NextEra Energy Partners(NEP) - 2025 Q3 - Quarterly Report

Financial Risks - XPLR's substantial amount of indebtedness may adversely affect its ability to operate and execute its business plan[20] - XPLR's long-term debt was approximately $5.9 billion as of September 30, 2025, with 99% not exposed to interest rate fluctuations due to being fixed rate or financially hedged[152] - A hypothetical 10% decrease in interest rates would increase the fair value of XPLR's long-term debt by approximately $94 million[152] - A hypothetical 10% decrease in rates would decrease XPLR's net derivative assets by approximately $48 million[153] - XPLR's future tax liability may exceed expectations if net operating losses (NOLs) are insufficient to offset taxable income[23] - XPLR's ability to use NOLs to offset future income may be limited, and distributions to unitholders may be taxable as dividends[23] Operational Risks - XPLR's renewable energy projects are significantly impacted by weather conditions, which can affect cash flows and operational performance[15] - The company relies on a limited number of customers and vendors, exposing it to credit and performance risks[15] - Changes in government laws and regulations regarding clean energy incentives could negatively impact XPLR's operations[20] - XPLR's ability to develop and acquire assets involves various risks, including project siting and financing challenges[20] - The company may not be able to extend or renew existing power purchase agreements (PPAs) at favorable rates[15] - XPLR's insurance coverage may not protect against all significant losses, impacting its financial stability[15] - The company is subject to environmental, health, and safety regulations that may require significant capital expenditures[15] Competitive Landscape - The company faces competition from regulated utility holding companies and independent power producers in the U.S. market[20] Governance and Structural Risks - XPLR's partnership agreement restricts remedies for common unit holders against breaches of fiduciary duties by directors or XPLR GP[23] - Holders of XPLR's common units cannot remove XPLR GP without NEE's consent, potentially delaying favorable acquisitions[23] - The issuance of common units may dilute ownership and impact the market price of XPLR's common units[23] Credit Risk Management - Credit risk is managed through credit policies and a diversified portfolio of counterparties to mitigate non-performance risks[154]