Q2 2023 Clearway Energy Inc Earnings Call

Okay.

Yeah.

Operator: Good day, and thank you for standing by. Welcome to the Clearway Energy, Inc. second quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator instructions] Again, please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Sotos, president and CEO.

One on your telephone and wait for your name to be announced to withdraw. Your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Chris Sotos, President and CEO .

Chris Sotos: Good morning. We first thank you for taking the time to join Clearway Energy, Inc.'s second quarter call. Joining me this morning are Akil Marsh, director of investor relations; Sarah Rubenstein, CFO; and Craig Cornelius, president and CEO of Cleary Energy Group, our sponsor. Craig will be available for the Q&A portion of our presentation.

Joining me. This morning are a kill Marsh director of Investor Relations, Sir with his team CFO and Craig Cornelius President and CEO of Clearway Energy group are sponsored Craig will be available for the Q&A portion of our presentation.

Chris Sotos: Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. Please review the safe harbor in today's presentation, as well as the risk factors in our SEC filings. In addition, we 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. 

Please review the Safe Harbor in today's presentation as well as the risk factors in our SEC filings. We 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.

We 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.

Chris Sotos: Turning to Page 4, Clearway had a soft first half of the year as weather and renewable resource conditions deviate substantially from historical averages across most geographies. For the second quarter, Clearway generated $137 million of CAFD with the lowest quarterly wind production in the company's history.

Clearly had a soft first half of the year as weather and renewable resource conditions deviate substantially from historical averages across most geographies for the second quarter, clearly generate a $137 million of Kathy with the lowest quarterly wind production in the company's history.

Chris Sotos: As we look ahead to the balance of the year, we are updating and reducing our full year guidance to a range of $330 million to $360 million, which accounts for our first half results and reflects a range of potential outcomes and renewable resources and weather impacts on load.

Chris Sotos: All results have stabilized in July and are materially on plan for the month. We are cautious, given the weak renewable resource and relatively mild weather in California through June. Nonetheless, enabled by our prudent financial management, Clearway is announcing an increase in its dividend of 2% to $0.3891 per share in the third quarter of 2023, or $1.5564 on annualized basis, keeping on target to achieve the upper range of our dividend growth objectives for 2023. Despite our challenges, Clearway continues its focus on growth in long-term CAFD and our asset base.

We are cautious given the weak renewable resource and relatively mild weather in California through June .

Nonetheless enabled by our prudent financial management Clearway is announcing an increase in dividend of 2% to $3 91 per share in the third quarter of 2023, or one $505 64 on annualized basis, keeping on target to achieve the upper range of our dividend growth objectives for 2023. Despite our challenges clearway continues its focus on growth and long term, Kathy and our asset base and.

Despite our challenges clearway continues its focus on growth and long term, Kathy and our asset base and.

Chris Sotos: In terms of dropdowns from Clearway Energy Group, we recently committed to acquire Cedar Creek Wind for $107 million at a greater than a 9% CAFD yield, as well as Rosamond Central Storage for $32 million at approximately 11% CAFD yield. As such, we are raising our pro forma CAFD outlook from $410 million to $420 million. In terms of our continued growth trajectory, our sponsor's pipeline has grown over 30 gigawatts including 6.9 gigawatts of late-stage projects expected to reach COD in the next four years. We continue to work toward binding commitments on the remainder of dropdown '24 with Texas Solar Nova, which will have an estimated capital commitment of $40 million.

As well as Rosemont central storage for $32 million, an approximate 11% cap deal as such we are raising our pro forma <unk> outlook from $410 million to $420 million. In terms of our continued growth trajectory, our sponsor's pipeline has grown over 30, gigawatts, including six nine gigawatts of mid stage projects expected to reach <unk> in the next four years. We continue to work towards finding commitments on the remainder of dropdown 'twenty four with Texas Solar Novo, which all have an estimate capital commitment of $40 million.

In terms of our continued growth trajectory, our sponsor's pipeline has grown over 30, gigawatts, including six nine gigawatts of mid stage projects expected to reach <unk> in the next four years. We continue to work towards finding commitments on the remainder of dropdown 'twenty four with Texas Solar Novo, which all have an estimate capital commitment of $40 million.

We continue to work towards finding commitments on the remainder of dropdown 'twenty four with Texas Solar Novo, which all have an estimate capital commitment of $40 million.

Chris Sotos: Working with Clearway Group on dropdown '25 that begins our deployment of $220 million of capital commitments, we have received our first offer on these assets in the form of Dan's Mountain, a wind farm with a target completion at year end 2024 and a greater than 9% CAFD yield. Offers that are subsequent dropdown '25 assets are anticipated from our sponsor over the balance of the year with the contribution of those assets targeted provide a CAFD contribution consistent with our goals. Here at Clearway, we are keenly aware of the capital market volatility of recent months. I want to reiterate a key point around capital, which is we have enough cash to fund our line-of-sight dropdowns that underpin our $2.15 per share long-term target.

Offers a subsequent dropdown 25 assets are anticipated for our sponsor over the balance of the year with the contribution of those assets targeted to provide a cafe contribution consistent with our goals.

Here clearly we are keenly aware of the capital market volatility in recent months. And to reiterate a key point are on capital, which is we have enough cash to fund our line of sight Dropdowns that underpin our $2 15 per share long term target.

And to reiterate a key point are on capital, which is we have enough cash to fund our line of sight Dropdowns that underpin our $2 15 per share long term target.

Chris Sotos: Clearway also benefits from an undrawn revolver, excess cash flow generation, and unused leverage capacity to fund additional growth through this volatile period. In summary, Clearway continues to execute its growth plan with a very strong internal liquidity profile, so it's well positioned to grow beyond the $2.15 CAFD per share, combined with the EPS growth rate in the upper range through 2026. Turning to Slide 5 to provide an overview of our recent capital commitments. On the left side of the page, review Cedar Creek Wind, 160-megawatt Idaho project underpinned by a 25-year busbar PPA with an investment grade utility.

In summary, <unk> continues to execute growth plan with a very strong internal liquidity profile. So is well positioned to grow beyond the $2 15 <unk> per share combined with the EPS growth rate in the upper range through 2026. Turning to slide five to provide an overview of our recent capital commitments. On the left side of the page review Cedar Creek Wind 160 megawatt Idaho project underpinned by a 25 year bus bar, a PPA for an investment grade utility.

Turning to slide five to provide an overview of our recent capital commitments. On the left side of the page review Cedar Creek Wind 160 megawatt Idaho project underpinned by a 25 year bus bar, a PPA for an investment grade utility.

On the left side of the page review Cedar Creek Wind 160 megawatt Idaho project underpinned by a 25 year bus bar, a PPA for an investment grade utility.

Chris Sotos: This project should produce 10 million of CAFD annually for an approximate 9.3% CAFD yield by chief commercial operations targeted for the first half of 2024. On the right side of the page, our Rosamond Central Battery Storage project is co-located with the Rosamond Central solar facility. This project is expected to require $32 million of capital with an approximately 11% CAFD yield when achieved commercial operation in the first half of 2024. This represents our continued diversification into a new asset class beyond wind and solar, with CWEN owning or committing to invest in over 550 gross megawatts of storage today.

On the right side of the page our Rosemont Central battery storage project is co located with our Rosemont Central solar facility. This project is expected to require $32 million of capital with an approximate 11% cap deal my chief commercial operation in the first half of 2024. This represents our continued diversification into a new asset class beyond wind and solar with <unk> owning or committing to invest in over 550 gross megawatts of storage to date.

This project is expected to require $32 million of capital with an approximate 11% cap deal my chief commercial operation in the first half of 2024. This represents our continued diversification into a new asset class beyond wind and solar with <unk> owning or committing to invest in over 550 gross megawatts of storage to date.

This represents our continued diversification into a new asset class beyond wind and solar with <unk> owning or committing to invest in over 550 gross megawatts of storage to date.

Chris Sotos: In summary, we continue to advance our growth objectives with these two high-quality capital commitments. Slide 6 provides an update about our path to invest the thermal excess proceeds and achieve our growth targets. With our announced investments in Rosamond and Cedar Creek, our pro forma CAFD outlook now increases to 420 million, with our remaining capital targeted for investment in Texas Solar Nova and the anticipated 220 million hours of commitments in dropdown '25 offered from Clearway Group, of which the recently offered Dan's Mountain represents approximately 35% of this future commitment. Despite our current challenges due to poor renewable resources in the first half of the year and ongoing capital market volatility, Clearway remains on track regarding continued executions versus $2.15 CAFD per share goal and beyond. Now, I'll turn it over to Sarah. Sarah?

Slide six provides an update about our path to invest that thermal excess proceeds and achieve our growth targets.

With our announced investments in Rosemont, and Cedar Creek, our pro forma cap your outlook now increases of $420 million with a remaining capital targeted for investment in <unk> solar Nova and anticipate $220 million of commitments and dropped down 25%.

Offered from Clearway group have wished originally offered trans mountain represents approximately 35% of this future commitment. Despite our current challenges due to poor renewable resources in the first half of the year and ongoing capital market volatility clearly remains on track regarding continued execution, which was $2 <unk> <unk> per share going beyond now I will turn it over to Sarah Sarah.

Despite our current challenges due to poor renewable resources in the first half of the year and ongoing capital market volatility clearly remains on track regarding continued execution, which was $2 <unk> <unk> per share going beyond now I will turn it over to Sarah Sarah.

Sarah Rubenstein: Thanks, Chris. On Page 8, we provide an overview of Q2 results, including adjusted EBITDA for the second quarter of 2023 of $316 million and cash available for distribution of $137 million. These results reflect the previously disclosed historically low wind production that resulted in an approximately $30 million reduction to second quarter revenue, including a decrease as compared to expectations of approximately $16 million for the Alta projects.

Page eight we provide an overview of Q2 results, including adjusted EBITDA for the second quarter of 2023 of $316 million and cash available for distribution of $137 million. These results reflect the previously disclosed historically low wind production that resulted in an approximately $30 million reduction in the second quarter revenue, including a decrease as compared to expectation of approximately $16 million for the Alta projects.

These results reflect the previously disclosed historically low wind production that resulted in an approximately $30 million reduction in the second quarter revenue, including a decrease as compared to expectation of approximately $16 million for the Alta projects.

Sarah Rubenstein: Results at the conventional segment were also below internal expectations. The Marsh Landing and Walnut Creek facilities, whose initial tolling agreements ended in May and June, respectively, generated lower-than-expected merchant energy margin in the quarter because of milder-than-normal temperatures. Despite the first-half challenges impacting CAFD, the company remains well positioned for growth with its long-term CAFD per share outlook intact, a strong balance sheet, large revolver capacity, and pro forma credit metrics in line with target ratings.

Despite the first half challenges impacting capp deep the company remains well positioned for growth with its long term Kathy per share outlook intact, our strong balance sheet large revolver capacity and pro forma credit metrics in line with target rating.

Sarah Rubenstein: There continues to be no external equity needs for line-of-sight growth to meet the $2.15 of CAFD per share and results in dividend per share objectives. Moving to Page 9, we provide a walk from our previous 2023 full year CAFD guidance of $410 million to our revised guidance range.

Moving to page nine we. Let me provide a walk from our previous 2023 full year cost guidance of $410 million to our revised guidance range.

Let me provide a walk from our previous 2023 full year cost guidance of $410 million to our revised guidance range.

Sarah Rubenstein: Starting from the left, the first quarter of 2023 reflected lower solar irradiance due to above average rainfall in California, which resulted in lower-than-normal solar revenues. First quarter 2023 results also reflected extended outages at the conventional facilities that reduced capacity revenue and increased maintenance costs compared to expectations. As previously noted, second quarter reflected historical low wind production yielding a decrease in revenue compared to expectations of approximately 30 million, with a material shortfall at the Alta facilities, along with generation underperformance across all wind facilities in the portfolio. In addition, the conventional facilities generated lower-than-expected merchant energy margin due to milder-than-normal temperatures.

First quarter 2023 results also reflected extended outages at the conventional facilities that reduce the capacity revenue and increased maintenance costs compared to expectation. As previously noted second quarter reflected historical low wind production, yielding a decrease in revenue compared to expectations of approximately $30 million. With a material shortfall at the Alta facilities, along with generation underperformance across all wind facilities in the portfolio.

As previously noted second quarter reflected historical low wind production, yielding a decrease in revenue compared to expectations of approximately $30 million. With a material shortfall at the Alta facilities, along with generation underperformance across all wind facilities in the portfolio.

With a material shortfall at the Alta facilities, along with generation underperformance across all wind facilities in the portfolio.

In addition, the conventional facilities generated lower than expected merchant energy margin due to milder than normal temperatures.

Sarah Rubenstein: The impact of the first half of 2023 results led to a revision to full year 2023 CAFD guidance down to a range of $330 million to $360 million. We have observed more normal wind production trends for the month of July. And while we have not altered our long-term view of P50 median production estimates, the revised guidance range reflects the possibility that renewable resource may trend lower than normal for the balance of 2023, given the more volatile renewable resource experienced in 2023 thus far. The guidance range also reflects a sensitivity for merchant energy margin at the conventional facilities for the remaining summer months.

We have observed more normal wind production trends for the month of July and while we have not altered our long term view of <unk> median production estimates the revised guidance range reflects the possibility of that renewable resource may trend lower than normal for the balance of 2023.

Given the more volatile renewable resource experienced in 2023, thus far the.

The guidance range also reflects a sensitivity from merchant energy margin at the conventional facilities.

Sarah Rubenstein: While temperatures increase during the month of July, the company cannot predict how weather, as well as other factors, such as gas prices and the availability of other generation sources, may impact energy margin at the conventional facilities. Finally, the revised guidance range reflects the expected timing of committed growth investments, including estimated project CODs. And with that, I'll turn it back to Chris for closing remarks. Thank you Sir.

Such as gas prices and the availability of other generation sources may impact energy margin at the convention facilities. Finally, the revised guidance range reflects the expected timing of committed growth investments. Including estimated project. And with that I'll turn it back to Chris for closing remarks.

Finally, the revised guidance range reflects the expected timing of committed growth investments. Including estimated project. And with that I'll turn it back to Chris for closing remarks.

Including estimated project. And with that I'll turn it back to Chris for closing remarks.

And with that I'll turn it back to Chris for closing remarks.

Chris Sotos: Thank you, Sarah. Turning to Page 11. Through the challenging first half of the year and potential volatility in the back half of the year, we will be unable to achieve our original CAFD guidance of $410 million. While we do not control the weather, all of us within the Clearway enterprise take this very seriously by continuing focus on improving results and forecasting of both the short and long term.

Due to the challenging first half of the year and potential volatility in the back half of the year, we will be unable to achieve our original capital guidance of $410 million.

While we cannot control the weather all of us within the Clearway enterprise take this very seriously by continuing focus on improving results and forecasting about the short and long term.

Chris Sotos: Despite these challenges, we remain on track to support the upper range of our 5% to 8% long-term dividend objective. As discussed in previous years, the rationale for a long-term payout ratio of 80% to 85% is precisely to manage through years like 2023, so that Clearway can continue to grow its dividend based on long-term cash flows without undue financial stress despite periods of short-term negative weather volatility. In addition, Clearway continues to work through commitments for the remaining dropdown offers from October of 2022 with our investments in Cedar Creek Wind and Rosamond Central Battery Storage and our first offer on the next batch of drop downs with Dan's Mountain. We expect to have commitments completed for all drop downs that underpin our $2.15 CAFD per share line of sight by the first half of 2024.

As discussed in previous years, the rationale for our long term payout ratio of 80% to 85% is precisely to manage three years. Like 2023 is that clearly can continue to grow its dividend based on long term cash flows without undue financial stress despite periods of short term negative weather volatility. In addition, clearway continues to work through commitments for the remaining dropdown offers from October 2022, with our investments in Cedar Creek win and Rosemont Central battery storage and our first offer on the next batch of Dropdowns with Dan's Mountain. We expect to have commitments completed for all Dropdowns that underpin our $2 50 inside cathie. <unk> per share line of sight or the first half of 2024.

In addition, clearway continues to work through commitments for the remaining dropdown offers from October 2022, with our investments in Cedar Creek win and Rosemont Central battery storage and our first offer on the next batch of Dropdowns with Dan's Mountain. We expect to have commitments completed for all Dropdowns that underpin our $2 50 inside cathie. <unk> per share line of sight or the first half of 2024.

We expect to have commitments completed for all Dropdowns that underpin our $2 50 inside cathie. <unk> per share line of sight or the first half of 2024.

<unk> per share line of sight or the first half of 2024.

Chris Sotos: Beyond the $2.15 of CAFD per share, we continue to add projects, such as the Cedro Hill repowering that was discussed last quarter, the extension of resource adequacy contracts on our California fleet, and continued improvement in our operational performance. In conclusion, 2023, thus far, has been a difficult year for Clearway, given the weakness in the renewable resources and volatility in the capital markets. While these headwinds impact us currently, Clearway Energy has always been about the long game, about compounding our dividend over time that leads to stock price appreciation. The foundations of this long-term growth are still intact: strong sponsorship and a key growth sector of America's infrastructure; significant development capital spent to provide growth opportunities for Clearway Energy, Inc., and a discipline capital and investment approach.

And volatility in the capital markets. While these headwinds impact is currently clearway energy has always been about the long game about compounding our dividend overtime that leads to stock price appreciation. Foundations of this long term growth are still intact. Trunk sponsorship and our key growth sector of America's infrastructure. Significant development capital spent to provide growth opportunities for Clearway Energy Inc. Disciplined capital and investment approach.

Foundations of this long term growth are still intact. Trunk sponsorship and our key growth sector of America's infrastructure. Significant development capital spent to provide growth opportunities for Clearway Energy Inc. Disciplined capital and investment approach.

Trunk sponsorship and our key growth sector of America's infrastructure. Significant development capital spent to provide growth opportunities for Clearway Energy Inc. Disciplined capital and investment approach.

Significant development capital spent to provide growth opportunities for Clearway Energy Inc. Disciplined capital and investment approach.

Disciplined capital and investment approach.

Chris Sotos: As Clearway celebrates its 10th year of existence, our ability to withstand and grow through these challenges has been demonstrated in the long term. Operator, open the lines for questions, please.

<unk> has been demonstrating the long term. Operator open the lines for questions. Please.

Operator open the lines for questions. Please.

Operator: Thank you.  [Operator instructions] Our first question comes from Julien Dumoulin-Smith with Bank of America. You may proceed.

Julien Patrick Dumoulin-Smith: Hey, good morning, team. Thanks so much for the time. Appreciate it. Hey, quickly, obviously, you know, you're talking a lot about the challenges past tense here through the first half of the year. Can you talk a little bit more about sort of today, mark-to-market, if you will, through part of the third quarter. How are trends continuing across the portfolio in terms of renewable generation? Sure I think as I.

Today, Mark to market, if you will through part of the third quarter Howard trends continuing.

The portfolio in terms of renewable generation.

Chris Sotos: Sure, I think as I mentioned in my comments, you know, July was on track for plans, so we didn't see a significant deviation on a CAFD basis for that portfolio as a whole. So, I think, you know, August, it's early days. You want to get a full month in there. But July was on track. So, we're hoping that the weakness we saw in the first half of the year has abated.

So I think August its early days, we want to get a full month in there but July was on track. So we're hoping that the weakness we saw in the first half of the Euro has abated.

Julien Patrick Dumoulin-Smith: Got it. Oh yeah, I see stabilized here, yup. And then, more to the point, in terms of the capital market backdrop, you alluded to the challenges. At the same time, you know, clearly, transaction models in the market have come in. How do you see that as transforming and impacting the plan that you described or brief reaffirming here today in terms of acquisition and acquisition multiple? There's obviously some puts and takes in terms of your financing plan. But can you speak to a little bit what the transfer multiple through acquisition, multiple through your contemplating past tense in the plan versus today, if you will?

And then more to the point in terms of the capital market backdrop, you alluded to the challenge at the same time clearly transaction multiples in the market have come and how do you see that is transforming and impacting the plan that you described are reaffirming here today in terms of acquisitions and acquisition multiple I mean, obviously there's puts. And takes in terms of your financing plan. Can you speak to a little bit to what. Transfer multiples or acquisition multiples you were contemplating past tense in the plan versus today, if you will.

And takes in terms of your financing plan. Can you speak to a little bit to what. Transfer multiples or acquisition multiples you were contemplating past tense in the plan versus today, if you will.

Can you speak to a little bit to what. Transfer multiples or acquisition multiples you were contemplating past tense in the plan versus today, if you will.

Transfer multiples or acquisition multiples you were contemplating past tense in the plan versus today, if you will.

Chris Sotos: I don't think they've shifted that much, given I think kind of what you're saying, Julien, may have phrased differently, is a lot of the volatility in the 10-year Treasury has really shown up past two weeks, depending on how you look at it. And so, from my perspective, a lot of the multiples we were looking at in terms of acquisition, which are very similar to what we have for drop downs, really hasn't changed that much. I think for us, you know, I don't know if what we're seeing in terms of about a 4-10, I think, 10-year Treasury environment currently versus call it a 3-7, 3-8, maybe three, four weeks ago and if that's transferred through real seller price expectations to date. So, long way to way of saying, I don't think it's impacted us that much in the current period, but we'll have to see how sticky this Treasury environment is and if it translates to M&A multiples.

Really hasnt changed that much I.

I think for US I don't know if what we're seeing in terms of about <unk> 10, I think 10 year Treasury environment currently versus call. It a 3738, maybe three or four weeks ago.

Thats transferred through real seller price expectations to date, so long way of saying I don't think it has impacted us that much in the current period, but we'll have to see how sticky. This treasury environment is if it translates to M&A multiples.

Multiple: [Julien Dumoulin-Smith] Right, but your point is, despite seeing some transactions in the quarter here at, perhaps, lower headline multiples, you wouldn't necessarily read into those as being indicative of the wider trends, right? They're more discrete to specific portfolios and the issues that might otherwise be embedded in them, if I hear you right. [Chris Sotos] Correct. I don't think you can extrapolate best upon the past three weeks of Treasury volatility, there's capitulation, the M&A market comes new levels. [Julien Dumoulin-Smith] Right, or more important -- more specifically, transactions actioned through the balance of the second quarter here, if I hear you right. [Chris Sotos] Correct.

Transactions in the quarter here at perhaps a lower headline multiple you wouldnt necessarily read into those as being indicative of the wider trends right. There more discrete to specific portfolios and the issues that might otherwise be embedded in them. If I hear you correct. I don't think you can extrapolate based upon the past three weeks of Treasury volatility Theres capitulation in there. M&A market in terms of new levels. Right or more important more specifically transactions. Action through the balance of the second quarter here. If I heard correct correct.

M&A market in terms of new levels. Right or more important more specifically transactions. Action through the balance of the second quarter here. If I heard correct correct.

Right or more important more specifically transactions. Action through the balance of the second quarter here. If I heard correct correct.

Action through the balance of the second quarter here. If I heard correct correct.

If I heard correct correct.

Julien Patrick Dumoulin-Smith: And then, just lastly here, if you don't mind, super quick, on the backdrop of California. I mean, data points continue to accrue across the forward curve at very robust prices, if not higher quarter over quarter. Again, would love to come back to how you're thinking about your commercial strategy here and then ultimately extending out your outlook, too.

Just. The backdrop of California, I mean data points continue to accrue. Across the forward curve at very robust prices, if not higher on higher quarter over quarter. Would love to come back to how Youre thinking about your commercial strategy here and then ultimately extending out your outlook too.

The backdrop of California, I mean data points continue to accrue. Across the forward curve at very robust prices, if not higher on higher quarter over quarter. Would love to come back to how Youre thinking about your commercial strategy here and then ultimately extending out your outlook too.

Across the forward curve at very robust prices, if not higher on higher quarter over quarter. Would love to come back to how Youre thinking about your commercial strategy here and then ultimately extending out your outlook too.

Would love to come back to how Youre thinking about your commercial strategy here and then ultimately extending out your outlook too.

Chris Sotos: Sure, so a couple different questions here, Julien, I'll try to unpack it. I think to your point, you know, some of the forwards are still very strong. In California, however, I think as we're, you know, all familiar with peaking assets, when it occurs, run times, and exactly what the peak price achieved are critical assumptions in determining profitability. So, right now, you have a relatively cool environment in California that's supposed to heat up kind of back end of next week or middle of next week. So, I think in terms of run times and seeing really where we're at, it's probably much more a next-week event than in current. So, for us, you know, especially the comments I gave, July was kind of on plan. It was tough for some days, then came in really well other days. It's just the nature of peaking assets. So, I think for the remainder of the year, we feel pretty good about where we're at, but once again, it's highly --- now, telling you, they don't know. It's highly dependent on weather, highly dependent on duration and severity of that weather. In terms of the longer term, you know, RA pricing, as we've talked about over the year, we bid in as part of the RFP conducted by the utilities, you know, in the second quarter. We anticipate getting any results and announce those on the November call.

With peaking assets when it occurs run times and exactly what the peak price achieved our critical assumptions in determining profitability. So right now you have a relatively cool environment in California, that's supposed to heat up kind of back end of next week or middle of next week. So I think in terms of run times and seeing really we're at it's probably much more on next week event there in current so.

For us yes.

Especially as the comments I gave.

July was kind of on plan that was tough for some days then came in really well other days. It's just the nature of peaking assets. So I think for the remainder of the year, we feel pretty good about we're at but once again, it's highly not telling you. They don't know its highly dependent on weather highly depend on duration and severity of that weather.

In terms of a longer term or a pricing as we've talked about over the year, we bid in as part of the RFP conducted by the utilities in the second quarter. Getting any results and announce those on the November call.

Getting any results and announce those on the November call.

Julien Patrick Dumoulin-Smith: Understood. Assets running okay in California here? Yes.

Multiple: [Chris Sotos] Yes. [Julien Dumoulin-Smith] Excellent. Wonderful. Thank you, guys. Good luck. Thank you.

Operator: Thank you. One moment for questions. The next question comes from Mark Jarvi with CIBC. You may proceed.

Our next question comes from Mark Jarvi with CIBC you May proceed.

Mark Thomas Jarvi: Thanks. Good morning, everyone. So, just coming back to the last commentary on the California assets, just when you think of your guidance, any changes at all went into guidance here now around expectations for energy margins in the back-half 2023?

Chris Sotos: Not in terms of the baseline number. However, it does help inform the range if kind of some of the cooler weather that I talked about were to appear. So, maybe to answer your question, it doesn't really change our pinpoint estimate, but in terms of helping inform the range, yes it does.

Mark Thomas Jarvi: And then, when you think of the range specific to those assets, what do you think -- like, obviously, there's the renewable assets, it brings some more variability, particularly wind. But what's the sort of, I guess, the range you think is conventional in terms of swings in terms of CAFD expectations for the balance of the year? Is it -- Is it I don't know.

What's the sort of I guess the range that you think is conventional in terms of swing in terms of your expectations for the balance of the year.

Chris Sotos: I don't know if -- yeah, I don't know if --

Mark Thomas Jarvi: Is it narrower than the broader range you've given? Or is it about the same in terms of that sort of $30 million range?

Chris Sotos: I would say it would be within the range given. It's not as though that the wind would -- or, you know, renewable assets would kind of offset a deviation in the gas feed, if that's where you're going. So, it's not as though the deviation is wider than that. The deviation on the conventional would tend to be within that range.

Mark Thomas Jarvi: Got it. And then, just in terms of the offer here on Dan's Mountain, 9% CAFD, you know, what -- it performs at a bit lower than where I think the 9.5% range, you know, stocks trading at 8.5%. So, how do you think about that transaction off your own, you know, currency in terms of your share price, what you'd be buying back stock at? And if there's anything around the funding plan you could optimize to bring up that CAFD yield over time with Dan's Mountain.

Performs at a bit lower than where I think the nine 5% range stocks trading at eight 5%. So how do we think about that transaction relative to your own currency in terms of share price to be buying back stock at and if theres anything around the funding plan and can optimize it bring up that cap yield overtime with danske.

Chris Sotos: Sure, a couple different questions there. I'll try to unpack that. I think part one, you know, for Dan's, we put approximately in these for a reason. You know, sometimes it ends up 9.2. The big point is when we first talked about dropdown '24 and dropdown '25, we talked about those on a weighted average basis being about 9.5 for the entire fleet. Some of those are going to be below the 9.5.

Chris Sotos: Some of those, like Rosamond bests are, you know, at 11. So, I think the key point is, each end of -- when we say 9.5, it doesn't mean every asset is going to be 9.5 or greater. That's the portfolio as a whole, some being a little bit lower, some being higher. So, I'd say it's consistent with how we view things overall. Second, basically, I mean, the asset is pretty attractive with a 12-year contracted basis. So, once again, longer is better, but 12 is pretty strong in today's market. And so, overall, we think that that's, you know, once again, subject to diligence. And going in front of the GCN and the like, that number doesn't surprise me nor do I view it negatively. To your point around stock buybacks and the like, that's something we look at. I tend to think that as long as we can continue to find accretive acquisitions or drop downs from our sponsor, those tend to still be a better form of investment because it helps to diversify the portfolio, broaden it out and then, also, keep adding to our PPA tenure and the like. If we were to, let's say, stop doing drop downs and focus solely on stock buybacks, you know, through time, that PPA duration would kind of walk in on you a bit. So, I think with the acquisitions that we just talked about, actually the drop downs we just talked about with Cedar Creek and Rosamond, as well as hopefully Dan's Mountain, you continue to see kind of that PPA duration being done in a creative basis for drop downs versus dilution. Through time that PPA duration would kind of walk in on you a bit so I think with the acquisitions that we just talked about exiting the dropdowns, we just talked about with Cedar Creek, and Rosemont as well as hopefully Dan's mountain you continue to see kind of that PPA duration being being done on an accretive basis for dropdowns versus dilution.

Second, basically, I mean, the asset is pretty attractive with a 12-year contracted basis. So, once again, longer is better, but 12 is pretty strong in today's market. And so, overall, we think that that's, you know, once again, subject to diligence. And going in front of the GCN and the like, that number doesn't surprise me nor do I view it negatively. To your point around stock buybacks and the like, that's something we look at. I tend to think that as long as we can continue to find accretive acquisitions or drop downs from our sponsor, those tend to still be a better form of investment because it helps to diversify the portfolio, broaden it out and then, also, keep adding to our PPA tenure and the like. If we were to, let's say, stop doing drop downs and focus solely on stock buybacks, you know, through time, that PPA duration would kind of walk in on you a bit. So, I think with the acquisitions that we just talked about, actually the drop downs we just talked about with Cedar Creek and Rosamond, as well as hopefully Dan's Mountain, you continue to see kind of that PPA duration being done in a creative basis for drop downs versus dilution.

That number doesn't surprise me, nor do I view it negatively. To your point around stock buybacks and the like that's something we look at I tend to think that as long as we can continue to find accretive acquisitions or dropdowns from our sponsor those tend to still be a better form of investment because it helps to diversify the portfolio broaden it out as it also keep adding to our PPA tenor of like if we were to let's say stopped doing.

To your point around stock buybacks and the like that's something we look at I tend to think that as long as we can continue to find accretive acquisitions or dropdowns from our sponsor those tend to still be a better form of investment because it helps to diversify the portfolio broaden it out as it also keep adding to our PPA tenor of like if we were to let's say stopped doing.

Dropdowns and focus solely on stock buybacks.

Mark Thomas Jarvi: Okay, that makes sense, Chris. And then, just coming to the dividend increases, obviously, you've talked about not needing equity to hit the 2.15 and drive 8% dividend growth. But given where the stock's going to trade now and market conditions, if you're not being rewarded for the increases, you start to moderate down the lower end or you just take that long-term view and stick with the plan? You're at 8% for the foreseeable future.

This dividend increase is obviously you've talked about not needing equity. 2015, and drive 8% dividend growth, but given where the stocks are trading now in market condition, if youre not being rewarded for the increase as you start to moderate down at a lower end or do you just take a long long term view and stick with the plan here at 8% for the foreseeable future.

2015, and drive 8% dividend growth, but given where the stocks are trading now in market condition, if youre not being rewarded for the increase as you start to moderate down at a lower end or do you just take a long long term view and stick with the plan here at 8% for the foreseeable future.

Chris Sotos: Sure. I think, you know, subject to moving conditions, I would inform your answer by a couple things. One, as I talked about in response to earlier questions, I think we all need to see where the Treasury market kind of settles out at. This kind of fore-handle has been a pretty recent phenomenon, which I think has driven some of the weakness in the stock. So, part one is, you know, where do treasuries kind of stabilize. Part two, to me the difference in growing let's say at six versus eight to come up with, you know, a number that's lower than eight for purposes of the conversation isn't a significant deviation in terms of, you know, significant cash that's left on the balance sheet, right? Four hundred ten million dollars of CAFD, every 1% is $4 million of CAFD, so a 2% difference in growth is about $8 million. It's not a paradigm shift in saying, well, we have a lot more cash on the balance sheet with which to basically, you know, invest in assets for like. So, I don't see the dividend growth rate and changes in that really driving a significant deviation in retain cash that can be available for investment.

<unk>.

To me the difference and growing let's say at six versus eight to come up with. A number that's lower than eight for purposes of the conversation isn't a significant deviation in terms of significant cash that's left in the balance sheet right at $410 million of Kathy every 1% is $4 million of casting so a 2% difference in growth is about $8 million, it's not a paradigm shift in saying well. We have a lot more cash on the balance sheet. With which to basically. Invested assets were like so I don't see the dividend growth rate and changes in that really driving a significant deviation in. Retained cash that can be available for investment.

A number that's lower than eight for purposes of the conversation isn't a significant deviation in terms of significant cash that's left in the balance sheet right at $410 million of Kathy every 1% is $4 million of casting so a 2% difference in growth is about $8 million, it's not a paradigm shift in saying well. We have a lot more cash on the balance sheet. With which to basically. Invested assets were like so I don't see the dividend growth rate and changes in that really driving a significant deviation in. Retained cash that can be available for investment.

We have a lot more cash on the balance sheet. With which to basically. Invested assets were like so I don't see the dividend growth rate and changes in that really driving a significant deviation in. Retained cash that can be available for investment.

With which to basically. Invested assets were like so I don't see the dividend growth rate and changes in that really driving a significant deviation in. Retained cash that can be available for investment.

Invested assets were like so I don't see the dividend growth rate and changes in that really driving a significant deviation in. Retained cash that can be available for investment.

Retained cash that can be available for investment.

Chris Sotos: To your question around, you know, how do we think about moderating that in the future, that I think will be based upon -- you know, if we're never valued for it, right? I think that's pushing the envelope. But if, for example, you know, the market just doesn't value dividends anymore, which, to be clear, I do not think is the case currently, then we kind of take a look at it again. But I think right now, we're comfortable with the long-term growth rate. We're comfortable with the high end of the range. And everybody uses eight, but just to be clear, it's kind of 6.5 to eight. It's the high end of our range. And third, you know, I still see value in the dividend in terms of our equity holders. I think we just need this tenure to settle down a bit and then we'll kind of see where we're at.

How do we think about moderating that in the future that I think will be based upon. We're never valued for us I think that that's pushing the envelope, but if for example, the market just doesn't value dividends anymore, which to be clear I do not think is the case currently than. And then we can take a look at it again, but I think right now we're comfortable with the long term growth rate, we're comfortable with the high end of the range and everybody uses eight but just to be clear thats kind of six 5% to eight is the high end of our range.

We're never valued for us I think that that's pushing the envelope, but if for example, the market just doesn't value dividends anymore, which to be clear I do not think is the case currently than. And then we can take a look at it again, but I think right now we're comfortable with the long term growth rate, we're comfortable with the high end of the range and everybody uses eight but just to be clear thats kind of six 5% to eight is the high end of our range.

And then we can take a look at it again, but I think right now we're comfortable with the long term growth rate, we're comfortable with the high end of the range and everybody uses eight but just to be clear thats kind of six 5% to eight is the high end of our range.

And everybody uses eight, but just to be clear, it's kind of 6.5 to eight. It's the high end of our range. And third, you know, I still see value in the dividend in terms of our equity holders. I think we just need this tenure to settle down a bit and then we'll kind of see where we're at.

Then, we'll kind of see where at.

Mark Thomas Jarvi: Okay,  all right. I'll leave it there. Thanks for the time today. Thank you.

Operator: Thank you. One moment for questions. Our next question comes from Angie Storozynski with Seaport Research Partners. You may proceed.

Our next question comes from Andrew <unk> with Seaport Research Partners you May proceed.

Angieszka Anna Storozynski: Good morning. So, one question on the gas plants. So, could you comment on the dispatch of the assets and how it differs versus what we saw for the output from these assets under the tolls?

One question on the gas plants so. Could you comment on the dispatch of the assets and how it differs versus. What we saw for the output from these assets under the tolls.

Could you comment on the dispatch of the assets and how it differs versus. What we saw for the output from these assets under the tolls.

What we saw for the output from these assets under the tolls.

Chris Sotos: I can't really say there's a difference that can really be identified, Angie. Obviously, the tolling entities probably ran them differently based upon what they're seeing in their portfolios versus us just taking market signals. So, I will say -- and it's also a little bit difficult because, obviously, we've only got really two months of full data, maybe three, and also not around the full fleet. So, I don't know if there's a really good basis for that comparison, Angie, to be fair to your question.

Also not around the full fleet. So I don't know if theres, a really good basis for that comparison Angie it would be fair to your question.

Angieszka Anna Storozynski: Okay. I understand. And then, changing topics, on the CAFD per share expectation, so I'm looking at your HoldCo debts and maturities and where these bonds currently trade. And I know that some of them are 2020 and further out. But I mean, is there a plan how to absorb the incremental interest expense from that refinancing in that CAFD per share projection?

So im looking at your. Holdco debt maturities and where these bonds currently trade so. And I know that some of them are 2020, and further out but I mean. Is there a plan how to absorb. The incremental interest expense from debt refinancing and that. <unk> per share projections.

Holdco debt maturities and where these bonds currently trade so. And I know that some of them are 2020, and further out but I mean. Is there a plan how to absorb. The incremental interest expense from debt refinancing and that. <unk> per share projections.

And I know that some of them are 2020, and further out but I mean. Is there a plan how to absorb. The incremental interest expense from debt refinancing and that. <unk> per share projections.

Is there a plan how to absorb. The incremental interest expense from debt refinancing and that. <unk> per share projections.

The incremental interest expense from debt refinancing and that. <unk> per share projections.

<unk> per share projections.

Chris Sotos: Sure, I think to your question, if I'm answering correctly, the corporate bonds are in 2028, 2031, and 2032. And I think while again, you know, that gives us some time to continue to grow the portfolio. You know, if in the end, Angie, if those things are, you know, yielding nine, it may make sense to buy those back at that period of time because you obviously have a pretty strong cap yield at that point. So, I think, for me, you know, A, we've got a bit of time between now and then; two, one way to manage those and continue to grow the portfolio; third is -- you know, obviously, the other two are very long-dated with 2031 and 2032. So, hopefully that answers your question.

And as if those things are yielding nine. To buy those back at that period of time, because you obviously have a pretty strong cap deal that point, so I think for me. We've got a bit of time between now and then to one way to manage those to continue to grow the portfolio third is obviously the other two are very long dated with 2031 in 2032. So hopefully that answers your question.

To buy those back at that period of time, because you obviously have a pretty strong cap deal that point, so I think for me. We've got a bit of time between now and then to one way to manage those to continue to grow the portfolio third is obviously the other two are very long dated with 2031 in 2032. So hopefully that answers your question.

We've got a bit of time between now and then to one way to manage those to continue to grow the portfolio third is obviously the other two are very long dated with 2031 in 2032. So hopefully that answers your question.

So hopefully that answers your question.

Angieszka Anna Storozynski: Yes, thank you.

Operator: Thank you. Our next question comes from Noah Kaye with Oppenheimer. You may proceed.

Our next question comes from Noah Kaye with Oppenheimer You May proceed.

Noah Duke Kaye: Thanks for taking the questions. Maybe just a little bit of cleanup math here following prior questions. I mean, the midpoint of your revised guide, you've got the 1Q '23 plus 2Q '23 numbers in that deck very clear, and then there's basically another 5 million slightly lower CAFD at the midpoint in the back half. Is that the right way to think about the potential for lower energy?

Following prior questions I mean, the midpoint of your revised guide. You've got the <unk> 23, plus <unk> 23 numbers in that very clear and then there is basically another $5 million. Slightly lower <unk> at the midpoint in the back half of that. Is it the right way to think about it.

You've got the <unk> 23, plus <unk> 23 numbers in that very clear and then there is basically another $5 million. Slightly lower <unk> at the midpoint in the back half of that. Is it the right way to think about it.

Slightly lower <unk> at the midpoint in the back half of that. Is it the right way to think about it.

Is it the right way to think about it.

That's correct for lower energy and okay. So the way I would put it.

Chris Sotos: Yeah, the way I would put it, Noah, is given the first-half results, we kind of skewed the range a bit to the downside, just taking into account the first half of the year. Once again, I think to some of the other questions, fortunately, we haven't seen the weather patterns that persisted in the first half of the year in July, so we're hoping the trend in July continues. But, you know, long way to go.

Noah Duke Kaye: So, just a little bit of conservative on basically -- And then, just not changing your view -- or actually you increased your pro forma CAFD view because of those portfolio additions, but not changing your view of the existing portfolio's pro forma, long-term EBITDA, CAFD, I guess what underpins that at this point? You know, you talked about this being historically low quarter for wind production. Obviously, some mean reversion would be implied. But as a company that is generally investing on the right side of climate change, you know, you certainly have to look at some of these weather patterns and wonder is there anything to be concerned about. So, talk to us about your assessment of the portfolio and how hard you're testing those long-term assumptions. Sure.

And then, just not changing your view -- or actually you increased your pro forma CAFD view because of those portfolio additions, but not changing your view of the existing portfolio's pro forma, long-term EBITDA, CAFD, I guess what underpins that at this point? You know, you talked about this being historically low quarter for wind production. Obviously, some mean reversion would be implied. But as a company that is generally investing on the right side of climate change, you know, you certainly have to look at some of these weather patterns and wonder is there anything to be concerned about. So, talk to us about your assessment of the portfolio and how hard you're testing those long-term assumptions.

The existing portfolios.

Pro forma long term EBITDA cafe.

Guess, what what underpins that at this point.

You talked about this being historically low quarter for wind production, obviously, some mean reversion would would be implied but.

As a company that. Is generally investing in the right side of the climate change. You certainly have to look at some of these weather patterns and wonder is there anything to be concerned about so talk to us about your assessment of the portfolio and how hard you're kind of testing those long term assumptions.

Is generally investing in the right side of the climate change. You certainly have to look at some of these weather patterns and wonder is there anything to be concerned about so talk to us about your assessment of the portfolio and how hard you're kind of testing those long term assumptions.

You certainly have to look at some of these weather patterns and wonder is there anything to be concerned about so talk to us about your assessment of the portfolio and how hard you're kind of testing those long term assumptions.

Chris Sotos: Sure. Part one is typically, any long-term assumptions, we'll update in November. So, just to be clear, it's not as though we don't see any adjustments at all occurring, just simply we don't do that kind of every quarter. We do that comprehensively in November, which takes into account any revisions to P50s, which we've done in previous years, cost increases, merchant curves, and the extension of RA contracts and the like. So, part one is that the long-term view is typically done in November, where you comprehensively bring everything else down. Part two is, I think to your question, you know, for us on long-term data, also, if you look back at our historical production indices, it would be exception of this year, they really do oscillate around 100. You kind of have 93 and 90 -- 103, I beg your pardon, and 97 showing up. So, you do see kind of that oscillation around 100, pick your year, some better, some worse.

Cost increases merchant curves and the extension of our contracts and the like so part one is that the long term view is typically done in November we're constantly comprehensive we bring everything else down. Part two is I think to your question for US on long term data Youll also if you look back at our historical production indices. <unk> of this year, they really do oscillate around 100, you kind of have 93 and 90. 103 beg your pardon and 97 showing up so you do see kind of that oscillation around 100 pick your year some better some worse.

Part two is I think to your question for US on long term data Youll also if you look back at our historical production indices. <unk> of this year, they really do oscillate around 100, you kind of have 93 and 90. 103 beg your pardon and 97 showing up so you do see kind of that oscillation around 100 pick your year some better some worse.

<unk> of this year, they really do oscillate around 100, you kind of have 93 and 90. 103 beg your pardon and 97 showing up so you do see kind of that oscillation around 100 pick your year some better some worse.

103 beg your pardon and 97 showing up so you do see kind of that oscillation around 100 pick your year some better some worse.

Chris Sotos: So, I think for us, it's really about continuing to get longer-term data and refining that. So, in terms of like, are our models necessarily wrong? Not -- when we get enough data in them, no. And that's kind of we would use Alta to demonstrate that. And I do think just this year is so -- you know, I think, not to minimize the question, there's a reason that we kind of don't maximize leverage. There's a reason we don't maximize payout ratio, right? There was a question about dividend growth. Easiest way for me to generate dividend growth is to move the payout ratio to 90, right? It doesn't require anything. I think, from my perspective, these years are going to happen, and we try to basically run things in terms of being able to manage that. To me, I would actually -- I'm not going to argue it's a positive, obviously.

Our models necessarily wrong, not when we get enough data in them no and that is kind of weird used also to demonstrate that and I do think just this year is so.

I think not to minimize the question. There is a reason that we kind of don't maximize leverages. A reason, we don't maximize payout ratio there was questions about dividend growth.

Wait for me to generate dividend growth is to move the payout ratio to 90 right doesn't require anything I think from my perspective. <unk> are going to happen and we try to basically run things in terms of being able to manage that to me. I would actually. Not going to argue is a positive obviously, but.

<unk> are going to happen and we try to basically run things in terms of being able to manage that to me. I would actually. Not going to argue is a positive obviously, but.

I would actually. Not going to argue is a positive obviously, but.

Not going to argue is a positive obviously, but.

Chris Sotos: But given the weakness of this year, to view that we were able to amortize all project debt, pay off all corporate interest, and still generate at the midpoint, you know, $345 million of cash, despite a P90 or P85 year in multiple parts of the fleet, and it's a weakness in conventional, don't get me wrong, wish it was higher. Not making that point, but I think it actually shows the robustness of the system to deal with these weaknesses that we are going to see over a 10-year period once in a while in terms of the book.

Wish it was higher not making that point, but I think it actually shows the robustness of the system to deal with these weaknesses that we are going to see over a 10 year period once in a while in terms of the book.

Noah Duke Kaye: Appreciate that. And one last question if I could, you know, just with Rosamond, you have the 15-year RA agreement in place with the high-quality IOU. What kind of attributes do you need to see to invest in additional stand-alone storage projects? I assume you need some elements of long-term revenue visibility, you know, hopefully in a desirable market. But just walk us through how you think about the investability of stand-alone storage. Assume you need some elements of long term revenue visibility.

Just with Rosemont you have the <unk>.

15 year R&D agreement in place with the fed hike.

Quality, Idaho U.

It kind of attributes do you need to see to invest in additional. Standalone storage projects.

Standalone storage projects.

Hopefully. Desirable market, but just walk us through how you think about the invest ability of standalone storage.

Desirable market, but just walk us through how you think about the invest ability of standalone storage.

Chris Sotos: Sure. I think if you're saying to invest in stand-alone storage purely on a merchant basis, where capacity and energy are open, that's probably tough for us, unless it fits in with other parts of our book where we're trying to mitigate positions or scarcity pricing. So, I think kind of step one from our view is that if you were to say, hey, what's the likelihood of CWEN investing in 100% merchant storage that's not integrated with the rest of its portfolio, that's not a probable place we're going to invest. Secondly, I think that because storage is a little bit, you know, nascent from an asset perspective, the significant -- I think we use the term, you know, significant majority of the economics are from the capacity side of things. So, we don't want to bet a lot on, let's say, merchant energy. Not that we don't need any, that would be a little bit too positive. But we're really trying to mitigate that through contracting as long as we can on the capacity side of things. So, from our view, you do need kind of that merchant dispatch, but if not, we're not going to take a 75% bet in terms of economics on the merchant portion of it either, if that's kind of your question.

Merchant storage. Not integrated with the rest of its portfolio. Not a probable place we're going to invest secondly, I think that because storage is a little bit nascent from. And asset perspective.

Not integrated with the rest of its portfolio. Not a probable place we're going to invest secondly, I think that because storage is a little bit nascent from. And asset perspective.

Not a probable place we're going to invest secondly, I think that because storage is a little bit nascent from. And asset perspective.

And asset perspective.

The significant I think we just have a significant majority of the economics are from the capacity side of things. So we don't want to bet a lot on let's say merchant energy not that we don't need any of that would be a little bit too positive, but we're really trying to mitigate that through contracting as long as we can on the capacity side of things so far.

So, from our view, you do need kind of that merchant dispatch, but if not, we're not going to take a 75% bet in terms of economics on the merchant portion of it either, if that's kind of your question.

Noah Duke Kaye: Yes, that's very helpful. Thank you.

Operator: Thank you. I'd now like to turn the call back over to Chris Sotos for any closing remarks.

Chris Sotos: Thank you. Once again, I appreciate everyone's patience during this difficult year. I think we're working it through. And like I said, you know, July looks to have reversed some of the trends we saw in the first half. We hope it continues, but thank you all for your support. Take care.

Operator: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect. Okay.

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[music].

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Okay.