NextEra prepared to stop new wind development without extended PTC

Failure of Congress to extend the production tax credit (PTC) this year could mean the leading wind energy company in the U.S. would return cash to shareholders in the form of a stock buyback instead of investing in more projects.

NextEra Energy, Inc. (NYSE: NEE) CFO Moray Dewhurst discussed that possibility in an April 25 conference call with investment analysts that reviewed the company’s first-quarter results.

With more than 8,700 MW of existing wind projects in its portfolio and the expectation to complete an additional 1,300 MW this year, unit NextEra Energy Resources owns and operates the largest wind fleet in the U.S.

NextEra has a project backlog that it would complete, but, “we have no expectations for (new) U.S. wind beyond 2012,” Dewhurst said.

In financial guidance for 2014, potential income from new wind projects was not included, but a share repurchase was broached. “I want to emphasize that is by no means a commitment, but whether or not we are in a position to find make good, attractive investments. If we are not, we would be in a position to return cash to shareholders,” he added.

“While we continue to be optimistic that federal policy support for renewable development will be maintained, at least to some degree, beyond the expiration of the production tax credit at the end of the year, we are not counting on that. We hope to be able to add additional projects to our backlog in due course, but if we do not, we would expect to be in a position to return some cash to investors in 2014,” Dewhurst said.

“New wind investments added to the portfolio since the first quarter of last year contributed 7 cents, reflecting both higher convertible investment tax credit, or CITC, elections as well as on-going operating earnings. We continue to expect to elect CITCs on roughly 450 MW of new projects that are expected to be placed into service in 2012,” according to NextEra’s earning statement.

CITC is more commonly known as “cash grants” that projects are eligible to receive if they met certain construction requirements during 2011, as the economic stimulus-created program expired on Dec. 31.

Overall, wind income was flat, as existing wind assets decreased 7 cents per share in adjusted EPS relative to last year’s comparable quarter due to a combination of favorable state tax credits recorded last year as well as lower federal production tax credits, lower energy prices, and higher operating expenses.

NextEra said it brought 177 MW of wind capacity and completed the acquisition of 40 MW of solar capacity in Canada. In addition to its new wind capacity in the U.S., it has 600 MW of contracted wind capacity in Canada in 2012 through 2015, and roughly 900 MW of contracted solar capacity between 2012 and 2016.

Overall, NextEra Energy, which includes its regulated Florida Power & Light unit, reported 2012 first quarter net income on a GAAP basis of $461 million, or $1.11 per share, compared with $268 million, or $0.64 per share, in the first quarter of 2011.

For 2012, NextEra Energy currently expects full-year adjusted earnings per share to be in the range of $4.35 to $4.65. It also continues to expect that adjusted earnings per share in 2014 will be in the range of $5.05 to $5.65.