NRG Energy Inc (NRG) — Q4 2025 Earnings Call Transcript

Thank you. Good morning, and welcome to NRG Energy's Fourth Quarter and Full Year 2025 Earnings Call. This morning's call is being broadcast live over the phone and via webcast. The webcast presentation and earnings release can be located in the Investors section of our website at www.nrg.com under Presentations and Webcasts. Please note that today's discussion may contain forward-looking statements, which are based upon assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor in today's presentation as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation and earnings release. With that, I will now turn the call over to Larry Coben, NRG's Chair and Chief Executive Officer.

Thank you, Brendan, and good morning, everyone. I'm joined today by Bruce Chung, our CFO; and Rob Gaudette, our President. Other members of our management team are also on the line and available to answer questions. Let's begin with the key messages on Slide 4. We exceeded the midpoint of our raised 2025 guidance, marking the third consecutive year we increased our outlook and delivered above it. We introduced stand-alone 2026 guidance in November, updated it in February to reflect 11 months of LS Power ownership. And today, we are reaffirming those ranges. We successfully closed LS Power at the end of January. Integration is well underway and performance is already exceeding our underwriting assumptions. With LS Power now closed, we are rolling forward our long-term outlook. We continue to target at least 14% annual growth in adjusted earnings per share and free cash flow before growth per share, now measured from 2026 through 2030 rather than the previous through 2029. We are maintaining this more than 14% trajectory despite a much higher share price than assumed at the original announcement. This is achieved through higher earnings from both the LS Power portfolio and our legacy businesses. Finally, as demand accelerates across our markets, affordability and reliability will define long-term success. New large loads must bring their own power and contract for the generation that supports them. Flexible demand response must scale alongside that. Otherwise, prices will rise and volatility will increase. NRG is well positioned to do both and thus meet rising demand across our markets. Let's turn to Slide 5, our 2025 financial and business results. 2025 was a record year of performance at NRG. Full year adjusted EPS was $8.24 per share and adjusted EBITDA was $4.087 billion, both above the high end of our raised guidance. Free cash flow before growth totaled $2.210 billion or $11.63 per share, above the midpoint of our revised outlook. Turning to our 2025 scoreboard. We delivered against the priorities we outlined at the start of that year. We achieved top decile safety performance for the 10th consecutive year and delivered our 2025 target under our $750 million organic growth plan. We signed 445 megawatts of long-term data center PPAs at attractive margins. We secured Texas Energy Fund loans for 1.5 gigawatts of new capacity with all construction on budget and on schedule. We launched our Texas residential VPP and finished the year at nearly 10 times our original objective. We also announced the LS Power transaction, which we'll cover in more detail on the next slide. In 2025, we returned $1.6 billion to shareholders through repurchases and dividends, while increasing the dividend by 8% for the sixth consecutive year. Our momentum has carried forward into 2026. During Winter Storm Fern, our Texas fleet achieved 97% in-the-money availability. Our assets were ready when the grid needed them. That performance reflects investments we have made in the plants in recent years and the great work by our amazing people. Turning to Slide 6. Beyond 2025 performance, we strengthened our competitive position with the close of the LS Power portfolio. Our generation fleet has doubled to 25 gigawatts. We added 18 natural gas assets, primarily in PJM with additional positions in ERCOT, NYISO, and ISO New England. The combined fleet is now more than 75% natural gas. Together with our existing generation and projects under development, we are naturally long against our residential load in our core markets. In PJM, several of the newly acquired peaking units provide a potential 1 gigawatt of upgrades through conversion to combined cycle configuration. That adds flexibility to support future large load demand. CPower, a preeminent company in the demand response space, strengthens our capabilities and expands our position in this sector with both commercial and industrial customers. This transaction was immediately accretive, supports our long-term leverage targets, and strengthens our credit profile. Performance is already exceeding our underwriting assumptions, driven by stronger capacity and energy prices. In addition, 100% bonus depreciation enhances after-tax returns relative to our original modeling. We have expanded our earnings base and strengthened our competitive position as markets tighten. Turning to Slide 7. Let's discuss our near- and long-term outlook. Beginning with 2026, we are reaffirming the guidance ranges introduced in early February following the close of LS Power. Recall that the LS contribution reflects 11 months of ownership, not a full year. In 2026, we will deliver these results embedded in our outlook and integrate the LS Power portfolio. We are also targeting at least 1 gigawatt plus signed long-term data center power contract under our Bring Your Own Power approach. Turning to the longer-term framework. We are rolling forward our outlook and continue to target at least 14% annual growth in adjusted EPS through 2030. This extends the prior 5-year framework, which ended in 2029 and reflects our expanded earnings base. Consistent with our prior methodology, the outlook assumes flat power and capacity prices across the planning horizon. Detailed assumptions and Texas and PJM price sensitivities are included in the appendix. The plan also now incorporates all 3 Texas Energy Fund projects rather than one. The first remains on track for June 2026 completion, and the additional 2 are expected online by mid-2028, and these represent incremental value relative to the prior outlook. The plan also reflects the portion of the 445 megawatts of previously announced signed data center contracts that are expected to be online during this period. I must emphasize that the outlook does not assume any additional data center contracts or higher power or capacity prices. Let me repeat that. The outlook does not assume any additional data center contracts or higher power or capacity prices. So beyond what is embedded in this plan, of course, we see significant opportunities to contract new large load natural gas generation under long-term agreements with high-quality counterparties. We have the ability today to support more than 6 gigawatts of long-term power agreements to serve large data center demand. At that level, it represents the potential to add more than $2.5 billion of recurring annual adjusted EBITDA on contracts of up to 20 years. These projects would provide stable contract-backed cash flows. Discussions are ongoing, so stay tuned. Turning to Slide 8. I want to discuss our approach to affordability, which has two primary components. First, bring your own power. New large loads should contract directly for the generation that supports them. Data centers must pay for their required capacity additions. Cost and volatility should not be shifted to existing customers. Second, demand response. Flexible demand is an essential complement to our approach. Demand response, including virtual power plants, provides dispatchable capacity when the system is tight. It lowers peak costs and strengthens reliability without adding structural costs to the system. We are executing on this model today. We have more than 6 gigawatts of natural gas generation capacity reserved for customer-backed large load projects, including 5.4 gigawatts through our GEV and Kiewit venture and 1 gigawatt of upgrade potential within the recently acquired LS portfolio. We are also developing new generation through the Texas Energy Fund to support grid reliability. On the residential side, we are building a 1 gig virtual power plant in Texas and preparing to extend that model into PJM. On the commercial and industrial side, CPower now anchors one of the leading demand response platforms in the country. We built all of these platforms early in anticipation of where markets were heading and what politicians and customers are now saying. It is operating today. As demand expands, this model supports significant growth without compromising affordability or reliability. With that, let me turn it over to Bruce for the financial review.

Thank you, Larry. Starting with Slide 10, I am pleased to share that NRG delivered exceptional full year financial results in 2025. We achieved earnings at or above the high end of our raised financial guidance ranges, including record level performance across several key metrics. Our 2025 adjusted EPS was $8.24 and adjusted EBITDA was $4.087 billion, representing an increase of 21% and 8%, respectively, over the prior year. We delivered $1.606 billion of adjusted net income and $2.21 billion of free cash flow before growth. Our strong financial performance in 2025 marks the third consecutive year where excellent execution across our businesses continues to show the reliability of our integrated platform. Moving on to segment results, our Texas segment delivered full year adjusted EBITDA of $1.877 billion, driven by margin expansion and excellent commercial optimization throughout the year, as well as favorable weather that benefited our home energy volumes. The East segment contributed full year adjusted EBITDA of $981 million, reflecting a slight decline from the prior year, mainly due to higher regional retail power supply and planned maintenance costs and the retirement of the Indian River facility. These impacts were partially offset by solid capacity revenues at our plants, winter weather driving natural gas margin expansion, and continued commercial optimization in both power and gas. Our West and Other segment provided full year adjusted EBITDA of $137 million, a slight decline from the prior year, driven by the absence of earnings from the sale of our Airtron business in September 2024 and the lease expiration at the Cottonwood facility in May 2025. These were partially offset by higher retail power margins in the West. The Smart Home business generated full year adjusted EBITDA of $1.092 billion, driven by record new customer additions and impressive retention rates, in addition to expanded net service margins. Free cash flow before growth for 2025 was $2.21 billion, exceeding 2024 results by $148 million or 7% year-over-year growth. This increase is primarily driven by strong adjusted EBITDA results, lower interest payments due to the Vivint ring-fence removal, and receipt of the remaining insurance proceeds from our WA Parish Unit 8 claims. Turning to Slide 11, we are reaffirming the 2026 financial guidance announced earlier this month, which includes 11 months of earnings from our recently acquired generation assets and CPower. Midpoints for our reaffirmed guidance ranges are as follows: adjusted EBITDA is $5.575 billion, adjusted net income is $1.9 billion, adjusted EPS is $8.90 per share, and free cash flow before growth is $3.05 billion. As noted in the waterfall charts at the bottom portion of the slide, we have made moderate adjustments to the pro forma guidance shared on the third quarter call. The updated adjusted EBITDA and free cash flow before growth disclosures now reflect improved pricing and capacity values, plus a pre-closing adjustment for January 2026 financial performance for the LS Power assets. You can find more details on the energy and capacity price assumptions we use in the appendix of this presentation. Moving to Slide 12 for updates to our capital allocation for 2026, our total cash for allocation has increased to $3.05 billion. This includes $2.1 billion from the legacy company free cash flow before growth midpoint, along with $950 million from the recently acquired assets from LS Power, prorated to 11 months. As part of our commitment to a strong balance sheet, we expect to execute approximately $1 billion towards debt payments throughout the year. For the integration of the acquired assets, we expect to spend $123 million in one-time costs to properly incorporate the assets into our operational and commercial portfolio. We remain dedicated to our robust return of capital program and plan to return at least $1.4 billion of capital to shareholders through share repurchases and common dividends. Lastly, we are allocating the remaining capital to continued investments in our core portfolio, with $310 million earmarked for growth initiatives, which mainly involves spending for our new generation build in Texas, including Texas Energy fund proceeds and ongoing investment in our consumer platform. Turning to Slide 13, we are reaffirming our long-term adjusted EPS and free cash flow before growth per share CAGR of over 14%, while also rolling forward the long-term outlook from 2029 to 2030. As noted when we first disclosed the acquisition of assets from LS Power, we have a clear path to achieving more than 14% growth in our adjusted EPS and free cash flow before growth per share over the next 5 years, supported by solid business expansion and disciplined capital allocation. On the left side of the page with adjusted EPS, we moved from the original 2025 midpoint of $7.25 to our 2026 updated midpoint of $8.90, reflecting strong underlying business performance, contributions from the LS Power portfolio, and the benefits of our share repurchase program. Looking ahead, we forecast adjusted EPS of greater than $14 per share by 2030, driven by existing growth initiatives in our core business operations and our solid return of capital program. Shifting to the right, our free cash flow before growth is also expected to rise on a per-share basis. Starting with the original 2025 guidance midpoint of $11.20, we have increased this midpoint to $14.50 for 2026 and expect it to further exceed $22 per share by 2030, delivering a compounded annual growth of over 14%. The main drivers for this increase in per-share metrics are similar to those for our EPS growth and reflect the strong cash generation capabilities of our platform combined with a disciplined capital allocation framework. It's worth noting that our long-term outlook assumes flat energy and capacity prices throughout this period. Our energy price assumptions reflect market prices as of December 2025, while our PJM capacity price assumptions are based on pricing capped at $325 per megawatt day for the upcoming capacity auctions in June and December 2026. Importantly, this long-term outlook does not account for potential benefits from rising power prices, new data center contracts, or the 1 gigawatt CT to CCGT conversion opportunities available with the acquired LS portfolio. We have included more details on these assumptions in our long-term outlook appendix. Additionally, we have provided updated power price sensitivity slides to help model the significant correlation our portfolio has with rising power prices. In wrapping up this slide, we believe our long-term outlook represents a de-risked and significant opportunity for above-market earnings and free cash flow per share growth, with meaningful upside potential. I look forward to updating you on our progress toward achieving this long-term outlook in future earnings calls. Finally, on Slide 14, we are refreshing our view of long-term capital allocation. On the left side of the slide, we have updated our forecast for capital allocation from 2026 to 2029 for better comparison. Our current forecast reflects a significant 55% increase in capital available for allocation and a 32% increase in share repurchases from our original guidance provided in Q3 '24. Furthermore, the current plan allocates 85% of cash available after debt reduction to capital return, compared to 80% in the original plan. Moving to the right side of the slide, we have rolled forward our plan to include 2030 cash available for allocation, totaling $18.3 billion by 2030. Including an additional year's earnings for 2030, we are increasing our return of capital program to $13.2 billion, consisting of $11 billion in share repurchases and $2.2 billion in common dividends. This marks an increase of $5.3 billion and $800 million for share repurchases and dividends, respectively, compared to the original plan shown at the far left of the chart. Forecasted amounts for growth or unallocated capital are expected to see a modest increase of $400 million, primarily in the unallocated category. The combination of an improved earnings profile and planned debt reduction of $2.9 billion over this five-year period will help us achieve our targeted credit metric of 3x net debt to EBITDA. Our long-term capital allocation strategy remains aligned with our core principles, emphasizing a robust balance sheet and a strong return of capital. The significant free cash flow we anticipate generating during this period will provide flexibility for accretive capital deployment. Share repurchases will continue to be a key element of our annual capital allocation plan. While we have shown a large portion of capital dedicated to share repurchases, we recognize the potential for other highly accretive uses of that capital, especially in developing power plants for extended data center contracts, and we will assess these opportunities carefully. However, any and all of these situations will be evaluated against our stated hurdle rates of 12% to 15% pretax unlevered IRR alongside the implied return from buying back our stock. In closing, NRG delivered record financial and operational execution through 2025, showcasing the resilience of our platform and the ongoing momentum across our core businesses. Looking forward, the 2026 outlook and capital allocation priorities outlined here demonstrate the strength of our strategy and our commitment to disciplined growth, responsible liability management, and long-term value creation. With the successful completion of our acquisition of assets from LS Power, we have strengthened and enhanced our portfolio. Integration is progressing well, and incorporating these assets into our combined portfolio positions us for ongoing growth and effective execution of our strategic and capital allocation priorities. With that, I'll turn it back to you, Larry.

Thank you, Bruce. Let me close with our priorities for 2026. Demand is accelerating, led by data centers. Our priority is to serve that growth under a Bring Your Own Power framework, securing long-term power agreements that support the new generation required to meet it. We will complete T.H. Wharton. We will integrate LS Power. We will continue building our Virtual Power Plant platform. Execution and capital discipline remain our lodestar. We will deliver the financial results embedded in our guidance, return at least $1.4 billion to shareholders, grow the dividend consistent with our framework, and maintain balance sheet strength. As I approach the conclusion of my time as CEO, I want to thank all of our 18,000 employees for their incredible work and commitment, our customers for their trust, and our shareholders for their support. Over the past 27 months, the NRG team has reshaped the portfolio, strengthened the balance sheet, and positioned NRG to compete and keep winning in a changing power market. We entered 2026 strong, disciplined, and well prepared for this next phase of growth. I look forward to continuing as an adviser and long-term shareholder and to watching this incredible team build on the foundation in the years ahead. This is only the beginning, and the best is yet to come. Thank you all for everything you have done. Operator, we're now ready to open the line for questions.

All right. Larry, congratulations to you and Rob on the terrific transition, and best of luck to both of you on your Phase 2. I apologize for forgetting to mention Bruce, who is doing a great job as CFO. Congratulations on that Phase 1. Now that the LS deal is closed, Larry, could you elaborate on your comments regarding commercially contracting the combined portfolio? A $2.5 billion EBITDA is significant, and I would like to understand the timing and structure, specifically regarding which party will assume the gas risk in these deals, or if the risk will be shared and passed on to the counterparties. Any insights on the structures would be appreciated.

Yes. Depending on the hyperscalers, we are anticipating blocks over 1 gig. We expect contracts with a minimum duration of 10 years and often 20 years, involving investment-grade entities that can support the necessary credit to facilitate this. There will be a significant fixed price component involved. From the information provided, including margin and capacity numbers, you can determine the timeline for implementation. The first tower could be operational by late 2029, with the potential for around 1 gig per year, possibly more, for each subsequent year.

Got it. Okay. And then just the fuel risk, Larry, this is a question we get from a lot of investors is who actually takes on the gas risk?

It's Rob. The contract we are working on, which the hyperscalers seem to accept, involves a substantial capacity payment, as Larry mentioned, along with a variable component that essentially functions as a heat rate for the hyperscaler. They assume the gas risk, but if they wish to transfer that risk, I have a gas platform that can assist them.

Got it. Okay. Perfect. And then just in terms of PJM and the regulatory process, do you guys see FERC PJM directive opening opportunities for energy to bring new generation to that market? Would you focus on the 1 gigawatt of uprates that you noted in the slides? Or is there opportunity beyond that similar to what you're doing in Texas under the TEF? I guess how attractive is that reserve auction?

I mean, look, I think it's attractive, Shar, but I think our focus in PJM, at least initially will be the 1 gig of uprates. It's just faster and quicker to market and the demand is there for Texas. If somebody were to come to us and say that they wanted it in PJM, obviously, we have the flexibility to do that. But I think that we would focus in PJM on the 1 gig of uprates and probably the other 5.4 outside of PJM.

Got it. This is perfect. I appreciate it, guys. And Larry, big congrats. And Rob, just do me a favor as you take the spot, just make sure you continue to work Bruce really hard like Larry did.

Larry, Rob, congratulations. And Bruce, I swear we will never forget you. But with that said, let me come back to a couple of things, right? So first off, on the capital allocation, the 14% here. Just to break that down a little bit further here, how much latitude do you have in that in as much as you're not reflecting, I don't believe, the CapEx for the data center. I mean, presumably, you could be forgoing buybacks in the near and medium-term sense to invest in a longer-term sense in presumably 2030 and beyond if you start to pivot into the data center. So maybe just talk about the latitude that exists within that commitment through 2030 against the buyback numbers and how you could see that shift as you allocate capital? Again, if I understand it right, the first data center here under your targets with GEV and Kiewit, it would be a 2029 in-service anyway. So conceivably, you'd get some of those cash flows on a run rate basis in 2030. But again, obviously, as you continue to scale the strategy, you need to roll forward that target. So Rob, when are you doing an Analyst Day pro forma with all these data centers is really the other way to ask that. But I'll pass it to you guys.

Julien, regarding the buyback question, we believe that the variability in that buyback amount is likely to be more influenced by factors in the later years rather than the earlier years. The $1 billion we are considering for the next few years is fairly secure from our viewpoint. We see plenty of opportunities to fund these initiatives while maintaining at least a $1 billion buyback program. Therefore, we don't perceive any significant risk in that regard. The focus is really on how we manage our cash flows in the coming years, especially after we reduce our debt, and how those funds can be invested in some potentially profitable projects.

Any sense on returns, though? Maybe that's the other back-ended way to ask this is like how are you thinking about what the operate and/or new data center counterparty in Texas would look like here?

Yes. Look, I mean, we've always been very consistent about and transparent about what our hurdle rate is. It's 12% to 15% pretax unlevered. And every project and every dollar devoted to a project is going to be held against that standard.

I understand. Thank you. If I could ask a bit more, as you consider the rollout of VPP, when do you plan to expand it? It appears to be performing well. I'm interested in how you view the economics related to this situation. Briefly, I noticed your long-term targets.

Yes. This is Brad speaking. I've been really pleased with our results in Texas. So we continue to scale in Texas. And then we are looking to launch a VPP-like program in the East here in early second quarter. That, coupled with our relationships with GoodLeap and Sunrun, we continue to scale batteries up. So we feel really good about what we've learned so far and well ahead of our targets, as Larry had mentioned, and pacing well against the 300-megawatt number we gave you for 2027.

All right. Fair enough. Still, I'm asking when do we get a robust Analyst Day, but you don't necessarily need to commit today. All right.

More to come. Every day with us, Julien, is a robust day.

Congrats to Larry and Rob here.

Before you ask your question, would you also congratulate Bruce, please?

I'm feeling really hurt these days.

Congratulations to Bruce. You’ve asked some great questions so far. I wanted to follow up on Shar's comments regarding the $2.5 billion figure. In previous presentations, you indicated a target price for signings above $80 per megawatt hour. What are your current thoughts on that figure and what supports the $2.5 billion amount?

It's Rob. We adjusted our targets to a range of over $80. As we've discussed, if you're going to build 1.2 gigawatts of GEV turbines, that figure will be on the high end. So as you consider this, think in the range of $90 to $95 which was part of our original guidance. It's at the top end; it needs to cover equipment costs and ensure a return, and we won't proceed unless it does.

That's helpful. And then maybe just understand the share repurchases, if they are going to be affected at all from new build. It sounds like it's more in the back end of the plan. But I guess you have a strategic advantage on cost and securing these turbines early. I assume they're going to be project financed. So just what would your kind of targeted equity contribution be? Would it be in the 20% to 30% range? And maybe that's just one way to understand how that could pressure the buybacks.

Yes, from our perspective, project financing can have its advantages, but it can also come with challenges. In this case, we really value simplicity and transparency. Therefore, you shouldn't assume that project financing will be our chosen method. We are more likely to prefer corporate-style balance sheet financing. Consequently, you should consider the capitalization for these projects in line with our corporate capitalization, which is approximately at a 3x leverage level.

I was just hoping maybe we could refresh a little on what the key components of the organic growth beyond 2026. I know you've kind of laid that out in bits and pieces over the last year or so. But can you maybe just frame that up between like the test, the VPP, some of the other things? What are kind of the core drivers? And then how much of it is the buyback? I know that's become smaller as your stock has done well.

In terms of the components driving the underlying earnings growth for the business, first, it's the $750 million growth program that we announced in 2023. We are on track to achieve that, and we're confident in reaching our goal. Approximately half of that is due to organic growth in the Smart Home business, supported by about 6% net subscriber growth, and we achieved 9% this past year. The team is performing well in that area. The other half is from growth investments in both the C&I business and the retail energy business, and we remain confident about that $750 million. The other factors in the plan include all three test plants, which are now part of our strategy, with the last one coming online in 2028. Additionally, we have the 400 megawatts from smaller data center deals previously announced also included in the plan. When considering how this affects our growth, we mentioned a 14% plus growth rate with an 80-20 split between organic growth and share repurchases, and this remains true as we speak today.

Okay. That's very helpful. I appreciate you laying that out, Bruce. And then just in terms of the upgrade opportunities at the LS assets in PJM, any sense of timing there just in terms of what you're going to do, particularly with the RBA going on in the background, but also the value of kind of speed and what you could do there? Just a sense of timing would be great.

Thanks, Sully, it's Rob. So we already have engineers at every plant running around and assessing not just the 1,000 megawatts of uprates that we mentioned when we did the transaction. We're obviously looking at that, but we're also running around, given the RBA and the need for additionality or bringing more power to the markets, we're running around to see if there's 25 or 50-megawatt clips that we can add on to the back of other assets. So we're out there looking. I expect to hear from us later when we actually have some math. But given the timing of the RBA and kind of how that plays out, we're working very hard to know what we can bring to serve that market and serve our customers. And data centers want to get built up there, too. So we'll be looking for opportunities to monetize that through hyperscalers.

Larry, Rob, you guys have done great. So I'll just keep it with Bruce. Bruce, congratulations on...

Thanks, Nick. You're now his new favorite.

Absolutely. I have all the time in the world for you. Great, that's what I aimed for. I have three quarters worth of questions I need to ask. Considering that you’ve provided strong guidance and have now beaten and raised expectations three times in a row, is there anything we can pinpoint about what has gone particularly well or what has exceeded expectations in the recent past?

I mean with a slight amount of humility, Nick, I'll say it's just we have a great team, and we have great employees, and we just execute really well. I mean that's really what it boils down to is just execution, execution, execution. We took our lumps in years past. We learned a lot from those. We made a lot of significant operational changes. And that is really what's bearing fruit for us. I mean bear in mind, too, that when we budget and we put out guidance, we plan for weather normalized. And depending on what happens with weather, that can also influence the results. And for us, we've had situations where the weather has been favorable for us, and we've been able to take advantage of that.

Nick, I would only add to that, we've created a culture where our employees are always looking to improve, bringing improvements to the table and sharing them in ways probably we've never done before. We are really one NRG across all of our businesses and that kind of collaboration, just we keep finding new ways to do everything we do better and more profitably.

Great, that makes a lot of sense. I wanted to explore a bit further. With the VPP opportunity and the RTC+B initiative in ERCOT in Texas now operational for about 2 to 3 months, is there potential for you to see additional upside? Given the quantity of data points from Vivint and other touch points, can we consider this as an added opportunity for your team?

Yes. I mean it's early days, but we look at this as an enormous opportunity and one that nobody is as well positioned to capture as we are. And when I said at the end of my remarks that the best is yet to come. That's one of the things I think is yet to come. But I think it's an extraordinary opportunity that we're just really beginning to quantify and understand.

Congrats to everybody in the room. Just a question around how you guys are evaluating the creditworthiness of the counterparties on some of these data center deals. Are you guys exclusively targeting Tier 1 hyperscalers? Or how are you thinking about evaluating that risk?

Yes, we are indeed targeting even within the group of hyperscalers. We monitor all the same credit reports that you do.

Okay. Regarding the retail channel, you have integrated the 400 megawatts. I believe you mentioned the possibility of adding another 500 megawatts in that channel. Is that still an opportunity for you?

Yes, I believe we will still see some of those smaller transactions, which, although I hesitate to label 445 megawatts as small, are indeed smaller than the larger ones we've been discussing. These opportunities won't specifically target the groups we just mentioned. We remain optimistic about this channel and plan to continue pursuing it, so expect to hear more about these in the future. We're making a distinction here between the large gigawatt-plus hyperscaler deals and the smaller ones that we've already announced this year.

Okay. Can you clarify how much of the $2.2 billion growth in unallocated through 2030 is actually unallocated? We would like to understand what portion of this can be allocated toward servicing the data center projects, especially as you start announcing some of these contracts, versus needing to draw from the share repurchase funds.

If you consider the $2.2 billion, a significant portion is dedicated to our growth plans, particularly the organic growth over the years. I wouldn't view that amount as a major source for funding the data center projects. Ultimately, it isn't a large sum that could be easily redirected. So, I think it's important not to approach it in that manner.

So my main question is about your upcoming gas-fired new build. I think I'm still recovering from the PTSD associated with gas-fired new build from the early 2000s and the assumptions that were made back then. I mean, I understand that your contracts will be mainly driven by capacity payments, but I still have only about a 10- to 15-year contract for an asset that has a 40-year useful life. And I'm sure you run the same math that I did. It's not actually so obvious to see that double-digit return over the life of the assets, again, given the short duration of the contract. So how do you address this risk as you embark on the gas-fired new build?

I think there are a few important points to consider, Angie. One is the length of the contract; we are probably looking at contracts longer than 10 years. When we evaluate the pricing we're receiving and the costs we're incurring, we have a firm stance that we will not proceed with anything that does not meet our unlevered hurdle rate, and I assure you of that. Rob and Bruce also stand by this commitment, and I can speak for everyone else here as well. I understand the challenges you faced in the past, and we have no interest in speculating in new capacity build projects. We continuously analyze the numbers, and for those who seek power at a lower cost, they may find it elsewhere, but it will not be through us.

Okay. Do the prices for the future contracts you mentioned include payments for the site? For instance, when Rob talks about the $95-plus figure, does that cover a site lease, or is there an additional payment for the land itself? Is the $95 just for energy or capacity, or both?

$95 represents the lower end of what the total value looks like based on capacity and variable factors. Keep in mind that this will involve significant capacity, so it doesn't really translate to a dollar per megawatt hour basis. Each transaction we've examined, particularly those on our sites, also includes a land transaction that is not reflected in this figure. Therefore, the way to approach these is that we will recover our return and capital within that 20-year contract, as that is our structuring approach and our requirement. We are among the few who possess 9 turbines that can be installed next to data centers, offering affordability while avoiding regulatory complications.

Okay. Understood. And then just the last one, the $2.5 billion of an EBITDA upside that you're showing me, does that directly correspond with that 5.4 gigs in gas-fired new build plus the 1 gigawatt of uprates? Or is there something else included in that $2.5 billion of EBITDA?

No, it's exactly what you said, Angie. It's roughly 6 gigs.

You highlighted in the slides several hundred megawatts of bridge power available beginning in 2028. Can you just talk a little bit about that opportunity in terms of maybe key suppliers, what technologies you're looking at and just how you view the duration of that opportunity?

Certainly. Bridge Power is a limited resource currently, and the technology we find most effective is the overengineered reciprocating engines. There is a significant demand for spinning steel in these systems. Bridge Power allows hyperscalers to expand their capacity while the CCGT is being constructed, enabling them to establish their operations sooner. Our discussions with hyperscalers indicate a varying interest in Bridge Power; some are eager to have it, while others may choose to rely solely on CCGTs as they become available. We do have agreements with Bridge Power suppliers, allowing us to provide this limited resource as part of a package for hyperscalers. The interest in it varies among our clients, with some needing it urgently and others incorporated within their existing portfolios. Regardless, it serves as a valuable solution for our customers.

Got it. Okay. That's really helpful. And then I think you also noted a new battery storage contract in ERCOT. Just 1 gigawatt, I think, expected to be online at the end of this year. Can you maybe just talk a bit about that opportunity and how you could see the battery portion sort of scaling over time?

Sure. We have a series of contracts that collectively add up to over 1 gigawatt of battery capacity in Texas, which are power purchase agreements, or tolls. This allows us to incorporate them into our portfolio and utilize them for serving our retail customers in Texas. As we operate these batteries, they will help shape our long-term strategy. Batteries offer a quick boost of power when needed and enable us to shift renewable energy across different hours. As customer demand fluctuates or increases, we will consider expanding that portfolio if it is advantageous.

I think I'll take a different approach. I'm going to say congrats to Brendan and the IR team. Congrats to everybody. Just a couple of follow-ups. You covered a lot of ground today, but one is you talked pretty positively about the outlook for ERCOT and opportunities for your gigawatts finding homes there. How are you thinking about the batching proposal? Do you worry that might slow things down? Or I think you've had some pretty positive comments there, but how do you see that impacting the pace of signing contracts in ERCOT?

I think the batching work that ERCOT is doing is perfect for the market. It is a great step forward to accelerate the process for people to get data centers and large loads interconnected to the grid. It's actually a very thoughtful approach, and we're very happy that the PUC and ERCOT are making it happen in that way. It makes a lot more sense than a serial process that just stacks up forever. This is a very good thing for us and all of our customers as well as those who want to serve them.

Accelerate, did you say?

I'm sorry?

Did you say...

Versus serial processes of do loops and like reevaluating every time somebody puts something in, yes, this will accelerate it versus that.

Okay. Great. And then one more. Just to be really explicit, the guidance, you talked about you're targeting 1 gigawatt of an announcement for 2026. Is your goal to announce the gigawatt, but the financial impact would be upside? Or does the guidance include that gigawatt but not incremental projects? I just want to specify that.

First of all, it's at least or a minimum of 1 gigawatt. I want to make that really clear. And that gigawatt or more than gigawatt is not included in the guidance or in the roll-forward outlook.

Congratulations, Larry, Rob and Bruce. Let me see. Just one question for me. I was just wondering, in the PJM market, how has activity in PJM been impacted by the whole backstop auction process and the general policy uncertainty that we've had over the last several months. Has that changed the pace of conversations with data centers and contracting opportunities just given the policy that's in flux there?

There have been many discussions. As we've mentioned for some time, progress is going to be slower than in Texas, and that remains the case. While they are making advances, when considering a 20-year investment, there is much to establish. Although we would prefer a quicker pace, progress is indeed occurring, just at a faster rate outside of PJM currently.

I want to thank you all again for all of your support. When I arrived, you came on these calls with an open mind and were willing to kind of look at NRG freshly. We made you a lot of promises that we kept, and we really appreciate the challenges that you gave us, the feedback that you gave us, and the support that you've given us over this last time. And I do mean it when I say the best is yet to come. So thank you all very, very much.