Prepared remarks
Thank you for standing by, and welcome to Talen Energy Corporation's First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during this session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Sergio Castro, Vice President and Treasurer. Sir, please go ahead.
Thank you, Michelle. Welcome to Talen Energy Corporation's first quarter 2025 conference call. Speaking today are Chief Executive Officer Mac McFarland, Chief Financial Officer Terry Nutt, and Chief Commercial Officer Chris Morice. They are joined by other talented senior executives to address questions during the second part of today's call as necessary. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Talen Energy Corporation's website, talendenergy.com. Today, we are making some forward-looking statements based on current expectations and assumptions. Actual results could differ due to risk factors and other considerations described in our financial disclosures and other SEC filings. Today's discussion also includes references to certain non-GAAP financial measures. We have provided information reconciling our non-GAAP measures to the most directly comparable GAAP measures in our earnings release and the appendix of our presentation. With that, I will now turn the call over to Mac.
Great. Thank you, Sergio. And welcome, everyone, to the call. We appreciate your continued interest in Talen Energy Corporation. In an uncertain market, we remain certain about our strategic path forward and our investment thesis. While the markets have been choppy and tariffs and trade restrictions on things like rare earth metals have introduced complexities, we remain committed to the simplicity of executing our business plan: focusing on operations, commercialization of our megawatts, returning capital to shareholders, and executing our growth strategy through our contract with AWS at Susquehanna and expanding our strategy to contract megawatts at our other sites, thereby delivering the most free cash flow per megawatt, and that is how we measure ourselves. We believe the long-term prospects for the IPP business and for Talen Energy Corporation more specifically remain strong. Our fundamental view of tightening power markets has not changed.
Our belief in ever-growing data center load has not changed. Our belief that Pennsylvania is a hub for data center development has not changed. In fact, many of these beliefs have strengthened. PPL just announced 11 gigawatts of advanced data center development in their transmission territory where our plants are located. New development costs and construction timelines are escalating. Some estimates for new CCGTs are $2,200 to even $2,600 a kW. While some uncertainty around supply chains, tariffs, and tax policy have also hindered renewable development, hyperscalers continue to affirm or accelerate their capital plans and are showing no signs of slowing. All that said, market news of data center rebalancing and a lack of strength in power forwards has led some skeptics to question the underlying thesis in the IPP space and its intersection with data centers. To those skeptics, we say we are undeterred.
Rebalancing is just that: rebalancing. And the forward markets are thinly traded and don't reflect the new normal of tight power markets. Turning to slide two, we had a solid quarter bolstered by strong load and power prices as well as very good operations and performance by fossil plants, Susquehanna, and the commercial team. All working together to deliver $200 million of EBITDA and $87 million of free cash flow, which is ahead of our Q1 internal estimate that underpinned our 2025 guidance. I'd like to thank the women and men of Talen Energy Corporation who worked tirelessly through the winter cold snap and kept the lights on. During Q1, we continued to execute under our share repurchase program, buying back $83 million worth of shares. The AWS campus has been electrified, and we are delivering power and receiving revenues under our existing contract. AWS continues to build out the campus with multiple buildings under construction.
We are excited about the future that this brings as we continue to execute under our current arrangement in the approved 300 megawatt ISA. We are moving forward and not looking back. We look forward to hosting investors at the site so they can see the activity for themselves. I'm sure you all want to know how and when we are moving past the 300 megawatts of our current ISA. As I have said before, we don't comment on commercial activities we are undertaking. That said, we remain keenly focused on finding the right solution for our customers and Talen Energy Corporation. Let me add this. Last year was one of the most exciting years in my career in the IPP space, and I'd like to think Talen Energy Corporation played a role in that. In 2025, it's shaping up to surpass last year as the intersection of power and data centers is validated. While not a Q1 activity, we have extended our refueling outage on Susquehanna Unit 2 to perform incremental maintenance.
We went into this outage with a plan to gain operational efficiency through the recovery of 27 megawatts through a fix in the condenser. We performed this work and expect to recover those megawatts. However, while doing this work, we identified incremental maintenance we felt prudent to undertake during the spring period of low prices, and we extended our outage by just over three weeks at an incremental cost of roughly $20 million. We believe this incremental work will restore megawatts in excess of the 27 that we originally planned to achieve. All of this leads us to expect a payback in approximately one and a half years at today's prevailing market prices. This sets us up well for the future with more energy to sell, and ultimately, this decision is the right thing to do at the right time. We have incorporated our favorable first quarter results into our guidance for 2025 and also included the incremental maintenance we are undertaking.
As a result, we are narrowing and affirming that guidance. Our 2026 outlook remains unchanged. Turning to slide three, our view of the markets has not wavered. We continue to see tightening markets driven by increased demand. In Q1, we saw seven terawatt hours or approximately 3.5% of incremental deliveries on a weather-adjusted basis, 1.6 terawatt hours more than it was in the same quarter last year. The additional generation all came from our fossil fleet and supports our view that energy demand will increase the dispatch of our flexible fleet. As I mentioned, we have seen PPL announce even more data center load from prior estimates last year, and we see other forms of demand further strengthening. AI continues to move forward at a significant pace, and hyperscalers continue to raise or affirm their capital investment plans. Further, cloud services and hosting activity continue to show significant growth as indicated by several earnings reports over the last few weeks.
While data center demand in AI is somewhat of a recent phenomenon and the markets are trying to digest a lot of discrete data points — shift production and sales, lease termination, and new data center announcements in the rebalancing I mentioned earlier — from where we sit, we do not see a pullback. While there will be a supply response to this increasing demand, in the short term, efforts to bring more megawatts to the grid at Susquehanna will happen across the industry. However, we don't see notable new builds coming online until late in the decade. With supply chains tight and tariff and trade restrictions going into place, when a lot of equipment is sourced in Europe, the cost of new builds makes new supply even more challenged in the short term. In the long term, we do believe that supply will ultimately arrive in response to market demand and signals. But there is some truth to the view that current capacity pricing as well as the forward markets don't support new build investment and don't reflect the tightening market.
Chris will provide some additional detail on our hedging program later, which demonstrates that while we believe the forwards are not representative of supply and demand fundamentals, we did take the opportunity in the first quarter to layer on additional hedges in '26 and '27 when the forward market was well bid. Turning to slide four, I mentioned most of this in my opening remarks. We continue to execute. AWS continues to build. We are delivering electrons and receiving dollars. As a reminder, the schedule over the course of the year is to ramp up to 120 megawatts. With that, I'll turn it over to Terry on slide five.
Thanks, Mac, and good morning, everyone. Let's look at our first quarter financial and operating results. Our team continues to deliver from an operational perspective. During the quarter, our fleet ran well during periods of high demand, demonstrating the value of a dispatchable fleet. We generated 9.7 terawatt hours of power with an equivalent forced outage rate of 1.2%, slightly less than half of this generation came from our carbon-free Susquehanna nuclear facility, as our fossil fleet ran more in periods of high demand. While we experienced higher run times at our fossil plants, our Montour and Brunner Island facilities saw significant increases in generation during the quarter. Safety remains our first priority across the fleet, and our team works safely during the busy winter run-in cold conditions. Our Q1 recordable incident rate was only 0.4. This is in line with or better than our peers.
Turning to slide six, I'll provide some more financial details. We had a solid start to the year with the results better than our estimates. We reported adjusted EBITDA of $200 million and adjusted free cash flow of $87 million. The weather in PJM was cold this quarter with heating degree days in Philadelphia above the ten-year average. Below-average temperatures during the first quarter of 2025 contributed to increased demand that resulted in higher settled on-peak power prices compared with the prior year. On a comparative basis, our first quarter results in the prior year benefited significantly from approximately $165 million of realized hedge gains, with Q1 2025 only containing a modest hedge impact. Our fleet performed when needed as evidenced by our low forced outage rate. Our fossil fleet generated approximately 20% more power than the same period last year, despite the absence of our ERCOT assets.
As you may remember from our Investor Day in September last year, our earnings in the second half of 2025 will be higher due to the inclusion of the 2025-2026 capacity pricing of approximately $270 a megawatt-day and the reliability must-run impacts of our Brandon Shores and Wagner facilities. As Mac mentioned earlier, we are reaffirming and narrowing our previously announced 2025 guidance ranges. The strong performance in the first quarter and expectations for the balance of the year are expected to offset the impacts of the extended Susquehanna outage. Our narrowed adjusted EBITDA range is $975 million to $1.125 billion, and our narrowed adjusted free cash flow range is $450 million to $540 million. In the near term, market uncertainty on trade restrictions and tariffs do not have a material effect on cost. In the longer term, it is more uncertain as we evaluate tariffs and the impact throughout our supply chain.
Our 2026 outlook remains unchanged from what we disclosed at our Investor Day back in September. These ranges continue to demonstrate Talen Energy Corporation's robust earnings and cash flow growth profile, which includes tripling adjusted free cash flow per share by 2026. Turning to slide eight, we continue to target a return of 70% of adjusted free cash flow to our shareholders. We view share repurchases as the first priority for excess cash, and we will use that as the benchmark to measure the return profile of any growth opportunities. As Mac mentioned earlier, the pullback in the equity market allowed us to purchase $83 million or approximately 452,000 shares in the first quarter. Since the start of 2024, we have repurchased approximately 14 million or 23% of our outstanding shares. We have approximately $1 billion in buyback capacity remaining through year-end 2026 and balance sheet flexibility to execute our program or act strategically if the right opportunities present themselves.
Moving to slide nine, we remain committed to maintaining net leverage below our target of 3.5 times along with ample liquidity. As of May 2, our forecasted net leverage ratio was approximately 2.6 times, well below our target. In addition, we have approximately $970 million of liquidity with over $270 million of cash on the balance sheet. During the quarter, we took advantage of falling rates to execute $550 million of interest rate swaps. Since the end of the quarter, we added an additional $150 million of swaps, which reduces our floating rate exposure and allows for more predictable cash flows. With that, I'll now turn the call over to Chris.
Thanks, Terry, and good morning, everyone. Moving to Slide 10, I'd like to highlight our hedging activity this past quarter. Our hedging strategy is focused on maintaining appropriate risk tolerances with an emphasis on protecting cash flows across our generation fleet. On the left, there's a graph of average calendar year 2026 and 2027 PJM West Hub around-the-clock pricing. On the heels of a strong winter, prices rose, and our commercial team started to layer in additional hedges during the period. As a reminder, we have a pragmatic, not programmatic hedging strategy, which gave our team the flexibility to add hedges during higher price periods as detailed on the right-hand side. In Q1, we doubled 2026 and 2027 hedges in a rising price environment. These actions allowed us to increase the certainty of the near-term cash flows for the business while still maintaining appropriate exposure to rising price fundamentals in 2027 and beyond. With that, I hand the discussion back to Mac for closing remarks.
Great. Thanks, Chris. This remains an exciting time to be in IPP. Market fundamentals remain incredibly strong, data center load growth continues to arrive, and we continue to execute on our AWS contract. All of this gives us strong conviction in our investment thesis. Talen Energy Corporation is well-positioned to power the future. We appreciate everyone's interest in Talen Energy Corporation and for joining us on the call today. We'll now turn it back to the operator and open the line for questions.
Questions and answers
Thank you. Please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. The first question comes from David Arcaro with Morgan Stanley. Your line is open.
Thanks so much. Good morning.
Morning, David.
Following up on maybe a few comments of your peers this week, one of your peers highlighted a shift in customer interest toward front-of-the-meter deals. I was wondering if you could elaborate on your current conversations, and with the backdrop of the FERC process going on, have there been a change in tone or strategy or a desire to go front-of-the-meter versus behind-the-meter in your conversations as well?
Well, thanks. Appreciate the question. I'd first start with we have a current transaction or contract with AWS that we're executing under, and as I mentioned in the remarks earlier, we're actively delivering megawatts and receiving revenues, and there's ongoing construction there. Since the time we signed that contract, we've mentioned to people that we've been looking at all different forms of opportunity with respect to how to power data centers and to expand our growth strategy. You've seen a lot of activity that started with the denial by FERC of the ISA extension and then the ongoing dialogue back and forth with PJM. PJM's submitting eight different alternatives and basically allowing options of ways to power data centers. We think that's highly supportive and continue to support that process. Working with our counterparties, we're looking at a number of different ways to get megawatts quickly delivered because it's speed to market, and how to contract megawatts across the fleet. So we've been working actively for over a year on that. That's pretty much it. Cole, anything you want to add?
No. I think that's right, Mac. We said last September at our Analyst Day that across our fleet we're looking at a variety of different options. Obviously, we had the Susquehanna behind-the-meter deal with Amazon, but a front-of-the-meter solution is the right solution in many cases, and we've been working on those constructs for a while. With the FERC denial in November, we've been working on alternative commercial solutions as well. One further point I mentioned in the opening remarks: you continue to see PPL discuss the backlog moving from nine gigawatts to 11 gigawatts, and they've been advancing that. There will be a number of solutions in the territory where we have plants, land, water, access, transmission capability, etc., to connect to the grid. It's a matter of how the power source is procured and where it comes from. PPL is actively engaging with PJM thinking about what is needed from the transmission system. All of that points to signs that the customers are there and how contractual arrangements are going to occur, and it's going to evolve. I think it's going to be a really exciting time in 2025 when this power-data center intersection gets validated.
Got it. That makes sense. I appreciate the color. Maybe touching on the current status of the FERC process and colocation: how do you see that playing out in terms of the path forward? Do you see a path for a settlement process potentially opening up?
Yes, and it's hard to predict. The FERC process has been evolving. Chairman Christie has said that they want to resolve it quickly. There was a conference at the Pennsylvania PUC wanting to promote the ability to serve large loads and data centers and to move quickly because people realize there's a huge amount of economic development associated with this. Pennsylvania wants to become a hub for data centers. We're watching this closely. The PJM eight options went to FERC and FERC is looking to resolve this matter quickly; we're highly supportive of that. We're engaged in the FERC process, and we also have a legal matter pending in the Fifth Circuit with respect to our ISA, while Cole and his team continue commercial activity, because there are a number of different ways to resolve how to get data centers power. Those are all evolving and progressing.
Okay, great. Appreciate the comments. Thanks so much.
And our next question comes from Angie Storozynski with Seaport. Your line is open.
Thank you. I wanted to follow up on the comments about PPL. I'm looking at the PPL zone: about seven gigawatts of peak load and about 13 gigawatts of installed capacity in the PPL zone. PPL is showing 11 gigawatts of potential incremental demand. PPL does not provide generation, so whoever joins that queue needs to procure electricity, presumably many of them from your plants. Given that, are you open to expanding some of your assets under long-term contracts?
Good morning, Angie. Our growth strategy is focused on leveraging our platform. We have a number of different assets in addition to Susquehanna. The focus has been on Susquehanna and how to expand at Susquehanna, which would require change to that contract and some form of grid support to provide the same reliability. We've been looking at how to use the rest of the assets in our portfolio and provide a platform solution. With a portfolio, you have a different risk backstop and balance sheet advantage compared to single assets. We've been looking at how to leverage that portfolio and lessons learned from the contract with AWS across the fleet. While I won't comment specifically on transactions or M&A, I hope that gives you a flavor for what we're trying to do.
And no comment about expansion of existing assets. I understand you don't want to comment on that.
As a matter of practice, we don't comment on M&A activity or commercial arrangements we're working on or not working on. We don't comment on the presence or absence of material non-public information. When working on commercial activities—contracts, acquisitions, divestitures—it doesn't help to have public discussion, as it may give one side leverage. We will announce things at the appropriate time when they're executed.
Just one last one: you have a head start because of Susquehanna. As time goes by, are you concerned that head start or competitive advantage won't last as more deals are announced by competitors?
We have a first-mover advantage. There's hundreds of millions of dollars of transmission infrastructure at Susquehanna and hundreds of millions in buildings and other infrastructure going in, and we have a contract we're executing under. As we go through ramp-up and billing, we're advancing our knowledge of how to power data centers. I've said I'd like to announce our second deal before somebody announces their first, and I'll stick to that. A rising tide lifts all boats; the more contracts that prove up this intersection the better for the industry. We're competitive and want to announce more deals before anyone else, but these things take time. Our lack of public discussion doesn't mean lack of effort or progress. Paul—sorry, Cole—anything you want to add?
I’ll add on Susquehanna: we have a couple-year head start with substations in the ground and buildings actively drawing power, and the campus is expanding. We don't need to wait for an announced next contract to continue to expand rapidly. Our other assets are advantaged: water, fiber, land, etc., and they're in the right location relative to the 11 gigawatts potentially coming to the zone. We've been advancing opportunities to lock that in. Vince and the team at PPL have been constructive with a commercial mindset allowing data centers to flourish in their backyard. They have a transmission system that can absorb a lot of these megawatts without impacting residential customers. We like the position we're in and who we're working with.
Good. Thank you.
Thanks, Angie.
And our next question comes from Michael Sullivan with Wolfe. Your line is open.
Hey, good morning.
Good morning, Michael.
Mac, wanted a little more detail on the Susquehanna outage. How confident are you that it'll be back in the next week or so? In terms of what's being improved, how should we think about that?
When you go into a nuclear outage, you have a minute-by-minute schedule. With the extension, mid-May is the target time frame, but schedules can move. We have confidence in the work: we went into the condenser knowing we had planned maintenance to get approximately 27 megawatts to get us back to full capacity injection ratings for the capacity market. When we did the upgrade, we identified additional work upstream in the extraction steam system between the condenser and the turbine. Without getting too technical, we found things that would further enhance steam flow and anticipate getting incremental megawatts. With the $20 million incremental cost and the lost opportunity during a low-price spring period for the three-and-a-half-week extension, we expect payback because we'll get more out of the system. That's the work we're doing.
So it's more on the balance of plant side of things?
Yes. It's on the non-nuclear island, the balance of plant. That's the simplest way to say it.
Very helpful. And my second question: your updated level of conviction in the 2026 outlook that you gave back in September — you've layered on hedges, pricing has been moving around, and there's the cap-floor construct for the auction coming up. How confident are you in the 2026 outlook?
Chris hit on this in the presentation: we saw opportunity to add hedges as price moved up in the term market. We add hedges when we evaluate risk tolerances. The market was well bid in the term market for '26 and '27 during the first quarter cold snap, so we layered in additional hedges. The backwardation in the market does not make sense to us given our view of tightening markets. Terry, Chris, do you want to add? We have significant confidence in our '26 outlook number. We have seen forwards move and commodity bids come in. We have a ton of confidence in that outlook, and the upcoming auction results could potentially provide upside depending on the outcome. But overall, we have a lot of confidence.
Okay. Thanks very much. Appreciate it.
And our next question will come from Jeremy Tonet with JPMorgan. Your line is open.
Hi. Good morning. On capital allocation, any thoughts you could share about the pace of buybacks in a given quarter given we've seen a lot of share price volatility? If free cash flow in a given quarter impacts pace or any other considerations we might think about given the level of volatility?
Jeremy, happy to take that. Good morning. From a pace standpoint, you can look at what we did in the first quarter as an example. When market opportunities present themselves, we'll get out and put our share repurchase program in place and transact. Ultimately, growing free cash flow per share is our goal. There's a little seasonality in our cash because of how our debt service works, but not enough to keep us out of the market for a quarter or period of time. We have over $270 million of cash on the balance sheet, ready to transact when appropriate.
Got it. Thanks. Mac, do you want to add anything?
Yes. We filed our proxy on March 19 with current numbers showing buybacks versus the 12/31 share count. We were in the market and executing trades in early March. We've always said our benchmark is returning capital to shareholders before pursuing other uses of cash. We've shown the propensity to execute under our capital allocation program. We've bought back about $1.9 billion—23% of outstanding shares—so we'll continue to evaluate that strategy and use that as our benchmark.
That makes sense. I was wondering if there could have been more in the quarter given the volatility if there are limiting factors. I understand there are limits on volume per day and the like. Thanks.
I wish we could have bought a billion back at $185. There are limits on volume and other practical constraints. We executed when we thought it was a good use of capital and will continue to be supportive of the stock when appropriate.
And our next question comes from Julien Dumoulin Smith with Jefferies. Your line is open.
Hey, good morning, team. Maybe to follow up on the Susquehanna outage, can I follow up a little on the non-nuclear island? What exactly are you upgrading? Does it pertain to blades or the generator?
It's the extraction steam system that comes off the turbine and eventually flows down into the condenser. We knew we had work to do in the condenser—the 27-megawatt recovery—but as we went upstream toward the turbine there were additional repairs and incremental maintenance on some of the piping in the extraction steam system. Doing that work tightens the steam flow and with the same fuel you get additional energy out of the system.
Got it. So not the turbine or blades. And your confidence in the timeline—mid-May target—is pretty high?
We feel good about the mid-May time frame based on our scope and planning, though schedules can always move when executing outages.
Understood. Pivoting slightly: Montour is interesting. How do you think about additionality there? Some peers have commented on this; you have an interesting potential here. How do you think about what could come ahead, especially with growing conversations on additionality?
I think about the market in near term, midterm, and longer term. In the near term we have plenty of energy; the next five years is about solving a capacity issue for twenty to forty hours. That's where the industry is starting to talk about how to address that. Additionality in terms of incremental new plants is more of an end-of-decade, twenty-thirty to thirty-five issue. In the next five years we need to solve those twenty to forty-hour shortage events using demand response, upgrades to existing sites, and other lower-cost incremental generation. Construction costs for new builds are rising—$2,200 to $2,600 a kW—and lead times are long. Current markets don't support that today. So additionality new builds are more of an out-year discussion.
So to set expectations for your portfolio, any near-term moves would be more about conventional use of existing capacity rather than greenfield incremental megawatts.
Yes, you could look at a portfolio of solutions; existing capacity and portfolio management will be vital for the near term.
And our next question comes from Ross Fowler with Bank of America. Your line is open.
Terry, Mac, how are you? Any updates on the litigation process at the Fifth Circuit around the ISA? Are we where we were?
Ross, I'm happy to take that. The Fifth Circuit briefing schedule will come out in the next couple of weeks. The appeal has a lot of technical issues; the upshot is the FERC decision turned on theoretical concerns about nonconforming provisions and applied those to hypothetical future transactions. We think FERC should have evaluated our transaction and not future transactions that might or might not occur. That process will play out over the next several months in the Fifth Circuit. We're pursuing this option because the denial of the ISA incremental to 960 from 300 was denied without prejudice and without a reasoned explanation as to why it was denied. Our Fifth Circuit case asks FERC to provide a reasoned explanation for the denial. We view that as a prudent step.
That makes sense. Thanks.
Thanks, Ross.
And our next question comes from Craig Shere with Tuohy Brothers. Your line is open.
Good morning. Digging further on the gas-fired and Montour questions: a leading midstream company has coined some rapid-build greenfield simple-cycle data center deployments that could be online in the next couple of years. Any thoughts on reconciling your 2023–2035 timeline for additionality given that, if your comments were focused more around efficient CCGTs, data centers may accept simple-cycle support—does that change your math?
I don't think it's inconsistent. There are parallels to past periods where less efficient units were deployed for speed to market. Smaller reciprocating or simple-cycle solutions can provide speed to market for incremental load. The scale matters: when you start talking gigawatts you need higher-efficiency machines. Our comments around 2030–2035 referenced when you might see larger CCGT builds in significant numbers. In the near term, you can deploy smaller simple-cycle solutions for speed to market; that's within the realm of possible solutions.
To add: it's a question of scale. That technology can be used for near-term solutions, but the scale and whether it's interconnected to the grid matters. Our speed-to-market advantage is our existing assets; we have higher heat-rate machines in Montour and other assets and could deploy those. Over the longer term, we would consider higher-efficiency machines.
Other companies will find pockets of opportunity to build near-term for speed to market. For us, our advantage is existing assets. We already have higher heat-rate machines at Montour, so adding more of that may not be a natural fit. If anything, it would be to add high-efficiency machines over the longer term.
I think it's going to require a portfolio of solutions.
Flipping to the auction and front-of-the-meter: peers anticipate notable demand response increases in the upcoming auction that could pave the way for more front-of-the-meter PPA solutions by peak-shaving and allowing IPPs to tap spare gas-fired capacity. Would you agree with that outlook for progression of the front-of-the-meter market and the pending auction?
You're hitting on an industry theme: people are looking at aggregating emergency response capabilities and demand response to address the twenty to forty-hour shortage events. That muscle has atrophied and needs rebuilding. We need good PJM rules on how demand response and other solutions integrate, particularly for critical loads like data centers where you can't curtail critical activity. We need to think about how to integrate solutions to solve the near-term twenty to forty-hour issue across the system in PJM.
Great. That was helpful. Thank you.
Last question comes from Durgesh Chopra with Evercore. Your line is open.
Good morning. Quick clarification on the FERC/PJM discussion: one of your peers asked for a settlement amongst parties. Any views there? Vistra thought a settlement could push out the decision further. Any thoughts on that and how you see this playing out?
We were not a party to the show-cause order. PJM pushed back on it, and we are not pushing for that show-cause order. We think the regular course of the process is the most effective way to get to a resolution. There's no explicit statutory timeline for FERC, but you're hearing from the White House and Chairman Christie that they want this resolved quickly because of the economic development tied to data centers. Practically speaking, there's pressure to solve this sooner rather than later. We are pursuing our Fifth Circuit appeal and continuing other commercial activities in parallel.
Thank you. Appreciate the time.
Okay. Thanks, Durgesh. Great. And thanks, everyone, for joining us. Have a great day.
This concludes today's conference call. Thank you for participating. You may now disconnect.