Financial Data and Key Metrics Changes - In 2023, the company achieved adjusted EBITDA of $3.282 billion, a 76% increase compared to the previous year, primarily driven by improved operational performance and the addition of the Smart Home business [54][108] - Free cash flow before growth reached $1.925 billion, setting a new record and representing an improvement of $1.4 billion over the prior year [59][109] - The company reported $9.25 of free cash flow before growth per share, exceeding the $8.50 target set during the Investor Day [60][109] Business Line Data and Key Metrics Changes - The Smart Home business contributed $753 million in adjusted EBITDA, achieving 6% subscriber growth and improving monthly recurring service margins to 9% [58][109] - The Texas region saw an increase in adjusted EBITDA by $806 million over 2022, driven by higher revenue rates and lower supply costs [55][109] - The East/West services segments experienced a decline of $142 million compared to the prior year due to asset retirements and a challenging housing market [57][109] Market Data and Key Metrics Changes - The company is positioned to benefit from the growing demand for power, particularly from data centers and AI, which is expected to expand margins across its existing generation portfolio [51][87] - The Lubbock market opened with 65% of consumers making a choice for their electricity provider, indicating strong customer engagement [93][96] - The company maintains a 39% share of customers in Texas, outperforming expectations in the residential market [96] Company Strategy and Development Direction - The company is committed to achieving a 15% to 20% growth in free cash flow per share and is focused on integrating Smart Home with its energy businesses [39][71] - The strategic plan includes a $550 million target for growth and cost initiatives by the end of 2025, with a focus on leveraging synergies and optimizing capital allocation [49][105] - The company is evaluating additional storage options and has three brownfield projects ready to go in Texas, indicating a proactive approach to meeting future energy demands [46][52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to handle load demands and maintain performance during extreme weather events, citing successful operations during Winter Storm Heather [5][62] - The outlook for 2024 remains positive, with expectations for continued growth in consumer energy and improved margins across various customer segments [43][56] - Management highlighted the importance of adapting to market conditions and the potential for improved valuations in the energy sector due to tightening supply-demand fundamentals [71][72] Other Important Information - The company has executed over $1.5 billion in debt repayment and returned another $1.5 billion to shareholders, demonstrating a strong capital allocation strategy [42][66] - The company is not actively pursuing an investment-grade rating but is focused on achieving metrics that align with such a rating [33][100] - The company plans to continue its disciplined capital allocation strategy, including significant share repurchases and dividends [66][107] Q&A Session Summary Question: How does the company view its positioning relative to the free cash flow per share target? - Management reaffirmed commitment to achieving the 15% to 20% growth in free cash flow per share, with expectations for $150 million above previous guidance for 2024 [4][39] Question: What is the status of the CEO search process? - Management indicated that they are looking for a candidate who spans both consumer and energy sectors, with a timeline of three to nine months for the search [19][20] Question: How does the company plan to address the tightening supply-demand fundamentals in the energy market? - Management emphasized the importance of being asset optimal rather than asset-light, with plans for brownfield projects and partnerships to meet growing demand [25][32] Question: What are the expectations for the Smart Home business in 2024? - Management expects continued growth in subscriber numbers and recurring revenue, with a focus on maintaining high customer retention rates [84][85] Question: How does the company view the impact of data centers on its business? - Management noted that increased demand from data centers is expected to expand margins and drive customers towards larger, quality providers like the company [87][88]

Topic 1: Financial Performance - Revenue increased by 15% compared to the previous quarter [1]. - Net profit margin improved to 12%, up from 10% last year [2]. - Operating expenses were reduced by 8% due to cost-cutting measures [3]. Topic 2: Market Expansion - The company entered two new international markets in Asia and Europe [4]. - Market share in the domestic market grew by 5% [1]. - A new product line was launched to target younger demographics [2]. Topic 3: Operational Efficiency - Production efficiency improved by 10% due to new technology implementation [3]. - Supply chain disruptions were minimized, leading to a 7% reduction in delivery times [4]. - Employee productivity increased by 12% following training programs [1]. Topic 4: Strategic Investments - The company invested $50 million in R&D for future innovations [2]. - A strategic partnership was formed with a leading tech firm to enhance digital capabilities [3]. - Capital expenditures were increased by 20% to support long-term growth [4]. Topic 5: Risk Management - Cybersecurity measures were strengthened to protect customer data [1]. - A new risk assessment framework was implemented to mitigate financial risks [2]. - Insurance coverage was expanded to cover potential supply chain disruptions [3].

[Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD%20LOOKING%20INFORMATION) [Overview of Forward-Looking Statements and Risks](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD%20LOOKING%20INFORMATION) Identifies forward-looking statements in the 10-Q report and lists risks that could cause actual results to differ from projections - Forward-looking statements are identified by words such as "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates," "should," and "forecasts"[10](index=10&type=chunk) - Key risks include business uncertainties related to integrating Vivint Smart Home, maintaining retail market share, general economic conditions, changes in wholesale power/gas markets, fuel cost fluctuations, regulatory changes, and cybersecurity risks[11](index=11&type=chunk) - NRG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws[12](index=12&type=chunk) [Glossary of Terms](index=5&type=section&id=GLOSSARY%20OF%20TERMS) [Definitions of Key Terms and Abbreviations](index=5&type=section&id=GLOSSARY%20OF%20TERMS) Provides definitions for technical terms and abbreviations, ensuring consistent understanding of industry and company-specific language - The glossary defines critical terms such as Adjusted EBITDA, ERCOT, GAAP, ISO, MWh, PJM, and various debt instruments, which are essential for understanding the financial and operational context of the report[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) [Part I — Financial Information](index=8&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1 — Condensed Consolidated Financial Statements and Notes](index=8&type=section&id=ITEM%201%20%E2%80%94%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20AND%20NOTES) Presents unaudited condensed consolidated financial statements and notes, detailing business, accounting policies, revenue, acquisitions, and disclosures [Condensed Consolidated Statements of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Q3 2023 net income rose to $343 million despite lower revenue; nine months saw a $684 million net loss due to increased costs Three Months Ended September 30 (in millions) | Metric | 2023 | 2022 | Change | | :----------------------------------- | :----- | :----- | :----- | | Revenue | $7,946 | $8,510 | $(564) | | Total operating costs and expenses | $7,385 | $8,376 | $(991) | | Operating Income/(Loss) | $561 | $156 | $405 | | Income/(Loss) Before Income Taxes | $408 | $83 | $325 | | Net Income/(Loss) | $343 | $67 | $276 | | Income/(Loss) per Weighted Average Common Share — Basic | $1.42 | $0.29 | $1.13 | Nine Months Ended September 30 (in millions) | Metric | 2023 | 2022 | Change | | :----------------------------------- | :----- | :----- | :----- | | Revenue | $22,016 | $23,688 | $(1,672) | | Total operating costs and expenses | $22,671 | $20,404 | $2,267 | | Operating Income/(Loss) | $(453) | $3,335 | $(3,788) | | Income/(Loss) Before Income Taxes | $(866) | $3,055 | $(3,921) | | Net Income/(Loss) | $(684) | $2,316 | $(3,000) | | Income/(Loss) per Weighted Average Common Share — Basic | $(3.14) | $9.73 | $(12.87) | [Condensed Consolidated Statements of Comprehensive Income/(Loss)](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%2F%28LOSS%29) Q3 2023 comprehensive income increased to $336 million; nine months reported a $684 million comprehensive loss Comprehensive Income/(Loss) (in millions) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income/(Loss) | $343 | $67 | $(684) | $2,316 | | Other Comprehensive (Loss)/Income | $(7) | $(34) | $0 | $(28) | | Comprehensive Income/(Loss) | $336 | $33 | $(684) | $2,288 | [Condensed Consolidated Balance Sheets](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased to $27,910 million by September 30, 2023, primarily from reduced current assets; liabilities also declined Condensed Consolidated Balance Sheets (in millions) | Metric | September 30, 2023 | December 31, 2022 | Change | | :----------------------------------- | :----------------- | :------------------ | :----- | | Total current assets | $9,468 | $16,231 | $(6,763) | | Goodwill | $5,143 | $1,650 | $3,493 | | Customer relationships, net | $2,299 | $943 | $1,356 | | Total Assets | $27,910 | $29,146 | $(1,236) | | Total current liabilities | $8,930 | $12,982 | $(4,052) | | Long-term debt and finance leases | $10,741 | $7,976 | $2,765 | | Total Liabilities | $24,392 | $25,318 | $(926) | | Total Stockholders' Equity | $3,518 | $3,828 | $(310) | - The significant increase in Goodwill and Customer relationships, net, is primarily due to the acquisition of Vivint Smart Home[23](index=23&type=chunk)[49](index=49&type=chunk)[66](index=66&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=12&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Operating cash flow shifted to a $462 million net use for nine months 2023; investing activities increased cash used for acquisitions Cash Flows (in millions) | Metric | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :----- | | Cash Flows from Operating Activities | $(462) | $1,758 | $(2,220) | | Cash Flows from Investing Activities | $(2,631) | $(205) | $(2,426) | | Cash Flows from Financing Activities | $1,590 | $855 | $735 | | Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash | $(1,503) | $2,403 | $(3,906) | | Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period | $675 | $3,513 | $(2,838) | - The significant increase in cash used for investing activities is primarily due to the **$2,502 million** payment for acquisitions of businesses and assets, net of cash acquired, in 2023[27](index=27&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=13&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) Stockholders' equity decreased to $3,518 million by September 30, 2023, due to net loss and dividends, offset by preferred stock Stockholders' Equity (in millions) | Metric | Balance at Dec 31, 2022 | Balance at Sep 30, 2023 | Change | | :----------------------------------- | :---------------------- | :---------------------- | :----- | | Preferred Stock | $0 | $650 | $650 | | Additional Paid-In Capital | $8,457 | $8,527 | $70 | | Retained Earnings | $1,408 | $425 | $(983) | | Treasury Stock | $(5,864) | $(5,911) | $(47) | | Total Stockholders' Equity | $3,828 | $3,518 | $(310) | - The issuance of Series A Preferred Stock contributed **$650 million** to preferred stock, while net loss and common stock dividends reduced retained earnings[29](index=29&type=chunk) [Note 1 — Nature of Business and Basis of Presentation](index=15&type=section&id=Note%201%20%E2%80%94%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) NRG is a leading energy, smart home, and services company across the U.S. and Canada, with financial statements prepared under GAAP - NRG is a leading energy, smart home, and services company with approximately **7.5 million** residential consumers and **15 GW** of generation as of September 30, 2023[34](index=34&type=chunk) - The company's business is segmented into Texas, East, West/Services/Other, Vivint Smart Home, and Corporate activities[40](index=40&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=15&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) Details accounting policies for Vivint Smart Home's Flex Pay plan, capitalized contract costs, credit loss provisions, and goodwill - Vivint Smart Home's Flex Pay plan treats product and service sales as a single performance obligation, recognizing revenue on a straight-line basis over the contract term, typically five years[39](index=39&type=chunk)[40](index=40&type=chunk) - Capitalized contract costs, including installed products and commissions, are amortized over an expected benefit period of approximately five years[42](index=42&type=chunk) Allowance for Credit Losses Activity (in millions) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $120 | $627 | $133 | $683 | | Provision for credit losses | $85 | $52 | $165 | $103 | | Ending balance | $158 | $638 | $158 | $638 | Goodwill by Segment (in millions) | Segment | Balance as of Dec 31, 2022 | Goodwill from Vivint Smart Home Acquisition | Balance as of Sep 30, 2023 | | :-------------------- | :------------------------- | :--------------------------------- | :------------------------- | | Texas | $710 | $0 | $710 | | East | $723 | $0 | $721 | | West/Services/Other | $217 | $0 | $218 | | Vivint Smart Home | $0 | $3,494 | $3,494 | | Total | $1,650 | $3,494 | $5,143 | [Note 3 — Revenue Recognition](index=18&type=section&id=Note%203%20%E2%80%94%20Revenue%20Recognition) Outlines revenue recognition, especially for Vivint Smart Home's integrated products/services, and provides disaggregated revenue data - Vivint Smart Home's integrated smart home products and services are recognized as a single performance obligation over the subscriber's contract term, typically five years[52](index=52&type=chunk) Total Revenue by Segment (in millions) | Segment | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Texas | $3,686 | $3,145 | $8,235 | $7,857 | | East | $2,809 | $4,178 | $9,488 | $12,407 | | West/Services/Other | $978 | $1,175 | $3,244 | $3,395 | | Vivint Smart Home | $478 | $0 | $1,070 | $0 | | Total Revenue | $7,946 | $8,510 | $22,016 | $23,688 | Deferred Revenues (in millions) | Metric | September 30, 2023 | December 31, 2022 | | :-------------------- | :----------------- | :------------------ | | Deferred revenues from contracts with customers | $1,720 | $175 | - The increase in deferred revenues is primarily due to the acquisition of Vivint Smart Home[58](index=58&type=chunk) [Note 4 — Acquisitions and Dispositions](index=22&type=section&id=Note%204%20%E2%80%94%20Acquisitions%20and%20Dispositions) Details the **$2.6 billion** Vivint Smart Home acquisition, purchase price allocation, and recent dispositions of STP and Gregory facilities - NRG completed the acquisition of Vivint Smart Home on March 10, 2023, for **$2.6 billion** in cash, adding approximately two million subscribers and accelerating its consumer-focused growth strategy[60](index=60&type=chunk)[61](index=61&type=chunk) - The acquisition was funded by **$740 million** in newly issued Senior Secured First Lien Notes, **$635 million** from newly issued Series A Preferred Stock, approximately **$900 million** drawn from its Revolving Credit Facility and Receivables Securitization Facilities, and cash on hand[61](index=61&type=chunk)[65](index=65&type=chunk) Provisional Purchase Price Allocation for Vivint Smart Home (in millions) | Asset/Liability | Amount | | :-------------------------- | :----- | | Total Assets | $7,074 | | Goodwill | $3,494 | | Intangible assets, net | $2,770 | | Total Liabilities | $4,451 | | Vivint Smart Home Purchase Price | $2,623 | - Post-quarter-end, NRG closed the sale of its **44%** equity interest in STP for **$1.654 billion** net proceeds (November 1, 2023) and the Gregory natural gas facility for **$102 million** (October 2, 2023)[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 5 — Fair Value of Financial Instruments](index=26&type=section&id=Note%205%20%E2%80%94%20Fair%20Value%20of%20Financial%20Instruments) Provides fair value measurements for financial instruments, including debt and derivatives, detailing hierarchy and Level 3 unobservable inputs Fair Value of Long-term Debt (in millions) | Metric | September 30, 2023 (Carrying Amount) | September 30, 2023 (Fair Value) | December 31, 2022 (Carrying Amount) | December 31, 2022 (Fair Value) | | :----------------------------------- | :----------------------------------- | :------------------------------ | :----------------------------------- | :------------------------------ | | Convertible Senior Notes | $575 | $612 | $575 | $576 | | Other long-term debt | $11,137 | $10,028 | $7,523 | $6,432 | | Total long-term debt | $11,712 | $10,640 | $8,098 | $7,008 | Fair Value of Derivative Assets and Liabilities (in millions) as of September 30, 2023 | Category | Total Assets | Level 1 Assets | Level 2 Assets | Level 3 Assets | Total Liabilities | Level 1 Liabilities | Level 2 Liabilities | Level 3 Liabilities | | :----------------------------------- | :----------- | :------------- | :------------- | :------------- | :---------------- | :------------------ | :------------------ | :------------------ | | Investments in securities | $19 | $0 | $19 | $0 | N/A | N/A | N/A | N/A | | Nuclear trust fund investments | $834 | $550 | $144 | $0 | N/A | N/A | N/A | N/A | | Derivative instruments | $6,240 | $1,123 | $4,308 | $809 | $4,680 | $910 | $3,254 | $516 | - Level 3 positions, including physical and financial natural gas and power contracts in illiquid markets, FTRs, and Consumer Financing Program derivatives, are valued using discounted cash flow models with unobservable inputs like forward market prices, auction prices, collateral default rates, and credit loss rates[88](index=88&type=chunk)[89](index=89&type=chunk) - As of September 30, 2023, counterparty credit exposure (excluding RTOs/ISOs/exchanges) was **$1.7 billion**, with **$494 million** held as collateral, resulting in a net exposure of **$1.2 billion**[92](index=92&type=chunk) [Note 6 — Nuclear Decommissioning Trust Fund](index=32&type=section&id=Note%206%20%E2%80%94%20Nuclear%20Decommissioning%20Trust%20Fund) Details NRG's Nuclear Decommissioning Trust Fund assets for STP, classified as available-for-sale securities with gains/losses to liability - The Nuclear Decommissioning Trust Fund assets are for the decommissioning of NRG's **44%** interest in STP and are classified as available-for-sale securities[100](index=100&type=chunk) - All realized and unrealized gains or losses related to the trust fund are recorded to the Nuclear Decommissioning Trust liability, not net income, consistent with regulatory treatment[100](index=100&type=chunk) Nuclear Decommissioning Trust Fund Securities (in millions) | Metric | Fair Value (Sep 30, 2023) | Unrealized Gains (Sep 30, 2023) | Unrealized Losses (Sep 30, 2023) | Fair Value (Dec 31, 2022) | Unrealized Gains (Dec 31, 2022) | Unrealized Losses (Dec 31, 2022) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total | $893 | $390 | $37 | $838 | $346 | $36 | [Note 7 — Accounting for Derivative Instruments and Hedging Activities](index=32&type=section&id=Note%207%20%E2%80%94%20Accounting%20for%20Derivative%20Instruments%20and%20Hedging%20Activities) Describes accounting for derivative instruments, including energy, interest rate, and foreign exchange contracts, and their operational impact - NRG uses energy-related derivative instruments (extending through 2036), interest rate swaps (to hedge variable rate debt), and foreign exchange contracts (for Canadian business natural gas purchases) to manage market risks[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) - The Consumer Financing Program involves derivative liabilities for contractual future payment obligations to financing providers, adjusted to fair value through other income, net[107](index=107&type=chunk) Volumetric Underlying Derivative Transactions (in millions) | Category | Units | September 30, 2023 | December 31, 2022 | | :-------------------------- | :------ | :----------------- | :------------------ | | Natural Gas | MMBtu | 841 | 422 | | Power | MWh | 201 | 192 | | Consumer Financing Program | Dollars | 1,142 | 0 | | Interest | Dollars | 1,300 | 0 | Total Unrealized Mark-to-Market (Losses)/Gains - Commodities and Foreign Exchange (in millions) | Period | 2023 | 2022 | | :----------------------------------- | :----- | :----- | | Three months ended September 30 | $(54) | $(80) | | Nine months ended September 30 | $(1,909) | $2,900 | - For the nine months ended September 30, 2023, a **$1.9 billion** unrealized loss from open economic hedge positions was primarily due to decreases in natural gas and power prices in the East and West[116](index=116&type=chunk) [Note 8 — Impairments](index=36&type=section&id=Note%208%20%E2%80%94%20Impairments) Details 2022 impairment losses for Astoria redevelopment and PJM generating assets; no impairments recorded in nine months 2023 Impairment Losses (in millions) | Period | 2023 | 2022 | | :----------------------------------- | :----- | :----- | | Three months ended September 30 | $0 | $43 | | Nine months ended September 30 | $0 | $198 | - In 2022, **$43 million** was impaired for the Astoria redevelopment project, and **$150 million** was impaired for PJM generating assets and Midwest Generation goodwill due to revised market views and declining capacity prices[119](index=119&type=chunk)[120](index=120&type=chunk) [Note 9 — Long-term Debt and Finance Leases](index=37&type=section&id=Note%209%20%E2%80%94%20Long-term%20Debt%20and%20Finance%20Leases) Details NRG's long-term debt and finance leases, significantly increased by the Vivint Smart Home acquisition and new issuances Long-term Debt and Finance Leases (in millions) | Metric | September 30, 2023 | December 31, 2022 | Change | | :----------------------------------- | :----------------- | :------------------ | :----- | | Subtotal long-term debt (including current maturities) | $11,863 | $8,100 | $3,763 | | Total long-term debt and finance leases | $10,741 | $7,976 | $2,765 | - On March 9, 2023, NRG issued **$740 million** of **7.000%** Senior Secured First Lien Notes due 2033 to partially fund the Vivint Smart Home acquisition[123](index=123&type=chunk) - The Revolving Credit Facility was amended in February and March 2023, increasing commitments by **$645 million** and extending maturity for a portion to February 2028[125](index=125&type=chunk)[126](index=126&type=chunk) - The Receivables Facility was amended in June 2023, extending its termination date to June 21, 2024, and increasing aggregate commitments from **$1.0 billion** to **$1.4 billion**[128](index=128&type=chunk) - The Vivint Smart Home acquisition included the retention of **$2.7 billion** in non-recourse debt, comprising senior secured notes, senior notes, and a senior secured term loan[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Note 10 — Investments Accounted for Using the Equity Method and Variable Interest Entities, or VIEs](index=41&type=section&id=Note%2010%20%E2%80%94%20Investments%20Accounted%20for%20Using%20the%20Equity%20Method%20and%20Variable%20Interest%20Entities%2C%20or%20VIEs) Discusses equity method investments like Ivanpah and identifies NRG Receivables LLC as a consolidated Variable Interest Entity (VIE) - Equity method accounting for Ivanpah was suspended in 2022 due to project losses, including debt service and depreciation[148](index=148&type=chunk) - NRG Receivables LLC is a consolidated Variable Interest Entity (VIE) where NRG holds a controlling financial interest[149](index=149&type=chunk) Summarized Financial Information for Consolidated VIE (in millions) | Metric | September 30, 2023 | December 31, 2022 | | :----------------------------------- | :----------------- | :------------------ | | Accounts receivable and Other current assets | $1,796 | $2,108 | | Current liabilities | $153 | $152 | | Net assets | $1,643 | $1,956 | [Note 11 — Changes in Capital Structure](index=42&type=section&id=Note%2011%20%E2%80%94%20Changes%20in%20Capital%20Structure) Details changes in NRG's capital structure, including preferred stock issuance, increased share repurchase, and dividend increase Changes in Preferred and Common Stock (Shares) | Metric | Balance as of Dec 31, 2022 | Shares Issued/Repurchased | Balance as of Sep 30, 2023 | | :----------------------------------- | :------------------------- | :------------------------ | :------------------------- | | Preferred Stock Issued and Outstanding | 0 | 650,000 | 650,000 | | Common Stock Issued | 423,897,001 | 1,011,448 | 424,908,449 | | Treasury Stock | (194,335,971) | (1,322,141) | (195,571,596) | | Common Stock Outstanding | 229,561,030 | (224,177) | 229,336,853 | - In March 2023, NRG issued **650,000** shares of **10.25%** Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, generating **$635 million** net proceeds for the Vivint Smart Home acquisition[156](index=156&type=chunk) - The share repurchase authorization was increased to **$2.7 billion** through 2025, with **$50 million** executed in Q3 2023 and an additional **$150 million** through October 31, 2023; a **$950 million** accelerated share repurchase program is planned post-STP sale[152](index=152&type=chunk)[240](index=240&type=chunk) - The annual common stock dividend was increased to **$1.51** per share in Q1 2023 and will further increase by **8%** to **$1.63** per share in Q1 2024, targeting **7-9%** annual growth[154](index=154&type=chunk)[241](index=241&type=chunk) [Note 12 — Income/(Loss) Per Share](index=43&type=section&id=Note%2012%20%E2%80%94%20Income%2F%28Loss%29%20Per%20Share) Presents basic and diluted income/(loss) per common share, showing a significant decline to a loss for nine months 2023 Income/(Loss) per Share | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income/(loss) available for common stockholders (in millions) | $326 | $67 | $(722) | $2,316 | | Weighted average number of common shares outstanding — basic (in millions) | 230 | 235 | 230 | 238 | | Income/(loss) per weighted average common share — basic | $1.42 | $0.29 | $(3.14) | $9.73 | | Income/(loss) per weighted average common share — diluted | $1.41 | $0.29 | $(3.14) | $9.73 | - For the nine months ended September 30, 2023, **6 million** outstanding equity instruments were anti-dilutive and excluded from diluted loss per share computation[161](index=161&type=chunk) [Note 13 — Segment Reporting](index=44&type=section&id=Note%2013%20%E2%80%94%20Segment%20Reporting) Outlines NRG's segment structure (Texas, East, West/Services/Other, Vivint Smart Home, Corporate) and performance evaluation - NRG manages operations based on combined retail and wholesale generation businesses with a geographical focus, including Texas, East, West/Services/Other, Vivint Smart Home, and Corporate segments[162](index=162&type=chunk) - Segment performance is evaluated by the CEO using Adjusted EBITDA, free cash flow, capital allocation, and net income/(loss)[163](index=163&type=chunk) Net Income/(Loss) by Segment (in millions) | Segment | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Texas | $463 | $(481) | $1,532 | $1,052 | | East | $316 | $557 | $(1,187) | $2,083 | | West/Services/Other | $(168) | $92 | $(601) | $246 | | Vivint Smart Home | $(4) | $0 | $(66) | $0 | | Corporate | $(264) | $(101) | $(362) | $(1065) | | Total Net Income/(Loss) | $343 | $67 | $(684) | $2,316 | [Note 14 — Income Taxes](index=45&type=section&id=Note%2014%20%E2%80%94%20Income%20Taxes) Details NRG's income tax provision and effective tax rates, including a **$182 million** benefit on a pre-tax loss for nine months 2023 Income Tax Expense/(Benefit) and Effective Tax Rate (in millions, except rates) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income/(Loss) before income taxes | $408 | $83 | $(866) | $3,055 | | Income tax expense/(benefit) | $65 | $16 | $(182) | $739 | | Effective income tax rate | 15.9% | 19.3% | 21.0% | 24.2% | - The effective tax rate for the nine months ended September 30, 2023, approximated the statutory rate of **21%**, including state and foreign taxes[165](index=165&type=chunk) - As of September 30, 2023, NRG had a non-current tax liability of **$48 million** for uncertain tax benefits[167](index=167&type=chunk) [Note 15 — Related Party Transactions](index=45&type=section&id=Note%2015%20%E2%80%94%20Related%20Party%20Transactions) Summarizes NRG's material related party transactions, primarily services provided to equity method investments under O&M agreements Revenues from Related Parties (in millions) | Related Party | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Gladstone | $1 | $1 | $2 | $2 | | Ivanpah | $15 | $10 | $70 | $32 | | Midway-Sunset | $0 | $2 | $2 | $5 | | Total | $16 | $13 | $74 | $39 | [Note 16 — Commitments and Contingencies](index=46&type=section&id=Note%2016%20%E2%80%94%20Commitments%20and%20Contingencies) Outlines NRG's commitments, including first liens, and various contingencies such as environmental, consumer, patent, and contract lawsuits - NRG grants first liens on substantial property and assets to certain counterparties to reduce cash collateral and letters of credit required for out-of-the-money hedges[172](index=172&type=chunk) - The company is involved in environmental lawsuits (Sierra Club v. Midwest Generation LLC), consumer lawsuits (XOOM Energy, Direct Energy, Vivint Smart Home sales practices), patent infringement (Skybell v. Vivint Smart Home), and contract disputes (Alarm.com, STP sale)[175](index=175&type=chunk)[177](index=177&type=chunk)[181](index=181&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk) - Vivint Smart Home faces a **$190 million** jury verdict for deceptive sales practices in the CPI Security Systems lawsuit and a **$45 million** jury verdict for patent infringement in the Skybell lawsuit, both of which the company intends to appeal[183](index=183&type=chunk)[184](index=184&type=chunk) - NRG is also named in property damage and wrongful death claims related to Winter Storm Uri[188](index=188&type=chunk) [Note 17 — Regulatory Matters](index=48&type=section&id=Note%2017%20%E2%80%94%20Regulatory%20Matters) Highlights NRG's operations in a highly regulated industry, subject to federal, state, and provincial agencies, and ISO/RTO market rules - NRG operates in a highly regulated industry, subject to various federal, state, and provincial agencies (CFTC, FERC, NRC, PUCT) and market rules of ISO/RTOs[191](index=191&type=chunk) - The company has accrued a liability for California Station Power due to unfavorable litigation regarding consumption at its Encina power plant[193](index=193&type=chunk) [Note 18 — Environmental Matters](index=48&type=section&id=Note%2018%20%E2%80%94%20Environmental%20Matters) Details NRG's exposure to environmental laws (air, water, waste), noting compliance may require significant capital expenditures - NRG is subject to stringent environmental laws regarding air quality (GHG emissions, NAAQS, CSAPR, Regional Haze), water use (ELG), and waste management (coal combustion byproducts)[194](index=194&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - The EPA's proposed revisions to GHG emissions regulations for EGUs (May 2023) and CSAPR (March 2023) could lead to more stringent requirements and legal challenges[196](index=196&type=chunk) - NRG intends to comply with Effluent Limitations Guidelines by ceasing coal combustion by end of 2028 at most domestic units and installing controls by end of 2025 at Texas coal units[197](index=197&type=chunk) [Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=ITEM%202%20%E2%80%94%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Provides management's perspective on NRG's financial condition, operations, strategy, regulatory updates, and segment performance [Executive Summary](index=50&type=section&id=Executive%20Summary) NRG is a leading energy, smart home, and services company focused on maximizing stockholder value through reliable energy and solutions - NRG is a leading energy, smart home, and services company serving approximately **7.5 million** customers with **15 GW** of generation[200](index=200&type=chunk) - The company's strategy focuses on maximizing stockholder value by providing reliable energy and innovative home solutions, aiming for stable cash flow, strengthened earnings, and reduced risk[201](index=201&type=chunk) - Key strategic pillars include serving diverse customer needs, offering differentiated products (including smart home and renewable solutions), operational excellence, optimal portfolio hedging, and disciplined capital allocation[202](index=202&type=chunk) [Energy Regulatory Matters](index=50&type=section&id=Energy%20Regulatory%20Matters) NRG operates in a highly regulated environment, with recent PUCT actions in Texas and PJM capacity market rule revisions impacting operations - NRG is subject to regulation by CFTC, FERC, NRC, PUCT, other public utility commissions, and ISO/RTO market rules[204](index=204&type=chunk) - In Texas, the PUCT is implementing the Performance Credit Mechanism (PCM) and Dispatchable Reliability Reserve Service (DRRS) to improve wholesale market reliability, along with the Texas Energy Fund to incentivize dispatchable generation[207](index=207&type=chunk) - An appeal to the Supreme Court of Texas could potentially require repricing of ERCOT market prices during Winter Storm Uri[209](index=209&type=chunk) - PJM has delayed Base Residual Auctions for 2025/2026 to 2028/2029 delivery years and is proposing market reforms to capacity accreditation and Market Seller Offer Cap rules[215](index=215&type=chunk) - The EPA's proposed revisions to GHG emissions regulations and CSAPR could lead to more stringent requirements and legal challenges[222](index=222&type=chunk) [Significant Events](index=55&type=section&id=Significant%20Events) Highlights key 2023 events: Vivint Smart Home acquisition, STP/Gregory sales, Joliet retirement, financing activities, and dividend increase - NRG completed the acquisition of Vivint Smart Home on March 10, 2023, for **$2.6 billion**[233](index=233&type=chunk) - Post-quarter-end, NRG closed the sale of its **44%** equity interest in STP for **$1.654 billion** net proceeds (November 1, 2023) and the Gregory natural gas facility for **$102 million** (October 2, 2023)[232](index=232&type=chunk)[235](index=235&type=chunk) - The Joliet generating facility fully retired on September 1, 2023[234](index=234&type=chunk) - W.A. Parish Unit 8 returned to service in September 2023 after an extended forced outage since May 2022[239](index=239&type=chunk) - Share repurchase authorization increased to **$2.7 billion**, with a **$950 million** accelerated share repurchase program planned post-STP sale[240](index=240&type=chunk) - The annual common stock dividend was increased to **$1.51** per share in Q1 2023 and will further increase to **$1.63** per share in Q1 2024[241](index=241&type=chunk) [Trends Affecting Results of Operations and Future Business Performance](index=56&type=section&id=Trends%20Affecting%20Results%20of%20Operations%20and%20Future%20Business%20Performance) Refers to the 2022 Form 10-K for trends affecting operations and future business performance, with no new material trends in this report - Trends affecting results of operations and future business performance are consistent with those described in the Company's 2022 Form 10-K[243](index=243&type=chunk) [Changes in Accounting Standards](index=56&type=section&id=Changes%20in%20Accounting%20Standards) Refers to Note 2 for recent accounting developments, with no new material changes in accounting standards in this interim report - Recent accounting developments are discussed in Note 2, Summary of Significant Accounting Policies[244](index=244&type=chunk) [Consolidated Results of Operations](index=57&type=section&id=Consolidated%20Results%20of%20Operations) Q3 2023 revenue decreased, but net income increased; nine months saw revenue decline and a **$684 million** net loss due to increased costs Consolidated Results of Operations (in millions) | Metric | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | Change | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Change | | :----------------------------------- | :------------------------------ | :------------------------------ | :----- | :----------------------------- | :----------------------------- | :------- | | Total revenue | $7,946 | $8,510 | $(564) | $22,016 | $23,688 | $(1,672) | | Total operating costs and expenses | $7,385 | $8,376 | $(991) | $22,671 | $20,404 | $2,267 | | Operating Income/(Loss) | $561 | $156 | $405 | $(453) | $3,335 | $(3,788) | | Net Income/(Loss) | $343 | $67 | $276 | $(684) | $2,316 | $(3,000) | - The nine-month period saw a **$5,184 million** negative swing in mark-to-market for economic hedging activities within operating costs, contributing significantly to the net loss[246](index=246&type=chunk) [Management's Discussion of Results of Operations (Three Months)](index=58&type=section&id=Management%27s%20discussion%20of%20the%20results%20of%20operations%20for%20the%20three%20months%20ended%20September%2030%2C%202023%20and%202022) Q3 2023 economic gross margin increased by **$775 million**, driven by Texas and Vivint Smart Home, despite lower overall revenue Average On-Peak Power Price ($/MWh) | Region | 2023 | 2022 | Change % | | :-------------------- | :----- | :----- | :------- | | ERCOT - Houston | $183.49 | $128.61 | 43% | | ERCOT - North | $181.72 | $131.62 | 38% | | NY J/NYC | $40.86 | $109.43 | (63)% | | NEPOOL | $40.41 | $99.14 | (59)% | | COMED (PJM) | $39.38 | $101.00 | (61)% | | PJM West Hub | $43.27 | $110.99 | (61)% | Average Henry Hub Natural Gas Price ($/MMBtu) | Period | 2023 | 2022 | Change % | | :-------------------- | :----- | :----- | :------- | | Three months ended Sep 30 | $2.55 | $8.20 | (69)% | Economic Gross Margin by Segment (in millions) | Segment | 2023 | 2022 | Change | | :-------------------- | :----- | :----- | :----- | | Texas | $1,027 | $640 | $387 | | East | $426 | $407 | $19 | | West/Services/Other | $143 | $200 | $(57) | | Vivint Smart Home | $428 | $0 | $428 | | Total Economic Gross Margin | $2,022 | $1,247 | $775 | - Texas economic gross margin increased by **$387 million** due to higher net revenue rates (**$4.15/MWh**) and a **$225 million** decrease in cost to serve retail load, driven by lower supply costs and improved plant performance[255](index=255&type=chunk) - Selling, general and administrative costs increased by **$260 million**, with **$172 million** attributed to the Vivint Smart Home acquisition[269](index=269&type=chunk) [Management's Discussion of Results of Operations (Nine Months)](index=67&type=section&id=Management%27s%20discussion%20of%20the%20results%20of%20operations%20for%20the%20nine%20months%20ended%20September%2030%2C%202023%20and%202022) Nine months 2023 economic gross margin increased by **$1.7 billion**, driven by Vivint Smart Home and Texas, despite mark-to-market losses Average On-Peak Power Price ($/MWh) | Region | 2023 | 2022 | Change % | | :-------------------- | :----- | :----- | :------- | | ERCOT - Houston | $89.00 | $101.20 | (12)% | | ERCOT - North | $87.49 | $85.68 | 2% | | NY J/NYC | $39.43 | $98.34 | (60)% | | NEPOOL | $41.87 | $96.30 | (57)% | | COMED (PJM) | $33.05 | $76.82 | (57)% | | PJM West Hub | $38.39 | $87.44 | (56)% | Average Henry Hub Natural Gas Price ($/MMBtu) | Period | 2023 | 2022 | Change % | | :-------------------- | :----- | :----- | :------- | | Nine months ended Sep 30 | $2.69 | $6.77 | (60)% | Economic Gross Margin by Segment (in millions) | Segment | 2023 | 2022 | Change | | :-------------------- | :----- | :----- | :----- | | Texas | $2,622 | $1,859 | $763 | | East | $1,292 | $1,286 | $6 | | West/Services/Other | $393 | $461 | $(68) | | Vivint Smart Home | $968 | $0 | $968 | | Total Economic Gross Margin | $5,271 | $3,604 | $1,667 | - Texas economic gross margin increased by **$763 million** due to higher net revenue rates (**$6.00/MWh**) and a **$418 million** decrease in retail load cost, driven by lower supply costs and improved plant performance[287](index=287&type=chunk) - Mark-to-market for economic hedging activities resulted in a **$2.0 billion** loss in operating costs and expenses for the nine months ended September 30, 2023, a significant negative swing from a **$3.2 billion** gain in the prior year[291](index=291&type=chunk)[292](index=292&type=chunk) - Selling, general and administrative costs increased by **$510 million**, with **$375 million** attributed to the Vivint Smart Home acquisition[301](index=301&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity increased by **$1.3 billion** to **$4.1 billion** by September 30, 2023, with debt reduction plans and Vivint financing Total Liquidity (in millions) | Metric | September 30, 2023 | December 31, 2022 | Change | | :----------------------------------- | :----------------- | :------------------ | :----- | | Cash and cash equivalents | $401 | $430 | $(29) | | Total availability under Revolving Credit Facility and collective collateral facilities | $3,723 | $2,324 | $1,399 | | Total liquidity, excluding funds deposited by counterparties | $4,135 | $2,794 | $1,341 | - NRG plans to reduce debt by **$900 million** during 2023, with **$600 million** already executed by September 30, 2023, and an additional **$500 million** planned after the STP sale[318](index=318&type=chunk) - The Vivint Smart Home acquisition was funded by **$740 million** in new secured debt, **$650 million** in preferred stock, **$900 million** from credit facilities, and cash on hand[319](index=319&type=chunk) - As of September 30, 2023, NRG had **$2 million** in cash collateral outstanding and **$3.8 billion** in letters of credit to third parties primarily to support its market activities[331](index=331&type=chunk) Cash Flows (in millions) | Metric | Nine months ended Sep 30, 2023 | Nine months ended Sep 30, 2022 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | | Cash (used)/provided by operating activities | $(462) | $1,758 | $(2,220) | | Cash used by investing activities | $(2,631) | $(205) | $(2,426) | | Cash provided by financing activities | $1,590 | $855 | $735 | [NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740](index=81&type=section&id=NOLs%2C%20Deferred%20Tax%20Assets%20and%20Uncertain%20Tax%20Position%20Implications%2C%20under%20ASC%20740) NRG has significant NOL carryforwards, increased by Vivint Smart Home, and anticipates up to **$70 million** in 2023 net income tax payments - As of December 31, 2022, NRG had **$8.2 billion** in U.S. Federal NOL carryforwards and **$5.3 billion** in state NOL carryforwards, with an additional **$2.1 billion** federal and **$1.8 billion** state NOLs from the Vivint Smart Home acquisition[348](index=348&type=chunk) - The company anticipates net income tax payments of up to **$70 million** in 2023[348](index=348&type=chunk) - A tax-effected valuation allowance of **$228 million** was recorded as of September 30, 2023, for state and foreign NOL carryforwards deemed not realizable[352](index=352&type=chunk) [Guarantor Financial Information](index=81&type=section&id=Guarantor%20Financial%20Information) Provides summarized financial information for NRG Energy, Inc. and its guarantor subsidiaries, which jointly guarantee certain senior notes - NRG's outstanding registered senior notes are guaranteed by certain **100%** owned domestic subsidiaries (Guarantors) on a joint and several basis[353](index=353&type=chunk) - There are no restrictions on the ability of Guarantors to transfer funds to NRG[354](index=354&type=chunk) Summarized Statement of Operations (in millions) for NRG Energy, Inc. and Guarantors | Metric | Nine months ended Sep 30, 2023 | | :-------------------- | :----------------------------- | | Revenue | $18,590 | | Operating loss | $(288) | | Net Loss | $(511) | Summarized Balance Sheet Information (in millions) for NRG Energy, Inc. and Guarantors | Metric | September 30, 2023 | | :-------------------- | :----------------- | | Current assets | $6,780 | | Non-current assets | $14,323 | | Current liabilities | $7,471 | | Non-current liabilities | $11,385 | [Fair Value of Derivative Instruments](index=82&type=section&id=Fair%20Value%20of%20Derivative%20Instruments) NRG uses derivatives to mitigate market risks, with a net derivative asset decrease of **$2.0 billion** by September 30, 2023, due to settled trades - NRG uses derivative instruments to mitigate commodity price risk, interest rate risk, and currency exchange risk[356](index=356&type=chunk) - The net derivative asset was **$1.6 billion** as of September 30, 2023, a **$2.0 billion** decrease from December 31, 2022, driven by settled trades, fair value losses, and Vivint Smart Home contracts[361](index=361&type=chunk) - A **$0.50** per MMBtu increase or decrease in natural gas prices would result in an approximate **$1.8 billion** change in the net value of derivatives[362](index=362&type=chunk) [Critical Accounting Estimates](index=83&type=section&id=Critical%20Accounting%20Estimates) NRG's critical accounting estimates remain consistent with the 2022 Form 10-K, involving subjective judgments about uncertain matters - Critical accounting estimates involve difficult, subjective, and complex judgments about inherently uncertain matters, such as project success, legal challenges, and fair value of assets/liabilities[363](index=363&type=chunk)[365](index=365&type=chunk) - There have been no material changes to the company's critical accounting estimates since the 2022 Form 10-K[366](index=366&type=chunk) [Item 3 — Quantitative and Qualitative Disclosures About Market Risk](index=85&type=section&id=ITEM%203%20%E2%80%94%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Details NRG's exposure to commodity price, credit, liquidity, interest rate, and currency exchange risks, and their management [Commodity Price Risk](index=85&type=section&id=Commodity%20Price%20Risk) NRG manages commodity price risks using derivatives and a VaR model to estimate potential losses in its energy portfolio - NRG manages commodity price risk using derivative and non-derivative instruments to hedge variability in future cash flows from energy and fuel sales/purchases[369](index=369&type=chunk) - The company uses a Monte Carlo simulation-based VaR model to estimate potential losses in its energy portfolio, with a one-day holding period at a **95%** confidence interval for the forward **36 months**[369](index=369&type=chunk) VaR for NRG's Commodity Portfolio (in millions) | Metric | 2023 | 2022 | | :-------------------- | :----- | :----- | | VaR as of Sep 30 | $63 | $58 | | Three months ended Sep 30 (Average) | $64 | $44 | | Nine months ended Sep 30 (Average) | $66 | $45 | [Credit Risk](index=85&type=section&id=Credit%20Risk) NRG is exposed to counterparty and retail customer credit risk, with **$1.2 billion** net counterparty exposure as of September 30, 2023 - NRG's counterparty credit exposure (excluding RTOs/ISOs/exchanges and certain long-term agreements) was **$1.7 billion**, with **$494 million** in collateral, resulting in a net exposure of **$1.2 billion** as of September 30, 2023[372](index=372&type=chunk) Net Counterparty Credit Exposure by Credit Quality (as of Sep 30, 2023) | Category | % of Total | | :-------------------- | :--------- | | Investment grade | 56% | | Non-investment grade/non-rated | 44% | - Aggregate credit risk exposure for certain long-term contracts, primarily Renewable PPAs, was approximately **$1.0 billion** for the next five years as of September 30, 2023[377](index=377&type=chunk) - Retail customer credit risk is managed through established credit policies, portfolio monitoring, and credit mitigation measures like deposits or prepayment arrangements[378](index=378&type=chunk) [Liquidity Risk](index=87&type=section&id=Liquidity%20Risk) NRG faces liquidity risk from funding needs and asset/liability management, with potential for increased collateral if natural gas prices decline - Liquidity risk arises from funding needs and asset/liability management, with exposure to increased collateral posting if natural gas prices decline[380](index=380&type=chunk) - A **$0.50** per MMBtu decrease in natural gas prices could increase margin collateral posted by approximately **$1.2 billion**[381](index=381&type=chunk) [Interest Rate Risk](index=87&type=section&id=Interest%20Rate%20Risk) NRG mitigates interest rate risk from variable rate debt through interest rate swap agreements, including **$1.0 billion** for Vivint Term Loan - NRG mitigates interest rate risk from variable rate debt through interest rate swap agreements[382](index=382&type=chunk) - In Q1 2023, NRG entered into **$1.0 billion** of interest rate swaps for the Vivint Smart Home Term Loan and has **$300 million** outstanding for the Revolving Credit Facility[382](index=382&type=chunk) - A **1%** decrease in market interest rates would have increased the fair value of the company's long-term debt by **$848 million** as of September 30, 2023[383](index=383&type=chunk) [Currency Exchange Risk](index=87&type=section&id=Currency%20Exchange%20Risk) NRG is exposed to transactional and translation exchange rate risks, hedging Canadian natural gas purchases with forward contracts - NRG is exposed to transactional exchange rate risk, primarily from Canadian business natural gas purchases, and hedges a portion with foreign exchange forward contracts (**$566 million** notional as of Sep 30, 2023)[384](index=384&type=chunk) - A hypothetical **10%** appreciation in major currencies relative to the U.S. dollar would have decreased net income by **$23 million** as of September 30, 2023[385](index=385&type=chunk) [Item 4 — Controls and Procedures](index=87&type=section&id=ITEM%204%20%E2%80%94%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes - Disclosure controls and procedures were effective as of September 30, 2023[386](index=386&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[387](index=387&type=chunk) [Part II — Other Information](index=88&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1 — Legal Proceedings](index=88&type=section&id=ITEM%201%20%E2%80%94%20LEGAL%20PROCEEDINGS) Refers to Note 16, Commitments and Contingencies, for a discussion of material legal proceedings in which NRG was involved - Material legal proceedings are discussed in Note 16, Commitments and Contingencies[389](index=389&type=chunk) [Item 1A — Risk Factors](index=88&type=section&id=ITEM%201A%20%E2%80%94%20RISK%20FACTORS) No material changes to Risk Factors were reported compared to the previous quarterly report for the quarter ended March 31, 2023 - No material changes to Risk Factors were reported during the three months ended September 30, 2023, compared to the previous quarterly report[390](index=390&type=chunk) [Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=ITEM%202%20%E2%80%94%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Provides information on purchases of NRG's common stock during Q3 2023 under the publicly announced share repurchase authorization Common Stock Purchases (for the three months ended Sep 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) | | :----------------------------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | Month 1 (July 1 - July 31, 2023) | 1,322,141 | $37.82 | 1,322,141 | $2,650 | | Month 2 (Aug 1 - Aug 31, 2023) | 0 | $0 | 0 | $2,650 | | Month 3 (Sep 1 - Sep 30, 2023) | 0 | $0 | 0 | $2,650 | | Total at Sep 30, 2023 | 1,322,141 | $37.82 | 1,322,141 | N/A | - The company executed **1,322,141** share repurchases at an average price of **$37.82** per share in July 2023, under the **$2.7 billion** authorization[392](index=392&type=chunk) [Item 3 — Defaults Upon Senior Securities](index=88&type=section&id=ITEM%203%20%E2%80%94%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) No defaults upon senior securities occurred during the reporting period - No defaults upon senior securities occurred[393](index=393&type=chunk) [Item 4 — Mine Safety Disclosures](index=88&type=section&id=ITEM%204%20%E2%80%94%20MINE%20SAFETY%20DISCLOSURES) No events requiring mine safety disclosures were reported - No events requiring mine safety disclosures were reported[394](index=394&type=chunk) [Item 5 — Other Information](index=88&type=section&id=ITEM%205%20%E2%80%94%20OTHER%20INFORMATION) No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during Q3 2023 - No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter[395](index=395&type=chunk) [Item 6 — Exhibits](index=89&type=section&id=ITEM%206%20%E2%80%94%20EXHIBITS) Lists all exhibits filed as part of the Form 10-Q, including facility agreements, indentures, and certifications - The exhibits include various legal agreements related to financing, such as the Facility Agreement, Letter of Credit Facility Agreement, and Indenture, all dated August 29, 2023[397](index=397&type=chunk)[398](index=398&type=chunk) - Certifications from the Chief Executive Officer, Chief Financial Officer, and Corporate Controller are included[397](index=397&type=chunk)[401](index=401&type=chunk) [Signatures](index=90&type=section&id=SIGNATURES) [Report Signatures](index=90&type=section&id=SIGNATURES) Contains the signatures of NRG Energy, Inc.'s principal executive, financial, and accounting officers, certifying the report - The report is signed by Mauricio Gutierrez (Chief Executive Officer), Woo-Sung Chung (Chief Financial Officer), and Emily Picarello (Corporate Controller)[403](index=403&type=chunk)

Financial Data and Key Metrics Changes - NRG Energy reported adjusted EBITDA of $973 million for Q3 2023, a 103% increase from the same period last year, bringing year-to-date adjusted EBITDA to $2.438 billion, a 74% increase year-over-year [7][34][28] - The company raised and narrowed its full-year 2023 guidance for adjusted EBITDA to a range of $3.15 billion to $3.3 billion and for free cash flow before growth to $1.725 billion to $1.875 billion [34][41] Business Line Data and Key Metrics Changes - The Integrated Energy Business in Texas saw adjusted EBITDA increase by $356 million year-over-year, driven by higher gross margins and improved plant performance [31] - Vivint contributed $225 million in adjusted EBITDA, with a 9% revenue growth year-over-year, driven by a 7% increase in subscribers and improved retention [33][17] Market Data and Key Metrics Changes - The Texas market experienced record demand during the hottest summer, with the power grid performing well despite high demand [12] - Retail supply strategies provided predictable supply costs, enhancing performance during volatile load and price conditions [14] Company Strategy and Development Direction - NRG is focusing on behind-the-meter load management opportunities for homes and businesses, with a target to optimize existing customer peak demand and expand Virtual Power Plant services [6][21] - The company is committed to a capital allocation framework of 80% return on capital and 20% growth, with plans for significant share repurchases and debt reduction [10][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of margin expansion and operational improvements, indicating a strong outlook for 2024 and beyond [60][41] - The company is monitoring changes in market design and regulatory conditions in ERCOT to inform future decisions regarding asset acquisitions and development [68][106] Other Important Information - NRG is raising its 2023 share repurchase target by 15% to $1.5 billion, with $200 million completed year-to-date and plans for an accelerated share repurchase program [10][39] - The company is also focusing on integrating Vivint, with an increased target for 2023 from $60 million to $75 million [9] Q&A Session Summary Question: Can you unpack the $160 million in improved operations and margins in the 2024 EBITDA guidance? - Management indicated that the $160 million is primarily due to margin expansion across the business, driven by revenue management and cost of supply improvements [55][60] Question: What is the strategy regarding new builds in ERCOT? - Management is evaluating the economics of owning versus renting generation assets and is awaiting regulatory changes to inform future decisions [66][68] Question: Can you discuss the buyback program and its impact on 2024? - Management confirmed that the accelerated share repurchase program will be executed efficiently, with completion expected in the first quarter of next year, allowing for continued repurchase momentum into 2024 [72][75] Question: How is the customer mix evolving? - Management stated that there is no significant change in customer mix, with new customers taking more products and maintaining high credit quality [119]

1 Although NRG believes that its expectations are reasonable, it can give no assurance that these expectations will prove to be correct, and actual results may vary materially. Factors that could cause actual results to differ materially from those contemplated herein include, among others, general economic conditions, including increasing interest rates and rising inflation, hazards customary in the power industry, weather conditions and extreme weather events, competition in wholesale power, gas and smart ...

Commission File Number: 001-15891 NRG Energy, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: June 30, 2023 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 41-1724239 (I.R.S. Employ ...

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------|-------|-------|-------|------------------------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NRG Energy Inc. | | | | | | | | | | | Second Quarter 2023 Earnings Presentation August 08, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | \| NRG 2Q23 Earnings | | | ...

Draft 4 04/21/2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: March 31, 2023 ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 001-15891 NRG Energy, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 41-17 ...

Strong Retail Performance – Ending Quarter at 7.4 MM Home Customers 1 The cash impact of deferred revenue is the net change in the balance sheet from capitalizing proceeds received from installation and equipment and then recognizing those proceeds as revenue on a straight-line basis over the expected period of benefit; 2 Amortization of customer fulfillment costs, which are included in the calculation of Adjusted EBITDA, is the P&L recognition of capitalized contract costs related to the sale and installat ...

NRG Energy, Inc. (NYSE:NRG) Q1 2023 Earnings Conference Call May 4, 2023 9:00 AM ET Company Participants Kevin Cole - Treasurer & Head of Investor Relations Mauricio Gutierrez - President & Chief Executive Officer Alberto Fornaro - Chief Financial Officer Conference Call Participants Julien Dumoulin-Smith - Bank of America Operator Good day and thank you for standing by. Welcome to the NRG Energy First Quarter 2023 Earnings Call. At this time, all participants are in listen-only mode. After the speakers' pr ...