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Executives

Jim Von Riesemann - IR

Moray P. Dewhurst - CFO

Lewis Hay - CEO

James L. Robo – COO

Armando J. Olivera – President, Florida Power & Light Company

Mitch Davidson – President, FPL Energy

Analysts

Dan Eggers - Credit Suisse

John Kiani - Deutsche Bank

Greg Gordon – Citigroup

[Ashar Kyle – SAC Capital]

Paul Patterson - Glenrock Associates

[Steve Blishman] - Catapult Capital Management

Shalini Mahajan – UBS

Patrick Forkin – Tejas Securities

Paul Ridzon – Keybanc Capital Markets

FPL Group, Inc. (FPL-OLD) Q4 2007 Earnings Call January 28, 2008 9:00 AM ET

Operator

Good day everyone and welcome to the FPL Group fourth quarter 2007 earnings conference call. (Operator Instructions) At this time for opening remarks I’d like to turn the conference over to your host Mr. Jim Von Riesemann, please go ahead sir.

Jim Von Riesemann

Good morning everyone and welcome to our fourth quarter and full year 2007 earnings conference call. Moray Dewhurst, Chief Financial Officer of FPL Group will provide and overview of our performance for the quarter. Also with us this morning are Lewis Hay, FPL Group’s Chairman and Chief Executive Officer, Jim Robo, President and Chief Operating Officer of FPL Group, Armando Olivera, President of Florida Power & Light Company and Mitch Davidson, President of FPL Energy. Following Moray’s remarks our senior management team will be available to take your questions.

Let me remind you that our comments today will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made herein about future operating results or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from such forward-looking statements. A discussion of factors that could cause actual results or events to vary is contained in the appendix herein and our SEC filings and in the Investors section of our website, www.fplgroup.com.

And now I would like to turn the call over to Moray Dewhurst, Moray?

Moray Dewhurst

Thank you Jim, good morning everyone. 2007 was another excellent year for FPL Group driven again by outstanding performance from FPL Energy. Despite some weakness in revenues at Florida Power & Light Company particularly late in the year, full year results for FPL Group exceeded the expectations we shared with you at this time last year and 2007 was second only to 2006 in the last 20 years in terms of adjusted EPS growth. At the same time, in both major businesses we made significant progress in positioning our selves for good future growth. As a result we continue to believe that average adjusted EPS growth of at least 10% per year off the 2006 base is achievable. We have good growth plans in place and we believe we are well positioned relative to likely long term trends in both commodity prices and the increasingly important issue of global climate change. We look forward to sharing with you more details of our growth plans at our Investor Conference in late March and at various other conferences during the year.

We expected FPL Energy to perform well in 2007 and it did driven by contribution from new investment as well as the roll off of below market hedges in the existing fleet. In addition however, the merchant portfolio enjoyed good market conditions and delivered at the high end of our expectations while the same favorable market environment enabled our wholesale marketing and trading activities to deliver much better results than we had anticipated. At the same time, we funded significant expansion of our internal capabilities to support the new and more aggressive growth goals especially for the wind business that we introduced during the year. Florida Power & Light Company delivered good results overall although the latter part of the year was a bit disappointing on the revenue front. We expected that 2007 would be a challenging year for this business going to cost pressures but we were generally successful in managing these. We went into the year with uncertainty on the revenue front and were pleasantly surprised with the first part of the year; however particularly with the fourth quarter it has now become clear that we are seeing definite signs of a slowdown in growth in our service territory as well as signs of changes in customer usage patterns. I’ll discuss these topics in more detail later.

Nevertheless, for the full year Florida Power & Light Company came in $0.01 short at the lower end of the range we had originally set out in the fall of 2006 which we think is strong performance in a challenging environment. Much effort in 2007 was spent in both major businesses laying the ground work for future growth and we are very pleased with our progress in this regard. At FPL Energy responding to what we see as an increased opportunity for our wind business we expanded and accelerated our growth plans and outlined for you our program to add to an additional 8-10 GW of wind generation in the period 2007 through 2012. We are pleased with our progress to date. We expect to add at least 11 GW with our 2008 program of which more than 700 is currently under construction. Assuming continued policy support, we expect to roughly double our annual capacity to deliver new MW by 2012. FPL Energy also invested significant effort in other growth initiatives including new solar capacity and new transmission facilities designed to leverage the overall growth of the renewables business.

We also welcomed the team at the two unit Point Beach Nuclear Facility to the FPL Group portfolio. Florida Power & Light Company responded to a sometimes rapidly changing external environment and adjusted its development plans to ensure its ability to support continued long term growth in the state. In the generation area, significant progress was made with fossil, nuclear and renewables development all of which have important roles to play in the future portfolio. At the same time we continued to invest in strengthening our transmission and distribution infrastructure and our advanced metering initiative yielded good early results. Overall we are very pleased with the progress made in both businesses.

Last October we shared our thoughts on expectations for 2008 and 2009 adjusted income and EPS. At this point we continue to expect full year 2008 adjusted EPS to be in the range $3.83 to $3.93 and we continue to see a reasonable range for 2009 of $4.15 to $4.35. The revenue outlook for Florida Power & Light Company has clearly deteriorated since we discussed expectations last October. On the other hand some other drivers, particularly on the FPL Energy side have improved. But the overall adjusted EPS range is still a bit reasonable at this time. We will continue to keep you posted on our views of the future as we go through the year.

As a reminder when we discuss FPL Group’s earnings expectations we assume normal weather and mark our open positions to the current forward curves. We also exclude the affect of adopting new accounting standards if any, and the mark-to-market affect of non qualifying hedges neither of which can be determined at this time. Now let’s look at the results for the fourth quarter and full year 2007.

In the fourth quarter of 2007, FPL Group’s GAAP results were $224 million or $0.56 per share compared to $268 million or $0.67 per share during the 2006 fourth quarter. FPL Group’s adjusted 2007 fourth quarter net income and EPS were $282 million and $0.71 respectively compared with $254 million or $0.63 per share in 2006. As a reminded our adjusted earnings exclude the mark-to-market affect of non qualifying hedges. Please refer to the appendix of the presentation for a complete reconciliation of GAAP results to adjusted earnings. We use adjusted earnings internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors and as inputs to the company’s employee incentive compensation plan.

I should also remind you that last year’s fourth quarter and full year adjusted results were affected by two large items. Again a $0.15 or $0.16 for the full year at FPL Energy from the resolution of a long standing commercial dispute and a loss of $0.15 at corporate [inaudible] from the write down of FPL Fibrenet’s metro assets in response to changing market conditions. Both these items make direct comparison of 2007 and 2006 adjusted results a bit challenging.

For the full year FPL Group’s 2007 net income was $1.312 billion or $3.27 per share compared to $1.28 billion or $3.23 per share in 2006. Excluding the mark-to-market affect of non qualifying hedges and merger related costs, FPL Group’s 2007 adjusted earnings were $1.40 billion or $3.48 per share compared to $1.20 billion or $3.04 per share in 2006. Again please refer to the appendix of the presentation for reconciliation of GAAP results to adjusted earnings.

Turning now to Florida Power & Light Company, before discussing 2007 results, I’d like to highlight two items in the 2006 results that will make the comparison to 2007 more meaningful. First earnings in 2006 were reduced roughly $27 million by the net write off of certain disallowed storm costs, secondly usage due to weather in 2006 contributed about $19 million relative to what we had expected from normal weather. Excluding these two items normalized 2006 results might be thought of as about $810 million which would have resulted in an increase in 2007 earnings of about $26 million over normalized 2006 earnings. As I mentioned earlier we expected 2007 to be a challenging year on the cost front and we also indicated some uncertainty about the revenue outlook. As the year unfolded we were able to find offsetting productivity improvements for some of the cost pressures but the revenue performance fell well short of our expectations with much of the shortfall concentrated in the latter part of the year.

Clearly we’ve been seeing some significantly different trends during the past four months than earlier in the year. These affect both customer growth and usage. Customer growth on average for the full year was in line with our expectations adding $0.11 per share to earnings. However much of the growth occurred early in the year when we were a bit surprised by its continued strength, it then tapered off considerably at the end of the year and the customer count has been roughly flat for the last several months.

Weather for the year as a whole was roughly in line with normal although with large swings which has complicated our analysis of usage patterns. Non weather related usage was inconsistent throughout the year and did not deliver the growth that we expected for either the fourth quarter or the year as I’ll discuss in a moment. Results were aided by a base revenue increase associated with the addition of the 1144 MW Turkey Point Generating Facility which went into service in May, slightly ahead of schedule and under budget. For the year the revenue associated with the new Turkey Point Facility added $0.13 per share. This was the first application of the generation base rate adjustment or GBRA which you may recall is a mechanism introduced as part of the FPL’s 2005 rates [inaudible] settlement and stipulation agreement which allows FPL to increase base rates for the cost of approved new generation facilities placed into service prior to the end of the agreement in 2009 with a simplified administrative review. The addition of Turkey Point 5 to our portfolio is beneficial both to customers and to shareholders with a slight increase in base rates more than offset by the fuel savings arising from the incremental efficiency of the new unit.

On the expense front costs were up but not as high as we had indicated when we discussed our expectations for 2007 in late 2006. The absence of disallowed storm costs broken our separately on our financial statement helped the comparative results by $0.07 per share. FPL undertook several initiatives throughout the year to continue to position the company for the long term. We continue to make good progress with our West County Energy Center generation expansion, two identical natural gas units of approximately 1220 MW are currently under construction. The first facility is expected to be placed into service in mid 2009 and the second approximately a year later. The total approved cost of the two units is approximately $1.3 billion. These units will be among the lowest emitting and most efficient fossil units anywhere in the world and like Turkey Point 5 will have the affect of displacing older less efficient capacity as well as supporting continued service territory growth.

In December we received regulatory approval to implement extended power uprights at all four existing Florida nuclear units. The uprights will provide roughly 400 MW of incremental base load capacity with zero greenhouse gas emissions and should be completed by the end of 2012. The estimated cost of approximately $1.8 billion will be recovered under the nuclear cost recovery rule adopted by the Florida Public Service Commission in early 2007. This recovery mechanism allows the cash recovery of all carrying costs during construction and subject to annual prudency reviews of the costs as they are incurred a base rate increase when the new capacity comes into service with a simplified administrative procedure. We also filed a petition for need determination for two new nuclear units to be constructed at our Turkey Point site subject to numerous required regulatory approvals and satisfactory resolution of outstanding technical and economic uncertainties.

If all goes well the new units will add approximately 2,200 to 3,000 MW of new generation in the 2018 to 2020 time frame. While there are many challenges associated with developing new nuclear capacity in this country we continue to believe that any serious national response to the challenge of global climate change has to include the deployment of new nuclear units. Hearings begin on our petition later this week and the commission is scheduled to vote on our request in mid March.

During 2007 FPL also made good progress in our continuing development of advanced metering technology. We now have several years of practical experience with different technologies and believe that our current approach can provide a solid basis for a reliable, scalable and manageable network architecture. To date we have deployed about 50,000 advanced meters with another 50,000 expected to be deployed in 2008 ramping up further in 2009 and beyond if all continues to go well. FPL expects the full deployment of this advanced metering initiative to require a capital investment of approximately $500 million. We are very optimistic that when fully deployed the new technology will allow us to reduce costs, improve the quality of our service and at the same time provide our customers insight into their consumption patterns and greater flexibility in choice in using electricity. Finally Florida Power & Light Company continues to make progress in responding to Governor Crisp policy initiatives particularly in the area of climate change. We have accelerated plans for renewables development. We expect to build a 10 MW solar thermal facility for proof of technology and economics and assuming this is successful we will then expand to 300 MW of capacity. We also expect very soon to open the state’s largest [inaudible] facility and we continue to seek opportunities for wind generation projects with within the state.

We believe we can find specific renewables projects that will allow us to increase the percentage of our supply coming from renewable resources without significant adverse rate impact for our customers.

For the fourth quarter Florida Power & Light Company reported net income of $173 million compared with $170 million in last year’s fourth quarter. The corresponding contributions to EPS were $0.43 per share in both just completed and comparable year ago quarter. For the full year Florida Power & Light Company reported net income of $836 million compared with $802 million in 2006. Earnings per share for 2007 were $2.09 versus $2.02 in the comparable period a year ago. For the full year customer growth ended up about where we had expected at 2%. The average number of customer accounts increased by 87,000. But essentially all this growth was concentrated in the first half of the year. The first half of the year saw customer growth rates slightly ahead of our expectations while the latter portion of the year experienced very little growth. In the last four months of the year, Florida Power & Light Company customer growth was disappointing. We had built into our expectations some tapering off of growth but in fact the customer base stayed essentially constant during the fourth quarter. As a result the fourth quarter year on year growth rate was only 1.5% equating to 64,000 customers.

In a few moments I will discuss customer growth in greater detail in the context of the recent declines in housing starts that Florida and the rest of the nation face. For now let me just note that we continue to believe that the medium to longer term prospects for growth in our service territory remain good. In the fourth quarter retail kWh sales rose 3.1%. This was made up of the 1.5% customer growth I just mentioned, 2.6% due to favorable weather comparisons with last year’s fourth quarter and negative 1% from underlying usage mix and all other affects. For the full year our total retail sales growth was 1.6% made up of 2% customer growth, and negative 0.8% weather affect and positive 0.4% from underlying usage growth mix and other. For most of 2007 usage growth has been lower than our statistical model which takes into account weather affects, general economic conditions, price elasticity and long term trend data would suggest.

However it has been very difficult to detect any consistent pattern. During the fourth quarter we undertook more in depth analysis of revenue trends for the past few years and while we have eliminated some hypothesis we cannot at this stage say we have a clear handle on systemic changes in the drivers of revenue. Broadly speaking we believe the weakness in usage is likely to be related to two categories of change experienced by our customers, first there likely are negative economic factors that drive lower usage per customer that are not fully reflected in our forecast model. The housing sector in particular has experienced a significant downturn in recent months and certainly this should have some affects on usage patterns which cannot be positive. However this factor is likely to prove cyclical. Obviously we have experienced economic cycles before and by themselves they do not lead us to charge our positive outlook for long term growth based on the fundamentals of the Florida economy which remains strong.

On the other hand it will clearly be some time before the housing sector cycle has been played out and therefore we can expect continued revenue weakness for Florida Power & Light Company from this source at least through 2008. It’s possible that there may also be a component of usage weakness related to growing customer efficiency actions not directly related to price although we have no solid evidence for this as yet. To the extent these affects are present they are likely to last indefinitely. Unfortunately they are very hard to model in a meaningful way and they give us little insight into what to expect in terms of magnitude of usage impact going forward. Of course historically, we have seen a fairly consistent long term trend towards greater efficiency but average usage has nevertheless increased as customers have utilized more electro power devices and as average home sizes have increased. We continue to believe that the long term outlook for usage growth will remain positive as long as electricity prices remain moderate.

We will continue to analyze the data to understand the patterns and improve our forecast models but there is no obvious single explanation at this point. For the moment we believe the prudent thing to do is to assume that we are seeing some cyclical weakness in underlying usage in the near term and perhaps a modest shift in the longer term trend. Of course with the base rate agreement, the shareholder bears essentially all the risk of revenue variability through the end of 2009. Thereafter any fundamental shift in demand growth would be reflected through the rate setting process. As a reminder in the past we’ve seen annual usage growth that has averaged about 1% but this figure has always been quite volatile from quarter to quarter and year to year. As with customer growth we will continue to monitor usage trends and let you know if we see any reason to change our outlook.

Having acknowledged that our understanding that the reasons for the revenue trends we have recently experienced is less than we would like let me try and place one element at least in context. This chart shows the historical relationship between the housing starts in our service territory and customer growth. As you can see generally speaking there’s been a close relationship between the two but this relationship broke down in 2004 and 2005 with housing starts running away from customer growth. Since then of course housing starts have slid dramatically. This is very clear evidence of the housing bubble that we’ve discussed before with much of the over building occurring in the condominium segment of the market. This suggests to us that the recent weakness we have experienced in customer growth is not directly tied just to the Florida housing market but instead is probably driven by the broader housing market issues. If it were strictly related to Florida issues, we should have seen a much earlier and more dramatic flowing of customer growth than we in fact have. Instead recognizing that our customer growth historically has been driven by inward migration to the state, we suspect that weaknesses in the housing markets in other parts of the country have at least as much to do with the recent slowdown in customer growth as anything occurring within our state.

For example, if a family contemplating a move to Florida finds itself unable to sell its current house at an acceptable price it may well choose to defer its move until the situation improves. Thus changes in markets outside of Florida can result in changes in our customer growth rate. To the extent these factors are at play we are likely to continue to see weakness in customer growth until the Florida market issues have been resolved across the country at large. This is likely to take some time.

On the other hand, chart shown here clearly suggests that the Florida housing bubble should have had an impact on our usage patterns. It implies a build up in unsold new homes particularly condos, which while they were likely count for us as new customers will not likely have the same level of usage as a new home that is occupied. This element of usage impact which I should stress is probably only one of a number of issues affecting us will likely go away as the surplus of housing is gradually absorbed. However since this absorption too is likely to depend on national economic trends and national housing market trends it could take some time.

Looking forward we feel it’s important to maintain a balanced perspective. Clearly the near term outlook has weakened, by exactly how much is very difficult to say. On the other hand we continue to feel very positively about the longer term growth prospects. As long as the Florida economy continues to perform well particularly on a relative basis, we believe the natural attractions of the state coupled with the beginnings of the baby boomer retirement wave, will continue to serve as a basis for healthy growth and demand for electricity.

For the fourth quarter FPL’s 2007 O&M expense was $380 million compared to $350 million in last year’s fourth quarter driven by higher distribution, power generation and employee benefits costs. Comparative nuclear expenses were down slightly owing to timing issues associated with scheduled plant outages. For the full year FPL’s O&M expense was $1.45 billion up from $1.37 billion in 2006. Higher operating costs in nuclear power generation and distribution drove O&M expenses as well as costs associated with employee benefits. Generally speaking the trends we had anticipated were present but with the exception of nuclear costs we were generally able to do better than we had expected. We remain on track with Storm Secure our long term plan to strengthen our network and make it more resilient in the face of extreme weather conditions.

Looking forward we see the same general areas of cost pressure, nuclear and increase in the number of planned fossil unit outages and employee related costs. Despite the modest up tick we have seen in cost per kWh or cost per customer over the last few years, our latest benchmarking data confirms that Florida Power & Light Company remains one of the most cost efficient utilities in the country ranking in the top deciles in performance in our analysis with O&M costs per kWh roughly 30% below average.

Depreciation in the fourth quarter declined to $197 million from $199 million in the same period a year ago. For the full year depreciation fell to $773 million from $787 million. The fourth quarter and full year reflect underlying growth in transmission and distribution and the introduction of the Turkey Point fossil unit which were more than offset by reductions in certain amounts recovered through the capacity clause. Underlying base depreciation increased by approximately $8 million and $20 million for the quarter and year respectively. The table shown here summarizes the drivers of the earnings growth of Florida Power & Light Company for both the quarter and year in the interest of time I will not read each number for you. For those of you without immediate access to the slides they will be available in the Investor Section of our website, www.fplgroup.com. In total the totally comparison was flat year over year and the comparative annual figure is $0.07 per share.

Relative to the expectations we shared with you in the fall of 2006 we ended the year $0.01 below the lower end of the range almost entirely due to the slowdown in revenues.

FPL Energy had another excellent quarter and outstanding year overall and the adjusted financial comparisons are in fact stronger than they may appear. In 2006 FPL Energy recorded a gain on a litigation settlement which is included in adjusted earnings benefiting last year’s fourth quarter and year by $0.15 and $0.16 per share respectively. The annual growth was driven by margin expansion at the existing assets, notably in April where we benefited from the anticipated roll over of older hedges to hire prices, by new assets primarily new wind projects with a minor contribution from Point Beach, and by increased contributions from our wholesale, marketing and trading operations including our full requirements business. While all these factors were to some degree built into the expectations we shared with you a year or so ago, the existing portfolio and our marketing and trading results exceeded our expectations as we were able to take advantage of favorable market conditions to extract incremental value from our physical and contractual positions.

Operationally the fleet continued to perform very well with a total portfolio forced outage rate under 3% despite some continued teething problems with some of the newer wind turbines. In addition, we were able to fund certain incremental G&A expenditures primarily for new wind development that will help us continue to drive growth into the future. It was a good quarter for our longer term outlook too. We saw some strengthening in the gas curve which is good for the long term outlook for FPL Energy even while it produces book losses under generally accepted accounting principals for the non qualifying hedge category. We remain well hedged for 2008 and 2009. For 2008 we are essentially fully hedged to the first order impact for natural gas prices and very significantly hedged against other price movements including [inaudible]. Over 90% of the equivalent gross margin we expect our existing asset portfolio to generate in 2008 is protected against commodity price volatility. For 2009 the comparable figure is about 84%.

As you are aware there has been a significant movement on the political front with regard to climate change policy. We continue to believe that the scientific evidence suggests that we need to take action at the Federal level on this topic and we believe FPL Energy is well positioned relative to the likely regulatory frameworks that might result from such action. Our wind development program which calls for the addition of 8-10 GW over the 2007-2012 time period has made excellent progress. In 2007 we added 1064 MW of incremental wind. This is slightly ahead of where we expected to be when we shared our revised wind program with you last July. For 2008 we expect to add at least 1100 MW of incremental wind. To date we have more than 750 MW under construction or already approved.

Beyond 2008 we expect to scale up our growth even further subject to continued public policy support for the wind business. Some of you may have been disappointed that an extension of the production tax credit beyond the end of 2008 wasn’t included in last year’s energy legislation, however we continue to believe there is bipartisan support for extension of the PTCs. Also during the fourth quarter we welcomed the Point Beach team to the FPL Group portfolio. While the financial contribution of this asset is small in 2007 it will grow over time and add meaningfully to our growth profile.

Finally we continue to make good progress on our other growth initiatives, solar transmission and others and we look forward to discussing these with you in more depth at various investor conferences later this year. FPL Energy’s 2007 fourth quarter reported results were $72 million or $0.18 per share compared with $148 million or $0.37 per share in the prior period results. Adjusted earnings for 2007 which exclude the affect of non qualifying hedges were $130 million compared to $133 million. The equivalent per share contribution in both quarters was $0.33. To repeat last year’s fourth quarter adjusted results included litigation gain amounting to $0.15 for the quarter and $0.16 for the full year which I referred to in my earlier comments.

Excluded from adjusted results are the affects of transactions in the non qualifying hedge category. During the quarter the forward curve for natural gas rose significantly and has naturally led to book losses in the non qualifying hedge category. These are of course offset by roughly equivalent gains in the economic value of the underlying physical asset positions, which gains appear no where in the financial statements. For the full year, FPL Energy’s reported earnings were $540 million or $1.35 per share compared with $610 million or $1.54 per share in 2006. Adjusted earnings were $626 million or $1.56 per share versus $518 million or $1.31 per share last year.

The full year impact of the non qualifying hedge category was a negative $86 million reflecting the large increase in forward prices that we observed over the course of the year. FPL Energy’s fourth quarter adjusted EPS growth was flat comparatively but the prior period was driven to a great extent by the one time gain on resolution of litigation. The existing portfolio added $0.15 in the quarter driven primarily by favorable market conditions in the New England fleet and the absence of a refueling outage at Seabrook. The existing wind fleet improved slightly year over year. New asset contributions namely wind and Point Beach accounted for a $0.06 improvement. The 2007 fourth quarter results benefited from approximately 1215 MW of additional wind capacity compared with a year ago. Results from marketing and trading activities increased by $0.03 per share. This was offset by the absence of a $0.03 gain posted in 2006 from the sale of certain development rights. All other factors were a negative $0.06 owing primarily to additional interest expense and overhead associated with continued growth of the business.

For the full year FPL Energy’s adjusted net earnings per share increased $0.25. As indicated earlier the prior period results contain the unusual $0.16 item associated with the litigation gain settlement, so the effective increase was even greater. In the fall of 2006 we indicated that 2007 would show very healthy growth owing primarily to two key drivers, the roll over of older lower priced hedges to more current market values and the additional contributions from new wind. Both drivers played out very much as we expected but FPL Energy ended up doing better than we expected primarily because the existing portfolio was stronger than anticipated and because the opportunities to our wholesale marketing and trading arm were better.

These factors helped us more than offset disappointing wind resource in the first part of the year. New investment added $0.19 which was about what we had expected although we were a little behind with the wind portfolio owing to some delays in one particular project. This was offset by a small contribution from Point Beach which was not in the expectations we shared with you in October 2006. The existing portfolio added $0.28 which was at the upper end of what we had expected. Wind resource in Texas was weak in the early part of the year but other parts of the year of our portfolio outperformed our expectations as did the [inaudible]. In general we enjoyed good market conditions with generally strong pricing and some periods of volatility which enabled us to take advantage of the inherent optionality of the physical assets.

As noted earlier last year we had a gain of $0.03 from the disposal of certain development rights has hurt the 2007 comparison by the same amount. Same market conditions that led to additional opportunities for our physical assets also were beneficial to our marketing and trading operations, the contribution of which increased by $0.14 of which roughly half came from our full requirements portfolio. As a reminder we expect these elements of FPL Energy’s business to grow roughly in line with overall income growth over several years. 2007 was a particularly strong year in this area. Increases in interest expense had a negative $0.06 impact on the full year 2007 versus 2006 comparison. This was slightly larger than we had set out in October 2006 owing to the impact of Point Beach. All other factors had a negative $0.11 impact on the full year comparison. This was primarily owning to increased spending to support future growth and was larger than we had expected since we elected to accelerate our growth plans particularly for the wind business part way through the year.

We are very pleased that we could fund programs designed to accelerate growth at the same time as delivering results better than expected. In the appendix we have included a chart that reconciles FPL Energy’s full year 2007 results to the ranges we originally set out for you and that ties together the gross margin ranges and the adjusted earnings ranges. We have also included a similar tie from adjusted gross margin to adjusted earnings for our 2008 expectations. These are in response to requests from some of you to assist modeling.

In the relative commodity markets the main feature of note in the quarter was a general increase in the forward curve for natural gas as illustrated here. As you know an increase in the natural gas curve is generally good for FPL Energy’s future earnings outlook and it also generally produces losses in the non qualifying hedge category. We continue to believe the long term fundamentals for both natural gas and spark spreads in our key markets are strong but we expect continued volatility in our markets.

Before closing I’d like to take a moment to highlight a few points about our wind portfolio. As of the end of 2007 we now have over 5000 MW of wind projects in operation and we continue to be the largest competitor in the US business. In fact on a kWh basis we believe we are the largest in the world since our average capacity facts are higher than that of our leading global competitor reflecting the more attractive wind resource characteristics of our portfolio. Our wind power output is very competitively priced and in 2007 we were again the largest developer in the US.

Since a number of you have asked about EBITDA for the wind business we have made a rough estimate of where we expect to be in 2008 and 2009. Recognizing that the economics of the US wind business are different from those of other countries, we think of the adjusted EBITDA of a US wind project as encompassing the pre tax equivalent value of the PTCs. On this basis we expect the adjusted EBITDA for the wind business to be in the range of $900 million to $1 billion in 2008 and between $1.2 billion and $1.4 billion in 2009. Of these figures roughly 50% to 55% of the adjusted EBITDA will be in the form of pure EBITDA, i.e. revenues minus certain costs but excluding depreciation and amortization and 45% to 50% in the form of the pre tax equivalent value for PTCs. We hope these forward looking estimates will be of help to you in analyzing the business as we recognize that different analysts look at the business in different ways. Please note that these figures are not and are not intended to be taken as measures of GAAP performance.

Another way of thinking about the contribution to wind business to the FPL Group portfolio is to recognize that it contributes roughly 30% to 40% of FPL Energy’s adjusted earnings. This has been true for the last few years and is likely to continue to be true for the next few years assuming we continue to be successful in executing our growth plans.

Finally where you know we have supported the growth in the wind business and its intended capital requirements very successfully over the past several years with a variety of financial instruments. Late in the fourth quarter we entered into what may well be the first of several differential partnership transactions designed to support the continued growth of the wind business. As you know we believe our competitive advantage in the wind business lies primarily in developing and operating wind facilities. In addition we believe the market does not at this stage fully recognize the long term value of these assets and therefore we are comfortable retaining long term upside exposure and risk. In contrast there is much less disagreement about the value of the first ten years or so of a project’s life particularly if the project has a long term PBA. And during this period our regular cost of capital may not be the lowest available in the broader markets for capital.

Accordingly a transaction in which we affectively sell off a large portion of the value of the project in its early years for a completive price while retaining the longer term upside can potentially be attractive to us and to counter parties. This is effectively what the differential partnership transaction that we entered into December does. In exchange for upfront cash we offer our partners a differential interest in the economic attributes of a portfolio of projects including the tax attributes for a variable period. The exact period depends upon the performance of the project relative to pro forma expectations but is likely to be about ten years. Once certain conditions have been met the differential interests flip around and FPL Energy retains the bulk of the long term upside. Through this transaction we have actually sold partnership interest in a portfolio of nearly 600 MW of wind projects. From an economic perspective however, we can think of the partnership as an alternative to financing the same projects and because the sale of the partnership interest still leaves value in the projects we also raised additional project level debt in an associated transaction. Thus looking forward we can evaluate and compare using either of these differential partnership structures or conventional project financing as tools for supporting the growth of the wind business. While they have somewhat different economic and accounting impacts both provide us means of recycling our capital investment in wind projects in a very efficient fashion to support additional growth and both do so in a way that does not lean heavily on our corporate credit. While we can fairly claim to have led the way in the US wind industry with project financing the differential partnership transactions are ones that have been pioneered by others and are now widely used in the wind business. We are very pleased that we now have an additional tool in our kit bag that will help us achieve our aggressive growth goals while allowing us to retain our strong and efficient corporate capital structure and credit position.

We expect to use a mix of project lending, differential partnerships, hybrid corporate capital issuances as well as conventional corporate debt first mortgage bonds and perhaps a limited amount of new equity capital over the next five years as we continue to support strong capital expenditure profiles at both main businesses.

To summarize the 2007 fourth quarter on an adjusted basis FPL contributed $0.43, FPL Energy contributed $0.33 and corporate and other was a negative $0.05 contribution. That is a total of $0.71 compared to $0.63 in the 2006 fourth quarter on an adjusted basis. For the full year 2007 again on an adjusted basis FPL contributed $2.09, FPL Energy contributed $1.56 and corporate and other contributed a negative $0.17. That is a total of $3.48 a share or an increase of $0.44 over the same period in 2006. For the year the corporate and other drag was a little less than we had expected primarily owing to a more favorable impact from certain consolidating state tax adjustments than we had anticipated. We finished the year $0.03 better than the high end of the $3.35 to $3.45 range that we originally set out in October of 2006 and delivering growth and adjusted EPS of about 15%. It was an excellent year overall for FPL Group.

To conclude we are very pleased with what we have been able to accomplish in 2007 and look forward to building on this base in 2008. At this point in the year we continue to see a range of adjusted EPS from $3.83 to $3.93 as being reasonable for 2008 as well as a range of $4.15 to $4.35 for 2009. And now we’ll be happy to take your questions.

Question-and-Answer Session

Operator

Your first question comes from Dan Eggers - Credit Suisse

Dan Eggers - Credit Suisse

On the utility you said you did a good job helping us understand the volume end of the conversation but I guess I was wondering if you could give us a little more color around some of the operating efficiency synergy type of benefits you anticipate that’s helping to offset the O&M cost increase and help mitigate some of the volume pressure particularly for ’08?

Moray Dewhurst

I’ll ask Armando if he has any further comments. I guess my response is that we were just a little sharper across the board. We initiated a number of new sort of small scale productivity initiatives. We knew it was going to be a tough year on the cost front and we were generally a bit more successful than I think we expected to be but I don’t think there was anything in particular of note. Armando?

Armando Olivera

I don’t have a lot more to add except that as we saw the downturn in the economy we started to pull back in distribution and transmission. Although a lot of that was capital cost, it was just enough O&M to help us during that transition. We sharpened our pencil too on the customer service side and managed to do pretty well on the uncollectable side so a lot of little efforts across the board really added up.

Dan Eggers - Credit Suisse

What kind of cost inflations should we be thinking about I guess for 2008, 2009 and maybe in the slower customer growth environment?

Moray Dewhurst

Dan I don’t think we have anything really new. I would go back to the charts that we shared with you in the October release. I think at this stage you know they’re probably the best guide we have. Obviously we are going to be thinking very carefully about whether we need to adjust the revenue outlook and if so what the ripple impact will be on some of the operating areas. But we haven’t really been through that yet so I can’t give you any new information beyond what we shared in October.

Dan Eggers – Credit Suisse

Okay and I guess just one other, obviously a lot of optimism in PTC’s get extended but can you just start giving us the thought process for ’09 if the tax credits aren’t there, are there markets where you can still build because the contracts will compensate you without the tax credits and that sort of thought process?

Moray Dewhurst

Well I think on that front I think I’ll just repeat what I’ve said many times before which is we don’t think that’s a likely scenario but if it were to play out, it would very much depend upon the circumstance at the time and what I mean by that is if everybody thinks that there is just a temporary and the PTCs are then going to come back, then frankly I think we’ll see a sharp drop off in new wind development and it will come back when the PTCs come back. On the other hand, if people perceive that there will never be any more PTCs again we would expect to see continued wind development albeit at probably a somewhat lower rate than in the presence of PTC support. As long as you have the state level renewable portfolio standards you create the demand pull but that would then come at a cost and pricing consequence.

Dan Eggers - Credit Suisse

Okay, thank you.

Operator

Your next question comes from John Kiani - Deutsche Bank

Now that you’ve had a chance to observe the [inaudible] of wind IPO can you give us your latest thoughts on separation or some strategic transactions with your wind business or perhaps or the differential partnership transactions that you just discussed more the route you want to take going forward?

Moray Dewhurst

My reaction would be that at least at the moment its tending to kind of reinforce some of the factors that we talked about before and in particular as we’ve noted we see the extent that there’s a disconnect it seems to be mostly on the long term outlook for wind. So one of the concerns is that in doing a partial IPO you end up in a sense selling some of that long term short. In that sense the differential partnership structure is preferable because they allow us to preserve essentially close to 100% of that long term upside. But Lewis I don’t know if you have any other thoughts?

Lewis Hay

Yeah, I’m not sure there’s a whole lot to add to that. The one thing we have noticed is that our stock is seeing a fair amount of volatility that seems to be somewhat correlated with the [inaudible] so somehow the market is focusing a little bit more on that part of our business and how that company’s stock is trading so we are getting a bit of that benefit if you will but also the cost of that volatility. And I will point out it’s only been trading for roughly a month and a half so it’s still a little early to see how its really going to trade and I’d say lets give it a little bit more time but it’s not like we’re really capital constrained at this point in being able to fund our wind business and we still are very bullish on the long term value as Moray pointed out of our wind portfolio and we really aren’t, we see no need to sell it at a value below what we view it as and leave money on the table.

John Kiani - Deutsche Bank

That’s very helpful and just one other question, Moray I didn’t see a hedging slide for FPL Energy this time in your deck, can you tell us is there anything that’s meaningfully different in ’08 or ’09 from a hedging perspective since you last updated that and then can you also just talk a little bit about how those differential partnership transactions would affect what we were looking at before on those hedging slides?

Moray Dewhurst

On the first part we didn’t include any updates; there really haven’t been any material changes in the last quarter here. We were very heavily hedged as of the end of third quarter for ’08. Essentially close to fully hedged.

John Kiani - Deutsche Bank

And then in ’09?

Moray Dewhurst

In ’09 we’re still actually a little bit higher than we would typically expect to be at at the equivalent point kind of a year and a bit out. So we’ve added a little bit in the fourth quarter to the ’09 numbers but not materially. As for how the differential partnership structures affect that, since these were done on a series of PBA projects, they’re all essentially represented in the contracted segment. To the extent that sometime in the future we were to do an equivalent structure using some of the hedged projects, I’m not sure I haven’t really thought about how we would present that, but thank you flagging that. If we ever get there I will make a note to make sure we’re clear on however we present it.

John Kiani - Deutsche Bank

And then the earnings that come out from the differential partnership transactions are replaced by what?

Moray Dewhurst

I guess the simple way to think of it is [inaudible] partnership interest but it’s kind of economically equivalent to a financing so you give up the revenue but you give the expense. So it’s just as though a piece of the thing hadn’t been there but on the other hand you’ve got the capital that’s immediately been recycled.

John Kiani - Deutsche Bank

Okay thanks.

Operator

Your next question comes from Greg Gordon – Citigroup

Greg Gordon – Citigroup

Follow on to that question on FPL E and then one question on utility first. Just to make it simple you essentially sold 600 MW of the wind portfolio, you’ve taken a chunk of the business and monetized it, correct?

Moray Dewhurst

No, that’s not correct. What we have essentially done in economic terms is sold the vast majority of the first ten years of [inaudible] projects while retaining the upside.

Greg Gordon – Citigroup

Okay so you’ve sold the earnings stream, cash flow and earnings stream of 600 MW for ten years and you’ve gotten cash in return.

Moray Dewhurst

All the economic attributes for roughly a ten year period.

Greg Gordon – Citigroup

Okay so for all intents and purposes its like you monetized it for ten years and then in year 11 it returns to the income statement and the cash flow in year 11.

Moray Dewhurst

Yes, that’s a simplification but economically that’s about what it does.

Greg Gordon – Citigroup

Can you tell us what the proceeds were for the 600 MW, what the compensation was for the 600 MW for the first ten years?

Moray Dewhurst

Well in the two transactions we raised or received roughly $950 million total, of that about $700 was the actual partnership structure and the other $250 million was the additional project leverage put on the residual economic interest.

Greg Gordon – Citigroup

So you received $750 million in cash?

Moray Dewhurst

Seven hundred in cash.

Greg Gordon – Citigroup

And then you were able to lever the piece of the partnership interest that you retained.

Moray Dewhurst

By an additional $250 million. So essentially we have pulled close to I think it’s 99% of the capital for those projects out as ready to be recycled. But obviously we still retain the longer term, I’m sorry I’ve been corrected, it’s actually 94%.

Greg Gordon – Citigroup

So basically if I have a view on what the first ten year’s worth of cash flows were from those properties I can just count them back and look at those proceeds and figure out what the economic value was that that partner was willing to pay?

Moray Dewhurst

Yeah, I think that’s reasonable.

Greg Gordon – Citigroup

On the utility side….

Lewis Hay

Excuse me Greg for a second, just one of the things that we’re planning on doing and we haven’t done yet so Moray’s probably going to kick me because it’s not been worked out but for the investor conference it’s my intention that the team put together a simple example, not that’s its simple in this world of comparing a sort of a typical wind project financed the way we have historically financed it versus one with this kind of a structure just so you can see it sort of side by side and walk through it. At a greater risk of Moray kicking me, I just view this as an alternative way of financing this structure. It’s not anywhere near that simple but because there’s a little bit more upfront earnings drag, but the end of the day I got comfortable with it, as I said a little drag on upfront earnings but the NPVs are just about the same and the overall financial result albeit a slightly different pattern aren’t all that different.

Greg Gordon – Citigroup

Lewis, from my perspective you’ve basically you’ve monetized a slice of the business. It seems like you’ve got a very good price for that and all things being equal you’re still able to meet your near and long terms earnings ….

Lewis Hay

You’re thinking about it more as a monetization, I’m thinking about it more as a leverage financing, but hold off on the, I would suggest holding off on a lot of these questions for the investor conference. It’s just about two months away and hopefully we’ll have some real live examples to be able to walk you through at that point in time and you’ll be able to see it in real life if you will some examples of how it works and the impact on the balance sheet but also the economic impacts.

Moray Dewhurst

Let me just add that in the interim just for modeling purposes, frankly the simplest way to treat these I think is actually to treat them as equivalent project financing. They have slightly different accounting treatment and actually not quite as favorable from an accounting perspective but as a short hand you can in your models substituting the equivalent amount of project financing is not a bad way to get at the impact.

Greg Gordon – Citigroup

Moray when you look at the EBITDA projection you’ve given for 2008 that EBITDA now excludes the EBITDA from the $600 million that are subject to this transaction, right?

Moray Dewhurst

Yes, that’s correct.

Greg Gordon – Citigroup

Because it came in a little bit light. That projection was a bit light to what I would have expected and I think the differential transaction explains that that’s why I was asking, that was my train of thought in the question. The second thing on FPNL you’ve had the ability to have some flex in the amount of deprecation you book and you’ve also been spending quite aggressively on Storm Secure, are those the flexion points you can use to manage your costs going into the ’09 rate case or are you in fact doing it, are there other areas in the operating and capital budget that are more flexible or that you’re also using to try to get ahead of the deceleration and usage growth?

Moray Dewhurst

Really the latter, the two factors you mentioned significant factors that will play into where ever we are for 2009 rate discussions, but between now and then they are relatively limited in flexibility. We are very committed to the Storm Secure program. It’s driven really from the operational level, from the ground up on looking at specific facilities in the order in which we want to harden them so I think the main thing that we would hope for in the next two years is simply that we will continue to get more efficient in our deployment of capital and assets in support of Storm Secure. But the major areas where I think we can still hope to, as Armando put it, sharpen the pencil and push the teams a little further are really outside of those two areas.

Greg Gordon – Citigroup

And this is all hopefully academic presuming revenue requirement for the 2009 case is accurately reflects the economic conditions going into 2010.

Moray Dewhurst

That’s exactly right and that was the point I tried to make in my prepared remarks. We’ve got more uncertainty for the next two years but for better or worse, whatever the then realistic outlook is will form the basis for the rate negotiations or rate proceeding in 2009 that will set the base for 2010 and beyond.

Greg Gordon – Citigroup

Thank you Moray.

Operator

Your next question comes from [Ashar Kyle – SAC Capital]

Not to belabor the point Moray you mentioned these differential partnerships will be used going forward could you tell us is there more projection for 2008 to sell more of these interests as we look forward?

Moray Dewhurst

I guess the way I look at that is we have sort of a portfolio of tools to support the capital needs of that business which we will use in any particular time period or any particular circumstance again going to depend upon the situation at the time. At this point I’m not anticipating that we’ll do another one in 2008 but that could change later on. So we’ll just have to see. The main thing is that we have now multiple means of supporting the growth and that makes me feel very good about the capital requirements of the business. What I like about these particular transactions is that they are very clear and rapid recycling of the capital that we deployed and as I indicated in the prepared remarks where we really add the value is in the development in the early stage of getting the project up and getting it to peak operating conditions so the quicker we can get the capital back out and move on to the next one the better off we are.

[Ashar Kyle – SAC Capital]

And if I could just end up with, could you just mention a little bit on the FPL Energy’s pipeline in respect to solar projects, what is your thinking about developing in the pipeline and what can we hear in the next 12 months?

James Robo

Ashar we think it’s a strong pipeline. We are hoping to get full approvals for our first project sometime this year and I would basically benchmark our success on that based on how much we’re able to bring through full approval this year and announce for full construction. We probably as our policy, we probably won’t announce it until it actually goes COD but we feel good about the pipeline and I feel like this year is going to be a watershed year for us in the solar business. So time will tell.

Moray Dewhurst

Having said that in terms of contribution to the earnings growth profile we are not looking for any meaningful contribution really until 2011, 2012 time frame. So there’s a lot of…the development cycle here is a little bit longer than even for the wind business and the construction cycle is a bit longer too so we feel good about where we are on the development front but it’s going to be a little further out before it turns into earnings than it would be for comparable effort on the wind side.

[Ashar Kyle – SAC Capital]

Okay thank you so very much.

Operator

Your next question comes from Paul Patterson – Glenrock Associates

Paul Patterson – Glenrock Associates

On the customer demands you mentioned that there was a, there could have been a potential impact associated with non price customer usage or demand but that was hard to model out, I was wondering if you could just elaborate what you were sort of talking about there, that wasn’t completely clear to me. And then also are you seeing any impact on demand response or anything with advanced metering or have you seen anything on that end?

Moray Dewhurst

On the second part of that question I don’t think we’re really deep enough into the development program really to see anything meaningful. On the first part, my comment was really meant to capture the fact that obviously there’s been a huge amount of attention focused on energy issues, energy efficiency issues, climate change, all those kinds of things so that has to be present in people’s consciousness. To what extent people may actually have acted on that and as a consequence changed their consumption patterns of electricity manifesting itself in lower usage, we just don’t know. But that’s obviously something that mechanical model which has a price elasticity term in wouldn’t capture. The reality is that our prices as you may recall in 2006 when we had a significant increase in prices driven by fuel, we expected a price elasticity affect and it came through pretty much as the model would have predicted. Now in 2007 retail prices were flat or actually slightly down, so there should be no price elasticity affect one way or the other. We should go back to whatever our underlying trend is, but the underlying trend was short of our expectations. So possibly customers have begun actually to change their usage patterns but as I say, that’s kind of speculative and in any case its not very operational for us to use the predicting where we’re going to be in 2008 so that we really have little alternative other than to continue to monitor it and learn more as we go along.

Paul Patterson – Glenrock Associates

Okay great and then just the regulatory ROE that you guys have earned, could you just tell us what that was for 2007.

Moray Dewhurst

We came in the end at 12%; it was actually a little better than we had expected mainly due to some working capital issues I believe.

Paul Patterson – Glenrock Associates

Okay great, thanks a lot.

Operator

Your next question comes from [Steve Blishman – Catapult Capital Management]

[Steve Blishman – Catapult Capital Management]

First just on these wind claim sales, the differential transactions, the contracts at the end when you own full ownership are you selling that power merchant or is that power contracted beyond the ten year period?

Moray Dewhurst

This portfolio has I think they’re all 20 year PPAs on them. So obviously at the end of 20 years we have all the pure long term upside whatever that turns out to be in a carbon constrained environment, we think its probably going to be pretty significant. But we also get the vast bulk of the economics back for the second ten years.

[Steve Blishman – Catapult Capital Management]

And then another question on the, we have this SCM auction coming up, I wonder if Jim might have any view on where that likely goes and if he can’t be specific just some views on whether he expects it’ll actually represent true capacity prices?

James Robo

Well first of all Steve you know obviously we’re watching it very closely and since we will be a big player in that auction it’s probably not appropriate for us to talk about where we think things are going end up.

Moray Dewhurst

Steve, let me to just add to that, I think that the rules of bidding process are complex but clear is perhaps the best way to put it and built into that sort of descending auction format there are a couple of points where the participants clearly get to make some decisions as to kind of what they want to do with their capacity. So there’s some inherent options that one has in the bidding process and I think that provides pretty strong incentives for all market players to think very carefully about those options as they go through their bidding.

[Steve Blishman – Catapult Capital Management]

Okay, thank you.

Operator

Your next question comes from Shalini Mahajan – UBS

Shalini Mahajan – UBS

Moray could you quantify the top line pressure that Florida Power & Light Company a bit more specifically in terms of your ’08 EPS guidance for the utility at 215 and 220 which almost had a $0.30 to $0.35 contribution from revenue growth?

Moray Dewhurst

Yeah we don’t have any update on that at the moment, it’s really very early in the new year and frankly I don’t know what else I could put in there. So all I would say is relative to that which we shared with you in October, clearly we don’t feel as good about the revenue piece but how much that is going to turn out to be I just couldn’t say at the moment. So I just have to say, bear with us, hopefully we’ll get a better view as we go through the first quarter as to what’s happening and we’ll adjust it. But in terms of the overall outlook for 2008 for the whole portfolio while there’s clearly some weakness in the drivers on that side offsetting that we’ve seen some strengthening in some of the drivers for FPL Energy so at this stage it is very early in the year, I feel very good about the overall range. Sorry I can’t be more helpful to you.

Shalini Mahajan – UBS

Okay could you elaborate on these offsets a little bit because it seems you know give the differential partnership structure there is some earnings drag from that as well?

James Robo

I’ve been wanting to make this comment on the differential partnership structure through all these questions which is certainly for ’08 and ’09 any of the impacts from that transaction were reflected in the expectations that we gave you in October.

Moray Dewhurst

And more than that, the difference between using that kind of structure and a conventional project finance structure is really immaterial in the context of the earnings ranges that we set out so it really is a non factor in that regard.

Shalini Mahajan – UBS

Okay and just lastly Moray, I thought you mentioned I’m not sure if I caught it correctly but I thought you mentioned in your comments about some problems with wind turbines?

Moray Dewhurst

Oh yeah we had mentioned as we went through last year that we continue to have, experience teething problems with some of the newer turbines. The technology of these wind turbines is pretty good but it’s still not quite as robust and reliable as we would really like it to be and that’s most noticeable whenever any of the manufacturers kind of makes a step up and particularly in size or introduces a new gearbox or whatever it happens to be in the design, so we tend to have a few infant mortality problems and the operational guys are still working through those on the wind fleet. So but as you saw an overall forced outage rate for the full portfolio of less than 3% and we think it’s outstanding.

Shalini Mahajan – UBS

Okay great that’s helpful, thank you Moray.

Operator

Your next question comes from Patrick Forkin - Tejas Securities

Patrick Forkin - Tejas Securities

With respect to your advanced metering project I was wondering if you could give us a little insight into the gating factors on that 50,000 end points that you did last year and 50,000 for 2008, it seems like a relatively slow ramp up. Are those gating factors proving the technology and/or any regulatory constraints?

Moray Dewhurst

First of all let me make clear that we are still in the pilot or early development phase and our philosophy in just about everything we attempt is to work really hard on a small scale to work out all the bugs before we scale things up. That’s worked very well for us in lots of areas in the past but with that general comment, Armando do you want to talk some more about that?

Armando Olivera

Sure, just to put it in some context this is affectively our third technology pilot and the reason we felt more comfortable coming out and talking about it is because it’s been a very, very successful pilot but it’s been primarily along the technology side and making sure that it has the kind of flexibility and a broad set of kind of future functionality. We have not yet done any testing for changes in customer behavior as a result of having this technology in place. Obviously we are kind of contemplating a number of those, most of them would require some sort of regulatory approval and kind of sort of a pilot rate but we’re not there today yet. We’re still focused very much on the technology and making sure that it works in our environment. But so far it’s been a very, very successful pilot.

Patrick Forkin - Tejas Securities

Thank you that’s helpful.

Operator

Your next question comes from Paul Ridzon – KeyBanc Capital Markets

Paul Ridzon – KeyBanc Capital Markets

You talked about that you had monetized 600 MW for 94% of the capital costs, what would that percentage be of new build?

Moray Dewhurst

Well these are essentially all new build projects.

Paul Ridzon – KeyBanc Capital Markets

So that pricing was current?

Moray Dewhurst

Yes.

Paul Ridzon – KeyBanc Capital Markets

Okay. Thank you very much.

Moray Dewhurst

Okay, thank you.

Operator

That does conclude our question and answer session; I’d like to turn it back over to management for any additional or closing remarks.

Moray Dewhurst

Thank you for joining us today.

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Source: FPL Group, Inc., Q4 2007 Earnings Call Transcript
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