NRG Energy (NRG) 10-K risk factor changes: FY2021 vs FY2020

NRG's risk factors are grouped into the following categories: (i) Risks Related to [removed: Public Health Threats; (ii) Risks Related to] the Acquisition of Direct Energy; [removed: (iii)] [added: (ii)] Risks Related to the Operation of NRG's Business; [removed: (iv)] [added: (iii)] Risks Related to Governmental Regulation and Laws; [added: (iv) Risks Related to Public Health Threats;] and (v) Risks Related to [removed: the Company's Indebtedness and] Economic and Financial Market [removed: Conditions.][added: Conditions, and the Company's Indebtedness.]

For example, the ongoing global COVID-19 pandemic [removed: has] negatively impacted local and global economies, disrupted financial markets and international trade, resulted in increased unemployment levels and impacted local and global supply chains, all of which negatively impact the electricity industry and the Company’s business.

[removed: In addition, federal,] [added: Federal,] state, and local governments [removed: have] [added: had] implemented various mitigation measures, including travel restrictions, border closings, restrictions on public gatherings, shelter-in-place orders and limitations on business activities.

Although the operations of the Company are considered an essential service, some of these measures [removed: have] [added: may] adversely [removed: impacted] [added: impact] the ability of NRG employees, contractors, suppliers, customers, and other business partners to conduct [removed: business activities.]

- the potential impairment of relationships with employees and [removed: partners as a result of any integration of new management personnel;][added: partners;]

- the effect of any government regulations [removed: which] [added: that] relate to the business acquired.

- changes in generation capacity in the Company’s markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, the continued operation of uneconomic power plants due to state subsidies, [added: retirement of existing plants] or [removed: additional] [added: addition of new] transmission capacity;

Additionally, increases in wholesale costs to retail customers may cause additional customer defaults or increased customer attrition, or may be [removed: limited] [added: impacted] by regulatory rules.

Further, [added: in] low natural gas [removed: prices can cause] [added: price environments,] natural gas [removed: to] [added: can] be the more cost-competitive fuel compared to coal for generating electricity.

[removed: Because the] [added: The] Company enters into guaranteed supply contracts to provide for the amount of coal needed to operate its base load coal-fired generating facilities, the Company may experience periods where it holds excess amounts of coal if fuel pricing results in the Company reducing or idling coal-fired generating facilities.

As a result, financial performance depends on the ability to obtain adequate supplies of power and gas from third parties at prices below the prices [removed: it] [added: NRG] charges its customers.

Competitors may offer different products, lower prices, and other [removed: incentives,] [added: incentives] which may attract customers away from the Company.

NRG's competitors may be able to respond more quickly to new laws or regulations or emerging technologies, or [removed: to] devote greater resources to marketing of retail [removed: power] [added: energy] than NRG can.

NRG also buys significant quantities of [removed: electricity] [added: energy] and fuel on a short-term or spot market basis.

Further, if [removed: any of NRG's facilities experience unplanned outages or if] retail customers use more power or gas than expected, [added: or if any of NRG's facilities experience unplanned outages,] the Company may be required to procure additional power or gas at spot market prices to fulfill contractual commitments.

The ongoing operation of NRG's facilities involves risks that include the breakdown or failure of equipment or processes, performance below expected levels of output or efficiency and the inability to transport the Company's [removed: product] [added: products] to its customers in an efficient manner due to a lack of transmission capacity.

Unplanned outages typically increase the Company's operation and maintenance expenses and may reduce the Company's revenues as a result of selling fewer MWh or [added: incurring] non-performance penalties [removed: or] [added: and/or] require NRG to incur significant costs as a result of [removed: running one of its higher cost units or] obtaining replacement power from third parties in the open market [added: or running one of its higher cost units] to satisfy the Company's forward power sales obligations.

[removed: There is a risk that mistakes, mis-operations,] or [removed: actions taken by these third-parties could be attributed to NRG, including the risk of investigation or] penalties being assessed to NRG in connection with the services it offers, or that regulators could question whether NRG had the appropriate safeguards in place.

NRG cannot provide any assurance that its insurance coverage will continue to be available at all or [added: at rates or on terms similar to those presently available.]

[removed: Many of] NRG's facilities require periodic maintenance and repair.

If the Company is unable to enter into replacement [removed: fuel or fuel transportation] purchase agreements or other replacement hedging agreements, the Company would be exposed to market price volatility and the risk that fuel and transportation may not be available during certain periods at any price.

[removed: If transmission or distribution is disrupted, including by force majeure events, or if the transmission or distribution] infrastructure is inadequate, NRG's ability to deliver power may be adversely impacted.

NRG relies on storage, transportation assets and suppliers, which [removed: they do] [added: it does] not own or control, to deliver natural gas.

The Company's ability to provide natural gas for its present and projected [removed: sales] [added: customers] will depend upon its suppliers' ability to obtain and deliver supplies of natural gas, as well as NRG's ability to acquire supplies directly from new sources.

[removed: As a result of the acquisition of Direct Energy, the] [added: The] Company owns Direct Energy Regulated Services, which serves as a regulated rate supplier for residential and commercial energy customers in portions of the province of Alberta.

[added: Failure to achieve these anticipated benefits] could result in increased costs or decreases in the amount of expected revenues and could adversely affect NRG's future business, financial condition, operating results and prospects.

Further, the integration and consolidation of acquisitions requires substantial human, financial and other [removed: resources and, ultimately, the Company's acquisitions may not be successfully integrated.]

As part of these initiatives, the Company may be liable to customers for any damage caused to customers’ homes, facilities, belongings or property during the installation of Company products and systems, such as [removed: mass market] [added: home] back-up generators and residential HVAC system repairs, installation and replacements.

In addition, shortages of skilled labor for Company projects could significantly delay a [removed: project or otherwise increase its costs.]

As of December 31, [removed: 2020,] [added: 2021,] approximately [removed: 23%] [added: 13%] of NRG's employees were covered by collective bargaining agreements.

[added: Advances in these or other technologies could reduce the costs] of power production to a level below what the Company has currently forecasted, which could adversely affect its cash flows, results of operations or competitive position.

NRG's business is subject to extensive U.S. federal, state and local laws and foreign [removed: and provincial] laws.

Compliance with, or changes to, the requirements under these legal [removed: and regulatory] regimes may cause the Company to incur significant additional costs, reduce the Company's ability to hedge exposure or to sell retail power within certain states or to certain classes of retail customers, or restrict the Company’s marketing practices, its ability to pass through costs to retail customers, or its ability to compete on favorable terms with competitors, including the incumbent utility.

Except for ERCOT generation facilities and power marketers, all of NRG's non-qualifying facility generating [added: companies and power marketing affiliates in the U.S. make sales of electricity in interstate commerce and are public utilities for purposes of the FPA.]

If NRG's generating and power marketing companies were to lose their market-based rate authority, such companies would be required to obtain FERC's acceptance of a cost-of-service rate schedule and could become subject to the accounting, [removed: record-keeping, and reporting requirements that are imposed on utilities with cost-based rate schedules.][added: record-]

The integration of the Capacity Performance product into the PJM market [removed: and the Pay-for-Performance mechanism in ISO-NE] could lead to substantial changes in capacity income and non-performance penalties, which could have a material adverse effect on NRG’s results of operations, financial condition and cash flows.

[removed: Both ISO-NE and] PJM [removed: operate] [added: operates] a pay-for-performance model where capacity payments are modified based on real-time generator performance.

This equipment is also likely to require periodic [removed: upgrading and improvement.]

See also Item 15 *—* Note [removed: 24,] [added: 23,] *Commitments and Contingencies*, *Nuclear Insurance*.

NRG's GHG emissions for [removed: 2020] [added: 2021] can be found in Item 1, *Business —Environmental Regulatory Matters.* GHG regulation, at the state or federal level, could increase the cost of electricity generated by fossil fuels, and such increases could reduce demand for the power NRG generates and markets.

There is a risk that mistakes, mis-operations, or actions taken by these third-parties could be attributed to NRG, including the risk of investigation

If transmission or distribution is disrupted, including by force majeure events, or if the transmission or distribution

resources and, ultimately, the Company's acquisitions may not be successfully integrated.

project or otherwise increase its costs.

keeping, and reporting requirements that are imposed on utilities with cost-based rate schedules.

In addition, in some of these markets, interested parties have proposed material market design changes.

upgrading and improvement.

The consumer privacy landscape continues to experience momentum for greater privacy protection and reform at the state and federal level in response to precedents set forth by the General Data Protection Regulation (the "GDPR") and the California Consumer Privacy Act (the "CCPA").

The development and evolving nature of domestic and international privacy regulation and enforcement could impact and potentially limit how NRG processes personally identifiable information.

The 2020 enactment of the CCPA granted certain data access rights to California residents with respect to their personal information, and with the forthcoming amendments to the CCPA supported by the California Privacy Rights Act (the “CPRA”), effective January 1, 2023, California residents will have increased access rights (including the right to limit the use and disclosure of sensitive personal information), which will be enforced by a new state privacy regulator, resulting in more scrutiny of business practices and disclosures.

Additional states including Virginia, Colorado, and Nevada have similarly adopted enhanced data privacy legislation patterned after the standards set forth by CCPA, including broader data access rights, with Virginia going a step further requiring businesses to perform data protection assessments for certain processing activities.

business activities.

- NRG's ability to mitigate forced outage risk;

at rates or on terms similar to those presently available.

At times, NRG may rely on a single customer or a few customers to purchase all or a significant portion of a facility's output, in some cases under long-term agreements that account for a substantial percentage of the anticipated revenue from a given facility.

In many cases for renewable generation, these purchases are specific to a facility, which at times may be in the early stages of development.

If the Company was unable to enter into replacement PPAs, the Company would sell its plants' power at market prices.

Failure to achieve these anticipated benefits

Advances in these or other technologies could reduce the costs

companies and power marketing affiliates in the U.S. make sales of electricity in interstate commerce and are public utilities for purposes of the FPA.

In addition, in some of these markets, interested parties have proposed material market design changes, including the elimination of a single clearing price mechanism, as well as proposals to reinstate the vertical monopoly utility of the markets or require divestiture by generating companies to reduce their market share.

See also Item 1 *—* *Regulatory Matters — Nuclear Operations — Decommissioning Trusts* and Item 1 *— Environmental Matters — Federal Environmental Initiatives — Nuclear Waste* for further discussion.

There has been increased public attention regarding the use of personal information and data transfers, accompanied by legislation and regulations intended to strengthen data protection, information security and consumer and personal privacy.

The law in these areas continues to develop and the changing nature of privacy laws in the United States, Europe and elsewhere could impact how NRG processes personal information of employees, customers, and others.

Effective January 1, 2020, the California Consumer Privacy Act of 2018 (the “CCPA”) grants certain rights to California residents with respect to their personal information, and the California electorate recently approved Proposition 24, the California Privacy Rights Act (the “CPRA”), which will replace the CCPA effective January 1, 2023 and grant additional rights to California residents as well as create a new state privacy regulator.

The General Data Protection Regulation, adopted in the European Union, requires companies to satisfy strict new requirements regarding the handling of personal information, including its use, protection and the ability of persons whose data is processed to exercise a number of rights with respect to their personal information, such as correcting or requiring deletion of data about themselves.

The CCPA requires companies to make new disclosures to consumers about such companies’ data collection, use, and sharing practices and inform consumers of their personal information rights such as deletion rights, allows consumers to opt out of data sales to third parties, and provides a new cause of action for data breaches.

The CPRA will add more disclosure obligations (including an obligation to disclose retention periods or criteria for categories of personal information), grant consumers additional rights (including rights to correct their data, limit the use and disclosure of sensitive personal information, and opt out of the sharing of personal information for certain targeted behavioral advertising purposes), which will likely result in greater regulatory activity and enforcement in the privacy area.

In some cases, these countries have greater

The combination of lower demand for power and increased supply of natural gas has put downward price pressure on wholesale energy markets in general, further impacting NRG’s energy marketing results.

- NRG's ability to mitigate forced outage risk for units subject to capacity performance requirements in PJM, performance incentives in ISO-NE, and scarcity pricing in ERCOT;

- Executive Summary, including the business environment in which the Company operates, a discussion of regulation, weather, competition and other factors that affect the business, [removed: a Transformation Plan update,] and other significant events that are important to understanding the results of operations and financial condition;

- Results of operations for the years ended December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] including an explanation of significant differences between the periods in the specific line items of NRG's Consolidated Statements of Operations;

- Financial condition addressing credit ratings, liquidity position, sources and uses of cash, capital resources and requirements, [added: contractual obligations and market] commitments, and off-balance sheet arrangements; and

- Critical accounting [removed: policies] [added: estimates] that are most important to both the portrayal of the Company's financial condition and results of operations, and require management's most difficult, [removed: subjective] [added: subjective,] or complex judgments.

As you read this discussion and analysis, refer to NRG's Consolidated Statements of Operations in this Form 10-K, which present the results of the Company's operations for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and also refer to Item 1 to this Form 10-K for more detail discussion about the Company's business.

A discussion and analysis of fiscal year [removed: 2018] [added: 2019] may be found in Part II, Item 7 *—* Management's Discussion and Analysis of Financial Condition and Results of Operations of [removed: Exhibit 99.1 to] the [removed: Current] [added: Annual] Report on Form [removed: 8-K, filed on May 7, 2020, which provides retrospectively revised historical financial information to correspond with] [added: 10-K for] the [removed: Company's current segment structure.][added: fiscal year ended December 31, 2020.]

NRG brings the power of energy to customers by producing and selling energy and related products and [removed: services in major competitive power and gas markets] [added: services, nation-wide] in the U.S. and Canada in a manner that delivers value to all of NRG's stakeholders.

The industry dynamics and external influences affecting the Company, its businesses, and the retail energy and power generation industry in [removed: 2020] [added: 2021] and for the future medium term include:

[removed: *Commodities Markets*] [added: *Market Dynamics*] — The price of natural gas plays an important role in setting the price of electricity in many of the regions where NRG operates.

In [removed: 2020,] [added: 2021,] the average natural gas [removed: prices] [added: price] at Henry Hub was [removed: 21% lower] [added: 85% higher] than in [removed: 2019.][added: 2020.]

[removed: The low-priced] [added: Coal] commodity [removed: environment has] [added: prices increased significantly in 2021, which is partly due to supply chain disruptions, as further discussed below in *Global Supply Chain Disruptions*, as well as] stressed coal equities, [removed: leading] [added: which has led] coal suppliers to file for bankruptcy protection, launch debt exchanges, rationalize assets, and cut production.

The following table summarizes average on-peak power prices for each of the major markets in which NRG operates for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019.][added: 2020.]

| | | | Year Ended December [removed: 31] [added: 31,] | | | | | | | | | | | | [removed: 2020] [added: 2021] vs [removed: 2019] [added: 2020] | | |

| Region | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | Change % | | |

| ERCOT - Houston(a) | | | $ | [removed: 27.65] [added: 192.17] | | | | | $ | [removed: 51.44] [added: 27.65] | | | | | [removed: (46)] [added: 595] | | % |

| ERCOT - North(a) | | | [removed: 25.85] [added: 189.05] | | | | | | [removed: 50.80] [added: 25.85] | | | | | | [removed: (49)] [added: 631] | | % |

| NY J/NYC(b) | | | [removed: 24.55] [added: 48.71] | | | | | | [removed: 33.73] [added: 24.55] | | | | | | [removed: (27)] [added: 98] | | % |

| NEPOOL(b) | | | [removed: 26.52] [added: 51.81] | | | | | | [removed: 34.89] [added: 26.52] | | | | | | [removed: (24)] [added: 95] | | % |

| COMED (PJM)(b) | | | [removed: 22.48] [added: 41.33] | | | | | | [removed: 28.28] [added: 22.48] | | | | | | [removed: (21)] [added: 84] | | % |

| PJM West Hub(b) | | | [removed: 24.49] [added: 45.67] | | | | | | [removed: 30.85] [added: 24.49] | | | | | | [removed: (21)] [added: 86] | | % |

[removed: | West/Other | | | | | | | | | | | | | | | | | |][added: West/Services/Other]

| CAISO - SP15(b) | | | [removed: 38.15] [added: 53.53] | | | | | | 38.15 | | | | | | [removed: —] [added: 40] | | % |

| MISO - Louisiana Hub(b) | | | [removed: 24.43] [added: 43.05] | | | | | | [removed: 30.58] [added: 24.43] | | | | | | [removed: (20)] [added: 76] | | % |

The following table summarizes average realized power prices for [removed: each region in which NRG operates,] [added: NRG,] including the impact of settled hedges, for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

| [removed: East] [added: East(a)] | | | $ | [removed: 34.92] [added: 36.33] | | | | | $ | [removed: 34.37] [added: 34.92] | | | | | [removed: 2] [added: 4] | | % |

| [removed: West/Other] [added: West/Services/Other] | | | [removed: 34.80] [added: 43.63] | | | | | | [removed: 32.41] [added: 34.80] | | | | | | [removed: 7] [added: 25] | | % |

(a) Average Realized Power Price reflects energy sales from the generation fleet, [removed: omitting] [added: including] sales to the retail component of the East Segment.

Intercompany financial transactions hedging generation with the retail operations make up [removed: $12.18/MWh] [added: ($8.03)/MWh] in the year ended December 31, [removed: 2020] [added: 2021] and [removed: $5.40/MWh] [added: $12.18/MWh] in the year ended December 31, [removed: 2019.][added: 2020]

The Company became an early supporter of the Task Force on Climate-related Financial Disclosures ("TCFD") recommendations after they were issued in 2017, published a TCFD mapping disclosure in December 2020 and [removed: will issue] [added: issued] a stand-alone TCFD report in [added: December] 2021.

According to ERCOT, [removed: Inc., 36%] [added: 39%] of [removed: 2020] [added: 2021] energy consumption in the ERCOT market was generated from carbon emission-free resources, with wind power contributing [removed: 23%.][added: 24%.]

*Weather* — Weather conditions in the regions of the U.S. in which NRG [removed: does] [added: conducts] business influence the Company's financial results.

For discussion of the recent weather event in Texas, see [removed: *Other Significant] [added: *Significant] Events - Extreme Weather Event in Texas During February 2021* [added: *and expected Uplift Securitization Proceeds*] below.

*Environmental Matters, Regulatory Matters and Legal Proceedings* — Details of environmental matters are presented in Item 15 — Note [removed: 26,] [added: 25,] *Environmental Matters*, to the Consolidated Financial Statements and Item 1 *—* Business, *Environmental Matters*.

Details of regulatory matters are presented in Item 15 — Note [removed: 25,] [added: 24,] *Regulatory Matters*, to the Consolidated Financial Statements and Item 1 *—* Business, *Regulatory Matters*.

Details of legal proceedings are presented in Item 15 — Note [removed: 24,] [added: 23,] *Commitments and Contingencies*, to the Consolidated Financial Statements.

[removed: Other Significant] [added: Significant] Events

The following [removed: additional] significant events occurred during [removed: 2020] [added: 2021] and through the filing [removed: date:][added: date, as further described within this Management's Discussion and Analysis and the consolidated financial statements:]

*Extreme Weather Event in Texas During February [removed: 2021*][added: 2021 and expected Uplift Securitization proceeds*]

During February 2021, Texas experienced unprecedented cold temperatures for a prolonged [removed: duration,] [added: duration as a result of Winter Storm Uri,] resulting in a power emergency, blackouts, and an estimated all-time peak demand of 77 [removed: GWs] [added: GW] (without load shed).

On January 5, 2021, the Company acquired Direct Energy, [added: which had been] a North American subsidiary of [removed: Centrica plc.][added: Centrica.]

NRG Energy, Inc., or NRG or the Company, is a consumer services company built on dynamic retail brands.

NRG sells power, natural gas, home and power services, and develops innovative, sustainable solutions, predominately under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy.

The Company has a customer base that includes approximately 6 million Home customers as well as commercial, industrial, and wholesale customers, supported by approximately 18,000 MW of generation as of December 31, 2021.

NRG may experience impacts to gross margins due to significant, rapid changes in current natural gas prices and the lag in our ability to make a corresponding adjustment to the retail rates we charge customers on term and month to month contracts.

The Company hedges its load commitments in order to mitigate the impact of changes in commodity prices, and as a result, these gross margin impacts would be realized in future periods until we are able to make the corresponding adjustments to the retail customer rates.

The average on-peak power prices increased significantly in Texas due to the impact from Winter Storm Uri.

The average on-peak power prices increased in East and West/Services/Other due to higher natural gas prices.

| Segment | | | 2021 | | | | | | 2020 | | | | | | Change % | | |

The average realized power prices increased less than average on peak power prices for the year ended December 31, 2021, as compared to the same period in 2020, due to the Company's multi-year hedging program impacting average realized power prices, while on peak power prices increased due to increased natural gas prices and warmer June temperatures in California.

*Global Supply Chain Disruptions —* There are currently global supply chain disruptions impacting natural gas, coal and other fuels and materials necessary for the production and sale of electricity to our retail customers.

These supply chain disruptions are due in part to increased demand driven by a number of factors outside the Company's control including the COVID-19 pandemic, labor shortages and extreme weather events in the U.S. These factors are impacting the dispatch of generation facilities, as well as the costs to serve our retail customers.

The Company expects supply chain disruptions will continue throughout the remainder of 2022.

We are working closely with our suppliers and customers to minimize any potential adverse impacts of these events.

We will continue to actively monitor all direct and indirect potential impacts of the supply chain disruptions, and will seek to mitigate and minimize their impact on our business.

*Financing Activities*

On August 23, 2021, the Company issued $1.1 billion of aggregate principal amount at par of 3.875% senior notes due 2032 (the "2032 Senior Notes").

The 2032 Senior Notes are senior unsecured obligations of NRG and are guaranteed by certain of its subsidiaries.

During the year ended December 31, 2021, the Company redeemed $1.9 billion in aggregate principal of its Senior Notes for $1.9 billion using the proceeds of the 2032 Senior Notes and cash on hand.

The Texas Legislature passed House Bill 4492, which among other things, authorized ERCOT to obtain $2.1 billion of financing to distribute to LSEs that were charged and paid to ERCOT exceptionally highly priced ORDPA and ancillary service costs during Winter Storm Uri.

Based on LSE-level detail published by the PUCT on December 7, 2021, NRG will receive $689 million from ERCOT.

During the year ended December 31, 2021, Winter Storm Uri's pre-tax financial impact to the Company was a loss of $380 million, which reflects the recovery of $689 million of cost of operations as a result of the proceeds we will receive from the Uplift Securitization discussed above, with receipt expected to occur during the second quarter of 2022.

The Company continues to pursue additional mitigants including, but not limited to, customer bad debt mitigation, counterparty default recovery, and additional ERCOT default recovery.

*Limestone Extended Outage*

In early July 2021, Limestone Unit 1 came offline as a result of damage to the duct work associated with the flue gas desulfurization system.

Based on management's current assessment of necessary remediation efforts, Limestone Unit 1 is expected to remain on an outage until the second quarter of 2022.

*PJM Base Residual Auction results and Planned Retirement of 1,600 MWs of PJM Coal Capacity*

During the second quarter of 2021, the results of the PJM Base Residual Auction for the 2022/2023 delivery year were released, leading the Company to announce the near-term retirement of a significant portion of its PJM coal generating assets in June 2022.

On July 30, 2021, PJM identified reliability impacts resulting from the proposed deactivation of one of those assets, Indian River Unit 4.

On August 27, 2021 the Company notified PJM that it would continue operations at Indian River Unit 4 until the reliability upgrades identified by PJM were completed, provided that the unit receives a satisfactory and compensatory 'reliability must run' arrangement.

The Company recorded impairment losses of $271 million and $35 million on the PJM generating assets and Midwest Generation goodwill, respectively, in connection with the decline in PJM capacity prices and the near-term retirement dates of certain assets.

See Item 15 *—* Note 11, *Asset Impairments* to the Consolidated Financial Statements for further discussion.

The Company is continuing to evaluate the viability of the remaining PJM generating assets.

NRG recognized a gain on the sale of $17 million, including cash disposed of $7 million.

In December 2021, the Company's board of directors authorized the Company to repurchase $1.0 billion of its common stock.

Through February 24, 2022, an additional $82 million of share repurchases were executed at an average price of $40.26 per share, including $6 million of equivalent shares purchased in lieu of tax withholdings on equity compensation issuances.

The total GW entered into through PPAs may be impacted by contract terminations when they occur.

COVID-19

While the pandemic presented risks, as further described in Part II, Item 1A — Risk Factors of this Form 10-K, to the Company’s business, there was not a material adverse impact on the Company’s results of operations for the years ended December 31, 2021 and 2020.

| Contract amortization | | | (30) | | | | | | — | | | | | | (30) | | |

| Cost of fuel | | | 1,844 | | | | | | 851 | | | | | | (993) | | |

- GenOn Energy, Inc.

NRG is an integrated power company built on dynamic retail brands with diverse generation assets.

As of December 31, 2020, the Company sold energy, services, and innovative, sustainable products and services directly to retail customers under the brand names NRG, Reliant, Green Mountain Energy, Stream, and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation.

For discussion of COVID-19 related considerations refer to Item 1 *— Business.*

If long-term gas prices increase, the Company is likely to encounter higher realized energy prices, leading to higher energy revenues as lower priced hedge contracts mature and are replaced by contracts with higher gas and power prices.

This impact is partially offset by the retail operations, as NRG's retail gross margins have historically decreased as natural gas prices increase.

NRG's retail gross margins have historically improved as natural gas prices decline.

This would be partially offset by lower realized energy prices, leading to lower energy revenues as higher priced hedge contracts mature and are replaced by contracts with lower gas and power prices.

To further mitigate this impact, NRG may increase its percentage of coal and nuclear capacity sold forward using a variety of hedging instruments, as described under the heading "Energy-Related Commodities" in Item 15 — Note 6, *Accounting for Derivative Instruments and Hedging Activities,* to the Consolidated Financial Statements.

If multiple parties withdraw from the market, liquidity could be challenged in the short term.

Inventory overhang will be utilized to offset production losses.

Coal prices are typically affected by the price of natural gas.

ERCOT power prices decreased for the year ended December 31, 2020 as compared to 2019 primarily due to the lower power prices in summer and lower gas prices in the first half of the year.

Power prices in the East and West/Other decreased for the year ended December 31, 2020 as compared to 2019 due to lower prices associated with lower demand due to COVID-19.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

The average realized power prices were relatively stable year over year due to the Company's hedging program.

In the United States, the current Administration has stated that limiting climate change is one of its top priorities.

In its early days, the Administration issued an Executive Order on "Tackling the Climate Crisis at Home and Abroad." This included commitments to reset the United States' greenhouse gas emission reduction targets under the Paris Climate Agreement, integrate environmental justice considerations into all aspects of its climate and environmental policy, consider climate change and conservation in federal permitting decisions and align government procurement strategy and standards with climate goals.

To enable climate policy development and implementation, the Administration has pledged to adopt a "whole-of-government" approach and is establishing various new climate-oriented positions and working groups.

For example, it created the White House Office of Domestic Climate Policy, led by the first-ever National Climate Advisor and Deputy National Climate Advisor, which will create a central office in the White House that is charged with coordinating and implementing the President's domestic climate agenda.

The newly established National Climate Task Force will assemble representatives from across 21 federal agencies and departments.

The Federal Reserve is creating a committee to deepen its understanding of the risks that climate change poses to the financial system.

The SEC has created the new role of Senior Policy Advisor for Climate and Environmental, Social and Governance ("ESG") to oversee and coordinate the agency's efforts related to climate risk and other ESG developments, and to examine how these issues intersect with the regulatory framework across its offices and divisions.

An interagency working group on Coal and Power Plant Communities and Revitalization will identify and deliver federal resources to revitalize the economics of coal, oil, gas and power plant dependent communities.

Outside the United States, a foreign climate agenda will be advanced through the Special Presidential Envoy for Climate in concert with departments including State and Treasury.

Transformation Plan

NRG completed its three-year Transformation Plan as of December 31, 2020.

The Transformation Plan targets were achieved as follows:

- Achieved recurring cost savings and margin enhancement of $1,065 million, including $590 million of cumulative cost savings, a $215 million net margin enhancement program, $50 million annual reduction in maintenance capital expenditures, and $210 million in permanent selling, general and administrative expense reduction associated with asset sales

- Fully realized $370 million of non-recurring working capital improvements and $295 million of one-time costs to achieve

- Completed asset sales of $3.0 billion, accomplishing the planned portfolio optimization

- Initially targeted credit ratio of 3.0x net debt / adjusted EBITDA(a) was achieved.

The credit metrics target was subsequently revised and successfully completed, to further strengthen its balance sheet and improve credit ratings by reducing leverage

(a) adjusted EBITDA as defined per the Senior Credit Facility

NRG is committed to working with all necessary stakeholders on a comprehensive, objective, and exhaustive root cause analysis of the entirety of the energy system.

The estimated financial impact is still preliminary, due to customer meter and settlement data not being finalized, as well as potential customer and counterparty risk and expected ERCOT default allocations.

Based on a preliminary analysis, Winter Storm Uri's financial impact is not expected to be adverse to NRG's financial results.

The Company separately stress-tested assumptions and although at a lower probability, this stress-test analysis indicated a potential plus or minus $100 million to income from continuing operations in 2021.

NRG's integrated platform continues to deliver stable results through unprecedented events.

The Company paid an aggregate purchase price of $3.625 billion in cash, subject to a purchase price adjustment of $77 million.

Market risk is the potential loss that may result from market changes associated with the Company's retail operations, merchant power generation, or with an existing or forecasted financial or commodity [removed: transaction.][added: transactions.]

In order to manage these risks, the Company uses various fixed-price forward purchase and sales contracts, futures and option contracts traded on [removed: NYMEX,] [added: NYMEX] and [added: other exchanges, and] swaps and options traded in the over-the-counter financial markets to:

NRG manages the commodity price risk of the Company's [added: load servicing obligations and] merchant generation operations [removed: and load serving obligations] by entering into various derivative or non-derivative instruments to hedge the variability in future cash flows from forecasted sales and purchases of [removed: electricity, natural gas] [added: electricity] and fuel.

NRG measures the risk of the Company's portfolio using several analytical methods, including sensitivity tests, scenario tests, stress tests, position [removed: reports,] [added: reports] and VaR.

NRG uses a Monte Carlo simulation based VaR model to estimate the potential loss in the fair value of [removed: the Company's] [added: its] energy assets and liabilities, which includes generation assets, [added: gas transportation and storage assets,] load [removed: obligations,] [added: obligations] and bilateral physical and financial [removed: transactions.][added: transactions, based on historical and forward values for factors such as customer demand, weather, commodity availability and commodity prices.]

The following table summarizes average, maximum and minimum VaR for [removed: NRG] [added: NRG's commodity portfolio, calculated using the VaR model] for the years ended December 31, [removed: 2020] [added: 2021] and [removed: 2019:][added: 2020:]

| (In millions) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | |

| VaR as of December 31, [added: (a)] | | | $ | 30 | | | | | $ | [removed: 42] [added: 30] | |

| [removed: Average] [added: Average(b)] | | | $ | [removed: 30] [added: 35] | | | | | $ | [removed: 44] [added: 30] | |

| [removed: Maximum] [added: Maximum(b)] | | | [removed: 47] [added: 53] | | | | | | [removed: 55] [added: 47] | | |

| [removed: Minimum] [added: Minimum(b)] | | | [removed: 22] [added: 23] | | | | | | [removed: 33] [added: 22] | | |

The VaR for the derivative financial instruments calculated using the diversified VaR model for the entire term of these instruments entered into for both asset management and trading was [removed: $13] [added: $242] million as of December 31, [removed: 2020,] [added: 2021,] primarily driven by asset-backed transactions.

NRG is exposed to retail credit risk related to its [removed: C&I] [added: Business] and [removed: Mass Market] [added: Home] customers.

As of December 31, [removed: 2020,] [added: 2021,] the Company's retail customer credit exposure to [removed: C&I] [added: Home] and [removed: Mass] [added: Business] customers was diversified across many customers and various industries, as well as government entities.

The Company's provision for credit losses resulting from credit risk was [removed: $108] [added: $698] million, [removed: $95] [added: $108] million and [removed: $85] [added: $95] million for the years ending December 31, [removed: 2020, 2019,] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] respectively.

Based on a sensitivity analysis for power and gas positions under marginable contracts as of December 31, [removed: 2020,] [added: 2021,] a $0.50 per MMBtu decrease in natural gas prices across the term of the marginable contracts would cause an increase in margin collateral posted of approximately [removed: $226] [added: $828] million and a 1.00 MMBtu/MWh decrease in heat rates for heat rate positions would result in an increase in margin collateral posted of approximately [removed: $204] [added: $378] million.

This analysis uses simplified assumptions and is calculated based on portfolio composition and margin-related contract provisions as of December 31, [removed: 2020.][added: 2021.]

Approximately [removed: 54%] [added: 87%] of the Company's exposure before collateral is expected to roll off by the end of [removed: 2022.][added: 2023.]

As of December 31, [removed: 2020,] [added: 2021,] the aggregate credit exposure is shown net of collateral held, and includes amounts net of receivables or payables.

| Utilities, energy merchants, marketers and other | | | [removed: 96] [added: 67] | | % |

| Financial institutions | | | [removed: 4] [added: 33] | | |

| Investment grade | | | [removed: 59] [added: 55] | | % |

| Non-Investment grade/Non-Rated | | | [removed: 41] [added: 45] | | |

The Company has [removed: $47 million of] [added: no] exposure to [removed: two] wholesale counterparties in excess of 10% of the total net exposure discussed above as of December 31, [removed: 2020.][added: 2021.]

Based on these valuation techniques, as of December 31, [removed: 2020,] [added: 2021,] aggregate credit risk exposure managed by NRG to these counterparties was approximately [removed: $645 million] [added: $1.1 billion] for the next five years.

As of December 31, [removed: 2020,] [added: 2021,] the Company's debt fair value was [removed: $9.4] [added: $8.3] billion and carrying value was [removed: $8.8] [added: $8.0] billion.

NRG estimates that a 1% decrease in market interest rates would have increased the fair value of the Company's long-term debt by [removed: $765] [added: $690] million.

Certain of the Company's hedging [added: and trading] agreements contain provisions that [removed: require] [added: entitle] the [removed: Company] [added: counterparty] to [added: demand that the Company] post additional collateral if the counterparty determines that there has been deterioration in [added: the Company's] credit quality, generally termed [removed: "adequate assurance"] [added: “adequate assurance”] under the agreements, or require the Company to post additional collateral if there were a downgrade in the Company's credit rating.

The collateral [added: potentially] required for contracts [removed: that have] [added: with] adequate assurance clauses that are in a net liability position as of December 31, [removed: 2020,] [added: 2021,] was [removed: $26 million.][added: $1.0 billion.]

The Company is also a party to certain marginable agreements under which it has a net liability position, but the counterparty has not called for the collateral due, which was approximately [removed: $35] [added: $70] million as of December 31, [removed: 2020.][added: 2021.]

[removed: If] [added: In the event of a downgrade in the Company's credit rating and if] called for by the counterparty, $1 million of additional collateral would be required for all contracts with credit rating contingent features as of December 31, [removed: 2020.][added: 2021.]

The Company's VaR model is based on a one-day holding period at a 95% confidence interval for the forward 36 months, not including the spot month.

The VaR model is not a complete picture of all risks that may affect the Company's results.

Certain events such as counterparty defaults, regulatory changes, and extreme weather and prices that deviate significantly from historically observed values are not reflected in the model.

(a)Calculation includes entire NRG portfolio as of December 31, 2021

(b)Calculation is based on NRG generation assets and load obligations excluding the acquisition of Direct Energy assets and load obligations in the first quarter of 2021

The increase in the VaR for derivative financial instruments was primarily due to the acquisition of Direct Energy.

As a result of Winter Storm Uri, the Company incurred additional credit losses from Business customers primarily due to a segment of customers whose contracts included a pass through of wholesale power prices which were significantly escalated during the storm and from customers who failed to meet their obligations in ERCOT load curtailment programs.

As of December 31, 2021, counterparty credit exposure, excluding credit exposure from RTOs, ISOs, and registered commodity exchanges and certain long-term agreements, was $2.2 billion, of which the Company held collateral (cash and letters of credit) against those positions of $598 million resulting in a net exposure of $1.6 billion.

During Winter Storm Uri, the Company experienced nonperformance by a counterparty in one of its bilateral financial hedging transactions, resulting in exposure of $403 million.

The Company is pursuing all means available to enforce its rights under this transaction but, given the size of the exposure, cannot determine with certainty what the amount of its ultimate recovery will be.

The full exposure was recorded as a provision for credit losses during the year ended December 31, 2021.

In addition, as a result of the acquisition of Direct Energy from Centrica, certain of the Company’s agreements as of December 31, 2021, were still supported by credit support posted by Centrica, and as a result could require the Company to post collateral upon a deterioration or downgrade of Centrica.

NRG is subject to transactional exchange rate risk from transactions with customers in countries outside of the United States, primarily within Canada, as well as from intercompany transactions between affiliates.

Transactional exchange rate risk arises from the purchase and sale of goods and services in currencies other than our functional currency or the functional currency of an applicable subsidiary.

NRG hedges a portion of its forecasted currency transactions with foreign exchange forward contracts.

As of December 31, 2021, NRG is exposed to changes in foreign currency primarily associated with the purchase of U.S. dollar denominated natural gas for its Canadian business and entered into foreign exchange contracts with notional amount of $279 million.

The Company is subject to translation exchange rate risk related to the translation of the financial statements of its foreign operations into U.S. dollars.

Costs incurred and sales recorded by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period.

As a result, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar, primarily the Canadian and Australian dollars.

A hypothetical 10% appreciation in major currencies relative to the U.S. dollar as of December 31, 2021 would have resulted in an increase of $10 million to net income within the Consolidated Statement of Operations.

These instruments include forwards, futures, swaps, and option contracts traded on various exchanges, such as NYMEX and ICE, as well as over-the-counter markets.

The portion of forecasted transactions hedged may vary based upon management's assessment of market, weather, operation and other factors.

While some of the contracts the Company uses to manage risk represent commodities or instruments for which prices are available from external sources, other commodities and certain contracts are not actively traded and are valued using other pricing sources and modeling techniques to determine expected future market prices, contract quantities, or both.

NRG uses the Company's best estimates to determine the fair value of those derivative contracts.

However, it is likely that future market prices could vary from those used in recording mark-to-market derivative instrument valuation and such variations could be material.

The key assumptions for the Company's VaR model include: (i) lognormal distribution of prices; (ii) one-day holding period; (iii) 95% confidence interval; (iv) rolling 36-month forward looking period; and (v) market implied volatilities and historical price correlations.

As of December 31, 2020, the VaR for NRG's commodity portfolio, including generation assets, load obligations and bilateral physical and financial transactions calculated using the VaR model was $30 million.

Due to the inherent limitations of statistical measures such as VaR, the evolving nature of the competitive markets for electricity and related derivatives, and the seasonality of changes in market prices, the VaR calculation may not capture the full extent of commodity price exposure.

As a result, actual changes in the fair value of mark-to-market energy assets and liabilities could differ from the calculated VaR, and such changes could have a material impact on the Company's financial results.

Current economic conditions may affect the Company's customers' ability to pay bills in a timely manner, which could increase customer delinquencies and may lead to an increase in credit losses.

As of December 31, 2020, aggregate counterparty credit exposure to a significant portion of the Company's counterparties totaled $210 million, of which the Company held collateral (cash and letters of credit) against those positions of $14 million resulting in a net exposure of $204 million.

Given the credit quality, diversification and term of the exposure in the portfolio, the Company does not anticipate a material impact on its financial position or results of operations from nonperformance by any counterparty.

NRG was previously exposed to fluctuations in interest rates through its issuance of variable rate debt.

Exposures to interest rate fluctuations may be mitigated by entering into derivative instruments known as interest rate swaps, caps, collars and put or call options.

These contracts reduce exposure to interest rate volatility and result in primarily fixed rate debt obligations when taking into account the combination of the variable rate debt and the interest rate derivative instrument.

NRG's risk management policies allow the Company to reduce interest rate exposure from variable rate debt obligations.

The Company previously entered into interest rate swaps.

As of December 31, 2019, NRG had no interest rate derivative instruments, as a result of the early termination of such contracts in connection with the repayment of the 2023 Term Loan Facility during the second quarter of 2019.

During the fourth quarter of 2020, NRG entered into $1.6 billion of interest rate hedges associated with anticipated certain financing needs.

As of December 31, 2020 the interest rate hedges were settled in connection with the issuance of fixed rate debt resulting in a gain of $11 million that was recorded as a reduction to interest expense.

NRG's foreign earnings and investments may be subject to foreign currency exchange risk, which NRG generally does not hedge.

As these earnings and investments are not material to NRG's consolidated results, the Company's foreign currency exposure is limited.

NRG Energy, Inc., or NRG or the Company, is [removed: an integrated power] [added: a consumer services] company built on dynamic retail [removed: brands with diverse generation assets.][added: brands.]

NRG brings the power of energy to customers by producing and selling energy and related products and services, [removed: in major competitive power and gas markets] [added: nation-wide] in the U.S. and Canada in a manner that delivers value to all of NRG's stakeholders.

Direct Energy is a leading retail provider of electricity, natural gas, and home and business [removed: energy related] [added: energy-related] products and services in North America, with operations in all 50 U.S. states and 8 Canadian provinces.

On [removed: February 28,] [added: December 1,] 2021, the Company [removed: entered into a definitive purchase agreement with Generation Bridge, an affiliate of ArcLight Capital Partners, to sell] [added: sold] approximately 4,850 MWs of fossil generating assets from its East and West regions of operations [removed: for total proceeds of $760 million, subject] to [removed: standard purchase price adjustments and certain other indemnifications.][added: Generation Bridge, an affiliate of ArcLight Capital Partners.]

As part of the transaction, NRG [removed: is entering] [added: entered] into a tolling agreement for [removed: its] [added: the] 866 MW Arthur Kill plant in New York City through April 2025.

See Item [removed: 7 - *Management's Discussion] [added: 15 *—* Note 4, *Acquisitions, Discontinued Operations] and [removed: Analysis of] [added: Dispositions*, to the Consolidated] Financial [removed: Conditions and Results of Operations*] [added: Statements] for further discussion.

NRG's strategy is to maximize stakeholder value through the safe production and sale of reliable [removed: power] [added: electricity] and [added: natural] gas to its customers in the markets it serves, while positioning the Company to provide innovative solutions to the end-use energy [added: or service] customer.

To effectuate the Company’s strategy, NRG is focused on: (i) serving the energy needs of end-use residential, commercial and industrial, and wholesale customers in competitive markets through multiple brands and channels; (ii) offering a variety of energy products and services, including renewable energy solutions, that are differentiated by innovative features, premium service, sustainability, and loyalty/affinity programs; (iii) excellence in operating performance of its [removed: existing] assets; (iv) optimal hedging of [removed: NRG's] [added: its] portfolio; and (v) engaging in disciplined and transparent capital allocation.

[removed: Sustainability] [added: It] is an integral piece of NRG's strategy and ties directly to business success, reduced risks and [removed: brand value.][added: enhanced reputation.]

[removed: Under its new GHG] [added: NRG's climate goals are to reduce greenhouse gas] emissions [removed: reduction timeline, NRG is targeting a] [added: by] 50% [removed: reduction] by 2025, from its current 2014 baseline, and [added: to achieve] net-zero emissions by 2050.

The Company’s core business is the sale of electricity and natural gas to residential, commercial and industrial [added: and wholesale] customers, supported by the Company's wholesale generation.

[removed: As part of perfecting the integrated model, in which the majority of the Company’s generation serves its retail customers, the Company began managing] [added: NRG manages] its operations based on the combined results of the retail and wholesale generation businesses with a geographical [removed: focus in 2020.][added: focus.]

The Company's business is [removed: segregated] [added: segmented] as follows:

- East, which includes [removed: the remaining activity related to customer operations and] all activity related to [added: customer,] plant and market operations in the East;

- [removed: West/Other,] [added: West/Services/Other,] which [added: primarily] includes the following assets and activities: (i) all activity related to [added: customer,] plant and market operations in the [removed: West,] [added: West and Canada,] (ii) [added: the services businesses, (iii)] activity related to the Cottonwood [removed: power plant that was sold to Cleco on February 4, 2019 and is being leased back until 2025, (iii)] [added: facility, (iv)] the remaining renewables activity, including the Company’s equity method [removed: investments] [added: investment] in Ivanpah Master Holdings, [removed: LLC and Agua Caliente (which was sold on February 3, 2021) and the NFL stadium solar generating assets,] [added: LLC,] and [removed: (iv)] [added: (v)] activity related to the Company’s equity method investment for the Gladstone power plant in Australia; and

As of December 31, [removed: 2020, the vast majority of the Company’s business was] [added: 2021,] in Texas, [removed: where] the Company’s generation supply is fully integrated with its retail load.

[removed: The acquisition of Direct Energy broadens] [added: It also broadened] the Company's presence in the Northeast and [removed: into] [added: in] states and locales where it did not previously operate, supporting NRG's objective to diversify its business.

The Company’s integrated model [added: in Texas] provides the advantage of being able to supply [added: a significant portion of] the Company’s retail customers with electricity from the Company’s assets, which reduces the need to sell electricity to and buy electricity from other institutions and intermediaries, resulting in stable earnings and cash flows, lower transaction costs and less credit exposure.

The integrated model also results in a reduction in actual and contingent collateral through offsetting transactions, thereby [removed: minimizing] [added: reducing] transactions with third parties.

[removed: Residential and small commercial ("Mass market")] [added: Home] customers typically contract for terms ranging from one month to five years, while [removed: industrial and large commercial ("C&I")] [added: Business] contracts are often between one year and five years in length.

[added: NRG sold 157 TWhs of electricity and 1,877 MMDth of natural gas in 2021, making it one of the largest competitive energy retailers in the U.S.] As of the end of [removed: 2020,] [added: 2021,] NRG had recurring electricity and/or natural gas sales in [removed: 19] [added: 24] U.S. states, the District of Columbia, and [removed: 2] [added: 8] provinces in Canada.

[removed: ][added: ]

Extreme Weather Event in Texas During February [removed: 2021][added: 2021 and expected Uplift Securitization proceeds]

During February 2021, Texas experienced unprecedented cold temperatures for a prolonged [removed: duration,] [added: duration as a result of Winter Storm Uri,] resulting in a power emergency, blackouts, and an estimated all-time peak demand of 77 [removed: GWs] [added: GW] (without load shed).

Throughout all Customer Operations activities, the customer experience is kept at the forefront to inform decision-making and optimize retention, while creating supporters and advocates for NRG’s brands in the [added: market.]

Following the expansion of the customer base with the acquisition of Direct Energy, Customer Operations now comprises three end-use customer facing teams: NRG Home, which serves [removed: Mass Market] [added: residential] customers, NRG Business, which serves [removed: medium and large] business customers, and NRG Services, which primarily includes the services businesses acquired.

NRG sells a variety of products to residential and small commercial customers, including retail electricity and energy management, natural gas, home security, line and surge protection products, HVAC installation, repair and maintenance, home [removed: warranty and] protection products, carbon offsets, back-up power stations, portable power, portable solar and portable lighting.

[removed: Mass market] [added: Home and Services] customers make purchase decisions based on a variety of factors, including price, incentive, customer service, brand, innovative offers/features and referrals from friends and family.

The Company provides power and natural gas to the business-to-business markets in North America, as well as retail services, including demand response, commodity sales, energy efficiency and energy management solutions to [removed: C&I] [added: Business] customers.

The Company is an integrated provider of supply and distributed energy resources and focuses on distributed products and services as businesses seek greater reliability, cleaner power [removed: and/or] [added: and] other benefits that they cannot obtain from the grid.

In providing on-site energy solutions, the Company often benefits from its ability to supply energy products from its wholesale generation portfolio to [removed: C&I] [added: Business] customers.

To meet [removed: these] [added: the market operations] objectives, NRG enters into supply, power and gas sales and hedging [removed: arrangements] [added: agreements] via a wide range of products and contracts, including (i) [removed: renewable PPAs, (ii) capacity auctions] [added: physical] and [removed: other contracted revenue sources, (iii)] [added: financial commodity instruments, (ii)] fuel supply and transportation contracts, [added: (iii) renewable PPAs] and (iv) [removed: physical and financial natural gas derivative instruments] [added: capacity] and other [removed: financial instruments.][added: contracted revenue sources, as further discussed below.]

[removed: *Renewable PPAs*][added: Renewable PPAs]

[removed: During 2019, NRG began procuring] [added: The Company's strategy is to procure] mid to long-term renewable generation through power purchase agreements.

As of December 31, [removed: 2020,] [added: 2021,] NRG has entered into PPAs [removed: in Texas] totaling approximately [removed: 1,800 MWs] [added: 2.6 GW] with third-party project developers and other counterparties.

The [added: average] tenor of these agreements is [removed: an average between eleven and] twelve years.

The Company expects to continue evaluating and executing [removed: agreements, such as these,] [added: similar agreements] that support the needs of the business.

[removed: *Capacity] [added: Capacity] and Other Contracted Revenue [removed: Sources*][added: Sources]

The Company's largest sources of [added: continuing] capacity revenues are capacity auctions in [removed: PJM, ISO-NE] [added: PJM] and NYISO.

[removed: Both] PJM [removed: and ISO-NE operate] [added: operates] a pay-for-performance model where capacity payments are modified based on real-time performance and NRG's actual revenues will be the combination of revenues based on the cleared auction [removed: MWs] [added: MW] plus the net of any over- and under-performance of NRG's respective generation assets.

NRG sells power, natural gas, and home and power services, and develops innovative, sustainable solutions, predominately under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy.

The Company has a customer base that includes approximately 6 million Home customers as well as commercial, industrial, and wholesale customers, supported by approximately 18,000 MW of generation as of December 31, 2021.

The following chart represents NRG's sales volumes for the year ended December 31, 2021:

Sustainability is a philosophy that underpins and facilitates value creation across our business for our stakeholders.

The 2021 fiscal year was pivotal for the Company.

NRG completed the acquisition of Direct Energy, doubling the size of its retail portfolio, while further decreasing its physical generation through the sale and planned retirement of certain assets, each as further discussed below.

The completion of these significant activities positioned NRG for the next phase of its strategy focusing on growth.

The Company implemented a four-year plan beginning in 2022 to invest up to $2 billion in order to achieve growth through optimization of the Company's core power and natural gas sales, as well as integrated solution sales within its core network in both power and home services.

*Significant Acquisitions, Dispositions and Announced Retirements*

On January 5, 2021, the Company acquired Direct Energy.

The acquisition increased NRG's retail portfolio by over 3 million customers and complemented its integrated model.

NRG realized its planned synergy target of $175 million in 2021 and expects to realize annual synergies of $225 million and $300 million in 2022 and 2023, respectively.

During the second quarter of 2021, the results of the PJM Base Residual Auction for the 2022/2023 delivery year were released, leading the Company to announce the near-term retirement of approximately 1,600 MW of its PJM coal generating assets in June 2022.

On July 30, 2021, PJM identified reliability impacts resulting from the proposed deactivation of one of those assets, Indian River Unit 4.

On August 27, 2021 the Company notified PJM that it would continue operations at Indian River Unit 4 until the reliability upgrades identified by PJM were completed, provided that the unit receives a satisfactory and compensatory reliability must run arrangement.

See Item 15 *—* Note 11, *Asset Impairments,* to the Consolidated Financial Statements for further discussion.

The Company is continuing to evaluate the viability of the remaining PJM generating assets.

The Texas Legislature passed House Bill ("HB") 4492, which among other things, authorized ERCOT to obtain $2.1 billion of financing to distribute to LSEs that were charged and paid to ERCOT exceptionally highly priced ORDPA and ancillary service costs during Winter Storm Uri (the "Uplift Securitization").

NRG will receive $689 million from ERCOT based on LSE-level detail published by the PUCT on December 7, 2021.

During the year ended December 31, 2021, Winter Storm Uri's pre-tax financial impact to the Company was a loss of $380 million, which reflects the recovery of $689 million of cost of operations as a result of the proceeds NRG will receive from the Uplift Securitization discussed above, with receipt expected to occur during the second quarter of 2022.

The Company continues to pursue additional mitigants including, but not limited to, customer bad debt mitigation, counterparty default recovery, and additional ERCOT default recovery.

In the West/Services/Other, the Company’s business is primarily serving retail load and services customers.

NRG provides energy and related services at either fixed, indexed or month-to-month prices.

Power and natural gas are the two main commercial groups within market operations.

*Power*

The power commercial group is responsible for end-use electricity supply including power plant optimization and certain fuel supply.

Similarly, STP has begun the process of covering fuel supply requirements into the extended license period and has secured a fabrication contract with Westinghouse through 2047/2048.

Other fuel requirements such as uranium, conversion and enrichment remain open at this time.

The total GW entered into through PPAs may be impacted by contract terminations when they occur.

*Natural Gas*

The natural gas commercial group is responsible for all costing, logistics and supply for all of NRG's residential, commercial & industrial and wholesale customers.

The Direct Energy acquisition, which closed on January 5, 2021, significantly increased our capabilities and scale across the natural gas value chain.

NRG has acquired contractual rights to natural gas transportation and storage assets across its footprint that allow for optimal supply economics in support of our various businesses.

Our diversified load coupled with this asset portfolio enables us to deliver supply economically while providing incremental optimization activities when market conditions allow.

The scale of the natural gas operation extends from the wellhead (through our producer services business) to our end use customers (through our various sales channels).

This scale, coupled with our associated assets, gas system platform and people, create significant opportunity across North America.

| Natural gas | | | | | | 4,775 | | | | | | 1,881 | | | | | | 1,494 | | | | | | | | | | | | 8,150 | | |

| Oil | | | | | | — | | | | | | 455 | | | | | | — | | | | | | | | | | | | 455 | | |

| Total generation capacity | | | | | | 10,083 | | | | | | 5,476 | | | | | | 2,318 | | | | | | | | | | | | 17,877 | | |

| Home - Texas | | | 42,397 | | | | | | 38,473 | | | | | | 38,958 | | |

NRG is a customer-centric business focused on perfecting the integrated model by balancing retail load with generation supply within its deregulated markets.

As of December 31, 2020, the Company sold energy, services, and innovative, sustainable products and services directly to retail customers under the brand names NRG, Reliant, Green Mountain Energy, Stream, and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation.

NRG also conducts business under the brand name of Direct Energy as a result of the Company's acquisition of Direct Energy, a North American subsidiary of Centrica plc, on January 5, 2021.

In addition, Direct Energy is a participant in the wholesale gas and power markets in the United States and Canada.

The transaction is expected to close in the fourth quarter of 2021, and is subject to various closing conditions, approvals and consents, including FERC, NYSPSC, and antitrust review under Hart-Scott-Rodino.

The Company has achieved the targets related to operations and cost excellence, portfolio optimization, and capital structure and allocation enhancement, as set out by the Transformation Plan.

In 2019, NRG announced the acceleration of its science-based GHG emissions reduction goals to align with prevailing climate science, limiting global warming in the post-industrial era to 1.5 degree Celsius.

The Company is on track to meet its 2025 goal.

As a result, the Company changed its business segments from Retail and Generation to Texas, East and West/Other beginning in the first quarter of 2020.

The Company's updated segment structure reflects how management makes financial decisions and allocates resources.

In the West, the Company’s business is primarily generation supply.

The acquired operations of Direct Energy will be integrated into the existing NRG segment structure.

Domestic customer and market operations will be combined into the corresponding geographical segments of Texas, East and West/Other.

The East segment will also include the deregulated customer and market operations of Canada.

The West/Other segment will also include activity related to the regulated operations in Alberta, Canada and the services businesses.

NRG provides energy and related services to residential, industrial and commercial, and wholesale customers at either fixed, indexed or month-to-month prices through various brands and sales channels across the U.S. and Canada.

NRG sold approximately 68.2 TWhs of electricity and 23.5 MMDth of natural gas in 2020 and served approximately 3.6 million customers as of December 31, 2020, making it one of the largest competitive energy retailers in the U.S. In any given year, the quantity of TWhs and MMDth sold can be affected by weather, economic conditions and competition.

Following the acquisition of Direct Energy, NRG has recurring electricity and/or natural gas sales in 24 U.S. states, the District of Columbia, and 8 provinces in Canada.

The charts below illustrate NRG's U.S. retail capabilities, power generation and net capacity as of and for the year ended December 31, 2020:

NRG is committed to working with all necessary stakeholders on a comprehensive, objective, and exhaustive root cause analysis of the entirety of the energy system.

The estimated financial impact is still preliminary, due to customer meter and settlement data not being finalized, as well as potential customer and counterparty risk and expected ERCOT default allocations.

Based on a preliminary analysis, Winter Storm Uri's financial impact is not expected to be adverse to NRG's financial results.

The Company separately stress-tested assumptions and although at a lower probability, this stress-test analysis indicated a potential plus or minus $100 million to income from continuing operations in 2021.

NRG's integrated platform continues to deliver stable results through unprecedented events.

COVID-19

In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency.

Electricity was deemed a ‘critical and essential business operation’ under various state and federal governmental COVID-19 mandates.

NRG has been and continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations.

During 2020, NRG contributed $2 million to COVID-19 relief efforts, including funding for urgently needed safety equipment supporting first responders, as well as funds that aided local communities and teachers.

The Company also allocated funding to the NRG Employee Relief Fund to assist employees adversely impacted by natural disasters and other extraordinary events.

NRG activated its Crisis Management Team ("CMT") in January 2020, which proactively began managing the Company's response to the impacts of COVID-19.

The CMT implemented the business continuity plans for the Company and had taken a variety of measures to ensure the ongoing availability of the Company's services, while maintaining the Company's commitment to its core values of health and safety.

Pursuant to the Company's Infectious Disease & Pandemic Policy, in March 2020, NRG implemented restrictions on business travel and face-to-face sales channels, instituted remote work practices and enhanced cleaning and hygiene protocols in all of its offices and facilities.

In order to effectively serve the Company’s customers, select essential employees and contractors continued to report to plant and certain office locations.

In June 2020, summer-critical office employees also returned to the offices.

The Company requires pre-entry screening, including temperature checks, separation of work crews, additional personal protective equipment for employees and contractors when social distancing cannot be maintained, and a ban on all non-essential visitors.

As a result of these business continuity measures, the Company has not experienced any material disruptions in its ability to continue its business operations to date.

The first COVID-19 vaccine became available in the United States in December 2020.

NRG continues to advocate alongside state and federal trade groups for the high prioritization of essential electric industry personnel for inoculation against COVID-19.

States are receiving weekly doses of vaccines and allocating those doses to frontline healthcare workers, elderly populations and high risk individuals.

See Item 15 — Note [removed: 24,] [added: 23,] *Commitments and Contingencies*, to the Consolidated Financial Statements for discussion of the material legal proceedings to which NRG is a party.

| ☒ | | | | | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, [removed: 2020.] [added: 2021.] | | |

As of the last business day of the most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately [removed: $6,941,658,699] [added: $8,611,281,553] based on the closing sale price of [removed: $32.56] [added: $40.30] as reported on the New York Stock Exchange.

| Common Stock, par value $0.01 per share | | | | | | [removed: 244,687,907] [added: 242,153,239] | | |

Portions of the Registrant's definitive Proxy Statement relating to its [removed: 2021] [added: 2022] Annual Meeting of Stockholders

| | | | [GLOSSARY OF [removed: TERMS](#i4c90ae9cbc544373a9f9e7ed35c4419f_10)] [added: TERMS](#i4e8ca856cd5e4b3f94a56a416e1b771e_10)] | | | [removed: [3](#i4c90ae9cbc544373a9f9e7ed35c4419f_10)] [added: [3](#i4e8ca856cd5e4b3f94a56a416e1b771e_10)] | | |

| | | | [Item 1 — [removed: Business](#i4c90ae9cbc544373a9f9e7ed35c4419f_16)] [added: Business](#i4e8ca856cd5e4b3f94a56a416e1b771e_16)] | | | [removed: [8](#i4c90ae9cbc544373a9f9e7ed35c4419f_16)] [added: [7](#i4e8ca856cd5e4b3f94a56a416e1b771e_16)] | | |

| | | | [Item 1A — Risk [removed: Factors](#i4c90ae9cbc544373a9f9e7ed35c4419f_19)] [added: Factors](#i4e8ca856cd5e4b3f94a56a416e1b771e_19)] | | | [removed: [26](#i4c90ae9cbc544373a9f9e7ed35c4419f_19)] [added: [24](#i4e8ca856cd5e4b3f94a56a416e1b771e_19)] | | |

| | | | [Item 1B — Unresolved Staff [removed: Comments](#i4c90ae9cbc544373a9f9e7ed35c4419f_22)] [added: Comments](#i4e8ca856cd5e4b3f94a56a416e1b771e_22)] | | | [removed: [42](#i4c90ae9cbc544373a9f9e7ed35c4419f_22)] [added: [39](#i4e8ca856cd5e4b3f94a56a416e1b771e_22)] | | |

| | | | [Item 2 — [removed: Properties](#i4c90ae9cbc544373a9f9e7ed35c4419f_25)] [added: Properties](#i4e8ca856cd5e4b3f94a56a416e1b771e_25)] | | | [removed: [43](#i4c90ae9cbc544373a9f9e7ed35c4419f_25)] [added: [40](#i4e8ca856cd5e4b3f94a56a416e1b771e_25)] | | |

| | | | [Item 3 — Legal [removed: Proceedings](#i4c90ae9cbc544373a9f9e7ed35c4419f_28)] [added: Proceedings](#i4e8ca856cd5e4b3f94a56a416e1b771e_28)] | | | [removed: [44](#i4c90ae9cbc544373a9f9e7ed35c4419f_28)] [added: [41](#i4e8ca856cd5e4b3f94a56a416e1b771e_28)] | | |

| | | | [Item 4 — Mine Safety [removed: Disclosures](#i4c90ae9cbc544373a9f9e7ed35c4419f_31)] [added: Disclosures](#i4e8ca856cd5e4b3f94a56a416e1b771e_31)] | | | [removed: [44](#i4c90ae9cbc544373a9f9e7ed35c4419f_31)] [added: [41](#i4e8ca856cd5e4b3f94a56a416e1b771e_31)] | | |

| | | | [Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i4c90ae9cbc544373a9f9e7ed35c4419f_37)] [added: Securities](#i4e8ca856cd5e4b3f94a56a416e1b771e_37)] | | | [removed: [45](#i4c90ae9cbc544373a9f9e7ed35c4419f_37)] [added: [42](#i4e8ca856cd5e4b3f94a56a416e1b771e_37)] | | |

| | | | [Item 7 — Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i4c90ae9cbc544373a9f9e7ed35c4419f_43)] [added: Operations](#i4e8ca856cd5e4b3f94a56a416e1b771e_49)] | | | [removed: [46](#i4c90ae9cbc544373a9f9e7ed35c4419f_43)] [added: [44](#i4e8ca856cd5e4b3f94a56a416e1b771e_49)] | | |

| | | | [Item 7A — Quantitative and Qualitative Disclosures About Market [removed: Risk](#i4c90ae9cbc544373a9f9e7ed35c4419f_118)] [added: Risk](#i4e8ca856cd5e4b3f94a56a416e1b771e_124)] | | | [removed: [78](#i4c90ae9cbc544373a9f9e7ed35c4419f_118)] [added: [73](#i4e8ca856cd5e4b3f94a56a416e1b771e_124)] | | |

| | | | [Item 8 — Financial Statements and Supplementary [removed: Data](#i4c90ae9cbc544373a9f9e7ed35c4419f_121)] [added: Data](#i4e8ca856cd5e4b3f94a56a416e1b771e_127)] | | | [removed: [81](#i4c90ae9cbc544373a9f9e7ed35c4419f_121)] [added: [76](#i4e8ca856cd5e4b3f94a56a416e1b771e_127)] | | |

| | | | [Item 9 — Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#i4c90ae9cbc544373a9f9e7ed35c4419f_124)] [added: Disclosure](#i4e8ca856cd5e4b3f94a56a416e1b771e_130)] | | | [removed: [81](#i4c90ae9cbc544373a9f9e7ed35c4419f_124)] [added: [76](#i4e8ca856cd5e4b3f94a56a416e1b771e_130)] | | |

| | | | [Item 9A — Controls and [removed: Procedures](#i4c90ae9cbc544373a9f9e7ed35c4419f_127)] [added: Procedures](#i4e8ca856cd5e4b3f94a56a416e1b771e_133)] | | | [removed: [81](#i4c90ae9cbc544373a9f9e7ed35c4419f_127)] [added: [76](#i4e8ca856cd5e4b3f94a56a416e1b771e_133)] | | |

| | | | [Item 9B — Other [removed: Information](#i4c90ae9cbc544373a9f9e7ed35c4419f_130)] [added: Information](#i4e8ca856cd5e4b3f94a56a416e1b771e_136)] | | | [removed: [83](#i4c90ae9cbc544373a9f9e7ed35c4419f_130)] [added: [79](#i4e8ca856cd5e4b3f94a56a416e1b771e_136)] | | |

| | | | [Item 10 — Directors, Executive Officers and Corporate [removed: Governance](#i4c90ae9cbc544373a9f9e7ed35c4419f_136)] [added: Governance](#i4e8ca856cd5e4b3f94a56a416e1b771e_142)] | | | [removed: [85](#i4c90ae9cbc544373a9f9e7ed35c4419f_136)] [added: [80](#i4e8ca856cd5e4b3f94a56a416e1b771e_142)] | | |

| | | | [Item 11 — Executive [removed: Compensation](#i4c90ae9cbc544373a9f9e7ed35c4419f_139)] [added: Compensation](#i4e8ca856cd5e4b3f94a56a416e1b771e_145)] | | | [removed: [88](#i4c90ae9cbc544373a9f9e7ed35c4419f_139)] [added: [80](#i4e8ca856cd5e4b3f94a56a416e1b771e_145)] | | |

| | | | [Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i4c90ae9cbc544373a9f9e7ed35c4419f_142)] [added: Matters](#i4e8ca856cd5e4b3f94a56a416e1b771e_148)] | | | [removed: [88](#i4c90ae9cbc544373a9f9e7ed35c4419f_142)] [added: [80](#i4e8ca856cd5e4b3f94a56a416e1b771e_148)] | | |

| | | | [Item 13 — Certain Relationships and Related Transactions, and Director [removed: Independence](#i4c90ae9cbc544373a9f9e7ed35c4419f_145)] [added: Independence](#i4e8ca856cd5e4b3f94a56a416e1b771e_151)] | | | [removed: [88](#i4c90ae9cbc544373a9f9e7ed35c4419f_145)] [added: [81](#i4e8ca856cd5e4b3f94a56a416e1b771e_151)] | | |

| | | | [Item 14 — Principal Accounting Fees and [removed: Services](#i4c90ae9cbc544373a9f9e7ed35c4419f_148)] [added: Services](#i4e8ca856cd5e4b3f94a56a416e1b771e_154)] | | | [removed: [88](#i4c90ae9cbc544373a9f9e7ed35c4419f_148)] [added: [81](#i4e8ca856cd5e4b3f94a56a416e1b771e_154)] | | |

| | | | [Item 15 — Exhibits, Financial Statement [removed: Schedules](#i4c90ae9cbc544373a9f9e7ed35c4419f_154)] [added: Schedules](#i4e8ca856cd5e4b3f94a56a416e1b771e_160)] | | | [removed: [89](#i4c90ae9cbc544373a9f9e7ed35c4419f_154)] [added: [82](#i4e8ca856cd5e4b3f94a56a416e1b771e_160)] | | |

| Convertible Senior Notes | | | | | | As of December 31, [removed: 2020,] [added: 2021,] consists of NRG’s $575 million unsecured 2.75% Convertible Senior Notes due 2048 | | |

| Cottonwood | | | | | | Cottonwood Generating Station, a [removed: 1,153] [added: 1,177] MW natural gas-fueled plant | | |

| GenOn Entities | | | | | | GenOn and certain of its wholly owned subsidiaries, including GenOn Americas Generation, [added: LLC,] that filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court on June 14, 2017 | | |

| GWh | | | | | | Gigawatt [removed: Hour] [added: Hours] | | |

| kWh | | | | | | [removed: Kilowatt-hour] [added: Kilowatt-hours] | | |

| Revolving Credit Facility | | | | | | The Company's [removed: $2.6] [added: $3.7] billion revolving credit facility as of December 31, [removed: 2020,] [added: 2021,] a component of the Senior Credit Facility, due 2024 was amended on May 28, 2019 and August 20, 2020 | | |

| Senior Notes | | | | | | As of December 31, [removed: 2020,] [added: 2021,] NRG's [removed: $5.3] [added: $4.6] billion outstanding unsecured senior notes consisting of [removed: $1.0 billion of the 7.25% senior notes due 2026, $1.23 billion] [added: $375 million] of the 6.625% senior notes due 2027, $821 million of 5.75% senior notes due 2028, $733 million of the 5.25% senior notes due 2029, $500 million of the 3.375% senior notes due 2029, [removed: and] $1.0 billion of the 3.625% senior notes due 2031 [added: and $1.1 billion of the 3.875% senior notes due 2032] | | |

| Senior Secured Notes | | | | | | As of December 31, [removed: 2020,] [added: 2021,] NRG’s $2.5 billion outstanding Senior Secured First Lien Notes consists of $600 million of the 3.75% Senior Secured First Lien Notes due 2024, $500 million of the 2.0% Senior Secured First Lien Notes due 2025, $900 million of the 2.45% Senior Secured First Lien Notes due 2027, and $500 million of the 4.45% Senior Secured First Lien Notes due 2029 | | |

| TWh | | | | | | Terawatt [removed: Hour] [added: Hours] | | |

| 910 Louisiana Street, Houston, Texas *(Address of principal executive offices)* | | | | | | 77002 *(Zip Code)* | | |

(713) 537-3000

| Class | | | | | | Outstanding at February 24, 2022 | | |

| [PART I](#i4e8ca856cd5e4b3f94a56a416e1b771e_13) | | | | | | [7](#i4e8ca856cd5e4b3f94a56a416e1b771e_16) | | |

| [PART II](#i4e8ca856cd5e4b3f94a56a416e1b771e_34) | | | | | | [42](#i4e8ca856cd5e4b3f94a56a416e1b771e_34) | | |

| | | | [Item 6 — Reserved](#i4e8ca856cd5e4b3f94a56a416e1b771e_40) | | | [43](#i4e8ca856cd5e4b3f94a56a416e1b771e_40) | | |

| | | | [Item 9C— Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i4e8ca856cd5e4b3f94a56a416e1b771e_3059) | | | [79](#i4e8ca856cd5e4b3f94a56a416e1b771e_3059) | | |

| [PART III](#i4e8ca856cd5e4b3f94a56a416e1b771e_139) | | | | | | [80](#i4e8ca856cd5e4b3f94a56a416e1b771e_139) | | |

| [PART IV](#i4e8ca856cd5e4b3f94a56a416e1b771e_157) | | | | | | [82](#i4e8ca856cd5e4b3f94a56a416e1b771e_157) | | |

| | | | [Item 16 — Form 10-K Summary](#i4e8ca856cd5e4b3f94a56a416e1b771e_328) | | | [166](#i4e8ca856cd5e4b3f94a56a416e1b771e_328) | | |

| [EXHIBIT INDEX](#i4e8ca856cd5e4b3f94a56a416e1b771e_325) | | | | | | [160](#i4e8ca856cd5e4b3f94a56a416e1b771e_325) | | |

| Brazos | | | | | | Brazos Electric Power Cooperative, Inc. | | |

| Business | | | | | | NRG Business, which serves business customers | | |

| Centrica | | | | | | Centrica plc | | |

| Dual fuel customers | | | | | | Customer that have both electricity and natural gas service with the Company | | |

| GW | | | | | | Gigawatts | | |

| Home | | | | | | NRG Home, which serves residential customers | | |

| ORDPA | | | | | | Online Reliability Deployment Price Adder | | |

| Rayburn | | | | | | Rayburn Country Electric Cooperative, Inc. | | |

| Receivables Securitization Facilities | | | | | | Collectively, the Receivables Facility and the Repurchase Facility | | |

| | | | | | | | | |

| Winter Storm Uri | | | | | | A major winter and ice storm that had widespread impacts across North America occurring in February 2021 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 804 Carnegie Center , Princeton , New Jersey *(Address of principal executive offices)* | | | | | | 08540 *(Zip Code)* | | |

(609) 524-4500

| Class | | | | | | Outstanding at March 1, 2021 | | |

| [PART I](#i4c90ae9cbc544373a9f9e7ed35c4419f_13) | | | | | | [7](#i4c90ae9cbc544373a9f9e7ed35c4419f_13) | | |

| [PART II](#i4c90ae9cbc544373a9f9e7ed35c4419f_34) | | | | | | [45](#i4c90ae9cbc544373a9f9e7ed35c4419f_34) | | |

| | | | [Item 6 —](#i4c90ae9cbc544373a9f9e7ed35c4419f_3357) [Removed and Reserved](#i4c90ae9cbc544373a9f9e7ed35c4419f_3357) | | | [45](#i4c90ae9cbc544373a9f9e7ed35c4419f_3357) | | |

| [PART III](#i4c90ae9cbc544373a9f9e7ed35c4419f_133) | | | | | | [85](#i4c90ae9cbc544373a9f9e7ed35c4419f_133) | | |

| [PART IV](#i4c90ae9cbc544373a9f9e7ed35c4419f_151) | | | | | | [89](#i4c90ae9cbc544373a9f9e7ed35c4419f_151) | | |

| | | | [Item 16 — Form 10-K Summary](#i4c90ae9cbc544373a9f9e7ed35c4419f_340) | | | [171](#i4c90ae9cbc544373a9f9e7ed35c4419f_340) | | |

| [EXHIBIT INDEX](#i4c90ae9cbc544373a9f9e7ed35c4419f_337) | | | | | | [167](#i4c90ae9cbc544373a9f9e7ed35c4419f_337) | | |

| 2023 Term Loan Facility | | | | | | The Company's term loan facility due 2023, a component of the Senior Credit Facility, which was repaid during the second quarter of 2019 | | |

| BETM | | | | | | Boston Energy Trading and Marketing LLC | | |

| Business Solutions | | | | | | NRG's business solutions group, which includes demand response, commodity sales, energy efficiency and energy management services | | |

| California Bankruptcy Court | | | | | | United States Bankruptcy Court for the Northern District of California, San Francisco Division | | |

| Chapter 11 Cases | | | | | | Voluntary cases commenced by the GenOn Entities under the Bankruptcy Code in the Bankruptcy Court | | |

| C&I | | | | | | Commercial, industrial and governmental/institutional | | |

| EME | | | | | | Edison Mission Energy | | |

| Energy Plus Holdings | | | | | | Energy Plus Holdings LLC | | |

| GenConn | | | | | | GenConn Energy LLC | | |

| GenOn Americas Generation | | | | | | GenOn Americas Generation, LLC | | |

| GenOn Mid-Atlantic | | | | | | GenOn Mid-Atlantic, LLC and, except where the context indicates otherwise, its subsidiaries, which include the coal generation units at two generating facilities under operating leases | | |

| Guam | | | | | | NRG's wholly owned subsidiary NRG Solar Guam, LLC that was sold during the first quarter of 2019 | | |

| GW | | | | | | Gigawatt | | |

| IPPNY | | | | | | Independent Power Producers of New York | | |

| Mass Market | | | | | | Residential and small commercial customers | | |

| NJBPU | | | | | | New Jersey Board of Public Utilities | | |

| NYSPSC | | | | | | New York State Public Service Commission | | |

| PER | | | | | | Peak Energy Rent | | |

| PG&E | | | | | | PG&E Corporation (NYSE: PCG) and its primary operating subsidiary, Pacific Gas and Electric Company | | |

| PTC | | | | | | Production Tax Credit | | |

| RCE | | | | | | Residential Customer Equivalent is a unit of measure used by the energy industry to denote the typical annual commodity consumption by a single-family residential customer. 1 RCE represents 1,000 therms of natural gas or 10,000 kWh of electricity | | |

| REMA | | | | | | NRG REMA LLC, which leases a 100% interest in the Shawville generating facility and 16.7% and 16.5% interests in the Keystone and Conemaugh generating facilities, respectively | | |

| Restructuring Support Agreement | | | | | | Restructuring Support and Lock-Up Agreement, dated as of June 12, 2017 and as amended on October 2, 2017, by and among GenOn Energy, Inc., GenOn Americas Generation, LLC, and subsidiaries signatory thereto, NRG Energy, Inc. and the noteholders signatory thereto | | |

| RPM | | | | | | Reliability Pricing Model | | |

| SCE | | | | | | Southern California Edison Company | | |

| SDG&E | | | | | | San Diego Gas & Electric | | |

| Services Agreement | | | | | | NRG provided GenOn with various management, personnel and other services, which include human resources, regulatory and public affairs, accounting, tax, legal, information systems, treasury, risk management, commercial operations, and asset management, as set forth in the services agreement with GenOn | | |

| Settlement Agreement | | | | | | A settlement agreement and any other documents necessary to effectuate the settlement among NRG, GenOn, and certain holders of senior unsecured notes of GenOn Americas Generations and GenOn, and certain of GenOn's direct and indirect subsidiaries | | |

| Transformation Plan | | | | | | NRG's three-year plan announced in 2017 that included targets related to operations and excellence, portfolio optimization, and capital structure and allocation enhancement and was completed as of December 31, 2020 | | |

Listed below are descriptions of NRG's interests in facilities, operations and/or projects owned or leased as of December 31, [removed: 2020.][added: 2021.]

Net MW capacity is adjusted for the Company's owned or leased [removed: interest, excluding capacity from inactive/mothballed units] [added: interest] as of December 31, [removed: 2020.][added: 2021.]

| [removed: Limestone] [added: Limestone(c)] | | | | | | ERCOT | | | | | | Fossil | | | | | | Coal | | | | | | TX | | | | | | 1,660 | | | | | | 1,660 | | | | | | 100.0 | | | | | |

| Petra Nova [removed: Cogen(c)] [added: Cogen] | | | | | | ERCOT | | | | | | Fossil | | | | | | Natural Gas | | | | | | TX | | | | | | 68 | | | | | | 34 | | | | | | 50.0 | | | | | |

| T.H. Wharton | | | | | | ERCOT | | | | | | Fossil | | | | | | Natural Gas | | | | | | TX | | | | | | [removed: 1,001] [added: 1,002] | | | | | | [removed: 1,001] [added: 1,002] | | | | | | 100.0 | | | | | |

| [removed: Arthur Kill] [added: Astoria Turbines(e)] | | | | | | NYISO | | | | | | Fossil | | | | | | Natural Gas | | | | | | NY | | | | | | [removed: 866] [added: 420] | | | | | | [removed: 866] [added: 420] | | | | | | 100.0 | | | | | |

| Indian [removed: River] [added: River(f)] | | | | | | PJM | | | | | | Fossil | | | | | | Coal | | | | | | DE | | | | | | 410 | | | | | | 410 | | | | | | 100.0 | | | | | |

| Joliet | | | | | | PJM | | | | | | Fossil | | | | | | Natural Gas | | | | | | IL | | | | | | [removed: 1,373] [added: 1,381] | | | | | | [removed: 1,373] [added: 1,381] | | | | | | 100.0 | | | | | |

| [removed: Waukegan] [added: Waukegan(f)] | | | | | | PJM | | | | | | Fossil | | | | | | Coal | | | | | | IL | | | | | | 682 | | | | | | 682 | | | | | | 100.0 | | | | | |

| Will [removed: County] [added: County(f)] | | | | | | PJM | | | | | | Fossil | | | | | | Coal | | | | | | IL | | | | | | 510 | | | | | | 510 | | | | | | 100.0 | | | | | |

| Total East | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 9,482] [added: 5,476] | | | | | | [removed: 9,482] [added: 5,476] | | | | | | | | | | | |

| Cottonwood | | | | | | MISO | | | | | | Fossil | | | | | | Natural Gas | | | | | | TX | | | | | | [removed: 1,153] [added: 1,177] | | | | | | [removed: 1,153] [added: 1,177] | | | | | | ___(d) | | | | | |

| Stadiums [added: and Other] | | | | | | | | | | | | Renewable | | | | | | Solar | | | | | | various | | | | | | 5 | | | | | | 5 | | | | | | 100.0 | | | | | |

| Total West/Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: 4,934] [added: 3,830] | | | | | | [removed: 3,234] [added: 2,318] | | | | | | | | | | | |

Additionally, ERCOT [removed: requires] [added: and PJM require] periodic demonstration of capability, and the capacity may vary individually and in the aggregate from time to time

NRG leases its [added: operational and corporate headquarters at 910 Louisiana Street, Houston, Texas, its] financial and commercial corporate [removed: headquarters] [added: offices] at 804 Carnegie Center, Princeton, New Jersey, [removed: its operational headquarters at 910 Louisiana Street, Houston, Texas,] as well as its retail operations [removed: offices and] [added: offices,] call centers, and various other office space.

| Total Texas | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,809 | | | | | | 10,083 | | | | | | | | | | | |

| Total Fleet | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 21,115 | | | | | | 17,877 | | | | | | | | | | | |

(c)In early July 2021, Limestone Unit 1 came offline as a result of damage to the duct work associated with the flue gas desulfurization system.

Based on management's current assessment of necessary remediation efforts, Unit 1 is expected to remain on an outage until the second quarter of 2022

(e)On February, 22, 2022, NRG submitted deactivation notices to the NYISO for the Astoria facility, with a planned retirement date of 2023

(f)During the second quarter of 2021, the results of the PJM Base Residual Auction for the 2022/2023 delivery year were released, leading the Company to announce the near-term retirement of a significant portion of its PJM coal generating assets as detailed bellow:

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Name of Facility | | | | | | Power Market | | | | | | Primary Fuel | | | | | | Net MW Capacity | | | | | | Retirement Date | | |

| Indian River 4 | | | | | | PJM | | | | | | Coal | | | | | | 410 | | | | | | June 2022* | | |

| Waukegan 7 | | | | | | PJM | | | | | | Coal | | | | | | 328 | | | | | | June 2022 | | |

| Waukegan 8 | | | | | | PJM | | | | | | Coal | | | | | | 354 | | | | | | June 2022 | | |

| Will County | | | | | | PJM | | | | | | Coal | | | | | | 510 | | | | | | June 2022 | | |

| | | | | | | | | | | | | Total | | | | | | 1,602 | | | | | | | | |

* On July 30, 2021, PJM identified reliability impacts resulting from the proposed deactivation of one of those assets, Indian River Unit 4.

On August 27, 2021 the Company notified PJM that it would continue operations at Indian River Unit 4 until the reliability upgrades identified by PJM were completed, provided that the unit receives a satisfactory and compensatory reliability must run arrangement.

| Total Texas | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11,808 | | | | | | 10,082 | | | | | | | | | | | |

| Astoria Turbines | | | | | | NYISO | | | | | | Fossil | | | | | | Natural Gas | | | | | | NY | | | | | | 423 | | | | | | 423 | | | | | | 100.0 | | | | | |

| Connecticut Jet Power | | | | | | ISO-NE | | | | | | Fossil | | | | | | Oil | | | | | | CT | | | | | | 142 | | | | | | 142 | | | | | | 100.0 | | | | | |

| Devon | | | | | | ISO-NE | | | | | | Fossil | | | | | | Oil | | | | | | CT | | | | | | 133 | | | | | | 133 | | | | | | 100.0 | | | | | |

| Middletown | | | | | | ISO-NE | | | | | | Fossil | | | | | | Oil | | | | | | CT | | | | | | 762 | | | | | | 762 | | | | | | 100.0 | | | | | |

| Montville | | | | | | ISO-NE | | | | | | Fossil | | | | | | Oil | | | | | | CT | | | | | | 491 | | | | | | 491 | | | | | | 100.0 | | | | | |

| Oswego | | | | | | NYISO | | | | | | Fossil | | | | | | Oil | | | | | | NY | | | | | | 1,617 | | | | | | 1,617 | | | | | | 100.0 | | | | | |

| Agua Caliente | | | | | | WECC | | | | | | Renewable | | | | | | Solar | | | | | | AZ | | | | | | 290 | | | | | | 102 | | | | | | 35.0 | | | | | |

| Long Beach | | | | | | CAISO | | | | | | Fossil | | | | | | Natural Gas | | | | | | CA | | | | | | 252 | | | | | | 252 | | | | | | 100.0 | | | | | |

| Sunrise | | | | | | CAISO | | | | | | Fossil | | | | | | Natural Gas | | | | | | CA | | | | | | 586 | | | | | | 586 | | | | | | 100.0 | | | | | |

| Total Fleet | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,224 | | | | | | 22,798 | | | | | | | | | | | |

(c)The cogeneration facility operated on a seasonal basis in ERCOT during 2020.

Carbon capture operations were suspended in May 2020 with the downturn in oil prices.

The facility is fully capable of operating and can be brought back online when economics improve.

For more information about the NRG LTIP and the NRG GenOn LTIP, refer to Item 12 — S*ecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters* and Item 15 — Note [removed: 22,] [added: 21,] *Stock-Based Compensation*, to the Consolidated Financial Statements*.*

As of January 31, [removed: 2021,] [added: 2022,] there were [removed: 17,427] [added: 16,501] common stockholders of record.

NRG increased the annual dividend to [added: $1.30 from] $1.20 per share [added: beginning] in the first quarter of [removed: 2020 from $0.12 per share,] [added: 2021] and further increased the annual dividend [added: by 8%] to [removed: $1.30] [added: $1.40] per share beginning in the first quarter of [removed: 2021.][added: 2022 .]

[removed: During] [added: The table below sets forth] the [removed: quarter ended December 31, 2020, no] [added: information with respect to] purchases [removed: of NRG's common stock were] made by or on behalf of NRG or any "affiliated purchaser" (as defined in Rule 10b-18(a)(3) under the Exchange [removed: Act).][added: Act) of NRG's common stock during the quarter ended December 31, 2021.]

The performance graph below compares the cumulative total stockholder return on NRG's common stock for the period December 31, [removed: 2015] [added: 2016] through December 31, [removed: 2020] [added: 2021] with the cumulative total return of the Standard & Poor's 500 Composite Stock Price Index, or S&P 500, and the Philadelphia Utility Sector Index, or UTY.

The performance graph shown below is being furnished and compares each period assuming that $100 was invested on December 31, [removed: 2015,] [added: 2016,] in each of the common stock of NRG, the stocks included in the S&P 500 and the stocks included in the UTY, and that all dividends were reinvested.

[removed: ][added: ]

| | | | [removed: 12/31/2015] [added: 12/31/2016] | | | | | | [removed: 12/31/2016] [added: 12/31/2017] | | | | | | [removed: 12/31/2017] [added: 12/31/2018] | | | | | | [removed: 12/31/2018] [added: 12/31/2019] | | | | | | [removed: 12/31/2019] [added: 12/31/2020] | | | | | | [removed: 12/31/2020] [added: 12/31/2021] | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| For the three months ended December 31, 2021 | | | | | | Total Number of Shares Purchased | | | | | | Average Price Paid per Share(b) | | | | | | 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(a)(c) | | |

| Month #1 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (October 1, 2021 to October 31, 2021 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| Month #2 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (November 1, 2021 to November 30, 2021, | | | | | | — | | | | | | $ | — | | | | | — | | | | | | $ | — | |

| Month #3 | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (December 1, 2021 to December 31, 2021) | | | | | | 1,084,752 | | | | | | $ | 40.85 | | | | | 1,084,752 | | | | | | $ | 955,665,275 | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total at December 31, 2021 | | | | | | 1,084,752 | | | | | | $ | 40.85 | | | | | 1,084,752 | | | | | | | | |

(a)On December 6, 2021 the Company announced that the Board of Directors has authorized $1 billion for share repurchases, as part of NRG’s Capital Allocation Program.

The program began in December 2021 and will continue throughout 2022

(b)The average price paid per share excludes commissions of $0.02 per share paid in connection with the open market share repurchases

(c)Includes commissions of $0.02 per share paid in connection with the open market share repurchases

| NRG Energy, Inc. | | | $ | 100.00 | | | | | $ | 233.70 | | | | | $ | 326.22 | | | | | $ | 328.47 | | | | | $ | 321.43 | | | | | $ | 381.07 | |

| S&P 500 | | | 100.00 | | | | | | 121.83 | | | | | | 116.49 | | | | | | 153.17 | | | | | | 181.35 | | | | | | 233.41 | | |

| UTY | | | 100.00 | | | | | | 112.82 | | | | | | 116.79 | | | | | | 148.11 | | | | | | 152.14 | | | | | | 179.90 | | |

| NRG Energy, Inc. | | | $ | 100.00 | | | | | $ | 106.40 | | | | | $ | 248.67 | | | | | $ | 347.11 | | | | | $ | 349.50 | | | | | $ | 342.02 | |

| S&P 500 | | | 100.00 | | | | | | 111.96 | | | | | | 136.40 | | | | | | 130.42 | | | | | | 171.49 | | | | | | 203.04 | | |

| UTY | | | 100.00 | | | | | | 117.39 | | | | | | 132.45 | | | | | | 137.10 | | | | | | 173.87 | | | | | | 178.61 | | |

Management's report on the Company's internal control over financial reporting and the report of the Company's independent registered public accounting firm are incorporated under the caption "Management's Report on Internal Control over Financial Reporting" and under the caption "Report of Independent Registered Public Accounting Firm" in this Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2020.][added: 2021.]

[removed: There] [added: Other than the Direct Energy acquisition, there] were no changes in NRG’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred in the fourth quarter of [removed: 2020] [added: 2021] that materially affected, or are reasonably likely to materially affect, NRG’s internal control over financial reporting.

Based on the Company's evaluation under the framework in *Internal Control — Integrated Framework (2013)*, the Company's management concluded that its internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of the Company's internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] has been audited by KPMG LLP, the Company's independent registered public accounting firm, as stated in its report which is included in this Annual Report on Form 10-K.

We have audited NRG Energy, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission*.* In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2020 and 2019,] [added: 2021] and [added: 2020,] the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated [removed: March 1, 2021] [added: February 24, 2022] expressed an unqualified opinion on those consolidated financial statements.

During the year ended December 31, 2021, the Company completed its acquisition of Direct Energy.

In the first quarter of 2022, the Company integrated a significant component of Direct Energy's accounting systems into NRG's legacy ERP system.

As part of this integration, the Company has completed the evaluation of our internal controls related to Direct Energy, and designed and implemented a control structure over Direct Energy's operations.

On January 5, 2021, NRG acquired Direct Energy, as further described in Note 4, *Acquisitions, Discontinued Operations and Dispositions.* Direct Energy comprised of approximately 35% of the Company's total assets as of December 31, 2021 and approximately 58% of the Company's total revenues for the year ended December 31, 2021.

As of December 31, 2021, we are in the process of evaluating the internal controls of the acquired business and integrated it into our existing operations.

The acquired business has, therefore, been excluded from management's assessment of internal control over financial reporting for the year ended December 31, 2021.

The Company acquired Direct Energy during 2021 and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2021.

Direct Energy's internal control over financial reporting are associated with 35% of total assets and 58% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Direct Energy.

February 24, 2022

March 1, 2021

[removed: Compensatory] [added: *Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory] Arrangements of Certain [removed: Officers][added: Officers.*]

*Entry into a Material Definitive Agreement.*

On February 22, 2022, the Company entered into a Supplemental Indenture (the “Supplemental Indenture”), by and among the Company, the guarantors named therein (the “Guarantors") and Delaware Trust Company, as trustee and conversion agent (the “Trustee”), to supplement the Indenture, dated as of May 24, 2018 (the “Indenture”), among the Company, the Guarantors and the Trustee, governing the Convertible Senior Notes.

Pursuant to the Supplemental Indenture, the Company has irrevocably (i) eliminated the right of the Company to elect Physical Settlement (as defined in the Indenture) as the Settlement Method (as defined in the Indenture) on any conversion of Convertible Senior Notes that occurs on or after the date of the Supplemental Indenture and (ii) elected that, with respect to any Combination Settlement (as defined in the Indenture), the Specified Dollar Amount (as defined in the Indenture) per $1,000 principal amount of the Convertible Senior Notes shall be no lower than $1,000.

The foregoing description of the Supplemental Indenture does not purport to be complete and is qualified in its entirety by reference to the full text of the Supplemental Indenture, a copy of which is filed as Exhibit 4.52 to this report and is incorporated herein by reference.

Effective February 24, 2022, Emily C.

Picarello, CPA, was named as Principal Accounting Officer of NRG Energy, Inc. Ms. Picarello, age 41, joined the Company in December 2018 and served as Assistant Controller for the Company through November 2021, when she was promoted to Vice President and Corporate Controller.

Ms. Picarello will continue in this role reporting to Alberto Fornaro, NRG's Executive Vice President and Chief Financial Officer.

Prior to her employment with the Company, Ms. Picarello spent over seven years with PVH Corp., one of the largest global apparel companies in the world, first as the Director of Financial Reporting and then as the Vice President, Financial Reporting.

Prior to Ms. Picarello's time with PVH Corp., she was an auditor with KPMG LLP for over eight years, holding various positions including Audit Senior Manager.

Sale of 4.8 GWs of Generation Assets

On February 28, 2021, the Company entered into a Purchase and Sale Agreement (the "Purchase Agreement") with Generation Bridge Acquisition, LLC ("Generation"), a Delaware limited liability company, pursuant to which NRG has agreed to sell, or cause to be sold, as applicable, to Generation one hundred percent (100%) of the outstanding membership interests of each of (1) Long Beach Generation LLC ("Long Beach") and Mission Del Cielo, LLC ("Mission Del Cielo"), each of which is an indirect wholly owned subsidiary of NRG, and (2) Arthur Kill Power LLC ("Arthur Kill"), Connecticut Jet Power LLC ("Connecticut Jet Power"), Devon Power LLC ("Devon"), Middletown Power LLC ("Middletown"), Montville Power LLC ("Montville") and Oswego Harbor Power LLC ("Oswego," and together with Long Beach, Mission Del Cielo, Arthur Kill, Connecticut Jet Power, Devon, Middletown and Montville, the "Subsidiaries"), each of which is a wholly owned subsidiary of NRG (such sale, the "Transaction").

Mission Del Cielo owns one hundred percent (100%) of the outstanding membership interests of Mission del Sol, LLC ("Mission Del Sol," and together with Mission Del Cielo, the "Holdcos").

Mission Del Sol owns one hundred percent (100%) of the outstanding membership interests of Sunrise Power Company, LLC (together with Long Beach, the "California Project Companies").

Arthur Kill, Connecticut Jet Power, Devon, Middletown, Montville and Oswego, together with the California Project Companies, are referred to as the "Project Companies".

Consideration

Subject to the terms and conditions of the Purchase Agreement, NRG has agreed to sell, or cause to be sold, as applicable, to Generation all of the outstanding membership interests of the Subsidiaries for an aggregate base purchase price of $760 million, subject to adjustments for working capital, indebtedness, and certain operations of the Holdcos and the Project Companies during the interim period between the date of the Purchase Agreement and the consummation of the Transaction (the "Closing").

Representations and Warranties and Covenants

The Purchase Agreement contains customary representations and warranties of NRG and Generation.

The representations and warranties of each party set forth in the Purchase Agreement have been made solely for the benefit of the other party to the Purchase Agreement, and such representations and warranties should not be relied on by any other person.

In addition, such representations and warranties (a) have been qualified by disclosure schedules that the parties have delivered in connection with the execution of the Purchase Agreement, (b) are subject to the materiality standards set forth in the Purchase Agreement, which may differ from what may be viewed as material by investors, (c) in certain cases, were made as of a specific date, and (d) may have been used for purposes of allocating risk between the respective parties rather than establishing matters of fact.

Accordingly, no person should rely on the representations and warranties as characterizations of the actual state of facts.

Moreover, information concerning the subject matter of the representations and warranties may change after the date of the execution of the Purchase Agreement.

Generation has agreed to obtain, at its sole cost, a representation and warranty insurance policy.

As a result, NRG will not be liable for any breach of its representations and warranties that occurs after the Closing.

Between the date of the Purchase Agreement and the Closing, subject to certain exceptions, NRG agrees to cause the Holdcos and the Project Companies to be operated in the ordinary course of business consistent with laws and permits and past practice and to use commercially reasonable efforts to preserve, maintain and protect the assets and business of the Holdcos and the Project Companies.

Following the Closing, NRG will be required to pay all costs incurred by Generation or the applicable Project Companies arising out of or related to certain environmental liabilities (the "Specific Environmental Liabilities") relating to certain remedial actions or the ownership of the Project Companies or the generation facilities owned by the Project Companies, other than certain costs to decommission such facilities, prior to the date of the Closing (the "Closing Date"), subject to a $39 million cap established as set forth in the Purchase Agreement (the "Seller Environmental Liability Cap").

NRG's obligations to pay such costs will terminate on the earlier to occur of the seventh anniversary of the Closing Date and the date on which NRG has paid Generation an amount equal to the Seller Environmental Liability Cap, subject to an extension of such term and a corresponding increase in the Seller Environmental Liability Cap to the extent there are remaining costs to address Specific Environmental Liabilities that have been reasonably estimated but not yet incurred prior to such anniversary date.

Conditions to Closing and Deliverables

The Transaction is subject to various conditions to Closing, including: (a) the accuracy of the representations and warranties of each party at the time of Closing, (b) compliance by each party with its covenants), (c) the absence of any law or order prohibiting the Closing, (d) certain contractual consents having been obtained, (e) receipt of certain regulatory approvals, as necessary (including HSR, FERC, and NYSPSC authorizations), and (f) the absence of a material adverse effect with respect

to the Holdcos, the California Project Companies and the other Subsidiaries, as well as other customary closing conditions.

The Transaction is expected to close in the fourth quarter of 2021.

In connection with the closing of the Transaction, NRG and Generation will enter in to certain additional ancillary agreements, including a transition services agreement.

In addition, ArcLight Energy Partners Fund VII, L.P., the parent company of Generation, has executed and delivered a parent guaranty with respect to the obligations of Generation in connection with the Transaction.

Indemnification and Termination

Both NRG and Generation have agreed, subject to certain limitations, to indemnify the other party for losses arising from certain breaches of the Purchase Agreement.

In addition, NRG has agreed to indemnify Generation for liabilities related to certain environmental matters and certain ongoing actions or proceedings, among other things.

The Purchase Agreement contains certain customary termination rights for each of NRG and Generation, including among other things, that either party may terminate the Purchase Agreement if (a) the parties mutually agree in writing, (b) the Closing has not occurred on or before December 31, 2021, which date may be extended for an additional 90 days to enable the parties to satisfy certain regulatory conditions, or (c) the other party has incurably breached a representation, warranty, covenant or agreement contained in the Purchase Agreement resulting in a failure of a condition set forth in the Purchase Agreement.

If NRG terminates the Purchase Agreement as a result of a breach by Generation of certain representations, warranties covenants or other agreements, Generation will be required to pay NRG a termination fee equal to 10 percent of the purchase price as adjusted in accordance with the Purchase Agreement.

As previously disclosed in a Current Report on Form 8-K, filed with the SEC on February 4, 2021, the Company announced that Gaëtan Frotté was appointed Interim Chief Financial Officer of the Company effective February 4, 2021.

On March 1, 2021, the Compensation Committee of the Board of Directors of the Company (the "Compensation Committee") determined that while Mr. Frotté serves as Interim Chief Financial Officer, in addition to his base salary, he will be entitled to a monthly stipend of $50,000, effective February 4, 2021, to recognize his additional responsibilities.

In addition, the Board of Directors of the Company approved the promotion of Mr. Brian E.

Curci, the Senior Vice President and General Counsel, to Executive Vice President and General Counsel, effective on February 22, 2021.

Mr. Curci will continue to be responsible for the day-to-day legal operations of the Company.

In addition, on March 1, 2021, the Compensation Committee approved changes to Mr. Curci's annual compensation.

Mr. Curci's annual base salary increased to $500,000 effective February 22, 2021.

In addition, Mr. Curci's target long-term incentive award under the Company's LTIP has been increased to 200% of his base salary and Mr. Curci's target bonus under the Company's Annual Incentive Plan ("AIP") has been increased to 75% of his base salary with a maximum of 150%.

The general terms and conditions of the LTIP and AIP are described in the Company's definitive proxy statement filed on March 15, 2020 with the SEC.

The description of the LTIP is qualified in its entirety by reference to the full text of the LTIP, a copy of which was filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on April 28, 2017, and the description of the AIP is qualified in its entirety by reference to the full text of the AIP, a copy of which was filed as Exhibit 10.1 to the Company's current report on Form 8-K filed on May 7, 2015.

PART III

Not applicable.

PART III

[removed: Executive] [added: Directors and Executive] Officers

Other information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.

Directors

*E.

Spencer Abraham* has been a director of NRG since December 2012.

Previously, he served as a director of GenOn Energy, Inc. from January 2012 to December 2012.

He is Chairman and Chief Executive Officer of The Abraham Group, an international strategic consulting firm based in Washington, D.C. which he founded in 2005.

Prior to that, Secretary Abraham served as Secretary of Energy under President George W.

Bush from 2001 through January 2005 and was a U.S. Senator for the State of Michigan from 1995 to 2001.

Secretary Abraham serves on the boards of the following public companies: PBF Energy and Two Harbors Investment Corp., as well as chairman of the board of Uranium Energy Corp. Secretary Abraham previously served as the non-executive chairman of AREVA, Inc., the U.S. subsidiary of the French-owned nuclear company, and as a director of Occidental Petroleum Corporation, Deepwater Wind LLC, International Battery, C3 IoT, Green Rock Energy, ICx Technologies, PetroTiger and Sindicatum Sustainable Resources.

He also previously served on the advisory board or committees of Midas Medici (Utilipoint), Millennium Private Equity, Sunovia and Wetherly Capital.

*Antonio Carrillo* has been a director of NRG since October 2019.

Mr. Carrillo currently serves as Arcosa Inc.’s President and Chief Executive Officer since November 2018 and is a member of its Board of Directors.

From April 2018 to November 2018, Mr. Carrillo served as Senior Vice President and Group President of Construction, Energy, Marine and Components of Trinity Industries, Inc. (Trinity).

From 2012 to February 2018, Mr. Carrillo served as the Chief Executive Officer of Orbia Advance Corporation (formerly known as Mexichem S.A.B. de C.V.) (Orbia), a publicly-traded global specialty chemical company.

Prior to joining Orbia, Mr. Carrillo spent 16 years at Trinity where he served as Senior Vice President and Group President of Trinity’s Energy Equipment Group and was responsible for Trinity’s Mexico operations.

Mr. Carrillo previously served as a director of Trinity from 2014 until November 2018 and a director of Dr Pepper Snapple Group, Inc. from 2015 to 2018.

*Matthew Carter, Jr.* has been a director of NRG since March 2018.

Mr. Carter currently serves as Chief Executive Officer of Aryaka Networks, Inc. Mr. Carter served as President and Chief Executive Officer and a director of Inteliquent, Inc., a publicly traded provider of voice telecommunications services, from June 2015 until February 2017 when Inteliquent, Inc. was acquired.

He served as President of the Sprint Enterprise Solutions business unit of Sprint Corporation, a publicly traded telecommunications company, from September 2013 until January 2015 and, previous to that position, served as President, Sprint Global Wholesale & Emerging Solutions at Sprint Nextel Corporation.

Mr. Carter also serves as a director of Jones Lang Lasalle Incorporated.

He previously served as a director of USG Corporation from 2012 to 2018, Apollo Education Group, Inc. from 2012 to 2017 and Inteliquent, Inc. from June 2015 to February 2017 and has significant marketing, technology and international experience, including previous management oversight for all of Inteliquent, Inc.’s operations.

*Lawrence S.

Coben* has served as Chairman of the Board since February 2017, and has been a director of NRG since December 2003.

He was Chairman and Chief Executive Officer of Tremisis Energy Corporation LLC until December 2017.

Dr. Coben was Chairman and Chief Executive Officer of both Tremisis Energy Acquisition Corporation II, a publicly held company, from July 2007 through March 2009 and of Tremisis Energy Acquisition Corporation from February 2004 to May 2006.

From January 2001 to January 2004, he was a Senior Principal of Sunrise Capital Partners L.P., a private equity firm.

From 1997 to January 2001, Dr. Coben was an independent consultant.

From 1994 to 1996, Dr. Coben was Chief Executive Officer of Bolivian Power Company.

Dr. Coben serves on the board of Freshpet, Inc. and served on the advisory board of Morgan Stanley Infrastructure II, L.P. from September 2014 through December 2016.

Dr. Coben is also Executive Director of the Escala Initiative and a Consulting Scholar at the University of Pennsylvania Museum of Archaeology and Anthropology.

*Heather Cox* has been a director of NRG since March 2018.

Ms. Cox currently serves as Chief Digital Health and Analytics Officer at Humana Inc. Ms. Cox was Executive Vice President, Chief Technology & Digital Officer of United Services Automobile Association, Inc. from October 2016 to March 2018.

Ms. Cox served as Chief Executive Officer, Financial Technology Division and Head of Citi FinTech of Citigroup, Inc. from November 2015 to September 2016, and as Chief Client Experience, Digital and Marketing Officer, Global Consumer Bank of Citigroup, Inc. from April 2014 to November 2015.

Prior to that, Ms. Cox served at Capital One Financial Corporation for six years, most recently as Executive Vice President, US Card Operations, Capital One from August 2011 to August 2014.

Ms. Cox also served in various managerial and executive roles at E*Trade Bank for ten years.

*Elisabeth B.

Donohue* has been a director of NRG since October 2020.

Ms. Donohue retired in January 2020 from Publicis Groupe, the world’s third largest communications company where she spent 32 years advising clients on their consumer marketing efforts and business transformation.

Her most recent role included serving as the chief executive officer of Publicis Spine, a data and technology start up launched by Publicis Groupe in October 2017.

From April 2016 to October 2017, Ms. Donohue served as Global Brand President of the media communications agency Starcom Worldwide.

From 2009 through 2016, Ms. Donohue served as chief executive officer of Starcom USA, where she drove Starcom’s digital offering and built the

Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

| Equity compensation plans [added: not] approved by security holders | | | [removed: 2,449,484] [added: 20,131] | | | [removed: (1)] [added: (2)] | | | [removed: $] [added: 20.07] | [removed: 19.83] | | | | | [removed: 12,139,321] [added: —] | | | [added: (4)] | | |

| Equity compensation plans [removed: not] approved by security holders | | | [removed: 78,903] [added: 2,514,828] | | | [removed: (2)] [added: (1)] | | | [removed: 26.16] [added: $] | [added: —] | | | | | [removed: —] [added: 11,508,073] | | | [removed: (4)] | | |

As of December 31, [removed: 2020,] [added: 2021,] there were [removed: 2,753,591] [added: 2,636,199] shares reserved from the Company's treasury shares for the ESPP

See Item 15 — Note [removed: 22,] [added: 21,] *Stock-Based Compensation*, to Consolidated Financial Statements for a discussion of the NRG GenOn LTIP

(3)Consists of [removed: 9,385,730] [added: 8,871,874] shares of common stock under NRG's LTIP and [removed: 2,753,591] [added: 2,636,199] shares of treasury stock reserved for issuance under the ESPP.

[removed: See] [added: For further discussion, see] Note [removed: 22,] [added: 21,] *Stock-Based [removed: Compensation*, for additional information][added: Compensation*]

Other information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

| Total | | | 2,534,959 | | | | | | $ | 20.07 | | | | | 11,508,073 | | | (3) | | |

| Total | | | 2,528,387 | | | | | | $ | 25.13 | | | | | 12,139,321 | | | (3) | | |

Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its [removed: 2021] [added: 2022] Annual Meeting of Stockholders.

The following consolidated financial statements of NRG Energy, Inc. and related notes thereto, together with the reports thereon of KPMG LLP, [added: Philadelphia, PA, Auditor Firm ID: 185,] are included herein:

Consolidated Statements of Operations — Years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Statements of Comprehensive Income — Years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Balance Sheets — As of December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

Consolidated Statements of Cash Flows — Years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

Consolidated Statements of Stockholders' Equity — Years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018][added: 2019]

We have audited the accompanying consolidated balance sheets of NRG Energy, Inc. and subsidiaries (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal [removed: Control - Integrated] [added: Control* – *Integrated] Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated [removed: March 1, 2021] [added: February 24, 2022] expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

*Critical Audit [removed: Matter*][added: Matters*]

The critical audit [removed: matter] [added: matters] communicated below [removed: is a matter] [added: are matters] arising from the current period audit of the consolidated financial statements that [removed: was] [added: were] communicated or required to be communicated to the audit committee and that: (1) [removed: relates] [added: relate] to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of [removed: a] critical audit [removed: matter] [added: matters] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matter] [added: matters] below, providing [removed: a] separate [removed: opinion] [added: opinions] on the critical audit [removed: matter] [added: matters] or on the accounts or disclosures to which [removed: it relates.][added: they relate.]

*Evaluation of the sufficiency of audit evidence [removed: obtained] over operating revenues*

As discussed in Note 3 to the consolidated financial statements, the Company had [removed: $9,093 million] [added: $26.989 billion] of operating revenues.

| (In millions, except per share amounts) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Total operating revenues | | | $ | [removed: 9,093] [added: 26,989] | | | | | $ | [removed: 9,821] [added: 9,093] | | | | | $ | [removed: 9,478] [added: 9,821] | |

[removed: | Cost] [added: Cost] of [removed: operations | | | 6,540 | | | | | | 7,303 | | | | | | 7,108 | | |][added: Operations]

| Depreciation and amortization | | | [removed: 435] [added: 785] | | | | | | [removed: 373] [added: 435] | | | | | | [removed: 421] [added: 373] | | |

| Impairment losses | | | [removed: 75] [added: —] | | | | | | [removed: 5] [added: (35)] | | | | | | [removed: 99] [added: —] | | | [added: | | | | | | | | | (35) | | |]

| Selling, general and administrative costs | | | [removed: 933] [added: 1,293] | | | | | | [removed: 827] [added: 810] | | | | | | [removed: 799] [added: 760] | | |

| Total operating costs and expenses | | | [removed: 7,991] [added: 23,895] | | | | | | [removed: 8,538] [added: 7,991] | | | | | | [removed: 8,528] [added: 8,538] | | |

| Gain on sale of assets | | | [removed: 3] [added: 247] | | | | | | [removed: 7] [added: 3] | | | | | | [removed: 32] [added: 7] | | |

| Operating Income | | | [removed: 1,105] [added: 3,341] | | | | | | [removed: 1,290] [added: 1,105] | | | | | | [removed: 982] [added: 1,290] | | |

| Equity in earnings of unconsolidated affiliates | | | 17 | | | | | | [removed: 2] [added: 17] | | | | | | [removed: 9] [added: 2] | | |

| Impairment losses on investments | | | [removed: (18)] [added: —] | | | | | | [removed: (108)] [added: (18)] | | | | | | [removed: (15)] [added: (108)] | | |

| Other income, net | | | [removed: 67] [added: 63] | | | | | | [removed: 66] [added: 67] | | | | | | [removed: 18] [added: 66] | | |

| Loss on debt [removed: extinguishment, net] [added: extinguishment] | | | [removed: (9)] [added: (77)] | | | | | | [removed: (51)] [added: (9)] | | | | | | [removed: (44)] [added: (51)] | | |

| Interest expense | | | [removed: (401)] [added: (485)] | | | | | | [removed: (413)] [added: (401)] | | | | | | [removed: (483)] [added: (413)] | | |

| Total other expense | | | [removed: (344)] [added: (482)] | | | | | | [removed: (504)] [added: (344)] | | | | | | [removed: (515)] [added: (504)] | | |

| Income from Continuing Operations Before Income Taxes | | | [removed: 761] [added: 2,859] | | | | | | [removed: 786] [added: 761] | | | | | | [removed: 467] [added: 786] | | |

| Income tax expense/(benefit) | | | [removed: 251] [added: 672] | | | | | | [removed: (3,334)] [added: 251] | | | | | | [removed: 7] [added: (3,334)] | | |

| Income from Continuing Operations | | | [removed: 510] [added: 2,187] | | | | | | [removed: 4,120] [added: 510] | | | | | | [removed: 460] [added: 4,120] | | |

| Income from discontinued operations, net of income tax | | | — | | | | | | [removed: 321] [added: —] | | | | | | [removed: (192)] [added: 321] | | |

| Net Income | | | [removed: 510] [added: 2,187] | | | | | | [removed: 4,441] [added: 510] | | | | | | [removed: 268] [added: 4,441] | | |

| Less: Net income attributable to [added: redeemable] noncontrolling interest [removed: and redeemable interests] | | | — | | | | | | [removed: 3] [added: —] | | | | | | [removed: —] [added: 3] | | |

| Net Income Attributable to NRG Energy, Inc. | | | $ | [removed: 510] [added: 2,187] | | | | | $ | [removed: 4,438] [added: 510] | | | | | $ | [removed: 268] [added: 4,438] | |

| [removed: Earnings/(Loss)] [added: Income] Per Share Attributable to NRG Energy, Inc. Common Stockholders | | | | | | | | | | | | | | | | | |

| Weighted average number of common shares outstanding — basic | | | 245 | | | | | | [removed: 262] [added: 245] | | | | | | [removed: 304] [added: 262] | | |

| Income from continuing operations per weighted average common share — basic | | | $ | [removed: 2.08] [added: 8.93] | | | | | $ | [removed: 15.71] [added: 2.08] | | | | | $ | [removed: 1.51] [added: 15.71] | |

| [removed: Income/(loss)] [added: Income] from discontinued operations per weighted average common share — basic | | | $ | — | | | | | $ | [removed: 1.23] [added: —] | | | | | $ | [removed: (0.63)] [added: 1.23] | |

For certain revenue streams, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue recognition processes.

For certain revenue streams, we involved IT professionals, who assisted in testing certain IT applications used by the Company in its revenue recognition processes.

In addition, we assessed recorded revenue for a selection of transactions by comparing the amounts recognized to underlying documentation, including contracts with customers.

*Fair value of customer relationship intangible assets*

As discussed in Note 4 to the consolidated financial statements, the Company acquired Direct Energy on January 5, 2021 for consideration of $3.724 billion.

The Company recorded the identifiable assets acquired and liabilities assumed at fair value at the acquisition date, including $1.277 billion of customer relationship intangible assets which represent the generation of future income reflective of Direct Energy's customer base.

Customer relationship intangible assets were valued using the excess earnings method of the income approach.

We identified the evaluation of the fair value of customer relationship intangible assets acquired in the Direct Energy transaction as a critical audit matter.

A higher degree of auditor judgment was required to evaluate the customer attrition used in the excess earnings method.

Changes in the customer attrition could have a significant impact on the forecasted future cash flows used in the excess earnings method and the resulting fair value of the customer relationship intangible assets.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's acquisition-date valuation process, including controls over the development of the customer attrition.

We performed sensitivity analyses over the Company's customer attrition used to determine the estimated fair value of the customer relationship intangible assets to assess the effect of changes in that assumption on the Company's determination of fair value.

We evaluated the customer attrition by comparing it to the Company's actual customer attrition.

| Cost of operations (excluding depreciation and amortization shown below) | | | 20,482 | | | | | | 6,540 | | | | | | 7,303 | | |

| Acquisition-related transaction and integration costs | | | 93 | | | | | | 23 | | | | | | 2 | | |

| Uplift securitization proceeds receivable from ERCOT | | | 689 | | | | | | — | | |

| Cash collateral paid in support of energy risk management activities | | | 291 | | | | | | 50 | | |

| Depreciation and amortization | | | 785 | | | | | | 435 | | | | | | 373 | | |

| Uplift securitization proceeds receivable from ERCOT | | | (689) | | | | | | — | | | | | | — | | |

| Net receipts/(payments) from settlement of acquired derivatives that include financing elements | | | 938 | | | | | | (7) | | | | | | (4) | | |

For further discussion of supplemental cash flow information see Note 26, *Cash Flow Information*

| Balance at December 31, 2021 | | | | | | | | | $ | 4 | | | | | $ | 8,531 | | | | | $ | 464 | | | | | $ | (5,273) | | | | | $ | (126) | | | | | $ | 3,600 | |

(a)Includes $(9) million, $(27) million and $(36) million of equivalent shares purchased in lieu of tax withholding on equity compensation issuances for the years ended December 31, 2021, 2020 and 2019, respectively

NRG sells power, natural gas, home and power services, and develops innovative, sustainable solutions, predominately under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy.

The Company has a customer base that includes approximately 6 million Home customers as well as commercial, industrial, and wholesale customers, supported by approximately 18,000 MW of generation.

On January 5, 2021, the Company acquired Direct Energy, which had been a North American subsidiary of Centrica.

The acquisition increases NRG's retail portfolio by over 3 million customers and complements its integrated model.

It also broadens the Company's presence in the Northeast and into states and locales where it does not currently operate, supporting NRG's objective to diversify its business.

NRG received $623 million of net proceeds, after purchase price adjustments pursuant to the terms of the Purchase and Sale Agreement entered into on February 28, 2021.

During the second quarter of 2021, the results of the PJM Base Residual Auction for the 2022/2023 delivery year were released, leading the Company to announce the near-term retirement of approximately 1,600 MW of its PJM coal generating assets in June 2022.

On July 30, 2021, PJM identified reliability impacts resulting from the proposed deactivation of one of those assets, Indian River Unit 4.

On August 27, 2021 the Company notified PJM that it would continue operations at Indian River Unit 4 until the reliability upgrades identified by PJM were completed, provided that the unit receives a satisfactory and compensatory reliability must run arrangement.

See Item 15 *—* Note 11, *Asset Impairments,* to the Consolidated Financial Statements for further discussion.

The Company is continuing to evaluate the viability of the remaining PJM generating assets.

The Company's business is segmented as follows:

interests.

Though some amounts are segregated into separate accounts, not all funds are contractually restricted.

Based on the Company's intention, these funds are not available for the payment of general corporate obligations; however, they are available for liquidity management.

Winter Storm Uri Uplift Securitization Proceeds

*Changes in Accounting Principle*

As discussed in Note 10 to the consolidated financial statements, effective January 1, 2019, the Company adopted Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC) Topic 842, *Leases*, and related amendments.

As discussed in Note 3 to the consolidated financial statements, effective January 1, 2018, the Company adopted FASB ASC Topic 606, *Revenue from Contracts with Customers*, and related amendments.

For each revenue stream over which procedures were performed, we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue recognition processes; involved IT professionals, who assisted in testing certain IT applications used by the Company in its revenue recognition processes; and assessed the recorded revenue by selecting transactions and comparing the amounts recognized to underlying documentation, including contracts with customers.

March 1, 2021

| Reorganization costs | | | — | | | | | | 23 | | | | | | 90 | | |

| Development costs | | | 8 | | | | | | 7 | | | | | | 11 | | |

| Unrealized gain on derivatives, net of income tax | | | — | | | | | | — | | | | | | 23 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Redeemable noncontrolling interest in subsidiaries | | | — | | | | | | 20 | | |

| GenOn settlement, net of insurance proceeds | | | — | | | | | | — | | | | | | (63) | | |

| Net loss on deconsolidation of Agua Caliente and Ivanpah projects | | | — | | | | | | — | | | | | | 13 | | |

| Deconsolidations of Agua Caliente and Ivanpah projects | | | — | | | | | | — | | | | | | (268) | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balances at December 31, 2017 | | | | | | | | | $ | 4 | | | | | $ | 8,376 | | | | | $ | (6,268) | | | | | $ | (2,386) | | | | | $ | (72) | | | | | $ | 2,314 | | | | | $ | 1,968 | |

| Sale of assets to NRG Yield, Inc. | | | | | | | | | | | | | | | 8 | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 16 | | |

| Distributions to noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (43) | | | | | | (43) | | |

| Dividends paid to NRG Yield, Inc. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (61) | | | | | | (61) | | |

| Contributions from noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 304 | | | | | | 304 | | |

| Adoption of new accounting standards | | | | | | | | | | | | | | | | | | | | | 15 | | | | | | | | | | | | | | | | | | | | | | | | 15 | | |

| Sale of NRG Yield and other business | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (2,548) | | | | | | (2,548) | | |

| Equity component of convertible senior notes | | | | | | | | | | | | | | | 101 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 101 | | |

NRG is a customer-centric business focused on perfecting the integrated model by balancing retail load with generation supply within its deregulated markets.

As of December 31, 2020, the Company sold energy, services, and innovative, sustainable products and services directly to retail customers under the names NRG, Reliant, Green Mountain Energy, Stream and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation.

NRG also conducts business under the brand name of Direct Energy as a result of the Company's acquisition of Direct Energy, a North American subsidiary of Centrica plc, on January 5, 2021.

Following the acquisition, the Company serves more than 6 million customers.

In addition, Direct Energy is a participant in the wholesale gas and power markets in the United States and Canada.

As a result, the Company changed its business segments from Retail and Generation to Texas, East and West/Other beginning in the first quarter of 2020.

The Company's businesses are segregated as follows:

All affected disclosures presented herein have been recast to reflect these changes for all periods presented.

The East segment will also include the deregulated customer and market operations of Canada.

COVID-19

In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency.

Electricity was deemed a 'critical and essential business operation' under various state and federal governmental COVID-19 mandates.

NRG had activated its Crisis Management Team ("CMT") in January 2020 to proactively manage the Company's response to the impacts of COVID-19.

NRG continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations.

In June 2020, summer-critical office employees returned to the offices and safety protocols were successfully implemented.

The Company continues to maintain certain restrictions on business travel and face-to-face sales channels, remote work practices remain in place and there are enhanced cleaning and hygiene protocols in all of its facilities.

In addition, select essential employees and contractors are continuing to report to plant and certain office locations.

In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant in the capacities indicated on [removed: March 1, 2021.][added: February 24, 2022.]

| /s/ MAURICIO GUTIERREZ | | | | | | President, Chief Executive Officer and | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| [removed: Gaëtan Frotté] [added: Alberto Fornaro] | | | | | | (Principal Financial Officer) | | | | | | | | |

| [removed: David Callen] [added: Emily Picarello] | | | | | | (Principal Accounting Officer) | | | | | | | | |

| /s/ LAWRENCE S. COBEN | | | | | | [removed: Chairman] [added: Chair] of the Board | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ E. SPENCER ABRAHAM | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ ANTONIO CARRILLO | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ MATTHEW CARTER, JR. | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ HEATHER COX | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ ELISABETH B. DONOHUE | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ PAUL W. HOBBY | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ ALEXANDRA PRUNER | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ ANNE C. SCHAUMBURG | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

| /s/ THOMAS H. WEIDEMEYER | | | | | | Director | | | | | | [removed: March 1, 2021] [added: February 24, 2022] | | |

Date: February 24, 2022

| /s/ ALBERTO FORNARO | | | | | | Chief Financial Officer | | | | | | February 24, 2022 | | |

| /s/ EMILY PICARELLO | | | | | | Corporate Controller | | | | | | February 24, 2022 | | |

Date: March 1, 2021

| /s/ GAËTAN FROTTÉ | | | | | | Interim Chief Financial Officer | | | | | | March 1, 2021 | | |

| /s/ DAVID CALLEN | | | | | | Chief Accounting Officer | | | | | | March 1, 2021 | | |