John Kousinioris: As you know, John, it’s pretty skinny in terms of where the forward curve is out in 2025. So I would say we’re developing our position in 2025, a considerable amount of focus on our C&I business candidly, which has been, I’d say, pretty robust, both in terms of the component that basically flows with market pricing. But what we’re more focused is sort of in our fixed price component of that. So that’s actually been, at least from my own perspective, Todd, kind of the main focus of what we’re trying to do in setting up 2025. In some respects, at least I’m viewing 2024 a little bit like 2021 was. We’re seeing quite a bit of new supply come in the market. It’ll be a little bit of a reset in terms of what we see.
And I think we’re all, I think, at the company waiting to see, as the year progresses, what we can expect a little bit closer. We do, as you know, our own fundamental modeling internally, but just want to see the market evolve as we go forward. So I’d say, we’re still — we still have work to do for 2025, I think, at this point. So providing a lot of guidance associated with it is, at least my view would be premature. I don’t know if, Todd, you want to add…
Todd Stack: No, I think we will have an update at our Investor Day potentially.
Operator: Your next question is from Ben Pham from BMO.
Ben Pham: On the hydro results and your comment around hedges benefiting the quarter, we saw that also I think in the first quarter. Could you talk about if any there’s been any sort of structural changes in your portfolio that’s allowing you to hedge the hydro, because I don’t think you’ve really done it historically in the past?
John Kousinioris: I don’t think there’s been anything structural, I would say, from a hydro perspective in terms of where we are. I think we’ve just been opportunistic on occasion. So when we’ve seen strong pricing, particularly in a particular quarter that might have a different new compared to what our own internal fundamental forecast is internally, I think, the team goes and just takes the position and uses it to sort of guarantee the outcomes that we expect. And we’ve done it a little bit more, I’d say, Todd, over the last couple of years really. And I think it’s been a little bit more visible more recently just because we’ve seen strongest pricing, which just makes sense for us to do it. I don’t know if you want to add anything…
Todd Stack: Yes, I would say just the nature of the hydro assets where they’re able to capture the peaks that is the expectation out of that fleet is to be getting the peak pricing when the market really…
John Kousinioris: We still have an open position on…
Todd Stack: So it’s difficult to hedge at the average price or like we certainly don’t want to hedge at the average price often in hydro. And we really — as John said, we look for those opportunistic periods. And if you recall stepping back three months, August and September prices were very, very strong in the forward market. And so the team picked off some of those higher opportunities more in line with what we would expect the fleet to generate.
John Kousinioris: But it’s more opportunistic, I would say, very opportunistic.
Ben Pham : I guess with a quarter like this where hydro was below average. I mean, isn’t there a [necessary] situation where you could be short the curve quite a bit because of your hedging? No?
John Kousinioris: No. The hedges in the hydro business are relatively — remember there’s 800 megawatts of capacity there now. It can’t run 24/7 at that level. But it is very, very unlikely that we would be short on the hydro business.
Ben Pham: And then adding peakers then with Heartland. Do you — I know you mentioned Alberta, sounds like they need more peakers. But does TransAlta need or does your peaking plant you’re advancing, does that still make sense for you?
John Kousinioris: Look, I mean, in terms of the portfolio that we would be getting with Heartland, I think, we are very comfortable with those, peaking units. I think, there they have competitive heat rates. The cogen two candidly has competitive heat rates. Those assets at the purchase price that we have set are much, much cheaper than anything you would be able to bill for today. And then when we look at peaking going forward, we kind of like pinnacle, which would be a small addition kind of in that mid 40 megawatt rapid response inexpensive. So you get your return of it on capital closer sort of facility, might we do run more [Technical Difficulty] if possible. But I think we are kind of comfortable from a post acquisition portfolio perspective with how it’s kind of playing out.
Todd Stack: And I would generally say, again, the Heartland portfolio has been in operation for a while. The team did see incremental opportunity in adding peaking capacity and fast responding storage to the province. So we need to go through all of the work before those projects are FID, but we still see positive attributes of both those projects for sure.
Ben Pham: And maybe just one last follow-up for upcoming investor day. Do you think you are in a position to talk with ’24 guidance at that point?
John Kousinioris: We are — what I would say, Ben, is stay tuned, that’s definitely something that we are focused on. Let’s put it that way.
Operator: [Operator Instructions] And your next question from Patrick Kenny from National Bank.
Patrick Kenny: Just on your emission credits, I see your inventory has doubled year-to-date towards $55 million. And I was just wondering on a pro forma Heartland basis if you can comment on how well protected or how long you might be sheltered from compliance costs? And then I guess taking it one step further and playing the hypothetical here, but given the fluid situation in Ottawa around the carbon tax. If there is a break on carbon tax for power generation similar to home heating oil or even if it is just reduced somewhat, can you just speak to what that could mean directionally to your overall margins across your portfolio or how meaningful that could be to your free cash flow outlook?
Todd Stack: Let me start with the emission credits service. I can’t remember exactly what word you used, but generally the emissions credits, we don’t consider them as sheltering the gas facilities. We look at them as having a certain market value. We see the value of that potentially increasing over time and we treat them on a standalone basis. And similarly, when we operate gas facilities that have a carbon footprint, when we look about what it will cost to offset the emission there, we again look at it on a standalone basis. So I don’t subsidize my gas business by using greatly created emissions credit. So we really do think of them as a standalone asset. But to your point, we do generate a fair number in the year, we do have a large inventory. So there is certainly no shortfall. But we are happy with the inventory receipt future value and I think you will see us starting to monetize some of that value over the next couple of years.
