Investor MeetingsJune 28 – July 2, 2004

2

Cautionary Statements And Risk Factors That May Affect Future Results

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.

3

FPL Group Key Investment Themes

• Strong financial position– strong balance sheet and cash flow– competitive, growing dividend

• Premier electric utility franchise in the U.S.– strong growth– constructive regulatory regime

• Moderate risk, profitable wholesale business– well diversified– poised for upside

• Environmental leadership• Strong corporate governance

4

Two Strong Businesses

FPL Group

FPL FPL Energy

1 Year ended 12/31/032 See Appendix for reconciliation of GAAP and adjusted earnings

• Largest electric utility in Florida• Vertically integrated, retail

rate-regulated utility• 4.1 million customers1

• $8.3 billion operating revenue1

• 5-year average annual growth in net income of 4%

• Successful wholesale generator• U.S. market leader in wind-

generation • 11,041 mw in operation1

• $1.3 billion operating revenue1

• 5-year average annual growth in adjusted net income of 40%2

5

FPL Group At-A-Glance Rank among U.S. Electric

Utilities

(In USD$ millions, except per share amounts)

Recent Stock Price 63.94

Market Capitalization 11,782 9

Annualized Dividend per Share 2.48

Current Yield (%) 3.9

Payout Ratio (%) ~ 49

2003 Revenues 9,630

2003 Adjusted Net Income 871

2003 Adjusted Earnings per Share 4.89

Generating Capacity (mw) 29,827 4

Utility Customer Accounts (thousands) 4,192 3

Market data as of 6/21/04. See appendix for reconciliation of GAAP to adjusted amounts

6

Consistently Recognized as a Top Performer

• 2003 Edison Award – electric industry’s highest honor

– “FPL Group’s winning strategy clearly demonstrates that environmental excellence and outstanding financial performance can go hand-in-hand” – Edison Electric Institute

• AAA-rated by Innovest– ranked #1 in electric utility sector for EcoValue– ranked #2 in electric utility sector for Intangible Value

• Platts awarded FPL Group a 2003 Global Energy Award as “Renewable Company of the Year”

• Recognized for excellence in Corporate Governance– fully compliant with Sarbanes-Oxley requirements– ISS corporate governance rating of 83.5% of the industry– GMI score of 9.0 out of 10 for home market

7

Compared to Our Peers

FPL12.6

0

2

4

6

8

10

12

14

16

18

20

FPL$22

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Total Enterprise Value 1, 2 ($bn)

1 As of 6/21/042 As of latest SEC filingNYSE ticker (common stock): FPL

2004 P-E Ratios 1

Average = 13.7

8

Compared to Our Peers

1 As of 6/21/042 As of latest SEC filingNYSE ticker (common stock): FPL

Total Debt to Capitalization Ratio 2

FPL59

0

25

50

75

100

(%)

Average = 63%

Credit Ratings 1

Average = BBB

FPLA

A

BBB

BB

9

Performance Rewarded in Capital MarketsIndexed Return Since 12/31/98

Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-0450

60

70

80

90

100

110

120

130

140

150

Ind

exe

d R

etu

rn (

%)

29.1%

10.2%

(0.5)%

FPL Group

S&P 500 Index

Dow Jones Utilities Index

Through 6/21/04

11

FPL: A Leading Electric Utility

• Attractive growth• Superior cost performance• Operational excellence• Constructive regulatory

environment• Delivering value to customers

and shareholders

12

Capitalizing on Growth at FPL

4.12

3.35

93 94 95 96 97 98 99 00 01 02 03

Steady customer growth has translated into growing profitability

Delivered Sales & Adj. Net Income

Average Customer Accounts

(mm)

200

400

600

800

93 94 95 96 97 98 99 00 01 02 03

Ad

just

ed N

et I

nco

me

($m

m)

-

25

50

75

100

Del

iver

ed S

ales

(b

illi

on

kw

h)

Adjusted Net IncomeCAGR 3.7%

FPL Delivered Sales CAGR 3.6%

1 CAGR calculated from 1992 to 2002

See Appendix for reconciliation of GAAP and adjusted earnings

CAGR 2.1%

U.S. Delivered Sales CAGR 2.4% 1

13

Constructive Regulatory Environment in Florida

• Appointed public service commission– 5 commissioners with staggered terms

• Fuel, purchased power directly passed through

• “Rate certainty” through end of 2005

– incentive-based agreement allowing shareholders to benefitfrom productivity improvements

– “win-win” revenue sharing provisioninstead of ROE measure

• No current activity on wholesale restructuring

CustomerSatisfaction

FinancialViability

Reliability &Service Programs

Regulatory Environment

Regulated Environment

14

FPL: Substantial Regulated Generation Fleet

• 19,059 1 MW of generating capability in Florida– 1,900 MW to be

added in 2005

– 1,100 MW to be added in 2007

• Diverse fuel mix

34%

21%

20%

19%6%

Oil

Natural Gas

Nuclear

Coal

Purchased Power

Energy Sources(based on kWh produced in 2003)

1 As of 3/31/04

15

FPL Generation Consistently Outperforms Industry

Industry Average

89.9

72.5

FPL90.9

77.8

93 94 95 96 97 98 99 00 01 02 03

1 Investor owned utilities with at least 5,000 megawatts. Source: North American Reliability Council (NERC). Excludes MOF.2 Source: Electric Utility Cost Group NIID2002, Platts World Nuclear Performance, February 2003. Reflects Florida Power & Light performance only.

Nuclear Capacity Factor 2

(percent)

2002 Fossil Equivalent Availability Factor 1

(%)

FPL200390.1

FPL200294

Good

Top Decile

90.4Top

Quartile 89

16

Top Quartile in Service Unavailability

Service Unavailability(average annual minutes)

FPL68

137

104

97 98 99 00 01 02 03

Industry Average

137

EEI industry averageFPL data - distribution information only

17

Superior Cost Performance

1.79 1.78

1.79

1.26

93 94 95 96 97 98 99 00 01 02 03

O&M per Retail kwh(cents)

Industry

FPL

Source: FERC Form 1

18

0.92

2.181.81

5.78

Emission Rates – Leadership Position

0.72

1.28

Nitrogen Oxide and Sulfur Dioxide

(lbs/mwh)

Industry Average

FPL

Carbon Dioxide(lbs/kwh)

Industry Average

FPL

2003 projected resultsReflects FPL ownership share only, purchased power not included Electric Utility Industry projected data from DOE's EIA “Annual Energy Outlook 2003” (1/03)

FPL Industry Average

SO2NOx

19

FPL Value Proposition

• Growing demand for electricity in our service territory

• Collaborative and progressive regulatory environment

• Outstanding operating performance• Low environmental risk

•Premier utility franchise•Strong earnings and cash flow potential

21

FPL Energy: A DisciplinedWholesale Generator

• Moderate risk approach– diversified by region, fuel source– well hedged portfolio– emphasis on base-load assets

• Low cost provider– modern, efficient, clean plants– operational excellence

• Industry leader in wind generation

• Conservative, integrated asset optimization function

• 10,768 1 net MW in operation

1 As of 6/3/04

FPL Energy operations

22

Northeast

Mid-Atlantic24%

25%

17%

34%

West

Regional Diversity

Wind

Diversified Portfolio at FPL EnergyYear-end 2004 (Projected) 1

11,512 Net MW in Operation

Central

Fuel Diversity

Gas57%

24%Other1%

Hydro3% 6%

Oil Nuclear9%

1 As of 6/3/04

23

FPL Energy Contract Coverage

Balance 2004 2005

Asset Class Available

MW 1 % MW

Hedged Available

MW 1 % MW Hedged

Wind 2 2,719 99 2,719 99 Contracted 2,202 96 2,202 99 Merchant

NEPOOL 3 2,344 70 2,301 60 ERCOT 3 2,751 83 2,732 24 All other 3 798 14 1,275 1

Total portfolio 3 10,814 82 11,229 62

1 Weighted to reflect in-service dates, planned maintenance, and refueling outages at Seabrook2 Reflects Round-the-Clock MW3 Reflects on-peak MWAs of 3/31/04

More than 90 percent of expected 2004 gross margin hedged

24

Wind Portfolio Profile

• Public policy support required

• Long-term contracts– 15-25 years

• Superior returns– ROEs in high teens/low 20s– accretive in first full year

• Capital market financing – validates business model

17%18%

22%

33%

37%

43%

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

98 99 00 01 02 03

mw

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

FP

L E

ner

gy

Mar

ket

Sh

are

FPL Energy Rest of Industry FPL Energy Market Share

U.S. Leader in Wind Energy

25

Gas48%

Other7%

Gas/Oil45%

0

500

1,000

1,500

2,000

2,500

2004

2006

2008

2010

2012

2014

2016

2018

2020

MW

Un

de

r C

on

tra

ct

Contracted Portfolio Profile

Contract Maturity

2,202 1 Net MW in Operation

Fuel Diversity

1 As of 6/3/04

26

Merchant Portfolio Profile

ERCOT41%

All Other20%

NEPOOL39%

• Premier nuclear asset in the Northeast – Seabrook 1,024 net mw

• Low cost, efficient base load combined cycle units

• Gas assets well positioned in liquid, gas-on-margin markets

• Long-term upside potential

6,592 1 net mw1 As of 6/3/04. Projected year-end 2004

27

Significant Growth Opportunities

• Wind (build and acquire)

• 89 net mw Seabrook uprate

• Asset optimization growth across our portfolio

• Origination growth

• Upside leverage from merchant fleet

• Asset acquisition opportunities

28

Disciplined Acquisition Strategy

ContractedFossil

PartnersNuclear Wind

FPL EnergyFocus

Acquisition criteria• Strategic • Fits the portfolio

• Largely hedged/“Deep in the money” • Financeable

• Operational upside • Attractive economics

• Immediately accretive to earnings

29

Proven Ability to Transfer Skills

Fossil Renewable

Non-fuel O&M reduction 40% 30%

Availability improvement 2% to 20% 10% to 18%

Forced outage ratereduction 10% to 50% 10% to 60%

Reduced Costs and Added Operational Flexibility

Acquired Asset Examples

30

FPL Energy Business Strategies

• Maximize value of current portfolio– cost control– operational reliability– risk management– asset optimization

• Expand market-leading wind position– new development– support policy trends– acquisitions– explore international

• Build portfolio incrementally and selectively– nuclear– fossil (includes QF partners)– criteria: accretive, strategically attractive and financeable

• Explore gas infrastructure opportunities

32

Capitalizing on FPL Group Strengths

• Financial strength– steady earnings growth– strong credit ratings– improving cash flow

• Financial discipline– conservative balance sheet– ample liquidity– successful hedging program

• Operational excellence– “best-in-class” results– continuous improvement tradition

33

$4.95

$5.00

$4.14

$2.73

$4.62

2000 2001 2002 2003 2004E

FPL Group Earnings Performance

$4.95$4.89

$4.38 $4.69 $4.80

2000 2001 2002 2003 2004E

GAAP Adjusted

CAGR 3.8%

1 Excluding the effect of adopting new accounting standards as well as the mark-to-market effect of non-qualifying hedges which cannot be determined at this time

See appendix for reconciliation of GAAP to adjusted amounts

$5.20 1$5.20 1

1 1

34

Financial Position Remains Strong• Financial discipline• Strong credit ratings• Prudent dividend policy

As of the latest SEC filing.Includes AYE, AEE, AEP, CEG, CIN, CMS, CNP, D, DTE, DUK, ED, EIX, ETR, EXC, FE , FPL, PCG, PGN, PNW, PPL, SO, TE, TXU, and XELSource: FactSet Research Systems. Figures were downloaded on 6/21/04

0

4

8

45 55 65 75 85 95

Most Recent Total Debt to Total Capitalization

LT

M C

ash

Flo

w F

rom

Op

erat

ion

s / L

TM

In

tere

st E

xpen

se

FPL Group

35

Future Deployment of Free Cash Flow

• Lower FPL Energy capital expenditures will create free cash flow at FPL Group

• FPL Group choices are:

• Value creation either way

Invest at returnsthat exceed

cost of capital

Return cash toshareholders

Dividends Sharerepurchase

or

36

Strong Outlook for 2004

• FPL– expect earnings contribution of $4.20 - $4.35 per

share assuming normal weather

• FPL Energy– expect earnings contribution of $1.05 - $1.20 per share

• Corporate and Other– net drag of 30 - 35 cents per share

1 Excluding the effect of adopting new accounting standards as well as the mark-to-market effect of non-qualifying hedges which cannot be determined at this time

EPS of $4.95 to $5.20 1

37

Strong, Tangible Growth Prospects

• Customer and usage growth at FPL• Growing wind business• Seabrook Station improvements• Contract restructurings• Asset acquisitions• Upside leverage on merchant fossil fleet• Acquisitions of regulated distribution

companies and/or regulated integrated utilities• Gas infrastructure / LNG

38

The Building Blocks of Long-Term Growth

Potential Range of Contribution to 5-year

Growth

2.5% 3.0%

0.0% 1.0%

2.3% 4.5%

1.0% 2.0%

5.8% 10.5%

Base Growth atFlorida Power & Light

Base Growth atFPL Energy

+

+

Return to MerchantMarket Equilibrium

Accretion From ExcessCash Flow

+

Long-Term EarningsGrowth Potential

FPL Group =

Above figures are illustrative only, and not intended to represent a specific forecast. Please refer to FPL Group’s Safe Harbor Statement.

Appendix

41

Florida Ranks 1st in Growthamong Ten Largest StatesGrowth of Most Populous States

1 Estimated population as of 7/1/03Source: U.S. Census Bureau

FPL serves roughly half of the state

State

Population

CAGR (%) in 2003 1 2000-2003 (millions)

Florida 2.0 17.0 Texas 1.8 22.1 Georgia 1.8 8.7 California 1.4 35.5 New Jersey 0.8 8.6 Illinois 0.6 12.7 Michigan 0.4 10.1 New York 0.3 19.2 Pennsylvania 0.2 12.4 Ohio 0.2 11.4

42

99.589.5

75.4 73.867.6

54.4 54 52 49.8 48.3

FPL #1 in Total Sales

Total mwh Sales(millions)

FPL data as of 2003; all others as of 2002Source: Energy Information Administration, 2002

43

FPL Energy Wind – Our Competitive Advantage

• Business scale (U.S. and world leader)

• Project development track record

• Quick to market (3 – 6 months)

• Tax appetite

• Creditworthy

• Efficient third party financing access

44

Wind Leadership

458

118

843

324

975

Pre-00

00 01 02 03

• Since 2000, FPL Energy has added an average of 565 mw of wind per year

• Long-term potential average of 200 - 500 mw per year

• $125 - $150/kw of estimated shareholder value creation

• 1st year accretion of approx. $0.03/share per 100 mw

• PTC program expiration has resulted in “lumpiness” of investment opportunities

• PTC extension currently attached to several bills

MWs Added

45

Seabrook Uprate Potential

• Could be as early as Spring 2005

• Recent range of RTC forwards– $45/mwh - $54/mwh 1

• Nuclear “spark spread” potential– $40/mwh - $49/mwh

• Annualized potential pre-tax margin contribution from uprate assuming normalized (3-year average) availability– $28 - $34 million

1 RTC Cal ’05 price range from 3/1/04 to 6/18/04

46

Asset Optimization and Origination

• Actively managing forward sales

• Unlocking our plant’s option value

• Origination efforts leveraging our asset position

– full requirements, load following transactions

Asset Optimization and Origination generated $43 million of pre-tax income in 2003

47

Merchant Upside

2005 Assumed Spark SpreadsEstimated Margin

(millions)

AvailableMw

Capacity Factor

RecentForwards 1

Assumed Equilibrium 2

Potential Improvement Pre-Tax After-Tax

ERCOT 2,732 60% $8.00 $16.00 $8.00 $110 $70

1 Forwards consistent with 2004 earnings expectations2 Assumes CCGT at $500/kw and $4.50/mmbtu natural gas price

2005 available

mw

After-tax incremental margin range

(millions)

Seabrook 1,024 $50 – $60

NEPOOL (Other) 1,277 60 – 70

ERCOT 2,732 60 – 80

Other 1,275 50 – 60

Total earnings contribution potential $220 – $270

Total earnings per share contribution potential $1.20 – $1.50

ERCOT Example:

Applied to the Merchant Portfolio:

48

Electricity Regulatory Structure in the U.S.

• Historic model– vertical integration– retail-rate regulation by state utility commissions – regulation of wholesale transactions by FERC

• Modest move toward competition in generation in the late-1970’s (PURPA)

• Move toward retail competition by states in the mid-1990’s

– unbundling and separation of business segments (generation, transmission, distribution, supply)

– divestiture of generation and sometimes transmission– transition plans for full retail– uneven implementation (geography, market rules)

• Move toward wholesale market design by FERC (Order 2000)

– multi-state market areas for transmission (RTO’s)– independence of transmission from other market participants

49

Status of U.S. Electric Competition

1 Arkansas and New Mexico repealed their restructuring laws 2/24/03 and 4/8/03, respectively.Source: EEI, Status as of April 2003

Adopted electricity restructuring – 18

Restructuring suspended – 1

Large customer access – 2

Repealed restructuring – 2 1

Delayed start dates – 2DC

50

Grid West

California ISO

WestConnect

ERCOT ISO

Midwest ISO

PJM/PJM West

GridFlorida

RTO New England

New York ISO

SPP

Wholesale Market AreasApproved RTO’s and Existing ISO’s

The map includes service territories of transmission-dependent utilities.Utility participation as of 6/04. Source: EEI. Service territory data source: POWERmap, 2Q02 release, Platts

51

FPL - Reconciliation GAAP to Adjusted Earnings($ millions) 1993 1999 2000 2001Reconciliation of Net Income to Earnings

Excuding After-tax Effect of Certain Items:

Net income $ 425 $ 576 $ 607 $ 679

Adjustments:Charges due to cost reduction program 85 Loss on settlement of litigation 42 Merger-related expenses 38 16 Earnings excluding after-tax effect of certain items $ 510 $ 618 $ 645 $ 695

Totals may not add due to rounding

52

FPL Energy - Reconciliation GAAP to Adjusted Earnings

($ millions) 1999 2000 2001 2002 2003Reconciliation of Net Income (Loss) to Earnings

Excuding After-tax Effect of Certain Items:

Net income (Loss) (46)$ 82$ 113$ (169)$ 194$

Adjustments:Impairment loss 104 Merger-related expenses 1 Cumulative effect of change in accounting principle (FAS 142) 222 Restructuring and other charges 73 Cumulative effect of change in accounting principles (FIN 46) 3 Net unrealized mark-to-market losses (gains) associated

with non-qualifying hedges (8) (22) Earnings excluding after-tax effect of certain items 58$ 83$ 105$ 126$ 175$

Reconciliation of Earnings (Loss) Per Share to Earnings (Loss)Per Share Excluding After-tax Effect of Certain Items:

Earnings (Loss) Per Share (assuming dilution) (0.27)$ 0.48$ 0.67$ (0.97)$ 1.09$

Adjustments:Impairment loss 0.61 Merger-related expenses 0.01 Cumulative effect of change in accounting principle (FAS 142) 1.28 Restructuring and other charges 0.42 Cumulative effect of change in accounting principles (FIN 46) 0.02 Net unrealized mark-to-market losses (gains) associated

with non-qualifying hedges (0.04) (0.13) Earnings Per Share excluding certain items 0.34$ 0.49$ 0.62$ 0.73$ 0.98$

Totals may not add due to rounding

53

FPL Group - Reconciliation GAAP to Adjusted Earnings

2000 2001 2002 2003

Reconciliation of Earnings Per Share to Earnings

Per Share Excluding After-tax Effect of Certain Items:

Earnings Per Share (assuming dilution) 4.14$ 4.62$ 2.73$ 5.00$

Adjustments:

Merger-related expenses - $0.22 per share at FPL, $0.01 per share at

FPL Energy, and $0.01 per share at Corporate & Other 0.24

Merger-related expenses - $0.09 per share at FPL and $0.02 per share at

Corporate & Other 0.11

Cumulative effect of change in accounting principle (FAS 142) - FPL Energy 1.28

Charges due to restructuring - $0.42 per share at FPL Energy and $0.37

per share at Corporate & Other 0.79

Reserve for leveraged leases - Corporate & Other 0.17

Gain on settlement of IRS litigation - Corporate & Other (0.17)

Cumulative effect of change in accounting principles (FIN 46) - FPL Energy 0.02

Net unrealized mark-to-market (gains) associated

with non-qualifying hedges, primarily FPL Energy (0.04) (0.13)

Earnings Per Share excluding certain items 4.38$ 4.69$ 4.80$ 4.89$

54

Cautionary Statements And Risk Factors That May Affect Future ResultsIn connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and Florida Power & Light (FPL) are hereby filing cautionary statements identifying important factors that could cause FPL Group's or FPL's actual results to differ materially from those projected in forward-looking statements (as such term is defined in the Reform Act) made by or on behalf of FPL Group and FPL in this presentation, in response to questions or otherwise.  Any statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as will likely result, are expected to, will continue, is anticipated, believe, could, estimated, may, plan, potential, projection, target, outlook) are not statements of historical facts and may be forward-looking. Forward-looking statements involve estimates, assumptions and uncertainties.  Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could cause FPL Group's or FPL's actual results to differ materially from those contained in forward-looking statements made by or on behalf of FPL Group and FPL.

Any forward-looking statement speaks only as of the date on which such statement is made, and FPL Group and FPL undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.  New factors emerge from time to time and it is not possible for management to predict all of such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

The following are some important factors that could have a significant impact on FPL Group's and FPL's operations and financial results, and could cause FPL Group's and FPL's actual results or outcomes to differ materially from those discussed in the forward-looking statements:

FPL Group and FPL are subject to changes in laws or regulations, including the Public Utility Regulatory Policies Act of 1978, as amended (PURPA), and the Public Utility Holding Company Act of 1935, as amended (Holding Company Act), changing governmental policies and regulatory actions, including those of the Federal Energy Regulatory Commission (FERC), the Florida Public Service Commission (FPSC) and the utility commissions of other states in which FPL Group has operations, and the U.S. Nuclear Regulatory Commission (NRC), with respect to, among other things, allowed rates of return, industry and rate structure, operation of nuclear power facilities, operation and construction of plant facilities, operation and construction of transmission facilities, acquisition, disposal, depreciation and amortization of assets and facilities, recovery of fuel and purchased power costs, decommissioning costs, return on common equity and equity ratio limits, and present or prospective wholesale and retail competition (including but not limited to retail wheeling and transmission costs).  The FPSC has the authority to disallow recovery by FPL of costs that it considers excessive or imprudently incurred.

The regulatory process generally restricts FPL's ability to grow earnings and does not provide any assurance as to achievement of earnings levels.

FPL Group and FPL are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, wildlife mortality, natural resources and health and safety that could, among other things, restrict or limit the output of certain facilities or the use of certain fuels required for the production of electricity and/or increase costs.  There are significant capital, operating and other costs associated with compliance with these environmental statutes, rules and regulations, and those costs could be even more significant in the future.

55

FPL Group and FPL operate in a changing market environment influenced by various legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the energy industry, including deregulation of the production and sale of electricity.  FPL Group and its subsidiaries will need to adapt to these changes and may face increasing competitive pressure.

FPL Group's and FPL's results of operations could be affected by FPL’s ability to renegotiate franchise agreements with municipalities and counties in Florida.

The operation of power generation facilities involves many risks, including start up risks, breakdown or failure of equipment, transmission lines or pipelines, use of new technology, the dependence on a specific fuel source or the impact of unusual or adverse weather conditions (including natural disasters such as hurricanes), as well as the risk of performance below expected or contracted levels of output or efficiency.  This could result in lost revenues and/or increased expenses. Insurance, warranties or performance guarantees may not cover any or all of the lost revenues or increased expenses, including the cost of replacement power. In addition to these risks, FPL Group's and FPL's nuclear units face certain risks that are unique to the nuclear industry including the ability to dispose of spent nuclear fuel, as well as additional regulatory actions up to and including shutdown of the units stemming from public safety concerns, whether at FPL Group's and FPL's plants, or at the plants of other nuclear operators.  Breakdown or failure of an FPL Energy, LLC (FPL Energy) operating facility may prevent the facility from performing under applicable power sales agreements which, in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages.

FPL Group's and FPL's ability to successfully and timely complete their power generation facilities currently under construction, those projects yet to begin construction or capital improvements to existing facilities is contingent upon many variables and subject to substantial risks.  Should any such efforts be unsuccessful, FPL Group and FPL could be subject to additional costs, termination payments under committed contracts, and/or the write-off of their investment in the project or improvement.

FPL Group and FPL use derivative instruments, such as swaps, options, futures and forwards to manage their commodity and financial market risks, and to a lesser extent, engage in limited trading activities.  FPL Group could recognize financial losses as a result of volatility in the market values of these contracts, or if a counterparty fails to perform.  In the absence of actively quoted market prices and pricing information from external sources, the valuation of these derivative instruments involves management's judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.  In addition, FPL's use of such instruments could be subject to prudency challenges and if found imprudent, cost recovery could be disallowed by the FPSC.

There are other risks associated with FPL Group's non-rate regulated businesses, particularly FPL Energy.  In addition to risks discussed elsewhere, risk factors specifically affecting FPL Energy's success in competitive wholesale markets include the ability to efficiently develop and operate generating assets, the successful and timely completion of project restructuring activities, maintenance of the qualifying facility status of certain projects, the price and supply of fuel, transmission constraints, competition from new sources of generation, excess generation capacity and demand for power. There can be significant volatility in market prices for fuel and electricity, and there are other financial, counterparty and market risks that are beyond the control of FPL Energy.  FPL Energy's inability or failure to effectively hedge its assets or positions against changes in commodity prices, interest rates, counterparty credit risk or other risk measures could significantly impair its future financial results. In keeping with industry trends, a portion of FPL Energy's power generation facilities operate wholly or partially without long-term power purchase agreements.  As a result, power from these facilities is sold on the spot market or on a short-term contractual basis, which may affect the volatility of FPL Group's financial results.   In addition, FPL Energy's business depends upon transmission facilities owned and operated by others; if transmission is disrupted or capacity is inadequate or unavailable, FPL Energy's ability to sell and deliver its wholesale power may be limited.

56

FPL Group is likely to encounter significant competition for acquisition opportunities that may become available as a result of the consolidation of the power industry.  In addition, FPL Group may be unable to identify attractive acquisition opportunities at favorable prices and to successfully and timely complete and integrate them.

FPL Group and FPL rely on access to capital markets as a significant source of liquidity for capital requirements not satisfied by operating cash flows.  The inability of FPL Group and FPL to maintain their current credit ratings could affect their ability to raise capital on favorable terms, particularly during times of uncertainty in the capital markets which, in turn, could impact FPL Group's and FPL's ability to grow their businesses and would likely increase interest costs.

FPL Group's and FPL's results of operations can be affected by changes in the weather.  Weather conditions directly influence the demand for electricity and natural gas and affect the price of energy commodities, and can affect the production of electricity at wind and hydro-powered facilities.  In addition, severe weather can be destructive, causing outages and/or property damage, which could require additional costs to be incurred.

FPL Group and FPL are subject to costs and other effects of legal and administrative proceedings, settlements, investigations and claims, as well as the effect of new, or changes in, tax rates or policies, rates of inflation, accounting standards, securities laws or corporate governance requirements.

FPL Group and FPL are subject to direct and indirect effects of terrorist threats and activities.  Generation and transmission facilities, in general, have been identified as potential targets.  The effects of terrorist threats and activities include, among other things, terrorist actions or responses to such actions or threats, the inability to generate, purchase or transmit power, the risk of a significant slowdown in growth or a decline in the U.S. economy, delay in economic recovery in the United States, and the increased cost and adequacy of security and insurance.

FPL Group's and FPL's ability to obtain insurance, and the cost of and coverage provided by such insurance, could be affected by national events as well as company-specific events.

FPL Group and FPL are subject to employee workforce factors, including loss or retirement of key executives, availability of qualified personnel, collective bargaining agreements with union employees or work stoppage.

The issues and associated risks and uncertainties described above are not the only ones FPL Group and FPL may face. Additional issues may arise or become material as the energy industry evolves.  The risks and uncertainties associated with these additional issues could impair FPL Group's and FPL's businesses in the future.