We don’t have rate payers. We’re a wholesale power generator. So since we are not buying electrons from MISO, we have no obligation to provide them capacity. So we €“ but yet we have capacity. So we sell our capacity to different utilities. In this case, we’re selling part of it to Hoosier. We have one agreement with another utility in South today where we’re selling capacity. So they can use that contractually to show to MICO that they’ve met their obligation, to buy electrons from the grid. So if somebody wants to buy a 100 megawatts worth of electricity for MISO in 2023, for the 2023 calendar year, which is June first of 2023 through May 31, 2024, they could come to us and say, right, how are we would like to buy a 100 megawatt capacity from €“ here’s the terms of that we agreed to.
But when you’ve sold that, what does that obligated to do, that obligation on. It obligates Hallador to bid in its plant into MICO each and every day, which basically says, we send a message to MICO saying that, for tomorrow we’re willing to bid in at these hours, this many megawatts at these prices. And
Unidentified Analyst: But you must have an obligation, to meet some price criteria and otherwise it doesn’t mean anything.
Brent Bilsland: Correct. So there are parameters about what price we can bid in. I think the limit is up to three times our cost. Or we can bid as low as we want, right? We can bid at a loss if we so choose.
Unidentified Analyst: And then if they accept it, you must deliver.
Brent Bilsland: Correct. And with €“ and we get paid. So let’s say we bid in at $40. So let’s say for that given hour of the next day, the last generator to turn on for that Hallador bid in at $60, we would get paid the $60 price. So we’re told to turn on, all box is doing is matching demand to supply. So think of it like a layered cake, right where you’ve got the wind operators maybe bidding in at $5 of megawatt, and you’ve got the solar guys coming in and saying, Look, we’ll provide us these hours at $6 of megawatt. You’ve got the nuclear plan saying, hey, we’re either on or we’re off, we’re going to be on, so we’re going to bid in at $10 of megawatt. And then now you have the assets such as gas and coal coming in higher up the stack and bidding in, and what MICO was saying is, hey, look, we’re going to bid this all the way up until we get enough generations to meet load, but everybody gets paid the highest price for that particular hour.
Unidentified Analyst: And then a follow up, all in all, what was your prediction of CapEx for 2023?
Larry Martin: Yes, it was, 35 to 40 on coal and it was about 15 to 20 for reliability at the plant. And then around 17, 18 for ELG.
Unidentified Analyst: ELG means what?
Larry Martin: The effluent limitation guidelines that the EPA put out a few years ago. That has to be, we have to be in compliance with by 2025.
Unidentified Analyst: At the end of 2025.
Brent Bilsland: Roughly, that’s roughly $40 million to $45 million over the next three years. And so
Unidentified Analyst: Okay. Thank you.
Brent Bilsland: Thank you, Anday.
Operator: Our next question comes from Jeff Bronchick with Cove Street Capital. Your line is now open.
Jeff Bronchick: Good. Thank you very much. Good afternoon, gentlemen. So just quickly, out of the $150 million in EBITDA, €œexpected in 2023€ is that all coal or does that include the capacity payments from Merom?
