Release Date: October 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- NextEra Energy Partners LP (NEP, Financial) reported a 10% year-over-year increase in adjusted earnings per share for the third quarter, indicating strong financial performance.
- The company added approximately 3 gigawatts to its renewables and storage backlog for the second consecutive quarter, bringing the total to approximately 11 gigawatts over the past year.
- NEP announced new framework agreements with two Fortune 50 companies for potential development of up to 10.5 gigawatts of renewables and storage projects by 2030.
- The company has a robust pipeline of projects, with a total backlog of over 24 gigawatts, providing visibility into future growth.
- NEP's wind repowering target has increased to approximately 1.9 gigawatts through 2026, up from the previous target of 1.3 gigawatts, indicating expanded organic growth opportunities.
Negative Points
- The company faced significant challenges due to Hurricanes Helene and Milton, which caused power outages for millions of customers and required substantial restoration efforts.
- NEP's third quarter adjusted EBITDA and cash available for distribution declined by approximately $35 million and $92 million, respectively, from the same period last year.
- The divestiture of the Texas pipeline portfolio negatively impacted NEP's financial results for the quarter.
- The company is facing increased costs associated with storm recovery, with an estimated $1.2 billion in restoration costs to be recovered from customers.
- NEP is undergoing a strategic review of its yield curve model and distribution policy, creating uncertainty about future capital allocation and distribution growth targets.
Q & A Highlights
Q: Could you provide more details on the framework agreements and the shift towards them?
A: John Ketchum, Chairman, President, and CEO, explained that the framework agreements with Entergy and two Fortune 50 companies, totaling over 10.5 gigawatts, offer flexibility in asset allocation and foster close partnerships. Rebecca Kujawa, CEO of NextEra Energy Resources, added that these agreements reflect the significant and urgent energy needs of customers, showcasing NextEra's unique position with a substantial pipeline of projects.
Q: Can you disclose the industries of the Fortune 50 companies involved in the framework agreements?
A: John Ketchum stated that while they might disclose the names in the future, these agreements are not with technology companies. Rebecca Kujawa emphasized that these customers are outside the tech industry, focusing on low-cost, low-carbon energy solutions, indicating broad-based demand across various sectors.
Q: What are the key steps and potential costs for recommissioning the Duane Arnold nuclear plant?
A: John Ketchum mentioned that they are evaluating the recommissioning of the Duane Arnold plant, focusing on engineering assessments and stakeholder engagement. He noted that the plant's boiling water reactor design is simpler and less costly to recommission compared to other designs, making it an attractive long-term asset.
Q: What is the status of NextEra Energy Partners' financial review and distribution growth targets?
A: John Ketchum indicated that the review is nearing completion, with a focus on addressing NEP's cost of capital and potentially shifting capital allocation towards growing underlying cash flow rather than distributions. He confirmed that NextEra Energy intends to remain the owner of NEP, with updates expected in the fourth quarter call.
Q: How is NextEra Energy preparing for potential changes in the safe harbor program and supply chain challenges?
A: John Ketchum assured that NextEra has fully derisked its safe harbor program through 2029 and has secured critical electrical infrastructure components like transformers and switchgears. This proactive approach positions them to avoid delays and meet customer demands effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
