Question-and-Answer Session
Operator
(Operator Instructions) We’ll hear first from Greg Gordon of Citigroup.
Greg Gordon - Citigroup
Thank you. A couple questions. First, you’re reiterating your earnings guidance with a bias towards the high end of the range despite the fact that you’re charging off the costs of the storm damage that you weren’t allowed to recover.
Moray Dewhurst
That’s correct.
Greg Gordon - Citigroup
Can you sort of site the areas, either in FPL or FPL Energy that are sort of indirectly making up the difference?
Moray Dewhurst
Greg, it’s pretty much entirely due to FPL Energy so absent the $0.07 hit from the PSC decision, we would expect FPL to come for the full year, you know, roughly in line with our original expectations.
So the difference is all coming on the FPL Energy side and it’s a combination of things. Really, the existing portfolio has performed even better than we had anticipated and that’s really been true both from a commercial perspective and an operating perspective. We are doing extremely well on the new wind development and getting things into service. So it’s just pretty much the business is hitting on all cylinders.
Greg Gordon - Citigroup
With regard to wind development, we’ve seen a lot of cost escalation for basic materials. When we look at the fact that it’s a good thing that you’ve got more opportunities to build wind turbines, how does that factor into our Capex budget? Should we expect the Capex budget to rise here just because of, not because of necessarily, only because of higher number of projects but is the – what are you looking at in terms of the cost per megawatt at this point?
Moray Dewhurst
There’s no question that the cost of KW installed has gone up. You know, a few years ago we would be thinking about an average of $1,000 per KW and nowadays we’re probably thinking more of $1,300, $1,400, depending upon where it is. You know, obviously it’s cheaper if it’s a nice flat mesa that you’re building the thing than if it’s a crumpled ridge line. So, you know, that’s factored into the economics. So you’re right that the Capex gets driven both by the volume and the rate effect.
Now offsetting that, of course, is the basic market environment for wind projects has also improved at the same time so, you know, the net is really, we think, very positive for the business, but certainly the cost of KW has gone up some.
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