Matthew Roskot - Director, Investor Relations John Ketchum - Executive Vice President Finance 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 James Robo - Chairman and Chief Executive Officer, NextEra Energy.

Stephen Byrd - Morgan Stanley Steve Fleishman - Wolfe Research Julien Dumoulin-Smith - Bank of America Merrill Lynch Greg Gordon - Evercore ISI Michael Lapides - Goldman Sachs Shahriar Pourreza - Guggenheim Securities Jonathan Arnold - Deutsche Bank.

Good morning, and welcome to the NextEra Energy, Inc. and NextEra Energy Partners, LP Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded.

I would now like to turn the conference over to Matt Roskot. Please go ahead..

Thank you, Brendan. Good morning, everyone. And thank you for joining our third quarter 2018 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 and the comments made during this conference call, in the Risk Factors section of the accompanying presentation, on 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 historical non-GAAP measures to the closest GAAP financial measure. With that, I will turn the call over to John.

Organically; acquiring assets from third parties; or acquiring assets from Energy Resources portfolio, which continues to rapidly expand given Energy Resources’ competitive advantages and corresponding success in renewables origination.

In addition to clear visibility into how it will grow going forward, NEP maintains a cost of capital and access to capital advantage.

Without a need to sell common equity until 2020 at the earliest, other than modest aftermarket issuances, NEP has substantial flexibility to finance its long-term growth as was further demonstrated by the financing transaction executed this quarter and the $5 billion forward-starting interest rate hedge that remains in place.

These strengths together with NEP’s favorable tax position and enhanced governance rights leave NEP well positioned to meet its financial expectations and we remain as enthusiastic as ever about its long-term prospects. That concludes our prepared remarks. And with that, we will open the line for questions. .

We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Stephen Byrd with Morgan Stanley. Please go ahead..

I wanted to talk about, at NEP, the BlackRock financing that you described John.

Is this something that you view as a potential ongoing tool, meaning is it replicable? Does it have the sort of features that you're looking for? Is this more do you think sort of a one-off transaction?.

Yes, it's absolutely replicable. To be able to find money at a 2.5% yield for the first three years, to be able to convert 70% of the position into NEP stock, really provides an attractive source of capital for us going forward and it's certainly something that we can replicate on future transactions..

Great. And just on the conversion element, you walked through it quite well. I just want to make sure I understood.

If you did not convert the security into NEP common, what would the cash coupon yield sort of move up to in that event?.

It moves up to roughly 8%..

Got you. Understood. Okay. And then I wanted to step away back on the wind side and just talk longer term about the growth potential for wind. We do hear a lot of debate about the size of the US wind market when the federal subsidy eventually does sunset.

And I know that's down the road, but you all obviously see a lot of technology changes on the wind side.

So I was just curious, in the long run, how do you see that playing out in terms of the size of the wind market? Do you see a contraction because of loss of subsidy or technology change is sufficiently beneficial that you see growth continuing? How do you see that changing over time?.

Steve, it's Armando. I think longer term, as we've previously pointed out, we think by the mid part of the next decade that the pricing of wind is going to be pretty much on par to where we see it today with a 100% PTC.

Now, obviously, we've got to get from a 100% PTC, and 80% and 60% and 40%, down to zero, but we think that the improvements that we are seeing with technology which are essentially taller towers, longer blades, better electronics beyond kind of machine which captures the wind better.

We absolutely believe that by mid part of the next decade you're going to have the costs around the same place that you have it today. In the meantime, for ‘19, ‘20 and what we are seeing now in 2021, wind is going to remain very, very competitive, pretty much where we see it today or maybe even a little bit lower.

So we think it's -- we think there's going to be a lot of wind that gets built over the next three to four years on top of the solar and storage that we are clearly seeing is coming to market..

Great. Thanks. And if I could, just one last one on the utility side. You’ve spent some time talking about preparing for dealing with storm damage et cetera.

Is there more broadly additional work that might be done just to further harden the system beyond? I know you have extensive efforts underway and have had a good track record of storm recovery, but should we be thinking about potential incremental opportunities for preparing for hurricanes or other sort of physical changes to your system?.

Yes, absolutely, Steve. I'm going to let Eric comment on the details, but we've spoken a little bit about the undergrounding opportunity that we have going forward, the continued automation, the continued hardening that we have in the existing system. I think that certainly applies to Gulf as well, but I'll let Eric expand upon that..

Yes, Stephen, so this is Eric Silagy. We have a number of different opportunities and programs that are underway currently. So about 88% of our transmission is currently steel or concrete and we are on a program to take all wood out of our transmission system across our service territory. We'll be done with that after beginning of the decade.

I would say there's a lot of opportunities also with additional technology that we continue to deploy on the smart grid side that also helps during storm response.

And then, John touched on it, the undergrounding initiatives that we have piloted right now on ways to get additional costs out to make it more affordable will be something that we are focused on for years to come. We have about 6,700 miles of distribution in our system in Florida. 40% of that roughly is underground now.

So there's a lot of work to do on the remaining piece and doing it cost effectively is what we are focused on now..

Very good. Thank you very much..

Our next question comes from Steve Fleishman with Wolfe Research. Please go ahead..

Yes, good morning.

Could you maybe just talk to how we should think about where you stand on your renewables kind of backlog targets now that you’re already in the lower end of the range? Is it likely you might kind of hit the high end of that or how should we just think about the pacing of additional projects within your kind of backlog goals?.

Well, Steve, we certainly feel very good about where we are. I mean already have 9,300 megawatts added to backlog, adding almost 5,000 already for the year. We are certainly in terrific position given that we still have a couple of more years before the PTC even runs down on us.

And so, terrific wind development opportunities, terrific solar opportunities with the four year start of construction, with all of the success that we are having in pairing batteries with solar is enabling a lot more development. So strong progress and potential opportunities across the board.

And even when you look at wind, as the PTC expires or starts to phase down from 100% at the end of 2020 to 80% in 2021 and 60% and 40%, with the technology improvements that we are seeing, we think ‘21 is going to look a lot like ‘19.

And so you're going to continue to see a lot of progress as you get into the next decade based on the discussions that we've been having with the OEMs and the technology improvements that we know are coming..

Okay, great. Thank you..

Our next question comes from Julien Dumoulin-Smith with Bank of America Merrill Lynch. Please go ahead..

Hey. So maybe just to pick up where Steve left off. Can you comment a little bit about the cadence of that contracting, given again the range that you have for the 2017 through 2020 period for NEER? I mean obviously tremendous success first half of this year.

But when do you have to kind of stitch things up just with respect to the development activities for ‘20, I mean do you expect to have continued success at this current pace through ‘18? I mean, I'm just thinking about kind of hitting the midpoint of that range that you talk about, right, at a minimum, if you will, and what that means for contracting activities kind of in the remaining period of that ‘17 through ‘20?.

Julien, it's Armando. I think my comments will probably reflect closely on what we said last time which is when Jim and John say that it's probably the best renewables environment in history, we are absolutely seeing that on the origination side. We do not believe that this third quarter origination total is a peak.

Obviously, we have a view as to what's going to be happening in the next three to four months and the contracting remains very strong. We have signed some 2020 wind deals. But my expectation is that we are going to see a lot more 2020 wind deals that get priced over the next six months or so.

We have priced actually a lot more 2021 and 2022 solar deals than I would have expected at this point. But I also believe that you're going to see some significant 2020 solar origination over the next six months or so. So our origination folks are very busy. There's a lot of RFPs and there's also individual conversations being had with customers.

I think customers understand that the PTC is slated to ramp down. So they're anxious on the wind side to get in the queue. They're also anxious on the wind repowering side to get into the queue before the end of 2020 which was one of the reasons why we had strong origination this quarter.

So, in my view, we are far from a peak and I think it's going to continue to remain strong for a while..

Got it. Excellent. And then just digging a little bit into the numbers here. Can you reconcile a little bit the difference here in the debt service between -- on the ‘18 projected NEER portfolio? And I suppose what comes out of that just given what seems like a higher number is potentially some interest rate exposure.

And how do you think about using the flexibility afforded, right? You've got this option before you’ve given the interest rate hedge product that you entered into.

When do you choose to enter into that? How do you think about that option?.

Yes, Julien. So I think you're referring on the first part of your question to our EBITDA, CAFD walk. You see some debt service coming out that impacts CAFD in 2018. The answer is simple. It was NPV positive as part of our liability management program to pay some of those debt obligations off early on some of our older projects.

And then second, for our repowering activity, we always go ahead and just pay the debt off. We know we are going to put new tax equity on them. That's just a matter of course. That's all that's happening in that line.

And then on your second point on when do we look to use the $3 billion interest rate hedge that we have? Remember that product is designed a lot like the NEP $5 billion hedge. We have a tremendous amount of flexibility under both the $3 billion at NextEra Energy and the $5 billion at NEP. Those don't have mandatory forward starts until 2028.

So we can essentially decide to bring those in, in whole or in part, at any time we want to over the next 10 years. So if we see interest rates tick up and we want to use debt financing to finance additional capital expenditures, we can always utilize that.

But what we like the best about those products is they provide tremendous amount of flexibility as to when we decide to use them..

And to clarify the earlier point on the walk, you're saying it was NPV positive but the higher debt service is because you're basically layering a new debt preemptively for repowering? I just want to make sure I heard that right..

No. Yes, so two things. One is, we have just debt on all projects that it's just NPV positive to go ahead and pay it off. It gives us a refinancing option going forward.

And then second, when we repower a project, we want to pay the debt off because we are planning to put tax equity financing in place on those projects going forward and have to be unencumbered in order to put that tax equity financing on those assets..

So, Julien, this is Jim. Said another way, we had not planned at the beginning of the year to pay that $150 million of debt off, but we -- through the liability management program, we made a decision to pay it off as NPV positive, so it's good for shareholders and we did it. We did it.

We are going to do it this year and so that's why you're seeing that. It's actually a good guy, not a bad guy..

Got it. Thank you..

Yes. You’ve to remember, last year -- and remember, last year, Julien, we did the same thing in the fourth quarter of 2017, $150 million of NPV positive moves on debt repayments around our liability management program. So we are constantly looking for opportunities to save shareholders' money..

Much appreciated..

Our next question comes from Greg Gordon with Evercore ISI. Please go ahead..

Thanks. Good morning. Thanks for clearing that up. That was one of my questions.

So there's no material or meaningful floating rate debt exposure at NEER, just to be clear?.

No. No, not at all. Quite the contrary. I think we are very well positioned to manage interest rate risk going forward, much better than our peers. And I think that we not only do we have an access to capital advantage, but a cost of capital advantage in that $3 billion hedge that we have in place, I think will be instrumental going forward..

Yes. At first it was little bit confusing, but I see that the debt balance at NEER from Q1 to Q3 is actually on an absolute basis down and that syncs with the footnote there that shows that you include debt retirements in that number. So thank you. The second question I have is -- was on, there were also some moving parts in the -- on overall EBITDA.

So if I look at the story arc from Q1 to Q3, it looks like your assumed EBITDA from renewables is lower. I think is it fair to attribute that to just wind resource over the course of the year? And then, nuclear pipeline is significantly higher.

Can you just take us through, generally speaking, how the EBITDA contributions have evolved over the year?.

Yes. I think when we look at it and you'll get an update on this next quarter on how we did going into the year versus how we finished the year, we expect to be within the range on all the items that we provided to you.

So while there’s ups and downs in any one quarter and we always try to give investors a good feel, on the nuclear side, we've had better execution on outages, better execution on E4. And on the wind, it's really just been bad resource. So we've made some adjustments there.

But again, for the full year, and you'll see this next quarter, our current expectation is that we should be within the range of what we showed you last year on our EBITDA-to-CAFD walk..

Yes.

And do you have any insight as to why the pipeline numbers improved? Is that just better throughput or you've made more conservative assumptions? What changed there?.

Hey, Greg, it's Armando. I'm not sure. It could be a little better throughput, but it's nothing that's really sticking out at me as to why there's been an improvement..

Okay, great. Final question. Nobody has asked, Jim, but you usually do make a comment around where you -- given the robust outlook you have, where you would expect to be inside the 6% to 8% guidance range and you haven't volunteered that yet.

So is there a reason why you haven't volunteered? That is something changed with regard to your earnings aspiration inside the range?.

No, not at all, Greg. I think we continue to target the midpoint for this year of 7.70% and -- but in 2021, I'll be very disappointed if we don't hit the high end of the range..

Thank you very much, guys. Take care..

Our next question comes from Michael Lapides with Goldman Sachs. Please go ahead..

Hey, guys. Just an easy one on Project Accelerate. I think this was probably version three of that.

When you talk about several hundred million of run rate efficiencies, are these O&M savings that will drop to the bottom-line, so we'll actually see this in some future EPS or is this just O&M savings that will offset other cost increases that will help, but won't necessarily see them on the bottom-line numbers?.

Hey, Michael, this is Jim. So, first of all, FPL, what it does is create surplus, right? And so it gives us headroom to continue to find good projects for customers to invest, to improve our value proposition without having any impact on rates, okay? So that's how you see it on the FPL side.

And at the NEER side, it absolutely falls to the bottom-line..

Got it.

So safe to assume -- if I were to put a tax rate on the couple of hundred million, let's say, it's $200 million to $250 million to $300 million, some portion of that gets allocated to NEER, I don't know if that's a 50-50 or if this is FP&L weighted and that would almost be something that's already embedded in your EPS guidance for 2020, 2021?.

Yes, that's right. That's all right and it would -- the split is roughly equal to the EBITDA split of 65-35..

Got it. Thank you, Jim. Much appreciated..

Our next question comes from Shahriar Pourreza with Guggenheim Partners. Please go ahead..

So just a real quick follow-up on the BlackRock deal.

Are you actually seeing players step up for a similar structure even though you can replicate it? And then, as you sort of think about the NEP standalone just from a self-sustaining standpoint, your equity needs, have they sort of evolved post the deal? I know you kind of still guide around 2020 at the earliest, but that was obviously provided even before this BlackRock deal.

So just curious on that and I've got a follow-up..

Yes, we have received an inordinate amount of inbound interest on structure that looks similar to BlackRock. As a matter of fact, the NEP and the treasury team have been busy fielding those calls. So a lot of inbound interest there.

And on -- from an equity standpoint, I think what we said is, look, I mean this is a very low cost of capital, very attractive financing which certainly puts us in good position going forward..

Got it. That's helpful. And then just real quick on Gulf Power. You guys have obviously have moved past data rooms and have had more time to sort of digest really what you're buying. So as you sort of think about the accretion guide, you've got an O&M that's almost double the size of yours at FP&L.

You have materially higher purchase power cost, no standstill agreements. Like I get the playbook but the math seems to point to somewhat of a conservative guide especially with the inefficiencies you're taking on.

One, am I thinking about this correctly? And then just from the timing perspective, the process seems to be moving along relatively quickly.

Is there any opportunity to close some time in Q1 versus first half?.

So I'll take the second part of that first, Shahriar, this is Jim. Listen, we have -- the team has worked very hard to work through all of the potential issues at FERC. We feel very good that in the change of control part of that docket that there are no outstanding protests right now.

And so we feel we still have some work to do where we continue to target the first half. But as I tell the team, there's 182 days in the first half and we could close on any one of those days.

On the first part, I think when we laid out our guidance for the accretion of the transaction, we were pretty much -- I don't think we were conservative and we weren't aggressive. We were what I'd call [P50], pretty down in the middle of the road on what we think we can achieve.

The Gulf Power team is in the midst of a very tough hurricane restoration now. They've done just an outstanding job in a very tough situation and we are doing what we can to help everyone in that part of Florida to restore. And so, we are honestly right now focused on that and feel very good about the transaction.

Looking forward to welcoming the Gulf team to the NEE family, and we are looking forward to getting the deal done and moving forward with our plan..

Got it.

And then, Jim, since no one's asked, any comments you can provide around South Carolina or Santee and then especially with the RFPs expected sometime in the fourth quarter or early Q1?.

So I don't -- it's been no secret that if there is an RFP on Santee that we would have an interest. And so I think I'll stop it at that. And we've been watching it closely for 18 months and we'll see how that process plays out..

Terrific. Thanks, guys..

Our next question comes from Jonathan Arnold with Deutsche Bank. Please go ahead..

Good morning, guys.

Just on the NEP expansion project, can you just clarify, is that included in the 2019 run rate guidance or would that be incremental?.

Yes. No, it's included in the 2019 run rate guidance. It doesn't come online until 2020, Jonathan..

Okay. So it's in the 2019 run rate, but it comes in early 2020.

Is there incremental -- is there something potentially beyond that, because from memory, there were some bigger opportunities there at one point?.

Hey, Jonathan, it's Armando. Just to clear it up. I mean it's -- the expansion project is both in ‘19 and ‘20, right. You've got to start spending CapEx in ‘19 in order to get it done in ‘20. It's COD I think the third quarter of 2020. So it's in the numbers. There's nothing incremental to add.

In terms of additional projects, the team continues to work on several projects associated with the pipelines that it has. It's done a decent job so far since we bought those pipelines in 2015 and we continue -- I continue to have expectations that they will be able to find onsies or twosies to add as projects at NEP.

I don't foresee anything that significant at this point, but we would all be very disappointed if we don't continue to see small opportunities that they bring to the table..

Great. Thank you. And if I may, just to revisit the debt service question just very quickly. Jim mentioned the $150 million increase. I think that's how much it went up between Q2 and Q3, but it was -- there was also a 90 odd million increase in Q2.

Is that the same issue as the buyouts of some of the debt associated with repowerings, et cetera?.

Exact same issue. As we repower our assets, you can always expect the debt to be retired and you'll see an impact in the EBITDA, CAFD walk from that..

So, is it safe to assume that ‘19, given the amount of repowering you have in the plan that this will -- we will have a similar dynamic there and at some point that will roll down to that sort of high 800s number it used to be?.

Yes, that's correct..

Okay, great. Thank you..

Yes. Hey, Jonathan, real quick, though, understand that's already in our plan..

Oh! Yes..

In our financial expectations, so..

Okay..

This concludes our question-and-answer session as well as today's conference. Thank you for attending today's presentation. You may now disconnect..