compound annual rate of 7 percent for the 10 years ended Dec. 31, 2011, compared to a 4.9 percent rate for the S&P 500 Electric Utilities Index. Over the 10 years ended Dec. 31, 2011, our total shareholder return was 209 percent, compared to 129 percent for the S&P 500 Electric Utilities Index and 33 percent for the S&P 500 Index. In February 2012, we announced an increase in our quarterly dividend to 60 cents per share, which is consistent with the current expectation of the Board of Directors to target a payout ratio, expressed relative to adjusted earnings, of about 55 percent in 2014. We remain focused on building long- term value for our shareholders by investing in energy technologies that are designed to provide affordable and reliable power for our customers for years to come. 

## Florida Power & Light Company 

For the full year 2011, FPL reported net income of $1.07 billion, or $2.55 per share, compared with $945 million, or $2.29 per share, in 2010. The main drivers of this earnings growth were our investments in clean and efficient power generation. These investments provide significant benefits for our customers, who have electric bills that are the lowest in Florida and 25 percent lower than the national average. Our customers enjoy reliability that ranks as the best in the state among investor-owned utilities as well as award-winning customer service. FPL customers also benefit from an emissions profile that is among the best in the industry. 

During 2011, FPL deployed more than $3 billion in capital on projects providing significant customer benefits. In addition to Cape Canaveral, other major capital investments also moved forward last year. Unit 3 at our West County Energy Center in Palm Beach County came into service on time and under budget. Local officials and residents from Riviera Beach, also in Palm Beach County, enjoyed witnessing firsthand the demolition of the old Riviera plant, paving the way for another modernization. We began to pursue a third modernization project, Port Everglades in Broward County, which is also expected to save customers hundreds of millions of dollars over and above the cost of the plant. 

Operationally, FPL’s fossil fuel fleet set a new record for its fuel efficiency in 2011, bringing its systemwide heat rate − a key measure of power plant efficiency −  down to 7,803 British thermal units (BTU) per kilowatt-hour. The average fossil heat rate for the electric utility industry was 10,045 BTUs per kilowatt-hour for 2010, the most recent year for which data is available. Since 2001, FPL’s fossil heat rate has improved by 19 percent, and greater fuel efficiency has saved our customers more than $5.5 billion in fuel costs, including more than $650 million in 2011 alone. As fuel costs for our customers have averaged nearly $5 billion per year over the five years ended in 2011, FPL’s fuel efficiency since 2001 has saved our customers the equivalent of approximately one year’s supply of fuel. 

FPL also had a very good year in keeping operations and maintenance (O&M) costs low, and reliability high. FPL’s O&M expenses for all of 2011 were 1.64 cents per retail kilowatt-hour sales, compared with the latest available industry average of 2.28 cents per retail kilowatt-hour sales. FPL’s service reliability, as measured by the System Average Interruption Duration Index (SAIDI), was the best among Florida investor-owned utilities during the five years ended in 2011. 

We are proud of the affordable and reliable electric power FPL delivered to our 4.6 million customers in 2011, and we believe our investments will continue to benefit our customers going forward. Through 2013, we expect to invest an average of approximately $3 billion per year in generation and infrastructure projects that benefit our customers, including new, clean, efficient power generation. 

In part to help pay for these investments and to maintain our superior performance for customers, FPL has filed with the Florida Public Service Commission a request for an increase, currently estimated at $6.97 per month, or about 23 cents per day, on the base portion of a typical residential bill beginning in 2013. We know there is never a good time to ask for a rate increase. Yet because of projected fuel savings resulting from investments in more efficient power generation, as well as lower fuel prices and 

