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XPLR Infrastructure, LP

XPLR Infrastructure, LPXIFREarnings & Financial Report

NYSE · Utilities · Electric Services

XPLR Infrastructure is a publicly traded subsidiary of NextEra Energy, is a Juno Beach, Florida-based renewable energy company.

What changed in XPLR Infrastructure, LP's 10-K — 2023 vs 2024

Top changes in XPLR Infrastructure, LP's 2024 10-K

863 paragraphs added · 893 removed · 723 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

42 edited+25 added−28 removed4 unchanged
The environmental laws in the U.S., including, among others, the Endangered Species Act (ESA), the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act (BGEPA), provide for the protection of numerous species, including endangered species and/or their habitats, migratory birds, bats and eagles. In 2023, the U.S.
The environmental laws in the U.S., including, among others, the Endangered Species Act (ESA), the Migratory Bird Treaty Act, and the Bald and Golden Eagle Protection Act (BGEPA), provide for the protection of numerous species, including endangered species and/or their habitats, migratory birds, bats and eagles.
In addition, NEP's portfolio consists of wind and solar generation facilities, solar-plus-storage projects, a stand-alone battery storage project and an investment in pipeline assets. A diverse portfolio tends to reduce the magnitude of individual project or regional deviations from historical resource conditions, providing a more stable stream of cash flows over the long term than a non-diversified portfolio.
In addition, XPLR's portfolio consists of wind and solar generation facilities, solar-plus-storage projects, a stand-alone battery storage project and an investment in pipeline assets. A diverse portfolio tends to reduce the magnitude of individual project or regional deviations from historical resource conditions, providing a more stable stream of cash flows over the long term than a non-diversified portfolio.
The pipeline assets in which NEP is invested primarily operate under long-term firm transportation contracts under which counterparties pay for a fixed amount of capacity that is reserved by the counterparties and also generate revenues based on the volume of natural gas transported on the pipeline.
The pipeline assets in which XPLR is invested primarily operate under long-term firm transportation contracts under which counterparties pay for a fixed amount of capacity that is reserved by the counterparties and also generate revenues based on the volume of natural gas transported on the pipeline.
For taxable years beginning after 2022, renewable energy tax credits generated during the year can be transferred to an unrelated purchaser for cash, providing an additional path, along with sales of differential membership interests, for developers to monetize the value of the renewable energy tax credits.
For taxable years beginning after 2022, clean energy tax credits generated during the year can be transferred to an unrelated purchaser for cash, providing an additional path, along with sales of differential membership interests, for developers to monetize the value of the clean energy tax credits.
NEP has indirect equity method investments in projects with a net generating capacity of approximately 862 MW with ownership interests ranging from 33.3% to 50%. Additionally, NEP has indirect controlling ownership interests ranging from 49% to 67% in projects with a net generation capacity of approximately 2,087 MW and battery storage capacity of 244 MW.
XPLR OpCo has indirect equity method investments in projects with a net generating capacity of approximately 862 MW with ownership interests ranging from 33.3% to 50%. Additionally, XPLR OpCo has indirect controlling ownership interests ranging from 49% to 67% in projects with a net generation capacity of approximately 2,087 MW and battery storage capacity of 244 MW.
Pipeline investment – At December 31, 2023, through its ownership interest in Meade Pipeline Co, LLC, NEP has an indirect equity method investment in the Central Penn Line (CPL), natural gas pipeline assets in Pennsylvania with 191 miles of pipeline with 30 inch and 42 inch diameter pipes which is fully contracted with contract expirations between 2033 and 2041.
Pipeline investment – At December 31, 2024, through its ownership interest in Meade Pipeline Co, LLC (Meade), XPLR has an indirect equity method investment in the Central Penn Line (CPL), natural gas pipeline assets in Pennsylvania with 191 miles of pipeline with 30 inch and 42 inch diameter pipes which is fully contracted with contract expirations between 2033 and 2041.
NEE Equity may tender its NEP OpCo common units and in exchange receive NEP common units on a one-for-one basis, or the value of such common units in cash, subject to the terms of an exchange agreement. (c) At December 31, 2023, certain project entities and the pipeline investment are subject to noncontrolling interests.
NEE Equity may tender its XPLR OpCo common units and in exchange receive XPLR common units on a one-for-one basis, or the value of such common units in cash, subject to the terms of an exchange agreement. (c) At December 31, 2024, certain project entities and the pipeline investment are subject to noncontrolling interests.
ENVIRONMENTAL MATTERS NEP is subject to environmental laws and regulations, including extensive federal, state and local environmental statutes, rules and regulations relating to, among others, air quality, water quality and usage, waste management, wildlife protection and historical resources, for the ongoing operations, siting and construction of its facilities.
ENVIRONMENTAL MATTERS XPLR is subject to environmental laws and regulations, including extensive U.S. federal, state and local environmental statutes, rules and regulations relating to, among others, air quality, water quality and usage, waste management, wildlife protection and historical resources, for the ongoing operations, siting and construction of its facilities.
The information and materials available on NEP's website (or any of its subsidiaries' or affiliates' websites) are not incorporated by reference into this Form 10-K. 9 Table of Contents
The information and materials available on XPLR's website (or any of its subsidiaries' or affiliates' websites) are not incorporated by reference into this Form 10-K. 10 Table of Contents
NEER provides O&M, administrative and management services to NEP's projects pursuant to the MSA and other agreements. Through these agreements, NEP benefits from the operational expertise that NEER currently provides across its entire portfolio.
NEER provides O&M, administrative and management services to XPLR's projects pursuant to the MSA and other agreements. Through these agreements, XPLR benefits from the operational expertise that NEER currently provides across its entire portfolio.
Pursuant to the terms of the ROFR agreement, prior to engaging in any negotiation regarding any sale of a NEP OpCo ROFR asset, NEP OpCo must first negotiate for 30 days with NEER to attempt to reach an agreement on a sale of such asset to NEER or any of its subsidiaries.
Pursuant to the terms of the ROFR agreement, prior to engaging in any negotiation regarding any sale of a XPLR OpCo ROFR asset, XPLR OpCo must first negotiate with NEER to attempt to reach an agreement on a sale of such asset to NEER or any of its subsidiaries.
(b) At December 31, 2023, NEE Equity owns approximately 51.4% of NEP OpCo's common units representing limited partnership interests and 100% of NEP OpCo's Class B partnership interests.
(b) At December 31, 2024, NEE Equity owns approximately 51.4% of XPLR OpCo's common units representing limited partnership interests, 100% of XPLR OpCo's Class B partnership interests and 100% of XPLR OpCo's Class P units.
NEP OpCo pays NEE an annual management fee. See Note 15 – Management Services Agreement. NEP and NEP OpCo are parties to a ROFR agreement with NEER granting NEER and its subsidiaries (other than NEP OpCo and its subsidiaries) a right of first refusal on any proposed sale of any NEP OpCo ROFR assets.
XPLR OpCo pays NEE a management fee pursuant to the terms of the MSA. See Note 15 – Management Services Agreement. XPLR and XPLR OpCo are parties to a ROFR agreement with NEER granting NEER and its subsidiaries (other than XPLR OpCo and its subsidiaries) a right of first refusal on any proposed sale of any XPLR OpCo ROFR assets.
NEP and its subsidiaries have utilized various financing structures including limited-recourse project-level financings, the sale of differential membership interests and equity interests in certain subsidiaries, preferred units, convertible senior unsecured notes and senior unsecured notes, as well as revolving credit facilities and term loans.
XPLR and its subsidiaries have utilized various financing structures including limited-recourse project-level financings, the sale of differential membership interests and equity interests in certain subsidiaries, convertible preferred units, convertible senior unsecured notes and senior unsecured notes, as well as revolving credit facilities and term loans. • Utilize NEER’s operational excellence to maintain the value of the projects in XPLR's portfolio.
NEP, NEP OpCo and NEP OpCo GP are parties to the MSA with an indirect wholly owned subsidiary of NEE, under which operational, management and administrative services are provided to NEP under the direction of the board, including managing NEP’s day-to-day affairs and providing individuals to act as NEP’s executive officers, in addition to those services that are provided under O&M agreements and ASAs between NEER subsidiaries and NEP subsidiaries.
See Item 1A for a discussion of risks related to XPLR's counterparties. 6 Table of Contents XPLR, XPLR OpCo and XPLR OpCo GP are parties to the MSA with an indirect wholly owned subsidiary of NEE, under which operational, management and administrative services are provided to XPLR under the direction of the board, including managing XPLR’s day-to-day affairs and providing individuals to act as XPLR’s executive officers, in addition to those services that are provided under O&M agreements and ASAs between NEER subsidiaries and XPLR subsidiaries.
(d) At December 31, 2023, NEP owns an approximately 50% non-economic ownership interest in three NEER solar projects with a total generating capacity of 277 MW and battery storage capacity of 230 MW. All equity in earnings of these non-economic ownership interests is allocated to net income attributable to noncontrolling interests. See Note 2 – Investments in Unconsolidated Entities.
(c) At December 31, 2024, XPLR OpCo owns an approximately 50% non-economic ownership interest in three NEER solar projects with a total generating capacity of 277 MW and battery storage capacity of 230 MW. All equity in earnings of these non-economic ownership interests is allocated to net loss (income) attributable to noncontrolling interests.
The Inflation Reduction Act of 2022 (IRA) expanded the PTC to include solar generation facilities and extended the 100% PTC and the 30% ITC to wind and solar generation facilities that start construction before the later of 2034 or the end of the calendar year following the year in which greenhouse gas emissions from U.S. electric generation are reduced by 75% from 2022 levels (phaseout).
Wind and solar generation facilities are eligible for 100% PTC or 30% ITC if such facilities start construction before the later of 2034 or the end of the calendar year following the year in which greenhouse gas emissions from U.S. electric generation are reduced by 75% from 2022 levels.
HUMAN CAPITAL NEP does not have any employees and relies solely on employees of affiliates of the manager under the MSA, including employees of NEE and NEER, to serve as officers of NEP. See further discussion of the MSA and other payments to NEE in Note 15.
HUMAN CAPITAL XPLR does not have any employees and relies solely on employees of affiliates of the manager under the MSA, including employees of NEE and NEER, to serve as officers of XPLR.
WEBSITE ACCESS TO SEC FILINGS NEP makes its SEC filings, including the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8‑K, and any amendments to those reports, available free of charge on NEP's internet website, www.nexteraenergypartners.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC.
See further discussion of the MSA and other payments to NEE in Note 15. 9 Table of Contents WEBSITE ACCESS TO SEC FILINGS XPLR makes its SEC filings, including the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8‑K, and any amendments to those reports, available free of charge on XPLR's internet website, www.xplrinfrastructure.com, as soon as reasonably practicable after those documents are electronically filed with or furnished to the SEC.
REGULATION NEP's projects and the pipeline assets underlying its pipeline investment are subject to regulation by a number of U.S. federal, state and other organizations, including, but not limited to, the following: • the FERC, which oversees the acquisition and disposition of generation, transmission and other facilities, transmission of electricity and natural gas in interstate commerce and wholesale purchases and sales of electric energy, among other things; • the NERC, which, through its regional entities, establishes and enforces mandatory reliability standards, subject to approval by the FERC, to ensure the reliability of the U.S. electric transmission and generation system and to prevent major system blackouts; • the Environmental Protection Agency (EPA), which has the responsibility to maintain and enforce national standards under a variety of environmental laws.
Regulation XPLR's projects, including projects under development, and the pipeline assets underlying its pipeline investment are subject to regulation by a number of U.S. federal, state and other organizations, including, but not limited to, the following: • the FERC, which oversees the acquisition and disposition of generation, transmission and other facilities, transmission of electricity and natural gas in interstate commerce and wholesale purchases and sales of electric energy, among other things; 7 Table of Contents • the NERC, which, through its regional entities, establishes and enforces mandatory reliability standards, subject to approval by the FERC, to ensure the reliability of the U.S. electric transmission and generation system and to prevent major system blackouts; • the Environmental Protection Agency (EPA), which has the responsibility to maintain and enforce national standards under a variety of environmental laws, while also working with industries and all levels of government, including U.S. federal and state governments, in a wide variety of voluntary pollution prevention programs and energy conservation efforts; • various agencies in Pennsylvania, which oversee environmental and general welfare laws related to the pipeline assets in which XPLR is invested; and • the Pipeline and Hazardous Materials Safety Administration, which, among other things, oversees the safety of natural gas pipelines.
See Note 2 – Noncontrolling Interests, Note 11 and Note 14 – Class B Noncontrolling Interests. Projects with net generating capacity of approximately 1,539 MW are encumbered by liens against their assets securing various financings.
Third-party investors own differential membership interests in projects with net generating capacity of approximately 6,295 MW and battery storage capacity of 274 MW. See Note 2 – Noncontrolling Interests, Note 11 and Note 14 – Class B Noncontrolling Interests. Projects with net generating capacity of approximately 2,208 MW are encumbered by liens against their assets securing various financings.
(c) Third-party investors own noncontrolling Class B membership interests in the NEP subsidiaries that own interests in projects with net generating capacity of approximately 5,622 MW and battery storage capacity of 120 MW. Third-party investors own differential membership interests in projects with net generating capacity of approximately 6,494 MW and battery storage capacity of 274 MW.
See Note 2 – Investments in Unconsolidated Entities and – Noncontrolling Interests. (b) Third-party investors own noncontrolling Class B membership interests in the XPLR subsidiaries that own interests in projects with net generating capacity of approximately 5,560 MW and battery storage capacity of 120 MW.
U.S. federal, state and local governments have established various incentives to support the development of renewable energy projects. These incentives include accelerated tax depreciation, PTCs, ITCs, cash grants, tax abatements and RPS programs.
XPLR believes this will create a variety of opportunities at its existing portfolio as well as other adjacent investment opportunities. Policy Incentives U.S. federal, state and local governments have established various incentives to support the development of clean energy projects. These incentives include accelerated tax depreciation, PTCs, ITCs, cash grants, tax abatements and RPS programs.
In addition, the IRA expanded the 30% ITC to include storage projects placed in service after 2022 (previously, such projects qualified only if they were connected to and charged by a renewable generation facility that claimed the ITC), subject to the phaseout and certain other requirements.
In addition, the 30% ITC applies to energy storage projects placed in service after 2022 (previously, such projects qualified only if they were connected to and charged by a renewable generation facility that claimed the ITC). Energy storage projects are eligible for a 10 percentage point increase in the ITC rate if the facilities satisfy certain tax credit enhancement requirements.
Owners of wind and solar facilities are eligible to claim an income tax credit (the PTC, or an ITC in lieu of the PTC) upon initially achieving commercial operation. This incentive was created under the Energy Policy Act of 1992 and has been extended several times for wind (the previous PTC for solar expired in 2006).
Owners of wind and solar facilities are eligible to claim an income tax credit (the PTC, or an ITC in lieu of the PTC) upon initially achieving commercial operation.
Through NEP OpCo, NEP owns, or has a partial ownership interest in, a portfolio of contracted renewable energy assets consisting of wind, solar and solar-plus-storage projects and a stand-alone battery storage project, as well as contracted natural gas pipeline assets (pipeline investment).
Through XPLR OpCo, XPLR has a partial ownership interest in a portfolio of contracted clean energy assets consisting of wind, solar and solar-plus-storage projects and a stand-alone battery storage project, as well as contracted natural gas pipeline assets (pipeline investment). 4 Table of Contents The following diagram depicts XPLR's simplified ownership structure: (a) At December 31, 2024, NEE owns 2,377,882 XPLR common units.
During 2023, NEP generated approximately 25.8 million MWh and 3.8 million MWh from wind and solar generating facilities, respectively. During 2022, NEP generated approximately 23.8 million MWh and 3.4 million MWh from wind and solar generating facilities, respectively.
During 2023, XPLR OpCo generated approximately 25.8 million MWh and 3.8 million MWh from wind and solar generating facilities, respectively, and discharged 0.2 million MWh from its battery storage projects.
Alternatively, an ITC equal to 30% of the cost of the facility may be claimed in lieu of the PTC. A facility must also meet certain labor requirements to qualify for the 100% PTC or 30% ITC rate or construction must have started on the facility before January 29, 2023.
The PTC is determined based on the amount of electricity produced by the facility during the first ten years of commercial operation. A facility must also meet certain labor requirements to qualify for the 100% PTC or 30% ITC rate or construction must have started on the facility before January 29, 2023.
In wholesale markets, customers' needs are met through a variety of means, including long-term bilateral contracts, standardized bilateral products such as full requirements service and customized supply and risk management services. In addition, NEP competes with other companies to acquire well-developed projects with projected stable cash flows.
As such, there is a wide variation in terms of the capabilities, resources, nature and identity of the companies XPLR competes with depending on the market. In wholesale and merchant markets, customers' needs are met through a variety of means, including long-term bilateral contracts, standardized bilateral products such as full requirements service and customized supply and risk management services.
NEP believes that it is well-positioned to execute its strategy and deliver cash distributions to its common unitholders over the long term based on the following competitive strengths: NEE management and operational expertise. NEP believes it benefits from NEE’s experience, operational excellence and cost-efficient operations.
XPLR believes that it is well-positioned to execute its strategy and deliver value to its common unitholders and customers over the long term based on the following competitive strengths: Contracted projects with stable cash flows.
Through the MSA and other agreements with NEE and its subsidiaries, NEP's projects will receive the same benefits and expertise that NEE currently provides across its entire portfolio. Repowering opportunities.
Through the MSA and other agreements with NEE and its subsidiaries, XPLR's projects will receive the same benefits and expertise that NEE currently provides across its entire portfolio. XPLR also seeks to take advantage of incremental investment opportunities enabled by NEE's long-standing industry and customer relationships, knowledge and experience.
See Note 4. 5 Table of Contents The following map shows NEP's ownership interests in clean energy projects in operation, excluding its non-economic ownership interests, and NEP's pipeline investment. Each of the renewable energy projects sells substantially all of its output and related renewable energy attributes pursuant to long-term, fixed price PPAs to various counterparties.
Each of the clean energy projects sells the majority of its output and related renewable energy attributes pursuant to long-term, fixed price PPAs to various counterparties.
NEP believes its primary competitors for opportunities in North America are regulated utility holding companies, developers, IPPs, pension funds and private equity funds. NEP's pipeline investment faces competition with respect to retaining and obtaining firm transportation contracts and competes with other pipeline companies based on location, capacity, price and reliability.
XPLR's pipeline investment faces competition with respect to retaining and obtaining firm transportation contracts and competes with other pipeline companies based on location, capacity, price and reliability.
COMPETITION Wholesale power generation is a capital-intensive, commodity-driven business with numerous industry participants. While NEP's renewable energy projects are currently contracted, NEP may compete in the future primarily on the bases of price and terms, but also believes the green attributes of NEP's renewable energy generation assets, among other strengths discussed below, are competitive advantages.
XPLR expects that these services will maximize the operational efficiencies of its portfolio. 8 Table of Contents COMPETITION Wholesale power generation is a capital-intensive, commodity-driven business with numerous industry participants. While the majority of XPLR's existing projects are currently contracted, XPLR may compete in the future primarily on the bases of price and terms.
Wholesale power generation is a regional business that is highly fragmented relative to many other commodity industries and diverse in terms of industry structure. As such, there is a wide variation in terms of the capabilities, resources, nature and identity of the companies NEP competes with depending on the market.
XPLR also believes the clean attributes of XPLR's generation assets, among other strengths discussed below, are competitive advantages. Wholesale power generation is a regional business that is highly fragmented relative to many other commodity industries and diverse in terms of industry structure.
NEP believes its cash flow profile, geographic, technological and resource diversity, operational excellence and cost-efficient business model provide NEP with a significant competitive advantage and enable NEP to execute its business strategy. The following diagram depicts NEP's simplified ownership structure at December 31, 2023: (a) At December 31, 2023, NEE owns 2,377,882 NEP common units.
XPLR believes its cash flow profile, geographic, technological and resource diversity, operational excellence, contractual relationships with NEE and disciplined approach to capital allocation provide XPLR with a competitive advantage and enable XPLR to execute its business plan. OWNERSHIP STRUCTURE AND PORTFOLIO XPLR is a limited partnership.
NEP's net ownership interest represents an approximately 39% aggregate ownership interest in the CPL and net capacity of 0.73 billion cubic feet per day. In December 2023, NEP sold its interests in a portfolio of seven natural gas pipelines assets in Texas (Texas pipelines).
XPLR's net ownership interest represents an approximately 39% aggregate ownership interest in the CPL and net capacity of 0.73 billion cubic feet per day. XPLR is evaluating options relating to the expected sale of its ownership interest in Meade in the second half of 2025. See Note 7 – Nonrecurring Fair Value Measurements.
The renewable energy projects have a total weighted average remaining contract term of approximately 13 years at December 31, 2023 based on expected contributions to cash available for distribution. 8 Table of Contents Geographic and resource diversification. NEP's portfolio is geographically diverse across the U.S.
The clean energy projects in XPLR's portfolio are contracted with a diverse group of customers under long-term PPAs that generally provide for fixed price payments over the contract term. The clean energy projects have a total weighted average remaining contract term of approximately 13 years at December 31, 2024 based on forecasted contributions to earnings.
See Note 2 – Noncontrolling Interests. 4 Table of Contents Renewable energy projects – At December 31, 2023, NEP owned interests in a portfolio of clean, contracted renewable energy projects located in 31 states as summarized below: NEP Acquisition/Investment Date Technology Net MW (a) Contract Expiration 2014 Solar Wind 250 492 2030 – 2039 2015 Solar Wind 20 851 (b) 2026 – 2041 2016 Solar Wind 132 584 2033 – 2040 2017 Solar Wind 143 798 2030 – 2046 2018 Solar Wind 20 1,368 2031 – 2042 2019 Solar Wind 191 420 2030 – 2042 2020 Battery Storage Solar Wind 30 219 280 2034 – 2045 2021 Battery Storage Solar Wind 58 558 1,784 2025 – 2051 2022 Battery Storage Solar Wind 186 61 931 2032 – 2043 2023 Solar Wind 196 546 2036 – 2046 10,118 (c)(d) ____________________ (a) MWs reflect NEP's net ownership in the renewable energy project capacity based on respective ownership interests.
Clean energy projects – At December 31, 2024, XPLR owned interests in a portfolio of contracted clean energy projects located in 31 states as summarized below: Technology Net MW (a) Contract Expiration Wind 8,054 2025 – 2051 Solar 1,790 2035 – 2051 Battery Storage 274 2037 – 2051 10,118 (b)(c) ____________________ (a) MWs reflect XPLR OpCo's net ownership in the clean energy project capacity based on respective ownership interests.
If an agreement is not reached within the initial 30-day period, NEP OpCo will be able to negotiate with any third party for the sale of such asset for a 30-day period.
This negotiation with NEER and its subsidiaries could occur over two separate 30-day periods, by the end of which, if NEER and XPLR OpCo have not reached an agreement, XPLR OpCo will have the right to sell such asset to a third party.
In addition, NEP believes the geographic diversity of its portfolio helps minimize the impact of adverse regulatory conditions in particular jurisdictions.
In addition, XPLR believes the geographic diversity of its portfolio helps minimize the impact of adverse regulatory conditions in particular jurisdictions. Organic growth opportunities at XPLR's existing assets. XPLR has organic reinvestment opportunities across its existing portfolio through renewable energy repowering that could provide additional value to customers and are expected to produce attractive returns for XPLR.
NEP intends to focus its investments in North America, where it believes industry trends present significant opportunities to acquire contracted clean energy projects in diverse regions and favorable locations and repower existing wind projects.
Geographically, XPLR intends to focus its investments in the U.S., where it believes industry trends present significant investment opportunities, including acquisitions of clean energy assets in various regions and favorable locations where power demand growth is expected. • Deliver long-term value to common unitholders through disciplined capital allocation.
Removed
Item 1. Business NEP is a growth-oriented limited partnership with a strategy that emphasizes acquiring, managing and owning contracted clean energy assets with stable long-term cash flows with a focus on renewable energy projects. At December 31, 2023, NEP owned a controlling, non-economic general partner interest and a 48.6% limited partner interest in NEP OpCo.
Added
Business XPLR, through its ownership in XPLR OpCo, has a partial ownership interest in a clean energy infrastructure portfolio in the U.S. with approximately 10 gigawatts of net generating capacity in 31 states as of December 31, 2024 and is one of the largest generators of energy from the wind and sun in the U.S. based on 2024 MWh produced on a net generation basis.
Removed
NEP expects to take advantage of trends in the North American energy industry, including the addition of clean energy projects as aging or uneconomic generation facilities are phased out, increased demand from utilities for renewable energy to meet state RPS requirements and improving competitiveness of energy generated from wind and solar projects relative to energy generated using other fuels.
Added
XPLR's portfolio is diversified across generation technologies including wind, solar and battery storage projects and an investment in natural gas pipeline assets.
Removed
NEP plans to focus on high-quality, long-lived projects operating under long-term contracts that are expected to produce stable long-term cash flows and organic growth through wind turbine repowering opportunities across its portfolio.
Added
In January 2025, XPLR announced a strategic repositioning, including suspension of the distribution to its common unitholders, intended to allow XPLR to use its retained operating cash flow and balance sheet capacity to make investments that it believes will enhance the long-term value of its portfolio.
Removed
See Note 2 – Investments in Unconsolidated Entities and – Noncontrolling Interests. (b) Reflects the sale of a 62 MW wind project in January 2023. See Note 2 – Disposal of Wind Project.
Added
XPLR's capital allocation priorities include investments to improve and expand XPLR's existing portfolio and the pursuit of investment opportunities in areas adjacent to its existing clean energy assets that are expected to benefit from U.S. power sector growth.
Removed
In 2023, NEP derived approximately 14% of its consolidated revenues from its contracts with Pacific Gas and Electric Company. In 2023, NEP also derived approximately 11% of its consolidated revenues from its contracts with Mex Gas Supply S.L., which was related to the Texas pipelines (see Note 4). See Item 1A for a discussion of risks related to NEP's counterparties.
Added
XPLR believes anticipated long-term growth in U.S. electricity demand will create opportunities for XPLR to invest in its existing portfolio, including through additional investments in renewable energy repowering projects and co-located battery storage and through renewing or extending existing PPAs.
Removed
Prior to accepting any third-party offer, NEP OpCo will be required to restart negotiations with NEER for the next 30 days and will not be permitted to sell the applicable asset to the third party making the offer if NEER agrees to terms substantially consistent with those proposed by such third party.
Added
XPLR also plans to pursue investment opportunities in areas adjacent to its existing clean energy projects, with a focus on assets that are expected to provide incremental cash flows and opportunities for growth.
Removed
If, by the end of the 30-day period, NEER and NEP OpCo have not reached an agreement, NEP OpCo will have the right to sell such asset to such third party within 30 days. 6 Table of Contents INDUSTRY OVERVIEW Renewable Energy Industry Growth in renewable energy is largely attributable to the increasing cost competitiveness of renewable energy driven primarily by government incentives, RPS, improving technology and declining installation costs and the impact of environmental rules and regulations on other types of generation.
Added
At December 31, 2024, XPLR owned a controlling, non-economic general partner interest and an approximately 48.6% limited partner interest in XPLR OpCo.
Removed
U.S. federal, state and local governments have established various incentives to support the development of renewable energy projects.
Added
See Note 2 – Investments in Unconsolidated Entities. 5 Table of Contents During 2024, XPLR OpCo generated approximately 27.0 million MWh and 4.0 million MWh from wind and solar generating facilities, respectively, and discharged 0.2 million MWh from its battery storage projects.
Removed
These incentives make the development of renewable energy projects more competitive by providing accelerated depreciation, tax credits or grants for a portion of the development costs, decreasing the costs associated with developing such projects or creating demand for renewable energy assets through RPS programs. In addition, RPS provide incentives to utilities to contract for energy generated from renewable energy providers.
Added
In December 2023, XPLR sold its interests in a portfolio of seven natural gas pipelines assets in Texas (Texas pipelines). See Note 4. The following map shows XPLR's ownership interests in clean energy projects in operation, excluding its non-economic ownership interests, and XPLR's pipeline investment.
Removed
Continuous improvements in renewable energy technology have resulted in wind and solar energy generation becoming the lowest cost energy generation technologies in many regions in the U.S.
Added
In 2024, XPLR derived approximately 15% and 15% of its consolidated revenues from its contracts with Pacific Gas and Electric Company and Southern California Edison Company, respectively.
Removed
The improvements in these technologies, including taller wind towers, longer wind turbine blades, improved solar cell production and more efficient energy conversion equipment, allow the renewable energy projects to more efficiently capture resource and produce more energy which is expected to lead to continued growth in the renewable energy industry.
Added
INDUSTRY OVERVIEW Energy Industry U.S. electric power demand is expected to undergo long-term secular growth due in part to data centers, onshoring of manufacturing and electrification of industry, which XPLR expects will increase demand for clean energy.
Removed
Additionally, combining wind and solar energy generation facilities with battery storage projects allows for the utilization of energy stored when the renewable resource is not as strong and alleviates congestion.
Added
The expected need for electric power will require utilities and other wholesale end users to look to new electricity generation across a wide range of energy generating options including renewable and other clean energy sources, such as battery storage, natural gas-fired generation and other adjacent and complementary infrastructure.
Removed
Policy Incentives Policy incentives in the U.S. have the effect of making the development of renewable energy projects more competitive by providing credits for a portion of the development costs or by providing favorable contract prices.
Added
XPLR believes that these standards and goals will create incremental demand for renewable energy in the future. The foregoing incentives have the effect of making the development of renewable energy projects more competitive. A loss of, or reduction in, the foregoing incentives could decrease the attractiveness of renewable energy projects to developers.
Removed
A loss of or reduction in such incentives could decrease the attractiveness of renewable energy projects to developers, including NEE, which could reduce NEP's future acquisition opportunities. Such a loss or reduction of incentives could also reduce NEP's willingness to pursue or develop certain renewable energy projects, including wind turbine repowerings, due to higher operating costs or decreased revenues.
Added
U.S. federal, state and local governments have established extensive approvals and permitting requirements for items such as disturbing wetlands, obtaining no hazard determinations from the Federal Aviation Administration, interacting with wildlife, making wholesale sales of electricity, and other clearances. These requirements may change from time to time.
Removed
Accordingly, owners of wind and solar generation facilities placed in service in 2022 or later are eligible to claim a PTC (or an ITC in lieu of the PTC) upon initially achieving commercial operation. The PTC is determined based on the amount of electricity produced by the facility during the first ten years of commercial operation.
Added
For example, a federal executive order was issued in January 2025 that calls for a pause in federal land leasing, permitting and approvals for wind development facilities pending completion of a review of the federal rules providing for leasing, permitting and approvals for wind projects.
Removed
In addition, storage projects claiming an ITC are eligible for a 10 percentage point increase in the ITC rate if the facilities satisfy certain tax credit enhancement requirements.
Added
This or similar initiatives could limit XPLR's and its subsidiaries' ability, and the ability of third parties with which XPLR contracts, to obtain or renew necessary approvals, rights-of-way, permits, leases or loans for wind or other clean energy projects. In addition, XPLR is also subject to environmental laws and regulations described in the Environmental Matters section below.
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NEP believes that these standards and goals will create incremental demand for renewable energy in the future. 7 Table of Contents BUSINESS STRATEGY NEP's primary business objective is to deliver cash distributions to common unitholders which it plans to grow over time through accretively acquiring ownership interests in contracted clean energy projects, with a focus on renewable energy projects, from NEER or third parties and wind turbine repowering at existing projects.
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BUSINESS STRATEGY XPLR's primary business objective is to deliver value to common unitholders which it plans to do over time by allocating the cash flows generated by its assets toward selected clean energy investments. These investments may include organic growth opportunities at existing assets, as well as selective acquisitions of ownership interests in clean energy projects or other investments.
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To achieve this objective, NEP intends to execute the following business strategy: • Focus on contracted clean energy projects. NEP intends to focus on long-term contracted clean energy projects with newer and more reliable technology, lower operating costs and relatively stable cash flows, subject to seasonal variances, consistent with the characteristics of its portfolio. • Focus on North America.
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To achieve this objective, XPLR intends to execute the following business strategy: • Invest cash generated by existing assets to enhance long-term value. Among other uses, XPLR and XPLR OpCo intend to use retained cash to repower renewable energy projects which would extend the life of their existing assets, enhance operations and provide attractive returns.
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By focusing on North America, NEP believes it will be able to take advantage of NEE’s long-standing industry relationships, knowledge and experience. • Maintain a sound capital structure and financial flexibility.
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XPLR also intends to use cash to exercise buyout rights relating to noncontrolling Class B members' interests under certain limited liability company agreements to which XPLR and certain of its subsidiaries is a party (see Note 2 – Noncontrolling Interests and Note 14 – Class B Noncontrolling Interests). • Focus ancillary investments on areas where XPLR expects to generate attractive returns.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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These incentives make the development of clean energy projects more competitive by providing tax credits or grants and accelerated depreciation for a portion of the development costs, decreasing the costs and risks associated with developing such projects or creating demand for renewable energy assets through RPS programs.
These incentives make the development of clean energy projects more competitive by providing transferable renewable energy tax credits, grants and accelerated depreciation for a portion of the development costs, decreasing the costs and risks associated with developing such projects or creating demand for renewable energy assets through RPS programs.
In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, droughts, extreme temperatures, icing events, wildfires, severe convective storms and earthquakes, can be destructive and cause power outages, personal injury and property damage, reduce revenue, affect the availability of fuel and water and require NEP to incur additional costs to, for example, restore service and repair damaged facilities, obtain replacement power, access available financing sources, obtain insurance, pay for any associated injuries and damages and fund any associated legal matters and compliance penalties.
In addition, severe weather and natural disasters, such as hurricanes, floods, tornadoes, droughts, extreme temperatures, icing events, wildfires, severe convective storms and earthquakes, can be destructive and cause power outages, personal injury and property damage, reduce revenue, affect the availability of fuel and water and require XPLR to incur additional costs to, for example, restore service and repair damaged facilities, obtain replacement power, access available financing sources, obtain insurance, pay for any associated injuries and damages and fund any associated legal matters and compliance penalties.
Transferees of common units are liable both for the obligations of the transferor to make contributions to the partnership that were known to the transferee at the time of transfer and for those obligations that were unknown if the liabilities could have been determined from the partnership agreement.
Transferees of common units are liable both for the obligations of the transferor to make contributions to the partnership that were known to the transferee at the time of transfer and for those obligations that were unknown if the liabilities could have been determined from XPLR's partnership agreement.
Each of the MSA and the management sub-contract, respectively, provides that NEE Management and NEER, respectively, may terminate the applicable agreement upon 180 days’ prior written notice of termination to NEP if NEP defaults in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results in material harm to NEE Management or its affiliates other than NEP or its subsidiaries, and the default continues unremedied for a period of 90 days after written notice thereof is given to NEP or upon the happening of certain specified events.
Each of the MSA and the management sub-contract, respectively, provides that NEE Management and NEER, respectively, may terminate the applicable agreement upon 180 days’ prior written notice of termination to XPLR if XPLR defaults in the performance or observance of any material term, condition or covenant contained in the agreement in a manner that results in material harm to NEE Management or its affiliates other than XPLR or its subsidiaries, and the default continues unremedied for a period of 90 days after written notice thereof is given to XPLR or upon the happening of certain specified events.
NEP and its subsidiaries have entered into financing agreements which contain various covenants and restrictive provisions and certain financial ratios that may limit their ability to, among other things: • incur or guarantee additional debt; • make distributions on or redeem or repurchase common units; • make certain investments and acquisitions; • incur certain liens or permit them to exist; • enter into certain types of transactions with affiliates; • merge or consolidate with another company; and • transfer, sell or otherwise dispose of projects.
XPLR and its subsidiaries have entered into financing agreements which contain various covenants and restrictive provisions and certain financial ratios that may limit their ability to, among other things: • incur or guarantee additional debt; • make distributions on or redeem or repurchase common units; • make certain investments and acquisitions; • incur certain liens or permit them to exist; • enter into certain types of transactions with affiliates; • merge or consolidate with another company; and • transfer, sell or otherwise dispose of projects.
Risk Factors Limited partnerships and limited partnership interests are inherently different than corporations and shares of capital stock of a corporation, although many of the business risks to which NEP is subject are similar to those that would be faced by a corporation engaged in similar businesses and NEP has elected to be treated as a corporation for U.S. federal income tax purposes.
Risk Factors Limited partnerships and limited partnership interests are inherently different than corporations and shares of capital stock of a corporation, although many of the business risks to which XPLR is subject are similar to those that would be faced by a corporation engaged in similar businesses and XPLR has elected to be treated as a corporation for U.S. federal income tax purposes.
NEP's projects and pipeline investment also carry inherent environmental, health and safety risks, including, without limitation, the potential for related civil litigation, regulatory compliance actions, remediation orders, fines and other penalties. Proceedings related to any such litigation or actions could result in significant expenditures as well as the restriction or elimination of the ability to operate any affected project.
XPLR's projects and pipeline investment also carry inherent environmental, health and safety risks, including, without limitation, the potential for related civil litigation, regulatory compliance actions, remediation orders, fines and other penalties. Proceedings related to any such litigation or actions could result in significant expenditures as well as the restriction or elimination of the ability to operate any affected project.
Additionally, the maximum amount of the aggregate liability of NEE Management or any of its affiliates in providing services under the MSA or otherwise (including, but not limited to, NEER under the management sub-contract), or of any director, officer, employee, contractor, agent, advisor or other representative of NEE Management or any of its affiliates, will be equal to the base management fee previously paid by NEP in the most recent calendar year under the MSA.
Additionally, the maximum amount of the aggregate liability of NEE Management or any of its affiliates in providing services under the MSA or otherwise (including, but not limited to, NEER under the management sub-contract), or of any director, officer, employee, contractor, agent, advisor or other representative of NEE Management or any of its affiliates, will be equal to the base management fee previously paid by XPLR in the most recent calendar year under the MSA.
Since the number of customers that purchase wholesale bulk energy or require the transportation of natural gas is limited, NEP or its pipeline investment may be unable to find a new customer on similar or otherwise acceptable terms or at all. In some cases, there currently is no economical alternative counterparty to the original customer.
Since the number of customers that purchase wholesale bulk energy or require the transportation of natural gas is limited, XPLR or its pipeline investment may be unable to find a new customer on similar or otherwise acceptable terms or at all. In some cases, there currently is no economical alternative counterparty to the original customer.
Such events or actions could significantly decrease or eliminate the revenues of a project or pipeline, significantly increase its operating costs, cause a default under NEP's financing agreements or give rise to damages or penalties payable to a PPA or transportation agreement counterparty, another contractual counterparty, a governmental authority or other third parties or cause defaults under related contracts or permits.
Such events or actions could significantly decrease or eliminate the revenues of a project or pipeline, significantly increase its operating costs, cause a default under XPLR's financing agreements or give rise to damages or penalties payable to a PPA or transportation agreement counterparty, another contractual counterparty, a governmental authority or other third parties or cause defaults under related contracts or permits.
If NEP is not able to extend, renew or replace on acceptable terms existing PPAs before contract expiration, or if such agreements are otherwise terminated prior to their expiration, NEP may be required to sell the energy on an uncontracted basis at prevailing market prices, which could be materially lower than under the applicable contract.
If XPLR is not able to extend, renew or replace on acceptable terms existing PPAs before contract expiration, or if such agreements are otherwise terminated prior to their expiration, XPLR may be required to sell the energy on an uncontracted basis at prevailing market prices, which could be materially lower than under the applicable contract.
If holders of the noncontrolling Class B membership interests, convertible notes or any convertible securities issued in the future, were to dispose of a substantial portion of these common units in the public market following such a conversion or settlement, whether in a single transaction or series of transactions, it could adversely affect the market price for NEP's common units.
If holders of the noncontrolling Class B membership interests, convertible notes or any convertible securities issued in the future, were to dispose of a substantial portion of these common units in the public market following such a conversion or settlement, whether in a single transaction or series of transactions, it could adversely affect the market price for XPLR's common units.
To the extent that resources are not available at planned levels, the financial results from these facilities may be less than expected. NEP depends on certain of the renewable energy projects and the investment in pipeline assets in its portfolio for a substantial portion of its anticipated cash flows.
To the extent that resources are not available at planned levels, the financial results from these facilities may be less than expected. XPLR depends on certain of the renewable energy projects and the investment in pipeline assets in its portfolio for a substantial portion of its anticipated cash flows.
For example, NEP’s partnership agreement provides that: • whenever NEP GP or the board, or any director or any committee of the board (including, but not limited to, the conflicts committee), makes a determination or takes, or declines to take, any other action in its respective capacity, they are required to act in good faith; 21 Table of Contents • NEP GP will not have any liability to NEP or its unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith; • NEP GP and its officers and directors and the officers and directors of NEP will not be liable for monetary damages to NEP or NEP's limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining such persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and • NEP GP and its affiliates and NEP’s directors will not be in breach of their obligations under NEP’s partnership agreement (including, but not limited to, any duties to NEP or its unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is: • approved by the conflicts committee of the board, although the board is not obligated to seek such approval; • approved by the vote of a majority of the outstanding common units, excluding any common units owned by NEP GP and its affiliates if the conflict involves NEP GP or any of its affiliates; • determined by the board to be on terms no less favorable to NEP than those generally being provided to or available from unrelated third parties; or • determined by the board to be fair and reasonable to NEP, taking into account the totality of the relationships among the parties involved, including, but not limited to, other transactions that may be particularly favorable or advantageous to NEP.
For example, XPLR’s partnership agreement provides that: • whenever XPLR GP or the board, or any director or any committee of the board (including, but not limited to, the conflicts committee), makes a determination or takes, or declines to take, any other action in its respective capacity, they are required to act in good faith; • XPLR GP will not have any liability to XPLR or its unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith; • XPLR GP and its officers and directors and the officers and directors of XPLR will not be liable for monetary damages to XPLR or XPLR's limited partners resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining such persons acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was criminal; and • XPLR GP and its affiliates and XPLR’s directors will not be in breach of their obligations under XPLR’s partnership agreement (including, but not limited to, any duties to XPLR or its unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is: • approved by the conflicts committee of the board, although the board is not obligated to seek such approval; • approved by the vote of a majority of the outstanding common units, excluding any common units owned by XPLR GP and its affiliates if the conflict involves XPLR GP or any of its affiliates; • determined by the board to be on terms no less favorable to XPLR than those generally being provided to or available from unrelated third parties; or • determined by the board to be fair and reasonable to XPLR, taking into account the totality of the relationships among the parties involved, including, but not limited to, other transactions that may be particularly favorable or advantageous to XPLR.
Also, upon the occurrence of certain events, including, but not limited to, NEP's subsidiaries’ inability to satisfy distribution conditions for an extended period of time, NEP's subsidiaries’ revenues may be swept into one or more accounts for the benefit of the lenders under the subsidiaries’ debt agreements and the subsidiaries may be required to prepay indebtedness.
Also, upon the occurrence of certain events, including, but not limited to, XPLR's subsidiaries’ inability to satisfy distribution conditions for an extended period of time, XPLR's subsidiaries’ revenues may be swept into one or more accounts for the benefit of the lenders under the subsidiaries’ debt agreements and the subsidiaries may be required to prepay indebtedness.
For example, if NEP fails to obtain eagle "take" permits under the BGEPA or incidental take permits under the ESA for certain of its wind facilities and eagles or listed species, like cave bats, perish in collisions with facility turbines, NEP or its subsidiaries could face criminal prosecution under these laws.
For example, if XPLR fails to obtain eagle "take" permits under the BGEPA or incidental take permits under the ESA for certain of its wind facilities and eagles or listed species, like cave bats, perish in collisions with facility turbines, XPLR or its subsidiaries could face criminal prosecution under these laws.
Under certain other financing agreements, noncontrolling Class B investors own membership interests in certain NEP subsidiaries and receive a portion of the related NEP subsidiaries’ cash distributions specified in the applicable limited liability company agreements. NEP has the option (buyout right), subject to certain limitations, to purchase 100% of the noncontrolling Class B membership interests during specified periods.
Under certain other financing agreements, noncontrolling Class B investors own membership interests in certain XPLR subsidiaries and receive a portion of the related XPLR subsidiaries’ cash distributions specified in the applicable limited liability company agreements. XPLR has the option (buyout right), subject to certain limitations, to purchase 100% of the noncontrolling Class B membership interests during specified periods.
Under the CSCS agreement, guarantees and letters of credit have been provided by NEECH, NEER and other NEE affiliates to counterparties on behalf of NEP's subsidiaries to satisfy NEP's subsidiaries’ contractual obligations to provide credit support, including, but not limited to, under PPAs. These NEE affiliates also have provided credit support to lenders to fund reserve accounts.
Under the CSCS agreement, guarantees and letters of credit have been provided by NEECH, NEER and other NEE affiliates to counterparties on behalf of XPLR's subsidiaries to satisfy XPLR's subsidiaries’ contractual obligations to provide credit support, including, but not limited to, under PPAs. These NEE affiliates also have provided credit support to lenders to fund reserve accounts.
NEP and/or NEP OpCo may be included in the combined or unitary tax returns of NEE or one or more of its subsidiaries for U.S. state or local income tax purposes. NEP is a party to a tax sharing arrangement which determines the share of taxes that NEP will pay to, or receive from, NEE.
XPLR and/or XPLR OpCo may be included in the combined or unitary tax returns of NEE or one or more of its subsidiaries for U.S. state or local income tax purposes. XPLR is a party to a tax sharing arrangement which determines the share of taxes that XPLR will pay to, or receive from, NEE.
The obligations of NEP OpCo under the ROFR agreement may discourage a third party from pursuing a transaction with NEP OpCo. Even if such third party is able to acquire the applicable asset, NEP OpCo’s compliance with its obligations under the ROFR agreement could result in delays and transaction costs, as well as a reduced sales price.
The obligations of XPLR OpCo under the ROFR agreement may discourage a third party from pursuing a transaction with XPLR OpCo. Even if such third party is able to acquire the applicable asset, XPLR OpCo’s compliance with its obligations under the ROFR agreement could result in delays and transaction costs, as well as a reduced sales price.
A disruption or failure of electric generation, transmission or distribution systems or natural gas production, transmission, storage or distribution systems in the event of a hurricane, tornado or other severe weather event, or otherwise, could prevent NEP from operating its business in the normal course and could result in any of the adverse consequences described above.
A disruption or failure of electric generation, storage, transmission or distribution systems or natural gas production, transmission, storage or distribution systems in the event of a hurricane, tornado or other severe weather event, or otherwise, could prevent XPLR from operating its business in the normal course and could result in any of the adverse consequences described above.
The indebtedness, financing and other agreements of NEP and its subsidiaries, including the agreements under which the noncontrolling Class B investors own membership interests in certain NEP subsidiaries, contain provisions that may trigger acceleration of indebtedness or specified payment obligations of NEP or its subsidiaries upon or in connection with specified transactions, including specified change of control and similar transactions.
The indebtedness, financing and other agreements of XPLR and its subsidiaries, including the agreements under which the noncontrolling Class B investors own membership interests in certain XPLR subsidiaries, contain provisions that may trigger acceleration of indebtedness or specified payment obligations of XPLR or its subsidiaries upon or in connection with specified transactions, including specified change of control and similar transactions.
The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's pipeline investment. NEP's pipeline investment competes with other energy midstream enterprises, some of which are much larger and have significantly greater financial resources and operating experience in its areas of operation.
The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect XPLR's pipeline investment. XPLR's pipeline investment competes with other energy midstream enterprises, some of which are much larger and have significantly greater financial resources and operating experience in its areas of operation.
If NEP does not exercise the buyout rights during the specified periods because of a lack of access to capital on commercially reasonable terms or otherwise, or if NEP only partially exercises the buyout rights during the specified periods, the portion of the NEP subsidiaries’ cash distribution allocated to the noncontrolling Class B investors would significantly increase.
If XPLR does not exercise the buyout rights during the specified periods because of a lack of access to capital on commercially reasonable terms or otherwise, or if XPLR only partially exercises the buyout rights during the specified periods, the portion of the XPLR subsidiaries’ cash distribution allocated to the noncontrolling Class B investors would significantly increase.
If NEE Management terminates the MSA, if NEER terminates the management sub-contract or if either of them defaults in the performance of its obligations under the respective agreement, NEP may be unable to contract with a substitute service provider on similar terms, and the costs of substituting service providers may be substantial.
If NEE Management terminates the MSA, if NEER terminates the management sub-contract or if either of them defaults in the performance of its obligations under the respective agreement, XPLR may be unable to contract with a substitute service provider on similar terms, and the costs of substituting service providers may be substantial.
NEP has agreed, and will cause certain affiliates to, indemnify NEE Management and its affiliates and any of their directors, officers, agents, members, partners, stockholders and employees and other representatives of NEE Management and its affiliates to the fullest extent permitted by law from and against any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection with NEP's, NEP OpCo GP's, NEP OpCo's and certain affiliates' operations, investments and activities or in respect of or arising from the MSA or the services provided thereunder by NEE Management and its affiliates, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the conduct in respect of which such persons have liability as described above.
XPLR has agreed, and will cause certain affiliates to, indemnify NEE Management and its affiliates and any of their directors, officers, agents, members, partners, stockholders and employees and other representatives of NEE Management and its affiliates to the fullest extent permitted by law from and against any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection with XPLR's, XPLR OpCo GP's, XPLR OpCo's and certain affiliates' operations, investments and activities or in respect of or arising from the MSA or the services provided thereunder by NEE Management and its affiliates, except to the extent that the claims, liabilities, losses, damages, costs or expenses are determined to have resulted from the conduct in respect of which such persons have liability as described above.
In addition, certain provisions in NEP's partnership agreement, including limitations upon the ability of unitholders to make binding proposals of other business to be considered at annual meetings or to request special meetings, may discourage unitholders from attempting to remove the general partner or otherwise change NEP's management.
In addition, certain provisions in XPLR's partnership agreement, including limitations upon the ability of unitholders to make binding proposals of other business to be considered at annual meetings or to request special meetings, may discourage unitholders from attempting to remove the general partner or otherwise change XPLR's management.
The holders of the noncontrolling Class B membership interests generally have certain registration rights that would facilitate such dispositions promptly and NEP cannot guarantee that these holders will not dispose of a substantial portion or all of their common units promptly upon conversion or settlement.
The holders of the noncontrolling Class B membership interests generally have certain registration rights that would facilitate such dispositions promptly and XPLR cannot guarantee that these holders will not dispose of a substantial portion or all of their common units promptly upon conversion or settlement.
Reductions in demand for natural gas in the U.S. and low market prices of natural gas could materially adversely affect NEP's pipeline investment's operations and cash flows. The price of natural gas fluctuates in response to changes in supply and demand, market uncertainty and additional factors that are beyond NEP's control.
Reductions in demand for natural gas in the U.S. and low market prices of natural gas could materially adversely affect XPLR's pipeline investment's operations and cash flows. The price of natural gas fluctuates in response to changes in supply and demand, market uncertainty and additional factors that are beyond XPLR's control.
NEP may retain separate counsel for itself or the holders of common units in the event of a conflict of interest between NEE and its affiliates, on the one hand, and NEP or the holders of common units, on the other, depending on the nature of the conflict. NEP does not intend to do so in most cases.
XPLR may retain separate counsel for itself or the holders of common units in the event of a conflict of interest between NEE and its affiliates, on the one hand, and XPLR or the holders of common units, on the other, depending on the nature of the conflict. XPLR does not intend to do so in most cases.
If exercised, NEP has the right to pay all or a portion of the buyout price in NEP non-voting common units (convertible into NEP common units) or NEP common units, as specified in the related limited liability company agreement, issued at the then-current market price of NEP common units, subject to certain limitations.
If exercised, XPLR has the right to pay all or a portion of the buyout price in XPLR non-voting common units (convertible into XPLR common units) or XPLR common units, as specified in the related limited liability company agreement, issued at the then-current market price of XPLR common units, subject to certain limitations.
A general partner of a limited partnership generally has unlimited liability for the obligations of the limited partnership except for those contractual obligations of the limited partnership that are expressly made without recourse to the general partner. NEP is organized under Delaware law and NEP conducts business in a number of other states.
A general partner of a limited partnership generally has unlimited liability for the obligations of the limited partnership except for those contractual obligations of the limited partnership that are expressly made without recourse to the general partner. XPLR is organized under Delaware law and XPLR conducts business in a number of other states.
For example, • failure to comply with the covenants in the agreements governing these obligations could result in an event of default under those agreements, which could be difficult to cure, result in bankruptcy or, with respect to subsidiary debt, result in loss of NEP OpCo's ownership interest in one or more of its subsidiaries or in some or all of their assets as a result of foreclosure; • NEP's and its subsidiaries’ debt service obligations require them to dedicate a substantial portion of their cash flow to pay principal and interest on their debt, thereby reducing, in the case of NEP's subsidiaries, their cash available for distribution to NEP and, in the case of NEP, its cash available for distribution to its unitholders; • NEP's and its subsidiaries’ substantial indebtedness could limit NEP's ability to fund operations of any projects acquired in the future and NEP's financial flexibility, which could reduce its ability to plan for and react to unexpected opportunities or challenges; • NEP's and its subsidiaries’ substantial debt service obligations make NEP vulnerable to adverse changes in general economic, credit markets, capital markets, industry, competitive conditions and government regulation that could place NEP at a disadvantage compared to competitors with less debt; • NEP's and its subsidiaries’ substantial indebtedness could limit NEP's ability to obtain financing for working capital, including, but not limited to, collateral postings, capital expenditures, debt service requirements and events of default, as well as, acquisitions and general partnership or other purposes; and • NEP's and its subsidiaries' failure to repay or refinance debt at or prior to maturity could limit NEP's ability to obtain financing for working capital.
For example, • failure to comply with the covenants in the agreements governing these obligations could result in an event of default under those agreements, which could be difficult to cure, result in bankruptcy or, with respect to subsidiary debt, result in loss of XPLR OpCo's ownership interest in one or more of its subsidiaries or in some or all of their assets as a result of foreclosure; • XPLR's and its subsidiaries’ debt service obligations require them to dedicate a substantial portion of their cash flow to pay principal and interest on their debt, thereby reducing, in the case of XPLR's subsidiaries, their cash available for distribution to XPLR OpCo and XPLR ; • XPLR's and its subsidiaries’ substantial indebtedness could limit XPLR's ability to fund operations of any projects acquired in the future and XPLR's financial flexibility, which could reduce its ability to plan for and react to unexpected opportunities or challenges; • XPLR's and its subsidiaries’ substantial debt service obligations make XPLR vulnerable to adverse changes in general economic, credit markets, capital markets, industry, competitive conditions and government regulation that could place XPLR at a disadvantage compared to competitors with less debt; • XPLR's and its subsidiaries’ substantial indebtedness could limit XPLR's ability to obtain financing for working capital, including, but not limited to, collateral postings, capital expenditures, debt service requirements and events of default, as well as development opportunities, acquisitions and general partnership or other purposes; and • XPLR's and its subsidiaries' failure to repay or refinance debt at or prior to maturity could limit XPLR's ability to obtain financing for working capital.
Examples of decisions that NEP GP and its affiliates may make in their individual capacities include: • appointment of three directors of NEP; • how to exercise voting rights with respect to the units NEP GP or its affiliates own in NEP OpCo and NEP; • whether to exchange NEP OpCo common units owned by NEE Equity for NEP common units or, with the approval of the conflicts committee, to have NEP OpCo redeem NEP OpCo common units owned by NEE Equity for cash; and • whether to consent to, among other things, NEP’s participation in certain activities or lines of business, the sale of all or substantially all of the assets of NEP, any merger, consolidation or conversion of NEP, dissolution of NEP, or an amendment to NEP OpCo’s partnership agreement.
Examples of decisions that XPLR GP and its affiliates may make in their individual capacities include: • appointment of three directors of XPLR; • how to exercise voting rights with respect to the units XPLR GP or its affiliates own in XPLR OpCo and XPLR; • whether to exchange XPLR OpCo common units owned by NEE Equity for XPLR common units or, with the approval of the conflicts committee, to have XPLR OpCo redeem XPLR OpCo common units owned by NEE Equity for cash; and • whether to consent to, among other things, XPLR’s participation in certain activities or lines of business, the sale of all or substantially all of the assets of XPLR, any merger, consolidation or conversion of XPLR, dissolution of XPLR or an amendment to XPLR OpCo’s partnership agreement.
If an affiliate transaction or the resolution of a conflict of interest is not approved by NEP's unitholders or the conflicts committee and the board determines that the resolution or course of action taken with respect to the affiliate transaction or conflict of interest satisfies either of the standards set forth in the third and fourth sub-bullets above, then it will be presumed that, in making its decision, the board acted in good faith, and in any proceeding brought by or on behalf of any limited partner or NEP challenging such determination, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
If an affiliate transaction or the resolution of a conflict of interest is not approved by XPLR's unitholders or the conflicts committee and the board determines that the resolution or course of action taken with respect to the affiliate transaction or conflict of interest satisfies either of the standards set forth in the third and fourth sub-bullets above, then it will be presumed that, in making its decision, the board acted in good faith, and in any proceeding brought by or on behalf of any limited partner or XPLR challenging such determination, the person bringing or prosecuting such proceeding will have the burden of overcoming such presumption.
If the interconnection or transmission arrangement for a project is terminated, NEP may not be able to replace it on similar terms to the existing arrangement, or at all, or NEP may experience significant delays or costs in connection with such replacement.
If the interconnection or transmission arrangement for a project is terminated, XPLR may not be able to replace it on similar terms to the existing arrangement, or at all, or XPLR may experience significant delays or costs in connection with such replacement.
These events are beyond NEP's control. Lower overall economic output could reduce the volume of natural gas transported or gathered. Transmission revenues could be affected by long-term economic declines which could result in the non-renewal of long-term contracts.
These events are beyond XPLR's control. Lower overall economic output could reduce the volume of natural gas transported or gathered. Transmission revenues could be affected by long-term economic declines which could result in the non-renewal of long-term contracts.
NEP shares insurance coverage with NEE and its affiliates, for which NEP reimburses NEE. NEE currently maintains liability insurance coverage for itself and its affiliates, including NEP, which covers legal and contractual liabilities arising out of bodily injury, personal injury or property damage to third parties.
XPLR shares insurance coverage with NEE and its affiliates, for which XPLR reimburses NEE. NEE currently maintains liability insurance coverage for itself and its affiliates, including XPLR, which covers legal and contractual liabilities arising out of bodily injury, personal injury or property damage to third parties.
The agreements governing NEP's subsidiaries’ project-level debt contain financial tests and covenants that NEP's subsidiaries must satisfy prior to making distributions and restrict the subsidiaries from making more than one distribution per quarter or per six-month period.
The agreements governing XPLR's subsidiaries’ project-level debt contain financial tests and covenants that XPLR's subsidiaries must satisfy prior to making distributions and restrict the subsidiaries from making more than one distribution per quarter or per six-month period.
Any such person or entity will not be liable to NEP or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to NEP.
Any such person or entity will not be liable to XPLR or to any limited partner for breach of any fiduciary duty or other duty by reason of the fact that such person or entity pursues or acquires such opportunity for itself, directs such opportunity to another person or entity or does not communicate such opportunity or information to XPLR.
The agreement continues until January 1, 2068 and thereafter renews for successive five-year periods unless NEP OpCo or NEE Management provides written notice to the other that it does not wish for the agreement to be renewed.
The agreement continues until January 1, 2068 and thereafter renews for successive five-year periods unless XPLR OpCo or NEE Management provides written notice to the other that it does not wish for the agreement to be renewed.
Additionally, as NEP is a publicly traded limited partnership listed on the NYSE, it is not required to have, and it does not currently have, a majority of independent directors on the board and is not required to establish a compensation committee or a nominating and corporate governance committee.
Additionally, as XPLR is a publicly traded limited partnership listed on the NYSE, it is not required to have, and it does not currently have, a majority of independent directors on the board and is not required to establish a compensation committee or a nominating and corporate governance committee.
These factors could also reduce the useful lives of and degrade equipment, interconnection facilities and transmission facilities, and materially increase maintenance and other costs. Unanticipated costs associated with maintaining or repairing NEP's projects and pipeline investment may reduce profitability.
These factors could also reduce the useful lives of and degrade equipment, interconnection facilities and transmission facilities, and materially increase maintenance and other costs. Unanticipated costs associated with maintaining or repairing XPLR's projects and pipeline investment may reduce profitability.
To the extent geopolitical factors, terrorist acts, cyberattacks or other similar events equate to a force majeure event under NEP's PPAs, the renewable energy counterparty may terminate such PPAs if such a force majeure event continues for a specified period.
To the extent geopolitical factors, terrorist acts, cyberattacks or other similar events equate to a force majeure event under the XPLR's PPAs, the renewable energy counterparty may terminate such PPAs if such a force majeure event continues for a specified period.
NEP also depends upon third-party pipelines and other facilities that transport natural gas to and from its pipeline investment. Because NEP does not own these third-party pipelines or facilities, their continuing operations are not within its control.
XPLR also depends upon third-party pipelines and other facilities that transport natural gas to and from its pipeline investment. Because XPLR does not own these third-party pipelines or facilities, their continuing operations are not within its control.
The ownership interests in the land subject to these easements, leases and rights-of-way may be subject to mortgages securing loans or other liens and other easements, lease rights and rights-of-way of third parties that were created prior to NEP's projects’ easements, leases and rights-of-way.
The ownership interests in the land subject to these easements, leases and rights-of-way may be subject to mortgages securing loans or other liens and other easements, lease rights and rights-of-way of third parties that were created prior to XPLR's projects’ easements, leases and rights-of-way.
Further, the integration and consolidation of acquisitions require substantial human, financial and other resources and, ultimately, NEP's acquisitions may divert NEP's management’s attention from its existing business concerns, disrupt its ongoing business or not be successfully integrated.
Further, the integration and consolidation of acquisitions require substantial human, financial and other resources and, ultimately, XPLR's acquisitions may divert XPLR's management’s attention from its existing business concerns, disrupt its ongoing business or not be successfully integrated.
Any failure of NEP's subsidiaries to maintain acceptable credit support or credit support providers to honor their obligations under their respective credit support arrangements could cause, among other things, events of default to arise under NEP's subsidiaries’ PPAs and financing agreements.
Any failure of XPLR's subsidiaries to maintain acceptable credit support or credit support providers to honor their obligations under their respective credit support arrangements could cause, among other things, events of default to arise under XPLR's subsidiaries’ PPAs and financing agreements.
Because the levels of wind and solar resources are variable and difficult to predict, NEP’s results of operations for individual wind and solar facilities specifically, and NEP's results of operations generally, may vary significantly from period to period, depending on the level of available resources.
Because the levels of wind and solar resources are variable and difficult to predict, XPLR’s results of operations for individual wind and solar facilities specifically, and XPLR's results of operations generally, may vary significantly from period to period, depending on the level of available resources.
NEP does not own all of the land on which the projects in its portfolio are located and they generally are, and its future projects may be, located on land occupied under long-term easements, leases and rights-of-way.
XPLR does not own all of the land on which the projects in its portfolio are located and they generally are, and its future projects may be, located on land occupied under long-term easements, leases and rights-of-way.
Additionally, valuation allowances may be needed for deferred tax assets that NEP estimates are more likely than not to be unusable, based on available evidence at the time the estimate is made.
Additionally, valuation allowances may be needed for deferred tax assets that XPLR estimates are more likely than not to be unusable, based on available evidence at the time the estimate is made.
Accordingly, if NEP makes distributions from current or accumulated earnings and profits as computed for U.S. federal income tax purposes, such distributions will generally be taxable to unitholders as ordinary dividend income for U.S. federal income tax purposes.
Accordingly, if XPLR makes distributions from current or accumulated earnings and profits as computed for U.S. federal income tax purposes, such distributions will generally be taxable to unitholders as ordinary dividend income for U.S. federal income tax purposes.
In addition, certain agreements and guarantee arrangements would require posting of additional collateral in the event of a ratings downgrade. Some of the factors that can affect credit ratings are cash flows, liquidity, the amount of debt as a component of total capitalization, the rating agencies' treatment of certain financing arrangements and other instruments convertible into equity.
In addition, certain agreements and guarantee arrangements would require posting of additional collateral in the event of a ratings downgrade. Some of the factors that can affect credit ratings are cash flows, liquidity, the amount of debt as a component of total capitalization, the rating agencies' treatment of certain financing arrangements and other instruments convertible into or settleable with equity.
Wind turbine or solar panel placement, interference from nearby wind projects or other structures and the effects of vegetation, snow, ice, land use and terrain also affect the amount of energy that NEP's wind and solar projects generate.
Wind turbine or solar panel placement, interference from nearby wind projects or other structures and the effects of vegetation, snow, ice, land use and terrain also affect the amount of energy that XPLR's wind and solar projects generate.
To the extent NEE or any of its affiliates experience covered losses under the insurance policies, the limit of NEP's coverage for potential losses may be decreased. NEE may also reduce or eliminate such coverage at any time.
To the extent NEE or any of its affiliates experience covered losses under the insurance policies, the limit of XPLR's coverage for potential losses may be decreased. NEE may also reduce or eliminate such coverage at any time.
Because these provisions may materially increase the capital NEP may need to expend to complete such a transaction, these provisions may preclude NEP from pursuing or consummating such transactions and limit the types of transactions NEP is able to consummate.
Because these provisions may materially increase the capital XPLR may need to expend to complete such a transaction, these provisions may limit or preclude XPLR from pursuing or consummating such transactions and limit the types of transactions XPLR is able to consummate.
NEER and certain of its affiliates are permitted to borrow funds received by NEP OpCo or its subsidiaries and is obligated to return these funds only as needed to cover project costs and distributions or as demanded by NEP OpCo.
NEER and certain of its affiliates are permitted to borrow funds received by XPLR OpCo or its subsidiaries and is obligated to return these funds only as needed to cover project costs and distributions or as demanded by XPLR OpCo.
Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for NEP will not have any duty to communicate or offer such opportunity to NEP.
Any such person or entity that becomes aware of a potential transaction, agreement, arrangement or other matter that may be an opportunity for XPLR will not have any duty to communicate or offer such opportunity to XPLR.
A unitholder could be liable for any and all of NEP's obligations as if the unitholder were a general partner if a court or government agency were to determine that: • NEP was conducting business in a state but had not complied with that particular state’s limited partnership statute; or • the unitholder’s right to act with other unitholders to remove or replace NEP GP, to approve some amendments to NEP's partnership agreement or to take other actions under NEP's partnership agreement constitute “control” of NEP's business.
A unitholder could be liable for any and all of XPLR's obligations as if the unitholder were a general partner if a court or government agency were to determine that: • XPLR was conducting business in a state but had not complied with that particular state’s limited partnership statute; or • the unitholder’s right to act with other unitholders to remove or replace XPLR GP, to approve some amendments to XPLR's partnership agreement or to take other actions under XPLR's partnership agreement constitute “control” of XPLR's business.
NEP's ability to use its NOLs to offset future taxable income could be substantially limited if NEP’s unitholders that own 5% or more of NEP’s outstanding common units, as defined under Code Section 382, increase their ownership in NEP by more than 50 percentage points over a rolling three-year period through, among other things, additional purchases of NEP's common units and certain types of reorganization transactions.
XPLR's ability to use its NOLs to offset future taxable income could be substantially limited if XPLR’s unitholders that own 5% or more of XPLR’s outstanding common units, as defined under Code Section 382, increase their ownership in XPLR by more than 50 percentage points over a rolling three-year period through, among other things, additional purchases of XPLR's common units and certain types of reorganization transactions.
Additionally, NEP risks overpaying for such projects or not making acquisitions on an accretive basis. Although NEP performs due diligence on prospective acquisitions, NEP may not discover all potential risks, operational issues or other issues in such projects.
Additionally, XPLR risks overpaying for such projects or not making acquisitions on an accretive basis. Although XPLR performs due diligence on prospective acquisitions, XPLR may not discover all potential risks, operational issues or other issues in such projects.
NEER and certain of its affiliates are permitted to withdraw funds received by NEP OpCo under the CSCS agreement, or NEP OpCo's subsidiaries in connection with certain long-term debt agreements, and hold them in an account of NEER or its affiliates to the extent the funds are not required to pay project costs or otherwise required to be retained by NEP's subsidiaries, until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or NEP OpCo otherwise demands the return of such funds.
NEER and certain of its affiliates are permitted to withdraw funds received by XPLR OpCo under the CSCS agreement, or XPLR OpCo's subsidiaries in connection with certain long-term debt agreements, and hold them in an account of NEER or its affiliates to the extent the funds are not required to pay project costs or otherwise required to be retained by XPLR's subsidiaries, until the financing agreements permit distributions to be made, or, in the case of XPLR OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or XPLR OpCo otherwise demands the return of such funds.
The vote of the holders of at least 66 2⁄3% of all outstanding common units and special voting units voting together as a single class is required to remove NEP's general partner.
The vote of the holders of at least 66 2⁄3% of all outstanding common units and special voting units voting together as a single class is required to remove XPLR's general partner.
Further, the vote of the holders of at least a majority of all outstanding common units and special voting units voting together as a single class is required to name a new general partner of NEP.
Further, the vote of the holders of at least a majority of all outstanding common units and special voting units voting together as a single class is required to name a new general partner of XPLR.
Further, the IRS or other tax authorities could challenge one or more tax positions NEP or NEP OpCo takes, such as the classification of assets under the income tax depreciation rules, the characterization of expenses (including, but not limited to, fees paid to NEE) for income tax purposes, the extent to which sales, use or goods and services tax applies to operations in a particular state or the availability of property tax exemptions with respect to NEP's projects.
Further, the IRS or other tax authorities could challenge one or more tax positions XPLR or XPLR OpCo takes, such as the classification of assets under the income tax depreciation rules, the characterization of expenses (including, but not limited to, fees paid to NEE) for income tax purposes, the extent to which sales, use or goods and services tax applies to operations in a particular state or the availability of property tax exemptions with respect to XPLR's projects.
In addition, although return-of-capital distributions are generally non-taxable to the extent of a unitholder’s basis in its units, such distributions will reduce the unitholder’s adjusted tax basis in its units, which will result in an increase in the amount of gain (or a decrease in the amount of loss) that will be recognized by the unitholder on a future disposition of NEP's common units, and to the extent any return-of-capital distribution exceeds a unitholder’s basis, such distributions will be treated as gain on the sale or exchange of the units. 24 Table of Contents Item 1B.
In addition, although return-of-capital distributions are generally non-taxable to the extent of a unitholder’s basis in its units, such distributions will reduce the unitholder’s adjusted tax basis in its units, which will result in an increase in the amount of gain (or a decrease in the amount of loss) that will be recognized by the unitholder on a future disposition of XPLR's common units, and to the extent any return-of-capital distribution exceeds a unitholder’s basis, such distributions will be treated as gain on the sale or exchange of the units. 26 Table of Contents Item 1B.
For renewable energy projects or pipelines located near populated areas, including, but not limited to, residential areas, commercial business centers, industrial sites and other public gathering areas, or areas more prone to wildfires, the level of damage resulting from certain of these risks could be greater.
For renewable energy projects, battery storage projects, other facilities or pipelines located near populated areas, including, but not limited to, residential areas, commercial business centers, industrial sites and other public gathering areas, or areas more prone to wildfires, the level of damage resulting from certain of these risks could be greater.
Affiliates of NEP GP, including, but not limited to, NEE and its other subsidiaries, are not prohibited from owning projects or engaging in businesses that compete directly or indirectly with NEP. NEE currently holds interests in, and may make investments in and purchases of, entities that acquire, own and operate clean energy projects.
Affiliates of XPLR GP, including, but not limited to, NEE and its other subsidiaries, are not prohibited from owning projects or engaging in businesses that compete directly or indirectly with XPLR. NEE currently holds interests in, and may make investments in and purchases of, entities that develop, acquire, own and operate clean energy projects.
Any failure by NEE Management or NEER to perform their administrative, O&M and construction management services obligations or the failure by NEP to identify and contract with replacement service providers, if required, could materially impact the successful operation of its projects. Under these agreements, certain NEE employees provide services to NEP.
Any failure by NEE Management or NEER to perform their administrative, O&M and development and construction management services obligations or the failure by XPLR to identify and contract with replacement service providers, if required, could materially impact the successful operation of its projects. Under these agreements, certain NEE employees provide services to XPLR.
NEP may not be able to maintain or obtain insurance of the type and amount NEP desires at reasonable rates and NEP may elect to self-insure some of its wind and solar projects.
XPLR may not be able to maintain or obtain insurance of the type and amount XPLR desires at reasonable rates and XPLR may elect to self-insure some of its wind and solar projects.
While NEP performs title searches, obtains title insurance, records its interests in the real property records of the projects’ localities and enters into non-disturbance agreements to protect itself against these risks, such measures may be inadequate to protect against all risk that NEP's rights to use the land on which its projects are or will be located and its projects’ rights to such easements, leases and rights-of-way could be lost or curtailed.
While XPLR performs title searches, obtains title insurance, records its interests in the real property records of the projects’ localities and enters into non-disturbance agreements to protect itself against these risks, such measures may be inadequate to protect against all risk that XPLR's rights to use the land on which its projects are or will be located and its projects’ rights to such easements, leases and rights-of-way could be lost or curtailed.
Any violation of such an order could result in the loss or curtailment of NEP's rights to use any federal land on which its projects are or will be located.
Any violation of such an order could result in the loss or curtailment of XPLR's rights to use any federal land on which its projects are or will be located.
However, if such person is NEP's general partner or any of its affiliates, the 9.99% limitation on voting power applies only to the election or removal of certain directors.
However, if such person is XPLR's general partner or any of its affiliates, the 9.99% limitation on voting power applies only to the election or removal of certain directors.
In connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by NEP GP or the board, or the conflicts committee of the board, must be made in good faith.
In connection with a situation involving a transaction with an affiliate or a conflict of interest, any determination by XPLR GP or the board, or the conflicts committee of the board, must be made in good faith.
If certain agreements with NEE Management or NEER are terminated, NEP may be unable to contract with a substitute service provider on similar terms. NEE's affiliates provide, or arrange for the provision of, administrative, O&M and construction management services under agreements with NEE Management and NEER, respectively.
If certain agreements with NEE Management or NEER are terminated, XPLR may be unable to contract with a substitute service provider on similar terms. NEE's affiliates provide, or arrange for the provision of, administrative, O&M and development and construction management services under agreements with NEE Management and NEER, respectively.
NEP and NEP OpCo have entered into a ROFR agreement with NEER granting NEER and its subsidiaries (other than NEP OpCo and its subsidiaries) a right of first refusal on any proposed sale of any of the NEP OpCo ROFR assets.
XPLR and XPLR OpCo have entered into a ROFR agreement with NEER granting NEER and its subsidiaries (other than XPLR OpCo and its subsidiaries) a right of first refusal on any proposed sale of any of the XPLR OpCo ROFR assets.
Because of these factors, NEP OpCo may not have sufficient available cash each quarter to pay a quarterly distribution per common unit or any other amount.
Because of these factors, XPLR OpCo may not have sufficient available cash each quarter to pay a quarterly distribution per common unit or any other amount.
In addition, if beneficiaries draw on credit support provided by NEECH, NEER and these other NEE affiliates, then NEP OpCo may be required to reimburse them for the amounts drawn, which could reduce NEP OpCo’s cash distributions. These events could decrease NEP's revenues, restrict distributions from its subsidiaries, or result in a sale of or foreclosure on its assets.
In addition, if beneficiaries draw on credit support provided by NEECH, NEER and these other NEE affiliates, then XPLR OpCo may be required to reimburse them for the amounts drawn, which could reduce XPLR OpCo’s cash distributions. These events could decrease XPLR's revenues, restrict distributions from its subsidiaries, or result in a sale of or foreclosure on its assets.
For example, NEP’s partnership agreement permits the board to make some decisions in its sole discretion, free of any duties to NEP or its unitholders other than the implied contractual covenant of good faith and fair dealing (which means that a court will enforce the reasonable expectations of the partners where the language of the partnership agreement does not provide for a clear course of action).
For example, XPLR’s partnership agreement permits the board to make some decisions in its sole discretion, free of any duties to XPLR or its unitholders other than the implied contractual covenant of good faith and fair dealing (which means that a court will enforce the reasonable expectations of the partners where the language of the XPLR partnership agreement does not provide for a clear course of action).
Such events of default could entitle customers to terminate their contracts with NEP's subsidiaries or could entitle lenders to accelerate indebtedness owed to them, which could result in the insolvency of NEP's subsidiaries.
Such events of default could entitle customers to terminate their contracts with XPLR's subsidiaries or could entitle lenders to accelerate indebtedness owed to them, which could result in the insolvency of XPLR's subsidiaries.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Assessment of an incident includes, but is not limited to, analysis of the urgency and operational or business impact of an incident and the status and effectiveness of incident defenses. NEE invests in personnel and technologies with the objective of limiting the frequency and impact of cybersecurity incidents.
Assessment of incidents includes, but is not limited to, analysis of the urgency and operational or business impact of an incident and the status and effectiveness of incident defenses. NEE invests in personnel and technologies with the objective of limiting the frequency and impact of cybersecurity incidents.
NEE operates a cybersecurity program which, among other objectives, seeks to identify potential unauthorized occurrences on or conducted through the electronic information resources owned or used by NEE (information systems), including those used for the provision of functions to NEP, that may result in adverse effects on the confidentiality, integrity or availability of its information systems or any information residing on those systems (cybersecurity threats), as well as on its operations, including its provision of services to NEP.
NEE operates a cybersecurity program which, among other objectives, seeks to identify potential unauthorized occurrences on or conducted through the electronic information resources owned or used by NEE (information systems), including those used for the provision of functions to XPLR, that may result in adverse effects on the confidentiality, integrity or availability of its information systems or any information residing on those systems (cybersecurity threats), as well as on its operations, including its provision of services to XPLR.
Following documented cybersecurity incident response procedures, the cybersecurity incident response team escalates information about cybersecurity incidents depending on circumstances to oversight committees and personnel charged with managing specific aspects of cybersecurity risk, including, among others, the Cybersecurity and Resiliency Committee, the Cybersecurity Governance Executive Committee and individuals serving as officers and directors of NEP.
Following documented cybersecurity incident response procedures, the cybersecurity incident response team escalates information about cybersecurity incidents depending on circumstances to oversight committees and personnel charged with managing specific aspects of cybersecurity risk, including, among others, the Cybersecurity and Resiliency Committee, the Cybersecurity Governance Executive Committee and individuals serving as officers and directors of XPLR.
NEE operates a cybersecurity operations center and has cyber threat intelligence capability to identify, monitor, detect and respond to cybersecurity threats, including those related to NEP, which is led by a cybersecurity incident response team.
NEE operates a cybersecurity operations center and has cyber threat intelligence capability to identify, monitor, detect and respond to cybersecurity threats, including those related to XPLR, which is led by a cybersecurity incident response team.
Although there have been no cybersecurity incidents or threats with a material impact on NEE's nor NEP's business strategy, results of operations, or financial condition, NEE's information technology systems could fail or be breached, and such systems could be inoperable, causing NEE and NEP to be unable to fulfill critical business operations.
Although there have been no cybersecurity incidents or threats with a material impact on NEE's nor XPLR's business strategy, results of operations, or financial condition, NEE's information technology systems could fail or be breached, and such systems could be inoperable, causing NEE and XPLR to be unable to fulfill critical business operations.
Item 1C. Cybersecurity Risk Management and Strategy Under agreements with NEE Management and NEER, NEE's affiliates provide or arrange for the provision to NEP of substantially all of NEP's information technology functions, including those relating to cybersecurity. NEP's board oversees the provision of these services.
Item 1C. Cybersecurity Risk Management and Strategy Under agreements with NEE Management and NEER, NEE's affiliates provide or arrange for the provision to XPLR of substantially all of XPLR's information technology functions, including those relating to cybersecurity. XPLR's board oversees the provision of these services.
The cybersecurity capabilities of third-party vendors providing system solutions to NEE or accessing NEE’s systems or data, including those related to NEP, is evaluated as part of the new vendor establishment process. NEE retains the right to audit vendors for cybersecurity of products and services.
The cybersecurity capabilities of third-party vendors providing services to NEE or accessing NEE’s systems or data, including those related to XPLR, are evaluated as part of the new vendor establishment process. NEE retains the right to audit vendors for cybersecurity of products and services.
NEE uses these resources to identify cybersecurity threats and monitor for anomalies that may result in cybersecurity incidents on its systems and monitors for impacts to external vendors or suppliers, including those related to NEP.
NEE uses these resources, and leverages third party resources, to identify cybersecurity threats and monitor for anomalies that may result in cybersecurity incidents on its systems, and monitors for impacts to their vendors or suppliers, including those related to XPLR.
Where applicable in NEE’s or NEP's contracts with third-party vendors accessing their systems or data, standard data security terms and conditions are utilized and minimum amounts of insurance coverage based on the risk of exposure are required.
Where applicable in NEE’s or XPLR's contracts with third-party vendors accessing their systems or data, standard data security terms and conditions are utilized and minimum amounts of insurance coverage based on the risk of exposure are required. NEE operates U.S. critical infrastructure for XPLR.
There have been cyberattacks and other physical attacks within the energy industry on energy infrastructure such as substations, gas pipelines and related assets in the past and there may be such attacks in the future.
There have been cyberattacks and other physical attacks within the energy industry on energy infrastructure such as substations, gas pipelines and related assets and there may be such attacks in the future. In addition, the advancement of artificial intelligence has given rise to new security risks.
These NEE committees are charged with governing cybersecurity, cyber risks and resilience activities as well as the cyber and physical security policies and programs for NEE and its subsidiaries as well as NEP.
These NEE committees are charged with governing cybersecurity, cyber risks and resilience activities as well as the cyber and physical security policies and programs for NEE and its subsidiaries as well as XPLR. The XPLR board is responsible for the oversight of risks from cybersecurity threats. XPLR continues to utilize, through the MSA, NEE's cybersecurity program and capabilities.
Further, NEE has a cybersecurity training program and a mock phishing program to educate and train employees on potential cybersecurity risks and on privacy and data protection. Given geopolitical events, NEE continues to take steps to protect against cybersecurity threats to its and NEP's critical infrastructure, including communications with personnel to ensure heightened awareness of increased cybersecurity threats worldwide.
Given geopolitical events, NEE continues to take steps to defend against cybersecurity threats to its and XPLR's critical infrastructure, including communications with personnel to ensure heightened awareness of increased cybersecurity threats worldwide.
NEE conducts an annual internal cybersecurity drill with the participation from time to time of local, state and federal agencies to test its capability of dealing with a simulated cyber-attack. NEE also participates in industry forums and trade groups, as well as, in NERC activities to learn and apply these learnings to its cybersecurity policies and procedures.
NEE conducts periodic desktop exercises and an annual cybersecurity drill with the participation from time to time of local, state and U.S. federal agencies to test its capability of dealing with a simulated cyberattack.
These individuals participate in or receive updates from not only the cybersecurity incident response team but also cybersecurity 25 Table of Contents oversight committees, such as the Cybersecurity and Resiliency Committee comprised of various members of management, including NEP's chief financial officer, general counsel, and president and the Cybersecurity Governance Executive Committee comprised of various members of management, including NEE's vice president of internal audit and executive director of emergency preparedness.
They have careers that represent more than 50 years of combined experience related to the management and protection of technologies. These individuals participate in or receive updates from not only the cybersecurity incident response team but also cybersecurity oversight committees, such as the Cybersecurity and Resiliency Committee and the Cybersecurity Governance Executive Committee.
NEE uses third parties to periodically assess the extent to which its cybersecurity risk management protocols align with the U.S. Department of Energy’s Cybersecurity Capability Maturity Model standard. Certain functions within NEE are required to comply with certain regulatory standards that are designed to protect against cybersecurity incidents, including the NERC Critical Infrastructure Protection standards.
NEE also participates in industry forums and various trade groups, as well as in NERC activities, to learn and apply these incident preparedness learnings to its cybersecurity policies and procedures. NEE uses third parties to periodically assess the extent to which its cybersecurity risk management protocols align with the U.S. Department of Energy’s Cybersecurity Capability Maturity Model standard.
Governance NEE's chief information officer, the vice president, IT infrastructure and cybersecurity and the chief information security officer are responsible for assessing and managing material risks from cybersecurity threats, including those related to NEP, and have careers that represent more than 75 years of combined experience related to the management and protection of technologies.
The disclosures herein should be reviewed with the risk factors included in Item 1A. Governance NEE's vice president and chief information officer, vice president cybersecurity and executive director cybersecurity are responsible for assessing and managing material risks from cybersecurity threats, including, through the MSA, those related to 27 Table of Contents XPLR.
The NEP board is responsible for the oversight of risks from cybersecurity threats and receives cybersecurity updates from NEE’s chief information officer and its vice president, IT infrastructure and cybersecurity. Significant active cybersecurity incidents and threats are communicated to board personnel as they occur.
Significant active cybersecurity incidents and threats are communicated to XPLR's board as they occur.
Removed
The disclosures herein should be reviewed with the risk factors included in Item 1A.
Added
Certain functions within NEE are required to comply with certain regulatory standards that are designed to protect against cybersecurity incidents, including the NERC Critical Infrastructure Protection standards. Further, NEE has a cybersecurity training program and a mock phishing program to educate and train employees on potential cybersecurity risks and on privacy and data protection.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties NEP and its subsidiaries maintain properties consisting of renewable generation projects and, through an equity method investment, natural gas pipeline assets; the principal properties are described in Item 1. Business, which description is incorporated herein by reference.
Item 2. Properties XPLR and its subsidiaries maintain properties consisting of clean generation projects and, through an equity method investment, natural gas pipeline assets; the principal properties are described in Item 1. Business, which description is incorporated herein by reference.
See Item 1. Certain of the generating facilities and the natural gas pipeline assets are encumbered by liens securing various financings. Additionally, some of the generating facilities and the natural gas pipeline assets occupy or use real property that is not owned by NEP subsidiaries, primarily through various easements, leases, rights-of-way, permits or licenses from private landowners or governmental entities.
Additionally, some of the generating facilities and the natural gas pipeline assets occupy or use real property that is not owned by XPLR subsidiaries, primarily through various easements, leases, rights-of-way, permits or licenses from private landowners or governmental entities.
Character of Ownership The majority of NEP's generating facilities and NEP's investment in natural gas pipeline assets are owned by NEP subsidiaries and are currently subject to NEE Equity's 51.4% noncontrolling limited partner interest in NEP OpCo. In addition, NEER owns noncontrolling ownership interests in certain NEP OpCo subsidiaries and third-party investors own noncontrolling interests in certain NEP OpCo subsidiaries.
Character of Ownership Substantially all of XPLR's generating facilities and XPLR's investment in natural gas pipeline assets are owned by XPLR subsidiaries and are currently subject to NEE Equity's approximately 51.4% noncontrolling limited partner interest in XPLR OpCo.
Added
In addition, NEER owns noncontrolling ownership interests in certain XPLR OpCo subsidiaries and third-party investors own noncontrolling interests in certain XPLR OpCo subsidiaries. See Item 1. Certain of the generating facilities and the natural gas pipeline assets are encumbered by liens securing various financings.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Item 3. Legal Proceedings With regard to environmental proceedings to which a governmental authority is a party, NEP's policy is to disclose any such proceeding if it is reasonably expected to result in monetary sanctions of greater than or equal to $1 million. Item 4. Mine Safety Disclosures Not applicable 26 Table of Contents PART II
Item 3. Legal Proceedings With regard to environmental proceedings to which a governmental authority is a party, XPLR's policy is to disclose any such proceeding if it is reasonably expected to result in monetary sanctions of greater than or equal to $1 million. Item 4. Mine Safety Disclosures Not applicable 28 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Under the MSA, for any quarter in which NEP OpCo has adjusted available cash at least equal to a base incentive amount (total common units outstanding multiplied by $0.3525, plus approximately $14 million paid to NEE Management quarterly for IDRs) any excess adjusted available cash will be split 75% to NEP OpCo common unitholders and 25% to NEE Management for IDRs.
Under the MSA, for any quarter in which XPLR OpCo has adjusted available cash at least equal to a base incentive amount (total common units outstanding multiplied by $0.3525, plus approximately $14 million paid to NEE Management quarterly for IDRs) any excess adjusted available cash will be split 75% to XPLR OpCo common unitholders and 25% to NEE Management for IDRs.
If NEP OpCo's adjusted available cash for any quarter falls below the base incentive amount, the IDRs will be paid using the target quarterly distribution levels below calculated using the number of NEP OpCo common units outstanding on January 30, 2017, subject to certain adjustments for repurchases, splits and combinations: Total Quarterly Distribution per NEP OpCo Common Unit Target Amount Marginal Percentage Interest in Adjusted Available Cash NEP OpCo Common Unitholders NEE Management Minimum Quarterly Distribution $0.1875 100% —% First Target Quarterly Distribution Above $0.1875 up to $0.215625 100% —% Second Target Quarterly Distribution Above $0.215625 up to $0.234375 85% 15% Third Target Quarterly Distribution Above $0.234375 up to $0.281250 75% 25% Thereafter Above $0.281250 50% 50% During 2023, 2022 and 2021, NEP paid IDR fees of approximately $39 million, $152 million and $129 million, respectively.
If XPLR OpCo's adjusted available cash for any quarter falls below the base incentive amount, the IDRs will be paid using the target quarterly distribution levels below calculated using the number of XPLR OpCo common units outstanding on January 30, 2017, subject to certain adjustments for repurchases, splits and combinations: Total Quarterly Distribution per XPLR OpCo Common Unit Target Amount Marginal Percentage Interest in Adjusted Available Cash XPLR OpCo Common Unitholders NEE Management Minimum Quarterly Distribution $0.1875 100% —% First Target Quarterly Distribution Above $0.1875 up to $0.215625 100% —% Second Target Quarterly Distribution Above $0.215625 up to $0.234375 85% 15% Third Target Quarterly Distribution Above $0.234375 up to $0.281250 75% 25% Thereafter Above $0.281250 50% 50% During 2023 and 2022, XPLR paid IDR fees of approximately $39 million and $152 million, respectively.
The majority of such available cash is expected to be derived from the operations of the projects. The cash available for distribution could fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind and solar resource, maintenance and outage schedules, timing of debt service and other factors.
The majority of such available cash is expected to be derived from the operations of the projects and could fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind and solar resource, maintenance and outage schedules, timing of debt service and other factors.
The IDR fee paid by NEP is capped at $39.25 million per quarter ($157 million per year) if quarterly distributions to NEP OpCo unitholders are at or above $0.7625 ($3.05 on an annualized basis) per NEP OpCo common unit.
The IDR fee paid by XPLR is capped at $39.25 million per quarter ($157 million per year) if quarterly distributions to XPLR OpCo unitholders are at or above $0.7625 ($3.05 on an annualized basis) per XPLR OpCo common unit.
In May 2023, the MSA was amended to suspend the IDR fee to be paid by NEP in respect to each calendar quarter beginning with the IDR fee related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026.
In May 2023, the MSA was amended to suspend the IDR fee to be paid by XPLR in respect to each calendar quarter beginning with the IDR fee related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026.
IDRs represent the right to receive a fee calculated based on the amount of adjusted available cash from operating surplus, as defined in the MSA, that NEP OpCo would be able to distribute to its common 27 Table of Contents unitholders after specified minimum quarterly and target quarterly distribution levels have been achieved.
IDRs represent the right to receive a fee calculated based on the amount of adjusted available cash from operating surplus, as defined in the MSA, that XPLR OpCo would be able to distribute to its common unitholders after specified minimum quarterly and target quarterly distribution levels have been achieved.
Purchases of Equity Securities by Affiliated Purchaser. In October 2015, NEP was advised that NEE authorized a program to purchase, from time to time, up to $150 million of NEP's outstanding common units.
Purchases of Equity Securities by Affiliated Purchaser. In October 2015, XPLR was advised that NEE authorized a program to purchase, from time to time, up to $150 million of XPLR's outstanding common units.
The purpose of the program is not to cause NEP’s common units to be delisted from the NYSE or to cause the common units to be deregistered with the SEC. During 2023, 2022 and 2021, there were no purchases under the program.
The purpose of the program is not to cause XPLR’s common units to be delisted from the NYSE or to cause the common units to be deregistered with the SEC. During 2024, 2023 and 2022, there were no purchases under the program.
At December 31, 2023, the dollar value of units that may yet be purchased under the program was approximately $114 million. Item 6. Reserved 28 Table of Contents
At December 31, 2024, the dollar value of units that may yet be purchased under the program was approximately $114 million. Item 6. Reserved 30 Table of Contents
Item 5. Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Common Unit Data. NEP's common units are traded on the NYSE under the symbol "NEP". NEP's partnership agreement requires it to distribute available cash quarterly.
Item 5. Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities Common Unit Data. XPLR's common units are traded on the NYSE under the symbol "XIFR". XPLR's partnership agreement requires it to distribute all of its available cash quarterly.
NEP OpCo's partnership agreement requires it to distribute all of its available cash to its unitholders, including NEP, each quarter. Generally, NEP OpCo's available cash is all cash on hand at the date of determination relating to that quarter, plus any funds borrowed, less the amount of cash reserves established by NEP OpCo GP.
Generally, XPLR OpCo's available cash is all cash on hand at the date of determination relating to that quarter, plus any funds borrowed, less the amount of cash reserves established by XPLR OpCo GP.
As of January 31, 2024, there were 13 holders of record of NEP's common units. Incentive Distribution Rights Fee.
As of January 31, 2025, there were 11 holders of record of XPLR's common units. Incentive Distribution Rights Fee.
Generally, available cash is all cash on hand at the date of determination relating to that quarter (including any expected distributions from NEP OpCo), less the amount of cash reserves established by the board. NEP currently expects that cash reserves would be established solely to provide for the payment of income taxes by NEP, if any.
Generally, available cash is all cash on hand at the date of determination relating to that quarter (including any expected distributions from XPLR OpCo), less the amount of cash reserves established by the board.
Although, as described above, NEP currently expects that cash reserves would be established by the board solely to provide for the payment of NEP's income taxes, if any, NEP expects NEP OpCo to establish cash reserves prior to making distributions to NEP to pay costs and expenses of NEP's subsidiaries, in addition to NEP's expenses, as well as any debt service requirements and future capital expenditures.
XPLR expects XPLR OpCo to establish cash reserves prior to making distributions, if any, to XPLR to pay costs and expenses of XPLR's subsidiaries, in addition to XPLR's expenses, as well as any debt service requirements, future capital expenditures and to provide for the exercise of the buyout rights relating to noncontrolling Class B members' interest under certain limited liability company agreements to which XPLR and certain of its subsidiaries is a party or by which it is bound, or its assets are subject, or otherwise for the proper conduct of XPLR OpCo's business.
Removed
Cash flow is generated from distributions NEP receives from NEP OpCo each quarter.
Added
XPLR currently expects that any cash on hand at the date of determination relating to that quarter would be reserved by the board to provide for the proper conduct of XPLR's business. Cash flow is generated from distributions XPLR receives from XPLR OpCo each quarter.
Removed
In February 2024, NEP paid a distribution of $0.88 per common unit to its unitholders of record on February 6, 2024. See Management's Discussion – Liquidity and Capital Resources – Financing Arrangements and Note 14 with respect to distribution restrictions. There are currently no restrictions in effect that limit NEP's ability to pay distributions to its unitholders.
Added
XPLR OpCo's partnership agreement requires it to distribute all of its available cash to its unitholders, including XPLR, each quarter. However, XPLR OpCo GP may reserve cash that otherwise would be available for distribution to unitholders, including XPLR, for other business purposes in its discretion.
Added
XPLR OpCo currently expects that any cash on hand at the date of determination relating to that quarter would be reserved to pay costs and expenses of XPLR's subsidiaries, in addition to XPLR's expenses, as well as any debt service requirements, future capital expenditures and to provide for the exercise of the buyout rights relating to noncontrolling Class B members' interest under certain limited liability company agreements to which XPLR and certain of its subsidiaries is a party or by which it is bound, or its assets are subject, or otherwise for the proper conduct of XPLR OpCo's business. 29 Table of Contents In January 2025, as part of a strategic repositioning, XPLR's board and XPLR OpCo GP reserved cash for other business purposes as described above and accordingly XPLR suspended distributions to its common unitholders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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A disposal group that meets held for sale criteria and also represents a strategic shift that will have a major effect on the entity's operations and financial results is also reflected as discontinued operations in the statements of income and prior periods are recast to reflect the earnings or losses from such business as income from discontinued operations, net of tax expense.
A disposal group that meets held for sale criteria and also represents a strategic shift that will have a major effect on the entity's operations and financial results is reflected as discontinued operations in the statements of income and prior periods are recast to reflect the earnings or losses from such business as income from discontinued operations, net of tax expense.
Assets Held for Sale and Discontinued Operations Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from the board, commits to a plan to sell and sale is expected to be completed within one year.
Discontinued Operations Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from the board, commits to a plan to sell and a sale is expected to be completed within one year.
While NEP has the right to exercise the buyout right to purchase the noncontrolling Class B membership interests during a specified period of time as set forth in the related limited liability company agreement and may exercise the buyout right by paying cash, NEP may exercise, or begin to exercise if exercisable only in part, the buyout right on or at the beginning of the buyout period, and the buyout price may consist of the maximum percentage of NEP non-voting common units or NEP common units, as specified in the related limited liability company agreement.
While XPLR has the right to exercise the buyout right to purchase the noncontrolling Class B membership interests during a specified period of time as set forth in the related limited liability company agreement and may exercise the buyout right by paying cash, XPLR may exercise, or begin to exercise if exercisable only in part, the buyout right on or at the beginning of the buyout period, and the buyout price may consist of the maximum percentage of XPLR non-voting common units or XPLR common units, as specified in the related limited liability company agreement.
The rating is subject to revision or withdrawal at any time by the assigning rating organization. (b) The outlook indicated by each of Moody's, S&P and Fitch is stable.
The rating is subject to revision or withdrawal at any time by the assigning rating organization. (b) The outlook indicated by each of Moody's and Fitch is stable. The outlook indicated by S&P is negative.
See Note 4. Quantitative and Qualitative Disclosures About Market Risk NEP is exposed to market risks in its normal business activities. Market risk is measured as the potential loss that may result from hypothetical reasonably possible market changes associated with its business over the next year. The types of market risks include interest rate and counterparty credit risks.
See Note 4. Quantitative and Qualitative Disclosures About Market Risk XPLR is exposed to market risks in its normal business activities. Market risk is measured as the potential loss that may result from hypothetical reasonably possible market changes associated with its business over the next year. The types of market risks include interest rate and counterparty credit risks.
Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from NEP's current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. See Note 8.
Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from XPLR's current estimate of the tax liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which they are determined. See Note 8.
Interest rate swaps are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements (see Note 6). NEP has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates.
Interest rate swaps are used to mitigate and adjust interest rate exposure when deemed appropriate based upon market conditions or when required by financing agreements (see Note 6). XPLR has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates.
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 2 – Noncontrolling Interests and Note 14 – Class B Noncontrolling Interests). In addition, NEP expects to fund debt maturities through refinancing.
XPLR 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 2 – Noncontrolling Interests and Note 14 – Class B Noncontrolling Interests). In addition, XPLR expects to fund debt maturities through refinancing.
During 2023, NEP OpCo issued $750 million in aggregate principal amount of 7.25% senior unsecured notes due in 2029 and, in connection with projects acquired, an indirect subsidiary of NEP borrowed approximately $330 million under a senior secured limited-recourse variable rate term loan facility maturing in 2028.
During 2023, XPLR OpCo issued $750 million in aggregate principal amount of 7.25% senior unsecured notes due in 2029 and, in connection with projects acquired, an indirect subsidiary of XPLR borrowed approximately $330 million under a senior secured limited-recourse variable rate term loan facility maturing in 2028.
ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. NEP recognizes tax liabilities in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available.
ASC 740 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, and disclosure and transition. XPLR recognizes tax liabilities in accordance with ASC 740 and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available.
The majority of such available cash is expected to be derived from the operations of the projects. The cash available for distribution could fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind and solar resource, maintenance and outage schedules, timing of debt service and other factors.
The majority of such available cash is expected to be derived from the operations of the projects and could fluctuate from quarter to quarter, and in some cases significantly, as a result of the performance of the projects, seasonality, fluctuating wind and solar resource, maintenance and outage schedules, timing of debt service and other factors.
In May 2023, the MSA was amended to suspend the IDR fee to be paid by NEP in respect to each calendar quarter beginning with the IDR fee related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026. See Item 5 – Incentive Distribution Rights Fee.
In May 2023, the MSA was amended to suspend the IDR fee to be paid by XPLR in respect to each calendar quarter beginning with the IDR fee related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026. See Item 5 – Incentive Distribution Rights Fee.
NEP has buyout rights, subject to certain limitations and/or extensions, under which NEP has the right to pay a portion of the buyout price with respect to the noncontrolling Class B membership interests in NEP non-voting common units or NEP common units, as specified in the related limited liability company agreement.
XPLR has buyout rights, subject to certain limitations and/or extensions, under which XPLR has the right to pay a portion of the buyout price with respect to the noncontrolling Class B membership interests in XPLR non-voting common units or XPLR common units, as specified in the related limited liability company agreement.
Interest Rate Risk NEP is exposed to risk resulting from changes in interest rates associated with outstanding and expected future debt issuances and borrowings. NEP manages interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed rate and variable rate debt.
Interest Rate Risk XPLR is exposed to risk resulting from changes in interest rates associated with outstanding and expected future debt issuances and borrowings. XPLR manages interest rate exposure by monitoring current interest rates, entering into interest rate contracts and using a combination of fixed rate and variable rate debt.
NEP monitors and manages credit risk through credit policies that include a credit approval process and the use of credit mitigation measures such as prepayment arrangements in certain circumstances. NEP also seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
XPLR monitors and manages credit risk through credit policies that include a credit approval process and the use of credit mitigation measures such as prepayment arrangements in certain circumstances. XPLR also seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.
Carrying Value of Equity Method Investments NEP evaluates its equity method investments for impairment when events or changes in circumstances indicate that the fair value of the investment is less than the carrying value and the investment may be other-than-temporarily impaired.
Carrying Value of Equity Method Investments XPLR evaluates its equity method investments for impairment when events or changes in circumstances indicate that the fair value of the investment is less than the carrying value and the investment may be other-than-temporarily impaired.
For the year ended December 31, 2023, NEP recorded income tax benefit of $25 million on loss from continuing operations before income taxes of $257 million, resulting in an effective tax rate of approximately 10%.
For the year ended December 31, 2023, XPLR recorded income tax benefit of $25 million on loss from continuing operations before income taxes of $257 million, resulting in an effective tax rate of approximately 10%.
If NEER fails to return withdrawn funds when required by NEP OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER in the amount of such withdrawn funds.
If NEER fails to return withdrawn funds when required by XPLR OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER in the amount of such withdrawn funds.
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.
Capital expenditures primarily represent the estimated cost of capital improvements, including development and construction expenditures that are expected to increase XPLR 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.
NEP OpCo will have a claim for any funds that NEER fails to return: • when required by its subsidiaries’ financings; • when its subsidiaries’ financings otherwise permit distributions to be made to NEP OpCo; • when funds are required to be returned to NEP OpCo; or • when otherwise demanded by NEP OpCo.
XPLR OpCo will have a claim for any funds that NEER fails to return: • when required by its subsidiaries’ financings; • when its subsidiaries’ financings otherwise permit distributions to be made to XPLR OpCo; • when funds are required to be returned to XPLR OpCo; or • when otherwise demanded by XPLR OpCo.
Assessment of whether an investment is other-than-temporarily impaired involves, among other factors, consideration of the length of time that the fair value is below the carrying value, current expected performance relative to the expected performance when the investment was 37 Table of Contents initially made, performance relative to peers, industry performance relative to the economy, credit rating, regulatory actions and legal and permitting challenges.
Assessment of whether an investment is other-than-temporarily impaired involves, among other factors, consideration of the length of time that the fair value is below the carrying value, current expected performance relative to the expected performance when the investment was initially made, performance relative to peers, industry performance relative to the economy, credit rating, regulatory actions and legal and permitting challenges.
To finalize purchase accounting for significant transactions, NEP may utilize the services of independent valuation specialists to assist in the determination of the fair value of acquired intangible assets and property, plant and equipment.
To finalize purchase accounting for significant transactions, XPLR may utilize the services of independent valuation specialists to assist in the determination of the fair value of acquired intangible assets and property, plant and equipment.
Investments that are other-than-temporarily impaired are written down to their estimated fair value and cannot subsequently be written back up for increases in estimated fair value. Impairment losses, if any, would be recorded in equity in earnings (losses) of equity method investees in NEP’s consolidated statements of income.
Investments that are other-than-temporarily impaired are written down to their estimated fair value and cannot subsequently be written back up for increases in estimated fair value. Impairment losses, if any, would be recorded in equity in earnings of equity method investees in XPLR’s consolidated statements of income (loss).
Critical accounting policies are those that NEP believes are both most important to the portrayal of its financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain.
Critical Accounting Estimates Critical accounting estimates are those that XPLR believes are both most important to the portrayal of its financial condition and results of operations, and require complex, subjective judgments, often as a result of the need to make assumptions about the effect of matters that are inherently uncertain.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates NEP is using to manage the underlying businesses.
These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates XPLR is using to manage the underlying businesses.
For business acquisitions, the allocation of the purchase price may be modified up to one year from the date of the acquisition if new information is obtained about the fair value of assets acquired and liabilities assumed. See Note 3.
For business acquisitions, the allocation of the purchase price may be modified up to one year from the date of the acquisition if new information is obtained about the fair value of assets acquired and liabilities assumed.
Liquidity and Capital Resources NEP’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 15, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 13 and Note 6), distributions to common unitholders, and distributions to the holders of noncontrolling interests.
Liquidity and Capital Resources XPLR’s ongoing operations use cash to fund O&M expenses, including related party fees discussed in Note 15, maintenance capital expenditures, debt service payments and related derivative obligations (see Note 13 and Note 6) and distributions to the holders of noncontrolling interests.
In evaluating NEP's ability to recover its deferred tax assets individually by entity and by taxing jurisdiction, NEP considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
In evaluating XPLR's ability to recover its deferred tax assets individually by entity and by taxing jurisdiction, XPLR considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
Impairment of Long-Lived Assets NEP evaluates long-lived assets, including finite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset.
Impairment of Long-Lived Assets XPLR evaluates long-lived assets, including finite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. 38 Table of Contents An impairment loss is required to be recognized if the carrying value of the asset exceeds the undiscounted future net cash flows associated with that asset.
In projecting future taxable income, NEP begins with historical results and incorporates assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.
In projecting future taxable income, XPLR begins with historical results and incorporates assumptions including the amount of future state, U.S. federal and foreign pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies.
Income from Discontinued Operations Income from discontinued operations reflects the gain recognized on the sale of the Texas pipelines of approximately $375 million ($329 million after tax) as well as the operations of the Texas pipelines prior to the sale in December 2023. See Note 4.
Income from Discontinued Operations Income from discontinued operations for the year ended December 31, 2023 reflects the gain recognized on the sale of the Texas pipelines of approximately $375 million ($329 million after tax) as well as the operations of the Texas pipelines prior to the sale in December 2023. See Note 4.
Also during 2023, an indirect subsidiary of NEP borrowed approximately $237 million under a revolving credit facility and in December 2023, as part of the sale of the Texas pipelines, $437 million outstanding under the credit agreement was paid off which included a $200 million term loan.
Also during 2023, an indirect subsidiary of XPLR borrowed approximately $237 million under a revolving credit facility and in December 2023, as part of the sale of the Texas pipelines, $437 million outstanding under the credit agreement was paid off which included a $200 million term loan. See Note 13.
Income Taxes NEP recognizes in income its applicable ownership share of income taxes due to the disregarded tax status of substantially all of the projects under NEP OpCo. Net income or loss attributable to noncontrolling interests includes minimal income taxes.
Income Tax Expense (Benefit) XPLR recognizes in income its applicable ownership share of income taxes due to the disregarded tax status of substantially all of the projects under XPLR OpCo. Net income or loss attributable to noncontrolling interests includes minimal income taxes.
NEP expects to satisfy these requirements primarily with cash on hand and cash generated from operations.
XPLR expects to satisfy these requirements primarily with cash on hand and cash generated from operations.
In January 2023, NEP completed the sale of a 62 MW wind project located in North Dakota and in December 2023, NEP sold its Texas pipelines which has been presented as discontinued operations (see Note 2 – Disposal of Wind Project and – Assets Held for Sale and Discontinued Operations and Note 4).
In January 2023, XPLR completed the sale of a 62 MW wind project located in North Dakota and in December 2023, XPLR sold its Texas pipelines which has been presented as discontinued operations (see Note 2 – Disposal of Wind Project and – Discontinued Operations and Note 4).
In 2022, NEP sold its ownership interests in a pipeline (see Note 2 – Disposal of Pipeline).
In 2022, XPLR sold its ownership interests in a pipeline (see Note 2 – Disposal of Pipeline).
NEP OpCo has agreed to allow NEER or one of its affiliates to withdraw funds received by NEP OpCo or its subsidiaries and to hold those funds in accounts of NEER or one of its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by NEP's subsidiaries, until the financing agreements permit distributions to be made, or, in 32 Table of Contents the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs.
XPLR OpCo has agreed to allow NEER or one of its affiliates to withdraw funds received by XPLR OpCo or its subsidiaries and to hold those funds in accounts of NEER or one of its affiliates to the extent the funds are not required to pay project costs or otherwise required to be maintained by XPLR's subsidiaries, until the financing agreements permit distributions to be made, or, in the case of XPLR OpCo, until such funds are required to make distributions or to pay expenses or other operating costs.
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 (see Note 13).
XPLR may, but does not expect to, issue common units to satisfy XPLR's conversion obligation in excess of the aggregate principal amount of the convertible notes upon conversion (see Note 13).
Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, future operating margins, the weighted average cost of capital, and future market conditions, among others.
XPLR estimates the fair value of a reporting unit using a combination of the income and market approaches. Determining the fair value of a reporting unit requires judgment and the use of significant estimates and assumptions. Such estimates and assumptions include revenue growth rates, future operating margins, the weighted average cost of capital, and future market conditions, among others.
O&M expenses related to the existing portfolio are expected to remain relatively stable from year to year. However, NEP's O&M expenses are likely to increase as NEP acquires new projects. Depreciation and Amortization Depreciation and amortization expense reflects costs associated with depreciation and amortization of NEP's assets, based on depreciable asset lives and consistent depreciation methodologies.
O&M expenses related to the existing portfolio are expected to remain relatively stable from year to year. However, XPLR's O&M expenses would likely increase if it acquires new projects. Depreciation and Amortization Depreciation and amortization expense reflects costs associated with depreciation and amortization of XPLR's assets, based on depreciable asset lives and consistent depreciation methodologies.
(Fitch) continue to assign the following credit ratings to NEP: Moody's (a) S&P (a) Fitch (a) NEP corporate credit rating (b) Ba1 BB BB+ _________________________ (a) A security rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating.
(Fitch) had assigned the following credit ratings to XPLR: Moody's (a) S&P (a) Fitch (a) XPLR corporate credit rating (b) Ba1 BB BB+ _________________________ (a) A security rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating.
See Note 7 – 38 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 $57 million at December 31, 2023.
See Note 7 – Financial Instruments Recorded at Other than Fair Value. Based upon a hypothetical 10% decrease in interest rates, the fair value of XPLR's long-term debt would increase by approximately $40 million at December 31, 2024.
A goodwill impairment charge would be recognized for the amount by which the carrying value of goodwill exceeds its reassessed fair value. NEP performed its annual goodwill impairment test in October 2023 and determined, based on the results, that no goodwill impairment charge was required.
A goodwill impairment charge would be recognized for the amount by which the carrying value of goodwill exceeds its reassessed fair value. XPLR performed its annual goodwill impairment test at October 1, 2024 and determined, based on the results, that no goodwill impairment charge was required at that time.
At December 31, 2023, NEP had interest rate contracts with a net notional amount of approximately $3.1 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, NEP’s net derivative assets at December 31, 2023 would decrease by approximately $53 million.
At December 31, 2024, XPLR had interest rate contracts with a net notional amount of approximately $5.5 billion related to managing exposure to the variability of cash flows associated with outstanding and expected future debt issuances and borrowings. Based upon a hypothetical 10% decrease in rates, XPLR’s net derivative assets at December 31, 2024 would decrease by approximately $118 million.
See Note 2 – Noncontrolling Interests and Note 14 – Class B Noncontrolling Interests.
See Note 14 – Class B Noncontrolling Interests.
At December 31, 2023, 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 December 31, 2023, 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.
At December 31, 2024, approximately 92% 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 December 31, 2024, the estimated fair value of XPLR's long-term debt was approximately $5.2 billion and the carrying value of the long-term debt was $5.3 billion.
See Note 14 – Class B Noncontrolling Interests. In 2023, NEP paid aggregate consideration of approximately $792 million in cash for the buyout of the Class B noncontrolling membership interests in South Texas Midstream, LLC and $180 million in cash for the buyout of 15% of the Class B noncontrolling membership interests in NEP Renewables II, LLC.
In 2023, XPLR paid aggregate consideration of approximately $792 million in cash for the buyout of all of the Class B noncontrolling membership interests in South Texas Midstream, LLC and $180 million in cash for the buyout of 15% of the originally issued Class B noncontrolling membership interests in XPLR Renewables II, LLC.
During 2023, 2022 and 2021, NEP issued approximately 5.1 million common units, 1.8 million common units and 0.7 million common units under the ATM program for gross proceeds of approximately $316 million, $145 million and $50 million, respectively. As of December 31, 2023, NEP may issue up to approximately $337 million in additional common units under the ATM program.
During 2023 and 2022, XPLR issued approximately 5.1 million common units and 1.8 million common units under the ATM program for gross proceeds of approximately $316 million and $145 million, respectively. As of December 31, 2024, XPLR may issue up to approximately $337 million in additional common units under the ATM program. See Note 14 – ATM Program.
These sources of funds are expected to be adequate to provide for NEP's short-term and long-term liquidity and capital needs, although its ability to make future acquisitions, fund repowering of existing projects, fund the purchase price payable in connection with the exercise of buyout rights, refinance debt maturities and maintain and increase its distributions to common unitholders will depend on its ability to access capital on acceptable terms.
These sources of funds are expected to be adequate to provide for XPLR's short-term and long-term liquidity and capital needs, although its ability to fund repowering of existing projects, fund battery storage and other investment opportunities, fund the purchase price payable in connection with the exercise of buyout rights, refinance debt maturities and return capital to common unitholders will depend on its ability to access capital on acceptable terms.
Net Income Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests primarily reflects the net income or loss attributable to NEE Equity's noncontrolling interest in NEP OpCo, a non-affiliated party's interest in one of the Texas pipelines, a non-affiliated party's interest in Star Moon Holdings, LLC, the loss allocated to differential membership interest investors, the income allocated to Class B noncontrolling membership interests and NEER's noncontrolling ownership interests in Silver State South Solar, LLC, Sunlight Renewables Holdings, LLC and Emerald Breeze Holdings, LLC.
Net Loss (Income) Attributable to Noncontrolling Interests During the years ended December 31, 2024 and 2023, net loss (income) attributable to noncontrolling interests primarily reflects the net income or loss attributable to NEE Equity's noncontrolling interest in XPLR OpCo, a non-affiliated party's interest in Star Moon Holdings, LLC, the loss allocated to differential membership interest investors, the income allocated to Class B noncontrolling membership interests and NEER's noncontrolling ownership interests in Silver State South Solar, LLC, Sunlight Renewables Holdings, LLC and Emerald Breeze Holdings, LLC.
The income tax benefit is primarily 30 Table of Contents comprised of federal income tax benefits of approximately $54 million at the federal statutory rate of 21% and $28 million of PTCs, partly offset by income tax expense of $54 million related to income tax attributable to noncontrolling interests. See Note 8.
The tax benefit is primarily comprised of federal tax benefits of approximately $54 million at the U.S. federal statutory rate of 21% and $28 million of renewable energy tax credits, partly offset by tax expense of $54 million related to tax attributable to noncontrolling interests. See Note 8.
At December 31, 2023, NEP's subsidiaries were in compliance with all financial debt covenants under their financings. Equity Arrangements Certain NEP OpCo subsidiaries have issued and sold noncontrolling Class B membership interests in their subsidiaries.
At December 31, 2024, XPLR and its subsidiaries were in compliance with all financial debt covenants under their financings. 35 Table of Contents Equity Arrangements Certain XPLR OpCo subsidiaries have issued and sold noncontrolling Class B membership interests in their subsidiaries.
Cash Distributions to Unitholders NEP's partnership agreement requires it to distribute available cash quarterly. Generally, available cash is all cash on hand at the date of determination relating to that quarter (including any expected distributions from NEP OpCo), less the amount of cash reserves established by the board.
Generally, available cash is all cash on hand at the date of determination relating to that quarter (including any expected distributions from XPLR OpCo), less the amount of cash reserves established by the board.
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 4).
The investment, development and buyout opportunities are expected to be funded with borrowings under credit facilities or term loans, issuances of indebtedness or capital raised pursuant to other financing structures, cash on hand and cash generated from operations and divestitures, and may be funded with issuances of additional XPLR common units, including under its ATM program.
Securities that may 34 Table of Contents be issued under the registration statement include common units, preferred units, warrants, rights, debt securities, equity purchase contracts and equity purchase units. Capital Expenditures Annual capital spending plans are developed based on projected requirements for the projects.
The amount of securities issuable by XPLR is established from time to time by the board. Securities that may be issued under the registration statement include common units, preferred units, warrants, rights, debt securities, equity purchase contracts and equity purchase units. Capital Expenditures Annual capital spending plans are developed based on projected requirements for the projects.
Cash Flows The following table reflects the cash flows for the comparative periods: Years Ended December 31, 2023 2022 2021 (millions) Net cash provided by operating activities $ 731 $ 776 $ 677 Net cash used in investing activities $ (194) $ (1,194) $ (2,301) Net cash provided by (used in) financing activities $ (527) $ 551 $ 1,663 35 Table of Contents Net Cash Provided by Operating Activities The decrease in net cash provided by operating activities in 2023 compared to 2022 was primarily driven by the timing of transactions impacting working capital, lower resource, and lower O&M costs primarily due to the suspension of the IDR fee which is recorded in O&M, partly offset by cash flows associated with the ownership interests in projects acquired in late 2022 and mid-2023.
Cash Flows The following table reflects the cash flows for the comparative periods: Years Ended December 31, 2024 2023 2022 (millions) Net cash provided by operating activities $ 800 $ 731 $ 776 Net cash provided by (used in) investing activities $ 1,236 $ (194) $ (1,194) Net cash provided by (used in) financing activities $ (2,002) $ (527) $ 551 Net Cash Provided by Operating Activities The increase in net cash provided by operating activities in 2024 compared to 2023 was primarily driven by the timing of transactions impacting working capital, higher resource, lower O&M expenses primarily due to the suspension of the IDR fee which is recorded in O&M and higher operating cash flows associated with the renewable energy projects acquired in 2023, partly offset by the loss of cash flows from the Texas pipelines.
The income tax expense is primarily comprised of federal income tax expense of approximately $63 million at the federal statutory rate of 21% and $10 million of state income tax expense, partly offset by income tax benefit of $32 million related to income tax attributable to noncontrolling interests. See Note 8.
The tax benefit is primarily comprised of federal tax benefits of approximately $96 million at the U.S. federal statutory rate of 21% and $32 million of renewable energy tax credits, partly offset by tax expense of $82 million related to tax attributable to noncontrolling interests. See Note 8.
If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings except as otherwise agreed upon with NEP OpCo. Liquidity Position At December 31, 2023, NEP's liquidity position was approximately $4,232 million.
If NEER or one of its affiliates realizes any earnings on the withdrawn funds prior to the return of such funds, it will be permitted to retain those earnings, and will not pay interest on the withdrawn funds except as otherwise agreed upon with XPLR OpCo. 34 Table of Contents Liquidity Position At December 31, 2024, XPLR's liquidity position was approximately $2,530 million.
Additionally, project acquisitions or wind turbine repowering opportunities could impact future revenues. Operating Expenses Operations and Maintenance O&M expenses include interconnection costs, labor expenses, equipment servicing costs, land payments, insurance, materials, supplies, shared services and administrative expenses attributable to NEP's projects, and costs and expenses under the MSA, ASAs and O&M agreements (see Note 15).
Operating Expenses Operations and Maintenance O&M expenses include interconnection costs, labor expenses, equipment servicing costs, land payments, insurance, materials, supplies, shared services and administrative expenses attributable to XPLR's projects, and costs and expenses under the MSA, ASAs and O&M agreements (see Note 15).
Results of Operations Years Ended December 31, 2023 2022 2021 (millions) OPERATING REVENUES $ 1,078 $ 969 $ 722 OPERATING EXPENSES Operations and maintenance 520 527 374 Depreciation and amortization 521 394 251 Taxes other than income taxes and other 65 40 28 Total operating expenses – net 1,106 961 653 GAINS (LOSSES) ON DISPOSAL OF BUSINESSES/ASSETS – NET — 36 (5) OPERATING INCOME (LOSS) (28) 44 64 OTHER INCOME (DEDUCTIONS) Interest expense (394) 848 50 Equity in earnings of equity method investees 152 177 158 Equity in earnings of non-economic ownership interests 4 56 27 Other – net 9 5 4 Total other income (deductions) – net (229) 1,086 239 INCOME (LOSS) BEFORE INCOME TAXES (257) 1,130 303 INCOME TAX EXPENSE (BENEFIT) (25) 161 37 INCOME (LOSS) FROM CONTINUING OPERATIONS (232) 969 266 INCOME FROM DISCONTINUED OPERATIONS, net of tax expense of $59 million, $10 million and $11 million, respectively 450 152 158 NET INCOME 218 1,121 424 NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (18) (644) (287) NET INCOME ATTRIBUTABLE TO NEXTERA ENERGY PARTNERS, LP $ 200 $ 477 $ 137 2023 Compared to 2022 Operating Revenues 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 (see Note 2 – Intangible Assets – PPAs and – Intangible Liabilities – PPAs).
Results of Operations Years Ended December 31, 2024 2023 2022 (millions) OPERATING REVENUES $ 1,230 $ 1,078 $ 969 OPERATING EXPENSES Operations and maintenance 504 520 527 Depreciation and amortization 550 521 394 Goodwill impairment charge 575 — — Taxes other than income taxes and other – net 73 65 40 Total operating expenses – net 1,702 1,106 961 GAINS ON DISPOSAL OF BUSINESSES/ASSETS – NET 13 — 36 OPERATING INCOME (LOSS) (459) (28) 44 OTHER INCOME (DEDUCTIONS) Interest expense (170) (394) 848 Equity in earnings of equity method investees 107 152 177 Equity in earnings of non-economic ownership interests 18 4 56 Other – net 47 9 5 Total other income (deductions) – net 2 (229) 1,086 INCOME (LOSS) BEFORE INCOME TAXES (457) (257) 1,130 INCOME TAX EXPENSE (BENEFIT) (46) (25) 161 INCOME (LOSS) FROM CONTINUING OPERATIONS (411) (232) 969 INCOME FROM DISCONTINUED OPERATIONS, net of tax expense of $59 million and $10 million, respectively — 450 152 NET INCOME (LOSS) (411) 218 1,121 NET LOSS (INCOME) ATTRIBUTABLE TO NONCONTROLLING INTERESTS 388 (18) (644) NET INCOME (LOSS) ATTRIBUTABLE TO XPLR $ (23) $ 200 $ 477 31 Table of Contents 2024 Compared to 2023 Operating Revenues Operating revenues primarily consist of income from the sale of energy under XPLR's PPAs, partly offset by the net amortization of intangible assets – PPAs and intangible liabilities – PPAs (see Note 2 – Intangible Assets – PPAs and – Intangible Liabilities – PPAs).
O&M expenses decreased $7 million during the year ended December 31, 2023 primarily due to approximately $95 million of lower other corporate expenses primarily relating to the suspension of the IDR fee, partly offset by $61 million related to the projects acquired in late 2022 and 2023 and $24 million of higher operating costs.
O&M expenses decreased $16 million during the year ended December 31, 2024 primarily due to approximately $61 million of lower other corporate expenses primarily relating to the suspension of the IDR fee and absence of costs related to the disposal of the Texas pipelines which occurred in 2023, partly offset by $31 million of higher operating costs and $14 million related to the renewable energy projects acquired in 2023.
Goodwill Goodwill acquired in connection with business combinations represents the excess of consideration over the fair value of net assets acquired. For goodwill, an assessment for impairment is performed annually or whenever an event indicating impairment may have occurred. NEP completes the annual impairment test for goodwill using an assessment date of October 1.
See Note 3. 39 Table of Contents Goodwill Goodwill acquired in connection with business combinations represents the excess of consideration over the fair value of net assets acquired. For goodwill, an assessment for impairment is performed annually or whenever an event indicating impairment may have occurred.
The 2023 capital expenditures primarily relate to the assets acquired from NEER in December 2022 which were acquired under construction or recently placed in service, and the 2022 capital expenditures primarily relate to the three facilities acquired in December 2021 from NEER that were under construction (see Note 3).
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 (see Note 3). Such expenditures were reimbursed by NEER as contemplated in the acquisition.
For the years ended December 31, 2023 and 2022, NEP had capital expenditures, excluding the purchase prices of acquired projects, of approximately $1,269 million and $1,351 million, respectively.
For the years ended December 31, 2024 and 2023, XPLR had capital expenditures, excluding the purchase prices of acquired projects, of approximately $241 million and $1,269 million, respectively. The 2024 capital expenditures primarily relate to wind turbine repowering.
NEP has an at-the-market equity issuance program (ATM program), which was renewed in 2023, pursuant to which NEP may issue, from time to time, up to $500 million of its common units.
See Note 14 – Class B Noncontrolling Interests. XPLR has an at-the-market equity issuance program (ATM program), which was renewed in 2023, pursuant to which XPLR may issue, from time to time, up to $500 million of its common units. During 2024, XPLR did not issue any common units under the ATM program.
Other key inputs that require judgment include discount rates, comparable market transactions, estimated useful lives and probability of future transactions. The most significant assumptions requiring the most judgment involve identifying and estimating the fair value of intangible assets and property, plant and equipment and the associated useful lives for establishing amortization periods.
The most significant assumptions requiring the most judgment involve identifying and estimating the fair value of intangible assets and property, plant and equipment and the associated useful lives for establishing amortization periods.
For the year ended December 31, 2021, NEP recorded income tax expense of $37 million on income from continuing operations before income taxes of $303 million, resulting in an effective tax rate of approximately 12%.
For the year ended December 31, 2024, XPLR recorded income tax benefit of $46 million on loss from continuing operations before income taxes of $457 million, resulting in an effective tax rate of approximately 10%.
Net Cash Used in Investing Activities Years Ended December 31, 2023 2022 2021 (millions) Acquisitions of membership interests in subsidiaries – net $ (661) $ (989) $ (2,352) Capital expenditures and other investments (1,269) (1,351) (113) Proceeds from CITCs — — 75 Proceeds from sale of a business 1,885 204 — Payments to related parties under CSCS agreement – net (1,213) (240) (47) Distributions from equity method investee — 15 1 Distributions from non-economic ownership interests — — 90 Reimbursements from related parties for capital expenditures 1,063 1,161 15 Other – net 1 6 30 Net cash used in investing activities $ (194) $ (1,194) $ (2,301) The decrease in net cash used in investing activities in 2023 compared to 2022 was primarily driven by proceeds from the sale of the Texas pipelines (see Note 4), proceeds from the sale of a wind facility (see Note 2 – Disposal of Wind Project) and lower acquisition costs compared to 2022, partly offset by higher payments to NEER subsidiaries (net of amounts received) under the CSCS agreement.
Net Cash Provided by (Used) in Investing Activities Years Ended December 31, 2024 2023 2022 (millions) Acquisitions of membership interests in subsidiaries – net $ — $ (661) $ (989) Capital expenditures and other investments (241) (1,269) (1,351) Proceeds from sale of a business — 1,885 204 Payments from (to) related parties under CSCS agreement – net 1,384 (1,213) (240) Distributions from equity method investee — — 15 Reimbursements from related parties for capital expenditures 66 1,063 1,161 Other – net 27 1 6 Net cash provided by (used in) investing activities $ 1,236 $ (194) $ (1,194) 37 Table of Contents The change in net cash provided by (used in) investing activities in 2024 compared to 2023 was primarily driven by higher payments from NEER subsidiaries (net of amounts paid) under the CSCS agreement and the absence of payments to acquire membership interests in subsidiaries, partly offset by the absence of proceeds from the sale of the Texas pipelines.
The table below provides the components of NEP’s liquidity position: December 31, 2023 Maturity Date (millions) Cash and cash equivalents $ 274 Amounts due under the CSCS agreement 1,511 Revolving credit facilities 2,500 2028 (a) Less issued letters of credit (53) Total $ 4,232 ____________________ (a) At December 31, 2023, approximately $50 million had a maturity date in 2025.
The table below provides the components of XPLR’s liquidity position: December 31, 2024 Maturity Date (millions) Cash and cash equivalents $ 283 Amounts due under the CSCS agreement 127 Revolving credit facility (a) 2,500 2029 Less borrowings (b) (330) Less issued letters of credit (50) Total $ 2,530 ____________________ (a) At December 31, 2024, approximately $50 million had a maturity date in 2025 and an additional $90 million had a maturity date in 2028.
Income Taxes Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense.
Further details regarding XPLR's critical accounting estimates are as follows: Income Taxes Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense.
However, certain of NEP's financings accrue interest at variable rates based on an underlying index plus a margin. Interest rate contracts were entered into for certain of these financings to hedge against interest rate movements with respect to interest payments on the related borrowings.
Interest rate contracts were entered into for certain of these financings to hedge against interest rate movements with respect to interest payments on the related borrowings.
Depreciation and amortization expense also includes a provision for wind and solar facility dismantlement, asset removal costs and accretion related to asset retirement obligations and the amortization of finite-lived intangible assets. Depreciation and amortization expense increased $127 million during the year ended December 31, 2023 primarily due to depreciation related to projects acquired in late 2022 and 2023.
Depreciation and amortization expense also includes a provision for wind and solar facility dismantlement, asset removal costs and accretion related to asset retirement obligations and the amortization of finite-lived intangible assets.
At December 31, 2023, NEP owned an approximately 48.6% limited partner interest in NEP OpCo and NEE Equity owned a noncontrolling 51.4% limited partner interest in NEP OpCo.
XPLR consolidates the results of XPLR OpCo and its subsidiaries through its controlling interest in the general partner of XPLR OpCo. At December 31, 2024, XPLR owned an approximately 48.6% limited partner interest in XPLR OpCo and NEE Equity owned a noncontrolling 51.4% limited partner interest in XPLR OpCo.
NEP OpCo's partnership agreement requires it to distribute all of its available cash to its unitholders, including NEP, each quarter. Generally, NEP OpCo's available cash is all cash on hand at the date of determination relating to that quarter, plus any funds borrowed, less the amount of cash reserves established by NEP OpCo GP.
However, XPLR OpCo GP may reserve cash that otherwise would be available for distribution to unitholders, including XPLR, for other business purposes in its discretion. Generally, XPLR OpCo's available cash is all cash on hand at the date of determination relating to that quarter, plus any funds borrowed, less the amount of cash reserves established by XPLR OpCo GP.
Net Cash Provided by (Used in) Financing Activities Years Ended December 31, 2023 2022 2021 (millions) Proceeds from issuance of common units – net $ 315 $ 147 $ 50 Issuances of long-term debt, including premiums and discounts 2,362 1,505 2,880 Retirements of long-term debt (1,523) (1,544) (1,159) Partner contributions — 2 2 Partner distributions (741) (636) (619) Proceeds related to differential membership interests – net 20 202 87 Proceeds related to Class B noncontrolling interests – net 31 952 813 Buyout of Class B noncontrolling interest investors (972) — (265) Debt issuance costs (12) (17) (12) Capped call transactions — (31) (31) Payment of CITC obligation to third party — — (65) Other (7) (29) (18) Net cash provided by (used in) financing activities $ (527) $ 551 $ 1,663 The change in net cash provided by (used in) financing activities in 2023 compared to 2022 is primarily due to the buyout of Class B noncontrolling interest investors and lower proceeds related to differential membership interests – net (see Note 2 – Noncontrolling Interests and Note 14 – Class B Noncontrolling Interests), partly offset by higher issuances of long-term debt in 2023 compared to 2022.
Net Cash Provided by (Used in) Financing Activities Years Ended December 31, 2024 2023 2022 (millions) Proceeds from issuance of common units – net $ 3 $ 315 $ 147 Issuances (retirements) of long-term debt – net (991) 839 (39) Partner contributions (distributions) – net (753) (741) (634) Proceeds related to differential membership interests – net 98 20 202 Proceeds (payments) related to Class B noncontrolling interests – net (92) 31 952 Buyout of Class B noncontrolling interest investors (254) (972) — Debt issuance costs (2) (12) (17) Capped call transactions — — (31) Other – net (11) (7) (29) Net cash provided by (used in) financing activities $ (2,002) $ (527) $ 551 The change in net cash provided by (used in) financing activities in 2024 compared to 2023 primarily reflects retirement 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, partly offset by lower payments to buy out Class B noncontrolling interest investors.
Goodwill is reviewed for impairment by comparing the carrying value of a reporting unit’s net assets, including allocated goodwill, to the estimated fair value of a reporting unit. NEP estimates the fair value of a reporting unit using a combination of the income, market and cost approaches.
XPLR completes the annual impairment test for goodwill using an assessment date of October 1. Goodwill is reviewed for impairment by comparing the carrying value of a reporting unit’s net assets, including allocated goodwill, to the estimated fair value of a reporting unit.
Other Income (Deductions) Interest Expense Interest expense decreased approximately $798 million during the year ended December 31, 2022 primarily reflecting approximately $854 million of favorable mark-to-market activity ($1,017 million of gains recorded in 2022 compared to $163 million of gains recorded in 2021), offset by higher interest expense due to increased average debt outstanding and higher interest rates.
Interest expense decreased $224 million during the year ended December 31, 2024 primarily reflecting approximately $268 million of favorable mark-to-market activity ($146 million of gains recorded in 2024 compared to $122 million of losses recorded in 2023), partly offset by $30 million of higher interest expense due to higher interest rates on the average debt outstanding and $15 million relating to projects acquired in 2023.
NEP currently expects that cash reserves would be established solely to provide for the payment of income taxes by NEP, if any. Cash flow is generated from distributions NEP receives from NEP OpCo each quarter.
XPLR currently expects that any cash on hand at the date of determination relating to that quarter would be reserved by the board to provide for the proper conduct of XPLR's business. Cash flow is generated from distributions XPLR receives from XPLR OpCo each quarter.
Equity in Earnings of Non-Economic Ownership Interests Equity in earnings of non-economic ownership interests decreased $52 million for the year ended December 31, 2023 primarily reflecting unfavorable mark-to-market activity on interest rate contracts in 2023.
Equity in Earnings of Non-Economic Ownership Interests Equity in earnings of non-economic ownership interests increased $14 million for the year ended December 31, 2024 primarily reflecting debt payoff in 2024.
See Note 14 – ATM Program. During 2023 and 2022, NEP issued approximately 1.7 million NEP common units and 0.8 million NEP common units, respectively, upon NEE Equity's exchange of NEP OpCo common units on a one-for-one basis.
During 2023 and 2022, XPLR issued approximately 1.7 million XPLR common units and 0.8 million XPLR common units, respectively, upon NEE Equity's exchange of XPLR OpCo common units on a one-for-one basis. In July 2024, XPLR filed a shelf registration statement with the SEC for an unspecified amount of securities, which became effective upon filing.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

249 edited+47 added−81 removed47 unchanged
A disposal group that meets held for sale criteria and also represents a strategic shift that will have a major effect on the entity's operations and financial results is also reflected as discontinued operations in the statements of income and prior periods are recast to reflect the earnings or losses from such business as income from discontinued operations, net of tax expense.
A disposal group that meets held for sale criteria and also represents a strategic shift that will have a major effect on the entity's operations and financial results is reflected as discontinued operations in the statements of income and prior periods are recast to reflect the earnings or losses from such business as income from discontinued operations, net of tax expense.
Certain projects have also entered into various types of agreements including those related to shared facilities and transmission lines, transmission line easements, technical support and construction coordination with subsidiaries of NEER whereby certain fees or cost reimbursements are paid to, or received by, certain subsidiaries of NEER.
Certain projects have also entered into various types of agreements including those related to shared facilities and transmission lines, transmission line easements, technical support and development and construction coordination with subsidiaries of NEER whereby certain fees or cost reimbursements are paid to, or received by, certain subsidiaries of NEER.
NEP OpCo pays NEE an annual management fee equal to the greater of 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the most recently ended fiscal year and $4 million (as adjusted for inflation beginning in 2016), which is paid in quarterly installments with an additional payment each January to the extent 1% of the sum of NEP OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the preceding fiscal year exceeds $4 million (as adjusted for inflation beginning in 2016).
XPLR OpCo pays NEE an annual management fee equal to the greater of 1% of the sum of XPLR OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the most recently ended fiscal year and $4 million (as adjusted for inflation beginning in 2016), which is paid in quarterly installments with an additional payment each January to the extent 1% of the sum of XPLR OpCo’s net income plus interest expense, income tax expense and depreciation and amortization expense less certain non-cash, non-recurring items for the preceding fiscal year exceeds $4 million (as adjusted for inflation beginning in 2016).
In December 2022, an indirect subsidiary of NEP (the purchaser) completed the acquisition of ownership interests (December 2022 acquisition) in a portfolio of wind and solar-plus-storage generation facilities from subsidiaries of NEER (the seller) consisting of the following: • 100% of the Class A membership interests in Emerald Breeze, representing a 49% controlling ownership interest, which indirectly owns: • Great Prairie Wind, an approximately 1,029 MW wind generation facility in Texas and Oklahoma. • Appaloosa Run Wind, an approximately 172 MW wind generation facility in Texas. • Yellow Pine Solar, a 125 MW solar generation and 65 MW storage facility in Nevada (Yellow Pine). • 100% of the membership interests in Sac County Wind Holdings, LLC and Elk City Sholes Holdings, LLC, which indirectly own: • Sholes Wind, an approximately 160 MW wind generation facility located in Nebraska. • Elk City Wind II, an approximately 107 MW wind generation facility located in Oklahoma. • Sac County Wind, an approximately 80 MW wind generation facility located in Iowa.
In December 2022, an indirect subsidiary of XPLR (the purchaser) completed the acquisition of ownership interests (December 2022 acquisition) in a portfolio of wind and solar-plus-storage generation facilities from subsidiaries of NEER (the seller) consisting of the following: • 100% of the Class A membership interests in Emerald Breeze, representing a 49% controlling ownership interest, which indirectly owns: • Great Prairie Wind, an approximately 1,029 MW wind generation facility in Texas and Oklahoma. • Appaloosa Run Wind, an approximately 172 MW wind generation facility in Texas. • Yellow Pine Solar, a 125 MW solar generation and 65 MW battery storage facility in Nevada (Yellow Pine). • 100% of the membership interests in Sac County Wind Holdings, LLC and Elk City Sholes Holdings, LLC, which indirectly own: • Sholes Wind, an approximately 160 MW wind generation facility located in Nebraska. • Elk City Wind II, an approximately 107 MW wind generation facility located in Oklahoma. • Sac County Wind, an approximately 80 MW wind generation facility located in Iowa.
The Seiling related party note receivable is intended to compensate NEP for the operational performance issues and is supported in full by compensation expected from an equipment vendor under an undertaking the vendor has with NEER. This receivable bears interest at 7.1% per annum, is payable by NEER in equal semi-annual installments and matures in December 2035.
The Seiling related party note receivable is intended to compensate XPLR for the operational performance issues and is supported in full by compensation expected from an equipment vendor under an undertaking the vendor has with NEER. This receivable bears interest at 7.1% per annum, is payable by NEER in equal semi-annual installments and matures in December 2035.
For the differential membership interests and Class B noncontrolling membership interests, NEP has determined the allocation of economics between the controlling party and third-party investor should not follow the respective ownership percentages for each investment but rather the hypothetical liquidation of book value (HLBV) method based on the governing provisions in each respective limited liability company agreement.
For the differential membership interests and Class B noncontrolling membership interests, XPLR has determined the allocation of economics between the controlling party and third-party investor should not follow the respective ownership percentages for each investment but rather the hypothetical liquidation of book value (HLBV) method based on the governing provisions in each respective limited liability company agreement.
Related Party Long-Term Debt – In connection with the December 2022 acquisition from NEER of Emerald Breeze (see Note 3), a subsidiary of NEP acquired a note payable from a subsidiary of NEER relating to restricted cash reserve funds put in place for certain operational costs at the project based on a requirement of the differential membership investor.
Related Party Long-Term Debt – In connection with the December 2022 acquisition from NEER of Emerald Breeze (see Note 3), a subsidiary of XPLR acquired a note payable from a subsidiary of NEER relating to restricted cash reserve funds put in place for certain operational costs at the project based on a requirement of the differential membership investor.
NEP, through O&M and administrative services agreements (ASAs) with subsidiaries of NEER, operates and manages the wind, solar and battery storage projects, and consolidates the entities that directly and indirectly own the wind, solar and battery storage projects. The third-party investors are allocated earnings, tax attributes and cash flows in accordance with the respective limited liability company agreements.
XPLR, through O&M and administrative services agreements (ASAs) with subsidiaries of NEER, operates and manages the wind, solar and battery storage projects, and consolidates the entities that directly and indirectly own the wind, solar and battery storage projects. The third-party investors are allocated earnings, tax attributes and cash flows in accordance with the respective limited liability company agreements.
Certain subsidiaries of NEP OpCo have noncontrolling interests in entities accounted for under the equity method that are considered VIEs. See Note 10. NEP has an indirect equity method investment in three NEER solar projects with a total generating capacity of 277 MW and battery storage capacity of 230 MW.
Certain subsidiaries of XPLR OpCo have noncontrolling interests in entities accounted for under the equity method that are considered VIEs. See Note 10. XPLR has an indirect equity method investment in three NEER solar projects with a total generating capacity of 277 MW and battery storage capacity of 230 MW.
NEP's written policies include a Code of Business Conduct & Ethics that states management's policy on conflicts of interest and ethical conduct. Compliance with the Code of Business Conduct & Ethics is confirmed annually by key personnel. The Board of Directors pursues its oversight responsibility for financial reporting and accounting through its Audit Committee.
XPLR's written policies include a Code of Business Conduct & Ethics that states management's policy on conflicts of interest and ethical conduct. Compliance with the Code of Business Conduct & Ethics is confirmed annually by key personnel. The Board of Directors pursues its oversight responsibility for financial reporting and accounting through its Audit Committee.
Subsequent to the acquisition in December 2022 from NEER (see Note 3), NEP recorded redeemable noncontrolling interests of approximately $101 million relating to certain contingencies whereby NEP may have been obligated to reacquire all or a portion of the third-party investor's interests in an under construction project.
Subsequent to the acquisition in December 2022 from NEER (see Note 3), XPLR recorded redeemable noncontrolling interests of approximately $101 million relating to certain contingencies whereby XPLR may have been obligated to reacquire all or a portion of the third-party investor's interests in an under construction project.
Upon the occurrence of a fundamental change (as defined in the related indenture), holders of the 2020 convertible notes may require NEP to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the 2020 convertible notes to be repurchased, plus accrued and unpaid special interest, if any.
Upon the occurrence of a fundamental change (as defined in the related indenture), holders of the 2020 convertible notes may require XPLR to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the 2020 convertible notes to be repurchased, plus accrued and unpaid special interest, if any.
Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the fair value measurement of its assets and liabilities and the placement of those assets and liabilities within the fair value hierarchy levels.
Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. XPLR’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the fair value measurement of its assets and liabilities and the placement of those assets and liabilities within the fair value hierarchy levels.
In March 2023, NEP sold differential membership interests in Eight Point to third-party investors for proceeds of approximately $92 million. The purchase price for the asset acquisition was allocated to the assets acquired and liabilities assumed, including the noncontrolling interests, based on their estimated fair value.
In March 2023, XPLR sold differential membership interests in Eight Point to third-party investors for proceeds of approximately $92 million. The purchase price for the asset acquisition was allocated to the assets acquired and liabilities assumed, including the noncontrolling interests, based on their estimated fair value.
Upon the occurrence of a fundamental change (as defined in the related indenture), holders of the 2022 convertible notes may require NEP to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the 2022 convertible notes to be repurchased, plus accrued and unpaid interest, if any.
Upon the occurrence of a fundamental change (as defined in the related indenture), holders of the 2022 convertible notes may require XPLR to repurchase all or a portion of their convertible notes for cash in an amount equal to the principal amount of the 2022 convertible notes to be repurchased, plus accrued and unpaid interest, if any.
In any taxable period that begins at least five years after the taxable period for which any such allocation of taxable income or gain is made to NEE Equity, NEE Equity may approve the allocation of offsetting losses and deductions to NEE Equity with respect to such income or gain allocation as specified in the NEP OpCo LP Agreement.
In any taxable period that begins at least five years after the taxable period for which any such allocation of taxable income or gain is made to NEE Equity, NEE Equity may approve the allocation of offsetting losses and deductions to NEE Equity with respect to such income or gain allocation as specified in the XPLR OpCo LP Agreement.
Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. NEP’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities within the fair value hierarchy levels.
Certain financial instruments may be valued using multiple inputs including discount rates, counterparty credit ratings and credit enhancements. XPLR’s assessment of the significance of any particular input to the fair value measurement requires judgment and may affect the placement of those assets and liabilities within the fair value hierarchy levels.
While the third-party investor owned the noncontrolling Class B membership interests in STX Midstream, the third-party investor received 12.5% of STX Midstream's distributable cash. During 2023, NEP paid aggregate cash consideration of approximately $792 million to the third-party investor after electing to exercise the buyout right and purchase all of the Class B membership interests in STX Midstream.
While the third-party investor owned the noncontrolling Class B membership interests in STX Midstream, the third-party investor received 12.5% of STX Midstream's distributable cash. During 2023, XPLR paid aggregate cash consideration of approximately $792 million to the third-party investor after electing to exercise the buyout right and purchase all of the Class B membership interests in STX Midstream.
NEP records all derivative instruments that are required to be marked to market as either assets or liabilities on its consolidated balance sheets and measures them at fair value each reporting period. NEP does not utilize hedge accounting for its derivative instruments.
XPLR records all derivative instruments that are required to be marked to market as either assets or liabilities on its consolidated balance sheets and measures them at fair value each reporting period. XPLR does not utilize hedge accounting for its derivative instruments.
Fair Value Measurements – NEP uses several different valuation techniques to measure the fair value of assets and liabilities relying primarily on the market approach of using prices and other market information for identical or comparable assets and liabilities for those assets and liabilities that are measured on a recurring basis.
Fair Value Measurements – XPLR uses several different valuation techniques to measure the fair value of assets and liabilities relying primarily on the market approach of using prices and other market information for identical or comparable assets and liabilities for those assets and liabilities that are measured on a recurring basis.
Transportation and Fuel Management Agreements – In connection with the Texas pipelines (see Note 4), a subsidiary of NEP assigned to a subsidiary of NEER certain gas commodity agreements in exchange for entering into transportation agreements and a fuel management agreement whereby the benefits of the gas commodity agreements (net of transportation paid to the NEP subsidiary) are passed back to the NEP subsidiary.
Transportation and Fuel Management Agreements – In connection with the Texas pipelines (see Note 4), a subsidiary of XPLR assigned to a subsidiary of NEER certain gas commodity agreements in exchange for entering into transportation agreements and a fuel management agreement whereby the benefits of the gas commodity agreements (net of transportation paid to the XPLR subsidiary) are passed back to the XPLR subsidiary.
In June 2023, an indirect subsidiary of NEP acquired from indirect subsidiaries of NEER ownership interests in a portfolio of wind and solar generation facilities with a combined generating capacity totaling approximately 688 MW (2023 acquisition) for cash consideration of approximately $566 million, plus working capital of $32 million and the assumption of the portfolio’s existing debt and related interest rate swaps of approximately $141 million at time of closing.
Acquisitions In June 2023, an indirect subsidiary of XPLR acquired from indirect subsidiaries of NEER ownership interests in a portfolio of wind and solar generation facilities with a combined generating capacity totaling approximately 688 MW (2023 acquisition) for cash consideration of approximately $566 million, plus working capital of $32 million and the assumption of the portfolio’s existing debt and related interest rate swaps of approximately $141 million at time of closing.
NEP uses different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or similar assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis.
XPLR uses different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or similar assets and liabilities for those assets and liabilities that are measured at fair value on a recurring basis.
In May 2023, the MSA was amended to suspend these payments to be paid by NEP OpCo in respect to each calendar quarter beginning with the payment related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026.
In May 2023, the MSA was amended to suspend these payments to be paid by XPLR OpCo in respect to each calendar quarter beginning with the payment related to the period commencing on (and including) January 1, 2023 and expiring on (and including) December 31, 2026.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to NEP in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to XPLR in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to NEP in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to XPLR in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Those economics are allocated primarily to the third-party investors until they receive a targeted return (the flip date) and thereafter to NEP. NEP has the right to call the third-party interests at specified amounts if and when the flip date occurs. See Note 11.
Those economics are allocated primarily to the third-party investors until they receive a targeted return (the flip date) and thereafter to XPLR. XPLR has the right to call the third-party interests at specified amounts if and when the flip date occurs. See Note 11.
NEER and its affiliates may keep the funds until the financing agreements permit distributions to be made, or, in the case of NEP OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or NEP OpCo otherwise demands the return of such funds.
NEER and its affiliates may keep the funds until the financing agreements permit distributions to be made, or, in the case of XPLR OpCo, until such funds are required to make distributions or to pay expenses or other operating costs or XPLR OpCo otherwise demands the return of such funds.
In the opinion of management, the overall system of internal accounting control provides reasonable assurance that the assets of NEP and its subsidiaries are safeguarded and that transactions are executed in accordance with management's authorization and are properly recorded for the preparation of financial statements.
In the opinion of management, the overall system of internal accounting control provides reasonable assurance that the assets of XPLR and its subsidiaries are safeguarded and that transactions are executed in accordance with management's authorization and are properly recorded for the preparation of financial statements.
Basis for Opinion NEP’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on NEP's internal control over financial reporting based on our audit.
Basis for Opinion XPLR’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on XPLR's internal control over financial reporting based on our audit.
Property, plant and equipment – net on NEP's consolidated balance sheets includes construction work in progress which reflects construction materials, other equipment, third-party engineering costs, capitalized interest and other costs directly associated with the development and construction of the various projects.
Property, plant and equipment – net on XPLR's consolidated balance sheets includes construction work in progress which reflects construction materials, other equipment, third-party engineering costs, capitalized interest and other costs directly associated with the development and construction of the various projects.
See Note 4. Derivative Instruments and Hedging Activities – Derivative instruments, when required to be marked to market, are recorded on NEP’s consolidated balance sheets as either an asset or a liability measured at fair value. See Note 6.
See Note 4. Derivative Instruments and Hedging Activities – Derivative instruments, when required to be marked to market, are recorded on XPLR’s consolidated balance sheets as either an asset or a liability measured at fair value. See Note 6.
The purchase price included total consideration of approximately $805 million, plus working capital and other adjustments of approximately $4 million and NEP's share of the portfolio’s existing noncontrolling interests related to differential membership investors of approximately $1.4 billion at the time of closing.
The purchase price included total consideration of approximately $805 million, plus working capital and other adjustments of approximately $4 million and XPLR's share of the portfolio’s existing noncontrolling interests related to differential membership investors of approximately $1.4 billion at the time of closing.
NEP recognized a gain on disposal of the Texas pipelines of approximately $375 million ($329 million after tax), which is reflected in income from discontinued operations in its consolidated statement of income for the year ended December 31, 2023.
XPLR recognized a gain on disposal of the Texas pipelines of approximately $375 million ($329 million after tax), which is reflected in income from discontinued operations in its consolidated statement of income for the year ended December 31, 2023.
Derivative Instruments and Hedging Activity NEP uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings and to manage the physical and financial risks inherent in the sale of electricity.
Derivative Instruments and Hedging Activity XPLR uses derivative instruments (primarily interest rate swaps) to manage the interest rate cash flow risk associated with outstanding and expected future debt issuances and borrowings and to manage the physical and financial risks inherent in the sale of electricity.
If NEER or its affiliates fail to return withdrawn funds when required by NEP OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER or its affiliates in the amount of such withdrawn funds.
If NEER or its affiliates fail to return withdrawn funds when required by XPLR OpCo's subsidiaries’ financing agreements, the lenders will be entitled to draw on any credit support provided by NEER or its affiliates in the amount of such withdrawn funds.
Disposal of Pipeline – In 2022, subsidiaries of NEP sold all of their ownership interests in an approximately 156-mile, 16-inch pipeline that transports natural gas in Texas to a third party for total consideration of approximately $203 million.
Disposal of Pipeline – In 2022, subsidiaries of XPLR sold all of their ownership interests in an approximately 156-mile, 16-inch pipeline that transports natural gas in Texas to a third party for total consideration of approximately $203 million.
(e) The buyout right is subject to certain limitations and/or extensions in the respective agreements, including, but not limited to, NEP being able to purchase a maximum of the Class B units following anniversaries specified in certain of the agreements.
(e) The buyout right is subject to certain limitations and/or extensions in the respective agreements, including, but not limited to, XPLR being able to purchase a maximum of the Class B units following anniversaries specified in certain of the agreements.
Accounts Receivable and Allowance for Doubtful Accounts – Accounts receivable are reported at the invoiced or estimated amount adjusted for any write-offs and any estimated allowance for doubtful accounts on NEP's consolidated balance sheets. The allowance for doubtful accounts is reviewed periodically based on amounts past due and significance.
Accounts Receivable and Allowance for Doubtful Accounts – Accounts receivable are reported at the invoiced or estimated amount adjusted for any write-offs and any estimated allowance for doubtful accounts on XPLR's consolidated balance sheets. The allowance for doubtful accounts is reviewed periodically based on amounts past due and significance.
NEER, as holder of the NEP OpCo Class B Units, will retain 100% of the economic rights in the projects to which the respective Class B Units relate, including the right to all distributions paid by the project subsidiaries that own the projects to NEP OpCo.
NEER, as holder of the XPLR OpCo Class B Units, will retain 100% of the economic rights in the projects to which the respective Class B Units relate, including the right to all distributions paid by the project subsidiaries that own the projects to XPLR OpCo.
Related Party Note Receivable – As part of the 2016 acquisition from NEER of Seiling Wind Investments, LLC, a subsidiary of NEP acquired an approximately $25 million receivable from a subsidiary of NEER (Seiling related party note receivable) relating to operational performance issues at the related projects.
Related Party Note Receivable – As part of the 2016 acquisition from NEER of Seiling Wind Investments, LLC, a subsidiary of XPLR acquired an approximately $25 million receivable from a subsidiary of NEER (Seiling related party note receivable) relating to operational performance issues at the related projects.
NEP has elected not to apply the recognition requirements to short-term leases and not to separate nonlease components from associated lease components for substantially all classes of underlying assets except for purchase power agreements.
XPLR has elected not to apply the recognition requirements to short-term leases and not to separate nonlease components from associated lease components for substantially all classes of underlying assets except for purchase power agreements.
NEP has elected not to separately disclose discontinued operations on its consolidated statements of cash flows. Long-lived assets are not depreciated or amortized once they are classified as held for sale.
XPLR has elected not to separately disclose discontinued operations on its consolidated statements of cash flows. Long-lived assets are not depreciated or amortized once they are classified as held for sale.
Through a series of transactions, a subsidiary of NEP issued 1,000,000 NEP OpCo Class B Units, Series 1 and 1,000,000 NEP OpCo Class B Units, Series 2, to NEER for approximately 50% of the ownership interests in the three solar projects (non-economic ownership interests).
Through a series of transactions, a subsidiary of XPLR issued 1,000,000 XPLR OpCo Class B Units, Series 1 and 1,000,000 XPLR OpCo Class B Units, Series 2, to NEER for approximately 50% of the ownership interests in the three solar projects (non-economic ownership interests).
NEER has also agreed to continue to manage the operation of the projects at its own cost, and to contribute to the projects any capital necessary for the operation of the projects, until NEER offers to sell economic interests to NEP and NEP accepts such offer.
NEER has also agreed to continue to manage the operation of the projects at its own cost, and to contribute to the projects any capital necessary for the operation of the projects, until NEER offers to sell economic interests to XPLR and XPLR accepts such offer.
NEP recognizes a right-of-use (ROU) asset and a lease liability for operating and finance leases by recognizing and measuring leases at the commencement date based on the present value of lease payments over the lease term.
XPLR recognizes a right-of-use (ROU) asset and a lease liability for operating and finance leases by recognizing and measuring leases at the commencement date based on the present value of lease payments over the lease term.
NEP is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have a controlling interest in these entities. 12.
XPLR is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have a controlling interest in these entities. 12.
Lease payments under the land use agreements, which convey exclusive use of the land during the arrangement, are either fixed based on the terms of the related lease agreement or variable primarily based on the amount of generation at the renewable energy project. NEP’s operating and finance leases with fixed payments have expiration dates ranging from 2028 to 2058.
Lease payments under the land use agreements, which convey exclusive use of the land during the arrangement, are either fixed based on the terms of the related lease agreement or variable primarily based on the amount of generation at the energy project. XPLR’s operating and finance leases with fixed payments have expiration dates ranging from 2028 to 2058.
(f) Each limited liability company agreement provides the Class B investor the right to require NEP to repurchase the Class B membership interests in the event of a specified change in control of NEP at a stated rate of return.
(f) Each limited liability company agreement provides the Class B investor the right to require XPLR to repurchase the Class B membership interests in the event of a specified change in control of XPLR at a stated rate of return.
Amounts will be paid to NEER as the wind projects receive payments from third parties for related notes receivable recorded in noncurrent other assets on NEP’s consolidated balance sheets.
Amounts will be paid to NEER as the wind projects receive payments from third parties for related notes receivable recorded in noncurrent other assets on XPLR’s consolidated balance sheets.
NEP evaluates whether an entity is a VIE whenever reconsideration events as defined by the accounting guidance occur. See Note 11. Leases – NEP determines if an arrangement is a lease at inception.
XPLR evaluates whether an entity is a VIE whenever reconsideration events as defined by the accounting guidance occur. See Note 11. Leases – XPLR determines if an arrangement is a lease at inception.
NEP records losses of the unconsolidated entities only to the extent of its investment unless there is an obligation to provide further financial support for the investee. All equity in earnings (losses) of the non-economic ownership interests is allocated to net income attributable to noncontrolling interests. See Note 10 and Note 11.
XPLR records losses of the unconsolidated entities only to the extent of its investment unless there is an obligation to provide further financial support for the investee. All equity in earnings of the non-economic ownership interests is allocated to net loss (income) attributable to noncontrolling interests. See Note 10 and Note 11.
(c) At December 31, 2021, NEP retained certain Class B membership interests in NEP Renewables III which were sold to the Class B investors for approximately $408 million at a final funding in June 2022. Prior to the final Class B funding, NEP received approximately 67.5% of NEP Renewables III's cash distributions and the third-party investors received 32.5%.
(b) At December 31, 2021, XPLR retained certain Class B membership interests in XPLR Renewables III which were sold to the Class B investors for approximately $408 million at a final funding in June 2022. Prior to the final Class B funding, XPLR received approximately 67.5% of XPLR Renewables III's cash distributions and the third-party investors received 32.5%.
At the point in time that the third party, in hypothetical liquidation, would achieve its targeted return, NEP attributes the additional hypothetical proceeds to the differential membership interests based on the call price.
At the point in time that the third party, in hypothetical liquidation, would achieve its targeted return, XPLR attributes the additional hypothetical proceeds to the differential membership interests based on the call price.
Approximately $45 million of the cash proceeds from the sale were distributed to the third-party owner of noncontrolling Class B membership interests in NEP Renewables II (see Note 14 – Class B Noncontrolling Interests).
Approximately $45 million of the cash proceeds from the sale were distributed to the third-party owner of noncontrolling Class B membership interests in XPLR Renewables II (see Note 14 – Class B Noncontrolling Interests).
In addition, NEP believes that the obligation to deliver renewable energy attributes is satisfied at multiple points in time, with the control of the renewable energy attribute being transferred at the same time the related energy is delivered.
In addition, XPLR believes that the obligation to deliver renewable energy attributes is satisfied at multiple points in time, with the control of the renewable energy attribute being transferred at the same time the related energy is delivered.
NEP is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have controlling interests in these entities.
XPLR is not the primary beneficiary and therefore does not consolidate these entities because it does not control any of the ongoing activities of these entities, was not involved in the initial design of these entities and does not have controlling interests in these entities.
Due to Related Parties – Noncurrent amounts due to related parties on NEP's consolidated balance sheets primarily represent amounts owed by certain of NEP's wind projects to NEER to refund NEER for certain transmission costs paid on behalf of the wind projects.
Due to Related Parties – Noncurrent amounts due to related parties on XPLR's consolidated balance sheets primarily represent amounts owed by certain of XPLR's wind projects to NEER to refund NEER for certain transmission costs paid on behalf of the wind projects.
NEP evaluates its equity method investments for impairment when events or changes in circumstances indicate that the fair value of the investment is less than the carrying value and the investment may be other-than-temporarily impaired. An impairment loss is required to be recognized if the impairment is deemed to be other than temporary.
XPLR evaluates its equity method investments for impairment when events or changes in circumstances indicate that the fair value of the investment is less than the carrying value and the investment may be other-than-temporarily impaired (OTTI). An impairment loss is required to be recognized if the impairment is deemed to be other than temporary.
Variable Interest Entities NEP has identified NEP OpCo, a limited partnership with a general partner and limited partners, as a VIE. NEP has consolidated the results of NEP OpCo and its subsidiaries because of its controlling interest in the general partner of NEP OpCo.
Variable Interest Entities XPLR has identified XPLR OpCo, a limited partnership with a general partner and limited partners, as a VIE. XPLR has consolidated the results of XPLR OpCo and its subsidiaries because of its controlling interest in the general partner of XPLR OpCo.
Cash and Cash Equivalents – Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. NEP primarily holds such investments in money market funds.
Cash and Cash Equivalents – Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. XPLR primarily holds such investments in money market funds.
Assets Held for Sale and Discontinued Operations – Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from NEP's Board of Directors, commits to a plan to sell and sale is expected to be completed within one year.
Discontinued Operations – Generally, a long-lived asset to be sold is classified as held for sale in the period in which management, with approval from XPLR's Board of Directors, commits to a plan to sell and sale is expected to be completed within one year.
Deferred interest includes interest expense recognized in excess of the interest payments accrued for the related debt’s stated interest payments and is recorded in other liabilities on NEP’s consolidated balance sheets.
Deferred interest includes interest expense recognized in excess of the interest payments accrued for the related debt’s stated interest payments and is recorded in other liabilities on XPLR’s consolidated balance sheets.
(b) In December 2022, NEP entered into agreements to acquire certain differential membership interests, which resulted in the reclassification of the remaining noncontrolling interests to current other liabilities.
(b) In December 2022, XPLR entered into agreements to acquire certain differential membership interests, which resulted in the reclassification of the remaining noncontrolling interests to current other liabilities.
In June 2023, NEE contributed 100,169 NEP OpCo units to NEP as payment to settle this related party tax receivable and the units were subsequently cancelled.
In June 2023, NEE contributed 100,169 XPLR OpCo units to XPLR as payment to settle this related party tax receivable and the units were subsequently cancelled.
All of the goodwill is expected to be deductible for income tax purposes over a 15 year period. 59 Table of Contents NEXTERA ENERGY PARTNERS, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the final amounts recognized by NEP for the estimated fair value of assets acquired and liabilities assumed in the 2023 acquisition: (millions) Total consideration transferred $ 598 Identifiable assets acquired and liabilities assumed Cash $ 15 Accounts receivable, inventory and prepaid expenses 17 Current derivative assets 4 Property, plant and equipment – net 764 Intangible assets – PPAs 141 Goodwill 21 Noncurrent derivative assets 8 Noncurrent other assets 5 Accounts payable, accrued expenses and current other liabilities (5) Long-term debt (153) Asset retirement obligation (12) Intangible liabilities – PPAs (37) Noncurrent other liabilities (5) Noncontrolling interest (165) Total net identifiable assets, at fair value $ 598 NEP incurred approximately $3 million in acquisition-related costs during the year ended December 31, 2023 which are reflected as operations and maintenance in the consolidated statements of income.
All of the goodwill is expected to be deductible for income tax purposes over a 15 year period. 56 Table of Contents XPLR INFRASTRUCTURE, LP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the final amounts recognized by XPLR for the estimated fair value of assets acquired and liabilities assumed in the 2023 acquisition: (millions) Total consideration transferred $ 598 Identifiable assets acquired and liabilities assumed Cash $ 15 Accounts receivable, inventory and prepaid expenses 17 Current derivative assets 4 Property, plant and equipment – net 764 Intangible assets – PPAs 141 Goodwill 21 Noncurrent derivative assets 8 Noncurrent other assets 5 Accounts payable, accrued expenses and current other liabilities (5) Long-term debt (153) Asset retirement obligation (12) Intangible liabilities – PPAs (37) Noncurrent other liabilities (5) Noncontrolling interest (165) Total net identifiable assets, at fair value $ 598 XPLR incurred approximately $3 million in acquisition-related costs during the year ended December 31, 2023 which are reflected as operations and maintenance in the consolidated statements of income (loss).
Management Services Agreement (MSA) – Under the MSA, an indirect wholly owned subsidiary of NEE provides operational, management and administrative services to NEP, including managing NEP’s day-to-day affairs and providing individuals to act as NEP’s executive officers and directors, in addition to those services that are provided under the existing O&M agreements and ASAs described above between NEER subsidiaries and NEP subsidiaries.
Management Services Agreement (MSA) – Under the MSA, an indirect wholly owned subsidiary of NEE provides operational, management and administrative services to XPLR, including managing XPLR’s day-to-day affairs and providing individuals to act as XPLR’s executive officers and directors, in addition to those services that are provided under the existing O&M agreements and ASAs described above between NEER subsidiaries and XPLR subsidiaries.
Restricted cash at December 31, 2023 and 2022 is primarily related to an operating cash reserve. Restricted cash reported as current assets are recorded as such based on the anticipated use of these funds. Concentration of Credit Risk – Financial instruments which potentially subject NEP to concentrations of credit risk consist primarily of accounts receivable and derivative instruments.
Restricted cash at December 31, 2024 and 2023 is primarily related to an operating cash reserve. Restricted cash reported as current assets are recorded as such based on the anticipated use of these funds. Concentration of Credit Risk – Financial instruments which potentially subject XPLR to concentrations of credit risk consist primarily of accounts receivable and derivative instruments.
ROU assets are included primarily in noncurrent other assets, lease liabilities are included in current and noncurrent other liabilities and net investments in sales-type leases are included in current and noncurrent other assets on NEP's consolidated balance sheets.
ROU assets are included primarily in noncurrent other assets, lease liabilities are included in current and noncurrent other liabilities and net investments in sales-type leases are included in current and noncurrent other assets on XPLR's consolidated balance sheets.
NEP OpCo is a limited partnership with a general partner and limited partners. NEP consolidates the results of NEP OpCo and its subsidiaries because of its controlling interest in the general partner of NEP OpCo.
XPLR OpCo is a limited partnership with a general partner and limited partners. XPLR consolidates the results of XPLR OpCo and its subsidiaries because of its controlling interest in the general partner of XPLR OpCo.
In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of NEP as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of XPLR as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
NEP’s customers typically receive bills monthly with payment due within 30 days. Revenues yet to be earned under contracts with customers to deliver energy and any related energy attributes, which have maturity dates ranging from 2025 to 2052, will vary based on the volume of energy delivered.
XPLR’s customers typically receive bills monthly with payment due within 30 days. Revenues yet to be earned under contracts with customers to deliver energy and any related energy attributes, which have maturity dates ranging from 2025 to 2051, will vary based on the volume of energy delivered.
If, upon conversion of the 2020 convertible notes, the price per NEP common unit during the relevant valuation period is above the strike price, there would generally be a payment to NEP (if NEP elects to cash settle) or an offset of potential dilution to NEP's common units up to the cap price (if NEP elects to settle in NEP common units). 14.
If, upon conversion of the 2020 convertible notes, the price per XPLR common unit during the relevant valuation period is above the strike price, there would generally be a payment to XPLR (if XPLR elects to cash settle) or an offset of potential dilution to XPLR's common units up to the cap price (if XPLR elects to settle in XPLR common units). 14.
(d) At December 31, 2022, NEP retained certain Class B membership interests in NEP Renewables IV which were sold to the Class B investors for approximately $177 million at a final funding in November 2023. Prior to the final Class B funding, NEP received approximately 86% of NEP Renewables IV's cash distributions and the third-party investors received 14%.
(c) At December 31, 2022, XPLR retained certain Class B membership interests in XPLR Renewables IV which were sold to the Class B investors for approximately $177 million at a final funding in November 2023. Prior to the final Class B funding, XPLR received approximately 86% of XPLR Renewables IV's cash distributions and the third-party investors received 14%.
(g) NEP may elect to pay the buyout price in NEP non-voting common units or cash (or any combination thereof), subject to conditions and limitations set forth in the applicable agreements. Percentages shown represent the maximum percentages NEP expects it can pay in NEP non-voting common units without the acquiescence of the Class B investor, subject to applicable closing conditions.
(h) XPLR may elect to pay the buyout price in XPLR non-voting common units or cash (or any combination thereof), subject to conditions and limitations set forth in the applicable agreements. Percentages shown represent the maximum percentages XPLR expects it can pay in XPLR non-voting common units without the acquiescence of the Class B investor, subject to applicable closing conditions.
Operating lease expense is included in O&M expense, interest and amortization expense associated with finance leases are included in interest expense and depreciation and amortization expense, respectively, and rental income associated with operating leases and interest income associated with sales-type leases are included in operating revenues in NEP’s consolidated statements of income. See Note 12.
Operating lease expense is included in O&M expense, interest and amortization expense associated with finance leases are included in interest expense and depreciation and amortization expense, respectively, and rental income associated with operating leases and interest income associated with sales-type leases are included in operating revenues in XPLR’s consolidated statements of income (loss). See Note 12.
Basis for Opinion These financial statements are the responsibility of NEP’s management. Our responsibility is to express an opinion on NEP's financial statements based on our audits.
Basis for Opinion These financial statements are the responsibility of XPLR’s management. Our responsibility is to express an opinion on XPLR's financial statements based on our audits.
NEP OpCo also made certain payments to NEE based on the achievement by NEP OpCo of certain target quarterly distribution levels to its unitholders.
XPLR OpCo also made certain payments to NEE based on the achievement by XPLR OpCo of certain target quarterly distribution levels to its unitholders.
Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense, which is included in depreciation and amortization expense in NEP’s consolidated statements of income.
Changes in the ARO resulting from the passage of time are recognized as an increase in the carrying amount of the liability and as accretion expense, which is included in depreciation and amortization expense in XPLR’s consolidated statements of income (loss).
Upon conversion of the 2022 convertible notes, NEP will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, NEP common units or a combination of cash and common units, at NEP's election, in respect of the remainder, if any, of NEP's conversion obligation in excess of the aggregate principal amount of the notes being converted.
Upon conversion of the 2022 convertible notes, XPLR will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, XPLR common units or a combination of cash and common units, at XPLR's election, in respect of the remainder, if any, of XPLR's conversion obligation in excess of the aggregate principal amount of the notes being converted.

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