FPL’s military-style approach to storms bolsters its success, and its parent company’s growth.
At Florida Power & Light’s hurricane command center, the 10 a.m. meeting starts at 9:59. The 5 p.m. meeting begins at 4:59.
Promptness isn’t the only thing prized by the utility’s executives. They also fixate on keeping the lights on, or, when storm-force winds make that goal impossible, turning them back on as quickly as possible.
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As the company’s top brass gathered Monday and Tuesday to plot their response to Hurricane Dorian, the number of FPL customers who had lost power appeared prominently on a screen at the front of the room. At the rear was a chart showing how many customers lost power during past storms and how quickly FPL turned the lights back on.
While it’s impossible to boil down FPL parent NextEra Energy’s secret sauce into a few ingredients, promptness and attention to metrics illustrate its disciplined approach. The utility blends military precision into a corporate strategy that has made it a money-minting machine for shareholders.
Juno Beach-based NextEra (NYSE: NEE) has transformed itself, in less than two decades, from middle-of-the-pack power producer into the nation’s most valuable utility. It’s a remarkable run that practically begs outsiders to sift through the company culture for clues to its success.
That culture is largely beyond the view of the millions of Floridians who depend on FPL’s electricity to power their homes and businesses. FPL put it on display for a brief moment this past week — during the two days when one of the most powerful storms in history churned just 100 miles to the east of the power behemoth’s command center.
As Dorian menaced Florida on Labor Day, FPL executives and employees gathered at the utility’s Riviera Beach bunker to lay out a battle plan for an unpredictable enemy that threatened "significant destruction," as FPL President and Chief Executive Eric Silagy had warned the public the previous day.
The troops, ordered to arrive at 6 a.m. even though it was a holiday and tropical storm winds were hours away, dutifully rolled in before dawn, pulling roller bags and toting pillows. For the 10 a.m. strategy meeting, Silagy, NextEra Chairman James Robo and other company leaders were in their seats well before the appointed hour.
Keeping with the military ethos, execs referred to their "cadence" of twice-daily meetings. The heads of human resources, information technology, commercial real estate and nuclear power delivered updates that were crisp — often just a few sentences.
Only company meteorologist Tim Drum gave more than short remarks, and that was because he possessed insight into the question that would determine everyone else’s fate: Where is Dorian going?
After the meeting, Silagy, 54, compared FPL’s mission to a military operation. The logistical challenges are similar, he said, noting that the company needed to fuel, feed and lodge the 17,000 workers who were poised to begin the treacherous task of restringing high-voltage wires after the storm passed.
"If they’re not fed and they’re not getting any rest, they’re making mistakes," Silagy said. "This business will kill you if you make mistakes."
Safety is another of Silagy’s mantras, along with efficiency.
To maximize refueling, FPL has its own stash of petroleum and a fleet of mobile refueling vehicles that travel to bucket trucks and fill four tanks at a time. The attention to detail means drivers don’t have to go in search of fuel – and they don’t spend time looking for gas and waiting in line at gas stations.
With 17,000 workers on the road, even small time savings matter. If every crew wastes an hour refueling, Silagy figures, the loss metastasizes into 17,000 squandered hours.
"That’s the way you have to look at it," he said.
If there’s a military structure underlying FPL’s storm response, it’s not the Hollywood version that Clint Eastwood, George C. Scott and Lee Ermey played on the screen. Swearing is rare, hazing non-existent. The only moment anyone sounded remotely combative, at least during the behind-the-scenes meetings and interactions witnessed by a Palm Beach Post reporter, came when a supervisor asked about delays between out-of-state crews repairing lines and FPL turning on the electricity to those lines.
"That’s a safety issue," Silagy said. "I’m not going to compromise on it."
As FPL’s brass met, Dorian had stalled over the Bahamas. With the hurricane’s forward motion slowing to a halt, Silagy reminded his managers that the stutter only delayed the inevitable.
"Use this time wisely," Silagy said. "Ask yourself what else you can or should be doing."
Robo, for his part, posed a few concise questions and otherwise listened intently but quietly. His company, however, has been anything but quiet – it has delivered massive returns to shareholders in recent years.
As shares have shot above $200, NextEra has become an investor darling. Thanks to the rising stock price, Robo routinely is the best-paid utility executive in the country, according to Palm Beach Post research.
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When trading opened Tuesday, NextEra was worth $106 billion, far outpacing the market capitalizations of rivals Duke Energy Corp., Dominion Energy and Southern Co., all worth less than $70 billion apiece.
NextEra’s leaders win points for routinely delivering the results they promise.
"To me, they’re the best management team in the industry," said Andy Smith, a utility analyst at Edward Jones in St. Louis. "They have a good ability to predict where the industry is going. A little bit of it has been luck, too."
NextEra’s long run of market-beating performance starts with FPL. It’s a reliable profit producer that’s the primary provider of power in a fast-growing state that’s now the nation’s third-largest.
Population growth is only part of the story, however. Florida’s influx of new residents slowed during the Great Recession, just as NextEra was widening its lead on other utilities. At any rate, rapid population growth is something of a mixed bag for utilities, which must find ways to pay for new power plants to pump out electricity for all those new homes and businesses.
NextEra’s fortunes have risen thanks to a combination of mergers with smaller rivals such as Gulf Power and investments in wind and solar power around the U.S. and the world.
Fans of the stock point to an aggressive acquisition strategy and a focus on clean power.
As an early investor in green power, NextEra set itself up to sell wind energy to other utilities. Many power companies are compelled by state regulators to produce at least some of their electricity from green sources.
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The result is that NextEra for years has been the nation’s largest producer of renewable energy — a lead it aims to keep. As the costs of solar panels have fallen, NextEra and FPL have invested aggressively in harnessing energy from the sun. FPL, for its part, now operates 18 solar plants. FPL expects to install 30 million solar panels statewide by 2030.
NextEra reported a profit of $6.6 billion on revenue of $17 billion in 2018, making it both massively profitable and the largest company headquartered in Palm Beach County.
Investors aren’t the only ones to benefit from NextEra’s strong run in recent years. FPL’s electric rates are among the lowest in the country.
The company also employs thousands of well-paid workers. In 2018, the company had 14,148 employees in the U.S., and their median pay was $125,365, NextEra disclosed in a regulatory filing this year.
If there’s anything that jolts utility investors, it’s the specter of a botched response to a natural disaster. Pacific Gas and Electric, California’s largest utility, filed bankruptcy this year, part of the fallout from wildfires that killed dozens and destroyed thousands of homes.
By midday Tuesday, Dorian had turned north, delivering only a glancing blow to FPL’s power grid. Smith, the analyst who covers the company, wasn’t surprised to hear of the company’s full-court press to prepare for massive outages.
"When you’re a regulated utility, it’s very important to keep the regulator happy and the customers happy," Smith said.
After all, Smith said, displeased regulators tend to take a harsher view of rate requests.
Silagy, for his part, could count it as a victory that Dorian’s damage was confined to lost sleep on the part of his employees.
On Monday night, as hundreds of employees crammed into roll-away beds and cots in conference rooms and cubicles, a few unfortunate souls found that the motion sensors in some of the new facility’s overhead lights were a bit too sensitive, creating less-than-ideal sleeping conditions. Silagy learned of the mishap the next morning.
"Every storm teaches you something new," Silagy said.