NextEra plans for post-PTC world with record wind installations

NextEra Energy (NYSE: NEE) remains on track to set a record for new wind installations in 2012, putting its total about 10,000 MW.

But the company said its NextEra Energy Resources unit will see a significant drop-off in activity in 2013, even if Congress extends the federal production tax credit (PTC) for wind sometime after the election.

The discussion was part of the company’s third-quarter earnings call on Oct. 24. NextEra expects to put 1,200 MW of wind projects online in the fourth quarter, bringing the year’s total to 1,500 MW. This includes an acquisition of 165 MW during the quarter.

“There will continue to be a wind business in the U.S. beyond 2012, even if the PTC is not extended,” CFO Moray Dewhurst said. The company had reported a power purchase agreement for 2013 for 100 MW of a wind project that is not contingent on a PTC extension.

And acquisitions is where some of the additional activity may occur.

“I can tell you there’s a lot of activity out there,” said Armando Pimentel, executive vice president and CFO for the Energy Resources unit. Single and multiple projects, along with those in development, are open for discussion, he added.

“I’ll be disappointed if we don’t over the next 12 to 15 months pick up one or two like we just did,” Pimentel added.

Pimental said the company is “fairly optimistic” there will be a one- or two-year extension of the PTC for the company to resume its own development program.

New wind construction for next year nationwide may be revived with the PTC, but a steep drop-off from the expected 12 GW in 2012 is almost assured.

Negative factors for wind construction next year are a combination of accelerated activity in 2012 to take advantage of the credit before its expiration and a disruption of the manufacturing supply chain that will be felt through most of 2013 as suppliers rebuild inventory.

As the new assets are added, the Energy Resources unit expects to improve results by 10%-15%, or adjusted earnings from $740m-$780m.

Overall, NextEra Energy reported 2012 third quarter net income of $415m, or 98 cents per share, compared with $407m, or 97 cents per share, in the third quarter of 2011.

“NextEra Energy continued to execute well in the third quarter against our record capital investment program,” said NextEra Energy President and CEO Jim Robo. “At FPL, we expect our increased investments to further enhance a customer value proposition that delivers the lowest typical residential customer bill in the state, reliability that is among the best in the country and nationally recognized customer service. At NextEra Energy Resources, we expect to add approximately 1,500 megawatts of new U.S. wind generation this year as we continue work on a record backlog of contracted renewables projects.”

For the Florida Power & Light unit, the Nuclear Regulatory Commission approved FPL’s license amendment request for the nuclear uprate program at St. Lucie Unit 2 and the company expects that uprate to be completed by year-end. Turkey Point Unit 4 will begin its uprate in the fourth quarter, which is expected to completed in the spring of 2013. Coupled with the completed uprates at both St. Lucie Unit 1 and Turkey Point Unit 3, these investments are now expected to provide at least an additional 526 MW.

For 2012, NextEra Energy continues to expect 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.