Moray DewhurstMoray DewhurstChief Financial OfficerChief Financial Officer
Safe Harbor Statement: Any statements made herein about future operating results or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ substantially from such forward-looking statements. A discussion of factors that could cause actual results or events to vary is contained in FPL Group's 2001 SEC Form 10-K.
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Capitalizing on Our Strengths
Premier integrated utilityPremier integrated utility– high growth, stable customer base
Successful wholesale generation businessSuccessful wholesale generation business– well hedged portfolio with predictable earnings growth
Strong balance sheetStrong balance sheet– 51% Debt to Capital1, A2 / A credit rating2
Substantial cash flow to fund expansionSubstantial cash flow to fund expansion– $1.4 billion operating cash flow in 2001, net of $1.4 billion operating cash flow in 2001, net of
dividendsdividends High degree of earnings visibilityHigh degree of earnings visibility
Premier integrated utilityPremier integrated utility– high growth, stable customer base
Successful wholesale generation businessSuccessful wholesale generation business– well hedged portfolio with predictable earnings growth
Strong balance sheetStrong balance sheet– 51% Debt to Capital1, A2 / A credit rating2
Substantial cash flow to fund expansionSubstantial cash flow to fund expansion– $1.4 billion operating cash flow in 2001, net of $1.4 billion operating cash flow in 2001, net of
dividendsdividends High degree of earnings visibilityHigh degree of earnings visibility1 Pro forma for offerings
2 Corporate credit rating
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Favorable customer mix Favorable customer mix Strong customer and usage growth Strong customer and usage growth Operational excellence Operational excellence Proven cost management Proven cost management Constructive regulatory environment Constructive regulatory environment
Premier Electric Utility
Attractive financial returnsAttractive financial returns
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High Growth Utility With Favorable Customer Mix
Strong demand growth Strong demand growth 11
– 2.1% annual increase in customer accounts
– 1.1% annual increase in usage per customer
GenerationGeneration
– 16,619 MW
– 2,700 MW added in 2001-2003
– 1,900 MW more by 2006
Residential
Commercial
Industrial
Other
FPL IndustryAverage
56%56%
37%37%
3%3%
4%4%
33%33%
32%32%
32%32%
3%3%
1 Over last 10 years
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Operational Excellence
Superior Cost ManagementSuperior Cost Management(O&M $ per customer)(O&M $ per customer)
Plant AvailabilityPlant Availability
527
481
407
275
250
300
350
400
450
500
550
600
91 92 93 94 95 96 97 98 99 00
Industry Average
FPL
FPL = 36% better
than average
IndustryAverage
FPL
95%87%
93% 90%
FPL(Fossil)
IndustryAvg.
(Fossil)
FPL(Nuclear)
IndustryAvg.
(Nuclear)
1.091.091.17
1.221.271.301.33
1.49
1.611.65
1.791.82
90 91 92 93 94 95 96 97 98 99 00 01
Down 40%since 1990
Over a Decade of O&M ReductionsOver a Decade of O&M Reductions(Cents per Kilowatt Hour)(Cents per Kilowatt Hour)
Service Reliability Service Reliability 2001 Outage Time Per Customer (Min.)2001 Outage Time Per Customer (Min.)
69
107
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FPL Rates Lower Than National, Florida Averages
Comparisons of a 1,000 kWh residential bill
$81.93
NationalAverage
$76.22$86.45
FPL FPC andTECO
Average
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Constructive Regulatory Environment
Vertically integrated utility modelVertically integrated utility model Fuel, capacity charges directly passed through to Fuel, capacity charges directly passed through to
customerscustomers ““Rate certainty” through end of 2005Rate certainty” through end of 2005
– incentive-based agreement– “win-win” revenue sharing provision– no ROE limits– shareholders benefit from productivity improvements
No current activity on wholesale restructuringNo current activity on wholesale restructuring“I just don’t think there’s a sense of urgency to this.”
- Governor Jeb Bush
Vertically integrated utility modelVertically integrated utility model Fuel, capacity charges directly passed through to Fuel, capacity charges directly passed through to
customerscustomers ““Rate certainty” through end of 2005Rate certainty” through end of 2005
– incentive-based agreement– “win-win” revenue sharing provision– no ROE limits– shareholders benefit from productivity improvements
No current activity on wholesale restructuringNo current activity on wholesale restructuring“I just don’t think there’s a sense of urgency to this.”
- Governor Jeb Bush
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Major U.S.Wholesale Generator
Attractive, visible growthAttractive, visible growth– average earnings growth >20% from
identified projects through 2005 Low-risk approachLow-risk approach
– diversified by region, fuel source– well-hedged portfolio– emphasis on base-load assets
Low cost providerLow cost provider– modern, efficient, clean plants– operational excellence
Conservative, integrated asset Conservative, integrated asset optimization functionoptimization function
• 5,063 MW in operation
• presence in 18 states
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NortheastNortheast
Mid-AtlanticMid-Atlantic21%21%
26%26%
16%16%
37%37%
WestWest
Regional DiversityRegional Diversity Fuel Diversity
GasGas59%59%
21%21%WindWind
OtherOther2%2%
HydroHydro3%3% 7%7%
OilOil
Diversified Portfolio
11,588 Net MW in Operation11,588 Net MW in OperationYear-end 2004Year-end 2004
CentralCentral
NuclearNuclear9%9%
Assumes addition of 1,000 mw of wind. Percentages may not add to 100% due to rounding.
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Disciplined Growth Strategy
Grow generation portfolio in prudent wayGrow generation portfolio in prudent way– aggressive wind development – focused fossil development– pursuit of M&A opportunities
Optimize asset valueOptimize asset value – integrated operations, business management and
marketing and trading capabilities Hedge position via substantial contract coverageHedge position via substantial contract coverage Moderate risk by regional and fuel diversity Moderate risk by regional and fuel diversity Manage portfolio activelyManage portfolio actively
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-
2,000
4,000
6,000
8,000
10,000
12,000
98 99 00 01 0297 03
5,063 MW
+11,500 MW
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Existing Plants 2001
New WindBlytheRISEPBayswaterBastrop
Marcus Hook
New WindCalhounForneySeabrook
Disciplined Growth(Projected Operating Net-MW)
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Seabrook Acquisition
A premier nuclear plantA premier nuclear plant Attractive priceAttractive price Plays to our strengthsPlays to our strengths
– superior operating skills– northeast trading expertise
Immediately accretiveImmediately accretive– 1 - 4 cents in 2003– 10 - 12 cents avg. ‘03 - ‘06– accelerating thereafter
Attractive financial returnsAttractive financial returns– strong cash flow– substantial NPV– 18% - 20% ROE
Based on current forward price curves
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Wind Energy: Unique Advantage
Nearly 1,500 net MW in operationNearly 1,500 net MW in operation
– U.S. market leader with 1/3 market share Supported by policy trends (RPS, PTCs) and Supported by policy trends (RPS, PTCs) and
economicseconomics Attractive financial characteristicsAttractive financial characteristics
– long-term power contracts (15 – 25 years)
– ROEs in the high teens/low 20s
– accretive in first full year Additional 1,000 – 2,000 MW by 2002 - 2003Additional 1,000 – 2,000 MW by 2002 - 2003
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Conservative Risk Management
Marketing & Trading
Risk ReductionAsset
Optimization
Risk ControlRisk ControlRisk ControlRisk Control
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Well-Hedged Position
2002 = 79% 1
2003 = 51%
1 For the remaining months in 2002
0%
20%
40%
60%
80%
100%
Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06
Delivery Period
Committed MW
Merchant MW
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ERCOT Spot Spark Spreads on Peak
($ per MWh)
Current Forward Contract % under
Spark Spread Spark Spread Contract
2002 $9.33 $14.83 81%
2003 $6.38 $15.83 50%
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Enhancing Profitability in ERCOT
0
2
4
6
8
10
12
14
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CurrentForward Spark
Spread
North/SouthSpread
Firm vs Non-Firm Contracts
Water Cooled AdditionalTrading
Opportunities
PotentialRealized Spark
Spreads
($)
6.00 - 7.00
8.00 - 9.00
0.50 - 1.50 0.2515.75 - 18.751.00+
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Financial disciplineFinancial discipline Strong credit ratingsStrong credit ratings
A2 / A = FPL Group Capital
Aa3 / A = Florida Power & Light Company
13.5% ROE in 200113.5% ROE in 2001 2001 net income of nearly 2001 net income of nearly
$800 million $800 million 11
Prudent dividend policyPrudent dividend policy
Strong Financial Position
Debt to Cap Ratio
51
62
25
50
75
FPL Group IndustryAverage
(%)
1 Excluding non-recurring items
2 Pro forma for recent offerings
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3.573.85
3.98
4.38
4.69
2.00
2.50
3.00
3.50
4.00
4.50
5.00
1997 1998 1999 2000 2001
($)
7.1% average annual EPS
growth rate
Excluding non-recurring items and effects of FAS 133
Financial StrengthEPS Growth
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Capital Plan Supports Disciplined Growth Strategy
Projected Capital Sources & Uses 2002 - 2005($ billion)
Operating cash flow less dividends
Current and completed equity/equity-linked issuance, benefit plans
Future debt issuance
Regulated utility
FPL Energy
Seabrook
8.0 – 10.0 8.0 – 10.0
0.5 – 1.5
1.5 - 2.0
6.0 - 6.54.6 - 5.6
0.8
1.6
Sources Uses
1.0 – 2.0Wind
Gas
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Strong Rating Valuable, but not a Fixed Target
Long-term goal: ‘A’ Long-term goal: ‘A’ or equivalent…or equivalent…
……subject to subject to fluctuating agency fluctuating agency standardsstandards
CreditCreditRatingRating
InvestmentInvestmentGradeGrade
Absolute goal - strong investment gradeAbsolute goal - strong investment grade
Relative goal - upper band of peer groupRelative goal - upper band of peer group
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Financial Outlook
Underlying average EPS growth of 6-8% per yearUnderlying average EPS growth of 6-8% per year– FPL earnings growth 4-5% average– FPL Energy earnings growth 20-30% average
2002 EPS guidance: $4.70 - $4.752002 EPS guidance: $4.70 - $4.75– FPL approximately flat, assuming normal weather– FPL Energy up 15-20%, assuming no major change to
market prices 2003 EPS guidance: $5.10 - $5.202003 EPS guidance: $5.10 - $5.20
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Relative Low Risk, High Return
FPL Group represents one of best FPL Group represents one of best combinations of risk, return and earningscombinations of risk, return and earnings growth among major electric companiesgrowth among major electric companies
Risk
FPL Group
Earnings Growth/Return
Low
High
High
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