Rasesh Patel: Yeah. So, I will say, and we literally just finish a pilot where we are connecting our Smart Home technology to our commercial operations. So let me take a little bit of a step-back. We already cover residential demand response program on our traditional energy business and that is connected to the backbone of our commercial operations to make sure that we optimize the system. What we have been doing the last couple of weeks and then is to connect now the Smart Home technology platform to our commercial operations backbone. That was very successful. That’s why I said that, we are accelerating those efforts and instead of being a five-plus-year opportunity, I see that as a three-plus-year opportunity. The improvements and investments that we need to do on the technology backbone is included in that 20% of growth, we are not going to increase that.
What I am saying is that, there is the need and the — by the consumer and quite candidly by the power grid to accelerate these efforts. So really, really good progress there, Angie.
Angie Storozynski: Okay. And then the last question, and again, I understand the explanation behind the divestiture of STP and I see that the EBITDA contribution from Gregory was very small, but you are getting shorter and shorter power in Texas. And again I know that not for a given summer because you hedge, but we just survive this the summer, I mean, better than survived, but anyway. I mean, all of these conservation alerts from ERCOT are causing anxiety among us and new investors, I am sure. So just strategically speaking, getting rid of more power plants in Texas, how do we manage this risk of matching the retail load with self-generation in Texas?
Mauricio Gutierrez: Yeah. So, Angie, let me just say two things. Number one, we are — when we serve our customers we are not short. We are actually leaning long. We don’t have to own every megawatt or produce every megawatt that we sell to our customers. That will be the first thing. The second thing is, and perhaps, to your point about, ERCOT. When I think about the market, my view is that, the marginal unit, which means the most cost-efficient today is renewable energy. It’s going to be wind and solar, intermit and generation. That’s zero variable cost generation. What that means is that, for the most part of ours in the market is quite clear at a very low price, except for those periods where perhaps renewable is not performing as normal, because the wind is not blowing and the sun is not shining.
So you are going to see very few periods of scarcity conditions. But for the most part, the rest of the intervals, the rest of the hours are going to be very low price. So that’s why demand response and the optimizing demand management is so, so important, because that basically gives you instantaneous peaking capacity exactly for the duration that you want, which is very short durations. I think we have the improvement that we have made on our supply strategy is very consistent with what we expect the market will be paid in the future and the opportunity around the management is again completely consistent with that expectation in terms of price formation and market behavior. So I believe we have positioned the company very, very well for the foreseeable future.
And I will just say one more thing, we literally experienced the hottest summer on record in Texas and the grid handled it very well. The only time when we saw scarcity pricing was really at phase where we have low renewable output and even there ERCOT was managing the grid very conservatively. So I will say that, for those of you who really wanted to test the ERCOT market and the improved supply strategy that we have at NRG. This was the test and we passed with high flying colors I think.
Angie Storozynski: Great. Thank you.
Operator: Thank you. Our — please wait one moment for our next question. Our next question comes from Michael Sullivan of Wolfe. Your line is now open.
Michael Sullivan: Hey, everyone. Good morning.
Mauricio Gutierrez: Good morning, Michael.
Michael Sullivan: Hey. Just wanted to follow-on one of the questions from earlier in terms of the growth target realization looks like that’s coming little bit sooner than expected. Does that indicate any potential upsides to the 2025 number of $300 million run rate?
Mauricio Gutierrez: I think right now we are comfortable accelerating the 2023 targets, just given the success on our growth and cross-sell. Yeah, I think, it’s early to start thinking about moving the $300 million by 2025. What I will say is that, that roadmap does not include the VPP or demand side management potential and that’s something that we are going to be talking to all of you, quantifying it and how big it be and when can we start realizing it. So that’s more to come there.
Michael Sullivan: Okay. Great. And then just specifically on the ERCOT portfolio, next week’s vote on the loan bill, does that drive any decision-making in terms of optimization of the fleet or newbuild or anything like that?
Mauricio Gutierrez: I mean, it is one more data point that we are going to take into consideration. I think the first step for the loan program, it is the vote and then the second step is the rules around how the loan program is going to work. Obviously, all market participants are looking at it and we will — again, it will be one more data point for us to inform our supply strategy, but it is only one more data point.
Michael Sullivan: Okay. Great. Thank you.
Mauricio Gutierrez: Thank you, Michael.
Operator: Thank you. One moment for our next question. Our final question comes from the line of Ryan Levine of Citi. Your line is now open.
Ryan Levine: Good morning. I am hoping to start off saying more on the strategic side. At the Analyst Day, you indicated an aversion to larger strategic acquisitions. Given that the pre-capsule picture is becoming more favorable and maybe pricing for assets is going down. How committed are you to that vision and you think you highlight some potential VPP and power plant opportunities? Is there any scope around what type of incremental capital that could enable?
Mauricio Gutierrez: Well, the first thing I will say is, as I mentioned on Investor Day, we don’t see any more acquisitions. Second, we are completely committed to this capital allocation framework of 80% of return, 20% of growth. And third, the 20% is inclusive of the opportunity that we see on VPP. So, we will continue unpacking what that opportunity is and the investment, but it will be contained within the 20% during the planning period that we provided to you.
Ryan Levine: Okay. I appreciate the clarification. And then one more on the modeling side in terms of the Vivint, subscriber acquisition cost coming up and that subscriber acquisition cost coming up, what’s driving that and what do you think from a trend standpoint in terms of customer acquisitions?
Mauricio Gutierrez: Yeah. It is really a function of two things. One is the increase in interest rates year-over-year and two is a function of the consumer buying more products when they take our service. And on the second point, we feel very good about both the payback period, as well as the IRR. You see the boost in recurring revenue per subscriber that’s disclosed in the KPIs. I want to remind you that that’s across the entire 2.1 million subscriber base. If you would only look at the new customer acquisition cohort, the revenue increase — the service revenue increase is even more substantive than that. And so, we feel very good about the payback of that incremental investment in the consumer as they take more products from us.
