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					FPL GROUP (NYSE: FPL)                                                 BUY 1,000 Shares
Sector: Utilities               Industry: Electric Utilities

                                                                                Snapshot of FPL Group:
                                                                                Recent Price:               $62.83
                                                                                52 Week Range: $46.02 – $66.52
                                                                                Market Cap:                $25.56B
                                                                                Beta:                          0.62
                                                                                PEG Ratio (5 year expected): 1.96
                                                                                P/E Ratio:                   18.50
                                                                                P/B Ratio (mrq):               2.50
                                                                                P/S Ratio (ttm):               1.66
                                                                                ROE (ttm):                  13.98%

Company Profile 1

FPL Group, with annual revenues of more than $11.8 billion, is nationally known as a high-
quality, efficient, organization focused on energy-related products and services.
Originating in Florida, FPL Group now has a presence in 26 states and has established itself
as one of the premier power companies. Through its subsidiaries, FPL Group engages in
the generation, transmission, distribution, and sale of electric energy. FPL Group prides itself in producing
electricity from clean and reusable fuels. The company has delivered significant value to its shareholders in
the last five years, providing a 40-percent total shareholder return. During this time, FPL Groupshares
significantly outperformed both the S&P 500 Index and a key peer group, the Philadelphia Utilities Index.

                        Recommendation: Buy 1,000 Shares Approximate Value: $62,000

           Subsidiary rapidly gaining market share in alternative energy sector

           Federal tax credits encourage further development in alternative energy

           Florida’s market for electricity has above average customer and usage growth

           Electric Utilities Industry regulations provide revenue stability in foreseeable future

           Sound balance sheet compared to industry with conservative debt -to-capital

Report Written by: Saira Bhiman i, Peter Cooper, Michael Kleiman and Brian Thompson


                                 Table of Contents
Social Responsibility                                     3
Industry Analysis                                         4
Company Profile                                           5
Board of Directors                                        6
Company History                                           7
Recent Events                                             7
Quality Awards and Recognition                            8
Competitors                                               9
SWOT Analysis                                            10
Competition: Regulated vs. Unregulated                   11
Natural Disaster Precautionary Measures                  11
Investor Relations                                       12
BCG Matrix                                               13
Analyst Recommendations                                  13
Financial Ratio Analysis
       Liquidity                                         14
       Asset Management                                  14
       Debt Management                                   14
       Profitability                                     14
       Extended DuPont Model                             14
Pro Forma Income Statement                               15
Valuation Ratios                                         16
P/E Valuation                                            16
Segment Information                                      17
Income Statement                                         18
Balance Sheet                                            19
Statement of Cash Flows                                  21
Valueline Report                                         23

                                    Social Responsibility 2
The U.S. currently relies heavily on coal, oil, and natural gas for its energy. Fossil fuels are nonrenewable, that is, they
draw on finite resources that will eventually dwindle, becoming too expensive or too environmentally-damaging to
retrieve. In contrast, renewable energy resources — such as wind and solar energy — are constantly replenished and will
never run out. Renewable energy is important because of the benefits it provides. The key benefits are:

         Benefits                                                        Description
Environmental           Renewable energy technologies are clean sources of energy that have a much lower environmental impact
                        than conventional energy technologies.
Energy for the future   Renewable energy never runs out. Other sources of energy are finite and will someday be depleted.
Jobs and the economy    Most renewable energy investments are spent on materials and workmanship to build and maintain the
                        facilities, rather than on costly energy imports. Renewable energy investments are usually spent:

                                within the U.S.
                                frequently in the same state, and
                                often in the same county.

                        This means your energy dollars stay home to create jobs and to fuel local economies, rather than going
                        overseas. Meanwhile, renewable energy technologies developed and built in the U.S. are being sold
                        overseas, improving the U.S. trade deficit.
Energy security         After the oil supply disruptions of the early 1970s, our nation has increased its dependence on foreign oil
                        supplies instead of decreasing it. This increased dependence impacts more than just our national energy
                        policy. Our nation’s energy security continues to be threatened by our dependency on fossil fuels. These
                        conventional energy sources are vulnerable to:

                                political instabilities
                                trade disputes
                                embargoes and
                                other disruptions.

FPL Energy is among the leading wholesale generation companies in the U.S. The Company develops, builds and
operates electricity-generating facilities, with an emphasis on:
      clean fuel sources
             o natural gas
             o nuclear energy
      renewable resources
             o wind
             o solar energy
             o hydroelectric power
In fact, these fuel sources account for more than 90 percent of the power FPL Energy produces. This electricity is sold to
utilities, municipalities, cooperatives and regional power systems that, in turn, supply it to homes and businesses in their
respective market areas.

                                        Industry Analysis
Electric Utilities Industry3
          This industry benefits from the world’s growing dependence on electricity. Coal is the primary source of
electricity generated in the United States today and will continue to be in the near future. Its abundance as well as low
processing costs allows consumers in the United States to enjoy relatively cheap electricity.
          New technological developments within the industry are geared toward keeping coal as the primary source of
energy within the foreseeable future. Companies are working hard to find avenues to virtually eliminate the sulfur,
nitrogen and mercury pollutants emitted into the air when coal is burned. Additionally, industry participants are
developing ways to prevent the release of greenhouse gases into the atmosphere, a step towards mollifying the recent
discussion of global warming issues.
          Research is also underway to increase the fuel efficiency of coal-fueled power plants. Today’s plants convert
only a third of coal’s energy potential to electricity. New technologies developing within the industry could nearly
double efficiency levels in the next 10-15 years. Higher efficiencies mean even more affordable electricity and fewer
greenhouse gases.
          Although coal is the most prevalent resource used to generate energy, natural gas is the nation’s fastest growing
fuel. More than 90% of the power plants to be built in the next 20 years will likely be fueled by natural gas. Natural gas
is also likely to be a primary fuel for distributed power generators – mini-power plants that would be sited close to
where the electricity is needed.
          In addition, new technologies are being developed for the storage of energy and the transmission of energy that
will contribute to energy efficiency of the electric industry. For instance, the copper wires used in typical transmission
lines lose a percentage of the electricity passing through them because of resistance, which causes the wires to heat up.
But "superconducting" materials have no resistance, and if they are used to transmit electricity in the future, very little
of the electricity will be lost. Although the electrical utilities industry seems to be in its maturity stage, the opportunity
for new, energy saving technologies and developments can be conducive to the overall efficiency of the participants’
overall operations.
Alternative Energy Industry4
          Electricity markets are now fully or partially open to competition in more than a dozen states. To date,
competitive marketers have offered green power to retail or wholesale customers in District of Columbia, California,
Illinois, Maryland, New Jersey, New York, Pennsylvania, Texas, or Virginia, and several New England states.
          The term "green power" is used to define power generated from renewable energy sources, such as wind and
solar power, geothermal, hydropower and various forms of biomass. Green power marketing has the potential to
expand domestic markets for renewable energy technologies by fostering greater availability of renewable electric
service options in retail markets. Although renewable energy development has traditionally been limited by cost
considerations, customer choice allows consumer preferences for cleaner energy sources to be reflected in market
          Green pricing is an optional utility service that allows customers an opportunity to support a greater level of
utility company investment in renewable energy technologies. Participating customers pay a premium on their electric
bill to cover the incremental cost of the additional renewable energy. As of early 2006, more than 600 utilities across the
nation, including investor-owned, municipal utilities, and cooperatives, offer a green pricing option.
          Whether or not they have access to green power through their local utility or a competitive electricity marketer,
consumers can purchase renewable energy certificates or RECs (also known as green tags or tradable renewable
certificates). RECs represent the environmental attributes of the power produced from renewable energy projects and
can be sold separately from the physical electricity. Customers can buy RECs without having to switch electricity


                                          Company Profile
Florida Power & Light Company 5
Florida Power & Light is among the largest and fastest-growing electric utilities in the United
States. In 2005, the company’s average number of customer accounts grew by more than
97,000, or 2.3 percent, to more than 4.3 million. The company has a favorable customer mix.
Revenues from industrial customers make up only about 3 percent of the total, compared with
an average of about 19 percent for the electric utility industry. A smaller than average percentage of industrial
customers means the company is less exposed to economic cyclicality. FPL provides power to one of the
fastest growing utility service territories in the nation. Over the last 10 years, the number of FPL’s customer
accounts has grown at a compounded average annual rate of 2.2 percent. Additionally, usage per customer
has grown at an average annual rate of 0.6 percent. FPL generation expansion plans reflect this growth, as the
company brought online 1,900 megawatts of generating capacity in 2005 and brought online an additional
1,150 megawatts of generating capacity in mid-2007.

FPL Energy
FPL Energy has adhered to a disciplined and moderate risk strategy that focuses on clean
energy. FPL Energy’s net generation grew to more than 13,300 megawatts during 2006.
The company achieved this dramatic growth while maintaining a diversified portfolio
regionally. Meanwhile, the diversification of fuel expanded primarily due to the wind and nuclear portfolio
additions made during the year. FPL Energy is also known as a clean generator. Although gas is its primary
fuel, the company is also diversified among several other fuel types. FPL Energy is the nation’s largest
developer, owner and operator of wind powered generating plants, having roughly 4,000 net megawatts of
wind in service. Improved technology and ever increasing fuel costs have led to a greater focus on wind-
powered generating plants by energy providers across the nation. In 2006, nearly 2,500 megawatts of new
capacity were installed throughout the United States, and FPL Energy was the project developer responsible
for the largest portion of that new wind generation.

FPL FiberNet6
FPL FiberNet, LLC is nationally known as a high quality, efficient and customer-driven
organization focused on energy-related products and services. FPL FiberNet, LLC delivers
wholesale services throughout most major metropolitan areas in Florida, with its extensive
long-haul and metro fiber-optic networks. FPL Group’s fiber-optic network was originally developed in the late
1980’s to provide internal telecommunications services to support company operations. In 1996, FPL began
selling excess fiber-optic capacity along its network to the major telecommunications companies operating in
Florida. FPL FiberNet, LLC acquired an existing 1,600-mile inter-city fiber network from Florida Power & Light.
The company was launched in early 2000 to sell fiber-optic network capacity and dark fiber on a wholesale
basis to local and long distance telephone companies, Internet Service Providers and other
telecommunications companies in Florida. Since its inception, FPL FiberNet has invested millions of dollars to
build its fiber-optic network throughout Florida’s major metropolitan areas as well as state of the art Optical
Networking and Ethernet equipment.

                                         Board of Directors7
                  Mr. Hay is the chairman and chief executive officer of FPL Group, having relinquished the title of president on
                  December 15, 2006. He became a director, president and chief executive officer of FPL Group in June 2001, and
                  chairman of FPL Group and chairman and chief executive officer of Florida Power & Light Company in January
                  2002. He joined FPL Group in 1999 as vice president, finance and chief financial officer. From March 2000 until
                  December 2001 he served as president of FPL Group’s competitive energy subsidiary, FPL Energy, LLC. He is a
                  director of Capital One Financial Corporation and Harris Corporation, as well as FPL Group’s subsidiary, Florida
                  Power & Light Company.
                  Mr. Robo is President and Chief Operating Officer of FPL Group. He joined FPL Group in early 2002 as Vice
                  President of Business Development and was named president of FPL Energy a few months later. Prior to joining
                  the Florida-based energy services company, Robo was with General Electric for ten years, where he was president
                  and CEO of a major division of GE Capital and served as chairman and CEO of GE Mexico. He received a BA Summa
                  Cum Laude from Harvard College and an MBA from Harvard Business School, where he was a Baker Scholar.

                   Moray P. Dewhurst has been Senior Vice President, Finance and Chief Financial Officer of Florida Power & Light Co.
                   since July 19, 2001. Mr. Dewhurst has been Vice President, Finance and Chief Financial Officer of FPL Group Inc.,
                   parent of Florida Power & Light Co. since July 17, 2001. Prior to July 17, 2001, Mr. Dewhurst was Senior Partner of
                   Dean & Company, a management consulting and investment firm that he co-founded in 1993. Mr. Dewhurst has
                   been a Director of Florida Power & Light Company since 2001.

                   Armando J. Olivera has been President of Florida Power & Light Co., since June 25, 2003. Mr. Olivera served as
                   Senior Vice President of Power Systems of FPL, a subsidiary of FPL Group Inc. from July 1, 1999 to July 25, 2003.
                   Mr. Olivera has been a Director of Florida Power & Light Company, a subsidiary of FPL Group Inc. since 1999. He
                   serves as Member of the Board of Directors of Enterprise Florida Inc. After finding a job at FPL, he began as an
                   engineer trainee, performing draft work. FPL Energy, LLC is a subsidiary of FPL Group. Mr. Olivera majored in
                   electrical engineering at Cornell University. Mr. Olivera was born in Sancti Spiritus, Cuba, and raised in Miami.

                   Carmen Perez joined FiberNet in 2004 and was named president of FPL FiberNet in January 2007 after having
                   served as vice-president of sales and as controller and director of accounting. Prior to joining FiberNet, she served
                   in the customer service organization of Florida Power & Light Company as director of revenue recovery. Before
                   that, Perez served as FPL’s director of corporate accounting and assistant controller. From 1982 to 1989, she was a
                   certified public accountant with the accounting firm of Deloitte & Touche, where she specialized in the
                   management of audits of large financial and governmental institutions. Perez holds a bachelor degree in business
                   administration degree from Florida International University.

                   Mitchell F. Davidson joined FPL Energy in June 2004 as vice president of business management for the subsidiary’s
                   Texas-based business operations and was appointed senior vice president of all business management activities in
                   May 2006. He has been responsible for the day-to-day activities of the business management organization,
    No Picture     including all activities related with FPL Energy’s generating assets. Prior to joining FPL Energy, Davidson was senior
    Available      vice president, energy management, for Duke Energy North America. He held a number of other senior
                   management positions while at Duke, including senior vice president, origination. Earlier, Davidson was at
                   Entergy-Koch LP where he held a number of executive positions of increasing responsibility. Mr. Davidson holds a
                   BA in Industrial Technology from Southwest Texas State University and an MBA from the University of Houston.

                                   Company History9,10
Key Dates:
1925: Florida Power & Light (FP&L) Company is formed as part of the American Power & Light Company.
1950: FP&L becomes independent of American Power & Light Company and is listed on the New York Stock Exchange.
1965: FP&L contracts to buy natural gas for 20 years from Pan-American Petroleum Corporation and Florida Gas
Transmission Company.
1984: FPL Group, Inc. is organized as a holding company.
1985: FPL Group buys Colonial Penn Life Insurance Company and sets up ESI Energy Inc.
1990: The Company buys 76 percent of Georgia Power Company’s plant near Atlanta.
1991: Colonial Penn is sold after losing money.
2001: Jim Broadhead retires after 13 years as chairman and CEO, replaced by Lewis Hay I
2004: FPL Group ranked #1 for environmental performance in Innovest report
2005: FPL Group completed acquisition of Gexa Energy
2006: FPL Group, Inc. And Constellation Energy terminate plans to merge

                                         Recent Events11
FPL Group, Inc.’s FPL Energy, LLC Completes Acquisition Of Point Beach Nuclear Power Plant – October 1, 2007
          FPL Group, Inc.’s FPL Energy, LLC announced that it has completed the purchase of the two-unit, 1,023-
megawatt Point Beach nuclear power plant located near Two Rivers, Wisconsin. FPL Energy purchased the Point Beach
nuclear power plant for approximately $924 million.
FPL Group, Inc.’s Subsidiary Enters Into Agreement with Citrus Energy For Developing Ethanol Plant – July 19, 2007
          FPL Group, Inc.’s subsidiary FPL Energy, LLC, announced that it has signed a letter of intent with Citrus Energy,
LLC, of Boca Raton, FL, to develop the commercial scale citrus peel to ethanol plant. The cellulosic ethanol plant will be
owned and operated by FPL Energy and is expected to produce four million gallons of ethanol per year.
FPL Group, Inc. Announces Expansion Plans – April 3, 2007
          FPL Group, Inc. announced that it plans to meet anticipated customer growth and electricity needs of customers
with a strategy that focuses on fuel diversity, energy conservation and renewable energy sources to improve system
reliability and help stabilize future power prices. As part of this strategy, the Company plans to increase its power
generating resources by approximately 28% by 2016. The Company’s diverse generation expansion plan includes: the
completion of construction of 1,150 megawatts of new combined-cycle natural gas-fired generation at its Turkey Point
plant site in south Miami-Dade County; construction of 2,400 megawatts of new generation at its West County plant site
in western Palm Beach County to begin serving in 2009; approval to add 1,960 megawatts of advanced clean coal
technology in Glades County. The Company expects the facility to begin serving needs by 2013 and 2014. To round out
the end of the 10 year planning horizon, the Company tentatively plans to add 1,200 megawatts of combined-cycle
natural gas-fired generation. In addition, 2018 and beyond the Company also is taking steps to create the option for new
nuclear power generation in Florida.
FPL Group, Inc. And Constellation Energy Terminate Plans to Merge – October 25, 2006
          FPL Group, Inc. and Constellation Energy announced they have reached a joint and amicable agreement to
terminate their plans to merge. Constellation Energy initiated a request to end the planned merger, citing continued
uncertainty over regulatory and judicial matters in Maryland and the potential for a protracted and open-ended merger
review process.


                    Quality Awards and Recognition 12

2007                               FPL is ranked no. 1 among Electric & Gas Utilities on Fortune Magazine’s annual list of “America’s
                                   Most Admired Companies”
2005                               FPL Group hosts U.S. business leaders in meeting of The Conference Board – U.S. Quality Council.
2004                               In recognition of FPL’s restoration performance after Hurricanes Charley, Frances and Jeanne,
                                   the company was presented the Emergency Response Award from the Edison Electric Institute
                                   (EEI), noteworthy in that EEI is a leading trade association comprised of electric industry peers.
2003                               EEI presented FPL with its Emergency Response Award for our efforts to help other utilities
                                   restore electric service after Hurricane Isabel.
2002                               FPL was named No. 1 among leading electric utilities for environmental performance by
                                   Innovest, an investment research firm.
2001                               FPL received EEI’s top award for outstanding achievements in land management and
                                   environmental stewardship activities for our wetlands mitigation bank and crocodile protection
                                   and research program at our Turkey Point power plant.
2000                               FPL is one of six utilities honored with the Edison Electric Institute’s Emergency Response Award
                                   for outstanding efforts to restore service to customers in the wake of natural disasters, such as
                                   Hurricane Irene in October 1999.
1999                               FPL’s Turkey Point nuclear plant is only nuclear plant in U.S. to earn Power Plant of the Year
                                   award for world class performance.
1998                               First electric utility to win William M. Benkert Award, U.S. Coast Guard’s highest honor for
                                   excellence in marine environmental protection.
1998                               FPL quality manager serves as co-chairperson of U.S. Quality Council; judge of USA Today Quality
                                   Cup; Board of Directors, Florida Sterling Council; and Chairman, Greater Miami Chamber Quality
1998                               FPL is named the most admired utility by Fortune magazine, based on its annual survey.
1997                               Employees celebrated the 10 anniversary of their participating in the President’s Cup (now the
                                   James L. Broadhead Award) challenge. FPL employees recognized for quality leadership served as
                                   quality ambassadors and shared their successes internationally. Their appearances included the
                                   International Convention for QC Circles in Beijing, China.
1994                               A Post-Deming Prize review is held. Two examiners from JUSE (Dr. Kume and Dr. Akao) gave high
                                   marks to FPL with special recognition for its efforts in benchmarking, creativity and technology,
                                   empowerment and quality promotion.
1989                               FPL becomes the first non-Japanese company in the world to receive the prestigious Deming
                                   Prize, a quality award administered by the Union of Japanese Scientists and Engineers (JUSE).
1986                               FPL Chairman and CEO John J. Hudiburg, Dr. Joseph Juran and Doug Ekings, Chairman of the
                                   American Society for Quality, testified before the U.S. Congress for the establishment of what
                                   was signed into law by President Ronald Reagan as The Malcolm Baldridge National Quality
                                   Award. FPL staff was subsequently involved in developing the internal systems and structures of
                                   the award.
1985                               FPL receives the Edison Award for Excellence and Quality Achievements

Progress Energy Inc. (PGN)
Progress Energy, Inc., together with its subsidiaries, operates as an
integrated energy company serving the southeast region of the United
States. It engages in the generation, transmission, distribution, and sale
of electricity in North Carolina, South Carolina, and Florida. The company also produces and sells coal-based
solid synthetic fuels in Kentucky and West Virginia; operates synthetic fuels facilities for third parties in West
Virginia; and provides coal terminal services, which include procuring and processing coal, and transloading
and marketing synthetic fuels. It offers its coal terminal services in Kentucky and West Virginia. The company
serves textile, chemical, metal, paper, food, rubber and plastics, wood products, and electronic machinery and
equipment sectors, as well as phosphate rock mining and processing, electronic design and manufacturing,
and citrus and other food processing sectors. As of December 31, 2006, it had approximately 21,300
megawatts of regulated electric generation capacity and served approximately 3.1 million retail electric
customers. Progress Energy, formerly known as CP&L Energy, Inc., was founded in 1925 and is headquartered
in Raleigh, North Carolina.

Southern Company (SO)
Southern Company, through its subsidiaries, engages in the generation, transmission,
distribution, and sale of electricity in Alabama, Georgia, Florida, and Mississippi. As of
December 31, 2006, it served approximately 2,305,676 residential, commercial, and
industrial customers. The company also engages in the construction, acquisition, and management of
generation assets; provision of digital wireless communications services; and the provision of fiber optic
solutions to telecommunication providers. In addition, it holds investments in synthetic fuels and leveraged
lease projects. Southern Company was founded in 1945 and is based in Atlanta, Georgia.

TECO Energy, Inc. (TE)
TECO Energy, Inc., through its subsidiaries, engages in diversified energy-related
operations in the United States. The company’s activities primarily include
generation, purchase, transmission, distribution, and sale of electric energy. The
company provides retail electric services to approximately 661,000 customers in the west central Florida. It
also purchases, distributes, and sells natural gas to approximately 332,000 customers, including residential,
commercial, industrial, and electric power generation customers in Florida. In addition, TECO Energy owns
interests in coal processing and loading facilities, synthetic fuel production facilities, and mineral rights, as well
as owns or operates surface and underground mines in eastern Kentucky, Tennessee, and Virginia; and
provides waterborne transportation, storage, and transfer services of coal and other dry-bulk commodities.
The company was founded in 1899 and is headquartered in Tampa, Florida.


                                    SWOT Analysis14
     FPL Group: Environmental awareness and public support
     FPL Energy: Nation’s leader in wind and solar energy generation
     FPL Energy: facilities located in multiple locations, lower weather-related performance risk
     FPL Energy: Diversified Portfolio and favorable customer mix
     FPL Energy: Infinite amount of energy
     FPL Energy: Tax Credits for renewable energy
     FP&L: Above average customer growth rate
     FP&L: Regulated territorial customer base

   FPL Energy: Renewable energy makes up low market share
   FPL Energy and FiberNet: Expensive technology and high capital costs
   FPL Energy: Political scrutiny due to bird and bat deaths
   FPL Energy and FiberNet: Competitive industry
   FPL Energy: Wind farms need specific topography
   FiberNet: Only geographical, not technological competitive advantage

    FPL Group: Improvement in technology
    FPL Energy: Renewable energy is a growing industry
    FPL Energy: Governmental regulations that could benefit “green” energy
    FPL Energy and FP&L: Acquisition of assets
    FPL Energy and FiberNet: Expansion in market share

    FPL Group: Natural disasters
    FPL Group: Frequently changing regulatory environment
    FPL Energy: Continuance of relatively cheap crude oil

     FPL Group 10-K
           Competition: Regulated vs. Unregulated 15
        Providing services in both a regulated and deregulated market, FPL Group Inc. faces and is shielded
from direct competition. Florida Power & Light is FPL Group’s Inc. primary subsidiary, providing electricity to
residents, businesses, and industrial customers in Florida and is responsible for the majority of FPL Group’s
Inc, revenue. Other electrical providers in Florida include Teco Energy (TE) and Progress Energy (PGN).
However, these providers do not pose a direct threat, since FPL Group and other electrical facilitators operate
in a highly regulated industry. The Florida Public Service Commission (FPSC) which has jurisdiction over retail
rates, service territory, issuances of securities, planning, sighting and construction of facilities. The industry is
also regulated by the Federal Energy Regulatory Commission (FERC). With designated service territories, FP&L
serves as the only provider to its customers. This provides a difficult barrier to entry within specific
geographical locations. However, as a result of the controlled competition, FP&L’s growth is significantly based
on population growth rather than capturing customers from its competitors.
        On the other hand, FPL Energy, which is an unregulated wholesale subsidiary, is not restricted to
specific territories. This gives FPL Energy the freedom to expand its operations without territorial restrictions.
FPL Energy now has a presence in twenty five states. However, this opportunity for FPL Energy is also provides
an opportunity for its competitors to produce comparable energy in the same geographical locations.

         Natural Disaster Precautionary Measures 16
        Stationed in Florida, FP&L is frequently susceptible to hurricanes. In 2005, Hurricane Wilma hit the
heavily populated west coast and South Florida regions. A record 3.2 million FP&L customers were
temporarily left without power as transmission lines and substations were especially hard hit. To avoid such
damages in the future, FP&L has worked to improve such programs as Storm Secure, which takes
precautionary measures to help reduce FP&L related damages caused by hurricanes. Such measures include
infrastructure hardening. Systems have been designed to better withstand high pressure winds and older
parts of the infrastructures have been replaced by stronger ones. Other preventative measures include tree
trimming. This action helps prevent trees making contact with FP&L electrical power lines and causing
electrical interruptions for its customers. FP&L has also put for effort to consistently inspect electrical poles
for any damage or weathering that may affect services in the future and that can better withstand future
storm activity. In addition, FP&L has encouraged the construction of underground facilities. Today, more than
37% of FP&L power delivery system is underground. These preventative measures hope to make a significant
impact in providing reliable electricity during the Florida’s stormy seasons.

                                       Investor Relations17
1. How does FP&L compete for customers? Do customers of FPL Energy have a choice in purchasing renewable or non-
  renewable energy?
               Florida is a regulated state, which means the government dictates regions in which separate utilities can
               operate. Where a customer resides dictates their electricity provider. FPL Energy sells the majority of
               its output to utilities and aggregates; hence the individual end customer does not necessarily have a
               choice if they are buying green power. In many of our historical PPA agreements, the purchaser of the
               power retains the green attribute and not FPL Energy necessarily.

2. What implications does the 8-K that was recently filed with the SEC have on future earnings expectations?
               On October 3rd, FPL Group filed an 8-K with the SEC regarding the purchase of Point Beach for
               approximately $924 million. FPL Group simply provided a cautionary statement to investors that actual
               results in this quarter’s report may differ from those figures projected as a result of the acquisition.

3. Is there any pending regulation that would affect FP&L and FPL Energy?
                 At FP&L, the utility in Florida, the rates are set by the regulators and a rate agreement is in place though
                 the end of 2009. At FPL Energy, the primary force would be market dynamics to a large degree. In
                 certain cases legislation at either the state level or federal level could impact FPL Energy.

4. FPL is currently building an ethanol plant. What is the future of ethanol?
                  FPL Energy has entered into an agreement to produce cellulosic ethanol. This plant is a very small piece
                  of our overall portfolio. There are many companies and research labs investing a considerable amount
                  of money in ethanol. It remains unclear what its future will be.

5. Why did FPL issue $300 million in bonds?
                Proceeds from the bond offering will be used to repay FP&L's short term debt, and also for general
                corporate purposes.

6. FPL Energy announced that it will be investing in a new solar energy production with Ausra, Inc. Considering solar
  energy constitutes only 1% of the company’s energy production, what type of return on this investment does FPL
  Energy expect?
                Over time, FPL may invest $2.4 billion both in increasing solar thermal energy output and in programs
                reducing carbon dioxide emissions. We do not disclose our ROI, but it meets or exceeds our internal

7. What is the growth potential of FiberNet given its immaterial revenue contribution in recent years?
                Since we are currently in our "quiet period" (prior to an earnings release), I cannot answer that question.

8. What is each subsidiary’s competitive advantage within its respective industry?
                We produce reliable power at low cost, giving us the ability to negotiate good agreements with our
                regulators. We are one of the lowest cost producers in the industry. We are in the top decile in almost
                every other metric that you might look at. We have a very clean portfolio both at FP&L and FPL Energy.

     Eszter Dimarzio, FPL Group Shareholder Services Department
                                                 BCG Matrix
FP&L functions primarily as the cash cow for FPL Group: this
subsidiary has high market share in the slow-growth electrical                               Star                   Question
utilities industry. It generates roughly 80% of the total revenue              High
within the FPL Group as a whole. Although FP&L serves as a
leader in a mature industry, the company has been expanding its           Market
presence rapidly throughout Florida by investing in various               Growth
energy production efficiency projects within the region.
Recently, FP&L completed construction on its Turkey Point                      Low
power plant in Miami, and plans to invest another $650 million
annually through the end of the decade in its transmission and
distribution infrastructure to meet the growing demand for                                 Cash Cow                        Dog
electricity in Florida.                                                                          Strong                    Weak
                                                                                                   Relative Competitive Position
FPL Energy functions as the star out of the three subsidiaries:
this unit has high earnings and growth potential within the
developing alternative energy industry. Alternative energy has been the topic of choice among those who seek a
cleaner environment, and FPL Energy provides affordable options for consumers to utilize green energy. Currently, FPL
Energy offers a “Sunshine Energy” membership to stewards of the environment. This program educates consumers on
what they can do to help preserve the environment for future generations. For every 10,000 customers who sign up for
Sunshine Energy, an additional 150kw of solar will be built in Florida. New solar arrays are scheduled to be announced
this year which will be among the largest solar energy producers in Florida. FPL Energy is rapidly expanding its
alternative energy production capabilities with the goal of utilizing only green energy and in turn protecting our
environment for a cleaner tomorrow.

Finally, FPL FiberNet functions as the dog among the three subsidiaries: the company has a weak relative competitive
position within its industry considering it delivers wholesale services only in Florida. Its market growth is contingent
upon FP&L’s expansion plans, and unfortunately, since FP&L’s market is territorially regulated, there is little chance that
FiberNet will entertain plans of expansion outside of Florida.

                           Analyst Recommendations 18
                                 Current Month           Last Month             Two Months Ago                Three Months Ago

         Strong Buy                   4                      3                        1                                1

            Buy                       7                      7                        5                                4

            Hold                      6                      7                        11                              12

            Sell                      0                      0                        0                                0

         Strong Sell                  0                      0                        0                                0

Four strong buy recommendations indicate that these analysts believe the stock will outperform the market over the
next six months. The total number of buy recommendations has more than doubled over the past three months, while
the number of sell recommendations has remained zero. Overall, analysts are confident that FPL is a strong stock with
earnings potential over the next six months.


                               Financial Ratio Analysis
Liquidity Ratios                              FPL 2004 FPL 2005 FPL 2006           PGN          SO             TE      Industry
Current Ratio:                                  0.59     0.69     0.77             0.95        0.87           1.24       1.03
Quick Ratio:                                    0.51     0.61     0.63             0.60        0.60           0.99       0.59

Participants in the electrical utilities industry naturally have a high amount of fixed assets, which weighs down liquidity
ratios. FPL's liquidity has been increasing over the past three years; its current ratio has been increasing, but is still
below the industry average, while its quick ratio is comparable to the industry average.

Asset Management
Asset Management                             FPL 2004 FPL 2005 FPL 2006          PGN         SO            TE        Group Avg.
Total Asset Turnover:                          0.37     0.36     0.44            0.38       0.35          0.47          0.41
Fixed Asset Turnover:                          0.50     0.53     0.51            0.52       0.36          0.57          0.49
Avg. collection Period:                       35.72    43.46    29.31            34.98      30.43         35.29        32.50

Total asset turnover measures the company's efficiency in using its assets to generate sales; since participants within
this industry have a large amount of fixed assets, its TATO tends to be in a low range. FPL's TATO and Average
Collection Period are increasing and decreasing respectively, which are positive trends, increasing their asset

Debt Management
Debt Management                            FPL 2004    FPL 2005     FPL 2006       PGN         SO          TE        Group Avg.
Equity Multiplier:                           3.76        3.85         3.62          3.1       4.45        4.26          3.86
Debt-to-Equity:                              1.29        1.24         1.13         1.15       1.35        1.99          1.41
Times Interest Earned:                       4.04        3.51         3.97         2.64       4.62        2.33          3.39

In regards to debt management, FPL is currently more reliant on debt than equity; in context with the group, however,
this is normal in the industry and not necessarily a sign for concern. The times interest earned multiple shows that
revenue sufficiently covers current period interest payable charges, more so than the company average.

Profitability         FPL 2004           FPL 2005           FPL         PGN           SO               TE             Industry
ROE:                   11.89%             10.52%          13.98%       9.46%        14.97%           15.03%            16.36%
ROA:                   3.16%               2.73%          3.79%        3.79%        3.99%            2.59%              3.36%

Extended DuPont Model                            PM            TATO             EM                                   FPL 2006
ROE:                                             8%            0.44             3.62                  =               12.90%
ROA:                                             8%            0.44             ---                   =                3.56%

A combination of a slightly lower Equity Multiplier and Total Asset Turnover lowers FPL’s Return on Equity. Comparing
that to the trailing twelve months, however, FPL has shown improvement from previous year end. Return on Assets is
comparable to industry standards providing more evidence that a weak equity multiplier is part of the cause for a weak
Return on Equity.

          Pro Forma Income Statement and Valuation
                                                             (in millions)

                                              Projected      Forecasted       Forecasted      Forecasted      Forecasted
                                            December 31st   December 31st    December 31st   December 31st   December 31st    % of
                                                2007            2008             2009            2010            2011        Revenue

Projected Revenue Growth                       13.7%            13.7%           13.7%           13.7%           13.7%

Revenue                                        17,862          20,309           23,092          26,255          29,852

Operating Expenses
Fuel, purchased power and interchange           9,443          10,737           12,208          13,880          15,782        52.9%
Other operations and maintenance                2,617           2,975            3,383           3,846           4,373        14.7%
Depreciation and amortization                   1,773           2,016            2,292           2,606           2,963        9.9%
Taxes other than income taxes                   1,396           1,587            1,805           2,052           2,333        7.8%
Other Expenses                                  250              284             323             368             418          1.4%
 Operating Income/(Loss)                        2,383           2,710            3,081           3,503           3,983        13.3%

Non-operating Income/Expenses
Interest Income/(Expense)                       (778)           (885)           (1,006)         (1,144)         (1,301)       -4.4%
Other Income/(Loss)                             286              325             370             420             478          1.6%
 Pre-tax Income/(Loss)                          1,891           2,150            2,444           2,779           3,160        10.6%
Provision for income taxes                      446              507             577             656             746          2.5%

Net Income/(Loss)                               1,445           1,642            1,867           2,123           2,414        8.1%

Operating Income/(Loss)                         2,383           2,710            3,081           3,503           3,983        13.3%
Add: Depreciation & Amortization Expenses       1,773           2,016            2,292           2,606           2,963        9.9%
EBITDA                                          4,156           4,725            5,373           6,109           6,946        23.3%

Weighted average shares outstanding
Basic                                           408              418             428             438             448
Diluted                                         411              421             431             441             451

Earnings per share of common stock
Basic                                           3.54             3.93            4.36            4.85            5.39
Assuming dilution                               3.51             3.90            4.33            4.81            5.35

- Projected Revenue Growth is an average of the last five years
- All other fields use the average % of revenue from the past three years
- Weighted Average Shares Outstanding increase by an estimate of 10 million per year, in accordance with prior year

                                       Valuation Ratios19
Valuation                           FPL                                                           TTM
Ratios           2003        2004         2005        2006         FPL         PGN        SO        TE          Industry
P/E               13         15.2         18.2        16.8         18.5        15.7      16.4      12.9            20
P/B               1.7         1.8          1.9         2.2         2.5          1.5      2.4       1.9             2.6
P/S               1.2         1.3          1.3         1.4         1.6          1.2      1.9        1              1.4
P/CF              5.2         5.1          9.7         8.5         6.4          8.7        9       6.5             8.4

In regards to relative pricing, FPL is on par with the industry in regards to P/B and P/S. Its P/E and P/CF ratios, however,
are below the industry averages, suggesting the stock may be slightly undervalued. A good sign of continuing growth is
that all of FPL’s year end valuation ratios have an increasing trend.

                                            P/E Valuation
By using our forecasted diluted EPS figure for 2008 and multiplying it by our most recent P/E ratio (ttm), we estimate a
value of:

                                                  $3.90 x 18.5 = $72.15


                                                    Recent Price: $62.33

                               Our P/E Valuation predicts a 16% increase in value for 2008.

                                                          FPL GROUP, INC.
                                                  SEGMENT INFORMATION
                                             (millions, except per share amounts)
                                                      2006                                              2005
                                                               Corp.                                           Corp.
                                                  FPL            and                             FPL             and
                                      FPL      Energy          Other        Total      FPL    Energy           Other    Total
Operating revenues                  11,988        3,558          164        15,710    9,528    2,221              97    11,846

Operating expenses                  10,525        2,803          285        13,613    8,181    2,067             108    10,356

Interest charges                      278          269           159          706      224       223             146      593

Depreciation and amortization         787          375            23         1,185     951       311              23     1,285

Equity in earnings of equity

  method investees                       -         181              -         181         -      124                -     124

Income tax expense

  (benefit) (d)                       424          110          (137)         397      408       (55)            (71)     282

Net income (loss)                     802          610          (131)        1,281     748       203             (50)     901

Capital expenditures, independent

  power investments and

  nuclear fuel purchases             1,868        1,809           62         3,739    1,711      822              13     2,546

Property, plant and equipment       25,686       10,224          242        36,152   24,407    8,568             334    33,309

Accumulated depreciation             9,848        1,679          126        11,653    9,530    1,253             105    10,888

  and amortization

Total assets                        23,073       11,371         1,547       35,991   22,726    9,394             870    32,990

Investment in equity

  method investees                       -         361             9          370         -      320               9      329

                                                         FPL GROUP, INC.
                                             CONSOLIDATED STATEMENTS OF INCOME
                                               (millions, except per share amounts)
                                                                                      Years Ended December 31,
                                                                             2006            2005                 2004
OPERATING REVENUES                                                      $   15,710     $   11,846            $   10,522

                  Fuel, purchased power and interchange                      8,943          6,171                 5,217
                  Other operations and maintenance                           2,022          1,814                 1,659
                  Impairment and restructuring charges                         105              -                   81
                  Disallowed storm costs                                        52              -                     -
                  Merger-related                                                23              -                     -
                  Amortization of storm reserve deficiency                     151            155                     -
                  Depreciation and amortization                              1,185          1,285                 1,198
                  Taxes other than income taxes                              1,132            931                  882
                  Total operating expenses                                  13,613         10,356                 9,037

OPERATING INCOME                                                             2,097          1,490                 1,485

                  Interest charges                                            (706)         (593)                 (489)
                  Equity in earnings of equity method investees                181            124                   96
                  Gains (losses) on disposal of assets                          29             52                   (3)
                  Allowance for equity funds used during                        21             28                   37
                  Interest income                                               53             59                   25
                  Other - net                                                     3            23                   17
     Total other deductions - net                                             (419)         (307)                 (317)

INCOME BEFORE INCOME TAXES                                                   1,678          1,183                 1,168
Income Taxes                                                                   397            282                  272
NET INCOME                                                              $    1,281     $      901            $     896

Earnings per share of common stock:
                  Basic                                                 $      3.25    $     2.37            $      2.5
                  Assuming dilution                                     $      3.23    $     2.34            $     2.48

Dividends per share of common stock                                     $       1.5    $     1.42            $      1.3

Weighted-average number of common shares outstanding:
                  Basic                                                      393.5          380.1                 358.6
                  Assuming dilution                                          396.5          385.7                 361.7

                                                                         FPL GROUP, INC.
                                                              CONSOLIDATED BALANCE SHEETS
                                                                                                    Years Ended December 31,

PROPERTY, PLANT AND EQUIPMENT                                                               2,006               2,005             2004
  Electric utility plant in service and other property                             $       34,071       $      31,844           29,721

  Nuclear fuel                                                                               688                  520              504

  Construction work in progress                                                             1,393                 945            1,495

  Less accumulated depreciation and amortization                                           11,653              10,888          (10,494)

    Total property, plant and equipment - net                                              24,499              22,421           21,226


  Cash and cash equivalents                                                                  620                  530              225

  Customer receivables, net of allowances of $32 and $34, respectively                      1,279               1,064              785

  Other receivables, net of allowances of $8 and $9, respectively                            377                  366              259

  Materials, supplies and fossil fuel inventory - at average cost                            785                  567              394

  Regulatory assets:

     Deferred clause and franchise expenses                                                  167                  795              230

     Storm reserve deficiency                                                                106                  156              163

     Derivatives                                                                             921                     -                9

     Other                                                                                     3                    7                 -

  Derivatives                                                                                376                1,074              110

  Other                                                                                      365                  428              352

    Total current assets                                                                    4,999               4,987            2,527


  Nuclear decommissioning reserve funds                                                     2,824               2,401            2,271

  Pension plan assets - net                                                                 1,608                 849              740

  Other investments                                                                          533                  474

  Regulatory assets:

     Storm reserve deficiency                                                                762                  957              373

     Deferred clause expenses                                                                   -                 307                 -

     Unamortized loss on reacquired debt                                                      39                   42                45

     Litigation Settlement                                                                                                           45

     Other                                                                                    80                   37                38

  Other                                                                                      647                  515            1,068

    Total other assets                                                                      6,493               5,582            4,580
TOTAL ASSETS                                                                       $       35,991              32,990           28,333


  Commercial paper                                                    1,097    1,159     492

  Current maturities of long-term debt                                1,645    1,404    1,225

  Accounts payable                                                    1,060    1,245     762

  Customer deposits                                                    510      433      394

  Margin cash deposits                                                  35      393          5

  Accrued interest and taxes                                           302      253      227

  Regulatory liabilities:

     Deferred clause and franchise revenues                             37       32         30

     Derivatives                                                          -     757          -

     Pension                                                            17         -         -

  Derivatives                                                         1,144     463      118

  Other                                                                646     1,128     995

    Total current liabilities                                         6,493    7,267    4,248


  Asset retirement obligations                                        1,820    1,685    2,207

  Accumulated deferred income taxes                                   3,432    3,052    2,685

  Regulatory liabilities:

     Accrued asset removal costs                                      2,044    2,033    2,012

     Asset retirement obligation regulatory expense difference         868      786      266

     Pension                                                           531         -        81

     Other                                                             209      256      106

  Other                                                               1,073    1,311    1,164

    Total other liabilities and deferred credits                      9,977    9,123    8,521

TOTAL CAPITALIZATION AND LIABILITIES                             $   35,991   32,990   28,333

                                                                           FPL GROUP, INC.
                                                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                           Years Ended December 31,
                                                                                                   2006              2005                   2004
            Net income                                                                       $    1,281        $      901             $      896
            Adjustments to reconcile net income to net cash provided by (used in)
            operating activities:
                          Depreciation and amortization                                           1,143              1,242                 1,153
                           Nuclear fuel amortization                                                127                 99                    93
                           Impairment and restructuring charges                                     105                  -                    33

                           Recoverable storm-related costs of FPL                                 (364)              (659)                 (627)
                           Amortization of storm reserve deficiency                                 151               155                       -
                           Unrealized (gains) losses on marked to market energy contracts         (173)               191                     25

                           Deferred income taxes                                                    393               343                    433
                           Cost recovery clauses and franchise fees                                 940              (825)                   144
                           Change in prepaid option premiums                                        (66)              (57)                    21
                           Equity in earnings of equity method investees                          (181)              (124)                   (96)
                           Distributions of earnings from equity method investees                   104                 86                    83

                           Changes in operating assets and liabilities:
                                         Customer receivables                                     (215)              (225)                    23
                                         Other receivables                                           62               (64)                    16
                                         Material, supplies and fossil fuel inventory             (203)              (173)                    29

                                         Other current assets                                         8                (9)                   (10)
                                         Other assets                                             (142)               (47)                   (88)
                                         Accounts payable                                         (202)               346                    220
                                         Customer deposits                                           76                 32                    37
                                         Margin cash deposits                                     (546)               387                      5
                                         Income taxes                                               (46)              (51)                   108
                                         Interest and other taxes                                    49                 29                    (2)
                                         Other current liabilities                                   50               (95)                    80
                                         Other liabilities                                           32               (53)                   (48)
                           Other - net                                                              115               118                    122
     Net cash provided by operating activities                                                    2,498              1,547                 2,650

  Capital expenditures of FPL                                                                    (1,763)           (1,616)                (1,394)

  Independent power investments                                                                  (1,701)             (815)                 (476)
  Nuclear fuel purchases                                                                          (212)              (102)                 (141)
  Other capital expenditures                                                                        (63)              (13)                    (6)
  Sale of independent power investments                                                              20                 69                    93
  Loan repayments and capital distributions from equity method investees                               -              199                      9

   Proceeds from sale of securities in nuclear decommissioning and storm funds              3,135         2,837         2,311

   Purchases of securities in nuclear decommississioning and storm funds                   (3,217)       (2,956)       (2,220)
   Proceeds from sale of other securities                                                      96           100            30
   Purchases of other securities                                                            (109)         (112)           (45)
   Sale of Olympus Communications, L.P. note receivable                                          -             -          126
   Funding of secured loan                                                                       -          (43)        (128)
   Repayment of secured loan                                                                     -          218              -
   Proceeds from termination and sale of leveraged leases                                        -           58              -
   Other - net                                                                                  7            11           (31)
      Net cash used in investing activities                                                (3,807)       (2,165)       (1,872)

   Issuances of long-term debt                                                              3,408         1,391           569

   Retirements of long-term debt and FPL preferred stock                                   (1,665)       (1,220)        (432)
   Proceeds from purchased Corporate Units                                                    210              -             -
   Payments to terminate Corporate Units                                                    (258)              -             -
   Net change in short-term debt                                                              (62)          667         (423)
   Issuances of common stock                                                                  333           639           110
   Dividends on common stock                                                                (593)         (544)         (467)
   Other - net                                                                                 26           (10)          (39)
     Net cash provided by (used in) financing activities                                    1,399           923         (682)

Net increase in cash and cash equivalents                                                      90           305            96
Cash and cash equivalents at beginning of year                                                530           225           129

Cash and cash equivalents at end of year                                               $      620    $      530    $      225

  Cash paid for interest (net of amount capitalized)                                   $      648    $      543    $      460
  Cash paid (received) for income taxes - net                                          $       30    $        8    $     (254

  Issuance of common stock and conversion of options and warrants in connection with

    the acquisition of Gexa Corp.                                                      $         -   $       74    $         -


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