Q1 2024 NRG Energy Inc Earnings Call

Okay.

Speaker Change: Good day, and thank you for standing by and welcome to the NRG Energy, Inc. First quarter 'twenty 'twenty four earnings call. At this time, all participants are in listen only mode.

Operator: Good day, and thank you for standing by. Welcome to the NRG Energy Inc. first quarter 2024 earnings call. At this time, all participants are in listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand the conference over.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Kevin Cole, Head of Treasury and Investor Relations. Please go ahead.

Speaker Change: To your first speaker today, Kevin Cole head of Treasury and Investor Relations. Please go ahead.

Kevin L. Cole: Thank you good morning, and welcome to NRG Energy's first quarter 2024 earnings call. This morning's call will be 45 medicine.

Kevin L. Cole: Thank you. Good morning, and welcome to NRG Energy's first quarter 2024 earnings call. This morning's call will be 45 minutes in length and is being broadcast live over the phone and via webcast, which can be located in the investor section of our website at www.nrg.com under presentations and webcast. Please note that today's discussion may contain forward-looking statements that are based upon assumptions that we believe to be reasonable as of this date. However, actual results may differ materially.

Kevin L. Cole: Is being broadcast live over the phone or via webcast, which can be located in the investors section of our website at www Dot NRG dot com under presentations and webcast.

Kevin L. Cole: Please note that today's discussion may contain forward looking statements, which are based upon assumptions that we believe to be reasonable as of this date.

Kevin L. Cole: Actual results may differ materially.

Kevin L. Cole: We urge everyone to review the safe harbor in today's presentation, as well as the risk factors in our SEC filing. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures.

Kevin L. Cole: We urge everyone to review the Safe Harbor in today's presentation as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law.

Kevin L. Cole: In addition, we will refer to both GAAP and non-GAAP financial measures for information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. Please refer to today's presentation.

Kevin L. Cole: For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation. And with that, I'll now turn the call over to Dr. Larry Coben, NRG's Chairman and Interim President and CEO. Thank you very much, Kevin.

Speaker Change: With that I'll now turn the call over to Dr. Larry Coben, Nrg's chair and interim President and CEO.

Lawrence Stephen Coben: Thank you very much Kevin good morning, everyone and thank you for your interest in NRG and <unk>.

Lawrence Stephen Coben: Good morning, everyone, and thank you for your interest in NRG. I'm joined this morning by Bruce Chung, our Chief Financial Officer, and we also have members of the management team on the call who are available to answer questions. Let's begin with the three key messages for today's presentation on slide 4.

Speaker Change: Joining this morning also by Bruce Chen our Chief Financial Officer, and we also have members of the management team on the call who are available to answer questions. Let's.

Lawrence Stephen Coben: Let's begin with the three key messages for today's presentation on slide four.

Lawrence Stephen Coben: First, our business performance exceeded expectations in the first quarter. I'm incredibly pleased with our strong start to the year and in reaffirming our 2024 financial guidance ranges. Second, electrification trends compounded by Gen-AI data center growth forecast a signal of transformative rises in power demand. As a result, we expect competitive markets to realize outsized benefits driven by business-friendly environments, available resources, and the ability to site projects quickly. Finally, NRG is well-positioned to capitalize on tightening supply and demand in its core markets.

Speaker Change: First our business performance exceeded expectations in the first quarter I'm incredibly pleased with our strong start to the year and then reaffirming our 2024 financial guidance ranges.

Speaker Change: Second electrification trends compounded by Gen AI data center growth forecast, a signal of transformative rises and power demand as a result, we expect competitive markets to realize outsized benefits driven by business friendly environments available resources and the ability to save.

Speaker Change: <unk> quickly.

Speaker Change: Finally, NRG is well positioned to capitalize on tightening supply and demand in our core markets. Our technology led consumer platform, our diversified generation portfolio, our leading business energy platform and our real estate portfolio presents a unique upper.

Lawrence Stephen Coben: Our technology-driven consumer platform, our diversified generation portfolio, our leading business energy platform, and a real estate site portfolio present a unique opportunity to create significant shareholder value. I'm going to give you visibility into this later in the presentation.

Speaker Change: <unk> to create significant shareholder value.

Speaker Change: Im going to give you visibility into this later in the presentation.

Lawrence Stephen Coben: Let's move to slide five, because I want to share again our value proposition, which may not be familiar to those of you who are new to NRG, and I understand there are several of you on this call. We serve nearly 8 million residential customers and operate the second largest C&I energy and natural gas retail business by volume in the United States. Our company sits at the intersection of energy and technology in the home and the grid.

Speaker Change: Let's move to slide five because I wanted to share again, our value proposition, which may not be familiar to those of you who are new to NRG and I understand there are several of you on this call.

Speaker Change: We served nearly 8 million residential customers and operate the second largest C&I energy natural gas retail business by volume in the United States.

Speaker Change: Our company sits at the intersection of energy and technology in the home and the grid.

Lawrence Stephen Coben: We generate significant excess cash well beyond our current business needs, resulting in the financial flexibility to grow earnings while returning significant capital to our shareholders and maintaining a strong balance sheet. The strength of our business and financial outlook positions us uniquely positioned to capitalize on what we believe to be the beginning stages of an exceptional time for our industry. It's an exciting time for our company, and we remain on track to achieve our 15 to 20% free cash flow before growth per share. Tiger Target, even as a rising stock price means buying shares at higher prices than projected a year ago. Turning to slide six.

Speaker Change: We generate significant excess cash well beyond our current business needs, resulting in the financial flexibility to grow earnings while returning significant capital to our shareholders and maintaining a strong balance sheet.

Speaker Change: The strength of our business and financial outlook has us uniquely positioned to capitalize on what we believe to the beginning stages of an exceptional time for our industry.

Speaker Change: It's an exciting time for our company.

Speaker Change: We remain on track to achieve our 15% to 20% free cash flow before growth per share.

Speaker Change: CAGR target, even as a rising stock price means buying shares at higher prices than projected a year ago.

Speaker Change: Turning to slide six.

Lawrence Stephen Coben: In recent months, we've received numerous questions about the impacts of the forthcoming power demand growth super cycle on the industry and NRG in particular. Today, I'd like to talk about what we are seeing. Bruce will then discuss the first quarter results later in the presentation.

Speaker Change: In recent months, we have received numerous questions about the impacts of the forthcoming power demand growth Super cycle on the industry ended NRG in particular.

Speaker Change: I'd like to talk about what we are seeing Bruce who will then discuss the first quarter results later in the presentation.

Lawrence Stephen Coben: Starting with macro trends, we're seeing clear signs of a step change in the long-term fundamentals of power demand from multiple catalysts. This marks a departure from an extended period of stagnant power demand during which energy efficiency outpaced usage growth. For the first time in decades, and perhaps in my 40 years in this business, we are experiencing fundamental improvements driven by demand rather than commodity prices. We, along with every other forecasting expert I have read, are now expecting a step change in long-term power demand.

Bruce Chung: Starting with macro trends, we're seeing clear signs of a step change in the long term fundamentals of power demand from multiple catalysts. This largely departure from an extended period of stagnant power demand.

Bruce Chung: Which energy efficiency outpace usage growth.

Bruce Chung: For the first time in decades, and perhaps in my 40 years in this business, we are experiencing fundamental improvements driven by demand rather than commodity prices.

Speaker Change: We along with every other forecasting expert I have read are now expecting a step change in long term power demand this increasing.

Lawrence Stephen Coben: This increase in demand is attributed to several factors, including electrification, manufacturing on-shoring, LNG, crypto, greater industrial loads, and data center growth. Recent advancements in Gen-AI are compounding and accelerating these factors, leading to the formation of the next power demand super cycle. At the same time, the U.S. power supply that is expected to accommodate this growth will increasingly depend on intermittent resources, which highlights a growing and unprecedented imbalance between dispatchable supply and demand. To be clear, it takes only a fraction of what is being forecasted to nudge us into this super cycle.

Speaker Change: Leasing demand is attributed to several factors, including electrification manufacturing onshoring, LNG crypto greater industrial loads and datacenter growth.

Speaker Change: Recent advancements in Gen AI are compounding and accelerating these factors leading to the formation of the next power demand Super cycle.

Speaker Change: At the same time the U S power supply that is expected to accommodate this growth we will increasingly depend on intermittent resources.

Speaker Change: Which highlights a growing an unprecedented imbalance between dispatch of both supply and demand to be clear. It takes only a fraction of what is being forecasted to not just into this super cycle and this super cycle will require an all of the above supply approach, including retail.

Lawrence Stephen Coben: And this super cycle will require an all-of-the-above supply approach, including retaining existing generation assets, developing new generation, and approaching supply and demand differently through the adoption of technology by shifting large loads, residential VPP, and other forms of demand and energy management. This is a transformative opportunity for our sector and for NRG. Turn to slide 7, and you'll see why competitive markets, such as those in which NRG operates, are best positioned to realize outsized benefits of this large load growth. It's due to the competitive framework.

Speaker Change: The existing generation assets, developing new generation and approaching supply and demand differently through the adoption of technology by shifting large loads residential VP and other forms of demand and energy management.

Speaker Change: This is a transformative opportunity for our sector and for NRG.

Speaker Change: If you turn to slide seven Youll see wide competitive markets such as those in which NRG operates are best positioned to realize outsized benefits of this large load growth. It's due to the competitive framework. It offers speed to market affordability and resource availability.

Lawrence Stephen Coben: It offers speed to market, affordability, and resource availability. We see Texas and portions of the Northeast as the most favorable markets. Texas stands out as it is already a preferred destination for large loads, including crypto, LNG, and manufacturing onshoring, which all have experienced substantial growth in recent years and are exhibiting strong outlooks for the future. Texas benefits from its business-friendly practices, favorable regulatory environment, tax incentives, and large land footprint, positioning it as a winner in the era of generative AI and other large load growth.

Speaker Change: We see Texas and portions of the northeast as the most favorable markets.

Speaker Change: Texas stands out as it is already a preferred destination for large loans, including crypto LNG and manufacturing onshoring, which all have experienced substantial growth in recent years and are exhibiting strong outlook on the future.

Speaker Change: <unk> benefits from its business friendly practices favorable regulatory environment tax incentives and large land footprint.

Speaker Change: <unk> as a winner in the euro of generative AI and other large load growth.

Lawrence Stephen Coben: Furthermore, coupled with our ability to site projects years faster than in regulated markets and its proximity to major fiber channels, I expect Texas to continue to be a leader in load growth. On slide eight, I'd like to highlight four of the many key opportunities for value creation that exist across our platform. To leave no doubt, each of these opportunities represents upside to our June 2023 Investor Day Growth Plan, and it's not relying on potentially transitory subsidies or Inflation Reduction Act funding.

Speaker Change: Furthermore, coupled with our ability to cite projects years faster than in regulated markets and its proximity to Maine fiber channels I expect Texas to continue to be a leader in load growth.

Speaker Change: On slide eight I'd like to highlight four of the many key opportunities for value creation that exists across our platform.

Speaker Change: To leave no doubt each of these opportunities represent upside to our June 2023, Investor day growth plan and not relying on potentially transitory subsidies or inflation reduction Act funding.

Lawrence Stephen Coben: First, we are the only company to have residential energy and smart technologies at scale, with nearly 8 million customers. We're a trusted provider and have the unique capability to provide novel energy management through our smart home ecosystem, a capability that will be necessary and increase in value in a tightening market. Second, you may not be aware or fully cognizant of the opportunity that it represents, but we are the second largest business-to-business electricity and largest natural gas provider by volume in North America.

Speaker Change: First we are the only company to have residential energy and smart technologies at scale with nearly 8 million customers. We are a trusted provider and have the unique capability to provide novel energy management through our smart home ecosystem.

Speaker Change: <unk> that will be necessary and increase in value in a tightening market.

Speaker Change: Second you may not be aware are fully cognizant of the opportunity that it represents but we are the second largest business to business electricity and largest natural gas provider by volume in North America beyond.

Lawrence Stephen Coben: Beyond selling customers more of our products, we are a leader in premium services. We offer tailored energy management solutions that focus on optimizing and stabilizing energy costs. We're also able to commercially help our customers achieve their sustainability goals. These customers include many of America's largest industrial players and corporations, as well as the hyperscalers. Third, our Texas Generation Fleet Mix is a diverse set of assets that enable us to deliver stable supply costs while maintaining insurance for volatility through higher cost units that are not economical in the current year. These uneconomic units are primarily higher heat rate natural gas assets that, in recent low price times, may have run for only a few peak hours per year.

Speaker Change: Beyond selling customers more of our products. We are a leader in premium services, we offer tailored energy management solutions that focus on optimizing and stabilizing energy costs were also able to commercially help our customers achieve their sustainability goals. These customers include many.

Of America's largest industrial players and corporations as well as the Hyperscale.

Lawrence Stephen Coben: Third our Texas generation fleet mix is a diverse set of assets that enable us to deliver stable supply costs, while maintaining insurance for volatility through higher cost units that are not economical in the current year. These uneconomic units are primarily higher heat rate natural gas asset.

Speaker Change: But in recent low price times may have run for only a few peak hours per year.

Lawrence Stephen Coben: We primarily use our generation fleet to supply our residential retail portfolio, with customer fixed price contracts typically lasting a year or two. As a result, our generation fleet is mostly open 18 to 24 months out. This creates a significant opportunity to swiftly capitalize on rising power prices and rising demand. As the value of our product increases, and equally importantly, units that have historically operated only a few hours annually could now see increasing run times and, of course, profitability.

Lawrence Stephen Coben: We primarily use our generation fleet to supply our residential retail portfolio with customer fixed price contracts typically last thing a year or two.

Lawrence Stephen Coben: As a result, our generation fleet is mostly opened 18 to 24 months out.

Lawrence Stephen Coben: This creates a significant opportunity to swiftly capitalize on rising power prices and rising demand as the value of our products increases and equally importantly units that have historically operated only a few hours annually could now see increasing run times and of course profit.

Lawrence Stephen Coben: Ability.

Lawrence Stephen Coben: Lastly, our real estate portfolio has several potential development sites for co-location of large loads or power plants. We own 21 sites with 21,000 acres of retired and existing generation facilities that generally have existing or access to grid interconnection. They are in competitive markets, and given the extreme focus on project speed, potentially provide another avenue of value creation.

Lawrence Stephen Coben: Lastly, our real estate portfolio has several potential development sites for co location of large loads or power plants.

Lawrence Stephen Coben: We owned 21 sites with 21000 acres of retired an existing generation facilities generally have existing or access to grid interconnection. They are in competitive markets and given the extreme focus on project speed potentially provide another avenue of value creation.

Speaker Change: Let's try to unpack each of these a bit.

Lawrence Stephen Coben: Turning to slide 9, we operate one of the leading business-to-business power and natural gas platforms in North America. We serve nearly 100 terawatt hours of electricity and almost 1.8 trillion cubic feet of natural gas annually. As demand growth scales, we anticipate increasing electric and natural gas sales volumes. Through our business platform, we help large load customers accomplish their intended goals through tailored plans, including stabilizing their energy costs, delivering specific attributes for their sustainability commitments, and optimizing their usage through services such as demand response.

Lawrence Stephen Coben: Turning to slide nine we operate one of the leading business to business power and natural gas platforms in North America. We served nearly 100 terawatt hours of electricity in almost one eight trillion cubic feet of natural gas annually as demand growth scales.

Lawrence Stephen Coben: We anticipate increasing electric and natural gas sales volumes.

Lawrence Stephen Coben: Through our business platform, we help large load customers accomplish their intended goals through tailored plans, including stabilizing their energy costs delivering specific attributes for their sustainability commitments and optimizing their usage through services such as demand response.

Lawrence Stephen Coben: At heart, these customers are looking for a partner to help them navigate complicated energy markets while minimizing their risk. We stand ready to provide the services they need as a large market participant with a best-in-class commercial operations platform and a track record of high-quality customer experience. With respect to data centers, it is still the early days, but we are seeing signs that they are planning to ramp up capacity in the coming years. As an anecdotal example, a data center customer approached us about increasing their capacity by three times at an existing facility in the next 36 months. We are seeing and experiencing man growth in real time.

Lawrence Stephen Coben: At heart. These customers are looking for a partner to help them navigate complicated energy markets, while minimizing the risks.

Lawrence Stephen Coben: We stand ready to provide the services. They need is a large market participant with a best in class commercial operations platform and a track record of high quality customer experiences.

Lawrence Stephen Coben: With respect to data centers. It is still the early days, but we're seeing signs that they are planning to ramp up capacity in the current years.

Lawrence Stephen Coben: As an anecdotal example of datacenter customer approached us about increasing their capacity by three times at an existing facility in the next 36 months.

Lawrence Stephen Coben: We are seeing.

Lawrence Stephen Coben: And experiencing demand growth in real time.

Lawrence Stephen Coben: Moving to slide 10, our Texas generation fleet is diverse in technology, age, and merit order. We operate 8.5 gigawatts of generation capacity in Texas, supplemented by 1.6 gigawatts of long-term power purchase agreements. We also have 1.5 gigawatts of shovel-ready brownfield projects in development. This strategic diversification across technologies, fuel types, and merit orders ensures near-term stability and positions us to capitalize on opportunities for medium to long-term margin expansion driven by higher power prices.

Lawrence Stephen Coben: Moving to slide 10, our Texas generation fleet is diverse and technology age and Merit order.

Lawrence Stephen Coben: We operate eight five gigawatts of generation capacity in Texas supplemented by one six gigawatts of long term power purchase agreements.

Lawrence Stephen Coben: We also have one five gigawatts of shovel ready brownfield projects in development.

Lawrence Stephen Coben: This strategic diversification across technologies fuel types, and merit orders insurance near term stability and positions us to capitalize on opportunities for medium to long term margin expansion driven by higher power prices.

Lawrence Stephen Coben: On the right side of the slide, we provide our Texas generation open gross margin sensitivity to changes in around-the-clock power price scenarios. This sensitivity provides insight into our generation portfolio's earnings power as economic generation increases in value and currently uneconomic generation becomes not only economical but very profitable. On slide 11, we provide a more detailed look at our Texas Generation Gross Margin Sensitivity. This analysis focuses on changes in power prices, assuming flat natural gas pricing and normal weather.

Lawrence Stephen Coben: On the right hand of the slide we provide our Texas generation open gross margin sensitivity to changes in around the clock power price scenarios.

Lawrence Stephen Coben: This sensitivity provides insight into our generation portfolios earnings power as economic generation increases in value and currently uneconomic generation becomes not only economic but very profitable.

Lawrence Stephen Coben: On slide 11 provide a more detailed look at our Texas generation gross margin sensitivity.

Lawrence Stephen Coben: This analysis focuses on changes in power prices, assuming flat natural gas pricing and normal weather.

Lawrence Stephen Coben: On the left side of the slide, we have included Texas's around-the-clock and peak pricing forwards for July 2023 and April 2024, which represents the assumed pricing in our 2024 guidance and is compared to today's forward. As you can see, ERCOT forward pricing has moved up significantly. The only explanation for this is that the market is starting to reflect increased power demand from large load growth. Also, noteworthy is that the curve is no longer backward gated, suggesting a view and a long-term view of sustained tightness in the Texas power market.

Lawrence Stephen Coben: On the left side of the slide we have included Texas is around the clock compete pricing forwards for July 2023, and April 2024, which represents the assumed pricing in our 2020 for guidance and are compared to todays forwards.

Lawrence Stephen Coben: As you can see ERCOT forward pricing has moved up significantly the.

Lawrence Stephen Coben: The only explanation for this is that the market is starting to reflect increased power demand from large load growth.

Lawrence Stephen Coben: Also noteworthy is that the curve is no longer backward dated.

Lawrence Stephen Coben: Testing, a view and a long term view of sustained tightness in the Texas power market.

Lawrence Stephen Coben: Building upon last quarter's additional modeling disclosure, on the right side of the slide, we have provided the necessary components to directionally model the gross margin opportunities for our Texas fleet in a dynamic pricing environment. We begin with the 2024 Texas generation-based gross margin and include expected hedge positions of nearly fully hedged in year one, roughly half in year two, and less than 25% in year three for economic generation, respectively. We have also included an open gross margin scenario, which assumes no hedge.

Lawrence Stephen Coben: Building upon last quarter's additional modeling disclosure on the right side of the slide we have provided the necessary components to Directionally model. The gross margin opportunities for our Texas fleet and a dynamic pricing environment. We begin with the 2024, Texas generation base gross margin.

Lawrence Stephen Coben: And include expected hedge positions of nearly fully hedged in year, one roughly half in year, two and less than 25% in year, three or economic generation respectively.

Lawrence Stephen Coben: We have also included an open gross margin scenario, which assumes no hedges.

Lawrence Stephen Coben: You will observe that our price sensitivity doesn't follow a linear pattern. Units become economically viable at different price levels, resulting in disproportionately larger benefits from increases in power prices compared to decreases. With ERCOT forward pricing rising $10 in the outer years on an open gross margin basis, this equates to more than $400 million of margin benefit compared to 2024. Assuming we are 25% hedged in the year that that move occurs, it translates to approximately $350 million of upside compared to 2024. And this is simply the beginning.

Lawrence Stephen Coben: You will observe that our price sensitivity doesn't follow a linear pattern units, becoming economically viable at different price levels, resulting in disproportionately larger benefits from increases in power prices compared to decreases.

Lawrence Stephen Coben: With ERCOT forward pricing rising $10 in the outer years on an open gross margin basis.

Lawrence Stephen Coben: This implies more than $400 million of margin benefit compared to 2024.

Lawrence Stephen Coben: Assuming we are 25% hedged in the year that that move occurs it translates to approximately $350 million of upside compared to 2024.

Lawrence Stephen Coben: And this is simply the beginning.

Lawrence Stephen Coben: This sensitivity analysis demonstrates that our portfolio is well positioned to capture significant margin upside in a rising price environment and that the underlying fundamental value of our fleet has materially increased. Supported by our diversified supply strategy, we have the agility and flexibility to leverage these market dynamics and translate them into significant and durable shareholder value. On slide 12, I want to close by providing details of our site portfolio. Driven by the need for more capacity and the highly valued attributes these sites possess, we are incredibly excited about their potential value.

Lawrence Stephen Coben: This sensitivity analysis demonstrates that our portfolio is well positioned to capture significant margin upside in a rising price environment and that the underlying fundamental value of our fleet has materially increased.

Lawrence Stephen Coben: Supported by our diversified supply strategy, we have the agility and flexibility to leverage these market dynamics and translate them into significant and durable shareholder value.

Lawrence Stephen Coben: On slide 12, I want to close by providing details of our site portfolio.

Lawrence Stephen Coben: Driven by the need for more capacity in the highly valued attribute these sites possess we are incredibly excited about their potential value.

Lawrence Stephen Coben: We have 21 sites with 21,000 acres of land within competitive markets that are prime locations for new large loads and power plant development, with co-location opportunities both behind and in front of the meter. These sites offer a mix of valuable and critical access to infrastructure, including transmission, interconnection, water, abundance of land, and proximity to long-haul fiber networks.

Lawrence Stephen Coben: We have 21 sites with 21000 acres of land within competitive markets that our prime locations for new large loads and power plant development.

Lawrence Stephen Coben: With co location opportunities, both behind and in front of the meter.

Lawrence Stephen Coben: These sites offer a mix of a valuable and critical access to infrastructure, including transmission interconnection water abundance of land in proximity to long haul fiber networks.

Lawrence Stephen Coben: Of particular significance to data centers, these attributes offer expedited construction timelines, measured in years of time savings. We have established a dedicated team focused on maximizing the value of our site portfolio. When the analysis is complete later in the year, you can expect to hear more information from us regarding the potential for these sites and what would be required to turn them into new capacity, data center locations, or behind-the-meter projects. With that, I will turn it over to Bruce for the first quarter review.

Lawrence Stephen Coben: Particular significance to data centers. These attributes offer expedited construction timelines.

Bruce: <unk> and years of time savings, we have established a dedicated team focused on maximizing the value of our site portfolio. When the analysis is complete later in the year you can expect to hear more information from us regarding the potential for these sites and what would be required to turn them into new capacity data.

Bruce: Center locations or behind the meter projects.

Lawrence Stephen Coben: With that let me turn it over to Bruce for the first quarter review.

Bruce Chung: Thank you, Larry. Turning to slide 14, our top desktop safety and strong operating performance resulted in first quarter adjusted EBITDA of $849 million, exceeding the first quarter of 2023 by $203 million. This represents a 31% increase in our adjusted EBITDA from the prior year. $150 million of the year-over-year increase was the result of the inclusion of a full quarter's worth of smart home EBITDA.

Bruce: Thank you Larry.

Bruce: Turning to slide 14, our top decile safety and strong operating performance resulted in first quarter adjusted EBITDA of $849 million exceeding the first quarter of 2023 by $203 million.

Bruce Chung: This represents a 31% increase in our adjusted EBITDA from the prior year.

Bruce Chung: $150 million of the year over year increase was the result of the inclusion of a full quarter's worth of smart home EBITDA the remaining.

Bruce Chung: The remaining increase was attributable to outperformance in our east and west segments driven by lower realized supply costs, partially offset by a slight decline in our Texas region due to mild weather. Our consumer energy and smart home platforms increased customer counts year over year by 8% and 6%, respectively. Most notably, we added 35,000 customers from the newly opened Lubbock Market in Texas, representing a healthy share of the available customer base.

Bruce Chung: The increase was attributable to our performance in our east and west segments, driven by lower realized supply costs, partially offset by a slight decline in our Texas region due to mild weather.

Bruce Chung: Our consumer energy and smart home platforms increased customer accounts year over year by 8% and 6% respectively.

Bruce Chung: Most notably we added 35000 customers from the newly opened Lubbock market in Texas, representing a healthy share of the available customer base.

Bruce Chung: This is a testament to the hard work of our consumer energy team over the past two years to position NRG and its brands as the electricity provider of choice in Lubbock. Similar to 2023, our smart home platform continued to demonstrate strong execution. In addition to growing customer count 6% year-over-year, service margins increased 5% year-over-year, and monthly recurring revenue per subscriber grew 5% over the same period. It is clear that customers recognize the value of our smart home services as evidenced by our growth in the face of various macro headwinds affecting the consumer discretionary sector.

Bruce Chung: This is a testament to the hard work of our consumer energy team over the past two years to position NRG and its brands as the electricity provider of choice in Lubbock.

Bruce Chung: Similar to 2023, our smart home platform continued to demonstrate strong execution.

Bruce Chung: In addition to growing customer count, 6% year over year service margins increased 5% year over year and monthly recurring revenue per subscriber grew 5% over the same period.

Bruce Chung: It is clear that customers recognize the value of our smart home services as evidenced by our growth in the face of various macro headwinds affecting the consumer discretionary sector.

Bruce Chung: Our diversified supply strategy continued to deliver, ensuring that we sustain the level of margin expansion we saw in 2023 while also providing the necessary coverage against potential volatility in the winter months. As we discussed in our last earnings call, our fleet performed well in the first quarter, demonstrating a 12% improvement in our in-the-money availability factor winter over winter. We have taken advantage of the mild winter in February and March to conduct our maintenance activities more proactively, and we feel confident about fleet performance heading into the critical summer months.

Bruce Chung: Our diversified supply strategy continued to deliver ensuring that we sustain the level of margin expansion. We saw in 2023, while also providing the necessary coverage against potential volatility in the winter months as.

Bruce Chung: As we discussed in our last earnings call. Our fleet performed well in the first quarter, demonstrating a 12% improvement in our in the money availability factor winter over winter.

Bruce Chung: We have taken advantage of the mild winter in February and March to conduct our maintenance activities more proactively and we feel confident about fleet performance heading into the critical summer months.

Bruce Chung: Next, I would like to highlight some of what we have focused on as an organization through the first quarter, as well as what we continue to remain focused on through the balance of the year. During the quarter, we concluded the $950 million accelerated share purchase program we launched in November of last year.

Bruce Chung: Next I would like to highlight some of what we have focused on as an organization during the first quarter as well as what we continue to remain focused on through the balance of the year.

Bruce Chung: Through that program, we repurchased nearly 19 million shares at an average price of $50.43 per share, or almost 10% of the shares outstanding at the time that we launched the ASR. We remain committed to our capital allocation plan, and we are reaffirming our 2024 return of capital amount of approximately $1.2 billion, comprised of our common dividends, which we increased earlier this year, and a further $825 million in share repurchase. As Larry discussed, we continue to advance our 1.5 gigawatts of brownfield development in Texas. We will be filing our notices of intent for the three projects with the Texas Energy Fund in the coming days, and we anticipate filing formal loan applications in early June when they are due.

Bruce Chung: During the quarter, we concluded the $950 million accelerated share repurchase program. We launched in November of last year through that program, we repurchased nearly 19 million shares at an average price of $50 43 per share or almost 10% of the shares outstanding at the.

Bruce Chung: Time that we launched the ASR.

Bruce Chung: We remain committed to our capital allocation plan and we are reaffirming our 2020 for return of capital amount of approximately $1 2 billion.

Bruce Chung: Comprised of our common dividends, which we increased earlier this year and a further $825 million and share.

Bruce Chung: Purchases.

Bruce Chung: As Larry discussed we continue to advance our one five gigawatts of brownfield development in Texas.

Bruce Chung: We will be filing our notices of intent for the three projects to the Texas Energy fund in the coming days and we anticipate filing formal loan applications in early June when they are due.

Bruce Chung: Our brownfield development portfolio, comprised of two peaking plants and one combined cycle project with CODs ranging from 2026 to 2028, is shovel-ready and represents some of the most realistic natural gas fire development opportunities in the ERCOP market. We've been developing these projects since 2021, and we believe that the advancements we have made on the permitting and equipment procurement fronts should position these projects at the front of the queue for consideration by the PUCT for funding under the loan program.

Bruce Chung: Our brownfield development portfolio comprised of two peaking plants and one combined cycle project with Cod's ranging from 2026 2028 is shovel ready and represents some of the most real natural gas fire development opportunities in the ERCOT market.

Bruce Chung: We've been developing these projects since 2021, and we believe that the investments we have made on the permitting and equipment procurement fronts should position. These projects at the front of the queue for consideration by the PUC T for funding out of the loan program.

Bruce Chung: Next, we continue to remain on track to achieve our $550 million program of growth and efficiency initiatives across our business platform. As I mentioned earlier, our consumer platforms continue to drive strong stand-alone growth, and we continue to see positive momentum in our ability to generate more margin per customer. A great example of this is the tremendous progress we've made in selling the Vivint Protection Plan. We started selling this plan shortly after closing the Vivint acquisition, and to date, we have about 15% penetration of the existing smart home customer base, or over 300,000 active plans, with each plan generating approximately $9 of monthly revenue per customer.

Bruce Chung: Next we continue to remain on track to achieve our $550 million program of growth and efficiency initiatives across our business platforms.

Bruce Chung: As I mentioned earlier, our consumer platforms continue to drive strong standalone growth and we continue to see positive momentum and our ability to generate more margin per customer a.

Bruce Chung: A great example of this is the tremendous progress we've made in selling the prepayment protection plan.

Bruce Chung: We started selling these plans shortly after closing the <unk> acquisition and to date, we have about 15% penetration of the existing smart home customer base or over 300000 active plans with each plan generating approximately $9 of monthly revenue per customer.

Bruce Chung: Finally, we are reaffirming our 2024 guidance for both EBITDA and free cash flow before growth. We have tremendous momentum in both our consumer and business platforms, and the measures we are taking in our diversified supply strategy should set us up well for the balance of the year. Turning to slide 15 for an updated view of our 2024 capital allocation, As you can see from the slide, there have been no substantial changes since our last earnings call in terms of the quantum of capital allocated to liability management and capital return.

Bruce Chung: Finally, we are reaffirming our 2024 guidance for both EBITDA and free cash flow before growth.

Bruce Chung: We have tremendous momentum in both our consumer and business platforms and the measures. We are taking in our diversified supply strategy should set us up well for the balance of the year.

Bruce Chung: Turning to slide 15 for an updated view of our 2020 for capital allocation.

Bruce Chung: As you can see from the slide there have been no substantial changes since our last earnings call in terms of the quantum of capital allocated to liability management and capital return.

Bruce Chung: As you may recall, we had planned $500 million of debt reduction in our last earnings call as part of the 2024 capital allocation plan. As you can see from the slide, that has changed slightly given our efforts in Q1 to address our outstanding convertible notes. Through April 30th, we repurchased $343 million of the outstanding principal of the convertible notes, resulting in $257 million of additional premium paid to retiring note holders. Given the cash allocated to settle the convertible note premium, that reduced our net debt reduction to $243 million planned for the year.

Bruce Chung: As you May recall, we had planned $500 million of debt reduction in our last earnings call as part of the 2024 capital allocation plan.

Bruce Chung: As you can see from the slide that has changed slightly given our efforts in Q1 to address our outstanding convertible notes.

Bruce Chung: Through April 30, we repurchased $343 million of the outstanding principal of the convertible notes, resulting in $257 million of additional premium paid to retiring noteholders.

Bruce Chung: Given the cash allocated to settle the convertible note premium that reduced our net debt reduction to $243 million plan for the year.

Bruce Chung: Our strong share price performance over the past year made the convertible notes one of the most expensive pieces of paper in our capital structure. Therefore, we believe it makes the most economic sense to pursue a retirement of that instrument before it would get even more expensive as our share price continues to reflect our fair value. Moving a few columns over to the right, you will see that the share purchase column is $865 million versus the $825 million we showed in our last earnings call.

Bruce Chung: Our strong share price performance over the past year made the convertible notes one of the most expensive pieces of paper in our capital structure.

Bruce Chung: Therefore, we believe that made the most economic sense to pursue a retirement of that instrument before and we get even more expensive as our share price continues to reflect our fair value.

Bruce Chung: Moving a few columns over to the right you will see that the share repurchase column is $860 $65 million versus the $825 million. We showed in our last earnings call.

Bruce Chung: The reason for that is because we now include $40 million of cash allocated to settle tax matters related to our 2023 share purchases and employee stock compensation plan. This would include the excise tax on share purchases instituted as part of the passage of the Inflation Reduction Act.

Bruce Chung: Because we now include $40 million of cash allocated to settle tax matters related to our 2023 share repurchases and employee stock compensation plan.

Bruce Chung: This would include the excise tax on share repurchases instituted as part of the passage of the inflation or reduction Act.

Bruce Chung: Previously, we had bucketed that allocated cash in other categories, but we decided to move those dollars into the share of purchases category in order to more accurately reflect what the cash is being used for. Finally, similar to our last earnings call, we continue to show $41 million of unallocated capital available for allocation in 2024, which we will evaluate the use of as we move along the year. With that, I will turn it back to you, Larry. Thank you very much, Bruce.

Bruce Chung: Previously, we had buckets that allocated cash in other categories, but we decided to move those dollars into the share repurchases category in order to more accurately reflect what the cash is being used for.

Bruce Chung: Finally, similar to our last earnings call. We continue to show a $41 million of unallocated capital available for allocation in 2020 for which we will evaluate the use of as we move along the year.

Bruce Chung: With that I will turn it back to you Larry.

Larry: Thank you very much Bruce.

Lawrence Stephen Coben: On slide 17, I want to provide you with a few closing thoughts on our 2024 priorities and expectations. We remain laser-focused on execution and on delivering on our financial, operational, and safety commitments. We are seeing a step change improvement in fundamentals across all of our platforms. We believe that this will put a spotlight on the scarcity of the critical products and services we sell and the durability of that platform. We are uniquely positioned to deliver significant shareholder value for years to come.

Larry: On slide 17, I want to provide you with a few closing thoughts on our 2024 priorities and expectations.

Lawrence Stephen Coben: We remain laser focused on execution and delivering on our financial operational and safety commitments.

Lawrence Stephen Coben: We are seeing a step change improvement in fundamentals across all of our platforms.

Lawrence Stephen Coben: We believe that this will put a spotlight on the scarcity of the critical products and services, we sell and the durability of that platform.

Lawrence Stephen Coben: We are uniquely positioned to deliver significant shareholder value for years to come.

Lawrence Stephen Coben: Again, we are the only company to combine residential energy and smart technologies at scale with nearly 8 million customers and the necessary capabilities to create sustainable value through both tightening and loosening power market conditions. We operate the second largest business-to-business electricity and largest natural gas platform in North America, positioning us as a leader in premium services and tailored energy management solutions.

Lawrence Stephen Coben: Again, we are the only company to combine residential energy and smart technologies at scale with nearly 8 million customers and the necessary capabilities to create sustainable value through both tightening and loosening power market conditions.

Lawrence Stephen Coben: We operate the second largest business to business electricity and largest natural gas platform in North America positioning us as a leader in premium services and tailored energy management solutions.

Lawrence Stephen Coben: Our integrated supply strategy provides incredible capabilities to stabilize near-term earnings while capturing medium to long-term margin expansion opportunities from higher power prices. And we own a large land portfolio with premium attributes for what is to come in the super cycle of power demand. In my 20 years at the company and over 40 years in power, I have never been more excited about the future of our sector and NRG. The step change in demand should also lead to a change in the depressed valuations for NRG and its peers. These depressed valuations have resulted in double-digit cash flow yields such as ours.

Lawrence Stephen Coben: Our integrated supply strategy provides.

Lawrence Stephen Coben: Incredible capabilities to stabilize near term earnings while capturing medium to long term margin expansion opportunities from higher power prices.

Lawrence Stephen Coben: And we own a large land portfolio with premium attributes.

Lawrence Stephen Coben: For what is to come in the Super cycle of power demand.

Lawrence Stephen Coben: In my 20 years at the company in over 40 years in power I have never been more excited about the future of our sector in NRG.

Lawrence Stephen Coben: The step change in demand should lead also to a change in the depressed valuations for NRG and its peers.

Lawrence Stephen Coben: Depressed valuations have resulted in double digit cash flow yields such as ours.

Lawrence Stephen Coben: This revaluation will be good for NRG and others in our space, and it's very exciting times. I look forward to updating you on our progress along the way. With that, I want to thank you for your time and interest in NRG. We're now ready to open the line for questions. Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press star one on your telephone and wait for your name to be announced.

Lawrence Stephen Coben: This revaluation will be good for NRG and others in our space and it's very exciting times.

Lawrence Stephen Coben: Look forward to updating you on our progress along the way with that I want to thank you for your time and interest in NRG, We're now ready to open the lines for questions.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to P&L.

Lawrence Stephen Coben: Your question. Please press star one again, please standby, while we compile the Q&A roster.

Operator: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Shahriar Pourreza with Guggenheim Partners. Your line is open. Hey guys, good morning. Good morning, Shahriar. How are you?

Lawrence Stephen Coben: Our first question comes from Shar <unk> with Guggenheim Partners. Your line is open.

Shahriar Pourreza: Hey, guys good morning.

Shahriar Pourreza: Morning, Shar how are you good.

Lawrence Stephen Coben: Good morning, Larry. How are you doing? Just Larry on the curves themselves, there's obviously a lot of chatter in the industry right now about some large generators wanting to go behind the meter. Is this something, I guess, that concerns you as you look at your length? Western markets, so as you go out to the market to match load, are suppliers raising any kind of concerns there? Hey Shahriar, it's Rob.

Shahriar Pourreza: Good morning, Larry how are you doing.

Lawrence Stephen Coben: Good.

Lawrence Stephen Coben: Excellent.

Rob: On the cards themselves, there's obviously a lot of chatter in the industry right now about some large generators like nukes to go behind the meter is this something I guess that concerns you as you look at your length in the eastern markets. So as you go out to the market to match mode, our suppliers raising any kind of concerns there.

Lawrence Stephen Coben: Okay. Thanks, Shar, it's Rob.

Lawrence Stephen Coben: Yes.

Robert J. Gaudette: Good morning. It doesn't raise any concerns for us as far as trying to purchase supply so that we can meet retail obligations. Even if they do go behind the meter, there are plenty of players in the East.

Rob: Good morning.

Rob: It doesn't raise any concerns for us as far as trying to purchase supply. So that we can meet retail obligations.

Robert J. Gaudette: It's very likely. Okay, got it. Perfect. And then maybe just a little longer dated.

Rob: Even if they do go behind the meter there's plenty of players in the east very liquid market.

Lawrence Stephen Coben: But as you're kind of highlighting the Texas fleet heavily here, it seems warranted. How would the recent sort of EPA regs as they stand impact your generation profile, maybe over the next couple of years, right? Is it just additional CapEx? Could we see an acceleration of gas development work beyond the 1.5 gigs that, you know, that Bruce was highlighting for shovel-ready proposals? Just more color in how these items are kind of interacting.

Robert J. Gaudette: Okay got it perfect and then maybe just a little longer dated but as you've as you kind of highlighting the Texas fleet heavily here. It seems when warranted how would you the recent sort of the EPA regs as they stand impact your generation profile, maybe over the next couple of years right is it.

Lawrence Stephen Coben: Additional capex could.

Lawrence Stephen Coben: We'd see an acceleration of gas development work beyond the one five gigs that.

Lawrence Stephen Coben: That obviously Bruce was highlighting of shovel ready proposals just more color on how these items are kind of interacting thanks.

Lawrence Stephen Coben: Sure. So, when you think about the regulations that were promulgated, you know, the first thing I would say, Shahriar, is that they're all going to be litigated, right? AGs, states, ISOs, consumers, everyone has a view and a reason to make sure that these rules get set in place in a way that works for the system and provides reliable and affordable power over time.

Speaker Change: Sure. So when you think about the regulations that were promulgated.

Lawrence Stephen Coben: First thing I would say shneur is that theyre all going to be.

Lawrence Stephen Coben: Litigated right.

Lawrence Stephen Coben: On AG States ISO as consumers everyone has a view.

Lawrence Stephen Coben: And a reason to make sure that these rules get set in place in a way that works for the system and provides reliable and affordable power over time.

Lawrence Stephen Coben: As far as specifics around us, you know, some of the rules, we'll have to see how they pan out at the end. But, you know, what I would tell you is that our decisions to invest in the gas fleet or the 1.5 gigs that Bruce talked about earlier have nothing to do with these rigs. It's all about the opportunity that we see in the markets, and, you know, we'll continue to drive that way. Does that make sense? Yes, that was perfect.

Lawrence Stephen Coben: As far as specifics around us some of it.

Lawrence Stephen Coben: Yes.

Lawrence Stephen Coben: The rules will have to see how they pan out at the end.

Lawrence Stephen Coben: But what I would tell you is that our decisions to invest around the gasoline or quick five gigs.

Lawrence Stephen Coben: <unk>.

Lawrence Stephen Coben: Bruce talked about earlier.

Lawrence Stephen Coben: I have nothing to do with <unk>, it's all about the opportunity that we see in the markets.

Speaker Change: And we will continue to drive that way that makes sense, yes that was perfect and then Larry it sounds like Youre, having a really good time on the job right now so maybe youre not in a rush, but is there anything as far as any updates on the CEO search are you having too much fun.

Lawrence Stephen Coben: And then, Larry, it sounds like you're having a really good time on the job right now. So maybe you're not in a rush, but is there anything as far as any updates on the CEO search or are you having too much fun? Well, Shahriar, I am having a lot of fun. But you know, look, it's a great team.

Speaker Change: We will start having a lot of fun, but look it's a great team and it's a great company and it's.

Lawrence Stephen Coben: And it's a great company. And Look, it's a fantastic job. The committee continues to do its work.

Larry: Look it's a fantastic job the committee continues to do its work.

Lawrence Stephen Coben: I think they're still on the time frame that I talked to you about, but, you know, there's no rush. I've told them that, you know, to take their time and that I will continue in this position as long as necessary until they find the right person that they're happy with to be the next CEO of NRG. But, you know, being given all the opportunities that we have and everything that, you know, we've been talking about on this call, you're right, Shahriar. I am having fun, and I think you're supposed to Perfect. Thank you, guys. I appreciate it. And a really big congratulations to Elizabeth. She's been such a fantastic face for NRG for some time, so good luck on the next one.

Speaker Change: I think there is still on the timeframe that I talked to you about but.

Lawrence Stephen Coben: There is no rush I've told them that to.

Lawrence Stephen Coben: To take their time and that I will continue in this position as long as necessary until they find the right person that they're happy with to be the next CEO of NRG, but.

Lawrence Stephen Coben: Given all of the opportunities that we have and everything.

Lawrence Stephen Coben: We've been talking about on this call your rates are I am having fun and I think you are supposed to have fun.

Lawrence Stephen Coben: Perfect. Thank you guys I appreciate it.

Lawrence Stephen Coben: Really big congrats to Elizabeth she's been such a fantastic place for for NRG for some time. So good luck on the next step.

Lawrence Stephen Coben: Thank you, Shahriar. One moment for the next question. The next question comes from Agnieszka Storozynski with CPOR. Your line is open.

Speaker Change: Thank you Shar.

Agnieszka Anna Storozynski: One moment for the next question.

Lawrence Stephen Coben: Okay.

Agnieszka Anna Storozynski: The next question comes from Andrew <unk> with Seaport. Your line is open.

Agnieszka Anna Storozynski: Good morning guys. Good morning, Angie. How are you?

Agnieszka Anna Storozynski: Good morning, guys.

Agnieszka Anna Storozynski: Good morning, Nancy Alright, so far Jamie go ahead, okay. So first of all that.

Agnieszka Anna Storozynski: Maybe 20 years.

Agnieszka Anna Storozynski: Trying to convince us that power price agnostic.

Agnieszka Anna Storozynski: Okay, that's fine.

Agnieszka Anna Storozynski: So how do we think about it with new <unk>.

Agnieszka Anna Storozynski: New backdrop, how it impacts your retail business versus wholesale business is this additional margin is going to be.

Agnieszka Anna Storozynski: By selling this more expensive parts of the retail arm. So that's number one number two is so this is the graph. This is gross margin is back and that can additional O&M layer, we should think about or.

Agnieszka Anna Storozynski: Maintenance.

Agnieszka Anna Storozynski: On the cost side and Capex side.

Agnieszka Anna Storozynski: Just to get a sense of how big and how.

Agnieszka Anna Storozynski: How big of an impact you will have.

Agnieszka Anna Storozynski: On the EBIT.

Agnieszka Anna Storozynski: The swing in copper prices.

Agnieszka Anna Storozynski: And let me have Rob talk a little bit about the capex and repair side, and then I'll ask Ashish to talk a little bit about the margin side.

Agnieszka Anna Storozynski: Yes.

Agnieszka Anna Storozynski: Very good. Okay, so first, for the last maybe 20 years, you were trying to convince us that you were an energy price agnostic. Clearly, not anymore.

Agnieszka Anna Storozynski: Hey, Angie good morning.

Agnieszka Anna Storozynski: When you think about taking the gross margin expansion that you see on the chart and then trying to translate that to crossover to EBITDA I would point out to think about it two pieces right. So on the plants that are the generation that is currently running Tonight right. The stuff that was built into our numbers and are running today when you see that changing.

Agnieszka Anna Storozynski: Zero impact on Opex for those megawatts because they are already running.

Agnieszka Anna Storozynski: The place, where you'll pick up additional opex and translate that down to EBITDA.

Agnieszka Anna Storozynski: He is on the stuff that's running more so we've talked to you guys with historically about an increase in.

Agnieszka Anna Storozynski: Run times on some assets given a change in price, it's those additional hours that actually cost you more.

Agnieszka Anna Storozynski: The way that I would translate that down it would probably be at the same kind of rate, which as Bruce correct me, if I'm wrong, 80%, Yes, we would probably see something like an 80% translation to EBITDA and then probably like a 75% translation to free cash flow.

Agnieszka Anna Storozynski: So to answer your question yes.

Agnieszka Anna Storozynski: That's number one. So how do we think about this new backdrop, how it impacts your retail business versus wholesale business? Is this additional margin going to be realized by selling this more expensive power through the retail arm?

Speaker Change: Thank you.

Agnieszka Anna Storozynski: And then Andy on the retail margins I mean, I think we've proven our ability to maintain strong retail margins over time.

Agnieszka Anna Storozynski: Increasing power prices really affect our competitors as well and historically proven to be rational in pricing again, so when you look at quarterly.

Agnieszka Anna Storozynski: Move up the curve like we're experiencing now it gives us ample time to pass that through to consumers and in fact.

Agnieszka Anna Storozynski: Energy prices have gone up.

Agnieszka Anna Storozynski: Almost 75% Cogs from 2017 to 2023, we've actually been able to increase margin over that period, and so we feel confident in our ability to do that.

Agnieszka Anna Storozynski: Okay.

Agnieszka Anna Storozynski: Number two is, so this is gross margin. Is there an additional O&M layer we should think about or maintenance, both on the cost side and CAPEX side, just to get a sense of how big an impact you will have on EBITDA, the swing in power prices? Let me have Rob talk a little bit about the CAPEX and repair side, and then I'd ask Rasesh to talk a little bit about the margin side.

Speaker Change: Okay and then one other question. So you are talking about.

Rob: Gas fired newbuild.

Rob: I mean I'm just I was just doing Simpson realigning some simple math here.

Speaker Change: Given growing supply of renewable power rates, you, probably can't necessarily count on very high capacity.

Rob: Capacity factors for these assets, which would suggest that power prices need to be multiples of what we are seeing in the forward curve in order to.

Agnieszka Anna Storozynski: Justify construction of decent <unk>, so I'm just wondering.

Agnieszka Anna Storozynski: Hey Angie, good morning. When you think about taking the gross margin expansion that you see on the chart and then trying to translate that across over to EBITDA, I would point out that you should think about it in two pieces, right? So, on the plants that are the generation that's currently running today, right?

Angie: How do you see it.

Agnieszka Anna Storozynski: Even in Texas, now speakers and their combined cycle gas lines insurance, we're pitching even with subsidized.

Agnieszka Anna Storozynski: Loans, it's hard to imagine that these assets would be economic.

Agnieszka Anna Storozynski: I don't know $60 around the clock ERCOT north price.

Robert J. Gaudette: The stuff that was built into our numbers and is running today, when you see a step change in power, that has zero impact on OPEX for those megawatts because they're already running. The place where you'll pick up additional OPEX and translate that down to EBITDA is on the stuff that's running more. So we've talked to you guys historically about an increase in run times on some assets given a change in price. It's those additional hours that actually cost you more.

Agnieszka Anna Storozynski: Hey, Andy it's Rob again.

Agnieszka Anna Storozynski: I would tell you that the assets are economic the way to think about the beauty of <unk>.

Robert J. Gaudette: Sure.

Robert J. Gaudette: Can flex, meaning they can move and taking capture the value and the hours that matter, we've been trying to transfer our portfolio to something like that for a few years now.

Robert J. Gaudette: So when you see prices move right. So as you see the curves fill up particularly in ERCOT. It doesn't mean that every hour goes not financing amount it's the.

Robert J. Gaudette: And, you know, the way that I would translate that down would probably be at the same kind of rate, which is, Bruce, correct me if I'm wrong, 80%? Yeah, we would probably see something like an 80% translation to EBITDA, and then probably about a 75%. Does that answer your question? Yeah, thank you.

Robert J. Gaudette: Very tight towers that go up those exponential announcement you are talking about is that clear.

Robert J. Gaudette: Cleared up so think about the afternoon in Texas.

Robert J. Gaudette: In the summer.

Speaker Change: That is going to go up five or six times versus morning of that same thing we have going on at once.

Robert J. Gaudette: And <unk> of the things that make money and network.

Agnieszka Anna Storozynski: And then Angie, on retail margins, I mean, I think we've proven our ability to maintain strong retail margins over time. Increasing power prices really affect our competitors as well, and historically, you know, they have proven to be rational in pricing. And so when you look at an orderly, you know, move up of the curve, like we're experiencing now, it gives us ample time to pass that, you know, through to consumers. And in fact, energy prices have gone up almost 75% from 2017 to 2023.

Robert J. Gaudette: Andrew Let me just add that every one of these projects you have been on a sort of without thinking about it lots of rising pricing without thinking about borgata insurance costs are things pencils out to be <unk> pencil out to be over our stated hurdle rate.

Agnieszka Anna Storozynski: And everything I, just mentioned and the things that Rob just mentioned our upside on top of that.

Agnieszka Anna Storozynski: We've actually been able to increase margin over that period. And so, you know, we feel confident in our ability to do that. Okay, and then one other question. So you're talking about the gas-fired new build.

Angie: But in light of that I'm, sorry, if I'm asking questions, but in light of that.

Angie: The fact that the new build is materializing at these prices wouldn't that suggest that there's a cap.

Speaker Change: On the upside to power prices, because that's usually what with what it suggests.

Agnieszka Anna Storozynski: Build material lines as an episode of <unk>.

Agnieszka Anna Storozynski: The tightness of Pollo markets.

Agnieszka Anna Storozynski: Okay.

Speaker Change: And I think if you look at the tightness versus the one five gigawatts with tightness far exceeds it.

Speaker Change: Yes at some point of course, if there is enough newbuild that Mike.

Speaker Change: Exclude the tightness, but if you look at the number of projects that are on the books not just ours, but everybody's the time, it's going to take to complete those.

Agnieszka Anna Storozynski: I don't worry about that tightness being loosened in any significant way for the next several years.

Speaker Change: Awesome, Okay. Thank you guys.

Angie: Thanks Sanjay.

Speaker Change: One moment for our next question.

Agnieszka Anna Storozynski: The next question comes from Steve Fleishman with Wolfe Research. Your line is now open.

Agnieszka Anna Storozynski: I mean, I was just doing some simple math here, you know, given the growing supply of renewable power, right? You probably can't necessarily count on very high capacity factors for these assets, which would suggest that power prices need to be multiples of what we are seeing in the forward curve in order to justify the construction of these new gas plants. So I'm just, you know, wondering how you see it, you know, even in Texas, those peakers and combined cycle gas plants that you're pitching, even with subsidized, you know, loans. It's hard to imagine that these assets would be economical at $60 around the clock or cut north, right? Hey Angie, it's Rob again.

Speaker Change: Hey, good morning, Thank you.

Agnieszka Anna Storozynski: I would tell you that the assets are economical. The way to think about the beauty of peakers or CCGTs is that they can flex, meaning they can move, and they can capture the value in the hours that matter. We've been trying to transfer our portfolio to something like that for a few years now. And so when you see prices move, right, as you see the curves go up, particularly in ERCOT, it doesn't mean that every hour goes up by that same amount. It's the very tight hours that go up those exponential amounts that you're talking about. Does that clear it up? So think about the afternoon in during the summer.

Speaker Change: Hi, good morning.

Robert J. Gaudette: That is going to go up five or six times versus the morning of that same day may have gone up, and Peekers are the things that might. Angie, let me just add that every one of these projects, even on a sort of, without thinking about lots of rising prices, without thinking about foregone insurance costs or things, pencils have to be, they all pencil out to be over our stated hurdle rate, and everything I just mentioned and the things that Rob just mentioned are upside on top of that.

Speaker Change: So just I guess following on Andrew's first question.

Robert J. Gaudette: So, but in light of that, I'm sorry that I'm asking too many questions, but in light of that, you know, the fact that the new build is materializing at these prices, wouldn't that suggest that there's a cap on the upside to power prices? Because that's usually what it suggests, right?

Lawrence Stephen Coben: That the new build materializes, and that sort of deflates the tightness of the power markets. And Angie, I think if you look at the tightness versus the 1.5 gigawatts, the tightness far exceeds it. And so, you know, yes, at some point, of course, if there's enough new construction, that might loosen the tightness. But if you look at the number of projects that are on the books, not just ours but everybody's, the time it's going to take to complete those, I don't worry about that tightness being loosened in any significant way for the next several years. Okay, thank you guys. Thanks, Angie.

Angie: I just wanted to try to reconcile kind of NRG in the old world.

Lawrence Stephen Coben: Low prices for longer versus NRG now in this new world.

Speaker Change: I don't recall you talking about.

Lawrence Stephen Coben: Hedges rolling off and then suddenly being exposed to low power prices there was the integrated model.

Lawrence Stephen Coben: Customers kind of <unk>.

Speaker Change: Sorry to kind of hedge the low prices.

Speaker Change: So just how do I see why wouldn't I.

Lawrence Stephen Coben: Still not have to think about some kind of integrated model.

Speaker Change: Maybe the retail margins coming down against the lower.

Lawrence Stephen Coben: Against the higher power prices.

Speaker Change: Or just how do I reconcile the two Steve I think what it has to do with really is the step change in the market before.

Lawrence Stephen Coben: Prices move really commodity driven.

Lawrence Stephen Coben: We're sort of transitory and we were managing to for the steadiness.

Lawrence Stephen Coben: What youre seeing here is a step change where the flexibility of the integrated model allows us to gear ourselves in order to take advantage of the higher prices. So the model Hasnt changed its one of the reason we never talked about it is we never saw a step change like this but one of the benefits of the integrated model that we've been pursuing is that it.

Lawrence Stephen Coben: Allows us to gear to price increases like this.

Speaker Change: Got it.

Lawrence Stephen Coben: And then on the.

Lawrence Stephen Coben: On the kind of sites opportunity and also on the Newbuild.

Lawrence Stephen Coben: Generation could you give us maybe a little bit more color on how youre thinking about.

Lawrence Stephen Coben: <unk> for those opportunities and how much might come from NRG versus.

Lawrence Stephen Coben: Kind of third party.

Lawrence Stephen Coben: Buying stakes are making the investment just maybe some kind of a broader overlay how youre thinking about that.

Lawrence Stephen Coben: Yes, Steve its Bruce here.

Lawrence Stephen Coben: First on the new builds obviously from a funding perspective, we intend to access the Texas energy funds. So that's going to be 60% of the capital costs related to the new builds right. There. The other 40% of equity we feel confident that we can fund that from our own cash and cash flow without impacting any of our capital allocation Committee.

Lawrence Stephen Coben: <unk>.

Lawrence Stephen Coben: In terms of share repurchases and deleveraging so.

Lawrence Stephen Coben: From our perspective, we feel pretty well capitalized to be able to handle all of that by ourselves. Obviously as we've always said to the extent that these projects are getting built and there is a unique opportunity to potentially attract third party capital at a very attractive.

Lawrence Stephen Coben: Proposition then we would certainly give that some consideration, but right now as we sit here today, we feel good about our ability to fund those projects on our own.

Lawrence Stephen Coben: As far as the 21 sites.

Lawrence Stephen Coben: It's still early days, how it is that that ultimately translates into what sort of.

Lawrence Stephen Coben: <unk> that results in.

Lawrence Stephen Coben: Are still still to be discovered and so don't really have a perspective on any capital need in that regard it as we sit here today.

Speaker Change: Okay. Thanks.

Speaker Change: And then just last quick one obviously the higher stock price.

Lawrence Stephen Coben: The you mentioned still reaffirming the 15% to 20%.

Speaker Change: Gross so that I, assuming youre expecting.

Lawrence Stephen Coben: Better numerator there in terms of free cash flow.

Lawrence Stephen Coben: To support that and what's what is driving that is that mainly the higher power prices.

Lawrence Stephen Coben: I always had my opportunity to give you a warmer where to answer Larry Tobin.

Lawrence Stephen Coben: Yes.

Speaker Change: Well the first part of your answer yes.

Lawrence Stephen Coben: But look.

Lawrence Stephen Coben: Look I mean, I think we see obviously not only continued execution against our $550 million.

Lawrence Stephen Coben: Growth in cost program, but I think as you can see here based on the sensitivities we provided you.

Lawrence Stephen Coben: There is going to be we do see upside as a result of the forward curve.

Speaker Change: Great. Thank you.

Operator: One moment for our next question. The next question comes from Steve Fleishman with Wolf Research. Your line is now open.

Speaker Change: One moment for the next question.

Steven Isaac Fleishman: The next question comes from <unk> Chopra with Evercore ISI your.

Steven Isaac Fleishman: Your line is open.

Steven Isaac Fleishman: Hey, good morning. Thank you. Hi, Steve. How are you?

Steven Isaac Fleishman: Hey, good morning, Tien, Thanks for giving me time.

Steven Isaac Fleishman: Yes. Good morning, Thank you Jeff.

Steven Isaac Fleishman: Hi, good morning. So, just, I guess, following on Angie's first question, that I just want to try to reconcile NRG and the old world of low prices for longer versus NRG now in this new world. I don't recall you talking about hedges rolling off and then suddenly being exposed to low power prices. There was the integrated model and the customers kind of... side to kind of hedge the low prices.

Speaker Change: Maybe can you.

Steven Isaac Fleishman: Help us just frame very high level.

Steven Isaac Fleishman: On the 21 sites that you discussed how many if theres a way to think about how many potential gigawatts that you can add over time and then also address how quickly.

Steven Isaac Fleishman: You can you can add the gigawatts just the reason being that the demand like you just said Larry This is a step change in demand I'm just thinking about how quick the response can be to that.

Steven Isaac Fleishman: So just, how do I, why wouldn't I still have to think about some kind of integrated model and the, you know, maybe the retail margins coming down against the lower, against the higher power prices, or just how do I reconcile the two? Steve, I think what it has to do with the step change in the market. I mean, before when prices moved and were really commodity driven.

Lawrence Stephen Coben: Those were sort of transitory, and we were managing to, you know, for the study. I think what you're seeing here is a step change where the flexibility of the integrated model allows us to gear ourselves in order to take advantage of higher prices. So the model hasn't changed, it's one of the things, the reason we never talked about it is that we never saw a step change like this, but one of the benefits of the integrated model that we've been pursuing is that it allows us to adjust to price increases like this.

Steven Isaac Fleishman: Okay. And then on the kind of sites opportunity, and also on the new build generation, could you give us maybe a little bit more color on how you're thinking about funding for those opportunities and how much might come from NRG versus kind of third parties, you know, buying stakes or making the investment, just maybe some kind of a broader overlay on how you're thinking about that. Yes, Steve, it's Bruce here.

Bruce Chung: Great question, Doug and it's one that we're working on and it's why we've set up this sort of new group to deal with data centers.

Bruce Chung: I don't know the answer yet.

Bruce Chung: We're trying to figure that out we see ginormous potential, but obviously there is a ton of work to do in terms of.

Bruce Chung: To figure out exactly how quickly whats best on this site is it better for a data center or a power plant is it better for co location behind the meter in front of the meter so.

Bruce Chung: Spending a lot of time working through those and I think when we have more color on them. We will certainly provide that to you all but I'm not sure that will be in the next two or three months it will probably be closer to the end of the year because as you know the power plant development is an awful lot of work.

Bruce Chung: That makes sense I appreciate that Larry. Thank you and then maybe just I know this is not going to be another tough question, but just can you share your calculus or how youre thinking about buybacks here given how the stock has gone up in valuation.

Bruce Chung: Versus investing in these in these opportunities, which obviously have a tremendous runway or how do you think about that.

Bruce Chung: First on the new bills, you know, obviously, from a funding perspective, we intend to access the Texas Energy Fund. So that's going to be 60% of the capital costs related to the new bills right there. The other 40% of equity, we feel confident that we can fund that from our own cash and cash flow without impacting any of our capital allocation commitments in terms of share of purchases and deleveraging.

Steve: Let me begin by repeating what Bruce said, which is we are reaffirming our capital allocation that we promised everybody.

Bruce Chung: Obviously, when your stock is trading at a 25% free cash flow yield it's an easy decision, but we still believe we have enough capital to both do our investing and return capital to our shareholders and I don't see that changing in the short or medium term.

Bruce Chung: So I think we're going to just continue to be disciplined in terms of returning capital.

Bruce Chung: And given especially given the rises that we've been talking about here will act, we should actually have more capital to invest ourselves and it won't surprise you to hear that there is an awful lot of people, who also know wanted to co invest with us and a lot of these kind of projects. So I think the possibilities for doing accretive generation and related products.

Bruce Chung: So from our perspective, we feel pretty well capitalized to be able to handle all that by ourselves. Obviously, as we've always said, to the extent that these projects are getting built, and there's a unique opportunity to potentially attract third-party capital at a very attractive proposition, then we would certainly give that some consideration. But right now, as we sit here today, we feel good about our ability to fund those projects on our own. As far as the 21 sites, you know, it's still early days; how it ultimately translates into what sort of opportunities that results in is still to be discovered.

Bruce Chung: <unk> are there regardless.

Bruce Chung: Respective of our capital allocation principles.

Speaker Change: That's very clear. Thank you I appreciate the time.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Bruce Chung: And so I don't really have a perspective on any capital need in that regard as we sit here today. Okay, thanks. And just last quick one, obviously, at the higher stock price, the, you know, you mentioned still reaffirming the 15 to 20% growth. So that I assume means you're expecting a better numerator there in terms of free cash flow to support that. And what is driving that?

Bruce Chung: Our next question comes from David Zimmerman at Morgan Stanley David Your line is open.

Steven Isaac Fleishman: Is that mainly due to higher power prices? I always have my opportunity to give you a one-word answer, ah, Larry Coben. But, well, the first part of your answer, yes. But, you know, look, I mean, I think we see obviously not only continued execution against our $550 million growth and cost program. But, you know, I think, as you can see here, based on the sensitivities we provided you, there is going to be, we do see upside as a result of the forward. Great, thank you. One moment for the next question. The next question comes from Durgesh Chopra with Evercore ISI. Durgesh, your line is open. Hey, good morning, team. Thanks for giving me time. Good morning. How are you?

Bruce Chung: Hey, good morning, Dave Arcaro here, Thanks for taking my question.

Durgesh Chopra: Good morning, Larry. Thank you. I'm OK.

Durgesh Chopra: Just maybe, can you help us just frame the very high-level question: on the 21 sites that you discussed, if there's a way to think about how many potential gigawatts that you can add over time and then also address how quickly you can add the gigawatts, just the reason being that the demand, like you just said, Larry, this is a step change in demand. I'm just thinking about how quick the response can be to that. It's a great question, Durgesh, and it's one that we're working on, and it's why we've set up this sort of new group to deal with data centers.

Durgesh Chopra: David how are you.

Lawrence Stephen Coben: I don't know the answer yet. I don't, you know; we're trying to figure that out. We see ginormous potential, but obviously, there's a ton of work to do in terms of, you know, figuring out exactly how quickly what's best on this site. Is it better for a data center or a power plant? Is it better for co-location behind the meter or in front of the meter?

Lawrence Stephen Coben: So we're spending a lot of time working through them, and I think when we have more color on them, we'll certainly provide that to you all, but I'm not sure that'll be in the next 2 or 3 months. It'll probably be closer to the end of the year.

Durgesh Chopra: Good good.

Speaker Change: Following up on one of the earlier questions. I was wondering just on the ERCOT market and pricing in the market and the forward curve do you have a view from here on were cut prices could go is there still room for upside do you think in terms of where the forward curve is currently pricing.

Durgesh Chopra: But as you know, power plant development is an awful lot of work. That makes sense. I appreciate that, Larry. Thank you. And then maybe just, I know this is not going to be another tough question, but just can you share your calculus or how you're thinking about buybacks here, given how the stock has kind of gone up in valuation versus investing in these opportunities, which obviously have a tremendous runway? How do you think about that?

Rob: Hey, David it's Rob.

Lawrence Stephen Coben: Yes.

Durgesh Chopra: The markets can definitely go off if you look at the the large loans that are coming to the state into the system ERCOT is already beginning to monitor and take a look at it it's a lot and you've seen that price then there is more upside in the curves from here.

Speaker Change: Okay got it thanks and does that.

Durgesh Chopra: As you're as you're kind of hedging into that then is that a view that you're embedding as you as you start to layer in hedges and firm up some of your out year EBITDA forecast.

Speaker Change: So when we think about our out year EBITDA remember that a big part of our hedging program is through the retail book right. So as we sell to our 8 million consumers.

Durgesh Chopra: Yes.

Durgesh Chopra: Ultimately takes a lot of that value and it's translated over through the retail revenue rates.

Larry: We're always looking way out the curve, David if I thought that something was really high and out of whack, then I would say that we could take something off the table, but we like the position we like the trend.

Durgesh Chopra: We like where our portfolio is.

Speaker Change: Got it thanks and could you touch on what the competitive dynamics are that youre seeing in the retail energy business right now in terms of.

Lawrence Stephen Coben: Let me begin by, you know, repeating what Bruce said, which is, you know, reaffirming our capital allocation, which we promised everybody. Obviously, when your stock is trading at a 25% free cash flow yield, it's an easy decision, but we still believe we have enough capital to both do our investing and return capital to our shareholders, and I don't see that changing in the short or medium term. So, I think we're going to just continue to be disciplined in terms of returning capital, and especially given the increases that we've been talking about here, we should actually have more capital to invest ourselves.

Lawrence Stephen Coben: And it won't surprise you to hear that there are an awful lot of people who also now want to co-invest with us in a lot of these kinds of projects. So, I think the possibilities for doing, you know, accretive generation and related projects are there regardless, you know, irrespective of our capital allocation principles. That's very clear. Thank you. I appreciate the time.

Operator: Thank you. One moment for our next question. The next question comes from David Zimmerman at Morgan Stanley. David, your line is open. Oh, hey, good morning. Dave Arcaro here.

Lawrence Stephen Coben: Any pressure from new entrants or pricing pressure in the market that might.

David Zimmerman: That might push margin, one way or the other right now.

David Zimmerman: It's been very.

David Zimmerman: Very stable performance that you saw.

David Zimmerman: We had strong performance in terms of customer growth year over year.

David Zimmerman: Similarly, good performance and load growth.

David Zimmerman: And our margins and so we feel very good.

David Zimmerman: There are.

David Zimmerman: A couple of new entrants in the market, but we look at our.

Operator: Outflow.

David Zimmerman: Report, we don't really see any meaningful traction there.

David Zimmerman: Okay, Great. That's helpful. Thanks, so much.

David Zimmerman: Thanks, David.

David Zimmerman: One moment for our next question.

David Zimmerman: And the final question.

David Zimmerman: Comes from.

David Zimmerman: One moment.

David Zimmerman: Final question comes from Ryan Levine with Citi. Your line is open.

David Keith Arcaro: Thanks for taking my question. Hi David, how are you? Good, good. Hey, following up on one of the earlier questions, I was wondering just about the ERCOT market and pricing in the market in the forward curves. Do you have a view from here on where ERCOT prices could go? Is there still room for upside, do you think? Weather for Recurve Hey, David, it's Rob. Yes, the markets can definitely go up. If you look at the large loads that are coming into the state's system, ERCOT is already beginning to monitor them and take a look at them. It's a lot. And you know, you've seen that price before.

David Zimmerman: Thank you for taking my question.

Speaker Change: Some of the capital Hi, everybody Hey, just to follow up on some of the capital allocation framework is there a price where you would consider buybacks.

Robert J. Gaudette: There's more upside in the curves from, got it, thanks, and does that as you're as you're kind of hedging into that, then is that a view that you're embedding as you start to layer in? Firm up some of your out year forecast. So, when we think about our out-year EBITDA, remember that a big part of our hedging program is through the retail book, right? So, as we sell to our 8 million consumers, that ultimately takes a lot of that value and translates it over through retail revenue rates. We're always looking way out ahead, David.

Robert J. Gaudette: If I thought that something was really high and out of whack, then I would say that we could take something off the table, but we like the position, we like the trend, and we like where our portfolio is. Got it. Thanks. And could you touch on what the competitive dynamics are that you're seeing in retail business right now? Any pressure from new... that might push margin one way or the other right now. It's been a very, very stable performance.

Robert J. Gaudette: Not trying to take any view on the value of the energy security.

David Keith Arcaro: As you saw, we had strong performance in terms of customer growth year over year. We saw similarly good performance and low growth, you know, for our margins. And so we feel very good. I think there are a couple of new entrants in the market. But as we look at our outflow, you know, reports, we don't really see any meaningful traction there. Okay, great. That's helpful.

Robert J. Gaudette: Brian There is no price that we would necessarily sit here and tell you as the absolute.

David Keith Arcaro: Thanks, David. One moment for our next question. And the final question comes from. One moment.

Operator: The final question comes from Ryan Levine with Citi. Your line is open. Thanks for taking my question. Just a follow-up on some of the capital... Hi, everybody. Just to follow up on some of the capital allocation framework, is there a price where you'd reconsider buybacks, or are you not trying to take any view on the value of energy security? Ryan, there is no price that we would necessarily sit here and tell you is the absolute line at which we would stop buybacks.

David Keith Arcaro: Line at which we would stop buybacks, we're always going to be looking what are what is implied in the share price with respect to our free cash flow yield and will make determination from that standpoint, but as we sit here today, we see plenty of room to run for us to continue to be buying back shares.

Bruce Chung: We're always going to be looking at what is implied in the share price with respect to our free cash flow yield, and we'll make a determination from that standpoint. But as we sit here today, we see plenty of room to run for us to continue to be buying back. Okay. And then as you're looking at investment opportunities related to power generation growth in your service territory, are you focusing on? You mentioned a number of opportunities for new build and partnerships. Do you have a preference for partnerships, or would you prefer to own the assets outright?

Bruce Chung: Okay, and then as Youre looking at an investment opportunities related to power generation growth in your service territory.

Bruce Chung: Are you.

Bruce Chung: Are you focusing you mentioned a number of opportunities for new build and partnerships give a preference for partnerships or do you prefer to.

Bruce Chung: On the outset that right.

Bruce Chung: I think for us, it's just a maximization and optimization process. So I don't think we have a preference one way or another. It's related to cost of capital, operational flexibility, and, at the end of the day, what falls best for our bottom line. Okay, and given the economic outlook that you suggested was attractive for these new builds, are there any customer commitments or duration of demand that you're looking for the data centers to commit to underwrite some of these new builds? I guess Rob, the answer to that is no. The new bills that we've talked about are not.

Bruce Chung: I think for US, it's just a maximization and optimization process and so I don't think we have a preference one way or another it's related to cost of capital operational flexibility and at the end of the day, what falls best to our bottom line.

Bruce Chung: Okay.

Bruce Chung: Given the economic outlook that you suggested it was attractive for these new builds.

Bruce Chung: Are there any customer commitments or or duration of.

Bruce Chung: Demand that you are looking for the data centers to commit to for tender right. Some of these new builds.

Speaker Change: Thanks, Rob.

Bruce Chung: The answer to that is we know.

Bruce Chung: The new builds that we talked about.

Bruce Chung: Or not.

Bruce Chung: The conversations we are in the early days of around co-location or use of our sites will be a case-by-case basis as to whether or not it's a long-term deal or not, right, with a data center or other large, But that's going to come as we evaluate. But the things we've talked about thus far are for our book and our program. Um, and just one last question, in terms of retail margin on electricity, the movement and or cut forward prices, do you think that will have any impact on the margin that you will ultimately be able to realize on that part of your budget?

Bruce Chung: Set up for data centers or for to meet that load. The conversations we are in early days with around co location or use of our sites those will be a case by case basis.

Bruce Chung: As to whether or not it is.

Bruce Chung: A long term deal or not right with a data center or other large leather but.

Bruce Chung: But thats going to come as we evaluate each opportunity, but the things we've talked about thus far are for our book and our portfolio.

Bruce Chung: And just one last question in terms of retail margin on electricity movement in ERCOT forward prices do you think that will have any impact on the margin that you ultimately be able to realize.

Bruce Chung: On that part of your business.

Bruce Chung: Well, we've proven the ability to maintain, you know, strong retail markets through various curves. And so we have a very sophisticated Analytic Engine that gives us insights into the price sensitivity of customers. And when you have sort of these orderly shifts in power prices, we're able to pass them on to consumers over time.

Bruce Chung: We've proven the ability to maintain strong retail margins.

Bruce Chung: Through various curve and so we have a very sophisticated.

Bruce Chung: Analytic engine that gives us insights into the price sensitivity of customers and when you have sort of these orderly shifts in power prices were able to.

Bruce Chung: Pass them on to consumers over time, so we feel we feel good about our muscle there.

Ryan Michael Levine: So we feel good about our must. Thanks for taking my question. This concludes our question and answer session. I would like to turn it back to Larry Coben, Chairman and Interim President and CEO, for closing remarks. Thank you all very much for joining us. I think you can hear the palpable excitement that we all feel here at NRG about the potential, and we look forward to continuing to deliver great results and executing on that upside in the days, months, and years ahead.

Speaker Change: Thanks for taking my questions.

Lawrence Stephen Coben: This concludes our question and answer session I'll now turn it back to Larry Cogan, Chairman and interim President and CEO for closing remarks.

Lawrence Stephen Coben: Thank you all very much for joining us I think you can hear the palpable excitement that we all feel here at NRG for the potential and we look forward to continuing to deliver great results and executing on that upside in the.

Lawrence Stephen Coben: Days months and years ahead. Thank you all.

Ryan Michael Levine: Thank you all. Thank you, ladies and gentlemen, for your participation in today's conference. This concludes the program. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? © The Ultimate Parody Site! In the name of the Father, and of the Son, and of the Holy Spirit, amen. Thank you for watching! ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? and the National Society for the Prevention of Cruelty to Animals. For more information, visit www.nrg.nlm.nl www.nrg.nlm.nl www.nrg.nlm.nl www.nrg.nlm.nl

Lawrence Stephen Coben: Thank you, ladies and gentlemen for your partner.

Ryan Michael Levine: And Jason in today's conference. This concludes the program.

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Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Speaker Change: Thank you.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Thanks.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Speaker Change: Thank you.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: [music].

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: [music].

Ryan Michael Levine: Right.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Thanks.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Great.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Speaker Change: Uh huh.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: <unk>.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Hi.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Sure.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: [music].

Ryan Michael Levine: Yes.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Okay.

Ryan Michael Levine: Yes.

Ryan Michael Levine: Sure.