FPL Group Announces First Quarter Earnings

FPL Group Announces First Quarter Earnings

    Business Editors/Energy Editors

    JUNO BEACH, Fla.--(BUSINESS WIRE)--April 26, 2005--FPL Group, Inc. (NYSE:FPL):

--	Florida Power & Light's results dampened by mild weather
--	FPL Energy posts strong quarter with improved results from merchant portfolio
--	FPL Group lowers full-year earnings forecast by $0.05 due to weather at Florida Power & Light

    FPL Group, Inc. (NYSE:FPL) today reported 2005 first quarter net income on a GAAP basis of $137 million, or $0.36 per share, compared with $138 million, or $0.39 per share, in the first quarter of 2004. All historical and current earnings per share figures have been adjusted to reflect FPL Group's March 15, 2005 two-for-one stock split. FPL Group's net income for the first quarter of 2005 included a net unrealized after-tax loss of $31 million associated with the mark-to-market effect of non-qualifying hedges. The results for last year's first quarter included a net unrealized after-tax loss of $1 million associated with the mark-to-market effect of non-qualifying hedges.
    Excluding the mark-to-market effect of non-qualifying hedges, FPL Group's earnings would have been $168 million or $0.44 per share for the first quarter of 2005, compared with $139 million, or $0.39 per share, in the first quarter of 2004. FPL Group's management uses adjusted earnings internally for financial planning, for analysis of performance, for reporting of results to the Board of Directors and for the company's employee incentive compensation plan. FPL Group also uses earnings expressed in this fashion when communicating its earnings outlook to analysts and investors. FPL Group management believes that adjusted earnings provide a more meaningful representation of FPL Group's fundamental earnings power.
    "FPL Group performed well in the first quarter despite the negative effects of weak weather conditions, which impacted both Florida Power & Light and FPL Energy," said Lew Hay, chairman and chief executive officer of FPL Group. "Although Florida Power & Light's performance was not what we had hoped for due to mild weather, the underlying fundamentals of the business remain strong. We continue to benefit from strong growth in customer accounts, system reliability among the best in the industry and operating costs that are below industry averages. FPL Energy had another excellent quarter and benefited from a strong performance from its merchant and contracted portfolio, which was able to more than offset the weakest first quarter wind resource in more than a decade. The loss in the non-qualifying hedge category reflects rising gas prices and forward spark spreads, both of which increase the fair value of FPL Energy's merchant assets.
    "Given the weather driven shortfall at Florida Power & Light in the first quarter, we are lowering our full-year earnings estimate for FPL Group by $0.05 per share to a range of $2.45 to $2.55 per share, excluding the cumulative effect of adopting new accounting standards as well as the mark-to-market effect of non-qualifying hedges, neither of which can be determined at this time."
    In lowering its 2005 forecast, the company said it now expects Florida Power & Light to earn in the range of $1.93 to $2.00, down from the previous range of $1.98 to $2.05 per share, assuming normal weather for the remainder of the year. The previous forecasts for FPL Energy and Corporate and Other remain unchanged. The company said it continues to expect FPL Energy to earn in the range of $0.65 to $0.73 per share and Corporate and Other to have a negative impact of $0.15 to $0.18 per share.

    Florida Power & Light

    First quarter net income for Florida Power & Light, FPL Group's principal subsidiary, was $111 million or $0.30 per share, compared to $105 million or $0.29 cents per share for the prior-year quarter. In the last 12 months, the average number of FPL accounts increased by 95,000 or 2.3 percent, while retail sales of electricity grew 2.4 percent during the first quarter.
    Operations and maintenance (O&M) expense was up slightly compared to the prior year quarter. Depreciation decreased slightly in the first quarter. The depreciation expense related to additional plant in service was more than offset by certain items being fully depreciated quarter over quarter. The company said it expects depreciation expense to increase significantly during the second half of 2005 with the addition of the Martin and Manatee plants.
    "Weather remains the single biggest driver of earnings fluctuations at Florida Power & Light," said Hay. "While our customers enjoyed mild weather in the first quarter of this year, these weather conditions did dampen FPL's expected revenues due to lower usage per customer. The combination of heating and cooling degree days, a common metric used for determining weather impacts on energy usage, were down more than 11 percent in the quarter compared to normal. Customer growth, although lower than last year's first quarter, was particularly strong given the uncertainty caused by last year's devastating hurricanes."
    During the quarter, the company continued to make good progress on its generation expansion projects at Martin and Manatee. The company is currently testing critical systems at the plants and has sent test power to the grid. Both of the plants are scheduled to be completed mid-year, adding 1,900 megawatts of new capacity.
    In February, the company began recovering the $536 million deficit existing in its storm reserve fund through a monthly surcharge. As previously disclosed, the estimated costs associated with the restoration efforts associated with Hurricanes Charley, Frances and Jeanne were $536 million in excess of the balance in FPL's storm reserve at the end of 2004. The reasonableness of full recovery is being challenged by the Office of Public Counsel and other interested parties and recovery is contingent on the results of prudency hearings that took place last week. The Florida Public Service Commission (FPSC) is scheduled to vote on the storm cost recovery issue when it meets in early July. The company continues to believe it has a sound basis in regulatory policy for the full recovery of the shortfall.
    In March, the company filed a request with the FPSC to increase electric rates by approximately $430 million a year beginning January 1, 2006. The company said it expects a decision on its rate request by the FPSC by the end of the year.

    FPL Energy

    FPL Energy, the wholesale generation subsidiary of FPL Group, reported first quarter net income on a GAAP basis of $37 million or $0.10 per share, compared to $53 million or $0.15 per share in the prior year quarter. FPL Energy's net income for the first quarter of 2005 included a net unrealized after-tax loss of $31 million associated with the mark-to-market effect of non-qualifying hedges. The results for last year's first quarter included a net unrealized after-tax loss of $1 million associated with the mark-to-market effect of non-qualifying hedges.
    Excluding the mark-to-market effect of non-qualifying hedges, net income for FPL Energy would have been $68 million or $0.18 per share compared to $54 million or $0.15 per share in 2004. The company said the loss in the non-qualifying hedge category is offset by increases in the fair value of physical asset positions in the portfolio, which are not marked-to-market under GAAP. The same factors that drove the decline in value of the hedges also increased the future value of many of FPL Energy's physical assets.
    FPL Energy had another strong operating performance. Although the contribution from the existing wind assets was down due to an extremely poor wind resource during the first quarter - 13 percent less than normal - the remaining existing assets performed well. Improved market conditions for its merchant portfolio, particularly in Texas, and the ongoing impact of past contract restructurings, coupled with a new contract restructuring, benefited the quarter. The company continued to make good progress during the first quarter in selling forward the output from its power plants and now has approximately 75 percent of its 2006 expected gross margin from its wholesale generation fleet protected against fuel and power market volatility.
    During the first quarter, the company began commercial operation at its114-MW Callahan Divide Wind Energy Center in Texas. In addition to the Callahan Divide project, the company currently has 327 MWs of new wind projects under construction that are expected to be operational by the end of 2005. Given the progress to date on its wind development program and build out, the company said it now expects to add between 500 MW - 750 MW of new wind to its portfolio by the end of 2005, up from a range of 250 MW - 750 MW previously announced.
    FPL Energy also expanded its solar generation capability during the quarter with the purchase of an operating interest in 150 MWs of Solar Energy Generating System (SEGS III-VII) assets in the Mojave Desert of which FPL Energy owns 67.5 MWs. This acquisition, which is near FPL Energy's existing solar assets, brings the company's total solar generating capacity to nearly 148 MWs.
    In March, the company announced a definitive agreement to acquire GEXA Corp., a retail electric provider based in Houston, Texas, and expects to close the transaction by early third quarter 2005. The company said the transaction, when complete, will aid in hedging a portion of its generation in Texas and expand its reach across the energy value chain in the state.
    "FPL Energy's excellent overall results in the quarter reflect the strength of its growing, diversified portfolio," said Hay. "The company was able to overcome the worst wind resource for the first quarter in more than a decade and produce very strong results. The company is also looking to the future and entered into several transactions during the quarter that position it very well for continued growth."

    Corporate and Other

    Corporate and Other negatively impacted net income by $11 million or $0.04 per share. FPL FiberNet, an FPL Group subsidiary that provides fiber-optic networks and related services in Florida, had a net loss of $2 million compared to a net loss of $2 million in the prior-year quarter; however, it remains cash flow positive.

    Outlook for 2005

    "We are encouraged by the long-term growth potential at FPL Group," said Hay. "Florida Power & Light's customer growth remains strong, especially compared to historic levels, and we look forward to a return to normal weather conditions. At FPL Energy, although we experienced a large loss in the quarter in the non-qualifying hedge category, it largely reflects increasing forward spark spreads which is good news for our merchant generation portfolio. This, coupled with continued progress in selling forward the output from our merchant generation plants, and the disciplined growth of the business continues to give us confidence in the long-term future of the business."
    As previously announced, FPL Group's first quarter earnings conference call is scheduled for 9 a.m. EDT on Tuesday, April 26, 2005. The webcast is available on FPL Group's website by accessing the following link, http://www.FPLGroup.com/investor/contents/investor_index.shtml. The slides accompanying the presentation may be downloaded at http://www.FPLGroup.com beginning at 7:30 a.m. EDT today. For persons unable to listen to the live webcast, a replay will be available by accessing the same link as listed above until 12:00 a.m. EDT, Thursday, May 26, 2005.

    Profile

    FPL Group, with annual revenues of more than $10 billion, is nationally known as a high-quality, efficient, and customer-driven organization focused on energy-related products and services. With a growing presence in 26 states, it is widely recognized as one of the country's premier power companies. Its principal subsidiary, Florida Power & Light Company, serves more than 4.2 million customer accounts in Florida. FPL Energy, LLC, an FPL Group energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at http://www.FPLGroup.com, http://www.FPL.com and http://www.FPLEnergy.com.

    Additional Information on GEXA Transaction

    FPL Group will be filing a registration statement on Form S-4, including GEXA's proxy statement and FPL Group's prospectus and other relevant documents with the Securities and Exchange Commission concerning the proposed transaction. You are urged to read the registration statement containing the proxy statement/prospectus and any other relevant documents filed or that will be filed with the SEC when they become available because they will contain important information about FPL Group, GEXA and the transaction.
    Once filed, you may obtain the registration statement containing the proxy statement/prospectus and other documents free of charge at the SEC's web site, www.sec.gov. In addition, once they have been filed with the SEC, the proxy statement/prospectus and these other documents may also be obtained for free from FPL Group by directing a request to FPL Group, Inc. 700 Universe Blvd., Juno Beach, Florida, 33408, Attention: Investor Relations and from GEXA by directing a request to GEXA Corp., 20 Greenway Plaza, Suite 600, Houston, Texas, 77046, Attention: Dave Holman.
    FPL Group, GEXA and their respective directors and executive officers and other members of management and employees, may be deemed to be participants in the solicitation of proxies from the stockholders of GEXA in connection with the transaction. Information about the direct or indirect interests of FPL Group is set forth in its report on Schedule 13D filed with the SEC. Information about the directors and executive officers of FPL Group is set forth in its proxy statement for its 2005 annual meeting of shareholders and its annual report on Form 10-K for the fiscal year ended 2004 and information about the directors and executive officers of GEXA and their ownership of GEXA stock is set forth in the report on Form 8-K of GEXA filed March 28, 2005 and the ownership reports of such persons on Schedule 13D and Forms 3 and 4 filed with the SEC. Investors may obtain additional information regarding the interests of such potential participants by reading the proxy statement/prospectus when it becomes available.

    Cautionary Statements and Risk Factors That May Affect Future Results

    In connection with the safe harbor provisions of the Reform Act, FPL Group and 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 press release, 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 forwardlooking. 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 (PURPA), and the 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 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 any and all 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 require additional pollution
    control equipment and otherwise 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.

    -- 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 store and/or 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 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 FPL Group's 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.

    -- 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,
    FPL Group Capital 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 are 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 laws, 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, state or local 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.

FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)

Corporate FPL Three Months Ended March 31, Florida Power FPL & Group, 2005 & Light Energy Other Inc. -------------------------------------------------------------------- Operating Revenues $2,041 $372 $24 $2,437

Operating Expenses Fuel, purchased power and interchange 1,077 154 7 1,238 Other operations and maintenance 310 94 11 415 Amortization of storm reserve deficiency 19 - - 19 Depreciation and amortization 230 72 5 307 Taxes other than income taxes 204 19 1 224 ------------------------------------- Total operating expenses 1,840 339 24 2,203 ------------------------------------- - Operating Income (Loss) 201 33 - 234 ------------------------------------- - Other Income (Deductions) Interest charges (49) (52) (37) (138) Equity in earnings of equity method investees - 19 - 19 Allowance for equity funds used during construction 10 - - 10 Other - net 2 21 11 34

Total other income ------------------------------------- (deductions) - net (37) (12) (26) (75) ------------------------------------- - Income (Loss) Before Income Tax Expense (Benefit) 164 21 (26) 159 - Income Tax Expense (Benefit) 53 (16) (15) 22

------------------------------------- Net Income (Loss) $111 $37 $(11) $137 =====================================

Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):

Net Income (Loss) $111 $37 $(11) $137

Adjustments, net of income taxes: Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges - 31 - 31

------------------------------------- Adjusted Earnings (Loss) $111 $68 $(11) $168 =====================================

Earnings (Loss) Per Share (assuming dilution) $0.30 $0.10 $(0.04) $0.36 Earnings (Loss) Per Share excluding certain items $0.30 $0.18 $(0.04) $0.44 Weighted-average shares outstanding (assuming dilution) 377

FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

FPL Group, Inc. Condensed Consolidated Statements of Income (millions, except per share amounts) (unaudited)

Corporate FPL Three Months Ended March 31, Florida Power FPL & Group, 2004 & Light Energy Other Inc. -------------------------------------------------------------------- Operating Revenues $1,942 $369 $20 $2,331 - Operating Expenses Fuel, purchased power and interchange 1,024 130 5 1,159 Other operations and maintenance 296 89 13 398 Depreciation and amortization 231 65 5 301 Taxes other than income taxes 192 19 1 212 ------------------------------------- Total operating expenses 1,743 303 24 2,070 ------------------------------------- - Operating Income (Loss) 199 66 (4) 261 ------------------------------------- - Other Income (Deductions) Interest charges (46) (44) (32) (122) Equity in earnings of equity method investees - 15 - 15 Allowance for equity funds used during construction 7 - - 7 Other - net (3) 5 3 5

Total other income ------------------------------------- (deductions) - net (42) (24) (29) (95) ------------------------------------- - Income (Loss) Before Income Tax Expense (Benefit) 157 42 (33) 166 - Income Tax Expense (Benefit) 52 (11) (13) 28

------------------------------------- Net Income (Loss) $105 $53 $(20) $138 =====================================

Reconciliation of Net Income (Loss) to Adjusted Earnings (Loss):

Net Income (Loss) $105 $53 $(20) $138

Adjustments, net of income taxes: Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges - 1 - 1

------------------------------------- Adjusted Earnings (Loss) $105 $54 $(20) $139 =====================================

Earnings (Loss) Per Share (assuming dilution) $0.29 $0.15 $(0.05) $0.39 Earnings (Loss) Per Share excluding certain items $0.29 $0.15 $(0.05) $0.39 Weighted-average shares outstanding (assuming dilution) 359

FPL Energy's interest charges are based on a deemed capital structure of 50% debt for operating projects and 100% debt for projects under construction. Residual non-utility interest charges are included in Corporate & Other. Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

FPL Group, Inc. Preliminary Condensed Consolidated Balance Sheets (millions) (unaudited)

Corporate FPL Florida Power FPL & Group, March 31, 2005 & Light Energy Other Inc. --------------------------------------------------------------------- Property, Plant and Equipment Electric utility plant in service and other property $23,762 $8,044 $318 $32,124 Less accumulated depreciation and amortization (9,548) (1,014) (91) (10,653) -------------------------------------- Total property, plant and equipment - net 14,214 7,030 227 21,471 -------------------------------------- - Current Assets Cash and cash equivalents 71 92 78 241 Other 1,962 946 10 2,918 -------------------------------------- Total current assets 2,033 1,038 88 3,159 --------------------------------------

Other Assets 3,288 1,012 413 4,713 -------------------------------------- - Total Assets $19,535 $9,080 $728 $29,343 ======================================

Capitalization Common stock $1,373 $- $(1,369) $4 Additional paid-in capital 4,319 4,588 (4,888) 4,019 Retained earnings 570 430 3,168 4,168 Accumulated other comprehensive income (loss) - (98) (3) (101) -------------------------------------- Total common shareholders' equity 6,262 4,920 (3,092) 8,090 Long-term debt 2,813 2,098 3,590 8,501 -------------------------------------- Total capitalization 9,075 7,018 498 16,591 --------------------------------------

Current Liabilities Debt due within one year 1,188 140 - 1,328 Other 2,063 599 (17) 2,645

Total current -------------------------------------- liabilities 3,251 739 (17) 3,973 -------------------------------------- - Other Liabilities and Deferred Credits Asset retirement obligation 2,042 197 - 2,239 Accumulated deferred income taxes 2,040 778 35 2,853 Regulatory liabilities 2,434 - - 2,434 Other 693 348 212 1,253

Total other liabilities -------------------------------------- and deferred credits 7,209 1,323 247 8,779 -------------------------------------- - Commitments and Contingencies - Total Capitalization and Liabilities $19,535 $9,080 $728 $29,343 ======================================

Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

FPL Group, Inc. Condensed Consolidated Balance Sheets (millions) (unaudited)

Corporate FPL Florida Power FPL & Group, December 31, 2004 & Light Energy Other Inc. --------------------------------------------------------------------- Property, Plant and Equipment Electric utility plant in service and other property $23,515 $7,887 $318 $31,720 Less accumulated depreciation and amortization (9,467) (940) (87) (10,494)

Total property, plant -------------------------------------- and equipment - net 14,048 6,947 231 21,226 --------------------------------------

Current Assets Cash and cash equivalents 65 92 68 225 Other 1,690 613 (1) 2,302 -------------------------------------- Total current assets 1,755 705 67 2,527 --------------------------------------

Other Assets 3,311 855 414 4,580 --------------------------------------

Total Assets $19,114 $8,507 $712 $28,333 ======================================

Capitalization Common stock $1,373 $- $(1,371) $2 Additional paid-in capital 4,318 4,785 (5,687) 3,416 Retained earnings 459 393 3,313 4,165 Accumulated other comprehensive income (loss) - (42) (4) (46)

Total common -------------------------------------- shareholders' equity 6,150 5,136 (3,749) 7,537 Long-term debt 2,813 1,611 3,603 8,027 -------------------------------------- Total capitalization 8,963 6,747 (146) 15,564 --------------------------------------

Current Liabilities Debt and preferred stock due within one year 1,015 118 584 1,717 Other 2,008 524 (1) 2,531

Total current -------------------------------------- liabilities 3,023 642 583 4,248 --------------------------------------

Other Liabilities and Deferred Credits Asset retirement obligation 2,015 192 - 2,207 Accumulated deferred income taxes 1,949 675 61 2,685 Regulatory liabilities 2,465 - - 2,465 Other 699 251 214 1,164

Total other liabilities -------------------------------------- and deferred credits 7,128 1,118 275 8,521 --------------------------------------

Commitments and Contingencies

Total Capitalization and Liabilities $19,114 $8,507 $712 $28,333 ======================================

Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

Certain amounts have been reclassified to conform with current year presentation.

FPL Group, Inc. Condensed Consolidated Statements of Cash Flows (millions) (unaudited)

Corporate FPL Three Months Ended March 31, Florida Power FPL & Group, 2005 & Light Energy Other Inc. ===================================================================== Cash Flows From Operating Activities Net income (loss) $111 (1) $37 $(11) $137 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 219 72 6 297 Storm-related costs (196) - - (196) Storm-related recoveries 19 - - 19 Deferred income taxes and related regulatory credit 97 120 (27) 190 Cost recovery clauses and franchise fees 67 - - 67 Change in income taxes 3 (136) (25) (158) Other - net (56) (64) (22) (142) ------------------------------------- Net cash provided by (used in) operating activities 264 29 (79) 214 -------------------------------------

Cash Flows From Investing Activities Capital expenditures of FPL (378) - - (378) Nuclear fuel purchases (21) (1) - (22) Independent power investments - (296) - (296) Sale of independent power investments - 8 - 8 Capital expenditures of FPL FiberNet, LLC - - (2) (2) Contributions to special use funds (31) (4) - (35) Funding of secured loan - - (27) (27) Proceeds from termination of leveraged lease - - 43 43 Other - net (3) - (8) (11) ------------------------------------- Net cash provided by (used in) investing activities (433) (293) 6 (720) -------------------------------------

Cash Flows From Financing Activities Issuances of long-term debt - 506 - 506 Retirements of long-term debt - (7) (600) (607) Retirements of preferred stock (25) - 20 (5) Net change in short-term debt 200 - - 200 Issuances of common stock - - 603 603 Dividends on common stock - - (135) (135) Capital distributions to FPL Group - net - (198) 198 - Other - net - (37) (3) (40)

Net cash provided by (used in) ------------------------------------- financing activities 175 264 83 522 -------------------------------------

Net increase (decrease) in cash and cash equivalents 6 - 10 16 Cash and cash equivalents at beginning of period 65 92 68 225 -------------------------------------

Cash and cash equivalents at end of period $71 $92 $78 $241 =====================================

(1) Excludes preferred stock dividends.

Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

FPL Group, Inc. Condensed Consolidated Statements of Cash Flows (millions) (unaudited)

Corporate FPL Three Months Ended March 31, Florida Power FPL & Group, 2004 & Light Energy Other Inc. --------------------------------------------------------------------- Cash Flows From Operating Activities Net income (loss) $105 (1) $53 $(20) $138 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 220 65 5 290 Deferred income taxes and related regulatory credit 34 6 7 47 Cost recovery clauses and franchise fees 183 - - 183 Other - net 181 75 33 289

Net cash provided by (used in) ------------------------------------- operating activities 723 199 25 947 -------------------------------------

Cash Flows From Investing Activities Capital expenditures of FPL (401) - - (401) Nuclear fuel purchases (22) - - (22) Independent power investments - (120) - (120) Capital expenditures of FPL FiberNet, LLC - - (1) (1) Contributions to special use funds (37) (4) - (41) Funding of secured loan - - (15) (15) Other - net 1 (9) (22) (30)

Net cash provided by (used in) investing activities (459) (133) (38) (630) -------------------------------------

Cash Flows From Financing Activities Issuances of long-term debt 236 - 300 536 Retirements of long-term debt - (3) - (3) Issuances of preferred stock 20 - (20) - Net change in short-term debt (392) (6) (218) (616) Issuances of common stock - - 19 19 Dividends on common stock - - (111) (111) Capital contributions from FPL Group - net - 30 (30) - Other - net (91) (31) 83 (39)

Net cash provided by (used in) ------------------------------------- financing activities (227) (10) 23 (214) -------------------------------------

Net increase (decrease) in cash and cash equivalents 37 56 10 103 Cash and cash equivalents at beginning of period 4 74 51 129 -------------------------------------

Cash and cash equivalents at end of period $41 $130 $61 $232 =====================================

(1) Excludes preferred stock dividends and loss on redemption of preferred stock.

Corporate & Other represents other business activities, other segments that are not separately reportable, eliminating entries, and may include the net effect of rounding.

FPL Group, Inc. Earnings Per Share Summary (assuming dilution) (unaudited)

Three Months Ended March 31, ----------------------------- 2005 2004 ----------------------------- Florida Power & Light Company $0.30 $0.29 FPL Energy, LLC 0.10 0.15 Corporate and Other (0.04) (0.05)

----------------------------- Earnings Per Share $0.36 $0.39 =============================

Reconciliation of Earnings Per Share to Adjusted Earnings Per Share:

Earnings Per Share $0.36 $0.39

Adjustments, net of income taxes: Net unrealized mark-to-market (gains) losses associated with non-qualifying hedges, primarily FPL Energy 0.08 -

----------------------------- Adjusted Earnings Per Share $0.44 $0.39 =============================

FPL Group, Inc. Earnings Per Share Contributions (assuming dilution) (unaudited) First Quarter ------------------------------------------------------- ------------- FPL Group - 2004 Earnings Per Share $0.39

Florida Power & Light - 2004 Earnings Per Share 0.29 Customer growth 0.03 Usage due to weather 0.01 Underlying usage growth, mix and other (0.01) Depreciation expense - O&M expenses (0.02) Other, including AFUDC, share dilution and rounding - ------------- Florida Power & Light - 2005 Earnings Per Share 0.30

FPL Energy - 2004 Earnings Per Share 0.15 New investments (0.01) Existing assets: wind (0.02) Existing assets: all other 0.04 Asset optimization and trading - Restructurings activities 0.03 Interest expense (0.01) Non-qualifying hedges impact (0.08) Other, including share dilution and rounding - ------------- FPL Energy - 2005 Earnings Per Share 0.10

Corporate and Other - 2004 Earnings Per Share (0.05) FPL FiberNet operations - Other, including interest expense, share dilution and rounding 0.01 ------------- Corporate and Other - 2005 Earnings Per Share (0.04) -------------

FPL Group - 2005 Earnings Per Share $0.36

FPL Group, Inc. Schedule of Total Debt and Equity (millions) (unaudited)

March 31, 2005 Per Books Adjusted (1) --------------------------------------------------------------------- Long-term debt, including current maturities, commercial paper, and notes payable: Equity-linked debt securities $506 Junior Subordinated Debentures(2) 309 Project debt: Natural gas-fired assets 421 Wind assets 1,064 Debt with partial corporate support: Natural gas-fired assets 371 Other long-term debt, including current maturities, commercial paper, and notes payable 7,158 7,158 ------------------------- Total debt 9,829 7,158 Junior Subordinated Debentures(2) 309 Common shareholders' equity 8,090 8,090 Equity-linked debt securities 506 ------------------------- Total capitalization, including debt due within one year $17,919 $16,063 =========================

Debt ratio 55% 45%

December 31, 2004 Per Books Adjusted (1) --------------------------------------------------------------------- Long-term debt and preferred stock, including current maturities, commercial paper, and notes payable: Equity-linked debt securities $1,081 Junior Subordinated Debentures(2) 309 Project debt: Natural gas-fired assets 421 Wind assets 601 Debt with partial corporate support: Natural gas-fired assets 348 Other long-term debt and preferred stock, including current maturities, commercial paper, and notes payable 6,984 6,984 ------------------------- Total debt and preferred stock 9,744 6,984 Junior Subordinated Debentures(2) 309 Common shareholders' equity 7,537 7,537 Equity-linked debt securities 1,081 ------------------------- Total capitalization, including debt due within one year $17,281 $15,911 =========================

Debt ratio 56% 44%

(1) Ratios exclude impact of imputed debt for purchase power obligations

(2) Adjusted to reflect preferred stock characteristics of these securities (preferred trust securities)

FPL Group, Inc. Commercial Paper, Notes Payable, and Current Maturities of Long-term Debt and Preferred Stock Schedule as of 3/31/05 (unaudited)

Interest Maturity Amount Type of Debt Rate (%) Date (millions) --------------------------------------------------------------------- Florida Power & Light Commercial Paper VAR VAR $691 First Mortgage Bonds 6.875 12/01/05 500 Fair value swap (4) --------- TOTAL FLORIDA POWER & LIGHT 1,187 ---------

FPL Group Capital Commercial Paper VAR VAR -

FPL Energy Senior Secured Bonds Principal Payments 6.876 06/27/05 9 Principal Payments 6.639 06/30/05 22 Principal Payments 7.520 06/30/05 22 Principal Payments 5.608 09/10/05 8 Principal Payments 6.125 09/25/05 2 Principal Payments 7.520 12/31/05 19 Principal Payments 5.608 03/10/06 10 Principal Payments 6.125 03/25/06 3 --------- Total Senior Secured Bonds 95 ---------

Senior Secured Notes Principal Payments 7.110 06/30/05 2 Principal Payments 7.110 12/31/05 2 --------- Total Senior Secured Notes 4 ---------

Construction Term Facility Principal Payments VAR 06/30/05 4 Principal Payments VAR 12/31/05 15 --------- Total Construction Term Facility 19 ---------

Other Debt Principal Payments VAR 06/30/05 3 Principal Payments VAR 07/31/05 6 Principal Payments VAR 09/30/05 3 Principal Payments VAR 12/31/05 3 Principal Payments VAR 01/31/06 4 Principal Payments VAR 03/31/06 1 --------- Total Other Debt 20 ---------

TOTAL FPL ENERGY 138 --------- TOTAL FPL GROUP CAPITAL 138 --------- TOTAL FPL GROUP, INC. $1,325 =========

May not agree to financial statements due to rounding.

FPL Group, Inc. Long-term Debt, Net of Current Maturities Schedule as of 3/31/05 (unaudited)

Interest Maturity Amount Type of Debt Rate (%) Date (millions) --------------------------------------------------------------------- Florida Power & Light First Mortgage Bonds First Mortgage Bonds 6.000 06/01/08 200 First Mortgage Bonds 5.875 04/01/09 225 First Mortgage Bonds 4.850 02/01/13 400 First Mortgage Bonds 5.850 02/01/33 200 First Mortgage Bonds 5.950 10/01/33 300 First Mortgage Bonds 5.625 04/01/34 500 First Mortgage Bonds 5.650 02/01/35 240 --------- Total First Mortgage Bonds 2,065 ---------

Revenue Refunding Bonds Miami-Dade Solid Waste Disposal VAR 02/01/23 15 St. Lucie Solid Waste Disposal VAR 05/01/24 79 --------- Total Revenue Refunding Bonds 94 ---------

Pollution Control Bonds Dade VAR 04/01/20 9 Martin VAR 07/15/22 96 Jacksonville VAR 09/01/24 46 Manatee VAR 09/01/24 17 Putnam VAR 09/01/24 4 Jacksonville VAR 05/01/27 28 St. Lucie VAR 09/01/28 242 Jacksonville VAR 05/01/29 52 --------- Total Pollution Control Bonds 494 ---------

Industrial Bonds Dade VAR 06/01/21 46 --------- Total Industrial Bonds 46 ---------

FPL Fuels Senior Secured Notes 2.340 06/11/06 135

Unamortized discount (20)

--------- TOTAL FLORIDA POWER & LIGHT 2,814 ---------

FPL Group Capital Debentures Debentures 3.250 04/11/06 500 Debentures 7.625 09/15/06 600 Debentures 4.086 02/16/07 575 Debentures 6.125 05/15/07 500 Debentures (B Equity Units) 5.000 02/16/08 506 Debentures 7.375 06/01/09 225 Debentures 7.375 06/01/09 400 Debentures (Junior Subordinated) 5.875 03/15/44 309 --------- Total Debentures 3,615 ---------

Fair value swaps (22) Unamortized discount (4)

FPL Energy Senior Secured Bonds Senior Secured Bonds 6.876 06/27/17 109 Senior Secured Bonds 6.125 03/25/19 95 Senior Secured Bonds 7.520 06/30/19 269 Senior Secured Bonds 6.639 06/20/23 339 Senior Secured Bonds 5.608 03/10/24 347 --------- Total Senior Secured Bonds 1,159 ---------

Senior Secured Notes 7.110 06/28/20 107

Construction Term Facility VAR 06/30/08 381

Other Debt Other Debt VAR 12/27/07 331 Other Debt VAR 12/19/17 110 Other Debt 8.010 12/31/18 3 Other Debt 6.650 09/30/20 6 Other Debt 10.630 09/30/20 3 --------- Total Other Debt 453 --------- TOTAL FPL ENERGY 2,100 --------- TOTAL FPL GROUP CAPITAL 5,689 --------- TOTAL FPL GROUP, INC. $8,503 =========

May not agree to financial statements due to rounding.

Florida Power & Light Company Statistics (unaudited) Three Months ------------------------ Periods ended March 31, 2005 2004 ------------------------ Energy sales (million kWh) Residential 11,397 11,180 Commercial 9,813 9,564 Industrial 984 993 Public authorities 145 141 Electric utilities 350 343 Increase (decrease) in unbilled sales (758) (793) Interchange power sales 706 1,197 ----------- ----------- Total 22,637 22,625 =========== ==========

Average price (cents/kWh) (1) Residential 9.54 9.07 Commercial 8.19 7.81 Industrial 6.65 6.28 Total 8.78 8.36

Average customer accounts (000's) Residential 3,799 3,718 Commercial 465 453 Industrial 20 18 Other 3 3 ----------- ---------- Total 4,287 4,192 =========== ==========

(1) Excludes interchange power sales, net change in unbilled revenues, deferrals under cost recovery clauses and any provision for refund.

2005 Normal 2004 ------------------------------------ Three months ended March 31 Heating degree-days 198 215 177 Cooling degree-days 36 50 31

--30--CM/mi*

CONTACT: FPL Group, Inc., Miami Kevin Kelly, 305-552-3888

KEYWORD: FLORIDA INDUSTRY KEYWORD: ENERGY UTILITIES EARNINGS CONFERENCE CALLS SOURCE: FPL Group, Inc.

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