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Non-Derivative Fair Value Measurements

3 Months Ended

Mar. 31, 2024

Non-derivative fair value measurements consist of NEE’s and FPL’s cash equivalents and restricted cash equivalents, special use funds and other investments. The fair value of these financial assets is determined by using the valuation techniques and inputs as described in Note 2 – Fair Value Measurements of Derivative Instruments as well as below.

Cash Equivalents and Restricted Cash Equivalents – NEE and FPL hold investments in money market funds. The fair value of these funds is estimated using a market approach based on current observable market prices.

Special Use Funds and Other Investments – NEE and FPL hold primarily debt and equity securities directly, as well as indirectly through commingled funds. Substantially all directly held equity securities are valued at their quoted market prices. For directly held debt securities, multiple prices and price types are obtained from pricing vendors whenever possible, which enables cross-provider validations. A primary price source is identified based on asset type, class or issue of each security. Commingled funds, which are similar to mutual funds, are maintained by banks or investment companies and hold certain investments in accordance with a stated set of objectives. The fair value of commingled funds is primarily derived from the quoted prices in active markets of the underlying securities. Because the fund shares are offered to a limited group of investors, they are not considered to be traded in an active market.

Fair Value Measurement Alternative – NEE holds investments in equity securities without readily determinable fair values, which are initially recorded at cost, of approximately $559 million and $538 million at March 31, 2024 and December 31, 2023, respectively, and are included in noncurrent other assets on NEE's condensed consolidated balance sheets. Adjustments to carrying values are recorded as a result of observable price changes in transactions for identical or similar investments of the same issuer.

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


	March 31, 2024
	Level 1		Level 2			Level 3		Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(a)
NEE – equity securities	$	684	$	—		$	—	$	684
FPL – equity securities	$	11	$	—		$	—	$	11
Special use funds:(b)
NEE:
Equity securities	$	2,494	$	2,981	(c)	$	234	$	5,709
U.S. Government and municipal bonds	$	690	$	45		$	—	$	735
Corporate debt securities	$	1	$	642		$	—	$	643
Asset-backed securities	$	—	$	825		$	—	$	825
Other debt securities	$	—	$	14		$	—	$	14
FPL:
Equity securities	$	913	$	2,685	(c)	$	234	$	3,832
U.S. Government and municipal bonds	$	550	$	23		$	—	$	573
Corporate debt securities	$	—	$	468		$	—	$	468
Asset-backed securities	$	—	$	607		$	—	$	607
Other debt securities	$	—	$	6		$	—	$	6
Other investments:(d)
NEE:
Equity securities	$	52	$	1		$	—	$	53
U.S. Government and municipal bonds	$	246	$	3		$	—	$	249
Corporate debt securities	$	—	$	494		$	134	$	628
Other debt securities	$	—	$	191		$	39	$	230
FPL:
Equity securities	$	10	—			$	—	$	10

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(a)Includes restricted cash equivalents of approximately $19 million ($11 million for FPL) in current other assets on the condensed consolidated balance sheets.

(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 Other than Fair Value 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)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.


	December 31, 2023
	Level 1		Level 2			Level 3		Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(a)
NEE – equity securities	$	1,972	$	—		$	—	$	1,972
FPL – equity securities	$	12	$	—		$	—	$	12
Special use funds:(b)
NEE:
Equity securities	$	2,349	$	2,742	(c)	$	199	$	5,290
U.S. Government and municipal bonds	$	700	$	57		$	—	$	757
Corporate debt securities	$	3	$	620		$	—	$	623
Asset-backed securities	$	—	$	822		$	—	$	822
Other debt securities	$	6	$	14		$	—	$	20
FPL:
Equity securities	$	863	$	2,474	(c)	$	199	$	3,536
U.S. Government and municipal bonds	$	556	$	27		$	—	$	583
Corporate debt securities	$	3	$	455		$	—	$	458
Asset-backed securities	$	—	$	606		$	—	$	606
Other debt securities	$	5	$	6		$	—	$	11
Other investments:(d)
NEE:
Equity securities	$	50	$	—		$	—	$	50
U.S. Government and municipal bonds	$	288	$	3		$	—	$	291
Corporate debt securities	$	—	$	408		$	115	$	523
Other debt securities	$	—	$	196		$	15	$	211
FPL:
Equity securities	$	9	$	—		$	—	$	9

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(a)Includes restricted cash equivalents of approximately $34 million ($11 million for FPL) in current other assets on the condensed consolidated balance sheets.

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

(d)Included in noncurrent other assets on NEE's and FPL's condensed consolidated balance sheets.

Contingent Consideration – NEER had approximately $125 million and $126 million of contingent consideration liabilities related to acquisitions included in noncurrent other liabilities on NEE's condensed consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively. Significant inputs and assumptions used in the fair value measurement of the contingent consideration, some of which are Level 3 and require judgment, include the projected timing and amount of future cash flows, estimated probability of completing future development projects as well as discount rates.

Fair Value of Financial Instruments Recorded at Other than Fair Value – The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:


	March 31, 2024					December 31, 2023
	Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value
	(millions)
NEE:
Special use funds(a)	$	1,247	$	1,248		$	1,186	$	1,187
Other receivables, net of allowances(b)	$	626	$	626		$	777	$	777
Long-term debt, including current portion	$	72,087	$	67,997	(c)	$	68,306	$	64,103	(c)
FPL:
Special use funds(a)	$	884	$	885		$	856	$	856
Long-term debt, including current portion	$	24,059	$	22,403	(c)	$	25,274	$	23,430	(c)

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(a)Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis (Level 2).

(b)Approximately $400 million and $567 million is included in current other assets and $226 million and $210 million is included in noncurrent other assets on NEE's condensed consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively (primarily Level 3).

(c)At March 31, 2024 and December 31, 2023, substantially all is Level 2 for NEE and FPL.

Special Use Funds and Other Investments Carried at Fair Value – The special use funds noted above and those carried at fair value (see Recurring Non-Derivative Fair Value Measurements above) consist of NEE's nuclear decommissioning fund assets of approximately $9,172 million ($6,369 million for FPL) and $8,697 million ($6,049 million for FPL) at March 31, 2024 and December 31, 2023, respectively, and FPL's storm fund assets of $1 million and $1 million at March 31, 2024 and December 31, 2023, respectively. The investments held in the special use funds and other investments consist of equity and available for sale debt securities which are primarily carried at estimated fair value. The amortized cost of debt securities is approximately $3,409 million ($1,710 million for FPL) and $3,329 million ($1,693 million for FPL) at March 31, 2024 and December 31, 2023, respectively. Debt securities included in the nuclear decommissioning funds have a weighted-average maturity at March 31, 2024 of approximately eight years at both NEE and FPL. Other investments primarily consist of debt securities with a weighted-average maturity at March 31, 2024 of approximately six years. The cost of securities sold is determined using the specific identification method.

For FPL's special use funds, changes in fair value of debt and equity securities, including any estimated credit losses of debt securities, result in a corresponding adjustment to the related regulatory asset or liability accounts, consistent with regulatory treatment. For NEE's non-rate regulated operations, changes in fair value of debt securities result in a corresponding adjustment to OCI, except for estimated credit losses and unrealized losses on debt securities intended or required to be sold prior to recovery of the amortized cost basis, which are recognized in other – net in NEE's condensed consolidated statements of income. Changes in fair value of equity securities are primarily recorded in change in unrealized gains (losses) on equity securities held in NEER's nuclear decommissioning funds – net in NEE’s condensed consolidated statements of income.

Unrealized gains recognized on equity securities held at March 31, 2024 and 2023 are as follows:


		NEE					FPL
	Three Months Ended March 31,					Three Months Ended March 31,
		2024		2023			2024		2023
		(millions)
Unrealized gains		$	430	$	273		$	288	$	180

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


		NEE					FPL
	Three Months Ended March 31,					Three Months Ended March 31,
		2024		2023			2024		2023
		(millions)
Realized gains		$	11	$	8		$	10	$	7
Realized losses		$	11	$	38		$	8	$	30
Proceeds from sale or maturity of securities		$	564	$	428		$	432	$	299

The unrealized gains and 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
	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
	(millions)
Unrealized gains	$	25	$	41	$	18	$	31
Unrealized losses(a)	$	144	$	134	$	77	$	71
Fair value	$	2,134	$	1,862	$	968	$	872

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(a) Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at March 31, 2024 and December 31, 2023 were not material to NEE or FPL.

Regulations issued by the 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 Seabrook, decommissioning fund contributions and withdrawals are also regulated by the New Hampshire 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.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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