Kirk Crews
Executive Vice President Finance and Chief Financial Officer at NextEra Energy
Thanks, Kristin, and good morning. NextEra Energy delivered strong third quarter reports, growing adjusted earnings per share approximately 10.6% year-over-year. In the quarter FPL continue to deliver outstanding value to its customers in what we believe has been one of the most constructive regulatory jurisdictions in the nation. FPL's bills are well below the national average. And we are relentlessly focused on reliability and running the business efficiently. Energy Resources extended its leadership position in renewable energy during the third quarter with strong adjusted earnings growth in its best renewables and storage origination quarter in its history.
NextEra Energy has clear growth visibility through FPL's capital plan and Energy Resources over 21 gigawatt renewables and storage backlog. With the strongest balance sheets in the sector and worldwide banking relationships we believe NextEra Energy has both significant access to capital and cost of capital advantages and is well-positioned to continue to deliver long-term value for shareholders. Now let's turn to FPL's detailed results. For the third quarter of 2023, FPL's earnings per share increased $0.04 year-over-year. The principal driver of this performance was FPL's regulatory capital employed growth of approximately 13.6% year-over-year.
We continue to expect FPL to realize roughly 9% average annual growth in regulatory capital employed over our current rate agreement 4-year term, which runs through 2025. FPL's capital expenditures were approximately $2.6 billion for the quarter and we expect FPL's full-year 2023 capital investments to be between $9 billion and $9.5 billion. For the 12 months ending September 2023, FPL's reported ROE for regulatory purposes will be approximately 11.8%. During the third quarter, we reversed roughly $245 million of reserve amortization leaving FPL with a balance of over $1.2 billion. Over the current 4-year settlement agreement we continue to expect FPL to capital investments of between $32 billion to $34 billion.
Our capital investment plan is well-established and focused on enhancing what we believe is one of the best customer value propositions in the industry. Key indicators show that the Florida economy remains healthy and Florida continues to be one of the fastest-growing states in the country. FPL's third quarter retail sales increased 3% from the prior year comparable period due to warmer weather, which had a positive year-over-year impact on usage per customer of approximately 2%. As a result, FPL observed solid underlying growth in third quarter retail sales of roughly 1% on a weather-normalized basis.
Now let's turn to Energy Resources, which reported adjusted earnings growth of approximately 21% year-over-year. Contributions from new investments increased $0.11 per share year-over-year, while our existing clean energy portfolio declined $0.02 per share, which includes the impact of weaker year-over-year wind resource. The comparative contribution from our customer supply and trading and gas infrastructure businesses increased by $0.04 per share and $0.01 per share respectively. All other impacts reduced earnings by $0.08 per share. This decline reflects higher interest costs by $0.06 per share, half of which is driven by new borrowing costs to support new investments.
Energy Resources had a record quarter of new renewables and storage origination, adding approximately 3,245 megawatts to the backlog, which is the first time we have exceeded 3 gigawatts in a single quarter. Although, we will remind you that signings can be lumpy quarter-to-quarter we do believe this is a terrific sign of strong underlying demand for new renewable generation. With these additions, our backlog now totals over 21 gigawatts after taking into account roughly 1,025 megawatts of new projects placed into service since our second quarter call.
We also removed roughly 1,180 megawatts from our backlog, including roughly 800 megawatts of projects in New York following an adverse decision by [Indecipherable] two weeks ago. We are optimistic that these projects will ultimately move forward but are removing them from backlog for now. The remaining megawatts were removed due to permitting challenges. Overall, we remain on track to achieve our renewable development expectations of roughly 33 gigawatts to 42 gigawatts through 2026.
This quarter's backlog additions include roughly 455 megawatts to repower existing wind facilities, which includes Energy Resources share of approximately 740 megawatts of repowers within the NextEra Energy Partners portfolio, which I'm going to discuss in a few minutes. As a reminder, in a repower we invest roughly 50% to 80% of the cost of a newbuild, are able to refresh and enhance the performance of the turbine equipment and a new 10 years of production tax credits collectively resulting in attractive returns. Energy Resources has previously repowered roughly 6 gigawatts of its approximately 23 gigawatt operating wind portfolio.
And we believe we will be able to repower, much of our existing wind portfolio in the coming years. Also included in the backlog additions are roughly 250 megawatts of standalone battery storage projects collocated with existing wind and solar facilities. The combination of the standalone storage tax credit and the ability to utilize existing interconnection capacity from our operating renewables and storage footprint positions us well to serve our customers' growing needs for capacity. Turning now to our third quarter 2023 consolidated results; adjusted earnings from Corporate and Other decreased by $0.01 per share year-over-year.
Our long-term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top-end of our adjusted EPS expectation ranges in each year from 2023 through 2026. From 2021 to 2026, we continue to expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. And we continue to expect to grow our dividends per share at roughly 10% per year for at least 2024 off a 2022 base. As always, our expectations are subject to our caveats.
Going forward, we plan to fund the business in a manner similar to how we have historically done so at both FPL and Energy Resources. This includes utilizing cash flow from operations for roughly half of our funding needs in addition to tax equity, project finance and corporate debt. Sale of tax credits is serving as a new source of capital funding for NextEra Energy. We expect to transfer roughly $400 million in tax credits in 2023. And expect this amount to grow over the next couple of years to approximately $1.6 billion to $1.8 billion in 2026.
This dynamic has reduced NextEra Energy's capital recycling needs including those previously met via sales to NextEra Energy Partners, which has historically averaged roughly $1 billion of annual cash proceeds. Let me address future equity issuances specifically. Our balance sheet and financial discipline remains core to our strategy. As we find attractive investments for our customers and shareholders we expect to fund those investments in a way that maintains the strength of our balance sheet. As a reminder, over the last five years, we have issued roughly $1.5 billion annually on average of equity in the form of equity units.
We do not expect to issue any equity for the balance of 2023 and expect our year end credit metrics to exceed those specified by the agencies to support our credit ratings -- our current ratings From 2024 through 2026 we would expect our total equity needs to be no more than $3 billion in total with continued reliance on equity units to satisfy our equity needs which have no dilution for the first [Technical Issues] years. We believe FPL and Energy Resources are well-positioned to manage interest rate volatility in the current environment. At FPL, we primarily rely on the surplus mechanism to offset higher interest rates for the benefit of customers.
In addition, FPL's rate agreement already provided for in ROE adjusted [Technical Issues] 11.8% enabling it to earn a higher ROE in the current higher-rate environment. We expect that FPL will be able to absorb much and potentially all of the cumulative effects of the current interest rate environment through the use of the surplus mechanism over the remaining [Technical Issues] period. Consistent with the expiration of the current rate agreement FPL expects to file a rate case in early 2025 for new rates effective 2026. For Energy Resources and Corporate and Other we now have $20.5 billion of interest rate hedges in place.
While the amounts vary as we add and settle hedges, the tenor of the swaps are between five and 10 years and have a weighted-average rate of roughly 3.75%. Swaps allow us to mitigate the impact of interest rate changes on Energy Resources backlog return and Capital Holdings $12.8 billion of debt maturities from 2024 through 2026. Specifically, these swaps, allow us to hedge the project-level debt funding. We expect to issue on our renewables backlog as well as a portion of the $12.8 billion of new term maturities. To put this all in perspective NextEra Energy's sensitivity for an immediate 50 basis point upward shift in the yield curve has essentially no expected adjusted EPS impact on 2023 and 2024 and have, on average, $0.03 to $0.05 of expected adjusted EPS impact in 2025 and 2026, which is equivalent to approximately 1% of our adjusted EPS expectation.
This sensitivity of course assumes we do not implement other offsetting initiatives including, among others our normal process of cost reductions and capital efficiency opportunities. Our backlog is in good shape and is benefiting from our interest rate swaps, global supply chain management capabilities and the ability to procure equipment, materials and balance of plant services at scale across our portfolio. The expected return on equity for our backlog are mid-teens for solar and over 20 for wind and storage. As we have done historically, we price our power purchase agreements commensurate with current market conditions, including our current cost-of-capital in order to maintain appropriate returns.
In addition, at the time of our final investment decision before we commit significant capital to our backlog projects we are utilizing interest rate swaps on contracts that we entered into when rates were lower to maintain our return expectations. We remain financially disciplined and pass on projects that don't meet our return expectations. Going forward we are encouraged by the trends we are seeing in lower equipment pricing for solar panels and batteries, given increased competition globally and declining prices for materials, which we believe will help offset the impacts of higher interest rates on power purchase agreement prices.
We are optimistic that demand will remain resilient due to the factors you all know well including the continued cost competitiveness of renewable energy relative to alternative forms of generation. Importantly to-date demand has remained strong as evidenced by our substantial new additions to backlog this quarter. Now let's turn to NextEra Energy Partners. As a reminder, the partnership is a financing vehicle that grows its distribution by acquiring assets with long term contracted high-quality cash flows and financing those acquisitions at low cost. Over the years NextEra Energy Partners has been able to rely on low-cost financing to help drive this distribution growth.
To meet its financing needs in recent years the partnership has relied primarily on convertible equity portfolio financings that have a low cash coupon during their term and convert into equity over-time. The significant amount of the equity required to be issued to buy out these financings began coming due this year and over the next several years, which we believe contributed to the partnership's trading yield almost doubling at the same time interest rates were rising. Consequently, the partnership's cost-of-capital increased, which made it difficult to support a 12% growth rate in a way that is sustainable and in the best interest of unitholders over the long-term.
By reducing the growth rate to 6% NextEra Energy Partners LP distribution rate is now comparable to its peers and the partnership does not expect to require growth equity until 2027. In order to meet these objectives the partnership is focused on, first, executing against its transition plan. As a reminder, the transition plans include successfully entering into agreement to sell the Texas Natural Gas Pipeline portfolio and [Technical Issues] natural gas pipeline assets this year and in 2025, respectively. Doing so will enable the partnership to address the equity buyouts associated with the STX Midstream, the 2019 NEP Pipeline and NEP Renewables 2 convertible equity portfolio financing through 2025.
Through the period of our current financial expectations that would leave a small equity buyout of roughly $147 million on the Genesis Holding convertible equity portfolio financing in 2026. The partnership is continuing its process to sell the Texas Pipeline Portfolio and expect to have an update on or before our fourth quarter call in January. NextEra Energy Partners is focused on executing against this growth plan for unitholders. That involves organic growth, specific repowerings of approximately 1.3 gigawatts of wind projects as well as acquiring assets from Energy Resources or third-parties at favorable yields. Importantly, NextEra Energy Partners does not expect to need an acquisition in 2024 to meet the 6% growth in distributions per unit target.
Today, we're announcing plans to repower approximately 740 megawatts of wind facility through 2026, which require the final approval of the Customers' Board of Directors, which is expected to be received in the near-term. The repowerings are projected to generate its proactive CAFD yields and the partnership expects to fund the repowerings with either tax equity or project-specific debt. Repowerings represent an efficient way to support the partnership's growth target. Overall, we are pleased with this progress and remain focused on executing additional repowering opportunities in the future across NextEra Energy Partners roughly 8 gigawatt wind portfolio.
To minimize the volatility associated with changes in interest rates and support the growth plan, the partnership also executed roughly $1.9 billion to hedge refinancing costs for the 2024 and 2025 maturities. The resulting expected refinancing costs of the maturities are factored into our expectations. Turning to the detailed results; NextEra Energy Partners third quarter adjusted EBITDA was $480 million and cash available for distribution was $247 million. New projects, which primarily reflect contributions from approximately 1,100 net megawatts of new long-term contracted renewable projects acquired in 2022 and the approximately 690 net megawatts of new projects that closed in the second quarter of this year contributed approximately $66 million of adjusted EBITDA and $32 million of cash available for distribution.
The third quarter adjusted EBITDA contribution from existing projects increased by approximately $5 million year-over-year. Third quarter results for adjusted EBITDA and cash available for distribution were positively impacted by the incentive distribution rights fee suspension and provided approximately $39 million of benefit this quarter, more than offsetting the cash available for distribution impacts of lower PAYGO payments driven by lower wind resource at existing projects. Yesterday, NextEra Energy Partners' Board declared a quarterly distribution of $0.8675 per common unit or $3.47 per common unit on an annualized basis, which reflects an annualized increase of 6% from its second quarter 2023 distribution per common unit.
From a base of our second quarter 2023 distribution per common unit at an annualized rate of $3.42 we continue to see 5% to 8% growth per unit per year in LP distributions per unit with a current target of 6% growth per year of being a reasonable range of expectations through at least 2026. For 2023, we expect annualized rate for the fourth quarter 2023 distribution that is payable in February of 2024 to $3.52 per common unit. NextEra Energy Partners expects run rate contributions for adjusted EBITDA and cash available for distribution from its forecasted portfolio at December 31st, 2023 to be in the ranges of $1.9 billion to $2.1 billion and $708 million to $820 million respectively.
As a reminder, year end 2023 run rate projections reflect calendar year 2024 contributions from the forecasted portfolio at year end 2023. The adjusted EBITDA and related cash flow for distributions associated with the Texas Pipeline Portfolio have been excluded from these run rate financial expectations. As always, our expectations are subject to our caveats. While NextEra Energy partners navigates through this current environment it's important not to lose sight of the value of the underlying portfolio. NextEra Energy Partners is the seventh [Phonetic] largest producer of electricity from the wind and the sun in the world with over 10 gigawatts of renewables in operation.
The partnership owns renewable projects that deliver high-quality cash flows in 30 states serving 94 customers with an average counterparty credit rating of triple B-plus via contracts with an average remaining contract life of 14 years. We remain optimistic the partnership can be an attractive vehicle to own existing renewable assets over the long-term. We want the partnership to be successful. And separately to address the question we've been receiving from some investors NextEra Energy has no plans to buy back NextEra Energy Partners.
With that, I'll turn the call over to John.
