Amanda Finnis - Director, IR Jim Robo - Chairman & CEO John Ketchum - EVP & CFO Armando Pimentel - President & CEO, NextEra Energy Resources Eric Silagy - President and CEO, Florida Power & Light Company Mark Hickson - Senior Vice-President of NextEra Energy.

Stephen Byrd - Morgan Stanley Matt Tucker - KeyBanc Capital Markets Jonathan Arnold - Deutsche Bank Colin Rusch - Oppenheimer Angie Storozynski - Macquarie.

Good day, everyone and welcome to the NextEra Energy and NextEra Energy Partners 2016 Third Quarter Earnings Release Conference Call. Today's conference is being recorded. At this time for opening remarks, I would like to turn the call over to Ms. Amanda Finnis. Please go ahead, ma'am..

Thank you, Emelia. Good morning, everyone and thank you for joining our third quarter 2016 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, 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.

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 website, www.nexteraenergy.com and www.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, Amanda and good morning everyone. Before, I begin my remarks on our third quarter results; I would like to say a few words about Hurricane Matthew. As you know residents of the Caribbean and Southeastern U.S. were recently impacted by the severe effects of this dangerous and deadly storm.

Our deepest sympathies are with those who have been impacted by hurricane Matthews’ widespread destruction. Since 2006, FPL has invested more than $2 billion to build a stronger, smarter and more storm resilient energy grid.

Earlier this month when hurricane Matthew affected FPL service territory around Florida’s east coast, these investments benefitted customers by resulting a fewer outages and faster restoration.

In response to the hurricane FPL deployed more resources pre-storm than ever before which together with its grid investment enabled the company to restore service to 98.7% of the 1.2 million affected customers by the end of the second full day after the storm left our service territory.

At the height of restoration, FPLs workforce numbered 15,000 including our own employees along with workers from contracting companies and our partner utilities across the country. I would like to personally thank each member of this team for their dedicated service during this critical period for our customers.

In addition, earlier today NextEra Energy announced it has reached an agreement for an affiliate to merge with Texas Transmission Holdings Corporation, including TTHC’s approximately 20% indirect interest in [Oncor electric] delivery for total cash consideration of approximately $2.4 billion.

In addition, we have reached agreement to acquire the remaining 0.22% interest in Oncor that is owned by Oncor Management investment LLC for total cash consideration of approximately $27 million.

If approved, these transactions when combined with NextEra’s Energy previously announced merger with Energy future holdings for its 80% interest in Oncor would result in NextEra Energy owning 100% of Oncor. I will provide additional details on this announcement after reviewing our financial results.

Turning now to our financial performance, both NextEra Energy and NextEra Energy Partners delivered strong third quarter results and building upon solid progress made in the first half of the year we remain well positioned to achieve our overall objectives for 2016 NextEra Energy’s third quarter adjusted earnings per share increased 9% from the prior year comparable period primarily reflecting contributions from continued investments of both Florida Power and Light and Energy resources.

Equally as important both principal businesses executed well on our major initiatives and it was a period of continued advancement in our opportunity set for new renewable. At FPO, pursuing a balanced outcome in our based rate case to support continued execution of our successful strategy for customers remains a core focus.

Since the last call we completed the technical hearing for the case and after months of negotiation we are pleased to have reached with three interveners what we believe is a fair and constructive long term settlement agreement that will allow us to continue to focus on operating the business efficiently and reliably for the benefit of customers.

A one day hearing was held last Thursday to consider the proposed settlement agreement. We expect the Florida Public Service Commission to vote on our agreement at their agenda conference on November 29.

Our major capital initiatives progressed well and we were pleased to receive commission approval on our proposal to acquire and phase out the Indian town co-generation facility. I will provide additional details on this updates as well as FPL’s solid financial performance during the third quarter in just a moment.

At Energy Resources, contributions from new investments were the principal driver of growth and our major activities remain on track to support delivery of roughly 2500 megawatts of new contracted renewables project since 2016.

We continue to execute on our backlog to pursue additional contracted renewable development opportunities and it was an excellent period of new project origination.

Since the last call I am pleased to report that our development organization has added almost 2000 megawatts of renewable project for post 2016 delivery to our backlog including approximately 600 megawatts of new wind projects and roughly 1300 megawatts of additional repowering opportunities within Energy Resources existing U.S. wind portfolio.

We continue to conduct due diligence to identify the full opportunity said and I will provide our latest thoughts on our expectations for repowering projects later in the call. Energy Resources continued ability to expand its pipeline of growth opportunities is expected to benefit NEP.

Since the last call NEP completed its third major acquisition this year from Energy Resources with the addition of an approximately 132 megawatt share of high quality, long term contracted solar generation.

We continue to believe that the scale, financial strength, experience and track record of its best in class sponsor are what sets NEP apart from other infrastructure alternatives.

This acquisition is also another example of why NEP is important to NextEra Energy as it highlights the value of the Energy Resources contract of renewable portfolio, enables the recycling of capital from operating assets back in the development projects and enhances NextEra Energy’s tax efficiency.

NEP continued its strong year-to-date financial performance delivering third quarter adjusted EBITDA and cash available for distribution in line with our expectations. The NEP board declared a quarterly distribution of $0.34125 per common unit or $1.365 per common unit on an annualized basis up 26% from a year earlier.

Overall with three strong quarters now behind us, we are well positioned for the year and are very pleased with the progress we are making at both NEE and NEP. Now let’s look at the detailed results beginning with FPL.

For the third quarter of 2016, FPL reported net income of $515 million and earnings per share of $1.11 up $0.04 per share year-over-year. Regulatory capital employed increased by 8.6% over the same quarter last year and was the principal driver of FPLs net income growth.

Our reported ROE for regulatory purposes will be approximately 11.5% for the 12-months ended September 2016. As a reminder, under the current rate agreement we record reserve amortization entries to achieve a predetermined regulatory ROE for each trailing 12-month period.

We ended the second quarter of 2016 with a balance of $71 million and due to higher based revenues driven by weather related usage and customer growth, we reversed $159 million of reserve amortization in the third quarter.

We believe the remaining reserve amortization balance of $230 million coupled with our current CapEx and O&M expectations will allow us to support a year end regulatory ROE of 11.5% which is the upper end of the current allowed range.

Based on what we see right now, we are likely to end the year with the positive reserve amortization balance which under the terms of the proposed 2016 rate agreement we will be able utilize over the next four years.

Earlier this month, we were pleased to receive approval from the Florida Public Service Commission on our proposal to acquire and phase out the Indian town co-generation facility, a 330 megawatt coal-fired power plant that has a contract to supply capacity and energy to FPL through 2025.

Within expecting -- expect the closing for the transaction in early 2017, we plan to purchase the ownership interest in the facility for $451 million including existing debt.

Similar to the acquisition of Cedar Bay that we closed in the third quarter of 215, the transaction is expected to enable early retirement of one of the highest greenhouse gas emitting power plants in the state, while also providing estimated customer savings of $129 million.

In addition, construction has continued to progress well on FPL 374.5 megawatt utility scale solar PV projects that we expect to enter service this year. During the quarter we were pleased to announce the completed installation of half of the 1 million new solar panels that will comprise these new solar energy centers.

Once complete these projects will roughly triple the solar capacity on FPL system and add the overall fuel diversity of our fleet which is important for FPL and its customers.

Consistent with our commitment to provide low bills and clean energy solutions for the benefit of Florida customers the proposed 2106 rate agreement if approved allows FPL to recover and rates up to an incremental 1200 megawatts of cost effective new solar generation approved over the four-year terms of 2017 through 2020.

This would allow Florida customers to benefit from favorable tax incentive, cost declines and efficiency improvements in solar technology that together make universal solar a cost effective source of energy for our customers. The Florida economy remains healthy.

The state seasonally adjusted unemployment rate of 4.7% is below the national rate and Florida's annual job growth rate has exceeded the nation's rates since 2012. The latest ratings of Florida's consumer sentiment have remained close to post-recession highs.

FPL's third quarter retail sales increased 4% from the prior year comparable period and we estimate that approximately 3.2% of this amount can be attributed to weather-related usage per customer.

On a weather normalized basis third quarter sales increased 0.8%, continued customer growth of approximately 1.4% was partially offset by decline of 0.6% and weather normalized usage per customer.

Looking ahead, we expect year-over-year weather normalized usage per customer to average between zero and negative 0.5% per year for the foreseeable future. FPL was impacted by Hurricane Hermine in September 2016 and Hurricane Matthew in October 2016.

Although FPL has not completed the final accounting, our preliminary estimate of storm restoration costs is currently approximately $350 million. Prior to the storms FPL storm and property insurance reserve has the capacity to absorb approximately $112 million an additional storm restoration cost.

The remaining balance of the storm restoration costs not covered by the reserve will be the deferred and recorded as a regulatory asset on FPL balance sheet.

Under the 2012 rate agreement beginning 60 days following the filing of the cost recovery petition with the FPSC, FPL is authorized to recover the remaining balance of the storm restoration costs on an interim basis from customers through surcharges, plus an additional $117 million to replenish the reserve to the level authorized by the 2012 rate agreement.

Interim recovery is available for cost that in total for the calendar year do not exceed $4 for every 1000 kilowatt hours of usage on monthly residential bills based on a 12 months recovery period. FPL intends to file a petition with the FPSC in the fourth quarter of 2016 to seek interim recovery of storm restoration cost under this mechanism.

As a reminder, FPL filed the formal request on March 15th for rate release beginning in January 2017 following the exploration of our current settlement agreement.

The proceeding has encompassed an extensive evident to reprocess and during the quarter we completed the technical hearing for the case and subsequently submitted our post hearing brief in mid-September.

After months of negotiation we reached the proposed settlement agreement in early October with three of the interveners in the proceeding, the Office of Public Counsel, the South Florida Hospital and Healthcare Association and the Florida Retail Federation.

The four-year proposed agreement begin in January 2017 and end in December 2020 provides for retail base revenue adjustments as shown in the accompanying slide and an allowed regulatory return on equity of 10.55% with a range of 9.60% to 11.60% and no change to our equity ratio from investor sources.

The proposed agreement also includes the flexibility over the four-year term to amortize up to $1 billion of depreciation reserve surplus, plus any reserved amount remaining at the end of this year under the FPL's 2012 rate agreement.

As I mentioned earlier the proposed agreement also provides for Solar Base Rate Adjustments or SoBRA upon commercial operations of up to 300 megawatts annually of new solar generation subject to a cost cap of $1,750 per kilowatt and a showing of overall cost effectiveness for FPL's customers.

We expect our regulatory capital employed to be consistent with our rate case filing plus any incremental solar investment opportunities we move forward with under the SoBRA if approved by the commission.

Under the proposed agreement FPL would continue to recover prudently incurred storm costs consistent with the framework in the current settlement agreement.

Future storm restoration cost would be recoverable on an interim basis beginning 60 days from the filing of the cost recovery commission, [but cap] at an amount that could produce a surcharge of no more than $4 for every 1000 kilowatt hours of usage on residential bills during the 12 months of cost recovery.

Any additional costs would be eligible for recovery in subsequent years. A storm restoration costs were to exceed $800 million in any given calendar year. FPL could request an increase of $4 surcharge that recover the amount above $400 million.

The proposed agreement also authorizes the continuation with minor modification of the incentive mechanism for sharing with customers, the gains that we achieve in access of a threshold demand for gas and power optimization activities and introduces the 50 megawatt battery storage pilot program designed to enhance service for customers or operations of solar facilities.

FPL has agreed to not seek incremental recovery as a revenue requirement associated with the battery storage pilot program until its next general base rate case.

We believe the proposed settlement is fair, balanced and constructive and supports are continued ability to provide clean highly reliable, low cost service for our customers through the end of the decade.

Let me now turn to energy resources, which report the third quarter of 2016 GAAP earnings of $307 million or $0.66 per share, adjusted earnings for the third quarter were $279 million or $0.60 per share.

Energy Resources contribution to the third quarter adjusted earnings per share increased $0.11 or approximately 22% from the prior year comparable period. New investments added $0.27 per share including $0.14 from continued growth in our contractor renewables portfolio.

Contributions from new investments and natural gas pipes were $0.13 per share including a positive $0.09 impact resulting from a reduction in the contention earn out liability that was recorded as part of the Texas pipeline acquisition last year.

The earn out which was originally recorded a roughly $200 million is required to be paid of contracts for growth projects on the NET Mexico Pipeline are signed by December 31, 2016 and of those expansion projects meeting several precedent conductions.

Recently NET Mexico completed a non-binding open season while the results of that open season were encouraging in terms of capacity expansion on the pipeline we are still in the process of evaluating the responses and are having discussions with potential shippers over preceding agreements.

However, based on the information we have the date we no longer believe that the full $200 million will be payable. We will have a more detailed update in the fourth quarter earnings call as we move forward to sign agreements with the parties that have express an interest in new capacity.

The NET Mexico Pipeline remained well-positioned as it has the one of the lowest capacity payments of any pipe serving the growing Mexican market from the U.S. We remained confident that the Texas pipeline's asset which is owned by NEP will deliver on adjusted EBITDA and CAPD growth expectations that we outlined at the time of the acquisition.

Partially offsetting the positive contribution from natural gas pipeline was a $0.09 per share decline in contribution from our upstream gas infrastructure activities primarily due to lower commodity prices and increased depreciation expenses reflecting higher depletion rates.

On an annual basis we would expect the $0.09 to be roughly $0.15 for the full year 2016. The contribution from existing generation assets decline by $0.02 per share partly reflecting the sale of the Lamar and Forney natural gas generation assets earlier in the year net of interest expense.

Fleet-wide wind resource was 100% of the long-term average during the quarter. All other impacts reduce results by $0.05 per share including the effects of increased interest expenses reflecting continued growth in the business and share dilution.

We remain enthusiastic about the fundamentals for North American renewables growth driven by the continued execution of our development organization together with our purchasing power, scale and operations, strong access to capital and cost to capital advantages.

As you may recall the action taken by Congress in December 2015 to extend the Wind PTC over a five-year phase down period was further enhance earlier this year by our IRS guidance on start of construction. In addition to the four-year started construction safe harbor for wind the IRS also release guidance for repowering wind facilities.

Among other things the guidance provides for an 80/20 Rule by which a repowered wind turbine they qualify for a new 10-year PTC period that the cost of the new equipment incorporated in to the turbine is at least 80% of the turbine's total value.

Following our announcement on the last call that we are pursuing repowering opportunities that two of our existing Texas wind projects the team has continue to conduct due-diligence on our existing portfolio.

As our mentioned earlier today we are announcing plans to pursue additional repowering opportunities for roughly 1300 megawatts that can be completed in 2017, 2018 timeframe. We expect to invest approximately $875 million of capital to complete these repowering projects.

In earnings from the projects are expected to be comparable the similar new build opportunities will significantly less capital investment.

Based on everything we see now in inclusive of today's announcement and the announcement from our last call we expect this opportunity set to continue to grow to support a total of at least $2 billion to 2.5 billion of capital deployment opportunities for repowerings over the next four years with a greater portion of incremental opportunities expected to become actionable beyond 2018.

In addition to our plans to repower certain our existing wind generation facilities, I am also pleased to report continued strong customer demand for wind. Since the last call we sign contracts for roughly 600 megawatts of new wind projects including approximately 500 megawatts for post 2018 delivery.

The attached chart updates additional details on where our renewables development program now stands. Together with the repowering opportunities that I just mentioned we remain comfortable with the overall ranges we have discussed for 2017 and 2018. The development activities for our natural gas pipelines remain on track.

The Florida pipelines received further notice to proceed in August and have commenced full construction activities. We continue to expect an in service date in mid 2017. As a reminder, NextEra Energy's investments and stable trail transmission in Florida South Eastern connection are expect to be roughly $1.5 billion and $550 million respectively.

In FPL's the anchor ship were on both pipelines. The Mountain Valley pipeline has continued to progress through differed process. We continue to expect approximately 2 Bcf per day at 20-year firm capacity commitments to achieve commercial operations by year-end 2018. NextEra Energy's expected investment is roughly $1 billion.

Let me now review the highlights for NEP. Third quarter adjusted EBITDA and cash available for distribution over $174 million and $51 million respectively and strong contributions from new assets remain the principle driver of growth from the prior year comparable period.

In addition, existing assets benefitted from a favorable year-over-year comparison of overall wind and solar resource. As a reminder, these results are net of IDR fees which we treat as an operating expense. IDR fees increase $10 million from the prior year comparable quarter.

NEP has executed well against its growth objectives highlighted by strong access to equity in debt markets.

During September, NEP was able to sell to the underwriters at the time of the announcement, the full block of limited partnership units to be issued in connection with the acquisition of a partial interest in the Desert Sunlight Solar Energy Center.

This issuance which raised approximately $297 million was completed on a lower offering discount and lower trade yield than the prior February offering and demonstrated yet another source of capital for NEP as we're able to access the retail market for approximately 75% of the issuance.

In late September, the underwriters exercise the overwhelming option which allowed NEP to raise another $45 million. NEP continues to target a long-term capital structure utilizing a HoldCo leverage of approximately 3.5 times project distributions after project debt service.

And based on this metric we estimate our current incremental HoldCo debt capacity to be roughly $450 million to $500 million. Looking ahead together with the aftermarket durable program, we expect this debt capacity to allow NEP to continue to be flexible and opportunistic as the future growth opportunities in financing activities.

Turning now to the consolidated results for NextEra Energy. For the third quarter of 2016 GAAP net income attributable to NextEra Energy was $753 million or $1.62 per share. NextEra Energy's 2016 third quarter adjusted earnings and adjusted EPS for $809 million and a $1.74 per share respectively.

Adjusted earnings from a corporate and other segment decreased $0.01 per share compared to the third quarter of 2015.

As I mentioned in my opening remarks, earlier today NextEra Energy announced has reached an agreement for an affiliate to merge with Texas Transmission Holdings Corporation including TTHC's approximately 20% indirect interest in Oncor Electric Delivery for merger consideration of approximately $2.4 billion.

In addition, we have reached agreement to acquire the remaining 0.22% interest in Oncor that is owned by Oncor Management Investment LLC for total cash consideration of approximately $27 million.

If approved, these transactions win combine with NextEra Energies previously announced transaction with Energy Future Holdings for its 80% interest in Oncor would result in NextEra Energy owning 100% of all Oncor. The total transaction consideration implies an enterprise value for Oncor of $18.7 billion.

Under the terms of the TTHC merger agreement, NextEra Energy will pay TTHC 100% of the merger consideration in cash. As a result of the transaction, no debt will reside at TTHC or Texas Transmission Investment upon close of the merger.

We expect to fund the merger considerations or a combination of debt in equity consistent with our commitment to maintaining NextEra Energy strong balance sheet in credit ratings. We believe the transaction further firms NextEra Energy's commitment to Oncor, its customers in the state of Texas.

As a reminder, NextEra Energy previously announced on July 29th a proposed transaction with Energy Future Holdings that would result a NextEra Energy owning approximately 80% of Oncor electric delivery. The definitive agreement is part of an overall plan of reorganization designed to allow Energy Future Holdings to emerge from Chapter 11 bankruptcy.

During the quarter, the United States bankruptcy court for the district of Delaware approved EFHs entry into the merger agreement and we were also pleased to achieve additional credit support for the EFH transaction.

Although there is inherent uncertainty involved with the bankruptcy process, we currently expect a greater vote in confirmation hearing in the fourth quarter in order to be in a position to receive bankruptcy court confirmation of the plan of reorganization by the end of the year.

Step up from the bankruptcy approval process, together with Oncor; we look forward to filing by November 1st, our joined application with the public utility commission of Texas seeking approval of our proposed acquisition.

Based on our current targets for completing key milestones and subject to required approvals, we expect the transactions to close in the first half of 2017.

If approved, the transactions with EFH, TTHC, and OMI which would result the next era energy earning 100% of Oncor are expected to be meaningfully accretive to earnings enabling next era energy to grow at or near the top end of its previously announced next to 8% per year adjusted earnings per share growth rates through 2018 off the 2014 base.

Through the transactions we see an opportunity to make too already great companies even stronger. In addition, we expect that Oncor's credit rating will be improved post-closing generating real savings for customers in terms of lower borrowing cost.

NextEra shares Oncor's commitment to providing affordable and reliable electric service and providing high quality customer service for the benefit of Oncor's customers and the continued economic growth of the state.

We believe the transactions are beneficial for all key stake holders including the state of Texas and Oncor's customers, the creditors of EFH bankruptcy state and NextEra Energy's shareholders.

Setting aside the potential for accretion that we see with our proposed Oncor transaction, we continue to expect 2018 adjusted earnings per share at NextEra Energy to be in the range of $6.60 to $7.10, implying a compound annual growth rate of for 2014 base of 6% to 8%.

In addition, we 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. For this year, we continue to expect 2016 adjusted earnings per share at NextEra Energy to be in the range of $5.85 to $6.35.

Within this range, it's worth noting that we believe that we are well positioned to achieve results for 2016 towards the top end of our 6% to 8% per year adjusted earnings per share expectations, again off our 2014 base of $5.30.

We hope to be in a position to provide longer term expectations out of the Investor Conference this spring, following the resolution of the FPL rate proceeding and required milestones in the Oncor approval process. As always, our expectations are subject to the usual caveats including but not limited to normal weather in operating conditions.

Let me now turn to NEP. From a base of our fourth quarter 2015 distribution per common unit at an annualized rate of a $1.23, we continue to see 12% to 15% per year growth in LP distributions as being a reasonable range of expectations through 2020, subject to our usual caveats.

As a result, we expect the annualized rate of the fourth quarter 2016 distribution to be in a range of a $1.38 to a $1.41 per common unit, meaning the fourth quarter distribution that is payable in February 2017.

The December 31, 2016 run rate expectations for adjusted EBITDA of $670 million to $760 million and CAFD of $230 million to $290 million are unchanged, reflecting calendar year 2017 expectations for the forecasted portfolio at year-end December 31, 2016.

Today, we are introducing December 31, 2017 run rate expectations for adjusted EBITDA of $875 million to $975 million and CAFD of $310 million to $340 million, reflecting calendar year 2018 expectations for the forecasted portfolio at year-end December 31, 2017.

The midpoint of this CAFD range reflects roughly 25% growth from the comparable CAFD mid-point based on our December 31, 2016 run rate expectations. Our expectations are subject to our normal caveats and are net of anticipated IDR fees, as we expect these fees to be treated as an operating expense.

In summary, both NEE and NEP delivered excellent third quarter results and we are pleased with the progress we have made on all of our major initiatives. At FPL, we continue to focus on operational cost effectiveness, productivity and making long-term investments to further improve the quality, reliability and efficiency of everything we do.

At Energy Resources, we have made terrific progress on our development program and continue to feel optimistic about our renewables growth prospects and the quality of our renewables pipeline.

For NEP, renewable origination success at Energy Resources continues to expand the pipeline of potential drop-down assets, and NEP has excess debt capacity to enable it to be flexible and opportunistic regarding future growth. Overall, we continue to believe that we have one of the best opportunity sets and execution track records in our industry.

That concludes our prepared remarks and with that, we will open the line for questions..

Thank you. [Operator Instructions] And we will take our first question from Stephen Byrd with Morgan Stanley..

Hi. Good morning..

Good morning, Stephen..

So, I wanted to touch on what you, John had mentioned about repowering opportunities, very pleased to the see the magnitude of that. I just wanted to make sure I understood your commentary correctly.

You were indicating that essentially the capital costs would be lower than new build, which certainly makes sense but the return would be essentially, as if we are at new build investment levels so therefore it looks like a relatively attractive return on capital, did I get that right?.

You got that right. So the CapEx is roughly half of the new build and the return is superior to new build transaction..

Okay. Great.

And in terms of just the kinds of steps you need to go through to actually get these repowerings done, how should we think about execution risk, counterparty negotiations? How much is required in terms of counterparty negotiations, what sort of things should we be thinking about in terms of execution risks?.

Well, on the execution side, we have to negotiate with our counterparties. Some of those counterparty negotiations will include a blend-and-extend of the existing agreement.

But given that the CapEx is again roughly half of the CapEx for a new build and the returns are a bit higher, there is a little bit of room for those negotiations with counterparties. That’s one of the main execution risk that we have.

We also have to study the interconnection agreements to make sure that to the extent we are providing additional capacity that we have the ability to put that additional capacity on line. Those are the main execution risks around the repowering opportunities..

Okay. Understood.

And you are laying out $2 billion to $2.5 billion of capital deployment opportunities so we can sort of do the math and look at the total megawatts involved in I guess?.

That’s correct..

Okay. Sorry. And just one last question and then I will get back in queue. We’ve seen a number of companies announced their interest in becoming big in winds. We saw one company this morning lay that out.

I'm just curious if you could at a high level speak to competitive trends you are seeing, the kinds of barriers to entry that you see from your perspective given you’ve been one of the biggest players in wind for very long time. I’m interesting in your perspective on that..

Sure, Stephen. I’m going to turn that question over to Jim..

So, Stephen, we've had competitors in this business for 15 years. They’ve come, they’ve gone. There’s no one in this industry that has the greenfield capabilities that we do.

Plenty of folks lay out the facts if they want to be in the wind business and really what they are in is they are in the wind development project acquisition business at COD, which is frankly not really being in the wind business.

Being in the wind business, 70% or 80% of the value creation is in the organic development, the Greenfield development of that, of those projects. And there is no one in the industry that has the pipeline that we do. It has the team that we do in the year in and the year out our track record. I worry about lot of things.

That's like very, very low on my list of things that I worry about..

That’s great. Thank you very much..

And we will take our next question from Matt Tucker from KeyBanc Capital Markets..

Good morning. Thanks for taking my questions..

Good morning, Matt..

Wanted to ask few questions about the HoldCo Debt Capacity at NEP. I guess first, just serious, what kind of changed since you provided an estimate? I think when you announced Desert Sunlight that was about $75 million lower. Appreciate the math illustration you provided in the slides but still unclear about what changed there.

And then just how should we be thinking about how you are going to look to utilize this debt capacity? Is the target’s something that you would look to reach in over the next 12 to 18 months over the next few transactions, or how much cushion would you like to kind of leave there for potential periods where you really don’t feel like you can access equity and want to continue to make acquisitions?.

Yes. So, a few things. On the HoldCo Debt Capacity, remember that we financed our July drop-down of largely debt. We then went ahead and equitize the September drop. The cash purchase price for Desert Sunlight was $280 million. We’ve raised about $341 million in equity, which allowed us to pay down our revolver.

That really was the main contribution to the additional HoldCo Debt Capacity to get us to $450 million to $550 million. In terms of the cushion on debt capacity and I really think that puts us in an opportunistic and flexible position as to how we time future drop-down opportunities and as to how we finance those opportunities.

So, we will see how things progress in terms of the capital markets going forward but that does give us flexibility. Also, you’ve got to remember with wind assets, when we dropped the wind assets and you can think the leverage, about the leverage from tax equity being right around 45% to 55%. So, we are dropping those assets down.

They are naturally creating additional HoldCo Debt Capacity at the at the NEP level..

Thanks. That's very helpful.

And then lastly, just your thoughts on the current wind outlook, are we completely past El Niño or we seeing La Niña, just what you are kind of seeing over the next 6 to 12 months, however, far your outlook goes?.

Well, it’s tough to look out 12 months and really come up what an accurate forecast might look like. But certainly, we saw return to normal with our third quarter results. So, we'll see how the fourth quarter progresses..

Thanks guys..

[Operator Instructions] And we will take our next question from Jonathan Arnold with Deutsche Bank..

Good morning, guys..

Good morning, Jonathan..

Two quick questions.

One, on the new contracted wind that is not repowerings, the 100 megawatts in 17’ and ‘18 and then 500 post ’18, should we anticipate most of what you do on the backlog is going to be longer dated going forward here, or is that just the nature of some of these deals you signed this quarter because I know you talked about being unsure whether tax credit extensions are going to push things a little bit out?.

Hey, Jonathan, it’s Armando. I wouldn't read too much into that. It is just really the pace of negotiations. What I can say is that there is a lot of activity going on right now for both ‘17 and ‘18 and ‘19 and ’20. In the contracting market we were -- these two came in kind of at the right time for 2019.

But I wouldn't read too much into that other than just timing..

So there you’ve got irons in the fire still for ’17, ’18 is fair to say?.

Yes, absolutely. We still feel comfortable with the guidance or the expectations that we’ve provided to you and we reaffirm today for ’17, ’18..

Great. You obviously had a strong third quarter. Last time you spoke publicly I think you were talking down the second half a little bit versus the first half in terms of growth and we have you at about 6, ‘17 trailing 12 earnings. And I was curious why the guidance range you didn't take up the low end.

Are there some challenges in Q4 that we should be thinking about, or you -- it feels like you are tracking pretty well in the year?.

Yes. Jonathan, we did have a good third quarter but with the fourth quarter we still do expect the growth to drop off a bit compared to what we saw with 2015. And we are targeting again to be at the upper end of our 6% to 8% range is the way to think about how we will finish the fourth quarter and the full year..

Okay.

So then you’ve talked about some taxed timing issues in the second half, is that more a Q4 item then or is that still?.

There were some taxed timing issues that had benefited the early part of the year. That’s a part of it. There were some other smaller things as well, not any one thing we are calling out or mentioning..

All right. Nothing about those. Thank you..

And we will take our next question from Colin Rusch with Oppenheimer..

Thanks so much. I have got two questions.

Can you just give us a bit more detail on what’s in that receivable due from related party at NEP? And then secondly, with the wind repowering opportunity given the pretty dramatic price declines on battery storage with companies like LG and Tesla offering installations below $400,000 a kilowatt hour now, how are you seeing that opportunity change and is there a meaningful avoided cost PPA opportunity that you guys are seeing right now?.

Yes. On the due from related party for NEP, recall that NextEra Energy provides credit support to NEP. But as part of that credit support arrangement, NextEra Energy has the right to benefit from the cash sweeps by taking cash out of those accounts, which it has an obligation to put back in for the benefit of NEP.

So that's what the due from related parties is. On the battery question, I will defer to Armando..

So, we’ve been talking about batteries now I think for a couple of years. And we keep saying that we would expect batteries to be a significant investment opportunity for us some time earlier in the next decade and it’s tracking based on the where we thought our expectations would be.

We have roughly -- currently but I’m going to say about 10 projects, 10 battery projects across the U.S. and Canada. A little bit different technology in each one but these are fairly small investments that we are making in battery storage.

Somewhere in the neighborhood of $6 million to $15 million is a potential average for each one of those investments. Whether it is Tesla as you mentioned or whether its other estimates that you and us have seen, battery storage will continue to come down significantly through this decade.

And we continue to believe that at some point in the next decade. I don’t know whether it will be earlier or whether it will be later but battery storage will be commercially viable.

The cost will come down enough that you'll be able to strap it on with the renewable technology whether it's wind or more likely solar and have a very competitive project in the renewable energy space..

Okay. Great. I will take the rest of it offline. Thanks, guys..

And we will take our next question from Angie Storozynski with Macquarie..

Thank you. So, I had one follow-up on the repowerings.

So, how does the 50% reduction of CapEx versus new build reconcile with this IRS requirement that is an 80% increase in the value of the turbine?.

We can’t do that reconciliation, Angie. It’s Armando. The way that the 80/20 works is obviously for others on the phone, if you were to go out and completely teardown a wind project and start over, you would get PTCs on the new investment. While the IRS guidance allows you to do a whole bunch of work on those wind projects.

And 80% of the value that you are putting in, if you meet the 80% test, the entire investment qualifies as new production tax credit. It’s based on a fair value method though, not based on a cost method.

So when John answered the question before that it’s a lot less capital for repowering opportunities and the economic returns are just as good or better, he was talking about the costs that was going into the wind project, not about the 80/20 test..

Okay..

So, Angie, this is Jim. Simply said it’s not 80% of the new build cost, it’s 80% of the -- whatever you think the value of the existing asset is and the existing assets been typically depreciated by 10, or 11, or 12 years so. What you’re trying to do is apples and oranges..

Okay.

And then all of the projects that are going to be repowered or are considered repowering targets have PPAs, so they would be no merchants repowering?.

Actually, Angie, all of the projects that we announced today that were moving forward on the repowering side are all projects that we have long-term hedges on. We have not announced any repowerings of projects that have power purchase agreement.

So, when John mentioned our expectation that this could be a $2 billion to $2.5 billion dollar program, virtually all of the remaining opportunities that we are looking at are under power purchase agreements and therefore, we would have to have discussions with the counterparty as John mentioned earlier to make sure that we can move forward on those.

I feel comfortable that we would move forward on a vast majority of those and that’s what we gave CapEx guidance on the total program today..

Okay. Thank you. And last question on NEP, I understand that you have the corporate debt capacity to finance growth.

You are the only one really with active IDRs along with yieldcos and those IDRs require simply more and more assets to be dropped down in order to meet this 12% to 15% growth in distributions per share for LP holders and as such basically your funding requirements are growing quite considerably as you move to high spreads.

Would you consider for instance doing away with the IDRs in case there is no recovering of liquidity in the yieldco market on the equity side or you feel like between co-financing by NextEra or private placements you can actually replace the asset in order to achieve the growth and pay IDRs?.

Angie, the way we look at it, I think the first thing to look at when you’re dealing with the yieldco like ours with a strong sponsor is how many projects, what's the pipeline at the sponsor to be able to drop-down projects? Do you have a long pipeline of opportunities to be able to drop-down into -- in this case NextEra Energy Partners? Because if you have that the current economics certainly work? You talked about HoldCo Debt Capacity at the beginning of your discussion.

I hope it's clear. I think we've made it clear that we will not be reaching, at least our preliminary HoldCo Debt Capacity targets in 2017. We are slowly increasing the debt capacity in NextEra Energy Partners.

So by the end of 2018 at least preliminarily, we believe that we would get to the HoldCo Debt Capacity, which gives us in this market a tremendous amount of flexibility as to when to be able to raise equity and when to be able to raise additional HoldCo Debt Capacity.

I think it’s just too early in the life of NextEra Energy Partners to really start talking about what we're going to do in the future with IDRs. We feel comfortable with the way NextEra Energy Partners is working right now.

It brings a lot of benefits to NextEra Energy we are certainly not comfortable with where it’s trading, I don’t think any management team is ever comfortable with whether units are trading, but we feel confident that we at NextEra Energy will be able to have sufficient number of projects for sufficient number of times in order for NextEra Energy Partners to be successful long term..

Right. Thank you..

And we’ll take our last question from Stephen Byrd with Morgan Stanley..

Hi, yes just had one follow up.

In terms of the market for tax equity and tax appetite, I wonder if you could just [give a comp] insurance in terms of high level overall access your position there -- just your take on the state of monetizing tax attributes?.

Yes, we have seen the tax equity market for our projects continue to hang in there Stephen, we’ve seen no issues. I mean one of the things that we try to do going into any one year is estimate the amount of tax equity needs that we will have and then we allocate those to our tax equity providers going into the year.

So really, it has not been an issue for us with regard to our projects..

Thank you..

And with no further questions in the queue, that does conclude today’s presentation. Thank you for your participation. You may now disconnect..