Vistra Corp.
Q4 2020 Earnings Call Transcript

Published: 26 Feb 2021

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to this Vistra Fourth Quarter 2020 Results Conference Call. . After the speakers' presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Molly Sorg, Head of Investor Relations for Vistra. Please go ahead Ms. Sorg.

[Molly Sorg:]

Thank you Carol, and good morning, everyone. Welcome to Vistra's investor webcast discussing fourth quarter and full-year 2020 results, which is being broadcast live from the Investor Relations section of our website at www.vistra corp.com. Also available on our website are a copy of today's investor presentation, our Form 10-K and the related earnings release.

[Curtis Morgan:]

Thank you, Molly, and good morning everybody. We appreciate your interest in this call. Today, this morning, I would like to start out with the elephant in the room. We had a rough week last week, to say the least and for our investors who are listening to this call, I want to say on behalf of everybody at Vistra that we are disappointed and our inability to deal with this unprecedented event in a way that was favorable for the company. But I can assure you that we did everything we could to try to count come out on top. And I would like to take you through a little bit and Jim Burke will to the events that ensued. And what we tried to do to deal with those events, what happens, and also just to tell you on the front end, that it has taken us until middle of this week, to really sought out what really ultimately ended-up happening. And, and so therefore, we felt it was imperative that we have this discussion, even though we have not sorted out everything, that we have this discussion today, and started the process, have a conversation about, what actually happened, and then we will get to the final numbers. I can assure you that there isn't anybody more disappointed than us. And it is disappointing to me, that we let you down, because we pride ourselves in execution. And I think we have done a darn good job of it over the five years I have been here. And within literally an hour or two, our worlds kind of turned upside down.

[James Burke:]

Thanks, Curt. I'm going to quickly cover Slide 16. As Curt said, I know we want to get to Q&A. I want to just hit two slides. Our full-year 2020 retail results were 176 million higher than our full-year 2019 results, driven by the acquisitions of Crius and Ambit, plus strong ERCOT margin performance partially offset by milder weather. The 197 million favorability in our collective generation segments was driven by higher margins in our Texas, East and Sunset segments, including the higher period-over-period benefits from our OPI initiatives, partially offset by lower capacity revenues. As it relates to the impacts of COVID-19, Vistra was able to navigate through the challenges brought on by the pandemic with minimal impacts to our financial performance. On the retail side, we only saw a small uptick in bad debt during the year, while our lower business volumes were offset by higher residential volumes. And as we discussed on our first quarter earnings call in May of 2020, our commercial team executed some opportunistic transactions in anticipation of the market volatility caused by COVID-19, resulting in a positive benefit to Vistra for the year. In addition to these strong financial results, our retail business grew its residential customer count in Texas year-over-year, reflecting strong performance by our legacy brands, while our generation business once again executed with commercial availability of over 95%. On the liquidity side as of year-end 2020, Vistra had total available liquidity of approximately $2.4 billion, which was primarily comprised of cash and availability under its revolving credit facility. This strong liquidity position enabled Vistra to effectively manage the collateral requirements related to the winter storm Uri. As of February 25th, Vistra had more than $1.5 billion of cash and availability under its revolving credit facility to meet any liquidity needs. We can close with Slide 17. Vistra repaid more than $1.5 billion of debt in 2020 to end the year at our long-term leverage target of 2.5 time net debt to adjusted EBITDA. As of February 23rd, we have repurchased approximately 5.9 million shares at an average price of $21.15. $1.375 billion remains available under this authorization. We are continuing to execute on our strategic renewable and energy storage investments, including our Texas Phase I and California battery projects. As we have communicated to you, we will be disciplined as it relates to deploying capital, regularly evaluating all growth projects for financial viability. We will only invest in growth projects if we are confident in the expected returns. As a result of this continuous review, we are currently pausing one growth project in West Texas due to updated economics driven by higher-than-anticipated congestion costs. I know many of you are wondering how our existing capital allocation plan will change as a result of the impacts of this winter storm. We expect to provide an updated capital allocation plan for 2021 on our first quarter earnings call. We remain committed to our dividend trajectory and to maintaining a strong balance sheet. The challenges brought on by the global pandemic in 2020 and this historic winter storm in Texas last week have tested our business model. We truly believe it was a one-time historic event. The winter event was a significant financial hit. Our people worked in very tough conditions to generate as much power for the greatest possible. Importantly, our business still has the strong assets that it had just two weeks ago. Both our customer base and our generation footprint remain intact, and we believe with solid growth prospects. We are a resilient team and we will stay focused on bringing value for our stakeholders over the long term. With that, operator, we are now ready to open the lines for questions.

[Operator:]

Thank you. Your first question this morning comes from Stephen Byrd from Morgan Stanley. Please go ahead.

[Stephen Byrd:]

Thanks so much for taking my questions and I really do appreciate the very frank and kind of thorough review that you all provided. So thank you. Just first, maybe on the natural gas supply situation. In terms of just the supplier obligations to you, is there a potential to litigate to the extent that firm supply was not provided or is that not likely?

[Curtis Morgan:]

No, there is a potential to that.

[Stephen Byrd:]

Okay. In the sense that sort of folks who had some firm supply obligation to you did not provide the gas. And the situations in Texas wouldn't necessarily excuse their delivery obligations?

[Curtis Morgan:]

Yes. I mean look, so it is going to come down to - and I don't want to actually litigate it, but there are provisions and contracts. Every one of them is a little bit different, and it will come down to whether those provisions applied in this instance or not. And to be a very simple analysis, what I will say is there is potential. We are still doing the analysis as to whether it will make sense or not, and we can update you guys on that. But obviously it is something we need to take a look at, because we thought we had gas at a particular price. And obviously we didn't, and that was a big hit for us. So we will see where the stakes is, but there could be some disputes.

[Stephen Byrd:]

Yes. Understood. And then the ERCOT pricing glitch on Monday, that is obviously - I share your frustration. That just seems like a tremendous just mistake by the - in terms of how the price was set. Is that also possible to - I know there was language about sort of adjusting that. But could that be adjusted? And obviously that would have a very substantial impact to your loss position. So I was just curious how you think about that.

[Curtis Morgan:]

So I think the interesting thing on that one, Steve, is first of all, yes, it can be disputed. Secondly, it is going to be disputed on both ends. So the prospective increase to the cap and actually keeping it at the cap on Thursday into Friday is going to be something, I think, that is going - not only will be maybe challenged with Public Utility Commission, but it may be challenged at the legislature. So we absolutely believe that when you are in EEA 3 and you don't have reserves, you have negative reserves that you can't be anywhere but the cap. But there is a particular mechanism in pricing scheme that actually kicked in that had the prices being set at LMPs that were below the cap at times. And I think the commission rightly so determined that the price should be at the cap. Ultimately, I think they have the authority to make that order. I think we will likely challenge the notion that you can't retroactively price. But I think there may be others like retailers who may challenge whether it should have been set at the cap. So it is an unfortunate thing because billions of dollars changed hands in a week. People are going to go out of business over it. And I think people are going to try to see what they can do to change the playing field. So we won't really know until we get through all of that math, which I think will go on for some time. But we are probably going to contribute a little bit to the mess because there are some things that we think are legitimate to be - to dispute, and we may do that.

[Stephen Byrd:]

And Curt, just on that, this point about the position gas power plants were in, it strikes me as such a problem from a market design point of view, in the sense that the gas plant owners were in this on Monday, this really tough position. Do you buy gas at very high prices, first, not knowing necessarily whether you are going to dispatch, but secondly, into a price --a power where you are going to lose a lot of money. And yet at the same time, you want to provide as many electrons as you can so the people of Texas. Am I getting that right or I may have misunderstood.

[Curtis Morgan:]

No, you have got it exactly right, Stephen. And this was the dilemma that we were faced with. With an unknown load, an unknown financial obligation, but an absolute obligation to human needs. And this is the problem, and I said this last night, yesterday to the House and the Senate in Texas that I don't believe Texas can stop this type of an event, and I don't think any state really can'. I don't think they like the price cap. They don't like the grid products. They don't like consumers having it passed on. We don't like consumers having blips like this passed on because they will shop for another supplier or retailer. And so we all agree that the volatility in this market is probably not what it should be. On the other end of the spectrum, I'm not sure that everybody is ready to go to some full capacity market. But I do believe there is something that can be done in between where the price cap comes down and you increase the amount of reserves, which increases the revenues into the market and it increases the steel in the ground. So it brings this thing a little more stable with less layouts and less risk to consumers. Because what's a problem with the model now for us is as a retailer we don't want to increase price to consumers in the middle of this type of an event, yet our suppliers are increasing prices at will. And we get squeezed in the middle. That is an untenable situation. That is not something that can last. And I believe I made some good points and people are beginning to realize that in this market. So I am convinced that market design will help with that. But the other thing is we cannot let the gas system fail again, and it did. And I don't care what anybody says. All the way from the wellhead, I mean we are producing right now oil and gas in North Dakota. Don't tell me it can't be produced in that kind of weather. And so we can't have that happen again. I don't care if we produce more gas than we ever have in Texas because of demand. The reality is the pressures on the lines were not sufficient enough to get gas generators what they need it in order to be at the top. And we are in a virtuous cycle. We need to provide electricity for compressors and for gas processing and for production sites. We need gas bill to produce electricity. So they all have to work together. And sometimes, that is what regulatory - that is what regulation does and that is what policymakers do. And we need to make sure that happens.

[Stephen Byrd:]

Very good. I could ask 50 more questions, but I will hand it over to others.

[Curtis Morgan:]

Well, I think we are going to give a chance, I hope Tuesday.

[Stephen Byrd:]

Yes, sir, Tuesday I think next week. Thank you.

[Curtis Morgan:]

Alright. Thank you.

[Operator:]

Our next question comes from Steve Fleishman from Wolfe Research. Please go ahead.

[Steven Fleishman:]

Hi good morning, thanks. I will try to limit to the one question and follow-up.

[Curtis Morgan:]

You can do more than one.

[Steven Fleishman:]

Okay. Thanks, Curt. Just I think just a couple of days ago, you raised the dividend, and I think more - frankly, more than you were initially planning to for this year. Could you just talk about your thinking in doing that in the context of everything?

[Curtis Morgan:]

Yes, that is an excellent question. So you know we moved it in September. And then we decided to just move it a couple of pennies and to $0.60. And it was $10 million, Steve. And we had made the call, and we just didn't go back on it. $10 million's still $10 million. So we decided to go forward with it and thought it was still the right thing. This is one of these things where if you do it, some people say, "Why the heck are you doing, raising your dividend?" Regardless of how much it is in the middle of something like this, honestly I think the way we are thinking about this is that this is a onetime event. It is unfortunate, but we are still on the trajectory when 2022 rolls around. We are still back to where we were on our capital allocation plan in 2023 and forward. And so we made the call to continue with that. Relatively small, but still obviously it is an obvious change in the middle of this type of situation. It certainly can be second guessed, but we thought it was the right thing to do to move forward with it. We still are very interested in our dividend. We think it is important to our investors. And so we decided to stick with it. Because we made that decision, Steve, by the way, before this hit. As a Board, we decided to do this, and we did not revisit it. We said we are going to go ahead and move forward with it.

[Steven Fleishman:]

Okay. But I assume you did that with context knowing that you could get - even though this was a big hit, it is manageable in the scheme of the whole company?

[Curtis Morgan:]

Yes. So from a liquidity standpoint, we feel good. And not only do we feel good with what we have, we feel good with the partnerships we have with a number of different financial institutions that have frankly been very supportive. And they didn't know anything, by the way. They didn't know if we made money or we didn't make money. But they also knew people were winners and losers. And they have come to us and said, "Look, we believe in your long term. If you need it any kind of liquidity, we would be happy to make our balance sheet available to you to help you through this, if you needed it." I’m convinced that this is not a liquidity crisis for this company. This is a short run-material hit. We took a body blow. But I also believe that we will come back or out of this and move forward with strength. And the fact that people are willing to help us out in this, and they understand, they believe in us, that is huge to us. But Steve, I don't see this as a situation we are in dire straits. I would tell you, if we hadn't got our debt down and we are still the old IPP model, we would be in a different place.

[Steven Fleishman:]

Yes, good. And then just a follow-up is just thinking - trying to ignore 2021 and what happened and looking to 2022 let's say and beyond. Can you just talk a little bit about how you are thinking about both generation, which I think forwards have moved up some? But is there any different strategy there for you? And then retail, how are you thinking about the implications it is for retail at 2022 and onward?

[Curtis Morgan:]

Yes. So a number that Jim talk a little bit about retail. But I will just say - I'm sorry, what was the first part of that? I got the -.

[Steven Fleishman:]

Generation and hedging.

[Curtis Morgan:]

Yes, yes, yes, sorry.

[Steven Fleishman:]

Ignoring 2021, focusing for the future towards 2022.

[Curtis Morgan:]

Yes. So I guess gets in a little bit to the capital allocation discussion too. I mean first of all, we still believe probably more so than we ever have, in Texas. Until there is a market design change, the generation is pretty darn important. And now we know obviously supply chain around our generation with gas is even more important than we ever thought. But we still believe that the generation that we have is important. I still think that we are going to see coal retirements. And we believe, probably even more now than ever, because my guess is this is also going to impact development in the ERCOT market. But we think there is value in these - in the projects that we are doing. So we continue to want to do those. I will say, though, Steve, that how we finance those and how we realize the value from them. I think we always have been open-minded, and we will continue to be open-minded about - I'm talking now about the renewable investments that we are doing. And so there could be some things that we do. I think we would like to buy our shares back, and we are going to probably need to do that even more. So the real challenge in 2021 is there is not going to be a lot of money to do that, unless we were to do some project-level financing or something like that, which we will consider. In 2022 and beyond, by the way, retail actually held up through this. And Steve or Jim can get into the details and tell you his thoughts on retail real quick. But we are looking not only to maintain our retail, but we may end up getting - we are a provider of last resort in ERCOT. And we may get some of the customers, if in fact customers drop their customers to the provider of last resort, which is a mechanism in ERCOT. We may get a significant amount of new customers. And we are also open to continuing M&A around retail. So we have been saying we would like to get a little more retail in our business. I think we are continuing that. We like that business. We are good at it. And so I think that hasn't changed. On the generation front. We were sort of reducing our generation exposure a little bit anyway, and we are becoming more and more matched. I know this event obviously shakes people because we ended up being short. It was because of things that we did not, could not have planned for. So I still think that we are going to head down a path where our generation is going to be reduced in terms of megawatts as we retire coal. And we will add some renewables and batteries, and we will still have generation. But I think we will be a much more balanced company as we go forward. Even with this event, we still think that is the right move. I hope that I -- Jim, do you want to say anything about retail quick?

[James Burke:]

Yes, sure, I would. Thanks, Curt. Steve, I think over the evolution of the markets here in ERCOT, we have seen these events come every three to five-years. And it disciplines retailers to think differently about some of the collateral requirements and the hedging that is necessary to survive. This event had the chance to really create a runaway scenario for swing for the retail segment, for any retail business in ERCOT. And then the load shed capped out that exposure for some, and it actually it did for our business as well. And so the retail business held well. However, there still are some retail businesses that experienced swing, and they are reporting some results that are unfavorable. I think this business takes more capital than most people think. And it takes more discipline around hedging than most people think. And we found ourselves even in a business that we are very familiar with, having assets ready to run, being in a position to run and having trouble with the fuel supply, which we did not see coming to the extent obviously that had occurred. So I think there is going to be some retail consolidation. I think whether it is through the process or whether that is through a chance to take a look at some books. I think we are going to come out of this in a relative position in a very strong place. And we look at 2022 and beyond as back to normal. And to your point about the curves, the curves being up in the next several years is a 200 million to 300 million difference than where we were just a few weeks ago. And so we will see how that plays out. But this is a tough one, tough one to get through. But I think coming out on the other side, we are going to be relatively positioned in a good place.

[Steven Fleishman:]

Great. Thank you.

[Curtis Morgan:]

Thank you Steve.

[Operator:]

Your next question comes from Julien Dumoulin-Smith from Bank of America.

[Julien Dumoulin-Smith:]

Hey, thank you for all the color and commentary. I wish you guys the best. Can we talk about capital allocation? I know you mentioned an update coming, but there is some - you just alluded to it, so I want to bring it up more directly here. It seems like there is some latitude in the budget, especially if you think about having a probably disproportionate preference to review buybacks here. How do you think about investments in renewables and the ability not to pursue them, but to monetize those selectively as you complete them? Certainly, it seems like an added source, but also can we address the credit rating and your thought process, perhaps initially with the rating agencies?

[Curtis Morgan:]

Yes, great questions, Julien. So on the renewables, I think you sort of stated accurately. And I tried to portray this, maybe I didn't do a very good job on it. But I think there are some opportunity to potentially raise capital in a different way, let's put it that way, that could add capital to buy back shares. And I think we would like to buy our shares back. So I think we are going to be very open-minded. These projects have value to them. And now that can be somewhat contingent on also having contracted projects. And of course we have a retail business that we can look at to contract with, but we also can do that externally with third parties. So I think there is some work in 2021, we will do to make sure that. But we are not in a position where we have done it ahead and that we absolutely have to do it, but I think it is worth doing. And we were considering it even before this event, but I think it is an even higher priority. Jim, do you have anything you want to add to that? But that is kind of how I see that. And then I can answer the next piece of it too.

[James Burke:]

Our view is very similar to Curt, and I think there may be opportunities to look at current operating assets in the market, are those underway, as current owners or projects might have seen the performance get and how they hedged some of those assets in this market as well. And so I think there could be other opportunities that weren't on the horizon just a few weeks ago.

[Julien Dumoulin-Smith:]

It sounds interesting.

[Curtis Morgan:]

We have looked at that, Julien. And the problem is again if you want to sell it, and return to the hedge, I suppose you could do that. But the values just aren't there. There is so much generation that is either explicitly or implicitly for sale in the market that - and I don't feel like we have to do that. But if we found an opportunity to do that, that made some financial sense, we don't need to own all the megawatts that we have, and so we would consider that. But I'm not - we are not going to rush to that because we are not in a financial distress. And I think we are going to be a little more disciplined. I think I would rather look for ways to save money and to do things like that rather than to force a sale in the middle of a market that is not a particularly good market to sell assets in.

[Julien Dumoulin-Smith:]

I understand.

[Curtis Morgan:]

You asked about the ratings - yes, so rating agencies I will just say this, we have had some early discussions with them. And this is, like it is to you guys, it is an initial shock. They know that we are still disciplined, and we will continue to pay down debt and that we have been that way. And so look, I think we have had constructive discussions. I have nothing to announce at this point in time about that, and they don't either. But I would say the discussions have been constructive. And I'm going to spend some time I could. I was in these hearings all day yesterday. I'm going to spend some time with a couple of the agencies myself because I couldn't make the meetings and talk to them. But I found the discussions to be very open and honest and constructive, and I'm hopeful that we will be okay there.

[Julien Dumoulin-Smith:]

Okay. Thanks a lot.

[Curtis Morgan:]

Thank you.

[Operator:]

Your next question comes from (Ph) from Guggenheim Partners. Please go ahead.

[James Kennedy:]

It is actually James for Shar. Curt, to build off your policy points about middle ground between high-priced assets and a capacity market, I mean we watched the hearings yesterday. It sounds like there is sort of momentum kind of from where we stand today. Could you give us any probability on policy change actually coming out of the spring session in the legislature?

[Curtis Morgan:]

Yes. So look, we were asked to bring back ideas in a week. This event has really shaken the state of Texas from the very top. I was able to speak with some of the obviously the leadership in the state of Texas, they don't want this to happen again. I think they are beginning to realize that the mix of assets in the market combined with the structure itself is not sustainable, pretty obvious to them. And they also know this was a big weather event. And we can't lose sight of that, that this was an extreme weather event. But at the same time, they have to ask themselves even so, do we really want to even have to take the risk of this type of event. And I think they are asking themselves, and they know the answer, none of them can stomach really the idea that a bunch of this high pricing power is going to get passed on to customers. And so they realize that that is an untenable position to be in for us, and they are worried about having enough generation. And they realize if you don't have a market structure that works, people aren't going to invest. So that tells me that there is a very good probability that we could get something done here, and I would say north of 50%. And I wouldn't normally say that about any process like that, but I see momentum. And I know our company is going to have a seat at the table. And we are going to be working on this extensively in the next few days, because I do not want to lose the momentum. I think we do need a change. And were already considering these things, and so we were prepared. And I think it is time to get everybody together and find a way to move this market. Still using competitive market principles, but I think stabilizing it somewhat.

[James Kennedy:]

Got it. Thanks. This will be it.

[Curtis Morgan:]

Thank you.

[Operator:]

Our next question comes from (Ph) from BMO. Please go ahead.

[Unidentified Analyst:]

Hey Curt, thank you for taking my questions. I’m in Houston. So I hope you will indulge me since I just got the power back. So I figure I have earned it too. I think Curt, you kind of f talked a little bit about the Oak Grove coal supply issues with some of the rail transportation not kind of getting through. I'm just curious, but don't you typically have like a coal power that would represent a couple of weeks of burn? I guess you aren't shipping it coal every day to kind of burn that coal. Can you kind of fill us in a little bit on kind of the issues there?

[Curtis Morgan:]

Yes, I will, and then Jim can jump in. But it was kind of two things. Getting coal to the coal silos, but it also was wet coal that we actually had. And so what we were - and that was creating issues with the front end process to eventually burn coal. And so it was those two things. So we were trying to get fresh coal in, and then we were having problems with the rail. Because the coal we had on the ground was frozen, and it was also wet in going up and causing problems that we end up having to take the units down. But that is what I understand it. But Jim has been working on this night and day. So why don't we let him also explain his knowledge of what happened?

[James Burke:]

Sure. Thanks, Amit, for the question. That is one of the benefits of having a mine operation right there is that we can self-supply we have several days worked at the plant. And then of course we have at the mine, we have much more under whole barn, a covered area. So the thought was when the coal pile, which is right by the plant, is exposed, it froze over, becomes basically chunks of ice that you can't put through the equipment without tearing it up. So the goal is to try to get the dryer coal over from the mine to the plant. And that transportation system is really tough, not just the tracks, but the railcars, the doors that you used to dump the call they are freezing. So they were freezing shut and then we couldn't actually once we got them open, we couldn't get them back closed. And so we had a supply chain even within our own system where it was effectively difficult to work in the freezing conditions that got worse through the middle of the week Before we were able to find ways to work through that. So that wasn't about a rail coming in from elsewhere. It was really between the mine and the plant and trying to get the best fuel we could. At Martin Lake, we obviously do have also a supply on hand. It was a derated plant because of the freezing temperatures and also dealing with the pile, effectively turning into ice. And so we ended up our conveyor systems where we are transporting this call up through to the plants, they are exposed as well in many parts of the country. Those are completely enclosed. So these systems, as Curt mentioned earlier, they were designed for the heat and the warm weather, not the freezing temperatures we were in. So we took de-rates on that plan as well. We ended up at a 70% capacity factor for coal during the week. So the capacity factor is certainly lower than we expected and wanted to have. But that 30% that we were not able to keep going, and that includes the de-rates and being off-line. That just became a very expensive prospect for us. Because as Curt said, we were replacing $5 to $20 a megawatt hour fuel with $2,000 fuel in the form of gas that we were burning in some of our old gas steam units. And so a little bit of miss on the volume there multiplied by the delta on fuel cost was substantial. So we are going to have to look at the coal handling and look at what resiliency we need to build in for this type of a cold weather stretch at our coal plants.

[Unidentified Analyst:]

And I guess that kind of leads into my follow-up question. Just going back to kind of the press release you guys put out Wednesday, I guess kind of in the midst of all of this. And I have heard - I think you testified to this yesterday in front of legislature as well. If I kind of look at the percentage of load of cut you kind of reserving, and I kind of used Monday as an example since that was kind of the height of this. Is it fair to say if we set aside MGP, assume that ran - that your fossil fleet kind of ran at a kind of a blended kind of capacity factor of like 70%, 75%?

[Curtis Morgan:]

Yes. And so like with prices kind of on Tuesday and Wednesday kind of clearing at the cap, and it looked like you guys had some length or heat rate length open going into this. I guess I'm still trying to wrap my head around on kind of on why the losses where they were to such an extent. Are you guys kind of saying that because you did such a good job in a light state on in north zone versus say Houston zone that you just - and the demand was so high there relatively, that you guys kind of found yourself short, whereas other kind of generation units that were pointed at Houston zone basically had the benefit of the load just basically being cut, so they basically weren't short anymore? Yes. So I mean - go ahead.

[Scott Hudson:]

I mean yes in essence, this was a very interesting pattern because heading into the weather event when you see what the temperatures were going to be. This looked like we are generators, specialty generators with length would have an opportunity to make potentially a good return on their efforts. And retailers, no matter how much they were headed, whether it was through a P95 or P99 scenario, they were going to swing and likely pay much higher prices to cover their obligation to their customers. So it was originally going to look like a good generator segment opportunity and probably a tough one for retailers. Once the load shed happened and the load shed happened, not just curtailing load for retail but it actually curtailed and contributed to the gas supply issues, the retailers kind of got stopped out on their exposure to the swing. And in some cases depending on how much load was shed, could have become lost on their supply position. And the generators and the ones that were online including ourselves, we could not get the fuel to meet the obligation of what we had sold forward to both third parties as well as our own supply book. So it shifted this load curtailment shifted the entire risk from what should have been on a retail segment back to a generation segment, because of its linkage to the fuel supply challenge on particularly natural gas. And that is we were long. We had an ability to capture this, but you are long if you get the fuel. If you don't get the fuel, you are short. And that is why when we put the press release out, we put a lot of emphasis on the fact that we were having fueling challenges. And we also wanted to do address that our units were winterized, they were there running. And we have an opportunity here if we can solve the field challenges. And despite all that, we were still a disproportionate amount of the generation on the grid. So it played out very differently than we would have thought a week or two ago, but those are the major drivers.

[Curtis Morgan:]

And Jim, I will just add that what happened is too is Monday, as I said, pricing was not at the cap. For this very strange reason, we were long Monday. Then we started having gas delivery issues, pricing issues as well as pressure issues. And then we lost Oak Grove for about day and a half, which is our low-cost fuel. And so it is like one of these sayings where if it could go bad, it did. And all those things contributed, but a big chunk of it really was around gas. The cost of gas as well as the amount of gas we were getting delivered. And then there was another - that is a big bucket. That is like, I think Jim has said, about two-thirds. And about third of it was around our coal of that total. And I know - because - I mean you can only imagine what I was doing to meet - I was like pulling my hair out. Like I thought we were long. I thought we were in a good position. We are one of the biggest generators in terms of percentage on the grid. You think $9,000 cap, you are thinking everything is going well. But when you start tracing through it, it begins to make sense and unravel as to how our position changed and how we were - had the inability to really do much about it. But we did the right thing, but it was financially not good. And that is a tough thing when you do things and you know that you were doing the right thing and the outcome doesn't swing your way, it is very difficult.

[Unidentified Analyst:]

I appreciate all the time, Curt. I know you had a hell of a day yesterday. Thank you.

[Curtis Morgan:]

Yes. Take care.

[Operator:]

This concludes the Q&A portion of our call, and I would like to turn it back to Curt Morgan for final comments.

[Curtis Morgan:]

Well, I appreciate people that are still hanging in there. But thank you very much for your interest in our company. Tough week last week, but this company is strong, resilient. It is a good company, and we are going to come out of this stronger than ever. I hope you all have a great weekend, and look forward to talking to you soon.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you once again for participating. You may now disconnect.