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Think important to Flag that AEP is largely regulated so any cheaper financing they get just reduces the implied revenue requirement. Not as much torque to cheaper leverage as other companies have

A couple good resources on drivers of rising rates across the country:

Our piece @energyinnovation.bsky.social on drivers of rising electricity costs: energyinnovation.org/report/clean...

Recent @berkeleylabemp.bsky.social overview of retail cost trends and drivers: emp.lbl.gov/publications...

$CEG at ~15x ‘25 EBITDA of ~$5.7Bn. Calpine ‘24 EBITDA of ~$3-3.5Bn which puts LTM multiple at ~9.2x. Think the $30Bn is missing ~$10Bn in net debt which suggests LTM multiple closer to -12.3x. Shows how important cost of capital is for pubco, can make most deals look accretive

And on topic of midstream get the upside, agree 100%. Company like $ET will make out like a bandit if a freeze off proving event occurs as they trade gas using their physical pipe in the ground assets

Also as we move toward more winter peak load systems and the proliferation of gas as capacity resource continues, it’ll place additional stress on the gas transmission system to serve both power plants and LDC heating gas demand. Even more imperative to ensure reliability of gas transport infra

Ah in the consumer sense, solar is pretty undefeated, such cheap raw power

Would strongly agree with you here, BESS is going to have a really big role in grid stabilization and reliability and probably will have more/greater revenue sources in the future

Like in my opinion BESS are pretty solid risk-adjusted investments based on the rolling contracts I’ve seen but because I expect their cost curve to continue to decline rapidly, their replacement cost will continue to decline and therefore won’t be a great inflation hedge

I’d strongly argue that merchant gas plants with steel gas plants are much better than solar as an inflation hedge (not saying they are better risk-adjusted investments that solar, just better inflation hedge)

I think you’d be suprised at how limited inflation linked ppas are for utility scale solar projects. Other issue is that as nominal cost for panels continue to fall, the replacement value of solar projects also falls making them less effective as an inflation hedge /1

Issue is that from a capital allocators perspective to build solar you need a long-term contract and most offered in the market are currently fixed price with no CPI linkage. Long-term fixed price solar PPAs end up being pretty poor inflation hedges due to their exposure to duration risk

‪To be clear I think there will still be a net increase in demand for NG, but capital allocators should pay attention to the downside mechanisms as well. Technological advancement always surprises on the long-term ‬

Surprised by the conclusion that they see distortions due to data centres but not due to intermittent supply like solar or wind. All my electrical engineering classes point to the conclusion that variable supply should also distort frequency from the 60Hz threshold