Employee Retirement Benefits

Employee Benefit Plans and Other Postretirement Plan - NEE sponsors a qualified noncontributory defined benefit pension plan for substantially all employees of NEE and its subsidiaries. NEE also has a SERP, which includes a non-qualified supplemental defined benefit pension component that provides benefits to a select group of management and highly compensated employees. The impact of this SERP component is included within pension benefits in the following tables, and was not material to NEE's financial statements for the years ended December 31, 2011, 2010 and 2009. In addition to pension benefits, NEE sponsors a contributory postretirement plan for other benefits for retirees of NEE and its subsidiaries meeting certain eligibility requirements.

Plan Assets, Benefit Obligations and Funded Status - The changes in assets and benefit obligations of the plans and the plans' funded status are as follows:



	Pension Benefits						Other Benefits
	2011			2010			2011			2010
	(millions)
Change in plan assets:
Fair value of plan assets at January 1	$	3,233		$	3,028		$	32		$	32
Actual return on plan assets	(3		)	380			(2		)	2
Employer contributions^(a)	1			3			29			28
Transfers^(b)	—			(29		)	—			—
Participant contributions	—			—			8			9
Benefit payments^(a)	(109		)	(149		)	(39		)	(39		)
Fair value of plan assets at December 31	$	3,122		$	3,233		$	28		$	32
Change in benefit obligation:
Obligation at January 1	$	1,994		$	1,866		$	417		$	430
Service cost	64			59			6			6
Interest cost	98			102			21			23
Participant contributions	—			—			8			9
Plan amendments	22			1			17			—
Special termination benefits	—			13			—			—
Actuarial losses (gains) - net	54			102			(3		)	(12		)
Benefit payments^(a)	(109		)	(149		)	(39		)	(39		)
Obligation at December 31^(c)	$	2,123		$	1,994		$	427		$	417
Funded status:
Prepaid (accrued) benefit cost at NEE at December 31	$	999		$	1,239		$	(399	)	$	(385	)
Prepaid (accrued) benefit cost at FPL at December 31	$	1,080		$	1,027		$	(273	)	$	(279	)

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(a)	Employer contributions and benefit payments include only those amounts contributed directly to, or paid directly from, plan assets. FPL's portion of contributions related to SERP benefits was $1 million for 2011 and for 2010. FPL's portion of contributions related to other benefits was $27 million and $26 million for 2011 and 2010, respectively.


(b)	Represents amounts that were transferred from the qualified pension plan as reimbursement for eligible retiree medical expenses paid by NEE pursuant to the provisions of the Internal Revenue Code.


(c)	NEE's accumulated pension benefit obligation, which includes no assumption about future salary levels, for its pension plans at December 31, 2011 and 2010 was $2,068 million and $1,935 million, respectively.

NEE's and FPL's prepaid (accrued) benefit cost shown above are included on the consolidated balance sheets as follows:



	NEE												FPL
	Pension Benefits						Other Benefits						Pension Benefits						Other Benefits
	2011			2010			2011			2010			2011			2010			2011			2010
										(millions)
Prepaid benefit costs	$	1,021		$	1,259		$	—		$	—		$	1,088		$	1,035		$	—		$	—
Accrued benefit cost included in other current liabilities	(4		)	(3		)	(26		)	(27		)	(2		)	(2		)	(22		)	(23		)
Accrued benefit cost included in other liabilities	(18		)	(17		)	(373		)	(358		)	(6		)	(6		)	(251		)	(256		)
Prepaid (accrued) benefit cost at December 31	$	999		$	1,239		$	(399	)	$	(385	)	$	1,080		$	1,027		$	(273	)	$	(279	)

NEE's unrecognized amounts included in accumulated other comprehensive income (loss) yet to be recognized as components of prepaid (accrued) benefit cost are as follows:



	Pension Benefits						Other Benefits
	2011			2010			2011			2010
				(millions)
Components of AOCI:
Unrecognized prior service benefit (cost) (net of $3, $2 and $2 tax benefits, respectively)	$	(5	)	$	(4	)	$	(3	)	$	—
Unrecognized transition obligation (net of $1 tax benefit)	—			—			—			(1		)
Unrecognized gain (loss) (net of $24 tax benefit, $5 tax expense, $3 tax benefit and $5 tax benefit, respectively)	(37		)	8			(1		)	(4		)
Total	$	(42	)	$	4		$	(4	)	$	(5	)

NEE's unrecognized amounts included in regulatory assets (liabilities) yet to be recognized as components of net prepaid (accrued) benefit cost are as follows:



	Regulatory Assets (Liabilities) (Pension)					Regulatory Assets (SERP and Other)
	2011		2010			2011		2010
	(millions)
Unrecognized prior service cost	$	16	$	13		$	13	$	1
Unrecognized transition obligation	—		—			2		4
Unrecognized (gain) loss	153		(64		)	44		37
Total	$	169	$	(51	)	$	59	$	42

The following table provides the weighted-average assumptions used to determine benefit obligations for the plans. These rates are used in determining net periodic benefit cost in the following year.



	Pension Benefits				Other Benefits
	2011		2010		2011		2010
Discount rate	4.65	%	5.00	%	4.75	%	5.25	%
Salary increase	4.00	%	4.00	%	4.00	%	4.00	%

The projected 2012 trend assumption used to measure the expected cost of health care benefits covered by the plans for those under age 65 is 7.30% for medical and 7.90% for prescription drug benefits and for those age 65 and over is 7.00% for medical and 7.50% for prescription drug benefits. These rates are assumed to decrease over the next 6 years for medical benefits and 8 years for prescription drug benefits to the ultimate trend rate of 5.50% and remain at that level thereafter. The ultimate trend rate is assumed to be reached in 2018 for medical benefits and 2020 for prescription drug benefits. Assumed health care cost trend rates have an effect on the amounts reported for postretirement plans providing health care benefits. An increase or decrease of one percentage point in assumed health care cost trend rates would have a corresponding effect on the other benefits accumulated obligation of approximately $2 million at December 31, 2011.

NEE's investment policy for the pension plan recognizes the benefit of protecting the plan's funded status, thereby avoiding the necessity of future employer contributions. Its broad objectives are to achieve a high rate of total return with a prudent level of risk taking while maintaining sufficient liquidity and diversification to avoid large losses and preserve capital over the long term.

The NEE pension plan fund's current asset allocation is a mix of 43.5% equity investments, 43.5% fixed income investments, 10% convertible securities and 3% alternative investments. The fund's investment strategy emphasizes traditional investments, broadly diversified across the global equity and fixed income markets, using a combination of different investment styles and vehicles. The pension fund's equity allocation includes direct equity holdings and assets classified as equity commingled vehicles. Similarly, its fixed income allocation includes direct debt security holdings and assets classified as debt security commingled vehicles. These equity and debt security commingled vehicles include common and collective trusts, pooled separate accounts, registered investment companies or other forms of pooled investment arrangements. The pension fund's convertible security allocation is principally direct holdings of convertible securities and includes a convertible security oriented limited partnership. The pension fund's alternative investments allocation consists of absolute return oriented limited partnerships that use a broad range of investment strategies on a global basis.

With regard to its other benefits plan, NEE's policy is to fund claims as incurred during the year through NEE contributions, participant contributions and plan assets. The other benefits plan's assets are invested with a focus on assuring the availability of funds to pay benefits while maintaining sufficient diversification to avoid large losses and preserve capital. The other benefits plan's fund has a strategic asset allocation that targets a mix of 60% equity investments and 40% fixed income investments. The fund's investment strategy consists of traditional investments, diversified across the global equity and fixed income markets. The fund's equity investments are comprised of assets classified as equity commingled vehicles. Similarly, its fixed income investments are comprised of assets classified as debt security commingled vehicles. These equity and debt commingled vehicles include common and collective trusts, pooled separate accounts, registered investment companies or other forms of pooled investment arrangements.

The fair value measurements of NEE's pension plan assets by fair value hierarchy level are as follows:



	December 31, 2011^(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities^(b)	$	750	$	5	$	1	$	756
Equity commingled vehicles^(c)	—		568		—		568
U.S. Government and municipal bonds	84		51		—		135
Corporate debt securities^(d)	—		325		—		325
Asset-backed securities	—		318		—		318
Debt security commingled vehicles^(e)	—		586		—		586
Convertible securities	—		265		—		265
Limited partnerships^(f)	—		63		106		169
Total	$	834	$	2,181	$	107	$	3,122

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(a)	See Note 4 for discussion of fair value measurement techniques.


(b)	Includes foreign investments of $258 million.


(c)	Includes foreign investments of $185 million.


(d)	Includes foreign investments of $58 million.


(e)	Includes foreign investments of $61 million and $85 million of short-term commingled vehicles.


(f)	Includes alternative investments of $94 million, of which $31 million were foreign investments. Fair values have been estimated using net asset value per share of the investments. These investments primarily have a one- to three-year lockup and are redeemable on either a quarterly or annual basis with a 30 to 90 day redemption notification requirement and have unfunded commitments of $24 million.



	December 31, 2010^(a)
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(millions)
Equity securities^(b)	$	800	$	6	$	—	$	806
Equity commingled vehicles^(c)	—		669		11		680
U.S. Government and municipal bonds	60		35		—		95
Corporate debt securities^(d)	—		335		—		335
Asset-backed securities	—		263		—		263
Debt security commingled vehicles^(e)	—		744		—		744
Convertible securities	—		310		—		310
Total	$	860	$	2,362	$	11	$	3,233

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(a)	See Note 4 for discussion of fair value measurement techniques.


(b)	Includes foreign investments of $293 million.


(c)	Includes foreign investments of $219 million.


(d)	Includes foreign investments of $47 million.


(e)	Includes foreign investments of $56 million and $206 million of short-term commingled vehicles.

The fair value measurements, all of which were Level 2, of NEE's other benefits plan assets at December 31, 2011 and 2010 were approximately $17 million and $20 million of equity commingled vehicles (of which $4 million and $5 million were foreign investments) and $11 million and $12 million of debt security commingled vehicles, respectively.

Expected Cash Flows - NEE anticipates paying approximately $26 million for eligible retiree medical expenses on behalf of the other benefits plan during 2012.

The following table provides information about benefit payments expected to be paid by the plans, net of government drug subsidy, for each of the following calendar years:



	Pension Benefits		Other Benefits
	(millions)
2012	$	162	$	33
2013	$	162	$	36
2014	$	162	$	36
2015	$	162	$	30
2016	$	167	$	30
2017 - 2021	$	850	$	144

Net Periodic Cost - The components of net periodic benefit (income) cost for the plans are as follows:



	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
							(millions)
Service cost	$	64		$	59		$	51		$	6		$	6		$	5
Interest cost	98			102			109			21			23			24
Expected return on plan assets	(238		)	(241		)	(239		)	(2		)	(2		)	(3		)
Amortization of transition obligation	—			—			—			3			3			4
Amortization of prior service benefit	(3		)	(3		)	(3		)	—			—			—
Amortization of gains	—			1			(23		)	—			—			—
SERP settlements	—			1			—			—			—			—
Special termination benefits	—			13			—			—			—			—
Net periodic benefit (income) cost at NEE	$	(79	)	$	(68	)	$	(105	)	$	28		$	30		$	30
Net periodic benefit (income) cost at FPL	$	(51	)	$	(42	)	$	(73	)	$	21		$	23		$	23

Other Comprehensive Income - The components of net periodic benefit income (cost) recognized in OCI for the plans are as follows:



	Pension Benefits						Other Benefits
	2011			2010			2011			2010
				(millions)
Prior service cost (net of $2 tax benefit)	$	—		$	—		$	(3	)	$	—
Net gains (losses) (net of $32 tax benefit, none, $2 tax expense and $1 tax expense, respectively)	(45		)	1			3			2
Amortization of prior service benefit	(1		)	(1		)	—			—
Amortization of transition obligation	—			—			1			—
Total	$	(46	)	$	—		$	1		$	2

Regulatory Assets (Liabilities) - The components of net periodic benefit (income) cost recognized during the year in regulatory assets (liabilities) for the plans are as follows:



	Regulatory Assets (Liabilities) (Pension)					Regulatory Assets (SERP and Other)
	2011		2010			2011			2010
	(millions)
Prior service cost	$	1	$	1		$	12		$	—
Unrecognized (gains) losses	217		(35		)	7			(9		)
Amortization of prior service benefit	2		2			—			—
Amortization of transition obligation	—		—			(2		)	(2		)
Total	$	220	$	(32	)	$	17		$	(11	)

The weighted-average assumptions used to determine net periodic benefit (income) cost for the plans are as follows:



	Pension Benefits						Other Benefits
	2011		2010		2009		2011		2010		2009
Discount rate	5.00	%	5.50	%	6.90	%	5.25	%	5.50	%	6.90	%
Salary increase	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%	4.00	%
Expected long-term rate of return^(a)	7.75	%	7.75	%	7.75	%	8.00	%	8.00	%	8.00	%

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(a)

In developing the expected long-term rate of return on assets assumption for its plans, NEE evaluated input, including other qualitative and quantitative factors, from its actuaries and consultants, as well as information available in the marketplace. NEE considered different models, capital market return assumptions and historical returns for a portfolio with an equity/bond asset mix similar to its funds. NEE also considered its funds' historical compounded returns.

Assumed health care cost trend rates have an effect on the amounts reported for postretirement plans providing health care benefits. An increase or decrease of one percentage point in assumed health care cost trend rates would have a corresponding effect on the total service and interest cost recognized at December 31, 2011 by less than $1 million.

Employee Contribution Plans - NEE offers employee retirement savings plans which allow eligible participants to contribute a percentage of qualified compensation through payroll deductions. NEE makes matching contributions to participants' accounts. Defined contribution expense pursuant to these plans was approximately $42 million, $34 million and $38 million for NEE ($28 million, $26 million and $28 million for FPL) for the years ended December 31, 2011, 2010 and 2009, respectively. See Note 11 - Employee Stock Ownership Plan.