Good morning, and welcome to the fourth quarter and full year 2021 Vistra earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Meagan Horn, Vice President, Investor Relations and Sustainability. Please go ahead.
Thank you. Good morning. Welcome to Vistra's Investor Webcast discussing fourth quarter and full year 2021 results, which is being broadcast live from the investor relations section of our website at www.vistracorp.com. Also available on our website are copies of today's investor presentation, our Form 10-K and the related press release. Joining me for today's call are Curt Morgan, Chief Executive Officer, and Jim Burke, President and Chief Financial Officer. We have a few additional senior executives present to address questions during the second part of today's call, as necessary. Before we begin our presentation, I encourage all listeners to review the safe harbor statements included on slides 2 and 3 in the investor presentation on our website that explain the risks of forward-looking statements, the limitations of certain industry and market data included in the presentation, and the use of non-GAAP financial measures.
Today's discussion will contain forward-looking statements which are based on assumptions we believe to be reasonable only as of today's date. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected or implied. We assume no obligation to update our forward-looking statements. Further, today's press release, slide presentation, and discussions on this call will include certain non-GAAP financial measures. For such measures, reconciliations to the most directly comparable GAAP measures are provided in the press release and in the appendix to the investor presentation. I will now turn the call over to Curt Morgan to kick off our discussion.
Thank you, Meagan, and good morning to everyone on the call. As always, we appreciate your interest in Vistra. 2021 was undoubtedly a challenging year and in many ways a pivotal one for Vistra. We were faced with an unprecedented weather event at the beginning of the year with Winter Storm Uri, and the financial strength we worked so hard to put in place was challenged. Yet sitting here today, I'm proud of how our team came together to not only confront and mitigate the impact, but to then shift to building a stronger company. That strong balance sheet we built and the resilience of our team helped us stabilize the company and ultimately get back on track within months. Importantly, we accomplished what we set out to do following Uri.
We shifted our strategic direction and implemented an enhanced comprehensive capital allocation plan with substantial share repurchases, a new dividend policy, and an acceleration of our Vistra Zero portfolio, all while de-risking our company after Uri. We believe we exited the year in a position of strength, and we are excited about our competitive positioning and the long-term value creation opportunity ahead. I'd like to now turn to slide 6 to begin the presentation to discuss the key takeaways from our 2021 performance. We delivered on our adjusted EBITDA from ongoing operations guidance we issued in November, which notably was an increased and narrowed range from what we had announced in April.
After immediately stabilizing our company after Uri, we conducted a thorough review of our business, announcing a capital allocation plan that returns billions of capital to shareholders, enables us to cost-effectively fund the development of Vistra Zero, and maintains a strong capital structure by continuing to pay down debt. We also made significant progress in establishing ourselves as a leader in ESG and the clean energy transition with our Vistra Zero carbon-free generation portfolio and our efforts regarding DEI and sustainability, including enhanced disclosures. In fact, in December, we issued the first-ever green U.S. corporate perpetual preferred stock to fund our development and growth of Vistra Zero. We haven't emphasized this in a while, but we continued our OPI savings, realizing $500 million of such savings in 2021 from our generation segments.
OPI is now part of our DNA with continuous idea generation and conversion of ideas to executable opportunities on a regular basis. Our retail business rose to the challenge as well. We grew our ERCOT residential counts by approximately 23,000 customers, the highest organic growth we've seen since 2008. Most of this growth was within our flagship retail brand, TXU Energy, demonstrating the strength of our brand promise and continued importance to our customers. In all, we ended the year back strong again and look forward to building on that momentum through the execution of our four strategic priorities, which we will discuss in more detail a bit later.
Before I get to that, I would like to turn to slide 7 to discuss our 2021 performance in a little more detail. When the dust settled right after Uri, we were facing an adjusted EBITDA picture of right around $1.2 billion. I recall thinking that this is not the way that 2021 is going to end. We've got to put this company on a positive path and improve this picture. We instituted a stretch target of $500 million in self-help and in fact achieved the target coming in at $546 million. At the same time, we were very active in the Texas 2021 legislative and regulatory deliberations regarding Uri, which among other accomplishments, resulted in Vistra being allocated $544 million in ERCOT securitization payments.
I want to thank those in the state of Texas that had to deal with the fallout of Uri for their efforts, and specifically securitization for their courage and foresight. The self-help and securitization efforts resulted in an improvement following Uri of over $1 billion and significantly contributed to improving that initial picture that I mentioned earlier. In November, we issued refined guidance that increased and narrowed our adjusted EBITDA from ongoing operations estimates we had issued in April, and we delivered at the midpoint of that November guidance at $1.994 billion prior to taking into account an opportunity we had to settle some Uri-related retail bill credit liabilities.
Specifically, at the end of the year, we settled a block of these bill credits for $53 million prior to their expected settles in 2022 and 2023, all with internal rates of return ranging from 20% to over 40% and an average of more than 30%. While it did decrease our final adjusted EBITDA from ongoing operations for 2021, we expect the high IRR settlements will positively impact us in 2022 and 2023. Our Adjusted Free Cash Flow before Growth from ongoing operations was $179 million for the year, which is within the guidance range we offered in November. Excluding the early retail bill credit settlements that I just talked about, it would be over the midpoint at $232 million. Today, we are also reaffirming our 2022 guidance.
We see some headwinds and tailwinds as is normal in the coming months, and though the upcoming summer months will be critical to our performance, we continue to anticipate that 2022 will be consistent with our previous statements of adjusted EBITDA from ongoing operations of $3 billion or more. We are not establishing guidance beyond 2022, but our long-term view of Vistra's earnings power remains consistent with our previous views. Our generation and retail performance outlook is strong. As we always have, we will capitalize on opportunities to not only lock in adjusted EBITDA through hedging activities, but also incrementally add value through commercial optimization. The net of this activity, we believe, will be in the $3 billion+ adjusted EBITDA range.
In addition, we are positioned to grow from this level as investments in our Vistra Zero generation fleet become operational, which we will discuss in more detail shortly. This is all in despite the retirement of significant coal generation. Turning now to slide 8. In November, we announced four strategic priorities. Return capital to our shareholders, accelerate investment in our zero-carbon generation growth through an appropriate capital structure, continue to maintain a strong balance sheet and deliver long-term sustainable value. We delivered squarely on each of these priorities by year-end 2021 and are poised to continue delivering in the years ahead. First, we returned $290 million of capital to our shareholders via dividends in 2021 and have instituted our new $300 million dividend policy for 2022.
We front-end loaded our share repurchases and spent $764 million of the $2 billion share buyback program as of February 22, 2022. The combination of the new dividend program and share repurchases has yielded an approximately 13% increase in declared dividends in Q1 2022 as compared to Q1 2021. As we continue to buy back shares, will lead to further increases on a per share basis. We are also well on the way to deliver the $7.5 billion in shareholder capital return by year-end 2026. Finally, later this year, we expect to be in a position to announce the next phase of our share repurchase program after we complete the $2 billion program by the end of this year.
As long as our stock has the kind of free cash flow yield that it does currently, we will be buying our shares. Second, we executed on our goal to further finance and grow our leading Vistra Zero portfolio. In December, we issued an upsize $1 billion in green perpetual preferred stock. Proceeds from this issuance will be used to fund Vistra Zero's growth while allowing us to retain full control of the business. We expect that these proceeds will also offset the once anticipated $500 million per year equity contribution to Vistra Zero, freeing up that capital to be allocated to further execute on our share repurchase program. We expect Vistra Zero to be further financed as needed with project free cash flows and project-level financing. Third, we also continued to strengthen our balance sheet.
We reduced debt in the fourth quarter of 2021 by approximately $625 million and are on a pace to reduce total debt, exclusive of Vistra Zero project financing, by $1.5 billion by year-end 2022. We've increased liquidity year over year by $180 million and further strengthened our balance sheet with cost-effective preferred stock of $2 billion and a $1 billion commodity-linked revolver that will help provide incremental liquidity for cash postings under various of our commodity contracts when power prices are high. With these endeavors and the planned activities in 2022, we expect our balance sheet to be back into the pre-Uri range by year-end 2022. We continue to believe a strong balance sheet is essential to managing the risk of the company and creating long-term equity value.
Finally, we continue to pursue long-term sustainable value for our shareholders. I already mentioned the $500 million OPI value enhancements, which leads to a core set of generation that is highly efficient and necessary for the long-term grid reliability. You are beginning to see large asset managers essentially recognize the need for natural gas in the transition to net zero several years out. We possess a low-cost fleet of gas-fueled generation that is likely to be needed for many years to come. Our retail segment saw significant organic customer growth, and we continue to implement de-risking activities, including our expenditures to further harden our generation fleet in ERCOT. Specifically, in 2021, we invested approximately $50 million and will invest another $30 million in 2022, further de-risking our ERCOT fleet.
We installed dual fuel capabilities at plants where it was economic and prudent and added on-site and off-site fuel storage. We also revised our commodity hedging approach and carried extra length heading into the winter months in 2022. We've taken these precautions at a relatively low cost to guard against a severe financial impact in the event of a storm similar to Uri. While the recent weather events in February 2022 in Texas were certainly not Uri-like events, they have given us valuable insights into how our preparations would fare in a repeat situation. We are pleased to report that our fleet has performed exceptionally well with no weather-related outages. Moving on now to slide 9. We know there is quite a bit of interest in our Vistra Zero growth pipeline. This visual shows you by state the projects and megawatts in the pipeline.
We forecast that approximately 5,000 MW of projects will generate highly contracted revenue, resulting in approximately $450 million-$500 million of adjusted EBITDA annually. This is in addition to our nuclear plant, Comanche Peak, at 2,300 MW. All in, Vistra Zero is expected to be in the range of at least 7,300 MW of carbon-free generation by 2026. We have a clear line of sight to our project pipeline, as demonstrated by our recently announced Moss Landing expansion by another 350 MW, our acquisition of the 110-MW Angus Solar development in Texas, and our 450 MW coal to solar initiative in Illinois.
That's a total of 900 MW of planned renewable developments announced in the past five months. We expect to bring on three projects in ERCOT in the very near future, 260 MW of storage at De Cordova, plus 158 MW at Brightside and Emerald Grove. It is important to note that we continue to believe in the strength and growth opportunities at Vistra Zero despite the recent unplanned outages we have experienced at our Moss Landing 300 and 100 battery storage sites. We are committed to helping California and the country as a whole transition to cleaner sourced electricity, and batteries will undoubtedly play an important role. This is new technology, and it will continue to improve. These incidents give us and the industry important insights as we move the country forward in the energy transition.
Notably, we believe the issue has not stemmed from the batteries, but instead appears to be related to failures in the water-based safety system. Our investigations have revealed that the safety system is working. It's just experiencing leaks. We will do what it takes to fix this issue quickly, get the systems back online as soon as practical, and as always, we will do it all with safety as our number one priority. With that, I will now turn the call over to Jim Burke to discuss our financial results in more detail. Jim?
Thank you, Curt. Turning now to slide 11. Vistra delivered strong financial results during the quarter, with adjusted EBITDA from ongoing operations of approximately $1.2 billion, which is $363 million higher than 2020. Retail is approximately $526 million higher than Q4 2020. Primarily driven by our accrual of the expected $544 million of securitization proceeds. The favorability was partially offset by mild weather. Period over period, the collected generation segments ended the quarter $163 million lower than fourth quarter 2020, driven primarily by lower realized margin in ERCOT and our sunset segments. Adjusted EBITDA from ongoing operations was $1.941 billion for 2021 after subtracting the favorable bill credit settlement cost.
Year-over-year, the retail segment was $329 million higher than 2020, driven primarily by our self-help initiatives, partially offset by net Winter Storm Uri impacts and milder weather in ERCOT. The generation segment year-over-year was $2.15 billion lower than 2020, driven primarily by the Winter Storm Uri losses. While 2021 was significantly impacted by Winter Storm Uri, we believe we are back on track with 2022 adjusted EBITDA from ongoing operations guided to a midpoint of approximately $3 billion. I'm turning now to slide 12, which provides a more detailed breakdown of our 2021 execution on the announced capital allocation plan. We executed on our $2 billion share buyback plan with a total of $764 million of buybacks occurring through February 22, 2022.
This leaves just over $1.2 billion remaining of buybacks to be completed by year-end 2022. We remain confident that we will achieve this goal. With those buybacks through February 22, we have 448.8 million shares that remain outstanding, representing an approximately 7% reduction in share count or approximately 35 million shares since our last reported share count in the third quarter of 2021 10-Q. We continue to believe that buying back our shares will create a better supply and demand balance, generating a share price more reflective of what we believe to be our true value. Reducing our share count should also result in an increased dividend yield to our shareholders as we execute upon our announced plan to deliver $300 million in annual dividends to our common shareholders through 2026.
In keeping with this plan, on February 23, our board of directors declared a quarterly dividend of $0.17 cents per share of our common stock, approximately a 13% increase over our 2021 first quarter dividend amount. The $0.17 cents per share amount reflects an estimated $75 million of dividend payouts this quarter. The common dividend will be paid on March 31, 2022, to shareholders of record as of March 22, 2022. The board of directors also declared a dividend on the company's 8% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock of $40 per preferred share, payable on April 15 to preferred holders of record on April 1.
In accordance with our announced capital allocation plan, we also eliminated approximately $625 million of debt in the fourth quarter of 2021 and are on track to reach our goal of $1.5 billion debt reduction by year-end 2022, exclusive of project-level financing incurred in Vistra Zero. Finally, we previously announced our commitment to allocate capital to attractive strategic growth opportunities. We are executing on this commitment as we pursue the Vistra Zero portfolio. Vistra Zero's expected EBITDA of $450 million-$500 million per year from the 5 GW of storage and renewables projects by 2026 is the type of investment that makes sense financially and is a key component to our portfolio transition. We are excited to be a leader in the energy transition taking shape across our nation.
We saw that excitement echoed in the market when our green perpetual preferred stock issuance was upsized from $750 million- $1 billion while still locking in the low dividend at 7%. Even better, we learned that green-focused accounts drove nearly 25% of the total green perpetual preferred stock allocations, and 4 of the top 10 holders were green-focused accounts. In closing, we continue to believe that our execution of this capital allocation plan will continue to unlock the value of Vistra as we return significant amounts of capital to shareholders while transitioning our asset base. We look forward to updating you on our achievements as we execute throughout 2022. With that, operator, we are now ready to open the lines for questions.
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Stephen Byrd with Morgan Stanley. Please go ahead.
Hey, good morning. Thanks for taking my questions.
Hey, good morning, Stephen.
I wanted to start with a fairly high-level question on private market appetite for assets and for cash flows. This is a topic that I know you all think about a lot over time, but you know, it's the I guess our sense is the private market has a very strong bid for assets with strong cash flows. You all obviously have very strong cash flows. Those buyers also might have a different point of view on leverage. You know, I see this large disconnect that's been around for quite some time in terms of the kinds of valuations and cash flows that the private market would be willing to accept versus where the public market is pricing your stock. You know, you're taking great steps to take advantage of that.
You have a lot of capital flexibility, but there seems to be this persistent disconnect between the private and public market. I'm just curious to get your latest thoughts on that disconnect. Are there ways to take advantage of that? What's your latest thinking there?
Well, I think you outlined the things from a private market perspective that would be attractive about a company, you know, like ours, right? You know, I can't argue, you know, with those attributes because I believe, you know, they exist. I think I've said this before that, you know, we're a big size, you know, company in terms of, you know, a private market transaction. You know, I was with private equity firm. They have their own set of issues with their LPs in terms of, you know, what they can invest in, and they're getting the same pressures on ESG as anybody else.
I think, you know, the long-term valuation question that comes up with companies like ours and other, you know, fossil fuel-oriented companies, even though we're shifting, tend to come up in a private market setting as they do in a public market setting. Having said that, I think the investments we're making would be attractive on a private market basis. Look, I think we should be attractive both in public markets and in private markets. I get the point that you make that this company could be suitable to being in the private markets. You know, I think there are attributes that make us attractive. I can't argue with that. Other than that, I can't say anything more than that because there's nothing really to say. I think you're right about that, Stephen.
Understood. Are there ways beyond, obviously, just at the corporate level, more at the asset level, where you could optimize, find ways to essentially bring cash back at yields that are essentially lower than the stock overall, to take advantage of this dynamic?
There could be, yeah. You know, we've from time to time looked at that and, you know, we did not see, you know, what we thought were accretive transactions. Yes, there are opportunities and could be opportunities like that, and that's something that we look at on an ongoing basis. You know, if there is an opportunity like that, you know, we'd be interested in it. You know, it's one of the things that we look at.
Understood. Just one last one for me. Just on storage, you gave a good update there. I was just curious in terms of just next steps in resolution of determining liability, who's liable for the damages. Are you optimistic about sort of recovery of costs that you've incurred there? Could you just speak a little bit more to kind of next steps there on the storage operational issues?
Yeah. Look, I mean, here's the reality. We have warranties with our contractors and equipment suppliers, and we have insurance. There are deductibles with the insurance, but you know, we do one way or another, we feel like you know, we are covered in this from a cost standpoint. You know, the area where it gets gray sometimes is when you want to improve the current situation, which we are undoubtedly going to want to do. Then there's a question about you know, who pays for those improvements. You know, we'll sort through that. I think the biggest thing we're doing now is we're focused with our contractors and equipment manufacturers to work together because this is bigger than just Vistra or bigger than any one contractor or manufacturer.
This is about the long-term transition in the energy sector, and batteries have to work. You know, these two facilities are critical to this summer and beyond. I think what we're trying to do is keep this in a situation where we're working together and we're not splintered. I think once you start going to battle stations on this, then it creates even more issues. I think there's a way to do this in partnership with the folks that worked on with us on bringing these two facilities up, and that's what we're going to do.
I think at the end of the day, Stephen, that, you know, we have warranties and we have insurance, and we believe that ultimately, you know, the lion's share of the cost of this are gonna be borne, you know, by others. I'll just say that this company is committed to bringing these facilities back online. The good news in my mind is it's not huge money to really fix these the way that they need to be fixed. We're talking about basically the transportation and storage of water and then the release of water into each individual battery module. That should be able to be done. In every building, in every manufacturing facility in this country and in the world, you know, there are water-based fire suppression systems that do that very thing.
It's frustrating to me that, you know, we could not put a system in place that worked. These were turn-key deals. We expected the engineering to be right. We're gonna get it right. I think we can do it relatively quickly, and we will, you know, get this done right. We'll sort out the rest of it, but we do have the things in place that you would expect us to make sure that we're covered from a cost standpoint.
That's really clear and very helpful. Thank you very much.
The next question comes from Steve Fleishman with Wolfe. Please go ahead.
Yeah, good morning. Hi, Curt.
Hey, Steve.
Just on that topic on the Moss Landing issues. Is it you know, the two units have different EPC contractors. So I guess, is it more the actual equipment not kind of working as opposed to or design, or not clear?
Look, I gotta be careful about, you know, 'cause we're still going through all this. You know, I think, Steve, there's a little bit of difference, we believe in what happened at Moss Landing 300, you know, the initial phase versus Moss Landing 100. There's subtleties to all of this. I think that you hit the areas that we're focused on. It's whether the parts, some of the parts that were part of the water-based, you know, heat suppression system, were either not installed correctly and/or they had a defect to them, or that the design of the overall system, you know, needs to be improved.
I think there's frankly, Steve, there's an element to all of that, and that's what makes it a little complicated in sorting all this out. I'm just being as honest as I can be about it, that's what we're, you know, we'll end up sorting out in the long run. I think we've made a lot of progress on it. I think we were making a lot of progress on Moss 300 until 100 happened, and that opened up, you know, some additional learnings that we are taking into account. I think we'll take all of those together and come up with the right game plan, you know, for both 300 and 100 to get this right.
There are elements of each of the things you mentioned, Steve, in both the Moss 300 and the Moss 100 situation. They're a little bit different for each one, and that's about all I can say about it.
Okay. Separate topic, just commodity exposure, overall. Could you just maybe give a sense of kind of how to think? Obviously, commodities are moving around a decent amount. How to think about, kind of your position 2022, but maybe more importantly, 2023, 2024, to kind of. I know you gave your hedging, but just maybe kind of frame it broadly.
Yeah.
on how to think about it.
Yeah. In 2022, we're pretty hedged, you know, probably not a lot to talk about, although we are carrying a little more length going into this summer than what we would normally carry. I think you know that most of the markets we're in, the price of power is set in many hours by a natural gas unit, so we effectively are long natural gas equivalents as a company. But we also have, obviously, a big short position, which is our retail business. We're net long. You know, I think in 2023 and beyond, you know, we have length, gas length. It feels to me, you know, I'm not particularly good at predicting commodities, but we're in it, and I think we know it pretty well.
It does feel like we're in a period where, you know, natural gas, in particular, is probably gonna be set at a little bit higher level than the old $2.50-$3. It's feeling more to me like $3.50-$4 or more. You're seeing that U.S. gas is being connected to worldwide gas. You know, we've got geopolitical issues, and those are likely to persist for some time, you know, with Russian gas into Europe. You know, China has a big appetite, as well as the rest of Asia. You know, gas is beginning to trade on a global basis.
It feels like, you know, whether it's artificial or not, there's tightness in that system on a worldwide basis, which is probably gonna mean in the next, you know, few years, potentially several years, that we're just at a little higher plateau for gas. That, in the long run, is good for our company, given that we are long natural gas equivalent. So I think we're positioned well. You know, the real key, though, is for us to manage the volatility and to take advantage of it, 'cause I do believe that regardless of where it settles, the one thing we can pretty much bet on is that, you know, it's gonna be volatile just given the geopolitical issues that, you know, persist in the world. I think our team is, you know, up to that challenge and can take advantage of that.
You know, volatility is something that, you know, if you're good at it, you can benefit from it, and I think we're in a good position to do that. I don't know if Jim's on too. I don't know if he has anything he wants to add to that.
Yeah. Sure, Curt. Yeah. Hi, Steve. I would only add that, you know, as we put out our guidance last fall, we have certainly seen a commodity complex move up considerably. We see it particularly even outside of ERCOT. Spark spreads are up, you know, $3-$5. We are largely open to that, particularly when you get to 2023 and 2024. We're, you know, less than 20% hedged out in that 2024 and beyond timeframe, and you see us, you know, more hedged in 2023. We just put that hedge disclosure out. But still, you know, just about 25% hedged to spark spreads out in 2023. It's nice to see the diversification of the portfolio, where at times we've seen ERCOT run, but not the other areas.
Now we're seeing some of the other areas really have some swing up, and we have, you know, good opportunities to capture that. As Curt mentioned, you know, we'll get through the summer, and we'll come out with our guidance for 2023, and we'll, you know, hopefully give some view as to how the out years look. It's been a favorable move overall over the complex since we put out the guidance last fall.
Hey, Steve.
Okay.
One other thing just to tell you is that you know, while we've seen forwards move, the liquidity in the markets has been, you know, limited, and that's because I think the markets are you know, the bid and the ask are trying to figure out, you know, where this thing's gonna settle out and whether some of these geopolitical issues are long-lived or short-lived. So you know, it takes some time and patience to manage in this type of an environment, and you have to pick and choose, you know, the right times to do it.
It's not a cautionary note, but more of just a factual one that, you know, the liquidity in the markets, it has been somewhat limited just because, you know, buyers and sellers are trying to sort out, you know, whether these are long-term moves or not. Again, if you're in the market every day and you're patient, and you take it as it comes, you know, you can take advantage of this, and I think that's what we're trying to do.
Okay. Last quick question, just on the pace of the buyback. Should we assume if the stock stays in this rough area that you're gonna continue an aggressive pace or you think you'll kind of more average it out over the rest of the period?
Well, we've made
Go ahead, yeah.
I'm sorry.
No, I was gonna say we've made a commitment. Obviously, we've made the commitment to, you know, continue down this buyback to be able to deliver, you know, the $2 billion buyback by the end of the year. We've made, I think, tremendous progress so far, Steve. I think, you know, hopefully these disclosures, which, you know, come out periodically, folks saw it with the dividend increase of approximately 13% obviously being reflective of how aggressive we've been on the buybacks. Since, you know, we're just a little over a third of the way through that program, we've got a good ways to go through the end of this year, but we feel very good about it. We've announced, as we've said before, we intend to do another $1 billion, you know, in 2023.
I think the program has been well executed up to this point, and we're gonna continue to, you know, be aggressive through the balance of the year.
Great. Thank you.
Yeah, thanks, Steve.
The next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.
Hey, good morning, team. Thanks for having the opportunity.
Hey, Julien.
Can you hear me?
Yeah.
Okay.
Can you hear us?
Excellent. Absolutely. Thank you so much. Curt, I mean, if I go back, we were talking a lot about Vistra Zero a couple questions ago, but you know, of the 450-500, I mean, how much of this EBITDA is effectively locked in, if you will, right? Can you talk about the cadence of this EBITDA materializing? You know, you've obviously had great success already. How much of this effectively have you sort of captured? How much of it is, you know, quote-unquote, yet to go? Effectively, how much of this eventually comes from California, given your perhaps disproportionate successes in that geography?
Can you guys hear me?
Excuse me? Yeah, I can hear you.
Oh, sorry. I was talking Julien, and I had it on mute. I think we said in both Illinois and California that the underlying revenue streams and EBITDA were about, you know, sort of 50% contracted based on the constructs in both of those. They're different constructs, but they ended up coming out about the same, a little bit over that. In Texas, you know, we will contract essentially 100%, you know, of those likely with our retail business. If you just look at Vistra Zero on an isolated basis, you know. On a megawatt basis, we're probably looking at, you know, maybe half coming out of Texas or so.
That pushes you into kind of a, I'd say, you know, two-thirds, you know, contracted, something like that, just in pure math. I'd say that's about what it is. Of course, we will try to hedge as we go on further. Jim, anything you wanna add to that? That's, you know, the quick math in my head tells me that we'll be somewhere in that range, just given the way that we are contracted, you know, both in California and Illinois, how we expect to contract in Texas.
Curt, that's correct. Julien, as we put out announcements, what we've tried to do is give the five-year view, which we did in the fall. We want to keep filling that in so that we can talk to our investors in the market about how are we progressing. We announced, you know, since the fall, we had announced the fact that we had completed this Illinois coal-to-solar through the legislative activities. That's progressing well. We'll be going to the procurement of the REC contract here shortly. The Angus Solar facility and then the Moss 350, which would be the third phase of Moss Landing, all of that 900 MW there, you know, is going towards that 5 GW. Importantly, we've got 3 projects coming online right now.
We've got Brightside at 50 MW, Emerald Grove, 108 MW, both solar facilities in Texas. In De Cordova, energy storage will be online this spring, 260 MW. That's the unique hybrid project where we paired the combustion turbine with the one-hour battery. Incredibly flexible, you know, instant ramp, but with 24/7 duration if needed. Those are all coming online now, and that's part of what we want to do is keep bringing the awareness that this is real, it's coming online, and we're going to continue to roll out the announcements both when we secure the projects and have the contracts to back them, but also as they come online physically.
Maybe just to clarify on the
Julien, these
Oh, yeah, please.
Julien, sorry, but these are 10- to 15- to 20-year type contracts, just to remind you that there's a mix of that. But go ahead, sorry.
Absolutely. No, no, please. I mean, of the 450-500, though. What's the cadence? How quickly does that ramp, right? How are you thinking about the EBITDA profile in, say, you know, 2023, 2024, 2025 in the interim? You know, and that, when I said locked in, what I was trying to get at is, you know, how much of line of sight do you have on that EBITDA ready versus having to win contracts still in California? i.e., is there upside on that 450-500? Maybe even said differently.
Yeah, I think.
I'd say.
Go ahead, Jim.
No, in the earnings deck, I do think you can get a view. Curt covered the map of the U.S., and what we've done here is put the items that are basically inked and ready to go, we've itemized. Then the other items where we've left the queue, where we've said, here's what we have line of sight to, but don't have a contract to back in California. That was just over 1 GW of storage capabilities. In Texas, we have 1.3 GW of other opportunity. Some of those we do have within our portfolio. We're just not ready to announce those yet. Of the 5 GW, roughly 2.5 GW-3 GW, what we would say line of sight secured.
The rest we're going to continue to develop, you know, over the next couple of years and feel confident that by the 2026 timeframe, we can at least have accomplished this level of development.
Got it. Yeah, at least. Just separately, but in parallel with this, I mean, I do want to touch on the strategic aspect here. I mean, you guys have substantial plants that are retiring or at least have existing latent transmission interconnect, right? So you've got a leg up, shall we say, on independent renewable developers. In this environment in which so many developers are struggling to get that interconnect, can you speak to your ability to monetize and effectively capitalize on your existing positions on the grid from a transmission perspective? Seems like you're doing so already, but again, I'd love to hear that from an even more holistic perspective beyond just, you know, the narrow context of the plants that you talked about.
Yeah. Look, I mean, it's been why we've been able to build this business, in my opinion. Because it's all started, frankly, with California and with that Moss Landing site, which if anybody's ever been out there, it's a world-class industrial site in a state that doesn't have many of those. So there's a scarcity value, you know, to that site. There's a scarcity value to our Oakland site, as well as our Morro Bay site, all of which have, you know, transmission yards right next to them and access to transmission. Then if you think about it, you know, we've got the same type of situation in Texas.
We have multiple sites that were either purchased many years ago to put a power plant on that never happened, but have access to transmission because the site the reason we bought the sites is because of their proximity to transmission, or they already had a transmission interconnect. Of course, you know, the nine sites in Illinois all have transmission interconnect. In fact, you know, the transmission system was built around those assets. We also have, you know, the two sites, at least the two sites in Ohio that the two coal sites that we think ultimately will be available to us, you know, for batteries and solar. Same thing is we've got an opportunity at our NEPCO site that came from Dynegy in Pennsylvania. There's a number of opportunities.
Transmission is. You're right about this. I mean, we're seeing that PJM is struggling to keep up with transmission interconnect. We know that MISO is because we're working with those guys as well. Having that access and, in particular, that proximity, because there's also a cost in many of those markets to interconnect. If it's significant, it can weigh down the economics of any particular project. If you're right next to the transmission because that site was obviously used previously by a power plant, it just changes the game. I think it's something that we started doing. I'm not gonna. It was because we had a good site, and PG&E knew it, and they came to us.
It's something that we can replicate, you know, across the country with the sites that we have as we retire plants. We can add batteries and you know, battery storage and solar. You know, we would do wind too if it was you know, the right economic decision. It just hasn't been that way.
Got it. I'll leave it there. Thank you.
Thanks.
The next question comes from Shar Pourreza with Guggenheim. Please go ahead.
Hey, good morning, guys.
Hey, Shar.
Just, you know, you guys, I think you've hit the EBITDA question pretty well. Just given sort of the strong start, you have visibility, you guys are fairly hedged. Any thoughts on narrowing the 2022 range, you know, in 2Q versus the traditional 2Q, 3Q timeframe following some visibility in June, July? I mean, the range remains somewhat wide, and you guys do have a lot of good visibility. Just some thoughts there.
Yeah, you know, we'll. You know, look, I think we'll take a look at it around second quarter, Shar, because we will have, you know, July pretty much in the bucket and, you know. August is the biggest month for us in the summer. Because we've carried more length going into the summer and the winter months, you know, that is what creates the wider distribution. I think, you know, look, I think we always look at it, and, you know, if we feel like we have a high degree of confidence one way or another, you know, we would come to the market with that.
You know, because August is such a big month, and in Texas, the first part of September can always be a game changer. You know, we've been hesitant, you know, really, Shar, to come out and change that until we got, you know, into the third quarter call. In fact, you know, from the retail perspective, the shoulder months are really what are key, and that can be months like October. That's why we've been a little more hesitant to change. Because we did widen the guidance, you know, I think we'll take a look at it. I just think it's gonna come down to confidence. Because we've carried a little bit more length, we may be less apt to do that, but we'll see.
Okay. Got it. I know it's minor, but it looks like year-over-year customer losses in the eastern markets kind of continued for another quarter. Can you just maybe touch on what you're seeing in this segment in terms of attrition, just the ability?
Yeah.
to add new customers? Seems like Texas is doing well, but any color there would be helpful.
Yeah. You know, look, I mean, we'll call a spade a spade here. I mean, Crius has been. We've struggled, and it's because it was predominantly door-to-door channel. Door-to-door has suffered because of COVID. You know, you can't go knocking on people's doors with COVID. You know, we have pivoted to digital offering, but it's, you know, it's been a struggle. The other thing is that the standard service offers, you know, were hedged out and, you know, we've seen power prices go up. What's happened is there's been a squeeze on margin. People also, because the standard service offers have been lower than where market is, you know, from some of the retail providers like us, they've moved over to standard offer.
That's gonna change, you know, as those standard offers roll off, and there'll be an opportunity. We're also beginning to get back out on the door-to-door, but we're also strengthening our other channels. I think over time, we think we can build back what we've lost. You know, it's an unfortunate thing that what happened with COVID, and it disproportionately affected Crius because of the door-to-door nature of that channel. We think we can build it back over time. You know, Scott Hudson, who's on this call with us, is, he and his team have a good plan to do that, but it's gonna take time, Shar. It's not an overnight thing. We think we can do it.
The good news is Ambit has been particularly good in Texas. And, you know, we've also, you know, sort of moved Ambit into more of a value offering rather than just a an offering on price. We've been successful at that. Our consultants are doing a really good job in that particular channel. We're, you know, very happy with the Ambit acquisition, in particular in the ERCOT market in Texas. Crius has struggled some. Overall, though, still, you know, both very good acquisitions. And, you know, we think in the long run we're the right things to do. Texas just overall, in particular with TXU Energy, you know, when we went through Uri and some other things, that flight to quality was big.
Obviously, TXU Energy was, you know, part of that flight to quality, and so we grew customers in a significant way. 23,000 customers in a year for us is a big deal down in ERCOT because, you know, as you know, we had typically lost a slight amount of customers in the last few years. But we've been able to turn that tide around and add customers. You know, that's kind of the lay of the land for retail.
Got it. Just literally one last question. I know you're getting this a lot, on the private side, single asset, the whole company, whatever. It makes sense given where valuations are. I just want to confirm something, maybe just round out exactly what the key message is. Is this an exercise you even looked at? I mean, has there been serious considerations internally around this path or at this juncture when you're looking at sort of the visibility, you're looking at the clean energy, the transitioning? It's just the plan is too cemented to even give it a serious consideration. If you just round out everything and just give us a sense on whether you even kicked the tires around there.
Well, look, what I'll say about that is after Uri, you know, regardless of what we determined, you know, about why it happened, you know, you can't ignore the fact that it happened.
Right.
The board and the management team went to work. We looked at a very broad set of, you know, actions that we should consider in the wake of that event. I'll just say that everything got looked at and looked at seriously. I think the board, along with the management team and I know this is gonna sound cliché, but I just honestly believe this because I was in the middle of this. We were focused on what we thought was gonna bring the most value to the table. The one thing we control, obviously, is our strategy and our capital allocation plan, and we believe we did the right thing around that.
Whether there's somebody out there someday that would pay more than what we think that strategy is worth, you know, we are way open-minded on that. You know, we are flexible in terms of that because that's our job at the end of the day, is to get the most value for the company. You know, in terms of just actively going out and pitching that, you know, we looked at that relative to other opportunities, and that's all I can say about it. I can't, you know-
Got it.
You know, I just can't get into it in more detail. We are open-minded people, and our job is to maximize the value of this company for our current shareholders. I can guarantee you that's what we're trying to do.
Perfect. Thank you for that. I just wanted for you to hit that and conclude it. I appreciate it. Thank you, guys.
Thank you.
The next question comes from Jonathan Arnold with Vertical Research Partners. Please go ahead.
Good morning, guys.
Hey, Jonathan. How are you?
Good, thank you. Just wanna be sure I understand on the dividend, Curt, your intention is to run at this $75 million a quarter level, but declare it on a per share basis, you know, each quarter, so we could see, you know, multiple changes during the year? Or is it set now for the whole of 2022? I just want to make sure I got that right.
No. Yeah, I'll let Jim take you through it 'cause we looked at a couple of different options and, you know, made a call. Jim, you wanna take them through the detail?
Sure. Yeah. Hey, Jonathan. We, you know, we think one of the benefits of this strategy is as we continue to buy back shares throughout the year, it'll constantly change the denominator as we go. For this quarter, when we announced the dividend, we set the ex-dividend date for March 21 and the record date for March 22. We had to estimate how many shares do we think will be outstanding by that point in time, because we're gonna continue to buy back shares. That's how we set the dividend rate at $0.17. We're gonna come back in the next quarter, and we'll do the same thing. You should expect to see, as long as we're consistently out in the marketplace buying back our stock, you would expect to see that increase each quarter as we go.
That gives, you know, the investor obviously a sense of, you know, just how much of the equity we continue to buy back, but also reward the holders that are continuing to hold the stock that they, you know, we'll see double-digit year-over-year increases in the dividend.
Great. Okay. Thank you for that. Just on Vistra Zero and the way you intend to sort of communicate around it going forward, do you foresee this being pulled out as a separate segment or, you know, embedded within your current segments? You know, just I'm curious how, you know, you plan to, you know, highlight executing against the EBITDA target?
Jim, you wanna take that too?
Sure. Jonathan, as noted on this call, and since we announced it last fall, there's a lot of interest in seeing the visibility into Vistra Zero. We're looking at our segmentation across the business and analyzing the best way to bring that to light because as folks have covered the space, they are attributing different value to different asset classes. When we take this investment and we contract it becomes meaningful in the eyes of a lot of the investors that we're speaking to that are putting these much higher multiples on that asset class relative to some of our base business. We will probably bring that forward. It'll come shortly. I don't know if it'll be you know, at this next quarter. It could.
We are looking to bring segmentation that allows our investors to see that as it continues to grow. As you know, the rest of the business, retail is an important part of the business that folks wanna continue to have visibility into. I think it really will come down to how we think about some of our generating assets and which we see a lot of cash flow coming off these assets. Don't necessarily get as high a multiple as we think they deserve, but we also think that's the power of the capital allocation plan is to buy back the equity, obviously continue to pay down debt, as we said, consistent with our target.
If we can bring that Vistra Zero to light, continue to do the capital allocation steps that we have outlined last fall, we think both the sum of the parts as well as just the sheer force of the capital allocation program that we have instituted, you know, we're gonna realize a better Vistra value overall.
Okay, great. Thank you for that. I'll leave it at that.
Jonathan, thank you.
This concludes our question and answer session. I would like to turn the conference back over to Curt Morgan for any closing remarks.
Well, thanks everybody again. I know it's a busy season here, obviously, when all the earnings calls. Thanks for being on. You know, look, we feel like we've turned the corner here and strengthened our company. We de-risked it. We've got a very good set of priorities that we're working on and a capital allocation plan that matches that. We think the future is bright. Thank you for your time.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.