Good day, and thank you for standing by. Welcome to the NRG Energy, Inc. Third Quarter 2025 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brendan Mulhern, Head of Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to NRG Energy's Third Quarter 2025 Earnings Call. This morning's call is being broadcast live over the phone and via webcast. The webcast presentation and earnings release can be located in the Investors section of our website at www.nrg.com under Presentations and Webcast. Please note that today's discussion may contain forward-looking statements, which are based upon assumptions that we believe to be reasonable as of this date. Actual results may differ materially. We urge everyone to review the safe harbor in today's presentation as well as the risk factors in our SEC filings. We undertake no obligation to update these statements as a result of future events, except as required by law. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation and earnings release. With that, I will now turn it over to Larry Coben, NRG's Chair, President and Chief Executive Officer.

Thank you, Brendan. Good morning, everyone, and thank you for your continued interest in NRG. I'm joined today by Bruce Chung, our Chief Financial Officer, along with other members of our management team who are available for questions. Let's begin with the key messages. Strong performance across all areas of the business has led us to raise our 2025 financial guidance by $100 million in late September. This marks the third consecutive year we've increased our full-year outlook, and today we reaffirm that higher range. We are also introducing 2026 guidance that aligns with our long-term growth targets, reflecting NRG's stand-alone outlook, excluding contributions from the LS Power acquisition. We will provide updated guidance that includes LS Power around the time of closing. This quarter, we expanded our data center power agreements, raising total contracted capacity to 445 megawatts. We've also quickly developed a pipeline of potential projects under joint development and letters of intent totaling 5.4 gigawatts. These actions build on the agreement announced in August and signify strong momentum validating our data center strategy. The LS Power acquisition remains on track, with financings completed in September on favorable terms. All regulatory filings have been submitted, and we expect to close in the first quarter of 2026. Adjusted EPS for the third quarter was 32% higher than the same period last year, and adjusted EBITDA reached the highest quarterly level in company history. I want to take a moment to congratulate our 18,000 employees for this achievement. Our results reflect strong performance in both Energy and Smart Home. In Energy, supply optimization and disciplined commercial execution improved margins in our home and commercial businesses. In Smart Home, growth was fueled by an expanding customer base, record retention rates, and continued success in our home virtual power plant initiative. We achieved top decile safety performance and completed the loan agreement for our second Texas Energy Fund project. Year-to-date, our adjusted EPS is 36% higher than last year, showcasing strong performance across the business and ongoing cost discipline. These results keep us on track to meet our raised full-year 2025 guidance ranges. On the right side of the slide, we are presenting our 2026 guidance on a stand-alone basis, which is a preliminary view before providing full updates after the LS Power acquisition closes. Moving to market conditions, ERCOT experienced a mild summer with moderate pricing and a strong increase in overall power use. Total consumption in Texas has gone up nearly 30% over the past five years, driven by residential, commercial, and industrial demand as electrification and onshoring of manufacturing accelerate. Data center development usage is still in early stages, with ramp schedules expected to significantly increase capacity over the next few years. Looking ahead, power demand is expected to exceed new supply, maintaining a structurally tight market and emphasizing the need for reliable, dispatchable generation. Policymakers are acting through initiatives such as Senate Bill 6 in Texas, focusing on affordability, additionality, and reliability. We are encouraged by the current focus and progress to strengthen ERCOT and other competitive markets across the country. In this context, NRG is expanding its portfolio of reliable and flexible capacity. With the LS Power and Rockland acquisitions, Texas Energy Fund projects, and our home virtual power plant initiative, we are adding 15 gigawatts of natural gas and 7 gigawatts of virtual power plant capacity. Additionally, we have around 6 gigawatts of further opportunities through the GE Vernova partnership and our final Texas Energy Fund project that is under review. All these actions bolster our platform, positioning NRG to meet growing customer demand and support large load growth, including data centers across ERCOT, PJM, and other key markets. We have expanded our data center customer portfolio with 150 megawatts of new long-term power agreements, raising total contracted capacity to 445 megawatts across ERCOT and PJM. This builds on the framework announced last quarter with the same customer. These sites, located in Maryland and Illinois, support edge data center development with access to high-capacity fiber and proximity to major U.S. cities, with operations expected to begin in 2028 and ramping through 2032. The agreement was signed above the midpoint of our previous target range of $70 to $90 per megawatt hour. Due to strong customer demand and higher forward power curves, we are raising our target for new long-term data center agreements to over $80 per megawatt hour, reflecting sustained pricing improvement and NRG's leadership in offering reliable long-term power solutions for large load customers. We are also pursuing numerous additional opportunities, including up to 5.4 gigawatts of new data center capacity through 2032 via our GE Vernova and Kiewit partnerships, emphasizing the principle of additionality. Since last quarter, signed letters of intent have increased by 35%, indicating strong customer engagement from multiple hyperscalers and data center developers, as well as rising demand for new developments. We have identified additional gigawatts of potential projects within our broader pipeline. As markets shift towards bring-your-own-generation models, NRG is at the forefront of the next phase of data center growth. The LS Power acquisition remains on track for a first quarter 2026 closing. It strengthens our platform, broadens our earnings base, and enhances our reach in key competitive markets. This acquisition solidifies our role as one of the largest competitive generators in the country and increases our ability to meet long-term demand growth. From the announcement, the acquisition proved immediately accretive across all key metrics, reflecting the quality of the portfolio and an appealing purchase multiple. We also introduced a 14% EPS compound annual growth rate through 2029, which does not include contributions from data centers and is based on pricing assumptions below current market levels. These factors, along with other upside opportunities, highlight the significant potential ahead. Since the announcement, incremental benefits, including 100% bonus depreciation, have further improved the transaction's economics. All necessary filings have been submitted, and financing was completed under terms more favorable than originally projected. This transaction positions NRG for robust long-term growth, greater scale, and enhanced value creation as we integrate the two platforms. I will now turn it over to Bruce for the financial review.

Thank you, Larry. Beginning with Slide 10, NRG delivered strong financial and operational performance in the third quarter with $2.78 in adjusted earnings per share and $1.205 billion in adjusted EBITDA, representing a 32% and 14% increase from the same quarter of 2024, respectively. Adjusted net income was $537 million and free cash flow before growth was $828 million. Through the first 3 quarters of 2025, NRG delivered $7.17 of adjusted earnings per share and over $3.2 billion of adjusted EBITDA, a year-over-year increase of 36% and 12%, respectively. Our exceptional quarterly and year-to-date financial performance reflects continued execution in all of our businesses, driven primarily by a mix of expanded margins, favorable weather and excellent commercial and operational execution. Our Texas segment delivered third quarter and year-to-date adjusted EBITDA of $807 million and $1.618 billion, respectively, representing an improvement of 38% and 29% from the same periods in 2024. These results were driven by margin expansion across our operations in the region with lower realized supply costs and excellent optimization despite low summer volatility. The East segment contributed adjusted EBITDA of $107 million in the third quarter and $680 million through the first 3 quarters of 2025. These results reflect a modest decline from the same period of 2024, primarily driven by the net impact of higher supply costs throughout the region, partially offset by increased capacity revenues at our plants and favorable weather in the first quarter, which benefited our natural gas business. Our West Services Other segment had adjusted EBITDA of $19 million in the third quarter and $139 million for the first 3 quarters of 2025. The segment realized higher retail power margins, which were offset by the absence of earnings from the sale of our Airtron business in 2024 and the lease expiration at the Cottonwood facility in May 2025 when compared to the same period of the prior year. Our Smart Home business posted another impressive quarter and executed brilliantly through the key summer selling season, achieving adjusted EBITDA of $272 million in the third quarter and $803 million through the first 3 quarters of 2025. The segment continues to see record new customer adds and retention rates as well as expanded net service margins. Our consolidated free cash flow before growth was $828 million for the quarter and $2.035 billion for the first 3 quarters of 2025. Year-to-date free cash flow before growth exceeded the same period in 2024 by $597 million or 42%. The year-over-year increase is primarily driven by the higher year-to-date adjusted EBITDA, favorable working capital timing and receipt of the remaining insurance proceeds from our Paris Unit B claims. We expect some of the year-over-year favorability to moderate as working capital timing normalizes in the fourth quarter and as we continue to invest in our plants through our scheduled maintenance program. Looking to the remainder of 2025, we are reaffirming the increased financial guidance we announced last month with ranges of $7.55 to $8.15 for adjusted EPS, $3.875 billion to $4.025 billion for adjusted EBITDA, and $2.1 billion to $2.25 billion for free cash flow before growth. Moving to Slide 11 for updates to our capital allocation for the remainder of 2025. This has been updated to reflect the new midpoint of our raised free cash flow before growth guidance target, setting the total capital available for allocation in 2025 at $2.7 billion. Note that this slide excludes proceeds received from the $4.9 billion of new debt raised in October, most of which will be allocated to fund the cash portion of the pending LS Power transaction. A few other updates from what I shared in our second quarter call are denoted in light blue. Starting with an update to liability management. The $52 million increase primarily reflects transaction costs and financing fees associated with the LS Power transaction. Integration costs increased by $20 million due to a shift in spend from 2024 to 2025. The net total remained largely consistent with our communicated expectation between the 2 years. We remain on track to execute the full $1.3 billion in share repurchases slated in 2025. Through October 31, we have executed $1.084 billion in share repurchases or nearly 85% of our planned annual total at a weighted average price of $125.35 and expect to complete the full amount of share repurchases by the end of the year. Other related activities increased due to higher tax withholdings related to equity compensation resulting from the increase in our share price. The increase in the revenue synergy growth plan reflects the strong customer growth our Smart Home segment has delivered through the year. Customer growth for the business was 9% year-over-year, well surpassing the targeted 5% to 6% net customer growth embedded in our growth plan. On other investments, we are showing a net $30 million inflow of capital related to our Texas new build program. As you may recall, the stipulated capital structure for projects under the Texas Energy Fund program is 60-40 debt to equity. In order to get our TEF projects to that target capital structure, the initial disbursement under the loan took into account previously spent development costs. Given that catch-up mechanism under the loan, the disbursements we received in 2025 exceeded the amount of capital we expect to spend on the projects, therefore, resulting in a net inflow of capital for the year. Finally, we are on track to finish the year with $158 million of unallocated capital, which we currently plan to roll over into 2026 and deploy as part of our 2026 capital allocation plan. Turning to the next slide. We are initiating our 2026 NRG stand-alone financial guidance at ranges of $3.925 billion to $4.175 billion for adjusted EBITDA, representing a midpoint of $4.05 billion, and free cash flow before growth of $1.975 billion to $2.225 billion, representing a midpoint of $2.1 billion. We are not providing stand-alone EPS guidance as we acknowledge that EPS will change materially with the closing of the LS Power transaction due to associated accounting adjustments, pro forma capital allocation and other matters impacting any per-share financial metrics. As you can see on the slide, we have included the same adjusted EBITDA and free cash flow before growth for the acquisition, which we provided when we originally announced the transaction in May. This, combined with the 2026 NRG stand-alone guidance that we are initiating today should remind people of the pro forma company's earnings profile. We will provide an updated pro forma view once the transaction is closed, which we will include updates to items like energy and capacity prices, accelerated depreciation benefits and pro forma capital allocation, among others. On the bottom of the page, we have provided walks from the midpoint of our original 2025 guidance to the midpoint of our new 2026 guidance on a stand-alone NRG basis. For adjusted EBITDA, the net $200 million increase year-over-year is primarily driven by the addition of the Rockland assets acquired earlier in the year, the impact of higher power pricing in our Texas segment and the continued execution of our existing $750 million growth plan. The impact of higher power pricing in Texas that we are showing is consistent with the sensitivities we have provided in our previous earnings materials and reflects an increase in around-the-clock pricing from the $47 we previously used to $53 per megawatt hour, which reflects Texas pricing at the end of July. The sum total of these year-over-year increases is slightly offset by other minor drivers such as regulatory developments negatively impacting the Maryland and New York competitive retail markets and tariff impacts on our businesses. On free cash flow before growth, we expect strong year-over-year growth from core operations amounting to $145 million, comprised of the previously discussed EBITDA growth, partially offset by the continued investment in our generation fleet. After taking into account higher cash interest and taxes, we forecast free cash flow before growth to be flat year-over-year. The higher cash interest is largely driven by refinancing of very low-cost debt that was issued when the Fed funds rate hovered near 0%. The increase in cash taxes primarily relates to fewer federal tax credits available to offset income than in prior years. Just to reiterate, we will provide a more detailed update on pro forma financial metrics once we close the acquisition. I look forward to sharing that update with you soon. Moving to Slide 13 for a brief discussion on 2026 NRG stand-alone capital allocation. The key takeaway here is that we remain committed to our return of capital program through share repurchases of $1 billion and our planned 7% to 9% annualized growth of the common dividend per share. This is the case both on a stand-alone and pro forma basis. I'm also pleased to share that our Board has approved a new $3 billion share repurchase authorization to be executed through 2028. As you can imagine, certain elements of this chart, such as the starting point for excess cash and liability management will look very different after we close the acquisition. As such, I do not intend to go further into detail on this slide. We will provide a fulsome update on capital allocation alongside our key financial metrics once we close on the LS Assets acquisition. In closing, NRG has delivered outstanding financial and operational results through the first 3 quarters of this year, and we are poised to finish the year on a high note. The stand-alone 2026 financial guidance and capital allocation outlook I have shared today further demonstrates the solid growth and continued performance of our stand-alone base business. I look forward to providing you updated and detailed guidance for 2026 that includes the assets we are acquiring from LS Power following the closing of the transaction. With that, I'll turn it back to you, Larry.

Thank you, Bruce. Turning to Slide 15. 2025 has been an outstanding year across every part of our business, and our outlook continues to improve. Our near-term focus is on completing the LS Power acquisition and providing you with an updated long-term outlook following the close. We also continue expanding our data center portfolio, advancing our Texas energy projects, including completing the construction of the T.H. Wharton project and returning at least $1.3 billion to shareholders. These priorities reflect a disciplined approach to growth and capital allocation as we position NRG for 2026 and beyond, continuing to build a company defined by consistent execution and accelerating value creation. With that, we'll now open the line for questions.

Our first question comes from Shar Pourreza with Wells Fargo.

I'm ready to go back to Garden to be honest.

I want to see the flowers.

So Larry, just do you think '26 is kind of that year you're going to be able to announce a data center agreement that includes new development as part of your GEV, Kiewit partnership?

Yes.

You tongue tied me again.

Well, you remember the last time I gave you a one-word answer, it showed up. So I'm giving you a one-word answer.

Any sense around timing next year? Are we thinking back half or earlier part of the year?

It's hard to tell, Shar. As my good friend, Max said yesterday, these are complex, but super excited by the process and never been more sure.

Got it. Okay. That's helpful. And then just lastly, just maybe share a little bit more about sort of the announced data center deals, how they kind of compare to those announced by your peers. So a little bit more color around the margins given other peer deals that come with generation linkages.

Yes. We put a little slide in the appendix, which kind of talks about margin and pricing. This is very similar to the one that we announced last quarter, just locationally different. Premium margin as a result of different factors go into getting our premium margin on any deal, including land, including our commercial acumen. I really need to say we have the best commercial team in the business at both gas and electricity, being able to really meet customer needs in a flexible way; all of those lead to the margin that you see on that appendix chart.

Our next question comes from Julien Dumoulin-Smith.

Let me jump back to the question that our buddy just asked a second ago in a different way. Look, as far as GEV goes in this Kiewit partnership, do you have a certain time frame that you need to move some of this equipment, use it or lose it if you will? Can you speak to that a little bit? Because I think that's probably an important nuance to speak to when you talk about your confidence and the timelines under which you're operating to execute on this.

Look, Julien, we haven't disclosed any timelines, but I'm very confident that we're going to meet all of the timelines that are required under that agreement. But what you're really trying to do, Julien, and I know is pin me to a month, and I'm not going to let you do that.

Absolutely. You know what we're all trying. I mean start too.

Well done, but...

Not quite there. All right. I got it. Well, let me ask it this way. As far as it goes with the build-your-own-power, BYOP as we're calling it, right? Like there's clearly been an evolution in the marketplace. When you think about the scope of what's possible here, again, I know folks have been looking at co-located opportunities in the last couple of years, but now we firmly shifted. How meaningful, right? We've seen a few announcements here with a couple of hundred megawatts here, a couple of hundred megawatts this quarter. I mean when you say you're going to deliver updates next year, can you speak to BYOP and the scale of what's at hand here in terms of really building out contracted jet?

Sure. Starting with the GEV Kiewit deal, that's 5.4 gigawatts, which is a solid foundation. There are various ways we can enhance that figure, and bringing 5.4 gigawatts to the table would make everyone quite pleased. This is the scale we are currently focused on, but we are also exploring opportunities to potentially expand it even further.

Got it. All right. And then let me just shift this slightly. When you think about the focus here, I mean, a lot of conversations have been around your portfolio in Texas and ERCOT specifically. Can you speak a little bit more broadly? Obviously, you guys have Illinois site, PJM is talking increasingly about bringing new assets to fore. Illinois just passed legislation in recent weeks. For instance, is there an opportunity in the PJM portfolio to both add generation and storage specifically and perhaps tap into some of these developments that have been recently put to kind of quell the state's needs for new capacity?

Absolutely, Julien. And we are working hard on that, and we'll really accelerate those efforts, of course, once LS closes because until we own the generation assets there, that will really fault us into being a significant player, but there's no grass growing under our feet there in the meantime.

Got it. All right. And Illinois legislation, is there something for you guys to do there specifically to ask that more pointedly?

I don't think the legislation is really going to drive this, Julien. But as you know, we do have sites in Illinois.

Our next question comes from Agnie Storozynski with Seaport.

I see the slide that shows how your gross margin is affected by changes in forward power curves. We finally observed the movement in the curves that we had been anticipating. I'm curious if anything has changed regarding this. Are you planning to update it for your larger portfolio? Any comments?

Agnie, you just hit the nail on the head. We are waiting to update it for our enlarged portfolio.

Okay. Can you provide any insight into how the PJM price is moving and its impact on the pro forma EBITDA of the company for now?

Not at this stage. Well, certainly, we will provide, obviously, a very fulsome update soon after we close on the transaction.

Okay. And then the second thing is, so we've had some companies, new power companies or pretending to be new power companies that have aspirations to build gas plants without any prior expertise in power. So I mean, it is surprising that they could be ahead of you in the pecking order. It's not for the fact that you guys actually have sites, have equipment, know how to hedge gas, etc. So is it that they just talk more about their opportunities versus you guys? Or do you still feel like you have a head start over those companies?

Agnie, I'm convinced that we're in a great position to do what I was describing. We've had this for a long time, so there are many announcements. When I actually see what Sam Altman refers to as electrons flowing, then I will truly believe they are real or you'll see steel in the ground. We don't talk about what we're going to do; we share what we've accomplished, and that's my philosophy in all this. There will be many announcements because some people think they're data center and power developers. Some of those may be legitimate, but I'm very comfortable with where we stand in terms of building power plants and in relation to hyperscalers.

Okay. And then one more. I mean we are still seeing a lot of assets, private assets being offered to companies like you, hopefully. You do have a large pending acquisition. And I'm just wondering if you would still have interest in single asset transactions before the LS Power transaction closes.

We look at everything. And if there's something that's economically attractive, that's a great fit for our portfolio, we would be interested. We don't feel we need to add any additional capacity given the LS acquisition, the Rockland acquisition and the TEF projects, but we are always opportunistic when these things are out there.

And then lastly, Bruce, you mentioned the free cash flow guidance for '26 and the fact that you're sort of running out of the tax shield. I mean, the LS Power transaction brings the tax shield, right? So there would be presumably an improvement sort of free cash flow generation of the current business on the back of that transaction. Is that fair?

Yes, I think that's generally a fair statement, Agnie. The one thing that I'll just clarify for you is that uptick in cash tax that we talk about on a stand-alone basis isn't necessarily related to our NOLs disappearing. It's really more about certain tax credits that we had from our days when we owned renewable assets that eventually expired. And so regardless of the LS transaction, we're still going to have a very sizable NOL position. But clearly, the LS transaction is going to give us even more, which should inure to a cash flow benefit.

Next question comes from James West with Melius Research.

Larry, in your prepared comments, both at the beginning and the end, I think you made it very clear that you guys are not just standing still waiting to close LS, but you've got a lot of other things going on. If you were to kind of rank order what you're most excited about outside of that transaction, what would you say are the top kind of 1, 2, 3 other things or items that you're waiting to hopefully announce to us in the near term?

I'm going to mention them in no specific order because that feels like choosing favorites among your kids. We have a lot going on in both the commercial and industrial sectors, as well as in retail energy and Smart, which people seem to overlook. We have an impressive growth plan that we are executing well. Second, our residential virtual power plant really excites me. After closing the LS transaction, I am even more enthusiastic about our demand response potential. So, I'm considering all these factors. Additionally, bringing our first project online and making progress on the other two is significant. There’s so much happening that we haven't even begun to reflect in our numbers. Even without any data centers or changes in power prices, we're still projecting a 14% compound annual growth rate and a double-digit free cash flow discount rate. I’m very excited about that. I find it hard to believe where else in the market you could find such favorable figures with minimal downside, especially when considering all the other positive developments. So, I am more optimistic than ever.

Our next question comes from Nick Campanella with Barclays.

Maybe I could just follow up on the BYOP combo, just your conversation with policymakers at the states you operate in, how does that look in terms of BYOP? How have the customer conversations evolved over the last 6 months? And is it a fair assumption that all deals going forward just need some type of additionality in this space now? Or how would you kind of frame that?

Speaking to all deals is challenging, but it all begins with the Secretary of Energy, who has been very clear on this issue. As regulators increasingly focus on affordability and the distribution of costs for this new power, the most straightforward and equitable solution likely involves bringing your own generation. Whether this is calculated as megawatt hour per megawatt hour or through ratios like 75% or 50%, remains uncertain. However, every policymaker is considering this for two main reasons: the need for affordability and the recognition of the demand for new power and infrastructure. For instance, if you are the governor of New Jersey or Pennsylvania, you would prefer to distribute the costs among major corporations like Amazon, Meta, Google, or Microsoft, which serve billions of customers globally, rather than placing the burden on local ratepayers. This is a trend we began discussing a year ago, and with our joint venture with GEV and Kiewit, we have prepared for it, which is now rapidly gaining traction in recent months.

Definitely recognize that. Maybe just with PJM being a more important jurisdiction pro forma of this LS Power deal. Can you talk about the capacity auction and just the prospects and timing for the collar to potentially be extended or just what you're advocating for with stakeholders, where you think the industry is heading and ultimately, what outcome you think would be good for the industry?

It's Rob. Nothing has changed since the last auction in terms of supply and demand. Therefore, I expect we will price at the top of the cap and collar. In the long term, there are many different approaches being considered to solve the equation. Overall, there is a general concern about reliability and affordability. However, to achieve reliability, price signals are necessary, meaning the market must reflect certain conditions for new developments to occur. Regarding the collar, we supported its implementation last time, and I could see it being extended again as it offers certainty for everyone involved. Whether the top end of that collar is set appropriately is still to be determined.

Our next question comes from Carly Davenport with Goldman Sachs.

Larry, you mentioned before your excitement about the residential VPP program and the pilot there. I guess, any updates on how that's tracking in terms of uptake? And is that something that we should expect to see sort of regular updates on in subsequent calls?

Yes. I'm going to kick that over to Brad.

Thank you. Yes. No, we've been very pleased with the progress from VPP. So as you're aware, we did raise guidance earlier this year for the balance of '25. So we went from 20 megawatts to 150, and we remain on track for our 1 gig by year-end. We received a lot of great feedback from customers about the value and the experience of our offering. So we're really excited about that, and we're actually installing more customers than anticipated. And I think as we shared in our last earnings, we're actually seeing the upgrade of additional equipment kind of double our expectations. But apart from that, we're also piloting some additional new home automation offerings which not only deliver the demand response but will also help reduce home energy consumption, which will enable us to offer customers home energy savings. So as affordability and grid capacity become more critical, energy will really have the only solution to meet those needs to be able to reduce energy consumption and save customers money. So we're really excited about piloting that, not just in Texas, but we will also be taking that out to the East early next year.

Great. Okay. That's super helpful. And then maybe just on the data center pipeline, you have one agreement with first delivery in '26, another in '28. I guess, is there any trends that you're seeing in terms of when customers are looking to be energized on these fields?

I mean I think they're looking to be energized as quickly as possible, but there are some bottlenecks, as you know, with interconnection and things of that nature as well as if you really need to bring your own power plant, obviously, that doesn't occur in a day. So I think customers would love to start ramping yesterday, and they're doing what they can to do that. But I think if I look at the graph from now through 2031, there's more and more power coming online each of those years. So I don't think anybody comes to the table thinking, well, we really want to start in 2033, but I think they're also realistic about building their own businesses and the constraints that exist.

Our next question comes from David Arcaro with Morgan Stanley.

When you mention that you're increasing your expectations for data center power agreements to now be above $80 a megawatt hour, what does that reflect? Is that indicative of the current market prices? Also, considering the upper end of your previous $70 to $90 range, does that upper end increase as well? I'm curious if you would also be adjusting pricing for bring your own power deals.

I think everything is pricing upward as a result of increasing demand. If you look at the capital expenditure announcements by the hyperscalers, they continue to rapidly increase across the board. I think it's a recognition from people of our rather unique ability commercially to supply them in ways that they want to be supplied and to bring new power to the table and just really heightened interest from multiple hyperscalers and developers in a very accelerating fashion, just kind of using the basic laws of supply and demand. So all of those are factors that led us to raise this really to kind of take the top of the range and raise the bottom of the range.

Yes, this is Brad. We continue to see strong margins in Texas, mainly due to the competitive market. As prices have increased, we've managed to maintain those margins. We're exploring solutions to help certain customers reduce their energy consumption, as affordability will be a concern with rising prices. In the East, the situation is different due to the price comparison, which has resulted in some margin erosion that we're closely monitoring. However, as I mentioned earlier, we aim to present an integrated value proposition to consumers that goes beyond simply competing on price per kilowatt hour. Our goal is to provide solutions that lower energy consumption while also offering home protection and automation. We believe this approach can be scaled and help change the conversation. The dynamics differ significantly between the East and Texas.

Our next question comes from Ryan Levine with Citi.

Hoping to follow up on the Smart Home business. Good to see the 9% annual year-over-year growth there. What are you assuming for '26 stand-alone business contribution for Smart Home growth? And how do you see that trend evolving into your longer-term outlook?

Yes. In terms of customer counts, we're assuming something very similar to what we saw this year. We've seen really strong growth across really all of our channels of distribution. We're also launching more of a good, better, best. Historically, Vivint has been pushing the higher-end systems, but we're able to, as I mentioned earlier, offer a much more affordable entry-level offering that not only gives customers some security protection, but also that energy management savings that I touched on. So with the additional kind of good, better, best approach, it opens up new channels of distribution. And so we expect really strong growth in '26 as well.

Ryan, I want to remind you that when we announced the $750 million growth plan, we indicated that Smart Home net customer growth would be in the 5% to 6% range. So when Brad refers to the customer growth we are estimating for '26, it should remain quite consistent with that original growth plan, likely even higher.

And then in terms of the hyperscaler data center conversations, I appreciate the additional guidance around pricing and momentum. But in terms of duration of the contracts, are you seeing any change there around the tenor of contracts that the customers are looking for as demand has continued to accelerate?

No, we still continue to see people wanting at least 10 years, some even more than that. So if anything, tenure will be increasing, particularly if you're going to bring your own generation, you really need a longer-tenured contract in order to drive your own cost down. So we're seeing longer contracts, not shorter ones, Ryan.

Okay. And anything around inflation provisions? Are they becoming more standardized around some of the other commercial terms embedded in these contracts?

Most of the contracts will allow us to maintain our margins relatively stable across various factors.

Our final question comes from Andrew Weisel with Scotiabank.

First question on buybacks. I see that you're guiding to a moderation in next year to $1 billion. I think you previously alluded to that. Forgive me, I'm still a bit new to the story. Is that a function of LS Power and TEF CapEx, which is sort of onetime in nature? Or should we think of the $1 billion as a good run rate going forward? I can do the math, $3 billion through 2028 kind of implies that. But how are you thinking about this longer term?

Yes, we are staying consistent with our previous guidance regarding the LS Power transaction. We announced plans for buybacks of $1 billion per year until we complete our deleveraging. We just wanted to maintain that consistency while acknowledging that we will update our capital allocation once we finalize the transaction.

Okay. That makes sense. And similarly, on that last point there, you said that you'll update all the financials when LS Power closes. Does that mean like an 8-K or press release as soon as it closes? Or are you talking about the 4Q update in February?

I think it's really just going to be dependent on when we actually close and how that timing lines up with when we might otherwise regularly report earnings, fourth quarter earnings. And so we'll assess based on where things are lining up with respect to close to figure out what the best way to communicate with the investment community will be.

Okay. That makes sense. And one last one. You covered a lot of good details, so this is kind of a nuanced one, but I'm seeing some headlines that potential sale of the Gladstone asset in Australia. A lot of people might not even remember that you have that. But how are you thinking about that asset? And could there be value there?

We don't see much value in that asset; it will likely be nominal at best. I wouldn't consider it a significant driver. Instead, our focus is on simplifying our portfolio and streamlining our operations.

I'm showing no further questions at this time. I'd now like to turn it back to Larry Coben for closing remarks.

I want to thank you all for taking the time to listen and for your interest in NRG. I have never been more excited about our prospects as we are today, and I look forward to seeing you all on road shows and wherever so that we can discuss them in more detail. Thank you, operator, and thank you, everyone.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program.