NEXTERA ENERGY PARTNERS LP
For the period ended Jun 30, 2024. Filed Jul 24, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 24, 2024
XIFR$7.32+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-23.
0001603145-24-000010
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-24.
0001603145-24-000016
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 66 previous paragraphs and 91 current paragraphs.
43 unchanged; 18 reworded; 27 added; 4 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
Operating revenues increased $67 million for the three months ended June 30, 2024. The increase primarily reflects higher revenues of approximately $37 million associated with the renewable energy projects acquired in 2023, $25 million due to favorable wind resource (103% of long-term average wind speeds in 2024 compared to 88% in 2023) and $12 million resulting from an amendment to a derivative contract, partly offset by a $6 million decrease relating to lower solar generation.
Current report
O&M expenses increased $16 million during the three months ended June 30, 2024 primarily reflecting approximately $9 million of higher operating costs and $7 million related to the renewable energy projects acquired in 2023.
Current report
The increase in interest expense of $42 million during the three months ended June 30, 2024 primarily reflects higher interest expense due to increased average debt outstanding and $21 million of unfavorable mark-to-market activity ($28 million of gains recorded in 2024 compared to $49 million of gains in 2023).
Current report
Equity in earnings of non-economic ownership interests decreased $10 million during the three months ended June 30, 2024 primarily relating to debt payoff and related swap settlements and loss on extinguishment of the debt.
Current report
Other – net
Current report
For the three months ended June 30, 2024, the change in other – net primarily reflects interest income of approximately $15 million due from NEER for cash sweep amounts held relating to proceeds from the sale of the Texas pipelines (see Note 2).
Current report
For the three months ended June 30, 2024, NEP recorded income tax expense of $21 million on income from continuing operations before income taxes of $79 million, resulting in an effective tax rate of 27%. The tax expense is comprised primarily of income tax expense of approximately $17 million at the statutory rate of 21% and $12 million attributable to noncontrolling interests, partly offset by income tax benefit of $9 million attributable to PTCs.
Current report
For the three months ended June 30, 2023, NEP recorded income tax expense of $16 million on income from continuing operations before income taxes of $72 million, resulting in an effective tax rate of 22%. The tax expense is comprised primarily of income tax expense of approximately $15 million at the statutory rate of 21%, $4 million of state taxes and $4 million attributable to noncontrolling interests, partly offset by income tax benefits of $7 million attributable to PTCs.
Current report
Net Loss (Income) Attributable to Noncontrolling Interests
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Operating Revenues
Current report
Operating Expenses
Current report
Operations and Maintenance
Current report
Depreciation and Amortization
Current report
Other Income (Deductions)
Current report
Interest Expense
Current report
Other – net
Current report
For the six months ended June 30, 2024, the change in other – net primarily reflects interest income of approximately $34 million due from NEER for cash sweep amounts held relating to proceeds from the sale of the Texas pipelines (see Note 2).
Current report
Income Taxes
Current report
For the six months ended June 30, 2024, NEP recorded income tax expense of $8 million on income from continuing operations before income taxes of $100 million, resulting in an effective tax rate of 8%. The tax expense is comprised primarily of income tax expense of approximately $21 million at the statutory rate of 21%, partly offset by income tax benefit of $16 million attributable to PTCs.
Current report
Income from Discontinued Operations
Current report
Net Loss (Income) Attributable to Noncontrolling Interests
Current report
(b) In July 2024, NEP OpCo repaid $700 million principal amount of 4.25% senior unsecured notes.
Current report
Equity Arrangements
Current report
During the three months ended June 30, 2024, NEP exercised its buyout right and purchased 15% of the originally issued Class B membership interests in NEP Renewables II. See Note 9 – Class B Noncontrolling Interests.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Net Cash Provided by (Used in) Investing Activities
Removed paragraphs (4)
Previous report
Equity in earnings (losses) of non-economic ownership interests increased $12 million during the three months ended March 31, 2024 primarily reflecting favorable mark-to-market activity on interest rate swaps in 2024.
Previous report
For the three months ended March 31, 2023, NEP recorded income tax benefit of $36 million on loss from continuing operations before income taxes of $218 million, resulting in an effective tax rate of 17%. The tax benefit is comprised primarily of income tax benefit of approximately $46 million at the statutory rate of 21%, $7 million attributable to PTCs and $6 million of state taxes, partly offset by income tax expense of $22 million attributable to noncontrolling interests.
Previous report
Net Loss Attributable to Noncontrolling Interests
Previous report
Net Cash Provided by Investing Activities
Reworded paragraphs (18)
Previous wording
Operating revenues primarily consist of income from the sale of energy under NEP's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Wind resource levels, weather conditions and the performance of NEP's renewable energy portfolio represent significant factors that could affect its operating results because these variables impact energy sales. NEP utilizes the wind production index to determine the favorability of wind resource levels. The wind production index represents a measure of the actual wind speeds available for energy production for a stated period relative to long-term average wind speeds. NEP compares the actual wind speeds observed at each wind facility applied to turbine-specific power curves to produce the estimated MWh production for a stated period to the estimated long-term average wind speeds at each wind facility applied to the same turbine-specific power curves to produce the long-term average MWh production which results in the current period wind production index to determine the favorability of wind resource for the stated period.
Current wording
Operating revenues primarily consist of income from the sale of energy under NEP's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs. Wind resource levels, weather conditions and the performance of NEP's renewable energy portfolio represent significant factors that could affect NEP's operating results because these variables impact energy sales. NEP utilizes the wind production index to determine the impact of wind resource levels. The wind production index represents a measure of the actual wind speeds available for energy production for a stated period relative to long-term average wind speeds. NEP compares the actual wind speeds observed at each wind facility applied to turbine-specific power curves to produce the estimated MWh production for a stated period to the estimated long-term average wind speeds at each wind facility applied to the same turbine-specific power curves to produce the long-term average MWh production which results in the current period wind production index to determine the impact of wind resource for the stated period.
Previous wording
Depreciation and amortization expense increased $13 million during the three months ended March 31, 2024 primarily reflecting depreciation and amortization associated with the renewable energy projects acquired in 2023.
Current wording
Depreciation and amortization expense increased $12 million during the three months ended June 30, 2024 primarily reflecting depreciation and amortization associated with the renewable energy projects acquired or placed in service in 2023.
Previous wording
Equity in Earnings (Losses) of Non-Economic Ownership Interests
Current wording
Equity in Earnings of Non-Economic Ownership Interests
Previous wording
For the three months ended March 31, 2024, the change in net loss attributable to noncontrolling interests primarily reflects a higher net income allocation of approximately $122 million to NEE Equity's noncontrolling interest in 2024 compared to 2023, partly offset by $11 million of lower net income allocation to Class B noncontrolling interest investors due to buyouts in 2023 and $10 million higher net loss allocation to differential membership investors resulting from the renewable energy projects acquired in 2023. See Note 11 – Noncontrolling Interests.
Current wording
For the three months ended June 30, 2024, the change in net loss (income) attributable to noncontrolling interests primarily reflects a higher net loss allocation of approximately $61 million to differential membership investors resulting from higher PTCs, a lower net income allocation of $5 million to Class B noncontrolling interest investors primarily due to buyouts in 2023 and lower net income of $5 million from non-economic ownership interests, partly offset by higher net income allocation of $27 million to NEE Equity's noncontrolling interest in 2024 compared to 2023. See Note 11 – Noncontrolling Interests.
Previous wording
Operating revenues increased $12 million for the three months ended March 31, 2024. The increase primarily reflects higher revenues of approximately $22 million associated with the renewable energy projects acquired or placed in service in 2023, partly offset by lower revenues of $10 million primarily due to unfavorable wind resource (97% of long-term average wind speeds in 2024 compared to 102% in 2023).
Current wording
Operating revenues increased $80 million for the six months ended June 30, 2024. The increase primarily reflects higher revenues of approximately $60 million associated with the renewable energy projects acquired or placed in service in 2023 and higher revenues of $17 million primarily due to favorable wind resource (100% of long-term average wind speeds in 2024 compared to 95% in 2023).
Previous wording
O&M expenses decreased $23 million during the three months ended March 31, 2024 primarily reflecting lower corporate operating expenses of approximately $44 million primarily relating to the suspension of the IDR fee in May 2023, partly offset by higher net operating expenses at the existing NEP projects of $14 million and higher O&M expenses of $6 million associated with the renewable energy projects acquired in 2023.
Current wording
O&M expenses decreased $8 million during the six months ended June 30, 2024 primarily reflecting lower corporate operating expenses of approximately $44 million primarily relating to the suspension of the IDR fee in May 2023, partly offset by $22 million of higher operating costs and $14 million related to the renewable energy projects acquired in 2023.
Previous wording
The decrease in interest expense of $193 million during the three months ended March 31, 2024 primarily reflects approximately $212 million of favorable mark-to-market activity ($51 million of gains recorded in 2024 compared to $161 million of losses in 2023).
Current wording
The decrease in interest expense of $151 million during the six months ended June 30, 2024 primarily reflects approximately $197 million of favorable mark-to-market activity ($97 million of gains recorded in 2024 compared to $100 million of losses in 2023), partly offset by higher interest expense due to increased average debt outstanding.
Previous wording
For the three months ended March 31, 2024, NEP recorded income tax benefit of $13 million on income from continuing operations before income taxes of $22 million, resulting in an effective tax rate of (59)%. The tax benefit is comprised primarily of income tax benefit of approximately $11 million attributable to noncontrolling interests and $8 million attributable to PTCs, partly offset by income tax expense of $5 million at the statutory rate of 21%.
Current wording
For the six months ended June 30, 2023, NEP recorded income tax benefit of $20 million on loss from continuing operations before income taxes of $146 million, resulting in an effective tax rate of 14%. The tax benefit is comprised primarily of income tax benefit of approximately $31 million at the statutory rate of 21% and $14 million attributable to PTCs, partly offset by income tax expense of $26 million attributable to noncontrolling interests.
Previous wording
NEP’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 10, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 8 and Note 4), distributions to common unitholders and distributions to the holders of noncontrolling interests. NEP expects to satisfy these requirements primarily with cash on hand and cash generated from operations. In addition, as a growth-oriented limited partnership, NEP expects from time to time to make acquisitions (see Note 1), including in connection with the exercise of buyout rights (see Note 11 – Noncontrolling Interests), and other investments. These acquisitions and investments are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness, issuances of additional NEP common units, including under its ATM program, or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures (see Note 2). NEP may also utilize non-voting common units (convertible into common units) to fund the payment of specified portions of the purchase price payable in connection with the exercise of certain buyout rights (see Note 11 – Noncontrolling Interests). In addition, NEP expects to fund debt maturities through refinancing. NEP may, but does not expect to, issue common units to satisfy NEP's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion.
Current wording
NEP’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 10, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 8 and Note 4), distributions to common unitholders and distributions to the holders of noncontrolling interests. NEP expects to satisfy these requirements primarily with cash on hand and cash generated from operations. In addition, as a growth-oriented limited partnership, NEP expects from time to time to make acquisitions (see Note 1), including in connection with the exercise of buyout rights (see Note 9 – Class B Noncontrolling Interests and Note 11 – Noncontrolling Interests), and other investments. These acquisitions and investments are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness, issuances of additional NEP common units, including under its ATM program, or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures (see Note 2). NEP may also utilize non-voting common units (convertible into common units) to fund the payment of specified portions of the purchase price payable in connection with the exercise of certain buyout rights (see Note 11 – Noncontrolling Interests). In addition, NEP expects to fund debt maturities through refinancing. NEP may, but does not expect to, issue common units to satisfy NEP's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion.
Previous wording
At March 31, 2024, NEP's liquidity position was approximately $4,138 million. The table below provides the components of NEP’s liquidity position:
Current wording
At June 30, 2024, NEP's liquidity position was approximately $3,412 million. The table below provides the components of NEP’s liquidity position:
Previous wording
(a) Approximately $50 million of the NEP OpCo credit facility expires in 2025 and an additional $50 million expires in 2028.
Current wording
(a) Approximately $50 million of the NEP OpCo credit facility expires in 2025 and an additional $50 million expires in 2028. In July 2024, $50 million was drawn under the NEP OpCo credit facility.
Previous wording
Annual capital spending plans are developed based on projected requirements for the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including construction expenditures that are expected to increase NEP OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the three months ended March 31, 2024 and 2023, NEP had capital expenditures of approximately $64 million and $401 million, respectively. The 2023 capital expenditures primarily relate to the assets acquired from NEER in December 2022 which were acquired under construction or had recently been placed in service. Such expenditures were reimbursed by NEER as contemplated in the acquisition. Estimates of planned capital expenditures, including those relating to expected wind turbine repowerings, are subject to continuing review and adjustments and actual capital expenditures may vary significantly from these estimates.
Current wording
Annual capital spending plans are developed based on projected requirements for the projects. Capital expenditures primarily represent the estimated cost of capital improvements, including construction expenditures that are expected to increase NEP OpCo’s operating income or operating capacity over the long term. Capital expenditures for projects that have already commenced commercial operations are generally not significant because most expenditures relate to repairs and maintenance and are expensed when incurred. For the six months ended June 30, 2024 and 2023, NEP had capital expenditures of approximately $133 million and $807 million, respectively. The 2023 capital expenditures primarily relate to the assets acquired from NEER in December 2022 which were acquired under construction or had recently been placed in service. Such expenditures were reimbursed by NEER as contemplated in the acquisition. Estimates of planned capital expenditures, including those relating to expected wind turbine repowerings, are subject to continuing review and adjustments and actual capital expenditures may vary significantly from these estimates.
Previous wording
During the three months ended March 31, 2024, NEP distributed approximately $82 million to its common unitholders. On April 22, 2024, the board of directors of NEP authorized a distribution of $0.8925 per common unit payable on May 15, 2024 to its common unitholders of record on May 7, 2024.
Current wording
During the six months ended June 30, 2024, NEP distributed approximately $166 million to its common unitholders. On July 23, 2024, the board of directors of NEP authorized a distribution of $0.9050 per common unit payable on August 14, 2024 to its common unitholders of record on August 6, 2024.
Previous wording
The decrease in net cash provided by operating activities was primarily driven by the timing of transactions impacting working capital, partly offset by higher operating cash flows from new projects and lower corporate O&M expenses due to the suspension of the IDR fee.
Current wording
The increase in net cash provided by operating activities was primarily driven by higher operating cash flows from the renewable energy projects acquired in 2023 and lower corporate O&M expenses due to the suspension of the IDR fee, partly offset by the timing of transactions impacting working capital.
Previous wording
The change in net cash provided by investing activities was primarily driven by lower payments received from NEER subsidiaries (net of amounts paid) under the CSCS agreement, partly offset by the absence of payments to acquire membership interests in subsidiaries.
Current wording
The change in net cash provided by (used in) investing activities was primarily driven by the absence of payments to acquire membership interests in subsidiaries and higher payments received from NEER subsidiaries (net of amounts paid) under the CSCS agreement, partly offset by the absence of proceeds from sale of a business.
Previous wording
Net Cash Used in Financing Activities
Current wording
Net Cash Provided by (Used in) Financing Activities
Previous wording
The change in net cash used in financing activities primarily reflects the absence of buyouts of Class B noncontrolling interests (see Note 11 – Noncontrolling Interests), higher proceeds related to differential membership interests and lower payments to Class B noncontrolling interests, partly offset by lower proceeds related to the issuance of common units– net and lower proceeds from issuances of long-term debt – net.
Current wording
The change in net cash provided by (used in) financing activities primarily reflects retirements of long-term debt in 2024 compared to issuances of long-term debt in 2023 and lower proceeds related to the issuance of common units– net, partly offset by lower payments to buy out Class B noncontrolling interest investors and proceeds related to differential membership interests in 2024 compared to payments to differential membership interests in 2023.
Previous wording
NEP has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At March 31, 2024, approximately 99% of the long-term debt, including current maturities, was not exposed to fluctuations in interest expense as it was either fixed rate debt or financially hedged. At March 31, 2024, the estimated fair value of NEP's long-term debt was approximately $6.1 billion and the carrying value of the long-term debt was $6.3 billion. See Note 5 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of NEP's long-term debt would increase by approximately $55 million at March 31, 2024.
Current wording
NEP has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. At June 30, 2024, approximately 98% of the long-term debt, including current maturities, was not exposed to fluctuations in interest expense as it was either fixed rate debt or financially hedged. At June 30, 2024, the estimated fair value of NEP's long-term debt was approximately $5.6 billion and the carrying value of the long-term debt was $5.8 billion. See Note 5 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of NEP's long-term debt would increase by approximately $48 million at June 30, 2024.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Depreciation and amortization expense increased $25 million during the six months ended June 30, 2024 primarily reflecting depreciation and amortization associated with the renewable energy projects acquired or placed in service in 2023.
Current report — wording carried from elsewhere
Income from discontinued operations reflects the operations of the Texas pipelines prior to the sale in December 2023. See Note 2.
Current report — wording carried from elsewhere
For the six months ended June 30, 2024, the change in net loss (income) attributable to noncontrolling interests primarily reflects a higher net income allocation of approximately $144 million to NEE Equity's noncontrolling interest in 2024 compared to 2023, partly offset by a higher net loss allocation of $49 million to differential membership investors resulting from higher PTCs due to favorable wind resource, a higher net loss allocation of $21 million to differential membership investors resulting from the renewable energy projects acquired in 2023 and $16 million of lower net income allocation to Class B noncontrolling interest investors primarily due to buyouts in 2023. See Note 11 – Noncontrolling Interests.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023