NextEra Energy Partners(NEP) - 2025 Q1 - Quarterly Report

Financial Risks - XPLR's substantial amount of indebtedness may adversely affect its ability to operate and comply with financial obligations[19] - XPLR's long-term debt was approximately $6.5 billion as of March 31, 2025, with an estimated fair value of $6.4 billion[121] - Approximately 99% of XPLR's long-term debt was either fixed rate or financially hedged, minimizing exposure to interest rate fluctuations[121] - A hypothetical 10% decrease in interest rates would increase the fair value of XPLR's long-term debt by approximately $118 million[121] - XPLR had interest rate contracts with a net notional amount of approximately $4.0 billion to manage cash flow variability associated with debt issuances[122] - A hypothetical 10% decrease in rates would decrease XPLR's net derivative assets by approximately $63 million[124] - XPLR is exposed to counterparty credit risk, which could impact expected cash flows, and manages this risk through credit policies and a diversified portfolio of counterparties[125] - Future tax liabilities for XPLR may exceed expectations if net operating losses are insufficient to offset taxable income[1] - Distributions to unitholders may be taxable as dividends, impacting their overall returns[1] Operational Risks - XPLR's renewable energy projects are significantly affected by wind and solar conditions, which can impact cash flows[15] - The company relies on a limited number of customers and vendors, exposing it to credit and performance risks[15] - Government incentives for clean energy could be changed or eliminated, negatively impacting XPLR's project development[19] - XPLR's financial condition is highly dependent on the performance of NEER in returning funds received from XPLR OpCo[19] - The ability to develop and acquire assets involves risks related to project siting, financing, and governmental approvals[19] - The company faces competition from regulated utility holding companies and independent power producers in the U.S.[19] - XPLR's business is subject to environmental, health, and safety regulations, which may require significant capital expenditures[15] Governance and Structure - XPLR's ability to execute its business plan depends on cash distributions from its subsidiaries[1] - Holders of XPLR's common units may face voting restrictions and limited remedies for breaches of fiduciary duties[1] - The company may not be able to extend or renew expiring power purchase agreements at favorable rates[15] - XPLR's insurance coverage may not protect against all significant losses, affecting its financial stability[15]