NRG Energy, Inc. (NYSE:NRG) Q4 2022 Earnings Call Transcript

Mauricio Gutierrez: Yes. No, I mean that’s correct. So my expectation is that it will happen this year and obviously being very consistent with our capital allocation principles, we want to focus first on achieving our credit metrics and then we will — once we have the visibility in terms of achieving that and obviously, as we get cash proceeds in the door throughout the year, we will be executing on the share repurchases. So my commitment to everybody is that we will execute them, but we need to have first assurance is that we have — that we meet our commitment on credit metrics and that we have the cash available. So that’s how we’re thinking about it.

Angie Storozynski: So it’s not like the fact that you deferred the buyback — it’s in no way does that reduce the amount of financing that you will need to raise for the Vivint transaction.

Mauricio Gutierrez: No.

Operator: Our next question comes from David Arcaro with Morgan Stanley.

David Arcaro: I was wondering if you could elaborate on what assets might be considered for sale and what the potential timing might look like in terms of executing any processes related to that?

Mauricio Gutierrez: Yes, David. So as you know, we actually have been optimizing our portfolio for a number of years. I think we have a pretty good track record on doing that. And the way I think about it is you have core assets and non-core assets, right? So core assets are whatever helps us best serve our customers. And if there is an asset that doesn’t do that function, then it becomes a non-core asset, and we’ll look at monetizing that. There is a second set of things that — if there is an asset that is more valuable in somebody else’s business, we will definitely take a look at that and evaluate all the options. So what I can tell you is, this is an ongoing process. We sold and monetized some assets last year. We’re going to do that.

What I wanted today was to provide you more specificity around the amount that we are targeting and that this will be executed throughout 2023. In terms of timing, obviously, these will require 2 people coming to an agreement and — but we will be updating you as soon as we have available information.

David Arcaro: Okay. That’s helpful. And then I was wondering if you could speak a bit to just fleet reliability and resilience here. Wondering — just if you could talk to the strategy to improve the risk profile of the business during extreme heat and cold events. Are there further investments that you could make in your fleet to improve their resilience or more you could do to beef up the supply side of the equation?

Mauricio Gutierrez: Yes, David. So when you think about the reliability and resiliency, I actually — if you take a step back, and you think about our supply strategy to serve our retail loan, I think about it in 3 big buckets. The first one is the generation that we own, the second one is medium-term PPAs and then the third one is obviously, you complement that with market purchases. Today, we are roughly 50% of the megawatts that we serve, we supply with our own generation, 50% with third-party either tools or purchases. So what we have done on the — on our own generation is twofold. Number one, we have been a little bit more conservative when we run our forecast and what we use to hedge our node in terms of plan characteristics and that gives us a little bit more push on so we’re self-insuring.