Fair Value Measurements Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

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:

	September 30, 2014
	Level 1		Level 2			Level 3			Netting(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	13	$	—		$	—					$	13
Special use funds:(b)
NEE:
Equity securities	$	1,196	$	1,350	(c)	$	129					$	2,675
U.S. Government and municipal bonds	$	573	$	161		$	—					$	734
Corporate debt securities	$	—	$	677		$	—					$	677
Mortgage-backed securities	$	—	$	497		$	—					$	497
Other debt securities	$	25	$	36		$	—					$	61
FPL:
Equity securities	$	313	$	1,178	(c)	$	129					$	1,620
U.S. Government and municipal bonds	$	468	$	146		$	—					$	614
Corporate debt securities	$	—	$	478		$	—					$	478
Mortgage-backed securities	$	—	$	429		$	—					$	429
Other debt securities	$	25	$	21		$	—					$	46
Other investments:
NEE:
Equity securities	$	39	$	—		$	71	(d)				$	110
Debt securities	$	16	$	164		$	—					$	180
Noncurrent other assets:
FPL - equity securities	$	—	$	—		$	71	(d)				$	71
Derivatives:
NEE:
Commodity contracts	$	1,877	$	2,607		$	761		$	(3,906	)	$	1,339	(e)
Interest rate contracts	$	—	$	28		$	—		$	37		$	65	(e)
FPL - commodity contracts	$	—	$	11		$	4		$	(11	)	$	4	(e)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,825	$	2,535		$	417		$	(3,782	)	$	995	(e)
Interest rate contracts	$	—	$	91		$	128		$	37		$	256	(e)
Foreign currency swaps	$	—	$	74		$	—		$	—		$	74	(e)
FPL - commodity contracts	$	—	$	57		$	3		$	(11	)	$	49	(e)

————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.  NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.

(b) Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis.  See Fair Value of Financial Instruments Recorded at the Carrying Amount below.

(c) Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.

(d) Represents investments associated with noncontrolling interests in a limited partnership. See Note 7 - FPL.

(e) See Note 3 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

	December 31, 2013
	Level 1		Level 2			Level 3		Netting(a)			Total
	(millions)
Assets:
Cash equivalents:
NEE - equity securities	$	20	$	—		$	—				$	20
Special use funds:(b)
NEE:
Equity securities	$	1,170	$	1,336	(c)	$	—				$	2,506
U.S. Government and municipal bonds	$	647	$	180		$	—				$	827
Corporate debt securities	$	—	$	597		$	—				$	597
Mortgage-backed securities	$	—	$	479		$	—				$	479
Other debt securities	$	16	$	44		$	—				$	60
FPL:
Equity securities	$	291	$	1,176	(c)	$	—				$	1,467
U.S. Government and municipal bonds	$	584	$	154		$	—				$	738
Corporate debt securities	$	—	$	421		$	—				$	421
Mortgage-backed securities	$	—	$	401		$	—				$	401
Other debt securities	$	16	$	30		$	—				$	46
Other investments:
NEE:
Equity securities	$	51	$	—		$	—				$	51
Debt securities	$	11	$	107		$	—				$	118
Derivatives:
NEE:
Commodity contracts	$	1,368	$	2,106		$	1,069	$	(2,972	)	$	1,571	(d)
Interest rate contracts	$	—	$	90		$	—	$	—		$	90	(d)
FPL - commodity contracts	$	—	$	53		$	2	$	(7	)	$	48	(d)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,285	$	1,994		$	354	$	(2,693	)	$	940	(d)
Interest rate contracts	$	—	$	127		$	93	$	—		$	220	(d)
Foreign currency swaps	$	—	$	151		$	—	$	—		$	151	(d)
FPL - commodity contracts	$	—	$	7		$	2	$	(7	)	$	2	(d)

————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and margin cash collateral payments and receipts.  NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.

(b) Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis.  See Fair Value of Financial Instruments Recorded at the Carrying Amount below.

(c) Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.

(d) See Note 3 - Fair Value of Derivative Instruments 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 NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at September 30, 2014 are as follows:

Transaction Type	Fair Value at September 30, 2014				Valuation Technique(s)	Significant Unobservable Inputs	Range
	Assets		Liabilities
	(millions)
Forward contracts - power	$	357	$	80	Discounted cash flow	Forward price (per MWh)	$11	—	$193
Forward contracts - gas	63		26		Discounted cash flow	Forward price (per MMBtu)	$2	—	$10
Forward contracts - other commodity related	27		16		Discounted cash flow	Forward price (various)	$(12)	—	$95
Options - power	48		24		Option models	Implied correlations	10%	—	96%
						Implied volatilities	1%	—	127%
Options - gas	44		107		Option models	Implied correlations	10%	—	96%
						Implied volatilities	1%	—	127%
Full requirements and unit contingent contracts	222		164		Discounted cash flow	Forward price (per MWh)	$(12)	—	$250
						Customer migration rate(a)	—%	—	20%
Total	$	761	$	417

——————————

(a) Applies only to full requirements contracts.

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

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

	Three Months Ended September 30,
	2014						2013
	NEE			FPL			NEE			FPL
	(millions)
Fair value based on significant unobservable inputs at June 30	$	354		$	3		$	384		$	(1	)
Realized and unrealized gains (losses):
Included in earnings(a)	22			—			243			—
Included in other comprehensive income	11			—			—			—
Included in regulatory assets and liabilities	1			1			2			2
Purchases	209			197		(b)	19			—
Settlements	(36		)	—			(3		)	—
Issuances	(9		)	—			(16		)	—
Transfers in(c)	—			—			(2		)	—
Transfers out(c)	(136		)	—			(3		)	—
Fair value based on significant unobservable inputs at September 30	$	416		$	201		$	624		$	1
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(d)	$	(63	)	$	—		$	188		$	—

————————————

(a) For the three months ended September 30, 2014, realized and unrealized gains of approximately $42 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.  For the three months ended September 30, 2013, realized and unrealized gains of approximately $242 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in fuel, purchased power and interchange.

(b) Represents investments associated with a limited partnership that was consolidated during the three months ended September 30, 2014. See Note 7 - FPL.

(c) Transfers into Level 3 were a result of decreased observability of market data.  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.

(d) For the three months ended September 30, 2014, unrealized losses of approximately $43 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.  For the three months ended September 30, 2013, unrealized gains of approximately $188 million are reflected in the condensed consolidated statements of income in operating revenues.

	Nine Months Ended September 30,
	2014						2013
	NEE			FPL			NEE			FPL
	(millions)
Fair value based on significant unobservable inputs at December 31 of prior year	$	622		$	—		$	566		$	2
Realized and unrealized gains (losses):
Included in earnings(a)	(474		)	—			253			—
Included in other comprehensive income	11			—			—			—
Included in regulatory assets and liabilities	6			6			—			—
Purchases	223			197			89			—
Settlements	268			(2		)	(59		)	(1		)
Issuances	(103		)	—			(110		)	—
Transfers in(b)	16			—			(116		)	—
Transfers out(b)	(153		)	—			1			—
Fair value based on significant unobservable inputs at September 30	$	416		$	201		$	624		$	1
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)	$	(168	)	$	—		$	256		$	—

————————————

(a) For the nine months ended September 30, 2014, realized and unrealized losses of approximately $410 million are reflected in the condensed consolidated statements of income in operating revenues, $61 million in interest expense and the balance is reflected in fuel, purchased power and interchange.  For the nine months ended September 30, 2013, realized and unrealized gains (losses) of approximately $244 million are reflected in the condensed consolidated statements of income in operating revenues, $11 million in interest expense and the balance is reflected in fuel, purchased power and interchange.

(b) Transfers into Level 3 were a result of decreased observability of market data and, in 2013, a significant credit valuation adjustment.  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 nine months ended September 30, 2014, unrealized losses of approximately $107 million are reflected in the condensed consolidated statements of income in operating revenues and the balance is reflected in interest expense.  For the nine months ended September 30, 2013, unrealized gains of approximately $245 million are reflected in the condensed consolidated statements of income in operating revenues and $11 million in interest expense.

Fair Value, by Balance Sheet Grouping

Fair Value of Financial Instruments Recorded at the Carrying Amount - The carrying amounts of cash equivalents, short-term debt and commercial paper approximate their fair values.  The carrying amounts and estimated fair values of other financial instruments, excluding those recorded at fair value and disclosed above in Recurring Fair Value Measurements, are as follows:

	September 30, 2014					December 31, 2013
	Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
	(millions)
NEE:
Special use funds(a)	$	386	$	386		$	311	$	311
Other investments - primarily notes receivable	$	520	$	682	(b)	$	531	$	627	(b)
Long-term debt, including current maturities	$	28,231	$	30,080	(c)	$	27,728	$	28,612	(c)
FPL:
Special use funds(a)	$	247	$	247		$	200	$	200
Long-term debt, including current maturities	$	9,471	$	10,763	(c)	$	8,829	$	9,451	(c)

————————————

(a) Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis.

(b) Primarily classified as held to maturity.  Fair values are primarily 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 primarily 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, 2014 and December 31, 2013, NEE had no notes receivable reported in non-accrual status.

(c) As of September 30, 2014 and December 31, 2013, for NEE, $19,515 million and $17,921 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).

Available-for-sale Securities

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,
	2014		2013		2014		2013		2014		2013		2014		2013
	(millions)
Realized gains	$	34	$	40	$	19	$	17	$	182	$	103	$	107	$	48
Realized losses	$	19	$	26	$	16	$	18	$	99	$	69	$	85	$	48
Proceeds from sale or maturity of securities	$	879	$	822	$	731	$	613	$	3,093	$	2,604	$	2,530	$	1,967

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

	NEE				FPL
	September 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
	(millions)
Equity securities	$	1,174	$	1,125	$	830	$	777
Debt securities	$	54	$	42	$	45	$	36

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, 2014		December 31, 2013		September 30, 2014		December 31, 2013
	(millions)
Unrealized losses(a)	$	8	$	32	$	7	$	25
Fair value	$	615	$	1,069	$	480	$	844

————————————

(a) Unrealized losses on available for sale debt securities for securities in an unrealized loss position for greater than twelve months at September 30, 2014 and December 31, 2013 were not material to NEE or FPL.