- NextEra Energy CEO and Chairman James Robo told analysts on Wednesday that political will to sell South Carolina state-owned utility Santee Cooper remains, including the support of South Carolina Gov. Henry McMaster, despite opposition from other lawmakers.
- Robo did not confirm market rumors of NextEra's interest in other acquisitions, but he believes the economic uncertainty driven by COVID-19 will make "counterparties take a pause." NextEra's pursuit of utility assets remains unchanged, he said.
- The company anticipates meeting expectations for earnings growth despite the impacts from the COVID-19 epidemic, Robo said. "You've got a lot of insulation to the bottom line from the impacts of COVID," Stephen Byrd, Morgan Stanley analyst, told company participants on the Q1 call.
NextEra ended 2019 with dashed hopes of acquiring JEA, before the Jacksonville municipal utility board rejected all of its bids. However, Robo said he does not believe the South Carolina sale will tank.
"By no means is Santee Cooper done ... There remains a lot of energy still behind wanting to sell Santee Cooper," Robo told analysts.
The bid for the state-owned utility needs sign-off from South Carolina's lawmakers, which has been complicated by legislative delays related to the COVID-19 pandemic.
"The disagreements in the [state] Senate around what to do with Santee Cooper led to a bit of a standoff around the budget in the middle of the pandemic," Robo said.
NextEra and Dominion Energy are the last remaining bidders for Santee Cooper, according to the state Department of Administration, and Robo visited the state legislature earlier this year to convince lawmakers to accept NextEra's offer.
Under a state plan released in February, NextEra would pay off more than $6.8 billion in debt, bidding $9.46 billion for the sale, while Dominion, offered the state a 10-year management agreement. Dominion's management plan is not an acquisition, aiming instead to create efficiencies and savings between Santee Cooper's operations and another utility in the state, which is already owned by Dominion.
Robo did not comment on rumors for utility acquisitions in Missouri or Kansas, stating that "a strong credit rating is really critical to us and critical to our strategy" when considering potential acquisitions.
The utility's renewable energy subsidiary, NextEra Energy Resources, also announced it will continue delivering on its 2020 goals and commitments, expecting no headwinds from COVID-19 conditions.
"If there are minor disruptions that come up, we're able to pivot to other manufacturing facilities [owned by the same vendor], so we don't see the same impact that perhaps a smaller player, whether it's in wind or solar, would see," John Ketchum, CEO and president of NextEra Energy Resources, told analysts.
The company is "very bullish" on origination activities going forward. Energy Resources added 1.6 MW to its backlog of projects since the Q4 2019 earnings call, including 600 MW of wind projects for 2022 and beyond, Robo said.
"They seem to be pretty optimistic about their point of view and their position," Paul Patterson, analyst with Glenrock Associates, told Utility Dive of the Q1 call.
Supply chain concerns and access to capital are prevailing issues for smaller developers, Ketchum said, which "could create project M&A opportunities for us, where some of these smaller developers need a rescue plan because they're going to be running up against issues at the end of the year."
Robo also said NextEra is on track to commit "the largest ever annual battery storage investment by any power company in the world," expecting to exceed $1 billion in 2021, as Energy Resources continues growing and cheap renewables are increasingly paired with storage.