Question-and-Answer Session
Operator
Thank you. We are now ready to begin the question-and-answer session. (Operator Instructions). Our first question comes from Greg Gordon with Citi.
Greg Gordon - Citi
Thanks, good morning.
Mayo Shattuck
Good morning, Greg.
Greg Gordon - Citi
Looking at the disclosure on slide 35, which is the generation earnings outlook EDF JV, you have broken out to hedges between PPA/RSAs and other hedges. So when I think about the $700 million of present value of hedges that are going into the JV, those are the some total of both of those lines, correct?
Some portion of both of those is going into the JV, a 100% of the PPA/RSAs and some percentage of the other hedges, is that the right interpretation?
Jack Thayer
No, Greg, This is Jack. The PPAs and the RSAs associated with our Nine Mile in Gannett plants convey to the convey to JV in an effort to address hedges against Calvert Cliffs in the transaction given the timeframe in which we were negotiating with EDF rather than identify specific hedges what we agreed to was a contractual value.
The $700 million of underwater hedges that will convey is incremental to those PPAs and RSAs, and we're working with our partner EDF to negotiate, which other hedges we will put out of our portfolio and allocate to the joint-venture prior to confirmation of the transaction.
Greg Gordon - Citi
Okay, so the $700 million is incremental to the PPAs and RSA line item that goes on a pro rata basis with the JV right?
Jack Thayer
It's correct.
Greg Gordon - Citi
And so some portion of that under hedge line will essentially be also transferred to the JV, is that the right interpretation.
I would say the $700 million could take many forms.
Greg Gordon - Citi
Right
Jack Thayer
One form it could be conveyed is to convey these underwater positions to the joint-venture, but we will be working through that over the balance of the next six months or so to identify the form and fashion that $700 million will take.
Greg Gordon - Citi
Is it possible that that take the form of some kind of payment in lieu? In other words.
Jack Thayer
I think it’s fair to say that they could take many forms, but what is contractually committed is the $700 million present value at a 10% discount rate.
- To read the full transcript on Seeking Alpha, click here »
