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Fair Value Measurement (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Financial assets and liabilities and other fair value measurements

NEE's and FPL's financial assets and liabilities and other fair value measurements made on a recurring basis by fair value hierarchy level are as follows:

	June 30, 2019
	Level 1				Level 2				Level 3				Netting(a)				Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(b)
NEE - equity securities	$	861			$	—			$	—							$	861
FPL - equity securities	$	209			$	—			$	—							$	209
Special use funds:(c)
NEE:
Equity securities	$	1,679			$	1,890		(d)	$	—							$	3,569
U.S. Government and municipal bonds	$	561			$	113			$	—							$	674
Corporate debt securities	$	—			$	747			$	—							$	747
Mortgage-backed securities	$	—			$	444			$	—							$	444
Other debt securities	$	—			$	157			$	—							$	157
FPL:
Equity securities	$	520			$	1,715		(d)	$	—							$	2,235
U.S. Government and municipal bonds	$	417			$	88			$	—							$	505
Corporate debt securities	$	—			$	534			$	—							$	534
Mortgage-backed securities	$	—			$	334			$	—							$	334
Other debt securities	$	—			$	133			$	—							$	133
Other investments:(e)
NEE:
Equity securities	$	18			$	12			$	—							$	30
Debt securities	$	106			$	68			$	—							$	174
Derivatives:
NEE:
Commodity contracts	$	1,296			$	2,088			$	1,768			$	(2,753	)		$	2,399		(f)
Interest rate contracts	$	—			$	14			$	—			$	(5	)		$	9		(f)
Foreign currency contracts	$	—			$	23			$	—			$	—			$	23		(f)
FPL - commodity contracts	$	—			$	7			$	1			$	(2	)		$	6		(f)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,493			$	1,709			$	392			$	(2,965	)		$	629		(f)
Interest rate contracts	$	—			$	429			$	145			$	(5	)		$	569		(f)
Foreign currency contracts	$	—			$	37			$	—			$	—			$	37		(f)
FPL - commodity contracts	$	—			$	5			$	14			$	(2	)		$	17		(f)

———————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.

(b) Includes restricted cash equivalents of approximately $92 million ($77 million for FPL) in current other assets and $90 million ($90 million for FPL) in noncurrent other assets on the condensed consolidated balance sheets.

(c) Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.

(d) Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.

(e) Included in noncurrent other assets in the condensed consolidated balance sheets.

(f) See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

	December 31, 2018
	Level 1				Level 2				Level 3				Netting(a)				Total
	(millions)
Assets:
Cash equivalents and restricted cash equivalents:(b)
NEE - equity securities	$	486			$	—			$	—							$	486
FPL - equity securities	$	206			$	—			$	—							$	206
Special use funds:(c)
NEE:
Equity securities	$	1,445			$	1,601		(d)	$	—							$	3,046
U.S. Government and municipal bonds	$	449			$	155			$	—							$	604
Corporate debt securities	$	—			$	728			$	—							$	728
Mortgage-backed securities	$	—			$	478			$	—							$	478
Other debt securities	$	—			$	145			$	1							$	146
FPL:
Equity securities	$	398			$	1,452		(d)	$	—							$	1,850
U.S. Government and municipal bonds	$	350			$	120			$	—							$	470
Corporate debt securities	$	—			$	544			$	—							$	544
Mortgage-backed securities	$	—			$	367			$	—							$	367
Other debt securities	$	—			$	131			$	1							$	132
Other investments:(e)
NEE:
Equity securities	$	13			$	11			$	—							$	24
Debt securities	$	36			$	90			$	—							$	126
Derivatives:
NEE:
Commodity contracts	$	1,379			$	1,923			$	1,349			$	(2,811	)		$	1,840		(f)
Interest rate contracts	$	—			$	56			$	—			$	(7	)		$	49		(f)
Foreign currency contracts	$	—			$	17			$	—			$	13			$	30		(f)
FPL - commodity contracts	$	—			$	2			$	—			$	(2	)		$	—		(f)
Liabilities:
Derivatives:
NEE:
Commodity contracts	$	1,329			$	1,410			$	566			$	(2,622	)		$	683		(f)
Interest rate contracts	$	—			$	336			$	136			$	(7	)		$	465		(f)
Foreign currency contracts	$	—			$	30			$	—			$	13			$	43		(f)
FPL - commodity contracts	$	—			$	7			$	36			$	(2	)		$	41		(f)

———————————————

(a) Includes the effect of the contractual ability to settle contracts under master netting arrangements and the netting of margin cash collateral payments and receipts. NEE and FPL also have contract settlement receivable and payable balances that are subject to the master netting arrangements but are not offset within the condensed consolidated balance sheets and are recorded in customer receivables - net and accounts payable, respectively.

(b) Includes restricted cash equivalents of approximately $85 million ($81 million for FPL) in current other assets on the condensed consolidated balance sheets.

(c) Excludes investments accounted for under the equity method and loans not measured at fair value on a recurring basis. See Fair Value of Financial Instruments Recorded at Other than Fair Value below.

(d) Primarily invested in commingled funds whose underlying securities would be Level 1 if those securities were held directly by NEE or FPL.

(e) Included in noncurrent other assets in the condensed consolidated balance sheets.

(f)

See Note 4 - Fair Value of Derivative Instruments for a reconciliation of net derivatives to NEE's and FPL's condensed consolidated balance sheets.

Significant unobservable inputs used in valuation of contracts categorized as Level 3

The significant unobservable inputs used in the valuation of NEE's commodity contracts categorized as Level 3 of the fair value hierarchy at June 30, 2019 are as follows:

		Fair Value at								Valuation		Significant
Transaction Type		June 30, 2019								Technique(s)		Unobservable Inputs		Range
		Assets				Liabilities
		(millions)
Forward contracts - power		$	936			$	172			Discounted cash flow		Forward price (per MWh)		$(21)	—	$241
Forward contracts - gas		97				27				Discounted cash flow		Forward price (per MMBtu)		$1	—	$7
Forward contracts - other commodity related		3				2				Discounted cash flow		Forward price (various)		$1	—	$64
Options - power		42				14				Option models		Implied correlations		1%	—	100%
												Implied volatilities		6%	—	498%
Options - primarily gas		132				138				Option models		Implied correlations		1%	—	100%
												Implied volatilities		1%	—	198%
Full requirements and unit contingent contracts		558				39				Discounted cash flow		Forward price (per MWh)		$(50)	—	$409
												Customer migration rate(a)		—%	—	20%
Total		$	1,768			$	392

———————————————

(a)

Applies only to full requirements contracts.

Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation

The sensitivity of NEE's fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:

Significant Unobservable Input		Position		Impact on Fair Value Measurement
Forward price		Purchase power/gas		Increase (decrease)
		Sell power/gas		Decrease (increase)
Implied correlations		Purchase option		Decrease (increase)
		Sell option		Increase (decrease)
Implied volatilities		Purchase option		Increase (decrease)
		Sell option		Decrease (increase)
Customer migration rate		Sell power(a)		Decrease (increase)

———————————————

(a)

Assumes the contract is in a gain position.

Reconciliation of changes in the fair value measured based on significant unobservable inputs

The reconciliation of changes in the fair value of derivatives that are based on significant unobservable inputs is as follows:

	Three Months Ended June 30,
	2019								2018
	NEE				FPL				NEE				FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at March 31	$	844			$	(16	)		$	625			$	(2	)
Realized and unrealized gains (losses):
Included in earnings(a)	513				—				37				—
Included in other comprehensive income (loss)(b)	(2		)		—				7				—
Included in regulatory assets and liabilities	1				1				2				2
Purchases	43				—				61				—
Settlements	(81		)		2				(55		)		(1		)
Issuances	(37		)		—				(28		)		—
Transfers in(c)	—				—				1				1
Transfers out(c)	(50		)		—				—				—
Fair value of net derivatives based on significant unobservable inputs at June 30	$	1,231			$	(13	)		$	650			$	—
Gains (losses) included in earnings attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date(d)	$	487			$	—			$	57			$	—

———————————————

(a) For the three months ended June 30, 2019 and 2018, realized and unrealized gains of approximately $509 million and $44 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.

(b) Included in net unrealized gains (losses) on foreign currency translation in the condensed consolidated statements of comprehensive income.

(c) Transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.

(d) For the three months ended June 30, 2019 and 2018, unrealized gains of approximately $482 million and $64 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.

	Six Months Ended June 30,
	2019								2018
	NEE				FPL				NEE				FPL
	(millions)
Fair value of net derivatives based on significant unobservable inputs at December 31 of prior period	$	647			$	(36	)		$	566			$	—
Realized and unrealized gains (losses):
Included in earnings(a)	692				—				52				—
Included in other comprehensive income (loss)(b)	1				—				4				—
Included in regulatory assets and liabilities	(1		)		(1		)		—				—
Purchases	67				—				103				—
Settlements	(119		)		22				(7		)		(1		)
Issuances	(51		)		—				(61		)		—
Impact of adoption of revenue standard	—				—				(30		)		—
Transfers in(c)	—				—				1				1
Transfers out(c)	(5		)		2				22				—
Fair value of net derivatives based on significant unobservable inputs at June 30	$	1,231			$	(13	)		$	650			$	—
Gains (losses) included in earnings attributable to the change in unrealized gains (losses) relating to derivatives held at the reporting date(d)	$	568			$	—			$	38			$	—

———————————————

(a) For the six months ended June 30, 2019 and 2018, realized and unrealized gains of approximately $703 million and $71 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.

(b) Included in net unrealized gains (losses) on foreign currency translation in the condensed consolidated statements of comprehensive income.

(c) Transfers into Level 3 were a result of decreased observability of market data and transfers from Level 3 to Level 2 were a result of increased observability of market data. NEE's and FPL's policy is to recognize all transfers at the beginning of the reporting period.

(d)

For the six months ended June 30, 2019 and 2018, unrealized gains of approximately $578 million and $57 million, respectively, are included in the condensed consolidated statements of income in operating revenues and the balance is included in interest expense.

Fair Value, by Balance Sheet Grouping

The carrying amounts of commercial paper and other short-term debt approximate their fair values. The carrying amounts and estimated fair values of other financial instruments recorded at other than fair value are as follows:

	June 30, 2019								December 31, 2018
	Carrying Amount				Estimated Fair Value				Carrying Amount				Estimated Fair Value
	(millions)
NEE:
Special use funds(a)	$	956			$	955			$	884			$	883
Other investments(b)	$	31			$	31			$	54			$	54
Long-term debt, including current portion	$	36,620			$	39,158		(c)	$	29,498			$	30,043		(c)
FPL:
Special use funds(a)	$	766			$	765			$	693			$	692
Long-term debt, including current portion	$	13,420			$	15,246		(c)	$	11,783			$	12,613		(c)

———————————————

(a) Primarily represents investments accounted for under the equity method and loans not measured at fair value on a recurring basis (Level 2).

(b) Included in noncurrent other assets in the condensed consolidated balance sheets.

(c)

At June 30, 2019 and December 31, 2018, substantially all is Level 2 for NEE and all is Level 2 for FPL.

Gains and Losses on Available-for-sale Debt Securities

Realized gains and losses and proceeds from the sale or maturity of available for sale securities are as follows:

	NEE																FPL
	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended June 30,								Six Months Ended June 30,
	2019				2018				2019				2018				2019				2018				2019				2018
	(millions)
Realized gains	$	17			$	20			$	25			$	28			$	9			$	15			$	15			$	20
Realized losses	$	11			$	26			$	20			$	40			$	5			$	20			$	9			$	29
Proceeds from sale or maturity of securities	$	788			$	719			$	1,475			$	1,313			$	685			$	653			$	1,227			$	1,042

The unrealized gains and unrealized losses on available for sale debt securities and the fair value of available for sale debt securities in an unrealized loss position are as follows:

	NEE								FPL
	June 30, 2019				December 31, 2018				June 30, 2019				December 31, 2018
	(millions)
Unrealized gains	$	69			$	14			$	53			$	11
Unrealized losses(a)	$	11			$	52			$	8			$	41
Fair value	$	284			$	1,273			$	205			$	961

———————————————

(a)

Unrealized losses on available for sale debt securities in an unrealized loss position for greater than twelve months at June 30, 2019 and December 31, 2018 were not material to NEE or FPL.

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Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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