Standard&Poor's views the rate case settlement between Florida Power&Light Co. (a subsidiary of FPL Group Inc. (FPL; A/Negative/--)) and The Office of Public Counsel as negative for credit, because it reduces FPL's cash flow. The settlement requires a $250 million reduction in retail rates through 2005. The agreement provides regulatory certainty through 2005, continues incentive-based revenue sharing, and allows the company to request a change in base rates should ROE drop below 10%, which Standard&Poor's views as providing balance to the loss of cash flow. However, FPL's outlook will remain negative pending a full review of the credit implications associated with the agreement. Additional pressure is added to FPL's credit because FPL intends to
