Zach Dell

And so if power goes to 20 cents, I'm taking a bath.

If power goes to 5 cents, I'm jumping for joy.

Generation is a long position.

You own power.

And if the price goes up, you're really happy.

If the price goes down, you're really sad.

And so the gen-tailored business is more hedged.

It's more diversified.

And that's been a strong business model.

And you can see that in the stock prices of NRG, Vistra, et cetera.

In Texas, it was the early 2000s, and the Public Utility Commission basically said, okay, transmission distribution are going to be owned by the utilities.

They're going to be what's called TDSPs, transmission distribution service providers.

They're not allowed to own generation.

They're not allowed to own retail.

They are going to operate like a traditional investor-owned utility.

So they build infrastructure, and they earn a rate of return on that CapEx, and they're not going to own generation assets, and they're not going to be able to sell retail power.

Now, it's worth mentioning that actually, first of all, deregulation is kind of a misnomer.

The energy space in Texas is highly regulated.

There is this market structure dynamic which creates competition in Texas, and that's really a better way to frame it.

And also worth mentioning, in Texas, 80% of the market is this competitive market.