Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Financial assets and liabilities and other fair value measurements

Recurring Fair Value Measurements - NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:



	June 30, 2012
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting^(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	80	$	—		$	—	$	—		$	80
Special use funds:
NEE:
Equity securities	$	766	$	1,255	^(b)	$	—	$	—		$	2,021
U.S. Government and municipal bonds	$	477	$	192		$	—	$	—		$	669
Corporate debt securities	$	—	$	503		$	—	$	—		$	503
Mortgage-backed securities	$	—	$	598		$	—	$	—		$	598
Other debt securities	$	—	$	34		$	—	$	—		$	34
FPL:
Equity securities	$	142	$	1,102	^(b)	$	—	$	—		$	1,244
U.S. Government and municipal bonds	$	424	$	152		$	—	$	—		$	576
Corporate debt securities	$	—	$	346		$	—	$	—		$	346
Mortgage-backed securities	$	—	$	516		$	—	$	—		$	516
Other debt securities	$	—	$	20		$	—	$	—		$	20
Other investments:
NEE:
Equity securities	$	14	$	—		$	—	$	—		$	14
U.S. Government and municipal bonds	$	8	$	—		$	—	$	—		$	8
Corporate debt securities	$	—	$	46		$	—	$	—		$	46
Mortgage-backed securities	$	—	$	51		$	—	$	—		$	51
Other	$	5	$	4		$	—	$	—		$	9
Derivatives:
NEE:
Commodity contracts	$	2,144	$	3,838		$	1,186	$	(5,452	)	$	1,716	^(c)
Interest rate swaps	$	—	$	68		$	—	$	—		$	68	^(c)
Foreign currency swaps	$	—	$	6		$	—	$	—		$	6	^(c)
FPL - commodity contracts	$	—	$	22		$	10	$	(7	)	$	25	^(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	2,226	$	3,617		$	611	$	(5,305	)	$	1,149	^(c)
Interest rate swaps	$	—	$	349		$	—	$	—		$	349	^(c)
Foreign currency swaps	$	—	$	17		$	—	$	—		$	17	^(c)
FPL - commodity contracts	$	—	$	331		$	3	$	(7	)	$	327	^(c)

————————————


(a)	Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.


(b)	At NEE, approximately $1,150 million ($1,033 million at FPL) are invested in commingled funds whose underlying investments would be Level 1 if those investments were held directly by NEE or FPL.


(c)	See Note 2 for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.



	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Netting^(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	159	$	—		$	—	$	—		$	159
FPL - equity securities	$	11	$	—		$	—	$	—		$	11
Special use funds:
NEE:
Equity securities	$	709	$	1,206	^(b)	$	—	$	—		$	1,915
U.S. Government and municipal bonds	$	508	$	167		$	—	$	—		$	675
Corporate debt securities	$	—	$	516		$	—	$	—		$	516
Mortgage-backed securities	$	—	$	511		$	—	$	—		$	511
Other debt securities	$	—	$	47		$	—	$	—		$	47
FPL:
Equity securities	$	128	$	1,056	^(b)	$	—	$	—		$	1,184
U.S. Government and municipal bonds	$	458	$	134		$	—	$	—		$	592
Corporate debt securities	$	—	$	359		$	—	$	—		$	359
Mortgage-backed securities	$	—	$	434		$	—	$	—		$	434
Other debt securities	$	—	$	32		$	—	$	—		$	32
Other investments:
NEE:
Equity securities	$	4	$	—		$	—	$	—		$	4
U.S. Government and municipal bonds	$	8	$	—		$	—	$	—		$	8
Corporate debt securities	$	—	$	43		$	—	$	—		$	43
Mortgage-backed securities	$	—	$	33		$	—	$	—		$	33
Other	$	5	$	5		$	—	$	—		$	10
Derivatives:
NEE:
Commodity contracts	$	2,448	$	3,478		$	1,071	$	(5,477	)	$	1,520	^(c)
Interest rate swaps	$	—	$	37		$	—	$	—		$	37	^(c)
Foreign currency swaps	$	—	$	27		$	—	$	—		$	27	^(c)
FPL - commodity contracts	$	—	$	8		$	6	$	(2	)	$	12	^(c)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	2,588	$	3,582		$	585	$	(5,453	)	$	1,302	^(c)
Interest rate swaps	$	—	$	320		$	—	$	—		$	320	^(c)
Foreign currency swaps	$	—	$	9		$	—	$	—		$	9	^(c)
FPL - commodity contracts	$	—	$	513		$	2	$	(2	)	$	513	^(c)

————————————


(a)	Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.


(b)	At NEE, approximately $1,086 million ($979 million at FPL) are invested in commingled funds whose underlying investments would be Level 1 if those investments were held directly by NEE or FPL.


(c)	See Note 2 for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

Significant unobservable inputs used in valuation of contracts categorized as Level 3

The significant unobservable inputs used in the valuation of contracts categorized as Level 3 of the fair value hierarchy at June 30, 2012 are as follows:



Transaction Type	Fair Value at June 30, 2012		Valuation Technique(s)	Significant Unobservable Inputs	Range
	Assets	Liabilities
	(millions)
Forward contracts - power	$490	$82	Discounted cash flow	Forward price (per mwh)	$8	—	$218
Options - power	$332	$458	Option models	Implied correlations	12%	—	98%
				Implied volatilities	1%	—	214%
Options - gas	$61	$22	Option models	Implied correlations	12%	—	98%
				Implied volatilities	1%	—	63%
Full requirements and unit contingent contracts	$271	$40	Discounted cash flow	Forward price (per mwh)	$8	—	$185
				Customer migration rate^(a)	—%	—	20%

——————————


(a)	Applies only to full requirements contracts.

Reconciliation of changes in the fair value of derivatives measured based on significant unobservable inputs

The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:



	Three Months Ended June 30,
	2012						2011
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at March 31	$	589		$	7		$	104		$	5
Realized and unrealized gains (losses):
Included in earnings^(a)	53			—			95			—
Included in regulatory assets and liabilities	2			2			2			2
Purchases	23			—			53			—
Settlements	(58		)	(2		)	(58		)	(2		)
Issuances	(23		)	—			(38		)	—
Transfers in^(b)	—			—			1			—
Transfers out^(b)	(11		)	—			(4		)	—
Fair value of net derivatives based on significant unobservable inputs at June 30	$	575		$	7		$	155		$	5
The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date^(c)	$	76		$	—		$	89		$	—

————————————


(a)	For the three months ended June 30, 2012 and 2011, $53 million and $92 million, respectively, of realized and unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.


(b)	For the three months ended June 30, 2012 and 2011, transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.


(c)	For the three months ended June 30, 2012 and 2011, $76 million and $89 million, respectively, of unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues.



	Six Months Ended June 30,
	2012						2011
	NEE			FPL			NEE			FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior year	$	486		$	4		$	296		$	7
Realized and unrealized gains (losses):
Included in earnings^(a)	284			—			13			—
Included in regulatory assets and liabilities	6			6			2			2
Purchases	181			—			141			—
Settlements	(182		)	(3		)	(103		)	(4		)
Issuances	(200		)	—			(190		)	—
Transfers in^(b)	16			—			2			—
Transfers out^(b)	(16		)	—			(6		)	—
Fair value of net derivatives based on significant unobservable inputs at June 30	$	575		$	7		$	155		$	5
The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to derivatives still held at the reporting date^(c)	$	190		$	—		$	8		$	—

————————————


(a)	For the six months ended June 30, 2012 and 2011, $281 million and less than $1 million, respectively, of realized and unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.


(b)	For the six months ended June 30, 2012 and 2011, transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.


(c)	For the six months ended June 30, 2012 and 2011, $189 million and $3 million, respectively, of unrealized gains (losses) are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2

-Subparagraph (a,b,bb)

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19207-110258

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 32

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 2C

-URI http://asc.fasb.org/extlink&oid=7578670&loc=SL7498348-110258

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 3

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19279-110258

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

-SubTopic 10

-Section 50

-Paragraph 1

-URI http://asc.fasb.org/extlink&oid=7578670&loc=d3e19190-110258

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 33

-Subparagraph a, b

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details