4. Financial Instruments

The carrying amounts of cash equivalents, short-term debt and commercial paper approximate their fair values. At September 30, 2013 and December 31, 2012, other investments of NEE, not included in the table below, included financial instruments of approximately $35 million and $41 million, respectively, which primarily consist of notes receivable that are carried at estimated fair value or cost, which approximates fair value.

The following estimates of the fair value of financial instruments have been made primarily using the market approach of using prices and other market information for identical and/or comparable assets and liabilities. However, the use of different market assumptions or methods of valuation could result in different estimated fair values.



	September 30, 2013								December 31, 2012
	Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
	(millions)
NEE:
Special use funds	$	4,574		^(a)	$	4,574		^(a)	$	4,190		^(a)	$	4,190		^(a)
Other investments:
Notes receivable	$	500			$	624		^(b)	$	500			$	665		^(b)
Debt securities	$	121		^(c)	$	121		^(d)	$	111		^(c)	$	111		^(d)
Equity securities	$	49			$	49		^(e)	$	61			$	79		^(e)
Long-term debt, including current maturities	$	27,788			$	28,744		^(f)	$	26,647		^(g)	$	28,874		^(f)
Interest rate contracts - net unrealized losses	$	(143	)		$	(143	)	^(d)	$	(311	)		$	(311	)	^(d)
Foreign currency swaps - net unrealized losses	$	(117	)		$	(117	)	^(d)	$	(66	)		$	(66	)	^(d)
FPL:
Special use funds	$	3,155		^(a)	$	3,155		^(a)	$	2,918		^(a)	$	2,918		^(a)
Long-term debt, including current maturities	$	8,829			$	9,634		^(f)	$	8,782			$	10,421		^(f)

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(a)

At September 30, 2013, includes $234 million of investments accounted for under the equity method and $46 million of loans not measured at fair value on a recurring basis ($143 million and $33 million, respectively, for FPL). At December 31, 2012, includes $229 million of investments accounted for under the equity method and $40 million of loans not measured at fair value on a recurring basis ($138 million and $32 million, respectively, for FPL). For the remaining balances, see Note 3 for classification by major security type and hierarchy level. The amortized cost of debt and equity securities is $1,758 million and $1,488 million, respectively, at September 30, 2013 and $1,679 million and $1,500 million, respectively, at December 31, 2012 ($1,411 million and $788 million, respectively, at September 30, 2013 and $1,339 million and $839 million, respectively, at December 31, 2012 for FPL).

(b)

Classified as held to maturity. Estimated using a discounted cash flow valuation technique based on certain observable yield curves and indices considering the credit profile of the borrower (Level 3). Notes receivable bear interest at fixed rates and mature by 2029. Notes receivable are considered impaired and placed in non-accrual status when it becomes probable that all amounts due cannot be collected in accordance with the contractual terms of the agreement. The assessment to place notes receivable in non-accrual status considers various credit indicators, such as credit ratings and market-related information. As of September 30, 2013 and December 31, 2012, NEE had no notes receivable reported in non-accrual status.


(c)	Classified as trading securities.


(d)	See Note 3.


(e)	Primarily based on quoted prices in active markets (Level 1). The remainder is modeled internally based on recent market information including, among other things, private offerings of the securities (Level 3).

(f)

As of September 30, 2013 and December 31, 2012, $18,262 million and $18,962 million, respectively, is estimated using quoted market prices for the same or similar issues (Level 2); the balance is estimated using a discounted cash flow valuation technique, considering the current credit spread of the debtor (Level 3). For FPL, estimated using quoted market prices for the same or similar issues (Level 2).


(g)	Also includes long-term debt reflected in liabilities associated with assets held for sale on the condensed consolidated balance sheets, for which the carrying amount approximates fair value.

Special Use Funds - The special use funds consist of FPL's storm fund assets of $74 million and NEE's and FPL's nuclear decommissioning fund assets of $4,500 million and $3,081 million, respectively, at September 30, 2013. The investments held in the special use funds consist of equity and debt securities which are primarily classified as available for sale and carried at estimated fair value (see Note 3). For FPL's special use funds, consistent with regulatory treatment, changes in fair value, including any other than temporary impairment losses, result in a corresponding adjustment to the related regulatory liability accounts. For NEE's non-rate regulated operations, changes in fair value result in a corresponding adjustment to OCI, except for unrealized losses associated with marketable securities considered to be other than temporary, including any credit losses, which are recognized as other than temporary impairment losses on securities held in nuclear decommissioning funds and included in other - net in NEE's condensed consolidated statements of income. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at September 30, 2013 of approximately seven years at both NEE and FPL. FPL's storm fund primarily consists of debt securities with a weighted-average maturity at September 30, 2013 of approximately three years. The cost of securities sold is determined using the specific identification method.

Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:



	NEE				FPL				NEE				FPL
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012		2013		2012		2013		2012
	(millions)
Realized gains	$	40	$	75	$	17	$	20	$	103	$	206	$	48	$	81
Realized losses	$	26	$	16	$	18	$	12	$	69	$	48	$	48	$	34
Proceeds from sale or maturity of securities	$	822	$	953	$	613	$	592	$	2,604	$	3,890	$	1,967	$	2,949

The unrealized gains on available for sale securities are as follows:



	NEE				FPL
	September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
	(millions)
Equity securities	$	1,029	$	680	$	759	$	521
Debt securities	$	47	$	92	$	41	$	77

The unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:



	NEE				FPL
	September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
	(millions)
Unrealized losses^(a)	$	27	$	3	$	21	$	2
Fair value	$	708	$	277	$	543	$	223

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(a)	Unrealized losses on available for sale debt securities for securities in an unrealized loss position for greater than twelve months at September 30, 2013 and December 31, 2012 were not material to NEE or FPL.

Regulations issued by the Federal Energy Regulatory Commission (FERC) and the NRC provide general risk management guidelines to protect nuclear decommissioning funds and to allow such funds to earn a reasonable return. The FERC regulations prohibit, among other investments, investments in any securities of NEE or its subsidiaries, affiliates or associates, excluding investments tied to market indices or mutual funds. Similar restrictions applicable to the decommissioning funds for NEER's nuclear plants are included in the NRC operating licenses for those facilities or in NRC regulations applicable to NRC licensees not in cost-of-service environments. With respect to the decommissioning fund for NEER's Seabrook Station (Seabrook), decommissioning fund contributions and withdrawals are also regulated by the Nuclear Decommissioning Financing Committee pursuant to New Hampshire law.

The nuclear decommissioning reserve funds are managed by investment managers who must comply with the guidelines of NEE and FPL and the rules of the applicable regulatory authorities. The funds' assets are invested giving consideration to taxes, liquidity, risk, diversification and other prudent investment objectives.

Interest Rate and Foreign Currency Contracts - NEE and its subsidiaries use a combination of fixed rate and variable rate debt to manage interest rate exposure. Interest rate contracts are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements. In addition, with respect to certain debt issuances and borrowings, NEECH has two cross currency swaps to hedge against currency movements with respect to both interest and principal payments and a cross currency swap to hedge against currency and interest rate movements with respect to both interest and principal payments. See Note 2.