NextEra Energy, Inc.’s ( NEE - Analyst Report ) subsidiary Florida Power & Light Company (“FP&L”) got a nod from the Florida Public Service Commission (“FPSC”) to modernize its Port Everglades Next Generation Energy Center in Fort Lauderdale to a high-efficiency natural gas-fired unit. The company had filed this petition in November 2011.

Per the program, FP&L will replace 4 of its existing oil and natural gas-generating units at the location and install a 1,277-megawatt (“MW”) combined cycle natural gas unit at the site. The expected cost of this modernization program will be approximately $1.2 billion.

The development activities will begin from 2014 and the unit is expected to come on line from June 2016. The company expects this project to save FP&L consumers’ $469 million of expenses associated with electricity costs; create 650 new jobs and supply power to approximately 260,000 homes and businesses.

After implementation of the Clean Air Act by the U.S. Environmental Protection Agency (“EPA”), FP&L is rapidly upgrading its projects and transforming them into natural gas-fired units. The Riviera Beach and Cape Canaveral power plants, with an estimated power generation capacity of 1,200 MW each, have been subject to such upgrades. These operations are expected to begin power generation from 2013 and 2014, respectively.

We appreciate the initiatives taken by NextEra Energy for increasing renewable energy generation along with expansion of its wind and solar operations portfolio. The company is a well-managed, high-quality and regulated electric utility provider that serves high-growth areas in Florida. We also expect the company’s earnings growth to come from its high quality electric service, continued investments in Florida’s utility infrastructure, concentration on renewable energy production, and increasing wind and solar investments.

But, at the same time, we are skeptical about Florida’s economy and uncertainties associated with NextEra Energy’s commodity-linked generation assets.

NextEra Energy currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Juno Beach, Florida-based NextEra Energy Inc. is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The company offers both regulated and non-regulated energy-related products and services, with operations in 24 U.S. states and Canada. The company mainly competes with TECO Energy, Inc. ( TE - Analyst Report ) and Southern Company ( SO - Analyst Report ) .