NRG - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the NRG Energy, Inc’s.

First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. to of host Investor like Kevin today’s now Head Cole, Relations. would introduce for your conference, I Please go ahead.

Kevin Cole

SEC today’s morning’s Please which XX events Thank of be Investors you, Safe are being to obligation webcast, We quarter date. under This except which first www.nrg.com may believe to broadcast presentation our factors NRG will future note based on Danielle. statements filings. Good these forward-looking the result phone assumptions law. update & our statements, discussion located of as materially. in Harbor Presentations that as morning, website XXXX and Actual We live over a reasonable can may earnings at and we to well and undertake urge differ by review risk be in contain as section length this no minutes as to required welcome as that the Energy’s call today’s Webcasts. everyone of is be via call. the results the in in

and will GAAP to both measures. financial addition, we In refer non-GAAP

now to For presentation. GAAP and directly with the to measures, refer and our today’s financial CEO. Mauricio over turn Gutierrez, I’ll to NRG’s comparable the please that, call non-GAAP information reconciliations regarding most And measures President

Mauricio Gutierrez

available morning and on messages for call Operations. highlighting Thank this key call Andrews, have Kirk by Officer. Mass first and start I’d quarter everyone, in Elizabeth thank Business; of Moser, like and Chris on Head to Slide by Good Killinger, Chief the NRG. Head the Retail you, of the our X. the our we morning, Kevin. I’m questions, you for joined Also interest Financial for your

demonstrating during in the platform. business the quarter our expectations, and First, of our value integrated with performed line well

ranges. guidance also XXXX our reaffirming We’re

business getting markets well-positioned fundamentals our our and Second, the stronger. operations for are in summer is integrated core

million our current program, billion we to allocation share goals, third are our capital achieve the achieve clarity new by by on call. provide excess year-end earnings track XXXX and credit remaining complete cash $X you Finally, of $XXX on quarter metrics repurchase our the

to delivered and operational Moving and of We the X, results adjusted $XXX performance achieved review for quarter. quartile million to top safety EBITDA. want Slide the financial I

side we EBITDA a divestitures, asset or same-store slide, have changes right-hand generation through of the the either due deconsolidations. had On to the our in on provided basis, we’ve portfolio, our retirements

quarter important the EBITDA increases offset higher increased savings, will of changed from partially Our distribution same XX% has prices, realized supply primarily period a additional by in year, by the by our percentage last that the these quarterly to the section. power also note It with is results earnings. in retail his driven costs. cost third provide on earnings changes, of all Kirk larger now of details responsible Recognizing for

and cost We transformation first we I’m make continue million savings all targets. progress targets track. achieved that to to during the our pleased margin enhancement of quarter, on enhancement report on and margin remain plan $XX that

our share market share plan $X XXXX. $XXX committed We at average remainder of program per complete share. the capital over of current cap program during to repurchasing of the $X the completed also and We quarter, shareholders $XX.XX current in billion returning an X% of to million billion price our to buyback remain repurchase

generation performance and with the taken to summer are measures Finally, reliable the company. expanded readiness program provide fleet our getting the across an spring operations ensure NRG program summer for of months. outage we during our safe summer activation ready is and are to on able These

steps purchased and majority delayed average are but expect executed, four are power call, some years. the introduced has significant remains pace remaining remain skeptical new future of in a plant completed The the which shows projects do, the system. of taken investments an few left, to solar and been, however, highlights PUCT to this Now the first merchant supply fourth limited reliability given long-term low XXXX changes of the reserve scarcity chart below. following ever the eventually the capacity developments dependent tightest particularly sustained have believe will X% turning have We annual and these update market Slide better energy-only XXXX large ERCOT and to run. prices, impact reflect our in the necessary to the the forward CDR the is the It for the Both understand quarter the the with in market We been on margins gas we on with already Starting an the be retirements solar. by on as given We of growth. upper increase builds, economics. to balance how developed, ERCOT, ERCOT’s improve it growth. X. on agreements demand and at to helping the necessary new and in table long keep builds in look see system demand situation justify wind closer transmission conditions lack wind A new constraints of viable the have

our On we the Retail. steps integrated slide, portfolio. summer of the highlight right-side we have to our this taken the further Starting for readiness and strengthen with

bills. business options higher energy residential and and proactively providing and customers with educating tools are to We manage them our

options. also enhanced demand conservation alerts providing management We’re and energy

to Moving Generation.

of to take has esteemed bankruptcy the that XXXX, host. ERCOT the the our of results is relative provides positioned readiness wholesale predictable the today our part which to Gregory to more of of is since As to provide return to steps or ahead fall This our our been business. cycle while we retailers we a megawatt prudent generators, pure enhance plant, offline the capacity continue additional due to to best program, reliability summer. to platform further summer planning XXX system service Last, combined ERCOT are

platforms market And as creates Given an opportunity business to the retail. with of and in track the last record our quarter, medium-sized scalable to value. platform discussed small supply or volatility new expected to add businesses, and our grow I Generation acquire customers books must integrating higher

This strategy better our earnings update PPA serve provide I management underway on the complement capital-light. strategy will comprehensive We next in you position improves assets. to is physical to our our more a and customers, our call. it us are executing allows well

the moving a directed I the fast of tariff East This X, for Now capacity to the of remains fourth formation assets on implement regulatory uncertain, The to PJM existing markets and East. on FERC call, to new our price Slide has in the set Since NYISO remain resources. energy also intent class XXXX, announced is under the integrity rules. auction for a August FERC we but for mean, XXXX positive markets. changes action will has the its start timeline market allows in that whole this competitive changes. FERC to clear run price. focus confident protect quarter remains PJM

MOPR England, view to scarcity. generators In the been most continue effective way proposal a put nuclear harmful strong a in the the We forth of ISO and market. reduce fuel for to that of compensate has New simplest subsidies impact would

reforms positive We continue for changes overall. fuel believe to security these are

matter. forward too pending ISO to at However, slowly proposal this is New look is ISO security fuel on coming We insufficient. working FERC current England with the the and reform

and slide, we Northeast of to our the of strength highlight right-side portfolio. the Moving the diversification

our solid generation key Our capacity business foundation existing region. load portfolio growth a of in continued is and located provides fuel-resilient for retail in primarily centers and large the

turn While over region. regulatory uncertainty, region the optimistic regulatory it With succeeding outcomes Difficulty] the I’ll our the more activities these and to review. [Technical some provide that, integrated the about we’re believe in to importantly, for financial Kirk well-suited

Kirkland Andrews

Generation. first find you Thank bar first in consolidated financial you, the from quarter $XXX Slide slide Mauricio. EBITDA Retail Starting from to a with $XXX $XXX million. the quarter left-side results. charts results chart, and was XXXX consolidated million, we our this on center million Starting provide start million $XXX on the summary walk XXXX EBITDA of consolidated adjusted from of quarter with of this of The X, quarter’s the first EBITDA with

XXXX arrive and EBITDA XXXX the elements. of XXXX, in to total million required first which results. appropriate of sold accounting was basis to results, change for quarter we but from sales, our following of lease, quarter-to-quarter and included began Carlsbad starting in when baseline, our items from quarter of to order were comparison which from sold is which forma to an early these Central XXXX impact in the $XX plant BETM, items comprised four in second, quarter and consolidated for at our Deducting to million retirements The sale deconsolidations in was South this is for end the results eliminate quarter. this Agua method; these in finally, the the a new EBITDA later the impact before From to asset the Portfolio; One, initiatives. of third, changes three Caliente, XXXX quarter $XX impact of to the equity results first baseline year; and which circumstances online Ivanpah the fully address in XXXX later our in was retired results first and comparison XXXX facility, provides impact the related the the Encina Transformation Clearway. Plan brought first elements Cottonwood was XXXX pro of reported with we Next,

incremental produce million to we in XXXX. margin expense results related to programs, in enhancement later $XX SG&A expect begin First, we incurred to

Plan third, quarter first enhancement Next, in savings this cost incremental from we and $XXX the quarter our XXXX, realized savings $XX in Transformation margin $XX million an of having of $XX the in we or delivered savings in in EBITDA million programs realized increase million million. during first quarter;

due supply offset quarter cost which for Non-transformation were acquisition. primarily favorable Retail. XXXX, retail EBITDA the the from by the million $XX to results in increased Plan partially and to of XOOM quarter Turning lower, more were first weather

higher, quarter result average primarily higher Both the costs between intersegment $XX annual to the for the are on supply part which power are Generation the realized were and results in during realized higher Generation typically sales quarter. retail prices prices in million Retail, Generation based and higher power prices. Finally, of due

the transactions were summer, pricing average revenues from the intercompany these discount prices if annual lower implies first those in form prices a sales costs The which executed such As ERCOT for price to in these pricing shorter a used. quarterly become the based the and annual than annual as shoulder periods the in annual the Retail since resulting price higher result summer. or power different during to intercompany quarter and seasonal Generation, no increasingly average basis on periods, based seasonal have with and be prices, on will the annual observe pricing, premium the from prices for average prices seen during supply

XXXX As results our our reaffirming in the quarter with our were guidance ranges. we’re expectations, consolidated for $XXX line of million

Turning to Slide X.

announced in now from for that While previous complete we buyback our unchanged is of repurchase the February update, our share we of our will late $X capital first-half plan XXXX XXXX balance to allocation the have shares and program billion to continue completed program.

generate continue available expect which to million XXXX, become the capital year yet we of bulk during allocated $XXX later our this cash of be free quarter. third as We the flow to excess in will

by intended capital expect earnings update We of provide our an on excess third use quarter to that the call.

revised back using in up to as remain focused to we in track I’ll debt. Finally, allocated Mauricio. that, balance reduce are and on those previously with XX, on turn our $XXX target shown And it million XXXX, capital investment-grade including to Slide XXXX achieve to metrics you, further sheet on metrics,

Mauricio Gutierrez

Kirk. Thank you,

XX, Slide execution. excited for XXXX of on priorities Now thoughts with another year closing I’m and very turning to XXXX expectations. strong our a few

platform, the demonstrate the achieve transparent and adhering further to of million excess predictability principles. is integrated of our cash new remaining $XXX priority metrics deploy capital investment-grade our our to allocation top nearly credit Our

Plan initiatives also enhancement Transformation up our remain track all particularly on ramp our throughout targets, of we on to margin continue XXXX. as We

been. create the and Our predictable I the it our has deliver significant value company to summer positioned today and stronger is than is look in I’m shareholder beyond, platform ever long best run. confident And to as results

Danielle, with in for I that, we’re the you line ready interest questions. So to now open your want thank for NRG. to

Operator

Instructions] Julien Dumoulin-Smith And our of you. first from Bank America. comes [Operator from question Thank

is line go Please ahead. Your open. now

Julien Dumoulin-Smith

good team. Hey, morning,

Mauricio Gutierrez

morning, Julien. Good

Julien Dumoulin-Smith

couple a don’t on quick Hey, mind. if so you wanted follow-up things of to

on specifically on that question just year, allocation that does First, financial third of mean perhaps quarter a across expected raised looking specifically of Should this perspective the for segment than as more think it? Retail otherwise XQ positive this What detail is the the question, at the you expect more year-over-year for would more you impact about a balance the year? you have we a year. of from

Mauricio Gutierrez

going with Yes. about to prices. mean, now see in are the I summer with changes the distribution of I of you’re peak intersegment, mean, year And impact portfolio, particularly, it our if you months. the our the an for think the now earnings average

going year of results. Retail, increased for that just the entire While given prices peakiness impact have increased see have summer, prices Kirk? in you’re the the our power in guess, I to

Kirkland Andrews

that cost, When Mauricio on the said, standpoint is specifically quarter know, intercompany far related in year-over-year of Yes, our to I the with results. a the think, you of specifically isolation. – one, impact to I agree by supply that described it Mauricio dynamic as the the correct transfer, comes that transfer. to basis on in a certainly, Overall, as – is contributor increasingly, consolidated strongest third from

And so have there’s opposite quarter just will Retail first Slide the in on said to But intercompany quarter. transfer supply overall the first obviously contribute to may comparison the X than directions that, to similar more Generation you transfer our for I back see you the going a results. they that that cost what you to see But overall, intercompany as comparison, the overall being in indicated. related lot and on place, the within the

typically expect in we and robust of is certainly year, to be to than be – the it it’s the So, just Generation other third. overall quarter relatively any more significant the EBITDA

Julien Dumoulin-Smith

Yes, absolutely.

the the elaborate disclosure, more that be Reg little a Can provided what separately, out the back I provide on four core you appreciate impact the you’ve quickly Gen bit would more can in then on later Midwest you think and renewal and year? thoughts G your the it would to of this about that plant other Portfolio. potential specific Following financial FRR of your procurement about but impact very commentary segment to of fundamental, curious some Mauricio, full business. on And procurement, potentially be you how years? decisions in

Mauricio Gutierrez

first in impact me Portfolio. has start And the and Generation about your our Sure. it the just FRR. specific impact question Well, that of I’m let is with full Illinois that Midwest assuming

– in it other one additional think common the have meet to We or is don’t you a turn is for to that zone where outcome let put that looses needed Chris context. over I the before me the our would choice, are one we that to to just difficult a for retail it considerations Illinois it are they of of But very path – take, couple the there status decide there. the decides of we Remember, quo, very of under what know with you some decide they not what But with FRR that be I So, first, that, and details, say outcome, binary wins. Generation maintain I know be if have the has go I There units the zero FRR region. feel market is are that, done carve-out FRR, the about a repricing, to wanted FERC less anything comfortable the whether else since expected okay. our they to this there’s needs if load. regardless to a information to will will sort speculation With FRR, so The they respect have assess resource if right to If FRR, around enough always entire to. implement impact clear. to lot completely entire the to to is And mean, lot units specifics better Chris, FRR, RCO, can needed. I but states have don’t be, there’s off. how that certain want if ahead the we add. don’t time we’re of it’s whether a think,

Chris Moser

zone, is up going is taking I matter Illinois, which Chris. FERC are – ends would path would clear I at XX,XXX zone of that a our that, Mauricio to they matter. the in cover and said, this what taking is still big need No, load reliably. details going to will the are look, hey, I Julien, which ends and What units echo to to megawatts up chunk just a echo

impact what that kind that presentations. – of our I calls know Gen, and/or impact fraction a we would any be would earnings I anything outlined it say, of in expect the So of Midwest of that. And earlier would is percent I

Mauricio Gutierrez

mean, – said in of X% that approximately, about Yes. we��ve our total it’s I EBITDA. somewhat

thing, think capital-light progress. put With important team about what binary second question is the the the zero-sum your just But outcome, a That it not respect introduced I earnings call. last PPA in strategy again, impact let’s So be. made we to our this the would has game. really in context PPAs, a good

of in now, executing right middle that the We’re done we’re but yet. not

I’m where can on in you as you more So going strategy ability value progress specifics next call, – of that execution, earnings we’re by appreciate, on to on impair middle the to providing want the you get the those because around be to I our the the don’t hope, strategy. best and that

Julien Dumoulin-Smith

all. you, Thank Excellent.

Mauricio Gutierrez

you. Thank

Operator

you. Thank is Evercore from next now ISI. question open. from Greg Gordon Sir, line And your comes our

Greg Gordon

Hey, thanks. Good morning, guys.

Mauricio Gutierrez

Greg. morning, Good

Greg Gordon

on And at shows I to cost that incremental you confirm achieved looking $XX deck saves, appears achieved and you have had the this math the QX. Just $XXX the wanted me it million in just to here million XXXX. slide in

the much $XXX, that that to reading would cost correctly? corroborate I on on $XXX So Am so the you’re are pretty point view right? your basically targets at getting that saves,

Kirkland Andrews

Yes.

cost seasonal specifically reasonable because that nature. basis a the O&M overall, in the across to aren’t portions in the think, is on levelized savings of especially – of I are on the case respect way in the uptick. a certain year, of side realized interpret some term That is, in on to – that’s with they terms costs, the our –

our good the track going see we to guidance. that to incremental back cost original rate $XXX on variability you’ll is that But the increase in in which run are yes, in realized barometer getting see is a measure towards So your quarter-over-quarter. observation, savings embedded XXXX, to

Greg Gordon

target, was difficult – billion original where for through are giving is the you’re us still on expectation just year that it gross because billion out it’s Page margin you your the you’re the margin you now, that with of of in that is didn’t a us XXXX it’s a target? to fair you give called fair $X.XXX on QX gross it’s XQ to it QX. XXXX anything But there, that, give XQ And basis actually slides, given relative hard track XX. guidance Great. us deck to suss so achieved what But to haven’t out on that you in $X.XXX because to from the compare say little you bit – hit

Kirkland Andrews

Overall to yes. that question is,

I in expectations. And said, $XXX margin, million, I segment. As be gross right, later our you’re results the think were details line of filing I gross around the as Q margin is by find a the MD&A the with the with which quarterly I we’ll said, mean, realized with you’ll today

when over But the that is cited your way So combined the the outlook you overall, as of confirm to with would balance best XXXX, year that. overarching be the correct. on statement

guidance are part today. why We that’s track we’re and on the reaffirming of

Greg Gordon

results of volatility deliver that of consistently really that a to expectation question, or wholesale can margins, a long able performance a be types in you one-time it get would delivered and sort in that is, that’s a you think not higher sort appreciate a little just from summer rather you’re Last do opportunity balanced, significantly but you the opportunity this be benefit market and than of how if it market, the I of part to your out, year, Thanks. one, for in to theoretically for but given a right? the a might upside to answer is event? super volatility net company, all Is volatile do Texas with goal it limited most book If bit it. your will of position environments and the significant the sort we that operating your have it that a generate retail this specular better, balance so you

Mauricio Gutierrez

was Yes. to is Well say, that about exactly Greg. what I

to a Our rebalancing provide conditions. be and goal and is in the market predictable to in portfolio integrating number earnings Retail Generation of able

in All is specificity. bit Texas, just, more is me let I price there extreme hedged. scenario a load guess, an if provide our So little

know to go will So – months, our by have completely hedged. the summer retail when you that exposure we into be

side, we Generation a little bit of generation excess carry risk. the always manage operational On to

to And extent the that to power buffer operate going see to less, we to we’re units really if our prices. be If prices, our market. from high exposed So is to perform manage high you and exposed have more we’ll units a that well, not benefit that. to be the have that able

season with the So earnings overall, providing that goal in for complementary is and and any summer the the and of – continue the goal countercyclical Retail. for us Generation matter of businesses these to on predictable

Greg Gordon

But would higher at allow you’ve the your that you assets factors do a where sounds to hedged like book, it length you load and Okay. have volatility run way higher the event that prices.

they’re performance? actually And on be might given hedged and the benefit modest so there a Retail system – overall to you’re that the side,

Kirkland Andrews

certainly, not is Yes. have side. cost of that the in, to going load Greg, the prices there. prices Mauricio is business benefit the realize we’re would about which locked base; it better yet probably – the latter say, lock determining driven all is as by two, Generation, be depends think we’re that Obviously, there’s lock because equation the of priced, where ERCOT, when the you bandwidth load our depends other One We I to that factors way on that on the customer within maintaining side to very to obviously evolution in the benefit And sensitive we of said, of those you customer modest it and in that. Retail of reasonable in those on right? a that, price and two scenarios but the is of on and supply we two the have right? scenarios,

scenario on where the the in offset run price side. picture some a said, discipline concerned. the benefit but Generation Retail you’ll cost yes, realize maintain long length I’m supply it decide, in that we may by if Retail on side, for the the on near-term So of [indiscernible] We to be like of where, is painting a some is

Chris Moser

happens one summer is just And out slightly than is Greg, this volatile. super Chris. thing that what medium-term it’s would more throw if I this

us in you a capitalized end retailers some job moving great that I or have hedged think super aren’t book. summer, buying volatile as and and her of that loose shaken do may see that, we does a into team up things as well Elizabeth the

provide us opportunity the if for we retail see this you side, summer. super an to may that grow do described what as so And volatile

Mauricio Gutierrez

next gross volatile will impact or hedges us to following which margins increase higher an our and generation super And summer, the on capture also summer our gives opportunity part of business. the

Greg Gordon

answer, Very guys. Have great a detailed you. Thank morning.

Kirkland Andrews

Thank you.

Mauricio Gutierrez

to Thank you. Good talking you.

Operator

your question comes from you. And Angie Macquarie. Storozynski Thank next from

is now Your line open.

Mauricio Gutierrez

Angie. Good morning,

Angie Storozynski

Good morning.

On given the larger considering a wondering be you side? Retail could on M&A stress the Retail just Are side, you. actually transaction? it And moves. still the Thank third-party

Mauricio Gutierrez

Angie, that it. have we’ve have long our we perfect Generation mean, but know, an come to But there’s I that I as it, between past. said don’t said on rebalancing and we Yes. on I always comment very a Retail. in before portfolio opportunity good you M&A. way about the feel

we is, now how Retail business grow right our focus Our East. do the in

really a platform. have We good

We doing successfully. characterize organically, it have are been the to medium-size probably would opportunities they’re I But M&A way the very and limited. smaller

Texas. businesses going And they that to a be We – to East. have going in platform in where we already this already very space. have be – capital deploy platform. in We to we’re very and about on existing just the we’re platform complement to be opportunistic our have our the So the judicious has be a

a word. is a transaction of for tuck-in lack really better So a this

they’re smaller size. So medium and

Angie Storozynski

mentioned Okay. plan on buyback for remainder money more to can you And the second dedicate about the hear How we then plan. you your much the the update When to of the buyback? question, progress year?

Mauricio Gutierrez

Yes.

of cash remaining $XXX the million. So

$X.X on investment allocated As to capital and credit you our to we ratios. all returning metric already new shareholders metric achieve mostly of that’s know, billion, type

position be So – call. provide I quarter earnings by in third will in that the to a

this of before As summertime. here really unique asset given excess that have our peak the the We our in said, wait a even – cash sales. it. the become through need now of a earnings distribution of guess, the we year, excess allocate was to having I the more – cash, coming lot can kind door for I was And front-loaded because that

you from should anytime. expect that So third earnings quarter on us call the

So we to the at We’re shareholders. growth and how to look allocated consistent principles. capital going on have We that? be allocate capital way we allocation look to our going we’re returning with that at

measuring be have believe I continue and when we way also shares of a the of very to hurdles – we We implied our have for be return superior not we but own have our that transparent – clear sufficient. the return allocate growth, guess, undervalue. that They to that’s to

I be in it So to past. think, we’re the approach going that we in very have consistent the way

Angie Storozynski

you. Thank

Mauricio Gutierrez

Thank you, Angie.

Operator

from from Thank Research. you. Wolfe And Steve our next question comes Fleishman

ahead. go Your line Please open. now is

Steve Fleishman

Hey, good morning.

Mauricio Gutierrez

Good Steve. morning,

Steve Fleishman

Hi.

stock actually bought in accelerated you know if Just a that that repurchase, million got on $XXX clarification bank the now or some to still by The be the buyback. – $XXX all is the the that of with market, you did bought? do

Kirkland Andrews

still deliver so bank that Q completed balance today. and think, program The repurchase share, and that we I share quarter-end, mid-April. the No, file that outstanding, to later we was and the the we’ll That quarter-end this accelerated at the September you’ll know when program… the see subsequently but of program

Steve Fleishman

Okay.

So and your that’s in part price everything average it? buying of that of

Kirkland Andrews

Yes, that’s correct, it’s reflected.

Steve Fleishman

Yes.

Kirkland Andrews

Even impact first reflects at release, outstanding those our press $XXX complete [indiscernible]. I that up of quarter-end on reflected footnote in a shares the what that are it’s you I minute of shares tells the in million and pages to there’s the outstanding that. And one event, believe the first that

Steve Fleishman

And summer. last brought this back, just Okay. more do – And color a maybe I plant which just on know you little Texas you did for just this summer. not

even it’s that summer. last tighter assume I than suggest your So in view

on spikes how further the of or risk events major Just color this that, for your summer? things volatility like – just any sense what’s price

Chris Moser

margin look. week a okay? mind private that in and SARA will SARA. lot networks. they date, when next the the expect I on and to I next – going be come the Xth the or negatives SARA seven a or normally Thursday and out use doesn’t But to pretty going and the full look But will to that used tied. doesn’t that above you we coming of know more out D.C. It tight. keep mean, beyond in case. It are I I the is give week things as probably which the ERS change with doesn’t, count count a all the to show base I the that of it’s is reserve get us mean, that Wednesday CDR, lot bad. there’s think awfully of of mean, is

of way, Going in at calculation what But monitor and the we’re see a we’ll summer net start terms But and the we’ve and so that. from drought far It’s this a like of of People uptick relatively kind what been it’s Gregory what be seeing in far so aren’t in wet there, it. of monitor. doing middle will look you’ll there see shows. so the this around this at do the and from slight a spring, and a and is good prices we’ve you’re were year, at days, and there some lot we’re wow a XXs where load expectations pretty the up drought seen looking hey raining heck disappointing much. time got down to of pretty that you load averages other the down of we’ve had been high

are the have particularly we’re we’ll but the which out. at at it But of like direction. to Niño, look the But it comes reading, lot super bullish. tight, like look, El towards trending leaning X.X a reserve margin take see And and, other kind other said, SARA when a I going things so hey, we’ll of are looks forward isn’t

Steve Fleishman

you. Thank Okay.

Kirkland Andrews

Yes, take care.

Mauricio Gutierrez

Steve. you, Thank

Operator

you. Thank

comes from from Praful question next Your Citigroup. Mehta

Your now line open. is

Praful Mehta

so guys. Hi, Thanks much.

Mauricio Gutierrez

morning, good Praful. Hey,

Praful Mehta

Good morning.

free XX, So that? trend detailed I the question driving want be free maybe has on – This how Page the cash seems why $XXX first growth for that your the reduced of understand your you have for flow kind cash where And What’s which for the capital over down working a a to million? before year quarter. big quarter. draw, just collateral flow time? does to

Kirkland Andrews

is as the year. some related the postings versus the That receivables Retail to also related of to extent, capital obviously, on those collateral the off working comes of case One, in over mark-to-market payables to the basically the components two us, collateral that roll just realize course things. around back hedges our That’s postings and hedges business. And the to place. of put context we collateral

here, distribution towards even I third is to primary think, all have. mean, the the I kind on a say, that cash at you even is not I acutely light company, us, EBITDA an unusual there’s biased quarter is know free This quarter tends the follow you more free two would flow quarter this be the year. for our first cash that. basis. I flow the that, probably components of even mean, I because though of if piece of

Praful Mehta

you much expect the I hedging as tight that it because the be color. bit may how Generation And at for and out Texas it event fair actual It don’t is open. conditions, Thanks the Is understand that weather on a at itself get to comments, forward won’t But then in the that have and that the point? clearly, other not beneficial. most Gotcha. more a little during you the while is maybe of like wet, especially this your benefit tight, sounds like true that a beneficial, way if curve of reserve understand you Texas Texas, summer sounds be again. look that to margin previous it’s

Mauricio Gutierrez

I that’s mean, fair. think I

the balance for hedging the XX%, you disclosures XX% If we’re look at even year, hedged. our of

a an have risk. but And excess So, operational portfolio opportunity, I and open. it more will good if look our generation us eye is is gives you to we if our with where just high managing summer, impact years, our there forward XX% really definitely is really – XXXX. prices towards we’re this be going hedged mean, – XXXX, and really that at only

sure for it opportunity that again, in goal a to of make performs platform But conditions. an is creates it there our hedging on now future the – number and our market So modest is creates upside. a

Praful Mehta

do with do already, impact How expect curve? Gotcha. get moved is you I this forward has that you yet this finally, just the bullish Do it impact reform, terms road? fast the like on And of some in sounds later see down see just That’s in you reflected super to to helpful it prices? fast context. had view it reform track actually want PJM, or your then – on to see track

Chris Moser

been is think I this Chris. – it’s

to a by expecting been there. forward was think there mean, I I happen think We it’s bit the also muted to for begin asking and this slightly was – in this with. the in think I there change I curve what September. between little been sitting has PJM FERC was And what that were delivered.

the know this, up to curves been suggestion. run it’s be for to a summer my this I don’t So in for – while. – expect on I would $X has this the don’t Will forwards that going

Praful Mehta

Yes, I… that’s the I move, exactly. We see wanted I just to context, that’s didn’t so why that mean, get much so

Chris Moser

one and do it PJM exactly of the instead think that was slightly then didn’t what was I hour. which disappointed mostly asked, two a expected FERC hour,

Praful Mehta

Gotcha. Well, I really appreciate it, guys. Thank you.

Chris Moser

you. Thank

Mauricio Gutierrez

Thank you, Praful.

Operator

you. Thank

time have more for one question. We

comes from question Goldman final Michael Lapides Our Sachs. from

open. now Your is line

Michael Lapides

now? three, Q the about assuming think my from Hey, guys, thanks think, built. you, what to in grow. ERCOT – you what your for what’s What Q case, for you big obviously, market how Q for likely ERCOT taking which about I in are base like of looks will get given An guys But built solar, the gets percentage small do like actually for the renewable how four is years when is? two, a question continues the And you question. think

Chris Moser

that Mike. XX% versus in past the at wind we the past CDR So look Chris, this probably XX% the shared so. look build I wind delivered, when is what that and three in to in the over think, would years range it’s we or I see been say, we

built even about to gigs that, far you solar wind that less I coming. we’re I with solar, would the talk of on and When bearish then that think slightly be So XX that. already system the well some because for think pretty Greg [ph] Greg I than was supplied going to see

think needs good is at now, because the megawatts X,XXX load Texas growing load, new year. a I right that build peak

and we most solar assuming build the find can for – so they that. part seems a a of PPAs likely new like bunch need of it bunch a of And

I and or think mean, So And or gas the little that’s of remarks, is very days. been interconnection these some kind has four is times initial really. XX% already. gas mean, in I of that like of there’s queue his XXXX expected postponed only then quick, the Mauricio XX% a three gas I mentioned in

snapshot real it. a quick that’s So on

Michael Lapides

where be solar about has right I get the be unlike about West the that in to utility gigawatts impact in thinking load lot Texas, trying scale to potential two a come, it to the pockets? scale we will in when And think Yes. just wind you on the several the how am – it new pricing? will about thinking the solar of the about future total years three closer what think to I’m if you’re kind next of utility installed,

Chris Moser

solar I sighting sprinkled is grid. think be that the going to across

we’ve as the like in wind. seen that concentrated approach very the panhandle to opposed a So out in

I’ll cost, right? There’s may mean, the a set. leave be the load lot impact then you administratively with more, I solar that’s your will think a in on just this closer are landscape I pricing, And no thought. speckle to unit some the $X,XXX system zones. so to prices the of point,

cost doesn’t – XXXX, margin you when to scarcity. a and the winds get the to matter whether gas to that a $XX or there probably is that. don’t whether lot zero lot if So think be reserve to of get like I solar do unit really need marginal a a in we it going unit, to XX% And

going stay a for tight it’s think I So while. to

Michael Lapides

Thank appreciated. guys. you, Got Much it.

Chris Moser

welcome, You’re Michael.

Mauricio Gutierrez

you call you, before a next in forward your if to in earnings I and and look I roadshow you Michael, you. Thank or in that. for the Thank thank see you NRG, interest talking to

Operator

and Ladies today’s today’s does for conclude conference. thank gentlemen, in program. participating you This

NRG Energy (NRG) 2 May 192019 Q1 Earnings call transcript