FPL Energy - Growing National Presence

Additional plant construction underway | Keys to success

The presence of FPL Group in the national wholesale power business grew significantly in 2001 as FPL Energy - the company's unregulated electricity generation subsidiary - continued to add to an already-impressive portfolio of projects and increase its contributions to the parent company's earnings.

FPL Energy's net income rose 27 percent for the year, growing from $83 million in 2000 to $105 million, excluding the effects of FAS 133 and merger-related expenses. Contributions to earnings per share increased 27 percent, from 49 cents to 62 cents.

FPL Energy: A Growing Portfolio

FPL Energy is an industry leader in the production of clean energy with more than 80 percent of its generation coming from natural gas or renewable sources including wind, hydro and solar. While the company's primary focus has been on greenfield development - building on new sites - it expects to shift to a mix of development and acquisition.

The drivers of FPL Energy's growth in 2001 included increased optimization of the company's existing portfolio, contributions from new natural gas-fired generating facilities, and the continued expansion and strong performance of its wind portfolio.

FPL Energy added more than 1,000 megawatts to its portfolio in 2001, bringing its total number of net-megawatts in operation to more than 5,000. The additions included 171 megawatts from a peaking unit at the Doswell plant in Virginia, and approximately 843 megawatts from five wind facilities. Two of the wind plants are near Odessa, Texas, and produce 278 and 160 megawatts. Also added were a 263-megawatt wind facility on the Oregon-Washington border, a 112-megawatt facility in Gray County, Kansas, and a 30-megawatt facility at Montfort, Wisconsin.

Once considered a "niche" business, FPL Energy is now a leader in the U.S. wind power market. With the production tax credit for wind energy projects extended through 2003, the company is targeting the addition of 1,000 to 2,000 megawatts of wind-powered generation during that period.

Additional plant construction underway

Additional FPL Energy plants and their scheduled completion dates during 2002 include:

A 54-megawatt natural gas-fired peaking unit in New York City, which will supply electricity to the Long Island Power Authority (late spring)
A 566-megawatt natural gas combined-cycle plant near Austin, Texas, in which FPL Energy holds a 50 percent partnership (mid-year)
A 535-megawatt natural gas combined-cycle plant near Providence, Rhode Island (mid-year)
A 517-megawatt natural gas-fired plant in Blythe, California (late year).

Two additional plants are scheduled for completion during 2003. These include:

A 1,789-megawatt natural gas-fired plant in Forney, Texas, near Dallas, of which FPL Energy owns 1,700 megawatts (mid-year)
A 668-megawatt natural gas-fired plant in Calhoun County in northeastern Alabama (mid-year).

Keys to success

A key to FPL Energy's success is its outstanding power generation skills. The power generation division, which serves both FPL Energy and FPL, allows the company not only to develop low cost, state-of-the-art power plants utilizing clean technologies, but also to increase existing plant efficiency and achieve higher availability than the competition.

A Diversified Portfolio at FPL Energy

In addition, FPL Energy utilizes its enhanced energy marketing and trading organization - Power Marketing, Inc. - to realize the full value of its physical assets. The company employs a relatively low-risk, asset-based hedging strategy, rather than a speculative trading strategy, which enables it to moderate risk and enhance returns. Power Marketing, Inc. actively trades around FPL Energy's expanding portfolio and contracts for a substantial portion of its output, as market conditions warrant. At the beginning of this year approximately 80 percent of FPL Energy's 2002 capacity and more than 50 percent of its 2003 capacity was under contract.

Another key to FPL Energy's success is its financial strength and flexibility as part of FPL Group. This has enabled the company to seize opportunities to profitably grow its portfolio.