Shar Pourreza: Terrific, guys. Congrats on the execution and much appreciated.
Operator: Our next question will come from David Arcaro with Morgan Stanley.
David Arcaro: I was wondering — let’s see. Could you speak just a little bit more to the Winter Storm Elliott events. Curious if you could just elaborate a bit on how your Generation facilities operated, if there were any penalties that you might have experienced? And then also on the Retail side of things, how did you manage the unexpectedly strong load and get through that weather event?
Jim Burke: Sure. It’s a good question. So obviously, we ended the year with a really strong weather system that affected not just one market, but multiple markets. When we go into these events and some of this has been refined since Uri, we carry more length into these events because we’ve seen that particularly, in winter events, you can actually have some fuel disruptions, not just asset performance challenges. So we try to take that into consideration. So we hold back length on the Generation side, and then we expect that retail load, particularly in extremely cold weather, can swing even more than what we would normally have expected on a winter day. And we expect those 2 to offset each other, and in Winter Storm Elliot, that’s what happened.
So we were able to run our ERCOT fleet, and our fleet performed really well — and in PJM. And that extra length from an energy perspective covered the extra swing that we experienced on the retail side. On the penalty specifically, because PJM has yet another aspect to it with the penalties, you could be in a bonus or a penalty situation. And our view at this point, although we do not have full information yet from PJM, is that we’re in a net bonus situation, not by a lot, but we are in a net bonus situation. But we haircut a bonus expectations because of some of the default risk that others are concerned about, and this actual process could take 8 or 9 months to receive payments for people that are in a penalty, and they need to pay in order for us to receive a bonus.
So we’ve assumed for this purpose that we basically have a breakeven penalty bonus situation in PJM with that haircut on the bonuses. And so we came out of the storm where we expected to be. What we like about our business is, we can handle these events. What you tend to see in the aftermath of these events is some more volatility potentially in the forward curve. And then we try to hedge into that, and that’s how we’re able to provide the guidance that we provide. But we don’t go into any one event looking for it to be a significantly positive or negative event because we’re on both sides, the Gen and the Retail. And we try to come out of that event, and we had a good performance at Elliot.
David Arcaro: Got it. That’s great to hear. Obviously, a very tough event for a lot of generators. And then I was curious if you could just give an update on the margin deposits so far this year. Is there a level that you could give us as to what that currently stands at? I think you mentioned that it was kind of coming back in slower than expected. So curious if that’s starting to improve.
Kris Moldovan: Yes. This is Kris. So as of the end of the fourth quarter we talked about, we had expected to start seeing margin deposits come back as we settled our €“ settled some of those hedges in the fourth quarter. With the volatility that continued on in the fourth quarter, especially in December, we actually saw margin deposits go up from September 30 through the end of the year. Over the past 1.5 months, prices and volatility have settled a little bit, and we are seeing some return of cash, and so €“ and we’ve also settled some additional hedges. So we are seeing cash come back in, and we do expect more cash to come in, in the near term and over the course of the year. And over the course of the year, we would expect a significant portion of the €“ over $3 billion of cash that we had posted to come back.
Operator: Our next question will come from Durgesh Chopra with Evercore ISI.
Durgesh Chopra: Jim, can we get your updated thoughts on capital allocation, share buybacks, et cetera, et cetera. On the Q2 call last year, you announced $1.25 billion in additional share buybacks that you’re going to complete this year. But just can we get your latest thoughts there? And when should we — from a timing perspective, when should us and investors be looking for an update in terms of your forward-looking share buyback plans?
Kris Moldovan: Durgesh, this is Kris. I appreciate the question. So when we did upsize the program in the middle of the year last year and that was in part as we were seeing increased opportunity for 2023 that we went ahead and added that increase into the middle of last year. So we added a $250 million. As we disclosed this morning, we ended up completing the first $2.25 billion approximately of the program by the end of the year. And as you know, we have a 3.25 upsize program that we said that would be by the end of this year. So that left $1 billion for 2023. And we had said that we thought share buybacks would be at least $1 billion starting in 2023 through 2026. We have also disclosed today that we have already, through February 23, executed another approximately $200 million.
So that would leave approximately $800 million for the final 10 months of the year, which is consistent with going into the year, how we thought about it. We will — as with same as last year, any changes to capital allocation, including share buybacks, we wouldn’t likely consider those and talk to our Board about those until after we get through the important winter and summer months. So I’m not predicting any changes or updates as we had last year, but if there were to be any, that would probably come after we’ve gotten through a couple of the summer months.
