Q4 2021 NRG Energy Inc Earnings Call
Good day, and thank you for standing by welcome to the NRG energy incorporated fourth quarter and full year 2021 earnings call.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.
If you require assistance during the conference. Please press Star Zero I would now like to hand, the conference over to your speaker today, Kevin Cole head of Investor Relations.
Great. Thank you Amy good morning, and welcome to NRG Energy's fourth quarter 2021 earnings call. This morning's call is being broadcast live over the phone and via webcast, which can be located in the investors section of our website at www Dot NRG dot com under presentations and webcast.
Please note that today's discussion may contain forward looking statements, which are based on assumptions that we believe to be reasonable as of this date actual results may differ materially.
We urge everyone to review the Safe Harbor in today's presentation as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures for information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. Please refer to.
Today's presentation and with that I'll now turn the call over to Marcia Gutierrez, Nrg's, President and CEO . Thank.
Thank you Kevin Good morning, everyone and thank you for your interest in NRG I'm.
I'm joined this morning by Albert before narrow Chief Financial Officer also on the call and available for questions. We have at least heard killinger head of home retail and Chris Moser head of operations.
This is my 20 <unk> earnings call as CEO and I wanted to start with a quick look back on what we have achieved.
Over the past six years, we have transformed our company from a complex industrial story.
Into one that is much simpler and focus on our core strengths.
Along the way we have made significant progress in our strategy to get closer to the customer optimize our generation portfolio to serve those customers strengthened the financial health of our company and created significant shareholder value.
We now turn to the next phase in our evolution of growing our business and realizing the potential around the customer.
I am excited about the future and look forward to sharing our progress with all of you in the months to come.
Moving onto the three key messages of today's presentation on slide four.
Our business delivered results in line with the 2021 guidance.
Secondly, navigating supply chain constraints and volatile market conditions.
Further validating the strength and durability of our model.
Next I am pleased to report that we have successfully executed our winter storm jewelry mitigation plan and we are increasing 2022 capital available for allocation.
Finally, we continue to advance our five year strategic roadmap in moving closer to the customer and our commitment to being excellent stewards of shareholder capital.
Yeah.
The 'twenty, one financial and operational results are on slide five.
Beginning with our scorecard.
We executed on all our priorities.
I want to thank all the employees at NRG for maintaining focus during a challenging year, which included a global pandemic winter storm Yuri asset sales and the integration of direct energy.
Importantly.
We were able to operate through these conditions, while setting another record for the state.
This is the fourth straight year, we have set a new company safety record.
And incredible accomplishment worthy of recognition.
Direct energy integration remains ongoing and we are on track to achieve our run rate synergies.
During the year, we outperform our initial expectations, achieving $175 million versus our original expectation of $135 million.
This integration is led by the same team and supported by the same governance of the transformation plan, which gives me the utmost confidence in our ability to reach if not exceed our run rate targets.
Following multiple years of right sizing our business.
2021 marked a significant milestone in capitalizing our best in class consumer services platform.
We added roughly 3 million customers to our portfolio and expanded the scale and scope of home.
Sure and natural gas services.
Also during the year, we monetize four eight gigawatts of noncore fossil assets in our east and west regions.
And now the retirement of one six gigawatts of coal assets in the east.
And signed an additional 800 megawatts of renewables ppas.
Next.
We continue to adhere to our disciplined capital allocation principles.
In late 2021, we announced a $1 billion share repurchase program to be completed throughout 2022.
We also increased our dividend per share 8%.
In line with our stated dividend growth rate of 7% to 9%.
In June we held our Investor day, where we revealed our five year strategic road map to create significant stakeholder value by moving closer to the customer while also returning significant capital to our shareholders.
Moving to the right hand side of the slide for the financial results.
We delivered $433 million of adjusted EBITDA for the fourth quarter, 31% higher than the prior year.
This brings our full year results to $242 billion of adjusted EBITDA.
21% higher than the prior year.
Similarly, driven by the acquisition of direct energy.
Excluding the impact from winter storm Yuri.
Finally, we are maintaining our 2022, adjusted EBITDA and free cash flow before growth guidance ranges.
We are seeing promising results in mitigating winter supply chain constraints.
I look forward to updating you next quarter.
As a result of our winter storm Yuri mitigation plan, we are increasing our 2022 capital available for allocation by $212 million, which Alberto will discuss in more detail.
Now.
Turning to slide six for a brief update on the aircraft market.
Following winter storm Yuri it was clear that market reforms from wellhead to light bulb, where necessary to improve grid resilience.
In the months following the events, we actively engage in discussions with legislators regulators and other market participants.
To introduce comprehensive and competitive solutions across the entire system to address areas that Phil.
In 2021.
<unk> made significant progress in hardening, the electric grid through power plant and transmission Weatherization standards.
<unk> market design with changes in scarcity pricing.
Larry reforms and consumer protection improvements.
In 2022, we expect takes us to expand its focus on hardening the natural gas infrastructure and implementation of phase two of power reforms, which includes resource adequacy by establishing a load side reserve requirement.
Onsite fuel security.
Okay.
I want to commend the Texas Governor's office legislature PUC T in ERCOT for taking Swift action and <unk>.
Accelerating effective reforms that would normally take years and addressing them within months.
While our work is not done yet.
We believe Texas performance through a tough winter is a strong reflection of effective actions and policies.
Moving to the right hand side of the slide for an update on the financial impact from winter storm jewelry.
I am pleased to announce that we have successfully executed our mitigation strategy.
Today, we're updating the net financial impact from the storm to $380 million from our prior expected range of $500 million to $700 million.
Now.
Turning to slide seven.
It is important that we recognize our ESG principles and highlight a few of our 2021 accomplishments.
We created a sustainable framework with a strong foundation based on our corporate values and our sustainability program that brings all stakeholders working together with a common purpose.
From our customers to our employees to our operations.
Our sustainability program consistently upholds, our high standards of accountability and transparency across the key pillars of environmental leadership, social focus and strong governance.
I want to start with an update on our environmental leadership.
As you know, we committed to a stranger and de Carbonization path in line with the one five degree Celsius scenario.
Which has been certified by the science based targets initiative.
That means reducing our carbon emissions, 50% by 2025 and net zero by 2050.
As you can see on the right hand side of the slide since 2014, we have reduced our carbon emissions by 44% and.
And we have a clear line of sight to our 2025 goal.
So just to put this in perspective.
This is equivalent to taking $5 8 million passenger vehicles off the road for a year.
In addition.
As advocates for the electrification of transportation.
In 2021, we set a goal to electrify a 100% of our light duty vehicle fleet by 2030.
Further demonstrating our commitment to progress.
All of these efforts have resulted in the diversification of our revenue streams to cleaner solutions.
Since 2014.
Coal generation as a percentage of revenues has decreased by 80% and <unk>.
Now represents less than 5% of our total revenues.
If you recall.
Not long ago called made up almost one third of our revenues.
We still have much work to do.
But I am confident we are on the right track and have the right team to succeed on our goals.
On the social front.
Our engagement with our employees communities and customers continues to advance.
As I mentioned in my opening remarks in 2021, we once again achieved top decile employee safety performance.
We also implemented employee programs to support financial physical and mental well being.
Our diversity equity and inclusion value continues to shape, our culture and inform our decision, making as we strive to unlock the power of the EI.
A way to better understand our customers and the communities we serve.
While also making our team's stronger.
In our communities, we supported more than 750 nonprofit organizations through our philanthropic arm positive NRG.
We also focused our volunteer efforts on fuel security through virtual and in person food donations and packaging meals for those in need.
And for our customers.
We are always innovating.
We have been a leader in facilitating renewable energy for our residential customers as well as providing a path for small and medium sized businesses to participate in the sustainable energy transition.
And as we all know more than ever the form is the center of our lives.
So we continue to advocate for individual customers choice in the products and services that best suit their values and lifestyle delivered with reliability and affordability.
Finally.
Regarding our strong governance.
I am, particularly proud of our transparency and reporting and accountability on our goals.
In just these last year, we released our 11th annual sustainability report, our fifth reporting compliance with Sotheby's standards.
Im 12, CVP or climate disclosure project question there.
We also formally issue our first DC of the task force on climate related financial disclosure as a way to improve and ensure our stakeholders have the right tools to make informed decisions and track our progress.
In 2021, we issued our second sustainability linked bond.
If you recall, we were the first company in North America to do it back in 2020.
These bonds tie our financing cost to achieving our carbon reduction goals.
As you can see.
Our culture of sustainability is ingrained in every part of our organization.
And we continue to play an integral part in our transition to a consumer services company.
I am looking forward to sharing more details of our ESG journey with you later this spring in our 2021 sustainability report.
Now.
I want to provide you an update on our growth program.
As I shared with you during Investor day.
Our focus over 2021 and 'twenty two is twofold.
Optimizing the core.
And setting the stage for growing the core.
In terms of optimizing the four.
We continue to remain on track to integrate direct energy into our business and.
And have been successful in optimizing our generation portfolio to support our customer facing business.
We are also making solid progress on our efforts around growing the natural gas and dual fuel customer portfolio.
Let me give you a couple of specific examples for bolt.
One we are seeing early success in achieving our customer count by leveraging our existing and longstanding partnerships with big Big box retailers to sell natural gas and expand our geographic footprint.
Second we are advancing our digital experience so customers can easily enroll in both electricity and natural gas plants.
These efforts are relatively new.
I will share more details as we make progress later in the year.
Now moving on to growing the core.
You will remember that our plan is focused in two areas.
Energy services.
And home services.
How is the picture on the left really gives you a sense of the various customer solutions that are on our growth roadmap.
Some of these solutions.
Are already operational such as power natural gas and storage.
While others, such as solar and EV are in the pilot for the development phase.
The table on the right slide.
Provides the status on each of these targeted customer solutions.
The important key takeaway.
Is that we are not starting our growth program from zero.
We have meaningful existing capabilities to deliver many of our targeted customer solutions and.
And we are leveraging those capabilities as we speak.
For those customer solutions that are not currently operational.
We will use 2022 as a staging period for us to prudently test and learn optum.
Optimize our participation model and refine the go to market approach.
Such that when we get to 2023.
We'll have confidence in deploying capital against that growth.
Moving to slide nine.
As you can see our capital allocation on track record is cycle appropriate.
And directly in line with our roadmap to stabilize rightsize redefined and now enhance our company.
During 2016 and 17, our primary focus was simplifying and strengthening the balance sheet.
In 2018, and 19 with the balance sheet significantly improved we were able to shift to returning capital to shareholders and growth.
In 2020 one.
A direct acquisition more of our capital is shifted towards growth and debt reduction.
Now moving to 2022, we turn our focus towards achieving our per share growth objectives.
Growing into our investment grade credit metrics through the full realization of direct energy run rate earnings.
And our growth program.
And like I said earlier.
2022 remains a staging gear for girls.
To provide significant excess cash to be returned through dividends and share repurchases.
I will provide you an update on the remaining unallocated cash throughout the year.
So with that I will pass it over to Alberto for the financial review.
Thank you Mauricio.
I'll now turn to slide 11 for a review of the full year results.
We finished the year, achieving our 2021, adjusted EBITDA and free cash flow before growth targets in line with guidance.
Realizing more than $2 4 billion, and adjusted EBITDA, and $1 5 billion, including cash flow before growth.
Adjusted EBITDA reflects a $419 million increase compared to 2020.
Primarily due to the acquisition of direct energy in January of 2021.
This is despite several unexpected headwinds, including the extended forces.
Trio flexible unit one power plant.
Additional play.
And the unplanned outages in Texas.
And increased ancillary charges.
The results includes the achievement of $175 million of direct energy senior fees in line with the most recent expectations and the Nexus of the initial 2021 target at $155 million.
Free cash flow before growth walls 1 billion 512.
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[noise].
22 million ahead of the midpoint of 2021 guidance for.
Primarily to lower capital expenditures.
Moving into <unk> 2021 was a productive year in moving closer to the customer.
We closed on the direct energy acquisition and successfully started the integration costs.
Next in December we closed the sale of $4 eight gigawatt of noncore east and west wholesale.
Wholesale generation.
We also reduced our debt by $755 million and farther lead our financial performance to our climate goals, while reducing our interest expenses through refinancing callable debt totaled $1 1 billion sustainability linked to Paul.
Moving to the update on the winter storm impact.
We have significantly improved the net impact from the store.
You may recall that at the end of Q3.
Our expectation for the Michigan.
The range of $370 million to $570 million with the net impact of approximately $500 million to $700 million.
Today, we are reducing the net impact to 380 million as a result of increased the mitigation of $798 million as a result of the securitization as well as effective management of customer bad debt exposure.
So I'll make GAAP income statement perspective, we fully recognize these making against the 2021 through a reduction in cost of goods sold.
The cash impact however was different and it is highlighted on the bottom left of slide 11.
First you may recall that could be mitigated loss includes bill credits to C&I customers and other items, which are going to materialize as our cash flow in 2022.
At the end of December .
Italy amount was equal to $97 million.
Second.
Denying the 696 million of proceeds from the securitization was fully accrued in 2021 will be received in Q2 2022.
Overall, the cash impact of jewelry in 2021.
Therefore equal towards make other pool of 90.
$979 million offset by a cash inflow in 2022 of 599 million.
Moving to the right side of the slide we are maintaining our 2022 adjusted EBITDA of $1 95 billion to $2 25 billion.
And free cash flow before growth of 114 billion to $1 44 billion guidance range.
As Mauricio said during the scripted remarks, we are seeing promising results in mitigating our previously discussed winter supply chain constraints and we look forward to the.
Next quarter.
Quarter following the winter season.
Since the last earnings call in December we announced and immediately began executing our $1 billion share repurchase program.
We executed $120 million repo chase to equal changes to date with the 39 million in December .
One the median yesterday.
The remaining program will be completed.
2022.
Finally, our direct energy integration and synergy plan.
<unk> squarely on track.
I will turn now to slide 12 for a brief update on our 2021 with capital allocation.
Moving left to right.
Realized free cash flow before growth in 2021 is $22 million above the midpoint of the guidance.
Next we are showing our actual increase in cash of 41 million.
Of the 150 million previously planned.
Next during the fourth quarter, we finalized the purchase price adjustments with centrica towards the <unk> acquisition.
Nothing in a $25 million increase for the prior earnings call.
Next the weakest for beauty as mentioned before the 2021 cash outflow was 979 million.
While we expect to receive in its amount totaled 599 in 2022.
So in the next slide.
Next we completed another 500 million of debt reduction during the quarter, bringing the full year total to $755 million using a portion of the 623 million of net proceeds received.
But from the sale of the four either you go that will generally spinoffs.
Lastly, as mentioned before 48 million were utilized for share repurchases, including $39 million towards the $1 billion share repurchase program.
The capital available for that location at the end of 2021 has been therefore full year outlook.
Turning to slide 13, and again working lessons there at the.
<unk> of the midpoint of our 2022 free cash flow guidance, we the net cash expect pizza from the proceeds of the securitization.
We'll provide almost $1 9 billion of cash to be deployed in 2022.
Moving to the right, we expect to increase the medium cash to $650 million pay approximately $359 million in dividend.
<unk> completed the remaining $961 million of the share repurchases.
Please note that the dividend amount is based on current shares outstanding and we will provide updates on future revenue pools as we progress throughout the execution of the share repurchase program.
Next.
Investments column, we are committed to 170 million at this point, which includes $70 million for the continuing integration of <unk> business 50 million for its mobile acquisitions.
$95 million to prepare the land has been seeing that for an eventual.
<unk>.
And the $25 million in other smaller projects.
Lastly, we expect to add $310 million of remaining capital available for allocation seem to be allocated in 2020.
Now, let's turn to slide 14, we finished 2021 <unk> net debt to EBITDA of approximately three two times after adjusting for noncash items and removing the EBITDA from the recent past.
<unk>.
Our long term financial strategies and remains unchanged and we are committed to a strong balance sheet by continued to target investment grade credit metrics of two five to 275.
Primarily through full realization of the directors' tenure geographically synergies angle.
We will continue to provide updates on our path to investment grade metrics as we execute these initiatives.
Back to you.
Moving to our 2022 priorities on expectations on slide 16.
First we will always be focused on the blocking and tackling of delivering on our financial operational and ESG commitments.
Hearing to our capital allocation principles.
Beyond this we are focusing our efforts in two key areas.
To provide additional disclosure to help better model our business.
And provide greater detail around our growth strategy.
First of all our disclosures following the direct energy acquisition and our move towards consumers. We're working on a comprehensive rework that will enhance your ability to model the value of the customer.
In the meantime, I want to start with a new hedging methodologies slide in the appendix of today's presentation, which should help shed light on our rigorous risk management and supply optimization program.
<unk> stabilized our business.
On growth as I discussed earlier, we will be transparent in the process and I look forward to updating you on these throughout the year.
Finally, while the 2021 was a challenging year.
Today, our company is stronger and more promising than ever before.
I am very excited about 2022, and the significant opportunities we have to create shareholder value.
So with that I want to thank you for your time and interest in NRG, Amy We're now ready to open the line for questions.
Yeah.
Thank you and as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Your first question is from Jonathan Arnold at vertical research.
Hi, good morning, guys.
Hey, Jonathan good morning.
Marissa Thank you for the mentioned.
<unk>.
New disclosures.
Made I was curious if you can give us some sort of gauge of when we might expect to see those is that kind of.
In mid year next quarter.
Later in the year, just some framework there.
Yes, Jonathan so.
I hope that you find useful the new hedging disclosures.
And you know obviously, Kevin will be available if you have any questions. Because this is a new new information with respect to the the.
The disclosures to help better model the value of the customer my.
My expectation is that it will be done sometime.
Either later in the year or beginning of next year.
We are working hard to ensure that our <unk>.
Key performance indicators are in line with our financial disclosure Sam you know, we want to make sure that they are useful as opposed to rushing and giving you something mid year that you'll have to reconcile you know before and after so.
These type of these type of changes you know I appreciate there are always better.
At the end of the year. So if you start with the with a fresh slate so I would.
I was saying that it would be you know we're going to try to time. It when we are ready. When we believe is you know are going to be very useful and when we don't make you you know do a lot of work in reconciling the before and after so I hope that these provide you some idea when we're planning to Louise yes.
Yes, no very very helpful. Thank you Mauricio.
On the one thing I noticed was that Youll now talking about growing into the credit metrics I think before you had said you anticipated being there by the end of 2023.
Is that a change or just.
Over reading the slide.
Yeah. So I mean, our commitment continues to be up two 5% to 75, obviously, we need to stay flexible as you can appreciate there is a lot of things moving around this year I mean, it's a it continues to be a transition year because of the.
The growth program that we have the optimization that we have so our goal is to grow into the into the metrics, but obviously you know will you know we will you know we have to remain flexible in this environment.
And just Jonathan before I forget I wanted to make sure. The additional hedging disclosures are available now and they are in the appendix of the presentation. Okay. Just to make sure that you know that.
Crystal clear.
Actually I had seen those in.
Maybe I'll just ask a quick one on <unk>.
The.
Yeah.
Obviously, you're giving a look that shows that your.
I guess, 15% over hedged effectively all covered.
How you would describe it in Arca can you give us a little bit of insight into.
How does that look by season.
So the skewed winter to summer.
And I think beyond just kind of annual look.
Yes, Jonathan So obviously you know we you know we feel comfortable providing do the yearly disclosures why don't you start getting into.
Into the into the seasons you know it is competitive sensitive and you know in conversations with our commercial team.
We wanted to make sure that we just provided this level of granularity.
Make sure that we don't compromise our commercial activities I think that the two big takeaways from my perspective on the hedging slide is.
Number one we're pretty well hedged against our expected loss and then number two it is a combination of electricity.
Electricity that we generate plus market purchases and our commercial team is responsible for optimizing between the two so you know.
That to me is the big takeaway on that slide and we wanted to just show how much our market purchases versus electric generation.
One thing to note. These this is just the economic generation in the in the money hedges. So you know you should assume also that we got some flex capacity that is out of the money both on the generation that we own and some of the tolls and auctions that we buy from the market itself.
Just keep that in mind, great. Thank you very much for all the time guys.
Thank you John .
Your next question is from Michael Lapidus.
Goldman Sachs.
Guys. Thank you for taking my question, if I look at <unk> over the years when you've done M&A.
Often we get a year removed from the M&A, sometimes a little more sometimes a little less.
I started talking about outside the synergy savings.
Do you think now that we're a little more than a year removed from the direct energy acquisition and a new it's been a crazy year with CRE and everything else, whether how do you assess whether theres potential upside either on the broader cost management or cost management and synergy savings related to direct.
Yes, Michael good morning.
So.
Obviously, the integration of direct energy was a three year integration as you remember Michael and I am just very pleased with the performance of the team and achieving the synergies we actually increase the synergies that we achieved in our first year as we enter into the second year I will tell you. This I am incredibly.
Comparable but we're going to achieve them.
But being mindful that this was a three year program and we're literally just entering the second year I will assess the.
The potential of additional synergies.
What you should expect these throughout the year you know we will give you an update on our performance there, but you know you know.
Feel I remain very confident that we're going to achieve our numbers then.
And we will give you an update if you know throughout the year, if we decide to as they say two <unk>.
Matt.
Got it and then one quick follow up if I just look at the balance sheet.
And this is going to get a little wonky, but current assets significantly higher.
Meaning if I look at things like accounts receivable and accounts payable was spread between accounts receivable and accounts payable is about $1 billion a positive <unk>.
Ah is greater than AP and the current asset for derivatives is significantly greater than the current liability.
Those would imply that theres significant working capital cash inflows coming but when I look at your free cash flow guidance I don't think thats embedded in my just misreading that or are there other off.
Things that significantly offset those items.
Okay, Michael I will turn that over to Alberto and you know obviously you know if you said I mean I think this was a little you know.
Technical and we can always follow up with you but.
Is there something that you want out here I just want to point you to a couple of things Michael first of all did that EBIT resolve usually on the derivative value is a combination of the addition of the gas business and increasing the gas price. So that passed in this case, particularly on the asset side increases the value of that.
Regarding the comment on current and past its please consider that but we have also.
Included in the kind of investment that is the.
The proceeds from the securitization and so on but that say.
Having said that obviously, we have acquired and other business.
<unk> has an increase.
This increased our needs in terms of working capital we have put the debt under full <unk>.
Rest assured that there are other initiatives too.
Keep that under control that would be taken so.
Overall, we are very confident about the projections that we have for you and Michael just to.
To remind you.
Working capital was an area of focus during the transformation and we were very successful on that we kind of crowd the roadmap on how to Optum.
Optimize our working capital and we're going to we are applying all of those lessons learned through the integration of direct energy.
Got it. Thank you guys much appreciated and I'll follow up thank you Michael.
Your next question is from Paul Zimbardo Nathan of America.
Hi, good morning.
Hey, good morning, Paul.
I wanted to check in on kind of your achievement on the customer growth strategy and just any insights you could share on customer counts given some of the commodity volatility and if youre seeing any change in attrition recently.
I'll pass it over to Alicia for the attrition, but I would say it's remained pretty constant, but I think that's what we experienced during the.
Last year, you know the retention numbers were really good so at least something that you want to provide a little color here, yes. Thanks for the question.
We definitely achieved our customer count commitments for the year than what we had planned to achieve we actually beat it by a bit but.
As Joe mentioned retention was extremely strong.
One of our best years ever and that is a product of some of the efforts over the last five years of increasing the tools and techniques, we use a lot.
Averaging the data that we have to make sure we're putting the right renewal offers in front of customers.
That will entice them to stay with us.
Did have.
Some opportunity to recovery in our sales channels as well.
Covid or face to face channels were set back quite a bit and so we saw some improvements there and then finally on the integration front.
We met or beat our expectations for retaining those customers as you all know and have seen from us over the years as we acquire customers, whether it's through M&A or small Buck you do see some attrition in the year or two following that and as long as we keep meeting or beating what we expect from that.
We're gonna be really plays on.
Super proud of the work the team has done from the frontline folks either face to face or in our call centers and the digital teams for what they've done and I'm excited about the potential for 'twenty two and beyond.
Okay, that's great to hear.
And then a separate unrelated question I know you all have been very proactive with some of the strategic asset sales as you've repositioned. The business do you see more opportunities to continue that trend to become more capital light and then particular yard Texas on that theme.
Yes, I mean so.
You know, we completed a pretty large divestiture in 2021 and the optimization of the portfolio.
It's a focus of ours as you remember on Investor Day presentation, I said that in the growing the core is one of our key strategic priorities. That's going to continue the north star of that is we're going to have assets that better help us serve our customers. So whatever those are.
The core [laughter] theyre, not theyre, not core and we're going to look to optimize not with respect to taxes. You know obviously, we have our you know our capital light renewable PPA strategy that has been you know various.
Very successful you know close to 2.6 Gigawatts.
And.
To continue to focus on that we're constantly in the market. We're bonding rfps basically on a continuous basis, we're going to be very selective on that end.
It already has yielded tremendous.
Value for us.
And that's going to that's going to continue to be a focus now expects us to use you know changing some of the AR market design changes to incentivize responsible generation.
Are definitely looking into that but we have lots of sites that we can you know that we can evaluate opportunities and.
And as we have done in the east I mean, we're going to do it in Texas, obviously, if we find the right partner, we're going to do it but we're going to do it in a way that is a good use of our capital so and so I expect that to continue I know the teams.
Completely focusing in evaluating additional.
Additional opportunities that we have.
It will bring.
No additional supply to serve our customers.
Okay.
Great. Thank you very much.
Great.
Thank you Pablo.
Our final question comes from Angie <unk> of Seaport Global.
Thank you so.
Given what's happening in Europe , and your disclosures on gas hedges is it fair to say that even though there's this wide expansion of the positive gas basis in new England that should not have any negative impact on your gas.
Gas retail margins in 2022.
That's correct.
That's correct and just to perhaps put a little finer point on our natural gas business.
You need to think about it as a logistics business. Okay. We serve.
First of all we don't take any commodity price risk you know like Nymex Henry call.
Most of the you know most of the rates that we have it's around basis, and then within basis as we're serving customers.
Have access to a tremendous network of logistics, you know pipeline capacity LDC.
Relationships, so that network allows us to manage and optimize our basis risk.
You know based on the disclosures that we provided you know we feel very comfortable obviously you know there is always risk can be managed but I feel very comfortable where I sit today on that crew small sir I don't know if there is anything that you want to add.
No I think you hit the high points. Thanks Mircea.
Great and then secondly, I know you are going to be providing an update on <unk>.
On your guidance.
I think on the first quarter call, but just looking at the drivers that you showed us on the fourth quarter call I mean.
It seems like on any issues with coal and toner supplies have settled subsided.
Pallet traces in Texas this winter have been.
So the outage at El Copeland shouldn't be very painful from an EBITDA perspective.
Struggling to see what are the offsets to that that that those mitigating factors to the negatives that you showed us on the year over year change between 'twenty, one 'twenty two EBITDA.
Yes. So if you remember we provided you I think we call it transitory items.
You know on all on all three I think they are very constructive and positive signs that we're going to mitigate them. Obviously, we're just in February so I want to want to wait for the first quarter call but.
Alberto can you just provide a little bit more specificity on where we are on all of these three the three items that we highlighted on the last earnings.
First of all we can confirm that.
With regards to limestone, we still expect that units one it would be.
Background in guest in mid April and the amount of the impact that we had quantified that in $50 million.
Going into our third quarter call is basically confirm.
Let me just also remind you that we have not included in 2022 any reimbursement from insurance company and Gulfport thrombolytic damages.
Business interruption first of all because it is difficult to quantify it normally its a long process to get there, but secondly, because we expect it to happen in 2023.
We are working on it's about the again as I said, it's a long process second regarding the coal supply chain.
We quantified it in $100 million of which 16, Texas and 40 in the in the East as Mauricio said, the so far we have been able to make some progress against that as well.
Confirm.
At this moment the same number and we will update you in Q3.
Regarding the Texas ancillary services, which was an impact of $70 million.
We confirm the numbers and the direction that we've taken which is basically we are pass through.
The increases in price with the exception to the customers with the exception, where we have the fixed rate contracts and these will naturally happen with these contracts will be renewed right and just to I guess put a little finer point on the ancillary services.
The customers that are reopening contracts, we'll be able to pass through these ancillary services.
Think of it the change in law, if you remember.
Angie So you know I think there is an opportunity to.
Are those customers that we couldnt pass it through we will we will in the reopening and then I am just incredibly pleased with the commercial team and how they've been managing the supply chain constraint for Michael.
You know, we're still in the middle of the winter, but so far what they've done a fantastic job and you know we will have an opportunity to provide you additional visibility on quantified that in the in the next earnings call.
Good thank you.
Great. Thank you Angie so with that I want to thank you all for your interest and look forward to updating you on our exciting growth.
<unk> and other you know priorities throughout the year, Thank you and stay safe.
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program.
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