Q2 2019 Earnings Call
My name is northern I'll be facilitating the audio portion of todays interactive broadcast all lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. If you would like to ask US injury. This time seemed good press Star then the number one on your telephone keypad, if youd like to enjoy a question press. The pound key. This event also features streaming audio which allows you to be sensitive show so you'll see see speakers.
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At this time I'd like to try to show over to Dan Eggers, Exelons Senior Vice President of corporate Finance. Please go ahead Sir.
Thank you Laura good morning, everyone and thank you for joining our second quarter 2019 earnings conference call, leading the call today are Chris Frank Exelons, President and Chief Executive Officer, and Joe Nigro, Exelons Chief Financial Officer. They are joined by other members of the actual on senior management team will be available to answer your questions. Following our prepared remarks [laughter], we issued our earnings release. This morning, along with the presentation both of which can be found in the Investor Relations section of Exelons website.
The earnings release, and other matters, which we discussed during today's call will contain forward looking statements and estimates that are subject to various risks and uncertainties actual results could differ from our forward looking statements based on factors and assumptions discussion David trailing comments made during the call.
Please refer todays 8-K, and Exelons other FCC filings for discussions of risk factors and factors that may cause results to differ from management's projections forecasts and expectations. Today's presentation. Also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release reconciliations between the non-GAAP measures and nearest equivalent GAAP measures. We've scheduled 45 minutes for today's call I'll now turn the call over to Chris Crane Exelons CEO .
Thanks, Dan and good morning, everyone and thank you for joining us today before I turn to the financial results for the quarter I'm going to spend a few minutes, providing some key updates on a number of positive developments in our business is over the last three months.
First we continue to move forward on our utility regulatory strategy.
Piling distribution rate cases, and BG comet and Pepco, DC, reflecting our safety and reliability investments across a little service territories.
Additionally, we filed our first multi year rate case.
Pepco Piccolos formula rate transmission right.
Oh. The settlement includes a 10.35% are are we inclusive of a 50 basis point or are we at or.
The Pico made the original filing in 2017, and we expect the final order from FERC and 2020.
Third in June we issued our annual corporate sustainability report marketing, our performance and sustainability goals and priorities. In addition, the benchmarking air emissions report the pound.
Excellent is largest generator of zero.
Admissions energy in the U.S., producing 12% of the nations clean energy also that we have the lowest emissions rate admitting at a rate that is four times less than the next clean is generated.
Fourth the New Jersey to you, but the EU approved Zack payments for the state nuclear units, including our interest in saying we appreciate the state support for the carbon free power produced by these units fit.
We were unable to get legislation done in Pennsylvania in time to reverse the decision to close my this fall. Since then there have been continued discussions on a path forward for the remaining nuclear plants in the state, including consideration of Flint, placing a price on carbon through the regional carbon trading.
Six we are also pleased the Trump administration decide not to impose quotas on uranium which would have jeopardize the continued operation of commercial nuclear reactors in the United States.
And finally last week FERC issued an order directing PJM not to run the capacity auction in August we agree with the purchase decision to delay the auction until the rules are finalized the delay provides PJM in the state policymakers time to adjust to the commissions change.
Before I turn to the financial results I also want to address two matters.
You have raised with us recently.
First we received a number of questions from investors about the impact on our business from a steep decline in power prices. The decline presents a considerable challenge for us, but as you know our hedging disclosures are a point in time estimate.
You have seen them move up and down in the past.
We need to be thoughtful and deliberate about our response if these prices persist.
And we have a variety of levers that we can pull and decisions. We can make if this is the future of energy markets. We're pursuing a number of market reforms addressing the financial challenges many of our plants space.
Against this backdrop I can also again assure you that we will not operate and they are unprofitable or negative free cash flow plans, you've seen us close one of losing plants in the past you should expect that disciplined to continue if reforms are not enacted.
The bottom line is that fundamental market reforms are needed in the United States. If we want to meet the nations clean energy climate goals maintain fuel security and reliable system, we need to sustain and increased electrification preserving.
Significant economic value through good paying jobs and property taxes will continue to work at the state level and the national level with Bert The Congress and the administration to make this happen.
Second we've had we received numerous questions from our investors are belford subpoena, Illinois from the U.S attorneys office, we are cooperating fully and provided all are providing all information requested by the U.S attorneys office, we simply can't comment further on the investigation and we're not going to speculate on whether it may affect legislative efforts in Illinois. This fall.
What we do know above this fall session is there are a number of stakeholders, who want to see clean energy legislation enacted.
Illinois lacks behind other progressive states on clean energy policy, passing the clean energy energy legislation is a priority for many stakeholders include in Illinois, including the citizens utility Board labor the clean jobs coalition in the renewable commute.
These stakeholders want to greatly expand the renewable penetration so the state will be.
Able to achieve the 100% clean energy target by 2000.
Third.
Kathleen and her team are working with stakeholders to help craft legislation legislative package and the four members of the General Assembly on the benefits of this legislation.
It's important to remember that while we are putting a real effort into preserving the value of the generation fleet. Our focus remains on the utilities the bulk of our capital investment in Brooklyn.
Majority of our earnings are coming from the regulated business, where we continue to see great opportunities to invest and grow to the benefit of our customers and communities now I'll turn to the financial results on slide five.
We had a good quarter delivering earnings at midpoint range of our guidance.
On a GAAP basis, we earned 50 cents per share versus 56 last year on a non-GAAP basis. We earned 60 per share versus 71 last year, Joe will cover these drivers in his remarks.
Turning to slide six operational performance of the utility was mixed during the quarter. We continued performance top quartile levels of costs for reliability and customer operations metrics, what our safety performance has slipped safety is our highest priority and we are focused on ways to improve our safety culture and performance.
Outage frequency and outage duration performances in the top quartile for three of our four utilities would comment performing in the top decile.
So on the customer operation side, all of our utilities performed to top quartile for service level and call abandonment rate.
Our relationship with our customers is improving due to the investments, we're making to improve reliability and the customer experience.
This can be seen in our customer satisfaction scores and then the recent JD power electrical.
Residential customer satisfaction ratings.
BG and Pico and comment achieve top this outperformance and customer satisfaction.
Index, we improved or maintained our reiki rankings in the JD power rankings.
Delmarva ranked first in the east mid region of midsize region. The first excellent utility to ever be ranked first BG and Pico maintain their first quarter outperformance in the east large segment income improved and its ranking to the second quarter.
Generation performed well during the quarter nuclear produced 38.8, terawatts hours of zero emission electricity with a capacity factor of 95.1%.
And Oh excellent power and had a gas and hydro dispatch match of 99.7 exceeding our plan and the wind and solar capture.
On the plan was 96 or was the plan of 96%.
Now I'll turn it over to Joe.
Thank you, Chris and good morning, everyone today, I will cover our second quarter results.
Our quarterly financial updates, including trailing 12 month, our OE that utilities and our hedge disclosures.
Turning to slide seven.
We earned 50 cents per share on a GAAP basis, and 60 cents per share on a non-GAAP basis, which is at the midpoint of our guidance range of 55 to 65 cents per share.
Excellent utility delivered a combined 39 cents per share net of holding company expenses.
Utility earnings were modestly higher than our plan largely due to OEM timing it comment BG, any and Pico, which will reverse itself over the course of the year.
This was partially offset by milder weather than expected in the Philadelphia area impacting Pico by about one cents per share.
Next Gen earned 21 cents per share behind our plan.
This was the result of lower load volumes at constellation due to mild weather and the extended outage in sales.
These factors were partially offset by favorable OEM strong performance of our generation fleet and realized gains in our nuclear decommissioning Trust fund.
We are reaffirming our full year guidance of $3 to $3.30 per share and for the third quarter. We are providing adjusted operating guidance earnings guidance of 80 cents to 90 cents per share.
On slide eight we show per quarter over quarter walk.
60 cents per share in the second quarter of this year was 11 cents per share lower than the second quarter of 2018.
Exelons utilities less hold Co. earnings were up four cents per share compared with last year.
The earnings growth is driven primarily by higher distribution rates associated with the completed rate cases, and higher transmission revenues that comment in PHR relative to the second quarter of 2018.
This was partially offset by unfavorable weather at Pico.
Exchange earnings were down 13 cents per share compared with last year. The decrease was driven by lower realized energy prices, partially offset by higher tech revenue from the increase in New York set prices and the start of the new Jersey's that program.
Moving to slide nine our utility our OE has remained strong and we continue to exceed our 9% to 10% earned ROE targets across the utilities.
The consolidated PHR utility turned a 9.1% borrowing for the trailing 12 months compared to last quarter. We had some help from the constructed distribution rate case settlement at East Pepco, DC, and Pepco, Maryland, offset by equity infusion to cross PHR.
Legacy Exelons utilities maintained strong tenant half percent earned are always in the quarter importantly, consolidated our lease across our utilities were 10.2%.
We remain focused on meeting our utility earnings growth targets by maintaining the earned ROE PHR.
Standing strong performance at our other utilities.
Turning to slide 10 on May 24.
AG filed for a combined $148 million rate increase in electric and gas distribution revenues.
The requested rate increase will include 81 million and almost $68 million or electric and gas revenues respectively.
Based on rate base, and $5.4 billion and requested our Lee of 10.3%.
The increase is primarily driven by the ongoing need for capital investments to maintain and modernize the electric and gas distribution system.
It also reflects moving $15.8 million of revenues current are currently being recovered via the stride in electric liability investment surcharges.
Into rate base.
We into base rates, we expect to receive an order in the fourth quarter.
On May Thirtyth Pepco filed a multiyear plan in the district of Columbia requesting a revenue increase over three years to recover capital investments made during the 2018 19 period and planned investments over the 2020 to 22 time period that request provides necessary framework to allow pepco, new alignment system investments with policy goals set by the commission.
And enable us to continue to make the investments needed to modernize the energy grid support the district energy goals.
Sustain first quartile reliability performance and enhance programs and tools that have resulted in improved satisfaction among our customers.
The multiyear plan includes five performance incentive mechanisms, where PC Oems focused on system reliability customer service and interconnection and distribute distributed energy resources.
The inclusion of the tie ins with a multiyear plan provider performance based rate, making approach designed to strengthen general percentage are good utility performance.
The multi year plan provides customers with great predictability and reducing the administrative cost to customers caused by frequent filing traditional rate cases to recover costs.
On July 9th achieve public utility law judge.
Issued its proposed order in the Pepco, Maryland distribution rate case.
And Chief Judge recommended a $10.3 million revenue increase and a 9.6% allowed our a week.
Which is 10 basis points higher than Pepco, Maryland current Arlington.
A final order by the Maryland, PSC is expected by August 13.
Turning to slide 11, we are continuing our robust capital deployment program at the utility and during the second quarter, we invested $1.4 billion and capital to the benefit of our customers.
We expect to exceed our capital plan of $5.3 billion by $100 million. This year, we've been able to take advantage of the favorable weather to fund investments in our gas business at BG any plus we had some additional storm related work.
As Chris mentioned these investments are improving our infrastructure, increasing reliability and resiliency, which result in a better customer experience.
Today I'd like to talk about two projects that are part of these efforts and we'll bring improved operations to our customers in DC in northern Illinois.
The first project into the district of Columbia, Weiner Undergrounding project.
For DC plug.
At DC plug initiative is a $500 million multiyear partnership between the district's department of transportation and Pepco focused on the underground placement of more vulnerable distribution power lines.
Over the course of the initiative up to 30 theaters, where we placed underground with six during the first phase.
The underground placement of these lines will make the electric electric distribution system more resilient during severe weather events.
Using the duration and frequency of electric outages.
The second project featured as the expansion of comment Itasca substation is $48 million project installed the new distribution terminal and associated equipment, including an indoor switch gear building.
Three medium power Transformers, and 12, 138 kv circuit breakers.
The expanded substation provides capacity to power the equivalent of 45000 homes.
It will it will support three new data centers.
Any intact Elk Grove technology corridor near O'hare Airport.
These customers chose the greater Chicago area. After several years of discussions or comment economic development team part of our continuing efforts to bring additional investment in jobs in northern Alabama.
On slide 12, we provide our gross margin update and current hedging strategy as the generation company.
Before discussing the gross margin of eight I'd want to spend a minute talking about the drop in illiquid forward power curves during the second quarter, particularly in June .
Prices in PJM in 2020, and 2021 declined sharply.
Night hub around the clock power prices fell nearly $3 per megawatt hour for approximately 11 cents or 11% in 2020, and approximately $2.40 per megawatt hour or close to 10% in 2021.
Jim can cover in more detail during Q in AG, but at a high level. We think these declines reflected some combination of the following.
Lower natural gas prices.
A mild start to summer that weighed on crop pricing, which then cascade it out to the forward curve, which we've seen before some market anticipation of plants targeted retirement, looking less likely to retire and hedging activity likely including market participant selling.
Selling based on changes in the economic value of revenue put option sold are written to support new build power plants over the last few years driving down prices.
Despite the mild weather and low price environment 2019, total gross margins flat to our last update.
During the quarter, we executed $100 million in power, new business and $50 million in non power new business. We are highly hedged for the rest of the year and well balanced on our generation to load matching strategy.
In 2020, and 21, our total gross margin is down 100 million and $250 million respectively.
Open gross margin declined 500.
And 500 million, respectively, primarily due to lower energy prices at PJM West hub.
New York, Sonae and PJM NIE huh.
Mark to market of hedges were up $500 million and $300 million, respectively, as our hedge position mitigated parts of the impact of the plate price declines.
We also executed $50 million of power new business in both 2020 and 21.
We continue to remain behind our ratable.
Hedging from expected and added less than a ratable amount of hedges across our regions during the quarter.
We ended the quarter, 10% to 13% behind ratable in 2020.
7% to 10% behind in 21, when considering cross commodity hedges.
Finally, moving on to slide 13, we remain committed to maintaining a strong balance sheet and our investment grade credit rating.
Even at the June 30 in pricing Mark given the levers we have available we are confident that we will stay within our consolidated debt metrics in our disclosure when go to 19 2022.
Looking at next Gen. We are well ahead of our debt to EBITDA target of three times for 2019, we expect to be a two and a half times debt to EBITDA at two times on it recourse basis.
With that I will now turn the call back to Chris for his closing remarks.
Thanks, Joe turning to slide 14, we recognize the current power markets are creating headwinds for us we're prepared to meet them head on and take thorough.
Our thoughtful action if necessary in the meantime, we are accomplishing the things we've committed to do including maintaining industry, leading operations meeting our financial commitments effectively deploying more than 5 billion in capital across the utilities. This year in advocating for policies that support clean energy.
Our strategy remains the right one and we are committed to our value proposition. We continue to grow the utilities targeting a 7.8% rate base growth and a 6% to 8% earnings growth through 2022.
We continue to use free cash flow from the Genco to fund that incremental equity needs of the utilities pay down debt.
We will sustain strong investment grade credit metrics, and we will grow our dividend annually, 5% through 20 Twond.
The strategy underpinning this value proposition is effective we remain committed to optimizing the value of our businesses and earning your ongoing support of excellent. Operator, we can now open the call up to questions.
Thank you I'd like to remind everyone in order to ask questions by phone.
Hey Star then the number one on your telephone keypad. Your first question comes from the line of Greg Gordon of Evercore ISI.
Hey, good morning.
Hey, good.
So one one high level question and then.
Maybe one or two in the weeds questions and I don't want to.
Ask anything that you're maybe not comfortable delving too deeply into.
I'm going to come going to anyway.
You mentioned the.
The concept of levers that you have fall in order to stay.
On on track to generate free cash flow and credit.
Metric targets.
That you laid out for us.
Beginning of the year. Despite the fall in the forward curves and you talked about how you must run power plants that.
Our cash flow positive.
And look I've covered the stock for a long time coming for a long time, we've been in this situation before.
And nothing is ever as good or as bad as it looks at the moment, but what can you tell us.
Should this persist what some of those options are a little bit more detail. Please.
Yes ill, let Joe go through the list of what we've got laid out right now we've been talking quite a bit about it meeting on it.
As we watch the market. So Joe Yes, good morning, Greg Greg You mentioned, one of them and I think we've proven through our time with our financial discipline that we're not going to run power plants in perpetuity that are uneconomic, so that would be the first lever.
Obviously, you've seen us continue to drive efficiencies in our business and continue to look at ways to streamline our costs and we continue to do that and that would be a crossover exelon generation business as well as into business services company.
At our disposal and I won't speculate on what at this time, but we obviously have the opportunity if necessary to look at asset sales. We do have a small amount of growth capital in our exchange business. We would look at that and take a hard look at that and then there are alternative forms of financing. When you think about project financing you know the thing. So I think when you look at it. This is a point in time estimate or financial as you said, we've seen the markets move up and down.
We're comfortable at Kay said with our credit metrics through the disclosure period, and we continue to allocate capital in ways, we've laid out and if we had to discontinued we would look at these levers.
Our large nuclear units in the state of Illinois and.
I'm also cognizant that you're having a dialogue with with legislators and other.
Constituencies in the state around an omnibus energy strategy that that takes into account.
Contemplates.
Certain actions with regard to those plans can you tell us how about how that brought that coalition is as we get into the veto session.
Whether you think that the.
The state policymakers understand the implications of the lack of.
Necessary market reforms in PJM and the need to take back control market.
As you can imagine were have a significant communications drive with the legislative and the administration on.
That will balance out the needs for the state the goals that the Governor said.
After his election to get to a 100% clean by 20 to 30 and to be able to do that in an economic way that does not.
Harm part customers for you want to talk about the coalition.
Good morning, Greg.
There are a number of stakeholders that are very focused on getting clean energy legislation enacted in Illinois as you know a number of states across the country have for a set 100% clean energy targets.
And it's not just states like California, and New York, it's across the country and so Illinois is a lot of emphasis on making sure that Illinois, which is already the cleanest state in the country.
Has it been a equally aggressive target so.
On that question, we have folks in the environmental community heavily focusing on environmental Justice players to renewable developers are very focused on addressing both flaws in the prior version of the state's clean energy targets.
To make sure that they can achieve the goals that have been set previously but also as I said set a more ambitious new target for renewable development in state. It consumer advocate is heavily focused on this policy as well because the question of states, having not having to pay twice for capacity and very much in the forefront and ensuring that if we're going to incentivize clean energy, we count that capacity towards our obligations equity Dan and applying a labor can be very focused on what.
These policies mean, both for new construction and preservation of thing.
Energy resources, so that the coalition as focusing on putting the package together there are a number of parties who will come together in the end.
Hello.
Communicate the message that Chris mentioned that will be important for the state, but it's not going to be possibly we can allow this resource accounted for the past and that's why the f. for RP is foundational to getting is probably not.
Thanks, and my final question was actually.
A numbers question on the.
On the up to date update on the Mark to market. Joe There was 50 million dollar decline in power new business to go is that because that moved into.
Hedges because you executed sales or are you, assuming even lower volumes are lower margins in the out years ago in the retail business.
Hi, Greg This is Tim Mchugh that is just executed that execute a business that now has moved into the mark to market hedges. So.
When you net that all together and the numbers those two lines would be flat from last quarter. Its just executed now.
Okay. Thank you.
Your next question comes from the line of Steve Fleishman of Wolfe Research. Your line is open.
Yeah, Thanks, Hi.
Got follow up so both of Gregs question. So first of all just.
I know in the past when prices are falling a lot.
At certain times, just talked about actually.
How much.
Money, losing plants there are and.
Potential offsets can you give any flavor on that on just hey.
If prices stay this low if we shot certain plants are generally shut plants, what the potential offset could be.
If you're asking in market prices, we don't calculate the effect of uneconomic plants being shut down on the effect of the market.
If you're asking about.
The effect of.
Removing the negative free cash flow.
We haven't got those numbers to be published right now it's something that we're looking at what we're trying to evaluate.
Im unit by unit and then in aggregate as Weve said publicly right now you can see a challenge in the future. If this market persists and between the capacity of the energy market the Dresden.
Buyer in Brentwood are financially challenged.
Now.
Do you think we've got a clear path.
The with good coalition to support fixing now that some of it at the state level and we still are working very hard with.
So PJM for FERC to.
So.
But short of those things happening those three sites.
You can look into the future and see the challenges that they have.
Okay.
And then I guess, a I guess the point there is if we're just using current.
Forwards and taking it down that.
We're including basically losses on plants that.
You would not just sit and take forever.
Right correct, that's right, okay, either we have a clear path to securing them or the units will be shut down we will not damage the balance sheet.
Sitting around for years with negative free cash flow or negative earnings.
Okay.
And then just the specific question to the Illinois Coalition can you just give any color.
If possible, but since this news from a few weeks ago came out about the subpoena.
Has there been any pets have these talks are continued and is there any kind of.
Public process, we'll be able to see.
Kind of those talks or is it just going to kind of be suddenly it.
Legislative proposal.
Yes, Steve its bill by Hany and.
The activity that has.
Started and continued for for a number of months on advancing the clean energy legislation. Among the coalition that was referenced by Kathleen invite Chris remains unchanged.
We are meeting regularly we are doing the stakeholder outreach, we are trying to craft a package and educate members of legislature.
And the dependency of the Grand jury.
Subpoena it had no impact on the level of activity or the intensity of the activity in that regard.
Okay. Thank you.
Your next question comes from the line of police Turner of JP Morgan.
Your line is open.
Good morning.
I was wondering if you could just help us with some background of your franchise agreement in Chicago.
When that expires that the terms or renewal et cetera, and kind of how you're thinking about that right now.
Joe.
Well I'll start hi, this is Dan.
And Joe can they get this here as well, but basically the expiration date in C and December of 2020.
The city needs to give us any indication by the end of the year as to whether they want to.
Maintain status quo renegotiate or terminate the franchise agreement. So we'll know by the end of the year before.
In discussions with them, we started to have discussions around that we understand what their priorities are.
And there I think priorities are very much aligned with ours and they want to see more clean energy in the city of Chicago and they are concerned about honorable population.
In particular in terms of pricing and those are all those are both.
Strong strategic elements of our focus going forward and all are utilities, but that's the status right now.
Yeah, and Justin just to supplement what Ed said, we've we've been in the process of these negotiations for some time we've.
Exchange terms unhappy all discussions about how the agreement would be structured going forward, we had a slowdown in those negotiations during the transition to the new mayor, but those negotiations have resumed in full at this point.
Okay and right now that is your set of assets and you would need to be compensated if anything changed there.
Yes, that's correct, but.
But again the focus here is on getting the franchise agreement done our expectation is it will be fully negotiated and Don will address the issues that and talked about.
To the extent municipal innovation has looked at that will come with a very hefty price tag as you know and I I don't think realistically thats a path, we're going to go down.
Okay.
And then.
I guess just more modeling here for the balance of 2019, you put out to the third quarter guidance, there which was.
A little bit less than we had expected.
How are you thinking about fourth quarter, right now and what I guess might look like a tailwind and headwind at least in the back half overall.
Yep.
You heard me say in Mike It's Joe Good morning, you heard me say in my prepared remarks that we reaffirmed our guidance.
A range of three to 330, that's inclusive of the earnings guidance. We gave you obviously for the third quarter that were comfortable with those numbers.
Okay anything to think about that might be kind of one time or nonrecurring in nature for the third or fourth quarter that could help you year over year.
I mean, you saw some of the drivers in the second quarter. When we when we talked about the lower load volumes at constellation driven by the unfavorable weather and we continue to as Jim talked about we continue to execute our new business at constellation.
We continue to be able to utility business. Accordingly, we are comfortable with the full year guidance.
Okay, great. Thank you.
Your next question comes from the line of Michael Weinstein from Credit Suisse. Your line is open.
Hi, guys just one quick follow up.
On the guidance.
The guidance for 4.2 billion of cash flow generation from action over the next four years.
What does that assume in terms of.
On economics class B rating.
I guess retirement is going nowhere to those types.
What's built into that 4.2 billion number so.
Good morning, Michael It's Joe as Chris mentioned Didnt see when you just said.
Clue to.
When you look at the three plants in Illinois that he mentioned vibrant bravely in Dresden those plants are running in those cash flow forecast and then to the extent you know these power prices continue theres, obviously challenges financially with those and as I said in my remarks, we won't continue to run those plants in perpetuity on economically having said that we have provided the numbers specifically, but we will we put out a forecast on our fourth quarter call for $7.8 million of free cash flow from 2019 to 2022 coming off generation that we're still working with them.
So I mean would it be accurate to say that there's upside.
Your way from this point at this point, but the forward curves are where they are.
You know, we give me an update at the end at our fourth quarter call and it's.
You're getting like one side of the story here, obviously, because we in the numbers. We provide we're showing you the mark to market you see our gross margin disclosures and the change quarter over quarter, driven this quarter driven by the price drops we saw in the second quarter. I also discussed there are other levers at our disposal those are reflected in our disclosures, but you can go back to what we've modeled on the fourth quarter call and Thats, what weve disclosed at this point.
Okay, great. Thanks.
Your last question comes from the line of Chris learn math of Citigroup. Your line is open.
Thanks, So much hi, guys.
Right.
So maybe just following up a little bit on the ball markets. It was very helpful to get the levers that you've talked about but just to understand from a BGM perspective, do you see more happening on the market side as an other players shutting down other plants or other form of rationalization like you've also talked about regulation radio CPG I'm going because if it stays this way clearly some sustainable so wanted to understand how you thought the market would play out.
Yeah. Okay. Russell this is doing to us start I think from a market perspective first of all the one thing.
We I want to highlight to Joe's point about this is a point in time, we've already seen the night help market move up a dollar on the forward curve since the end of the quarter and the West hub markets moved up about 75 cents since the June thirtyth pricing. So we've seen a pickup in prices. So far I think when it comes to what we're working on we've talked over the last several quarters on the market reform side fast our pricing is waiting to be enacting enacted theres. Some work being done on on reserves and scarcity pricing and the our DC curve in PJM and then in the long run it's a little bit lower priority right now for PJM, but the focus on the base load price formation and Entergy relaxation. Those are some of those things I think there are we have new build and retirements both happening over the next four or five years as natural course of business the business in our fundamental analysis. So there will be a little bit of that but I think by and large there.
Reforms are around price formation, and then in the long run.
So if we're able to come up with the market solution to have carbon pricing in the market would be another thing in the long run that would be something we will continue working on.
The one thing that's interesting to me about where weve seen these prices in that 22 dollar area in denial, but if you look at account 20 120 223.
Thats trading down where this quarter to just cleared the quarter to now just cleared $22.25 with very very mild weather. So the entire curve is is trading where a very mild quarter just trade and so it's an interesting note to me and I think gives us some insight into why we think those prices on the forward curve to have that have already responded slightly higher in the last couple of weeks.
That's super helpful color and maybe just one follow up more strategic.
If you do see these profiles does that mean that you think.
More retail would be helpful to the business do you do you look to expand on the retail side or maybe apply more retail business is that something that you think would work.
Yes, so I think from a retail perspective.
Our customer facing facing businesses are doing pretty well the margins are hanging in our win rates are strong and we're holding our market share, but our retail.
Customer facing business and our wholesale load auctions and wholesale origination businesses have performed well I think as far as acquisitions and expanding it we have a we've talked for a while now about having grown really what is the best in class platform. So if we will look to acquire books of business. If there is a value proposition there that we can absorb it into our best in class platform and just take a retail book of business will look for those opportunities and and.
We certainly would take a hard look at them.
Alright really helpful. Thank you guys.
I would like to turn the call over back to speak a quick Crain. Please go ahead Sir.
Thank you all for participating in the call today, we remain on track to meet our commitments to our customers communities and shareholders with that we'll close out the call.
This concludes today's conference call you may now all disconnect.