1 00:00:02,520 --> 00:00:07,920 Speaker 1: Bloomberg Audio Studios, podcasts, radio news, Joe. 2 00:00:07,840 --> 00:00:11,559 Speaker 2: The Buzzword today, recession, slow and growth, other issues. Are 3 00:00:11,600 --> 00:00:13,640 Speaker 2: you noticing any of that A constellation? 4 00:00:13,960 --> 00:00:16,400 Speaker 1: No, not yet, certainly not in powered demand. 5 00:00:16,920 --> 00:00:19,160 Speaker 2: So what kind of power demand are you seeing? There's 6 00:00:19,160 --> 00:00:20,960 Speaker 2: been a lot of change in terms of deep seek. 7 00:00:21,079 --> 00:00:23,360 Speaker 2: There's been questions about how long the CAPEX cycle can 8 00:00:23,440 --> 00:00:24,440 Speaker 2: last for hyperscalers. 9 00:00:24,440 --> 00:00:24,959 Speaker 3: What are you seeing? 10 00:00:25,200 --> 00:00:27,120 Speaker 1: We don't see an end in sight right now. We're 11 00:00:27,120 --> 00:00:29,720 Speaker 1: starting to see it get rationalized. And by that I 12 00:00:29,800 --> 00:00:32,800 Speaker 1: mean we're not seeing the same request for data centers 13 00:00:32,840 --> 00:00:35,440 Speaker 1: popping up in five or six utilities. So I think 14 00:00:35,479 --> 00:00:39,120 Speaker 1: the hyperscalers are beginning to figure out where they want 15 00:00:39,120 --> 00:00:42,120 Speaker 1: to go. And it's not the frenzy of activity, but 16 00:00:42,159 --> 00:00:44,840 Speaker 1: in terms of the deal pace, it continues the same 17 00:00:44,840 --> 00:00:46,080 Speaker 1: way we saw it last year. 18 00:00:46,360 --> 00:00:48,440 Speaker 2: And how are the deals like? How is it to 19 00:00:48,479 --> 00:00:49,160 Speaker 2: get them done? 20 00:00:49,600 --> 00:00:52,160 Speaker 3: Is it hard? Is it coming up with a structure 21 00:00:52,320 --> 00:00:54,160 Speaker 3: the money? Like? What is it? 22 00:00:54,160 --> 00:00:57,080 Speaker 1: It's not hard, but they're complicated because they're multi billion 23 00:00:57,120 --> 00:01:00,480 Speaker 1: dollar deals, right, So we're talking about twenty year deals 24 00:01:00,520 --> 00:01:03,760 Speaker 1: for power that sometimes could cost five or ten billion dollars. 25 00:01:03,800 --> 00:01:06,679 Speaker 1: So like any commercial deal of that scale, it's going 26 00:01:06,760 --> 00:01:09,360 Speaker 1: to take a long time to negotiate, and each time 27 00:01:09,400 --> 00:01:11,480 Speaker 1: you need to do that with a new party you 28 00:01:11,600 --> 00:01:13,720 Speaker 1: have to go through all the terms and conditions again. 29 00:01:13,880 --> 00:01:16,520 Speaker 1: But I think we're going to get some some deals 30 00:01:16,520 --> 00:01:17,160 Speaker 1: done this year. 31 00:01:17,440 --> 00:01:20,120 Speaker 2: Can you give me some hints, like in maybe areas, 32 00:01:20,200 --> 00:01:23,320 Speaker 2: what kind of deals, like what kind of power? 33 00:01:23,720 --> 00:01:27,120 Speaker 1: Well, I think nuclear continues to be very attractive for 34 00:01:27,160 --> 00:01:30,800 Speaker 1: the hyperscalers because it operates twenty four to seven, it's cleaned, 35 00:01:30,880 --> 00:01:33,400 Speaker 1: so it meets their environmental goals, and it matches up 36 00:01:33,440 --> 00:01:35,440 Speaker 1: really well from a reliability standpoint. 37 00:01:35,680 --> 00:01:37,199 Speaker 3: So let's go to the money then for a second. 38 00:01:37,440 --> 00:01:40,360 Speaker 2: So coming up with the deals is very interesting, particularly 39 00:01:40,360 --> 00:01:42,760 Speaker 2: the one you do with Microsoft to restart three Mile Island. 40 00:01:43,440 --> 00:01:44,880 Speaker 3: Are your costs going up right now? 41 00:01:46,760 --> 00:01:50,000 Speaker 1: A little bit? But it's really labor inflation that we 42 00:01:50,120 --> 00:01:53,320 Speaker 1: mostly see. Now. Remember we have existing nuclear plants that 43 00:01:53,360 --> 00:01:56,040 Speaker 1: are already built, so a lot of the cost of 44 00:01:56,040 --> 00:01:59,680 Speaker 1: the raw materials that you're saying, you know, potentially impacted 45 00:01:59,680 --> 00:02:02,600 Speaker 1: by arafs in the long run, but an escalation through inflation. 46 00:02:03,000 --> 00:02:06,520 Speaker 1: We're not seeing much of that tiny bid on uranium pricing. 47 00:02:06,800 --> 00:02:09,560 Speaker 1: But most of what we're seeing is labor contracting, So are. 48 00:02:09,560 --> 00:02:12,360 Speaker 2: You planning for a tariff increase that we should be 49 00:02:12,360 --> 00:02:14,280 Speaker 2: seeing on steel and aluminum on Wednesday? 50 00:02:14,360 --> 00:02:16,919 Speaker 3: Right? You would have no, that would have limited impact. 51 00:02:16,960 --> 00:02:19,280 Speaker 1: How do you see that pretty limited impact on us? 52 00:02:19,360 --> 00:02:22,480 Speaker 1: It would impact replacement parts and that sort of thing, 53 00:02:22,560 --> 00:02:26,120 Speaker 1: But it's going to be a deminimous impact on our budget. 54 00:02:26,200 --> 00:02:28,679 Speaker 2: And if you wind up seeing an increase, right even 55 00:02:28,680 --> 00:02:32,000 Speaker 2: in labor does how does that change in your contracts? 56 00:02:32,040 --> 00:02:33,680 Speaker 2: Like you've already said it, you have to go back 57 00:02:33,919 --> 00:02:36,519 Speaker 2: to them and say, hey, listen, we got to renegotiate 58 00:02:36,560 --> 00:02:37,239 Speaker 2: my costs are going on. 59 00:02:37,520 --> 00:02:40,560 Speaker 1: No, there's no reopeners up or down for those sorts 60 00:02:40,560 --> 00:02:41,040 Speaker 1: of inflation. 61 00:02:41,200 --> 00:02:42,359 Speaker 3: So you're really taking on that risk. 62 00:02:42,560 --> 00:02:45,040 Speaker 1: Sure, yeah, yeah, we're taking it on for over twenty 63 00:02:45,120 --> 00:02:48,240 Speaker 1: year period. And that's the importance of being able to 64 00:02:48,280 --> 00:02:51,320 Speaker 1: do this with nuclear, Right, we know exactly what our 65 00:02:51,360 --> 00:02:54,160 Speaker 1: cost structure is going to be within a range for 66 00:02:54,320 --> 00:02:57,400 Speaker 1: ten and twenty years. Harder to do with our natural 67 00:02:57,440 --> 00:02:59,760 Speaker 1: gas assets, where we don't know what the price of 68 00:02:59,760 --> 00:03:01,880 Speaker 1: now gas is going to be ten years out, or 69 00:03:02,200 --> 00:03:04,000 Speaker 1: whether we're going to have a carbon tax, or what 70 00:03:04,080 --> 00:03:06,200 Speaker 1: the changes in environmental regulations are. 71 00:03:06,040 --> 00:03:07,560 Speaker 3: Going to be So how do you manage that risk? 72 00:03:07,760 --> 00:03:10,680 Speaker 1: Well, I think what's really difficult to do that. In 73 00:03:10,720 --> 00:03:13,160 Speaker 1: the case of natural gas, I think there what you're 74 00:03:13,200 --> 00:03:16,000 Speaker 1: doing is something that looks more like an index product 75 00:03:16,000 --> 00:03:19,560 Speaker 1: that is indexed either inflation or natural gas prices. 76 00:03:20,080 --> 00:03:22,639 Speaker 2: When you talk about the different parts of your business, 77 00:03:22,840 --> 00:03:25,160 Speaker 2: how much of the capex that you're spending is going 78 00:03:25,240 --> 00:03:29,680 Speaker 2: to new stuff, beefing up old stuff, or just replacing 79 00:03:29,720 --> 00:03:31,000 Speaker 2: and making sure everything stays on track. 80 00:03:31,120 --> 00:03:34,760 Speaker 1: Yeah, So for us alex we face a critical decision 81 00:03:34,920 --> 00:03:38,160 Speaker 1: as to whether to relicnse the nuclear plants for another 82 00:03:38,200 --> 00:03:41,520 Speaker 1: twenty years, and we're facing that across the fleet. So 83 00:03:41,560 --> 00:03:44,800 Speaker 1: when you say new, if we don't do this, it's 84 00:03:44,840 --> 00:03:47,240 Speaker 1: going to be retired, very much like Three Mile Island 85 00:03:47,360 --> 00:03:52,800 Speaker 1: was retired. So the distinction between keeping existing open and 86 00:03:53,000 --> 00:03:56,760 Speaker 1: something that's truly new is immaterial. Right. If it's gone, 87 00:03:56,840 --> 00:03:59,680 Speaker 1: it's gone. It's the same as if it were never built. 88 00:04:00,080 --> 00:04:03,040 Speaker 1: So we are investing all of our moneies to secure 89 00:04:03,120 --> 00:04:06,640 Speaker 1: that fleet for the future, and we're also doing uprates 90 00:04:06,680 --> 00:04:08,840 Speaker 1: and restarts and other things like that. In terms of 91 00:04:08,840 --> 00:04:12,080 Speaker 1: a percentage to your question, I would say ninety percent 92 00:04:12,120 --> 00:04:15,760 Speaker 1: of our spend is in the existing assets and getting 93 00:04:15,800 --> 00:04:17,800 Speaker 1: them ready to run for decades to come. 94 00:04:17,960 --> 00:04:21,880 Speaker 2: So when we talk about power demand booming and increasing 95 00:04:22,240 --> 00:04:26,480 Speaker 2: by multiple digits, right, I mean ten percent would be huge. 96 00:04:27,240 --> 00:04:29,240 Speaker 2: How do you play that? Like, if it's not new, 97 00:04:29,400 --> 00:04:30,800 Speaker 2: is it just expanding? 98 00:04:31,440 --> 00:04:33,640 Speaker 1: While it is expanding, a lot of our clients are 99 00:04:33,680 --> 00:04:38,400 Speaker 1: interesting interested in operating that's increasing the output of existing 100 00:04:38,480 --> 00:04:40,960 Speaker 1: nuclear plants, and we're doing that in a number of 101 00:04:41,040 --> 00:04:44,480 Speaker 1: different regions. Obviously, the restart is more limited. You had 102 00:04:44,560 --> 00:04:46,760 Speaker 1: one plant there that you could turn on, and I 103 00:04:46,800 --> 00:04:49,080 Speaker 1: think there might be another in the nation. And then 104 00:04:49,120 --> 00:04:52,480 Speaker 1: the rest of that is going to be probably spent 105 00:04:52,720 --> 00:04:56,320 Speaker 1: on renewables, storage and natural gas for the time being, 106 00:04:56,600 --> 00:04:57,479 Speaker 1: and then the fullness of. 107 00:04:57,480 --> 00:05:00,560 Speaker 2: Time new nuclear em and a for that I know Calpine, 108 00:05:00,600 --> 00:05:03,320 Speaker 2: So that really beefs up your natural gas. Nuclear is 109 00:05:03,320 --> 00:05:05,560 Speaker 2: now fifty percent of your portfolio versus say seventy. 110 00:05:05,600 --> 00:05:07,520 Speaker 3: That was a big shift. What else is in your 111 00:05:07,520 --> 00:05:08,120 Speaker 3: pipeline for. 112 00:05:08,040 --> 00:05:10,560 Speaker 1: That, Well, we've got a lot on our plate. We've 113 00:05:10,560 --> 00:05:13,080 Speaker 1: got a lot of food d Yeah, and so this 114 00:05:13,200 --> 00:05:16,080 Speaker 1: year we're going to spend making sure that we're ready 115 00:05:16,120 --> 00:05:19,920 Speaker 1: to integrate Calpine and prepared for regulatory approvals at the 116 00:05:19,960 --> 00:05:21,400 Speaker 1: back end of the year. But as you said, it's 117 00:05:21,400 --> 00:05:23,920 Speaker 1: a big deal. And I think what we've indicated as 118 00:05:23,920 --> 00:05:26,120 Speaker 1: a company is M and A is a big part 119 00:05:26,120 --> 00:05:27,640 Speaker 1: of our strategy. 120 00:05:27,839 --> 00:05:31,400 Speaker 2: Yes, m and A in beefing up nuclear, natural gas, 121 00:05:31,520 --> 00:05:32,720 Speaker 2: or you want to diversity, all of the. 122 00:05:32,680 --> 00:05:35,360 Speaker 1: Above, all of the above. I think storage is going 123 00:05:35,400 --> 00:05:38,040 Speaker 1: to increasingly be a part of the story, so we'll 124 00:05:38,080 --> 00:05:39,800 Speaker 1: look at those opportunities as well. 125 00:05:40,160 --> 00:05:42,159 Speaker 2: Everyone now wants to get into power. It is the 126 00:05:42,240 --> 00:05:45,080 Speaker 2: coolest thing right now in the market. Whether you're looking 127 00:05:45,120 --> 00:05:48,159 Speaker 2: integrated utilities, regulated utilities, even energy companies. 128 00:05:48,200 --> 00:05:49,560 Speaker 3: Are you seeing more competition. 129 00:05:50,320 --> 00:05:53,920 Speaker 1: I think there's a lot of interest from all kinds 130 00:05:53,960 --> 00:05:56,480 Speaker 1: of places. There's a lot of foreign interest in investing 131 00:05:56,640 --> 00:05:59,479 Speaker 1: in the US. I think what people are trying to 132 00:05:59,480 --> 00:06:03,240 Speaker 1: figure out is whether they too can secure longer term contracts. 133 00:06:03,680 --> 00:06:07,640 Speaker 1: I don't see people building spec power plants hoping, you know, 134 00:06:07,720 --> 00:06:11,880 Speaker 1: the demand will come. So I think there's going to 135 00:06:11,920 --> 00:06:14,360 Speaker 1: be a lot of interest there, but it's largely going 136 00:06:14,360 --> 00:06:17,159 Speaker 1: to be fossil. It'll continue to be renewables, but it 137 00:06:17,200 --> 00:06:20,080 Speaker 1: always has been renewables. And then we'll see whether they 138 00:06:20,080 --> 00:06:22,440 Speaker 1: could get deals done. You know, the hyperscaler is going 139 00:06:22,520 --> 00:06:25,279 Speaker 1: to have to make some tough decisions between their own 140 00:06:25,320 --> 00:06:28,320 Speaker 1: climate goals on the one hand, and their growth needs. 141 00:06:28,520 --> 00:06:31,599 Speaker 1: We think there are other opportunities to introduce that demand 142 00:06:32,279 --> 00:06:36,160 Speaker 1: without necessarily building more emitting generation. And we think a 143 00:06:36,160 --> 00:06:39,479 Speaker 1: big part of the story is curtailment demand what we 144 00:06:39,600 --> 00:06:42,520 Speaker 1: call demand response in the business. There's a new study 145 00:06:42,560 --> 00:06:44,719 Speaker 1: out of Duke that's been making the rounds over the 146 00:06:44,760 --> 00:06:47,680 Speaker 1: last couple two three weeks that indicates we could build 147 00:06:47,800 --> 00:06:52,279 Speaker 1: seventy one gigawatts of data centers in the US by 148 00:06:52,440 --> 00:06:55,880 Speaker 1: just getting curtailment of about zero point two five of 149 00:06:55,960 --> 00:07:00,240 Speaker 1: one percent. So it's it's really a peaky system where 150 00:07:00,240 --> 00:07:03,920 Speaker 1: we have problems during certain hours, but overwhelmingly I'll give 151 00:07:03,920 --> 00:07:07,120 Speaker 1: you a statistic, eighty percent of the time we use 152 00:07:07,279 --> 00:07:09,320 Speaker 1: less than two thirds of the power in the country. 153 00:07:09,680 --> 00:07:13,520 Speaker 3: Wow. Okay, So efficiency it is key. We started with macro, 154 00:07:13,600 --> 00:07:15,720 Speaker 3: so I want to end with macro as well. 155 00:07:16,520 --> 00:07:20,160 Speaker 2: If we wind up getting inflation, if stagflation becomes an issue, 156 00:07:20,240 --> 00:07:23,720 Speaker 2: if rates stay higher for longer, right, if renewables get 157 00:07:23,720 --> 00:07:26,040 Speaker 2: more in the chopping block because returns are dented because 158 00:07:26,040 --> 00:07:29,040 Speaker 2: of those higher rates, how does that impact how do 159 00:07:29,040 --> 00:07:29,920 Speaker 2: you think about your business? 160 00:07:30,080 --> 00:07:30,240 Speaker 3: Well? 161 00:07:30,280 --> 00:07:32,160 Speaker 1: I think there's a lot of push pull in all 162 00:07:32,200 --> 00:07:35,600 Speaker 1: of that. What I think will be most meaningfully impacted 163 00:07:36,120 --> 00:07:39,760 Speaker 1: is new generation that would otherwise come online. So I 164 00:07:39,800 --> 00:07:42,400 Speaker 1: talked a moment ago about the need for long term 165 00:07:42,440 --> 00:07:44,960 Speaker 1: contract and to support the new gen that people are 166 00:07:45,000 --> 00:07:48,600 Speaker 1: talking about. Everybody. There's a frenzy of activity, as you indicated, 167 00:07:48,640 --> 00:07:52,200 Speaker 1: around that, but that only happens if we have growth, 168 00:07:52,280 --> 00:07:54,040 Speaker 1: So that's the first thing to fall off.