Next up, we've got NextEra CEO, John Ketchum. John's got some comments and slides. He's kind enough to let me eat some lunch and watch him. Then we'll have.
Unfair, Steve. Unfair.
Don't go too fast. Not too fast. Then we'll have a discussion after. So John, I'll turn it to you.
Okay, terrific. Hey, great to be here, Steve. Thank you again for inviting us. Just a terrific conference you put on every year. Typical cautionaries you are all familiar with. I won't spend a lot of time with that. One of the things I want to talk about, and I'm sure Steve and I will spend a lot of time on this today, is if we all go back to December, and really October, when I was up here last year, I said 2026 would be the year of execution for NextEra, and it has been. I'm proud to say we've really delivered against it. I'm going to talk a little bit about the 12 ways to grow that we put up at this conference last year.
We talked a lot about in December, but this slide really just deals with what we've been able to accomplish in the last 60 days. This is 60 days of performance. Since the Q2 call, we have 16 GW now of federal hub opportunities. 10 GW with the Japanese fund, and we already have $3.3 billion of capital in the door on those first 10 GW. That is since the Q2 call.
We just announced yesterday, I was up in Washington, the Oval Office, with the President and his cabinet. We announced a 6.5 GW opportunity that we are calling Project Star, the first project done with Korea and with the U.S. Department of Commerce. That brings us to 16 GW. I am going to talk more about the federal hubs in a minute, and I think some of the misconceptions that I see out there in the marketplace.
We also, since the Q2 call, announced 4.6 GW at Paducah with the U.S. Department of Energy, so that puts us at 20.5 GW. Half of that Paducah opportunity is gas, and the other half is storage. If you add up the tally on the gas build, 18 GW. To put that in perspective, the installed gas build at FPL today, which has the largest gas fire generation in the United States, is 24 GW.
So in 60 days, we put up 18 GW of gas opportunities with the federal government. Obviously, we have a very large pipeline behind that, 40 data center hubs, which we will talk more about later. We also were able to recontract Point Beach in a very attractive contract for us there. You can see the EPS contribution, which is very strong.
Obtained a $2 billion loan from the U.S. Department of Energy for the recommissioning of Duane Arnold, which is going very well. I am sure we will talk more about that today as well. As you all know, we are recommissioning that plant. Google is the offtaker there on that facility. They will pay for 100% of the power generation. We also announced a 49% interest in a gas pipeline that is being built in Florida by Chesapeake.
So that is just 60 days of hard work by the NextEra team. This is really tying out some of the accomplishments that we have seen since December. When you look over the last nine months, in addition to what I just mentioned, Florida Power & Light is executing on all cylinders. We had a very favorable rate settlement agreement that came out at the end of last year.
We have had 9.3% regulatory capital employed growth at FPL. We have taken the large load growth estimate up in Florida from 6 GW to 8 GW. We continue to say that we would be disappointed not to be announcing a large load deal in Florida by the end of the year. We have had a lot of success, too, on the linear infrastructure program.
So I mentioned the gas pipeline opportunity, but we have also brought forward two major transmission projects. The CAGR that we had on the linear infrastructure, whether it is electric transmission or the gas pipeline business, was a 20% CAGR a year. Just in the first nine months, we are already at a 25% CAGR for that business. The renewable business continues to perform very well. We have already had roughly 7.5 GW for renewables and storage. The demand we see in the market, extremely strong going forward.
We've been able to recontract roughly 2 GW of PPAs. We have an 8 GW target as we look through 2032, making excellent progress there. Being able to recontract into a much higher price market across the board. The customer supply business continues to execute well with our acquisition of Symmetry. We're now third largest gas marketer in the U.S., third largest power marketer in the U.S.
Those are skill sets that are really, really important when we think about meeting the demands of hyperscalers, and we've had tremendous success on the artificial or super intelligence front across the board, and an extremely successful effort that we just had on our Rewire initiative on how to leverage technology in a way unlike any company in this sector, and to continue to design products that can be used by the utility industry across the board through our partnership with Google, which remains very strong and that relationship has been terrific.
I said I wanted to spend a little bit of time on federal hubs just to address some misconceptions out there. The message I want you to walk away with is this: We do not have to put one cent into these projects. Not one penny. These projects are owned by the federal government and the countries of Japan or the countries of Korea. Not NextEra. But we get fee income streams back.
That fee income stream is roughly 50% of the adjusted EPS that we would earn if we built the gas plant on our own balance sheet. So we don't put not one penny of equity or capital goes into these projects. We get 50% of the EPS profile that we would get if we built these on our own. So if we do the simple math on that, and we say we have 16 GW of federal hubs now secured, and we cut that in half based on the EPS contribution to 8 GW, what I told you was our expectations back in December were 4 GW-8 GW of gas. We're already at the high end of that for 2032.
If you add on the 2 GW of gas for Paducah, that takes us to 10 GW. We're already chipping away at 2033, and we've done that in just a short number of months. I would expect that there could be more opportunities to follow on the U.S. Department of Commerce and U.S. Department of Energy front as we look to the future. Like I said before, we've had $3.3 billion of capital come in on the Japanese project, the first 10 GW.
We just got funded today, $2.4 billion on Project Star, which we announced yesterday. So these projects are moving forward. I know there's a lot of focus from investors on, well, when are you going to get contracts on these? The way the federal government's looking at them is, we're going to build these projects. The contracts will come.
Project Star, one of our partners, is a leading DCO in the related companies, and that project is being built on Rod Lewis's land, who has been a partner of ours on the upstream side. It's all on private land. That is where the data center will be built. That is also where the power generation will be built, right over an existing gas field. The Anderson project right outside of Dallas, 5.2 GW.
One of our relationships there is with Comstock, who will provide the gas supply for that facility as well. So those projects are in good hands and are moving forward as we speak. One of the things that we have not talked about, this is new news, is all these federal hubs, so these 16 GW of federal hubs, we have all the rights to build the battery storage capacity that will serve these three hubs.
These are not in our financial expectations. So there is a 6 GW-11 GW incremental battery storage build opportunity that is an upside to the existing forecast expectations that we have laid out for investors. It is a bit of a busy slide. This is our 12 ways to grow. I have covered most of this. Your takeaway should be that we said we grow in 12 ways. We are growing in 12 ways, and we have made substantial progress against each of these metrics and targets that feed into our financial expectations as communicated back in December. I want to switch gears and just talk a little bit about affordability.
I know affordability is top of mind across the country, and we take great pride in driving very strong affordability for our customers, which is a message that we are bringing forward as part of the Virginia, South Carolina, and North Carolina messaging around the Dominion combination. So if you look at our bills in Florida, we have been accommodating growth for 20 years in the state, one of the fastest-growing states in the country, 14th largest economy in the free world if Florida were a country.
Our bill today is actually 20% less than it was 20 years ago in real dollars. Our bill is 37% lower than the national average. Our reliability is 60% better than the national average. Our O&M on a dollar-per-megawatt hour base is 70% lower than the industry average, and our O&M is 50% better than second best in the industry, and our customer service under the J.D.
Power's 2025 study is top decile. So we do not cut corners. We deliver on affordability. We know how to leverage scale benefits. We know how to deliver affordability and reliability to customers, and we are doing it not only in Florida, we are not only doing it across all 50 states, we are going to do it in Virginia, we are going to do it in South Carolina, we are going to do it in North Carolina.
With the combination, I think it is just a great story. Moving from 110 GW to roughly 240 GW by 2032 is the expectation, more than doubling the size of the company with regulatory capital employed growth of roughly 11%, and 9% + adjusted EPS growth going forward as filed in our S-4. So as I look back at what we said to investors in December, I fast-forward to today, we are really performing and executing across the board on the 12 ways to grow, and we have added a combination that is day one accretive to shareholders on top of that. With that, Steve will take your questions.
Great.
Here.
Yep. All right. Okay. Thanks, John. That was a great intro. Maybe just with the new news on the projects, with the gas projects and the scale of those projects, you could talk a little bit more about the. The earnings are basically kind of half of what you would get, but is the cash flow maybe even better or is the cash flow, because you are not adding any debt, so then cash flow to debt and just the overall balance sheet of the company in that context.
Yeah. That is right. I mean, it inures to FFO. We do not have the financing cost. The resources that we put up against supporting these projects are paid for dollar for dollar under the structure of the transaction. From a cash flow standpoint, very strong contribution. The way to think about it is we get development fees, milestone fees for meeting certain requirements as we build, and then two pieces of operating fees once we go COD, one that is fixed, one that is variable.
Compared to building plant yourself and the like, what risk do you take on, if any, in terms of these deals? Yeah.
Yeah. These are not our projects, right? These are projects for the federal government and for the country of Japan and Korea. Our obligation is to get them built. We put some of our fees at risk in terms of meeting milestones and certain operating requirements, but they're things that we're quite comfortable in our capability of achieving.
I'll get to you in a minute. What's your sense on how you got chosen to do these? Just what drove that?
I think it's really reputational. When you look at the market today, I think one of the things that's really unusual about NextEra and where power demand is headed in this country is it requires more than ever a company that can participate and contribute and has experience in every part of the energy value chain because the requirements to provide solutions for customers at scale is different by customer, it's different by location, it's different by profile of what they want to achieve. Some examples are, a lot of customers we talk to, they have a speed to power need, right? A way to get them up and running very quickly is with solar and storage. Then once they're up and running solar and storage, bring gas in behind it.
Depending on where we're located, we might have to bring a gas pipeline in or build new transmission. If it's a toll, we may need gas marketing capability. We need to understand gas flows on where to locate. Power marketing may be required for certain hedging requirements. Battery storage optimization with the software capabilities that we have and the edge that we have developed there, really, really important.
All these combinations of skills are really critical to being able to deliver cost-effective solutions for hyperscalers. The other thing I would mention is, if you look at the FERC show cause order, and you look at kind of where we are today, I think a lot of the way the market has evolved is if we look three or four years ago, there was a lot of excess capacity on the system. That's gone, right? That's been spoken for.
Now what you're seeing with the FERC show cause order and the focus and the doubling down by ISOs is, show me if you're going to build load, pair it with generation, right? I'll look at the SPP model, right? Those have to be two substations away. That's already been approved by FERC. If that's the kind of the model or some subset of that structure that moves forward, it's going to become critically important that load and generation are working together early on. The opportunity cost has never been higher on being wrong, right?
So if you're a hyperscaler and you're making a $100 billion bet on chips, if you're wrong because you chose the wrong power supplier, you're wrong because you chose the wrong location to build in, you're wrong because you didn't select somebody who has the supply chain capability and the ability to execute, deliver power where and when it's needed, on time, on schedule, on budget, you're in trouble.
The opportunity cost is massive. What we're now seeing, too, in our dialogue with hyperscalers is, and a lot of lessons learned is, a real willingness to work together early on. We have really strong relationships across the board. That's where I'm heading right after this meeting is out to the West Coast to spend a lot of time with one of our customers out there.
It's just never been more important, and I think that's why we were picked by the government. I was there in the Oval Office with all three cabinet secretaries yesterday, Secretary Lutnick, Secretary Wright, Secretary urgum, and they just all have a lot of confidence in NextEra, and our capability to build and to deliver.
I think you said there that there might be more of these. Any sense on how much more there could be of these or similar type projects?
Yeah. I do not want to put a number on it, Steve, but I think, look, we need super intelligence in this country, and power is a limiting factor. We have a supply-demand imbalance, and that is what the Trump administration is trying to address, is to make sure that we have the supply to meet the demand. I do think there is the potential for more opportunities here to partner together. Our whole strategy, if you look back 18 or 24 months ago, is we knew this was where this was heading. Our bet was this was going to be a bring your own generation rather than a recontracting market.
Yeah.
Because you cannot recontract low cost generation because somebody pays for that, right? That is the residential customer. We did not think that would work long term.
Yeah.
Our focus was bring your own generation, get land positions, get hubs up and running as quickly as we could in the right locations where we think hyperscalers will want to be based on the artificial intelligence tools, super intelligence tools that we have developed across the board at NextEra. Many of which you've all seen in practice during some of the investor events we've had on campus in Florida.
I guess last question on this topic is just there's a history of new presidents coming in and including the current one and not liking the stuff that the prior president did and was involved in administrations. Or just how are you dealing with the risk of that happening in the future? Because I assume these will still be getting built during that time.
These are going to be fast moving projects, right?
Yeah.
That are going to get, I think, funded rather quickly. You look at already on the Japan projects at almost $3.5 billion of capital. Those are just the first two capital calls. It could be more as we get through the year. The capital is already coming in at a pretty brisk pace. We already have a 10% funding on the Korean project today that's sitting in the bank account for $2.5 billion for us to get going on supply chain commitments. These are moving, and they're going to move quickly, and capital's going to be committed in a way that we get these projects up and running fast. I'm not too concerned about that.
Okay. But is there any protection around that? You did not really answer his question about what kind of [inaudible].
Well, we are not at risk. This is not my project. At the end of the day, we are taking the capital and we are buying equipment, or we are going engaged in services. We are not putting our balance sheet at risk for that. So the exposure that we are taking on is tied directly to the capital that flows into the door. And so we are never overextended or over-committed to a supplier of equipment or to a supplier of services on the EPC side. We take no risk in this.
So basically our government and the other government that would-
Exactly. They have the owner risk on this. But it is our job too, to make sure that we advise them, that we make smart moves on how we structure these contracts, but this is what we do every day. This is nothing new for us.
Yeah.
We are very comfortable structuring milestone payments to equipment suppliers and to EPC contractors in a risk mitigated way to where we never are out in front of our skis, so to speak.
Actually I lied. One more question on this. The behind the meter, front of the meter, I think a lot of these start behind the meter and then add front of the meter. Maybe you could just talk too.
Yeah. I think when you look at these projects, we're very comfortable with them starting behind the meter. We're able to show a front of the meter opportunity going forward. But it doesn't have to be one for one either. We can rely on the way we've designed and built these projects in a way where you don't have to have perfect redundancy on load interconnects to be able to supply. To get a load interconnect to be able to cover a 6.5 GW project, you're not going to get, right? But having enough in an emergency situation with enough redundancy in the build and the structure and the engineering of the underlying project is what's critically important.
I look for battery storage too, Steve, to play a bigger role. It's not only in terms of backup generation capability as a diesel substitute, but I would also look for the battery storage market to move not only from a capacity opportunity, but to a voltage regulation compliance market opportunity as well. Because you've seen some impacts from voltage fluctuations, right? That have been attributed to some data centers. Battery storage can play a critical role in that, and we're very, very focused on that as a huge business opportunity for us.
Then maybe just on when we think about these announcements, that list of things on the page there relative to the growth rate and plan that you had out there, what would you say is already kind of embedded in some way, and what would be an upside to that?
Well, if you look at our S-4, we had one federal hub in our S-4. We've got three now. I mentioned the battery storage opportunity now being 6 GW - 11 GW, not even in our development expectations, that we've reserved for our own build opportunity. What I remind the team of is every time we build a gas project across the country, that comes also with a couple of opportunities. The first one is a storage opportunity, whether that's on the compliance side or that's on the backup generation side. It also comes with a CFE element as well in combining technologies together.
That's one of the things that when I look at how we're positioned today, not only across the supply chain, but strategically with the vertical integration and the participation across the value chain with the different capabilities that we have at NextEra, it positions us in a way unlike any other company to be able to combine different resources together.
Which is critically important because there isn't one conversation that we're having with a major hyperscaler at scale that is just a one size fits all. Well, just build me gas, just build me an SMR, just build me solar and storage. It's always a conversation about, well, what if we start out at 1 gig of compute capacity and we move to three or four or five? What does that look like? What does that look like in terms of my storage needs?
What does that look like in terms of available transmission capacity, the load interconnect? All the things and tools we've designed over the last three to five years, where we have a massive data and super intelligence advantage over this industry. Then the products that we're developing in partnership with Google to really go after being able to even further distance our competitive advantage by driving technology solutions.
Two other questions from me, then I'm going to open it up. The Florida, I think you had talked about getting a data center announcement there by the end of this year. How are you feeling about hitting that? Is the election there kind of having any impact on data center demand and interest?
Yeah. So the first part of that, we took our forecast up from 6 GW to 8 GW here recently on large load opportunities. So we feel bullish about large load opportunities in Florida. We'll continue to be disappointed not to have announced something by the end of the year on that front. When I think about the election going forward, look, at the end of the day, this is good for Florida. This is going to create good paying jobs. It's going to stimulate local economies, but it's got to be done in the right way.
One of the things I spent a lot of time talking to the leaders of the hyperscalers about is our track record over the last 20 years developing in communities, and you have to go in and we have a really stringent large load tariff in Florida, one of the most customer protective in the country. We make sure that residential customers don't shoulder the burden of the build that we have on serving hyperscalers.
That's the first piece. Second piece is going in and making sure the hyperscaler's going to pay their property taxes. Third is they're not going to use the water, right? They're going to use closed loop cooling. They're going to use water from water treatment facilities. The fourth piece is the aesthetics. How hard is it to build a facade that makes a facility look like an office building?
Like when I go to Northern Virginia, a lot of the data centers have windows around. You wouldn't even know if it was an office building, data center, or a warehouse. You'd have no idea, right? How hard is it to make an investment in aesthetics and vegetation, and give something back to the community? What's in it for them? Get behind workforce training, job training.
One of the things we're supporting with Meta, with Dina Powell McCormick, I have a very good relationship with, is the American Workforce Academy. Taking folks coming out of that academy and repurpose them in the EPC jobs and putting them into roles in energy infrastructure, which is what we're doing. We've already committed to take 1,000 workers out of the AWA program. Giving bonuses to teachers like Meta's done with the $50,000 bonuses to teachers in the parish in Louisiana.
There are really smart things that we can do around being a responsible community citizen, giving back to first responders. Be a good corporate citizen. Be a job creator in those communities. Give back to workforce development. There's a right way to do it, and there's a wrong way to do it, and we're trying to do it the right way, and we're trying to partner with people that are doing it the right way.
Last for me, and I'll open up, Dominion deal. We haven't talked about that.
Yeah.
I don't know if that was because something has changed or just you're trying to remind people that you got a lot of growth on your own. Just how are you feeling about Dominion deal in terms of getting it done and then opportunity once you do?
Feeling really good about it. First of all, one of the things that we've really tried to do is listen, right, and take feedback. We've had hundreds of stakeholder meetings in Virginia, and we wanted to make sure that we were putting our best foot forward and that we were really listening to the community on what was important. What's been really clear are three things that have come out of that.
One is jobs, two is affordability, and three is clean energy. Not necessarily in that order. On the affordability side, we're able to work with the data center community. Amazon actually filed right before we filed our additional commitments on the Friday before, that they were willing to give up their credits, right, and they were getting most of the large load credits in Virginia, and reallocate those over to residential. We top that off with another $85 million commitment. That took residential credits from two years to four years.
Yeah.
We put $100 million behind the low-income bill assistance program that they have in Virginia, which gets paid out through 2038. We put $100 million behind workforce development. We've committed to 1,000 jobs, 600 coming from NextEra, which is doubling in size anyways, and then 400 new jobs coming from suppliers, building a new office tower to be able to house those folks in Richmond.
Richmond was hit hard by the banking community, having moved to Charlotte. It's now a chance by creating an ecosystem around Virginia for Virginia already leads in tech. They lead in defense. When you put these two companies together, you have the global leader in power, and it's a chance to have a co-headquarters of the global leader in power, so suppliers want to be there. By creating a workforce development and a supplier support program, too, we're committed to spend $1 billion a year in Virginia for suppliers doing business in Virginia. This creates that ecosystem for natural growth around the state. I feel like we've really put our best foot forward, and that's why.
Yeah
I answered the question the way I did. In South Carolina, we are committed to make investments in generation and transmission, just like in Virginia. Generation transmission, it is important for Virginia to become more energy independent, less reliant on expensive imports from PJM. We think we can get that done. They have 20 GW of storage that has to be built under statutory mandate by 2044.
Who better to do that than the world's leader in batteries? A lot of the 600 jobs that we would be bringing to Virginia are around renewables. They are around Battery Storage Excellence Center, SMRs, AI, cybersecurity. We think it is a really good fit. If the focus is on jobs, affordability, and clean energy, I cannot think of a better match for Virginia than NextEra combining with Dominion.
All right. Let me open it up to the audience. Jeff?
Okay. A follow-up on Terry's question, the federal hubs plan arrangement. Kind of watching all these things, their front-loading capital right now, but what sort of milestones are particularly worried about, like government shutdowns, things like that, primarily unfortunate for our government. Is there any sort of provisions for that in the contract, and are there any penalties if you guys don't meet the milestones?
Yeah. Without getting into too many of the details, because it is sensitive in terms of what we can talk about and what we cannot talk about, the way it is set up is that just like any energy infrastructure project, there are certain milestone payments that you have to make along the way. You have to reserve turbine slots. You have to make milestone payments to your EPC contractor to get the labor commitment upfront to build, and those payments have to be made over time. This is being structured through a special purpose vehicle, private.
It's outside the government infrastructure with funding commitments coming from the Japanese government, the Korean government, who have said, "Look, instead of facing tariffs with the U.S. government, they now have a chance to earn a return on investments here in the United States." The way the milestone payments are structured is such that we accommodate that build going forward.
From our standpoint, we're not the owner of the facility, so we will structure these milestone payments. They're due on certain dates to maintain schedule. This government, this administration, is very focused on making sure that these projects get up and running as soon as possible because we're desperately short energy generation in this country to accommodate data center supply.
Yep. Other questions?
John, can you speak a bit to the interest rate, the macro outlook, the interest rate environment? You guys have done a fair bit of interest rate hedging, which has been advantageous, but also your read on how that plays out and what might that do to the hyperscaler CapEx and financing views to the extent you're working with a lot of them, so it'd be great to hear your thoughts.
Yeah. I think first of all, if you think about the macro overlay with our company, and I'll start with the gas build. Since we're not committing capital, we're not exposed to rates on the gas build. It's that simple. When I move over to the renewable side and storage, you all know we match fund, so we have $46 billion of hedges in place.
Our interest rate sensitivity in today's interest rate environment is $0.01-$0.03 in 2028, because we have hedges in place. As we move forward on future origination, the cost advantage that we're seeing on the solar and storage side will be able to absorb those higher costs of capital. So I don't see any downturn in the demand for the renewable or the storage opportunities that we have going forward.
Don't forget, on the equipment side, we bought our equipment out through 2030. We're already physically and financially hedged. We have our equipment bought, signed up, and contracted through 2030. We don't just sit here and wait for things to happen to us. We plan ahead. We constantly plan ahead. We think strategically about the supply chain and how we risk mitigate our business so we don't wear window risk.
We lock things in a match fund when we sign contracts. That's the first piece. On the hyperscaler side, when you think about the super intelligence effort across the country and how critically important it is for not only global economic superiority and progress, but also some of the military and defense setbacks we could experience by not investing in it. They're substantial. These models are moving quickly.
There's been a lot of discussion with the federal government on how to manage those things. I just don't see that demand slowing down anytime soon. The opportunity cost of not investing is so substantial. We cannot afford for other countries to get ahead of us, so I just don't see much of a slowdown at all in that area.
I think we're pretty much-
You mentioned you just met with some cabinet members yesterday or yesterday. What, if any, changes in discussions, if you have, are there to why there haven't been any nuclear facilities announced yet, and what might be the challenges in announcing those? How they might change.
Yeah. I think the federal government is really getting behind nuclear. Part of the announcement yesterday, Westinghouse was there. I mean, it's three projects. It was the Trans-Alaska Pipeline System, it was a Westinghouse investment in eight nuclear units, and then it was our 6.5 gigawatt award on Project Star. The government is really getting behind nuclear.
It's a big part of it and a big part of that push. Secretary Wright, I think, has really tried to get behind that together with Secretary Ludnick, and I think now with the funding that's in place, your question really is, well, when will we see folks start to sign up? I think it's going to be important that the five wallet piece lines up. Which is number one, I view all this as forming a risk tower if you think about insurance. Who wears the primary layer or secondary? Who takes the last dollar risk?
I guess I'm thinking the federal government asking something specifically of yourself or other utilities to form this group that gets stuff together.
Yeah. Sure. They are out there having conversations undoubtedly, with the industry. I think I'll speak from a NextEra standpoint. The way we look at nuclear has not changed. We spent a lot of time focusing on Small Modular Reactors, for example. But the cost sharing has to be right. We are not going to take last dollar risk for our shareholder.
We put a little bit of risk, maybe fees or other things that are capped at risk, sure. But there's a lot of other folks involved in the value chain. You have the OEM, you have the EPC contractor, you have the developer, you have the federal government, and so the package would have to come together in a way where it was appropriately risk mitigated. We just can't take on untold risk for our shareholder, which I would never be willing to do, or for our customers.
I think we have-