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F500-2021-333-NRG Energy

The energy company produces and distributes electricity and other utility services to a variety of clients, both residential and commercial, across the country. In May, NRG Energy announced it relocated its headquarters from New Jersey to Houston, and the city has committed to purchasing 100% renewable energy.

This year's Fortune 500 marks the 66th running of the list.

F500 2020 324 NRG Energy

With headquarters in both Princeton, N.J. and Houston, this energy company serves about 3.7 million residential, small business, commercial, and industrial customers.

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Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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NRG Energy has grown into a top power, electricity, and smart home corporation in Texas, the Northeast, the Midwest, and parts of California. With headquarters in Houston, NRG focuses on power generation from natural gas and coal, but the gas side of the business is rapidly growing. In May, NRG agreed to pay $10 billion for 18 natural-gas-fired power plants from LS Power, not including debt, in a move designed to prepare NRG for a domestic power market that’s set to soar. NRG also is focusing more on smart home and security offerings since acquiring Vivint Smart Home in 2023, rather than just selling retail electricity.

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NRG Energy (NRG): Company Profile, Stock Price, News, Rankings

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NRG Energy

nrg energy

Okay, thank you for standing by. Welcome to the NRG Energy, Inc.'s first quarter 2026 earnings call. I would like to hand the conference over to your first speaker today, Brendan Mulhern, Head of Investor Relations. Please go ahead.

Thank you. Good morning. Welcome to NRG Energy's first quarter 2026 earnings call. This morning's call is being broadcast live over the phone and via webcast. The webcast presentation and earnings release can be found in the Investors section of our website at www.nrg.com under Presentations and Webcasts. Please note that today's discussion may contain forward-looking statements, which are based upon assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor in today's presentation, as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we'll refer to both GAAP and non-GAAP financial measures.

For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to our earnings release and the non-GAAP reconciliations and supplemental data file located in the Investor section of our website. With that, I will now turn the call over to Robert Gaudette, NRG's President and Chief Executive Officer.

Good morning, and thank you for joining us. I'm joined today by Bruce Chung, our CFO, and other members of the management team who are available for questions. Before we get into the quarter, I want to briefly acknowledge the CEO transition. I've been with NRG for over two decades and have worked across the company through multiple market cycles. That experience shapes how I think about and operate this business. I want to thank Larry Coben for his leadership over the past several years and the impact he's had on this company. I also want to acknowledge our employees across the business. The work you do every day is what makes this company run and positions us to deliver for our customers and our shareholders. As I step into this role, I view our responsibility clearly. We are stewards of your capital.

Our job is to allocate it with discipline, operate efficiently, and deliver consistent long-term returns. That's how I'll run this company. I've seen this business at its best and at its most challenging. Over time, outcomes come down to how well we operate and how we put your capital to work. We've positioned the business for where the market is going, and I see a clear opportunity to build on that and drive the next phase of performance. I have a high level of confidence in where we are, and I'm excited about the opportunity in front of us. With that, let me turn to slide four and walk through our key three messages. First, we delivered strong operational performance and are reaffirming our 2026 financial guidance and capital allocation. The business is tracking to plan. Our teams are executing, and the results reflect the underlying conditions this quarter.

Second, we're seeing a sustained shift in power demand outlooks across our markets, with regulatory frameworks continuing to evolve in response. What matters is not just that electricity load is growing, it's the pace, the location, and the duration. Near-term conditions remain variable, that is reflected in current market signals. Third, we're positioned to capture significant value from this environment. We have built a platform for where the market is going, with the flexibility to develop capacity alongside long-term demand as those opportunities evolve. Our base plan stands on its own. It does not require incremental contribution from large load or new development to hit our numbers. Those remain upside. Our job is to execute, allocate capital effectively, and convert the opportunity in front of us into results. Turning to slide five. First quarter results reflect a soft market environment.

Texas was mild, with heating degree days down 30% year-over-year, and the market offered limited opportunity. Where Winter Storm Fern drove significant price spikes across PJM in late January, but we closed the LS Power transaction on January 30th, after most of the storm had passed. Those assets were not part of our fleet during that period. Bruce will take you through the numbers. What I want to be clear about, none of that changes our view of the business or the year. We are reaffirming guidance, and the business is on track. Integration of the LS portfolio is underway and progressing well. The assets are performing as expected, and we're focused on fully incorporating them into our operating and commercial platform. Our first Texas Energy Fund project, T.H.

Wharton, is expected to come online in May, on time, on cost, and on spec, qualifying for the TEF completion bonus. Our remaining TEF projects continue to progress on schedule. At 1.5 GW, these three projects will power roughly 300,000 Texas homes at peak demand, arriving just as the state continues to add nearly 400,000 new residents a year. Very few companies have recent experience developing new natural gas generation. We have, and we're good at it. These projects were developed at well below current new build costs because we identified the opportunity and prepared the sites years before the TEF program existed. When the moment came, we were ready. If we execute on what is in front of us, this capability will be one of the most important competitive advantages in our industry. This is what you should expect from NRG.

We look around the corner, we prepare, and when the opportunity is there, we bring it home on time and on budget. Turning to slide six for an overview of our key markets. Demand expectations continue to increase. This quarter's earnings season reinforced the scale of investment being directed toward AI infrastructure, and the implications for power demand are significant. In ERCOT, the numbers are straightforward. The system's all-time peak demand is more than 85 GW. The preliminary long-term load forecast filed this month shows the pipeline of large load requests reaching over 367 GW by 2033. That is more than four times today's record peak in under a decade. Not all of that materializes, but even if a fraction of what is in that pipeline arrives on those timelines, this market looks fundamentally different from the one we're operating in today.

Senate Bill 6 and the Large Load Batch Process are bringing more structure to how new demand connects to the grid. We support those reforms. I want to specifically thank the PUCT and ERCOT teams for including Bring Your Own Generation support in the initial batch process. That's an important step in aligning new demand with new supply and supporting reliable system growth. In PJM, the Reliability Backstop Procurement is an important step to help bring new capacity forward. We appreciate the coordination across PJM, state policymakers, and the federal government in advancing these efforts. Within our existing fleet, we see up to 2 GW of upgrade and conversion opportunities. This represents an incremental 1 GW above the previously disclosed CT to CCGT conversion opportunity, with the additional capacity coming from more traditional natural gas upgrades.

We will pursue those where structures and returns support it through the procurement process or bilaterally where appropriate. We'll move forward selectively. Each opportunity must compete for capital, meet our return thresholds, and be supported by long-term commitments from high-quality customers. Turning to slide seven. I want to be specific about what makes our position in this market different, because I do not think it's fully appreciated yet. We serve commercial and industrial customers at a scale very few companies in this industry can match. That's not something you acquire. It's built over decades through relationships, credit, operational track record, and the ability to structure complex agreements across multiple markets. We have that foundation, and it's the reasons customers come to us when problems get hard. On flexible load, we acquired CPower because it is the leading commercial and industrial demand response business in the country.

Our Texas residential virtual power plant is targeting 1 GW of capacity, and we can only operate at that scale because we have the retail electricity business and Smart Home technology behind it. No one else has both of those running inside a generation and retail platform at our size. When load needs to move, we can move it. On generation, we operate a large dispatchable natural gas fleet, primarily in ERCOT and PJM. These assets run when the system needs them. They demonstrated that again this quarter, and they provide real earnings leverage as load growth materializes in our markets. On development, our TEF projects are under construction. Our partnership with GEV and Kiewit gives us construction capability, equipment access, and execution readiness that most companies in this space are still trying to establish. As the right opportunities emerge with the right structures, we are ready to move.

In PJM, we have additional development opportunities across upgrades and conversions that we will pursue through the procurement process or bilaterally, where structures and returns support it. Taken together, this is the platform this market is asking for. We can solve complex load problems. We know how to develop and build. We have equipment and labor access. We can move load when the grid needs it, and we have the customer relationships and scale to back it all up. I am confident in where we are going. Discussions on large load agreements are active and progressing. These are complex, long-duration structures, and we're moving forward in a disciplined way. We are seeing strong engagement in the right types of opportunities, and we feel good about how these discussions are developing. Based on what I'm seeing today, I have a high level of confidence in this company's position.

Thank you, Rob. Turning to slide nine for a discussion on our first quarter financial results. Before I go into the results, I wanted to be sure to highlight three items. First, we remain on track to deliver within our 2026 guidance ranges. As such, we are reaffirming those ranges today. Second, during Winter Storm Fern, our generation fleet demonstrated excellent operating and reliability performance, once again reflecting the benefits of our robust generation CapEx program over the past few years. Finally, as a reminder, the LS Power portfolio acquisition closed on January 30th. As such, our first quarter 2026 results reflect approximately two months of earnings contribution from the recently acquired portfolio. Now on to our financials.

NRG delivered adjusted EBITDA of $1.08 billion, adjusted net income of $308 million, and adjusted EPS of $1.49 for the first quarter of 2026. Year-over-year adjusted EBITDA was lower by $46 million. This reflects the impact of milder weather in Texas for most of the quarter and increased supply costs in the East due to Winter Storm Fern offsetting incremental earnings from our newly acquired portfolio. It is also worth mentioning that favorable weather was a big factor in making 1Q 2025 a record first quarter for NRG, thereby making the year-over-year comp for 1Q 2026 more challenging. To finish on consolidated results, both adjusted EPS and adjusted net income were also lower on a year-over-year basis.

The declines reflect higher interest expense and depreciation and amortization associated with the LS Power portfolio acquisition, as well as the partial period contribution of the acquired assets. Turning to segment results. Texas experienced the impact of unfavorable weather on our home energy volumes, as well as lower average power prices and minimal market volatility, which weighed on both our retail consumer business and commercial optimization activities. Specifically, Houston on-peak prices averaged $29 per MWh, down approximately 13% from last year. Notwithstanding the general lack of weather during the quarter, our fleet was well prepared to handle any moments of extreme volatility due to weather, as evidenced by fleet performance during Winter Storm Fern. Increased investment in our generation assets has been an important focus for the company over the past few years, and it is great to see that investment paying off.

Our East segment results benefited from a recently acquired portfolio, reflecting the immediate contribution these assets are making to the combined platform. These gains were offset by higher regional power supply costs incurred during Winter Storm Fern. PJM West Hub on-peak prices for the quarter averaged $103 per MWh, up approximately 72% from last year. A tailwind for our generation dispatch, but a headwind for our retail supply costs since we had not closed on the acquisition at the time of Winter Storm Fern. As a reminder, we closed the LS Power acquisition late in the storm, so we did not have access to those assets for most of the event.

Our West Segment results benefited from higher retail power margins driven by lower supply costs and favorable customer mix and include the impact of the expiration of the Cottonwood lease, which ended in May 2025. Smart Home results reflect continued organic customer growth and expanded net service margins, supported by sustained customer demand for our connected home platform. The business ended the quarter with approximately 2.37 million customers, a year-over-year increase of 9%, well ahead of the 5%-6% net customer growth embedded in our long-term growth plan. Moving to slide 10 for a look at our 2026 capital allocation, which remains unchanged from what I outlined on our fourth quarter call and is fully consistent with our previously disclosed priorities.

As a reminder, the waterfall on the left begins with $3.05 billion of capital available for allocation, reflecting the midpoint of our updated free cash flow before growth guidance range. As part of our ongoing commitment to a strong balance sheet, we expect to execute approximately $1 billion toward debt repayments throughout the year. On that front, I want to highlight an important balance sheet action completed subsequent to quarter end. On April 28, we closed on $3.5 billion of new financing, retiring the $1.5 billion Lightning Power, LLC senior secured notes and reducing revolver borrowings, a key step in our post-acquisition deleveraging plan and consistent with our 3x net leverage target.

This financing paves the way for the future removal of the ring fencing we had in place when we closed on the acquisition and will result in more than $10 million of annual net interest savings. Turning to return of capital, we remain on track to return at least $1.4 billion of capital to shareholders in the form of share repurchases and common dividends. Through April 30th, 2026, the company completed $817 million in share repurchases, inclusive of our negotiated repurchase of 1.83 million shares from LS Power. We are allocating the remaining capital to continued investments in our core portfolio with $310 million directed towards growth investments. In closing, NRG delivered solid first quarter results in a challenging weather environment, once again demonstrating the resilience of our integrated platform.

Our guidance reaffirmation today reflects confidence in the full year outlook, underpinned by disciplined capital allocation, prudent liability management, and the growing contribution from the LS Power portfolio. With LS Power integration well underway and tracking ahead of plan, we are well positioned for the remainder of 2026. I look forward to updating you on our progress in the quarters ahead. With that, I'll turn it back to you, Rob.

Thank you, Bruce. Let me close with our priorities on slide 12. We will run the fleet with a relentless focus on safety, reliability, and performance. That's the foundation this company is built on. We will continue to serve our customers with discipline, focusing on value, retention, and the integration of our retail, Smart Home, and flexible demand capabilities to strengthen those relationships over time. We will be disciplined in how we allocate capital, maintain a strong balance sheet, and continue to return capital to shareholders. We're advancing our key growth initiatives and are on track to deliver at least 14% adjusted EPS and free cash flow per share growth over the next five years before any contribution from large load or incremental development.

As I step into this role, that's where my focus will be, running this business with discipline and consistency, driving efficiency, allocating your capital with accountability, and converting the opportunities in front of us into results. Operator, we're ready to open the line for questions.

Thank you. At this time, we will conduct a question and answer session. As a reminder again, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from the line of Shahriar Pourreza from Wells Fargo. Your line is now open.

Morning. Rob, big congrats on your first earnings call. I know it's gonna be one of many. I know obviously the focus is on ERCOT, but in terms of PJM and the regulatory process there, do you guys see FERC PJM colocation rules opening up opportunities to bring both new generation and upside in existing assets in that market? I mean, looks like, you know, peers are having conversations with customers, so there is an opportunity with the asset base there as we're thinking about a tentative framework on things like new capacity versus existing capacity matching. Thanks.

Yeah. Great question. I believe that the PJM process and, look, I applaud, you know, all the effort that's going on between the states, PJM, the White House to try to make things happen up there. I think it presents kind of three opportunities for NRG if you think about it. We've obviously got up to about 2 GW, what we talked about today, in upgrades around existing assets that we picked up through the LS acquisition. We've have the opportunity to take the GE turbines up there, if the economics make sense and a customer is, you know, willing to go there. And then the third piece, and I think this is kind of the place where is new, is the potential to offer in kind of the load management side.

The VPP that the team's building down in ERCOT, that's something we can use up north. You know, through CPower, we've got a real capability around demand response. I think all of those pieces are opportunities for NRG, and I think they're also real reasons to think about how to solve the equation up in PJM. That answer your questions?

Yeah, it totally will. Appreciate that. In terms of the 5 GW plan in Texas, do you still anticipate all the capacity to be utilized front-of-the-meter, or is there a higher return option with BTM deals as we've seen an increase in behind-the-meter announcements with higher implied levelized revenues in the $150 range? Maybe any thoughts on how you're thinking about the $90-$95 range that you had previously talked about? Thanks.

Yeah. The $90-$95 was kind of the, where we had kind of put the top end, for, like, a normal data center deal, depending on the structure and where we would go. You know, the thing that we're gonna capture, Shar, is what our returns require. The prices could go up depending on the environment. Our primary focus is front-of-the-meter generation, front-of-the-meter data center, because we believe that's the right thing for the market. You know, we'll look at everything. We'll look at behind-the-meter solutions. We'll look at all of it. The conversations that we have today, are front-of-the-meter conversations, and they're progressing, you know, as well as they have been over the last 12 months. We continue to push really hard to get that done.

I think front-of-the-meter is the right solution. We're getting to a place now, where we're going to get something done quickly.

Got it. Perfect. Just I'll echo again one more time, just big congrats to you on phase two. Just do me a favor, make sure you work Bruce a little bit harder than Larry. Sounds nice.

Thank you. Our next question comes from the line of Julien Dumoulin-Smith from Jefferies LLC. Your line is now open.

Hey. Good morning, Rob. Thanks again for the time. Congratulations on the role. Bruce, man, hang in there. I gotta tell you, watch out.

There we go. I love it. Look, let me follow up quickly on here. I mean, obviously you talked about mild weather here in the quarter, et cetera. How do you think about offsets for 2026? Then probably more importantly here, how do you think about what we've seen in the power curve moves thus far? I mean, Robert Gaudette, you've been watching these markets for a long time. How do you view, you know, the movement forwards here in ERCOT of late relative to any potential delays in Batch 0 or any other interpretations? Maybe it's just transposing what we've seen in softness year to date forward or what have you. I'd love to get your perspective here.

Right. I'll take that in parts. Let's talk about the markets first. You know, the markets are, you know, they showed up, you know, physically weaker in the quarter. That's a reflection of, you know, the supply-demand and just lack of weather, right? There just wasn't any real weather in ERCOT. The traded markets tend to have a recency bias, so when people aren't excited, they kind of lean out the back, and you see the curves kind of trade down a little bit. What I would also tell you, and you know, we've talked about this in the past, you know, as far as out the curve, the real transaction capability or the things that are going on that are setting that curve are the large C&I customers and what they're doing around the markets.

You think about the macroeconomic environment that we're in today, that puts question marks into our big customers and what they're thinking. As that cleans up, as the, you know, the conflicts around the world, you know, help people have a little bit better view into what their business looks like in five years, that helps them get back out into the market and provide some support in the market. There's no natural buyer out there unless you're a large industrial trying to lock up your time. I don't remember the second question, Julien, I'm sorry. What was it?

Well, I mean, I was thinking about, like, just offsets on 2026 here. If you think about like, you know, softnesses of the year and see the reaffirm, is there anything that we should be keeping in mind there?

I think that, you know, the way our markets work is, you know, I talk about what's left in the year. You still got summer in front of you, Julien, right? We still got, you know, potential heat in Texas anytime. We've got to manage through that. We've invested in it so that our plants are ready to capture it. We've got the retail businesses ready to serve our customers. As far as offsets go and the way that we think about it, I'll turn it to Bruce, you know, obviously he and I are gonna work to ensure that we deliver what we told you guys we're gonna deliver.

Yeah. Julien, look, I think it's really as simple as this is just the first quarter. As you know, our company and our business has always been sort of seasonally weighted towards the last three quarters anyway. I think that's why we feel comfortable being able to reaffirm the ranges that we, that we put out there. Certainly, you know, that's the case on an EBITDA basis. I'd say we're even more confident on a free cash flow basis. We see certain working capital items sort of unwinding themselves over the remainder of the year that give us a lot of comfort that we're still gonna be able to hit a free cash flow number that we put out there.

Nice. Rob, bigger picture question here, right? You've taken over, how do you think about the strategic direction of the company here? I just wanna ask bluntly here and give you the opportunity to respond. I mean, obviously the company's already moving towards building new gen on contract, adding duration to the overall contract portfolio. It seems like that's the direction you all are going. You are doubling down on that statement, it seems like today with yet more gen build, given the increase in the opportunity in PJM here. Look, if you were to define the strategy in a way with your fingerprint here, how would you add or evolve what I've just described?

You know, Bruce, I, others, we're all part of the transition or transformation with Larry. You know, it's not gonna sound too different, Julien, but if there was something I was gonna put my finger on the scale on, I would say, you know, we are definitely putting more focus around contracted cash flows, looking for duration of cash flows with counterparties. That leads us to things like, you know, data center deals and new build generation, but it also leads us to thinking about, you know, the total addressable market differently, right? We have historically been kind of in the competitive markets only. I see an opportunity for us to find contracted cash flows by partnering with regulated entities that may not have the capital or the relationships or equipment or development capability that NRG has.

We have a really solid platform, and we should be able to take that to address other customers' needs from the Atlantic to the Pacific.

That's awesome. I don't wanna put words in your mouth, you know, that sounds like more like a contracted gen build strategy like a NextEra than it does like a Vistra. Not to, you know, point at others.

I'm not gonna try to figure out what other people are doing. I'm really focused on what we're doing. To say it, you know, succinctly, I think that we can create value for investors by putting their capital to work in generation, or other programs, right, with long-term contracts.

Yeah, I like it. Well, I'm curious to see where you go with it all. Best of luck to you and the team here.

Thank you. Our next question comes from the line of Michael Sullivan from Wolfe Research. Your line is now open.

Hey. Hey, Bruce. Maybe if you could just give us a little more color on what you mean by on track for the year in terms of the data center deal. It seems like you've had a sense of price and economics for some time now. What are kind of the main areas you're progressing on and, you know, to hit the 2029 COD, what we need to do in terms of equipment procurement for this year?

Sure. I'll answer your question in reverse. To hit 2029, we've got to get something done in 2026. We haven't given anything more specific than that, and I'm not gonna start today. As far as, like, the things that we're working through, the economics are pretty straightforward, right? We know where we need to kinda hammer to get our returns, and we know where our customers need to be for them to get their returns. That's not the issue. The real conversations and the work that's still, you know, ongoing, and it's probably on every project out there, is around infrastructure. Think interconnections for gen and load, and then depending on the location, sites, et cetera, what's that gas infrastructure look like too?

All things that we can manage through, and I'm confident that we will. It's just stuff that takes a little more time, and it's not as simple as just, okay, what's the number? It's a conversation with multiple parties. It's a conversation with regulated entities. We're working through this, and I have confidence that we will get that done.

Okay. Great. Thanks. Then, you know, the pace of buybacks was pretty quick year to date. Anything to read into that? I know a chunk of it was the direct transaction with LS, but any chance you go above $1 billion or, yeah, just anything to make of being a bit ahead of pace there on the buyback?

I mean, Sully, I think the read into that is we didn't like where our stock was trading during periods of the first quarter. We tried to be as opportunistic as we could. As we sit here today, you know, the average price that we bought back shares over the course of the quarter is well below what we had planned in our guidance. On a per share basis, we certainly, you know, expect to see some potential upside on that basis. You know, whether we would go above the $1 billion right now, right now the plan remains $1 billion. To the extent that we see opportunities for extra cash flow, you can probably assume that we'll be pretty laser focused on being able to deploy it in the form of share repurchases.

Thank you. Our next question comes from the line of Nicholas Amicucci from Evercore ISI. Nick, your line is open.

Hey, good morning, guys. I know Larry would want me to congratulate Bruce as well, so congratulations.

I wanted to kind of dig in a little bit on the residential side of the house. Just kind of thinking through that as well as kind of the opportunity now with, you know, the CPower guys, the CPower folks in the door. Just kind of, you know, how you can leverage kind of both the residential as well as kind of Vivint, segments and business lines to within that kind of offering of a VPP opportunity.

Sure. It's, it's a great question, and it's something that, you know, gives us a unique opportunity to both create value but also help manage affordability for customers. The portfolio, by having what we're doing around VPP, by having the tech stack that we've got through the Smart Home business and by adding CPower, which is more of a C&I play, but they do have an understanding of how to make things move, those all set us up for success. I'm gonna let Brad talk about like kind of where, you know, what our kind of milestones are going to be and how we're addressing that, if that helps.

Yeah. On the residential side, we're really pleased with our performance. We have made some choices around kind of the quality of customers we want in and around Texas, and we've seen that pay off in terms of bad debt and kind of record churn on that front. However, there are some segments where I think we're under-penetrated, so I do anticipate returning that to growth. On the home automation side, we're seeing, you know, we finished 2025 with record growth, and we've continued that momentum. Really pleased, not only on the acquisition side, but record retention numbers for Vivint, all the while driving a growth in margin and keeping acquisition costs in check. We see a lot of opportunity there.

We also spend a lot of time how we bring these two products together to create even more affordability for customers in a bundled type service. A lot of positive momentum on the residential side.

Great. Thanks. If I can, just kind of follow up too on Julien's question before. When we think about, obviously, you guys mentioned kind of, you know, there was no weather really in ERCOT from a pricing perspective. Just any kind of color you could provide just on the impact of kind of the RTC initiatives and just kind of the normalization, I guess we could say, of the ancillary costs that could be impacting that?

Yeah. I've been following that since they first started talking about it. you know, it kind of showed up the way we expected it. you know, honestly, Nick, like the ERCOT market boils down to the, you know, a couple facts, right? You saw a big solar build a few several years ago, then you saw a battery build over the last couple years. Both of those have kind of slowed down or will slow down in the next year or so. We haven't had any weather to really stick a marker out there for anybody to get excited about where those markers are, right? The goal was set or the peak was set a couple years ago.

You know, you get one hot summer, with a couple of handful of days where people remember that the price can go to $5,000, and these curves change radically. That's what we're building for, that's what we're supported on, and that's how we manage our portfolio. This market is gonna look very different, like I said in the scripted remarks, once you start adding generation-- or sorry, load, that starts to kind of eat up any marginal megawatts that were out there.

Thank you. Our next question comes from the line of Carly Davenport from Goldman Sachs. Your line is now open.

Hey, good morning. Thanks so much for taking my question. Maybe just to start on the LS assets, could you talk a little bit about as you're integrating those assets, what the key learnings have been so far? Any opportunities for synergies that you see today that perhaps weren't contemplated in your original plans?

When we've gotten under the hood on the assets after we closed in the middle of Fern, you know, look, the assets kind of came in where we expected them to, right. Our assessment during due diligence for the acquisition was pretty spot on. No big surprises there. Where we have seen some opportunities, if you remember when we announced the acquisition, we saw 1 GW of potential uprates as we continue to look at these assets. Depending on the market structure, Carly, right, you've got to get the rules right and we've got to get an opportunity in front of us, but we could take that up to 2 GW. That's a plus, and that's exciting.

As far as synergies go, you know, recall the acquisition was heavy on generation facility personnel, so you know, guys who make the plants go. Not a lot of synergy there. What we're gonna work through over time is how we work that into the portfolio, and that'll create, you know, better opportunities for us to think about hedging, better opportunities for how we serve customers and serve in those markets. I see an opportunity there. We just haven't put our finger on that yet.

Got it. Okay, great. We'll stay tuned there. Maybe just on the TEF development, seems like you're really close here on T.H. Wharton. Maybe can you just provide some detail on what is left there to get the asset online? Just maybe a status update on the process on Cedar Bayou and Greens Bayou, just as you progress those towards the 2028 in-service dates.

Yeah, we're very happy with TEF projects. We're extremely excited about where they are. I'm gonna let Matt give you an update on T.H. Wharton, and then the other two that come in 2028.

Good morning, Carly. The on T.H. Wharton, the kind of remaining steps between where we are and COD is just syncing the units to the grid, getting ERCOT to give us the, you know, the blessing that they show up the way we expect. That's all on track and on schedule. When you pivot over to Cedar Bayou and Greens Bayou, right, each of those projects are kind of in a, you know, 2028 COD. They're at various stages of construction, but they're all moving along right where we expect them to be at this point in time to hit that 2028 COD as well.

Thank you. Our next question comes from the line of Moses Sutton from BNP Paribas. Your line is now open.

Hi, Rob and team. Thanks for taking my question. We continue to see the ERCOT load pipeline rising. Slide six, you show supply demand we see as kind of believable too, if not conservative. How should we size up the upside to your uneconomic gen in Texas in TWh per year? Could we see 10, 15 TWh upside? You know, as ERCOT thermal fleet gets called upon more and more thinking into the out years, trying to frame this tailwind. Is it fair to assume that that incremental gen would go wholesale and not be integrated into the retail business? Anything you could give us on that, you know, down the road tailwind.

You know, that's a great question, and it's something that we think about every day. If I was gonna advise you as to how to think about it and how to kind of put your finger on that pulse, first, you're spot on, right? That the incremental generation wouldn't be attributed to retail load, right? It should be open. The reason why I say that is because we're obviously managing the position with the market curves where we are today, right? We're gonna cover that up. Which means that the generation, if prices move to the right place, that generation will become economic, that's additional megawatts.

The way I would think about how you frame it up for your clients or whomever is, you know, think about what that supply-demand list. We gave you a pretty decent graph or a slide on slide 14 that lets you take a look at what these price curves look like, and then what those impacts to the generation are, right? I think we've kind of given you the numbers. The thing you need to think through is what do you believe price impacts look like and what does that actually do from a, you know, overall impact to ERCOT pricing?

the answer you want, but I'm trying to point you to where you can get to.

No, it's very helpful. I guess it's a little bit tied to this, and you kind of mentioned it in one of the prior answers. Like, specifically on the industry battery build in Texas, you know, the returns have been abysmal now. The pipeline kind of remains there, which is strange. How do you think of the battery impact on the curves in particular? I know you mentioned it a bit, but do you still see multi-gigawatt builds still coming, even if they don't have real returns? Are these holding agreements? Like, what is still coming on the battery side in Texas that might be impacting the curves? How do you see that cadence of the decline? Because you kind of mentioned that in your solar and battery comment earlier.

My commentary around battery build and how I think it's gonna decline is based exactly on the facts you just pointed out, right? The economics just aren't working for them. What batteries do to ERCOT is it kind of pushes the pressure point out a couple hours when you get tight, right? Right now, you have peak demand that's around, call it four or five o'clock in the afternoon, but you have peak price around seven or eight o'clock in the evening in the summer. What batteries would do is push that out to, call it, nine or 10. They still have to draw, so it provides support for the markets in some parts of the day, and then it would kind of discharge during the peaks.

If we get even a percentage of what this data center load looks like, coming into the grid between now and 2033, you know, like I've alluded to before, this market is off to the races. You know, you eat through all of that battery push, and all of a sudden you've got the tight market that we all know ERCOT has been and can be, that we saw in 2022 and 2023.

Thank you. Our next question comes from the line of James West from Melius Research. Your line is now open, James.

Thanks. Good morning, guys. Rob, congrats again on your first conference call as CEO.

I also find it humorous sitting there in Texas complaining about mild temperatures in the first quarter for first quarter results we know it's gonna get bad.

NRG Energy (NRG) Q1 2026 Earnings Call Transcript

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