decommissioning funds and OTTI, net – NEER			$	(99)					$	(17)					$	(403)					$	103
Impairment charges related to investment in Mountain Valley Pipeline – NEER(b)			$	(24)					$	—					$	(650)					$	—

———————————————

(a) For the three months ended September 30, 2022 and 2021, approximately $3 million of gains and $952 million of losses, respectively, and for the nine months ended September 30, 2022 and 2021, $1,619 million and $1,937 million of losses, respectively, are included in NEER's net income; the 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) See Note 3 – Nonrecurring Fair Value Measurements for a discussion of the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline.

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. See Note 2.

RESULTS OF OPERATIONS

Summary

Net income attributable to NEE increased by $1,249 million for the three months ended September 30, 2022 reflecting higher results at NEER, FPL and Corporate and Other. Net income attributable to NEE increased by $256 million for the nine months ended September 30, 2022 reflecting higher results at FPL and Corporate and Other, partly offset by lower results at NEER.

FPL's increase in net income for the three and nine months ended September 30, 2022 was primarily driven by continued investments in plant in service and other property.

NEER's results increased for the three months ended September 30, 2022 primarily reflecting favorable non-qualifying hedge activity compared to 2021, partly offset by unfavorable changes in the fair value of equity securities in NEER's nuclear decommissioning funds. NEER's results decreased for the nine months ended September 30, 2022 primarily reflecting impairment charges on the Mountain Valley Pipeline investment and unfavorable changes in the fair value of equity securities in NEER's nuclear decommissioning funds, partly offset by favorable non-qualifying hedge activity compared to 2021.

Corporate and Other's results increased for the three and nine months ended September 30, 2022 primarily due to favorable non-qualifying hedge activity.

NEE's effective income tax rates for the three months ended September 30, 2022 and 2021 were approximately 17% and (10)%, respectively. NEE's effective income tax rates for the nine months ended September 30, 2022 and 2021 were approximately 12% and 4%, respectively. See Note 4 for a discussion of NEE's and FPL's effective income tax rates.

On August 16, 2022, the IRA was enacted which significantly expanded tax incentives for clean energy. The IRA expanded the PTC to include solar generation facilities and extended the 100% PTC and the 30% ITC to wind and solar generation facilities that start construction before the later of 2034 or the end of the calendar year following the year in which greenhouse gas emissions from U.S. electric generation are reduced by 75% from 2022 levels. Accordingly, owners of utility-scale wind and solar generation facilities placed in service in 2022 or later are eligible to claim a PTC (or an ITC in lieu of the PTC) upon initially achieving commercial operation. In order to qualify for the 100% PTC or 30% ITC rate, a facility must meet certain other requirements or construction must start on the facility before 60 days after guidance on these requirements is issued. In addition, the PTC is increased by 10% and the ITC rate is increased by 10 percentage points for facilities that satisfy certain tax credit enhancement requirements. Retrofitted wind and solar generation facilities may qualify for a PTC or ITC if the cost basis of the new investment is at least 80% of the facility’s total fair value.

In addition, the IRA expanded the 30% ITC to include storage projects placed in service after 2022 (previously, such projects qualified only if they were connected to and charged by a renewable generation facility that claimed the ITC) as well as renewable natural gas facilities that are placed in service after 2022 and begin construction before 2025. The IRA created a PTC of $3/kilogram of green (low emission) hydrogen produced at a facility after 2022 and during the first ten years of commercial operation (or a 30% ITC in lieu of the PTC), provided that construction of the facility begins before 2033. These credits are also subject to certain other requirements. In addition, storage projects and hydrogen facilities claiming an ITC are eligible for a 10 percentage point increase in the ITC rate if the facilities satisfy certain tax credit enhancement requirements. A wind or solar project that provides electricity to a green hydrogen facility may qualify for the PTC or ITC and the hydrogen facility may separately qualify for its own PTC or ITC.

For taxable years beginning after 2022, renewable energy tax credits generated during the taxable year can be transferred to an unrelated transferee.

NEE, including FPL, is monitoring solar supply chain disruptions from Southeast Asian locations and is taking steps intended to mitigate potential risks to their solar project development and construction activities. To date, there has been no material impact

on NEE's or FPL's operations or financial performance as a result of these activities.

FPL: Results of Operations

Investments in plant in service and other property grew FPL's average rate base by approximately $5.6 billion for both the three and nine months ended September 30, 2022 when compared to the same periods in the prior year, reflecting, among other things, the addition of the 1,246 MW Dania Beach Clean Energy Center which was placed in service on May 31, 2022, solar generation additions and ongoing transmission and distribution additions.

The use of reserve amortization for the three and nine months ended September 30, 2022 is permitted by FPL's 2021 rate agreement and, for the prior year periods, a December 2016 FPSC final order approving a stipulation and settlement between FPL and several intervenors in a prior base rate proceeding (2016 rate agreement). In order to earn a targeted regulatory ROE, subject to limitations associated with the 2021 and 2016 rate agreements, reserve amortization is 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 must be adjusted, in part, by reserve amortization to earn the targeted regulatory ROE. In certain periods, reserve amortization is reversed so as not to exceed the targeted regulatory ROE. The drivers of FPL's net income not reflected in the 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 September 30, 2022 and 2021, FPL recorded the reversal of reserve amortization of approximately $80 million and $124 million, respectively. During the nine months ended September 30, 2022 and 2021, FPL recorded a one-time reserve amortization adjustment of approximately $114 million, discussed under Depreciation and Amortization Expense below, and recorded reserve amortization of $291 million, respectively. During 2022 and 2021, FPL earned an approximately 11.80% and 11.60% regulatory ROE on its retail rate base, based on a trailing thirteen-month average retail rate base as of September 30, 2022 and September 30, 2021, respectively. See Note 11 – Rate Regulation for a discussion of the increase to FPL's authorized regulatory ROE.

In late September 2022, FPL's service territory was impacted by Hurricane Ian and FPL incurred recoverable storm restoration costs of approximately $1.1 billion. See Note 11 – Storm Reserve Deficit.

Operating Revenues

During the three and nine months ended September 30, 2022, operating revenues increased $941 million and $2,538 million, respectively. The increase for the three and nine months ended September 30, 2022 primarily reflects higher fuel revenues of approximately $500 million and $1,370 million, respectively, primarily related to higher fuel and energy prices. Retail base revenues increased $277 million and $717 million during the three and nine months ended September 30, 2022, respectively, as compared to the prior year period. The increase for the three and nine months ended September 30, 2022 in retail base revenues reflects additional revenues of approximately $180 million and $473 million, respectively, related to new retail base rates under the 2021 rate agreement. Retail base revenues during the three and nine months ended September 30, 2022 were also impacted by an increase of 2.3% and 1.7%, respectively, in the average usage per retail customer, primarily related to favorable weather when compared to the prior year period, and an increase of 1.5% in the average number of customer accounts for both periods. The increase in operating revenues for the three and nine months ended September 30, 2022 also reflects higher other revenues of approximately $164 million and $451 million, respectively, primarily related to increases in cost recovery clause revenue from storm protection plan and environmental, franchise fees and gross receipts taxes.

Although FPL estimates a greater than 10% fuel under-recovery for 2022, FPL does not plan to seek a midcourse correction in 2022. Instead, FPL intends to file a request with the FPSC for the 2022 fuel under-recovery toward the end of 2022 or beginning of 2023. FPL is continuing to assess actual fuel costs and is monitoring the natural gas market conditions before determining the time period over which it will request recovery of the 2022 fuel-under recovery.

Pursuant to FPL’s 2021 rate agreement, FPL will prospectively adjust base rates after a review by the FPSC for PTCs related to new solar generation facilities recovered in base rates during the term of the 2021 rate agreement. See Note 11 – Rate Regulation for a discussion of the impact of the IRA on FPL's revenue.

Fuel, Purchased Power and Interchange Expense

Fuel, purchased power and interchange expense increased $515 million and $1,411 million for the three and nine months ended September 30, 2022, respectively, primarily reflecting higher fuel and energy prices.

Other Operations and Maintenance Expense

O&M expenses increased $95 million for the three months ended September 30, 2022 primarily reflecting higher storm reserve expense used to limit FPL's regulatory ROE to the high end of the authorized range pursuant to the 2021 rate agreement.

Depreciation and Amortization Expense

Depreciation and amortization expense increased $14 million and $282 million during the three and nine months ended September 30, 2022, respectively, primarily reflecting the impact of reserve amortization and additional amortization of the capital recovery regulatory asset balance pursuant to the 2021 rate agreement. During the three months ended September 30, 2022 and 2021, FPL recorded the reversal of reserve amortization of approximately $80 million and $124 million, respectively. During the nine months ended September 30, 2022 and 2021, FPL recorded reserve amortization of approximately $0 million and $291 million, respectively. Reserve amortization, or reversal of such amortization, reflects adjustments to accrued asset removal costs provided under the 2021 and 2016 rate agreements in order to achieve the targeted regulatory ROE. Reserve amortization is recorded as either an increase or decrease to accrued asset removal costs which is reflected in noncurrent regulatory assets on the condensed consolidated balance sheets. At September 30, 2022, approximately $1,450 million of reserve amortization remains available under the 2021 rate agreement. In addition, during the nine months ended September 30, 2022, FPL recorded a one-time reserve amortization adjustment of $114 million as required under the 2021 rate agreement, 50% of which was used to reduce the capital recovery regulatory asset balance and the other 50% to increase the storm reserve regulatory liability.

Taxes other than income taxes and other – net

Taxes other than income taxes and other – net increased $76 million for the three months ended September 30, 2022 primarily due to higher franchise fees and gross receipts taxes, which are pass-through costs and reflect the increase in pass-through cost revenues.

NEER**: Results of Operations**

NEER’s results increased $1,083 million and decreased $459 million for the three and nine months ended September 30, 2022, respectively. 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 September 30, 2022						Nine Months Ended September 30, 2022
			(millions)
New investments(a)			$	32					$	44
Existing generation and storage assets(a)			(42)						127
Gas infrastructure(a)			11						(26)
Customer supply and proprietary power and gas trading(b)			127						127
NEET(a)			11						8
Other, including other investment income, interest expense and corporate general and administrative expenses			(28)						(26)
Change in non-qualifying hedge activity(c)			955						318
Change in unrealized gains/losses on equity securities held in nuclear decommissioning funds and OTTI, net(c)			(82)						(506)
NEP investment gains, net(c)			123						125
Impairment charges related to investment in Mountain Valley Pipeline(c)(d)			(24)						(650)
Change in net income (loss) less net loss attributable to noncontrolling interests			$	1,083					$	(459)

———————————————

(a) Reflects after-tax project contributions, including the net effect of deferred income taxes and other benefits associated with PTCs and ITCs for wind, solar, and storage projects, as applicable, but excludes allocation of interest expense or corporate general and administrative expenses. Results from projects, pipelines and rate-regulated transmission facilities and transmission lines are included in new investments during the first twelve months of operation or ownership. Project results, including repowered wind projects, are included in existing generation and storage assets, pipeline results are included in gas infrastructure and rate-regulated transmission facilities and transmission lines are included in NEET beginning with the thirteenth month of operation or ownership.

(b) Excludes allocation of interest expense and corporate general and administrative expenses.

(c) See Overview – Adjusted Earnings for additional information.

(d) See Note 3 – Nonrecurring Fair Value Measurements for a discussion of the first quarter of 2022 impairment charge related to the investment in Mountain Valley Pipeline.

Customer Supply and Proprietary Power and Gas Trading

Results from customer supply and proprietary power and gas trading increased for the three and nine months ended September 30, 2022 primarily due to higher margins.

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 September 30, 2022 increased $1,394 million primarily due to:

• the impact of non-qualifying commodity hedges due primarily to changes in energy prices (approximately $217 million of losses for the three months ended September 30, 2022 compared to $1,268 million of losses for the comparable period in 2021),

• net increases in revenues of $281 million from the customer supply, proprietary power and gas trading, and gas infrastructure businesses as compared to the prior year period primarily due to favorable market conditions, and

• revenues from new investments of $52 million.

Operating revenues for the nine months ended September 30, 2022 increased $207 million primarily due to:

• higher revenues from existing generation and storage assets of approximately $190 million primarily due to higher wind revenues as compared to the prior year period which was impacted by the February 2021 weather event,

• net increases in revenues of $176 million from the customer supply, proprietary power and gas trading, and gas infrastructure businesses as compared to the prior year period, and

• revenues from new investments of $140 million,

partly offset by,

• the impact of non-qualifying commodity hedges due primarily to changes in energy prices (approximately $3,105 million of losses for the nine months ended September 30, 2022 compared to $2,808 million of losses for the comparable period in 2021).

Operating Expenses – net

Operating expenses – net for the three months ended September 30, 2022 increased $248 million primarily due to increases of $146 million in O&M expenses, $42 million in depreciation and amortization and $38 million in fuel, purchased power and interchange expenses. The increases were primarily associated with growth across the NEER businesses.

Operating expenses – net for the nine months ended September 30, 2022 increased $423 million primarily due to increases of $212 million in O&M expenses, $92 million in fuel, purchased power and interchange expenses and $83 million in depreciation and amortization. The increases were primarily associated with growth across the NEER businesses, partly offset by lower bad debt expense associated with the February 2021 weather event (see Note 11 – Credit Losses).

Gains on Disposal of Businesses/Assets – net

For the three and nine months ended September 30, 2022, the changes in gains on disposal of businesses/assets – net primarily relates to the September 2022 sale of a battery storage facility and the resolution of a contingency related to the December 2021 sale of ownership interests in wind and solar projects. See Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests.

Interest Expense

NEER’s interest expense for the nine months ended September 30, 2022 decreased $314 million primarily reflecting approximately $335 million of favorable impacts related to changes in the fair value of interest rate derivative instruments.

Equity in Earnings of Equity Method Investees

NEER recognized $179 million of equity in earnings of equity method investees for the nine months ended September 30, 2022 compared to $465 million of equity in earnings of equity method investees for the prior year period. The change for the nine months ended September 30, 2022 primarily reflects impairment charges related to the investment in Mountain Valley Pipeline of approximately $0.8 billion (see Note 3 – Nonrecurring Fair Value Measurements), partly offset by an increase in equity in earnings of NEP recorded in 2022 primarily due to favorable impacts related to changes in the fair value of interest rate derivative instruments.

Change in Unrealized Gains (Losses) on Equity Securities Held in NEER's Nuclear Decommissioning Funds – net

For the three and nine months ended September 30, 2022, changes in the fair value of equity securities in NEER's nuclear decommissioning funds related to unfavorable market conditions in 2022 compared to the prior year periods.

Tax Credits, Benefits and Expenses

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. A portion of the PTCs and ITCs have been allocated to investors in connection with sales of differential membership interests. Also see Note 4 for a discussion of other income tax impacts.

GridLiance Acquisition

On March 31, 2021, a wholly owned subsidiary of NEET acquired GridLiance, which owns and operates three FERC-regulated transmission utilities with high-voltage transmission lines across six states, five in the Midwest and Nevada. See Note 5 – GridLiance.

RNG Acquisition

On October 27, 2022, a wholly owned subsidiary of NextEra Energy Resources entered into several agreements to acquire 100% of a portfolio of renewable energy projects as well as the related service provider. See Note 5 - RNG 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 $19 million and $362 million during the three and nine months ended September 30, 2022, respectively. The increases for the three and nine months ended September 30, 2022 primarily reflect favorable after-tax impacts of approximately $76 million and $440 million, respectively, as compared to the prior year periods, which were related to non-qualifying hedge activity as a result of changes in the fair value of interest rate derivative instruments. The increases for the three and nine months ended September 30, 2022 were partly offset by higher interest costs and corporate operating expenses.

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 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 and, from time to time, equity securities, proceeds from differential membership investors and sales of assets to NEP or third parties (see Note 11 – Disposal of Businesses/Assets and Sale of Noncontrolling Ownership Interests), 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 nine months ended September 30, 2022 and 2021 were as follows:

			Nine Months Ended September 30,
			2022						2021
			(millions)
Sources of cash:
Cash flows from operating activities			$	7,267					$	6,236
Issuances of long-term debt, including premiums and discounts			11,616						9,614
Proceeds from differential membership investors			443						328
Sale of independent power and other investments of NEER			575						384
Payments from related parties under the CSCS agreement – net			8						295
Issuances of common stock – net			1,458						7
Net increase in commercial paper and other short-term debt			743						1,785
Other sources – net			5						41
Total sources of cash			22,115						18,690
Uses of cash:
Capital expenditures, independent power and other investments and nuclear fuel purchases			(13,829)						(12,005)
Retirements of long-term debt			(2,137)						(4,262)
Dividends			(2,507)						(2,267)
Other uses – net			(986)						(699)
Total uses of cash			(19,459)						(19,233)
Effects of currency translation on cash, cash equivalents and restricted cash			(5)						1
Net increase (decrease) in cash, cash equivalents and restricted cash			$	2,651					$	(542)

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 2022 through 2026.

The following table provides a summary of capital investments for the nine months ended September 30, 2022 and 2021.

			Nine Months Ended September 30,
			2022						2021
			(millions)
FPL:
Generation:
New			$	955					$	697
Existing			1,065						861
Transmission and distribution			3,505						3,169
Nuclear fuel			67						110
General and other			385						425
Other, primarily change in accrued property additions and the exclusion of AFUDC – equity			111						(152)
Total			6,088						5,110
NEER:
Wind			2,565						3,389
Solar (includes solar plus battery storage projects)			2,114						1,629
Battery storage			488						267
Nuclear, including nuclear fuel			112						173
Natural gas pipelines			189						179
Other gas infrastructure			927						377
Rate-regulated transmission (2021 includes the acquisition of GridLiance, see Note 5 – GridLiance)			390						794
Other			505						87
Total			7,290						6,895
Corporate and Other			451						—
Total capital expenditures, independent power and other investments and nuclear fuel purchases			$	13,829					$	12,005

Liquidity

At September 30, 2022, NEE's total net available liquidity was approximately $14.0 billion. The table below provides the components of FPL's and NEECH's net available liquidity at September 30, 2022.

																											Maturity Date
			FPL												NEECH						Total						FPL												NEECH
			(millions)
Syndicated revolving credit facilities(a)			$	3,798											$	5,257					$	9,055					2023 – 2027												2022 – 2027
Issued letters of credit			(3)												(1,692)						(1,695)
			3,795												3,565						7,360
Bilateral revolving credit facilities(b)			2,180												3,025						5,205						2022 – 2025												2022 – 2023
Borrowings			—												—						—
			2,180												3,025						5,205
Letter of credit facilities(c)			—												3,250						3,250																		2022 – 2025
Issued letters of credit			—												(2,412)						(2,412)
			—												838						838
Bilateral revolving credit and letter of credit facilities(d)			—												1,000						1,000																		2023
Borrowings			—												—						—
Issued letters of credit			—												—						—
			—												1,000						1,000
Subtotal			5,975												8,428						14,403
Cash and cash equivalents			1,218												1,284						2,502
Commercial paper and other short-term borrowings outstanding			(200)												(2,663)						(2,863)
Amounts due to related parties under the CSCS agreement (see Note 6)			—												(65)						(65)
Net available liquidity			$	6,993											$	6,984					$	13,977

———————————————

(a) Provide for the funding of loans up to the amount of the credit facility and the issuance of letters of credit up to $3,175 million ($650 million for FPL and $2,525 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 $1,334 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 $1,327 million of floating rate notes in the event an individual noteholder requires repayment at specified dates prior to maturity. Approximately $3,130 million of FPL's and $3,844 million of NEECH's syndicated revolving credit facilities expire in 2027.

(b) Only available for the funding of loans.

(c) Only available for the issuance of letters of credit.

(d) Provide for the funding of loans and issuance of letters of credit up to an aggregate total of the amount of each credit facility.

During the nine months ended September 30, 2022, NEE increased its total capacity under its credit facilities by approximately $3.7 billion primarily to provide for additional liquidity to support and grow the business (see Note 2) and, at FPL, to fund fuel and storm restoration costs.

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 regarding guarantees of obligations on behalf of NEP subsidiaries. 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. At September 30, 2022, NEE believes that there is no material exposure related to these guarantee arrangements.

NEE subsidiaries issue guarantees related to equity contribution agreements associated with the development, construction and financing of certain power generation facilities, engineering, procurement and construction agreements and equity contributions associated with a natural gas pipeline project under construction and a related natural gas transportation agreement. Commitments associated with these activities are included and/or disclosed in the contracts table in Note 12.

In addition, at September 30, 2022, NEE subsidiaries had approximately $5.5 billion in guarantees related to obligations under purchased power agreements, nuclear-related activities, payment obligations related to PTCs, support for NEER's retail electricity provider activities, as well as other types of contractual obligations (see Note 3 – Contingent Consideration and 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. At September 30, 2022, these guarantees totaled approximately $504 million 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. At September 30, 2022, 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 at September 30, 2022) plus contract settlement net payables, net of collateral posted for obligations under these guarantees, totaled approximately $3.5 billion.

At September 30, 2022, subsidiaries of NEE also had approximately $5.6 billion of standby letters of credit and approximately $1.0 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 yet 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:

						Nine Months Ended September 30, 2022																		Year Ended December 31, 2021
						Issuer/Guarantor Combined**(a)**						NEECH Consolidated**(b)**						NEE Consolidated**(b)**						Issuer/Guarantor Combined(a)						NEECH Consolidated(b)						NEE Consolidated(b)
						(millions)
Operating revenues						$	(15)					$	1,711					$	14,792					$	(1)					$	3,139					$	17,069
Operating income (loss)						$	(259)					$	(1,932)					$	2,035					$	(352)					$	(1,317)					$	2,913
Net income (loss)						$	383					$	(961)					$	1,979					$	(275)					$	(395)					$	2,827
Net income (loss) attributable to NEE/NEECH						$	383					$	(315)					$	2,625					$	(275)					$	351					$	3,573

						September 30, 2022																		December 31, 2021
						Issuer/Guarantor Combined**(a)**						NEECH Consolidated**(b)**						NEE Consolidated**(b)**						Issuer/Guarantor Combined(a)						NEECH Consolidated(b)						NEE Consolidated(b)
						(millions)
Total current assets						$	99					$	7,641					$	12,891					$	48					$	5,662					$	9,288
Total noncurrent assets						$	2,732					$	64,071					$	143,518					$	2,308					$	57,620					$	131,624
Total current liabilities						$	8,503					$	20,281					$	27,793					$	1,553					$	11,560					$	17,437
Total noncurrent liabilities						$	30,253					$	43,992					$	81,870					$	27,956					$	40,289					$	77,806
Redeemable noncontrolling interests						$	—					$	—					$	—					$	—					$	245					$	245
Noncontrolling interests						$	—					$	8,117					$	8,117					$	—					$	8,222					$	8,222

————————————
(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.

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 gas infrastructure 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 and nine months ended September 30, 2022 were as follows:

									Hedges on Owned Assets
			Trading						Non- Qualifying						FPL Cost Recovery Clauses												NEE Total
			(millions)
Three Months Ended September 30, 2022
Fair value of contracts outstanding at June 30, 2022			$	1,004					$	(4,301)					$	98											$	(3,199)
Reclassification to realized at settlement of contracts			(93)						174						(198)												(117)
Value of contracts acquired			—						15						—												15
Net option premium purchases (issuances)			14						3						—												17
Changes in fair value excluding reclassification to realized			310						(432)						130												8
Fair value of contracts outstanding at September 30, 2022			1,235						(4,541)						30												(3,276)
Net margin cash collateral paid (received)																											473
Total mark-to-market energy contract net assets (liabilities) at September 30, 2022			$	1,235					$	(4,541)					$	30											$	(2,803)

									Hedges on Owned Assets
			Trading						Non- Qualifying						FPL Cost Recovery Clauses												NEE Total
			(millions)
Nine Months Ended September 30, 2022
Fair value of contracts outstanding at December 31, 2021			$	978					$	(1,392)					$	1											$	(413)
Reclassification to realized at settlement of contracts			(273)						691						(188)												230
Value of contracts acquired			(1)						29						—												28
Net option premium purchases (issuances)			142						11						—												153
Changes in fair value excluding reclassification to realized			389						(3,880)						217												(3,274)
Fair value of contracts outstanding at September 30, 2022			1,235						(4,541)						30												(3,276)
Net margin cash collateral paid (received)																											473
Total mark-to-market energy contract net assets (liabilities) at September 30, 2022			$	1,235					$	(4,541)					$	30											$	(2,803)

NEE's total mark-to-market energy contract net assets (liabilities) at September 30, 2022 shown above are included on the condensed consolidated balance sheets as follows:

			September 30, 2022
			(millions)
Current derivative assets			$	1,355
Noncurrent derivative assets			1,693
Current derivative liabilities			(2,842)
Noncurrent derivative liabilities			(3,009)
NEE's total mark-to-market energy contract net liabilities			$	(2,803)

The sources of fair value estimates and maturity of energy contract derivative instruments at September 30, 2022 were as follows:

						Maturity
						2022						2023						2024						2025						2026						Thereafter						Total
						(millions)
Trading:
Quoted prices in active markets for identical assets						$	(178)					$	(586)					$	(490)					$	(396)					$	(205)					$	(114)					$	(1,969)
Significant other observable inputs						428						1,736						819						640						405						497						4,525
Significant unobservable inputs						(131)						(838)						(152)						(59)						(38)						(103)						(1,321)
Total						119						312						177						185						162						280						1,235
Owned Assets – Non-Qualifying:
Quoted prices in active markets for identical assets						(6)						(69)						(43)						(36)						(42)						(45)						(241)
Significant other observable inputs						(389)						(1,177)						(839)						(565)						(364)						(590)						(3,924)
Significant unobservable inputs						1						—						(11)						(3)						1						(364)						(376)
Total						(394)						(1,246)						(893)						(604)						(405)						(999)						(4,541)
Owned Assets – FPL Cost Recovery Clauses:
Quoted prices in active markets for identical assets						—						—						—						—						—						—						—
Significant other observable inputs						5						4						—						—						—						—						9
Significant unobservable inputs						8						14						(1)						—						—						—						21
Total						13						18						(1)						—						—						—						30
Total sources of fair value						$	(262)					$	(916)					$	(717)					$	(419)					$	(243)					$	(719)					$	(3,276)

The changes in the fair value of NEE's consolidated subsidiaries' energy contract derivative instruments for the three and nine months ended September 30, 2021 were as follows:

									Hedges on Owned Assets
			Trading						Non- Qualifying						FPL Cost Recovery Clauses									NEE Total
			(millions)
Three Months Ended September 30, 2021
Fair value of contracts outstanding at June 30, 2021			$	777					$	(356)					$	5								$	426
Reclassification to realized at settlement of contracts			(44)						79						(6)									29
Value of contracts acquired			(5)						5						—									—
Net option premium purchases (issuances)			6						4						—									10
Changes in fair value excluding reclassification to realized			22						(1,312)						9									(1,281)
Fair value of contracts outstanding at September 30, 2021			756						(1,580)						8									(816)
Net margin cash collateral paid (received)																								(351)
Total mark-to-market energy contract net assets (liabilities) at September 30, 2021			$	756					$	(1,580)					$	8								$	(1,167)

									Hedges on Owned Assets
			Trading						Non- Qualifying						FPL Cost Recovery Clauses						NEE Total
			(millions)
Nine Months Ended September 30, 2021
Fair value of contracts outstanding at December 31, 2020			$	706					$	996					$	—					$	1,702
Reclassification to realized at settlement of contracts			49						94						(5)						138
Value of contracts acquired			7						7						—						14
Net option premium purchases (issuances)			19						6						—						25
Changes in fair value excluding reclassification to realized			(25)						(2,683)						13						(2,695)
Fair value of contracts outstanding at September 30, 2021			756						(1,580)						8						(816)
Net margin cash collateral paid (received)																					(351)
Total mark-to-market energy contract net assets (liabilities) at September 30, 2021			$	756					$	(1,580)					$	8					$	(1,167)

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 Hedges in FPL Cost Recovery Clauses(b)																		Total
			FPL						NEER						NEE						FPL						NEER						NEE						FPL						NEER						NEE
																											(millions)
December 31, 2021			$	—					$	17					$	17					$	1					$	148					$	148					$	1					$	149					$	149
September 30, 2022			$	—					$	29					$	29					$	6					$	250					$	255					$	6					$	210					$	204
Average for the nine months ended September 30, 2022			$	—					$	24					$	24					$	10					$	295					$	297					$	10					$	277					$	280

———————————————

(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 $16 million and $9 million at September 30, 2022 and December 31, 2021, 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 hedges in FPL cost recovery clauses category 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:

			September 30, 2022												December 31, 2021
			Carrying Amount						Estimated Fair Value**(a)**						Carrying Amount						Estimated Fair Value(a)
			(millions)
NEE:
Fixed income securities:
Special use funds			$	2,097					$	2,097					$	2,505					$	2,505
Other investments, primarily debt securities			$	550					$	550					$	311					$	311
Long-term debt, including current portion			$	61,962					$	57,029					$	52,745					$	57,290
Interest rate contracts – net unrealized gains (losses)			$	500					$	500					$	(633)					$	(633)
FPL:
Fixed income securities – special use funds			$	1,617					$	1,617					$	1,934					$	1,934
Long-term debt, including current portion			$	20,998					$	19,028					$	18,510					$	21,379

———————————————

(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.

At September 30, 2022, NEE had interest rate contracts with a notional amount of approximately $8.8 billion to manage exposure to the variability of cash flows primarily associated with expected future and outstanding debt issuances at NEECH and NEER. In October 2022, NEECH entered into a forward starting interest rate swap agreement with a notional amount of $10 billion to manage interest rate risk associated with forecasted debt issuances. See Note 2.

Based upon a hypothetical 10% decrease in interest rates, the fair value of NEE's net liabilities would increase by approximately $1,833 million ($794 million for FPL) at September 30, 2022.

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 $4,147 million and $5,511 million ($2,725 million and $3,552 million for FPL) at September 30, 2022 and December 31, 2021, respectively. NEE's and FPL’s investment strategy for equity securities in their nuclear decommissioning reserve funds emphasizes marketable securities which are broadly diversified. At September 30, 2022, a hypothetical 10% decrease in the prices quoted on stock exchanges would result in an approximately $399 million ($261 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.

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. At September 30, 2022, NEE's credit risk exposure associated with its energy marketing and trading counterparties, taking into account collateral and contractual netting rights, totaled $3.3 billion ($82 million for FPL), of which approximately 74% (100% for FPL) was with companies that have investment grade credit ratings. With regard to credit risk exposure to counterparties with below investment grade credit ratings, NEE has first lien security positions with respect to approximately 70% of such exposure. For the remaining unsecured positions with counterparties that have below investment grade credit ratings, no one counterparty makes up more than 6% of NEE’s total exposure to below investment grade counterparties. See Notes 1, 2 and 11 – Credit Losses.