NEE

Segment Performance (Net Income Attributable to NEE):

• FPL: $5,012 million (2025) vs. $4,543 million (2024).
• NEER: $2,975 million (2025) vs. $2,299 million (2024).
• Corporate and Other: $(1,152) million (2025) vs. $104 million (2024).

Material Changes Versus Prior Period

• Revenue Growth: Consolidated operating revenues increased by approximately 10.7% to $27.4 billion, driven by higher storm cost recovery revenues at FPL ($1.1 billion increase) and revenue growth from new investments at NEER.
• Net Income Decline: Net income attributable to NEE decreased by $111 million (1.6%) primarily due to a significant decline in "Corporate and Other" results. This was driven by unfavorable non-qualifying hedge activity related to interest rate derivatives and higher average debt balances.
• Segment Drivers:
  • FPL: Net income increased by $469 million, driven by a higher earned regulatory Return on Equity (ROE) of 11.70% (vs. 11.40% in 2024) and investments in plant in service.
  • NEER: Net income increased by $676 million, reflecting earnings from new wind, solar, and battery storage investments, partially offset by higher financing costs and a $0.7 billion impairment charge on the XPLR investment.
• Storm Costs: FPL completed a 12-month interim storm restoration surcharge in 2025 to recover approximately $1.2 billion in costs related to Hurricanes Debby, Helene, and Milton.

Guidance, Outlook, and Risks

Regulatory Developments: In January 2026, the Florida Public Service Commission (FPSC) approved a new base rate agreement for FPL effective through December 2029. This agreement establishes an authorized regulatory ROE of 10.95% (range 9.95% to 11.95%) and includes a Rate Stabilization Mechanism (RSM) of up to $1.5 billion. Certain intervenors have filed a motion for reconsideration challenging this order.

Capital Expenditures: NEE estimates capital expenditures of approximately $11.2 billion for FPL and $16.4 billion for NEER in 2026, totaling roughly $27.6 billion for the year.

Key Risks and Contingencies:

• Regulatory and Legislative Risk: Changes in federal tax laws (specifically the "One Big Beautiful Bill Act" or OBBBA) and executive orders regarding permitting and clean energy incentives could impact project economics. NEE believes its current pipeline qualifies for tax credits but is monitoring developments.
• Commodity and Hedging Risk: Volatility in energy and interest rate markets significantly impacted 2025 results through non-qualifying hedge activity. NEE uses derivatives to manage these risks but remains exposed to market fluctuations.
• Legal Proceedings: NEE is defending against a shareholder securities class action regarding alleged campaign finance violations (reversed dismissal in Nov 2025) and an antitrust lawsuit (partial dismissal in Sept 2025). Additionally, XPLR is facing securities class actions regarding its business model and distributions.
• Operational Risks: Severe weather events (hurricanes) pose significant risks to FPL's infrastructure. NEE also faces risks related to the restart of the Duane Arnold nuclear facility, which is contingent on regulatory approvals.

Investor Verification Checklist

• Regulatory ROE Realization: Verify FPL's ability to maintain its earned regulatory ROE within the authorized range (9.95% - 11.95%) under the new 2025 rate agreement, especially given the pending motion for reconsideration.
• Hedging Impact: Assess the volatility of "Corporate and Other" earnings driven by non-qualifying interest rate hedges and the company's strategy to manage this volatility in future periods.
• XPLR Investment Status: Monitor the fair value and potential for further impairment of the equity method investment in XPLR Infrastructure, LP, following the $0.7 billion charge in 2025.
• Capital Expenditure Execution: Track the execution of the ~$27.6 billion 2026 capital plan, particularly the deployment of new solar and battery storage capacity at NEER and transmission/distribution upgrades at FPL.
• Storm Cost Recovery: Confirm the final prudence review outcome of the $1.2 billion storm cost recovery for Hurricanes Debby, Helene, and Milton to ensure full recoverability.