And there’s frankly interest in stakeholders that our visits to Ohio state leaders, they’d like to see some new gas plants built. So it’s not just the Texas market dynamic, it’s other places where they’re attracting industry in the reshoring, the chips build out and they want to see more assets come to ground, which capacity markets play certainly a key role in sending that signal. So we have an improvement embedded Angie, but certainly not anything that I would call a big lift from what we’ve seen some historical clears be, but it’s going to have to prove out in the auctions themselves. And at this point, you know, we await the, they’ve been delayed for a while. So we’re all eager to see how these next couple auctions play out. Steve, anything you’d like to add?
Steve Muscato: No, I think Jim, you hit it. It’s basically if you look historically, PJM cleared on average $100 a megawatt day historically, we see that happening at the very least. And obviously as grids continue to get tighter with demand growth and PJM and the retirements of coal that Jim mentioned, which are really more environment that Jim mentioned, which are really more environmentally driven than they are price driven, that market should continue to tighten.
Angie Storozynski: Great. Thank you.
Jim Burke: Angie, thank you.
Operator: The next question comes from Steve Fleishman with Wolfe Research. Please go ahead.
Steve Fleishman: Thanks. Good morning, Jim, Kris. Thanks for the some of the new disclosures. I’m going to go back to an earlier question just on the 2026 hedging, the 50% hedged. Could you give a little more color on just how the pricing of those hedges are versus current market and or kind of the timing? Like if that 50% number, where was it at year end, ’23, Q1, ’24, just that would be helpful.
Jim Burke: Sure. Steve, the hedging obviously from our standpoint, we look at it as more opportunistic. So we look at where the price obviously is, where our fundamental view is and that is their actual liquidity in the market to transact. So just to give a perspective at the end of last, at the end of last year, so December timeframe, we were in a hedge percentage that was going to be closer to 10% to 15% hedged for 2026. So the team as they’ve seen this move, particularly more recently, they’ve been moving more volume. Steve, there’s also been more liquidity in the marketplace. And I’m going to ask Steve Muscato to comment on that a little bit because obviously if you’re looking to move some of your volume, depending on the depth in the market, you could be having impacts as well.
And the team is sensitive to that. And I’d like Steve to comment on how he’s seen that dynamic change because it’s been more recent. And I think it’s been indicative again of this recognition by market participants that the load is coming, some of the base load is retiring, and this is coming together in a supply-demand dynamic. And Steve, I’d like for you to comment.
Steve Muscato: Sure, Jim. And as you pointed out, we’ve been waiting for the curve in ERCOT to no longer be in backwardation and move up into a contango formation, which it is. And the second thing we look for is basically liquidity events, meaning, there’s got to be people that are willing to buy it with enough skill for us to get our hedges off. And we’re starting to see that liquidity come in. We’re seeing trades that are no longer, let’s say, 10 or 15 megawatts out in the 26th through 28th period we are seeing people willing to buy a couple of hundred megs at a time. And so, we try to mark it. It is something we can scale up. And now that we’re seeing some of that contango come in, we’re taking some off the table. I don’t think we’re done yet.
I think the gas prices are part of the reason why ERCOT is in contango, not just heat rate. But if you look at sparks, sparks are expanding. But if you look at heat rates, and I really want to bring that to your focus, heat rates are not expanding as fast as you would think, giving a tightening market. So a lot of this contango is gas driven. And we think there’s more to come in terms of heat rate expansion.
Steve Fleishman: Okay. And then just two, I guess, other questions on the hedging. In that 50% is there a big difference between your hedges between ERCOT and PJM? Are they both around 50 or?
Jim Burke: Yes, Steve, we weren’t planning to comment on specifically by region on that front. But obviously, those are our two biggest portfolios. So I would just leave it at that. I think it depends on the depth of the market and where we feel we can comfortably move some of the volume. And Steve, I do want to correct one thing I shared a minute ago. I was one file off as I was trying to respond to your question. We were close to around a 25% hedge at the end of the year in 2023, and that’s moved up closer to the 50. So I was trying to be a little bit too nimble and pulling up my —
Steve Fleishman: Yes, no worries. Directionally correct. So okay. And then just we’ve been getting a lot of questions on nuclear fuel with a with a current law. Just could you comment on how you’re positioned on enrich uranium and the like? That’d be helpful. Thank you.
Jim Burke: Yes, we have see we have secured the supply physically for the outages all the way through 2027 and substantially financially, there’s a few of our products that have some index pricing to it. And we are significantly hedged into 2028 as well. So we feel really good about fueling the six units over this planning horizon with the Russian band with an uncertain or to be determined waiver process, I should say, we’re very active in the discussions just to make sure that there’s ample liquidity in the market, as folks will look at these disruptions potentially, and it can cause the spot prices to move up considerably. We’re fairly well hedged in the financial range, we’re kind of looking at a $7 over the whole kind of time period, including Energy Harbor and the Comanche peak site.
So we were a little bit further hedged out for the Texas site, a little bit more open on the back end with Energy Harbor, if we put it all together and locked it all down, it’s a roughly a $7 a megawatt hour average over that period. But the spot markets are in the $11 the $12 range. So DOE with the additional funding of roughly $2.7 billion, we’ll be looking to incentivize domestic production. And we’ll see how that develops. But that’s probably going to take into that timeframe of the end of this decade to see something physically materialized there. But I think we’ve done a good job of locking down some of these risks both physically and financially. And that’s embedded in the in the numbers we’ve provided today.
Steve Fleishman: Great. Thanks so much.
Jim Burke: Thanks Steve.
Operator: The next question comes from Bill Apachele [ph] with UBS. Please go ahead.
Unidentified Analyst: Hi, good morning. Well, most of my questions have been answered. But just on the retail side, can you remind us the arbitration of the contracts and the ability to roll those prices forward as the wholesale prices go higher as we move through time?
Jim Burke: Sure. Yes, Bill. So the business contracts that we sell can be a duration of one to two years all the way up to 10 years. Now, our portfolio is more skewed to the residential, you know, business, which I would say those tend to be one to two year contracts. Residential customers don’t tend to have as much appetite for the longer dated contracts. And so, if you see a sustained higher price environment, you would expect the competitive market from a retail perspective to reflect the new cost of goods sold over time. And that would mean higher prices in a sustained high power market. It also has met in the past lower prices when you’ve seen lower power prices sustain themselves and retailers need to respond to that. I do believe that in this situation, this has been a relatively stable and steady build in power prices.
So these aren’t shock driven like the polar vortex and even winter storm Uri where there were large bills being sent by retailers that hadn’t fully hedged. This has been more of a steady build, I think more consistent with inflation that folks have been seeing in other categories that they procure. But from our integrated model standpoint, you would expect that after you get past the one to two year horizon, you start to reflect the higher or lower retail revenues associated with wholesale power costs. And we try to target more of a steady dollar per megawatt hour type margin and retail so that it’s, you know, additive to whatever’s happening on the wholesale side.
Unidentified Analyst: Thank you. That’s very helpful. And then just want to follow up on that same topic in terms of the given the population growth and can you just speak to your market share and, you know, customer accounts as, you know, you’ve seen that a growing pool of potential customers in the state?
Jim Burke: Sure, Bill. I’m going to ask Scott Hudson, our President of the Retail Business is here and I’ll ask Scott to cover.
Scott Hudson: Sure. Well, first of all, let me just touch on the current retail performance. We really had strong performance in the quarter and year-over-year. We grew residential direct-to-consumer customer accounts by 13%. That came not only from the Energy Harbor acquisition and we had some really nice success in the Lubbock market that just opened, but we’re also growing these books across all markets, you know, sort of organically. So, you know, really nice growth rates in Texas around the population. As Jim mentioned earlier, roughly 1.5% to 2%. And it’s our goal at retail to grow with the market or exceed that market and grow kind of market share. So, we have a very large flagship brand with TXU, Energy that holds significant share in the Europe top market, but we also have five other brands that continue to complement one another and our goal is sort of optimizing those brands by targeting them towards specific populations.
It really is that coordination and sort of our use of advanced analytics to understand what populations, what brands and what particular products that allow us to continue to grow in these markets.
Unidentified Analyst: Thank you, Scott.
Scott Hudson: Thank you, Bill.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Jim Burke for any closing remarks.
Jim Burke: Yes, thank you, everyone, for joining us. And I again want to thank the Vistra team, which includes our new members in Ohio and Pennsylvania, and we are very excited about our platform and our unique growth opportunities. The S&P 500 inclusion is a great milestone and our future looks bright. We appreciate your interest and investment in Vistra, and we look forward to visiting soon. Have a great day. Thank you.
Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
