John Ketchum
Chairman, President and Chief Executive Officer at NextEra Energy
Thank you, Jessica, and good morning everyone. Before I turn to a discussion of our financial results and the future growth prospects, I'd like to make some comments on the status of our review. As a reminder, we reported last quarter that we were reviewing allegations of Florida state and federal campaign finance law violations raised in media articles and a related complaint filed in October with the Federal Election Commission.
Our review of information reasonably available to us is now substantially complete. Regarding the Florida allegations, based on information in our possession, we believe that FPL would not be found liable for any of the Florida campaign finance law violations as alleged in the media articles.
With respect to the FEC complaint, you may recall that it was filed by a special interest group and primarily relies on media articles that allege certain violations of the Federal Election Campaign Act by various parties, including, by implication, FPL. The FEC process is a confidential, civil administrative process, with an investigation only commencing if the FEC votes to do so.
We plan to file our response seeking dismissal of the FEC complaint in the next few weeks and do not believe it is appropriate for a complaint such as this to move forward. The total amount of contributions referenced in the complaint is less than $1.3 million and we do not expect that allegations of federal campaign finance law violations taken as a whole would be material to us.
With that behind us, I would like to now discuss our fourth-quarter and full year 2022 financial results and future growth prospects. Both NextEra Energy and NextEra Energy Partners had a terrific year in 2022 and both businesses have never been better positioned. The cost and efficiency of new renewables have improved significantly over the last two decades, while natural gas prices have seen an increase over the past year with volatility likely to continue going forward. At the same time, landmark renewables legislation was entered into law last fall. After the passage of the Inflation Reduction Act, or IRA, we often said it was transformational for our industry and our business.
Before IRA, we largely qualified for two federal incentives; wind production tax credits and solar investment tax credits. We always had the challenge of planning the business with those federal incentives expected to phase down and expire in a few months or years. Some years they were extended, others they were not. The uncertainty changed customer behavior and it changed our behavior.
Today, the incentives are clear. They support a broader range of renewable technologies. They are in place for a much longer period of time. And they incentivize a domestic supply chain that will further reduce the cost of renewables that are made in the USA, creating new American jobs. In short, we believe the IRA provides growth visibility for a broad range of low-cost clean energy solutions, in a predictable way and for a long time.
We believe that, in this environment, low-cost renewables will help NextEra Energy and NextEra Energy Partners continue to drive long-term value for our customers and our shareholders and unitholders. So today, I am excited to share that we are extending our financial expectations for an additional year at both NextEra Energy and NextEra Energy Partners and I look forward to sharing more details on those expectations in a few minutes.
In 2022, NextEra Energy continued its long track record of outstanding execution, delivering full year adjusted earnings per share of $2.90, up nearly 14% from 2021. As a result of strong operational and financial performance at both FPL and Energy Resources, we achieved the high-end of our adjusted EPS expectations range. Over the past 10 years, we have delivered compound annual growth in adjusted EPS of roughly 10% for our shareholders, which is the highest among all top 10 power companies.
NextEra Energy outperformed the S&P 500 Index by nearly 10% in 2022, despite a challenging year in the financial markets. In terms of total shareholder return, NextEra Energy has outperformed the S&P 500 Index and the S&P 500 Utilities Index on a three, five, ten, and 15 year basis. Over the past 15 years, we have outperformed nearly all of the other companies in the S&P 500 Utilities Index and more than tripled the average total shareholder return of the index.
Over the same period, we have outperformed 75% of the companies in the S&P 500, while nearly tripling the average total shareholder return of the index. We are proud of our long-term track record of creating shareholder value, but we remain intensely focused on execution at both FPL and Energy Resources and we remain committed to delivering long-term growth for shareholders going forward.
We have a long history of executing and delivering on our commitments, even in periods of uncertainty and disruption, and 2022 was no exception. Despite a challenging macro environment, we invested more than $19 billion in American energy infrastructure, while maintaining our strong balance sheet and credit ratings. Overcoming supply chain challenges, we constructed and placed into service roughly 5,000 megawatts of new renewables and storage projects, demonstrating the strength and resiliency of our team's expertise and competitive advantages. While disruption created some near-term challenges, it also created opportunities and I am extremely proud of our team's execution in 2022, in delivering adjusted EPS growth of nearly 14%.
During 2022, FPL successfully executed on its strategic initiatives while delivering on what we believe is the best customer value proposition in America. Despite inflationary pressures, we further reduced our already best-in-class non-fuel O&M cost per megawatt-hour by approximately 8.6% versus 2021. We also continued our investments in solar generation that can reduce the variable fuel component of our customer bills. We placed into service approximately 450 megawatts of cost-effective solar during 2022 and we anticipate commissioning another roughly 1,200 megawatts of low-cost solar in 2023, bringing our total solar buildout to roughly 1.7 gigawatts within the first two years of our current rate agreement.
Our relentless focus on productivity and making smart capital investments for the benefit of customers is a significant part of what has kept our typical 1,000 kilowatt hours residential customer bills the lowest among Florida investor-owned utilities and more than 30% below the national average. FPL has also continued to provide exceptional service reliability and was recognized for the seventh time in eight years as being the most reliable electric utility in the nation.
Our team responded exceptionally well in response to hurricanes Ian and Nicole. And during a year of high inflation and high natural gas prices, FPL used its strong balance sheet to provide bill relief for its customers. Looking forward, we remain committed to providing clean, affordable, and reliable service to our customers for many years to come.
Energy Resources also had a terrific year in 2022, delivering adjusted earnings growth of nearly 11% versus the prior year. With economics driving strong demand for renewables, Energy Resources had a record year of new renewables and storage origination, adding more than 8,000 megawatts to our backlog as we continue to capitalize on the ongoing clean energy transition that is occurring across the United States.
With the significant net additions over the last year, our renewables and storage backlog now stands at a year-end record of approximately 19 gigawatts, net of projects placed in service, and provides strong visibility into the growth that lies ahead.
Our continued execution, combined with the long-term visibility into clean energy incentives and the strong market backdrop for low-cost renewables, gives us more confidence in our long-term outlook at NextEra Energy. Last June, we laid out our vision and strategy to decarbonize both ourselves and the broader U.S. economy. In August, the IRA helped provide more certainty and flexibility to plan for growth than at any other time in our history.
Over the next two decades, we are well positioned to continue our long track record of creating long-term value for shareholders through additional renewables and storage investments, expansion into new markets and products that enable even more renewables, and organic growth opportunities to optimize our existing fleet by repowering assets and co-locating storage.
At FPL, our plan is to lower costs for customers by accretively deploying capital into low-cost solar, storage and eventually hydrogen. By transforming our generation fleet and continuing our decades-long strategy of fuel-switching, we will not only help customers by keeping bills low but also help the state of Florida achieve energy independence. Our customers have already seen the positive impacts of the IRA on their bills. We estimate that solar production tax credits are expected to save customers roughly $400 million over the term of our current rate agreement. This month, those savings started with a one-time $36 million refund on customer bills for our completed 2022 rate base solar projects.
With only about 5% of FPL's generation mix coming from solar today, we are still in the early stages of building out our low-cost solar portfolio. In April, FPL expects to file its annual Ten-Year Site Plan, which will present our generation resource plan through 2032. Last year's plan included roughly 9,400 megawatts of new solar capacity through 2031, including roughly 4,600 megawatts of additional solar after 2025. By incorporating the IRA benefits, we expect the post-2025 new solar capacity in this year's plan will more than double what it was last year. We believe low-cost solar will also provide a valuable hedge for our customers against rising natural gas prices in the future.
At Energy Resources, the combination of low-cost renewables, higher natural gas prices and the broader push toward decarbonization across the economy enables our strategy to serve both utilities and commercial and industrial customers with comprehensive clean energy solutions. These comprehensive clean energy solutions are often complex and, in addition to new renewables, can include renewable fuels, hydrogen, and behind-the-meter projects; all of which are expected to ultimately create even greater demand for renewables.
Customers are looking for long-term partnerships with customized solutions at a scale unlike anything we have seen in the past. And we believe that no company is better positioned than Energy Resources to serve these complex customer needs in a way that helps them both save money on their energy bills and meet their emissions-reduction goals.
We are particularly excited about the potential for green hydrogen and the role it will play as a solution to help commercial and industrial customers cost-effectively lower emissions. We are building the algorithms and tools to identify and optimize the best green hydrogen sites around the country and leverage our significant interconnection and land inventory position. We are using the skills and capabilities that we have developed over the decades that we have led the renewables industry to participate in emerging clean hydrogen markets in a big way, and we are already starting to see some of our early efforts materialize.
Last week, we signed a term sheet for approximately 800 megawatts of new solar generation, which we have not included in our backlog, that is expected to reach commercial operations in 2026 and is expected to support a green hydrogen-related facility in development in the Central United States.
Additionally, Energy Resources is participating in the development of hydrogen hubs in the Southwest and Southeast. Earlier this month, these hubs were encouraged to file full applications for federal funding from the U.S. Department of Energy under its $8 billion program to create networks of hydrogen producers, consumers, and local connective infrastructure to accelerate the use of hydrogen as a clean energy carrier.
In the Southeast, our plan is to support a 140 tons-per-day clean hydrogen facility at our Gulf Clean Energy Center that would be powered by FPL solar projects. In the Southwest, our plan is to build a 120 tons-per-day electrolysis-based clean hydrogen project in Arizona in partnership with Linde, the world's largest industrial gases company and the largest liquid hydrogen producer in the United States, with whom we recently signed a memorandum of understanding.
The clean hydrogen produced by this facility would be used to support decarbonization of the West Coast mobility and industrial end-markets. These are just a few examples of the clean hydrogen opportunities our team is actively pursuing. We continue to work with various partners on hydrogen solutions and we are excited by both the number and scale of opportunities in front of us.
At our investor conference in June last year, we announced Energy Resources development expectations of roughly 28 gigawatts to 37 gigawatts of newbuild renewables and storage through 2025. In sizing those expectations, we considered, among other factors, the expiration and phase down of production tax credits and investment tax credits under the then-existing tax law. Typically, when tax credits are near the planned expiration dates, we see a spike in demand in the immediate years prior. Then, after tax credits are extended, demand weakens in the short term. Even though tax credits were extended with the IRA, we are continuing to see tremendous demand for new renewables.
It is against that backdrop of strong market demand and the continued cost advantages of renewables; combined with our unparalleled competitive advantages, that today we are extending our development expectations at Energy Resources through 2026. We now believe that we will place into service approximately 32,700 to 41,800 megawatts of new renewables and storage projects from 2023 through the end of 2026.
If you compare midpoint to midpoint, our new four-year development expectations at Energy Resources are approximately 15% higher than the previous four-year development expectations range that we announced at our investor conference last year. To put these numbers into context, just executing at the low-end of our new development expectations through 2026 would more than double the size of our current renewables and storage operating portfolio, which took us more than 20 years to complete.
Due to our long-term visibility into clean energy incentives and the significant growth opportunities at both FPL and Energy Resources, I am pleased to announce that we are extending our adjusted earnings per share growth expectations at NextEra Energy by an additional year, through 2026. For 2023 and 2024, we expect our adjusted earnings per share to be in the ranges of $2.98 to $3.13 and $3.23 to $3.43, respectively.
For 2025 and 2026, we expect to grow 6% to 8% off the 2024 adjusted EPS range. This equates to a range of $3.45 to $3.70 for 2025 and $3.63 to $4.00 for 2026. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted earnings per share expectations ranges in each of 2023, 2024, 2025 and 2026, while at the same time maintaining our strong balance sheet and credit ratings. As always, our expectations assume our usual caveats, including normal weather and operating conditions.
Let me now turn to NextEra Energy Partners, which had another terrific year of execution while delivering on its commitments to unitholders. For 2022, NextEra Energy Partners grew its LP distributions per unit by approximately 15% year-over-year and delivered more than 20% year-over-year growth in adjusted EBITDA, highlighting the strength of its operating portfolio. This growth is supported by NextEra Energy Partners' outstanding portfolio of clean energy assets, which was further diversified in 2022. During the year, NextEra Energy Partners acquired interests in approximately 1,200 net megawatts of long-term contracted renewables and storage assets from Energy Resources.
Our confidence in NextEra Energy Partners' long runway of growth has been further bolstered by the IRA. Against a backdrop that we believe includes at least two decades of clean energy incentives, we expect NextEra Energy Partners' opportunity set for acquiring renewables from both Energy Resources and from third parties to continue to be robust. NextEra Energy Partners' organic growth opportunities have also expanded significantly, and we are currently evaluating repowering investments for roughly 1.3 gigawatts of wind assets owned by NextEra Energy Partners for 2024 through 2026.
Additionally, earlier this month NextEra Energy Partners leveraged its cost of capital advantages to execute early buyouts of tax equity interests on two of its existing asset portfolios for approximately $190 million. These transactions are intended to enable NextEra Energy Partners to take advantage of the IRA's new transferability provisions, which allow for the sale of tax credits to third parties. With the buyouts and subsequent transfer of tax credits, NextEra Energy Partners can now fully access two cash flow streams for unitholders, project cash flows and cash flows that result from the transfer of PTCs. Taken together, NextEra Energy Partners expects these early tax equity investor buyouts to deliver an attractive cash available for distribution yield for unitholders.
The significant tailwinds provided by the IRA and Energy Resources' future renewables outlook, combined with NextEra Energy Partners' third-party M&A and organic growth opportunities and continued ability to raise low-cost capital, even in a challenging capital market environment, provide us with long-term growth visibility. As a result, today we are pleased to announce that we are extending our financial expectations for NextEra Energy Partners by another year. We now see 12% to 15% per year growth in per unit distributions as a reasonable range of expectations through at least 2026.
We believe that NextEra Energy Partners' distribution per unit growth expectations are best-in-class versus any other company of its kind in the market and that the combination of NextEra Energy Partners' clean energy portfolio, growth visibility and financing flexibility offers unitholders a uniquely attractive investor value proposition.
In summary, both NextEra Energy and NextEra Energy Partners have never been better positioned. We anticipate a tremendous acceleration of growth in renewables and storage deployment across the U.S. due in part to the IRA, particularly in the latter half of the decade. And we believe that our substantial competitive advantages will allow us to continue delivering value to shareholders and unitholders for many years to come.
Before turning the call over to Kirk, I'd like to talk about the important organizational changes we are announcing this morning. After 20 years with NextEra Energy, Eric Silagy has notified me of his intention to retire from FPL, where he has led the team for 11 years.
Eric has been a passionate advocate for continuous improvement and under his leadership FPL has been transformed into the nation's largest and most reliable electric utility. Over the last decade, Eric has led the efforts to modernize FPL's generating fleet, making it one of the cleanest, lowest-cost and most fuel-efficient in the country. His commitment to putting customers first is demonstrated every day by FPL's award-winning customer service, bills that are significantly lower than the national average and the best reliability in the country.
Last year during hurricanes Ian and Nicole, I saw firsthand Eric's dedication and compassion for our customers as he steered the FPL team to quickly restore power and quickly get the State of Florida back on its feet. Over his 20 years of dedicated service to our company, Eric has also been a tremendous supporter of the communities where we do business. His advocacy across the State has helped to foster Florida's economic growth, strengthen our state university system and grow the next generation of Florida leaders, just to name a few of his many accomplishments. I want to thank Eric for his service and wish him and his family all the best on this next chapter in life.
With Eric's departure we are excited to welcome Armando Pimentel back to NextEra Energy as FPL's president and CEO. As you know, Armando previously served as NextEra Energy's and FPL's CFO and the president and CEO of NextEra Energy Resources. As a lifelong Floridian, Armando is a proven leader that will be relentlessly focused on serving our customers. He is also a good friend and colleague who I've worked closely with for many years, and I am confident that under Armando's leadership FPL will continue its long track record of delivering outstanding performance to our customers.
Let me now turn the call over to Eric who will make some personal remarks.
