Amanda Finnis - Director-Investor Relations Moray P. Dewhurst - Vice Chairman & Chief Financial Officer Armando Pimentel - President & Chief Executive Officer, NextEra Energy Resources LLC James L. Robo - Chairman, President & Chief Executive Officer Eric E. Silagy - President & Chief Executive Officer, Florida Power & Light Co..

Dan L. Eggers - Credit Suisse Securities (USA) LLC (Broker) Brian J. Chin - Merrill Lynch, Pierce, Fenner & Smith, Inc. Stephen Calder Byrd - Morgan Stanley & Co. LLC Julien Dumoulin-Smith - UBS Securities LLC Paul T. Ridzon - KeyBanc Capital Markets, Inc. Steven Isaac Fleishman - Wolfe Research LLC Michael J. Lapides - Goldman Sachs & Co.

Paul Patterson - Glenrock Associates LLC.

Good day, everyone, and welcome to the NextEra Energy and NextEra Energy Partners First Quarter Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks, I would like to turn the call over to Amanda Finnis..

Thank you, Orlando. Good morning, everyone, and welcome to the first quarter 2015 combined earnings conference call for NextEra Energy and for NextEra Energy Partners.

With me this morning are Jim Robo, Chairman and Chief Executive Officer of NextEra Energy; Moray Dewhurst, Vice Chairman and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Senior Vice President of NextEra Energy, all of whom are also officers of NextEra Energy Partners; as well as Eric Silagy, President and Chief Executive Officer of Florida Power & Light Company; and John Ketchum, Senior Vice President of NextEra Energy.

Moray will provide an overview of our results and our executive team will then be available to answer your questions. We will be making forward-looking statements during this call based on our current expectations and assumptions, which are subject to risks and uncertainties.

Actual results could differ materially from forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings new release, in the comments made during this conference call, in the Risk Factor section of the accompanying presentation, or in the latest reports and filings with the Securities and Exchange Commission, each of which can be found on our websites, nexteraenergy.com and nexteraenergypartners.com.

We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to adjusted earnings and adjusted EBITDA, which are non-GAAP financial measures.

You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of the non-GAAP measure to the closest GAAP financial measure. With that, I will turn the call over to Moray..

Thank you, Amanda. Good morning, everyone. Both NextEra Energy and NextEra Energy Partners enjoyed strong first quarters and are off to a good start towards meeting their respective objectives for the year. At NextEra Energy, adjusted earnings per share grew 12% with Energy Resources leading the way despite generally weak wind resource.

The impact of weak wind resource was roughly offset by the recovery of the customer supply business to more normal levels of profitability, and the main driver of growth continued to be the growth of the contracted renewables portfolio. Energy Resources also had another good quarter of origination activity which I will discuss in more detail later.

Florida Power & Light's contribution to earnings per share grew only slightly relative to the first quarter of last year. But this may be a bit misleading as earnings per share contribution was affected by a number of small items and timing impacts, as well as by share dilution.

Growth in regulatory capital employed, on the equity portion of which we expect to earn a return of 11.5% for the full year, was 5.2% and we expect this to increase a bit over the course of the remainder of the year. We are very pleased with FPL's financial results.

Both main businesses continued to deliver good operating performance with excellent reliability of the generation fleet as well as FPL's transmission and distribution system.

Across the fossil and renewables generation portfolio, EFOR, or the equivalent forced outage rate, was approximately 1% for the quarter, while FPL's 2014 service reliability was more than 30% better than the state investor-owned utility average.

Both main businesses also continued to make good progress on their major capital initiatives which we discussed at our Investor Conference last month. All major initiatives remain consistent with our presentation in March.

At NextEra Energy Partners, operating performance was excellent and weak wind resource was largely offset by better-than-normal performance from the solar assets. Cash available for distribution for the quarter was reduced by debt service payments, but was consistent with our expectations.

The NEP Board declared a quarterly distribution of $0.205 per common unit or $0.82 per common unit on an annualized basis. And today, we are also announcing the execution of agreements to acquire additional assets form energy resources to support NEP's growth, details of which I will provide later in the call.

Given the strong start to the year, we continue to feel very comfortable with our financial expectations for NextEra Energy and for NextEra Energy Partners, both for 2015 and for the longer term. We are very pleased with the progress we're making. Now, let's look at the results for FPL.

For the first quarter of 2015, FPL reported net income of $359 million or $0.80 per share, up $0.01 per share year-over-year. Average regulatory capital employed grew roughly 5.2% over the same quarter last year. Capital expenditures during the quarter were roughly $765 million.

And, consistent with the expectations we shared at our Investor Conference last month, we expect full-year capital expenditures of $3.4 billion to $3.8 billion. Our reported ROE for regulatory purposes will be approximately 11.5% for the 12 months ending March 2015.

As a reminder, under the current rate agreement, we record reserve amortization entries to achieve a pre-determined regulatory ROE. We entered 2015 with a reserve amortization balance of $278 million.

And during the first quarter, we utilized $99 million in order to achieve the regulatory ROE of 11.5%, leaving us a balance of $179 million which can be utilized in the remainder of 2015 and 2016.

As in prior years, we expect to use surplus depreciation in the early months of the year and then reverse that usage during the summer months when revenues are higher in order to maintain the consistent regulatory ROE.

Looking ahead, we expect that the balance of the reserve amortization, coupled with current CapEx and O&M expectations, will allow us to support a regulatory ROE of approximately 11.5% in 2015 and to achieve the upper half of the allowed band of 9.5% to 11.5% through the end of our current rate agreement.

As always, our expectations assume normal weather and operating conditions. Before moving on, let me now take a moment to update you on some of our key capital initiatives. We continue to make good progress on the modernization project at Port Everglades which remains on budget and on track to achieve commercial operation in mid-2016.

During the quarter, we closed on the Woodford shale natural gas production project in Southeastern Oklahoma.

We continue to view this transaction as an important first step in what we hope will be a larger program to provide long-term physical hedges that will help mitigate the effects of potential volatility in the market price for natural gas on customer bills.

Although the evaluation of our proposed guidelines for subsequent investments has been extended beyond the expectations we shared with you last quarter, we are encouraged by actions of the Florida Supreme Court to enable the PSC to continue evaluation of the guidelines while the court reviews the PSC's approval of the Woodford project.

We are now expecting further PSC activity on the guidelines in the coming months. As we announced in March, we are also pursuing a plan to acquire the 250 megawatt coal-fired Cedar Bay generation facility located in Jacksonville, Florida, which has a contract to supply capacity and energy to FPL through 2024.

If approved by the commission, this transaction would lead to a change in plant dispatch that would likely significantly reduce the plant's operations and potentially enable earlier shutdown of the facility than would otherwise be the case.

This plan is projected to save FPL customers an estimated $70 million and prevent nearly 1 million tons of carbon dioxide emissions annually. At the end of March, the PSC established a schedule for this proceeding and we are expecting a PSC decision in September.

As we look toward the end of the decade, we anticipate a need for additional generation capacity as Florida continues to grow. And in March, we issued a request for proposals for 2019 capacity need.

In May, FPL and an independent evaluator will each conduct separate reviews of proposals received in response to the RFP, as well as FPL's potential self-build combined cycle unit.

We believe that our proposed unit would be one of the most fuel-efficient and cleanest combined cycle plants built to-date with an installed cost of approximately $670 per kilowatt. And we expect that it would be highly competitive with other alternatives.

We continue to make good progress on the other opportunities we discussed at our March Investor Conference, including adding roughly 223 megawatts of cost effective solar PV to our system and implementing an upgrade solution to our aging peaker fleet. We continue to expect these projects to be completed by the end of 2016.

The Florida economy continues to perform well with most indicators we track showing continued improvement. The March unemployment rate of 5.7% is the lowest level since mid-2008. The number of jobs in Florida was up approximately 284,000 compared with last year, an increase of 3.7%.

And Florida is now within approximately 30,000 jobs of its pre-recession peak in employment. Florida's private sector continues to drive the state's job growth and more than 841,000 private sector jobs have been added since December 2010.

The real estate sector continues to do well with new building permits remaining at a healthy level and mortgage delinquency rates continuing to decline. The Case-Shiller Index for South Florida shows home prices up 8.3% from the prior year.

The overall improvement in the Florida economy appears to be reflected in consumer sentiment and Florida's consumer sentiment index level in March was the highest in 11 years. First quarter retail sales at FPL were up 1.0%.

FPL's average number of customers increased by 66,000 over the prior year comparable quarter with an estimated impact on sales of 1.4%, which is consistent with our long-term expectation of 1.3% to 1.6% customer growth per year. Overall usage per customer decreased by 0.4%.

While it can be difficult to know exactly how much of this to attribute to weather, particularly during a quarter where heating and cooling loads have differed significantly from long-term averages and historic correlations to mean temperature readings, we believe that weather comparisons should have provided a usage lift to about 0.8%, implying that weather normalized usage declined by about 1.2%.

This is a relatively large decline, although as we have often noted, quarterly usage per customer can fluctuate somewhat randomly.

While we believe that it is unlikely that we are witnessing any structural change that would suggest a continuation of weather normalized declines in usage, it is certainly possible that our expectations of roughly 0.5% increase for the full year may prove to be a bit optimistic.

We will continue to analyze the usage data as they come in the months ahead and we'll update you on future calls.

As a reminder, modest changes in usage per customer are not likely to have a material effect on earnings this year as we will adjust the level of surplus depreciation utilization to offset any effect and allow us to maintain the expected 11.5% regulatory ROE.

Any changes we may make to our outlook for future years will, of course, be reflected in our expectations going forward. Let me turn now to Energy Resources, which reported first quarter 2015 GAAP earnings of $278 million or $0.62 per share. Adjusted earnings for the first quarter were $260 million or $0.58 per share.

Energy Resources' adjusted EPS increased by $0.10 per share year-over-year. As discussed earlier in the call, customer supply and trading returned to more normal levels of profitability, adding $0.20 per share relative to last year's first quarter.

You may recall that last year's first quarter results were impacted by polar vortex conditions in the Northeast that caused parts of our customer supply business to underperform, and we did not experience the same adverse effects in the first quarter this year.

Existing assets mostly offset this positive with negative $0.17 per share primarily caused by below average wind resource of approximately 87% during the quarter versus 107% in the comparable period last year.

Fleet-wide wind resource for the quarter was the second lowest first quarter on record over the past 37 years and the absolute lowest first quarter in Texas. Fortunately, the wind resources began to return to more normal levels in April.

Contributions from new investment added $0.09 per share due to continued growth of our contracted renewables business. Gas infrastructure added $0.02 per share. Given current market conditions, we elected not to invest capital in drilling certain wells, which resulted in earlier recognition of income through the value of the hedges we had in place.

This benefit more than offset increased depreciation expense as a result of higher depletion rates. Increased corporate G&A and other costs contributed negative $0.04 of the year-over-year change. All other effects were minor, as reflected on the accompanying slide. Energy Resources growth and adjusted EBITDA and cash flow were both strong.

For the first quarter of 2015, adjusted EBITDA and operating cash flow increased 20% and 42%, respectively, from the prior year comparable quarter.

While we expect considerable variability in cash flow growth from quarter to quarter, we see full-year cash flow from operations growing 20% to 25%, assuming no major changes in commodity prices and assuming normal operating conditions. The Energy Resources development team had another good quarter of origination activity.

Since our last earnings call, we have added 200 megawatts of wind projects and roughly 300 megawatts of new solar projects to our renewables backlog and we are well-positioned to add further projects in the weeks ahead.

We are particularly pleased that roughly 80 megawatts of solar capacity is for post 2016 delivery, suggesting that we can expect to see continued demand for solar projects even after the anticipated expiration of the current special ITC support.

The accompanying chart updates information we provided at the March Investor Conference, but our overall expectations have not changed. We continue to expect to bring into service a total of approximately 4,700 megawatts to 5,100 megawatts of renewables from 2015 through 2018.

Our forecast assumes PTCs expire at the end of 2016, with a further extension representing a potential upside to these numbers.

In addition to our development efforts in the United States, our future development efforts in Canada were focused on leveraging our Ontario feed-in tariff experience and we intend to participate in the new RFP processes that are expected to occur later this year and in 2016, which may present additional opportunities for wind, solar and storage projects.

Let me now review the highlights for NEP. First quarter adjusted EBITDA was approximately $70 million and cash available for distribution was negative $15 million.

As I mentioned earlier, cash available for distribution was affected by debt service payments, which for some projects occur semi-annually, and the CAFD for the quarter was consistent with our expectations. Before accounting for debt service, cash available for distribution was positive $52 million.

While weak wind resource adversely affected most of the portfolio's wind projects, performance of the solar assets was better than expected and the net effect was not material.

During the quarter, in addition to the closing of the 250-megawatt Palo Duro contracted wind project in Texas that we announced in January, NEP closed on its agreement to acquire Shafter, a 20-megawatt contracted solar project in California, for approximately $64 million, through the use of its existing revolving credit facility.

The project is expected to close on its financing and enter service by the end of the second quarter. We continue to execute on our plan to expand NEP's portfolio and I'm pleased to announce that the conflicts committee of the NEP board has reached an agreement with a sponsor to acquire four additional assets from the Energy Resources portfolio.

This acquisition portfolio is a geographically diverse mix of assets, collectively consisting of approximately 664 megawatts with a megawatt-weighted remaining contract life of 18 years.

The transaction represents another step towards growing LP unit distributions in a manner consistent with our previously stated expectations of reaching an annualized rate of at least $1.13 per unit by the end of the year.

NEP expects to acquire the portfolio for total consideration of approximately $412 million, plus the assumption of approximately $269 million in debt and tax equity financing.

The purchase price is subject to working capital and other adjustments and assumes additional project debt of approximately $60 million, which we expect to close within a few months of the acquisition.

The acquisitions are expected to contribute 2015 adjusted EBITDA and CAFD of roughly $40 million to $50 million and $15 million to $20 million respectively and to increase the annual run rate of adjusted EBITDA and CAFD by roughly $75 million to $85 million and $28 million to $32 million respectively.

We are currently evaluating a number of funding alternatives to finance the transaction, which we expect to close by the middle of May.

Once completed, we expect to be able to grow our second quarter LP unit distributions to an annualized rate of approximately $0.94 per unit while maintaining our 2015 guidance of $400 million to $440 million and $100 million to $120 million of adjusted EBITDA and CAFD, respectively.

Turning now to the consolidated results for NextEra Energy, for the first quarter of 2015, GAAP net income attributable to NextEra Energy was $650 million or $1.45 per share. NextEra Energy's 2015 first quarter adjusted earnings and adjusted EPS was $631 million and $1.41, respectively, with adjusted EPS up 12% over the prior year comparable quarter.

Year-over-year growth in first quarter operating cash flow was also very strong at 16%.

Consistent with the expectations we have previously shared for a slight improvement in our credit metrics in 2015, our results for this quarter account for the effects of dilution associated with the settlement of our forward agreement for 6.6 million shares that occurred at the end of 2014.

The impact of dilution in the first quarter was an approximately $0.03 per share decline from prior year comparable quarter.

As a reminder, our full year results will also be impacted by the settlements of the forward contract component of our equity units issued in May 2012 and September 2012, and the dilutive effects of these settlements will also have an impact on prior-period comparisons for the remaining quarters of this year.

Adjusted earnings from the Corporate and Other segment increased $0.04 per share compared to the first quarter of 2014, primarily due to miscellaneous corporate items, none of which were individually notable.

As a reminder, results associated with NextEra Energy Transmission and gas pipelines are reported through the Corporate and Other segment and our current infrastructure development initiatives continue to progress well during the first quarter.

Florida Southeast Connection and the Sabal Trail Transmission are on track, and we expect to be in the position to receive FERC approval around the end of this year. The land easement process continues to progress appropriately to support project construction assumptions, and we continue to expect a mid-2017 commercial operations date.

For the Mountain Valley Pipeline joint venture with EQT Corporation, we were pleased to announce during the quarter the addition of WGL Midstream as an additional shipper on the line, as well as the addition of WGL Midstream and Vega Midstream as additional partners.

The project has secured approximately 2 Bcf per day of 20-year firm capacity commitments with an expected capital opportunity for NextEra of $1 billion to $1.3 billion. Development efforts continue to progress well with the FERC application targeted for the fourth quarter of 2015 and entering commercial operations by year-end 2018.

During the quarter, our transmission team was selected by the Cal ISO to develop, build, own and operate two competitive transmission projects. These projects are the first non-incumbent utility awards for competitive transmission projects in California.

While a relatively modest and expected investment size, we are very pleased with these recent successes. While our first quarter performance was strong, a number of the key drivers, such as the recovery in our customer supply and trading activities at Energy Resources, were well-established heading into the year.

Based on what we see at this time, we continue to expect adjusted earnings per share for 2015 to be in the range of the $5.40 to $5.70 per share. The expectations we provided in March for 2016 through 2018 are also unchanged. We continue to see adjusted EPS growth at a compound annual growth rate of 5% to 7% through 2018 off our 2014 base.

As always, our expectations are subject to the usual caveats including but not limited to normal weather and operating conditions. Turning now to NEP, our expectation's taking into account all the asset acquisitions we are now contemplating are unchanged since the last call and the details we discussed at our Investor Conference last month.

For the full-year 2015, we continue to expect the NEP portfolio to grow to generate adjusted EBITDA of $400 million to $440 million and CAFD of $100 million to $120 million.

This would support a distribution level at an annualized rate of at least $1.13, which corresponds to the upper tier of the IDR splits by the end of the year or possibly slightly earlier. After 2015, we continue to see 12% to 15% per year growth in LP distributions as being a reasonable range of expectations for at least the next five years.

Assuming trading levels roughly consistent with current market conditions, this implies 2016 adjusted EBITDA of $580 million to $620 million and 2016 CAFD of $170 million to $190 million. These expectations are net of expected IDR fees of $20 million to $30 million for 2016, as we expect these fees to be treated as an operating expense.

To sum up, we continue to believe that NEE and NEP offer some of the best value propositions in the industry. We remain very focused on the major initiatives we discussed at our Investor Conference last night – or last month, and we are off to a very strong start. That concludes our prepared remarks.

And with that, we will now open the line for questions..

Thank you. We'll take our first question from Dan Eggers with Credit Suisse..

Hey. Good morning, guys..

Good morning..

I guess just following up kind of on the NEP dropdowns, at the Analyst Day, you guys brought up more discussion on acquisitions or the willingness to look at those kinds of projects coming available.

Can you just discuss what you're seeing in the market as far as actual qualifying projects that could be bought? And then just walk us through how you guys think about the cost of capital and how you budget equity cost of capital relative just the low yield where NEP trades today?.

Okay. Well, that was a few questions; Dan, it's Armando. We continue to see – I mean, the reason we brought it up at the Investor Conference is we continue to see sellers of individual assets and small portfolios out in the market. Some have transacted. Some have come to market, taken their assets back, maybe waiting for a better time.

We continue to participate, as you might expect, in anything of significance that comes to the market. But we're doing it, honestly, from a position of strength.

I mean we have a very, very nice portfolio, that I think everybody would agree, sitting at Energy Resources and our expectations would be that we will continue to drop those assets down into NEP from Energy Resources. But we will pursue acquisitions in the market if they make some sense. If none happen this year, that's fine.

I don't think anybody is going to be really disappointed. We're not going to try to be more aggressive than the next guy. We're going to try to be diligent in what we do. Having said that, I do believe that there will be, hopefully, some assets that work for our metrics and our portfolio.

The metrics, by the way, that we use when we are taking a look at acquisitions, because you asked a cost of capital question, are not much different than the metrics that we would use at Energy Resources, right. I mean, obviously, we realize that we have a great currency at NEP and it's trading at a very nice yield.

But in addition to CAFD and EBITDA multiples, which everybody seems to be focusing on, we continue to look at unlevered returns and ROEs even though the NEP units obviously trade very well compared to our other currency..

Dan, just a couple of comments on the cost of equity question. I think partly because the space is relatively new and partly because market conditions are, shall we say, historically unusual, nobody can tell you exactly what the cost of equity for any of these vehicles is.

It very clearly isn't simply the trading yield because that reflects expectations of growth which differ significantly from entity to entity; but it is also clearly true, at least in my judgment, that what we are seeing is with the creation of a vehicle like NEP, that we are accessing a lower cost of capital than we previously were able to take advantage of with respect to the long term ownership of the cash flow streams from these contracted renewable projects; though that's different from saying that there's been a change in the cost of capital for the development business..

That's good. Thank you for clarifying that. And, I guess, just on the pipeline of renewable additions, you guys were able to get down some solar beyond the 2016 time line.

Are you guys still seeing opportunity and interest in more projects getting done kind of beyond the two-year visible window and when do you think you might convert more of those into a bigger pipeline?.

for 2015 wind, for 2016 wind and 2016 solar, in addition to taking a look at solar beyond 2016. And what we are seeing, with this first PPA that was signed beyond 2016, we are seeing more interests particularly in the 2018 and 2019 timeframe from some of our traditional customers.

So I don't know whether that's going to mean that next quarter or the following quarter we've got a bunch of PPA announcements for 2018 or 2019. But what I like to see is that people are asking and inquiring as to what we could do in that timeframe. So I'm hopeful that we will be able to sign some way before the end of 2016..

Great. Thank you, guys..

Thanks..

And next, we'll take a question from Brian Chin with Merrill Lynch..

Hi. Good morning..

Good morning, Brian..

You highlighted on slide 8 that the underlying usage growth of minus 1.2% was a point of note, and that you might use the surplus D&A balance to offset this if the trend continued.

If you continue to track at this minus 1.2% for the rest of the year, would you expect that the surplus D&A levels, just given how you tend to use it at the beginning of the year and then you tend to add to it at the end of the year, do you think that that surplus D&A amount would be sufficient to offset a minus 1.2% trajectory? Would it be insufficient or still give you a nice degree of cushion? Can you just elaborate on that a little bit more?.

Sure. First of all, let me state clearly that we don't expect the negative 1.2% to continue and I'll come back to that a moment.

Having said that, if it were, hypothetically, to continue, by itself that 1%, roughly, of total revenue, is well within the bounds of the available surplus deprecation, so that really wouldn't be an issue in terms of this year.

As a practical matter, it wouldn't be an issue for a second reason, which is that the weather in April has turned out to be very favorable. So those things are going to bounce around a little bit. But I do want to comment a little bit more on the fundamentals of the negative 1.2%.

That's a large number for an individual quarter, coming off a quarter where we had positive underlying usage rate. That kind of change doesn't happen from quarter to quarter. It doesn't represent actual behavioral change, most likely. So it's probably that there's a lot of statistical noise in our weather adjustment going on here.

We had a quarter that was pretty mild so there wasn't a lot of either heating load or cooling load. And in that sort of situation, a traditional model doesn't behave particularly well. And so the amount that we're extracting for weather may or may not represent what the weather impact truly was.

So I'm not particularly concerned about it at this stage other than that it is possible that we are going to see a little bit lower underlying usage growth going forward. You may recall that the 0.5% expected growth in underlying usage was really still based on cyclical economic recovery from the downturn.

And our long-term expectation after this year or next year is really for underlying usage to be about flat..

That's very helpful. Thank you..

Thanks, Brian..

And next we'll hear from Stephen Byrd with Morgan Stanley..

Good morning..

Good morning, Stephen..

Wondered if you could provide a little bit more color on how you may finance the acquisition at NEP in terms of the $412 million.

I know, Moray, you talked a little bit about that but just trying to better understand the sort of net free cash flow yield that we could expect and how you're think about financing that?.

Sure. There's not a lot, really, to add to what we've said before. So, I divide the financing, really, into the strategic versus the tactical. Strategically, there is going to be equity financing to maintain a reasonable overall leverage ratio for NEP, consistent with what we've spoken about before.

We've said that it's reasonable to expect that projects will be acquired by NEP with somewhere between 65%, 70% leverage on them or to be levered to that level. And so, over time, you can expect to see the balance be provided by equity. So that's the long term, or the strategic, answer.

Then there's the tactical, which is how do you get there from any particular point in time, and that's really what we're more examining at the moment.

So there are a number of options there which, in one way or another, are tantamount to some form of bridge financing to get you to the longer term equity position, but we haven't made any decisions yet on exactly what we're going to do there..

Okay. Understood. And then I wanted to flip over to storage. Moray, you had mentioned wind, solar and storage. I was just curious, generally, on your take in terms of the kinds of opportunities that you may see in energy storage, what that business model might look like? I know in the past you've talked about storage linked with wind.

But just very interested in where you see storage opportunities coming from?.

storage is very expensive. It continues to be very expensive. And so, outside of markets where there is a regulatory call to pursue storage, so you can think about California, you can think about Hawaii, you can think of parts of New York, I don't think you're going to see a large uptick in storage CapEx for us or anybody else.

I've said internally that my expectation is if we can spend $100 million of capital in storage on an annual basis over the next couple of years, I think that'll be a good thing; but that by 2020 it should be, hopefully, a more significant part of what we spend on an annual basis. So we've got a lot of folks on it looking at that technology.

We've got a lot of folks in the development, but I don't expect it to be a huge jump here in the next couple of years..

That's great color. Thank you very much..

Hey, Stephen, just one last thing on your previous question; I just want to make sure because – we gave everybody a lot of numbers on these NEP acquisitions, I want to make sure that something is not being lost.

Moray said it today in the prepared remarks that there's roughly $60 million or so of financing that we would expect to get project financing on one of the assets. So although the CAFD metric, cash flow available for distribution is not something that we're fixated on; there are a lot of people that are fixated on that CAFD yield.

And so, when you're doing – when folks are doing that calculation, you've got to make sure that it's the $412 million of equity value that we gave you minus the $60 million of expected financing, which is going to occur here in the next couple of years, divided by the mid-range of the CAFD we gave you, which is roughly $30 million.

So that gets – if anybody's interested, that would get us to 8.7. Again, it's just one of very – a bunch of metrics that we look at..

Great. That's helpful. Thank you..

Moving on. We'll hear from Julien Dumoulin-Smith with UBS..

Hi. Good morning..

Good morning, Julien..

So, I wanted to address M&A but in a more generic context when you think about regulated opportunities.

Could you perhaps articulate the value proposition of pursuing more regulated assets within your overall corporate mix? Perhaps could you talk to some of the value either á la an NEP route or just what criteria might be vis-à-vis minimum accretion levels in pursing further opportunities on that side? I want to avoid the specific question but kind of get more tactical in understanding what the value proposition would be if you were to pursue any subsequent deals sort of ahead of time if you will?.

So, Julien, this is Jim. I think we – I think talked a little bit about this last month at the Investor Conference.

I think overall there are obviously a set of constraints in the industry to doing regulated M&A; those include the fact that you need to get state regulatory approvals, the fact that oftentimes synergies are shared with customers such that you can't afford to pay a very big premium.

Management teams tend not to be particularly excited about doing deals in this industry particularly given that you can't pay, necessarily, a very big premium. So there are set of constraints that you have to operate and as you think about regulated M&A.

That said, we've – for a very long time, have had a view that this is a – that scale matters in this industry ,that this is a very – for an industry that is as technology driven and is scale driven as it is – as this is, that it's very unconsolidated.

That secondly, there is enormous differentials in performance across the industry; you just need to pull the FERC data and look at the FERC data on a cost-per-customer, cost-per-megawatt-hour basis for utilities across the country to see those kind of enormous operating cost differentials.

There's also, frankly, enormous service reliability differentials. We see enormous differentials in terms of generation performance across utilities. And so, we've always had a view that we would have a lot to bring to a target in terms being able to run it better.

And so the other constraints, as we think about regulated M&A, is that we have a very constructive set of regulatory jurisdictions right now. And as we think about regulatory – regulated M&A, it's important that the jurisdictions that you would consider would also be viewed as constructive. So that also was another constraint to being able to do it.

But I think the main view of how you would create value over a long period of time is the combination of us being able to bring to bear our ability to run a utility much better than it's being run currently combined with, I think, a view that we have that we can deploy capital and technology in a way that can transform utilities for the betterment of both the customer and for the shareholder, much of how – much of which we have done over the last 15 years here in Florida.

So, hopefully, that's helpful to give you a framework of how we kind of think about regulated M&A..

But it's not necessarily á la NEP? There's no energy with that strategy?.

Julien, I think, in almost every state jurisdiction you would look at, I think it's very hard to think about putting a utility asset into a yieldco without a significant amount of regulatory risk..

Yes. Okay. And then, subsequently, just to come back to a comment you made earlier on the call, with respect to Canada and opportunities there, Ontario, can you elaborate a little bit around storage, wind and solar? You don't seem to have a lot in your backlog, as far as I can tell, in kind of the longer data period..

Sure. Sure, Julien; it's Armando. Several years ago, as many of you know, we were successful in winning a significant number of RFPs in the wind space. But even before that, we were successful in buying some solar assets and some wind assets in Canada.

The nice thing – actually, the very nice thing about the success that we had a number of years ago is we built a great team in Canada. We have an office in Canada. We have continued to develop assets and properties both on the wind and solar side in anticipation for the next round of bids that were coming out.

Those bids in Ontario have been delayed a couple of times. We're pretty sure that they're going to come out again this year. And we feel comfortable that we have a number of properties that should be competitive in the process.

That's not saying that we're going to pick any up but we certainly haven't been sitting on our hands up there just building the assets and so we're hopeful to be competitive in this next round this year..

So there's implicitly upside to your Canadian forecast with the backlog there?.

Absolutely..

Okay. Great. Thank you guys for the time..

Thanks, Julien..

And next we'll hear from Paul Ridzon with Keybanc..

Good morning. Congratulations on a solid quarter..

Thanks Paul..

I had three quick questions.

What are you hearing in Washington as far as ITC, PTC extension, the latest kind of body language there? And then what's your outlook for the full year at corporate given the strength in the first quarter? And then lastly, how is your outreach program going in Hawaii as far as getting the vote out given the unique kind of approval process there?.

So Paul, I'll – this is Jim. I'll answer those questions. First of all the PTC, ITC, on the ITC we fully expect at the end of 2016 that the solar ITC will step down from 30% to 10%. We support that step down and I think solar is going to be cost competitive without an ITC in the back half of this decade.

And so I don't think you need it to continue to drive solar demand going forward. On the PTC front, we see work on extenders probably happening, starting sometime in the late summer, early fall, once they – folks have still not given up hope on tax reform just yet this year.

That hope, I think, will probably be given up in the late summer, early fall and they'll get to work on trying to get to an extenders package.

I think there's clear understanding on the part of the leadership in both the Senate and the House that extending the – doing a tax extenders bill on getting it signed on December 22 or December 23 like happened last year is not optimal for planning for companies and doesn't really accomplish much of anything.

And so, I would expect them to try to get working on it earlier. I think my expectation, the most likely outcome for the PTC, is a – and for the whole extenders package is a one year, just a simple one year extension, kick the can down the road.

I do think there is a chance that you would see a multi-year phase out of the PTC, one that we've supported over – in the last extenders discussion. We almost got there with the multi-year phase out and extension of the PTC. And I think there's a chance that that would happen this year again.

But I think, as I said, the highest odds is just a simple one-year extension of all extenders in bonus depreciation by the end of the year. On – given we've had a good first quarter, it's still very early, and we still feel very comfortable with our expectations for the full year as Moray said on the call.

And then in terms of Hawaii and the shareholder votes, the vote is really not until May 12. It's very early.

Things have gone well so far, but it's very early and there's a significant amount of work going on in terms of outreach to both retail and institutional shareholders and so we'll have more visibility into that as we get closer to the May 12 date..

And then, if I could just add one more. Sorry.

When do you expect the Florida Supreme Court to rule on gas storage or gas reserves?.

Hey, Paul. This is Eric Silagy. It's always hard to predict when the court is going to rule. There's no set time line for the courts to have to rule, so we'll just have to wait and see. Unfortunately, there's no visibility in that..

Okay. Thank you again..

Thanks, Paul..

Next, we'll hear from Steven Fleishman with Wolfe Research..

Yeah. Hi, everyone.

Just further on the Hawaiian deal, what's the latest in terms of timelines for approval?.

Steve, we're still hopeful that we're going to be able to get all regulatory approvals by the end of the year and that's the target that we're working towards..

Okay.

Is there any movement toward like settlement discussions or still more formal process?.

I think, Steve, that we're very early in the process right now and discovery will be ongoing through the summer. And we expect all of the filings to be done by the end of August and so, anything on the settlement front would be very premature..

Steve, just data; we filed formal testimony. I think we've had some 300 interrogatories or data requests so far. We can expect to have a lot more over the coming months. That's good.

We want to make sure that all legitimate questions are appropriately aired and that people get the answers to the questions they have because we firmly believe this is fundamentally a good deal for folks in Hawaii, customers, as well as for shareholders.

So we want to make sure that all the facts come out, but it will take a while and the schedule calls for that to go through the summer..

Okay. And then one, just, follow-up question to some of the questions that came up on storage. I'm curious if you've had any pre-insight to what Tesla is going to come out with tomorrow and if it's anything that's significant within your view of movement on battery storage..

Nope. Unfortunately, I didn't get my pre-earnings Twitter feed. I have no idea, Steve..

Okay. Thank you..

And moving on, we'll go Michael Lapides with Goldman Sachs..

Hey, guys. Question for you on electric transmission, really merchant electric transmission. Can you talk about the size and the scale of the California projects and then when you look around the landscape in North America, not just U.S.

but Canada, how big of a potential opportunity and how long-dated?.

that if we can get, by the end of the decade, to a business that's got an annual net income contribution of $50 million to $100 million, that would be doing pretty well. And, obviously, you can figure out the CapEx that's required to get to that kind of level given typical transmission returns..

And how do you guys think about what is as close to a normal run rate for the customer supply business, for the retail business for your trading? Meaning, is 2015 a normal year? Is it still below normal and still some of the offshoots from what happened last year? Just if you could parse those three lines of business within the year (51:54) and where you think they are versus what's your view of what a potential normal could look like?.

Well, first of all, in terms of normal overall, I would say, you can look to the two charts in the back for the 2015-2016 expectations as to – I think those are normal expectations given what we see today.

On the specific, I think the way to think about the customer supply business is that last year's first quarter was truly abnormal in the negative sense, because of the peculiarities of the way the market behaved in response to extreme weather conditions.

This year, the weather conditions actually were not that dissimilar, but the market behaved very differently. And the customer supply business behaved much more as you would expect. If anything, it was actually, probably, a little ahead of where we would have steady-state profitability levels.

But having said that, the profitability of that business does vary from period to period and year to year as people move in and out of the market. It gets more or less competitive at different times.

So overall, I think the forward-looking numbers that we have in those two charts with 2015 and 2016 for EBITDA and cash flow are reasonable representations of what we can expect for a typical year for those businesses..

Got it. Thanks, Moray, much appreciated..

Thanks, Michael. I think we have time for one more question..

And next we'll hear from Paul Patterson with Glenrock Associates..

Good morning..

Morning, Paul..

The customer supply business, it looks to me like – and I apologize if you guys went over this at the conference – but it looks to me, just from quarter-over-quarter, that your expectations for that business are increasing. And of course, the quarter came out pretty well.

Could you just elaborate a little bit more in terms of – you guys said it was getting back to more normal levels or something.

Could you talk a little bit more about that?.

Yeah. Well, as I just said in response to Michael's question, last year's first quarter was very strongly adversely affected in the Full Requirements business by the impact of extreme weather conditions, winter weather conditions, up in the Northeast. That was not the case this year.

The market behaved much more normally in response to similar weather conditions, and so the business behaved much more normally. If anything, it was, again, as I said, a little bit ahead of our expectations..

But I guess what I'm – I'm sorry, I wasn't clear.

The projections in your slides for 2015 and 2016, it looks to me like the customer supply, as opposed to last quarter, looks like the projections for 2015 and 2016 have increased annually, significantly, if I'm reading them correctly, compared to the fourth quarter of 2014, when you guys had those slides there.

Do you follow me?.

There's a little bit of an increase in there. Yeah. Basically, based on some of the good news that we see in this year we're essentially assuming that it will continue into next year..

Okay. And that's simply because of the – okay. And did you think that last quarter because you guys were apprehensive about the – was there anything that actually changed....

All right. I see where you're going. Yeah. The impact of the way the markets behaved in this quarter is what gives us a little more comfort that the levels of profitability that we're seeing now may be what we should expect for the next couple of years..

Okay. Thanks. I'm sorry if I didn't ask the question clearly enough..

Okay. I didn't understand it..

And then the legislation that – the PSC reform legislation, any – it looks like it's been – the House abruptly has adjourned, I guess.

And it looks like – if I understand it correctly, maybe I don't, that the Senate is sort of left with either the original House bill because I guess they amended it and were going to send it back to the House; (a), any thoughts about the legislation? Does it have any significant – do you see any significant impact that the legislation might have on you, guys, positive or negative? And (b), does it look it like it's going to happen, I guess, given what happened I guess yesterday or something?.

Right. So, this is Eric. What I'll tell you is you're correct that the House sent back just before they adjourned the original House language. So they stripped out the three amendments that the Senate had put on the House language when they sent it over to the House.

And so, they sent it back to the Senate and then they adjourned, which means that the Senate has a choice of either passing it as presented to them or not passing it. They could not take it up, that kills it; or they could vote it down, that kills it; or they could pass it as it stands. I don't see any significant impact really at all.

No kind of impact to us whatsoever; not worried about that. What the Senate will do, hard to predict. It's always a challenge to figure out what's going to happen so we'll see if they even take it up..

Okay. And if they did take it up, I mean, just if it was passed as, I guess, it came out of the House, do you guys see this is as significant? It just seems like some reforms of sort of some of the elements to it. It didn't seem like anything all that substantial.

I just wanted to check – but I mean, maybe I'm wrong; is there any thoughts about it?.

No. No. You're correct. There's nothing there. I mean, frankly, it codifies what in many respects are already the rules..

Okay. Great. Thanks a lot..

All right. Thank you, Paul. Thank you, everybody. That completes our call. Thank you for your interest..

And, ladies and gentlemen, that does conclude today's conference. We thank you for your participation..