Q2 2026 Vistra Corp Earnings Call

August 7, 2026

Speaker #1: Good day, and welcome to the Vistra Corp. second quarter 2026 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.

Operator: Good day, welcome to the Vistra Corp Q2 2026 Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Eric Micek, Vice President of Investor Relations. Please go ahead.

Speaker #1: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone.

Speaker #1: To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Eric Micek, VP of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Good morning, and thank you for joining Vistra's Investor Webcast discussing our second quarter 2026 results. Our discussion today is being broadcast live from the Investor Relations section of our website at www.vistracorp.com.

Eric Micek: Good morning, thank you for joining Vistra's Investor Webcast discussing our Q2 2026 results. Our discussion today is being broadcast live from the investor relations section of our website at www.vistracorp.com. There you can also find copies of today's investor presentation and earnings release. Providing our prepared remarks today are Jim Burke, Vistra's President and Chief Executive Officer, and Kris Moldovan, Vistra's Executive Vice President and Chief Financial Officer. Other senior Vistra executives will be available to address questions during the second part of today's call as necessary. Our earnings release presentation and other matters discussed on the call today include references to certain non-GAAP financial measures. All references to Adjusted EBITDA and Adjusted Free Cash Flow before Growth throughout this presentation refer to ongoing operations Adjusted EBITDA and ongoing operations Adjusted Free Cash Flow before Growth.

Speaker #2: There you can also find copies of today's investor presentation and earnings release. Providing our prepared remarks today are Jim Burke, Vistra's President and Chief Executive Officer, and Chris Moldovan, Vistra's Executive Vice President and Chief Financial Officer.

Speaker #2: Other senior Vistra executives will be available to address questions during the second part of today's call as necessary. The earnings release, presentation, and other matters discussed on the call today include references to certain non-GAAP financial measures.

Speaker #2: All references to adjusted EBITDA and adjusted free cash flow before growth throughout this presentation refer to ongoing operations adjusted EBITDA and ongoing operations adjusted free cash flow before growth.

Speaker #2: Reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix to the Investor Presentation available in the Investor Relations section of Vistra's website.

Eric Micek: Reconciliations to the most directly comparable GAAP measures are provided in the earnings release and in the appendix in the investor presentation available in the investor relations section of Vistra's website. Today's discussion contains forward-looking statements which are based on assumptions we believe to be reasonable only as of today's date. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or implied. We assume no obligation to update our forward-looking statements. I encourage all listeners to review the safe harbor statements included on slide two in the investor presentation on our website that explain the risks of forward-looking statements, the limitations of certain industry and market data included in the presentation, and the use of non-GAAP financial measures. I will now turn the call over to our President and CEO, Jim Burke.

Speaker #2: Also, today's discussion contains forward-looking statements, which are based on assumptions we believe to be reasonable only as of today's date. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or implied.

Speaker #2: We assume no obligation to update our forward-looking statements. I encourage all listeners to review the safe harbor statements included on slide 2 of the Investor Presentation on our website that explain the risks of forward-looking statements and the limitations of certain industry and market data, included in the presentation, and the use of non-GAAP financial measures.

Speaker #2: I will now turn the call over to our president and CEO, Jim Burke.

Speaker #3: Thank you, Eric. Good morning, and thank you all for joining us today to discuss our second quarter 2026 results. We remain on track to achieve another record result in 2026 as the business continues to perform very well.

Jim Burke: Thank you, Eric. Good morning, and thank you all for joining us today to discuss our second quarter 2026 results. We remain on track to achieve another record result in 2026 as the business continues to perform very well. Within the geographies we serve, we are observing a structurally improved demand environment with both PJM and ERCOT hitting new all-time summer peak loads in July. This recent experience reinforces our focus on operational excellence, delivering power to our customers in a reliable and safe manner when it's needed most. We continue to be in active negotiations with large load customers as they seek to meet their power needs both in the short and long-term planning horizons.

Jim Burke: Thank you, Eric. Good morning, and thank you all for joining us today to discuss our second quarter 2026 results. We remain on track to achieve another record result in 2026 as the business continues to perform very well. Within the geographies we serve, we are observing a structurally improved demand environment with both PJM and ERCOT hitting new all-time summer peak loads in July. This recent experience reinforces our focus on operational excellence, delivering power to our customers in a reliable and safe manner when it's needed most. Data center activities remain stromng. We continue to be in active negotiations with large load customers as they seek to meet their power needs both in the short and long-term planning horizons.

Speaker #3: Within the geographies we serve, we are observing a structurally improved demand environment, with both PJM and ERCOT hitting new all-time summer peak loads in July.

Speaker #3: This recent experience reinforces our focus on operational excellence, delivering power to our customers in a reliable and safe manner when it's needed most. Data center development activity remains strong, and we continue to be an active negotiations with large load customers as they seek to meet their power needs both in the short and long-term planning horizons.

Speaker #3: With our large diversified and flexible fleet, our development capabilities, innovative retail franchise, and experienced commercial team, we believe Vistra is well positioned to deliver on these opportunities.

Jim Burke: With our large, diversified, and flexible fleet, our development capabilities, innovative retail franchise, and experienced commercial team, we believe Vistra is well positioned to deliver on these opportunities. The activity level we see today reinforces our view that the long-term expected improvement in power market fundamentals is underway. We remain excited about the growth opportunities ahead. Turning to slide five, the team has worked hard across the business, building on the first quarter momentum to deliver strong first half results for the company. We achieved second quarter Adjusted EBITDA of nearly $1.8 billion compared to second quarter 2025 of approximately $1.35 billion, representing an over 30% increase year over year.

Speaker #3: The activity level we see today reinforces our view that the long-term expected improvement in power market fundamentals is underway, and we remain excited about the growth opportunities ahead.

Speaker #3: Turning to slide 5, the team has worked hard across the business, building on the first quarter momentum to deliver strong first-half results for the company.

Speaker #3: We achieved second quarter adjusted EBITDA of nearly $1.8 billion, compared to second quarter 2025 of approximately $1.35 billion. Representing an over 30% increase year over year.

Speaker #3: At the core of these results are the 7,000 team members across the organization, whose close collaboration and consistent execution across generation, commercial, and retail highlights the one-team culture that is central to our success and reflects the strength of the integrated business model.

Jim Burke: At the core of these results are the 7,000 team members across the organization whose close collaboration and consistent execution across generation, commercial, and retail highlights the one-team culture that is central to our success and reflects the strength of the integrated business model. Operationally, the team successfully completed our annual spring maintenance cycle, positioning the fleet for strong performance through the critical summer period. To provide some perspective, the nuclear fleet successfully completed planned refueling outages for three of our units. Our gas and coal fleet successfully completed 92 planned outages in preparation for the summer run. This preparation was evident during the recent heat waves in Texas and PJM, where we achieved commercial availability of over 97% across the entire fleet.

Speaker #3: Operationally, the team has successfully completed our annual spring maintenance cycle, positioning the fleet for strong performance through the critical summer period. To provide some perspective, the nuclear fleet has successfully completed planned refueling outages for three of our units, and our gas and coal fleet successfully completed 92 planned outages in preparation for the summer run.

Speaker #3: This preparation was evident during the recent heat waves in Texas and PJM, where we achieved commercial availability of over 97% across the entire fleet.

Speaker #3: Moving to the outlook, we are reaffirming the guidance ranges for 2026 adjusted EBITDA and adjusted free cash flow before growth, and maintaining the range of potential 2027 adjusted EBITDA midpoint opportunities.

Jim Burke: Moving to the outlook, we are reaffirming the guidance ranges for 2026 Adjusted EBITDA and Adjusted Free Cash Flow before Growth and maintaining the range of potential 2027 Adjusted EBITDA midpoint opportunities. Kris will cover this in more detail later. Finally, we are also pleased to announce our partnership with KKR, NVIDIA, and the Kuwait Investment Authority to be a founding investor in Helix Digital Infrastructure. Helix will focus on combining power solutions for data centers with land and other digital infrastructure, creating a rack-to-grid, one-stop-shop solution that customers increasingly prefer. As part of this solution, the Helix platform will seek to leverage our deep expertise in power markets, our proven commercial track record, and our generation capabilities to deliver tailored energy solutions. Vistra's role will be twofold.

Speaker #3: Chris will cover this in more detail later. Finally, we are also pleased to announce our partnership with KKR, NVIDIA, and the Kuwait Investment Authority to be a founding investor in Helix Digital Infrastructure.

Speaker #3: Helix will focus on combining power solutions for data centers with land and other digital infrastructure, creating a rack-to-grid, one-stop-shop solution that customers increasingly prefer.

Speaker #3: As part of this solution, the Helix platform will seek to leverage our deep expertise in power markets, our proven commercial track record, and our generation capabilities to deliver tailored energy solutions.

Speaker #3: Vistra's role will be twofold. First, as a founding investor, Vistra will commit up to $1 billion to be invested over time, with any amount subject to the achievement of certain milestones.

Jim Burke: First, as a founding investor, Vistra will commit up to $1 billion to be invested over time, with any amount in excess of $500 million subject to the achievement of certain milestones. This aligns our participation in what we expect to be a leading digital infrastructure platform. Second, Vistra will serve as the preferred power partner, allowing us to participate in Helix development projects, either through contracted new build projects or through new contracts with existing assets. We believe this structure creates an additional avenue for growth and broadens our participation in a thoughtful manner as the digital economy expands. Importantly, we retain significant optionality to develop projects with Helix where it makes sense to do so while continuing to develop projects on our own as well.

Speaker #3: This aligns our participation in what we expect to be a leading digital infrastructure platform. Second, Vistra will serve as the preferred power partner, allowing us to participate in Helix development projects either through contracted new-build projects or through new contracts with existing assets.

Speaker #3: We believe this structure creates an additional avenue for growth and broadens our participation in a thoughtful manner as the digital economy expands. And importantly, we retain significant optionality to develop projects with Helix where it makes sense to do so, while continuing to develop projects on our own as well.

Speaker #3: We're excited about the potential this platform brings to our company, and look forward to working with the team to execute on this strategy. Turning to slide 6, as we have outlined on previous calls, we see a structurally improved demand environment and power markets that supports our long-term outlook.

Jim Burke: We're excited about the potential this platform brings to our company and look forward to working with the team to execute on this strategy. Turning to slide six, as we have outlined on previous calls, we see a structurally improved demand environment in power markets that supports our long-term outlook. We believe annual load growth of at least 4% to 6% in ERCOT and 2% to 3% in PJM through 2030 remain reasonable estimates for these markets. In July, we've also seen new all-time peaks in load in both PJM and ERCOT, with PJM hitting over 168 GW and ERCOT hitting over 91 GW. While data centers will be an important driver of load, particularly in 2028 and beyond, we believe a significant component of this growth is from sources other than data centers. This includes industrial reshoring, increasing electrification, population growth, particularly in Texas, and broader economic expansion.

Speaker #3: We believe annual load growth of at least 4 to 6 percent in ERCOT and 2 to 3 percent in PJM through 2030 remain reasonable estimates for these markets.

Speaker #3: In July, we've also seen new all-time peaks in load in both PJM and ERCOT, with PJM hitting over 168 gigawatts and ERCOT hitting over 91 gigawatts.

Speaker #3: While data centers will be an important driver of load, particularly in 2028 and beyond, we believe a significant component of this growth is from sources other than data centers.

Speaker #3: This includes industrial reshoring, increasing electrification, population growth—particularly in Texas—and broader economic expansion. Importantly, despite the strong level of growth, the performance of power grids during these recent summer peaks demonstrates that the power grids in our key markets are able to meet this growing demand.

Jim Burke: Importantly, despite the strong level of growth, the performance of power grids during these recent summer peaks demonstrates that the power grids in our key markets are able to meet this growing demand. As a diversified company with multiple forms of generation across the country, Vistra is well positioned to benefit from strengthening fundamentals across markets. Although recent demand trends, combined with strong weather, have driven strength in PJM forward pricing, the power price environment at ERCOT has softened recently. We view this as normal, with variability expected as load additions are lumpy and weather impacts can change year to year. We believe long-term growth fundamentals remain on track across our key markets, and our team is committed to delivering on our strategy given this growing load environment. This quarter has demonstrated strong execution across our business.

Speaker #3: As a diversified company with multiple forms of generation across the country, Vistra is well positioned to benefit from strengthening fundamentals across markets. Although recent demand trends, combined with strong weather, have driven strength in PJM forward pricing, the power price environment at ERCOT has softened recently.

Speaker #3: We view this as normal, with variability expected as load additions are lumpy, and weather impacts can change year to year. We believe long-term growth fundamentals remain on track across our key markets and our team is committed to delivering on our strategy given this growing load environment.

Speaker #3: This quarter has demonstrated strong execution across our business. Not to be left out of the discussion, we have been very active on many fronts, related to the regulatory process and advocacy in our key markets, while there is still more to finalize.

Jim Burke: Not to be left out of the discussion, we have been very active on many fronts related to the regulatory process and advocacy in our key markets. While there is still more to finalize, overall, we are encouraged by the direction of travel. I kept my opening remarks brief, recognizing that we will have an opportunity to provide our perspective on this topic in Q&A. With that, I'll turn it over to Kris to provide more details on our Q2 results, our outlook, and our capital allocation.

Speaker #3: Overall, we are encouraged by the direction of travel. I kept my opening remarks brief, recognizing that we will have an opportunity to provide our perspective on this topic in the Q&A.

Speaker #3: With that, I'll turn it over to Chris to provide more details on our second-quarter results, our outlook, and our capital allocation.

Speaker #2: Thank you, Jim. Turning to slide 8, Vistra delivered second quarter adjusted EBITDA of $1,767,000,000, representing a more than 30% increase compared to the second quarter of 2025.

Kris Moldovan: Thank you, Jim. Turning to slide eight, Vistra delivered Q2 Adjusted EBITDA of $1.767 billion, representing a more than 30% increase compared to Q2 2025. This strong performance was driven by contributions across both our Generation and Retail segments, reflecting the benefits of our integrated business model and comprehensive hedging program. Our Generation business delivered approximately $994 million of Adjusted EBITDA in the quarter, compared to approximately $593 million in Q2 2025. The year-over-year improvement was primarily driven by favorable hedging activity, resulting in the company's average realized prices being approximately 5% higher on a per MWh basis compared to the same quarter last year.

Speaker #2: This strong performance was driven by contributions across both our generation and retail segments, reflecting the benefits of our integrated business model and comprehensive hedging program.

Speaker #2: Our generation business delivered approximately $994 million of adjusted EBITDA in the quarter, compared to approximately $593 million in the second quarter of 2025. The year-over-year improvement was primarily driven by favorable hedging activity, resulting in the company’s average realized prices being approximately 5% higher on a per-megawatt-hour basis compared to the same quarter last year.

Speaker #2: Higher capacity revenues in PJM, optimizing the run profile of our flexible gas generation assets to capture margin opportunities, the restart of Martin Lake Unit 1, and contributions from the assets acquired from Lotus in the third quarter of 2025.

Kris Moldovan: Higher capacity revenues in PJM, optimizing the run profile of our flexible gas generation assets to capture margin opportunities, the restart of Martin Lake Unit 1, and contributions from the assets acquired from Lotus in Q3 2025. Retail also had a strong quarter, contributing approximately $773 million of Adjusted EBITDA, compared to approximately $756 million in Q2 2025. As a reminder, the Q2 and Q4 are typically the strongest quarters for Retail, given seasonal timing of margins. Turning to slide nine, we are reaffirming our 2026 Adjusted EBITDA guidance range of $6.8 to $7.6 billion and our Adjusted Free Cash Flow before Growth guidance range of $3.925 to $4.725 billion. Given our performance through the H1, we are confident in our ability to deliver at or above the midpoint of these ranges.

Speaker #2: Retail also had a strong quarter, contributing approximately $773 million of adjusted EBITDA, compared to approximately $756 million in the second quarter of 2025. As a reminder, the second and fourth quarters are typically the strongest quarters for retail, given the seasonal timing of margins.

Speaker #2: Turning to slide 9, we are reaffirming our 2026 adjusted EBITDA guidance range of $6.8 to $7.6 billion, and our adjusted free cash flow before growth guidance range of $3.925 to $4.725 billion.

Speaker #2: Given our performance through the first half of the year, we are confident in our ability to deliver at or above the midpoint of these ranges.

Speaker #2: Looking forward to 2027, current ERCOT forward curves are meaningfully lower than they were on October 31, 2025, which form the basis for the 2027 midpoint opportunity range we provided on our Q3, 2025 earnings call.

Kris Moldovan: Looking forward to 2027, current ERCOT forward curves are meaningfully lower than they were on 31 October 2025, which form the basis for the 2027 midpoint opportunity range we provided on our Q3 2025 earnings call. However, due to several offsetting factors, including higher prices in PJM, the support from our comprehensive hedging program, and the downside protection afforded by the nuclear PTC, we are maintaining our 2027 Adjusted EBITDA midpoint opportunity range of $7.4 to $7.8 billion. As a reminder, that range excludes any contribution from the pending acquisition of Cogentrix and the premium above market we expect to receive under the long-term power purchase agreements at our PJM nuclear sites with Meta. Finally, turning to slide 10, our forecast indicates that we will generate more than $10 billion of available cash in 2026 and 2027. We have been opportunistic, yet disciplined, in allocating this available cash.

Speaker #2: However, due to several offsetting factors, including higher prices in PJM, the support from our comprehensive hedging program, and the downside protection afforded by the nuclear PTC, we are maintaining our 2027 adjusted EBITDA midpoint opportunity range of 7.4 to 7.8 billion dollars.

Speaker #2: As a reminder, that range excludes any contribution from the pending acquisition of Cogentrix and the premium above market we expect to receive under the long-term power purchase agreements that our PJM nuclear sites with our forecast indicates that we will generate more than $10 billion of available cash in 2026 and 2027.

Speaker #2: We have been opportunistic, yet disciplined, in allocating this available cash. We have allocated approximately $3 billion to our equity holders in 2026 and 2027 through share repurchases and common and preferred dividends.

Kris Moldovan: We have allocated $3 billion to our equity holders in 2026 and 2027 through share repurchases and common and preferred dividends. Notably, our share repurchase program continues to create significant value. Since initiating the program in November 2021, we have retired 171 million shares at an average cost of $38 per share. We currently have $1.2 billion of share repurchase authorization remaining, which we expect to exhaust no later than the end of 2027. I am also pleased to report that with the amount of repurchases through 3 August, we have returned over $6.5 billion to our shareholders through share repurchases since initiating the program in late 2021, well ahead of the target we communicated at that time of at least $6 billion through year-end 2026.

Speaker #2: Notably, our share repurchase program continues to create significant value. Since initiating the program in November 2021, we have retired approximately 171 million shares at an average cost of approximately $38 per share.

Speaker #2: We currently have approximately 1.2 billion dollars of share repurchase authorization remaining, which we expect to exhaust no later than the end of 2027. I am also pleased to report that with the amount of repurchases through August 3, we have returned over 6.5 billion dollars to our shareholders through share repurchases, since initiating the program in late 2021, well ahead of the target we communicated at that time of at least $6 billion through year-end 2026.

Speaker #2: Pursuant to the opportunistic design of our 10(b)(5)(1) trading plan, our repurchase activity through July continued to run ahead of pro rata pace, given the elevated free cash flow yield indicated by our share price.

Kris Moldovan: Pursuant to the opportunistic design of our 10b5-1 trading plan, our repurchase activity through July continued to run ahead of pro rata pace, given the elevated free cash flow yield indicated by our share price. We will continue to evaluate our allocation to our shareholders with the flexibility to allocate additional cash to share repurchases in 2026 and/or 2027 should market conditions warrant. In addition to allocating significant amounts directly to our equity holders, we also expect to allocate $4.5 to $5 billion to accretive growth investments, including the Cogentrix acquisition, the development of the Permian gas units, the PJM nuclear operates supported by power purchase agreements with Meta, the development of the Oak Hill 2 solar facility supported by a power purchase agreement with a large investment-grade counterparty, and now our capital commitment to Helix.

Speaker #2: We will continue to evaluate our allocation to our shareholders, with the flexibility to allocate additional cash to share repurchases in 2026 and/or 2027, should market conditions warrant.

Speaker #2: In addition to allocating significant amounts directly to our equity holders, we also expect to allocate approximately 4.5 to 5 billion dollars to accretive growth investments, including the Cogentrix acquisition, the development of the Permian gas units, the PJM nuclear upgrade supported by power purchase agreements with Meta, the development of the Oak Hill 2 solar facility supported by a power purchase agreement with a large investment-grade counterparty, and now our capital commitment to Helix.

Speaker #2: Although we cannot predict the amount or timing of any potential capital calls by Helix, we believe it is prudent to allocate a portion of our available cash to cover any such request.

Kris Moldovan: Although we cannot predict the amount or timing of any potential capital calls by Helix, we believe it is prudent to allocate a portion of our available cash to cover any such request. Even after these significant allocations directly to our equity holders into growth, we expect $2 to $2.5 billion of additional cash available to allocate through year-end 2027. As always, we will be disciplined in how we allocate this remaining capital, balancing return of capital to our shareholders, strategically investing in attractive organic and inorganic growth opportunities that meet our mid-teens levered return threshold, and further strengthening our balance sheet. Speaking of the balance sheet, we have achieved investment-grade credit ratings from two of the major credit ratings agencies. We don't plan to stop there. Our long-term goal is to achieve mid-investment-grade credit ratings at all three major credit rating agencies.

Speaker #2: Even after these significant allocations directly to our equity holders and to growth, we expect approximately 2 to 2.5 billion dollars of additional cash available to allocate through year-end 2027.

Speaker #2: As always, we will be disciplined in how we allocate this remaining capital, balancing return of capital to our shareholders strategically investing in attractive, organic, and inorganic growth opportunities that meet our mid-teens levered return threshold, and further strengthening our balance sheet.

Speaker #2: Speaking of the balance sheet, we have achieved investment-grade credit ratings from two of the major credit ratings agencies. However, we don't plan to stop there.

Speaker #2: Our long-term goal is to achieve mid-investment-grade credit ratings at all three major credit rating agencies. We believe we can achieve these ratings primarily through disciplined EBITDA growth, but we will also consider allocating some of our available capital to additional debt paydown as necessary or appropriate.

Kris Moldovan: We believe we can achieve these ratings primarily through disciplined EBITDA growth, we will also consider allocating some of our available capital to additional debt paydown as necessary or appropriate. We believe mid-investment-grade credit ratings would allow us to maintain financial flexibility to continue to opportunistically grow our business and would position us well for long-term value creation. In closing, we are pleased with our Q2 results and the momentum we have built through the H1 of the year. We continue to see load growth materializing in our primary markets, we believe our integrated business model positions us well to deliver significant value to our stakeholders. With that, operator, we're ready to open the line for questions.

Speaker #2: We believe mid-investment-grade credit ratings would allow us to maintain financial flexibility to continue to opportunistically grow our business, and would position us well for long-term value creation.

Speaker #2: In closing, we are pleased with our second quarter first half of the year. We continue to see load growth materializing in our primary markets, and we believe our integrated business model positions us well to deliver significant value to our stakeholders.

Speaker #2: With that operator, we're ready to open the line for questions.

Speaker #1: We will now begin the question and answer session. To ask your question, you may press star, then 1 on your touchstone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question today comes from Shar Pourreza with Wells Fargo. Please go ahead.

Speaker #1: If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Speaker #1: The first question today comes from Shar Poreza with Wells Fargo. Please go ahead.

Speaker #3: Hi. Good morning, team. It's actually awesome being here for Shar. Appreciate the time today.

[Analyst] (Wells Fargo): Hi, good morning, team. It's actually Constantine here for Shar. Appreciate the time today.

Speaker #4: Hey, Constantine. How are you doing?

Jim Burke: Hey, Constantine. How are you doing?

Speaker #3: Oh, not too bad. Good morning. I just wanted to get your view on Texas data center audits. Potential delays batch zero. Have there been any commercial or counterparty concerns that you've heard just from existing or potential customers as we kind of get through this uncertainty?

Kris Moldovan: Oh, not too bad. Morning. I just wanted to get your view on Texas, the data center audit, potential delays, Batch Zero. Has there been any commercial or counterparty concerns that you've heard just from existing or potential customers, and as we kind of get through this uncertainty, especially with the curve impacts that we're seeing, is there any kind of pressure on near-term outlook and mitigation strategies through hedging, especially for 2027, 2028, when the portfolio is a little bit more open?

[Analyst] (Wells Fargo): Oh, not too bad. Morning. I just wanted to get your view on Texas, the data center audit, potential delays, Batch Zero. Has there been any commercial or counterparty concerns that you've heard just from existing or potential customers, and as we kind of get through this uncertainty, especially with the curve impacts that we're seeing, is there any kind of pressure on near-term outlook and mitigation strategies through hedging, especially for 2027, 2028, when the portfolio is a little bit more open?

Speaker #3: Especially with the curve impacts that we're seeing, is there any kind of pressure on near-term outlook and mitigation strategies for hedging, especially for 2027, 2028, when portfolios are a little bit more open?

Speaker #4: Yeah, sure. There's a lot there. I appreciate the question. Let me start by framing it first as we put out a load forecast a little over two years ago, in May of 2024, with an expectation of 115 to 120 gigawatts of load in ERCOT in 2030.

Jim Burke: Yeah, sure. There's a lot there. I appreciate the question. Let me start by framing it first. We put out a load forecast a little over 2 years ago, in May of 2024, with an expectation of 115 to 120 GW of load in ERCOT in 2030. That's still what we're projecting. From a long-term fundamentals of the business, we haven't actually changed our forecast for ERCOT, even though the queues have certainly grown. I think that's part of the challenge of what policymakers are balancing is, I think the concerns around generation supply are overstated when you look at a lot of the media reporting. I think the demand is overstated when you look at the interest that's being expressed in these queues.

Speaker #4: That's still what we're projecting. So from a long-term fundamentals of the business, we haven't actually changed our forecast for ERCOT, even though the Qs have certainly grown.

Speaker #4: And I think that's part of the challenge of what policymakers are balancing, is I think the concerns around generation supply are overstated when you look at a lot of the media reporting.

Speaker #4: And I think the demand is overstated when you look at the interest that's being expressed in these Qs. So policymakers are saying, "We need better information to make decisions because they're going to prioritize reliability and affordability for customers." And we support that.

Jim Burke: Policymakers are saying we need better information to make decisions because they're going to prioritize reliability and affordability for customers, and we support that. We fully support it. I do think in the near term, I think the audit is going to probably pause some of the reviews for a couple of months. We don't know exactly the timeframe. The key project that we have in our portfolio at Comanche Peak, we're looking to energize at the end of 2027. We don't see that being affected at this point. We support the conversation that the governor is wanting to have with the data center community to make sure that Texas does this right. I don't think it's a concern in the intermediate and long term, I think, we'll talk, I'm sure, at some point in the Q&A about the forward pricing.

Speaker #4: We fully support it. So, I do think in the near term, the audit is going to probably pause some of the reviews for a couple of months.

Speaker #4: We don't know exactly the time frame. The key project that we have in our portfolio at Comanche Peak, we're looking to energize at the end of 2027.

Speaker #4: We don't see that being affected at this point. And we support the conversation at the governor is wanting to have with the data center community to make sure that Texas does this right.

Speaker #4: So I don't think it's a concern in the intermediate and long term. I think, and we'll talk, I'm sure, at some point in the Q&A, about the forward pricing but what you see right now is the grid has more supply on it.

Jim Burke: What you see right now is the grid has more supply on it. This load that we expect to hook up, we expected to hook up in the 2027, 2028 timeframe. 2026 being soft is not that big of a surprise to us. That's also why we do the comprehensive hedging that we do. I'd like to see the queues culled. At the end of the day, I think everybody, if we raise the criteria and raise the bar on what is being proposed from the data center load, an ERCOT queue that has at times been expressed as over 400 GW, we think is somewhere in the 12 to 15 GW by 2030. When you have numbers overstated by more than 20x, it causes problems for policymakers.

Speaker #4: This load that we expect to hook up, we expected to hook up in the 2027, 2028 time frame. So 2026 being soft is not that big of a surprise to us.

Speaker #4: That's also why we do the comprehensive hedging that we do. So I'd like to see the Qs culled at the end of the day.

Speaker #4: I think everybody, if we raise the criteria and raise the bar on what is being proposed from the data center load, an ERCOT Q that has at times been expressed as over 400 gigawatts we think is somewhere in the 12 to 15 gigawatts by 2030.

Speaker #4: So when you have numbers overstated by more than 20x, it causes problems for policymakers. So we support the thinning of the Qs and getting to better realistic decisions to make sure we can all move forward.

Jim Burke: We support the thinning of the queues and getting to better realistic decisions to make sure we can all move forward.

Speaker #3: Excellent. Appreciate that. And then maybe just shifting to some of the commercial constructs. There's been multiple data points recently from peers around new projects IRRs, pricing, margin expectations on existing gen.

[Analyst] (Wells Fargo): Excellent. Appreciate that. Maybe just shifting to some of the commercial constructs. There has been multiple data points recently from peers around new projects, IRR, pricing, margin expectations on existing gen. Do you have a view here? Should long-term contracting still focus on the new build cost in that $90 range, or is there room for clean premiums, speed to market, et cetera?

Speaker #3: Do you have a view here? Should long-term contracting still focus on the new build cost kind of in that 90 range? Or is there room for clean premiums to be market, etc.?

Speaker #4: Yeah, there's a big spread. Obviously, that's one of the ironies of this discussion. Again, from a media standpoint, there's a view that power prices are too high.

Jim Burke: Yeah, there is a big spread. Obviously, that is one of the ironies of this discussion, again, from a media standpoint. There is a view that power prices are too high, they need to come down. Depends on what you are measuring off of. Year to date, ERCOT wholesale prices have been $30 a megawatt hour. They were $30 a megawatt hour last year. 30 is not going to get new stuff built. That is part of the dilemma. I think even when we talk about PJM and talking about a cap on the RBP of 555, that might get some things built, but there is still a lot that may not get built if you are looking at that as a hard cap. Now, there is a range with that 555, so some things can bid above it if something is clear below that.

Speaker #4: They need to come down. Depends on what you're measuring off of. Year-to-date, ERCOT wholesale prices have been $30 a megawatt-hour. They were $30 a megawatt-hour last year.

Speaker #4: 30 is not going to get new stuff built. That's part of the dilemma. I think even when we talk about PJM and talking about a cap on the RBP of 555, that might get some things built, but there's still a lot that may not get built.

Speaker #4: If you're looking at that as a hard cap, now, there's a range with that 555. So some things can bid above it. If some things clear below that.

Speaker #4: But in our role as investors and also owner-operators, the price of equipment in some cases has doubled, if not tripled. So, what was an acceptable price to build at a year or two ago is no longer an acceptable price.

Jim Burke: In our role as investors and also owner-operators, the price of equipment in some cases has doubled, if not tripled. What was an acceptable price to build at a year or two ago is no longer an acceptable price. I think the challenge is going to be, from a contracting standpoint, is when the customers, the large load customers, they are interested in contracting with existing, and they are interested in contracting at a premium with existing because it is still a discount to what new build would require, whether you are doing it bilaterally or you expect to do it on your own. As a behind the meter or island is. There is a big spread there. That is why I think our large base load position, there is a big spread between what we are currently receiving in a day-ahead spot type market versus what new build looks like.

Speaker #4: So I think the challenge is going to be from a contracting standpoint is when the customers, the large load customers, they are interested in contracting with existing, and they are interested in contracting at a premium with existing.

Speaker #4: Because it's still a discount to what new build would require, whether you're doing a bilaterally or you expect to do it on your own.

Speaker #4: So, as a behind-the-meter island—there’s a big spread there. That’s why I think, with our large baseload position, there’s a big spread between what we're currently receiving in a day-ahead, spot-type market versus what new build looks like.

Jim Burke: There is a big spread there. That is why I think our large base load position, there is a big spread between what we are currently receiving in a day-ahead spot type market versus what new build looks like. We still see that interest level from the customer base. I think you are going to see customers still contracting for new because there are areas of the country they want to be and they are looking for speed, and there is going to be customers that are contracting with existing. Our views on that have not changed. As far as margins and premiums, our views on that have not changed. I think the cost of new build has continued to tick up. If there is anything that has changed, that has kind of been where we have seen the pressure.

Speaker #4: So we still see that interest level from the customer base. And I think you're going to see customers still contracting for new because there's areas of the country they want to be and they're looking for speed.

Jim Burke: We still see that interest level from the customer base. I think you are going to see customers still contracting for new because there are areas of the country they want to be and they are looking for speed, and there is going to be customers that are contracting with existing. Our views on that have not changed. As far as margins and premiums, our views on that have not changed. I think the cost of new build has continued to tick up. If there is anything that has changed, that has kind of been where we have seen the pressure.

Speaker #4: And there's going to be customers that are contracting with existing. So that our views on that have not changed. And as far as margins and premiums, our views on that haven't changed.

Speaker #4: I think the cost of new build has continued to tick up. If there's anything that's changed, that's kind of been where we've seen the pressure.

Speaker #3: And the preference for Vistra is still kind of makes a new plus existing capacity for this sort of deal.

[Analyst] (Wells Fargo): The preference for Vistra is still kind of the hybrid solution, so mix of new plus existing capacity for this sort of deal?

Speaker #4: Yeah. Look, we have been a bit of an all the above. It really is customer-driven. And some customers are going to put more of a preference on new and additionality.

Jim Burke: Yeah, look, we have been a bit of an all of the above. It really is customer driven, some customers are going to put more of a preference on new and additionality. Others are going to look more for speed and where can they get hooked up. Co-location, for instance, can bring a speed advantage to hook up that even a new build, even if it were islanded, might still take more time. Yes, we're going to be in all forms of that. We have to get a return that we think is attractive for our shareholders, we have the capabilities to be in all of those solution sets, I'd expect us to continue going forward.

Speaker #4: Others are going to look more for speed and where can they get hooked up. So co-location, for instance, can bring a speed advantage to hook up that even a new build, even if it were islanded, might still take more time.

Speaker #4: So yes, we’re going to be in all forms of that. We have to get a return that we think is attractive for our shareholders.

Speaker #4: But we have the capabilities to be in all of those solution sets. And I'd expect us to continue going forward.

Speaker #3: Makes sense. No cookie-cutter approach. Appreciate the time today. Thanks so much.

[Analyst] (Wells Fargo): Makes sense. No cookie cutter approach. Appreciate the time today.

Jim Burke: Perfect.

[Analyst] (Wells Fargo): Thanks so much.

Speaker #4: Thank you. Thanks for the questions.

Jim Burke: Thank you. Thanks for the questions.

Speaker #1: The next question comes from Jeremy Tonet with JP Morgan. Please go ahead.

Operator: The next question comes from Jeremy Tonet with J.P. Morgan. Please go ahead.

Speaker #5: Hi, good morning.

Jeremy Tonet: Hi, good morning.

Jeremy Tonet ]: Hi, good morning.

Speaker #4: Hey, Jeremy.

Kris Moldovan: Hey, Jeremy.

Jim Burke: Hey, Jeremy.

Kris Moldovan: Hey, Jeremy.

Speaker #5: Interesting times across both PJM and ERCOT. I was just wondering if you could talk about the relative dynamics between the two, and how you're looking to secure more contracts, I guess.

Jeremy Tonet: Interesting times across both PJM and ERCOT. I was just wondering if you could talk about the relative dynamics between the two and with New York intent to secure more contracts, I guess, how the conversation trend compares, contrast between the two.

Jeremy Tonet ]: Interesting times across both PJM and ERCOT. I was just wondering if you could talk about the relative dynamics between the two and with New York intent to secure more contracts, I guess, how the conversation trend compares, contrast between the two.

Speaker #5: How do the conversation trends compare and contrast between the two?

Speaker #4: Yeah, that's a great question. I'll start off and I'm going to ask Stacey to comment since she is in the middle of these discussions on a daily basis.

Jim Burke: Yeah, that's a great question. I'll start off, and I'm going to ask Stacey to comment since she is in the middle of these discussions on a daily basis. The two markets are starting in slightly different places. As you know, with Texas, and you can see it in the forwards, you can see it in the real-time settles, the Texas market is just a lot less tight at the moment than the PJM market. What we have here is a situation where customers are just trying to get through the study processes. ERCOT took an approach to do a BAAS, sort of slow things down for a moment, and then study as much as you can realistically at once to give clear guidance to people.

Speaker #4: The two markets are starting in slightly different places. So, as you know with Texas—and you can see it in the forwards, you can see it in the real-time settles—the Texas market is just a lot less tight at the moment than the PJM market.

Speaker #4: And what we have here is a situation where customers are just trying to get through the study processes. ERCOT took an approach to do a batch, sort of slow things.

Speaker #4: Down for a moment, and then study as much as you can realistically at once to give clear guidance to people. Now, that's going to pause, for the reasons we just covered on the call, for a few months.

Jim Burke: Now, that's going to pause for the reasons we just covered on the call for a few months, but the approach is still the same. In PJM, there's still a process that's much more localized in terms of how the study process works, and obviously even the criteria that's being used around some of the wires costs and whether there's minimum takes and credit and other things that are still not yet settled in ERCOT. The markets are at different levels of maturity in terms of how different utilities are prioritizing the studies and the load, and we have to work with customers on that. Of course, our assets have some unique characteristics in each market. Since we're having conversations across both those major markets, I'm going to let Stacey provide more color on how she sees these developing.

Speaker #4: But the approach is still the same. In PJM, there's still a process that's much more localized in terms of how the study process works.

Speaker #4: And obviously, even the criteria that's being used around some of the wires costs and whether there's minimum takes and credit and other things that are still not yet settled in ERCOT.

Speaker #4: So the markets are at different levels of maturity in terms of how different utilities are prioritizing the studies and the load. And we have to work with customers on that.

Speaker #4: And of course, our assets have some unique characteristics in each market. But since we're having conversations across both those major markets, I'm going to let Stacey provide more color on how she sees these developing.

Speaker #1: Yeah, thanks, Jim. And thanks for the question, Jeremy. We continue to see a lot of interest in both PJM and ERCOT. We're in active discussions in both markets across multiple sites.

Stacey Doré: Thanks, Jim. Thanks for the question, Jeremy. We continue to see a lot of interest in both PJM and ERCOT. We're in active discussions in both markets across multiple sites, both about our existing resources as well as new build. Both markets have their own share of regulatory uncertainty and things in flux. I think at this point in time, it really comes down more to where are individual customers looking to expand their presence, and each customer is a little bit different in that regard. They have their own zone-type goals, and when they come to us, they kind of share with us where they're looking to locate their data centers. We continue to see really high interest in both of our largest markets, ERCOT and PJM. I'd say the regulatory uncertainty, of course, customers want more clarity.

Speaker #1: And both about our existing resources as well as new build. And both markets have their own share of regulatory uncertainty and things in flux.

Speaker #1: So I think at this point in time, it really comes down more to where are individual customers looking to expand their presence. And each customer is a little bit different in that regard.

Speaker #1: They have their own zone-type goals. And when they come to us, they kind of share with us where they're looking to locate their data centers.

Speaker #1: And we continue to see really high interest in both of our largest markets, ERCOT and PJM. And I'd say the regulatory uncertainty, of course, customers want more clarity and as we move along, we're getting more clarity.

Stacey Doré: As we move along, we're getting more clarity. We're seeing a lot of progress at FERC. As Jim started the Q&A session off with, we're also supportive of Governor Abbott's attempt to kind of thin the queue and ensure responsible development. You've seen customers come out in support of Governor Abbott's efforts. Those are positives. Those are actually helping us move towards clarity. At the same time, as we've seen with even the contracts we've executed to date, customers don't need perfect clarity in order to contract. You can find ways to deal with those risks through contractual provisions. They're not waiting on perfect clarity, but obviously the more clarity, the better. We continue to feel very optimistic about our opportunities in both PJM and ERCOT.

Speaker #1: We're seeing a lot of progress at FERC as Jim started the Q&A session off with. We're also supportive of Governor Abbott's attempt to kind of thin the queue and ensure responsible development.

Speaker #1: And you've seen customers come out in support of Governor Abbott's efforts, so those are positives. Those are actually helping us move towards clarity. And, at the same time, as we've seen with even the contracts we've executed to date, customers don't need perfect clarity in order to contract.

Speaker #1: You can find ways to deal with those risks through contractual provisions. And so they're not waiting on perfect clarity, but obviously, the more clarity, the better.

Speaker #1: So, we continue to feel very optimistic about our opportunities in both PJM and ERCOT.

Speaker #5: Got it. That's helpful. Thank you for that. And then, dialing into PJM a little bit more, just wondering, as PJM continues to evolve here and we step towards the RBP wondering what Vistra's strategy would be here relative level of appeal here and also how RBP compares to bilateral discussions if there's a preference one way or the other.

Jeremy Tonet: Got it. That's helpful. Thank you for that. Then dialing into PJM a little bit more, just wondering, as PJM continues to evolve here and we step towards the RBP, wondering what Vistra's strategy would be here, the relative level of appeal here, and also how RBP compares to bilateral discussions, if there's a preference one way or the other.

Jeremy Tonet ]: Got it. That's helpful. Thank you for that. Then dialing into PJM a little bit more, just wondering, as PJM continues to evolve here and we step towards the RBP, wondering what Vistra's strategy would be here, the relative level of appeal here, and also how RBP compares to bilateral discussions, if there's a preference one way or the other.

Speaker #4: Yeah, so I believe the bilateral discussion, which is something we've been supportive of even under current market conditions, unrelated to whether we're specifically talking about an RBP and the other framework around this IRAS, which I'm sure we'll talk about.

Jim Burke: I believe the bilateral discussion, which is something we've been supportive of, even under current market conditions, unrelated to whether we're specifically talking about an RBP and the other framework around this IRAS, which I'm sure we'll talk about. Setting that aside, the bilateral conversation is something that we have real possibilities with customers. We have good sites. We have some opportunities to develop these with their interest. Again, that has to meet their needs from a speed and a cost standpoint. That's a willing buyer, willing seller marketplace. Any bilaterals, as you know, that get done that meet the hurdles could drop the required RBP procured amount.

Speaker #4: Setting that aside, the bilateral conversation is something that we have real possibilities with customers. We have good sites, and we have some opportunities to develop these with their interest.

Speaker #4: Again, that has to meet their needs from a speed and a cost standpoint. So that's a willing buyer, a willing seller marketplace. But any bilaterals, as you know, that get done, that meet the hurdles, could drop the required RBP procurement amount.

Speaker #4: And ultimately, over time, I think if energy markets and bilaterals can continue to develop adequate returns, even less dependence on a capacity market, I think would overall be helpful for clarity of what kind of returns people can expect in these various markets, including PJM.

Jim Burke: Ultimately, over time, I think if energy markets and bilaterals can continue to develop adequate returns, even less dependence on a capacity market, I think would overall be helpful for clarity of what kind of returns people can expect in these various markets, including PJM. We're active in those discussions. When we think about the RBP itself, there's realistically batteries, peakers, CCGTs that you could see bid into that. Depending on where people are with their cost of equipment and EPC and when they got some of that locked down, the 555, there's going to probably need to be a spread around that $555 a megawatt day for certain projects to work. There's going to be pressure there. I think the bilaterals, you're going to see some pressure on that.

Speaker #4: So we're active in those discussions. When we think about the RBP itself, there's realistically batteries, peakers, CCGTs that you could see bid into that.

Speaker #4: Depending on where people are with their cost of equipment and EPC, and when they got some of that locked down, the $555 — there’s going to probably need to be a spread around that $555 a megawatt day for certain projects.

Speaker #4: To work. And so there's going to be pressure there. I think the bilaterals you're going to see some pressure on that. So that is, again, the conundrum of power markets today are still lower than where new build would require power markets to be to earn an adequate return.

Jim Burke: That is, again, the conundrum of power markets today are still lower than where new build would require power markets to be, to earn an adequate return. Whether that's going to come through the RBP or come through bilateral remains to be seen.

Speaker #4: So whether that's going to come through the RBP or come through bilateral remains to be seen.

Speaker #5: Got it. That makes a lot of sense. Since you brought up IRAS, maybe any thoughts you could share there, how you see things unfolding from this point?

Jeremy Tonet: Got it. That makes a lot of sense. Since you brought up IRAS, maybe any thoughts you could share there, how you see things unfolding from this point?

Jeremy Tonet ]: Got it. That makes a lot of sense. Since you brought up IRAS, maybe any thoughts you could share there, how you see things unfolding from this point?

Speaker #4: Yeah, I'm going to start off, but I'm going to turn it over to Stacey. There's a lot of detail and tracking all of these dockets and how this is unfolding.

Jim Burke: Yeah. I'm going to start off, I'm going to turn it over to Stacey. There's a lot of detail and tracking all of these dockets and how this is unfolding. I just would like to say that our discussions with customers have been evolving over the last 2 years, and we've mentioned this, that large load customers are willing to be part of the solution. They're willing to offer some flexibility. Our DNA is a choice-based DNA. We like customers to have incentives to be flexible, whether that's speeding them up in the interconnect queue, being able to ramp their load faster, maybe getting a discount on wires or capacity if they offered in DR. We're much more of a carrot approach because certain customers are making investments to be flexible. They should be compensated for it in some form, either actually or with speed.

Speaker #4: I just would like to say that our discussions with customers have been evolving over the last two years and we've mentioned this, that large load customers are willing to be part of the solution.

Speaker #4: They're willing to offer some flexibility. Our DNA is a choice-based DNA. I mean, we like customers to have incentives. To be flexible, whether that's speeding them up in the interconnect queue, being able to ramp their load faster, maybe getting a discount on wires or capacity if they offered NDR.

Speaker #4: So we're much more of a carrot approach because certain customers are making investments to be flexible. They should be compensated for it in some form, either actually or with speed.

Speaker #4: Some of these dockets and we understand why go much more to a stick approach. And it effectively says if you don't do these things, you're at risk of disconnection.

Jim Burke: Some of these dockets, and we understand why, go much more to a stick approach. It effectively says, if you don't do these things, you're at risk of disconnection. I think that's a much more blunt instrument, and I think this idea that you might actually be required to curtail before those that were paid to be curtailed, that feels odd to me. That's not the way markets should clear. You should actually have a spectrum of benefits or attributes that customers are willing to be paid for. I think we've got to work on this, and we're going to weigh in on this, as I'm sure many of the stakeholders in the process will weigh in. It's not filed yet, so we don't know all the details, but obviously, there'll be a lot to unpack when it comes in.

Speaker #4: I think that's a much more blunt instrument. And I think this idea that you might actually be required to curtail before those that were paid to be curtailed that feels odd to me.

Speaker #4: That's not the way markets should clear. You should actually have a spectrum of benefits or attributes that customers are willing to be paid for.

Speaker #4: And I think we've got to work on this and we're going to weigh in on this as I'm sure many of the stakeholders in the process will weigh in.

Speaker #4: And it's not filed yet, so we don't know all the details, but obviously, there'll be a lot to unpack when it comes in. So I'm going to let Stacey add any comments to this.

Jim Burke: I'm going to let Stacey add any comments to this.

Speaker #1: Yeah, the only thing I would add really, I mean, I think Jim covered it well, is we obviously have said for a long time, we don't support bring your own new capacity mandates.

Stacey Doré: Yeah. The only thing I would add really, I think Jim covered it well, is we obviously have said for a long time we don't support bring your own new capacity mandates. As we referenced even in this discussion today, customers in PJM are already in conversations about bilateral agreements for new build, and we should let the market drive the incentives to do that, rather than using the stick approach. We will be weighing in on that proposal when it gets filed at FERC. Many others will be as well. We do continue to believe that data center flexibility is a key asset, really, for the grid, and it should be encouraged, but it should be encouraged with incentives. It should also be recognized as a valuable resource that can be used during times of grid tightness.

Speaker #1: As we referenced even in this discussion today, customers in PJM are already in conversations about bilateral agreements for new build and we should let the market drive the incentives to do that rather than using kind of the stick approach.

Speaker #1: So we will be weighing in on that proposal when it gets filed at FERC. Many others will be as well. We do continue to believe the data center flexibility is a key asset, really, for the grid.

Speaker #1: And it should be encouraged, but it should be encouraged with incentives. And it should also be recognized as a valuable resource that can be used during times of grid tightness.

Speaker #1: And so, we need to kind of wait and see what the proposal says, and see what provisions are really specified in that proposal before we respond.

Stacey Doré: We need to wait and see what the proposal says, and see what provisions are really specified in that proposal before we respond. We do have some concerns about it. We think customers have some concerns about it as well. Frankly, it may actually even give some advantage to co-location with existing resources, we believe at the end of the day, because there's still a speed advantage to avoiding some of the transmission build that's necessary often to connect front of the meter. Typically, in these co-location conversations, customers are bringing backup generation anyway. We actually see it as potentially driving customers to be even more interested in co-location with existing resources.

Speaker #1: But we do have some concerns about it. We think customers have some concerns about it as well. And frankly, it may actually even give some advantage to co-location with end of the day, because there's still a speed advantage to avoiding some of the transmission build that's necessary often to connect front of the meter.

Speaker #1: And typically in these co-location conversations, customers are bringing backup generation anyway. And so we actually see it as potentially driving customers to be even more interested in co-location with existing resources.

Speaker #5: Got it. That makes a lot of sense. Thank you.

Michael Sullivan: Got it. That makes a lot of sense. Thank you.

Speaker #4: Perfect. Thank you.

Jim Burke: Perfect. Thank you.

Speaker #1: The next question comes from Michael Sullivan with Wolfe Research. Please go ahead.

Operator: The next question comes from Michael Sullivan with Wolfe Research. Please go ahead.

Speaker #6: Hey, good morning. Why don't I do one more? Hey, Jim, why don't I ask a little more on the Helix platform and just how you see that playing out at a big announcement?

Michael Sullivan: Hey, good morning.

Jim Burke: Good morning, Michael.

Michael Sullivan: Hey, Jim. I want to ask a little more on the Helix platform and just how you see that playing out. You had a big announcement, you put some money into it this year. How does that materialize through time? Maybe some color on what the milestones are that would require putting more money into it, how does that work at the same time you've been working through some of these existing commercial discussions?

Speaker #6: You put some money into it this year. How does that materialize through time? Maybe some color on what the milestones are that would require putting more money into it.

Speaker #6: And then how does that work as the same time you've been working through some of these existing commercial discussions?

Speaker #4: Yeah, Michael, thank you for that. First of all, it is considered an additive proposition for Vistra. So as we looked at the extent of the customer conversations we were having and I've even mentioned on previous calls, we've added staff to have conversations.

Jim Burke: Yeah. Michael, thank you for that. First of all, it is considered an additive proposition for Vistra. As we looked at the extent of the customer conversations we were having, I've even mentioned on previous calls, we've added staff to have conversations, Stacey would say she's still short-staffed to have conversations. It's part of extending our, what I'd call our channel or our capability to actually evaluate more deals. It's focused on both existing assets and new assets, bringing a simpler solution for customers so they can talk about the infrastructure of a data center and where it gets its power. Today, they're having to string all these conversations together, it is complicated, they go in fits and starts.

Speaker #4: And Stacey would say she's still short-staffed to have conversations. So it's part of extending our what I'd call our channel or our capability to actually evaluate more deals.

Speaker #4: And it's focused on both existing assets and new assets, and then bringing a simpler solution for customers so they can talk about the infrastructure of a data center and where it gets its power. Today, they're having to string all these conversations together.

Speaker #4: And it is complicated and they're going fits and starts. And so being customer-focused, our partnership obviously led first by KKR is helping us to bring a platform to a customer conversation.

Jim Burke: Being customer-focused, our partnership, obviously led first by KKR is helping us to bring a platform to a customer conversation. It is an option for Vistra to participate on any of these, if we want to use an existing asset to support a deal like this, that's our opportunity. It's not a requirement. We're excited about it because the more deals you can evaluate, the better chance you're going to find something that's meeting the spectrum of customer need as they evaluate their business over time. In addition, there's some criteria that if there's certain milestones met and the deals are actually coming and they're valuable to Vistra, we'd put in an additional $500 million. We'd be excited to do so because we wanted the interest to be aligned.

Speaker #4: It is an option for Vistra to participate. On any of these. So if we want to use an existing asset, to support a deal like this, that's our opportunity.

Speaker #4: It's not a requirement, but we're excited about it because the more deals you can evaluate, the better chance you're going to find something that meets the spectrum of customer needs as they evaluate their business over time.

Speaker #4: In addition, there's some criteria that, if certain milestones are met and the deals are actually coming in and they're valuable to Vistra, then we'd put in an additional $500 million.

Speaker #4: And we'd be excited to do so because we wanted the interests to be aligned. That was important for us. That was important for KKR.

Jim Burke: That was important for us, that was important for KKR, and the other partners, is that there's skin in the game. We're excited about the opportunity. We think this is, again, a customer orientation and we view that the chance to market our current assets as well as develop some new ones with someone who has a much greater access to capital in a sense that if it's required to do things like powered shells, powered land, that's something we don't believe our shareholders are expecting us to put a lot of capital in given our core business. Having a partner who can is very complimentary and that's how we see it unfolding.

Speaker #4: And the other partners is that they're skin in the game. So we're excited about the opportunity. We think this is, again, a customer-orientation and we view that the chance to market our current assets as well as develop some new ones with someone who has a much greater access to capital in a sense that if it's required to do things like powered shells, powered land, that's something we don't believe our shareholders are expecting us to put a lot of capital in given our core business, but having a partner who can is very complementary.

Speaker #4: And that's how we see it unfolding.

Speaker #6: Okay, great. Very helpful. And then Chris, I think you mentioned, just in terms of the financial outlook, midpoint or better in '26. Maybe just a sense of what's driving that?

Michael Sullivan: Okay, great. Very helpful. Chris, I think you mentioned, just in terms of the financial outlook, midpoint or better in 2026. Maybe just a sense of what's driving that. For 2027, the midpoint opportunity you mentioned the ERCOT softness and some of the offsets there. Should we just think about that as kind of netting out to a similar place or any kind of upward or downward bias around that range?

Speaker #6: And then for '27, the midpoint opportunity—you mentioned the ERCOT softness and some of the offsets there. Should we just think about that as kind of netting out to a similar place, or is there any kind of upward or downward bias around that range?

Speaker #2: Yeah, thanks, Michael. I think on 2026, obviously, what we talked about in the prepared remarks were the start that we've had to the year, positions as well.

Kris Moldovan: Thanks, Michael. I think on 2026, obviously, what we talked about in the prepared remarks were the start that we've had to the year positions us well. It's not typical for us to change guidance absent if there's a deal has closed or something at this time of the year. We're still getting through the summer. We still feel good about the full year and that we'll be at or above the midpoint and we have confidence that that'll be the case. As we turn to 2027, as you mentioned and as we mentioned in the prepared remarks, the ERCOT forwards are meaningfully lower. That headwind is offset by some higher prices in PJM and we do have the hedging program and the downside protection of the PTC.

Speaker #2: And we see ourselves we don't typically it's not typical for us to change guidance. Absent if there's a deal has closed or something at this time of the year, we're still getting through the summer.

Speaker #2: But we still feel good about the full year and that we'll be at or above the midpoint. And we have confidence that that'll be the case.

Speaker #2: As we turn to '27, as you mentioned, and as we mentioned in the prepared remarks, the ERCOT forwards are meaningfully lower. There are that headwind is offset by some higher prices in PJM and we do have the hedging program and the downside protection of the PTC.

Speaker #2: I would say that they don't fully offset the ERCOT headwind. So we would be trending towards the lower end of that range. But of course, we have announced two significant transactions that aren't included in that, and that's Cogentrix and the Meta PPA.

Kris Moldovan: I would say that they don't fully offset the ERCOT headwinds, we would be trending towards the lower end of that range. Of course, we have announced two significant transactions that aren't included in that, and that's Cogentrix and the Meta PPA. They're still excluded. Our current expectation is that we'll provide a guidance update for 2026 and 2027 on the Q3 earnings call. If Cogentrix hasn't closed at that time, we'll wait and likely provide an update to earnings for 2027 on our next earnings call after it closes. Again, with those two transactions, though, as you look to 2027 that we have not included based on our previous disclosures, you could reasonably conclude that they'd add roughly $700 million to our midpoint opportunity absent any other impacts.

Speaker #2: They're still excluded. So our current expectation is that we'll provide a guidance update for 2026 and 2027 on the third quarter earnings call. If Cogentrix hasn't closed at that time, we'll wait and likely provide an update to earnings for 2027 on our next earnings call after it closes.

Speaker #2: Again, with those two transactions, though, as you look to 2027 that we have not included, based on our previous disclosures, you could reasonably conclude that they'd add roughly $700 million to our midpoint opportunity absent any other impacts.

Speaker #2: And those impacts could obviously be further curve moves or what we learn about the hedge levels with respect to Cogentrix among some other things.

Kris Moldovan: Those impacts could obviously be further curve moves or what we learn about the hedge levels with respect to Cogentrix, among some other things. We're excited about 2026 and we feel that we have an opportunity to get back to where we want to be in 2027.

Speaker #2: So we're excited about 2026 and we feel that we have an opportunity to get back to where we want to be in 2027.

Speaker #6: Great. Very helpful. Thank you.

Michael Sullivan: Great. Very helpful. Thank you.

Speaker #1: The next question comes from James West with Mellie's Research. Please go ahead.

Operator: The next question comes from James West with Wolfe Research. Please go ahead.

Speaker #7: Hey, good morning, Jim and Chris.

James West: Hey, good morning, Jim and Kris.

Speaker #4: Hey, James.

Jim Burke: Hey, James.

Speaker #7: Hey, I was curious to dig in a little more on Helix. Clearly, 'deep pocket' is a good term to use to describe your current partners.

James West: Hey. Was curious to dig in a little more on Helix. Clearly, deep pocket is a good term to use to describe your current partners. You also described yourselves as founding partners which maybe suggests additional partners are coming in. That's kind of the first part of the question. The second part is, how are you thinking about this entity and its capital raising abilities going forward? Is it going to be from these platform companies or these infrastructure companies that you have and these investors that you have, or do you think this is something that could be a publicly traded entity over time? I mean, how are you guys thinking about the evolution here?

Speaker #7: But you also described yourselves as founding partners, which maybe suggests additional partners are coming in. So that's kind of the first part of the question.

Speaker #7: And then the second part is, how are you thinking about this entity and its capital-raising abilities going forward? Is it going to be from these platform companies—sorry, these infrastructure companies—that you have and these investors that you have, or do you think this is something that could be a publicly traded entity over time?

Speaker #7: I mean, how are you guys thinking about the evolution here?

Speaker #2: Yeah, thanks. I think we do. We are a founding investor, and we do expect that they will continue to add more investors over time.

Kris Moldovan: Yeah, thanks. I think we are a founding investor, and we do expect that they will continue to add more investors over time and substantially increase the amount of the capital that they have access to. I think from how we utilize that, the best word is we have a lot of flexibility in every deal. There'll be deals where we could potentially. Each deal will be different, and we could bring them in as an equity partner in any kind of new build power that we do. We could do that all of ourselves. We could search other opportunities to finance those. I think each deal will be different. We do expect to work with them. On the power side, it'll be a negotiation each time about how we go about financing our portion of any transaction that we get involved in.

Speaker #2: And substantially increase the amount of capital that they have access to. I think, in terms of how we utilize that, the best word is that we have a lot of flexibility in every deal.

Speaker #2: There'll be deals where we could potentially each deal will be different and we could access some we could bring them in as an equity partner as in any kind of new build power that we do.

Speaker #2: We could do that all ourselves. We could search for other opportunities to finance those. So I think each deal will be different. We do expect to work with them, but on the power side, it'll be a negotiation each time about how we go about financing our portion of any transaction that we get involved in.

Speaker #4: And James, let me just add, one of the things we were really excited about is that KKR actually approached us as part of this and wanted us to be the preferred power partner for this relationship.

Jim Burke: James, let me just add, one of the things we were really excited about is KKR actually approached us as part of this and wanted us to be the preferred power partner for this relationship. That gives us a lot of optionality with this, and again, not a requirement. If there is an opportunity for Helix to develop a project in a market that doesn't really make sense for Vistra's capabilities, we may not be the actual power provider in that, and we want Helix to be successful. Since we cover so much of the market and the markets we're in are actually attractive data center markets, we expect to be developing and being in that relationship with Helix to be able to bring a powered solution, whether it's existing assets or new.

Speaker #4: And that gives us a lot of optionality with this. And again, not a requirement. If there is an opportunity for Helix to develop a project, in a market that doesn't really make sense for Vistra's capabilities, we may not be that the actual power provider in that.

Speaker #4: And we want Helix to be successful. But since we cover so much of the market and the markets we're in are actually attractive data center markets, we expect to be developing and being in that relationship with Helix to be able to bring a powered solution, whether it's existing assets or new.

Speaker #4: But we want to be good partners. And so if we don't have something to bring to the table on something, we'll just be in effectively carried in our financial investment that we have committed on the deal.

Jim Burke: We want to be good partners. If we don't have something to bring to the table on something, we'll just be effectively carried in our financial investment that we have committed on the deal. We do expect a lot of overlap with what we're doing and what they're doing.

Speaker #4: But we do expect a lot of overlap with what we're doing and what they're doing.

Speaker #7: Okay. Okay, got it. Then maybe just one quick follow-up. And you may have mentioned this earlier—I may have missed it—but with Governor Abbott's moratorium here, is there a certain timeline that's been set to go through all the audit process and to clean up the queue?

James West: Okay. Got it. Maybe just one quick follow-up, and you may have mentioned this earlier, I may have missed it, but with Governor Abbott's moratorium here, is there a certain timeline that's been set to go through all the audit process and to clean up the queue?

Speaker #4: Yeah, well, first of all, this is also—and I know I've used the term 'media' a couple of times—that I'm just trying to...

Jim Burke: Yeah. Well, first of all, this is also, and I know I've used the term media a couple of times.

Speaker #7: Sure. Yeah.

Speaker #4: I'm just trying to recognize that things get distilled to words that aren't always being used. There isn't a moratorium at this point in time.

James West: Sure. Yeah.

Jim Burke: I'm just trying to recognize that things get distilled to words that aren't being used. There isn't a moratorium at this point in time, and there is a pause on letting people know. We were expecting to hear where we would stand from a base load for Batch Zero, any day now. We expect that's going to get kicked out. The PUC and ERCOT are going to work to get through these audits, we think in a couple months' timeframe. We don't see it impacting our projects in the timeframe that we were expecting to energize. It is possible that there were people looking to energize here in the more short-term horizon that might see a delay. I think this is about confidence and the fact that there's a lot of attention on this data center topic.

Speaker #4: And there is a pause on letting people know we were expecting to hear where we would stand from a base load for batch zero any day now.

Speaker #4: We expect that's going to get kicked out, and the PUC and ERCOT are going to work to get through these audits. We think it'll be a couple of months' timeframe, but we don't see it impacting our projects or the timeframe that we were expecting to energize.

Speaker #4: It is possible that there were people looking to energize here more in the shorter-term horizon. That might see a delay. But I think this is about confidence and the fact that there's a lot of attention on this data center topic.

Speaker #4: And I'll give you a simple example because we lived it. We've got two counties around our nuclear power plant. We had an idea that one of the counties would probably be the more ideal location to start siting a data center.

Jim Burke: I'll give you a simple example, because we lived it. We've got two counties around our nuclear power plant. We had an idea that one of the counties would probably be the more ideal location to start siting a data center. There were eight projects being considered in that county. Per my earlier remarks, there is a reasonable chance there'll be no projects in that county. It stirred up, as you would imagine, a lot of concern in the local community about, I might be okay with one of these, but I don't know if I'm okay with eight of these. We welcome the queue getting smaller and let the real projects move forward. If there's some short-term delay as a function of that, in the long run, I think we're all going to be better off if we can start talking about more realistic numbers.

Speaker #4: There were eight projects being considered in that county. Per my earlier remarks, there's a reasonable chance there'll be no projects in that county. But it stirred up, as you would imagine, a lot of concern in the local community about, 'I might be okay with one of these, but I don't know if I'm okay with eight of these.'

Speaker #4: So, we welcome the queue getting smaller and let the real projects move forward. But if there's some short-term delay as a function of that, in the long run I think we're all going to be better off if we can start talking about more realistic numbers.

Speaker #7: Makes sense. Thanks, Jim.

Kris Moldovan: Makes sense. Thanks, Jim.

James West: Makes sense. Thanks, Jim.

Speaker #4: you.

Jim Burke: Thank you.

Speaker #1: The next question comes from Carly Davenport with Goldman Sachs. Please go ahead.

Operator: The next question comes from Carly Davenport with Goldman Sachs. Please go ahead.

Speaker #5: Hey, good morning. Thank you for taking the question.

Carly Davenport: Hey, good morning. Thank you for taking the question.

Speaker #4: Good morning, Carly.

Speaker #5: Morning. Maybe just one on capital allocation—just as you think about that $2 to $2.5 billion of cash available for allocation.

Jim Burke: Morning, Carly.

Carly Davenport: Morning. Maybe just one on capital allocation. Just as you think about that $2 to 2.5 billion of cash available for allocation, can you talk about your kind of general willingness to lean in on the buyback if the market gives you opportunities, and if that's something that you would potentially go back to the board on in terms of the remaining $1.2 billion on the authorization?

Speaker #5: Can you talk about your kind of general willingness to lean in on the buyback if the market gives you opportunities and if there's some if that's something that you would potentially go back to the board on in terms of the remaining 1.2 billion on the authorization?

Speaker #2: Yeah, thanks, Carly. I think I mentioned in the prepared remarks that we do have flexibility. We have the $1.2 billion left, and we said that we would—we expect to exhaust that no later than the end of 2027.

Kris Moldovan: Thanks, Carly. I think I mentioned in the prepared remarks that we do have flexibility. We have $1.2 billion left, and we said that we expect to exhaust that no later than the end of 2027. Both management and the board, as we look at opportunities for share repurchases, I think there could be an opportunity, and we are flexible in adding to the share repurchase program in 2026 and/or 2027. I think if we add to it in 2026, we will go to the board and ask for additional authorization to make sure that we have at least $1 billion for 2027, and potentially more.

Speaker #2: Both management and the Board are, I have—as we look at opportunities for share repurchases, I think there could be an opportunity.

Speaker #2: And we are flexible in adding to the share repurchase program in 2026 and/or 2027. And I think if we add to it in 2026, we will go to the board and ask for additional authorization to make sure that we have at least $1 billion for 2027.

Speaker #2: And potentially more.

Speaker #5: Great. Okay, that's very clear. Thank you. And then maybe just one on—you've referenced the moves in the power curves a number of times on the call.

Carly Davenport: Great. Okay. That's very clear. Thank you. Then, maybe just one on, you've referenced the moves in the power curves a number of times on the call. Could you just talk a little bit about the hedge updates that you provided, and particularly on 2028? Is there any detail you can share across regions in terms of how you've changed activity across ERCOT and the East over the last quarter?

Speaker #5: Could you just talk a little bit about the hedge updates that you provided and particularly on 2028? Is there any detail you can share across regions in terms of how you've changed activity across ERCOT and the east over the last quarter?

Speaker #4: Well, Carly, I don't think we're going to talk that much about hedging strategies in detail on the call. You've seen some offsets in the portfolio, of course.

Jim Burke: Well, Carly, I don't think we're going to talk that much about hedging strategies in detail on the call. You've seen some offsets in the portfolio. Of course, you've seen PJM strengthening. You've seen ERCOT weakening. It helps to be a diversified player in this context. That has played out, not only in year-to-date results, but we expect that to continue to play out going forward. I think what we're seeing in ERCOT is a recency bias with what we're seeing with the weather, and frankly, a lot of batteries that came into the system post-August 2023, when the ECRS payments were rather large. What we've seen since then is returns on batteries have been about a fifth of what investors probably expected that they would be. That's the way competitive markets work. There's no guaranteed rate of return.

Speaker #4: You've seen PJM strengthening, and you've seen ERCOT weakening. It helps to be a diversified player in this context, and that has played out not only in year-to-date results, but we expect that to continue going forward.

Speaker #4: I think what we're seeing in ERCOT is a recency bias with what we're seeing with the weather, and frankly, a lot of batteries that came into the system post-August 2023, when the ECRS payments were rather large.

Speaker #4: And what we've seen since then is returns on batteries have been about a fifth of what investors probably expected that they would be. And that's the way competitive markets work.

Speaker #4: There's no guaranteed rate of return. And so but they are putting more supply in critical hours in that bridging solar hours to wind hours.

Jim Burke: They are putting more supply in critical hours in that bridging solar hours to wind hours, batteries were able to bridge that at this time. We're seeing the battery queues slow down, which you would expect. That's kind of natural when you're not getting the rates of return that you expected. Then you're going to see the load eventually hook up, and that is something that we've talked about, obviously, with this data center load. In Texas, the oil and gas and the residential small business load is about three of the five to 6%. The data center piece is about 2%. You've got 3% CAGR on non-data center sectors, about 2% CAGR being driven by the data center. I think we're going to see some strengthening that you're not seeing at the moment because of the recency effects.

Speaker #4: And batteries were able to bridge that at this time. We're seeing the battery queues slow down, which you would expect. That's kind of natural when you're not getting the rates of return that you expected.

Speaker #4: And then you're going to see the load eventually hook up. And that is something that we've talked about, obviously, with this data center load.

Speaker #4: In Texas, the oil and gas and the residential small business load is about three of the five to six percent. So the data center piece is about 2%.

Speaker #4: So you've got 3% CAGR on non-data center sectors, and about a 2% CAGR being driven by the data center. So I think we're going to see some strengthening that you're not seeing at the moment because of the recency effects, and I'd be interested—Sean Stuckey's here, our Head of Commercial.

Jim Burke: I'd be interested, Shawn Stuckey's here, our head of commercial. They did a little bit of a deep dive on the battery performance, just to give some insight as to how that affected pricing over the tightest days. Really, we were not close to any reliability event, but we were closer to seeing pricing that would be more expected with the kind of demand that we saw that day. Shawn, I'd love for you to add some commentary there.

Speaker #4: They did a little bit of a deep dive on the battery performance, just to give some insight as to how that affected pricing over the tightest days.

Speaker #4: And really, we were not close to any reliability as then, but we were closer to seeing pricing that would be more expected with the kind of demand that we saw that day.

Speaker #4: So Sean, I'd love for you to add some commentary there.

Speaker #3: Yeah. Thanks, Jim. I'll add a little bit of color. If you look at July 22nd, there was about a three-and-a-half-hour window as the solar was dropping off the grid that you needed the batteries to serve load.

Shawn Stuckey: Yeah. Thanks, Jim. I'll add a little bit of color. If you look at 22 July, there was about a three-and-a-half-hour window, as the solar was dropping off the grid, that you needed the batteries to serve load. You needed about 25 gigawatt hours worth of batteries to serve, and there's only about 31 gigawatt hours worth of batteries available on the system. Even though that day cleared $57, the batteries knew that they were not going to run out. It was a little bit of a chase to the bottom as they were looking to sort of deplete their energy toward the end of the day and capture the last bit of revenue that they could get.

Speaker #3: And you needed about 25 gigawatt-hours' worth of batteries to serve, and there's only about 31 gigawatt-hours' worth of batteries available on the system.

Speaker #3: So even though that day cleared 57, the batteries knew that they were not going to run out. And so it was a little bit of a kind of a chase to the bottom as they were looking to sort of deplete their energy toward the end of the day and capture the last bit of revenue that they could get.

Speaker #3: Had they known that they were going to have the ability to price themselves and be a little bit more competitive, we think it's very easy that that day could have cleared closer to a $400 or $500 day.

Shawn Stuckey: Had they known that they were going to have the ability to price themselves and be a little bit more competitive, we think it's very easy that that day could have cleared in closer to a $400 or $500 day. It's just a function of this market that you're sort of right on the razor's edge. It very easily with just a couple thousand megawatts difference in either thermal performance or load and/or wind, $57 could've been $400 or $500.

Speaker #3: So it's just a function of this market that you're sort of right on the razor's edge. Very easily, with just a couple thousand megawatts' difference in either thermal performance or load and/or wind, $57 could have been $400 or $500.

Speaker #4: And just to be clear, 'razor's edge' is more about pricing. There were still reliability reserves that ERCOT was maintaining. But as you know, Carly, there are pricing mechanisms that, as you get tighter, you'd expect to see the real-time prices reflect that.

Jim Burke: Just to be clear, razor's edge is more about pricing. There was still reliability reserve that ERCOT was maintaining. As you know, Carly, there's pricing mechanisms that as you get tighter, you'd expect to see the real-time prices reflect that. It really is a closer dynamic, and that's just the way these markets work. Good for customers. I mean, this is exactly the way markets should clear. That's what competition does, whether it's on the retail or the wholesale side. Again, this notion that this is a market that's not able to handle this load growth is not bearing out in the facts.

Speaker #4: And so, it really is a closer dynamic, and that's just the way these markets work. But good for customers—I mean, this is exactly the way markets should clear.

Speaker #4: That's what competition does, whether it's on the retail or the wholesale side. And so again, this notion that this is a market that's not able to handle this load growth is not bearing out in the facts.

Speaker #5: Got it. Okay, no, that's super clear—really helpful color. Thank you.

Carly Davenport: Got it. Okay. No, that is super clear. Really helpful color. Thank you.

Speaker #4: Thank you, Carly.

Jim Burke: Thank you, Carly.

Speaker #1: The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

Operator: The next question comes from David Arcaro with Morgan Stanley. Please go ahead.

Speaker #2: Hey, thanks. Good morning.

David Arcaro: Hey, thanks. Good morning.

Speaker #4: Hey, David.

Jim Burke: Hey, David.

Speaker #2: On Helix, I was wondering if you might be able to give any additional color on the project pipeline in terms of megawatts, or any progress or timing that could be possible—just kind of where is it in terms of its development outlook?

David Arcaro: Wondering on Helix, I was wondering if you might be able to give any additional color on the project pipeline, in terms of megawatts or any progress or timing that could be possible, just kind of where is it in terms of its development outlook? I am also curious about return targets, if there is any way that you would be able to frame that up, maybe versus your own capital return targets internally.

Speaker #2: I'm also curious about return targets—if there's any way that you'd be able to frame that up, maybe versus your own capital return targets internally.

Speaker #4: Sure. I'm going to let Stacey take this one, David, since she's working the pipelines—both the internal pipelines that we have and the pipelines that we'll look at with our Helix partnership.

Jim Burke: Sure. I am going to let Stacey take this one, David, since she is working the pipelines, both the internal pipelines that we have and the pipelines that we will look at with our Helix partnership.

Speaker #5: Yeah. Thanks, Jim. Yeah, obviously we just launched it last month, or I guess in June. And so it's early days, but we're having very close collaboration with KKR in particular.

Stacey Doré: Yeah. Thanks, Jim. Yeah, obviously we just launched it last month, or I guess in June. It is early days, we are having very close collaboration with KKR in particular, and they are staffing Helix up for development. We are really excited about the opportunity to simplify the conversations, especially on our existing sites. On our own, we are working on in-customer conversations about PPAs for our existing sites. Those end up being, in a lot of cases, multi-party conversations that we have to pull together because typically for those sites, the hyperscaler customers want to bring in a co-location developer. You have got them in the conversation. You have got other equipment providers in the conversation. Helix really is going to provide us an opportunity to simplify those conversations on our existing sites.

Speaker #5: And they are staffing Helix up for development, and we're really excited about the opportunity to simplify the conversations, especially on our existing sites—on our own.

Speaker #5: We are working on customer conversations about PPAs for our existing sites. But those end up being, in a lot of cases, multi-party conversations that we have to pull together, because typically for those sites, the hyperscaler customers want to bring in a co-location developer, and so you've got them in the conversation.

Speaker #5: You've got other equipment providers in the conversation, and Helix really is going to provide us an opportunity to simplify those conversations on our existing sites.

Speaker #5: So, you can think about—honestly, excuse me—you can think about the pipeline as really anything that's in our existing portfolio. We're able to—I'm sorry.

Stacey Doré: You can think about honestly, excuse me, you can think about the pipeline as really anything that is in our existing portfolio. We are able to bring that to bear with Helix, as well as pipeline conversations that they bring to us where they are getting inbounds from customers and they bring us into the power conversation. There is a number of those conversations as well, where there are opportunities that we would not have otherwise seen, but they are bringing us into the conversation to kind of help them understand what the power possibilities are. It goes both ways. They bring us opportunities, we show them opportunities, that is just another channel for us to increase our opportunity set. For us at Vistra, we would be looking to achieve the same mid-teens return targets that we have always promised our investors.

Speaker #5: We're able to bring that to bear with Helix, as well as pipeline conversations that they bring to us, where they're getting inbounds from customers and they bring us into the power conversation.

Speaker #5: So there's a number of those conversations as well, where there are opportunities that we would not have otherwise seen, but they're bringing us into the conversation to help them understand what the power possibilities are.

Speaker #5: So it goes both ways. They bring us opportunities, we show them opportunities, and that's just another channel for us to increase our opportunity set.

Speaker #5: For us at Vistra, we would be looking to achieve the same mid-teens return targets that we've always promised our investors. And so, we would only do projects that hit our return targets.

Stacey Doré: We would only do projects that hit our return targets. Obviously, Helix is going to have a bit of a different risk appetite for projects, and that is part of why we think it is a good channel for us to be able to look at projects and just benefit even as an investor from projects where maybe we are not providing the power, but they are taking more risk on capital. It is a good opportunity for us to not only have another channel to promote our own pipeline, but also to benefit from the economics associated with data centers to the extent that they get those projects done. We are in very close coordination with them and a lot of activity going on to launch that business, and we are in direct conversations with all of the major hyperscalers about it.

Speaker #5: Obviously, Helix is going to have a bit of a different risk appetite for projects, and that's part of why we think it is a good channel for us—to be able to look at projects and just benefit even as an investor from projects where maybe we're not providing the power, but they're taking more risk on capital.

Speaker #5: So it's a good opportunity for us to not only have another channel to promote our own pipeline, but also to benefit from the economics associated with data centers, to the extent that they get those projects done.

Speaker #5: So we're in very close coordination with them, and there's a lot of activity going on to launch that business. We're also in direct conversations with all of the major hyperscalers about it.

Speaker #4: Thanks, Stacey.

Jim Burke: Thanks, Stacey.

Speaker #2: Great, thanks. Yeah, that all makes sense. I appreciate that. Then, I was just curious—looking at batch zero—do you have other projects outside of Comanche Peak that you may be working on with partners, just within your own development pipeline, that might be going through the batch zero process?

David Arcaro: Great. Thanks. Yeah, that all makes sense. I appreciate that. I was just curious, looking at Batch Zero, do you have other projects outside of Comanche Peak that you may be working on with partners just within your own development pipeline that might be going through the Batch Zero process? Any color you would be able to provide there would be great.

Speaker #2: Any color you'd be able to provide there would be great.

Speaker #5: Yeah, thanks, David. We do have projects in batch zero, base load in batch zero, to-be-studied load, and even in the to-come batch one process, which is not yet finalized in terms of the rules for those.

Stacey Doré: Thanks, David. We do have projects in Batch Zero base load, in Batch Zero to be studied load, and even in the to-come Batch One process, which is not yet finalized in terms of the rules for those. We have multiple projects there. We are not going to comment on specifics beyond that, but we do have projects throughout the pipeline of Batch Zero.

Speaker #5: So, we have multiple projects there. We're not going to comment on specifics beyond that, but we do have projects throughout the pipeline of batch zero.

Speaker #4: And I think on the earlier questions, David, about some of the delays, I think the studied load, which would be studied in consideration of the base load of batch zero, that's part of what probably is going to see more of the uncertainty at this point.

Jim Burke: I think on the earlier questions, David, about some of the delays, I think the studied load, which would be studied in consideration of the base load of Batch Zero, that's part of what probably is going to see more of the uncertainty at this point. I think the base load projects, because they've been studied, you'd expect those to be moving forward. I think the to-be studied has yet another potential of figuring out what's the allocation, when is that going to be completed. That's why, with some confidence, we feel the base load projects, and obviously we need to meet delivery dates for our customers, but that's important, that we keep moving forward. We haven't gotten any signals that folks in Austin see the base load projects at this point as being materially off of a timeframe.

Speaker #4: I think the base load projects, because they've been studied, you'd expect those to be moving forward. I think the 'to be studied' has yet another potential of figuring out what's the allocation.

Speaker #4: When is that going to be completed? And that's why, with some confidence, we feel the base load projects—and obviously, we need to meet delivery dates for our customers, but that's important.

Speaker #4: That we keep moving forward, and we haven't gotten any signals that folks in Austin see the baseload projects at this point as being materially off of a timeframe.

Speaker #4: As I mentioned, if someone were looking to energize in the very near future, there may be an issue, but ours are tagged towards next year.

Jim Burke: As I mentioned, if some were looking to energize in the very near future, there may be an issue, but ours are tagged towards next year. We feel we can continue to make the progress we need.

Speaker #4: So, we feel we can continue to make the progress we need.

Speaker #5: And if I could just work really hard this year to launch batch zero in record time, frankly, and have a very active stakeholder process. Of course, we will know more at the open meeting next week where they discuss the governor's directive, and it's very important that they carry out the governor's directive, and that what comes out of that are only projects that are going to engage in responsible development.

Stacey Doré: If I could just add, the PUC and ERCOT have worked really hard this year to launch Batch Zero in record time, frankly, and a very active stakeholder process. Of course, we will know more at the open meeting next week where they discuss the Governor's directive, and it's very important that they carry out the Governor's directive and that what comes out of that are only projects that are going to engage in responsible development. I would just say, I think that the PUC and ERCOT and really all of Texas stakeholders are motivated to preserve the value that they've created through the Batch Zero process and to get the audit done in a timely manner and in a way that it doesn't result in material delays for the projects there.

Speaker #5: But I would just say, I think that the PUC and ERCOT, and really all of Texas stakeholders, are motivated to preserve the value that they've created through the batch zero process and to get the audit done in a timely manner, in a way that doesn't result in material delays for the projects there.

Speaker #4: Yeah, that's a good add. Thanks, Stacey. Thanks, David.

Jim Burke: Yeah. That's a good add. Thanks, Stacey.

Speaker #2: Thank you so much. I appreciate it.

David Arcaro: Great.

Jim Burke: Thanks, David.

David Arcaro: Thank you so much. Appreciate it.

Speaker #1: The last question today comes from Renee E. Singh with Bank of America. Please go ahead.

Operator: The last question today comes from Agnisheeta Singh with Bank of America. Please go ahead.

Speaker #6: Hi guys, thanks for taking the question. First, I think Stacey, you mentioned that the IRAS procedure could increase some of this co-location, especially to speed to advantage in the transmission.

Agnisheeta Singh: Hi, guys. Thanks for taking the question.

Rinny Singh: Hi, guys. Thanks for taking the question.

Jim Burke: Hi, Rini.

Agnisheeta Singh: I think first, Stacey, you mentioned that the IRAS procedure could increase some of this co-location, especially the speed to advantage in the transmission. I guess, how are you thinking about that co-location proceeding? I guess the timeline for it and the remaining uncertainty that kind of we need to figure out for that procedure.

Rinny Singh: I think first, Stacey, you mentioned that the IRAS procedure could increase some of this co-location, especially the speed to advantage in the transmission. I guess, how are you thinking about that co-location proceeding? I guess the timeline for it and the remaining uncertainty that kind of we need to figure out for that procedure.

Speaker #6: I guess, how are you thinking about that co-location proceeding? I guess the timeline for it and the remaining uncertainty that we need to figure out for that procedure.

Speaker #5: Yeah, thank you for that question. Well, first of all, I'll just say we were very pleased with FERC's co-location order that came out in June.

Stacey Doré: Yeah. Thank you for that question. Well, first of all, I'd just say, we were very pleased with FERC's co-location order that came out in June. They have made it crystal clear that PJM and the Transmission Owners need to accommodate co-location. They need to adopt these new transmission services that do so. They've given PJM very clear instructions about amending the tariff to do so. That was a very positive development for co-location projects, and we see that customers see it that way as well. They had ordered PJM to make a compliance filing and the Transmission Owners as well by mid-August. PJM and the Transmission Owners have now asked for more time to do that.

Speaker #5: They really have made it crystal clear that PJM and the transmission owners need to accommodate co-location. They need to adopt these new transmission services that do so, and they've given PJM very clear instructions about amending the tariff to do so.

Speaker #5: So, that was a very positive development for co-location projects, and we see that customers view it that way as well. They had ordered PJM to make a compliance filing—and the transmission owners as well—by mid-August.

Speaker #5: PJM and the transmission owners have now asked for more time to do that. We don't know if FERC's going to grant more time, but if they do, I think they will still want there to be as quick of a response as possible, because this docket has been pending for some time and FERC has made it clear they want these projects to be able to move forward with clarity.

Stacey Doré: We don't know if FERC's going to grant more time, but if they do, I think they will still want there to be as quick of a response as possible, because this docket has been pending for some time, and FERC has made it clear they want these projects to be able to move forward with clarity. I think sometime in the next, call it 30 to 60 days, whatever amount of time FERC decides to give PJM and the Transmission Owners, we will see a filing from PJM and the TOs that gets specific around accommodating these arrangements and the types of transmission services that apply to them. That will give all of us clarity about the rates that apply to these projects as well.

Speaker #5: So I think sometime in the next, call it 30 to 60 days—whatever amount of time FERC decides to give PJM and the transmission owners—we will see a filing from PJM and the TOs that gets specific around accommodating these arrangements and the types of transmission services that apply to them.

Speaker #5: And that will give all of us clarity about the rates that apply to these projects as well. So we're very optimistic about the outcome of that, and the order itself, frankly, adopted a lot of Vistra's arguments and positions as we advocated for those projects to be available to customers.

Stacey Doré: We're very optimistic about the outcome of that and the order itself, frankly, adopted a lot of Vistra's arguments and positions as we advocated for those projects to be available to customers.

Speaker #6: Okay. Great. That makes sense. Thanks, Stacey. And then if I could just ask, sticking on PJM, just what's the appetite for contracting energy and capacity versus just energy with this environment of potentially the bring your own new capacity charges and then also the possibility of being flexible in your conversations, just how is that kind of shaping up?

Agnisheeta Singh: Okay, great. That makes sense. Thanks, Stacey. Then if I could just ask, sticking on PJM, just what's the appetite for contracting energy and capacity versus just energy with this environment of potentially the bring your own capacity charges and then also the possibility of being flexible in your conversations, just how is that shaping up?

Rinny Singh: Okay, great. That makes sense. Thanks, Stacey. Then if I could just ask, sticking on PJM, just what's the appetite for contracting energy and capacity versus just energy with this environment of potentially the bring your own capacity charges and then also the possibility of being flexible in your conversations, just how is that shaping up?

Speaker #5: Yeah. We're still seeing robust customer appetite for both energy and capacity. In order to actually power their data centers, they need both, and they see a rising price environment.

Stacey Doré: Yeah, we're still seeing robust customer appetite for both energy and capacity. In order to actually power their data centers, they need both. They see a rising price environment, and they have interest in locking in some cost for that. I wouldn't say that we've seen a big increase in appetite for energy-only deals, although, of course, we're open to whatever conversations customers want to have. The conversations we're in, they're still interested in contracting for energy and capacity.

Speaker #5: And so they have interest in locking in some cost for that. So I wouldn't say that we've seen a big increase in appetite for energy only deals, although of course, we're open to whatever conversations customers want to have.

Speaker #5: But the conversations we're in—they're still interested in contracting for energy and capacity.

Speaker #6: Okay, great. Thanks so much, guys. I really appreciate it.

Agnisheeta Singh: Okay, great. Thanks so much, guys. Really appreciate it.

Rinny Singh: Okay, great. Thanks so much, guys. Really appreciate it.

Speaker #4: Thank you, Renee.

Jim Burke: Thank you, Rennie.

Speaker #1: This concludes our question-and-answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.

Speaker #4: Thank you, everyone, for joining. I want to take a moment to thank our team for their continued execution and service to our customers and communities, especially during these hot summer months.

Jim Burke: Thank you everyone for joining. I want to take a moment to thank our team for their continued execution and service to our customers and communities, especially during these hot summer months. The other thing that we'll continue to do is give you the most accurate view we can on these supply and demand variables and how they'll actually play out. Boy, I'm sorry. I thought I was done here, and now I'm giving you more. Look, it's important that we give you an accurate view on these variables because these are serious policy matters, and we're going to be engaged with customers and our peers in the industry and policymakers to get it right. We look forward to updating you on the progress of our business. We look forward to seeing you also in the fall, hopefully in person.

Speaker #4: The other thing that we'll continue to do is give you the most accurate view we can on these supply and demand variables, and how they'll actually play out.

Speaker #4: Well, I'm sorry. I thought I was done here and now I'm giving you more. But look, it's important that we give you an accurate view on these variables because these are serious policy matters and we're going to be engaged with customers and our peers in the industry and policymakers to get it right.

Jim Burke: Look, it's important that we give you an accurate view on these variables because these are serious policy matters, and we're going to be engaged with customers and our peers in the industry and policymakers to get it right. We look forward to updating you on the progress of our business. We look forward to seeing you also in the fall, hopefully in person. Thank you for joining, and have a great day.

Speaker #4: And we look forward to updating you on the progress of our business. We look forward to seeing you also in the fall, hopefully in person.

Speaker #4: And thank you for joining, and have a great day.

Jim Burke: Thank you for joining, and have a great day.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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