Robert Gaudette : It’s Rob. Yes. So generative AI is going to load or created additional demand across the markets. The way to think about how that affects the businesses generally is let’s start with that expands the margins on our existing generation portfolio and also makes that 1.5 gigawatts more interesting. And then when you think across the other parts of the business, C&I, you’re going to see people turning towards bigger players like us, where we’ve seen it historically, when things get tighter, they run to quality providers. We’re there. And then from a home perspective, a consumer perspective, we’ve had a retail platform that has historically and will in the future, manage through different commodity cycles. And as prices move, our retail platform, because of the experience we have beyond just being a commodity provider, we do well in those markets, too.
David Arcaro: Okay, great. Thanks for that. Much appreciated.
Operator: Our next question comes from Michael Sullivan with Wolfe. Your line is now open.
Michael Sullivan : Hey, everyone. Good morning. Appreciate the new disclosures on the Energy business, by the way. But I wanted to just go back to Texas and new build there. And just maybe if you could just frame the broader political dynamic there, where things stand just in light of the Lieutenant Governor making some comments, I think, asking for new bill, do you kind of continue to see these headlines noise around the ECRS. I know we’re not in a legislative session this year, but just kind of where the politics stand on market structure and the like?
Larry Coben : If I could understand Texas politics, I’d be in a different business probably, Michael, but there’s not a legislative session. I think it’s fair to say that people are now looking to see whether everything that was passed in the last session is actually going to generate capacity in the state before people start breaking it up again and starting over. The PUC has a lot — awful lot of work to do just to implement the many things that were passed in the legislature. And I think a combination of those measures plus the tightening market and the improving economics in the market and the expanding margins will probably generate the capacity that Texas will need to meet growth in the foreseeable future. At least that’s our view of what’s happening in politics. That doesn’t mean that people from time to time won’t try to use the energy business as a political football. But on balance, we actually see a fair amount of stability on the legislative front.
Michael Sullivan : Okay. That’s helpful. Appreciate that’s a tough one. And just if you do move forward with these brownfield plants, how long would it take to complete?
Robert Gaudette : So the — if you recall, the portfolio is 3 different projects, the speakers, we could get in, in 2 years and starting from whenever we broke ground and then a CCGT takes about 4. So you could expect if we were to go soon 2026 and 2028 would kind of be good years to think about from an additional capacity perspective.
Michael Sullivan : Okay. Great. And then just last 1 quick. You mentioned the new Lubbock market, any like rough sense of size of the opportunity set there? And is any of that baked into your plan? Or is that all upside?
Elizabeth Killinger : Yes. So this is Elizabeth. Thanks for the question. So we are really excited about the Lubbock opening. Two things about it. One, 65% of consumers made a choice. And if you have a reference point like when the Texas market opened, 5% made a choice. So demonstrating that consumers actually care who they do business with in Energy. NRG participated in the presale process. That’s where the 65% made the choice and those customers will come on flow in March, and that is baked into our 2024 and beyond growth plan. The only other thing I would say is so far, NRG is over performed, we have about 39% share of customers in Texas on the home front, and we are over performing relative to that. So again — and Larry mentioned it, but about 100,000 customers in the marketplace that are making a choice. And so they’ll start and be our and other retailer customers in March.
Michael Sullivan: Great. Thanks for all the color. Appreciated.
Operator: Our next question comes from Ryan Levine with Citi. Your line is now open.
Ryan Levine: Good morning. I am hoping to touch on retail energy gross margin outlook. It looks like your guidance is assuming about 100 basis points degradation there. How much is that weather normalized for ’24? And is there any conservatism embedded in that forecast in light of your comments? Any color you could share around potential upside there, in particular, in Texas?
Bruce Chung: So Ryan, it’s Bruce. The 2024 number is certainly on a weather-normalized basis. But the ’24 number does reflect a higher assumption on COGS for the retail business. And so there’s just a bit of a timing lag between the realization of that COGS relative to when that gets pushed through in revenue rate. But Elizabeth, if you want to provide a little bit more color to that?
Elizabeth Killinger: Yes. So we’ve demonstrated margin stability over the years in the home space. And that comes from — and most of you were there, from some of the AI machine learning revenue management tools and models we created back in the transformation program and since have continuously improved them. The other thing I would highlight is that over this, call it, the last decade, we’ve been able to deliver stable and growing margins in a variety of supply cost environment. So this one, Bruce mentioned, where costs have significantly increased over the last few years, and we’ve either grown or held margins through that time frame, aside from the weather normalization that you mentioned.
Ryan Levine: How much cost escalation are you assuming for 2024 that’s being offset by these other measures?
Bruce Chung: Ryan, that’s probably one that we’ll have to just get back to you on to make sure that we get you the right numbers on that.
Ryan Levine: Okay. Thanks for the time.
Operator: Thank you. This concludes the Q&A portion of today’s call. I will now pass it back to Larry Coben for closing remarks.
Larry Coben: I want to thank all of you for joining us on the call today and for your interest in NRG. And I think you can see we are at the most exciting point probably in NRG’s history. I think you can hear in the voices of the management and in our actual results, what we have and are planning to achieve going forward. We look forward to speaking with you more in the days ahead. We’ll be at the conferences in New York next week. In the meantime, please feel free to reach out to Kevin and Brendan with any further questions that you might have. Thank you all.
Operator: Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the program.
