Jeff Bronchick: Thank you. [Technical Difficulty] ladies and gentlemen. Hey Brent, and maybe just go over the cash flow implications of what we have today and the current structure is in place, and sort of an expectation for cash needs over the balance of the year as far as you can see? And then help us walk through what the model looks like, under you get rid of the contractual low sales, and you are signing these conceptual big contracts. How does the cash flow model look going forward?
Brent Bilsland: Well, you get a lot of questions wrapped up in one there. So, I think we are clear that we don’t give out forward-looking guidance. I think we can talk at a high level of what our cost structure looks like and what our revenue looks like, right. So…
Jeff Bronchick: Got it. I am not looking for guidance, what I am saying is you guys have woken up and said, we are changing the model. And the model change clearly has cash flow implications, which are transitory – at least transitorily not good, and therefore, you guys are tapping different versions of liquidity to kind of keep the engine rolling. And I am just curious I understand transition issues, but on a higher level, like an independent IPP that’s publicly traded, we should look like what as far as a cash flow profile. I am talking free cash flow. That’s what I am trying to get at.
Brent Bilsland: Yes. I think what we are trying to say is, look, on the revenue side, we have got – I mean we clearly state what our prices are, right, that our average prices are for the energy, somewhere between $36 a megawatt-hour average in 2025 to as high as $55.37 in 2026. As for the energy, capacity, we are targeting $65 million in sales. Some years are better than that. Some years are worse. But if you divide that by 6 million megawatt-hours, that’s going to be a little over somewhere between $10 to $11 a megawatt-hour, right. So, total those two lines together and you have depending on the year, somewhere between $47 and $56 – or excuse me, $66 a megawatt-hour that’s the revenue line. On the expense side, we have a cost structure that’s going to be in the variable costs that’s this quarter was around $32 and a fixed cost that – assuming a $60 million cost divided by 6 million megawatt-hours would be $10, right.
So, now $60 margins, $40 cost, that’s a $20 margin, 6 million megawatt-hours, that’s $120 million if we can hit all of our goals. We will see if we are successful in hitting of our goals.
Jeff Bronchick: But isn’t by definition, the IPP world, I mean you are never going to sell – you don’t want to sell out 100% of your capacity at the prices that the buyers want and vice versa. So, there is always a contracted versus spot. Hence, is not the IPP model highly variable and you will gush cash in the next year, you will be doing converts from the Board? I mean just help me out on it, how you are looking through this over multiple years. Let’s assume you guys execute perfectly. That’s what I am trying to get at.
Brent Bilsland: Well, I think on the capacity side, we clearly list out that we have a high percentage of our capacity sold. And so obtaining that goal there s a high likelihood of doing that because we have already got a high percentage of it sold, right. I mean if you are looking at percent of capacity contracted, it’s 100% this year, it’s 82% next year, it’s 77% the year beyond that, it’s 64% in the year beyond that. So, we don’t have a lot of work to do to obtain that goal. Where we have got to do work is on the energy side of the business, which is why we think in the next handful of months that we have participated in RFPs of our customers, and we have launched an RFP to target data center or industrial uses the power through an agreement with Hoosier Energy that we announced last quarter.
So, we will see how successful we are, but we would like to get a decent percentage of our plant contracted out so that we can get both units up and running and at least have both units running at minimum load, which would be about 65% of our generated output to run at minimum load all the time. So, that’s kind of the goal. And that’s, I think what we are looking at. And then the coal side of the business, our power plant is one of our largest customers. And so that kind of has an internal hedge on our cost structure, being able to produce coal at costs and deliver it to ourselves. We do purchase some coal from outside parties, just to kind of diversify that risk. And that seems to be working out as well.
Jeff Bronchick: Okay. Thank you very much.
Brent Bilsland: Thank you.
Operator: Thank you. [Operator Instructions] The next question will go to the follow-up of Lucas Pipes with B. Riley Financial. Your line is now open.
Lucas Pipes: Thank you very much for taking my follow-up question. Brent, I want to ask you about recently unveiled EPA Clean Power rule. At what point would you consider making investments? What do you think is the legal outlook for this rule? I appreciate your thoughts. Thank you.
Brent Bilsland: Well, look, I think the world is trying to balance a couple of different things. On one hand, we want to keep the lights on 24/7, and we seem to have, for the first time in 20 years, maybe 30 years, significant growth in demand for electrons. And at the same time the world desires lower carbon emissions. So, that’s kind of the tug-of-war that I think goes on there. And the challenge that we are all being guided to. And the grid took 150 years or so to build and it’s designed for a system of base load power and spinning generation. And in many cases, it needs on-site fuel. And so we are trying to transition to something else in a short period of time, and that’s going to be really, really challenging. And so we have seen this new carbon plant come out.
I suspect it will be stayed. And we have read different legal series and the like that it’s probably headed to the U.S. Supreme Court. And if I had to bet, I would bet they will probably say it was unlawful. But regardless of that, to me, it does give a path for our business to run through 2039 and that would be with co-firing with gas, which we have for the last nine months been studying to see if that is an alternative that a lever that makes sense for us to pull. So, we are continuing to evaluate that, and we are continuing to evaluate these new rules. There is going to be a lot of changes. But I think at the end of the day, the fact that we will always went out is the lights must always stay on. And if they don’t, there will be new leaders, right, because people just aren’t going to accept rolling blackouts in this country.
