Vistra Corp.

Good morning, everyone, and welcome to the Vistro second quarter 2021 investor conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Today's call will be 45 minutes in length, and after today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Molly Sorg, Head of Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to Vistra's second quarter 2021 results conference call, which is being broadcast live from the Investor Relations section of our website at www.vistracorp.com. Also available on our website are a copy of today's investor presentation, our Form 10-Q, and the related press release. Joining me for today's call are Kurt Morgan, Chief Executive Officer, and Jim Burke, President and Chief Financial Officer. We have a few additional senior executives present to address questions during 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 that 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. We assume no obligation to update our forward-looking statements. Further, today's press 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 provided in the press release and in the appendix to the investor presentation. I will now turn the call over to Kurt 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, especially on this crowded earnings reporting day. As we find ourselves at the start of August already, the fact that the power markets are in a state of transition continues to be apparent. California, Texas, and New York have all requested conservation at various times during the summer. June of 2021 was America's hottest June in 127 years of records, beating the prior record from June of 2016 by .8 degrees. Much of this record-breaking heat has been observed in the Pacific Northwest. North Texas was actually slightly below the 10-year average in June, with April and May also being very mild. So as a nation, there is no question that temperatures have been on the rise in 2021, as have the extremes in weather conditions. These weather extremes, coupled with the greater percentage of renewable resources making up the supply stack in various markets, have resulted in a heightened sensitivity to scarcity conditions by the system operators, reinforcing the importance of thermal resources especially natural gas, in maintaining a reliable grid now and several years into the future. Power markets and systems must also balance decarbonization efforts with affordability and reliability, which is proving to be a challenge, as evidenced in California and Texas. Given the uncertainty with COVID-19, especially the Delta variant, and the country's desire to return to normal, we have continued to prioritize the safety of our number one asset, our people, while delivering reliable and affordable power to our customers. The second quarter results we are announcing today reflect this dedication and focus. During the quarter, we continued our rebound from the very unfortunate impacts from URI, most notably hardening our assets, participating in the Texas legislative and regulatory processes, and refining our risk management policies. We have also begun a process to review our strategic direction and how we allocate capital. On slide six, we show our strong second quarter financial results. Excluding the second quarter impacts from winter storm URI related to bill credits and higher fuel costs, Vistra delivered adjusted EBITDA from ongoing operations of $909 million, comparable to its very strong second quarter 2020 financial results. Including these URI impacts, Vistra's adjusted EBITDA from ongoing operations was $825 million. These results were pretty much in line with management expectations for the quarter. We have similarly had a solid start in the execution of the self-help initiatives we identified when we announced our revised financial guidance in April. We currently have a line of sight to achieving the vast majority of the $500 million of self-help initiatives we previously announced, and we have achieved more than 40% through June 30th. We will continue to pursue the full $500 million, but only to the extent we do not jeopardize the future risk profile and or earnings of the company. As a result, we are reaffirming our 2021 guidance ranges for both ongoing operations adjusted EBITDA and ongoing operations adjusted free cash flow before growth as set forth on slide six. Importantly, excluding URI, VISTA would be tracking in line to ahead of our pre-URI guidance midpoint for the year. We understand that URI happened, but we also believe it is important to recognize that the long-term earnings potential for VISTA remains intact. Turning now to slide seven, as I mentioned at the beginning of the call, power markets have recently moved up with forward curves in both ERCOT and PJM, as well as our other markets, up meaningfully over the last several months. I am sure you have heard me discuss our point of view in the past, which is our modeled fundamental view of where prices are likely to move over time, incorporating various weather conditions, new build scenarios, and other key variables on a probability-weighted basis. Pretty much since I have been at Vistra, our point of view has decoupled from backward-aided forward curves, especially in ERCOT. Over the years, forward markets and, to some extent, settled prices have afforded Vistra the opportunity to construct realized price curves in line with our point of view. It is interesting that, The recent positive movement in 2022 forward curves have brought pricing in line with Vistra's point of view, especially in ERCOT. ERCOT sparks have increased primarily for the winter and summer months, and we believe this is being driven by market participants reducing their overall risk tolerance following URI, and possibly the potential for market reforms which could result in more favorable price formation for dispatchable resources in the future to support market reliability. In PJM, however, it is our view that the rise in power prices has been driven primarily by the increase in natural gas prices. As of July 30th, Vistra is now 54% and 93% hedged in ERCOT and PJM, up from 40% and 50% respectively for 2022. We have similarly meaningfully increased our hedge positions in New York, New England, California, and the MISO markets over the last several months, taking advantage of the increase in outright power prices and spark spreads. The recent momentum in forward prices, primarily in ERCOT, supports our previously stated strong outlook for 2022. You might recall last fall at our virtual investor event in September, we offered an early outlook for 2022, noting our view that in a commodity-exposed business like ours, looking at average adjusted EBITDA over time is a more appropriate way to evaluate the earnings power of the business. We further offered our view that we believe 2022 ongoing operations adjusted EBITDA could come in line with this average concept. Specifically, we noted that the average of our 2020 and 2021 ongoing operations adjusted EBITDA guidance midpoints was approximately $3.4 billion, which we believed could be indicative of 2022 financial performance and reflected our point of view pricing. At that time, curves were lower. With the recent uplift in forward curves, especially in ERCOT, we continue to believe 2022 adjusted EBITDA from ongoing operations could be in the range of $3.4 billion, excluding the impact of the retail bill credits from URI, with a 60% to 70% conversion to adjusted free cash flow before growth. I'm now on slide eight. As we mentioned on our business update call in April, VISTA is taking several actions intended to address the risk we were exposed to during winter storm URI. First, we are investing nearly $50 million in 2021 prior to the 2022 winter on improvements to further harden our coal fuel handling capabilities and to further weatherize our Texas fleet for even colder temperatures and longer durations. We intend to spend up to another $30 million in 2022 to further enhance the ability for our fleet to withstand extreme weather conditions. We have also contracted for a meaningful amount of additional gas storage, which performed well during the storm to support our gas fleet. And we are installing dual fuel capabilities at our gas steam units, while similarly increasing the fuel oil inventory at our dual fuel sites. Last, we plan to carry more generation length into the peak seasons, increasing the level of physical insurance we carry to protect against volatility. The absolute level of excess generation we carry will be a function of our investments in our generation infrastructure and the ERCOT market improvements that are implemented going forward. In addition to these improvements, we are making on a standalone basis. The Texas legislature recently passed legislation that provides for mapping of the integrated gas and electric systems, which should help to alleviate gas deliverability issues by identifying critical infrastructure allowing for weatherization and registration with the transmission and distribution utilities to ensure that those assets continue to operate in the inclement conditions and receive power in the event of rolling outages in the future. We have already seen a significant amount of registration activity since URI. We intend to play a role in ensuring the efforts to map and identify critical gas and power infrastructure are carried out in a manner that results in the intended reduction of risk to the integrated systems. Last, both ERCOT and the Public Utility Commission of Texas are evaluating various market reform alternatives to reduce risk and ensure that dispatchable resources have adequate revenues to incent investment and serve to balance the system with a growing number of intermittent renewables. We believe any such reforms could further improve ERCOT's risk profile for market participants and enhance the attractiveness of the market. The process is in its early stages, so it is difficult at this time to speculate on what form these reforms might take, though very clearly ERCOT and the PUC-T are focused on ensuring that Texans have reliable electricity going forward, reinforcing the importance of dispatchable resources like Vistra's. The most likely potential areas for reform are to the operating reserve demand curve, including reducing the price cap and extending the amount of reserves on the curve, and additional ancillary services to incentivize new investment and maintain existing dispatchable generation. Before I turn the call over to Jim, I would like to comment briefly on our strategic direction and capital allocation review. As we noted on our business update call in April, the events of URI required us to step back and rethink our strategic direction, enterprise risk, and how we allocate capital. The goal is to unlock the value of our company that we strongly believe remains intact. As you likely know, the events of URI also have set back the timeline for a potential investment-grade rating to at least the end of 2022 or at some point in 2023. The strategic review will undoubtedly address our leverage targets in the pursuit of investment-grade credit ratings. However, regardless of the direction we take, Vistra will always maintain a strong balance sheet that allows us to withstand extreme risk, pursue business opportunities, and attract investors. We understand the urgency of this work given where our stock is trading, but we also want to be prudent in our deliberations. We intend to provide more information when we have news to discuss on our longer-term strategic direction, no later than our third quarter earnings call in early November. Probably the most important point is that our deliberations have confirmed our confidence in the long-term value of our business. It is incumbent on us to put together the plan to realize this value and we intend to do so. We believe that our relatively young, low-cost assets that we are de-risking will play a critical role in the energy transition for the next couple of decades, which, when combined with our attractive retail and zero-carbon businesses, should deliver relatively consistent financial results while generating a substantial amount of free cash flow on an annual basis. At today's stock price, investing in our stock has to be at the top of the list of where to allocate our capital. We look forward to talking more about our strategic direction and how we plan to allocate our significant cash flow in the months ahead. I will now turn the call over to Jim Burke.

Thank you, Kurt. As shown on slide 10, Vistra delivered strong financial results during the quarter with adjusted EBITDA from ongoing operations of $825 million. Excluding the URI-related bill credits and fuel cost adjustments, Vistra's adjusted EBITDA from ongoing operations was $909 million, results that are comparable to our exceptionally strong second quarter 2020 financial results. Period over period, our retail segment results were $109 million higher than second quarter 2020, driven by the realization of our self-help initiatives in 21. The collective generation segments ended the quarter $213 million lower than second quarter 2020, driven primarily by lower realized prices in Texas after an exceptionally strong 2020 and lower capacity revenues. Importantly, the long-term earnings power of this company has not been affected by URI, which was a highly unusual event. In fact, without the impact of URI, we expect we would have been reaffirming our pre-URI guidance today. which had an adjusted EBITDA from ongoing operations midpoint of $3.275 billion. Next year, excluding the impact from URI bill credits, we believe we have the ability to deliver adjusted EBITDA from ongoing operations in the $3.4 billion range with 60% to 70% conversion to free cash flow before growth. All of this to say, we continue to believe this business will have significant capital to allocate in the years ahead, which takes me to slide 11. Last week our board approved our third quarter 2021 dividend of 15 cents, or 60 cents on an annual basis, subject to board approval at the appropriate times. We remain committed to maintaining a strong balance sheet, though as Curt mentioned, we believe we are still a couple of years out from a potential investment grade credit rating. In the second quarter of 2021, we did execute one capital markets transaction, issuing $1.25 billion of 4.375% senior unsecured notes due May 1, 2029. We used the proceeds to repay all of the outstanding principal amounts of the $1.25 billion 364-day term loan aid that we issued following URI. Beyond our priority to maintain a strong balance sheet, we also view our stock as significantly undervalued. We continue to believe that share buybacks at these levels would be one of the most attractive uses of our capital, and we will continue to evaluate opportunities to reallocate capital for the remainder of 2021. Last, as we previously discussed, we are also evaluating alternatives to accelerate the pace of our renewable development using lower-cost capital. All of these capital allocation tenants are being evaluated in our current review, so please stay tuned for more to come on these topics in the months ahead. In closing, while Winter Storm URI was a significant one-time financial hit in the first quarter, our business has been able to get back on track and execute well in the second quarter. And with the recent uptick in forward curves in both PJM and ERCOT, our forward outlook has only improved, with management expecting that we will be able to deliver strong adjusted EBITDA and adjusted free cash flow before growth in 2022 and beyond. We believe in the value of this business and our ability to generate significant free cash flow for allocation in the years ahead. In fact, with our long-term view that we will be able to generate $3 billion or more of adjusted EBITDA with 60% to 70% conversion of free cash flow on an annual basis, we could repurchase our entire market cap in roughly five years if we were to allocate all of this capital to share buybacks. Attractive value, in our opinion. Our teams are committed to execution. We prioritize operational excellence, low-cost operations, and disciplined financial management. As always, we are focused on delivering safe and reliable electricity to our customers while creating value for our stakeholders over the long term. With that operator, we are now ready to open the lines for questions.

Thank you, and we will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble the roster. And our first question today will come from Char Perreza with Guggenheim. Please go ahead. Hey, good morning, guys.

Hey, Char.

Good to hear from you.

Yeah, same, same, Kurt. Just quickly, Kurt, just on your comments regarding a review of your strategic direction, how you allocate capital, you mentioned in your prepared remarks, as you kind of continue to generate cash, can you maybe just speak on how you're thinking about buybacks versus perhaps a special dividend, especially as we're thinking about 22 and beyond? maybe more inorganic retail deals. Also, you kind of specifically also noted strategic direction. Could that also imply that there is maybe an internal debate around a go-private scenario if you continue to trade at these unsustainable, high free cash flow yields? Could a go-private scenario be the avenue to realize value? I guess just maybe if you can elaborate a little bit more on that strategic direction comment and will you be prepared to discuss this by November or could this be pushed out? Thanks.

Yeah. Hey, Char. So thank you. Uh, that's a great question. A lot in that question. Um, so, and, but, but that, I mean, I knew that I, I figured we should get that question. I think, you know, after the URI event, I think most people would expect that, um, you know, the management team and the board, we're going to sit down and have a discussion about our business. And, um, you know, something that obviously it was a risk that we did not contemplate and, um, you know, to just to brush it off and say, we're going to go at things business as usual. You know, I don't think that would have sat well with anybody and certainly not with me and not with the board. So I think the first and foremost that, you know, we felt a sense of urgency and of course you've got, you got, you know, this, I mean, our stock sold off big, um, And more so actually than the actual math that you would put into it in terms of our shares divided into the loss itself. So there was a loss in confidence. And I understand that. But we had to rethink things going forward. And I think that's what we're doing. I don't know that anything's really changed that much, but I think there are four main pillars that are driving us as we go through our strategic direction and as we think about allocating capital. Number one is our stock is incredibly cheap, and we've done a lot of analysis, and we still believe that we're significantly undervalued. And so we have to think about what's the best way to invest in our own company. If others don't believe in us, then we need to believe in ourselves, and we generate a lot of cash. And so I think we have to take a hard look at buying back our shares. And that ultimately adds value to the shareholders that stay in the company. And so it's a good use of capital in our mind. We said this in our remarks, Jim and I did, that we want to have a strong balance sheet. We never started this, though, with the idea that we had to pursue investment-grade rating. That kind of came along with it. And if we get there, that's fine. What's more important is that we have a balance sheet that can withstand the kind of risk that we did with URI. If we were sitting here at five or six, maybe seven times debt to EBITDA like the IPPs of the past, we'd probably be talking about a completely different situation right now. than what we are. So we believe a strong balance sheet is still, you know, one of the cornerstones of our company, but we're, you know, we're not going to be, you know, penny wise and pound foolish. So, you know, we're going to look, you know, real hard at that. We think a dividend will continue to be a part of what we do. And finally, you know, we did a review of our, of our renewable and battery business. And we have one of the best businesses. We see just about every development company that's trying to sell itself right now. We know what those teams look like. We understand Nextera's got an incredible business and, you know, kudos to them. But, you know, we're not second to anybody else in our view. We've got a great pipeline. We're using sites that have access to transmission. We have a tremendous capability in terms of development. You know, development's not just about going out and getting in the interconnection queue. You've got to have market knowledge and experience. You have to have you know, construction experience and operations and maintenance skills. We have the economies of scale from a functional support standpoint. We bring a lot to the table. The key for us, though, is it's a cost of capital gain. And so that's where partners may come into this. And so we're going to take a real hard look at, you know, how we can accelerate the growth in that business and make sure that we have a competitive cost of capital in that business. And that could also mean that we may want to do some project financing, but certainly bring in probably some infrastructure-type investment. So that's what we're working on. There's no disagreement with our board. I think our board and the management team are in lockstep, but these things take a little bit of time, and we're darn sure going to be prudent about it. We want to make sure whatever move we make is a long-term move. We don't want to have a knee-jerk reaction here and then have to do something again. And I feel good, Char, that we will likely do something no later than the Q3 call timeframe. We'd like to obviously not do it on the Q3 call because that gets you guys all congested because you've got other things to deal with. We certainly would like to do it before that and separately so that we can have the kind of time where we can spend time with investors and with you guys. That's where we are on this. We continue to believe in the long-term value of this company. I step back and think about it this way. We've got this incredible business that generates a tremendous amount of cash, and that cash can open up the opportunity for us to return capital. We've also got this burgeoning and very good growth business, and that business needs capital. And it also means a cost advantage. That's what we need to unlock. That's what we need to solve for. And that's what we are working on to do. And I feel very good that we're on a good path to do that. But there's a lot of work to be done. We want to get to the market as soon as we can on this direction because we feel the urgency, but we want to do it right.

So just to reiterate, Kurt, the strategic direction really isn't about a debate on whether investors will ever properly reflect the value of an IPP as a public company and whether you're debating whether we should go private because that's what private's willing to pay for assets. This is more of a strategic direction, maybe a change in how you're thinking about buybacks versus dividend versus organic growth versus inorganic growth as a publicly traded company. This isn't a debate between whether we should go private or stay public.

Yeah, no, you know, look, we're for sale every day. So if somebody wanted to pay an attractive price, but we're not out, you know, with a, you know, hanging our shingle out there, because I'll just tell you, I've said this before, you know this, Char, I've said it to you, but I've been in the private setting. I know what it is. I know what it takes. I know what private investors want. And I think that there are others out there that have gone private that are realizing that if you go private, it's the same thing that if you were public for these businesses, that it's a long-term game. And the idea that a private equity firm would come in here and could somehow then exit in three to five years, I just don't know who that exit would be. And the thing that makes it difficult for us is that we, you know, it would take a big equity check and a significant cap in order to get this done. That doesn't mean that it can't happen, but that's not, that is not our primary direction. We want to take a direction that we control. We don't control that direction. And so we want something that we control and that we think can unlock this value. So that's where we're focused.

Fantastic. Thank you guys so much. Appreciate it.

Yeah, thank you. And our next question will come from Steven Bird with Morgan Stanley.

Please go ahead. Hi, good morning. Thanks so much for taking my questions. Hey, Steven. I wanted to just talk a bit more about the opportunities for renewables that you're seeing and just get your latest view on sort of the state of play there and As much as I love the idea of growing in renewables, it does strike me as challenging to kind of beat the economics of your own stock. And I know you just went through a long discussion of your review, so I understand that this is in process. But just would you mind talking a bit about that opportunity set in renewables, what you're seeing broadly? I would guess there might be some degree of distress among some of those smaller players out there. But just could you talk a little bit more about what you're seeing there?

Yeah, good question, Stephen. So, look, I think I tried to say this, but I'll make it as clear as I can. We think at the top of our list of things to use to capital from this great cash generation machine that we have is our stock right now. And so, you know, you see the free cash flow yields. The math is pretty clear. And so, you know, but we also want to have a strong balance sheet. I went through all these things, and we do think paying a dividend makes sense. And so we're going to do that. The real challenge is can we return capital and grow what we believe is a very good, you know, and like I said, burgeoning renewables and battery storage business. I mean, these are opportunities just because of the sites that we have and we're in locations like California. I mean, California is talking about 12,000 megawatts plus of batteries that they need to put in. We've got sites that can do that. We can't walk away from that value proposition. We want to partner with PG&E and others in the state of California and with the state of California to help them solve, you know, where they're trying to take their state. And we have the sites to do that. And so I think what we've concluded is there are ways to do both. And that's where we're headed. We also want, we believe that partnering with people who have, let's say, at an advantage cost of capital and will put us in a position to of having an advantage across the capital will put us in a better position. We have everything else there is to compete in this business. And, you know, we have the full suite of capabilities. So I don't think it's a question of whether you can do one or the other. I think we can do both. The real question is, is how do we go about doing that? And that's where we're spending the time right now is concluding, you know, that effort so that we can pursue both. There are great companies out there. I use Nextera as one. I think Nextera is a great company. They've been able to do both. I think we can do both. We're going to just have to balance that. That's where we're headed.

Makes a lot of sense. I wanted to follow up on Illinois and just get your latest thoughts on the state of play there, the opportunity set. It strikes me sometimes folks don't appreciate the the potential there for you all. But I'm just curious what you're seeing on the ground, what your view is of where that may head.

Yeah, so, I mean, this is an interesting one because, you know, Governor Pritzker would like to move the state of Illinois in a very, you know, progressive way to a leadership position in, you know, the area of, you know, clean generation. And He's pushing very hard on doing that, and he sees an opportunity with an omnibus energy bill if that's going to happen, and I'm interpreting. He's not telling me this. I'm telling you what I'm reading through the discussions that I've had, and in so doing, that's a difficult thing because he would like to see emissions rates from thermal resources to decline, and part of the legislation is is pushing hard on that. And, of course, that creates disruption. And there's some co-ops that own coal plants that just built them, or munis, I should say, that just built them not too long ago, and they still have, you know, a huge amount of debt that are on a number of different municipalities, and that creates a lot of angst. And, of course, you know, there's others like us that own thermal resources, and we're trying to sort out how does that happen. Um, and you know, I think even within his own party, there is a debate going on as to how, how you actually accomplish that. Um, so, and, and that has created a bit of a divide. And I think at the end of the day, they're going to try to work together and I believe they will because there's too much at stake here and they'll come to a reasonable conclusion to move the state forward in terms of lowering its emissions. We're in the middle of that trying to help that. The one thing that I've tried to mention to people is that if you get the omnibus bill in place and you put the kind of stipulations in the rec auctions and require developers to actually complete their projects and get them online, that by that very nature will end up crowding out thermal resources and will reduce emissions without having to have a heavy-handed developer set of criteria that forces those to happen in an unnatural fashion. And so I think if they get this bill passed and they put the right teeth in so that they can get the development that they want of the renewable and battery resources, they will accomplish a major amount of what they want to get done. So the real essence, though, at the end of the day, can something get done? We're cautiously optimistic that there will be a way, a path forward that everybody will come together because, again, there's too much at stake. There's a lot of investment that they want to do in renewables. Our coal to solar is part of that. We feel strongly that we're solidly in the legislation. We have a very good program that helps communities that are losing jobs from the fact that we're shutting down coal plants and investing in those communities, bringing property tax base And we're real. We're a real company. We have real projects. And we can bring those online in a very short period of time. And so we think there's a lot in that for us as well. And so we would like to, you know, to obviously help bridge this gap and work together. And that's what we're doing. We're working together with as many people as we can to try to help bridge this divide. I think it'll get done, Stephen. But, you know, you never know. And, you know, we're cautiously optimistic. But there's a lot at stake, and we think, of course, the nukes, I didn't even mention that. Those are very important to the state. They've made that very clear. So all that has to come together. Most of it is already together. At the end of the day, it's just getting through this, you know, what do we do in the long run with thermal resources and the glide path for those to exit? And I think that's where we need to come up with a compromise, and I believe we'll be able to do that. That's really, really helpful. Thank you so much. Thank you.

And our next question will come from Steve Fleshman with Wolf Research. Please go ahead.

Hey, good morning. Thank you. Hey, Kurt. Could you just remind us the current capital plan, what was in there in terms of dollars for renewables capex over the next few years? And maybe just also give us an update on where you stand on projects there, particularly the ones you were planning to do in Texas.

Yeah. So, Steve, we had said that we would put a half a billion, roughly $500 million. Jim, while I'm answering this, Jim may be able to find the exact numbers that we have. But But a half a billion dollars a year, we had said for 10 years. And when we put out that 10-year view, and I think we're largely a little bit more and a little bit less in a couple of years. But we were going to reinvest that amount into renewables and batteries. And we're tracking sort of in that range. And that was the investment. In terms of the projects themselves, I don't have the list in front of me, but I know that we have, and I don't know, Jim, if you have that list and if you've been able to find that, but if you can pull up that list of where we are on each of the different projects.

Sure. Steve, we had in our investor day, we had talked about a capital allocation plan that would put over $600,000 million dollars into 21. We said 650 approximately in 21 and 522. We scaled the 650 down to 425 for this year. And we did that, you know, as part of the earlier questions, we're kind of reading the market signals on, you know, where we should best allocate our capital. And we control these sites. So these are sites that we can bring on you know, in the timeframe that we would like. We're going to be the off-taker, you know, predominantly for the Texas sites. And so this gives us a lot of flexibility to be able to, you know, bring them on and do it in the timeframe that makes the most sense for us. As far as the sites themselves, you know, we have both the MOS 300 and 100, which were completed. And those are, you know, operating with an RA agreement from PG&E. The other sites that we're focused on are the Bright Side Solar Project, the DeCordova Battery Project, which is our hybrid project here in Texas. We've got Emerald Grove, and we've got just a little bit of spend to keep some options alive at a few other sites. That's the bulk of our spend for this year, and we're going to continue to build out for the balance of this year. We've got some phase one projects that we had announced earlier. We just slowed the path down and we haven't gotten going yet on phase two. So the strategic review that Kurt has mentioned will obviously dictate a lot in terms of the pace and can we find a cheaper form of financing that helps us accelerate this but still use our capital for kind of its highest return. And so we'll share that as we bring the details of that going forward. But it's the pipeline we talked about before, just a little bit slower go given we were resetting post-Juri. But the projects that we have are moving forward well, and the battery projects in California are performing well.

And, Steve, one other thing to add on that. Andrews County is one. that we pulled back when we pulled back to this lower spin. And that was initially, this is why I talk about, you know, having the capability and having the discipline in development. If you're a development company and all you're going to do is kind of, you know, build this thing up and flip it, it's a little bit different. But we were going to have to, you know, live with it. But we had some issues with congestion. And we've worked with Encore, and we now believe, you know, that side could go up to 200 megawatts. But this is the kind of stuff that, We have a dedicated group on transmission that are, you know, incredible at what they do. And, you know, they can keep us out of issues by overdeveloping in an area and then having congestion and having the price reduced significantly. And so we pulled that back. But now, since we've been able to work it, it's a project we'll do later. And as Jim said, we control that site. So that was part of why we also pulled that back.

Okay. Just, I guess, a high-level question related to the renewables is just in your slide, you mentioned the, you know, alternatives to accelerate the pace of development using a cheaper cost of capital, which makes a lot of sense and frees up a lot more capital for buyback. In terms of then the mix of the company, if someone else is going to own some of this, like, can you grow the business fast enough, quicker that even if somebody is going to own some of it, the overall company keeps moving a lot greener over the period, you know, if someone, you know, if you have a partner.

Yeah, sure. So, yeah, I mean, that's a really good question and one that we have spent a lot of time, Jim and I have recently, by the way, but, You know, you're talking about whether, you know, how do you do this? Is this a JV? And, you know, those things tend to have governance associated with them, and, you know, there's a lot to them. You know, I think the way we're thinking about it, Steve, is, you know, there's a couple ways to do this. You know, you can have an equity investment. You can also have sort of what I'll call a structured financing system. where maybe it's a preferred convertible preferred or something like that. There's a number of ways to cut this in terms of how do you raise the capital against the spend and the value of the company that can allow you to grow this company and to maintain the ownership and the governance that allows you to control the shots. you can get into a situation if you don't have the right partner where it can get gummed up. And, you know, that's not what we're looking to do. What we're looking to do is get access, you know, to, there's a lot of capital out there right now and a lot of infrastructure funds and a lot of people looking for, you know, companies like us that are legitimate, that have a capability. And, and, and so, you know, I, we think that we can, you know, raise a reasonably priced capital, in a governance-friendly manner to continue to allow us to grow our business. And so, you know, we'll see. And the extent of how much the party would have, you know, a governance position in the company will depend on the size of the capital investment and the type of capital investment. And there'll be a balance that we'll make there. You know, we've got a number of good friends out there that are interested in this. And, you know, we know this because there are people, there are inbounds coming to us because I'm making comments like this on calls like this. But we know that there's interest in this. And then it comes down to just what do the terms look like. But we have people that we know that we're like-minded with, that we could work with, and that we believe that understand what we're trying to do, which is accelerate this, not slow it down. Okay.

Great. Makes a lot of sense. Thank you.

Thank you. And our next question will come from Durgesh Chopra with Evercore ISI. Please go ahead.

Hey, good morning, team. Just on the strategic review, you mentioned the size of the checks. I'm just wondering, like, as you go into the sort of the Q3 call and as you think through this, is there a possibility, so not sell the company outright, but perhaps get a like-minded partner who sees the value in the cash flow stream, sell a portion of the assets or a portion of the company? Is that a possibility? Yes, absolutely. Okay, perfect. And in terms of just the buyback you mentioned, obviously the currency is heavily discounted. On the Q3 call, should we expect sort of a formal program to be announced or like what to sort of, you know, you had this previous guidance of, I think it was a billion and a half dollars worth in share buyback. So should we expect a larger program or would you have done, you've taken some actions before then?

You know, I hesitate to get into precise numbers because we're working through this. We have a pretty big program that we already have out there for the next couple of years. I think what you're going to hear, though, is what we would like to do even longer term. I mean, I think we would like to paint a picture of, again, we've got this core business that generates a lot of cash, and I think we would like to earmark that to returning a bunch of cash. And so we want to give a picture of the future that goes multi-years and just kind of shows just how much return of capital that we can do over that period of time from that business. And then I think we also would like to paint a picture of what the growth side of our business would look like. And those two, you know, let's call them two separate businesses and two separate tracks. But at some point, those two ultimately merge again I think our biggest problem has been is that people can't envision the company long term. They say, well, at some point, those thermal assets are going to go away. But if you have two tracks, one, that you're generating a lot of cash and you're returning it to shareholders from your core business and you're building this large burgeoning renewable and battery business, at some point, those merge again. And then you have solved your long-term terminal value. Because our retail business isn't going anywhere. And we're going to grow that business. It's how we manufacture power, electricity that matters. And we've got a great business that returns a lot of capital. And I think we'll continue to do so for a long time that we can return to shareholders. We also have advantage sites and a core capability to be able to grow in renewables and batteries. And we want to be able to unlock both of those things. We think bringing in partners and additional capital is the way to do that. And then at some point in time, those two emerge again, and that you have this, you can then visualize this company in the long run because, you know, the supply side of our business, you know, has been essentially replaced from thermal to renewable and batteries. That's really the vision here. And then we need to get into the details of how that happens.

That makes sense, Kurt. Thank you. Just a quick one here. Could there be share buybacks this year in 2021? Potentially, previously you've said because of URI and sort of the balance sheet, there would be no share buybacks in 2020, but could you re-evaluate that?

We could. We could re-evaluate that, yes.

Okay, perfect. Thank you so much. I appreciate you taking the time.

Yeah, thank you. Thanks for the questions. And this will conclude our question and answer session. I'd like to turn the conference back over to Kurt Morgan for any closing remarks.

Thanks again, everybody, for joining the Q2 call. I know it's a busy, a very busy day. We tried to, we thought it was a pretty, you know, yeoman-like quarter. The company has rebounded well, so we didn't want to take, you know, the full hour. Hopefully this will give you some time. But, you know, a lot to talk about in the future, in the near term. You know, we'll be getting back to you soon with, you know, the strategic direction and the capital allocation. So thanks again. Hope everybody's well. Take care.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.