It is something we’ve taken a look at. We haven’t locked anything in for next year yet. When we first started locking in interest rates for — to address some of our floating rate exposure, it was when interest rates were really, really low. So there was very little downside in doing it. We started doing it this year because there was some volatility that we forecasted for the year. And so we wanted to take some of the potential downside pressure off the table. Still too early for us to weigh in on what that environment looks like next year, but we’ll continue to keep an eye on it.Kim Dang And the slots at expire?David Michels And yeah, we do have some — that’s a good point, Kim. Kim reminded me that we do have some of the swaps about, I think it’s $1.2 billion of our swaps portfolio mature by the end of the year this year.
So that’s also a component that we’re going to take into account when we’re thinking about locking in future swaps.Operator Next question in the queue is from Michael Blum with Wells Fargo. Your line is open.Michael Blum Thanks. Hi, everyone. I wanted to ask about D3 RIN prices. They’ve come down quite a bit recently. I wonder, if you can just remind us how this impacts the economics of your RNG projects?Steve Kean Anthony Ashley?Anthony Ashley Yeah, Michael, hi. Yeah. So then what we’ve seen, I think, is a bit of a short-term phenomenon with — and it kind of resulted out of the EPA proposal that came out last November. They came out with proposed RVO targets, which were, I think, clearly, the market realizes were too low and so through the market into excess supply.The current prices today, there’s really no liquidity in.
So I don’t think there’s necessarily any basis in those numbers. I think there’s a substantial evidence for the EPA when it comes out of its final ruling in June to increase those targets, and we fully expect RIN prices to recover in the second half of the year.Steve Kean And just maybe two other points, Anthony. We’re not a forced seller of D3 RINs. So we don’t — we’re not forced for funding or financing or other reasons to come out into this market at this point. And then the other point is we do this routinely, but we look to stress test our project returns to make sure there’s still good returns under different RINs pricing scenarios and the projects and the investments that we’ve made in this sector still look good.Michael Blum Okay. Thanks for all that.
My second question, I want to talk about the balance sheet. So your leverage is this 4.1, your budget for the year is 4.0. But your long-term target is 4.5. Any thoughts to reduce that reduce that target over time, or should we expect that leverage will go back to that 4.5 times level over time? And if it does, what would get you there? Thanks.David Michels Yeah, it’s a good question, Michael. So no, we don’t have an anticipation of changing our long-term leverage target of around 4.5 times. We have been operating below it, we think that’s prudent. It can give us some cushion, should we have any headwinds, or should we see favorable opportunities out there to take advantage of, we could utilize some of that capacity to take advantage of those opportunities.I think we would just have to wait and see what those look like.
I don’t think you have any particular ones on our table right now. But I think we can — we would say that, we’d be disciplined with the utilization of that capacity, because we do like having some of that cushion available to us.Michael Blum Thank you.Operator The next question in the queue is from Neal Dingmann with Truist Securities. Your line is open.Neal Dingmann Afternoon, guys. My question is natural gas storage. I’m just wondering, I’m wondering how you all view the natural gas storage opportunities given out there, obviously, the time spread reflects pretty heavy contango right now. So I’m just wondering maybe how much of a spread could you possibly capture? And I was curious, if there’s a lot of growth opportunities around that?Steve Kean Yeah, So Neal, we’ve flipped from a backward dated curve to a Contango curve.
We see the supply and demand fundamentals moving in a positive direction. And so when you just take a step back and look at storage, we’re seeing volatility across the network. I think the value in terms of what we can get to is new build, right, the new build mark. We’ve been renewing storage at $3 mark as of late and probably north of that. And so I think – as we move forward, we continue to see longer-term renewals as well as higher-priced renewals.Neal Dingmann Got it. Okay. And then just lastly, just on RNG, just wondering again, maybe you could just address that market overall. It seems that haven’t heard as much recently from you all or just on other opportunities that you might be seeing just on the horizon there?Steve Kean Anthony?Anthony Ashley Yeah.
I think where we are today is where our focus is on building out of the projects that we have in place that we effectively acquired with the three acquisitions we’ve done over the last couple of years. It has been I think on an M&A front, it become a little bit more of a frothy market for us. And so our focus has been building out the projects we have and future organic growth there.Neal Dingmann Very good. Thank you.Operator The next question is from Jean Ann Salisbury with Bernstein. Your line is open.Jean Ann Salisbury Hi. Good afternoon. Can you talk about the current backlog with a better multiple expectation at 3.5, obviously, than kind of your historical average. Does that reflect a raising of the bar generally, or is it specific to a couple of brownfield projects, big ticket items and the current backlog, and I shouldn’t read into it too much for the long term?Steve Kean Yeah.
It’s not really a raising of the bar. We’ve had a hurdle rate that we’ve talked about before of about 15% that turns out to be kind of a starting point, if there’s a project with long-term contracts, secure cash flows and very consistent cash flows, we flex off of that, which we do on bigger projects and then that gets you to why you’re seeing a difference in the multiple.The bigger long-haul projects and the bigger investments they tend to be done in an environment where there are others who are competing for that, and we end up with a good return, but a bit of a higher multiple of EBITDA. So I think GCX, PHP, think of Alba as an example, over this period of time that we’re talking about where we’ve had our hurdle rate in place. And so there have been more of those in the mix historically when we’ve been kind of showing you guys 6x EBITDA multiples on our projects, when we do our annual update at the investor conference.And now a lot of these projects are high-return build-offs of existing – the existing network at very attractive returns.
And so the multiple ends up being a lot more attractive. The EBITDA multiple is a lot lower as a result. So not a function of hurdle rate, more a function of the composition of long haul and short haul, call it.Jean Ann Salisbury Great. That makes sense. And then after Winter Storm Yuri, as you guys kind of talked about, there should have been kind of willingness to pay more for gas pipelines and storage in Texas as a form of insurance, and it looks like that’s been flowing through.I guess my question is, there’s been some talk about this Texas energy insurance program. The thing about building out all of these insurance gas power plants for spare capacity. Would you view that as a positive or negative for Kinder Morgan if it does go through, in a way, I suppose it’s sort of competing for insurance with your storage and pipeline capacity?Steve Kean Not really competing with it.
It would be a customer for it. And so, look, we’ll break it into two here. One is, whether or not its good public policy, and I’ll refrain from commenting on that. But the other is, if they build new gas-fired capacity in the state of Texas to improve reliability in the electric grid, that’s a good thing for gas companies in Texas.But you could have a long debate and there is a long debate happening in Austin on whether you ought to just simply let the people who already build those things and have been building them, at least along our footprint to continue to build them as opposed to having the state build them, or incent their building, I guess.Jean Ann Salisbury Okay. Thank you. That’s all for me.Operator Next question is from Spiro Dounis with Citi.
Your line is open.Spiro Dounis Thanks, operator. Afternoon, guys. Kim, first one for you. I think you had mentioned lower natural gas prices as a positive factor in attracting back some demand from power and industrial customers. Curious if you think we’ve maybe seen a lot of that demand elasticity sort of snap back and play out at this point, or do you think there’s a lot of latent capacity in the system that maybe hasn’t reacted to lower prices yet?Kim Dang In terms of the power demand, well, I’d say the power demand we saw in the first quarter was up 10% versus the first quarter of 2022. So we saw nice increases in power demand. But we didn’t have a winner in the center of the country all the way East really. And so, had we had more HDDs during the winter, I think that power demand could have been higher than what we saw and therefore, the gas that we moved to those power plants would have been higher.Spiro Dounis Got it.
