Talen Energy Corporation (NYSE:TLN) Q1 2016 Earnings Conference Call - Final Transcript
May 10, 2016 • 08:00 am ET
Ali Agha, SunTrust.
First, just a logistic question. So, to be clear, under your old way of reporting and showing us guidance, first quarter results would have excluded the $20 million that is associated with assets that were eventually sold. Is that the way to think about it, apples to apples?
Yes, that's correct, Ali.
Okay. Then second, Paul, I wanted to get your perspective on this new joint venture that -- or venture, whatever you call it -- the Riverstone has formed in Texas. From just reading it, it appears to be a direct competitor of Talen. And I'm just wondering, they're being your largest shareholder, was there any discussion with you guys? I want to just get your perspective on how to look at that venture versus Talen. And it just confused me, reading through that release.
Yes, Ali, I don't think we have any comments on what Riverstone is doing. Basically that's just the Topaz team that was managing the RJS portfolio before we bought it, is our understanding. So, beyond that, and them renaming the team, I don't really have a -- we don't have a perspective on what they're -- I don't know what assets -- I don't think they have assets. But I'm not sure what to read into that actually.
Okay. But am I right in thinking that they will be going after fossil fuel projects just like you guys in your regular course of business? Maybe looking for fossil fuel assets as well?
And we had said when we conceived the spin that this did not represent the spin of the PPL portfolio, and the merger or acquisition of RJS, that did not mark the end -- that was not Riverstone exiting the business. And that they had the capability to pursue conventional generation assets in the future, which they had planned to do. Now, they have market power limitations, based upon being an affiliate of Talen. But beyond that, they are free to continue to pursue those opportunities. Nothing's changed there.
I see. Separately, in the past, in one of your presentations, when you had talked about what could be uplifts to your EBITDA profile, you had mentioned that the (inaudible), Sapphire, and Longwood contracts, expiring I believe by the end of the year, would add about $60 million [ph] a year, and then you were still at that time thinking the Brunner duel fuel would add about $25 million a year, are those numbers still valid today?
The first number would still be valid. I have to believe -- and Joe's sitting here -- that Brunner, for 2016 especially, because we had originally planned to bring all three units on by year end, we've now, with strong execution and construction, feel confident we can get Brunner 3, the big unit, the 750-megawatt unit, on by August. That will provide an uplift. But gas prices have declined since. So, the project is going to add more gross margin and look