Good morning. My name is Lisa and I will be your conference operator today. At this time, I would like to welcome everyone to the Vistra Energy Third Quarter 2018 Results Webcast and Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Molly Sorg, Vice President of Investor Relations, you may begin your conference.

Thank you and good morning, everyone. Welcome to Vistra Energy’s investor webcast discussing third quarter 2018 results, which is being broadcast live from the Investor Relations section of our website at www.vistraenergy.com. Also available on our website are a copy of today’s investor presentation, our 10-Q and the related earnings release. Joining me for today’s call are Curt Morgan, President and Chief Executive Officer and Bill Holden, Executive Vice President and Chief Financial Officer. We also have additional senior executives in the room to address questions in the second part of today’s call as necessary. Before we begin our presentation, I encourage all listeners to review the Safe Harbor statements included on Slides 2 and 3 in the investor presentation on our website, which explain the risks of forward-looking statements, the limitations of certain industry and market data, included in the presentation and the use of non-GAAP financial measures. Today’s discussion will contain forward-looking statements, which are based on assumptions we believe to be reasonable only as of today’s date. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or implied. Further, our earnings release, slide presentation and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are in the earnings release and in the appendix to the investor presentation. I will now turn the call over to Curt Morgan to kick off our discussion.

Thank you, Molly and good morning to everyone on the call. As always, we appreciate your interest in Vistra Energy. Before we dive into results for the quarter, I would like to kickoff today’s call announcing the outcome of Vistra’s capital allocation planning process. As you can see on Slide 6, I am excited to announce today that the Vistra Energy Board of Directors has approved both a $1.25 billion increase to our repurchase program bringing our authorized total for share repurchases up to $1.75 billion as well as the initiation of a recurring dividend program. In addition, we remain committed to achieving our leverage target of 2.5x net debt to EBITDA. The core of our capital allocation policy is based on three key pillars: opportunistically repurchasing our shares when our stock price reflects an attractive valuation as we believe it does today; returning capital to shareholders through a recurring dividend that is both predictable and grows periodically; and maintaining the lowest leverage in the industry. We believe our capital allocation plan will attract new long-term investors and provide our shareholders with an attractive total shareholder return over the years. Now, let’s spend some time on the details of the capital allocation plan. First, the Board has approved a $1.25 billion increase to our existing $500 million share repurchase program bringing our authorized total up to $1.75 billion. We believe our equity which has been trading at a free cash flow yield in the mid to high-teens is meaningfully undervalued. As a result, allocating incremental capital towards share repurchases is one of the most attractive investments we can make at this present time. Our own analysis suggests the intrinsic value of the Vistra equity is significantly above current valuations. We plan to execute share repurchases under the additional authorization on…

Thanks, Curt. Turning now to Slide 14, as Curt mentioned, Vistra concluded the third quarter of 2018 delivering $1.153 billion of adjusted EBITDA from ongoing operations. While below average temperatures in ERCOT resulted in lower realized power prices on our remaining open positions, negatively impacting our ERCOT generation segment, our retail operations and generation segments outside of Texas performed well. In particular, generation performance in both PJM and California exceeded expectations as a result of favorable prices, higher generation volumes and lower SG&A expenses. Both segment results for the quarter can be found on Slide 21 in the appendix. So today, Vistra’s adjusted EBITDA from ongoing operations is $2.069 billion, which reflects 9 months of results from the legacy Vistra operations and results from the legacy Dynegy operations from the period from April 9, 2018 through September 30, 2018. Excluding the negative $20 million impact of the partial buybacks of the Odessa earn-outs that we executed in February and May, Vistra’s adjusted EBITDA from its ongoing operations would have been $2.089 billion for the period. We expect these partial buybacks to have a positive impact net of the premium paid over the period from 2018 through 2020. Finally, I am pleased to announce today that we have completed the $500 million share repurchase program, our Board authorized in June of this year. Under the program, we purchased approximately 21.4 million shares at an average price of approximately $23.36 per share. Given that we continue to view our current share prices meaningfully undervalued, we expect to begin executing share repurchases in 2018 under our newly authorized 1.25 billion share repurchase program. Turning now to Slide 15, you will see that Vistra is narrowing its 2018 ongoing operations guidance while reaffirming both the adjusted EBITDA and adjusted free cash flow before growth…

Thank you. [Operator Instructions] And our first question comes from the line of Greg Gordon from Evercore ISI. Your line is open.

Thanks. Good morning everyone.

Hey, good morning.

Thanks for the update. So looking at the numbers everything looks fantastic in terms of your free cash flow outlook and I think your confidence in the stability of EBITDA and the free cash flow in ‘20 is great, your guidance is – the high end of your EBITDA guidance range is a little bit below consensus? Thank you for giving us this walk on Page 17. Are you telling us that you were hedging into the rising, part of the reason why you are a little bit lower is because you were sort of averaging into the – and hedging as the prices were rising and then the fuel supply part is that coal or is that gas?

Yes. So Greg we were hedging into it, I think we have said that we are not basically taking the risk of just waiting for the highs of the highs when we see things above fundamental view we will hedge, so we get hedge into it, the prices moved up. We still have open position as you can see that’s attractive for us in ‘19 as well as ‘20 now and ‘21. So yes, that is what you are saying is that we did hedge into that previously before the recent run-up. And then the transport is both. We have seen an increase and this is in ERCOT. We have seen an increase in gas transport costs and then we also saw around Coleto Creek an increase in rail cost. And this probably doesn’t surprise you, but people know that the power markets have increased revenue and the power markets have increased and people don’t miss the trick when they can, they try to get a piece of that. And these are tough businesses because they are largely monopoly, have the monopoly position, but they don’t always act like monopoly. So I guess they do act like monopoly I guess is what I am saying. But we were able to negotiate when we thought we are relative to market, pretty good rates on these things, but nevertheless there was a little bit of a chunk that was taken out of us. And that happened, you guys know this too that we came out with ‘19 guidance in May and that’s why we had $200 million range around it and we had just done the merger and some of this stuff in that on ‘17 that you see is refinement of some of the assumptions when we took Dynegy’s plan and we melded it together to give guidance in May. We have made refinement since then and maybe we are a little more conservative in certain areas like MISO capacity and some other and retail in – the Dynegy retail business which is contributing to some extent to the negative bars on the waterfall.

So it would make sense in rising wholesale price environment that there would be some retail offset to retail margin, right, I mean one of the benefits of retail is its countercyclical, but when prices rise that should happen, correct?

That’s right. And the good news is about 105 incremental benefit, in ERCOT when you net the $30 million reduction and then you look at what’s up in ERCOT of that wholesale price increase, the integrated model is working, so we have a higher increase on wholesale than we do in retail. Some of that 30, though I will tell you, it’s about a third – a third of it is bad debt expense. With higher bills you tend to see a trend with higher bad debt expense and so a little bit as our forecast that we may see higher bad debt expense. A third of that is power cost as well. And then the other third of it is we just reduced the expectation around the Dynegy retail business. We – I think we have appropriately costed out that business relative to what the way that Dynegy looked at it and we just feel like it’s going to be a little bit lower. But I think we feel like we can build it up and actually increase that over time, but that’s what that 30 is Greg is those different pieces.

Right. Just two more questions and I will beat to the queue. In terms of how you manage your length in Texas, I know that one of the reasons why August was challenging for you is that you tend to bring a lot of length into the market, into the day ahead in the spot market for the self insure and manage risk and August basically didn’t happen. Is there some level of conservatism built into this guidance because you know that you are going to sort of may self-insure and manage your risk that way going forward?

Yes. So that open position especially after this summer we are a little bit gun shot here, but that open position is marked at a lower level and it takes into account a lower – basically a lower probability of pricing. So, we do have – we have market that 1,200, roughly 1,200 megawatts. And the way we size that Greg is that, we look at our largest unit, which is a Comanche Peak unit, and if we were to lose one of our largest units, we want to have enough backup generation to cover that. And so that's how we size that for risk management purposes. But that 1,200 megawatts is marked at a lower level. So, we got into the summer and real-time prices were very strong, because we would release that 1,200 megawatts into the real-time market, you certainly can see a much higher earnings power from the company.

Right. So, you don't want to count on that because basically you don’t want to have a disappointing third quarter like you did last year versus whatever expectation you set. Is that a fair summary?

That’s right.

Alright. Last question, do you have the CapEx associated with the Moss Landing and other battery projects in California baked into your capital allocation numbers right now or would that come out in the numbers if those were approved?

Yes. It’s – it is included.

Okay. Thank you, guys.

Thanks, Greg.

Our next question comes from the line of Julien Dumoulin-Smith from Bank of America/Merrill Lynch. Your line is open.

Hey, good morning.

Good morning, Julien. How are you?

Good, good, good. Excellent. Can you perhaps comment a little bit on the 2020 commentary you just provided with respect to having a flattish outlook? Are you basically saying the range ‘19 versus ‘20 is effectively flat on an EBITDA and FCF basis?

Yes. We are saying, it – the outlook I mean, within a percentage point here or there, but right now it is essentially flat from both a – an EBITDA and free cash flow basis. I think you’ve seen that our free cash flow conversion has actually gone up some from roughly 60% up to about – actually I think it’s 66%, I think we see that continuing, that’s partly due to some good management around our CapEx. And so – but yes that’s – that we’re seeing that as flattish. We also believe that beyond that there is a good chance of that as well. I mean, our view around ERCOT is that this tightness could persist for a while, we’ll see, but we feel pretty – we feel pretty good about what that outlook in ERCOT is shaping up to look like and we also think it could extend into ‘21, ‘22.

Got it. And then with respect to retail, just a multi-faceted question here. First, you’re bringing down 2019 expectations despite a higher customer count quarter-over-quarter, how exactly is – how are you thinking about that in terms of customers and composition? And then also can you comment a little bit more specifically around acquisition versus organic expansion, you made a couple of different comments in your prepared remarks with respect to both sides of that. I mean, as far as you see the expansion into the Northeast, is this principally organic at this point, I know you still have that strategic planning process underway?

Yes. So, on the – simply on the retail that the reduction in retail EBITDA there’s a couple of things related to that. One is that we are going to invest $20 million to build out our organic retail business. And when we’re doing that, we’re not going to have an offset basically from the gross margin side, but we expect to start to get that offset meaningfully in 2020 and 2021. So, there is a bit of a drag there. And then this is just a reflection frankly of higher costs against the retail business, but we do believe longer-term adding those customers is going to benefit as we bring them in, we should see some. And there is some offset in there for higher customer counts, it’s just not enough to cover the higher cost of goods sold essentially for the retail business. But we’re picking up that – we’re picking more than that up on the wholesale side, which is what you would expect those two things to somewhat offset. Jim Burke is with me. Jim, do you have anything to add to that?

Yes, Curt, I think you summarized it well. Julien the way we tend to think about this as little bit of a long-term proposition around how we serve customers. We faced a similar dynamic in 2014 and we were very disciplined about how we manage our margins and our customer acquisition channels and it paid off through reduced attrition in ‘15, ‘16, ‘17, and growth in ‘18. So, I think we’re just taking the long view on this and running the business in this integrated way for maximizing long-term value.

And then drilling on your other question about organic versus inorganic, I guess you’d call it M&A. We did do a false strategy went to the Board with it. We have a very detailed plan to grow out our business organically. The number of people we want to bring, the way we want to shape the organization, the market evolution, where we want to start and how we want to add to that. So, we’re going to embark on that. On the M&A side, we looked at everything that was out there. And frankly, given the evolution of our company right now, where we could spend our capital and the underlying value proposition at each of those businesses brought and the price that we would have to pay, we just did not feel comfortable that this was the right time for this company to spend somewhere between $0.5 billion to $1 billion into one of those businesses. We are concerned about high attrition rates. We’re concerned about effectively business practices and other things. I don't mean anything negative. I'm just saying the way that we conduct business and the way others do, it was just not necessarily a match that was comfortable for us. And I think it was a bit timing and we just didn't feel like this was the time that the Dynegy deal, we're in the middle of it, we’re I think we didn’t want to slip up on that. And as you can see that continues to provide very good benefits to us and we wanted to be able to integrate that to take on another acquisition at this point in time and the company just didn't make sense to it. We did not want to do something and then later regret it and that would have eroded the credibility of the company in terms of what we do at capital allocation. So what the reason we brought it up again though is that that does not mean that if we get into ‘20 and beyond that we would not consider doing an acquisition to help accelerate the organic retail strategy. So, we always keep that open. We look at everything. We have a dedicated team to do that and if we find something that we think is something we’re comfortable with that we can buy it at the right price and it’s a kind of business we like, we would certainly consider it.

Excellent. Thank you.

Thanks, Julien.

Our next question comes from the line of Shar Pourreza from Guggenheim Partners. Your line is open.

Hey, good morning, guys.

Hey, Shar.

So, let me just on the buybacks. The timing seems to highlight the program may go into 2020. Can you just elaborate a little bit, Curt and I don’t know you’re thinking about the timing i.e. should we assume sort of open market purchases occur in 2019 given obviously where the free cash yield, the stock is with any residual amounts being the crossing, block trades, private transactions whatever bleeding into 2020? And then just how are sort of conversations going with your ex-creditors, are we very preliminary right now?

Yes. So, those are good questions. So, on the timing front we’re going to begin this $1.25 billion program in 2018. And so, we said 12 months to 18 months, I think that is just purely to give us more time if we need to from an opportunistic standpoint depending on where our stock price is. But we intend to just like you would expect, we’re going to be out in the open market with a grid and we’re going – if our – if the price of our stock is in certain particular ranges, we’re going to buy back our stock. We will manage it with our cash because this business has a bit of a cyclical cash. So, we always have to manage what we’re going to buy in any given quarter based on what cash is going to look like. I should mention though, I think it’s really important to mention is that, we have moved our target on leverage from 2.5 by the end of ‘19 to 2.9, and then 2.5 by ‘20. The new people will know that that this assumes that we’re going to take debt down between now and the end of ‘19 by another $1 billion. So, we’re going to also manage the timing of debt repayment and the timing of the share repurchases. I would not be surprised as – and Bill can add to this. I would not be surprised that this would end up possibly being a 12-month program, I think we can support a 12-month program. But I would hope it wasn't and I would hope we don't even spend all of it because I’m hoping that we would actually realize our full price. Having said that, we are prepared to move on this and do the full program in 12 months if that’s what economics dictate and we will do that. Yes. Bill anything…?

The only thing I would add I guess I would agree with what Curt said. It – some of it will depend on where the stock is trading and will affect the pace of the open market program. And then just tactic to your question about potential block trade, I think we will hold some amount of cash so that we have dry powder to do block trades if we see opportunities that we find are attractive. But I think most of what we are going to do I would envision would be in open market purchases.

I am sure we have not.

Perfect.

To be very honest about this, we have not engaged with anybody – any of the large sort of emergence related shareholders. We have not engaged directly with them. The one thing I think we would want to consider and we have heard some feedback on this front is we would actually like to engage with investors and see if we can get an interest from other investors to join with us so that we can do a much bigger block and to bring either new or existing shareholders that want to increase their position along with us. And so I think we are going to engage on that front first and then we would engage to the extent there is interest. We don’t even know that there is interest. But we believe there probably will be. But we are perfectly comfortable doing open market purchases, 100% of this, if that’s what the way it shapes up. If there is something that we can bring a bigger block together of investors and we can do it at a discount in market which I think we would probably insist on and reasonably we would insist on that is that we are bringing liquidity to a seller that they can’t get on their own. And so there is a we believe there should be some discount to do that. Now there is definitely certain criteria around that and there is I would say normal circumstances dictate what that discount is, so I think everybody, I am not talking that we are going to get 50% of the share price, but there generally is for that kind of liquidity that gets offered to the market there is generally some level of discount. So we are going to factor all those things and we will see where that takes us. And ultimately we will see how this plays out. But we are prepared to do open market purchases and we are not uncomfortable with that at all.

That’s very good color. And then just real quick shifting to the capital allocation decision around the dividend, obviously the growth rate is much higher than many expected, what do you want ultimately kind of levelize that over the long-term right to similar to the utilities run 4% to 6% growth, do you have a specific yield in mind over the long-term or sort of just giving your cash flow conversion cycles, your pre-cash flow profile should we just assume 6% to 8% growth at least into the medium-term?

I think you should assume that 6% to 8% growth into medium-term. I mean the Board is going to – obviously management team will work with the Board on this. We will look at if we are 5 years, 6 years into this and we will see where we are, if we believe that we need to adjust that growth rate we will consider. But I believe that first of all the Board has to approve and declare dividends. And the Board is going to have to declare the growth rate. I think we have said this and we have said it for a reason is that management believes it will be 6% to 8%. We will recommend that to the Board. Certainly we talk to the Board about it, but the Board hasn’t necessarily committed to anything on that, but I think they are generally in line with us. What I would say is though that we consider that 6% to 8% I think a medium-term growth rate. I don’t think that any of us think that’s 1-year or 2-year deal, I think we are committed to it for a pretty good period of time and believe that we can reasonably afford it given our free cash flow. But also I think our ability to grow earnings I mean we have got things in place right now for the next 2 years to 3 years are going to grow earnings more than what it would more than fund 6% to 8% growth in the dividend. And then that’s not counting whether we would deploy some capital to long-term to growth which I think if you are $1.8 billion to $2 billion free cash flow you can probably expect. And then we say this all the time, but over time we are going to put some capital back into the business. We are going to find an opportunity to do something which would also grow EBITDA. So we think we can we can support that growth rate with line of sight growth in EBITDA that’s in front of us right now, and then longer term, we will likely deploy capital, and we would expect obviously to get EBITDA from that capital deployment.

Got it. And then just lastly on the MISO assets, when do you expect to sort of make a decision here? I mean, obviously given the cash flow profile, you can see an improvement in your conversion cycles I guess, Curt, what are you waiting for around MISO?

So, we unfortunately, we’ve got to wait to see what the multipollutant standard what the final outcome of that is unfortunately, it didn’t happen in the fourth quarter of ‘18, but we did get what I think is a reasonable and fair outcome from the Illinois Pollution Control Board we will have to go through another hearing on that that’s okay we’re not uncomfortable with that but we’re thinking April/May timeframe to get a final kind of outcome because what happens, Shar, it goes from the Illinois Pollution Control Board, they recommended it to a committee of the legislature it’s called JCAR. And then JCAR actually votes on it doesn’t have to go to the full legislature; it just goes to JCAR and we believe that it will go through as it is today and if that happens, we should be prepared then to come to the market, but more importantly to begin to execute on what we are going to do and how we’re going to create our final I shouldn’t say final, but create the business that we believe will be profitable now, work is going on right now, and so I want to make sure that and everybody knows that we’re going to be in a position to execute immediately so, we know if the deal goes through exactly the way it is now, we know what we would do and so, it’s just a matter of timing but we also have been contingency planning so, if something else happened, then we would be prepared for that, as well and that would include engaging with MISO to make sure that they understand our plans, engaging with politicians, engaging with the Illinois Commerce Commission, to make sure that we have the pathway to shore this up and there is a reasonably significant we believe a reasonably significant improvement in EBITDA once we clean this portfolio up and that’s what we’re trying to get to unfortunately, we’re going to have a little bit of a drag in 2019 to get to the point where we get a final multipollutant standard.

Got it congrats on this inflection point, guys, seriously.

Thank you.

Our next question comes from the line of Steve Fleishman from Wolfe Research. Your line is open.

Hi, good morning just so I have the right bearings, what curve date are you now using for ‘19 and ‘20 guidance commentary?

That’s end of September.

Okay and then, Curt or Bill, just when you look at the 2019 guide adjustments that you made, the different buckets, can we just maybe if you recharacterize them to adjustments made on the kind of Dynegy assumptions, because it seems like each bucket has some from that could you maybe do it that way? And also say do you feel like those are now totally done?

Yes, so and, Steve, I’ll look at 17 slide 17 maybe that’s the best way so, in MISO the MISO capacity but the way, both of those are Dynegy adjustments so, the one thing you may recall this, although it’s a while ago, Dynegy had a basis issue in, I think it was first quarter of 2018 and what happened is ultimately Stuart and Killen retired that created a basis issue in [indiscernible], and what happened is they had a bit of a hit on that, but it wasn’t reflected in their plan and so, we have basically made an adjustment around that basis I think it’s also Steve Muscato here was it also in Illinois, we had a basis adjustment, as well?

Yes, it was around several of the plants down in Southern Illinois, some mild basis adjustment.

And, Steve, this was just us getting in and doing our own modeling, because we do a precise transmission modeling and we determined that we felt like there was some basis cost that was missing in the plan and then on MISO capacity, this is just our view of what we think in MISO capacity is going to be and we do believe now we have it properly reflected I would actually say, over time, we may even be able to improve upon the basis situation and manage that better but the other thing is on MISO capacity, there’s some things we’re looking to do, both through shaping up our portfolio in MISO that could improve MISO capacity prices, but also some things that we might some actions we might take with FERC that might lead to an improvement in that we will see that’s proven to be talked in the past and then, on the outage front, I do want to make one comment just on outages is that we did move some outages into 2019 that weren’t there those are, as you know, sort of nonrecurring in nature that was a choice to move outages in and so, to me, that is there’s about 30 million of that effect, I believe, in here and so, if you take that 30 million that was a choice to move that’s right, it’s on the chart 30 million if you take that and you add it to where we, we’re kind of back to where we were when we had previous guidance and then on the regional front.

And is the outage timing at is that at the Dynegy assets, the outage timing? Or a mix of?

Go ahead, Jim. Which one is this?

Yes, Steve this is Jim Comanche Peak is a good portion of that, and then the other portion is PJM and MISO.

Yes, so it would be so, those obviously, we didn’t have assets in those margins, so those would be Dynegy and then on the retail front, we took it down I told you about 10 million of that, I believe, was we took down the retail business and that is, frankly we just got in, we looked at how they priced and the transfer pricing between those and what we thought the true pricing was of that retail business and we just felt like we needed to move that down for planning purposes of course, we’re going to be trying to push as hard as we can to get as much value as we can out of it, but we think this is the more realistic view of the business and that is strictly the Dynegy retail business.

Okay but, I guess most importantly, do you feel these are now fully scrubbed and that these kind of function changes won’t happen anymore?

We do and by the way, Steve, can I mention one thing? But the other side of this coin is that the wholesale assets are up pretty significantly and we’ve been able to hedge those up, as well so, on balance, our EBITDA actually from the Dynegy and if you take the cost savings, which we could not have gotten on a stand-alone basis, the EBITDA from the deal itself is up substantially but these are clean-up items I just want to be clear about the net balance of all the things we looked at when we looked at the Dynegy acquisition.

Great and then, just one last question on the comments about the 2020 guidance being flat so, just on the surface, you mentioned you have the capacity pressure in PJM and then you have the fact that the ERCOT curves are pretty backward dated downward, so could you just maybe quickly go through what are the positive offsets? I know you have your incremental cost cuts? What are the other positives?

Yes so, curves are a part of that, and they could be higher so, if we see the curves move like we expect them to as we get closer to 2020, we might even see that 2020 could potentially even be higher than ’19 we’re just marking that right now.

But you’re not assuming that, though? You’re just yes?

What’s that?

You’re not assuming that? You’re just marking? Yeah.

Yeah, we’re just marking and so, part of that improvement, Steve, is curves it’s also not just curves in ERCOT it’s also curves outside of we saw the curves move up in some of the other markets, which is why we’re hedging where we can in 2020 to some extent so, that’s part of it part of its exactly what you just said, which is we are also picking up value from OP and the synergies and then also, we’re getting a full year in ‘19 anyway, we’re getting a full year of Upton 2 but then beyond that, in ‘20, the timing yes, so we will not pick up I’m sorry I was going to say the California battery, but that doesn’t pick up until 2021 we have not assumed in these numbers that we have a pickup from MISO, so that is not in there, just to be clear about what are those things that are not we have not yet reflected in these numbers but it’s mainly curves, Steve, and it’s mainly the pickup from the value levers.

Great, thank you. That’s helpful. Thank you.

Alright, thanks a lot.

Our next question comes from the line of Praful Mehta from Citigroup. Your line is open.

Thanks so much, guys and appreciate the detailed and fulsome update that you are giving. So, appreciate it.

Thank you. Go ahead, Praful.

Yes. So, my question firstly was on all these curves that we have talked about, especially in ERCOT, you see these curves clearly going up, but they are backwardated and we see that you lost some potential for EBITDA given your hedging policy in ‘19. So for example, when we look at Slide 9, clearly you are now keeping your heat rates more open, you are hedging gas, but not as much on power, but especially in ‘20. But wanted to understand how much flexibility do you have with this? As in, how much can you keep open given your belief that these forward curves are backwardated and you are going to see more volatility? Should we expect pretty low hedging on the heat rate side going forward?

So, this is always the dilemma when you are trying to manage obviously manage what your earnings is going to be in any given year. We tend to do some hedging and we try to go in kind of increments, but we try to do, for example, for now for ‘20, we are about 30% hedged. We talk about that and say that’s probably a good place to be in ‘20. But we might go higher, for example in PJM and ISO New England, because the curves have moved up. And if there is liquidity, we might want to take more of that opportunity. We don’t see a lot more upside in that, but I would expect us to be a little more sticky on the ERCOT front as we move out on the curve. The real thing that’s difficult to really predict is does somebody do something that doesn’t make economic sense and then affect the curves in the future. We keep very close tabs on development and we have a pretty good sense of what’s out there. This is why I think we are going to probably keep heat rate in ERCOT a little more open than what we might otherwise do, because I think our belief is, is that this relative tightness in the market may rollout for a years longer, because we really don’t see the kind of development out there that’s going to close the gap and get us back to a higher reserve margin level. So, it’s a balance. Would I like to not have $80 million of negative against $185 million? Yes, but we made a conscious choice not knowing exactly how the market was going to play out that we thought it was right to take some risk off the table and…

Yes, that makes a lot of sense, Curt. Thanks for that. And then maybe just stepping back, giving all the discussion on capital allocation, if you take between now and let’s say 2020, your buybacks, dividend, the debt pay-down and the CapEx, especially the growth CapEx, do you see that, how much excess capital, I guess, do you still have to allocate kind of if you allocate into these buckets the way you are seeing it right now? You clearly have a little bit left over or is that mostly utilized through 2020 at this point?

Yes. So, Bill, you can give good detail.

Yes. Through 2020, we would be mostly – we will be using most of the capital available for the combination of things you listed: dividends, stock repurchases, and additional de-leveraging. But as Curt noted, the capital for the Moss Landing battery storage project is also included in the 2019 and ‘20.

Got it. So, the growth CapEx right now through ‘20 is about what, 150, 200 million number and when do you expect to kind of increase that growth CapEx profile going forward?

Well, I think as Bill said though given what our capital allocation program is, we are using most of our capital in ‘19 and ‘20 to either pay-down debt or repurchase shares and pay the dividend. We do have some available, but we are also doing as you now, probably, we are doing the Moss Landing, which is growth CapEx. So, that’s a fair amount of growth CapEx in ‘20. And then we have a few other things, some upgrades which we consider growth CapEx, some upgrades to some of our units. So, we are putting some money into growth that will increase EBITDA. But I think ‘21 and beyond is where we have a tremendous amount of cash flow coming in and so we will be looking at growth as being something plus some of these things we are doing, MISO, the batteries, those are going to add to EBITDA, so we look at that as increasing EBITDA. We’re probably going to want to turn our attention to growth beyond that period of time in ‘21 and looking for things to invest in to grow the business. And so, we would probably look at that starting in ‘21.

Got it. Thanks so much, guys. Very helpful.

Thank you.

I would now like to turn the call back to Curt Morgan for closing remarks.

Well, thank you again everybody for your attention today and your interest in our company and we enjoy these discussions. We’ll be out – members of management will be out talking to investors and the sell side analysts over the next couple of months. It’s a pretty busy schedule for us. We are always available, Molly as I’ll put her out there – for phone calls to follow up if there are further questions. But we are excited about where we are going with the company and we feel like we had very good results so far in ‘18 and we think ‘19 and ‘20 are shaping up to be very strong years. So, thank you for your time.

This concludes today’s conference call. You may now disconnect.