NextEra CEO on Possible IRA Credits Turmoil: ‘We Feel Good About Where Things Stand’
Think major changes will come to the energy elements of the Inflation Reduction Act after this fall’s election? NextEra Energy Inc. Chairman, President and CEO John Ketchum doesn’t.
Speaking to analysts after Florida-based NextEra reported second-quarter earnings, Ketchum said he and his team expect the renewable-energy components of the landmark IRA law to endure the political turmoil that might happen before and after Election Day. In a lengthy comment, Ketchum pointed both to political practicality—many Republican lawmakers who opposed the IRA are coming around to the impact of its tax credits supporting projects in their communities—and the U.S. economy’s need for much more renewable energy as it electrifies and absorbs reshoring investments.
On top of that, the man who has led NextEra since March 2022 said, the IRA tax credits are helping fund new generation projects that are helping lower utility customers’ bills.
“Why would you cut credits that are creating jobs, create a much-needed property tax base in rural America, that flow to customers that result in lower power prices, that attract new investments and that provide much needed faster deploy resource at a time when demand is accelerated?” Roberts summed up. “It just wouldn’t make sense. For all these reasons, we expect the credits to remain in place—the wind, the solar, the battery storage. All in all, while we would expect the heated rhetoric through the fall campaign, we feel good about where things stand.”
Ketchum’s comments came after NextEra Energy Resources, the company’s renewables group, put up a strong second quarter: The division grew its project backlog by about 3 GW—nearly half of it solar—to nearly 23 GW while putting into service about 1.6 GW of projects. Adjusted net income for the business came in at $865 million during the quarter, an 11% increase from a year earlier.
Including the operations of Florida Power & Light and its corporate functions, NextEra had adjusted earnings of $1.97 billion in the three months ended June 30, an increase from $1.78 billion in the prior-year quarter. Operating revenues were $6.07 billion while FPL’s retail sales grew 3.7%, with half of that number coming from customer growth and mix changes.
Among the other items Ketchum and his team discussed on their conference call:
- A potential restart of the Duane Arnold nuclear plant in Iowa, which NextEra decommissioned in 2020: With a growing need for power, a restart of the facility that first started commercial operations in 1975 would bring “opportunities and a lot of demand from the market,” Ketchum said. But NextEra would still need to thoroughly study the risks: “We would only do it if we could do it in a way that is essentially risk-free with plenty of mitigants around the approach. There are a few things that we would have to work through.”
- Feeling “better than ever” when it comes to ways NextEra could raise money from selling parts of its gas infrastructure and transmission divisions as well as other renewables holdings. NextEra Energy Resources recently sold a stake in some wind and solar assets to private-equity giant Blackstone for about $900 million and Ketchum said his team is looking at other opportunities to generate capital along those lines.
Shares of NextEra (Ticker: NEE) climbed more than 4% to $75.41 on July 24, a day the broader market gave up a lot of ground. They have now risen more than 30% over the past six months, growing the company’s market capitalization to $155 billion.
