To Our Shareholders

Lewis Hay, III; Chairman, President and Chief Executive Officer Lewis Hay, III
Chairman, President and Chief Executive Officer

2005 was another extraordinary year for FPL Group. In last year’s letter, I told you that 2005 would be defined by several major challenges and areas of focus for each of our businesses.

For Florida Power & Light Company, our regulated electric company subsidiary, we would need to recover our prudently incurred 2004 storm restoration costs, establish a new base rate structure to be approved by the Florida Public Service Commission (PSC) before the end of the year, and meet continued growth in demand for electric service in Florida.
For FPL Energy, our competitive energy subsidiary, our plan was to expand our U.S. market leading wind portfolio, continue to extract maximum value from our existing portfolio through a focus on operational excellence, manage a capacity uprate at our Seabrook nuclear power plant in New Hampshire and continue to upgrade our portfolio of assets.

I’m pleased to report that we were successful in meeting these challenges – and then some. Most notably:

The PSC granted us permission to recover prudently incurred storm costs through a small temporary monthly surcharge on customer bills that began in February 2005.
We negotiated and the PSC approved a new base rate agreement that provides for rate certainty at least through the end of 2009 and allows us to recover investment in new power plants. It also allows us to recover our prudently incurred storm restoration costs either through a surcharge on customers’ bills or through the sale of bonds known as securitization. We believe this outcome fairly balances the interests of both our customers and our shareholders.
Few people expected another storm season in Florida in 2005 like the one we experienced in 2004 - the year we prepared for and restored service after three powerful hurricanes that impacted more than 5.4 million FPL customers. But in many ways, 2005 proved every bit the match. We mobilized forces to restore service after four storms - Hurricanes Dennis, Katrina, Rita, and Wilma - resulting in approximately 5.3 million FPL customer outages and $906 million in restoration costs. Wilma caused the greatest number of power outages in FPL’s 80-plus year history - 3.2 million - and all told was our most challenging restoration effort ever. In many ways, 2005 was a watershed year for us on the storm front, especially from an operational standpoint. We made some key enhancements to our storm restoration processes after the 2004 season, and we are making substantial infrastructure changes after the 2005 season. An independent international engineering consultant’s review of our power delivery systems confirmed that our network meets or exceeds current standards and that it performed as expected under hurricane conditions. However, it is now clear that Florida is in the midst of a cycle of increased hurricane activity, and we must bolster our system. We recently announced a five-point, 10-year plan we call Storm Securesm that includes rapid completion of post-hurricane repairs and upgrades prior to the 2006 hurricane season, upgrades to our system to withstand higher wind velocity, converting more overhead lines to underground, revising our pole inspection processes, and increasing line clearing and vegetation management, particularly around critical infrastructure. We expect these actions will make our network much more resilient to hurricanes. Unfortunately, this will take a lot of time and a significant investment of capital to complete. And, regardless of what we do, no system will ever be totally hurricane-proof.
FPL Energy, our competitive energy business, had another year of strong performance, recording a 71 percent* increase in adjusted earnings over the prior year. Over the past five years, FPL Energy has grown adjusted earnings at an average annual rate of 29 percent*.
Additionally, in December, we announced our proposed merger with Constellation Energy which, if approved, is expected to create the nation’s leading competitive energy business and second largest regulated electric utility business. I’m very excited about this transaction. By successfully integrating our complementary businesses, we will cost effectively build scale and scope immediately to establish ourselves as the premier competitive energy business in America. From a financial standpoint, we expect the transaction to be immediately accretive to earnings, preserve balance sheet strength, and provide a solid foundation of risk-adjusted cash flows. As we see it today, the future earnings power of the combined company should be among the best in the industry. Following receipt of the necessary regulatory and shareholder approvals, we expect to complete the merger by the end of this year.

We’re pleased that, in 2005, the U.S. Congress passed and the President signed an energy bill, the first major reform of energy policy in decades. The legislation includes a number of provisions that are favorable to our company, including a wind energy production tax credit, a measure providing greater flexibility to restructure power contracts at certain of our facilities and a section eliminating archaic ownership restrictions on utilities. This last provision was instrumental in allowing for our decision to merge with Constellation.

FPL Group continues to perform extraordinarily well

FPL Group performed admirably again in 2005, and our results speak for themselves:

FPL Group provided a 15.1 percent total shareholder return for the year, which enabled us to continue to outperform the S&P 500 over the last one-, three-, five- and ten-year periods.
Net income reached $885 million, or $2.29 per share in 2005, compared with $887 million or $2.45 per share in 2004.
FPL Group’s adjusted earnings, which excludes the net unrealized mark-to-market effect associated with non-qualifying hedges, were $997 million or $2.58 per share in 2005, compared with $890 million or $2.46 per share in 2004. (See page 1 for reconciliation of net income to adjusted earnings and earnings per share to adjusted earnings per share.)
On February 17, 2006, the board of directors again increased the quarterly common stock dividend, this time by two cents per share, or 5.6 percent.

BUSINESS REVIEW AND 2005 PERFORMANCE

Florida Power & Light

Beyond meeting the extraordinary challenges I outlined earlier in this letter, Florida Power & Light achieved a variety of important results and met a number of key milestones last year.

FPL is one of the country’s largest and fastest growing electric utilities with nearly 4.4 million customer accounts. In 2005, the average number of FPL customer accounts increased by 97,000 or 2.3 percent, consistent with the growth that we have witnessed over the last three years.
We continued the outstanding operational performance that places FPL among the best utilities in the electric industry. The amount of time our fossil power plants are available to generate electricity is among the highest in the nation, and the reliability of our power delivery system is also among the very best.
We continue to invest heavily in this business to meet growth and to maintain system reliability. Last year, we reinvested approximately $1.7 billion in FPL. Of note, in June 2005, we added about 1,900 megawatts of gas-fired generation through expansions at our Martin and Manatee sites. Both of these facilities came into service on time and under budget.
FPL also was challenged in 2005 by conditions in the fuels markets. Dramatically higher prices for natural gas and oil affected the total cost of fuel we needed to generate electricity in 2005 and will have a continuing effect in future years. FPL finished the year having spent just over $1 billion more for fuel than anticipated, and this figure would have been some $600 million higher had it not been for the beneficial impact of our fuel hedging program. Approximately three-quarters of this underrecovery has been built into the 2006 fuel factor approved by the PSC, and the balance is expected to be recovered in 2007. In addition, the 2006 fuel charge to customers reflects higher costs for 2006, causing the typical residential customer bill to increase by 19 percent, while commercial and industrial customers’ bills went up by 30 to 40 percent. Even with these increases, FPL’s total bills are still well below the charges for equivalent usage in many other parts of the country.

FPL Energy

FPL Energy, a leading clean energy provider with natural gas, wind, solar, hydroelectric and nuclear power plants in operation in 24 states, had a great year in 2005.

Business results were positively impacted by new projects added during the year, a strong operating performance across the portfolio, improved market conditions, especially in Texas and New England, the ongoing benefits of previous contract restructurings and asset optimization and marketing activities.
We added just over 500 megawatts to our U.S. market-leading wind energy portfolio. By year-end, we had a 35 percent share of the U.S. market with 3,192 megawatts of clean wind energy, well outpacing our nearest competitor.
We also added 52 megawatts in the first phase of our two-phased uprate plan at the Seabrook nuclear plant in New Hampshire. The total uprate is anticipated to increase Seabrook’s net plant output to 1,106 megawatts.
Further, we continued to add value and reduce risk by actively hedging our wholesale energy portfolio. At year-end 2005, more than 90 percent of our expected 2006 gross margin and more than 80 percent of our expected 2007 gross margin was hedged.
In early 2006, we completed the acquisition of a 70 percent interest in the Duane Arnold Energy Center in Iowa, adding approximately 415 megawatts of nuclear power to our portfolio.
Importantly, the underlying earnings power of FPL Energy remains strong. We expect adjusted earnings per share growth to continue at a 20 to 30 percent annual pace through 2007, assuming normal weather and excluding the effect of adopting new accounting standards and the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time.

2006 AND BEYOND

Going forward, we have high expectations, sound strategies and strong tangible growth prospects.

From a corporate perspective we have three key priorities for 2006.

First, we are focused intensely on achieving our 2006 business objectives, which will culminate in anticipated adjusted earnings per share growth for FPL Group of approximately 9 to 12 percent, translating into adjusted earnings per share in the range of $2.80 - $2.90. This includes contributions from FPL of $2.05 to $2.10 and from FPL Energy of $0.90 to $1.00, as well as an expected negative impact from Corporate & Other of $0.15 to $0.20, largely due to interest expense. These ranges are on an FPL Group stand-alone basis, assume normal weather and exclude the effect of adopting new accounting standards and the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time. We expect to benefit from continued growth in customer accounts at FPL, ongoing productivity improvements at both FPL and FPL Energy, the full-year contributions of new wind generation added in 2005, the partial-year contributions from the continued buildout of FPL Energy’s portfolio in 2006, the addition of the Duane Arnold nuclear facility, and ongoing asset optimization and risk management activities at FPL Energy.
Second, we are committed to completing the merger with Constellation as soon as reasonably possible.
And third, we will prepare and begin implementing integration plans for “day one” operations of the combined company and to achieve the anticipated synergies in “year one.”

In support of the first priority, we have a busy year underway:

At Florida Power & Light, we’ll complete the analysis of the infrastructure and begin to implement our Storm Secure plan to further strengthen our system in order to minimize disruptions from hurricanes. We expect to complete the process for recovering prior- year storm costs and are proposing the rebuilding of a reserve of $650 million for future hurricanes. To ensure reliable electric service and to continue expanding our system to meet the growth in demand for electric power in our service territory, we’ll continue construction on the new natural gas-fired power plant at our existing Turkey Point location south of Miami, and we’ll continue development plans for a natural gas-fired plant in western Palm Beach County. As we make these and other future additions to our generation portfolio, we’ll remain mindful of the need to mitigate fuel prices, be sensitive to our environment and further diversify our fuel mix. On that last point, we’ll continue laying the groundwork necessary to hopefully bring lower-cost advanced technology coal and more nuclear power units into our Florida portfolio in coming years.
At FPL Energy, we’ll further expand our wind portfolio. Our wind development pipeline is in excellent shape, with more than 700 megawatts of projects board-approved or already under construction. We’ll continue to optimize our portfolio, seeking new assets as appropriate or divesting those that no longer fit into our portfolio. And we expect to benefit from the Duane Arnold nuclear plant acquisition I mentioned earlier.

I would like to personally thank Jesse Arnelle and Frank Zarb for their service as directors of FPL Group. They will be retiring from the board immediately prior to the 2006 annual meeting of shareholders. Jesse has been a director since 1990 and Frank since 2002. Each has made important contributions to our company. I’ve greatly appreciated their wise and candid counsel.

Rudy Schupp, Hansel Tookes and Brian Ferguson joined our board in 2005. Each has valuable expertise that will serve us well in our changing industry.

As always, I thank our employees for their outstanding efforts in providing safe and reliable power to our customers and for their concern for the environment and for the communities of which we are a part. I particularly want to thank them for the extraordinary hard work, dedication and personal sacrifices they have made to restore power to our customers following the seven hurricanes we experienced over the past two years. I firmly believe that no company could have done a better job than that done by these fine men and women. This past year, their efforts were recognized by several organizations:

The Edison Electric Institute, the major trade association in the electric power industry, presented us with three awards, one each for our hurricane work in Florida and assisting utilities on the Gulf Coast, and one for our Right Tree Right Place public education campaign.
For the fourth straight time, FPL Group received a No. 1 ranking for environmental performance among 23 electric utilities from Innovest, an internationally recognized research firm. The Innovest analysis indicates that companies that take positive and proactive measures to address environmental, social and governance factors are likely to outperform peers in stock price performance.
In January 2006, FPL Group for the second year in a row was named one of the Global 100 Most Sustainable Corporations in the World by Corporate Knights Inc., a Canadian media company. Chosen from a universe of 1,800 publicly-traded companies, FPL Group was cited for the honor after having among “the best developed abilities, relative to their industry peers, to manage the environmental, social and governance risks and opportunities they face.”
In March 2006, FORTUNE magazine ranked FPL Group second among electric and gas utilities in the magazine's annual survey of America's most admired companies. The top companies in their respective industries were rated on eight key attributes: innovation, quality of management, employee talents, quality of service, long-term investment value, financial soundness, social responsibility and use of corporate assets.

I also want to thank the several hundred utilities and contractors and their thousands of restoration personnel from 39 states and Canada that helped our power restoration efforts over the past two years. Their assistance and the support of their family members were invaluable.

As always, I appreciate the support of you, our shareholders, as we continue our ongoing pursuit of increasing shareholder value.

Lewis Hay, III
Chairman, President and Chief Executive Officer

March 31, 2006