- Extends 12% to 15% annualized distribution per unit growth
expectations for one year, through 2025
- Announces agreement with NextEra Energy to modify the
partnership's incentive distribution rights fees
- Increases year-end 2022 run-rate adjusted EBITDA expectations
and cash available for distribution expectations
JUNO
BEACH, Fla., June 14,
2022 /PRNewswire/ -- As previously announced, NextEra
Energy Partners, LP (NYSE: NEP) will host an investor conference
from 8:30 a.m. to 12:30 p.m. ET
today, June 14, in New York City. The members of the senior
management team plan to discuss, among other things, that NextEra
Energy Partners is extending its expectation that annualized
limited partner distributions per unit will grow about 12% to 15%
per year through at least 2025 from a base of NextEra Energy
Partners' fourth-quarter 2021 distribution per common unit at an
annualized rate of $2.83, subject to
the usual caveats.
NextEra Energy Partners is announcing that it has entered into a
third amended and restated management services agreement with an
indirect wholly owned subsidiary of NextEra Energy, Inc. (NYSE:
NEE) to structurally modify the partnership's incentive
distribution rights (IDR) fees, whereby fees will be flattened at
approximately $157 million per year.
Beginning in the third quarter of 2022, NextEra Energy will receive
a fixed fee of approximately $157
million, with no incremental IDRs on distribution per unit
growth above an annualized rate of $3.05 per common unit. The approximately
$157 million fee is predicated on
NextEra Energy Partners delivering limited
partner distributions at an annualized rate of at least
$3.05 per common unit to all
unitholders. If annualized limited partner distributions are
below $3.05 per common unit, then the
existing fee structure shall apply. The changes to the IDR fees are
expected to provide more cash available to limited partner
unitholders, require fewer asset additions to achieve growth
objectives, extend NextEra Energy Partners' distribution growth
runway and provide the partnership with more flexibility to finance
its growth over the coming years.
In addition, NextEra Energy Partners is increasing its year-end
2022 run-rate adjusted EBITDA expectations and cash available for
distribution (CAFD) expectations to be in the ranges of
approximately $1,785 million to
$1,985 million and $685 million to $775
million, respectively, reflecting calendar year 2023
expectations for the forecasted portfolio as of Dec. 31, 2022. These expectations are subject to
the usual caveats and include the impact of IDR fees, as these fees
are treated as an operating expense.
Beginning at 8 a.m. ET today, investors and other
interested parties will be able to access the presentation
materials at www.NextEraEnergyPartners.com. A live audio
webcast will be available on the previously named site beginning
at 8:30 a.m. ET. For those unable to listen to the live
webcast, a replay will be available for 30 days by accessing the
same links as listed above.
Adjusted EBITDA expectations represent projected (a) revenue
less (b) fuel expense, less (c) project operating expenses, less
(d) corporate G&A, plus (e) other income less (f) other
deductions including IDR fees. Projected revenue as used in the
calculations of projected EBITDA represents the sum of projected
(a) operating revenues plus (b) a pre-tax allocation of production
tax credits, plus (c) a pre-tax allocation of investment tax
credits, plus (d) earnings impact from convertible investment tax
credits, plus (e) the reimbursement for lost revenue received
pursuant to a contract with a subsidiary of NextEra Energy. CAFD
represents adjusted EBITDA less (1) a pre-tax allocation of
production tax credits, less (2) a pre-tax allocation of investment
tax credits, less (3) earnings impact from convertible investment
tax credits, less (4) debt service, less (5) maintenance capital,
less (6) income tax payments less, (7) other non-cash items
included in adjusted EBITDA if any. CAFD excludes changes in
working capital and distributions to preferred equity
investors.
Adjusted EBITDA, CAFD and limited partner distributions and
other expectations assume, among other things, normal weather and
operating conditions, positive macroeconomic conditions in the
U.S., public policy support for wind and solar development and
construction, market demand and transmission expansion support for
wind and solar development, market demand for pipeline capacity,
access to capital at reasonable cost and terms, and no changes to
governmental policies or incentives. NextEra Energy Partners'
adjusted EBITDA, CAFD and distributions and other expectations
should be viewed in conjunction with NextEra Energy Partners
cautionary statements and risk factors set forth below. The
adjusted EBITDA and CAFD run-rate expectations have not been
reconciled to expected net income because NextEra Energy Partners'
net income includes unrealized mark-to-market gains and losses
related to derivative transactions, which cannot be determined at
this time. NextEra Energy Partners' management uses adjusted EBITDA
and CAFD, which are non-GAAP financial measures, internally for
financial planning, analysis of performance and reporting of
results to the board of directors. NextEra Energy Partners also
uses these measures when communicating its financial results and
earnings outlook to analysts and investors.
NextEra Energy Partners,
LP
NextEra Energy Partners, LP (NYSE: NEP) is a
growth-oriented limited partnership formed by NextEra Energy,
Inc. (NYSE: NEE). NextEra Energy Partners acquires,
manages and owns contracted clean energy projects with stable,
long-term cash flows. Headquartered in Juno Beach,
Florida, NextEra Energy Partners owns interests in
geographically diverse wind, solar and energy storage projects in
the U.S. as well as natural gas infrastructure assets
in Texas and Pennsylvania. For more information
about NextEra Energy Partners, please visit:
www.NextEraEnergyPartners.com.
Cautionary Statements and Risk
Factors That May Affect Future Results
This news release contains "forward-looking statements" within
the meaning of the federal securities laws. Forward-looking
statements are not statements of historical facts, but instead
represent the current expectations of NextEra Energy Partners, LP
(together with its subsidiaries, NEP) regarding future operating
results and other future events, many of which, by their nature,
are inherently uncertain and outside of NEP's control.
Forward-looking statements in this news release include, among
others, statements concerning adjusted EBITDA, cash available for
distribution (CAFD) and unit distribution expectations, as well as
statements concerning NEP's future operating performance, financing
needs and results of acquisitions. In some cases, you can identify
the forward-looking statements by words or phrases such as "will,"
"may result," "expect," "anticipate," "believe," "intend," "plan,"
"seek," "aim," "potential," "projection," "forecast," "predict,"
"goals," "target," "outlook," "should," "would" or similar words or
expressions. You should not place undue reliance on these
forward-looking statements, which are not a guarantee of future
performance. The future results of NEP and its business and
financial condition are subject to risks and uncertainties that
could cause NEP's actual results to differ materially from those
expressed or implied in the forward-looking statements. These risks
and uncertainties could require NEP to limit or eliminate certain
operations. These risks and uncertainties include, but are not
limited to, the following: NEP's ability to make cash distributions
to its unitholders is affected by wind and solar conditions at its
renewable energy projects; operation and maintenance of renewable
energy projects and pipelines involve significant risks that could
result in unplanned power outages, reduced output or capacity,
personal injury or loss of life; NEP's business, financial
condition, results of operations and prospects can be materially
adversely affected by weather conditions, including, but not
limited to, the impact of severe weather; NEP depends on certain of
the renewable energy projects and pipelines in its portfolio for a
substantial portion of its anticipated cash flows; NEP may pursue
the repowering of wind projects or the expansion of natural gas
pipelines that would require up-front capital expenditures and
could expose NEP to project development risks; terrorist acts,
cyberattacks or other similar events could impact NEP's projects,
pipelines or surrounding areas and adversely affect its business;
the ability of NEP to obtain insurance and the terms of any
available insurance coverage could be materially adversely affected
by international, national, state or local events and
company-specific events, as well as the financial condition of
insurers. NEP's insurance coverage does not provide protection
against all significant losses; NEP relies on interconnection,
transmission and other pipeline facilities of third parties to
deliver energy from its renewable energy projects and to transport
natural gas to and from its pipelines. If these facilities become
unavailable, NEP's projects and pipelines may not be able to
operate or deliver energy or may become partially or fully
unavailable to transport natural gas; NEP's business is subject to
liabilities and operating restrictions arising from environmental,
health and safety laws and regulations, compliance with which may
require significant capital expenditures, increase NEP's cost of
operations and affect or limit its business plans; NEP's renewable
energy projects or pipelines may be adversely affected by
legislative changes or a failure to comply with applicable energy
and pipeline regulations; Petroleos Mexicanos (Pemex) may claim
certain immunities under the Foreign Sovereign Immunities Act and
Mexican law, and the Texas
pipeline entities' ability to sue or recover from Pemex for breach
of contract may be limited and may be exacerbated if there is a
deterioration in the economic relationship between the U.S. and
Mexico; NEP does not own all of
the land on which the projects 3 in its portfolio are located and
its use and enjoyment of the property may be adversely affected to
the extent that there are any lienholders or land rights holders
that have rights that are superior to NEP's rights or the U.S.
Bureau of Land Management suspends its federal rights-of-way
grants; NEP is subject to risks associated with litigation or
administrative proceedings that could materially impact its
operations, including, but not limited to, proceedings related to
projects it acquires in the future; NEP's operations require NEP to
comply with anti-corruption laws and regulations of the U.S.
government and Mexico; NEP is
subject to risks associated with its ownership interests in
projects that are under construction, which could result in its
inability to complete construction projects on time or at all, and
make projects too expensive to complete or cause the return on an
investment to be less than expected; NEP relies on a limited number
of customers and is exposed to the risk that they may be unwilling
or unable to fulfill their contractual obligations to NEP or that
they otherwise terminate their agreements with NEP; NEP may not be
able to extend, renew or replace expiring or terminated power
purchase agreements (PPA), natural gas transportation agreements or
other customer contracts at favorable rates or on a long-term
basis; if the energy production by or availability of NEP's
renewable energy projects is less than expected, they may not be
able to satisfy minimum production or availability obligations
under their PPAs; NEP's growth strategy depends on locating and
acquiring interests in additional projects consistent with its
business strategy at favorable prices; reductions in demand for
natural gas in the United States
or Mexico and low market prices of
natural gas could materially adversely affect NEP's pipeline
operations and cash flows; government laws, regulations and
policies providing incentives and subsidies for clean energy could
be changed, reduced or eliminated at any time and such changes may
negatively impact NEP's growth strategy; NEP's growth strategy
depends on the acquisition of projects developed by NextEra Energy,
Inc. (NEE) and third parties, which face risks related to project
siting, financing, construction, permitting, the environment,
governmental approvals and the negotiation of project development
agreements; acquisitions of existing clean energy projects involve
numerous risks; NEP may continue to acquire other sources of clean
energy and may expand to include other types of assets. Any further
acquisition of non-renewable energy projects may present unforeseen
challenges and result in a competitive disadvantage relative to
NEP's more-established competitors; NEP faces substantial
competition primarily from regulated utilities, developers,
independent power producers, pension funds and private equity funds
for opportunities in North
America; the natural gas pipeline industry is highly
competitive, and increased competitive pressure could adversely
affect NEP's business; NEP may not be able to access sources of
capital on commercially reasonable terms, which would have a
material adverse effect on its ability to consummate future
acquisitions and pursue other growth opportunities; restrictions in
NEP and its subsidiaries' financing agreements could adversely
affect NEP's business, financial condition, results of operations
and ability to make cash distributions to its unitholders; NEP's
cash distributions to its unitholders may be reduced as a result of
restrictions on NEP's subsidiaries' cash distributions to NEP under
the terms of their indebtedness or other financing agreements;
NEP's subsidiaries' substantial amount of indebtedness may
adversely affect NEP's ability to operate its business, and its
failure to comply with the terms of its subsidiaries' indebtedness
could have a material adverse effect on NEP's financial condition;
NEP is exposed to risks inherent in its use of interest rate swaps;
widespread public health crises and epidemics or pandemics may have
material adverse impacts on NEP's business, financial condition,
liquidity, results of operations and ability to make cash
distributions to its unitholders; NEE has influence over NEP; under
the cash sweep and credit support agreement, NEP receives credit
support from NEE and its affiliates. NEP's subsidiaries may default
under contracts or become subject to cash sweeps if credit support
is terminated, if NEE or its affiliates fail to honor their
obligations under credit support arrangements, or if NEE or another
credit support provider ceases to satisfy creditworthiness
requirements, and NEP will be required in certain circumstances to
reimburse NEE for draws that are made on credit support; NextEra
Energy Resources, LLC (NEER) or one of its affiliates is permitted
to borrow funds received by NEP's subsidiaries and is obligated to
return these funds only as needed to cover project costs and
distributions or as demanded by NextEra Energy Operating Partners,
LP (NEP OpCo). NEP's financial condition and ability to make
distributions to its unitholders, as well as its ability to grow
distributions in the future, is highly dependent on NEER's
performance of its obligations to return all or a portion of these
funds; NEER's right of first refusal may adversely affect NEP's
ability to consummate future sales or to obtain favorable sale
terms; NextEra Energy Partners GP, Inc. (NEP GP) and its affiliates
may have conflicts of interest with NEP and have limited duties to
NEP and its unitholders; NEP GP and its affiliates and the
directors and officers of NEP are not restricted in their ability
to compete with NEP, whose business is subject to certain
restrictions; NEP may only terminate the Management Services
Agreement among, NEP, NextEra Energy Management Partners, LP (NEE
Management), NEP OpCo and NextEra Energy Operating Partners GP, LLC
(NEP OpCo GP) under certain limited circumstances; if the
agreements with NEE Management or NEER are terminated, NEP may be
unable to contract with a substitute service provider on similar
terms; NEP's arrangements with NEE limit NEE's potential liability,
and NEP has agreed to indemnify NEE against claims that it may face
in connection with such arrangements, which may lead NEE to assume
greater risks when making decisions relating to NEP than it
otherwise would if acting solely for its own account; NEP's ability
to make distributions to its unitholders depends on the ability of
NEP OpCo to make cash distributions to its limited partners; if NEP
incurs material tax liabilities, NEP's distributions to its
unitholders may be reduced, without any corresponding reduction in
the amount of the IDR fee; holders of NEP's units may be subject to
voting restrictions; NEP's partnership agreement replaces the
fiduciary duties that NEP GP and NEP's directors and officers might
have to holders of its common units with contractual standards
governing their duties and the NYSE does not require a publicly
traded limited partnership like NEP to comply with certain of its
corporate 4 governance requirements; NEP's partnership agreement
restricts the remedies available to holders of NEP's common units
for actions taken by NEP's directors or NEP GP that might otherwise
constitute breaches of fiduciary duties; certain of NEP's actions
require the consent of NEP GP; holders of NEP's common units
currently cannot remove NEP GP without NEE's consent and provisions
in NEP's partnership agreement may discourage or delay an
acquisition of NEP that NEP unitholders may consider favorable;
NEE's interest in NEP GP and the control of NEP GP may be
transferred to a third party without unitholder consent; NEP may
issue additional units without unitholder approval, which would
dilute unitholder interests; reimbursements and fees owed to NEP GP
and its affiliates for services provided to NEP or on NEP's behalf
will reduce cash distributions from NEP OpCo and from NEP to NEP's
unitholders, and there are no limits on the amount that NEP OpCo
may be required to pay; increases in interest rates could adversely
impact the price of NEP's common units, NEP's ability to issue
equity or incur debt for acquisitions or other purposes and NEP's
ability to make cash distributions to its unitholders; the
liability of holders of NEP's units, which represent limited
partnership interests in NEP, may not be limited if a court finds
that unitholder action constitutes control of NEP's business;
unitholders may have liability to repay distributions that were
wrongfully distributed to them; the issuance of securities
convertible into, or settleable with, common units may affect the
market price for NEP's common units, will dilute common
unitholders' ownership in NEP and may decrease the amount of cash
available for distribution for each common unit; NEP's future tax
liability may be greater than expected if NEP does not generate net
operating losses (NOLs) sufficient to offset taxable income or if
tax authorities challenge certain of NEP's tax positions; NEP's
ability to use NOLs to offset future income may be limited; NEP
will not have complete control over NEP's tax decisions; and,
distributions to unitholders may be taxable as dividends. NEP
discusses these and other risks and uncertainties in its annual
report on Form 10-K for the year ended December 31, 2021 and other Securities and
Exchange Commission (SEC) filings, and this news release should be
read in conjunction with such SEC filings made through the date of
this news release. The forward-looking statements made in this news
release are made only as of the date of this news release and NEP
undertakes no obligation to update any forward-looking
statements.
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SOURCE NextEra Energy Partners, LP