10. Commitments and Contingencies

Commitments - NEE and its subsidiaries have made commitments in connection with a portion of their projected capital expenditures. Capital expenditures at FPL include, among other things, the cost for construction or acquisition of additional facilities and equipment to meet customer demand, as well as capital improvements to and maintenance of existing facilities and the procurement of nuclear fuel. At NEER, capital expenditures include, among other things, the cost, including capitalized interest, for construction of wind and solar projects and the procurement of nuclear fuel. Capital expenditures for Corporate and Other include, among other things, the cost to meet customer-specific requirements and maintain the fiber-optic network for the fiber-optic telecommunications business (FPL FiberNet) and the cost to maintain existing transmission facilities at NextEra Energy Transmission, LLC (NEET).

At September 30, 2013, estimated capital expenditures for the remainder of 2013 through 2017 were as follows:



	Remainder of 2013		2014		2015		2016		2017		Total
	(millions)
FPL:
Generation:^(a)
New^(b)(c)	$	195	$	710	$	290	$	75	$	—	$	1,270
Existing	245		760		730		600		540		2,875
Transmission and distribution	235		1,205		1,105		1,070		795		4,410
Nuclear fuel	115		140		210		220		225		910
General and other	60		160		110		125		120		575
Total^(d)	$	850	$	2,975	$	2,445	$	2,090	$	1,680	$	10,040
NEER:
Wind^(e)	$	455	$	660	$	115	$	10	$	5	$	1,245
Solar^(f)	130		455		825		530		—		1,940
Nuclear^(g)	115		315		280		305		245		1,260
Other^(h)	65		40		15		75		40		235
Total	$	765	$	1,470	$	1,235	$	920	$	290	$	4,680
Corporate and Other ⁽ⁱ⁾	$	25	$	75	$	70	$	60	$	70	$	300

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(a)	Includes allowance for funds used during construction (AFUDC) of approximately $19 million, $48 million, $57 million and $26 million for the remainder of 2013 through 2016, respectively.


(b)	Includes land, generating structures, transmission interconnection and integration and licensing.


(c)	Consists of projects that have received FPSC approval. Excludes capital expenditures for the construction costs for the two additional nuclear units at FPL's Turkey Point site beyond what is required to receive an NRC license for each unit.


(d)	FPL has identified $1.5 billion to $2.5 billion in potential incremental capital expenditures through 2016 in addition to what is included in the table above.

(e)

Consists of capital expenditures for new wind projects and related transmission totaling approximately 710 MW, including approximately 385 MW in Canada, that have received applicable internal approvals. Excludes new Canadian wind projects requiring internal approvals with generation totaling approximately 80 MW in 2014, with an estimated remaining cost of approximately $200 million. NEER expects to add up to 1,500 MW of new U.S. wind generation through 2014 at a total cost of up to $3 billion.

(f)

Consists of capital expenditures for new solar projects and related transmission totaling 1,045 MW that have received applicable internal approvals, including equity contributions associated with a 50% equity investment in a 550 MW solar project. Includes approximately $1.1 billion of estimated costs associated with the pending acquisition of a 250 MW solar project that is expected to close in early 2014, subject to certain conditions precedent, and complete construction in 2016.


(g)	Includes nuclear fuel.


(h)	Consists of capital expenditures that have received applicable internal approvals.


(i)	Excludes new natural gas pipeline system requiring certain external and internal approvals with an estimated total cost of approximately $1.6 billion. See Part II, Item 5. (c)(i) in the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 for NEE and FPL.

In October 2013, NEER obtained internal approvals for approximately 850 MW of new U.S. wind projects and the remaining 80 MW of new Canadian wind projects, all of which are expected to come into service in 2014 and 2015, at estimated costs totaling approximately $1.6 billion.

The above estimates are subject to continuing review and adjustment and actual capital expenditures may vary significantly from these estimates.

Contracts - In addition to the commitments made in connection with the estimated capital expenditures included in the table in Commitments above, FPL has commitments under long-term purchased power and fuel contracts. As of September 30, 2013, FPL is obligated under take-or-pay purchased power contracts with JEA and with subsidiaries of The Southern Company (Southern subsidiaries) to pay for approximately 1,330 MW annually through 2015 and 375 MW annually thereafter through 2021. FPL also has various firm pay-for-performance contracts to purchase approximately 705 MW from certain cogenerators and small power producers (qualifying facilities) with expiration dates ranging from 2024 through 2034. The purchased power contracts provide for capacity and energy payments. Energy payments are based on the actual power taken under these contracts. Capacity payments for the pay-for-performance contracts are subject to the qualifying facilities meeting certain contract conditions. FPL has contracts with expiration dates through 2036 for the purchase and transportation of natural gas and coal, and storage of natural gas.

As of September 30, 2013, NEER has entered into contracts with expiration dates ranging from November 2013 through 2030 primarily for the purchase of solar reflectors, wind turbines and towers, steam turbine generators and heat collection elements and related construction and development activities, as well as for the supply of uranium, conversion, enrichment and fabrication of nuclear fuel. Approximately $1.9 billion of commitments under such contracts are included in the estimated capital expenditures table in Commitments above. In addition, NEER has contracts primarily for the purchase, transportation and storage of natural gas and firm transmission service with expiration dates ranging from November 2013 through 2033.

The required capacity and/or minimum payments under the contracts discussed above as of September 30, 2013 were estimated as follows:



	Remainder of 2013		2014		2015		2016		2017		Thereafter
	(millions)
FPL:
Capacity charges:^(a)
Qualifying facilities	$	70	$	285	$	290	$	250	$	255	$	2,225
JEA and Southern subsidiaries	$	55	$	215	$	195	$	70	$	50	$	10
Minimum charges, at projected prices:
Natural gas, including transportation and storage^(b)	$	475	$	1,535	$	570	$	535	$	530	$	6,400
Coal^(b)	$	25	$	55	$	20	$	20	$	—	$	—
NEER	$	840	$	1,025	$	130	$	160	$	85	$	590
Corporate and Other^(c)(d)	$	40	$	20	$	15	$	10	$	10	$	10

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(a)

Capacity charges under these contracts, substantially all of which are recoverable through the capacity clause, totaled approximately $121 million and $129 million for the three months ended September 30, 2013 and 2012, respectively, and approximately $365 million and $391 million for the nine months ended September 30, 2013 and 2012, respectively. Energy charges under these contracts, which are recoverable through the fuel clause, totaled approximately $93 million and $110 million for the three months ended September 30, 2013 and 2012, respectively, and approximately $202 million and $232 million for the nine months ended September 30, 2013 and 2012, respectively.


(b)	Recoverable through the fuel clause.


(c)	Includes an approximately $60 million commitment to invest in clean power and technology businesses through 2021.


(d)	Excludes approximately $360 million, in 2013, of joint obligations of NEECH and NEER which are included in the NEER amounts above.

On October 28, 2013, the FPSC issued an order approving, subject to a 21-day protest period, FPL's 25-year natural gas transportation agreements with each of Sabal Trail Transmission, LLC (Sabal Trail, an entity in which a NEECH subsidiary has a 33% ownership interest), and Florida Southeast Connection, LLC (Florida Southeast Connection, a NEE subsidiary) for a quantity of 400,000 MMBtu/day beginning on May 1, 2017 and increasing to 600,000 MMBtu/day on May 1, 2020. These agreements collectively contain firm commitments by FPL totaling on average approximately $410 million annually over the term of the agreements. These firm commitments are contingent upon the occurrence of certain events, including FERC approval and completion of construction of the pipeline to be built by each of Sabal Trail and Florida Southeast Connection.

Insurance - Liability for accidents at nuclear power plants is governed by the Price-Anderson Act, which limits the liability of nuclear reactor owners to the amount of insurance available from both private sources and an industry retrospective payment plan. In accordance with this Act, NEE maintains $375 million of private liability insurance per site, which is the maximum obtainable, and participates in a secondary financial protection system, which provides up to $13.2 billion of liability insurance coverage per incident at any nuclear reactor in the United States. Under the secondary financial protection system, NEE is subject to retrospective assessments of up to $1.0 billion ($509 million for FPL), plus any applicable taxes, per incident at any nuclear reactor in the United States, payable at a rate not to exceed $152 million ($76 million for FPL) per incident per year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold Energy Center (Duane Arnold) and St. Lucie Unit No. 2, which approximates $15 million, $38 million and $19 million, plus any applicable taxes, per incident, respectively.

NEE participates in a nuclear insurance mutual company that provides $2.75 billion of limited insurance coverage per occurrence per site for property damage, decontamination and premature decommissioning risks at its nuclear plants. The proceeds from such insurance, however, must first be used for reactor stabilization and site decontamination before they can be used for plant repair. Effective April 1, 2013, a $1.5 billion sublimit was established for non-nuclear perils. NEE also participates in an insurance program that provides limited coverage for replacement power costs if a nuclear plant is out of service for an extended period of time because of an accident. In the event of an accident at one of NEE's or another participating insured's nuclear plants, NEE could be assessed up to $198 million ($118 million for FPL), plus any applicable taxes, in retrospective premiums in a policy year. NEE and FPL are contractually entitled to recover a proportionate share of such assessments from the owners of minority interests in Seabrook, Duane Arnold and St. Lucie Unit No. 2, which approximates $3 million, $5 million and $4 million, plus any applicable taxes, respectively.

Due to the high cost and limited coverage available from third-party insurers, NEE does not have property insurance coverage for a substantial portion of its transmission and distribution property and has no property insurance coverage for FPL FiberNet's fiber-optic cable. Should FPL's future storm restoration costs exceed the reserve amount established through the issuance of storm-recovery bonds by a VIE in 2007, FPL may recover storm restoration costs, subject to prudence review by the FPSC, either through surcharges approved by the FPSC or through securitization provisions pursuant to Florida law.

In the event of a loss, the amount of insurance available might not be adequate to cover property damage and other expenses incurred. Uninsured losses and other expenses, to the extent not recovered from customers in the case of FPL or Lone Star Transmission, LLC (Lone Star), would be borne by NEE and/or FPL and/or Lone Star, as the case may be, and could have a material adverse effect on NEE's and FPL's financial condition, results of operations and liquidity.

Spain Solar Projects - On March 28, 2013 and May 3, 2013, events of default occurred under the project-level financing agreements for the Spain solar projects (project-level financing) as a result of changes of law that occurred in December 2012 and February 2013. These changes of law negatively affected the projected economics of the projects and have caused the project-level financing to be unsupportable by expected future project cash flows. Under the project-level financing, events of default provide for, among other things, a right by the lenders (which they have not exercised to date for the project-level financing) to accelerate the payment of the project-level debt. Accordingly, approximately $784 million of debt and $91 million of derivative liabilities related to interest rate swaps continue to be classified as current maturities of long-term debt and current derivative liabilities, respectively, on NEE's condensed consolidated balance sheets as of September 30, 2013. The parties to the project-level financing agreements have been in negotiations with the lenders to seek to restructure the project-level financing.

In addition, pursuant to Spanish law, the impairment recorded due to the changes of law has caused NextEra Energy España, S.L. en Liquidación (NEE España), the NEER subsidiary in Spain that is the direct shareholder of the project-level subsidiaries (and whose primary assets are the stock of the project-level subsidiaries), to commence liquidation proceedings on October 21, 2013. The commencement of the liquidation process resulted in an additional event of default under the project-level financing agreements and, if not cured or waived within 30 days, also would result in the immediate acceleration of the payment of the debt outstanding (approximately $202 million outstanding at September 30, 2013) under a variable rate revolving loan agreement with a lender entered into by NEE España and NEECH, scheduled to mature in April 2014, which NEE España had used to fund a substantial portion of its base equity commitment under the project-level financing agreements (which base equity commitment was guaranteed by NEECH under the project-level financing agreements). NEECH believes that its liability under the project-level financing agreements together with its liability under the variable rate revolving loan agreement should not exceed NEE España’s total base equity commitment under the project-level financing agreements.

In connection with the foregoing, on March 20, 2013, NEECH filed a lawsuit in the U.S. District Court for the Southern District of New York against the lenders requesting that the court confirm NEECH's conclusion that its obligations to the lenders under the project-level financing agreements are limited, as a result of changes of law, to guaranteeing the payment of the remaining unfunded portion of the base equity commitment (approximately $12 million remaining at September 30, 2013) as opposed to guaranteeing the payment of all debt outstanding under the project-level financing agreements ($784 million at September 30, 2013) as well as associated interest rate swap breakage ($161 million at September 30, 2013) and other specified costs. In May 2013, the lenders filed a response to the lawsuit in which they disagree with NEECH's conclusion and contend that NEECH's obligations to guarantee the foregoing amounts have not been limited. There can be no assurance that the court will agree with NEECH's position that its guarantee is limited as a result of changes of law or that the financing arrangements will be successfully restructured.

In July 2013, the Spanish government published a new law that created a new economic framework for the Spanish renewable energy sector. Additional regulatory pronouncements from the Spanish government, which are expected in the first quarter of 2014, are needed to complete and implement the framework. At this time, NEE is unable to assess the framework's ultimate impact on the Spain solar projects which could include further impairment of the Spain solar projects and/or a partial refund of tariff revenues collected since July 2013.

Legal Proceedings - In November 1999, the Attorney General of the United States, on behalf of the U.S. Environmental Protection Agency (EPA), brought an action in the U.S. District Court for the Northern District of Georgia against Georgia Power Company and other subsidiaries of The Southern Company for certain alleged violations of the Prevention of Significant Deterioration (PSD) provisions and the New Source Performance Standards (NSPS) of the Clean Air Act. In May 2001, the EPA amended its complaint to allege, among other things, that Georgia Power Company constructed and is continuing to operate Scherer Unit No. 4, in which FPL owns an interest of approximately 76%, without obtaining a PSD permit, without complying with NSPS requirements, and without applying best available control technology for nitrogen oxides, sulfur dioxides and particulate matter as required by the Clean Air Act. It also alleges that unspecified major modifications have been made at Scherer Unit No. 4 that require its compliance with the aforementioned Clean Air Act provisions. The EPA seeks injunctive relief requiring the installation of best available control technology and civil penalties. Under the EPA's civil penalty rules, the EPA could assess up to $25,000 per day for each violation from an unspecified date after June 1, 1975 through January 30, 1997, up to $27,500 per day for each violation from January 31, 1997 through March 15, 2004, up to $32,500 per day for each violation from March 16, 2004 through January 12, 2009 and up to $37,500 per day for each violation thereafter. Georgia Power Company has answered the amended complaint, asserting that it has complied with all requirements of the Clean Air Act, denying the plaintiff's allegations of liability, denying that the plaintiff is entitled to any of the relief that it seeks and raising various other defenses. In June 2001, a federal district court stayed discovery and administratively closed the case and the EPA has not yet moved to reopen the case. In April 2007, the U.S. Supreme Court in a separate unrelated case rejected an argument that a "major modification" occurs at a plant only when there is a resulting increase in the hourly rate of air emissions. Georgia Power Company has made a similar argument in defense of its case, but has other factual and legal defenses that are unaffected by the U.S. Supreme Court's decision.

In 1995 and 1996, NEE, through an indirect subsidiary, purchased from Adelphia Communications Corporation (Adelphia) 1,091,524 shares of Adelphia common stock and 20,000 shares of Adelphia preferred stock (convertible into 2,358,490 shares of Adelphia common stock) for an aggregate price of approximately $35,900,000. On January 29, 1999, Adelphia repurchased all of these shares for $149,213,130 in cash. In June 2004, Adelphia, Adelphia Cablevision, L.L.C. and the Official Committee of Unsecured Creditors of Adelphia filed a complaint against NEE and its indirect subsidiary in the U.S. Bankruptcy Court, Southern District of New York. The complaint alleges that the repurchase of these shares by Adelphia was a fraudulent transfer, in that at the time of the transaction Adelphia (i) was insolvent or was rendered insolvent, (ii) did not receive reasonably equivalent value in exchange for the cash it paid, and (iii) was engaged or about to engage in a business or transaction for which any property remaining with Adelphia had unreasonably small capital. The complaint seeks the recovery for the benefit of Adelphia's bankruptcy estate of the cash paid for the repurchased shares, plus interest from January 29, 1999. NEE has filed an answer to the complaint. NEE believes that the complaint is without merit because, among other reasons, Adelphia will be unable to demonstrate that (i) Adelphia's repurchase of shares from NEE, which repurchase was at the market value for those shares, was not for reasonably equivalent value, (ii) Adelphia was insolvent at the time of the repurchase, or (iii) the repurchase left Adelphia with unreasonably small capital. The trial was completed in May 2012 and closing arguments were heard in July 2012.

In October 2004, TXU Portfolio Management Company (TXU) served FPL Energy Pecos Wind I, LP, FPL Energy Pecos Wind I GP, LLC, FPL Energy Pecos Wind II, LP, FPL Energy Pecos Wind II GP, LLC and Indian Mesa Wind Farm, LP (NEER Affiliates) as defendants in a civil action filed in the District Court in Dallas County, Texas. FPL Energy, LLC, now known as NextEra Energy Resources, LLC, was added as a defendant in 2005. The petition alleged that the NEER Affiliates had contractual obligations to produce and sell to TXU a minimum quantity of energy and renewable energy credits each year during the period from 2002 through 2005 and that the NEER Affiliates failed to meet this obligation. The plaintiff asserted claims for breach of contract and declaratory judgment and sought damages of approximately $34 million plus attorneys' fees, costs and interest. Following a jury trial in 2007, among other findings, both TXU and the NEER Affiliates were found to have breached the contracts. In August 2008, the trial court issued a final judgment holding that the contracts were not terminated and neither party was entitled to recover any damages. In November 2008, TXU appealed the final judgment to the Fifth District Court of Appeals in Dallas, Texas. In an opinion issued in July 2010, the appellate court reversed portions of the trial court's judgment, ruling that the contracts' liquidated damage provision is an enforceable liquidated damages clause. The appellate court ordered that the case be remanded back to the trial court for further proceedings to determine the amount of damages payable by the NEER Affiliates. The NEER Affiliates filed a motion for rehearing of the appellate court’s decision, which motion was denied, and in April 2011 filed a petition for review of the appellate court decision with the Texas Supreme Court. In February 2012, the Texas Supreme Court granted the petition for review and oral arguments were heard in October 2012.

NEE and FPL are vigorously defending, and believe that they or their affiliates have meritorious defenses to, the lawsuits described above. In addition to the legal proceedings discussed above, NEE and its subsidiaries, including FPL, are involved in other legal and regulatory proceedings, actions and claims in the ordinary course of their businesses. Generating plants in which subsidiaries of NEE, including FPL, have an ownership interest are also involved in legal and regulatory proceedings, actions and claims, the liabilities from which, if any, would be shared by such subsidiary. In the event that NEE and FPL, or their affiliates, do not prevail in the lawsuits described above or these other legal and regulatory proceedings, actions and claims, there may be a material adverse effect on their financial statements. While management is unable to predict with certainty the outcome of the lawsuits described above or these other legal and regulatory proceedings, actions and claims, based on current knowledge it is not expected that their ultimate resolution, individually or collectively, will have a material adverse effect on the financial statements of NEE or FPL.