Lawrence Martin: I will handle the coal part, and then Brent can answer the affluent question. But for the coal plant, we just had some – with our moving things around the 57% we moved, we had some mine development we had to do. And then we had some equipment that is going to come on at the end of the year that we thought was going to be in the next year. So that is our $10 million difference. Going forward, I think our plan is $35 million for CapEx for the coal plant. Do you want to talk about ELG.
Brent Bilsland: Yes, on ELG. So the EPA has proposed a new rule, that has yet to go final. So we are waiting to see where they ultimately end up. And we expect them to finalize that rule in this coming spring. And so that ultimately will decide what we do and the exact timing and compliance dates to meet that rule. Our Board has approved $45 million to spend on that. We still feel comfortable that that will meet where we think the EPA is heading with that rule and their most stringent standard. But we will wait to see where they end up on the final rule before we comply with that. So that is delaying the expenditure of some of those dollars until we know exactly what the EPA wants.
Kevin Tracey: Okay. And then last quick one here. On the last call, your latest update on your target of getting to basically 0 net debt was the second quarter of next year. Is there any update to that guidance?
Brent Bilsland: Yes. I think the higher cost that we experienced this quarter is going to push that out at least a quarter and into the third quarter of 2024.
Operator: Our next question comes from Kevin Pounds with Castlebury Advisory.
Kenneth Pounds: Kenneth. I think you mentioned in the last call that you were looking for you might benefit from hot summer or surges in demand in the summer. Did you experience that for the power plant?
Brent Bilsland: No, we really saw a pretty mild summer. I think we had two weeks of hot weather. So we saw good pricing during that time frame. But the balance was somewhere – from a power pricing perspective was fairly anemic. So we are still kind of waiting for more colder days or hotter days, but we don’t like 65-degree days from a business perspective, right?
Kenneth Pounds: On the West Coast here, there has been refineries closing. Are there some other older power plants that are in your area that might be closing that would tighten up the market or have you seen anything like that?
Brent Bilsland: Yes. We did just have another power plant that closed last week in MISO Zone 6, which is the zone that we are in. We think the trend continues to be – people are taking generation out of MISO that has an on switch and replacing it with generators that do not have an on switch. And as long as that trend continues, that should increase the value of capacity and it is going to create higher highs and lower lows in the power markets, right, because renewables tend to give you electrons not necessarily when you need them. And so if we can be a generator that can provide electrons when they are needed, we think that we are going to see some days where there is some pretty extreme high pricing. And when we have an open position such as we have today, a relatively open position, then it affords us those opportunities to take advantage of that.
So we will see what the weather brings. And we are continuing today to go to work to try to sell more power through bilateral agreements. And I think this quarter was a solid performance in that with, I guess, if you include the contract we dragged in the door today, it was $366 million of power and capacity sales, we keep having quarters like that, I think our investors are going to be very happy.
Kenneth Pounds: Yes. Sure you definitely improved earnings visibility. And I know you have made similar comments before, which sounds impressive. We have had a lot of reports lately about these renewable projects being too expensive and not delivering certainly the margins that people had wanted. Finally, you said you had four of the seven units that struggled. Are some of those units may be not going to be too high cost, if we keep seeing cost creep all over the country, not just you guys, obviously, with inflation and fuel and so forth?
Brent Bilsland: Yes, I thought it was interesting, there is been several mining companies that have reported before us, and it seemed like everybody had a tough operational third quarter. I’m not really sure why that is. I don’t know if it was something about the – a lot of humidity that came out of the mines. Has it cool down or if it was just coincidence. But certainly, everybody has seen cost pressure due to inflation, but I really think the majority of what we had going on in this particular quarter and into October was geologic and specific to our mines. And I think that we have solved that problem. And I’m sorry that the quarter wasn’t better from an operational cost point of view, but I hope – I think, we have fixed the problem.
Operator: Our next question comes from Jason Lustig with J. Goldman.
Jason Lustig: Just wanted to say thank you for increasing the disclosure in the contract table, really helps, I think as another caller said, just better understand the long-term economics of the company. So, appreciate that. As I have thought more about this table, I think we are getting a sense for what the future revenues of the company can look like, the three different revenue streams. We have a reasonable sense of the coal costs per ton, the fixed costs we have talked about in the past at the plant. One thing that I’m struggling a lot with and would appreciate trying to better understand is the variable costs per megawatt hour excluding fuel at the plant and how we should think about that over time.
Brent Bilsland: Well, look, I mean, fuel is the majority of it. I think we have come out and said that during the quarter on a consolidated basis, variable costs, including fuel and nonfuel, was $23.50 per megawatt hour. So I don’t think at this time we plan to break out what our nonfuel expense is. Quite frankly, I think we have got enough numbers that our goal was to not confuse everyone. Our goal was to create as much clarity as possible. And that is why we spent a lot of time on that table I referenced, in an effort to try to get everyone to understand, right, because it gets very confusing when you start pricing coal to yourself and you have these intercompany eliminations, which is all GAAP, it is all the way it is supposed to be.
But we are trying to clarify that, that, hey, at the bottom line, it is just a great earnings potential at the power plant. And we hope everybody gets as excited about that as we are, particularly when our most recent pricing particularly on a risk-free basis, since it is unit contingent, it is quite profitable. And so anyhow, I appreciate your compliments on that. We are probably not on this call going to get into what our nonfuel costs are at this time.
