Durgesh Chopra: Just maybe can you help us just frame very high level on the 21 sites that you discussed, how many — if there’s a way to think about how many potential gigawatts that you can add over time and then also address how quickly you can add the gigawatts, just — the reason being that the demand, like you just said like, this is a step change in demand. I’m just thinking about how quick the response can be to that.
Dr. Larry Coben: Yes. It’s a great question, Durgesh, and it’s one that we’re working on, and it’s why we’ve set up this sort of new group to deal with data centers. I don’t know the answer yet. I don’t — we’re trying to figure that out. We see ginormous potential, but obviously, there’s a ton of work to do in terms of — to figure out exactly how quickly what’s best on this site? Is it better for a data center or a power plant? Is it better for co-location behind the meter, in front of the meter. So, we’re spending a lot of time working through those. And I think when we have more color on them, we’ll certainly provide that to you all, but I’m not sure that will be in the next two or three months. It will probably be closer to the end of the year. As you know, the power plant development is an awful lot of work.
Durgesh Chopra: That makes sense. I appreciate that, Larry. And then maybe just — I know this is not going to be another tough question, but just can you share your calculus or how you’re thinking about buybacks here given how the stock has kind of gone up in valuation versus investing in these in these opportunities, which obviously have a tremendous run, but how do you think about that?
Dr. Larry Coben: Let me begin by repeating what Bruce said, which is we are reaffirming our capital allocation that we promised everybody. Obviously, when your stock is trading at a 25% free cash flow yield, it’s an easy decision, but we still believe we have enough capital to both do our investing and return capital to our shareholders. And I don’t see that changing in the short or medium term. So, I think we’re going to just continue to be disciplined in terms of returning capital and given — especially given the rises that we’ve been talking about here, we should actually have more capital to invest ourselves. And it won’t surprise you to hear that there’s an awful lot of people who also now want to co-invest with us in a lot of these kind of projects. So, I think the possibilities for doing accretive generation and related projects are there regardless irrespective of our capital allocation principles.
Operator: Next question comes from David Zimmerman at Morgan Stanley. David, your line is open.
Dave Arcaro: Dave Arcaro here. Following up on one of the earlier questions. I was wondering, just on the ERCOT market and pricing in the market and the forward curves, do you have a view from here on where ERCOT prices could go? Is there still room for upside, do you think in terms of where the forward curve is currently pricing?
Robert Gaudette: Dave, it’s Rob. Yes. The markets can definitely go up. If you look at the large loans that are coming to the state into the system, ERCOT is already beginning to monitor it and take a look at it. It’s a lot. And you’re seeing that price in. There is more upside in the curves from here.
Dave Arcaro: Okay. Got it. And does that — as you’re kind of hedging into that, then, is that a view that you’re embedding as you start to layer in hedges and firm up some of your out-year EBITDA forecast?
Robert Gaudette: So, when we think about our out-year EBITDA, remember that a big part of our hedging program is through the retail book, right? So, as we sell to our 8 million consumers, that ultimately takes a lot of that value and translates it over through the retail revenue rates. We’re always looking way out the curve, David. If I thought that something was really high and out of whack, then I would say that we could take something off the table. But we like the position, we like the trend, and we like where our portfolio is.
Dave Arcaro: Got it. And could you touch on what the competitive dynamics are that you’re seeing in the retail energy business right now in terms of any pressure from new entrants or pricing pressure in the market that might push margin one way or the other right now?
Dr. Larry Coben: It’s been a very stable performance. As you saw, we had strong performance in terms of customer growth year-over-year. We saw similarly good performance and load growth. and our margins. And so, we feel very good. I think there are a couple of new entrants in the market, but as we look at our outflow reports, we don’t really see any meaningful traction there.
Operator: The final question comes from Ryan Levine with Citi. Your line is open.
Ryan Levine: A follow up on some of the capital — just a follow up on some of the capital allocation framework. Is there a price where you would reconsider buybacks? Or are you not trying to take any view on the value of the energy security?
Dr. Larry Coben: Brian, there is no price that we would necessarily sit here and tell you is the absolute line at which we would stop buybacks. We’re always going to be looking at what is implied in the share price with respect to our free cash flow yield, and we’ll make the termination from that standpoint. But as we sit here today, we see plenty of room to run for us to continue to be buying back shares.
Ryan Levine: Okay. And then as you’re looking at on investment opportunities related to power generation growth in your service territory, are you — are you focusing — you mentioned a number of opportunities for new build and partnerships, do you have a preference for partnerships? Or would you prefer to own the assets out right.
Dr. Larry Coben: I think for us, it’s just a maximization and optimization process. And so, I don’t think we have a preference one way or another. It’s related to cost of capital, operational flexibility. And at the end of the day, what falls best to our bottom line.
Ryan Levine: Okay. And given the economic outlook that you suggested was attractive for these new builds, are there any customer commitments or duration of demand that you’re looking for the data centers to commit to underwrite some of these new builds?
Robert Gaudette: It’s Rob. The answer to that is no. the new builds that we talked about are not set up for data centers or for to meet that load. The conversations we are in early days with around colocation or use of our sites. Those will be a case-by-case basis as to whether or not it’s a long-term deal or not, right, with a data center or other large load. But that’s going to come as we evaluate each opportunity, but the things we’ve talked about thus far are for our book and our portfolio.
