Dive Brief:

• NextEra Energy is considering selling its Canadian portfolio owned by its yieldco, and "recycling" the capital back into U.S.-based assets, due to the recent corporate tax overhaul signed by President Trump. The assets reportedly include wind and solar projects totaling 400 MW.
• Officials discussed the possible sale during NextEra's earnings call on Friday. The company reported fourth quarter net income of more than $2.1 billion, more than double the prior-year's result.
• The lower corporate tax rate has led several energy companies to make adjustments, including utilities lowering customer rates. Moving its investment into U.S. assets results in "a longer federal income tax shield," NextEra officials said.

Dive Insight:

A number of utility companies say the Trump administration's tax overhaul, including lowering the corporate rate from 35% to 21%, has pushed them to make changes to rates and investment plans. 

In this month, Florida Power & Light announced it would use federal tax savings to repair $1.3 billion in damage caused by Hurricane Irma last year and to avoid a rate increase. Regulators in Kentucky cited the lower rate in approving a smaller-than-requested rate increase for Kentucky Power Co. And lawmakers in Virginia are working to undo a Dominion rate freeze and return some funds to ratepayers.

"Tax reform has highlighted several optimization opportunities within NEP's international portfolio, which we continue to evaluate," CFO John Ketchum told reporters and analysts. "We are looking at some optimization opportunities around our international portfolio."

Ketchum explained there is now a difference between the federal income tax shield in the U.S. and in Canada, and the company has "pinpointed a potential capital recycling opportunity." NextEra would sell the assets in the Canadian portfolio and then use those proceeds to reinvest in the United States.

"By reinvesting those proceeds in the U.S., what that does is it has the effect of actually creating more [cash available for distribution] for every dollar invested," Ketchum said. "And because of that, it puts us in a position where we could extend our runway, our financial expectations and extend the need for common equity. So it's kind of a very interesting opportunity that we continue to evaluate here internally."

This post has been updated.