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NextEra sunshine-state business radiates heat in 4Q14

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FPL’S EPS contribution

NextEra Energy’s (NEE) Florida operations are headed by its subsidiary, Florida Light & Power, or FPL. FPL contributed $0.65 per share to NextEra’s earnings in 4Q14. FPL’s EPS (earnings per share) in the quarter was up $0.08 per share, or 14% from the same quarter last year.

On a full-year basis, FPL also did well in 2014. NextEra’s EPS from FPL’s operation grew by more than 9% year-over-year in 2014. FPL’s annual contribution to NextEra’s earnings was $3.45 per share compared to $3.16 in fiscal 2013.

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Factors contributing to growth

FPL’s heavy investments in its operations were a major driver for fiscal 2014 earnings growth. New investments boosted earnings by $0.03 per share in 4Q14 over 4Q13, while for the full year, it added earnings of $0.15 per share compared to fiscal 2013.

Power companies operating in the regulated regions of the US earn a nominal rate of return from their total investments in the territories. The profits are set by state regulatory bodies though a process called ratemaking. So, higher investments in regulated businesses lead to earnings growth for power companies.

In fiscal 2014, FPL pumped in $29.3 billion of regulatory capital as opposed to $27.7 billion in 2013. This translates to a year-over-yea rise of 5.8%.

Among the companies that are part of the Utilities Select Sector Fund (XLU), Exelon Corporation (EXC), Duke Energy (DUK), and Southern Company (SO) made the highest capital expenditures in the last year.

Besides new investments, FPL’s wholesale operations contributed to its EPS growth in fiscal 2014. Earnings from FPL’s wholesale operations increased by $0.11 per share in fiscal 2014 compared to fiscal 2013.

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