NRG Energy, Inc. Q2 2008 Earnings Call

Jul.29.08 | About: NRG Energy, (NRG)

NRG Energy, Inc. (NYSE:NRG)

Q2 FY08 Earnings Call

July 29, 2008, 09:00 AM ET

Executives

Nahla Azmy - IR

David W. Crane - President and CEO

Robert C. Flexon - EVP and COO

Clint Freeland - Sr. VP and CFO

Mauricio Gutierrez - Sr. VP, Commercial Operations

Analysts

John Kiani - Deutsche Bank

Dan Eggers - Credit Suisse First Boston

Lasan Johong - RBC Capital Markets

Andrew Smith - JPMorgan

Elizabeth Parrella - Merrill Lynch & Co.

Michael Lapides - Goldman, Sachs & Co.

Chris Taylor - Evergreen Investments

Operator

Good day, ladies and gentlemen. Welcome to the NRG Energy Second Quarter 2008 Earnings Results Conference Call. I would now turn the meeting over to Ms. Nahla Azmy, Vice President, Investor Relations. Please go ahead.

Nahla Azmy - Investor Relations

Thank you, Jennifer. Good morning and welcome to our second quarter 2008 earnings call. This call is being broadcast live over the phone and from our website at www.nrgenergy.com. You can access the call presentation and press release furnished with the SEC through a link on the Investor Relations page of the website. A replay of the call will be posted on our website.

This call, including the formal presentation and question-and-answer session will be limited to one hour. In the interest of time, we ask that you please limit yourself to one question with just one follow-up.

And now for the obligatory Safe Harbor statement; during the course of this morning's presentation, management will reiterate forward-looking statements made in today's press release regarding future events and financial performance. These forward-looking statements are subject to material risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. We caution you to consider the important risk factors contained in our press release and other filings with the SEC that could cause actual results to differ materially from those in the forward-looking statements in the press release and this conference call.

In addition, please note that the date of this conference call is July 29, 2008 and any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events.

During this morning's call, we will refer to both GAAP and non-GAAP financial measures of the company's operating and financial results. For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's press release and this presentation.

Now with that, I'd like to turn the call over to David Crane, NRG's President and Chief Executive Officer.

David W. Crane - President and Chief Executive Officer

Thank you Nahla. And good morning everyone and thank you for joining us for this second quarter 2008 earnings call, which is the 18th earnings call in the history of the new NRG.

I am joined here this morning by Bob Flexon, our Chief Operating Officer; and Clint Freeland, our Chief Financial Officer, both of whom will be giving part of presentation. And also by Mauricio Gutierrez, who runs our Commercial Operations Group and who will be available for answer questions to the extend appropriate.

So let me start, and I'll be referring to slides, which appear on our website. Let me start with slide four. Before I hand it to Bob, I'd like to give you my take on the highlights of our performance year-to-date. So first, plant operating performance is the best. It has been since I've been here at NRG both in terms of safety and reliability and that performance I'm pleased to report has been achieved across all regions and all types of plants.

Second, our commercial operations team has done a stunningly good job both in capturing the value of our unhedged assets in real time, but also in adding another layer of baseload hedges during the period of high gas price volatility, which ended just recently. And third, our financial team has feared a cautious course during the quarter in which the Wall Street contingent dictated caution. And as a result, we easily weathered from a liquidity perspective, the mid quarter spike in natural gas prices, which forced others in the industry to arrange emergency crisis relief.

And during the second quarter, we substantially increased our net liquidity. I think this just acquires our never-ending commitment to prudent balance sheet management. And I am very pleased at the work that Clint and his team has done in this regard. What all this means is that we achieved the first half result that has enabled us to increase our full year guidance by a substantial amount. While as I mentioned before at the same time building up our future profitability with hedges struck at price level higher than we have generally realized in the past.

In short, apart from the recent performance of our share price, there is precious little for me to complaint about either in terms of our current operating performance or our future prospects.

With that, I'd like to hand it over to Bob Flexon.

Robert C. Flexon - Executive Vice President and Chief Operating Officer

Thank you David.

Like our first quarter results earlier this year, the company's operating performance during the quarter was outstanding. Slide 6 summarizes our year-to-date safety performance, the coal inventory position at June 30th in the quarterly and year-to-date generation. Starting with safety, our recordable incident rate through June 30th was 0.92 versus 1.69 through June 2007, nearly a 46% improvement in top quartile performance as compared to industry average.

Reportable incidents also declined over 40%, dropping from 27 through June of last year to 15 as of June 2008. Over the remainder of the year, priorities for our safety program are the further development news of leading safety indicators preparing for and filing the applications for OSHA's highly regarded voluntary protection program for five of our sites later this year and early 2009, and continuing improvement through our preventive safety and reporting program.

Coal inventories dropped during the second quarter to an average of 41 days on hand at June 30th versus 45 days at the end of the first quarter. The decline is primarily related to lower inventory level of Big Cajun II and WA Parish facilities resulting from rail and barge disruptions during the second quarter in connection with the Midwest floods and high water levels on the Mississippi. Our shipping routes and modes have returned to normal operation and inventory levels are building at these locations.

In addition to the transport issues, the baseload plants have improved their operating performance resulting in higher function of coal. Generation for the quarter and year-to-date increase over the same period last year across all regions. The higher generation was attributable to higher demand for the intermediate and peaking generation and higher baseload generation due impart to improve reliability, which I will cover next.

Slide 7 provides quarterly and year-to-date equivalents availability factors and equivalent forced outage rates for baseload generation. In addition to the company's employee safely performing their duties, the availability and performance result of our baseload fleet during 2008 has been equally extraordinary, leading the way for the achievement of our reported results. All three regions of baseload generations have improved their year-on-year quarterly and year-to-date forced outage rates with the Texas and South Central regions achieving content sale performance level.

Highlighted on the bottom half of the slide is examples of reliability records being established daily across our facilities. Not included in this list is the potential that our South Central region is on pace for, achieving their best annual E4 at Big Cajun II in at least the 15 years. Reliability improvements have not been limited to baseload facilities, but are also being achieved at intermediate and peaking facilities as well. A story for example, with 520 megawatts of in-city peaking capacity for New York has been called on nearly 900 times during the first half of 2008 and has achieved a startup for reliability rate of over 99%. Improved fleet reliability can be traced back to our FORNRG program, which is updated on slide 8.

Focus on ROIC@NRG or FORNRG as it is known within our company, is our cost and efficiency improvement initiative launched in 2005. The goal of FORNRG once point out has increased over time as we have hit our targets. Today, the goal is $250 million in cumulative improvement, the pre-tax income and cash flow by the end of 2008. At December 31st, 2007, $220 million of the $250 million have been achieved. For the first six months of 2008 and additional $21 million of benefit has been achieved, primarily through improved operation. Upon achievement of the $250 million target expected by the fourth quarter, the company intends to announce the launch FORNRG 2.0.

Turning to commercial operation on slide 9; unlike 2007, opportunities to have strategic power hedges in 2008 have been far more frequent. The second quarter experience continued natural gas volatility and record prices. Taking advantage of this volatility and price environment, the company added the equivalent of 18 million megawatts hour, our power hedges in the form of power and natural gas sales during the second quarter. This power was the first quarter addition of approximately 28 million megawatt hours of power equivalent hedges.

Natural gas prices was traded in the first quarter as high as $10 per million Btu at $9.43 per million Btu for 2009 and 2010 calendar strips traded higher in the second quarter with peak prices during the second quarter, higher by $2.47 per million Btu, and $1.81 per million Btu respectively. The power hedges closely aligned to fuel hedges, the company's dark spread is substantially hedged over the next several years.

Slide 10 provides the gross margins sensitivities to gas and heat rate movements on an equal probability basis. What can be distinguished by the natural gas and heat rate bar charge is the greater leverage natural gas prices are likely to have on the portfolio as compared to heat rates. Looking at 2013 as an example, the gross margin impact of natural gas movement is over four times greater than heat rate changes on an equal probability basis.

The additional hedges added during the second quarter have reduced volatility impact of natural gas movements on the portfolio for future gross margins. For 2009 and 2010, the portfolio gross margin impact for dollar per million Btu natural gas price change has declined over 20% and 25% respectively since the first quarter call.

Texas heat rates that continue to compress over the course of the year. We believe drivers of the declining for new generation along with the uncertainty on wind generation and transmission, which stayed that we will well address. And the exit of financial participants from the market for liquidity and risk reduction reasons. Our view remains that heat rates are overly compressed, reflecting our various settlements have a need to increase to justify new investments. Supporting our view is our Q2 results, which benefited from our heat rate position.

Slide 11 provides details on our plans for complying with the region of green house gas initiatives or RGGI effective in 2009. The ten Northeast states participating in RGGI released guidance on the first allowance options to be held on September 25th for the auction of 12.6 million allowances. For the ten states; Delaware, New Hampton, New Jersey, New York will not be contributing allowances to this first option. The reserve price of the $1.86 per credit and no single entity combined more than 25% of offered allowances.

The next auction is scheduled for December 17th, 2008 with auctions quarterly thereafter. The December auction is expected to offer approximately $30 million allowances.

The Delaware legislative... legislature passed legislation, which enabled RGGI in granite transitional allocations of CO2 allowances to in-state electric generators. 40% in 2009 declining by 8 percentage point annually for five years. NRG was allocated approximately $1.2 million allowances for 2009. Net of these allocations, NRG is expected to consume about $13.7 million allowances in 2009.

The company's compliance plans in addition to granite allowances are participating in the auctions in secondary markets while pursuing qualifying carbon offsets. To help for further cash cost with compliance, the company has been monetizing a portion of our excess carbon credit on the Chicago climate exchange.

Slide 12 highlights our operational focus... focal points for the balance of the year. First and foremost, we'll be keeping our eyes on the ball and build upon our first half successes in safety and operation to make 2008 NRG's best year operationally. We'll deliver the FORNRG 1.0 savings target and meet our financial goals. Finally, we'll position ourselves to be successful in 2009 by preparing for the up coming winter season and RGGI compliance.

I'll now turn to Clint for the second quarter financial performance review.

Clint Freeland - Senior Vice President and Chief Financial Officer

Thank you Bob.

Starting on slide 14, NRG built upon a solid first quarter with an exceptional second quarter, generating $683 million in adjusted EBITDA, 30% improvement over the second quarter of 2007. As David and Bob has indicated, these results are primarily due to outstanding plant operating performance throughout the fleet in a flexible commercial operation strategy, which enabled the company to benefit from recent market volatility.

Cash flow from operations totaled $376 million, a 7% improvement over the $353 million, posted in the second quarter of last year. The cash flow story for the quarter however was somewhat masked by movements in cash collateral postings, related to NRG short-term hedge positions. Excluding these collateral postings, cash flow from operation grew 65% to $554 million for the second quarter of 2008 versus $336 million, last year.

Coupled with a stronger than expected performance in the first quarter, particularly by the company's South Central and Western regions, year-to-date adjusted EBITDA is well ahead of last year totaling $1.21 billion for the first six months, an 18% increase compared to $1 billion in 2007. Cash flow from operations for the first half of 2008 was $436 million, down slightly from last year's $459 million. However, excluding the effect of cash collateral postings on both year's results, cash flow from operations increased 36% from $562 million, during the first half of 2007 to $764 million in 2008.

During periods of high commodity price volatility, liquidity becomes increasingly important, particularly when managing a significant hedging program. Notwithstanding the posting of an additional $178 million in net cash collateral during the second quarter and internally funding $245 million in capital expenditures, NRG's total liquidity rose by $276 million as a $420 million increase in cash balances more than offset a $144 million reduction in letter of credit capacity.

Based on the better than expected year-to-date results, today we are raising our 2008 adjusted EBITDA guidance from $2.16 billion to $2.3 billion. For the remainder of the year, we assume normal weather patterns and no material changes to the company's exiting hedge position. While adjusted EBITDA guidance has been meaningfully raised, we are maintaining our cash flow from operations guidance at $1.5 billion as higher collateral postings offset increased adjusted EBITDA.

Moving to slide 15, consolidated adjusted EBITDA during the second quarter increased 30% to $683 million compared to $524 million in 2007. As is evident from this regional breakout, Texas was the primary contributor for the year-over-year gain, as exceptional baseload plant performance, a 24% increase in gas plant generation, higher average merchant energy prices, and advantageous hedge positions came together to drive the region's results for the quarter. This along with the $29 million reduction in development expenses, primarily the result of capitalizing STP 3 and 4 costs and an $8 million partner reimbursement more than offset the impact of lower contract energy margins.

The West region's adjusted EBITDA doubled to $18 million during the quarter compared to $9 million, last year. The $9 million increase was primarily attributable to capacity revenues generated by the Long Beach facility, which went in to service August 1st of last year. As you may notice, there is no bar for our South Central region as quarter-over-quarter results were virtually flat.

Increases in capacity revenue from new peak set in 2007; higher contract revenue from fuel pass-throughs to coal-upload [ph] customers, an increased generation was offset by higher purchase power, increased transmission costs and unrealized losses on forward physical sales. Adjusted EBITDA for NRG's North East region decreased $18 million quarter-over-quarter from $131 million in 2007 to $118 million in 2008.

During the quarter, the region benefited from a 6% increase in generation, primarily at Indian River in Huntley and a 9% increase in net capacity revenues. This was more than offset though by a combination of lower net contract revenues as the cost to serve those contracts rose in line with market prices and higher coal cost at our Indian River in Somerset plants.

As you know, we routinely adjust our EBITDA to add back the impact of unrealized mark-to-market activity whether positive or negative related to asset back positions that are economic hedges of our portfolio, but do not meet the accounting requirements or deferrals under cash flow hedge treatment.

The dramatic change in commodity prices seen during the second quarter had a meaningful impact on the value of our hedges as shown by the $543 million non-cash mark-to-market loss as shown on the slide. Over 60% of the $543 million mark-to-market adjustment is due to hedge ineffectiveness, mainly on our Texas gas slots, resulting from the sharp rise in forward gas prices during a time when power prices did not increase at the same rate. For longer-term gas and power price correlation, however, remains effective.

Another 21% of the mark-to-market is from... North East forward energy sales that do not qualify for cash flow hedge accounting treatment while another 12% comes from gas swaps used to hedge Texas baseload plants, where the hedges cannot be perfectly matched with the shape of the expected monthly generation.

In summery, the story of the second quarter was outstanding commercial and operating performance in Texas, where the fleet ran exceptionally well during the period of higher prices and volatility. This together with lower development expenses in the West region's retiring contributions resulted in the significant improvement over 2007.

Slide 16 shows our results for the first half of 2008 compared to the first half of 2007. I would note that with all of the portfolio changes in recent years that this is the first time that we have had virtually no changes, in our asset base year-over-year, making this a more direct comparison between the period.

Adjusted EBITDA for the first half of 2008 increased 18% to $1.2 billion compared to $1 billion for 2007 as three of our four core regions hosted double to triple digit year-over-year gains. Texas was up 29%, South Central increased 47% and the West more than double. As shown on the slide, Texas led the way during the first half, primarily due to a strong second quarter as I just described.

Increased merchant margins, exceptional operations and decreased development costs drove adjusted EBITDA for the region up $181 million compared to the first half of 2007. South Central's adjusted EBITDA increased by $26 million from $55 million in the first half of 2007 to $81 million in 2008.

Fewer planned outages and lower E4 rates resulted in an 8% increase in coal generation, which when coupled with and only modest increase in coal upload, resulted in more power being available to sell in the higher price merchant market and reduced need for purchase power to meet our load obligation.

The resulting 45% increase in merchant sales and 16% reduction in purchase power volumes, together with the effective cost containment drove the year-to-date improvement. The West region's adjusted EBITDA rose to $35 million in the first half of 2008, compared to $14 million previous year. This increase was primarily related to capacity revenues from Long Beach, which was not yet in service, this time last year.

Adjusted EBITDA for NRG's North East region decreased $14 million year-over-year. As higher capacity revenue was more than offset by lower contract in energy margins Capacity revenue increased primarily due to the initiation of the RPM capacity market in PJM in June of 2007. A new RMR agreement at our Norwalk Harbor facility and affective hedging of our New York capacity.

Higher capacity revenues were more than offset by lowered net contract revenues as a cost to serve those contracts rose in line with market prices and reduced energy margins, which declined due to the retirement of hardly 65 and 66 in June of 2007 and higher fuel costs at Indian River and Somerset.

As I discussed earlier, we experienced significant non-cash mark-to-market losses, primarily related to an upward movement in the natural gas curve during the second quarter. Of the $713 million loss recorded for the first six months of the year, more than half was related to Texas gas slot ineffectiveness. 20% was due to North East forward energy sales and 18% was due to the shaping of hedges compared to forecasted monthly generation. For additional detail, we have included a slide in the appendix, which provides more detail on the impact of commodity price movements, given our hedge position on our income statement and balance sheet.

Slide 17 shows NRG's cash flow generation during the first half of 2008. Cash flow from operations fell $23 million from $459 million in the first half of 2007 to $436 million for the first half of 2008. But if we net out the impact of cash collateral movement to see the true cash generation of the business, cash from operations rose 36% from $562 million to $764 million. Virtually, all of this year-over-year increase in cash from operation net of collateral is attributable to second quarter adjusted EBITDA improvement.

NRG's free cash flow during the first half of 2008 was $32 million compared to $226 million in 2007 as both environmental and repowering investment accelerated. The year-over-year increase in environmental CapEx is related to the two back in control projects that are Huntley and Dunkirk locations.

Repowering investments increased in 2008 as we move forward with various investments including the Sherbino and Elbow Creek Wind Farms, Cedar Bayou four combined cycle plant in Texas and the Cos Cob heater [ph] facility in Connecticut. Repowering investments to-date also includes payments on one set of additional wind turbines, initial work toward our previously announced Delta Window [ph] project and continued investment in the STP 3 and 4 initiative, net of the $50 million contribution received from our partner Toshiba.

Moving to slide 18, NRG's liquidity program remains a differentiating factor for the company with one of the most active hedging programs in the industry and facing one of the more volatile commodity and financial environments in many years. We were able to navigate our way through the quarter, not only sustaining our liquidity but increasing it.

As outlined here, total liquidity stood at right over $2.6 billion at the end of second quarter, up $276 million since March 31st. This increase was attributable to $420 million increase in cash balances, net of $178 million increase in cash collateral resulting from strong operating cash flow and the receipt of the ITISA sale proceeds in April.

Partially offsetting this increase in cash was $144 million decline in letter of credit capacity as additional LCs were posted in support of commercial operations activity. The cornerstone of our liquidity program though is our first lean collateral structure, which is represented on the bottom right side of this slide.

As we have discussed previously, we are able to hedge up to 80% of our baseload capacity for the next five years under the structure and the size limit of this program is based on volumes hedge, not the dollar value of underlying notional positions. As such, the capacity of this program does not change as commodity prices move.

As you can see, peak annual utilization is in 2009 was 72% of our capacity that year currently committed to strategic hedges, following the 15% for existing hedges in 2013. This lean capacity, coupled with our significant available liquidity, positions the company to continue to protect and enhance the value our fleet through both short and long-term hedging strategy while acquiring ways to remove impediments to efficient capital allocation.

Given the company's stronger than expected financial performance during the first half of the year, we are updating our full year 2008 guidance as outlined on slide 19. We are increasing adjusted EBITDA guidance by $140 million from 2.16 billion currently to $2.3 billion. With increase in collateral requirements in recent months, we are maintaining our cash flow from operations guidance at $1.5 billion at cash margin postings offset a portion of the increase in adjusted EBITDA.

Also impacting cash flow guidance is an increase in forecasted cash tax payments for the year, as a result of the sale of ITISA during the second quarter. Previously, we expected to become a full tax payer beginning in the second quarter of 2009. However, with our higher earnings this year, we expect to use our remaining post bankruptcy NOL this year and become a tax... cash tax payer by year end.

As such, we expect our cash tax rate in 2009 to be approximately 30%, which is lower than the marginal tax rate due to a continuing $130 million limitation related to our pre-bankruptcy NOL. While cash flow from occurring operations remains virtually unchanged, we expect our free cash flow to increase approximately $70 million to our updated plans for environmental CapEx and our Big Cajun facility. So as we look out for the rest of the year, we expect to see continued strong free cash flow from occurring operations before environmental and repowering CapEx and yesterday's closing share price of occurring free cash flow yield of 15%.

Slide 20 outlines our 2008 capital allocation plan as it stands at mid-year. As I mentioned earlier, the primary focus during the second quarter was on our investment programs, where we invested a total of $245 million. 44 million in maintenance CapEx, 43 million in environmental CapEx, primarily on AQCS projects at our Huntley and Dunkirk facility, and $158 million on the powering initiative, primarily when Cedar Bayou 4 and Cos Cob.

Year-to-date CapEx investments have totaled $426 million with $97 million in maintenance CapEx, $61 million in environmental CapEx and $218 million in repowering investments. On the capital side, $188 million in consolidated debt has been repaid to date, not including the $300 term loan B prepayment at the end of 2007 and $140 million of the targeted $300 million in share repurchases has been completed.

In light of the turmoil in the financial markets during the second quarter, which coincided with an unprecedented run up in natural gas prices, we adopted a cautious approach to liquidity conservation. Nonetheless, we remain committed to completing the remaining $160 million in share repurchases for this year's program at the settle out of CSF I auctions when they expire in December.

With that, I'll turn it over you to David.

David W. Crane - President and Chief Executive Officer

Thank you Clint.

This is the part of presentation, I usually, talk a little bit about the company strategy going forward. And I think I may depart from tradition to some extent, because I think most people on the call have a pretty good idea of what company strategy is going forward and it hasn't really changed over the last three months. What I'd like to do is look a little more at the situation as it exists today.

And as I look at the situation, as I look it this company over the... and think about the past 12 months, I see a situation, in which the 12 months forward gas curve has gone up by 18%. We have during that 12 months period increased our EBITDA guidance now three times, twice in 2007 and now once in 2008. We filed the first application for a nuclear plant in United States in 29 years and we have still 12% of our nuclear development company for $300 million.

We have successfully completed two repairing projects Cos Cob and Long Beach, and we have three construction projects Sherbino, Elbow Creek, and Cedar Bayou 4, which are proceeding on time and on budget. And we have been awarded power purchase agreement long term PPAs for also doing a repowering project in the state of California, and our GenConn project in City of Connecticut. During that 12 months period, our stock is down more than 10%. That's somewhere it was 12 months ago.

Since, I am sure that this question is as much on your mind as it is our minds, and we are all shareholders here, I thought I would do what I can to try and identify the issues, which could be overhanging our stocks and analyze whether those issues are legitimate material concerns to NRG going forward or simply market phobias, more or less indiscriminately held against us during this time of relentless and apparently endemic pessimism on Wall Street.

So I came up with five phobias, which are listed on this slide 22. I can't guarantee that this is an exhaustive list. But you can name others, we'll be happy to address them during the Q&A that's going to follow my comments. So let's start on slide 23, with one of the more recent phobias which is dark spread compression. This concern was the callous for sell side reported a few weeks ago directed at mere end, which seems to offend a little strap to us as well.

On this slide, let's start with the obvious. We don't burn much eastern coal. We are completely hedged in 2008, and we are almost completely hedged in 2009. And we have a very high level coal inventory in stock. You knew all these facts since we have reported on them before. So we tried on this slide to make our analysis more quantitative and more comprehensive and given that the market seems to be enamored with idea of open EBITDA, which is probably we would look at it on an open dark spread basis for 2009.

By looking at the dark spread from both ends, from the cost push end and the revenue pull from the beginning of 2008 until now. You can see that the increase in the gas curve since the beginning of the year plus the reduction in SO2 cost has swamped the deterioration in heat rate in the modest increase in western coal prices, leading for NRG and almost $7 per megawatt hour improvement in the dark spreads since the beginning of the year.

Of course the key here, as you can tell from the comparison with the eastern coal burner on the right is our reliance on western coal. We continue to see no basis for believing that Powder River Basin prices are destined to link with global oil prices through fuel switching in Europe and several other leads to fate that would be required in order to make that connection a pricing reality. As such we don't believe we bear any material risk of dark spread compression.

So now moving on to the second phobia: the carbon overhang. So much has been written by others and so much has been said by us on this topics in Dan's reported last November that simply want to give our current take on the prospects for Federal Carbon Legislation. To us the key is the ten primarily democratic standards from the Hartland, who voted for Boxer [ph] and Lieberman-Warner, but then went on a record to say that they would not vote to the bill itself in its present form.

In our opinion, it doesn't matter what happens in the poll elections, the concerns are those centers need to be accommodated for legislation to be moved out of the Congress and on to the next President's desk. Moreover, we think it's clear that climate change legislation itself with the inherent prospect of a substantial carbon charge imposed on the American consumer cannot pass at all in the current high energy cost environment unless it is coupled with additional elements that hold out at least the prospects of lower future energy cost.

This means to us is a very least a nuclear tile, which of course by that I mean a series of provisions designed to incentivize and clear obstacles to the so called nuclear ransom [ph]. Obviously, nuclear tile almost... whatever it included would benefit us and are mean us subsidiary directly.

And I also think that the bill would... need to have an electric car title which should benefit the entire electric industry over time as transportation evolves into the biggest source of electricity demand growth in the years and decades to come. In summary, whether you are evaluating NRG from the perspective of carbon risk in the short term to medium term or the long term, we feel that the company is better positioned today than we have been at any time over the past 12 months.

Now on to wind and its impact on heat rate in Texas; no doubt the prospects of flood of zero marginal cost wind farms are significantly affected the psychology of the psychology of the ERCOT forward heat rate market. And heat in our opinion, the market has overreacted.

On slide 25, we tried the breakthrough of the negative market psychology in order to get the likely physical reality. This slide of course shows the narrower supply stock that we project for ERCOT in 2015 relative to 2008. To the extent that wind power depends on actual electricity sales for its economics, the key is the number of hours during the year that wind can avail itself as the CCGP marginal cost unit during off peak hours.

This is the cliff that you can see depicted in these supply stacks about one-third the way over from the left. Well, this slide demonstrates is that... with the 418 gig watt wind build out, this benefit is likely to be eroded relative to what wind projects are realizing today. Furthermore, there are important issues in terms of the pace of transmission construction and most importantly reliability.

We think that the PUCT and ERCOT officials in Texas are very mindful of the billions of dollars is going to take the bill, the credit transmission system and we feel that they are equally like hold the billions more to take the bill to maintain at quick start gas fire back of capacity need to... need to firm the wind. We believe that the future perhaps in the very near future ERCOT will begin to consider the topic of who pays for ancillary services, what wind firming capacity is necessary and how, and who will pay for that.

In short, when it comes to wind in Texas and its impact on forward heat rates, stay tuned. The market has over sold it and we're due for a reality check. In short, if you have a lot... like when the market actually believed that CXU is going to bring 11 coal plants online in the 2010 to 2012 timeframe. And then at which point, we incurred that that was not going to happen that the heat rate, the forward heat rates in Texas rebounded nicely.

Next up on the phobia list is environmental CapEx. When the DC circuit recently struck down the ECA's Clean Air Interstate Rule and when the Clean Air Mercury Rule was stated as well. It changed the regulatory basis for some, but not all of our spend on environmental retrofits. As a result, and skipping several intermediate steps, we get to the bottom line. The net effect on us is a six year environmental CapEx spend, which is currently projected to be about $70 million less in aggregate.

Plus we projected about the $400 million net shift out of the 2008 to 2010 timeframe in our total environmental spend with it being shifted into the 2011 to 2013 timeframe as depicted by the bar chart on the left. So from our perspective, the post care, post CAMR rule provides the modest respite in terms of near term environmental CapEx, but it's otherwise not materially different for NRG.

Finally, the fifth phobia, which is the all purpose sketch [ph] that the credit economic recession and the impact of reduced economic activity on future electricity demand growth. While recession and reduced demand growth are obviously a concern, particularly in such a high energy price environment, there are two important mitigating factors, which benefit our company. The first is our hedge program. As demonstrated by the hedging information previously provided by Bob, we believe the company has basically hedged its way through the current recession, given that most recession in American history have not exceeded 15 to 24 months in length.

The second litigant is Texas. It has been our sub position for sometime that the energy based economy at Texas would be fairly immune to a national recession in a world of $100 plus oil. While it's still in the early month and such as maybe too soon to draw final conclusion, the chart on the right side of this page comparing electricity demand growth in ERCTO, PJM on a weather adjusted, weather normalized basis for 2007 and year-to-date 2008, we tend to support our sub position.

Even weather normalize in 2008, Texas is growing at an average base of little bit more than 2% per annum, which is actually is putting electricity demand growth in Texas ahead of its growth rate from 2007. While PJM by comparison is experiencing a year-on-year draw, again whether normalized from about 2.5% per annum in 2007 to almost flat in 2008. With nearly 65% of our overall energy production in Texas, this obliviously is an important advantage or an important litigant for us.

Finally in conclusion, the impact of these five phobias on our company are stock appeared to us at least to be considerably over blown. The company has performed magnificently year-to-date rewarding all of its shareholders with a robust first half financial results, and we are well positioned to deliver similarly positive results over the balance of the year and in the months and years to come.

So thank you and I think we will open the line now for questions and answers.

Question And Answer

Operator

Thank you. [Operator Instructions]. The first question comes from John Kiani from Deutsche Bank. Please go ahead.

John Kiani - Deutsche Bank

Good morning.

David W. Crane - President and Chief Executive Officer

Good morning, John.

John Kiani - Deutsche Bank

In late May at our conference, you stated that the Calpine deal would either happen or not happen by the end of the second quarter. And I guess, we're one month beyond that timeframe now; and on slide 22, the company highlighted potential overhangs on the stock. I actually think that this is a meaningful overhang on NRG stock that wasn't discussed. Can you please tell me where you stand on that transaction?

David W. Crane - President and Chief Executive Officer

Well, I mean John, as you know, we don't comment on any discussions with anyone that's in progress or otherwise. Since I went to your conference at [indiscernible] personal expense or corporate expense and outlined our rationale for the Calpine proposal we made at the time. I think it's people on the phone were paying attention to what we said at your conference, and then there was a flurry of emails. I think our press reports later a week, I think they know everything, they need to know.

John Kiani - Deutsche Bank

Well, as you mentioned, I think during the presentation, that you just gave. Year-to-date long term natural gas has increased over 15%, your market EBITDA, your open EBITDA has increased almost $1 billion, but the stock is down 17% year-to-date. Why isn't the company looking at doing $1 billion stock buyback to take advantage of the substantial dislocation between the stock price and the intrinsic value that's only increased over the last 12 months? In the past, NRG I think has been very creative and opportunistic in using hybrid securities converts and other strategies to create substantial buyback capacity. Why isn't the company taking advantage of this opportunity in the stock price right now?

David W. Crane - President and Chief Executive Officer

Well I mean, John better than anyone that the direct answer to your question, is why we are not doing that is because of the limitations of restricted payment basket. So the real question is: the company's perpetual search for ways to free up more room in your restricted payment basket.

I think what Clint was trying to say is that this is a very high level of focus for us. There are a variety of ways in which we can do that, and I think there's a slide back in the appendices that try to articulate that. Because there's been a lot of focus from buy side investors about that. From our perspective... from my personal perspective, it's an intolerable situation for me that the company sit here with $2.6 billion of liquidity, and we have the freedom to distribute and optimize way. Right now we have $180 million effective limitation, which I guess will free up little bit more by the third quarter.

So, it's very high on our priority list. Certainly the idea of freeing up the restricted payment basket and then doing the share buyback that's something we seriously consider as well. I guess the question I would ask you is... my understanding is that Mirant from the middle of the $2.4 billion share buyback and sales in their stock seems to be dropping at the same pace as everyone else. So, I'd like to be persuaded that a major share buy back would be the fantasy for all our world. But maybe that's the debate we can have offline.

John Kiani - Deutsche Bank

Well I think, as you pointed out David, Mirant is experiencing massive dark spread compression, so I think that's why their stock has dropped. And I think your company is obviously in a completely different situation, where the intrinsic value has actually increased substantially over the last seven to eighth months as opposed to having decreased. Because you Mirant and other company are short Eastern coal, while you obviously own lignite, PRB and also nuclear generating assets and yet your stock is still down 17% year-to-date. And that's the opportunity to create additional value that I am referring to. I am just a little bit confused as to why... what's the direction of the company's capital allocation program is going in. Because I feel the stocks materially undervalued get the company is thinking about using it as currency. And in my opinion the best investment that NRG has right now is on stock.

David W. Crane - President and Chief Executive Officer

Well, I think John, you've got your opinion. And I could respond that. But I think at some point we need to take some other questions on the phone.

John Kiani - Deutsche Bank

Okay, thank you.

Operator

Your next question comes from Dan Eggers, Credit Suisse. Please go ahead.

Dan Eggers - Credit Suisse First Boston

Hey, good morning. I think John covered a lot of the capital allocation business. Clint, I was wondering if you can just give a little more color on some of the mark-to-market losses in the collateral postings, given the movement in commodity prices. I guess since the close of the quarter, we've been probably down. Any inside you could share us for mark-to-market would be going in the third quarter and any trend in collateral since then?

Clint Freeland - Senior Vice President and Chief Financial Officer

Sure Dan. On the mark-to-market front, we've actually taken a pretty close look at that over the few weeks. Obviously there has been a significant decline in the gas market. And what retaining is based on calculations that we just run in the last couple of days. There are a lot of ineffectiveness and mark-to-market that we experienced during the second quarter is reversing itself in a pretty significant way.

I think we are seeing what we would have expected to see with gas prices coming down as much as they have. So again mark-to-market looks like at this point with gas moving down is rehearsing itself quite meaningfully. On the collateral front, since the end of the quarter we've gotten about $60 million of net cash collateral back as a result of reduction in gas prices, so again moving in the direction that you would expect to see

Dan Eggers - Credit Suisse First Boston

And then just on the hedging effect and this was at all a tie to 2008 was reusable dim in 2009 and beyond the practice.

Clint Freeland - Senior Vice President and Chief Financial Officer

Really it was across the years. So it's not specific to 2008. There's effectiveness, kind of shrink strength basically throughout the program. And it really has to do with the fact that in all these years, when we looked at the changes in natural gas prices as of the end of the quarter on 6.30. We look at the change in gas prices and we look at the change in power prices and basically in all years what we saw is that natural gas prices during the quarter rose at a faster rate than power prices. And so that led to some degree of ineffectiveness rally throughout the hedge program.

Dan Eggers - Credit Suisse First Boston

Great, thank you.

Operator

Your next question comes from Lasan Johong from RBC Capital Markets. Please go ahead.

Lasan Johong - RBC Capital Markets

I am a little puzzled about the hedging strategy you adopted in second quarter. My understanding is... or has been that NRG prefers to lock away cash price volatility and keep its heat rate exposure open and in the current market, where dark spread compression, which I agree with David is kind of silly at this point and meaningless. Why would you hedge into that kind of dumb environment if you would driven by financial loans of the banks and other issues?

Unidentified Company Representative

Lasan, on the hedging front, the hedges that we added during the second quarter along the gas price, so we are locking in higher powered price. We already have the fuel hedge. So we are locking in very strong margins by locking in the gas business.

Lasan Johong - RBC Capital Markets

But the point is that the power prices were understated relative to its heat... what it actually should be because of heat rate compression. Am I wrong about that?

Unidentified Company Representative

Well, we left the heat rate position open. We hedged it with the GAAP, so... Right, we still keep the heat rates in upside, which is similar to what we did in the second quarter this year. We've kept the heat rate open and it benefited us by doing so.

Lasan Johong - RBC Capital Markets

So you bought the power and sold gas short.

Unidentified Company Representative

No, we think we just sold gas.

Lasan Johong - RBC Capital Markets

You just sold gas.

[Multiple speakers]

Lasan Johong - RBC Capital Markets

Okay, then have some... we can get into offline. Assuming the... I am seeing the sale of assets in international was in the discontinued offline; is that correct?

Unidentified Company Representative

Yes, that's right.

Lasan Johong - RBC Capital Markets

Okay, great. That's it for me. Thank you very much.

Unidentified Company Representative

Thanks Lasan.

Operator

Your next question comes from Andy Smith, JPMorgan. Please go ahead.

Andrew Smith - JPMorgan

Thanks, good morning guys,

Unidentified Company Representative

Good morning, Andy.

Andrew Smith - JPMorgan

One of the things you guys could talk a little bit in Texas about, that we saw some pretty high cost in the balancing market versus certainly just overall with the moving gas or some commodity price move. Could you guys talk a little bit about what the driver in the quarter was for the performance? Was it really more that kind of 15 minute increment, peakers in the balancing market, was it just overall commodity price and then I had a follow up question on that too.

Unidentified Company Representative

Well, I mean tempted with what made up the EBITDA increase for tax cutting was the full range more of output, better performance. We have the specific number on... I mean we try to isolate the number that came from the... sort of those pricing moments in May.

Unidentified Company Representative

We'll we don't have a specific number for that. I don't think we historically given out specific numbers for gas plant EBITDA. But I think the way to think about it is during the second quarter, gas plant generation was up 24% year-over-year and then when you look at on-peak power prices in Texas during the quarter, I believe were up over a 100% about 130%. So, I think you can kind of use those as a proxy for the impact.

Unidentified Company Representative

Yes, so we don't have that specific number. I know we can try and get it. Those moments got a lot of headlines that were actually relatively short lived in for just a few weeks, so I would... how much of an impact they would have. But we can discuss internally get back to you if that's an important number for you.

Andrew Smith - JPMorgan

Well, I was looking what were your qualitative comment, and so it sounds like what you just said qualitatively, you would say it was overall better pricing and fundamentals impacts in the quarter.

Unidentified Company Representative

Yes, and either way that I looked at it is qualitatively is that the price impact was the majority products were roughly three quarters and then the volume peak up due to better generation, better reliability, generation of the gas plants was the lesser part of it. So part of it was again the open heat rate position in and the pricing and then to a less extend the additional megawatt that we put out of the plant.

Andrew Smith - JPMorgan

Okay, great. And then congestion charges were up fairly significantly in the second quarter as well. Do you guys have any exposure to that or did you have any exposure to that, but you have a positive or negative?

Unidentified Company Representative

No, we sure didn't [ph].

Unidentified Company Representative

No, we didn't have anything meaningful. I mean we do participate in the basis market in Texas, but we were not affected adversely on the increase congestion product.

Andrew Smith - JPMorgan

Okay, great. Thanks guys.

Unidentified Company Representative

Thanks, Andy.

Operator

The next question comes from Elizabeth Parrella from Merrill Lynch, Please go ahead.

Elizabeth Parrella - Merrill Lynch & Co.

Thank you. I wanted to ask regarding the RP basket. Clint, could you just remind us or tell us what they were at the end of June both the bank and bond calculations versus where we were in at the end of March?

Clint Freeland - Senior Vice President and Chief Financial Officer

Sure, Elizabeth. The RP basket and the bonds, right now stands at I think $184 million. Under the bank, it's $1.10 billion. And then at the end of the first quarter, I believe it was $150 million under the bonds. And I don't recall what it was under the bank.

Elizabeth Parrella - Merrill Lynch & Co.

Okay. And just a second question on different area. In the wake of care ruling, have you looked at the caring value of your emission allowances particularly the ones in Texas that you value... coming out of the Texas GenConn acquisition. Whether you need to take any impairment on those? And if you do will that go into the calculations of net income for the bond or RP basket?

Clint Freeland - Senior Vice President and Chief Financial Officer

Elizabeth, we have taken a look at that. We looked at both our NOX and SOX [ph] credit banks. And just to be thorough, the NOX credit that we have are not impacted by the care decision. Those are really poor kind of local Houston-Galveston area compliant.

On the SOX front, as you mentioned really the only part of our bank that is affected by care are the other credits that we purchased as the part of the Texas GenConn transaction. We've looked at this over the past week, because we know that a number of other companies have faced this issue. And based on our existing carrying book value of those credit and based on our fundamental long-term view of what those credits are worth, we don't foresee any type of meaningful impairment, at this time. Obviously, we'll need to monitor that overtime. But I don't at this point see any type of meaningful impairment associated with us.

Elizabeth Parrella - Merrill Lynch & Co.

Okay. If there were impairment charges, they get included in the net income calculation for the bond warranty?

Clint Freeland - Senior Vice President and Chief Financial Officer

We need to look at that. That may be considered an extraordinary event, given what gives rise to that impairment, but that would be something that we have to look at more closely.

Elizabeth Parrella - Merrill Lynch & Co.

Okay, thank you.

Operator

Your next question comes from Michael Lapides from Goldman Sachs. Please go ahead.

Michael Lapides - Goldman, Sachs & Co.

Hey, guys congratulations on a really good quarter. When I ask you about RGGI, what are you expecting as your '09 RGGI costs? I am just trying to get your fundamental view over the... on kind of the dollar per ton pricing for RGGI credit.

Unidentified Company Representative

Well, go ahead Mauricio.

Mauricio Gutierrez - Senior Vice President, Commercial Operations

Hi, Michael, this is Mauricio. I think there has been some price discovery on the over the counter market. We have seen price fall anywhere between $750 to $850 per ton. Actually our fundamental view is lower than that, and so I would say in probably in the neighborhood of $4 to $6 per ton range.

Michael Lapides - Goldman, Sachs & Co.

Okay, so if you are buying 12 million to 13 million tons for talk to near about $100 million.

Mauricio Gutierrez - Senior Vice President, Commercial Operations

Yes.

Unidentified Company Representative

Michael, the way you should look at that on a cash basis, there are two things to consider; one is how much did it pass through in the marketplace show on and then the second point is, we have been monetizing some of our other excess pricing credits to offset some of those costs.

Michael Lapides - Goldman, Sachs & Co.

Okay. I have a question also and real quick one and I think about collateral cash posting. Under what scenario does the collateral that you've already posted year-to-date in offer term back you simply another spike in the gas prices?

Unidentified Company Representative

Yes I think that's the case Michael. If gas prices continue to rise, then it wouldn't, but again it's really more of a the timing issue. Because as the underlying hedges roll off and realize that cash collateral will come back to us. So, I think it's just a matter of matter of timing. But again it may not come back to us in time that we expect the cash prices continue to rise.

Michael Lapides - Goldman, Sachs & Co.

Got it. Okay. Thank you guys.

Unidentified Company Representative

Thanks, Michael.

Operator

Your next question comes from Chris Taylor, Evergreen Investments. Please go ahead.

Chris Taylor - Evergreen Investments

Thanks. I am want to talk about slide 27. You are talking about being recession resistant. You don't see more analysis for price impact and obviously the last year recessions we have fairly low energy prices and how much could the amount of destruction fee due to high the prices as opposed to a recession. Have you got search analysis?

Unidentified Company Representative

Well, we did have an analysis, which was based on historic... we didn't play it in here. But we tried to calculate it all the way through, some impact on natural gas prices. And again this is just sort of calculating based on sort of historic pattern. I think Mauricio, tell me what came about $0.30.

Mauricio Gutierrez - Senior Vice President, Commercial Operations

$0.35 to $0.50. But I mean this... as the calculation... we did the best we could. But that's what it came out to it. It's obviously highly speculative, but anyway.

Chris Taylor - Evergreen Investments

So, which are your more vulnerable period, is it recession or high electricity prices that amounts to destruction?

Unidentified Company Representative

More vulnerable to high electricity pricing?

Chris Taylor - Evergreen Investments

In terms of your volume? Which are your volumes more sensitive to a recession impact or high electricity price impact?

Unidentified Company Representative

I mean we are seeing the amount structuring gasoline logic...

Unidentified Company Representative

I think we have started seeing more sensitive to our portfolio right now, it's gas, it's now gasoline.

Chris Taylor - Evergreen Investments

I am not talking about your price impact; I am talking about your volume impact.

Unidentified Company Representative

Well, we are hedged for the next couple of years. So the volume for our base is basically 90% plus of our generation comes from baseload. So this recession you will see the impact more of the intermediate, you don't get much generation.

Unidentified Company Representative

Yes, I think as steep... a recession driven steep drop up in demand for natural gas got to be what would be most susceptible to. But since we take the benefit natural gas through sales of our baseload solid fuel plans, where we are heavily hedged for the next years, again that's least in our view in the expression that we think that were recession resistant. But if you are looking for one thing, it would be that recession driving reduction in natural demand for natural gas.

Chris Taylor - Evergreen Investments

Thanks.

Operator

Your next question comes from Maury Sean [ph] from MFS. Please go ahead.

Unidentified Analyst

Good morning. Bob congratulations on a safety operations. Dave, I am going to give you a second chance from the Calpine question, thrown out there by John. We have an entity out there for the temporary management team; such a new folks on the financial side can't keep tracks who's been put there. And statements by you that comments that this issue would come to a close sooner than it has. Obviously there is a CEO there. The board seem to give you bit of highs then and both stocks have been hammered a bit and so we are in the wonderful land of uncertainty and I as John were actually in some respect put that the number one list of the concern.

I appreciate the craziness of the market we are living at everyday. And the understanding of maintaining liquidity and given the RP basket and everything else put some constraints on things. But throwing uncertainty deal into a mix of the difficult market is not helping the cause. So I am going to give you second chance and try to help us better understand what is going on, and especially with the prospects of buying company that essentially has no management?

David W. Crane - President and Chief Executive Officer

Well, Maury I've been here for four years; and for four years, we've been identified with one or another company in this industry. I can't remember the order whether we were Mirant, Reliant and now Calpine or some other order. But the fact that I said I am not going to comment on whether there are any discussions going on. We also tend to say that in the other way, which is I would say, there is always discussion going on with all people.

We just don't comment on any type of transactions that's going. You can't read into that comment anything in particular about the Calpine situation. If there is uncertainty that concerns yourself and John Kiani about Calpine transaction that you don't like, again, I would refer back to the situation that existed at the end of the May.

In terms of... at that point, we laid out what we thought was the strategic project for a transaction in the letter. And we said in terms of whether the numbers work, that was something that we would have to determine on due diligence. I think that the market have that question as well. You and John for Calpine number one ahead of the five phobias that I talked about today. That maybe the case, I mean this is why the frustrations of this market. I mean, no one really knows what's causing any of these things.

I would only point out that, it's not just Calpine and NRG that has been hammered over the last two months; I think the entire sector has been hammered. And even the people who aren't rumored to be involved anything. And then the second point I would say is we are down 10% over the last 12 months. The Calpine thing is sort of came up in May, right? So maybe again you and John and I can take it offline. I would like to understand, why we didn't get the benefit of the favorable market conditions in terms of natural gas prices and other things over the last ten months prior to the Calpine announcement.

But, I am not... I'm sure that this answer is unsatisfactory to you, but we just can't get into this. I don't know any company that comments on transactions that may or may not be happening before they have happened.

Unidentified Analyst

So you said... again you have said in order to have reduce something of that sort, you would have to do two or three weeks of due diligence at Calpine to understand various issues from contract hedges and everything else and none of that has changed.

David W. Crane - President and Chief Executive Officer

None of... none that we would have to do something like that in order to understand their... no, I don't that is not our view point on that hasn't changed.

Unidentified Analyst

Okay, thank you.

David W. Crane - President and Chief Executive Officer

Thank you.

Operator

And the last question comes from Nitin Dayya [ph] from Lehman Brothers. Please go ahead.

Unidentified Analyst

Good morning. Without asking the views on Calpine and if the transaction were to happen, how do you plan to refinance the Calpine, I know that Calpine that and if you have given any thoughts to that?

David W. Crane - President and Chief Executive Officer

I think we've exhausted the Calpine topic today, so...

Unidentified Analyst

Fair enough. So, just on the RP basket issue again. Obliviously the bonds are about 96, 97 and would you again consider going back to the bondholders to seek their amendment there also just based on where the bonds are trading versus the CDS. I mean it almost seems... market almost seems to expect that you would actually seek to relax that. Could you comment on that?

Clint Freeland - Senior Vice President and Chief Financial Officer

Our bondholders are very significant part of our capital structure and I have always been constructive in dialogs obviously. We talked today about the RP restrictions being something that we're focused on. And I guess, all I would say is that we are certainly always open to a constructive dialog with any member of our investment community including the bondholders.

Unidentified Analyst

Is that the tax for possibility is on the table?

Clint Freeland - Senior Vice President and Chief Financial Officer

I am not prepared right now to suggest that that we are preparing any type of formal approach. All I would say is that that obviously is something that we thought about in the past and we will continue to consider that in future.

Unidentified Analyst

And also on slide partly the restricted payment 101, when you look at the various clauses under the indenture, where RP could be built. I suppose outside of that issuance, does equity earnings, cash distributions from deconsolidated entities? Do any of your entities have that capacity?

Clint Freeland - Senior Vice President and Chief Financial Officer

Not at this point. I mean what that referring to is if we have an unrestricted subsidiary, and that's a definition under the indenture that to the extent that we receive any cash distribution from them that that would increase the basket dollar for dollar. At this point, the only unrestricted subsidiaries that we have are the CSF I and CSF II structures. And I don't perceive that cash distributions being a dynamic within the context of those...

Unidentified Analyst

Okay. Thank you very much.

David W. Crane - President and Chief Executive Officer

Okay, Jennifer. We've gone a little bit longer. But thank everyone for participating in the call and we look forward to talking to you again in the next quarter. Thank you.

Operator

Ladies and gentlemen, this does conclude today's conference call. Thank you very much for your participation; and have a nice day.

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