Summary
NextEra Energy Inc. (NEE), through its subsidiary Florida Power & Light Company (FPL), announced on May 19, 2006, that the Florida Public Service Commission (FPSC) approved the issuance of approximately $708 million in bonds. These bonds are intended to recover FPL's unrecovered storm restoration costs from 2004 and 2005, totaling around $934 million, along with establishing a $200 million storm and property insurance reserve. This securitization is a significant event for investors as it provides a mechanism to recoup substantial storm-related expenses.
Key Highlights
- 1FPSC approval for securitization of approximately $708 million in bonds to recover $934 million in unrecovered storm restoration costs.
- 2Establishment of a $200 million storm and property insurance reserve.
- 3The approved recovery covers 2004 and 2005 storm restoration expenses, including interest.
- 4The FPSC decision modifies the previously approved storm cost recovery methodology.
- 5Certain adjustments and disallowances by the FPSC are expected to reduce FPL Group's and FPL's Q2 2006 net income by approximately $38 million.
- 6The FPSC's final order is anticipated on May 30, 2006, and is subject to a 30-day appeal period.
Frequently Asked Questions
The primary purpose of the bond issuance is to allow Florida Power & Light Company (FPL) to recover approximately $934 million in unrecovered storm restoration costs incurred in 2004 and 2005, along with funding a $200 million storm and property insurance reserve.
The FPSC's decision included certain adjustments and disallowances, which are expected to reduce the net income for FPL Group, Inc. and Florida Power & Light Company (FPL) by approximately $38 million in the second quarter of 2006.
The final order from the FPSC is expected to be issued on May 30, 2006. Following the issuance, there will be a 30-day appeal period, after which FPL will determine any appropriate actions.
No, while this approval facilitates the recovery of a significant portion of the costs through bond securitization, the unrecovered 2004 storm restoration costs will continue to be recovered through a previously approved surcharge until the securitization is fully implemented. Additionally, the FPSC's final order and potential appeals will influence the ultimate recovery process.