Item 7.01 Regulation FD Disclosure
On March 12, 2019, an international arbitration tribunal (Tribunal) issued a decision (decision) in an international arbitration proceeding brought by NextEra Energy Global Holdings B.V. and NextEra Energy Spain Holdings B.V. (Companies), each an indirect wholly owned subsidiary of NextEra Energy, Inc. (NEE), against the Kingdom of Spain (Spain). The Companies initiated the arbitration in 2014 after Spain abolished the long-term premium and tariff system that was the basis for the Companies' investments in two 49.9 megawatt concentrated solar power plants (plants) in the Spanish region of Extremadura.
The decision concludes that the Companies are entitled to damages based on a return on the capitalized costs of the Companies' investments in the plants as of June 30, 2016 on the basis of the plants' weighted average cost of capital plus a premium of 200 basis points, which NEE currently estimates to represent approximately €291 million (USD $329 million), plus pre- and post-judgment interest based on the 5-year Spanish sovereign bond rate.
The Tribunal upheld the Companies’ primary arguments on liability, by concluding that Spain did not comply with its obligation under the 1994 Energy Charter Treaty to provide fair and equitable treatment in failing to protect the Companies' legitimate expectations upon which the Companies made their investment decisions regarding the development of the plants. There are limited grounds by which Spain may seek to annul the decision and the Companies may need to seek to enforce the decision through further legal proceedings.
