NextEra makes strides on new gas plants during 2011

2011 was a mixed year for NextEra Energy (NYSE: NEE) as it made strides toward building new natural gas plants in Florida, although the company’s renewable sector did not grow as fast as hoped, company officials said in a Jan. 27 earnings call.

The company reported 2011 fourth-quarter net income on a GAAP basis of $667m compared with $263m in the fourth quarter of 2010. For the full-year 2011, NextEra Energy reported net income on a GAAP basis of $1.92bn compared with $1.96bn in 2010.

“We had a number of disappointments, but we also had at least an equal number of successes,” NEE Vice Chairman and CFO Moray Dewhurst said during the quarterly earnings call. “Although our final adjusted results were well within the range of expectations we originally set out for you in October 2010, they were not what we had hoped for,” Dewhurst said.

Despite those disappointments, NextEra is continuing to modernize its natural gas power plant fleet while also expanding its renewable energy footprint.

NextEra is replacing several old gas plants in Florida with new ones. The forward curve for natural gas prices has fallen significantly of late and this is good news for customers, Dewhurst said. “[O]ver the long haul, lower natural gas prices mean lower power prices for our key merchant assets,” Dewhurst said.

Nationally, the company also expects it will reach 10,000 MW in its renewable energy portfolio by the end of 2012, the company said during its 4Q 11 earnings call.

While the company was disappointed with the federal government’s failure to extend certain renewable energy incentives in 2011, it doubts the government will pull the plug on renewable incentives, Dewhurst said.

The company had hoped to squeeze “a few more megawatts” out of new renewable energy projects in 2011, company officials said.

An unplanned outage at the Seabrook nuclear plant complicated the company’s 2011 performance, they added.

“Although we had challenges within the nuclear fleet in 2011, our non-nuclear-generating facilities performed exceptionally well with one of the lowest forced outage rates on record,” Dewhurst said.

NEE’s Florida Power & Light is investing several billion dollars over the next few years to replace old gas-fired power generation with newer, more efficient combined-cycle gas units.

The 1,250-MW Unit 3 at the West County power plant came online in 2011. Construction has begun at the new Cape Canaveral gas plant and it should enter commercial operation in June 2013. The Riviera Beach gas plant should enter operation a year after that, a spokesperson said.

The company is also seeking Florida Public Service Commission approval for the 1,250-MW Port Everglades plant. If government approvals are attained on schedule, the Port Everglades plant could start generating electricity in the summer of 2016.

Each of the FPL gas plants should cost an average of $1bn, a spokesperson said.

The Riviera Beach power plant is supposed to start commercial operation in 2014.

NextEra said its capital investments are averaging $3bn per year between 2011 and 2013.

Florida Power & Light is seeking a base rate increase before the Florida PSC.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.