Q1 2025 Talen Energy Corp Earnings Call
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to Talen Energy First Quarter 2025 earnings call.
At this time, all participants are in a listen-only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you would need to press start 1-1 on your telephone. You will then hear an automated message advising your hand is raised. You will then hear an automated message advising your hand is raised.
Speaker Change: To withdraw your question, please press star 111 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Sergio Castro, Vice President and Treasurer. Sir, please go ahead.
Sergio Castro: Thank you, Michelle. Welcome to Talen Energy's first quarter, 2025 conference call. Speaking today, our Chief Executive Officer, Mark McFarland, Chief Financial Officer, Terry Nutt, and Chief Commercial Officer, Chris Morice.
Speaker Change: They are joined by other Talen senior executives to address questions during the second part of today's call as necessary.
Sergio Castro: We should our earnings release this morning, along with the presentation, all of which can be found in the Investor Relations section of Talon's website, talonenergy.com
Speaker Change: Today, we are making some forward-looking statements based on current expectations and assumptions.
Speaker Change: Actual results could differ due to risk factors and other considerations described in our financial disclosures and other advocacy filings.
Speaker Change: Today's discussion also includes references to certain non-GAAP financial measures. We have provided information, reconciling our non-GAAP measures to the most directly comparable GAAP measures in our earnings release and the appendix of our presentation.
Max: With that, I will now turn the call over to Max.
Max: Great, thank you Sergio, and welcome everyone to the call. We appreciate your continued interest in Talen Energy.
Max: In an uncertain market, we remain certain about our strategic path forward in our investment thesis.
Max: While the markets have been choppy and tariffs and trade restrictions on things like rare earth metals have introduced complexities.
Max: We remain committed to the simplicity of executing our business plan.
Max: focusing on operations, commercialization of our megawatts, returning capital to shareholders and executing our growth strategy through our contract with AWS at Cessco Hanna and expanding our strategy to contract megawatts at our other site, thereby delivering the most free cash flow per megawatt, and that is how we measure ourselves.
Max: We believe the long term prospects for the IPP business and for Talen more specifically remain strong.
Max: Our fundamental view of tightening power markets has not changed. Our belief in ever-growing data center load has not changed.
Max: Our belief that Pennsylvania is a hug for data center development has not changed. In fact, many of these beliefs have strengthened. PPL just announced 11 gigawatts of advanced data center development in their transmission territory, where our plants are located. New development costs and construction timelines are escalating.
Max: Some estimates for new CCGTs are $2,200 to even $2,600 a KW.
Max: While some uncertainty around supply chains, tariffs and tax policy have also hindered renewable development. All the while, hyperscalers continue to affirm or accelerate their capital plans and are showing no signs of slowing.
Thank you.
Max: All that said, market news of data center rebalancing and a lack of strength and power for it has led some skeptics to question the underlying thesis in the IPP space and its intersection with data centers.
Max: To those skeptics, we say we are undeterred. Rebalancing is just that, rebalancing, and a forward markets are thinly treated and don't reflect a new normal of tight power markets.
Turning the slide to
Max: We had a solid porter, bolstered by strong load and power prices, as well as very good operations and performance by our fossil plants, Cessco and Hannah and the commercial team.
Max: All working together to deliver $200 million of EBITDA and $87 million of free cash flow, which is ahead of our Q1 Internal Estimates that underpinned our 2025 guidance.
Max: I'd like to thank the women and men of talent that have delivered these results who worked tirelessly through the winter cold snap and kept the lights on.
Max: During Q1, we continue to execute under our Sherey Purchase Program, buying back $83 million worth of shares.
Max: The AWS campus has been electrified and we are delivering power and receiving revenues under our existing contract.
Max: and AWS continues to build out the campus with multiple buildings under construction.
Max: We are excited about the future that this brings as we continue to execute under our current arrangement in the approved 300 megawatt ISA. We are moving forward and not looking back. We look forward to hosting investors at the site so they can see the activity for themselves.
Max: I'm sure you all want to know how and when we are moving past the 300 megawatts of our current ISA. As I have said before, we don't comment on commercial activities we are undertaking.
Max: That said, we remain keenly focused on finding the right solution for our customers and talent.
Max: But let me add this. Last year was one of the most exciting years in my career in the IPP space and I'd like to think Talen played a role in that. And in 2025 is shaping up to surpass last year as the intersection of power and data centers is validated.
Max: While not a Q1 activity, we have extended our refueling outage on Susquehanna Unit 2 to perform incremental maintenance. We went into this outage with a plan to gain operational efficiency through the recovery of 27 megawatts.
Through a fix in the condenser, we worked.
Max: and perform this work in the megawatts we do expect to recover.
Max: However, while doing this work, we identified incremental maintenance. We felt prudent to undertake during the spring period of low prices.
Max: and we extended our outage by just over three weeks and had an incremental cost of roughly $20 million.
Max: We believe this incremental work will restore megawatts in excess of the 27 that we originally planned to achieve. All of this leads us to expect a payback approximately one and a half years at today's prevailing market prices.
Max: This sets us up well for the future with more energy to sell, and ultimately this decision is the right thing to do at the right time.
Max: We have incorporated our favorable first quarter results into our guidance for 2025 and also included the incremental maintenance we are undertaking and as a result we are narrowing and affirming that guidance and our 2026 outlook remains unchanged.
Max: We turn to slide three. Our view of the markets is not wavered. We continue to see tightening markets driven by increased demand.
Max: In Q1, we saw seven terawatt hours or approximately 3.5% of incremental deliveries on a weather-adjusted basis in PGM when compared to prior year.
Max: This caused our fleet to be dispatched by approximately 1.6 terawatt hours more than it was in the same quarter last year. The additional generation all came from our fossil fleet. And supports our view that energy demand will increase the dispatch of our flexible fleet.
Max: As I mentioned, we have seen PPL announce even more data center load from prior estimates last year and we see other forms of demand further strengthening.
Max: Further, cloud services and hosting activity continue to show significant growth as indicated by several earnings reports over the last few weeks. While data center demand an AI is somewhat of a recent phenomenon and the markets are trying to digest a lot of discrete data points.
Data points that include shift reduction in sales, lease terminations
Max: and new data announcements in the rebalancing I mentioned earlier, from where we sit we do not see a pullback. And while there will be a supply response to this increasing demand in the short term, things like the efforts I described to bring more megawatts to the grid at Cisco Hanna will happen across the industry.
Max: However, we don't see notable new build coming online until late in the decade . .
Max: And with supply chains tight and tariff and trade restrictions going into place, when a lot of equipment is sourced in Europe , the cost of new builds makes new supply even more challenged in the short term.
Max: In the long term, we do believe that supply will ultimately arrive in response to market demand and signals, but there is some truth to the view that current capacity pricing as well as the forward markets don't support new build investment and don't reflect the tightening market.
Speaker Change: Chris will provide some additional detail on our hedging program later that demonstrates that while we believe the Fords are not representative of supply and demand fundamentals, we did take the opportunity in the first quarter to layer on additional hedges in 26 and 27 when the Ford market was well bid.
[inaudible]
Speaker Change: Turning to slide four, I mentioned most of this in my opening remarks. We continue to execute. AWS continues to build. We are delivering electrons and receiving dollars. And as a reminder, the schedule over the course of the year is to ramp up to 120 megawatts. And as a reminder, the schedule over the course of the year is to ramp up to 120 megawatts.
Speaker Change: With that, I'll turn it over to Terry on slide 5. Terry? Terry?
Thanks, Matt, and good morning, everyone.
Let's look at our first quarter financial and operating results.
Our team continues to deliver from an operational perspective. Thank you.
Speaker Change: During the quarter, our fleet ran well during periods of high demand, demonstrating the value of a despatchable fleet.
Speaker Change: We generated 9.7 terawatt hours of power with an equivalent force out of the factor of 1.2 percent.
Speaker Change: Slightly less than half of this generation came from our carbon-free Susquehanna Nuclear Facility.
Speaker Change: as our fossil fleet ran more in periods of high demand.
Speaker Change: While we experience higher runtimes at our fossil plants, our Montour and Bruner Island facilities saw significant increases in generation during the Corps.
Speaker Change: Safety remains our first priority across the fleet, and our team works safely during the busy winter run and cold conditions.
Speaker Change: RQ1, Recordable Incident Rate, was only 0.4. This is in line with or better than our peers.
Dr. Prada, Dr. Prada, Dr. Prada, Dr. Prada, Dr. Prada,
Turning to slide six, I'll provide some more financial details.
David Arcarozynski, David Arcaro,
Speaker Change: We had a thought start to the year with results better than our estimates.
Speaker Change: We reported Adjustity with the amount of $200 million and adjusted free cash flow of $87 million.
Speaker Change: The weather in PJM was called this quarter with heating degree days in Philadelphia above the tenure average.
Speaker Change: Below average temperatures during the first quarter of 2025 contributed to increased demand that resulted in higher settled on peak power prices compared with the prior year.
Speaker Change: On a comparative basis, our first quarter result in the prior year benefited significantly from approximately 165 million of realized hedge gains.
with Q1 2025 only containing a modest hedge impact.
Speaker Change: Our fleet performed when needed as evidence by our low forced outage rate, and our fossil fleet generated approximately 20% more power than the same period last year, despite the absence of our ERCOT assets.
Speaker Change: As you may remember from our investor day in September of last year, our earnings in the second half of 2025 will be higher due to the inclusion of the 2025, 2026 capacity pricing of approximately $270 a megawatt day.
Speaker Change: and the reliability must run impacts of our brain insurers and Wagner facilities.
Speaker Change: As Mack mentioned earlier, we are reaffirming and narrowing our previously announced 2025 guidance ranges.
Speaker Change: The strong performance in the first quarter and expectations for the bounce of the year are expected to offset the impacts of the extended Susquehanna out.
Arnaro Adjusted Abidar Range is $975 million to $1.125 million.
Speaker Change: and our narrowed adjusted free cash flow range is $450 million to $540 million.
Speaker Change: In the near term, market uncertainty on trade restrictions and tariffs do not have a material that's on cost.
Speaker Change: and the longer term, it is more uncertain as we evaluate tariffs and the impact throughout our supply chain.
Speaker Change: Our 2026 Outlook remains unchanged from what we disclose at our investor day back in September .
Speaker Change: These ranges continue to demonstrate talent's robust earnings and cash flow growth profile, which includes tripling adjusted free cash flow for Shere by 2026.
Thank you.
Turning to side eight. [inaudible]
Speaker Change: We continue to target a return of 70% of adjusted free cash flow to our shareholders.
Speaker Change: We view Sherey purchases as the first priority for excess cash, and we will use that as the benchmark to measure the return profile of any growth opportunities.
and Mark McFarland.
Speaker Change: As Mack mentioned earlier, the pullback in the equity market allowed us to purchase $80 million or approximately $452,000 shares in the first quarter.
Speaker Change: Since the start of 2024, we have repurchased approximately 14 million or 23% of our outstanding shares.
Speaker Change: We have approximately 1 billion in buyback capacity remaining through year end 2026.
Speaker Change: and Balance Sheet Flexibility to execute our program for, act strategically, at the right opportunities present themselves.
Speaker Change: Moving to slide 9, we remain committed to maintaining net leverage below our target of 3.5 times, along with ample liquidity.
Speaker Change: As of May 2nd, our forecasted net leverage ratio was approximately 2.6 times, well below our targets.
Speaker Change: In addition, we have approximately $970 million of liquidity with over $270 million of cash on the balance sheet.
Speaker Change: During the quarter, we took advantage of falling rates to execute $550 million of interest rate swaps.
Speaker Change: and since the end of the quarter, we added an additional 150 million of swaps, which reduces our floating rate exposure and allows for more predictable cash flows.
With that, I'll now turn the call over to Chris.
Thanks, Terry. Good morning, everyone.
Speaker Change: Moving this slide, Ken, I'd like to highlight our hedging activity this past quarter. Our hedging strategy is focused on maintaining appropriate risk tolerances with an emphasis on protecting cash flows across our generation fleet. On the left, there is a graph of average calendar year, 2026 and 2027, PGM West Cove around the clock pricing.
Speaker Change: On the heels of a strong winter, prices rose and our commercial team started to layer in additional hedges during the period. As a reminder, we have a pragmatic, not programmatic hedging strategy, which gave our team the flexibility to add hedges during higher price periods as detailed on the right-hand side.
Speaker Change: In Q1, we doubled 2026 and 2027 hedges in a rising price environment. [inaudible]
Speaker Change: These actions allowed us to increase certainty of the near-term cash flows for the business while still maintaining appropriate exposure to rising price fondamentals in 2027 and beyond.
Mac: with that. I have a question back to Mack because we're more. [inaudible]
Great. Thanks, Chris.
This remains an exciting time to be an IPP.
Mac: Market Fundamentals remain incredibly strong, data center load growth continues to arrive. We continue to execute on our AWS contract. All of this gives a strong conviction in our investment thesis and Talen is well positioned to power the future.
Mac: We appreciate everyone's interest and talent for joining us on the call today. We'll now turn it back to the operator and open the line for questions.
Speaker Change: To withdraw your question. Please press Star one one again the first question comes from David Arcaro with Morgan Stanley. Your line is open.
David Arcaro: Alright, thanks, so much good morning.
David: Good morning, David.
Mac: Okay.
Speaker Change: Following up on maybe a few comments of your peers. This week one of your peers highlighted a shift in.
Speaker Change: Customer interest towards the front of the meter deals I guess I was wondering if you could maybe elaborate on your current conversations.
Speaker Change: And with the backdrop of this FERC process going on.
Speaker Change: Has there been a change in tone or strategy or.
Speaker Change: Desire to go in front of the meter versus behind the meter here in your conversations as well.
Speaker Change: Well. Thanks I appreciate the question.
Speaker Change: Look I mean, I'd first start with we have a current transaction our contract with AWS that we're executing under.
Speaker Change: And as I mentioned in the remarks earlier, we're actively delivering.
Speaker Change: Delivering.
Speaker Change: Megawatts, and receiving revenues et cetera, and ongoing construction area since the time I think.
Speaker Change: Signed that contract we've mentioned to people that we've been looking at all different forms of.
Speaker Change: Opportunity with respect to how to power data centers into expand our growth strategy.
Speaker Change: And you've seen a lot of activity, obviously that started with the.
Speaker Change: The denial by FERC.
Speaker Change: <unk> extension and then the technical conference and then the ongoing dialogue back and forth with PJM pjm's submitting a different alternatives and basically allowing options of ways to power data centers, we think thats highly supportive and continue to support that process and then working with our Counterparties.
Speaker Change: We're looking at a number of different ways to get megawatts quickly deliver because it is speed to market and how to contract megawatts.
Speaker Change: Across the fleet. So we have been working actively for over a year on that and that's.
Speaker Change: Pretty much it coal anything you want to add I think that's right Matt I mean, we said last September at our analyst day that.
Speaker Change: Across our fleet, we're looking at a variety of different options, obviously, we had the Susquehanna.
Speaker Change: Behind the meter deal with Amazon, but but obviously a front of the meter solution is the right solution in many cases and so we have been working on those kind of contracts for a while.
Speaker Change: And obviously with the FERC denial in November we've been I think saying routinely that and we're working on alternative commercial solutions there as well.
Speaker Change: Maybe just one further point and I mentioned this in the opening remarks, and then I think it is something to pay attention to you continue to see PPL discussed the backlog.
Speaker Change: Moving from nine Gigawatts to 11, Gigawatts and they've been advancing that so they're going to be a number of solutions in the territory, where we have plants land water access transmission capability et cetera to connect to the grid. So I think youre going to see that activity show up and now it's just a matter of how does it.
Speaker Change: Get its power source and where does it come from mpls actively engaging.
Speaker Change: With PJM and thinking about what is going to be needed from the transmission system. So I think that all points to the signs that the customers are there and how it has gone the contractual arrangements are going to occur.
Speaker Change: That's going to evolve and as I mentioned I think it is going to be a really exciting time in 2025 Windows power data center.
Speaker Change: Intersection gets validated.
Speaker Change: Got it no that all makes sense I appreciate the color.
Speaker Change: Maybe touching on the current status of the FERC process and co location, how do you see that playing out here in terms of the path forward do you see a.
Speaker Change: Passengers settlement process potentially opening up.
Speaker Change: So yes.
Speaker Change: Yes.
Speaker Change: Hard to predict I guess is that not.
Speaker Change: And not to Bury the headline look at the FERC processes has been evolving okay, but they have set and Christie Chairman Christie has said that they want to resolve it quickly I think you saw there was a conference at the Pennsylvania, PUC again wanting to promote the ability to serve long.
Speaker Change: <unk> loads data centers et cetera, wanting to move quickly because people realize that theres a huge amount of economic development associated with this Pennsylvania realizes there's a huge amount of economic development and wants to become a hub. If you will for data centers and so.
Speaker Change: Where we're at.
Speaker Change: Obviously involved in watching this and I think that the PJM eight options that went to FERC and then FERC looking to resolve this matter in a quick fashion, we're highly supportive, but again, so a lot of that FERC process, which we're engaged in the FERC process. We also have a legal matter pending <unk>.
Speaker Change: With respect to our RSA and then all of the commercial activity of Cole and his team that continues to progress because there are a number of different ways by which to resolve how to get data centers.
Speaker Change: Power right and so those are all evolving and progressing.
Speaker Change: Okay, Great I appreciate the comments thanks, so much.
Speaker Change: Thank you.
Speaker Change: And our next question comes from Angie <unk> with Seaport. Your line is open.
Speaker Change: Thank you.
Speaker Change: Wanted to follow up on the comments about PPL, So I'm actually looking at the PPL zone. It seems to me like about.
Speaker Change: Kevin Jacobs as load of piccolo than about 13 gigawatts of installed capacity in the <unk> zone.
Speaker Change: And.
Speaker Change: As you said pbms showing 11 gigs.
Speaker Change: Potential incremental demand.
Speaker Change: And then PPL does not provide generation right. So the whoever.
Speaker Change: <unk> joins from that Q needs to procure electricity, presumably many of them tonio plans in yet.
Speaker Change: <unk>.
Speaker Change: From from making any comments about other assets held Susquehanna.
Speaker Change: So that's number one and number two is.
Speaker Change: Given that again, the existing load into Q at optimal capacity currently available in the PPO zone would you be open till may be expanding some of your assets under long term contracts.
Speaker Change: Yes, as I said, our growth well first of all good morning, Angie how are you glad to hear permits.
Speaker Change: So look as I said our strategy when we.
Speaker Change: March of last year, when we signed the contract and since that date, we've been moving forward in our growth strategy is focused on leveraging our platform. So let's unpack. After this in a second which is how do we use our platform we have a number of different assets.
Speaker Change: In addition to Susquehanna the focus has been on Susquehanna and how do we expand at Susquehanna, which we always said would have to be a change to that contract and some form of grid to provide the same reliability. So we've been looking at that we've been looking at how do we use the rest of the assets in our portfolio.
Speaker Change: And provide a platform solution. So when you have single assets you don't have necessarily the <unk>.
Speaker Change: Risks backstop that you do when you have a portfolio you don't have the same balance sheet you do when you have a portfolio of assets. So we've been looking at how do we leverage that portfolio and leverage that work in the I'll call. It.
Speaker Change: If you will lessons learned first mover advantage whatever you want to call the contract with AWS, we have been looking at how do we leverage that across the fleet. So while not talking specifically I hope that gives you a flavor for what we're trying to do.
Speaker Change: Okay.
Speaker Change: And no comment about.
Speaker Change: Expansion of existing assets I understand you don't want.
Speaker Change: Sorry, Im sorry.
Speaker Change: Yes, I forgot to say no comment on the expansion.
Speaker Change: Yeah.
Speaker Change: Okay, that's great.
Speaker Change: Hi.
Speaker Change: Andy as you know and I always appreciate the questions, but I think it's fair it's fair to ask the questions. But it is also fair for us to say look we don't comment on M&A activity. We don't comment on commercial arrangements that were working on are not working on we don't comment on mmpi, having it or absence of having it okay.
Speaker Change: We just don't do that as a matter of practice because we're focused on.
Speaker Change: Executing our strategy and then when we have points in time by which we can.
Speaker Change: Let the market know by having something executed we will do so it's just a matter of practice that we do and when.
Speaker Change: When you are working on commercial.
Speaker Change: Activities, whether it be contracts.
Speaker Change: Acquisitions divestitures any of that.
Speaker Change: It doesn't behoove.
Speaker Change: Anybody in that process.
Speaker Change: Public discussion about it because.
Speaker Change: Their commercial activities and you don't want to give one side or the other leverage.
Speaker Change: So as a matter of I'm, sorry, but it's a matter of practice, we just don't comment on those things.
Speaker Change: Okay. So just one last one so.
Speaker Change: You have a head start.
Speaker Change: Thus far as contracting of assets, if only because of Susquehanna admittedly nobody else has in house contract. So it's not like you've lost it but.
Speaker Change: But at the time goes by.
Speaker Change: Are you concerned that.
Speaker Change: That that head start or that competitive advantage is not going to last in a sense at this time to power benefit that youre currently possess assist.
Speaker Change: Go away.
Speaker Change: Smaller wells.
Speaker Change: Additional deals are announced by your competitors.
Speaker Change: So.
Speaker Change: First of all.
Speaker Change: I do think we have a first mover advantage there is hundreds of millions of dollars of infrastructure.
Speaker Change: Manns mission infrastructure sitting on the ground at Susquehanna, there's hundreds of millions of dollars of buildings and other infrastructure thats going in.
Speaker Change: And we.
Speaker Change: We have a contract we're executing underneath that as we go through the ramp up as we go through billing as we go through all of this we are further advancing.
Speaker Change: What we know about how to power data centers.
Speaker Change: And what that looks like in the conversations that we have because of the 11 gigawatt backlog et cetera.
Speaker Change: We're advancing our knowledge.
Speaker Change: As far as.
Speaker Change: I've always I've said, and sometimes I regret and sometimes.
Speaker Change: People like us.
Speaker Change: Put it back to me I've always said I would like to announce our second deal before somebody announces their first and I'll stick to that that's true but at the same time, a rising tide lifts all boats and I think the more that the industry can sign contracts.
Speaker Change: And prove up this intersection as I mentioned in my remarks.
Speaker Change: Data centers and power and validate that the better off the entire industry is.
Speaker Change: But we're competitive so yes, we don't we want to be announcing more deals and doing it before anybody else but.
Speaker Change: It's just how these things work, we could talk about complexity, we could talk about time and contracting in legalese and all that type of stuff, but.
Speaker Change: At the end of the day.
Speaker Change: We are executing and theres a lot of activity so don't.
Speaker Change: Don't think that R. R.
Speaker Change: Our lack of.
Speaker Change: Public discussion about what we're doing is a lack of effort or.
Speaker Change: Our progress.
Paul: Paul anything you want to add.
Speaker Change: Yes.
Speaker Change: Back on the point around Susquehanna.
Speaker Change: We have a couple of year head start.
Speaker Change: As Matt said, we have substations in the ground buildings that are actively drawing power and canvas expanding so we don't need to wait for it announced next contract to continue to expand that at rapid pace and then back on the point around our other assets. They are in an advantaged.
Speaker Change: <unk> right. They have the right characteristics water fiber land et cetera, but also as you noted Angie they are in the right location right. There is 11, gigawatts potentially coming to the zone, whether it's contracted or not those assets are in really good position and we're able to and have been advancing opportunities to lock that in.
Speaker Change: And let me just add to that which is I think the advent and the team at PPL has been very constructive and they have a.
Speaker Change: Our commercial mindset.
Speaker Change: That is allowing data centers to flourish in their backyard. If you will and we have a constructive relationship with them and they also have a transmission system that can absorb a lot of these megawatts.
Speaker Change: And as.
Speaker Change: As they've said.
Speaker Change: Not impact residential customers. So that's a big advantage.
Speaker Change: We like the position that we're in and we like.
Speaker Change: Who were working with.
Speaker Change: Thank you.
Speaker Change: Thanks Angie.
Speaker Change: And our next question comes from Michael Sullivan with Wolfe Your line is open.
Michael Sullivan: Hey, good morning, Marty.
Speaker Change: Morning, Mike.
Speaker Change: Hey, Matt.
Speaker Change: Does this has asked for a little more detail on the Susquehanna outage I guess, how confident are we that will be back in the next week or so and then just in terms of what's being improved here.
Speaker Change: How should we think about that.
Speaker Change: Yes, so look.
Speaker Change: Viper glad you brought that up from a schedule standpoint, obviously when you go into a nuclear outage you have.
Speaker Change: Literally minute by minute type schedule and we've done that with the extension. So mid may is that.
Speaker Change: The target here.
Speaker Change: But with all things schedules can move, but we have confidence in what the fix that we're doing which is we went into the condenser and knew that we had some maintenance and that was planned and that was to get us approximately 27 megawatts for that would get us back to full capacity injection rates, which then would go into their capacity.
Speaker Change: Market, but when we did the op rate over a decade ago.
Speaker Change: There was we actually got past that from a.
Speaker Change: Capability of the plant that capacity injection rating and so.
Speaker Change: We determined the incremental work and I could go through the arcane engineering stuff of the extraction steam system between the condenser in the turbine et cetera, but without getting into that there was just some other things that we found that would further enhance effectively the steam flow and when we did that.
Speaker Change: Effective repair work, we anticipate getting incremental megawatts and that's why when we put that in there and say that $20 million of incremental cost plus.
Speaker Change: Call It lost opportunity, albeit during low price environment in the spring here of the three and a half weeks.
Speaker Change: We say that we're going to get payback on that over the time, because we're going to get even more energy out of the system. So that's the work we're doing hopefully that answers. Your question happy to take a follow up Michael If you have one yes.
Michael Sullivan: That's very helpful. So it sounds like it's more on the generation side of things yes.
Michael Sullivan: I should have made that I should have made that very clear. It's on the non so we describe things as nuclear island, a non nuclear island. It's on the non nuclear island aspect of things. So it's basically on balance of plant is the way that we would say it internally.
Michael Sullivan: Okay very helpful. Thank you and then my second question was sorry about the space on the market.
Michael Sullivan: No no.
Michael Sullivan: And your next question.
Michael Sullivan: Yes.
Michael Sullivan: Just.
Michael Sullivan: Maybe level of updated level of conviction in the 2026 outlook that you gave back in September I know you've layered on some hedges here pricing been moving around we've now got the cat floor construct for the auction coming up.
Michael Sullivan: Sure I'm happy to and Terry you should get in here too and Chris as well, but look I think Chris hit on it Thats why we actually had it as part of this presentation as we saw some opportunity to put some hedges on we don't necessarily.
Michael Sullivan: Need to go in and hedge we do it when we look at adjusting our risk tolerances, what I would say as the market was well bid in the term market 'twenty six 'twenty seven during the first quarter cold snap as Chris mentioned and so we layered in some additional hedges, but if you look out the backwardation in the market does not make sense to us I think is the way.
Michael Sullivan: I would say if you have that fundamental view of tightening markets. The capacity market I think is supported.
Speaker Change: Terry Chris Terry you want to yes, no Michael just to be direct we have a significant amount a significant amount of confidence in our 2006 outlet number as you mentioned earlier.
Speaker Change: You've seen you've seen the forwards move we've obviously seen the commodity market even the last few days.
Speaker Change: Get a bid in some of these out years. So we've got a ton of confidence on that we do have to see the results of the upcoming auction.
Speaker Change: There could be maybe even potential upside from that depending on the outcome, but but that sort of dovetails with with maybe a follow up question from year. One of your colleagues on how we feel about the auction but tons of confidence.
Speaker Change: Okay. Thanks very much appreciate it.
Jeremy Tonet: And our next question will come from Jeremy Tonet with JP Morgan Your line is open.
Jeremy Tonet: Hi, good morning.
Speaker Change: Good morning.
Speaker Change: Yes.
Speaker Change: Just wondering as it relates to capital allocation I know this has been touched on a bit here before as it relates to buybacks, but just wondering any thoughts you could share with us with regards of the pace of buybacks in a given quarter given we've seen a lot of share price volatility and just wondering.
Speaker Change: If.
Speaker Change: Free cash flow in a given quarter impacts pace or any other considerations, we might think about just given the level of volatility we've seen out there and how that could influence the buyback pace.
Speaker Change: Yes, Jeremy happy to take that good morning.
Speaker Change: So from a pace standpoint, obviously you can take a look at what we did in the first quarter as an example, when market opportunities present themselves, we're going to we're going to get out there and.
Speaker Change: Put our share repurchase program.
Speaker Change: In place and get moving.
Speaker Change: Ultimately the more dollar per share from a free cash flow standpoint that we can produce ultimately that's our goal right is <unk>.
Speaker Change: Growing our free cash flow per share growing growing with that looks like for our remaining customers. We did have a little bit of seasonality in our cash and I would tell you. There is a little bit of that just given how our debt service works.
Speaker Change: But not anything to wear it keeps us out of the market for any for any quarter or any period of time. So.
Speaker Change: As I mentioned earlier, we've got over $270 million of cash on the balance sheet.
Speaker Change: Ready and willing to transact when we can.
Speaker Change: Got it.
Hey, Jeremy it's Mac I might just add look.
Jeremy Tonet: I think there were we filed our proxy the 19th of March.
Jeremy Tonet: And there you would have seen if you look at the share count because its a current filing you have to put current numbers and you would have seen versus the 12 31 share count that we had bought back shares and so if you go back to the early March time frame.
Jeremy Tonet: That's a couple of months ago.
Jeremy Tonet: We were in the market and we are executing trades at that point buybacks at that point in time.
Jeremy Tonet: We just felt as though that was a good use of capital. We've always said that our benchmark is returning capital to shareholders before we would go and make other alternative.
Jeremy Tonet: Uses of that cash and so as Terry said, we're there and we're going to be supportive of the stock.
Jeremy Tonet: When we can.
Jeremy Tonet: No got it that makes sense I just didn't know if that could have been more in the quarter given the volatility if there is any limiting factors understand.
Jeremy Tonet: The response here so thank you for that.
Jeremy Tonet: Well I wish we could have bought 1 billion back at 185.
Jeremy Tonet: That's a little joke, okay, but there is there are limits as to what you can do on volume per day and things of that nature.
Jeremy Tonet: And I think there were people that wrote that when you get when we got down into that $185 range or plus or minus that that was sort of a reflection wasn't even a reflection of just pure fundamentals before you think about that power plant before you think about adding data centers on top of that so.
Jeremy Tonet: Look.
Jeremy Tonet: I think we've shown the propensity to execute under our capital allocation program and have bought back now what like $1 nine.
Jeremy Tonet: 1 billion, 23% of the market here so.
Jeremy Tonet: And again, we're going to continue to evaluate.
Jeremy Tonet: That strategy and that's our benchmark.
Jeremy Tonet: Okay.
Speaker Change: Got it that's helpful. And then just wanted to pivot towards PJM the market a little bit here with.
Speaker Change: With the PJM auction caller now prove just wondering how you think that sets up incentives I guess for.
Speaker Change: New builds in the next few years here, how did Pjm's recent approvals fast track new generation play into this any any thoughts on proposals to reregulate in Pennsylvania.
Speaker Change: Given I guess some of the news we hear out there.
Jeremy Tonet: Yeah. So Jeremy there is a lot in that question. So maybe we can take this.
Speaker Change: One step at a time.
Speaker Change: From a constructive standpoint for what we see in maybe let's touch on the capacity auction real quick we think the upcoming capacity auction will be extremely constructive let Chris add a few comments to that here at the end on.
Speaker Change: Reregulation in policy discussions in Harrisburg and alike.
Speaker Change: Obviously, we are proponents of what the IPP and the merchant generation space has done over the last several decades of bringing generation to bear once again when you take a look at it any sort of tightening cycle. The initial supply response is usually.
Speaker Change: It's a very orderly process youre going to get additional upgrades from existing sites first and foremost that's usually the lowest cost.
Speaker Change: On incremental generation, then youre going to get potential.
Speaker Change: Retirement that were in the plan that are not going to be retired and we've seen some of that already right. So youre seeing that supply response.
Speaker Change: The question of Newbuild outright is a challenging one because you now have two auctions, where you've got a floor and a ceiling.
Speaker Change: That limit the outcome from a capacity standpoint, and I would tell you the combination of those capacity those capacity outcomes with the existing energy price is not enough to cover a decent return on investing $2200.
Speaker Change: And Heaven forbid 2600, $2700 a kw for a combined cycle generation plant.
Speaker Change: And so.
Speaker Change: That new build Greenfield development is as challenge from that standpoint, even before you get into whether or not you can you can touch on it from a supply chain standpoint.
Speaker Change: Chris you want add anything on the capacity auction, yes look I think to.
Speaker Change: To say it simply right things still look we've got an updated parameters.
Speaker Change: Reliable reliability requirement up VLCC down.
Speaker Change: So some non some knowns and unknowns unknowns.
Speaker Change: Our wind participation those will be variable but.
Speaker Change: Maybe instructive right, let's go back and auction.
Speaker Change: As more active in that space.
Speaker Change: Riding bilaterally.
Speaker Change: You saw some <unk> coming across that certainly didn't reflect where the auction cleared and so the variability on price outcomes continues to be wide with the collar in place.
Speaker Change: Curve is steep and quite frankly, we are.
Speaker Change: One five to $1 six gigs from pricing floor on outcomes.
Speaker Change: The price variability certainly heightened but given the fundamental underlay things still look tight and things don't look where are you seeing trades, Chris for $26 27 in the bilateral market maybe that's a yes again, it's very we coming out of the last auction. We saw some 300 prints come through we're seeing a little more different flavor of three year strips two year strip.
Speaker Change: Yes.
Speaker Change: Contemplate a of a high clear this year with some uncertainty in the back half.
So again, all indicators still pretty constructive, but certainly some unknown variables vis vis wind in VR that could impact that.
Speaker Change: Got it that's very helpful I'll leave it there thanks.
Jeremy Tonet: Thanks, Jeremy.
Speaker Change: Question comes from Julien Dumoulin Smith with Jefferies. Your line is open.
Speaker Change: Hey, good good morning team. Thank you guys very much for the time I appreciate it maybe to follow up on.
Speaker Change: Hey, Matt. Thank you so maybe just to follow up a little bit on the earlier question with from Mr. Sullivan There can.
Speaker Change: Can I follow up a little bit on the non nuclear island, just what exactly.
Speaker Change: Is it that you guys are upgrading if I can get a little bit more details I mean as it pertained to the blades here.
Speaker Change: The generated accolades now.
Speaker Change: It's the extraction steam system that comes off of the turbine that then eventually the steam flows down into the condenser. We knew we had work to do on the condenser. That's a 27 megawatts that were talking about as you went up river. If you will back towards the turbine there was some additional repairs and incremental maintenance on.
Speaker Change: On some of the piping effectively there so thats the extraction steam system.
Speaker Change: That's simple and when you.
When we do that incremental work what it will do is effectively.
Speaker Change: This is.
Speaker Change: Layman's term I am an engineer, but I quit doing that up like 30 years ago.
Speaker Change: Is tightening the flow of the steam and by doing so you get for the same fuel you get additional energy out of the system.
Speaker Change: Got it okay, so turbine blades and the generators.
Speaker Change: No it's not the turbine has got the turbine.
Speaker Change: Sure.
Speaker Change: Appreciate that follow up question, because I should have been clear. Thank you for saying it multiple times.
Speaker Change: Yes, it's not the turbine.
The surrounding.
Speaker Change: Yes.
Speaker Change: Excellent.
Speaker Change: And as a consequence of your confidence on the timeline of the outage et cetera. I think you said a week away here is pretty high.
Speaker Change: Getting this going into it yes.
Speaker Change: As again, you put together timelines.
You put together the best of it with the best available information, but we feel real good about the mid may timeframe.
Speaker Change: Got it okay.
Speaker Change: Hoping to press you too much there I appreciate it alright excellent alright.
Speaker Change: Just if I can pivot slightly here I mean, <unk> is an interesting asset you guys have obviously a lot of focus on your Susquehanna site and there is a certain degree of adjacency. How do you think about the concept of additionality here.
Speaker Change: Some of your peers have been commenting on this and certainly you guys have an interesting potential player on this avenue. So again im trying not to pry on commercial terms it as much as I'm trying to think about the scope of how you think about what could come ahead here, especially in light of this growing conversation on additionality.
Speaker Change: Look I think.
Speaker Change: And.
Speaker Change: <unk> discussed this before when I think about the markets and the tightening of the markets.
Speaker Change: I think if things in sort of a near term midterm and longer term.
Speaker Change: In the near term, what we have and I've said this before and if you look at by the way its being validated in our results because if you look at the run times on monitory versus a year ago.
Speaker Change: We have plenty of energy in the system, what we have for the next five years is effectively trying to solve a capacity issue for 20 to 40 hours and I think that's where the industry has started to talk about how do we solve that 20 to 40 hours and we have enough energy there with respect to additionality I think what <unk> said.
Speaker Change: I Hope I hope I got it right Youre talking additionality in terms of incremental megawatts our plants on.
Speaker Change: That is a end of the decade.
Speaker Change: That next five year period, 30% to 35, that's when we're going to need energy and capacity that is new in my mind, we have a capacity shortage, which again is just $20 to 40 hours for the next five years.
Speaker Change: With the data center load coming there will have to be additional megawatts brought to bear. That's just the fact is as load growth.
Speaker Change: As I mentioned this is an exciting time, because we're seeing load growth again in the industry, which hasnt occurred, particularly in the northeast Theres been in the Gulf States, you've seen load growth pretty fairly substantial in Texas, Louisiana et cetera from industrial load, but data center load coming to the northeast and particularly specifically, Pennsylvania, we're excited about.
Speaker Change: Well, yes, there will have to be additional megawatts brought to bear, but again I think that is a 23% to 35 timeframe, if we as an industry.
Speaker Change: And as a load.
Speaker Change: Can't solve that 20 to 40 hours a year and I think that can come through demand response.
Speaker Change: Things like getting incremental energy from our our current megawatts, which we're looking at and doing.
Speaker Change: Installed at our current installed capacity across the fleet. So when it comes to Additionality I think thats a good discussion.
Speaker Change: But it's a discussion that to me is in the out years and again as I said in the opening those construction costs are going up youre looking at 'twenty 200, $2600, a kw range as what others have said.
Speaker Change: Whether it be greener brownfield it doesn't matter I mean, the costs are going up because of the materials et cetera, and it's long lead time and.
Speaker Change: So the current markets don't support that so again, we have pricing and megawatts right now.
Speaker Change: And it is speed to market for a lot of this data center load, it's like producing it now, but then we still have to solve this short term 20 to 40 hours a year issue and I think we as an industry can do that.
Speaker Change: Yes, absolutely.
Speaker Change: Set expectations with respect to your portfolio here again, I know youre in the race to get this second deal done it wouldn't necessarily be focused on incremental megawatts at the monitor side. What have you. It would be focused on a more conventional use of existing capacity if I'm hearing you right.
Speaker Change: I think it's.
Speaker Change: <unk>.
Speaker Change: I think there are multiple ways.
Speaker Change: Two.
Speaker Change: Supply power to data centers.
Speaker Change: You got it alright, good luck.
Speaker Change: <unk>.
Speaker Change: Hey, Joanne.
Ross Sandler: And our next question comes from Ross Sandler with Bank of America. Your line is open.
Ross Sandler: Good morning, Terry Good morning back how are you.
Ross Sandler: So first question just any updates on the litigation process at the fifth circuit around the RSA or just.
Ross Sandler: Where we were.
Ross Sandler: Hey, John do you want to take that our general counsel I'd be happy to take that Ross.
Ross Sandler: We are monitoring hang on a second.
Speaker Change: I'm thinking about a different issue can be two seconds here.
Ross Sandler: <unk>.
Ross Sandler: Yes, so look the fifth circuit is proceeding the briefing schedule is going to come out in the next couple of weeks.
Ross Sandler: That appeal is a lot of technical issues.
Ross Sandler: And I don't want to bore everybody with the where the technical side of it but the upshot is that that FERC decision turn on theoretical concerns about nonconforming provisions.
Ross Sandler: <unk> those are hypothetical future transactions, and we think <unk> evaluated our transaction and not future transactions that might or might not occur. So that process is going to play out over the course of the next several months and the fifth circuit.
Ralph: And as <unk> said several times, we're doing that along with other things. So Ralph let me just throw a little bit of additional color there.
Ralph: Pursuing that option, because we felt as though the denial of the RSA incremental.
Ralph: 960 from 300, which by the way that <unk> had been approved amended and approved and then deny that it was it was denied without prejudice, which meant that they didnt reason or argue why it was denied and our fifth circuit cases basically to ask FERC <unk>.
Ralph: Through the legal process to state why this is layman's terms not a legal term this basically provide.
Ralph: Provider a reasoned argument as to why it was denied because we felt that that was a prudent thing to do.
Ralph: Okay that makes complete sense and then and then following on to <unk>.
Speaker Change: <unk> questions and maybe Andy's questions too.
Speaker Change: I know you're not going to comment on specific assets that I know.
Speaker Change: We sort of beaten up the additionality question, but as I think about it you have you have the agreement with AWS off the back of a nuclear plant on co location basis now.
Speaker Change: As you flip that.
Speaker Change: From a 30000 foot view to natural gas, what kind of strategic things or risk factors things Big picture things that you're thinking about about how a natural gas plant arrangement would have to work different from a nuclear range.
Speaker Change: Yes.
Speaker Change: Again, I'm going to go back to why this is so exciting to be in the IPP space right now.
Speaker Change: If you think if you go back for those of US that can a couple of decades to the early two thousands trade.
Speaker Change: <unk> had not only dealing with real time spot and sort of biomarker Val week et cetera.
Speaker Change: There was also origination which meant longer term contracting and that skill has atrophied a lot okay in the industry.
Speaker Change: We're obviously rebuilding it and if you think about it.
Speaker Change: The behind the meter deal AWS or any of the other contemplated solutions that we're thinking about how to power data center, our effective origination structured type deals and to do that.
Speaker Change: You have to in my opinion have a platform.
Speaker Change: Like Talon has which is a trading floor or the ability to source and contract for gas schedule gas be able to understand the risks associated with it being able to backstop. If you were to go sell for example, this is an example, if you were to go sell a long term contract off of a single.
Speaker Change: Gas unit.
Speaker Change: That has.
Speaker Change: Risks embedded in it to the counterparty enter the structure if that unit is to go down, but if that unit goes down and you have incremental megawatts across our fleet you have an ability to portfolio risk that and to backstop that so we're excited about the platform that talent has to be able to find creative solution.
Speaker Change: And to go back to the world of origination and structuring where you had contracts for C&I, which if you think about the Amazon contracted as a C&I type customer. It just happens to look a lot like.
Speaker Change: And aluminum smelter that runs 24 by seven.
Speaker Change: But those contracts were 1357, sometimes even 10 years or longer like our AWS contracted coal you want to jump in on this yes. So look I mean, the question around what's different between gas really versus nuclear.
Speaker Change: Cut to that I think theres, one physical and one financial.
Speaker Change: Broad buckets that we've been working on and one is just the reliability aspect right, we talked about Susquehanna, having one unit back up the other than our current arrangement behind the meter and I think we've come back to our analyst day last year, we've been saying.
Speaker Change: Youll likely looks different needs to have some kind of grid support.
Speaker Change: The reliability.
Speaker Change: Features and whatnot, so and so we've been working on this type of arrangement well before the FERC projection in November and have some thought there as we talk with Counterparties and then on the economic side, it's really around price risk. Obviously is the gas commodity risk on our long term contract and who warehouses that theres a variety of different structures to do that.
Speaker Change: We certainly are built as macro is alluding to two warehouses.
Speaker Change: Appropriate risk and manage that for the appropriate return.
Speaker Change: So.
Speaker Change: That's where we're at with our discussions with Counterparties.
Speaker Change: That's well said because we.
Speaker Change: When we say things like warehouse risk, we mean manage it for our customers and we think that we're well positioned to do so we have a good balance sheet. We have a diverse portfolio of assets. In addition to Susquehanna that allows us to do that so when people start asking questions about <unk> and.
Speaker Change: And by the way, we use front of the meter is shorthand no one's really defined with front of the meter or front of the meter gasses, but if we just use that as a general umbrella concept that means that somebody is going to have to be effectively a retail provider that can provide a full solution over a long term manage risk, but do so at an appropriate.
Speaker Change: And we like how we're positioned there and we like how we're positioned to where our assets are positioned as well.
Speaker Change: That's a very comprehensive answer and Mac I'll say, Unfortunately, I am old enough or maybe Fortunately a more of a doctor.
Speaker Change: Hey, guys. Thank you.
Speaker Change: It's unfortunate I think I'm going to believe but anyway, yes.
Speaker Change: Sure.
Speaker Change: Take care guys.
Speaker Change: Yes.
Speaker Change: And our next question comes from Craig Shere with Tuohy Brothers. Your line is open.
Craig Shere: Good morning, Thanks for taking the questions.
Speaker Change: Hey, Greg good morning.
Craig Shere: Digging a little bit further on the <unk> gas fired julians onto our question.
Craig Shere: A leading midstream company has claimed some rapid fire Greenfield simple cycle data center deployments that look to be online in the next couple of years.
Craig Shere: Any thoughts on reconciling your 2030 to 20 <unk>.
Craig Shere: 35 timeline for additionality.
Craig Shere: Given that.
Craig Shere: If your comments are focused more around efficient CCG Ts, but data centers are happy with seemingly perpetually simple cycle support does that change your math air math at all.
Speaker Change: No no not not really Craig I mean, I think the corollary here is.
Craig Shere: It was interesting in the shale boom.
Craig Shere: I don't know, maybe 10 15 years ago right after sort of nine and 10.
Craig Shere: Back in <unk>.
Craig Shere: Before strip was triggered 11 bucks in <unk> west.
Craig Shere: West, Texas had a problem with electricity and there was a lot of upstream guys have said they were deploying.
Trailer 18, Wheeler mounted <unk> systems out there to power their rigs and the power of their pumps and compressors and things of that nature, I think thats a little bit of a corollary. There was a data center I think it was in Memphis that got plop down in some some reciprocating machines got plopped down next to it which are probably the least efficient, but it gave us a speed to market.
Craig Shere: Thats, all sort of within the realm of solutions and trying to figure out how to power data centers and that and so I don't think thats inconsistent my comments about 2000.
Craig Shere: But you can do that on a smaller scale, but when you start talking gigs.
Speaker Change: That's what I was talking 2030% to 35 being the Cgt's call Terry Mangan.
Speaker Change: Mac I think you hit on it. It's a question of scale right as you think about that technology and what its able to be used for the scale and the size matters.
Speaker Change: Then also the question of.
Speaker Change: What's your backup to that an interconnected to the grid or not I think that's important.
Speaker Change: One other thing on that.
Speaker Change: Other companies are going to find pockets of opportunity to build in the near term or speed to market.
Speaker Change: Speed to market advantages already our existing assets right. So we have higher heat rate machines or higher heat rate machines already.
Speaker Change: And <unk> and some other assets.
Speaker Change: So for us it just wouldn't be a natural fit to add more of that.
Speaker Change: If anything it would be to add to high efficiency machines over the longer term.
Speaker Change: Yes.
Speaker Change: And again I think Greg It goes back to like it's going to take our portfolio to provide a portfolio.
Speaker Change: Both solutions.
Speaker Change: Understood.
Speaker Change: Flipping a little bit.
Speaker Change: To the auction in front of the meter and industry peers seem to anticipate notable demand response increases in the upcoming auction.
Speaker Change: That could pave the way for.
Speaker Change: For more front of the meter PPA solutions Bye bye, all effectively teach shaving and allowing <unk> to tap their spare gas fired capacity.
Speaker Change: Would you agree with that outlook both.
Speaker Change: In terms of the progression of the front of the meter market and also in terms of the pending auction.
Speaker Change: I think what Craig what Youre hitting on is a growing chorus and.
Speaker Change: Done a number of visits the DC and thinking about how to this intersection with respect to and without getting into those.
Speaker Change: Private conversations I think its thematic in the industry that people are looking at and saying we have our emergency response capability through backup generators, just like backup generators at your house I mean, I wouldn't suggest that we go.
Speaker Change: Aggregate all of those but.
Speaker Change: Could be an option to solve things but.
Speaker Change: And size and people are looking at as I described how to solve this 20% to 40 hour issue not necessarily boil the ocean and try to get a bunch of newbuild when their supply chains et cetera, when we have energy as.
Speaker Change: Coal was this we have energy capacity at <unk>, we were running mom towards 7% three years ago, and we're now running at 46% in the first quarter I mean that it can ramp up and it's a gasoline it maybe it's a 10 heat rates. So it's not as efficient, but it is quick to market. It can ramp up but it can't solve that 20 to 40 hours.
Speaker Change: It was already counted in those 20% to 40 hours and so demand response and the ability to solve that we think needs to be.
Speaker Change: Again, that's atrophy, because there wasn't the need for it we think that needs to come back those muscles need to be rebuilt and we need to get some good rules in PJM on how that works and we need to think about how do we integrate that across the.
Speaker Change: The.
Speaker Change: Load if you will.
Speaker Change: But in doing so you can't change the reliability of the load and when you think about things like data centers and their load.
Speaker Change: Who knows what they're doing you don't want to cut their load.
Speaker Change: When they are performing.
Speaker Change: No.
Speaker Change: Activities or they're doing things for hospitals et cetera, you can't do that but we need to think about how do you integrate that and solve this 20% to 40 hours issue across the system for the next five years.
Speaker Change: Specifically talking about PJM right now.
Speaker Change: Great.
Speaker Change: Very helpful.
Speaker Change: Yep.
Speaker Change: I think we're just coming up on time, we got one more question yes.
Speaker Change: Yes, Sir last question will come from Derek <unk> Chopra with Evercore. Your line is open.
Speaker Change: Good morning, Thank you for squeezing me.
Speaker Change: Just had a quick clarification on the FERC PJM discussion earlier on in the call. So obviously one.
Speaker Change: <unk> asked for a settlement.
Amongst settlement talks amongst party just your views there Mac and Terry I apologize.
Speaker Change: You've discussed this already a couple of calls this morning, but just your views down the settlement and talking to investors yesterday that part was that settlement actually pushes out the decision. Even further so just any thoughts you can share there and how do you think this plays out.
Speaker Change: Look we weren't a party to the show cause order.
Speaker Change: <unk>.
Speaker Change: That was rejected.
Speaker Change: Somewhat staunchly rejected by PJM and we just.
Speaker Change: We're not.
Speaker Change: Pushing for that show cause order, nor did we and so.
Speaker Change: James pushed back on it we think the regular course of what's going on right now.
Speaker Change: In absence of that show cause order is the most effective way to get to a resolution.
Speaker Change: Thank.
Speaker Change: Thank you, Mike and there is no timeline right on that correct.
Speaker Change: Obviously want to get a decision out as quickly as possible, but <unk> is under no.
Speaker Change: Finally, there is no set timeline for one for sure.
Speaker Change: Sure.
Speaker Change: Sure.
Speaker Change: There's not an explicit timeline, but if you if you listen to the <unk>.
Speaker Change: White House, if you listened to chairman Christie, everybody says, we need to figure out the AI dominance, which means data centers, which means we need to figure out this solution. So.
Speaker Change: As a practical matter.
Speaker Change: There is a overall guiding principle to solve this sooner rather than later and so it's just going to need to take its course again.
Speaker Change: We want to continue to pursue that because we believe that the options. The eight options that PJM put forth need to be preserved, but that is not stopping us with respect to our other activities on the commercial front.
Speaker Change: Thank you really appreciate Glenn.
Speaker Change: Okay. Thanks, Peter Geis.
Speaker Change: And thanks, everyone for joining us today and for your continued support of talent and have a great day.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.