Amanda Finnis - Director of Investor Relations James Robo - Chairman and Chief Executive Officer John Ketchum - Executive Vice President and Chief Financial Officer Armando Pimentel - President and Chief Executive Officer, NextEra Energy Resources Eric Silagy - President and Chief Executive Officer, Florida Power & Light Company Mark Hickson - Executive Vice President of NextEra Energy.

Stephen Byrd - Morgan Stanley Steve Fleishman - Wolfe Research Greg Gordon - Evercore ISI Paul Ridzon - KeyBanc Jerimiah Booream - UBS Jonathan Arnold - Deutsche Bank Michael Lapides - Goldman Sachs.

Good day, everyone and welcome to the NextEra Energy and NextEra Energy Partners Conference Call. Today's conference is being recorded. At this time, for opening remarks, I would like to turn the call over to Mr. [Indiscernible]. Please go ahead, sir..

Thank you, Jane. Good morning, everyone and thank you for joining our first quarter 2017 combined earnings conference call for NextEra Energy and NextEra Energy Partners.

With me this morning are Jim Robo, Chairman and Chief Executive Officer of NextEra Energy; John Ketchum, Executive Vice President and Chief Financial Officer of NextEra Energy; Armando Pimentel, President and Chief Executive Officer of NextEra Energy Resources; and Mark Hickson, Executive 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.

John 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 current expectations and assumptions, which are subject to risks and uncertainties.

Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release, in the comments made during this conference call, in the Risk Factors section of the accompanying presentation or in our 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 non-GAAP financial measures.

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

Thank you, Matt, and good morning, everyone. NextEra Energy and NextEra Energy Partners delivered solid first quarter results and are off to a strong start towards meeting their respective objectives for the year.

NextEra Energy’s first-quarter adjusted earnings per share increased 10.1% against the prior year comparable quarter, reflecting strong performance at both Florida Power & Light and Energy Resources. Over the same period, NextEra Energy Partners grew per unit distributions by roughly 15% versus the prior year comparable period.

Adding to the solid run rate with which NEP entered the year, we are pleased to announce the acquisition of an additional asset from Energy Resources, which I will discuss in more detail later in the call. At FPL, earnings per share increased $0.10 from the prior year comparable quarter.

Continued investment in the business was the primary driver of growth as regulatory capital employed grew 9.7% year-over-year.

With residential build significantly lower than the national and Florida averages, FPL’s focus continues to be on finding smart investments to lower costs, improve reliability and provide clean energy solutions for the benefit of our customers.

In addition to the approximately 1750 MW Okeechobee Clean Energy Center, which remains on track and under budget FPL continues to make excellent progress towards its recently announced solar development initiatives.

Earlier this month, we filed FPL’s ten-year with the Public Service Commission and announced that we expect to add a total of nearly 2100 MW for solar across Florida over the next several years. We have already secured sites that will potentially support more than 3 GW of FPL’s continued solar growth.

We also remain excited about our 50 MW battery storage pilot program that was approved as part of the 2016 base rate settlement agreement, which is expected to complement our solar development efforts.

In addition to solar, as part of FPL’s 10-year site plan, we announced our intention to modernize one of FPL’s oldest power plant in the Dania Beach Florida, with a new approximately 1200 MW high efficiency natural gas plant, and to pursue the early phase out of an additional coal-fired plant that we co-own with JEA.

FPL was recognized in 2016 for the second consecutive year as being the most reliable electric utility in the nation, as well as for its response to Hurricane Matthew and Hermine.

We remain committed to continuously improving our customer value proposition by continuously making investments to harden and automate our existing transmission and distribution system.

Not only does FPL offer what we believe is a total customer value proposition that is second to none, but as a result of these initiatives we also expect to continue to deliver shareholder value as regulatory capital employed is expected to grow at a compound annual growth rate of roughly 8% per year over the four-year term of January 2017 to December 2020.

At Energy Resources, adjusted EPS increased by $0.10 per share against the comparable prior year quarter as contributions from new investments continued to drive growth. It was another outstanding period for renewables origination with the addition of 413 MW of wind and 208 MW of solar PPAs added to the backlog this quarter.

We also entered into agreements to sell over 1000 MW of wind development rights and new wind projects to one of our largest customers, which we have not previously announced and are not included in our backlog. I will provide more details on our continued origination success later in the call.

During the quarter, Energy Resources successfully commissioned the first 114 MW of its wind repowering program and continues to make solid progress on the remaining sites. As a reminder, we have tax equity financing commitments in place for the approximately 1600 MW of repowering projects that we have previously announced.

These projects represent around half of the total $2 million to $2.5 million of capital deployment that we expect for repowering through 2020. We continue to actively pursue additional repowering opportunities for our existing contracted portfolio, which will largely comprise the balance of the repowering opportunity in 2018, 2019 and 2020.

Beyond renewables, we continue to make good progress on development and construction activities related to our three natural gas pipeline projects and our development team continues to seek new pipeline opportunities going forward. At NextEra Energy Partners, the assets operated well and delivered financial results in line with our expectations.

Yesterday the NEP board declared a quarterly distribution of $0.365 per common unit or $1.46 per common unit on an annualized basis continuing our distribution growth at the top end of our range. Inclusive of this increase, NEP has grown its distribution per unit by 95% since the IPO in July of 2014.

Further building upon that strength, today we are announcing that NEP has reached an agreement to acquire the approximately 250 MW Golden West Wind Energy Center from Energy Resources.

We expect the transaction, which is anticipated to be funded with available debt capacity, to yield a double-digit return to NEP’s unit holders and be accretive to LP distributions.

With its extended growth runway, we believe NEP offers a superior value proposition and is better positioned than ever to deliver upon the expectations that we have outlined for our investors. Before continuing with the discussion of our strong results for the quarter, I would like to say a few words about the Oncor transactions.

Oncor has always been an opportunistic transaction that we believe leverages our core strength in operating rate regulated utilities efficiently to deliver on our customer value proposition of low bills, high reliability and outstanding customer service.

We are disappointed by the recent ruling from the Public Utility Commission of Texas that our proposed transactions are not in the public interest. We expect to file a motion for rehearing with the commission sometime in the next few weeks.

However, if we are ultimately unsuccessful with the transactions we continue to believe that we have one of the best growth opportunity sets in our industry and we will be disappointed if we are not able to deliver financial results at or near the top-end of our adjusted EPS growth range of 6% to 8% through 2020 off a 2016 base.

We remain laser focused on continuing our long term track record of delivering outstanding results for our shareholders.

As a reminder, through the end of 2016 we outperformed both the S&P 500 and the S&P utility index in terms of total shareholder return on a 1,3,5,7 and 10-year basis, and have outperformed more than 70% of S&P 500 over the last 10 years.

We were once again honored to be named for the 10th time in 11 years number one in the electric and gas utilities industry on Fortune’s 2017 list of world’s most admired companies, and to be ranked among the top 10 companies worldwide across all industries for innovation, social responsibility and wise use of corporate assets.

While third-party acknowledgments are a reflection of our past successes, we remain focused on the future.

We expect that the organic growth prospects of both FPL and Energy Resources combined with our continued focus on running our businesses efficiently through initiatives such as our recently announced [project] will allow us to extend our long term track record of delivering value for our customers and providing growth for our shareholders, while we continue to maintain one of the strongest balance sheets and credit positions in the industry.

Now let us look at the detailed results, beginning with FPL, for the first quarter of 2017 FPL reported net income of $445 million or $0.95 per share. Earnings per share increased $0.10 or approximately 12% year-over-year. The primary driver of FPL’s earnings growth was continued investment in the business.

Average regulatory capital employed grew roughly 9.7% over the same quarter last year. FPL’s capital expenditures were approximately $1.7 billion for the quarter, and we expect our full-year capital investments to be between $5 billion to $5.5 billion. I will discuss FPL’s capital initiatives in more detail in a moment.

Our reported ROE for regulatory purposes will be approximately11.5% for the 12 months ending March 2017. As a reminder, under the new rate agreement we maintain the ability to record reserve amortization entries to achieve a predetermined regulatory ROE for each trailing 12-month period.

We began 2017 with a reserve amortization balance of $1.25 billion and used $211 million during the first quarter to achieve the regulatory ROE of 11.5%.

As we previously discussed, we expect to use more reserve amortization in the first half of the year given the pattern of our underlying revenues and expenses, and we expect this year to be no different.

As you may recall, in 2016 we entered the year with a reserve amortization balance of $263 million and utilized $176 million in the first quarter, but ended the year with a balance of $250 million. The Florida economy continues to show healthy results with recent unemployment rates near their lowest level since 2007.

Florida’s consumer confidence level is at post-recession highs. The real estate sector continues to grow with average building permits and the Case-Shiller Index for South Florida up 1.1% and 6.7% respectively versus the prior year.

During the quarter, FPL’s average number of customers increased by approximately 65,000 or 1.3% from the comparable prior year quarter, which is generally consistent with our long-term expectations for customer growth. Overall usage per customer decreased 1.4% compared to the prior year.

As we have previously noted, usage per customer tends to exhibit significant volatility from quarter-to-quarter, which is more pronounced during periods of abnormal weather conditions similar to those experienced during the first quarter.

On a 12 month rolling average, weather normalized customer usage has declined by negative 0.5%, consistent with our long-term expectations averaging between 0% and approximately negative 0.5% per year. However, as a reminder, for the full year 2016 we saw no negative impact from weather normalized customer usage.

We will continue to closely monitor customer usage trends going forward. After accounting for these effects and the impact of a leap year day in 2016, first quarter retail sales decreased 1.2% year-over-year.

Looking ahead, for 2017, we continue to expect the flexibility provided by the reserve amortization balance coupled with our weather normalized sales growth forecast and current Capex and O&M expectations to support a regulatory ROE towards the upper end of the allowed band of 9.60% to 11.60% under our new rate agreement.

As always, our expectations assume among other things, normal weather and operating conditions.

Before moving on, let me now take a moment to update you on some of our key capital initiatives, during the first quarter FPL selected the sites for the initial projects being developed under the solar base rate adjustment or SoBRA mechanism of the base rate settlement agreement.

The approximately 600 MW of 2017 and 2018 solar is comprised of 874.5 MW sites, which are expected to commence construction this spring with commercial operation expected for half of the sites by year-end 2017 and the remainder in the first quarter of 2018.

As a reminder, under the SoBRA FPL is permitted to petition for recovery of up to 300 MW of cost-effective solar to be placed in service each year through 2020, and if approved immediately begin recovering the cost of these projects through rates upon commercial operation.

By selecting optimal sites on FPL’s transmission system and leveraging the company’s industry-leading construction, sourcing and development capabilities these projects are expected to produce millions of dollars of net lifetime savings for customers, and will help to further diversify FPL’s fuel mix.

We continue to develop sites for the approximately 600 MW of solar capacity planned for 2019 and 2020 under the SoBRA and will work to advance the additional 900 MW of solar that is included in our 10-year site plan over the next several years.

As part of the new 10-year site plan, FPL also announced its intention to further modernize the Lauderdale plant and Dania Beach, Florida with a new approximately 1200 MW high-efficiency, natural gas plant that will begin operation by mid-2022.

This project, the Dania Beach Clean Energy Center, will help FPL maintain its best in class rank among major US utilities for having the lowest operating to maintenance expenses measured on a cost per kilowatt hour of retail sales.

By modernizing a plant that was last updated nearly a quarter century ago with current state of the art technology, FPL customers are expected to save hundreds of millions of dollars in reduce fuel and operating the maintenance cost over its operational life.

FPL plans to initiate the public service commission approval process for the modernization in the second quarter. Additionally, earlier this year together with our joint interest owner, JEA, we announced a preliminary agreement to commission the St. Johns River Power Park, a 1252 MW coal-fired plant, in which FPL has a 20% ownership stake.

Similar to the Cedar Bay and Indiantown transactions the early closure of the St. Johns plant in 2018, which we intend to see commission approval of this spring, is expected to both reduce costs for FPL customers and significantly reduce emissions.

All of our ongoing capital initiatives are aimed at enhancing our overall customer value proposition of delivering low bills, high reliability, outstanding customer service and clean energy solutions for Florida customers. Let me now turn to energy resources, which reported first-quarter 2017 GAAP earnings of $476 million or $1.01 per share.

Adjusted earnings for the first quarter were $357 million or $0.76 per share. Energy Resources’ contribution to first quarter adjusted earnings per share increased $0.10 or approximately 15% from the prior year comparable period. New investments added $0.35 per share.

In 2016, we commissioned roughly 2500 MW of new wind and solar projects in the US, which was a record year for Energy Resources. Contributions from new investments and renewables together with the timing of tax incentives on certain projects added $0.31 per share, reflecting strong contributions from these new project additions.

New investments in natural gas pipelines added $0.04 per share. Contributions from existing generation assets were essentially flat against the prior year comparable period as was company-wide wind resource. Contributions from our upstream gas infrastructure activities declined by $0.11 per share.

As a result of sustained weak commodity prices, in the first quarter of 2016 we elected not to invest capital in drilling certain wells, which resulted in liquidation of [in the money] hedges and the resulting recognition of income.

The absence of these hedge liquidations this quarter combined with increased depreciation expense reflecting higher depletion rates were responsible for the year-over-year decline. Mild weather negatively affected our customers’ supply and trading business, where contributions declined by $0.04 per share.

All other impacts reduced results by $0.09 per share including the effects of interest expense, reflecting continued growth from the business and share dilution. Additional details are shown on the accompanying slide.

At Energy Resources, we continue to believe we are well positioned to capitalize on one of the best environments for renewables development in recent history. While state renewable portfolio standards continue to provide strong support for wind and solar growth, customer origination activity continues to be largely driven by economics.

Based upon continued equipment efficiency improvements and cost declines, Energy Resources can offer wind PPAs at very competitive prices. Similarly solar is becoming more competitive on a levelized cost of energy basis across the country.

We anticipate that improved wind and solar economics and low natural gas prices will continue to lead to additional retirements of coal, nuclear and less fuel-efficient oil and gas-fired generation units, creating significant opportunities for renewables growth going forward.

Additionally, over the long term as battery costs decline and efficiencies improve we expect batteries to further complement renewable economics, supporting additional demand as the tax credit stays down in the next decade.

As a result, we believe the size of the market potential for new renewables is larger than it has ever been helping to drive growth well into the next decade. I am pleased to report that since the last call we have signed contracts for roughly 413 MW of new wind projects, including 368 MW for post-2018 delivery.

We have also signed 208 MW of new solar projects, including 177 MW for post-2018 delivery. These contracts are a reflection of the factors I just mentioned combined with the continued success of our origination efforts as we capitalize on our competitive advantages in both solar and wind.

In addition, one of our largest customers is purchasing over 1000 MW of wind projects for self ownership.

These projects represent a combination of development asset sales, where our customer finishes development activities and manages construction and build-own transfer opportunities in which Energy Resources turns the project over prior to commercial operation.

With our strong internal origination efforts and large pipeline of development projects, Energy Resources has an ability to recycle capital by sometimes selling developed sites to or building projects for others, who may want to own some renewable assets outright.

These efforts allow us to optimize our development portfolio and in most cases are expected to help us secure additional PPAs.

More importantly the project sales are expected to generate a significant portion of the after-tax MPV per KW that we would realize over the life of a contracted wind project, roughly 20% to 25% of the MPV for development rights sale, and roughly 40% to 50% of the MPV for a build-own-transfer project.

Our core business will continue to be to provide long-term contracts to customers.

We believe the addressable long-term contracted market remains as strong as ever with cooperatives, municipalities, commercial and industrial customers, and most investor-owned utilities benefited from the scale and other competitive advantages that Energy Resources can provide.

The attached chart provides additional details on where our renewables development program now stands for 2017 and beyond. We will give further details on our renewables development program at our investor conference, which we plan to hold on June 22 in New York. The development activities for our natural gas pipeline projects remain on track.

Construction on the Florida pipelines is progressing well and we expect an in-service date in the second quarter of this year. As a reminder, NextEra Energy’s investments in Sabal Trail Transmission and Florida Southeast Connection are expected to be roughly $1.5 billion and $550 million respectively.

The Mountain Valley Pipeline has continued to progress through the FERC process. We continue to expect to be in a position to receive FERC notice to proceed later this year to support commercial operations by year-end 2018. NextEra Energy's expected investment is roughly $1 billion. Let me now review the highlights for NEP.

First quarter adjusted EBITDA was a $170 million and cash available for distribution was $40 million up $29 million and $2 million respectively against the prior year comparable quarter. Overall, results were consistent with our expectations. Portfolio additions over the last year drove growth and adjusted EBITDA of approximately 21%.

Adjusted EBITDA and cash available for distribution from existing projects was roughly flat declining by $2 million against the prior year comparable quarter, primarily as a result of lower wind and solar generation. For the NEP portfolio, wind resource was 99% a long term average versus 100% in the first quarter 2016.

Desert Sunlight, which NEP acquired a 24% interest in during the fourth quarter of 2016 provided a minimal contribution to first quarter cash available for distribution growth due to its seasonal generation profile and quarterly debt service payments.

Looking ahead, we expect substantial growth and cash available for distribution in the second and third quarters of this year as Desert Sunlight began to making meaningful contributions.

When viewed on a run rate basis, which removes the timing impact of acquisitions and their seasonal generation and debt service profiles, annual cash available for distribution grew 18% over the prior year comparable quarter forwarding the growth in LP distributions.

As a reminder, these results are net of IDR fees, since we treat these as an operating expense. The impact of other effects, including management fees and outside services are shown on the accompanying slide.

We continue to execute on our plan to expand NEP's portfolio and I'm pleased to announce that NEP has reached an agreement with Energy Resources to acquire the Golden West Wind Energy Center. Golden West is an approximately 250 MW wind project in Colorado that entered service in October 2015 and sells 100% of its output under a 25 year PPA.

The transaction which is expected to close in early May represents another step to our growing LP unit distributions in a manner consistent with our previously stated expectations of 12% to 15% per year through at least 2022.

NEP expects to acquire the Golden West project for total consideration of approximately $238 million, subject to working capital and other adjustments. Plus the assumption of approximately $184 million in liabilities related to tax equity financing.

The acquisition is expected to contribute adjusted EBITDA of approximately $53 million to $63 million and cash available for distribution of approximately $22 million to $27 million, each on an annual run rate basis as of December 31, 2017.

The purchase price for the transaction is expected to be funded entirely through existing debt capacity and the asset is expected to further enhance the quality and diversity of NEPs existing portfolio while being accretive to LP unit distributions. Turning now to the consolidated results for NextEra Energy.

For the first quarter of 2017, GAAP net income attributable to NextEra Energy was $1.583 billion or $3.37 per share. NextEra Energy's 2017 first quarter adjusted earnings and adjusted EPS were $820 million and a $1.75 per share respectively.

Adjusted earnings from the corporate and other segment decrease $0.04 per share compared to the first quarter of 2016 primarily due to the absence of FiberNet and the timing of certain tax items.

The sale of FiberNet at 16.7 times 2016 EBITDA, generated net cash proceeds of over a $1.1 billion and a net after-tax gain on disposition of approximately $685 million, that is excluded from NextEra Energy's first quarter adjusted earnings.

NextEra Energy's operating cash flow adjusted for the impacts of certain FPL cost recoveries in the Indiantown acquisition increased by over 10% year-over-year. Based on our first quarter performance at NextEra Energy, we remain comfortable with the expectations we have previously discussed for the full-year.

For 2017, we continue to expect adjusted earnings per share at NextEra Energy to be in the range of $6.35 to $6.85, and at or near the upper end of our previously disclosed 6% to 8% growth rate of 2016 base.

As part of the financing for Oncor, NextEra entered into equity forward transactions for 12 million shares which would provide approximately $1.5 billion in proceeds. Given that we do not have a current need for the equity, we intent to settle the forward contract shortly in an orderly manner.

We continue to expect adjusted earnings per share in the range of $6.80 to $7.30 for 2018, and for NextEra Energy's compound annual growth rate and adjusted EPS to be in the range of 6% to 8% through 2020 off of 2016 base while maintaining our strong credit ratings.

We also continue to expect to grow our dividends per share 12% to 14% per year for at least 2018 off of 2015 base of dividends per share of $3.08. As always, our expectations discussed throughout today's call are subject to the usual caveats including but not limited a normal weather and operating conditions. Turning now to NEP.

At NEP, as I mentioned earlier, yesterday the NEP board declared a quarterly distribution of $36.05 per common unit or $1.46 per common unit on an annualized basis representing a 15% increase over the comparable distribution a year earlier.

Our expectations for December 31, 2017 run rate adjusted EBITDA and CAFD are unchanged at $875 million to $975 million and $310 million to $340 million respectively. These expectations are subject to our normal caveats and our net of expected IDR fees since we treat these as an operating expense.

From a base of our fourth quarter 2016 distribution per common unit and an annualized rate of $1.41, we continue to see 12% to 15% per year growth and LP distributions as be in a reasonable range of expectations for at least 2022, subject to our usual caveats.

As a result, we expect the annualized rate of the fourth quarter 2017 distribution that is payable in February 2018 to be in the range of a $1.58 to a $1.62 per common unit. We continue to expect NextEra Energy Partners to achieve its distribution growth targets without issuing common equity for 2017 and potentially 2018.

In summary, we remain as enthusiastic as ever about our future prospects. FPL energy resources and NEP all have an outstanding set of opportunities across the board, now we are off to a strong start to 2017 as we continue to execute well against all of our strategic and growth initiatives.

At FPL, we continue to focus on operational cost effectiveness productivity and making smart long term investments to further improve the quality, reliability, and efficiency of everything we do.

Energy resources maintain significant competitive advantages to capitalize on the expanding market for renewables development and is continuing to make strong progress on its natural gas pipeline development and construction efforts.

For NEP, growth in the North American renewables market and the originations success and energy resources continue to expand the pipeline of potential dropdown assets and it's long term growth prospects remain stronger than ever providing benefits for both NEE and NEP.

We remain intensely focused on executing on these opportunities and extending our long term track record of delivering value to shareholders. With that, we will now open the line for questions..

[Operator Instructions] And we'll go first to Stephen Byrd with Morgan Stanley..

Hi, good morning and congratulations on good results..

Thank you, Stephen..

I wanted to explore the notion for rehearing in Texas and I wondered if you could just speak to what the process might look like and then I guess at the core of it, what I'm thinking about are the conditions that were set out it seem very challenging and probably really don’t set a good press in for our industry.

How could those potentially be addressed through this process?.

Steve, I might differ that question to Jim..

So, Steve, just from a process standpoints and I'll get the days pretty close, I think we have 25 days from when the final order went out to file through rehearing the commission then have 30 days to roll on that. They can extend it for a bit should they choose to. And so, that's the kind of process that you're looking at in terms of timing.

I think in terms of, obviously we were disappointed in the decision we think we would be a terrific owner of Oncor for the state and for its customers. I think we would add enormous value to customers in Texas from how we would operate the utility.

So, in terms of anything else, I think I guess the other two things I would say is obviously we can't pay $18.7 billion for utility that we can't run. And we can't control the board and we can't have access to dividends. And it's just bad business to do anything other than that.

And so, you can expect that we will not be accepting any conditions that would not allow us to point the majority of the board or have access to the dividends. I mean, that's just we've been very clear about that from the beginning on this transaction and we continue to be very clear on it.

And so, we remain very committed to trying to get it done and as I said we'll be filing for a rehearing here shortly..

Understood. And then if I could shift gears over to wind, we're certainly really encouraged by wind economic improvements. Just looking out a bit further than maybe we typically do.

When you think about the changes to wind turbine technology the next generation of blades and turbines, what's the approximate timing for the next generation and how should we think about potential step changes and improvements even further in terms of wind economics and what does to your addressable market?.

Yes. I think from a wind step change standpoint, we had commented on the last call that we expect wind to be about a $0.02 to a $0.03 product without tax credits, early in the next decade. And we get comfortable with that largely because of the step change and the improved economics that we see with wind turbines.

First of all, we're expecting even a taller tower design, wider rotor diameters, towers getting to about 90 meters, rotors up close to a 130 meters which could drive the NCF to right around 60%.

You combine now with what we expect to be continued progressive reductions and turbine equipment pricing, which we think we'll get even more aggressive as the PTC phase is down. That's how we really get comfortable with that market.

And then when you think about the production tax credit, actually facing down right around 2023, we continue to be optimistic about what we see on batteries.

We have 20 people dedicated to our battery development effort, we're investing upwards of a $100 million a year in batteries, we're excited about the 50MV battery storage pilot program that FPL has.

But imagine the game changer that that would be for renewables, not only wind, that blows predominantly during the in the peak shaving economic opportunities around solar. That could really also help to substantially drive renewable economics.

Granted battery still have a long way to go, they're still expensive, still inefficient, but with all the investment from the automotive industry, the focus that you're seeing from our sector, we obviously want to be a leader.

The Chinese have announced that they plan to take a major role in battery manufacturing which is one of the factors that really help to drive down the cost curve on PV panels. Those are all things that really make us very optimistic about the prospects for renewables development as we head into the next decade..

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

And we'll take our next question from Steve Fleishman with Wolfe Research..

Yes, hi. Two questions. First, I guess this was for Jim. Obviously you are pursuing we're hearing on Oncor, but assuming that that doesn't work out and you're kind of in the standalone case which it sounds like you're thinking you could hit the upper end of your growth rate. Kind of how important is looking at other M&A in the future.

I have some investors who say you strategically you guys need to do a deal, could you just kind of give your view on that?.

Sure, Steve. So, I think John said on the call, excluding Oncor, we'd be disappointed if we didn’t earn at the top end of the 6% to 8% range through 2020 from an EPS standpoint. And we're very comfortable with that, we're very comfortable with our organic growth prospects. We do not have to do anything.

I love our standalone prospects, I love our two businesses, they have tremendous opportunity to deliver growth for shareholders and also tremendous opportunity to do good things for customers. And so, I love our two businesses on a standalone basis. M&A is hard.

I think we've seen in the last month in our industry how hard it is and any -- our perspective of M&A really hasn’t changed for a very long time, which is it's that anything that we would do if we were to do something would have to be really compelling for shareholders. As I said, it's very hard to do.

And we're all as always we're going to stay disciplined and let me just reinforce again, we don’t have to do anything on the M&A front because we really do love our standalone organic growth prospects..

Okay, good. And then on the just a question on renewables. So, if you look at the your '17 to '18 development targets, you still have a decent amount to fill in to get to your kind of current expectations.

Could you just give color how you're feeling about getting to that?.

Hi Steve, I'm Armando. We feel good or we would have obviously changed the numbers. There is I think we said at the last call that there was a lot of activity really through the four years for wind from '17 through '20 and honestly there is a lot of activity in the market right now for solar from '18 to '21.

So, we continue to see folks that are interested and bring in renewables and in '18, even if the price maybe a little bit higher for them, they understand that but for their own reasons, whether its commercial and industrial folks that have something internally to get done or whether its folks on the utility broadly define the utility space that have made commitments to regulate us or others, they're interested in '18.

So, I don’t know ultimately how it will work out, but we looked at it again this quarter based on the activity that we have in-house and what we know is coming down the pipe. We continue to feel comfortable with the range..

Great, thank you..

Thank you..

And we'll take our next question from Greg Gordon with Evercore ISI..

Thank you, good morning..

Good morning, Greg..

Turning to the utility business. When you talk about the 8% growth rate and using this as sort of the settlement agreement as a benchmark, what's in the capital plan today and what's not. Refresh my memory but I believe and that was approved by the commission allowed up to 300MV a year of solar.

But it sounds like you're opportunity set it a lot higher than that. So, what is what are you planning on doing and then some of the new initiatives you've announced like the proposal to knock down and rebuild that gas plants.

Can you just give us what's in the baseline and what the opportunity set is?.

Yes, I mean, sure. One is the transmission and distribution, continued storm hardening, the automation effort that we have there. We have the Oak Ridge OB clean energy center opportunity as well. We have the 1200MV of solar or the extra 900MV in a minute that are part of the SoBRA adjustment. We have the 50MV in our battery storage.

Opportunity although would have to recover in rates during the next rate case on that. We still have combustion parts improvements that we continue to make to the existing facilities, continue to complete the peak or upgrades that we have talked about previously.

And then we have all the opportunities that we laid out in the 10 year side plan which are incremental. First of all, the additional 900MV of solar which we have secured better than 3 gigawatts of sides in Florida for that we like to be able to execute on over the next several years.

Obviously, we are in a good position with our surplus amortization balance, and then the Lauderdale opportunity that we announced as well, which would be more of a 20, 22, I think COD that we would pursue there. And then obviously the St.

Johns opportunity that I mentioned earlier, we continue to find smart investment opportunities to clean up the emissions profile in Florida and continue to make NextEra Energy and FPL one of the cleanest emission generators of all top 50 power producers in the country. And we'll continue to try to identify further opportunities going forward.

But those are the things that really drive that 8% regulatory capital employed growth..

Forgive me for following-on up on the solar. If you chose to go ahead and because you have the opportunity and the sites to go build more than what is in the current segment plan.

What's the recovery mechanism for that?.

So, Greg, this is Eric Silagy. So, outside of the rate agreement, if we went ahead and did solar, then we would seek to recover that during the next grade preceding. That would be the mechanism that we would do that. So, we are looking at opportunities and identifying sites.

And we'll determine whether or not we want to do that before we go to the next rate preceding or afterwards..

Okay..

And hey Greg, this is Jim. Just one last thing on that. We are going to, you could expect that in the June Investor Conference that we will lay that out with some details, yes..

Okay, thanks a lot. Two more quick ones.

Just to be clear on when you say you're going to settle the forward sale, I mean you're not issuing the equity?.

That is correct..

Okay. And then the numbers were great in the quarter, but you had that $0.11 headwind from upstream gas and you described very clearly why. When I look in the appendix of your release and I looked at the expected EBITDA PTC contribution from upstream and midstream which is 190, the 290 and 95 to 195.

Those that guidance is a function of your expectation that you were going to behave this way with regard to those investments, or should we expect that low end or below the low end?.

Yes. Remember Greg, we didn’t add any new projects that really impacted Q1 performance because of economics but we continue to through our development efforts look for further upstream opportunities that would satisfy that forecast that we have outlined in our materials..

Okay, great. Thanks, guys..

And we'll take our next question from Paul Ridzon with KeyBanc..

Good morning. Congratulations on the quarter..

Thanks, Paul. Good morning..

As you look at investment opportunity, you really keeping your own roots across the energy platform.

Would you ever look at an LDC?.

Well, a couple of things I'll say about LDC is 1) Is they tend to go up at very high premiums, just hard to make the economics fork on an LDC and then you got to get comfortable with the liability profile associate with an LDC as well..

Thank you. And --..

They tend to be expensive and we're only interested in doing transactions that create a long term shareholder value..

But on your repowering, is the entire capital program capture 100% of the PTC or I think those pace down to 80?.

I'm sorry, could you repeat the question?.

Your capital program fully powering the winter then? Where all those projects did a 100% of the PTC or is the timing?.

Yes. They all get a 100% of the production tax, right, that's correct. The test of the 80, it's an 80-20 test in terms of determining whether or not it's a new turbine to get a 100% of the PTC..

Is that M&A, private rating agencies comfortable enough with the contractiveness of energy resources that it's utility like enough that you don’t need to do any entry down to portfolio?.

Yes. We just to be clear, we do not need to do an acquisition to meet the growth prospects and maintain the credit ratings that awe have through our guidance period. Yes..

Just to be very clear, we will have very strong credit matrix in 2020 even with the growth that we expect out of both FPL and energy resources through 2020..

Great, thank you..

No need to do M&A to rebalance the balance sheet. And I know there's been a lot of investor questions about that. Just to put that to bed, hopefully once and for all..

Very helpful, thank you..

And we'll take our next question from Jerimiah Booream with UBS..

Hi, good morning. I just wanted to touch on the economics of build on transfer and development rights on the wind side. Obviously you've had a couple of big announcements recently.

How does that flow through the income statement and really what's the kind of near term earnings incremental opportunity that we should think about there?.

Yes. I mean, there is two impacts, there is book and cash. We talked a little bit about cash impacts on the call.

We said out of these opportunities, they think about them in two ways, one are development right sales which we put the NPV on a kilowatt basis when you compare to a long term contracted new build at about 20% to 25% and then a build on transfer, you get data and an after-tax NPV kilowatt basis, it's probably about 40% to 50% of the NPV of a long term contracted basis.

So, that's cash. On the book side, obviously you're going to generate again off those sales in those gains with we don’t think the material and would be reflected in our income statement..

Okay. And then also just more specifically on the commercial industrial opportunity.

I mean, how many of the PPAs that you're signing are really more focused on the CNI sphere going forward versus traditional PPAs?.

It's Armando. Just let me go back to the previous question just a second and I'll get to that one too. So, I just want to put it in context. We haven’t updated numbers on our pipeline for wind and solar in a while. And I just want everybody to understand we got a lot of development out there.

And when we talked a couple of years ago about how we would potentially doubling the amount of G&A that we put into both the wind and the solar business through 2018 and we're doing that. So, today just in terms of what I call inventory, we've got 10 gigawatts to 12 gigawatts of inventory on its way to 20 gigawatts here in the near future on wind.

And we've got about 10 gigawatts of solar that's on its way to 20 here in the near future. So, we got a lot of opportunities out there for projects. So, if once in a while someone's interested in doing some development and it makes sense for us then we've got the inventory to be able to do that. On the CNI side. CNI gets a lot of press and so on.

It's still not a giant portion of the market. It's a market that we've looked at, it's a market we played in, it's a market that we've originated. It is a market that we will probably do more of than we've done in the past in certain regions.

But it's also a market that doesn't make sense for us in certain regions where folks are looking for very short term contracts in places where we've got to take a significant amount of merchant risk in the term year.

So, my expectation is it could be 20% of what we do on a go-forward basis but I think the traditional stuff that we've been doing with the IOU, the muni, the COOPs and so on will continue to be the bulk of that business for us..

Okay that's great. And then just one last one from me.

On the legislation in Florida right now on gas reserves, can you just talk about any kind of stumbling blocks there and what -- any kind of material changes would be versus the previous program?.

Yes, this is Eric. So, it's we're right now in the midst of the legislative session. And so, there are a number of hurdles for that legislation to clear. And so, it's by no means certain that gas reserves legislation would actually clear both houses.

So, at this point I think it's just speculative to try to predict what's going to happen because there's a lot of areas that we need to cover lot of water and is be covered within legislative process at this point..

Okay, fair enough. Thanks, guys..

We'll take our next question from Jonathan Arnold with Deutsche Bank..

Hi, good morning guys..

Hi, Jonathan..

This one is to make we together a couple of the names you've already talked about.

So, the Xcel model of BOT and some development sales is, do you see the utility market shifting in that direction and this might well was that kind of a one off as you're looking at go forward?.

No, we do not see the market shifting in that direction. And I think that's the point Armando was making just a minute ago. I mean, we continue to see a very strong long term contracted market made up of our typical customers whether its muni's and COOP, CNI.

Most investor owned utilities, it is with the build on transfer like we're able to do with Xcel or you could see an opportunity to generate an attractive NPV off of a sale and yet get contracts back from customer who's been a one year largest customers. Those can be attractive situations.

But our core business is going to continue to be the long term contracted business. So, when we look out and we'll lay this out at the June Investor Conference. We really see the market continuing the stay at the levels that's been in the past on the long terms contracted opportunity set aside..

So, your preference is more to stay in that space.

I was just curious whether there was sort of a balance sheet angle that with these changing NPV but you have less on sheet tied up, so maybe that would reduce some of the rationale around the Oncor transaction where you certainly portrayed it at the time, is something that will give you the ability that will max your development activities..

Jonathan. That market and I know it's got a lot of play here recently. But that rate based market, if you go back historically, year-in year-out, I mean, people have been building rate base on the wind side for the last decade. And it's averaged about 15% of the market. Could it go up a little bit, yes, maybe it'll go up a little bit.

But it's a small portion of the overall market.

And so, we don’t although there were some transactions here recently, at least our view right now is then even if it goes up a little bit, it's just not a significant part of the market and if there are people that are interested and we can help them help us with our inventory, then we might look at the transaction. Why not.

John mentioned some economics that are attractive. But I wouldn’t spend honestly that much time thinking about whether would happen during the last three months is turn the market around. The rate base market is just not that large..

Okay. Then I just want to clarify one thing, you talked about a 1000MV transaction at the beginning.

I wasn’t sure that was something a new one that hasn’t yet been announced or why you're referring to the Xcel deal?.

Yes. No, the 1000MV is with is the large customer transaction. We just had not previously announced it, the customer had made announcements about the deal..

Okay. But we're talking about the one deal, basically this one..

One deal, that's correct. One deal..

Alright, thank you..

And we'll take our next question from Michael Lapides with Goldman Sachs..

Yes guys, just curious, Project Accelerate.

Is there any way to quantify what whether the EBITDA or EPS benefits from it would be and which of the businesses kind of more or less impacted by it?.

Yes. I mean, first of all Project Accelerate is an initiative that we've seen on last call, in this will generate several $100 million in run rate savings going forward. We will give more details on it at the June Investor Conference, but it effects all of our businesses.

I mean, we are reimagining and all the business at NextEra Energy resources at FPL finding smarter ways to leverage technology and other way other approaches to each of our individual lines. And we will lay that out including EPS impacts from that at the Investor Conference..

But when you say several $100 million, meaning on a pretax income run rate eventually or on a discounted cash flow type of view?.

Yes, on a pretax run rate basis going forward..

Got it. I mean, that's pretty material on an after-tax basis that would be a pretty material driver of an EPS uptick over time..

Yes. But remember that Project Accelerate is included in the expectations that we provided..

Got it, okay..

And the other thing Michael, to remember is FPLs roughly 2/3rds of the company and you cannot take the several 100 million -- that 2/3rds of that run rate creates surplus, it doesn't create earnings, okay..

Understood..

And there's got to be very careful about how you think about it from an earning standpoint..

Understood. That benefit over time would actually accrue to the customer once you hit the 11/5/11/6 range. Unrelated question.

Just curious Jim or Armando for your thoughts on the prospects in the economics of offshore wind in the US?.

So, Michael we have looked at offshore winds, we spent -- I personally spent an enormous amount of time looking at it for a very good customer of ours back when I was running energy resources. And we came away from that effort not being a big fan of offshore wind for several reasons.

One is it effectively from a construction standpoint, very hard to get comfortable that you can ever. It strikes me more is a new nuclear than it does of onshore wind in terms of the construction risk you take.

It's marine construction, the ONM associated with it is challenged if the seas are high, you can't you have to fly out to fix the turbines as opposed to get in the boat and go up there to do it. There is an enormous number of hurdles that you need to get to. And then you get to the biggest hurdle which is just its bad economics for customers.

I mean, we've been very proud that we've done good economic renewables for customers and we think onshore wind and onshore solar and frankly solar in New England will be probably a third of the cost of offshore wind. It is really not good for customers to be doing offshore winds relative to onshore solar or onshore wind.

So, to say that we're not fans would be an understatement and I don’t think it's good for customers and frankly I think it's I think it's we certainly wouldn’t do it, we think it's too risky..

Got it. Thank you, Jim. Much appreciate it, guys..

And ladies and gentlemen, that will conclude today's conference. We thank you for your participation. You may now disconnect..