| FLORIDA POWER & LIGHT CO included in Part I, Item 1A Risk Factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on FPL Groupapstas and/or FPLapstas operations and fina ncial results, and could cause FPL Groupapstas and/or FPLapstas actual results to differ materially from those contained in forward-looking statements made by or on behalf of FPL Group and/or FPL in this combined Form 10-K, in presentations, on their respective websites, in response to questions or otherwise |
| Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances, including unanticipated events, after the date on which such statement is made |
| New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement |
| Business FPL GROUP FPL Group was incorporated in 1984 under the laws of Florida |
| FPL Groupapstas principal subsidiary, FPL, is a rate-regulated utility engaged primarily in the generation, transmission, distribution and sale of electric energy |
| FPL Group Capital, a wholly-owned subsidiary of FPL Group, holds the capital stock and provides funding for FPL Groupapstas operating subsidiaries other than FPL The business activities of these operating subsidiaries primarily consist of FPL Energyapstas competitive energy business |
| At December 31, 2005, FPL Group and its subsidiaries employed approximately 12cmam400 people |
| In August 2005, President Bush signed into law the 2005 Energy Act, which substantially affected the regulation of energy companies |
| The 2005 Energy Act included provisions that, among other things, amended federal energy laws, provided the FERC with new oversight responsibilities, repealed the Public Utility Holding Company Act of 1935, as amended, which regulated the financial structure of certain utility holding companies and, among other things, restricted mergers and acquisitions in the electric industry, and enacted the Holding Company Act |
| FPL Group is a holding company, as defined in the Holding Company Act |
| In December 2005, FPL Group and Constellation Energy announced a proposed merger |
| The combined company is expected to be the nationapstas largest competitive energy supplier based on generation and have the second largest electric utility portfolio based on number of customers served |
| The companies are working to complete the merger by the end of 2006 |
| However, completion of the merger and the actual closing date depend upon the satisfaction of a number of conditions, including shareholder approvals and the receipt of required regulatory approvals |
| For additional information concerning the proposed merger, see Note 2 |
| Website Access to SEC Filings |
| FPL Group and FPL make their SEC filings, including their annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, available free of charge on the internet website, www |
| com, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC FPL OPERATIONS General |
| FPL was incorporated under the laws of Florida in 1925 and is a wholly-owned subsidiary of FPL Group |
| FPL supplies electric service to a population of more than eight million throughout most of the east and lower west coasts of Florida |
| During 2005, FPL served approximately 4dtta3 million customer accounts |
| The percentage of FPLapstas operating revenues by customer class was as follows: Years Ended December 31, 2005 2004 2003 Residential 55 % 54 % 56 % Commercial 37 37 37 Industrial 3 3 3 Other, including deferred or recovered clause revenues, the net change in unbilled revenues and any provision for retail rate refund 5 6 4 100 % 100 % 100 % FPL currently holds 174 franchise agreements to provide electric service in various municipalities and counties in Florida with varying expiration dates through 2035 |
| Of the 174 franchise agreements, four expire in 2006, 18 expire in 2007 and 85 expire during the period 2008 through 2015 |
| Ongoing negotiations are taking place to renew franchises with upcoming expirations |
| FPL considers its franchises to be adequate for the conduct of its business |
| See the discussion of the proposed merger with Constellation Energy under FPL Group above |
| Retail operations are regulated by the FPSC, which has jurisdiction over retail rates, service territory, issuances of securities, planning, siting and construction of facilities and other matters |
| FPL is also subject to regulation by the FERC with respect to certain aspects of its operations, including the acquisition and disposition of facilities, interchange and transmission services and wholesale purchases and sales of electric energy |
| In addition, FPLapstas nuclear power plants are subject to the jurisdiction of the NRC NRC regulations govern the granting of licenses for the construction, operation and retirement of nuclear power plants and subject these plants to continuing review and regulation |
| Retail Ratemaking |
| The underlying concept of utility ratemaking is to set rates at a level that allows the utility the opportunity to collect from customers total revenues (revenue requirements) equal to its cost of providing service, including a reasonable rate of return on invested capital |
| To accomplish this, the FPSC uses various ratemaking mechanisms |
| The basic costs of providing electric service, other than fuel and certain other costs, are recovered through base rates, which are designed to recover the costs of constructing, operating and maintaining the utility system |
| These basic costs include O&M expenses, depreciation and taxes, as well as a return on FPLapstas investment in assets used and useful in providing electric service (rate base) |
| The rate of return on rate base approximates FPLapstas weighted-average cost of capital, which includes its costs for debt and preferred stock and, typically, an allowed ROE The FPSC monitors FPLapstas actual ROE through a surveillance report that is filed monthly by FPL with the FPSC The FPSC does not provide assurance that an allowed ROE will be achieved |
| Base rates are determined in rate proceedings or through negotiations, which occur at irregular intervals at the initiative of FPL, the FPSC, the State of Florida Office of Public Counsel or a substantially affec ted party |
| In August 2005, FPL and all of the interveners in its 2005 rate case filing signed a stipulation and settlement agreement regarding FPLapstas retail base rates, which was subsequently approved by the FPSC (2005 rate agreement) |
| The 2005 rate agreement will be in effect through December 31, 2009, and thereafter shall remain in effect until terminated on the date new retail base rates become effective pursuant to an FPSC order |
| The 2005 rate agreement replaced a rate agreement that was effective April 15, 2002 through December 31, 2005 (2002 rate agreement) |
| The 2005 rate agreement provides that retail base rates will not increase during the term of the agreement except to allow recovery of the revenue requirements of any power plant approved pursuant to the Florida Power Plant Siting Act (Siting Act) that achieves commercial operation during the term of the 2005 rate agreement |
| The 2005 rate agreement also continues the revenue sharing mechanism in FPLapstas 2002 rate agreement, whereby revenues from retail base operations in excess of certain thresholds will be shared with customers on the basis of two-thirds refunded to customers and one-third retained by FPL Revenues from retail base operations in excess of a second, higher threshold (cap) will be refunded 100prca to customers |
| The revenue sharing threshold and cap for 2006 will be dlra3cmam991 million and dlra4cmam156 million, respectively, which was established by using the 2005 revenue sharing threshold and cap of dlra3cmam880 million and dlra4cmam040 million, respectively, and increasing them by the a verage annual growth rate in retail kwh sales for the ten-year period ending December 31, 2005 |
| For each succeeding year, retail base rate revenue sharing threshold and cap amounts will be established by increasing the prior yearapstas threshold and cap by the sum of the following: (i) the average annual growth rate in retail kwh sales for the ten-year period ending December 31 of the preceding year multiplied by the prior yearapstas retail base rate revenue sharing threshold and cap and (ii) the amount of any incremental base rate increases for power plants approved pursuant to the Siting Act that achieve commercial operation during the term of the 2005 rate agreement |
| Under the terms of the 2005 rate agreement: (i) FPLapstas electric property depreciation rates will be based upon the comprehensive depreciation studies it filed with the FPSC in March 2005; however, FPL may reduce depreciation by up to dlra125 million annually, (ii) FPL suspended contributions of approximately dlra79 million per year to its nuclear decommissioning fund beginning in September 2005, (iii) FPL suspended contributions of dlra20dtta3 million per year to its storm and property insurance reserve beginning in January 2006 and has the ability to recover prudently incurred storm restoration costs, either through securitization pursuant to Section 366dtta8260 of the Florida Statutes or through surcharges, and (iv) FPL will be allowed to recover through a cost recovery clause prudently incurred incremental costs associated with complying with an FPSC or FERC order regarding a regional transmission organization |
| FPL will not have an authorized regulatory ROE under the 2005 rate agreement for the purpose of addressing earnings levels |
| For all other regulatory purposes, FPL will have an ROE of 11dtta75prca |
| The revenue sharing mechanism described above will be the appropriate and exclusive mechanism to address earnings levels |
| However, if FPLapstas regulatory ROE, as reported to the FPSC in FPLapstas monthly earnings surveillance report, falls below 10prca during the term of the 2005 rate agreement, FPL may petition the FPSC to amend its base rates |
| The 2002 rate agreement provided for a dlra250 million annual reduction in retail base revenues allocated to all customers by reducing customers &apos base rates and service charges by approximately 7prca, as well as a revenue sharing mechanism based on stated thresholds |
| During the term of the 2002 rate agreement, FPL did not have an authorized regulatory ROE range for the purpose of addressing earnings levels and FPL reduced depreciation on its plant in service by dlra125 million each year |
| Fuel costs are recovered from customers through levelized charges per kwh established under the fuel clause |
| These charges are calculated annually based on estimated fuel costs and estimated customer usage for the following year, plus or minus a true-up adjustment to reflect the variance of actual costs and usage from the estimates used in setting the fuel adjustment charges for prior periods |
| An adjustment to the levelized charges may be approved during the course of a year to reflect a projected variance based on actual costs and usage |
| Due to the significant increase in fuel costs during 2005, FPL filed several revisions to its estimated true-up adjustment |
| In 2005, approximately dlra4dtta1 billion of costs were recovered through the fuel clause |
| The FPSC has approved a risk management fuel procurement program which is intended to reduce the risk of unexpected fuel price volatility by locking in fuel prices for a portion of FPLapstas fuel requirements |
| &nb sp;The results of the program are reviewed by the FPSC as part of the annual review of fuel costs |
| See Energy Marketing and Trading, Managementapstas Discussion - Results of Operations, Note 1 - Regulation and Note 4 |
| Capacity payments to other utilities and generating companies for purchased power are recovered from customers through the capacity clause and base rates |
| In 2005, approximately dlra651 million of costs were recovered through the capacity clause |
| Costs associated with implementing energy conservation programs totaled approximately dlra176 million in 2005 and were recovered from customers through the energy conservation cost recovery clause |
| Costs of complying with federal, state and local environmental regulations enacted after April 1993 totaled dlra24 million in 2005 and are recovered through the environmental clause to the extent not included in base rates |
| FPL was impacted by Hurricanes Dennis, Katrina, Rita and Wilma in 2005 and by Hurricanes Charley, Frances and Jeanne in 2004 |
| These hurricanes did major damage in parts of FPLapstas service territory and collectively resulted in customer power outages in 2005 and 2004 of 5dtta3 million and 5dtta4 million, respectively |
| At December 31, 2005, storm restoration costs incurred by FPL during 2005 and 2004 exceeded the amount in the storm and property insurance reserve |
| At December 31, 2005, FPLapstas storm reserve deficiency totaled approximately dlra1dtta1 billion |
| The storm reserve deficiency associated with the 2004 hurricanes, plus interest, is being recovered primarily through a storm damage surcharge applied to retail customer bills over a 36-month period that began in February 2005, and totaled approximately dlra297 million at December 31, 2005 |
| The remaining balance of the storm reserve deficiency primarily relates to the storm restoration costs associated wi th 2005 hurricanes |
| In January 2006, FPL petitioned the FPSC for approval to recover approximately dlra1dtta7 billion of storm costs through the issuance of dlra1cmam050 million of storm recovery bonds pursuant to the securitization provisions of Section 366dtta8260 of the Florida Statutes |
| The storm bond proceeds will provide for the net-of-tax recovery of the remaining balance of the unrecovered hurricane costs of dlra1cmam040 million (estimated balance as of July 31, 2006) and the replenishment of the storm reserve to approximately dlra650 million |
| If the FPSC determines that the storm restoration costs should not be securitized and instead should be recovered through another means, FPL has recommended as an alternative recovering the 2005 hurricane costs through a surcharge over approximately three years and implementing a separate surcharge to fund a dlra650 million storm reserve |
| On February 2, 2006, several interested parties fil ed a motion to dismiss FPLapstas petition, claiming that the petition did not satisfy certain technical requirements |
| FPL filed its response to the motion on February 6, 2006, asserting that the requirements cited are not applicable to FPLapstas petition and which were met in any event |
| The FPSC has the right to review FPLapstas storm charges for prudence, and has the authority to determine the manner and timing of recovery |
| See Note 1 - Storm Reserve Deficiency |
| In January 2006, the FPSC held an electric infrastructure workshop to discuss the damage to electric utility facilities incurred due to recent hurricanes and to explore ways of minimizing damage and resulting outages to customers in the future |
| Presentations on hurricane issues were made by representatives of city governments, vendors and the Florida utilities |
| On January 30, 2006, FPL filed a report with the FPSC outlining its Storm Secure Plan, a new initiative to enhance its electrical grid as a result of heightened hurricane activity and in response to concerns expressed by the community, state leaders and regulators |
| On February 7, 2006, the FPSC approved a rule that requires the Florida electric utilities to inspect their transmission and distribution wood poles on an eight-year inspection cycle and file an annual report with the FPSC regarding such inspections |
| The FPSC has scheduled a meeting for February 27, 2006 to discuss what the next step(s) will be |
| The FPSC has the authority to disallow recovery of costs that it considers excessive or imprudently incurred |
| Such costs may include, among others, O&M expenses, the cost of replacing power lost when fossil and nuclear units are unavailable, storm restoration costs and costs associated with the construction or acquisition of new facilities |
| FPL currently faces competition from other suppliers of electrical energy to wholesale customers and from alternative energy sources and self-generation for other customer groups, primarily industrial customers |
| Various states, other than Florida, have enacted legislation or have state commissions that have issued orders designed to allow retail customers to choose their electricity supplier |
| Such a regulatory restructuring, if enacted in Florida, would most likely result in a shift from cost-based rates to market-based rates for energy production and other services provided to retail customers |
| Although the legislation and initiatives in other states vary substantially, common areas of focus include when market-based pricing will be available for wholesale and retail customers, what existing prudently incurred costs in excess of the market-based price will be recoverable and whether generating assets should be separated from transmission, distribution and other assets |
| It is generally believed that transmission and distribution activities would remain regulated |
| Within the last few years, these state restructuring efforts have diminished, and several states have delayed the implementation or reversed previously approved restructuring legislation and rules |
| Management believes it is unlikely there will be any state actions to restructure the retail electric industry in Florida in the near future |
| If the basis of regulation for some or all of FPLapstas business changes from cost-based regulation, existing regulatory assets and liabilities would be written off unless regulators specify an alternative means of recovery or refund |
| Further, other aspects of the business, such as generation assets and long-term power purchase commitments, would need to be reviewed to assess their recoverability in a changed regulatory environment |
| The FPSC promotes cost competitiveness in the building of new steam generating capacity by requiring investor-owned electric utilities, such as FPL, to issue an RFP The RFP process allows independent power producers and others to bid to supply the needed generating capacity |
| If a bidder has the most cost-effective alternative, meets other criteria such as financial viability and demonstrates adequate expertise and experience in building and/or operating generation capacity of the type proposed, the investor-owned electric utility would seek to negotiate a power purchase agreement with the selected bidder and request that the FPSC approve the terms of the power purchase agreement and, if appropriate, provide the required authorization for the construction of the bidderapstas generation capacity |
| In August 2005, FPL issued part one of a two-part RFP for additional power resources beginning in 2009 |
| FPLapstas self-build approach calls for building two approximately 1cmam200 mw natural gas-fired combined-cycle units in western Palm Beach County, Florida, that would be operational in 2009 and 2010 |
| In January 2006, after evaluating alternative proposals, FPL concluded that its self-build approach is the most cost-effective alternative to satisfy the need for additional power resources in 2009 and 2010 |
| FPL plans to issue part two of this RFP in 2006 soliciting competitive bids for additional power resources beginning in 2012 |
| FPLapstas self-build approach calls for building two approximately 850 mw advanced technology coal generating units that would be operational in 2012 and 2013 |
| The FERC has jurisdiction over potential changes that could affect competition in wholesale transactions |
| In 1999, the FERC issued its final order on RTOs which, under a variety of structures, provides for the independent operation of transmission systems for a given geographic area |
| apstas and Tampa Electric Companyapstas proposed RTO) as the RTO for peninsular Florida |
| In late 2001, the FPSC determined that the RTO as proposed was not in the best interest of Florida customers and required the companies to develop a modified proposal |
| and Tampa Electric Company filed a modified RTO proposal with the FPSC changing the structure of GridFlorida from a for-profit transmission company to a non-profit ISO In late 2002, the FPSC approved many of the aspects of the modified RTO proposal, administratively approving recovery of GridFlorida &apos s incremental costs through the capacity clause |
| During 2004, the FPSC held workshops to address additional GridFlorida issues |
| In 2005, an independent consulting firm performed a cost benefit analysis of GridFlorida and concluded that GridFlorida would not be cost effective for the retail customers of the GridFlorida participants |
| In January 2006, FPL and the other GridFlorida participants petitioned the FPSC to approve the withdrawal of the GridFlorida proposal |
| System Capability and Load |
| During 2005, FPL completed the addition of approximately 1cmam900 mw of natural gas combined-cycle generation at its Martin and Manatee sites |
| FPL is currently constructing an 1cmam150 mw natural gas-fired plant at its Turkey Point site with a planned in-service date of mid-2007 |
| See Competition above regarding an RFP for additional power generation resources beginning in 2009 |
| At December 31, 2005, FPLapstas resources for serving load consisted of 23cmam768 Item 1A Risk Factors Risks Relating to FPL Groupapstas and FPLapstas Business FPL Group and FPL are subject to complex laws and regulations and to changes in laws and regulations as well as changing governmental policies and regulatory actions, including initiatives regarding deregulation and restructuring of the energy industry |
| FPL holds franchise agreements with local municipalities and counties, and must renegotiate expiring agreements |
| These factors may have a negative impact on the business and results of operations of FPL Group and FPL * FPL Group and FPL are subject to complex laws and regulations, and to changes in laws or regulations, including the PURPA, the Holding Company Act, the Federal Power Act, the Atomic Energy Act of 1954, as amended, the 2005 Energy Act and certain sections of the Florida statutes relating to public utilities, changing governmental policies and regulatory actions, including those of the FERC, the FPSC and the legislatures and utility commissions of other states in which FPL Group has operations, and the NRC, with respect to, among other things, allowed rates of return, industry and rate structure, operation of nuclear power facilities, operation and construction of plant facilities, operation and construction of transmission facilities, acquisition, disposal, depreciation and amortization of assets and facilities, recovery of fuel and purchased power costs, decommissioning costs, ROE and equity ratio limits, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs) |
| The FPSC has the authority to disallow recovery by FPL of any and all costs that it considers excessive or imprudently incurred |
| The regulatory process generally restricts FPLapstas ability to grow earnings and does not provide any assurance as to achievement of earnings levels |
| * FPL Group and FPL are subject to extensive federal, state and local environmental statutes as well as the effect of changes in or additions to applicable statutes, rules and regulations relating to air quality, water quality, waste management, wildlife mortality, natural resources and health and safety that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or require additional pollution control equipment and otherwise increase costs |
| There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future |
| * FPL Group and FPL operate in a changing market environment influenced by various legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the energy industry, including deregulation or restructuring of the production and sale of electricity |
| FPL Group and its subsidiaries will need to adapt to these changes and may face increasing competitive pressure |
| * FPL Groupapstas and FPLapstas results of operations could be affected by FPLapstas ability to renegotiate franchise agreements with municipalities and counties in Florida |
| The operation of power generation facilities, including nuclear facilities, involves significant risks that could adversely affect the results of operations and financial condition of FPL Group and FPL * The operation of power generation facilities involves many risks, including start up risks, breakdown or failure of equipment, transmission lines or pipelines, use of new technology, the dependence on a specific fuel source, including the supply and transportation of fuel, or the impact of unusual or adverse weather conditions (including natural disasters such as hurricanes), as well as the risk of performance below expected or contracted levels of output or efficiency |
| This could result in lost revenues and/or increased expenses, including the requirement to purchase power in the market at potentially higher prices to meet its contractual obligations |
| Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses, including the cost of replacement power |
| In addition to these risks, FPL Groupapstas and FPLapstas nuclear units face certain risks that are unique to the nuclear i ndustry including the ability to store and/or dispose of spent nuclear fuel, the potential payment of significant retrospective insurance premiums, as well as additional regulatory actions up to and including shutdown of the units stemming from public safety concerns, whether at FPL Groupapstas and FPLapstas plants, or at the plants of other nuclear operators |
| Breakdown or failure of an operating facility of FPL Energy may prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages |
| The construction of, and capital improvements to, power generation facilities involve substantial risks |
| Should construction or capital improvement efforts be unsuccessful, the results of operations and financial condition of FPL Group and FPL could be adversely affected |
| * FPL Groupapstas and FPLapstas ability to successfully and timely complete their power generation facilities currently under construction, those projects yet to begin construction or capital improvements to existing facilities within established budgets is contingent upon many variables and subject to substantial risks |
| Should any such efforts be unsuccessful, FPL Group and FPL could be subject to additional costs, termination payments under committed contracts, and/or the write-off of their investment in the project or improvement |
| The use of derivative contracts by FPL Group and FPL in the normal course of business could result in financial losses that negatively impact the results of operations of FPL Group and FPL * FPL Group and FPL use derivative instruments, such as swaps, options and forwards to manage their commodity and financial market risks, and to a lesser extent, engage in limited trading activities |
| FPL Group could recognize financial losses as a result of volatility in the market values of these contracts, or if a counterparty fails to perform |
| In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative instruments involves managementapstas judgment or use of estimates |
| As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts |
| In addition, FPLapstas use of such instruments could be subject to prudency challenges and if found imprudent, cost recovery could be disallowed by the FPSC FPL Groupapstas competitive energy business is subject to risks, many of which are beyond the control of FPL Group, that may reduce the revenues and adversely impact the results of operations and financial condition of FPL Group |
| * There are other risks associated with FPL Groupapstas competitive energy business |
| In addition to risks discussed elsewhere, risk factors specifically affecting FPL Energyapstas success in competitive wholesale markets include the ability to efficiently develop and operate generating assets, the successful and timely completion of project restructuring activities, maintenance of the qualifying facility status of certain projects, the price and supply of fuel (including transportation), transmission constraints, competition from new sources of generation, excess generation capacity and demand for power |
| There can be significant volatility in market prices for fuel and electricity, and there are other financial, counterparty and market risks that are beyond the control of FPL Energy |
| FPL Energyapstas inability or failure to effectively hedge its assets or positions against changes in commodity prices, interest rates, counterparty cred it risk or other risk measures could significantly impair FPL Groupapstas future financial results |
| In keeping with industry trends, a portion of FPL Energyapstas power generation facilities operate wholly or partially without long-term power purchase agreements |
| As a result, power from these facilities is sold on the spot market or on a short-term contractual basis, which may affect the volatility of FPL Groupapstas financial results |
| In addition, FPL Energyapstas business depends upon transmission facilities owned and operated by others; if transmission is disrupted or capacity is inadequate or unavailable, FPL Energyapstas ability to sell and deliver its wholesale power may be limited |
| FPL Groupapstas ability to successfully identify, complete and integrate acquisitions, including the proposed merger with Constellation Energy is subject to significant risks, including the effect of increased competition for acquisitions resulting from the consolidation of the power industry |
| * FPL Group is likely to encounter significant competition for acquisition opportunities that may become available as a result of the consolidation of the power industry, in general, as well as the passage of the 2005 Energy Act |
| In addition, FPL Group may be unable to identify attractive acquisition opportunities at favorable prices and to successfully and timely complete and integrate them |
| * FPL Groupapstas ability to successfully complete and integrate the proposed merger between FPL Group and Constellation Energy is subject to certain risks and uncertainties including the ability to obtain governmental approvals of the transaction on the proposed terms, conditions and schedule; the failure of FPL Group or Constellation Energyapstas shareholders to approve the transaction; the risk that anticipated synergies will not be achieved or will take longer to achieve than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees, suppliers or governmental entities; unexpected transaction costs or liabilities; economic conditions; and other specific factors discussed in documents filed with the SEC by both FPL Group and Constellation Energy |
| These risks, as well as other risks associated with the merger, will be more fully discussed in the joint proxy statement/prospectus that will be included in the Registration Statement on Form S-4 that Constellation Energy will file with the SEC in connection with the proposed merger |
| Because FPL Group and FPL rely on access to capital markets, the inability to maintain current credit ratings and access capital markets on favorable terms may limit the ability of FPL Group and FPL to grow their businesses and would likely increase interest costs |
| * FPL Group and FPL rely on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows |
| The inability of FPL Group, FPL Group Capital and FPL to maintain their current credit ratings could affect their ability to raise capital on favorable terms, particularly during times of uncertainty in the capital markets, which, in turn, could impact FPL Groupapstas and FPLapstas ability to grow their businesses and would likely increase their interest costs |
| Customer growth in FPLapstas service area affects FPL Groupapstas results of operations |
| * FPL Groupapstas results of operations are affected by the growth in customer accounts in FPLapstas service area |
| Customer growth can be affected by population growth as well as economic factors in Florida, including job and income growth, housing starts and new home prices |
| Customer growth directly influences the demand for electricity and the need for additional power generation and power delivery facilities at FPL Weather affects FPL Groupapstas and FPLapstas results of operations |
| * FPL Groupapstas and FPLapstas results of operations are affected by changes in the weather |
| Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities, and can affect the production of electricity at wind and hydro-powered facilities |
| FPL Groupapstas and FPLapstas results of operations can be affected by the impact of severe weather which can be destructive, causing outages and/or property damage, may affect fuel supply, and could require additional costs to be incurred |
| FPL Group and FPL are subject to costs and other effects of legal proceedings as well as changes in or additions to applicable tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements |
| * FPL Group and FPL are subject to costs and other effects of legal and administrative proceedings, settlements, investigations and claims, as well as the effect of new, or changes in, tax laws, rates or policies, rates of inflation, accounting standards, securities laws and corporate governance requirements |
| Threats of terrorism and catastrophic events that could result from terrorism may impact the operations of FPL Group and FPL in unpredictable ways |
| * FPL Group and FPL are subject to direct and indirect effects of terrorist threats and activities |
| Generation and transmission facilities, in general, have been identified as potential targets |
| The effects of terrorist threats and activities include, among other things, terrorist actions or responses to such actions or threats, the inability to generate, purchase or transmit power, the risk of a significant slowdown in growth or a decline in the US economy, delay in economic recovery in the US, and the increased cost and adequacy of security and insurance |
| The ability of FPL Group and FPL to obtain insurance and the terms of any available insurance coverage could be affected by national, state or local events and company-specific events |
| * FPL Groupapstas and FPLapstas ability to obtain insurance, and the cost of and coverage provided by such insurance, could be affected by national, state or local events as well as company-specific events |
| FPL Group and FPL are subject to employee workforce factors that could affect the businesses and financial condition of FPL Group and FPL * FPL Group and FPL are subject to employee workforce factors, including loss or retirement of key executives, availability of qualified personnel, collective bargaining agreements with union employees and work stoppage that could affect the businesses and financial condition of FPL Group and FPL |