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Moray Dewhurst. Chief Financial Officer.

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Moray Dewhurst

Chief Financial Officer

slide2

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.

2

capitalizing on our strengths
Capitalizing on Our Strengths
  • Premier integrated utility
    • high growth, stable customer base
  • Successful wholesale generation business
    • well hedged portfolio with predictable earnings growth
  • Strong balance sheet
    • 51% Debt to Capital1, A2 / A credit rating2
  • Substantial cash flow to fund expansion
    • $1.4 billion operating cash flow in 2001, net of dividends
  • High degree of earnings visibility

1 Pro forma for offerings

2 Corporate credit rating

premier electric utility
Premier Electric Utility
  • Favorable customer mix
  • Strong customer and usage growth
  • Operational excellence
  • Proven cost management
  • Constructive regulatory environment

Attractive financial returns

high growth utility with favorable customer mix

Residential

Commercial

Other

Industrial

High Growth Utility With Favorable Customer Mix

4%

3%

3%

  • Strong demand growth 1
    • 2.1% annual increase in customer accounts
    • 1.1% annual increase in usage per customer

32%

37%

32%

  • Generation
    • 16,619 MW
    • 2,700 MW added in 2001-2003
    • 1,900 MW more by 2006

56%

33%

FPL

IndustryAverage

1 Over last 10 years

operational excellence

FPL = 36% better

than average

Industry Average

FPL

FPL

Operational Excellence

Service Reliability 2001 Outage Time Per Customer (Min.)

Plant Availability

107

69

Industry

Average

Over a Decade of O&M Reductions(Cents per Kilowatt Hour)

Superior Cost Management(O&M $ per customer)

Down 40%

since 1990

fpl rates lower than national florida averages
FPL Rates Lower Than National, Florida Averages

$86.45

$81.93

$76.22

FPL

NationalAverage

FPC andTECOAverage

Comparisons of a 1,000 kWh residential bill

constructive regulatory environment
Constructive Regulatory Environment
  • Vertically integrated utility model
  • Fuel, capacity charges directly passed through to customers
  • “Rate 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 restructuring

“I just don’t think there’s a sense of urgency to this.” - Governor Jeb Bush

major u s wholesale generator

5,063 MW in operation

  • presence in 18 states
Major U.S.Wholesale Generator
  • Attractive, visible growth
    • average earnings growth >20% from identified projects through 2005
  • Low-risk approach
    • diversified by region, fuel source
    • well-hedged portfolio
    • emphasis on base-load assets
  • Low cost provider
    • modern, efficient, clean plants
    • operational excellence
  • Conservative, integrated asset optimization function
diversified portfolio
Diversified Portfolio

11,588 Net MW in Operation

Year-end 2004

Regional Diversity

Fuel Diversity

Gas

59%

Northeast

Central

26%

37%

Wind

21%

Other

Mid-Atlantic

2%

21%

Hydro

Nuclear

Oil

West

3%

9%

7%

16%

Assumes addition of 1,000 mw of wind. Percentages may not add to 100% due to rounding.

disciplined growth strategy
Disciplined Growth Strategy
  • Grow generation portfolio in prudent way
    • aggressive wind development
    • focused fossil development
    • pursuit of M&A opportunities
  • Optimize asset value
    • integrated operations, business management and marketing and trading capabilities
  • Hedge position via substantial contract coverage
  • Moderate risk by regional and fuel diversity
  • Manage portfolio actively
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+11,500 MW

5,063 MW

Disciplined Growth(Projected Operating Net-MW)

Marcus Hook

New Wind

Calhoun

Forney

Seabrook

New Wind

Blythe

RISEP

Bayswater

Bastrop

ExistingPlants 2001

97

98

99

00

01

02

03

04

seabrook acquisition
Seabrook Acquisition
  • A premier nuclear plant
  • Attractive price
  • Plays to our strengths
    • superior operating skills
    • northeast trading expertise
  • Immediately accretive
    • 1 - 4 cents in 2003
    • 10 - 12 cents avg. ‘03 - ‘06
    • accelerating thereafter
  • Attractive financial returns
    • strong cash flow
    • substantial NPV
    • 18% - 20% ROE

Based on current forward price curves

wind energy unique advantage
Wind Energy: Unique Advantage
  • Nearly 1,500 net MW in operation
    • U.S. market leader with 1/3 market share
  • Supported by policy trends (RPS, PTCs) and economics
  • Attractive 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 - 2003
conservative risk management
Conservative Risk Management

Marketing & Trading

Risk Reduction

Asset

Optimization

Risk Control

well hedged position
Well-Hedged Position

2002 = 79% 1

2003 = 51%

Merchant MW

Committed MW

1 For the remaining months in 2002

ercot spot spark spreads on peak per mwh
ERCOT Spot Spark Spreads on Peak($ per MWh)

Current ForwardContract% under

Spark Spread Spark Spread Contract

2002$9.33 $14.83 81%

2003 $6.38$15.83 50%

enhancing profitability in ercot
Enhancing Profitability in ERCOT

1.00+

15.75 - 18.75

0.25

0.50 - 1.50

8.00 - 9.00

6.00 - 7.00

strong financial position
Financial discipline

Strong credit ratings

A2 / A = FPL Group Capital

Aa3 / A = Florida Power & Light Company

13.5% ROE in 2001

2001 net income of nearly $800 million 1

Prudent dividend policy

Strong Financial Position

2

1 Excluding non-recurring items

2 Pro forma for recent offerings

financial strength eps growth
Financial StrengthEPS Growth

7.1% average annual EPS growth rate

Excluding non-recurring items and effects of FAS 133

capital plan supports disciplined growth strategy projected capital sources uses 2002 2005 billion
Capital Plan Supports Disciplined Growth StrategyProjected Capital Sources & Uses 2002 - 2005($ billion)

8.0 – 10.0

8.0 – 10.0

Future debt issuance

0.5 – 1.5

Wind

1.0 – 2.0

Current and completed equity/equity-linked issuance, benefit plans

1.5 - 2.0

FPL Energy

Seabrook

0.8

Gas

1.6

Operating cash flow less dividends

6.0 - 6.5

Regulated utility

4.6 - 5.6

Sources

Uses

strong rating valuable but not a fixed target
Strong Rating Valuable, but not a Fixed Target

Long-term goal: ‘A’ or equivalent…

…subject to fluctuating agency standards

CreditRating

InvestmentGrade

  • Absolute goal - strong investment grade
  • Relative goal - upper band of peer group
financial outlook
Financial Outlook
  • Underlying 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 - $4.75
    • FPL approximately flat, assuming normal weather
    • FPL Energy up 15-20%, assuming no major change to market prices
  • 2003 EPS guidance: $5.10 - $5.20
relative low risk high return
Relative Low Risk, High Return

FPL Group represents one of best combinations of risk, return and earningsgrowth among major electric companies

High

FPL Group

Earnings Growth/Return

Low

High

Risk