NRG Energy Inc (NRG) — Q1 2026 Earnings Call Transcript

Thank you. Good morning, and welcome to NRG Energy's First Quarter 2026 Earnings Call. This morning's call is being broadcast live over the phone and via webcast. The webcast, presentation and earnings release can be found in the Investors section of our website at www.nrg.com under Presentations & 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 our earnings release and the non-GAAP reconciliations and supplemental data file located in the Investors section of our website. With that, I will now turn the call over to Robert Gaudette, NRG's President and Chief Executive Officer.

Good morning, and thank you for joining us. I'm joined today by Bruce Chung, our CFO; and other members of the management team who are available for questions. Before we get into the quarter, I want to briefly acknowledge the CEO transition. I've been with NRG for over two decades and have worked across the company through multiple market cycles. That experience shapes how I think about and operate this business. I want to thank Larry for his leadership over the past several years and the impact he's had on this company. I also want to acknowledge our employees across the business. The work you do every day is what makes this company run and positions us to deliver for our customers and our shareholders. As I step into this role, I view our responsibility clearly. We are stewards of your capital. Our job is to allocate it with discipline, operate efficiently and deliver consistent long-term returns. That's how I'll run this company. I've seen this business at its best and at its most challenging. Over time, outcomes come down to how well we operate and how we put your capital to work. We've positioned the business for where the market is going, and I see a clear opportunity to build on that and drive the next phase of performance. I have a high level of confidence in where we are, and I'm excited about the opportunity in front of us. With that, let me turn to Slide 4 and walk through our key three messages. First, we delivered strong operational performance and are reaffirming our 2026 financial guidance and capital allocation. The business is tracking to plan. Our teams are executing and the results reflect the underlying conditions this quarter. Second, we're seeing a sustained shift in power demand outlook across our markets with the regulatory frameworks continuing to evolve in response. What matters is not just that electricity load is growing. It's the pace, the location and the duration. Near-term conditions remain variable, and that is reflected in current market signals. And third, we're positioned to capture significant value from this environment. We have built a platform for where the market is going with the flexibility to develop capacity alongside long-term demand as those opportunities evolve. Our base plan stands on its own. It does not require incremental contribution from large load or new development to hit our numbers. Those remain upside. Our job is to execute, allocate capital effectively and convert the opportunity in front of us into results. Turning to Slide 5. First quarter results reflect a soft market environment. Texas was mild with heating degree days down 30% year-over-year, and the market offered limited opportunity, where Winter Storm Fern drove significant price spikes across PJM in late January. We closed the LS Power transaction on January 30, after most of the storm had passed. So those assets were not part of our fleet during that period. Bruce will take you through the numbers. What I want to be clear about is none of that changes our view of the business or the year. We are reaffirming guidance, and the business is on track. Integration of the LS portfolio is underway and progressing well. The assets are performing as expected, and we're focused on fully incorporating them into our operating and commercial platform. Our first Texas Energy Fund project, TH Wharton, is expected to come online in May, on time, on cost and on spec, qualifying for the TH completion bonus. Our remaining TEF projects continue to progress on schedule. At 1.5 gigawatts, these three projects will power roughly 300,000 Texas homes at peak demand, arriving just as the state continues to add nearly 400,000 new residents a year. Very few companies have recent experience developing new natural gas generation. We have and we're good at it. These projects were developed at well below current new build costs because we identified the opportunity and prepared the site years before the TEF program existed. When the moment came, we were ready. If we execute on what is in front of us, this capability will be one of the most important competitive advantages in our industry. This is what you should expect from NRG. We look around the corner, we prepare — and when the opportunity is there, we bring it home on time and on budget. Turning to Slide 6 for an overview of our key markets. Demand expectations continue to increase. This quarter earnings season reinforced the scale of investment being directed toward AI infrastructure, and the implications for power demand are significant. The numbers are straightforward. The system's all-time peak demand is more than 85 gigawatts. The preliminary long-term load forecast filed this month shows the pipeline of large load requests reaching over 36 gigawatts by 2033. That is more than four times today's record peak in under a decade. Not all of that materializes, but even if a fraction of what is in that pipeline arises on those timelines, this market looks fundamentally different from the one we're operating in today. Senate Bill 6 and the large load batch process are bringing more structure to how new demand connects to the grid, and we support those reforms. I want to specifically thank the PUCT and ERCOT teams for including bring your own generation support in the initial batch process. That's an important step in aligning new demand with new supply and supporting reliable system growth. In PJM, the reliability backstop procurement is an important step to help bring new capacity forward, and we appreciate the coordination across PJM, state policymakers and the federal government in advancing these efforts. Within our existing fleet, we see up to two gigawatts of upgrade and conversion opportunities. This represents an incremental one gigawatt above the previously disclosed one gigawatt CCGT conversion opportunity, with the additional capacity coming from more traditional natural gas upgrades. We will pursue those where structures and returns support it through the procurement process or bilaterally where appropriate. We'll move forward selectively. Each opportunity must compete for capital, meet our return thresholds and be supported by long-term commitments from high-quality customers. Turning to Slide 7. I want to be specific about what makes our position in this market different because I do not think it's fully appreciated yet. We serve commercial and industrial customers at a scale very few companies in this industry can match. That's not something you acquire. It's built over decades of relationships, credit, operational track record and the ability to structure complex agreements across multiple markets. We have that foundation and it is the reason customers come to us when problems get hard. On flexible load, we acquired LS Power because it is the leading commercial and industrial demand response business in the country. Our Texas residential virtual power plant is targeting one gigawatt of capacity. And we can only operate at that scale because we have the retail electricity business and smart home technology behind it. No one else has both of those running inside of a generation and retail platform at our size. When a customer needs to move, we can move it. On generation, we operate a large dispatchable natural gas fleet, primarily in ERCOT and PJM. These assets run when the system needs them. They demonstrated that again this quarter, and they provide real earnings leverage as load growth materializes in our markets. On development, our TEF projects are under construction. Our partnership with GE and Kiewit gives us construction capability, equipment access and execution readiness that most companies in the space are still trying to establish. As the right opportunities emerge with the right structures, we are ready to move. In PJM, we have additional development opportunities across uprates and conversions that we will pursue through the procurement process or bilaterally where structures and return expectations make sense. Taken together, this is the platform this market is asking for. We can solve complex load problems. We know how to develop and build. We have equipment and labor access. We can move load when the grid needs it, and we have the customer relationships and scale to back it all up. I am confident in where we are going. Discussions on large load agreements are active and progressing. These are complex long-duration structures, and we're moving forward in a disciplined way. We are seeing strong engagement in the right types of opportunities, and we feel good about how these discussions are developing. Based on what I'm seeing today, I have a high level of confidence in this company's position. With that, I'll turn it over to Bruce.

Thank you, Rob. Turning to Slide 9 for a discussion on our first quarter financial results. Before I go into the results, I wanted to be sure to highlight three items. First, we remain on track to deliver within our 2026 guidance ranges. And as such, we are reaffirming those ranges today. Second, during Winter Storm Fern, our generation fleet demonstrated excellent operating and reliability performance, once again reflecting the benefits of our robust generation CapEx program over the past few years. And finally, as a reminder, the LS Power portfolio acquisition closed on January 30. As such, our first quarter 2026 results reflect approximately two months of earnings contribution from the recently acquired portfolio. Now on to our financials. NRG delivered adjusted EBITDA of $1.08 billion, adjusted net income of $308 million and adjusted EPS of $1.49 for the first quarter of 2026. Year-over-year adjusted EBITDA was lower by $46 million. This reflects the impact of milder weather in Texas for most of the quarter and increased supply costs in the East due to Winter Storm Fern offsetting incremental earnings from our newly acquired portfolio. It is also worth mentioning that favorable weather was a big factor in making 1Q 2025 a record first quarter for NRG, thereby making the year-over-year comp for 1Q 2026 more challenging. To finish on consolidated results, both adjusted EPS and adjusted net income were also lower on a year-over-year basis. The declines reflect higher interest expense and depreciation and amortization associated with the LS Power portfolio acquisition as well as the partial period contribution of the acquired assets. Turning to segment results. Texas experienced the impact of unfavorable weather on our home energy volumes as well as lower average power prices and minimal market volatility, which weighed on both our retail consumer business and commercial optimization activities. Specifically, Houston on-peak prices averaged $29 per megawatt hour, down approximately 13% from last year. Notwithstanding the general lack of weather during the quarter, our fleet was well prepared to handle any moments of extreme volatility due to weather as evidenced by fleet performance during Winter Storm Fern. Increased investment in our generation assets has been an important focus for the company over the past few years, and it is great to see that investment paying off. Our East segment results benefited from our recently acquired portfolio, reflecting the immediate contribution these assets are making to the combined platform. However, these gains were offset by higher regional power supply costs incurred during Winter Storm Fern. PJM West Hub on-peak prices for the quarter averaged $103 per megawatt hour, up approximately 72% from last year, a tailwind for our generation dispatch but a headwind for our retail supply costs since we had not closed on the acquisition at the time of Winter Storm Fern. As a reminder, we closed the LS Power acquisition late in the storm, so we did not have access to those assets for most of the event. Our West segment results benefited from higher retail power margins driven by lower supply costs and favorable customer mix and include the impact of the expiration of the Cottonwood lease, which ended in May 2025. Smart Home results reflect continued organic customer growth and expanded net service margins, supported by sustained customer demand for our connected home platform. The business ended the quarter with approximately 2.37 million customers, a year-over-year increase of 9%, well ahead of the 5% to 6% net customer growth embedded in our long-term growth plan. Moving to Slide 10 for a look at our 2026 capital allocation, which remains unchanged from what I outlined on our fourth quarter call and is fully consistent with our previously disclosed priorities. As a reminder, the waterfall on the left begins with $3.05 billion of capital available for allocation, reflecting the midpoint of our updated free cash flow before growth guidance range. As part of our ongoing commitment to a strong balance sheet, we expect to execute approximately $1 billion toward debt repayments throughout the year. On that front, I want to highlight an important balance sheet action completed subsequent to quarter end. On April 28, we closed on $3.5 billion of new financing, retiring the $1.5 billion Lightning senior secured notes and reducing revolver borrowings, a key step in our post-acquisition deleveraging plan and consistent with our 3x net leverage target. This financing paves the way for the future removal of the ring fencing we had in place when we closed on the acquisition and will result in more than $10 million of annual net interest savings. Turning to return of capital. We remain on track to return at least $1.4 billion of capital to shareholders in the form of share repurchases and common dividends. Through April 30, 2026, the company completed $817 million in share repurchases, inclusive of our negotiated repurchase of 1.83 million shares from LS Power. Finally, we are allocating the remaining capital to continued investments in our core portfolio with $310 million directed towards growth investments. In closing, NRG delivered solid first quarter results in a challenging weather environment, once again demonstrating the resilience of our integrated platform. Our guidance reaffirmation today reflects confidence in the full year outlook underpinned by disciplined capital allocation, prudent liability management and the growing contribution from the LS Power portfolio. With LS Power integration well underway and tracking ahead of plan, we are well positioned for the remainder of 2026. I look forward to updating you on our progress in the quarters ahead. With that, I'll turn it back to you, Rob.

Thank you, Bruce. Let me close with our priorities on Slide 12. We will run the fleet with a relentless focus on safety, reliability and performance. That's the foundation this company is built on. We will continue to serve our customers with discipline, focusing on value, retention and the integration of our retail, smart home and flexible demand capabilities to strengthen those relationships over time. We will be disciplined in how we allocate capital, maintain a strong balance sheet and continue to return capital to shareholders. We are advancing our key growth initiatives and are on track to deliver at least 14% adjusted EPS and free cash flow per share growth over the next five years before any contribution from large load or incremental development. As I step into this role, that's where my focus will be: running this business with discipline and consistency, driving efficiency, allocating your capital with accountability and converting the opportunities in front of us into results. Operator, we're ready to open the line for questions.

Rob, big congrats on your first earnings call. I know it's going to be one of many. I know obviously, the focus is on ERCOT. But in terms of PJM and the regulatory process there, do you guys see FERC or PJM colocation rules opening up opportunities to bring both new generation and upside in existing assets in that market? It looks like peers are having conversations with customers, so there is an opportunity with the asset base there as we're thinking about a tentative framework on things like new capacity versus existing capacity matching?

Yes. So great question. I believe that the PJM process — and look, I applaud all the effort that's going on between the states, PJM, the White House to try to make things happen up there. I think it presents kind of three opportunities for NRG if you think about it. We've obviously got up to about two gigs what we talked about today and upgrades around existing assets that we picked up through the LS acquisition. We've had the opportunity to take the GE turbines up there if the economics make sense and a customer is willing to go there. And then the third piece, and I think this is kind of the place where new is the potential to offer in kind of the load management side. So the BPP the team is building down in ERCOT, that's something we can use up north. And through LS Power, we've got a real capability around demand response. I think all of those pieces are opportunities for NRG, and I think there are also real reasons to think about how to solve the equation up in PJM. Does that answer your question?

Yes, totally, Rob. I appreciate that. And then in terms of the five gigawatt plant in Texas, do you still anticipate all the capacity to be utilized front of the meter? Or is there a higher return option with PJM deals as we've seen an increase in behind-the-meter announcements with higher implied levelized revenues in the $150 million range? Maybe any thoughts on how you're thinking about the $90 million to $95 million range that you had previously talked about.

Yes. So the $90 million to $95 million was kind of where we had put the top end for a normal data center deal, depending on the structure and where we would go. The thing that we're going to capture, Shahriar, is what our returns require. So the prices could go up depending on the environment. Our primary focus is front of the meter generation for data centers because we believe that's the right thing for the market. But we'll look at everything. We'll look at behind-the-meter solutions. We'll look at all of it. The conversations that we have today are front of the meter conversations, and they're progressing as well as they have been over the last 12 months. We continue to push really hard to get that done. I think front of the meter is the right solution, and we're getting to a place now where we're going to get something done quickly.

Got it. Perfect. And just go again one more time. Just a big congrats to you on Phase 2 and just do me a favor: make sure you work Bruce a little bit harder than Larry.

Congratulations on the role and hang in there. I got to tell you, watch out. Well, look, let me follow up quickly here. I mean, obviously, you talked about mild weather here in the quarter, et cetera. But how do you think about offsets for '26 and then probably more importantly here, how do you think about what we've seen in the power curve moves thus far? Rob, you've been watching these markets for a long time. How do you view the move forward here in ERCOT relative to any potential delays in build or any other interpretation? Maybe just transposing what we've seen in softness to date forward or what have you? Looking back to and also hedging views around that.

Right. So I'll take in parts. Let's talk about the markets first. The markets physically showed up weaker in the quarter. That's a reflection of supply-demand and just lack of weather, right? There just wasn't any real weather in ERCOT. The traded markets tend to have a recency bias. So when people aren't excited they kind of lean out the back and you see the curves trade down a little bit. And then what I would also tell you, and we've talked about this in the past: as far out the curve, the real transactional capability that is setting that curve are the large C&I customers and what they're doing around the markets. If you think about the macroeconomic environment that we're in today, that puts question marks into our big customers and what they're thinking. And so as that cleans up and people have a little bit better view into what their business looks like, in five years that helps them get back out into the market and provide some support. There's no natural buyer out there unless you're a large industrial trying to lock up your time. As far as offsets for '26, I'll turn it to Bruce in a moment. But obviously, he and I are going to work to ensure that we deliver what we told you guys we're going to deliver.

Well, I mean, I was thinking about offsets on '26 here. If you think about softness of the year and the reaffirmation—Is there anything that we should be keeping in mind there?

Julien, I think it's really as simple as this is just the first quarter. As you know, our company and our business has always been seasonally weighted towards the last three quarters anyway. So I think that's why we feel comfortable being able to reaffirm the ranges that we've put out there. And certainly, that's the case on an EBITDA basis; I'd say we're even more confident on a free cash flow basis. We see certain working capital items unwinding themselves over the remainder of the year. That gives us a lot of comfort that we're still going to be able to hit the free cash flow number that we put out there.

Rob, bigger picture question here. You've taken over, how do you think about the strategic direction of the company here? I just want to ask bluntly here and give you the opportunity to respond. The company is already moving towards building new generation on contract, adding duration to the overall contract portfolio. It seems like that's the direction you all are going. Are you doubling down on that? With more generation build given the increase in the opportunity in PJM? If you were to define the strategy with your fingerprint here, how would you add or evolve what I've just described?

Bruce, I, and others were all part of the transition or transformation with Larry. So it won't sound too different, Julien. But if there was something I would put my finger on the scale on, I would say we are definitely putting more focus around contracted cash flows, looking for duration of cash flows with counterparties. That leads us to things like data center deals and new build generation. But it also leads us to thinking about the total addressable market differently. We have historically been kind of in the competitive markets only. I see an opportunity for us to find contracted cash flows by partnering with regulated entities that may not have the capital or the relationships or equipment or development capability that NRG has. We have a really solid platform, and we should be able to take that to address other customers' needs from the Atlantic to the Pacific.

Congrats. Maybe if you could just give us a little more color on what you mean by on track for the year in terms of the data center now. It seems like you've had a sense of price and economics for some time now. So what are the main areas you're progressing on? And to hit the 2029 COD, what do we need to do in terms of equipment procurement for this year?

Sure. I'll answer your question in reverse. To hit '29, we've got to get something done in '26. We haven't given anything more specific than that, and I'm not going to start today with specifics. As far as the things that we're working through, the economics are pretty straightforward. We've been discussing where we need to be to get our returns, and we know where our customers need to be to get theirs. So that's not the issue. The real conversations and the work that's still ongoing—and it's probably on every project out there—is around infrastructure. I think interconnections for generation and load and then depending on the location, sites, what's that gas infrastructure look like too. These are all things we can manage through and I'm confident that we will—it's just stuff that takes a little more time, and it's not as simple as just, 'what's the number?' It's a conversation with multiple parties, including regulated entities, and we're working through those. I have confidence that we will get that done.

Okay. Great. And then the pace of buybacks was pretty quick year-to-date. Anything to read into that? I know a chunk of it was the direct transaction with LS. But any chance you go above $1 billion? Anything to make of being a bit ahead of pace there on the buyback?

I think the read into that is we didn't like where our stock was trading during periods of the first quarter, and so we tried to be as opportunistic as we could. As we sit here today, the average price that we bought back shares over the course is well below what we had planned in our guidance. So on a per-share basis, we certainly expect to see some potential upside on that basis. Whether we would go above $1 billion right now—the plan remains $1 billion—but to the extent that we see opportunities for extra cash flow, you can probably assume that we'll be pretty laser-focused on deploying it in the form of share repurchases.

I know Larry would want me to congratulate Bruce as well. So congrats. I wanted to dig in a little bit on the residential side. Just thinking through that as well as the opportunity now with the LS Power folks in the door, how can you leverage both the residential and other segments and business lines within that kind of offering of the virtual power plant opportunity?

Sure. It's a great question, and it's something that gives us a unique opportunity to both create value and help manage affordability for customers. By having what we're doing around the smart home platform, by having the tech stack that we've got through the smart home business and by adding C-Power, which is more of a C&I play but does have an understanding of how to make things move, those all set us up for success. On the residential side, we're really pleased with our performance. We have made some choices around the quality of customers we want in Texas, and we've seen that pay off in terms of bad debt and lower churn. However, there are some segments where I think we're underpenetrated, so I do anticipate returning that to growth. On the home automation side, we finished 2025 with record growth, and we've continued that momentum. We are seeing record retention numbers for Vivint, all the while driving growth in margin and keeping acquisition cost in check. We see a lot of opportunity there. We also spend a lot of time thinking about how we bring these two products together to create even more affordability for customers in a bundled service. So a lot of positive momentum on the residential side.

Great. And then if I can follow up on Julien's question. When we think about ERCOT, obviously you mentioned there was no weather really in the quarter from a pricing perspective. But any color you could provide on the impact of RTC plus B initiatives and the normalization of ancillary costs that could be impacting that?

Yes. The ERCOT market boils down to a couple of facts. You saw a big solar build a few years ago, then you saw a battery build over the last couple of years. Both of those have kind of slowed down or will slow down in the next year or so. And then we haven't had any weather to really stick a marker out there for anybody to get excited about where those markets are. The goal was set a couple of years ago. You get one hot summer with a handful of days where people remember that the price can go to $5,000, and these curves change radically. That's what we're building for. That's what we're supporting and that's how we manage our portfolio. This market is going to look very different, like I said in the scripted remarks, once you start adding generation — or sorry, load — that starts to consume marginal megawatts.

Maybe just to start on the LS assets. Could you talk a little bit about as you're integrating those assets, what the key learnings have been so far? Any opportunities for synergies that you see today that perhaps weren't contemplated in your original plans?

When we closed and started to get under the hood, the assets came in where we expected them to. Our assessment during due diligence for the acquisition was pretty spot on. So no big surprises there. Where we have seen some opportunities: as we announced in the acquisition, we saw potential uprates as we continue to look at these assets. Depending on market structure, we've got potential to take that up to two gigawatts. So that's a plus, and that's exciting. As far as synergies, recall the acquisition was heavy on generation facility personnel — people who operate the plants — so not a lot of immediate cost synergies there. But what we're going to work through over time is how we integrate that expertise into the portfolio, and that will create better opportunities for hedging, for how we serve customers and how we operate in those markets. So I see an opportunity there; we just haven't fully quantified it yet.

Got it. And then maybe just on the TEF development, it seems like you're really close on TH. Can you provide some detail on what is left to get the asset online? And a status update on the other TEF projects as you progress those towards the 2028 in-service date?

We're very happy with the TEF projects and extremely excited about where they are. On TH Wharton, the remaining steps between where we are and COD are completing final grading, getting ERCOT to give us the final system approvals and completing final commissioning tests. That's all on track and on schedule. The other two projects slated for end of 2028 COD are in various stages of construction and are progressing as expected. They remain on track to hit the 2028 COD at this point in time.

We continue to see the ERCOT load pipeline rising. Slide 6 shows supply/demand and looks believable, if not conservative. How should we size up the upside to uneconomic generation in Texas in terawatt hours per year? Could we see 10, 15 terawatt hours upside? ERCOT thermal fleet gets called upon more and more into the out years. Trying to frame the tailwind, and is it fair to assume incremental generation would go wholesale and not be integrated into the retail business? Anything you can give us on that down-the-road tailwind?

Great question. If I were advising you on how to think about it: incremental generation wouldn't be attributed to retail; it should be open wholesale. We're managing our position to the market curves where they are today, so we'll cover that exposure. If prices move to the right place, that generation becomes economic and that's additional megawatts. Think about the supply-demand slide and the price curves on Slide 14 — that'll help you model impacts to ERCOT pricing and then what that does to generation dispatch. The key is what you believe price impacts will look like and how that translates to overall ERCOT pricing. I know that's not a simple answer, but the materials we've shared give you the framework.

Very helpful. It ties to what you mentioned earlier about the battery build in Texas. Returns have been challenged and the pipeline kind of remains there, which is strange. How do you think of the battery impact on the curves in particular? Do you still see multi-gigawatt build coming even if returns are challenged? Or are these holding agreements? What is still coming on the battery side in Texas that might be impacting the curves? How do you see that cadence of decline?

My commentary around battery build and how I think it will decline is based on the economics: the economics just aren't working for many battery projects right now. Batteries tend to shift the timing of peak by a few hours; they push some of the pressure point later in the evening and provide support in parts of the day, discharging during peaks. But if you get even a fraction of the data center load pipeline coming online, that can overwhelm the battery's ability to shift those peaks and you end up back in a tight market like we've seen in 2022 and 2023. So batteries influence the curves, but their ability to fully offset large, sustained growth in load is limited.

Rob, congrats again on your first conference call as CEO. I wanted to touch on the large load data center opportunities in ERCOT and PJM. There are regulatory movements trying to speed things up, but also bilateral contracting is possible. Where are the conversations and the development process now? Are hyperscalers waiting for regulatory clarity before they contract, or are things stalled because of that? When should we expect to see movement on contracting? These data centers are being built and they need power.

In ERCOT, the regulatory structure and where the PUCT is on putting out rules around SB 6 is pretty well developed and moving. I wouldn't say that's the long pole in the tent in Texas. I think it's more infrastructure, interconnections and working with regulated partners. Everyone is working hard to deliver data centers to Texas. In PJM, you've got the long-term auction effort which is a good solution and helps get things moving; but counterparties are open to bilaterals too. We're in a unique position, with a couple of others, to offer bilateral solutions that don't need the PJM auction. The auction can be a backstop for conversations that we could have bilaterally. If the auction is priced right with the right rules, that's a great way to put uprates into our fleet. But we can also make bilateral deals directly with customers. Most conversations center on whether a customer wants to do a bilateral and then deal with any residual regulatory mechanisms; that all gets worked out over time. We support PJM's efforts and are actively engaging in those discussions.

Quick follow-up: a lot of this generation will be gas-fired. There's significant midstream activity to get gas to power plants. How aligned are you with that process to ensure fuel security? Can you get the actual gas supply where it's needed?

You raised an important point. We have a strong gas platform. We've been serving C&I customers and power plants for decades, so we have very good relationships with midstream and upstream players. If we want to procure long-term gas, we know who to call, and we'll arrange that if our customers want it. I feel very good about our platform's ability to secure supply and create value for customers and the company.

A couple of follow-ups on uprate potential and related questions. Most of the incremental uprate potential sounds like it's coming from the LS Power assets as opposed to legacy. Would you only pursue those uprates if they're backed by a long-term contract, whether bilateral or from the auction? Or could any of those make economic sense even without a hyperscaler contract? Also, given the uncertainty around network upgrade costs, how comfortable would you be bidding greenfield build into PJM? Or would that only be existing assets, and all of the new build would be in ERCOT?

We could build greenfield in PJM, but you bring up a risk that we'd have to adjust for. We're not going to put capital to work without contracts or long-term revenue. We have a fleet in PJM and a good position, but we won't pursue merchant build without backed revenue. We could find bilateral deals or go through the PJM auction process to backstop new build, but not without a commitment. Compared to ERCOT, ERCOT is a bit further ahead on regulatory process which makes it easier to execute, but we can take turbines anywhere. For the right economics and the right counterparty, we'll move where it makes sense.

Second, more philosophical: with more extreme winter storms and other weather events, while you're derisking and increasing predictability of earnings and cash flows, are there additional actions you can take to protect from weather events—hedging, insurance, M&A, other corporate actions?

We made a big step toward derisking the portfolio for winter by closing on the acquisition of LS, which gave us a presence in the Eastern markets where we have exposures. There is no better hedge than flexible, dispatchable natural gas assets. Bruce and I and the team think about our risk and hedging every day. We're continuously positioning the portfolio because managing through storms—winter or summer—is what we're paid to do. That's what we're focused on.

Thank you, everyone, for joining us this morning and for your continued interest in NRG. I'm excited about the opportunity ahead and honored to step into this role at such an important time for the company and the industry. We've built a strong platform. We're operating from a position of strength, and I'm confident in our ability to execute and create significant long-term value for our shareholders. Thank you again for your time today.