Hay details future to stock holders
– By Stephen Heiser –
Clean-energy investments are positioning FPL Group, Inc. for continued growth in a low-carbon future, FPL Group Chairman and CEO Lew Hay told shareholders at the company’s annual meeting.
Hay noted that companies with low carbon-dioxide emissions rates are poised to benefit if federal policymakers set a price on carbon in response to climate change.
“FPL Group has one of the lowest emissions rates in the sector. In fact, if every utility were as clean as FPL Group, CO2 emissions from the power sector would be reduced by nearly 50 percent and total U.S. carbon emissions would be reduced by 20 percent. That’s the equivalent of removing 209 million cars from the road, or roughly 80 percent of all vehicles in the nation,” Hay said.
FPL’s business strategy leading to strong results
Despite a challenging economy, FPL Group performed exceptionally well in 2008, delivering record adjusted earnings. A highlight of the year was the strong performance at NextEra Energy Resources, LLC, one of FPL Group’s principal subsidiaries and the largest generator in North America of renewable energy from the wind and sun.
“The true test of companies is not how well they perform in a booming economy. It is how well they perform in the face of a challenge,” Hay said. He pointed to FPL Group’s strong performance in the toughest economy in decades as “a powerful endorsement of our strategy, our commitment to financial discipline, and our dedicated and talented employees.”
FPL Group’s success in 2008 contributed to the company’s strong performance relative to its peers over the past seven years, as measured by both total shareholder return and growth in market capitalization.
“Consider this one simple fact: A dollar invested in the S&P 500 at the end of 2001 was worth 90 cents at the end of 2008. A dollar invested in FPL Group had more than doubled to $2.17,” Hay said.
Likewise, in terms of market capitalization, the companies in the S&P 500 and the S&P 500 utilities index were collectively smaller at the end of 2008 than they were at the end of 2001. FPL Group was twice as big.
In 2008, NextEra Energy Resources led the United States in total wind megawatts added for the seventh time in the last eight years. In addition, the company also acquired its first wind project in Canada and took the initial steps to build a new 250-megawatt solar thermal plant in California. Just after the turn of the year, NextEra Energy Resources was awarded a significant transmission project by the Public Utility Commission of Texas, where transmission constraints have impeded the flow of electricity from the company’s wind farms to population centers.
At Florida Power & Light Company, a difficult economy negatively impacted sales and revenue but progress on the company’s clean-energy projects continued. In 2008, FPL broke ground on the first of three solar generation projects, which would make the state second in the nation in solar energy production. FPL also won approval to modernize its Riviera and Cape Canaveral power plants and moved forward with upgrades to boost the capacity of its nuclear units.
FPL Group’s 2008 performance was recognized in March when the company was rated No. 1 in the electric power sector on Fortune magazine’s survey of the “World’s Most Admired Companies.” FPL Group was also No. 1 in 2007 and 2006.
Hay noted the dramatic growth experienced by FPL Group since 2002. “By almost any measure – capacity, assets, earnings or market cap – we are a significantly larger, stronger and more competitive company today than we were just a few years ago,” he said.
Looking ahead, Hay expressed confidence in FPL Group’s growth prospects, citing Florida’s long-term demographic trends, a bullish outlook for renewable generation, and national policy trends shaping the industry. “Whether it’s the stimulus bill’s support for renewable energy, cap-and-trade legislation setting a price on carbon dioxide, or a new federal standard for renewable electricity, we believe FPL Group is remarkably well positioned for the clean energy economy of the future,” he said.
Shareholders elect all directors, ratify appointment of independent registered public accounting firm, and approve the material terms under the Amended and Restated Long Term Incentive Plan for payment of performance-based compensation
During the annual meeting, shareholders elected the following slate of directors to a one-year term: Sherry S. Barrat, Robert M. Beall, II, J. Hyatt Brown, James L. Camaren, J. Brian Ferguson, Lewis Hay, III, Toni Jennings, Oliver D. Kingsley, Jr., Rudy E. Schupp, Michael H. Thaman, Hansel E. Tookes, II, and Paul R. Tregurtha.
Shareholders also ratified the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for 2009, and approved the material terms under the FPL Group, Inc. Amended and Restated Long Term Incentive Plan for payment of performance-based compensation.
Dividend declared
Also today, the board of directors declared a regular quarterly common stock dividend of 47.25 cents per share. The dividend is payable June 15, 2009, to shareholders of record June 5, 2009. Today's board action marks the 254th consecutive quarterly dividend paid to the holders of FPL Group common stock.
FPL Group: Energy Solutions for the Next Era
FPL Group, Inc. (NYSE: FPL) is a leading clean energy company with 2008 revenues of more than $16 billion, approximately 39,000 megawatts of generating capacity, and more than 15,000 employees in 27 states and Canada. Headquartered in Juno Beach, Fla., FPL Group’s principal subsidiaries are NextEra Energy Resources, LLC, the largest generator in North America of renewable energy from the wind and sun, and Florida Power & Light Company, which serves 4.5 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the country. Through its subsidiaries, FPL Group collectively operates the third largest U.S. nuclear power generation fleet. For more information about FPL Group companies, visit these Web sites: www.FPLGroup.com, www.NextEraEnergyResources.com, www.FPL.com.
Cautionary Statements And Risk Factors That May Affect Future Results
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light Company (FPL) are hereby providing cautionary statements identifying important factors that could cause FPL Group's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of FPL Group and FPL in this press release, on their respective websites, in response to questions or otherwise. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance, climate change strategy or growth strategies (often, but not always, through the use of words or phrases such as will, will likely result, are expected to, will continue, is anticipated, aim, believe, could, should, would, estimated, may, plan, potential, projection, target, outlook, predict and intend or words of similar meaning) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained or implied in forward-looking statements made by or on behalf of FPL Group and FPL.
Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.
The following are some important factors that could have a significant impact on FPL Group's and FPL's operations and financial results, and could cause FPL Group's and FPL's actual results or outcomes to differ materially from those discussed or implied in the forward-looking statements:
FPL Group and FPL are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions. FPL holds franchise agreements with local municipalities and counties, and must renegotiate expiring agreements. These factors may have a negative impact on the business and results of operations of FPL Group and FPL.
FPL Group and FPL are subject to complex laws and regulations, and to changes in laws or regulations, with respect to, among other things, allowed rates of return, industry and rate structure, operation of nuclear power facilities, construction and operation of generation facilities, construction and operation of transmission and distribution facilities, acquisition, disposal, depreciation and amortization of assets and facilities, recovery of fuel and purchased power costs, decommissioning costs, return on common equity and equity ratio limits, transmission reliability and present or prospective wholesale and retail competition. This substantial and complex framework exposes FPL Group and FPL to increased compliance costs and potentially significant monetary penalties for non-compliance. The Florida Public Service Commission (FPSC) has the authority to disallow recovery by FPL of any and all costs that it considers excessive or imprudently incurred. The regulatory process generally restricts FPL's ability to grow earnings and does not provide any assurance as to achievement of earnings levels.
FPL Group and FPL also are subject to extensive federal, state and local environmental statutes, rules and regulations, as well as the effect of changes in or additions to applicable statutes, rules and regulations that relate to, or in the future may relate to, for example, air quality, water quality, climate change, greenhouse gas emissions, carbon dioxide emissions, waste management, marine and wildlife mortality, natural resources, health, safety and renewable portfolio standards that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional pollution control equipment and otherwise increase costs. There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future.
FPL Group and FPL operate in a changing market environment influenced by various legislative and regulatory initiatives regarding regulation, deregulation or restructuring of the energy industry, including, for example, deregulation or restructuring of the production and sale of electricity, as well as increased focus on renewable and clean energy sources and reduction of carbon emissions. FPL Group and its subsidiaries will need to adapt to these changes and may face increasing costs and competitive pressure in doing so.
FPL Group's and FPL's results of operations could be affected by FPL's ability to negotiate or renegotiate franchise agreements with municipalities and counties in Florida.
The operation and maintenance of power generation, transmission and distribution facilities involve significant risks that could adversely affect the results of operations and financial condition of FPL Group and FPL.
The operation and maintenance of power generation, transmission and distribution facilities involve many risks, including, for example, start up risks, breakdown or failure of equipment, transmission and distribution lines or pipelines, the inability to properly manage or mitigate known equipment defects throughout FPL Group's and FPL's generation fleets and transmission and distribution systems, use of new or unproven technology, the dependence on a specific fuel source, failures in the supply or transportation of fuel, the impact of unusual or adverse weather conditions (including natural disasters such as hurricanes, floods and droughts), and performance below expected or contracted levels of output or efficiency. This could result in lost revenues and/or increased expenses, including, for example, lost revenues due to prolonged outages and increased expenses due to monetary penalties or fines, replacement equipment costs or an obligation to purchase or generate replacement power at potentially higher prices to meet contractual obligations. Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses. Breakdown or failure of an operating facility of NextEra Energy Resources, LLC (NextEra Energy Resources) may, for example, prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or subject NextEra Energy Resources to incurring a liability for liquidated damages.
The operation and maintenance of nuclear facilities involves inherent risks, including environmental, health, regulatory, terrorism and financial risks, that could result in fines or the closure of nuclear units owned by FPL or NextEra Energy Resources, and which may present potential exposures in excess of insurance coverage.
FPL and NextEra Energy Resources own, or hold undivided interests in, nuclear generation facilities in four states. These nuclear facilities are subject to environmental, health and financial risks such as on-site storage of spent nuclear fuel, the ability to dispose of spent nuclear fuel, the ability to maintain adequate reserves for decommissioning, potential liabilities arising out of the operation of these facilities, and the threat of a possible terrorist attack. Although FPL and NextEra Energy Resources maintain decommissioning trusts and external insurance coverage to minimize the financial exposure to these risks, it is possible that the cost of decommissioning the facilities could exceed the amount available in the decommissioning trusts, and that liability and property damages could exceed the amount of insurance coverage.
The U.S. Nuclear Regulatory Commission (NRC) has broad authority to impose licensing and safety-related requirements for the construction and operation and maintenance of nuclear generation facilities. In the event of non-compliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. NRC orders or new regulations related to increased security measures and any future safety requirements promulgated by the NRC could require FPL and NextEra Energy Resources to incur substantial operating and capital expenditures at their nuclear plants. In addition, if a serious nuclear incident were to occur at an FPL or NextEra Energy Resources plant, it could result in substantial costs. A major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit.
In addition, potential terrorist threats and increased public scrutiny of utilities could result in increased nuclear licensing or compliance costs which are difficult or impossible to predict.
The construction of, and capital improvements to, power generation and transmission facilities involve substantial risks. Should construction or capital improvement efforts be unsuccessful or delayed, the results of operations and financial condition of FPL Group and FPL could be adversely affected.
The ability of FPL Group and FPL to complete construction of, and capital improvement projects for, their power generation and transmission facilities on schedule and within budget are contingent upon many variables that could delay completion, increase costs or otherwise adversely affect operational and financial results, including, for example, limitations related to transmission interconnection issues, escalating costs for materials and labor and environmental compliance, delays with respect to permits and other approvals, and disputes involving third parties, and are subject to substantial risks. Should any such efforts be unsuccessful or delayed, FPL Group and FPL could be subject to additional costs, termination payments under committed contracts, loss of tax credits and/or the write-off of their investment in the project or improvement.
The use of derivative contracts by FPL Group and FPL in the normal course of business could result in financial losses or the payment of margin cash collateral that adversely impact the results of operations or cash flows of FPL Group and FPL.