filings.toolsItem 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Revenue | $ | 6,740 | $ | 6,659 | $ | 15,325 | $ | 14,088 | |||||||||||||||
| Operating Costs and Expenses | |||||||||||||||||||||||
| Cost of operations (excluding depreciation and amortization shown below) | 5,629 | 4,328 | 12,190 | 9,990 | |||||||||||||||||||
| Depreciation and amortization | 344 | 360 | 670 | 693 | |||||||||||||||||||
| Impairment losses | — | 15 | — | 15 | |||||||||||||||||||
| Selling, general and administrative costs (excluding amortization of customer acquisition costs of $68, $47,$133 and $89, respectively, which are included in depreciation and amortization shown separately above) | 724 | 545 | 1,273 | 1,094 | |||||||||||||||||||
| Acquisition-related transaction and integration costs | 43 | 6 | 51 | 15 | |||||||||||||||||||
| Total operating costs and expenses | 6,740 | 5,254 | 14,184 | 11,807 | |||||||||||||||||||
| Gain/(loss) on sale of assets | — | 5 | (7) | 1 | |||||||||||||||||||
| Operating Income | — | 1,410 | 1,134 | 2,282 | |||||||||||||||||||
| Other Income/(Expense) | |||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | 1 | 4 | 3 | 7 | |||||||||||||||||||
| Other income, net | 4 | 3 | 16 | 33 | |||||||||||||||||||
| Loss on debt extinguishment | (10) | (202) | (10) | (260) | |||||||||||||||||||
| Interest expense | (148) | (163) | (311) | (315) | |||||||||||||||||||
| Total other expense | (153) | (358) | (302) | (535) | |||||||||||||||||||
| (Loss)/Income Before Income Taxes | (153) | 1,052 | 832 | 1,747 | |||||||||||||||||||
| Income tax (benefit)/expense | (49) | 314 | 186 | 498 | |||||||||||||||||||
| Net (Loss)/Income | $ | (104) | $ | 738 | $ | 646 | $ | 1,249 | |||||||||||||||
| Less: Cumulative dividends attributable to Series A Preferred Stock | 17 | 17 | 34 | 34 | |||||||||||||||||||
| Net (Loss)/Income Available for Common Stockholders | $ | (121) | $ | 721 | $ | 612 | $ | 1,215 | |||||||||||||||
| (Loss)/Income per Share | |||||||||||||||||||||||
| Weighted average number of common shares outstanding — basic | 196 | 208 | 197 | 209 | |||||||||||||||||||
| (Loss)/Income per Weighted Average Common Share — Basic | $ | (0.62) | $ | 3.47 | $ | 3.11 | $ | 5.81 | |||||||||||||||
| Weighted average number of common shares outstanding — diluted | 196 | 214 | 203 | 214 | |||||||||||||||||||
| (Loss)/Income per Weighted Average Common Share —Diluted | $ | (0.62) | $ | 3.37 | $ | 3.01 | $ | 5.68 |
See accompanying notes to condensed consolidated financial statements.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Net (Loss)/Income | $ | (104) | $ | 738 | $ | 646 | $ | 1,249 | |||||||||||||||
| Other Comprehensive Income/(Loss) | |||||||||||||||||||||||
| Foreign currency translation adjustments | 13 | (2) | 15 | (10) | |||||||||||||||||||
| Defined benefit plans | 1 | (1) | 1 | (2) | |||||||||||||||||||
| Other comprehensive income/(loss) | 14 | (3) | 16 | (12) | |||||||||||||||||||
| Comprehensive (Loss)/Income | $ | (90) | $ | 735 | $ | 662 | $ | 1,237 | |||||||||||||||
See accompanying notes to condensed consolidated financial statements.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In millions, except share data) | (Unaudited) | (Audited) | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 180 | $ | 966 | |||||||
| Funds deposited by counterparties | 446 | 199 | |||||||||
| Restricted cash | 17 | 8 | |||||||||
| Accounts receivable, net | 3,421 | 3,488 | |||||||||
| Inventory | 451 | 478 | |||||||||
| Derivative instruments | 2,332 | 2,686 | |||||||||
| Cash collateral paid in support of energy risk management activities | 361 | 309 | |||||||||
| Prepayments and other current assets | 987 | 830 | |||||||||
| Total current assets | 8,195 | 8,964 | |||||||||
| Property, plant and equipment, net | 3,192 | 2,021 | |||||||||
| Other Assets | |||||||||||
| Equity investments in affiliates | 47 | 45 | |||||||||
| Operating lease right-of-use assets, net | 133 | 151 | |||||||||
| Goodwill | 5,017 | 5,011 | |||||||||
| Customer relationships, net | 1,379 | 1,538 | |||||||||
| Other intangible assets, net | 1,130 | 1,370 | |||||||||
| Derivative instruments | 1,745 | 1,710 | |||||||||
| Deferred income taxes | 1,935 | 2,067 | |||||||||
| Other non-current assets | 1,315 | 1,145 | |||||||||
| Total other assets | 12,701 | 13,037 | |||||||||
| Total Assets | $ | 24,088 | $ | 24,022 | |||||||
| June 30, 2025 | December 31, 2024 | ||||||||||
| (In millions, except share data) | (Unaudited) | (Audited) | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current Liabilities | |||||||||||
| Current portion of long-term debt and finance leases | $ | 1,132 | $ | 996 | |||||||
| Current portion of operating lease liabilities | 38 | 66 | |||||||||
| Accounts payable | 2,544 | 2,513 | |||||||||
| Derivative instruments | 1,954 | 2,297 | |||||||||
| Cash collateral received in support of energy risk management activities | 446 | 199 | |||||||||
| Deferred revenue current | 715 | 711 | |||||||||
| Accrued expenses and other current liabilities | 1,952 | 2,031 | |||||||||
| Total current liabilities | 8,781 | 8,813 | |||||||||
| Other Liabilities | |||||||||||
| Long-term debt and finance leases | 9,812 | 9,812 | |||||||||
| Non-current operating lease liabilities | 134 | 117 | |||||||||
| Derivative instruments | 1,273 | 1,107 | |||||||||
| Deferred income taxes | 12 | 12 | |||||||||
| Deferred revenue non-current | 905 | 862 | |||||||||
| Other non-current liabilities | 883 | 821 | |||||||||
| Total other liabilities | 13,019 | 12,731 | |||||||||
| Total Liabilities | 21,800 | 21,544 | |||||||||
| Commitments and Contingencies | |||||||||||
| Stockholders' Equity | |||||||||||
| Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at June 30, 2025 and December 31, 2024, aggregate liquidation preference of $650 at June 30, 2025 and December 31, 2024 | 650 | 650 | |||||||||
| Common stock; $0.01 par value; 500,000,000 shares authorized; 201,087,779 and 205,064,058 shares issued and 194,630,094 and 198,604,003 shares outstanding at June 30, 2025 and December 31, 2024, respectively | 2 | 2 | |||||||||
| Additional paid-in-capital | 305 | 705 | |||||||||
| Retained earnings | 1,970 | 1,535 | |||||||||
| Treasury stock, at cost; 6,457,685 shares and 6,460,055 shares at June 30, 2025 and December 31, 2024, respectively | (538) | (297) | |||||||||
| Accumulated other comprehensive loss | (101) | (117) | |||||||||
| Total Stockholders' Equity | 2,288 | 2,478 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 24,088 | $ | 24,022 |
See accompanying notes to condensed consolidated financial statements.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended June 30, | |||||||||||
| (In millions) | 2025 | 2024 | |||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net Income | $ | 646 | $ | 1,249 | |||||||
| Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
| Equity in and distributions from earnings of unconsolidated affiliates | (1) | (4) | |||||||||
| Depreciation of property, plant and equipment and amortization of customer relationships and other intangible assets | 444 | 553 | |||||||||
| Amortization of capitalized contract costs | 226 | 140 | |||||||||
| Accretion of asset retirement obligations | 20 | 3 | |||||||||
| Provision for credit losses | 113 | 133 | |||||||||
| Amortization of financing costs and debt discounts | 13 | 21 | |||||||||
| Loss on debt extinguishment | 10 | 260 | |||||||||
| Amortization of in-the-money contracts and emissions allowances | 51 | 73 | |||||||||
| Amortization of unearned equity compensation | 62 | 57 | |||||||||
| Net loss on sale of assets and disposal of assets | 10 | 8 | |||||||||
| Gain on proceeds from insurance recoveries for property, plant and equipment, net | (100) | — | |||||||||
| Impairment losses | — | 15 | |||||||||
| Changes in derivative instruments | 18 | (1,384) | |||||||||
| Changes in current and deferred income taxes and liability for uncertain tax benefits | 126 | 390 | |||||||||
| Changes in collateral deposits in support of risk management activities | 197 | 660 | |||||||||
| Changes in other working capital | (529) | (851) | |||||||||
| Cash provided by operating activities | $ | 1,306 | $ | 1,323 | |||||||
| Cash Flows from Investing Activities | |||||||||||
| Payments for acquisitions of businesses and assets | $ | (586) | $ | (32) | |||||||
| Capital expenditures | (595) | (172) | |||||||||
| Net purchases of emissions allowances | (7) | (11) | |||||||||
| Proceeds from sales of assets | 6 | 11 | |||||||||
| Proceeds from insurance recoveries for property, plant and equipment, net | 100 | 3 | |||||||||
| Cash used by investing activities | $ | (1,082) | $ | (201) | |||||||
| Cash Flows from Financing Activities | |||||||||||
| Payments of dividends to preferred and common stockholders | $ | (207) | $ | (204) | |||||||
| Equivalent shares purchased in lieu of tax withholdings | (77) | (35) | |||||||||
| Payments for share repurchase activity | (603) | (90) | |||||||||
| Net receipts/(payments) from settlement of acquired derivatives that include financing elements | 38 | (12) | |||||||||
| Proceeds from issuance of long-term debt | — | 875 | |||||||||
| Payments of deferred financing costs | (31) | (12) | |||||||||
| Repayments of long-term debt and finance leases | (10) | (956) | |||||||||
| Payments for debt extinguishment costs | — | (257) | |||||||||
| Proceeds from credit facilities | 865 | 625 | |||||||||
| Repayments to credit facilities | (730) | (625) | |||||||||
| Cash used by financing activities | $ | (755) | $ | (691) | |||||||
| Effect of exchange rate changes on cash and cash equivalents | 1 | — | |||||||||
| Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash | (530) | 431 | |||||||||
| Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period | 1,173 | 649 | |||||||||
| Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period | $ | 643 | $ | 1,080 |
See accompanying notes to condensed consolidated financial statements.
NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| (In millions) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stock-holders' Equity | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | 650 | $ | 2 | $ | 705 | $ | 1,535 | $ | (297) | $ | (117) | $ | 2,478 | |||||||||||||||||||||||||||||||||||||||
| Net income | 750 | 750 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 2 | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Share repurchases(a) | (322) | (322) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock(b) | (179) | 179 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based awards activity, net(c) | (8) | (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends and dividend equivalents declared(d) | (90) | (90) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock dividends(e) | (33) | (33) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | 650 | $ | 2 | $ | 518 | $ | 2,162 | $ | (440) | $ | (115) | $ | 2,777 | |||||||||||||||||||||||||||||||||||||||
| Net loss | (104) | (104) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | 14 | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares reissuance for ESPP | 2 | 6 | 8 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share repurchases(a) | (282) | (282) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock(b) | (178) | 178 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based awards activity, net(c) | (3) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends and dividend equivalents declared(d) | (88) | (88) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Capped Call Options(f) | (34) | (34) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | 650 | $ | 2 | $ | 305 | $ | 1,970 | $ | (538) | $ | (101) | $ | 2,288 | |||||||||||||||||||||||||||||||||||||||
(a)Includes excise tax accrued of $2 million for each of the quarters ended June 30 and March 31, 2025
(b)For further discussion of the treasury stock retirements, see Note 9, Changes in Capital Structure
(c)Includes $(37) million and $(40) million of equivalent shares purchased in lieu of tax withholding on equity compensation issuances for the quarters ended June 30 and March 31, 2025, respectively
(d)Dividends per common share were $0.4400 for each of the quarters ended June 30 and March 31, 2025
(e)Semi-annual dividend per share of Series A Preferred Stock was $51.25 for the period ended March 15, 2025
(f)For further discussion of the Capped Call Options, see Note 9, Changes in Capital Structure
| (In millions) | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Stock-holders' Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | 650 | $ | 3 | $ | 3,416 | $ | 820 | $ | (1,892) | $ | (91) | $ | 2,906 | |||||||||||||||||||||||||||||||||
| Net income | 511 | 511 | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | (9) | (9) | |||||||||||||||||||||||||||||||||||||||||||||
| Share repurchases(g) | 117 | (117) | — | ||||||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock(h) | (38) | 38 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based awards activity, net(i) | 8 | 8 | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends and dividend equivalents declared(j) | (86) | (86) | |||||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock dividends(k) | (33) | (33) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | 650 | $ | 3 | $ | 3,503 | $ | 1,212 | $ | (1,971) | $ | (100) | $ | 3,297 | |||||||||||||||||||||||||||||||||
| Net income | 738 | 738 | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | (3) | (3) | |||||||||||||||||||||||||||||||||||||||||||||
| Shares reissuance for ESPP | 1 | 5 | 6 | ||||||||||||||||||||||||||||||||||||||||||||
| Share repurchases(l) | (91) | (91) | |||||||||||||||||||||||||||||||||||||||||||||
| Retirement of treasury stock(h) | (38) | 38 | — | ||||||||||||||||||||||||||||||||||||||||||||
| Equity-based awards activity, net(i) | 16 | 16 | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends and dividend equivalents declared(j) | (87) | (87) | |||||||||||||||||||||||||||||||||||||||||||||
| Capped Call Options(m) | (253) | (253) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | 650 | $ | 3 | $ | 3,229 | $ | 1,863 | $ | (2,019) | $ | (103) | $ | 3,623 | |||||||||||||||||||||||||||||||||
(g)Represents the final settlements of the November 6, 2023 ASR agreements. See Note 9, Changes in Capital Structure for additional information
(h)For further discussion of the treasury stock retirements, see Note 9, Changes in Capital Structure
(i)Includes $(12) million and $(23) million of equivalent shares purchased in lieu of tax withholding on equity compensation issuances for the quarters ended June 30 and March 31, 2024, respectively
(j)Dividends per common share were $0.4075 for each of the quarters ended June 30 and March 31, 2024
(k)Semi-annual dividend per share of Series A Preferred Stock was $51.25 for the period ended March 15, 2024
(l)Includes excise tax accrued of $1 million for the quarter ended June 30, 2024
(m)For further discussion of the Capped Call Options, see Note 9, Changes in Capital Structure
See accompanying notes to condensed consolidated financial statements.
NRG ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Nature of Business and Basis of Presentation
General
NRG Energy, Inc., or NRG or the Company is a leading energy and smart home company powering a brighter, smarter future. The Company delivers gas, electricity, and smart home solutions to approximately 8 million residential customers (comprised of 6 million retail energy customers and 2 million smart home customers) in addition to large commercial and industrial, hyperscaler, and wholesale customers. Across the U.S. and Canada, NRG is redefining customers’ experience with energy under brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. As of June 30, 2025, the Company’s core power and natural gas business consists of approximately 12 GW of competitive power generation, primarily in Texas, and a natural gas portfolio that serves approximately 1,800 MMDth annually.
The Company's business is segmented as follows:
-
Texas, which includes all activity related to customer, plant and market operations in Texas, other than Cottonwood;
-
East, which includes all activity related to customer, plant and market operations in the East;
-
West/Services/Other, which includes the following assets and activities: (i) all activity related to customer, plant and market operations in the West and Canada, and (ii) activity related to the Cottonwood facility and other investments;
-
Vivint Smart Home; and
-
Corporate activities.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC's regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the consolidated financial statements in the Company's 2024 Form 10-K. Interim results are not necessarily indicative of results for a full year.
In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated balance sheets as of June 30, 2025, and the results of operations, comprehensive income, cash flows and stockholders' equity for the three and six months ended June 30, 2025 and 2024.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Reclassifications
Certain prior period amounts have been reclassified for comparative purposes. The reclassifications did not affect consolidated results of operations, net assets or consolidated cash flows.
Presentation Adjustments
Beginning in the third quarter of 2024, the Company is recording the amortization of capitalized contracts costs within depreciation and amortization. This change, along with additional financial statement disclosures, is meant to address investor inquiries by enhancing transparency to easier match expenses with revenues. NRG previously recorded amortization of capitalized contract costs related to fulfillment in cost of operations and amortization of capitalized contract costs related to customer acquisition primarily in selling, general and administrative costs in the consolidated statements of operations.
The following table presents adjustments within the condensed consolidated statement of operations for the three and six months ended June 30, 2024 related to capitalized contract costs:
| (In millions) | As Previously Presented | Presentation Adjustments | As Adjusted | |||||||||||||||||
| Three months ended June 30, 2024 | ||||||||||||||||||||
| Cost of operations (excluding depreciation and amortization shown below) | $ | 4,356 | $ | (28) | $ | 4,328 | ||||||||||||||
| Depreciation and amortization | 285 | 75 | 360 | |||||||||||||||||
| Selling, general and administrative costs | 592 | (47) | 545 | |||||||||||||||||
| Six months ended June 30, 2024 | ||||||||||||||||||||
| Cost of operations (excluding depreciation and amortization shown below) | $ | 10,041 | $ | (51) | $ | 9,990 | ||||||||||||||
| Depreciation and amortization | 553 | 140 | 693 | |||||||||||||||||
| Selling, general and administrative costs | 1,183 | (89) | 1,094 |
The following table presents adjustments within the condensed consolidated statement of cash flows for the six months ended June 30, 2024 related to capitalized contract costs:
| (In millions) | As Previously Presented | Presentation Adjustments | As Adjusted | |||||||||||||||||
| Six months ended June 30, 2024 | ||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||
| Amortization of capitalized contract costs | $ | — | $ | 140 | $ | 140 | ||||||||||||||
| Changes in other working capital | (711) | (140) | (851) |
Note 2 — Summary of Significant Accounting Policies
Depreciation and Amortization
The Company's depreciation and amortization included in the condensed consolidated statement of operations consisted of the following:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Amortization of capitalized contract costs related to fulfillment | $ | 48 | $ | 27 | $ | 89 | $ | 48 | |||||||||||||||
| Amortization of capitalized contract costs related to customer acquisition | 70 | 48 | 137 | 92 | |||||||||||||||||||
| Amortization of customer relationships and other intangible assets | 155 | 217 | 308 | 418 | |||||||||||||||||||
| Depreciation of property, plant and equipment | 71 | 68 | 136 | 135 | |||||||||||||||||||
| Total depreciation and amortization | $ | 344 | $ | 360 | $ | 670 | $ | 693 |
Credit Losses
Retail trade receivables are reported on the consolidated balance sheet net of the allowance for credit losses within accounts receivables, net. Long-term receivables are recorded net of allowance for credit losses in other non-current assets on the consolidated balance sheet. The Company accrues a provision for current expected credit losses based on (i) estimates of uncollectible revenues by analyzing accounts receivable aging and current and reasonable forecasts of expected economic factors including, but not limited to, unemployment rates and weather-related events, (ii) historical collections and delinquencies, and (iii) counterparty credit ratings for commercial and industrial customers.
The following table represents the activity in the allowance for credit losses for the three and six months ended June 30, 2025 and 2024:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Beginning balance | $ | 144 | $ | 140 | $ | 152 | $ | 145 | |||||||||||||||
| Provision for credit losses | 57 | 58 | 113 | 133 | |||||||||||||||||||
| Write-offs | (91) | (86) | (170) | (178) | |||||||||||||||||||
| Recoveries collected | 11 | 9 | 23 | 19 | |||||||||||||||||||
| Other | 6 | 6 | 9 | 8 | |||||||||||||||||||
| Ending balance | $ | 127 | $ | 127 | $ | 127 | $ | 127 |
Other Balance Sheet Information
The following table presents the accumulated depreciation included in property, plant and equipment, net and accumulated amortization included in customer relationships, net and other intangible assets, net:
| (In millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Property, plant and equipment accumulated depreciation | $ | 1,632 | $ | 1,508 | |||||||
| Customer relationships and other intangible assets accumulated amortization | 3,656 | 3,632 |
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash
The following table provides a reconciliation of cash and cash equivalents, restricted cash and funds deposited by counterparties reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:
| (In millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Cash and cash equivalents | $ | 180 | $ | 966 | |||||||
| Funds deposited by counterparties | 446 | 199 | |||||||||
| Restricted cash | 17 | 8 | |||||||||
| Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statement of cash flows | $ | 643 | $ | 1,173 |
Funds deposited by counterparties consist of cash held by the Company as a result of collateral posting obligations from its counterparties related to NRG's hedging program. 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. Depending on market fluctuations and the settlement of the underlying contracts, the Company will refund this collateral to the counterparties pursuant to the terms and conditions of the underlying trades. Since collateral requirements fluctuate daily and the Company cannot predict if any collateral will be held for more than twelve months, the funds deposited by counterparties are classified as a current asset on the Company's balance sheet, with an offsetting liability for this cash collateral received within current liabilities.
Restricted cash consists primarily of funds held by the Company that are restricted due to contractual or legal obligations.
Recent Accounting Developments — Guidance Not Yet Adopted
ASU 2023-09 – In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, or ASU 2023-09. The guidance in ASU 2023-09 enhances income tax disclosures by requiring disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold. Further the amendments of ASU 2023-09 require certain disclosures on income tax expense and income taxes paid. The Company plans to adopt the new guidance for the annual period ending December 31, 2025, on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2023-09 on its disclosures.
ASU 2024-03 – In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) – Disaggregation of Income Statement Expenses, or ASU 2024-03. The guidance in ASU 2024-03 requires more detailed information about specified categories of expenses included in certain captions presented on the face of the income statement. This ASU is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2)
retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2024-03 on its disclosures.
ASU 2024-04 – In November 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20) – Induced Conversions of Convertible Debt Instruments, or ASU 2024-04. The guidance in ASU 2024-04 clarifies the requirements related to accounting for the settlement of a debt instrument as an induced conversion when changes are made to conversion features as part of an offer to settle the instrument. This ASU is effective for annual periods beginning after December 15, 2025, with early adoption permitted. The amendments may be applied either (1) prospectively to any settlements of convertible debt instruments that occur after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements, with a cumulative adjustment-effect adjustment to equity. The Company is currently evaluating the impact of adopting ASU 2024-04 on its disclosures.
ASU 2025-05 – In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326) – Measurement of Credit Losses for Accounts Receivable and Contract Assets, or ASU 2025-05. The amendment provides a practical expedient that allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. The amendments of ASU 2025-05 should be applied prospectively and are effective for annual and interim periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-05 on its consolidated financial statements and related disclosures.
Note 3 — Revenue Recognition
Performance Obligations
As of June 30, 2025, estimated future fixed fee performance obligations are $856 million for the remaining six months of fiscal year 2025, and $1.5 billion, $1.1 billion, $707 million, $405 million and $52 million for the fiscal years 2026, 2027, 2028, 2029 and 2030, respectively. These performance obligations include Vivint Smart Home products and services, as well as cleared auction MWs in the PJM, ISO-NE, NYISO and MISO capacity auctions. The cleared auction MWs are subject to penalties for non-performance.
Disaggregated Revenues
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2025 and 2024:
| Three months ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue: | |||||||||||||||||||||||||||||||||||
| Home | $ | 1,804 | $ | 524 | $ | 238 | $ | 504 | $ | (18) | $ | 3,052 | |||||||||||||||||||||||
| Business | 975 | 2,084 | 408 | — | — | 3,467 | |||||||||||||||||||||||||||||
| Total retail revenue(a) | 2,779 | 2,608 | 646 | 504 | (18) | 6,519 | |||||||||||||||||||||||||||||
| Energy revenue(a) | 15 | 64 | 20 | — | — | 99 | |||||||||||||||||||||||||||||
| Capacity revenue(a) | — | 55 | 6 | — | — | 61 | |||||||||||||||||||||||||||||
| Mark-to-market for economic hedging activities(b) | — | 3 | (2) | — | (2) | (1) | |||||||||||||||||||||||||||||
| Other revenue(a) | 53 | 7 | 5 | — | (3) | 62 | |||||||||||||||||||||||||||||
| Total revenue | 2,847 | 2,737 | 675 | 504 | (23) | 6,740 | |||||||||||||||||||||||||||||
| Less: Revenues accounted for under topics other than ASC 606 and ASC 815 | — | — | 30 | — | — | 30 | |||||||||||||||||||||||||||||
| Less: Realized and unrealized ASC 815 revenue | 12 | 33 | (7) | — | (1) | 37 | |||||||||||||||||||||||||||||
| Total revenue from contracts with customers | $ | 2,835 | $ | 2,704 | $ | 652 | $ | 504 | $ | (22) | $ | 6,673 | |||||||||||||||||||||||
| (a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above: | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue | $ | — | $ | 7 | $ | — | $ | — | $ | — | $ | 7 | |||||||||||||||||||||||
| Energy revenue | — | 8 | (4) | — | — | 4 | |||||||||||||||||||||||||||||
| Capacity revenue | — | 16 | — | — | — | 16 | |||||||||||||||||||||||||||||
| Other revenue | 12 | (1) | (1) | — | 1 | 11 | |||||||||||||||||||||||||||||
| (b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 |
| Three months ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue: | |||||||||||||||||||||||||||||||||||
| Home | $ | 1,766 | $ | 537 | $ | 414 | $ | 467 | $ | (8) | $ | 3,176 | |||||||||||||||||||||||
| Business | 926 | 1,824 | 418 | — | — | 3,168 | |||||||||||||||||||||||||||||
| Total retail revenue(a) | 2,692 | 2,361 | 832 | 467 | (8) | 6,344 | |||||||||||||||||||||||||||||
| Energy revenue(a) | 16 | 46 | 51 | — | (3) | 110 | |||||||||||||||||||||||||||||
| Capacity revenue(a) | — | 39 | 6 | — | (1) | 44 | |||||||||||||||||||||||||||||
| Mark-to-market for economic hedging activities(b) | — | 65 | 17 | — | 2 | 84 | |||||||||||||||||||||||||||||
| Contract amortization | — | (6) | (1) | — | — | (7) | |||||||||||||||||||||||||||||
| Other revenue(a) | 55 | 27 | 5 | — | (3) | 84 | |||||||||||||||||||||||||||||
| Total revenue | 2,763 | 2,532 | 910 | 467 | (13) | 6,659 | |||||||||||||||||||||||||||||
| Less: Revenues accounted for under topics other than ASC 606 and ASC 815 | — | 12 | 19 | — | — | 31 | |||||||||||||||||||||||||||||
| Less: Realized and unrealized ASC 815 revenue | 8 | 108 | 32 | — | — | 148 | |||||||||||||||||||||||||||||
| Total revenue from contracts with customers | $ | 2,755 | $ | 2,412 | $ | 859 | $ | 467 | $ | (13) | $ | 6,480 | |||||||||||||||||||||||
| (a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above: | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue | $ | — | $ | 9 | $ | — | $ | — | $ | — | $ | 9 | |||||||||||||||||||||||
| Energy revenue | — | 15 | 16 | — | (2) | 29 | |||||||||||||||||||||||||||||
| Capacity revenue | — | 19 | — | — | — | 19 | |||||||||||||||||||||||||||||
| Other revenue | 8 | — | (1) | — | — | 7 | |||||||||||||||||||||||||||||
| (b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 |
| Six months ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue: | |||||||||||||||||||||||||||||||||||
| Home | $ | 3,359 | $ | 1,262 | $ | 727 | $ | 998 | $ | (34) | $ | 6,312 | |||||||||||||||||||||||
| Business | 1,807 | 5,696 | 920 | — | — | 8,423 | |||||||||||||||||||||||||||||
| Total retail revenue(a) | 5,166 | 6,958 | 1,647 | 998 | (34) | 14,735 | |||||||||||||||||||||||||||||
| Energy revenue(a) | 22 | 222 | 101 | — | (1) | 344 | |||||||||||||||||||||||||||||
| Capacity revenue(a) | — | 95 | 14 | — | (1) | 108 | |||||||||||||||||||||||||||||
| Mark-to-market for economic hedging activities(b) | — | (16) | — | — | — | (16) | |||||||||||||||||||||||||||||
| Contract amortization | — | (5) | — | — | — | (5) | |||||||||||||||||||||||||||||
| Other revenue(a) | 94 | 60 | 12 | — | (7) | 159 | |||||||||||||||||||||||||||||
| Total revenue | 5,282 | 7,314 | 1,774 | 998 | (43) | 15,325 | |||||||||||||||||||||||||||||
| Less: Revenues accounted for under topics other than ASC 606 and ASC 815 | — | 37 | 58 | — | — | 95 | |||||||||||||||||||||||||||||
| Less: Realized and unrealized ASC 815 revenue | 10 | 59 | (1) | — | — | 68 | |||||||||||||||||||||||||||||
| Total revenue from contracts with customers | $ | 5,272 | $ | 7,218 | $ | 1,717 | $ | 998 | $ | (43) | $ | 15,162 | |||||||||||||||||||||||
| (a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above: | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue | $ | — | $ | 18 | $ | — | $ | — | $ | — | $ | 18 | |||||||||||||||||||||||
| Energy revenue | — | 22 | — | — | — | 22 | |||||||||||||||||||||||||||||
| Capacity revenue | — | 32 | — | — | — | 32 | |||||||||||||||||||||||||||||
| Other revenue | 10 | 3 | (1) | — | — | 12 | |||||||||||||||||||||||||||||
| (b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 |
| Six months ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue: | |||||||||||||||||||||||||||||||||||
| Home | $ | 3,126 | $ | 1,239 | $ | 1,013 | $ | 935 | $ | (8) | $ | 6,305 | |||||||||||||||||||||||
| Business | 1,744 | 4,550 | 974 | — | — | 7,268 | |||||||||||||||||||||||||||||
| Total retail revenue(a) | 4,870 | 5,789 | 1,987 | 935 | (8) | 13,573 | |||||||||||||||||||||||||||||
| Energy revenue(a) | 23 | 127 | 118 | — | (6) | 262 | |||||||||||||||||||||||||||||
| Capacity revenue(a) | — | 80 | 8 | — | (2) | 86 | |||||||||||||||||||||||||||||
| Mark-to-market for economic hedging activities(b) | — | 14 | 8 | — | 2 | 24 | |||||||||||||||||||||||||||||
| Contract amortization | — | (16) | (1) | — | — | (17) | |||||||||||||||||||||||||||||
| Other revenue(a) | 103 | 53 | 9 | — | (5) | 160 | |||||||||||||||||||||||||||||
| Total revenue | 4,996 | 6,047 | 2,129 | 935 | (19) | 14,088 | |||||||||||||||||||||||||||||
| Less: Revenues accounted for under topics other than ASC 606 and ASC 815 | — | 22 | 25 | — | — | 47 | |||||||||||||||||||||||||||||
| Less: Realized and unrealized ASC 815 revenue | 10 | 132 | 42 | — | (3) | 181 | |||||||||||||||||||||||||||||
| Total revenue from contracts with customers | $ | 4,986 | $ | 5,893 | $ | 2,062 | $ | 935 | $ | (16) | $ | 13,860 | |||||||||||||||||||||||
| (a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above: | |||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate/Eliminations | Total | |||||||||||||||||||||||||||||
| Retail revenue | $ | — | $ | 19 | $ | — | $ | — | $ | — | $ | 19 | |||||||||||||||||||||||
| Energy revenue | — | 58 | 38 | — | (5) | 91 | |||||||||||||||||||||||||||||
| Capacity revenue | — | 41 | — | — | — | 41 | |||||||||||||||||||||||||||||
| Other revenue | 10 | — | (4) | — | — | 6 | |||||||||||||||||||||||||||||
| (b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 |
Contract Balances
The following table reflects the contract assets and liabilities included in the Company’s balance sheet as of June 30, 2025 and December 31, 2024:
| (In millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Capitalized contract costs (included in Prepayments and other current assets and Other non-current assets) | $ | 1,479 | $ | 1,220 | |||||||
| Accounts receivable, net - Contracts with customers | 3,347 | 3,393 | |||||||||
| Accounts receivable, net - Accounted for under topics other than ASC 606 | 70 | 90 | |||||||||
| Accounts receivable, net - Affiliate | 4 | 5 | |||||||||
| Total accounts receivable, net | $ | 3,421 | $ | 3,488 | |||||||
| Unbilled revenues (included within Accounts receivable, net - Contracts with customers) | $ | 1,479 | $ | 1,548 | |||||||
| Deferred revenues(a) | 1,620 | 1,573 |
(a)Deferred revenues from contracts with customers as of June 30, 2025 and December 31, 2024 were approximately $1.6 billion and $1.5 billion, respectively.
The revenue recognized from contracts with customers during the three months ended June 30, 2025 and 2024 relating to the deferred revenue balance at the beginning of each period was $285 million and $266 million, respectively. The revenue recognized from contracts with customers during the six months ended June 30, 2025 and 2024 relating to the deferred revenue balance at the beginning of each period was $430 million and $395 million, respectively. The change in deferred revenue balances during the three and six months ended June 30, 2025 and 2024 was primarily due to the timing difference of when consideration was received and when the performance obligation was transferred.
Note 4 — Acquisitions
Acquisitions
Anticipated Acquisition of LSP Portfolio
On May 12, 2025, NRG entered into a definitive agreement with LS Power to acquire a power portfolio including 13 GW of natural gas-fired generation facilities and a commercial & industrial virtual power plant platform with 6 GW of capacity (the “C&I VPP”). The consideration will consist of 24.25 million shares of NRG common stock and $6.4 billion in cash, subject to working capital adjustments as set forth in the purchase agreement. As part of the transaction, NRG will also assume $3.2 billion of debt. The Company expects to fund the cash portion of the consideration using a combination of newly-issued debt and cash on hand. The acquisition is expected to close in the first quarter of 2026, and is subject to the satisfaction or waiver of specified closing conditions, consents and regulatory approvals, including Hart-Scott-Rodino (“HSR”), FERC, DOJ, and the New York State Public Service Commission (“NYSPSC”). The definitive agreement also provides that, upon termination of the agreement under certain specified circumstances, NRG will be required to pay LS Power a termination fee of $400 million.
In connection with the anticipated acquisition of the LSP Portfolio, NRG entered into a commitment letter for a 364-day Senior Secured Bridge Facility (the “Bridge Facility”) in a principal amount not to exceed $4.4 billion for the purposes of paying a portion of the cash consideration for the anticipated acquisition and paying fees and expenses in connection with the acquisition.
Acquisition costs of $23 million for the three and six months ended June 30, 2025, are included in acquisition-related transaction and integration costs in the Company’s consolidated statement of operations.
Acquisition of Texas Generation Portfolio
On April 10, 2025, the Company acquired all of the ownership interests of six power generation facilities from Rockland Capital, LLC, adding 738 MW of natural gas-fired assets in Texas to its portfolio for $560 million in cash consideration, less $1 million in initial working capital adjustments. The acquisition enhances NRG’s integrated supply strategy with critical peaking and baseload capacity in key load zones across Texas.
Acquisition costs of $6 million for the three and six months ended June 30, 2025, are included in acquisition-related transaction and integration costs in the Company’s consolidated statement of operations.
The acquisition has been recorded as a business combination under ASC 805 with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair values on the acquisition date. The initial accounting for the business combination is not complete because the evaluation necessary to assess the fair value of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition closing date.
The purchase price is provisionally allocated as follows:
| (In millions) | |||||
| Property, plant and equipment | $ | 647 | |||
| Derivative instruments - Current assets | 6 | ||||
| Derivative instruments - Other assets | 2 | ||||
| Derivative instruments - Current liabilities | (34) | ||||
| Derivative instruments - Other liabilities | (57) | ||||
| Other, including current and non-current working capital | (5) | ||||
| Texas Generation Portfolio Purchase Price | $ | 559 |
Note 5 — Fair Value of Financial Instruments
For cash and cash equivalents, funds deposited by counterparties, restricted cash, accounts and other receivables, accounts payable and cash collateral paid and received in support of energy risk management activities, the carrying amounts approximate fair values because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying value and fair value of the Company's long-term debt, including current portion, is as follows:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (In millions) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||||||||
| Convertible Senior Notes(a) | $ | 232 | $ | 910 | $ | 232 | $ | 509 | |||||||||||||||
| Other long-term debt, including current portion | 10,777 | 10,649 | 10,648 | 10,252 | |||||||||||||||||||
| Total long-term debt, including current portion(b) | $ | 11,009 | $ | 11,559 | $ | 10,880 | $ | 10,761 |
(a)The Company settled all of the outstanding Convertible Senior Notes as of July 8, 2025. For further discussion, see Note 7, Long-term Debt and Finance Leases
(b)Excludes deferred financing costs, which are recorded as a reduction to long-term debt in the Company's consolidated balance sheets
The fair value of the Company's publicly-traded long-term debt and the Term Loan B are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. The estimated fair value of the borrowing under the Revolving Credit Facility approximates the carrying value because the interest rates vary with market interest rates, and is classified as Level 3 within the fair value hierarchy. The following table presents the level within the fair value hierarchy for long-term debt, including current portion, as of June 30, 2025 and December 31, 2024:
| June 30, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (In millions) | Level 2 | Level 3 | Level 2 | Level 3 | |||||||||||||||||||
| Convertible Senior Notes | $ | 910 | $ | — | $ | 509 | $ | — | |||||||||||||||
| Other long-term debt, including current portion | 10,514 | 135 | 10,252 | — | |||||||||||||||||||
| Total long-term debt, including current portion | $ | 11,424 | $ | 135 | $ | 10,761 | $ | — |
Recurring Fair Value Measurements
Debt securities, equity securities and derivative assets and liabilities are carried at fair market value.
The following tables present assets and liabilities measured and recorded at fair value on the Company's condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:
| June 30, 2025 | |||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||
| (In millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Investments in securities (classified within other current and non-current assets) | $ | 28 | $ | — | $ | 28 | $ | — | |||||||||||||||
| Derivative assets: | |||||||||||||||||||||||
| Foreign exchange contracts | 3 | — | 3 | — | |||||||||||||||||||
| Commodity contracts(a) | 3,213 | 490 | 2,413 | 310 | |||||||||||||||||||
| Equity securities measured using net asset value practical expedient (classified within other non-current assets) | 7 | ||||||||||||||||||||||
| Total assets | $ | 3,251 | $ | 490 | $ | 2,444 | $ | 310 | |||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||
| Interest rate contracts | $ | 7 | $ | — | $ | 7 | $ | — | |||||||||||||||
| Foreign exchange contracts | 3 | — | 3 | — | |||||||||||||||||||
| Commodity contracts(a) | 2,815 | 362 | 2,224 | 229 | |||||||||||||||||||
| Consumer Financing Program | 257 | — | — | 257 | |||||||||||||||||||
| Total liabilities | $ | 3,082 | $ | 362 | $ | 2,234 | $ | 486 |
(a)Excludes $861 million of derivative assets and $145 million of derivative liabilities that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis. For further discussion, see Note 6, Accounting for Derivative Instruments and Hedging Activities
| December 31, 2024 | |||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||
| (In millions) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Investments in securities (classified within other current and non-current assets) | $ | 28 | $ | — | $ | 28 | $ | — | |||||||||||||||
| Derivative assets: | |||||||||||||||||||||||
| Interest rate contracts | 9 | — | 9 | — | |||||||||||||||||||
| Foreign exchange contracts | 22 | — | 22 | — | |||||||||||||||||||
| Commodity contracts(a) | 3,368 | 528 | 2,645 | 195 | |||||||||||||||||||
| Equity securities measured using net asset value practical expedient (classified within other non-current assets) | 6 | ||||||||||||||||||||||
| Total assets | $ | 3,433 | $ | 528 | $ | 2,704 | $ | 195 | |||||||||||||||
| Derivative liabilities: | |||||||||||||||||||||||
| Interest rate contracts | $ | 3 | $ | — | $ | 3 | $ | — | |||||||||||||||
| Foreign exchange contracts | 1 | — | 1 | — | |||||||||||||||||||
| Commodity contracts(a) | 2,970 | 432 | 2,382 | 156 | |||||||||||||||||||
| Consumer Financing Program | 203 | — | — | 203 | |||||||||||||||||||
| Total liabilities | $ | 3,177 | $ | 432 | $ | 2,386 | $ | 359 |
(a)Excludes $997 million of derivative assets and $227 million of derivative liabilities that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis. For further discussion, see Note 6, Accounting for Derivative Instruments and Hedging Activities
The following table reconciles, for the three and six months ended June 30, 2025 and 2024, the beginning and ending balances for financial instruments that are recognized at fair value in the condensed consolidated financial statements, using significant unobservable inputs, for commodity derivatives:
| Fair Value Measurement Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
| Commodity Derivatives**(a)** | |||||||||||||||||||||||
| (In millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |||||||||||||||||||
| Beginning balance | $ | 49 | $ | 91 | $ | 39 | $ | 119 | |||||||||||||||
| Contracts added from Texas Generation Portfolio acquisition | (91) | — | (91) | — | |||||||||||||||||||
| Total gains/(losses) realized/unrealized included in earnings | 22 | 4 | 34 | (37) | |||||||||||||||||||
| Purchases | 37 | 31 | 37 | 31 | |||||||||||||||||||
| Transfers into Level 3(b) | 63 | 2 | 63 | 17 | |||||||||||||||||||
| Transfers out of Level 3(b) | 1 | (7) | (1) | (9) | |||||||||||||||||||
| Ending balance | $ | 81 | $ | 121 | $ | 81 | $ | 121 | |||||||||||||||
| Gains/(losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of period end | $ | 5 | $ | 8 | $ | 47 | $ | (29) |
(a)Consists of derivative assets and liabilities, net, excluding derivatives liabilities from the Consumer Financing Program, which are presented in a separate table below
(b)Transfers into/out of Level 3 within the fair value hierarchy are related to the availability of consensus pricing and external broker quotes, including volatilities, and are valued as of the end of the reporting period. All transfers in/out of Level 3 are from/to Level 2
Realized and unrealized gains and losses included in earnings that are related to the commodity derivatives are recorded in revenues and cost of operations.
The following table reconciles, for the three and six months ended June 30, 2025 and 2024, the beginning and ending balances of the contractual obligations from the Consumer Financing Program that are recognized at fair value in the condensed consolidated financial statements, using significant unobservable inputs:
| Fair Value Measurement Using Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||
| Consumer Financing Program | |||||||||||||||||||||||
| (In millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | |||||||||||||||||||
| Beginning balance | $ | (207) | $ | (124) | $ | (203) | $ | (134) | |||||||||||||||
| New contractual obligations | (81) | (43) | (113) | (58) | |||||||||||||||||||
| Settlements | 31 | 22 | 67 | 43 | |||||||||||||||||||
| Total losses included in earnings | — | (6) | (8) | (2) | |||||||||||||||||||
| Ending balance | $ | (257) | $ | (151) | $ | (257) | $ | (151) |
Gains and losses that are related to the Consumer Financing Program derivative are recorded in other income, net.
Derivative Fair Value Measurements
The fair value of the Company’s contracts primarily consist of non-exchange traded contracts based on consensus pricing provided by independent pricing services. As of June 30, 2025, contracts valued with prices provided by models and other valuation techniques made up 10% of derivative assets and 16% of derivative liabilities.
NRG's significant positions classified as Level 3 include physical and financial natural gas, power, capacity contracts and RECs executed in illiquid markets, FTRs, certain power options and the Consumer Financing Program. The significant unobservable inputs used in developing fair value include illiquid natural gas and power location pricing, which is derived as a basis to liquid locations. The basis spread is based on observable market data when available or derived from historic prices and forward market prices from similar observable markets when not available. Forward capacity prices are based on market information, forecasted future electricity demand and supply, past auctions and internally developed pricing models. REC prices are based on market information and internally developed pricing models. Power options are valued using industry standard option models. The valuation of certain power options includes significant unobservable inputs such as forward volatilities. For FTRs, NRG uses the most recent auction prices to derive the fair value. The Consumer Financing Program derivatives are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and credit loss rates.
The following tables quantify the significant, unobservable inputs used in developing the fair value of the Company's Level 3 positions as of June 30, 2025 and December 31, 2024:
| June 30, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Fair Value | Input/Range | ||||||||||||||||||||||||||||||||||||||||
| (In millions, except as noted) | Assets | Liabilities | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||||||||||||||||||||||||||||
| Natural Gas Contracts | $ | 32 | $ | 9 | Discounted Cash Flow | Forward Market Price ($ per MMBtu) | $ | 1 | $ | 18 | $ | 4 | |||||||||||||||||||||||||||||
| Power Contracts | 128 | 66 | Discounted Cash Flow | Forward Market Price ($ per MWh) | 2 | 123 | 36 | ||||||||||||||||||||||||||||||||||
| Capacity Contracts | 27 | 9 | Discounted Cash Flow | Forward Market Price ($ per MW/Day) | 16 | 524 | 218 | ||||||||||||||||||||||||||||||||||
| RECs | 18 | 38 | Discounted Cash Flow | Forward Market Price ($ per Certificate) | 2 | 380 | 15 | ||||||||||||||||||||||||||||||||||
| FTRs | 24 | 12 | Discounted Cash Flow | Auction Prices ($ per MWh) | (36,281) | 3,011 | 0 | ||||||||||||||||||||||||||||||||||
| Power Options | 81 | 95 | Option Models | Volatilities | 24 | % | 774 | % | 126 | % | |||||||||||||||||||||||||||||||
| Consumer Financing Program | — | 257 | Discounted Cash Flow | Collateral Default Rates | 0.75 | % | 49.78 | % | 8.47 | % | |||||||||||||||||||||||||||||||
| Discounted Cash Flow | Collateral Prepayment Rates | 2.00 | % | 3.00 | % | 2.62 | % | ||||||||||||||||||||||||||||||||||
| Discounted Cash Flow | Credit Loss Rates | 6.30 | % | 60.00 | % | 16.53 | % | ||||||||||||||||||||||||||||||||||
| $ | 310 | $ | 486 |
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Fair Value | Input/Range | ||||||||||||||||||||||||||||||||||||||||
| (In millions, except as noted) | Assets | Liabilities | Valuation Technique | Significant Unobservable Input | Low | High | Weighted Average | ||||||||||||||||||||||||||||||||||
| Natural Gas Contracts | $ | 56 | $ | 15 | Discounted Cash Flow | Forward Market Price ($ per MMBtu) | $ | 2 | $ | 27 | $ | 4 | |||||||||||||||||||||||||||||
| Power Contracts | 57 | 86 | Discounted Cash Flow | Forward Market Price ($ per MWh) | 0 | 109 | 39 | ||||||||||||||||||||||||||||||||||
| Capacity Contracts | 34 | 13 | Discounted Cash Flow | Forward Market Price ($ per MW/Day) | 16 | 510 | 220 | ||||||||||||||||||||||||||||||||||
| RECs | 30 | 14 | Discounted Cash Flow | Forward Market Price ($ per Certificate) | 2 | 375 | 15 | ||||||||||||||||||||||||||||||||||
| FTRs | 18 | 28 | Discounted Cash Flow | Auction Prices ($ per MWh) | (50) | 16,180 | 0 | ||||||||||||||||||||||||||||||||||
| Consumer Financing Program | — | 203 | Discounted Cash Flow | Collateral Default Rates | 0.52 | % | 76.80 | % | 11.71 | % | |||||||||||||||||||||||||||||||
| Discounted Cash Flow | Collateral Prepayment Rates | 2.00 | % | 3.00 | % | 2.83 | % | ||||||||||||||||||||||||||||||||||
| Discounted Cash Flow | Credit Loss Rates | 6.00 | % | 60.00 | % | 14.22 | % | ||||||||||||||||||||||||||||||||||
| $ | 195 | $ | 359 | ||||||||||||||||||||||||||||||||||||||
The following table provides sensitivity of fair value measurements to increases/(decreases) in significant, unobservable inputs as of June 30, 2025 and December 31, 2024:
| Significant Unobservable Input | Position | Change In Input | Impact on Fair Value Measurement | |||||||||||||||||
| Forward Market Price Natural Gas/Power/Capacity/RECs | Buy | Increase/(Decrease) | Higher/(Lower) | |||||||||||||||||
| Forward Market Price Natural Gas/Power/Capacity/RECs | Sell | Increase/(Decrease) | Lower/(Higher) | |||||||||||||||||
| FTR Prices | Buy | Increase/(Decrease) | Higher/(Lower) | |||||||||||||||||
| FTR Prices | Sell | Increase/(Decrease) | Lower/(Higher) | |||||||||||||||||
| Volatilities | Buy | Increase/(Decrease) | Higher/(Lower) | |||||||||||||||||
| Volatilities | Sell | Increase/(Decrease) | Lower/(Higher) | |||||||||||||||||
| Collateral Default Rates | n/a | Increase/(Decrease) | Higher/(Lower) | |||||||||||||||||
| Collateral Prepayment Rates | n/a | Increase/(Decrease) | Lower/(Higher) | |||||||||||||||||
| Credit Loss Rates | n/a | Increase/(Decrease) | Higher/(Lower) |
The fair value of each contract is discounted using a risk-free interest rate. In addition, the Company applies a credit reserve to reflect credit risk, which is calculated based on published default probabilities. As of June 30, 2025, the credit reserve was immaterial. As of December 31, 2024, the credit reserve resulted in a $1 million decrease primarily within cost of operations.
Concentration of Credit Risk
In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, to the Company's 2024 Form 10-K, the following is a discussion of the concentration of credit risk for the Company's contractual obligations. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. NRG is exposed to counterparty credit risk through various activities including wholesale sales, fuel purchases and retail supply arrangements, as well as retail customer credit risk through its retail load activities.
Counterparty Credit Risk
The Company's counterparty credit risk policies are disclosed in its 2024 Form 10-K. As of June 30, 2025, counterparty credit exposure, excluding credit exposure from RTOs, ISOs, registered commodity exchanges and certain long-term agreements, was $1.7 billion and NRG held collateral (cash and letters of credit) against those positions of $585 million, resulting in a Net Exposure of $1.1 billion. NRG periodically receives collateral from counterparties in excess of their exposure. Collateral amounts shown include such excess while Net Exposure shown excludes excess collateral received. Approximately 60% of the Company's exposure before collateral is expected to roll off by the end of 2026. Counterparty credit exposure is valued through observable market quotes and discounted at a risk free interest rate. The following tables highlight net counterparty credit exposure by industry sector and by counterparty credit quality. Net counterparty credit exposure is defined as the aggregate net asset position for NRG with counterparties where netting is permitted under the enabling agreement and includes all cash flow, mark-to-market and NPNS, and non-derivative transactions. The exposure is shown net of collateral held and includes amounts net of receivables or payables.
| Net Exposure**(a)(b)** | |||||
| Category by Industry Sector | (% of Total) | ||||
| Utilities, energy merchants, marketers and other | 69 | % | |||
| Financial institutions | 31 | ||||
| Total as of June 30, 2025 | 100 | % |
| Net Exposure (a)(b) | |||||
| Category by Counterparty Credit Quality | (% of Total) | ||||
| Investment grade | 64 | % | |||
| Non-investment grade/Non-Rated | 36 | ||||
| Total as of June 30, 2025 | 100 | % |
(a)Counterparty credit exposure excludes coal transportation contracts because of the unavailability of market prices
(b)The figures in the tables above exclude potential counterparty credit exposure related to RTOs, ISOs, registered commodity exchanges and certain long-term contracts
The Company had exposure to one wholesale counterparty in excess of 10% of total Net Exposure as of June 30, 2025. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration.
RTOs and ISOs
The Company participates in the organized markets of CAISO, ERCOT, AESO, IESO, ISO-NE, MISO, NYISO and PJM, known as RTOs or ISOs. Trading in the majority of these markets is approved by FERC, whereas in the case of ERCOT, it is approved by the PUCT, and whereas in the case of AESO and IESO, both exist provincially with AESO primarily subject to Alberta Utilities Commission and the IESO to the Ontario Energy Board. These ISOs may include credit policies that, under certain circumstances, require that losses arising from the default of one member on spot market transactions be shared by the remaining participants. As a result, the counterparty credit risk to these markets is limited to NRG’s share of the overall market and are excluded from the above exposures.
Exchange Traded Transactions
The Company enters into commodity transactions on registered exchanges, notably ICE, NYMEX and Nodal. These clearinghouses act as the counterparty and transactions are subject to extensive collateral and margining requirements. As a result, these commodity transactions have limited counterparty credit risk.
Long-Term Contracts
Counterparty credit exposure described above excludes credit risk exposure under certain long-term contracts, primarily solar under Renewable PPAs. As external sources or observable market quotes are not always available to estimate such exposure, the Company values these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of June 30, 2025, aggregate credit risk exposure managed by NRG to these counterparties was approximately $774 million for the next five years.
Retail Customer Credit Risk
The Company is exposed to retail credit risk through the Company's retail electricity and gas providers as well as through Vivint Smart Home, which serve both Home and Business customers. Retail credit risk results in losses when a customer fails to pay for services rendered. The losses may result from both non-payment of customer accounts receivable and the loss of in-the-money forward value. The Company manages retail credit risk by using established credit policies, which include monitoring of the portfolio and the use of credit mitigation measures such as deposits or prepayment arrangements.
As of June 30, 2025, the Company's retail customer credit exposure to Home and Business customers was diversified across many customers and various industries, as well as government entities. Current economic conditions may affect the Company’s customers’ ability to pay their bills in a timely manner or at all, which could increase customer delinquencies and may lead to an increase in credit losses.
Note 6 — Accounting for Derivative Instruments and Hedging Activities
Energy-Related Commodities
As of June 30, 2025, NRG had energy-related derivative instruments extending through 2036. The Company marks these derivatives to market through the consolidated statement of operations. NRG has executed energy-related contracts extending through 2037 that qualified for the NPNS exception and were therefore exempt from fair value accounting treatment.
On October 1, 2024, the Company elected NPNS for certain existing derivative contracts. Upon election of NPNS, the Company discontinued derivative accounting treatment and will no longer remeasure the derivative contracts at fair value each reporting period. The fair values of these derivative contracts were frozen as of October 1, 2024 and the Company is derecognizing the fair values to earnings at the same time as the contracts mature. The values of these contracts are included in Derivative instruments captions in the Consolidated Balance Sheets. Subsequent to the election date, costs associated with these contracts will be recorded when the underlying physical transaction is delivered. These derivative contracts extend through 2036.
Interest Rate Derivatives
NRG is exposed to changes in interest rates through the Company's issuance of debt. To mitigate the Company's interest rate risk, NRG enters into interest rate derivatives, including swaps and treasury locks. As of June 30, 2025, the Company had $700 million of interest rate swaps extending through 2029 to mitigate the risk of the floating rate of the Term Loan B. In July 2025, the Company entered into treasury locks with a total notional amount of $1.4 billion.
Foreign Exchange Contracts
NRG is exposed to changes in foreign currency primarily associated with the purchase of U.S. dollar denominated natural gas for its Canadian business. To manage the Company's foreign exchange risk, NRG entered into foreign exchange contracts. As of June 30, 2025, NRG had foreign exchange contracts extending through 2028. The Company marks these derivatives to market through the consolidated statement of operations.
Consumer Financing Program
Under the Consumer Financing Program, Vivint Smart Home pays a monthly fee to financing providers based on either the average daily outstanding balance of the loans or the number of outstanding loans. For certain loans, Vivint Smart Home incurs fees at the time of the loan origination and receives proceeds that are net of these fees. Vivint Smart Home also shares the liability for credit losses, depending on the credit quality of the customer. Due to the nature of certain provisions under the Consumer Financing Program, the Company records a derivative liability that is not designated as a hedging instrument and is adjusted to fair value, measured using the present value of the estimated future payments. Changes to the fair value are recorded through other income, net in the consolidated statement of operations. The following represent the contractual future payment obligations with the financing providers under the Consumer Financing Program that are components of the derivative:
-
Vivint Smart Home pays either a monthly fee based on the average daily outstanding balance of the loans, or the number of outstanding loans, depending on the financing provider;
-
Vivint Smart Home shares the liability for credit losses depending on the credit quality of the customer; and
-
Vivint Smart Home pays transactional fees associated with customer payment processing.
The derivative is classified as a Level 3 instrument. The derivative positions are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and credit loss rates. In summary, the fair value represents an estimate of the present value of the cash flows Vivint Smart Home will be obligated to pay to the financing providers for each component of the derivative.
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of NRG's open derivative transactions broken out by category, excluding those derivatives that qualified for the NPNS exception, as of June 30, 2025 and December 31, 2024. Option contracts are reflected using delta volume. Delta volume equals the notional volume of an option adjusted for the probability that the option will be in-the-money at its expiration date.
| Total Volume (In millions) | ||||||||||||||
| Category | Units | June 30, 2025 | December 31, 2024 | |||||||||||
| Emissions | Short Ton | 1 | 1 | |||||||||||
| Renewable Energy Certificates | Certificates | 13 | 13 | |||||||||||
| Coal | Short Ton | 10 | 10 | |||||||||||
| Natural Gas | MMBtu | 691 | 861 | |||||||||||
| Power | MWh | 88 | 91 | |||||||||||
| Interest | Dollars | 700 | 700 | |||||||||||
| Foreign Exchange | Dollars | 350 | 410 | |||||||||||
| Consumer Financing Program | Dollars | 1,340 | 1,219 |
Fair Value of Derivative Instruments
The following table summarizes the fair value within the derivative instrument valuation on the balance sheets:
| Fair Value | |||||||||||||||||||||||
| Derivative Assets | Derivative Liabilities | ||||||||||||||||||||||
| (In millions) | June 30, 2025 | December 31, 2024 | June 30, 2025 | December 31, 2024 | |||||||||||||||||||
| Derivatives Not Designated as Cash Flow or Fair Value Hedges: | |||||||||||||||||||||||
| Interest rate contracts - current | $ | — | $ | — | $ | 3 | $ | 3 | |||||||||||||||
| Interest rate contracts - long-term | — | 9 | 4 | — | |||||||||||||||||||
| Foreign exchange contracts - current | 3 | 15 | 1 | — | |||||||||||||||||||
| Foreign exchange contracts - long-term | — | 7 | 2 | 1 | |||||||||||||||||||
| Commodity contracts - current | 2,020 | 2,295 | 1,738 | 2,067 | |||||||||||||||||||
| Commodity contracts - long-term | 1,193 | 1,073 | 1,077 | 903 | |||||||||||||||||||
| Consumer Financing Program - current | — | — | 147 | 137 | |||||||||||||||||||
| Consumer Financing Program - long-term | — | — | 110 | 66 | |||||||||||||||||||
| Derivatives Not Designated as Cash Flow or Fair Value Hedges | $ | 3,216 | $ | 3,399 | $ | 3,082 | $ | 3,177 | |||||||||||||||
| Deferred gains/losses on NPNS contracts - current | 309 | 376 | 65 | 90 | |||||||||||||||||||
| Deferred gains/losses on NPNS contracts - long-term | 552 | 621 | 80 | 137 | |||||||||||||||||||
| Deferred gains/losses on NPNS contracts**(a)** | $ | 861 | $ | 997 | $ | 145 | $ | 227 | |||||||||||||||
| Total Derivatives Not Designated as Cash Flow or Fair Value Hedges | $ | 4,077 | $ | 4,396 | $ | 3,227 | $ | 3,404 |
(a)Balances related to certain derivative contracts that were previously accounted for as derivative contracts prior to the election of the NPNS exemption and the discontinuance of derivative accounting treatment as of the election date
The Company has elected to present derivative assets and liabilities on the consolidated balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. In addition, collateral received or paid on the Company's derivative assets or liabilities are recorded on a separate line item on the consolidated balance sheet. The following table summarizes the offsetting of derivatives by counterparty master agreement level and collateral received or paid:
| Gross Amounts Not Offset in the Statement of Financial Position | ||||||||||||||||||||||||||
| (In millions) | Gross Amounts of Recognized Assets / Liabilities | Derivative Instruments | Cash Collateral (Held)/Posted | Net Amount | ||||||||||||||||||||||
| As of June 30, 2025 | ||||||||||||||||||||||||||
| Interest rate contracts: | ||||||||||||||||||||||||||
| Derivative liabilities | $ | (7) | $ | — | $ | — | $ | (7) | ||||||||||||||||||
| Foreign exchange contracts: | ||||||||||||||||||||||||||
| Derivative assets | $ | 3 | $ | (2) | $ | — | $ | 1 | ||||||||||||||||||
| Derivative liabilities | (3) | 2 | — | (1) | ||||||||||||||||||||||
| Total foreign exchange contracts | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
| Commodity contracts: | ||||||||||||||||||||||||||
| Derivative assets | $ | 4,074 | $ | (2,799) | $ | (381) | $ | 894 | ||||||||||||||||||
| Derivative liabilities | (2,960) | 2,799 | 35 | (126) | ||||||||||||||||||||||
| Total commodity contracts | $ | 1,114 | $ | — | $ | (346) | $ | 768 | ||||||||||||||||||
| Consumer Financing Program: | ||||||||||||||||||||||||||
| Derivative liabilities | $ | (257) | $ | — | $ | — | $ | (257) | ||||||||||||||||||
| Total derivative instruments | $ | 850 | $ | — | $ | (346) | $ | 504 |
| Gross Amounts Not Offset in the Statement of Financial Position | ||||||||||||||||||||||||||||||||
| (In millions) | Gross Amounts of Recognized Assets / Liabilities | Derivative Instruments | Cash Collateral (Held)/Posted | Net Amount | ||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||
| Interest rate contracts: | ||||||||||||||||||||||||||||||||
| Derivative assets | $ | 9 | $ | (3) | $ | — | $ | 6 | ||||||||||||||||||||||||
| Derivative liabilities | (3) | 3 | — | — | ||||||||||||||||||||||||||||
| Total interest rate contracts | $ | 6 | $ | — | $ | — | $ | 6 | ||||||||||||||||||||||||
| Foreign exchange contracts: | ||||||||||||||||||||||||||||||||
| Derivative assets | $ | 22 | $ | (1) | $ | — | $ | 21 | ||||||||||||||||||||||||
| Derivative liabilities | (1) | 1 | — | — | ||||||||||||||||||||||||||||
| Total foreign exchange contracts | $ | 21 | $ | — | $ | — | $ | 21 | ||||||||||||||||||||||||
| Commodity contracts: | ||||||||||||||||||||||||||||||||
| Derivative assets | $ | 4,365 | $ | (2,992) | $ | (168) | $ | 1,205 | ||||||||||||||||||||||||
| Derivative liabilities | (3,197) | 2,992 | 61 | (144) | ||||||||||||||||||||||||||||
| Total commodity contracts | $ | 1,168 | $ | — | $ | (107) | $ | 1,061 | ||||||||||||||||||||||||
| Consumer Financing Program: | ||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | (203) | $ | — | $ | — | $ | (203) | ||||||||||||||||||||||||
| Total derivative instruments | $ | 992 | $ | — | $ | (107) | $ | 885 |
Impact of Derivative Instruments on the Statements of Operations
Unrealized gains and losses associated with changes in the fair value of derivative instruments not accounted for as cash flow and fair value hedges are reflected in current period results of operations.
The following table summarizes the pre-tax effects of economic hedges that have not been designated as cash flow hedges or fair value hedges and trading activity on the Company's consolidated statement of operations. The effect of foreign exchange and commodity hedges are included within revenues and cost of operations. The effect of the interest rate contracts are included within interest expense. The effect of the Consumer Financing Program is included in other income, net.
| (In millions) | Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||
| Unrealized mark-to-market results | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Reversal of previously recognized unrealized losses/(gains) on settled positions related to economic hedges(a) | $ | 120 | $ | 209 | $ | (98) | $ | 453 | |||||||||||||||
| Reversal of acquired loss positions related to economic hedges | 9 | 17 | 5 | 5 | |||||||||||||||||||
| Net unrealized (losses)/gains on open positions related to economic hedges | (412) | 649 | 141 | 889 | |||||||||||||||||||
| Total unrealized mark-to-market (losses)/gains for economic hedging activities | (283) | 875 | 48 | 1,347 | |||||||||||||||||||
| Reversal of previously recognized unrealized losses on settled positions related to trading activity | 3 | 4 | 2 | — | |||||||||||||||||||
| Net unrealized gains on open positions related to trading activity | 11 | 5 | 8 | 5 | |||||||||||||||||||
| Total unrealized mark-to-market gains for trading activity | 14 | 9 | 10 | 5 | |||||||||||||||||||
| Total unrealized (losses)/gains - commodities and foreign exchange | $ | (269) | $ | 884 | $ | 58 | $ | 1,352 |
(a)For the three and six months ended June 30, 2025, includes $30 million and $(53) million, respectively, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Total impact to statement of operations - interest rate contracts | $ | (5) | $ | 6 | $ | (14) | $ | 18 | |||||||||||||||
| Unrealized gains/(losses) included in revenues - commodities | $ | 13 | $ | 93 | $ | (6) | $ | 29 | |||||||||||||||
| Unrealized (losses)/gains included in cost of operations - commodities | (266) | 789 | 84 | 1,312 | |||||||||||||||||||
| Unrealized (losses)/gains included in cost of operations - foreign exchange | (16) | 2 | (20) | 11 | |||||||||||||||||||
| Total impact to statement of operations - commodities and foreign exchange | $ | (269) | $ | 884 | $ | 58 | $ | 1,352 | |||||||||||||||
| Total impact to statement of operations - Consumer Financing Program | $ | — | $ | (6) | $ | (8) | $ | (2) |
The reversals of acquired gain positions were valued based upon the forward prices on the acquisition date. The roll-off amounts were offset by realized gains or losses at the settled prices and are reflected in revenue or cost of operations during the same period.
For the six months ended June 30, 2025, the $141 million unrealized gain from open economic hedge positions was primarily the result of an increase in the value of forward positions as a result of increases in ERCOT power prices.
For the six months ended June 30, 2024, the $889 million unrealized gain from open economic hedge positions was primarily the result of an increase in the value of forward positions as a result of increases in ERCOT power prices.
Credit Risk Related Contingent Features
Certain of the Company's trading agreements contain provisions that entitle the counterparty to demand that the Company post additional collateral if the counterparty determines that there has been deterioration in the Company's credit quality, generally termed “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 potentially required for all contracts with adequate assurance clauses that were in a net liability position as of June 30, 2025 was $579 million. The Company is also 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 $36 million as of June 30, 2025. In the event of a downgrade in the Company's credit rating and if called for by the counterparty, $13 million of additional collateral would be required for all contracts with credit rating contingent features as of June 30, 2025.
See Note 5, Fair Value of Financial Instruments, for discussion regarding concentration of credit risk.
Note 7 — Long-term Debt and Finance Leases
Long-term debt and finance leases consisted of the following:
| (In millions, except rates) | June 30, 2025 | December 31, 2024 | Interest rate % | ||||||||||||||
| Recourse debt: | |||||||||||||||||
| Senior Notes, due 2028 | $ | 821 | $ | 821 | 5.750 | ||||||||||||
| Senior Notes, due 2029 | 733 | 733 | 5.250 | ||||||||||||||
| Senior Notes, due 2029 | 500 | 500 | 3.375 | ||||||||||||||
| Senior Notes, due 2029 | 798 | 798 | 5.750 | ||||||||||||||
| Senior Notes, due 2031 | 1,030 | 1,030 | 3.625 | ||||||||||||||
| Senior Notes, due 2032 | 480 | 480 | 3.875 | ||||||||||||||
| Senior Notes, due 2033 | 925 | 925 | 6.000 | ||||||||||||||
| Senior Notes, due 2034 | 950 | 950 | 6.250 | ||||||||||||||
| Convertible Senior Notes, due 2048 | 232 | 232 | 2.750 | ||||||||||||||
| Senior Secured First Lien Notes, due 2025 | 500 | 500 | 2.000 | ||||||||||||||
| Senior Secured First Lien Notes, due 2027 | 900 | 900 | 2.450 | ||||||||||||||
| Senior Secured First Lien Notes, due 2029 | 500 | 500 | 4.450 | ||||||||||||||
| Senior Secured First Lien Notes, due 2033 | 740 | 740 | 7.000 | ||||||||||||||
| Revolving Credit Facility | 135 | — | SOFR + 1.720 | ||||||||||||||
| Term Loan B, due 2031 | 1,311 | 1,317 | SOFR + 1.750 | ||||||||||||||
| Tax-exempt bonds | 466 | 466 | 1.250 - 4.750 | ||||||||||||||
| Subtotal recourse debt | 11,021 | 10,892 | |||||||||||||||
| Finance leases | 14 | 14 | various | ||||||||||||||
| Subtotal long-term debt and finance leases (including current maturities) | 11,035 | 10,906 | |||||||||||||||
| Less current maturities | (1,132) | (996) | |||||||||||||||
| Less debt issuance costs | (79) | (86) | |||||||||||||||
| Discounts | (12) | (12) | |||||||||||||||
| Total long-term debt and finance leases | $ | 9,812 | $ | 9,812 |
Recourse Debt
Senior Secured Bridge Facility
In connection with the anticipated acquisition of the LSP Portfolio, NRG entered into a commitment letter for the Bridge Facility in a principal amount not to exceed $4.4 billion for the purposes of paying a portion of the consideration for the anticipated acquisition and paying fees and expenses in connection with the anticipated acquisition.
Senior Credit Facility
Amendment to Term Loan
On July 22, 2025, the Company, as borrower, and certain subsidiaries of the Company, as guarantors, entered into the Fifteenth Amendment to the Second Amended and Restated Credit Agreement (the “Fifteenth Amendment”) with, among others, Citicorp North America, Inc., as administrative agent and as collateral agent (the “Agent”), and certain financial institutions, as lenders, which amended the Company’s Second Amended and Restated Credit Agreement, dated as of June 30, 2016 (the “Credit Agreement”).
The Fifteenth Amendment amended the Credit Agreement by adding a new incremental Term Loan B in an aggregate principal amount of $1.0 billion (the “Incremental Term Loan B Facility” and the loans thereunder, the “Incremental Term Loans”), which Incremental Term Loan B Facility is fungible with the Company’s existing Term Loan B facility (the “Existing Term Loan B Facility”). The terms of the Incremental Term Loans are identical to those applicable to the Company’s Existing Term Loan B Facility.
Revolving Credit Facility
On May 27, 2025, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Fourteenth Amendment to the Credit Agreement in order to (i) increase the commitments under the Revolving Credit Facility by $390 million (the “Incremental Commitments”) to an aggregate amount equal to $4.6 billion and (ii) make certain other
amendments to the Credit Agreement. The terms of the Incremental Commitments (including pricing) are identical to those applicable to, and constitute the same class as the existing commitments under, the Revolving Credit Facility. As of June 30, 2025, $135 million of borrowings were outstanding, which were fully repaid as of July 31, 2025.
2048 Convertible Senior Notes
Convertible Senior Notes Features — As of June 30, 2025, the Convertible Senior Notes were convertible pursuant to the issuance of the redemption notice into a combination of cash and the Company’s common stock at a price of $40.63 per common share, which is the equivalent to a conversion rate of approximately 24.6144 shares of common stock per $1,000 principal amount of Convertible Senior Notes. The net carrying amounts of the Convertible Senior Notes was $232 million and $231 million as of June 30, 2025 and December 31, 2024, respectively.
The following table details the interest expense recorded in connection with the Convertible Senior Notes:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions, except percentages) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Contractual interest expense | $ | 1 | $ | 2 | $ | 3 | $ | 6 | |||||||||||||||
| Amortization of deferred finance costs | — | 1 | — | 1 | |||||||||||||||||||
| Total | $ | 1 | $ | 3 | $ | 3 | $ | 7 | |||||||||||||||
| Effective interest rate | 0.79 | % | 0.76 | % | 1.55 | % | 1.54 | % |
Convertible Senior Notes Redemption
On May 15, 2025, the Company issued a notice of redemption for the Convertible Senior Notes. On July 8, 2025 (the “Redemption Date”), the Company used cash on hand to redeem $12 million in aggregate principal amount of the Convertible Senior Notes, at a redemption price equal to 100.000%. The majority of the Convertible Senior Note holders elected to convert the notes prior to the Redemption Date and received $220 million in cash with respect to the remaining principal amount of the Convertible Senior Notes and a total of 3,986,335 shares for the conversion premium.
Capped Call Options
During the second quarter of 2024, the Company entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”) to effectively lock in a conversion premium of $257 million on the remaining $232 million in aggregate principal amount of the Convertible Senior Notes. In the second quarter of 2025, the expiration date of the options was extended from June 1, 2025 to July 8, 2025. The Capped Calls were exercised and settled on July 8, 2025 in connection with the redemption of the Convertible Senior Notes. For further discussion, see Note 9, Changes in Capital Structure.
Receivables Securitization Facilities
On June 20, 2025, NRG Receivables, an indirect wholly-owned subsidiary of the Company, amended its existing Receivables Facility to extend the scheduled termination date to June 18, 2026.
Texas Development Priorities
On July 31, 2025, NRG entered into a $216 million loan agreement with the PUCT under the Texas Energy Fund (“TEF”, the “TEF loan”) to support development at its T.H. Wharton generation facility, which is currently under construction. The TEF loan bears interest at a fixed coupon rate of 3.000% per annum and has a final maturity date of July 31, 2045. The initial disbursement of funds for the TEF loan occurred in July 2025.
Note 8 — Investments Accounted for Using the Equity Method and Variable Interest Entities, or VIEs
Entities that are not Consolidated
NRG accounts for the Company's significant investments using the equity method of accounting. NRG's carrying value of equity investments can be impacted by a number of elements including impairments and movements in foreign currency exchange rates.
Variable Interest Entities that are Consolidated
The Company has a controlling financial interest that has been identified as a VIE under ASC 810 in NRG Receivables, which has entered into financing transactions related to the Receivables Facility as further described in Note 12, Long-term Debt and Finance Leases, to the Company’s 2024 Form 10-K.
The summarized financial information for the Company's consolidated VIE consisted of the following:
| (In millions) | June 30, 2025 | December 31, 2024 | |||||||||
| Accounts receivable and Other current assets | $ | 2,449 | $ | 2,402 | |||||||
| Current liabilities | 154 | 155 | |||||||||
| Net assets | $ | 2,295 | $ | 2,247 |
Note 9 — Changes in Capital Structure
As of June 30, 2025 and December 31, 2024, the Company had 10,000,000 shares of preferred stock authorized and 500,000,000 shares of common stock authorized. The following table reflects the changes in NRG's preferred and common stock issued and outstanding:
| Preferred | Common | ||||||||||||||||||||||
| Issued and Outstanding | Issued | Treasury | Outstanding | ||||||||||||||||||||
| Balance as of December 31, 2024 | 650,000 | 205,064,058 | (6,460,055) | 198,604,003 | |||||||||||||||||||
| Shares issued under LTIPs | — | 1,538,327 | — | 1,538,327 | |||||||||||||||||||
| Shares issued under ESPP | — | — | 81,903 | 81,903 | |||||||||||||||||||
| Shares repurchased | — | — | (5,594,139) | (5,594,139) | |||||||||||||||||||
| Partial settlement of Capped Call Options | — | — | (134) | (134) | |||||||||||||||||||
| Partial conversion of Convertible Senior Notes | — | — | 134 | 134 | |||||||||||||||||||
| Retirement of treasury stock | — | (5,514,606) | 5,514,606 | — | |||||||||||||||||||
| Balance as of June 30, 2025 | 650,000 | 201,087,779 | (6,457,685) | 194,630,094 | |||||||||||||||||||
| Shares issued under LTIPs | — | 14,042 | — | 14,042 | |||||||||||||||||||
| Shares repurchased | — | — | (988,749) | (988,749) | |||||||||||||||||||
| Settlement of Capped Call Options | — | — | (4,210,920) | (4,210,920) | |||||||||||||||||||
| Conversion of Convertible Senior Notes | — | — | 3,986,335 | 3,986,335 | |||||||||||||||||||
| Retirement of treasury stock | — | (1,091,281) | 1,091,281 | — | |||||||||||||||||||
| Balance as of July 31, 2025 | 650,000 | 200,010,540 | (6,579,738) | 193,430,802 |
Common Stock
Share Repurchases
The Company’s long-term capital allocation policy is to target allocating approximately 80% of cash available for allocation, after debt reduction, to be returned to shareholders. In June 2023, NRG announced an increase to its existing share repurchase authorization to $2.7 billion, to be executed through 2025. In October 2024, the Board of Directors authorized an additional $1.0 billion for share repurchases as part of the existing share repurchase authorization. As of July 31, 2025, $857 million is remaining under the $3.7 billion authorization. The following table summarizes the share repurchases made under the $3.7 billion authorization through July 31, 2025:
| Total number of shares purchased | Average price paid per share | Amounts paid for shares purchased (in millions) | ||||||||||||
| 2023 Repurchases: | ||||||||||||||
| Open market repurchases | 5,054,798 | $ | 39.56 | $ | 200 | |||||||||
| Repurchases made under the accelerated share repurchase agreements | 17,676,142 | (a) | 950 | |||||||||||
| Total Share Repurchases during 2023 | 22,730,940 | 1,150 | (b) | |||||||||||
| 2024 Repurchases: | ||||||||||||||
| Repurchases made under the accelerated share repurchase agreements | 1,163,230 | (a) | — | |||||||||||
| Open market repurchases | 10,562,333 | $ | 87.57 | 925 | ||||||||||
| Total Share Repurchases during 2024 | 11,725,563 | $ | 925 | (c) | ||||||||||
| 2025 Repurchases: | ||||||||||||||
| Open market repurchases(d) | 5,594,139 | $ | 107.14 | 600 | (e) | |||||||||
| Total Share Repurchases during the six months ended June 30, 2025 | 5,594,139 | $ | 600 | |||||||||||
| Open market repurchases July 1, 2025 through July 31, 2025 | 988,749 | $ | 154.30 | 152 | ||||||||||
| Shares received from the exercise of the Capped Calls Options | 224,585 | $ | 69.38 | 16 | ||||||||||
| Total Share Repurchases under the $3.7 billion authorization | 41,263,976 | $ | 68.88 | $ | 2,843 |
(a)Under the November 6, 2023 ASR, the Company received a total of 18,839,372 shares for an average price per share of $50.43, excluding the impact of the excise tax incurred. See discussion below for further information of the ASR agreements
(b)Excludes $10 million of excise tax accrued in 2023 which was paid in 2024
(c)Excludes $9 million of excise tax accrued in 2024 which was paid in 2025
(d)Includes $6 million accrued as of June 30, 2025
(e)Excludes $4 million accrued for estimated excise tax for the six months ended June 30, 2025
On November 6, 2023, the Company executed Accelerated Share Repurchase agreements to repurchase a total of $950 million of NRG's outstanding common stock based on volume-weighted average prices. The Company received 17,676,142 shares in the fourth quarter of 2023, which were recorded in treasury stock at fair value based on the closing prices of $833 million, with the remaining $117 million recorded in additional paid-in-capital, representing the value of the forward contracts to purchase additional shares. During the first quarter of 2024, the Company received an additional 1,163,230 shares pursuant to the ASR agreements. Upon receipt of the final shares, the Company transferred the $117 million from additional paid-in-capital to treasury stock.
Employee Stock Purchase Plan
The Company offers participation in the ESPP which allows eligible employees to elect to withhold between 1% and 10% of their eligible compensation to purchase shares of NRG common stock at the lesser of 90% of its market value on the offering date or 90% of the fair market value on the exercise date. An offering date occurs each April 1 and October 1. An exercise date occurs each September 30 and March 31.
NRG Common Stock Dividends
During the first quarter of 2025, NRG increased the annual dividend to $1.76 from $1.63 per share. A quarterly dividend of $0.44 per share was paid on the Company's common stock during the three months ended June 30, 2025. On July 21, 2025 NRG declared a quarterly dividend on the Company's common stock of $0.44 per share, payable on August 15, 2025 to stockholders of record as of August 1, 2025. The Company targets an annual dividend growth rate of 7%-9% per share in subsequent years.
The Company's common stock dividends are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations.
Retirement of Treasury Stock
During the six months ended June 30, 2025 and 2024, the Company retired shares of treasury stock as detailed below. These retired shares are now included in NRG's pool of authorized but unissued shares. The Company's accounting policy upon the formal retirement of treasury stock is to deduct its par value from common stock and to reflect any excess of cost over par value as a deduction from additional paid-in-capital.
| Total number of treasury shares retired | Average price per share | Carrying value of treasury shares retired (in millions) | |||||||||||||||
| 2025 Retirements: | |||||||||||||||||
| Shares retired during the first quarter of 2025 | 3,070,996 | $ | 58.23 | $ | 179 | ||||||||||||
| Shares retired during the second quarter of 2025 | 2,443,610 | 73.01 | 178 | ||||||||||||||
| Total shares retired during the six months ended June 30, 2025 | 5,514,606 | $ | 357 | ||||||||||||||
| 2024 Retirements: | |||||||||||||||||
| Shares retired during the first quarter of 2024 | 1,163,230 | $ | 32.67 | $ | 38 | ||||||||||||
| Shares retired during the second quarter of 2024 | 1,114,400 | 33.84 | 38 | ||||||||||||||
| Total shares retired during the six months ended June 30, 2024 | 2,277,630 | $ | 76 |
Capped Call Options
During the second quarter of 2024, the Company entered into Capped Calls. Each had a strike price of $40.63 per share, subject to certain adjustments, which correspond to the conversion price of the Convertible Senior Notes as of June 30, 2025. The Capped Calls had a cap price of $249.00 per share, subject to certain adjustments, and effectively locked in a conversion premium of $257 million on the remaining $232 million balance of the Convertible Senior Notes. The Capped Calls were separate transactions and not part of the terms of the Convertible Senior Notes. As these transactions met certain accounting criteria, the Capped Calls were recorded in stockholders' equity. In the second quarter of 2024, the Company recorded $253 million as a reduction to additional paid-in capital and a $4 million loss to other income, net to account for the change in the value of the Capped Calls during the calculation period which began on May 31, 2024 and concluded on June 28, 2024. In the second quarter of 2025, the expiration date of the options was extended from June 1, 2025 to July 8, 2025.
Upon the exercise and settlement of the Capped Calls on July 8, 2025, the Company paid a total amount of $292 million, inclusive of the initial conversion premium of $257 million. The Company received 4,210,920 shares of common stock, of which 3,986,335 were issued to the holders of the Convertible Senior Notes upon conversion, and the remaining 224,585 received were retired by the Company as of July 31, 2025.
Preferred Stock
Series A Preferred Stock Dividends
During the quarters ended March 31, 2025 and 2024, the Company declared and paid semi-annual 10.25% dividends of $51.25 per share on its outstanding Series A Preferred Stock, each totaling $33 million.
Note 10 — (Loss)/Income Per Share
Basic (loss)/income per common share is computed by dividing net (loss)/income less cumulative dividends attributable to preferred stock by the weighted average number of common shares outstanding. Shares issued and treasury shares repurchased during the period are weighted for the portion of the period that they were outstanding. Diluted (loss)/income per share is computed in a manner consistent with that of basic (loss)/income per share while giving effect to all potentially dilutive common shares that were outstanding during the period when there is net income. The relative performance stock units and non-vested restricted stock units are not considered outstanding for purposes of computing basic (loss)/income per share. However, these instruments are included in the denominator for purposes of computing diluted income per share under the treasury stock method for periods when there is net income. The Convertible Senior Notes were convertible, under certain circumstances, into cash or a combination of cash and the Company’s common stock. The Company is including the potential share settlements, if any, in the denominator for purposes of computing diluted income per share under the if converted method for periods when there is net income. The potential shares settlements are calculated as the excess of the Company's conversion obligation over the aggregate principal amount (which will be settled in cash), divided by the average share price for the period.
NRG's basic and diluted (loss)/income per share is shown in the following table:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions, except per share data) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Basic (loss)/income per share: | |||||||||||||||||||||||
| Net (loss)/income | $ | (104) | $ | 738 | $ | 646 | $ | 1,249 | |||||||||||||||
| Less: Cumulative dividends attributable to Series A Preferred Stock | 17 | 17 | 34 | 34 | |||||||||||||||||||
| Net (loss)/income available for common stockholders | $ | (121) | $ | 721 | $ | 612 | $ | 1,215 | |||||||||||||||
| Weighted average number of common shares outstanding - basic | 196 | 208 | 197 | 209 | |||||||||||||||||||
| (Loss)/Income per weighted average common share — basic | $ | (0.62) | $ | 3.47 | $ | 3.11 | $ | 5.81 | |||||||||||||||
| Diluted (loss)/income per share: | |||||||||||||||||||||||
| Net (loss)/income | $ | (104) | $ | 738 | $ | 646 | $ | 1,249 | |||||||||||||||
| Less: Cumulative dividends attributable to Series A Preferred Stock | 17 | 17 | 34 | 34 | |||||||||||||||||||
| Net (loss)/income available for common stockholders | $ | (121) | $ | 721 | $ | 612 | $ | 1,215 | |||||||||||||||
| Weighted average number of common shares outstanding - basic | 196 | 208 | 197 | 209 | |||||||||||||||||||
| Incremental shares attributable to the issuance of equity compensation (treasury stock method) | — | 3 | 2 | 2 | |||||||||||||||||||
| Incremental shares attributable to the potential share settlements of the Convertible Senior Notes (if converted method) | — | 3 | 4 | 3 | |||||||||||||||||||
| Weighted average number of common shares outstanding - dilutive | 196 | 214 | 203 | 214 | |||||||||||||||||||
| (Loss)/Income per weighted average common share — diluted | $ | (0.62) | $ | 3.37 | $ | 3.01 | $ | 5.68 |
For the three months ended June 30, 2025, the Company had 3 million of outstanding equity compensation instruments and 4 million of potential share settlement of the Convertible Senior Notes that were not included in the computation of the Company’s diluted loss per share. For all other periods presented, the Company had an insignificant number of outstanding equity instruments that were anti-dilutive and were not included in the computation of the Company's diluted income per share.
Note 11 — Segment Reporting
The Company’s segment structure reflects how management makes financial decisions and allocates resources. The Company manages its operations based on the combined results of the retail and wholesale generation businesses with a geographical focus except for Vivint Smart Home operations which are reported within the Vivint Smart Home segment. Corporate represents the corporate business activities, and corporate shared services, to support the Company’s operating segments. Beginning in the fourth quarter of 2024, Corporate now includes interest expense related to its consolidated debt financing activities and income tax expense related to its consolidated U.S. federal, foreign and state income taxes conforming to the way the Company internally manages and monitors the business. Prior periods amounts have been recast for comparative purposes to reflect this change, which had no impact on the Company’s consolidated financial position, results of operations, and cash flows. The accounting policies of the segments are the same as those applied in the consolidated financial statements as disclosed in Note 2, Summary of Significant Accounting Policies, to the Company’s 2024 Form 10-K.
NRG’s chief operating decision maker ("CODM"), its chief executive officer, uses more than one measure to evaluate the performance of its segments and allocate resources, including net income/(loss) and various non-GAAP financial measures such as adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA. Net income/(loss) and Adjusted EBITDA are used to review business performance and allocate resources as it provides a clearer view of segment profitability by focusing on operational performance. Additionally, operating expenses’ impact on each operating segment results are analyzed. On a monthly basis, Adjusted EBITDA is compared against the budget, latest forecast, and prior period.
| Three months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Revenue**(a)** | $ | 2,847 | $ | 2,737 | $ | 675 | $ | 504 | $ | — | $ | (23) | $ | 6,740 | ||||||||||||||||||||||||||||||
| Operating expenses | 2,371 | 3,048 | 520 | 428 | 52 | (23) | 6,396 | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 93 | 36 | 11 | 193 | 11 | — | 344 | |||||||||||||||||||||||||||||||||||||
| Total operating cost and expenses | 2,464 | 3,084 | 531 | 621 | 63 | (23) | 6,740 | |||||||||||||||||||||||||||||||||||||
| Operating income/(loss) | 383 | (347) | 144 | (117) | (63) | — | — | |||||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | 1 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||
| Other income, net | (1) | — | (1) | — | 6 | — | 4 | |||||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | — | — | (10) | — | (10) | |||||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (148) | — | (148) | |||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | 382 | (347) | 144 | (117) | (215) | — | (153) | |||||||||||||||||||||||||||||||||||||
| Income tax benefit | — | — | — | — | (49) | — | (49) | |||||||||||||||||||||||||||||||||||||
| Net income/(loss) | $ | 382 | $ | (347) | $ | 144 | $ | (117) | $ | (166) | $ | — | $ | (104) | ||||||||||||||||||||||||||||||
| (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues | $ | 6 | $ | 2 | $ | 2 | $ | 13 | $ | — | $ | — | $ | 23 | ||||||||||||||||||||||||||||||
| Other segment information | ||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 337 | $ | 5 | $ | 4 | $ | 7 | $ | 25 | $ | — | $ | 378 |
| Three months ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Revenue**(a)** | $ | 2,763 | $ | 2,532 | $ | 910 | $ | 467 | $ | — | $ | (13) | $ | 6,659 | ||||||||||||||||||||||||||||||
| Operating expenses | 1,719 | 2,045 | 851 | 255 | 22 | (13) | 4,879 | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 77 | 39 | 48 | 186 | 10 | — | 360 | |||||||||||||||||||||||||||||||||||||
| Impairment losses | — | — | 15 | — | — | — | 15 | |||||||||||||||||||||||||||||||||||||
| Total operating cost and expenses | 1,796 | 2,084 | 914 | 441 | 32 | (13) | 5,254 | |||||||||||||||||||||||||||||||||||||
| Gain on sale of assets | — | — | 5 | — | — | — | 5 | |||||||||||||||||||||||||||||||||||||
| Operating income/(loss) | 967 | 448 | 1 | 26 | (32) | — | 1,410 | |||||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | 4 | — | — | — | 4 | |||||||||||||||||||||||||||||||||||||
| Other income, net | — | — | 1 | (8) | 10 | — | 3 | |||||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | — | — | (202) | — | (202) | |||||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (163) | — | (163) | |||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | 967 | 448 | 6 | 18 | (387) | — | 1,052 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | — | — | — | — | 314 | — | 314 | |||||||||||||||||||||||||||||||||||||
| Net income/(loss) | $ | 967 | $ | 448 | $ | 6 | $ | 18 | $ | (701) | $ | — | $ | 738 | ||||||||||||||||||||||||||||||
| (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues | $ | 9 | $ | — | $ | 4 | $ | — | $ | — | $ | — | $ | 13 | ||||||||||||||||||||||||||||||
| Other segment information | ||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 80 | $ | — | $ | 4 | $ | 6 | $ | 13 | $ | — | $ | 103 |
| Six months ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Revenue**(a)** | $ | 5,282 | $ | 7,314 | $ | 1,774 | $ | 998 | $ | — | $ | (43) | $ | 15,325 | ||||||||||||||||||||||||||||||
| Operating expenses | 4,386 | 6,887 | 1,536 | 677 | 71 | (43) | 13,514 | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 176 | 73 | 24 | 375 | 22 | — | 670 | |||||||||||||||||||||||||||||||||||||
| Total operating cost and expenses | 4,562 | 6,960 | 1,560 | 1,052 | 93 | (43) | 14,184 | |||||||||||||||||||||||||||||||||||||
| Loss on sale of assets | — | — | (7) | — | — | — | (7) | |||||||||||||||||||||||||||||||||||||
| Operating income/(loss) | 720 | 354 | 207 | (54) | (93) | — | 1,134 | |||||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | 3 | — | — | — | 3 | |||||||||||||||||||||||||||||||||||||
| Other income, net | (1) | 4 | (1) | (8) | 22 | — | 16 | |||||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | — | — | (10) | — | (10) | |||||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (311) | — | (311) | |||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | 719 | 358 | 209 | (62) | (392) | — | 832 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | — | — | — | — | 186 | — | 186 | |||||||||||||||||||||||||||||||||||||
| Net income/(loss) | $ | 719 | $ | 358 | $ | 209 | $ | (62) | $ | (578) | $ | — | $ | 646 | ||||||||||||||||||||||||||||||
| (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues | $ | 13 | $ | 1 | $ | 4 | $ | 25 | $ | — | $ | — | $ | 43 | ||||||||||||||||||||||||||||||
| Other segment information | ||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 527 | $ | 5 | $ | 7 | $ | 8 | $ | 48 | $ | — | $ | 595 |
| Six months ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Revenue**(a)** | $ | 4,996 | $ | 6,047 | $ | 2,129 | $ | 935 | $ | — | $ | (19) | $ | 14,088 | ||||||||||||||||||||||||||||||
| Operating expenses | 3,517 | 4,940 | 2,117 | 503 | 41 | (19) | 11,099 | |||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 159 | 78 | 73 | 363 | 20 | — | 693 | |||||||||||||||||||||||||||||||||||||
| Impairment losses | — | — | 15 | — | — | — | 15 | |||||||||||||||||||||||||||||||||||||
| Total operating cost and expenses | 3,676 | 5,018 | 2,205 | 866 | 61 | (19) | 11,807 | |||||||||||||||||||||||||||||||||||||
| (Loss)/gain on sale of assets | (4) | — | 5 | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||
| Operating income/(loss) | 1,316 | 1,029 | (71) | 69 | (61) | — | 2,282 | |||||||||||||||||||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||||||||||||||||||
| Other income, net | — | — | (1) | (4) | 38 | — | 33 | |||||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | — | — | — | — | (260) | — | (260) | |||||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (315) | — | (315) | |||||||||||||||||||||||||||||||||||||
| Income/(loss) before income taxes | 1,316 | 1,029 | (65) | 65 | (598) | — | 1,747 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | — | — | — | — | 498 | — | 498 | |||||||||||||||||||||||||||||||||||||
| Net income/(loss) | $ | 1,316 | $ | 1,029 | $ | (65) | $ | 65 | $ | (1,096) | $ | — | $ | 1,249 | ||||||||||||||||||||||||||||||
| (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues | $ | 10 | $ | — | $ | 9 | $ | — | $ | — | $ | — | $ | 19 | ||||||||||||||||||||||||||||||
| Other segment information | ||||||||||||||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 125 | $ | — | $ | 10 | $ | 10 | $ | 27 | $ | — | $ | 172 |
The following table summarizes balance sheet information by segment:
| As of June 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Equity investments in affiliates | $ | — | $ | — | $ | 47 | $ | — | $ | — | $ | — | $ | 47 | ||||||||||||||||||||||||||||||
| Goodwill | 643 | 721 | 159 | 3,494 | — | — | 5,017 | |||||||||||||||||||||||||||||||||||||
| Total assets | 8,646 | 8,932 | 2,228 | 6,731 | 16,364 | (18,813) | 24,088 | |||||||||||||||||||||||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | Texas | East | West/Services/Other | Vivint Smart Home | Corporate | Eliminations | Total | |||||||||||||||||||||||||||||||||||||
| Equity investments in affiliates | $ | — | $ | — | $ | 45 | $ | — | $ | — | $ | — | $ | 45 | ||||||||||||||||||||||||||||||
| Goodwill | 643 | 721 | 153 | 3,494 | — | — | 5,011 | |||||||||||||||||||||||||||||||||||||
| Total assets | 6,925 | 8,021 | 2,254 | 6,624 | 15,543 | (15,345) | 24,022 |
Note 12 — Income Taxes
Effective Income Tax Rate
The income tax provision consisted of the following:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions, except rates) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| (Loss)/Income before income taxes | $ | (153) | $ | 1,052 | $ | 832 | $ | 1,747 | |||||||||||||||
| Income tax (benefit)/expense | (49) | 314 | 186 | 498 | |||||||||||||||||||
| Effective income tax rate | 32.0 | % | 29.8 | % | 22.4 | % | 28.5 | % |
For the three months ended June 30, 2025, the effective tax rate was higher than the statutory rate of 21%, primarily due to the state tax benefit and permanent differences.
For the six months ended June 30, 2025, the effective tax rate was higher than the statutory rate of 21%, primarily due to the state tax expense, partially offset with favorable permanent differences.
For the three and six months ended June 30, 2024, the effective tax rate was higher than the statutory rate of 21%, primarily due to the state tax expense and permanent differences.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBB”) was enacted into law. The OBBB includes changes to U.S. tax law that will be applicable to NRG beginning in 2025. Any impact of the OBBB on the Company’s condensed consolidated financial statements will be reflected in the third quarter.
On September 12, 2024, Treasury and the IRS released proposed regulations that provide guidance on the application of the CAMT. The proposed regulations allow the exclusion of unrealized mark-to-market gains and losses, related to qualified hedge transactions, from adjusted financial statement income. The Company will continue to evaluate the applicable corporation status and the impact of the CAMT based on the proposed guidance. NRG as an applicable corporation is subject to the CAMT and has reflected the impact in its current and deferred taxes, however, there is no impact on the Company’s provision for income taxes from the CAMT for the three and six months ended June 30, 2025 and 2024.
Uncertain Tax Benefits
As of June 30, 2025, NRG had a non-current tax liability of $60 million for uncertain tax benefits from positions taken on various federal and state income tax returns inclusive of accrued interest. For the six months ended June 30, 2025, NRG accrued $1 million of interest relating to the uncertain tax benefits. As of June 30, 2025, NRG had cumulative interest and penalties related to these uncertain tax benefits of $5 million. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense.
NRG is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state and foreign jurisdictions including operations located in Australia and Canada. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2021. With few exceptions, state and Canadian income tax examinations are no longer open for years prior to 2015.
Note 13 — Related Party Transactions
NRG provides services to some of its related parties, which are accounted for as equity method investments, under operations and maintenance agreements. Fees for the services under these agreements include recovery of NRG's costs of operating the plants. Certain agreements also include fees for administrative services, a base monthly fee, profit margin and/or annual incentive bonus.
The following table summarizes NRG's material related party transactions with third-party affiliates:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||
| Revenues from Related Parties Included in Revenue | |||||||||||||||||||||||
| Gladstone | $ | — | $ | — | $ | 1 | $ | 1 | |||||||||||||||
| Ivanpah(a) | 12 | 12 | 24 | 25 | |||||||||||||||||||
| Midway-Sunset | 1 | 1 | 2 | 2 | |||||||||||||||||||
| Total | $ | 13 | $ | 13 | $ | 27 | $ | 28 |
(a)Also includes fees under project management agreements with each project company
Note 14 — Commitments and Contingencies
Commitments
First Lien Structure
NRG has granted first liens to certain counterparties on a substantial portion of property and assets owned by NRG and the guarantors of its senior debt. NRG uses the first lien structure to reduce the amount of cash collateral and letters of credit that it would otherwise be required to post from time to time to support its obligations under out-of-the-money hedges. To the extent that the underlying hedge positions for a counterparty are out-of-the-money to NRG, the counterparty would have a claim under the first lien program. As of June 30, 2025, all hedges under the first liens were out-of-the-money on a counterparty aggregate basis.
Contingencies
The Company's material legal proceedings are described below. The Company believes that it has valid defenses to these legal proceedings and intends to defend them vigorously. NRG records accruals for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. As applicable, the Company believes it has established an adequate accrual for the applicable legal matters, including regulatory and environmental matters as further discussed in Note 15, Regulatory Matters, and Note 16, Environmental Matters. In addition, legal costs are expensed as incurred. Management has assessed each of the following matters based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. Unless specified below, the Company is unable to predict the outcome of these legal proceedings or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and contingencies could be at amounts that are different from its currently recorded accruals and that such difference could be material.
In addition to the legal proceedings noted below, NRG and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect NRG's consolidated financial position, results of operations, or cash flows.
Environmental Lawsuits
Sierra club et al. v. Midwest Generation LLC — In 2012, several environmental groups filed a complaint against Midwest Generation with the Illinois Pollution Control Board ("IPCB") alleging violations of environmental law resulting in groundwater contamination. In June 2019, the IPCB found in an interim order that Midwest Generation violated the law because it had improperly handled coal ash at four facilities in Illinois and caused or allowed coal ash constituents to impact groundwater. On September 9, 2019, Midwest Generation filed a Motion to Reconsider numerous issues, which the court granted in part and denied in part on February 6, 2020. In 2023, the IPCB held hearings regarding the appropriate relief. Midwest Generation has been working with the Illinois EPA to address the groundwater issues since 2010.
Consumer Lawsuits
Similar to other energy service companies (“ESCOs”) and smart home companies operating in the industry, from time-to-time, the Company and/or its subsidiaries may be subject to consumer lawsuits in various jurisdictions where they sell natural gas, electricity or smart home solutions.
Variable Price Case
Mirkin v. XOOM Energy (E.D.N.Y. Aug. 2019) — XOOM Energy is a defendant in a putative class action lawsuit pending in New York, alleging that XOOM Energy breached its contractual duty to set customer variable rates based on actual and estimated supply costs. The Court denied XOOM's motion for summary judgment and granted class certification. The Second Circuit denied XOOM's request to appeal the class certification grants. XOOM prevailed in its challenge to Mirkin's expert reports. The Court granted XOOM's motion to exclude both reports on damages. As a result, Mirkin has no method to establish damages for its class. The Court is considering whether class certification is still appropriate. Recently, this matter was moved to a new judge for further handling. A trial setting is not expected before Fall 2025. This matter was known and accrued for at the time of the XOOM acquisition.
Telephone Consumer Protection Act ("TCPA") Cases — In the cases set forth below, referred to as the TCPA Cases, such actions involve consumers alleging violations of the Telephone Consumer Protection Act of 1991, as amended, by receiving calls, texts or voicemails without consent in violation of the federal Telemarketing Sales Rule, and/or state counterpart legislation. The underlying claims of each case are similar. The Company denies the allegations asserted by plaintiffs and intends to vigorously defend these matters. These matters were known and accrued for at the time of the Direct Energy acquisition.
There are two putative class actions pending against Direct Energy: (1) Holly Newman v. Direct Energy, LP (D. Md Sept 2021) - Direct Energy filed its Motion to Dismiss asserting the ruling in the Brittany Burk v. Direct Energy (S.D. Tex. Feb 2019) preempts the plaintiff's ability to file suit based on the same facts. The Court denied Direct Energy's motion stating the Court does not have the benefit of all of the facts that were in front of the Burk court to issue a similar ruling. On April 12, 2023, the Court granted Direct Energy’s Motion to Transfer Venue, moving to the case to the Southern District of Texas. The parties are proceeding with written discovery; and (2) Matthew Dickson v. Direct Energy (N.D. Ohio Jan. 2018) - The case was stayed pending the outcome of an appeal to the Sixth Circuit based on the unconstitutionality of the TCPA during the period from 2015-2020. The Sixth Circuit found the TCPA was in effect during that period and remanded the case back to the trial court. Direct Energy refiled its motions along with supplements. On March 25, 2022, the Court granted summary judgment in favor of Direct Energy and dismissed the case. Dickson appealed and the case was sent back to the trial court. The parties conducted fact and expert discovery and Direct Energy submitted its motion for summary judgment in August 2024. The parties are waiting for a ruling from the Court on summary judgment and class certification.
Sales Practice Lawsuit
A Vivint Smart Home competitor has made a claim against Vivint Smart Home alleging, among other things, that Vivint Smart Home's sales representatives used deceptive sales practices. This matter was known and accrued for at the time of the Vivint Smart Home acquisition. CPI Security Systems, Inc. ("CPI") v. Vivint Smart Home, Inc. (W.D.N.C. Sept. 2020) was filed in 2020, went to trial, and in February 2023, the jury issued a verdict against Vivint Smart Home, in favor of CPI for $50 million of compensatory damages and an additional $140 million of punitive damages. Vivint Smart Home appealed. The Fourth Circuit Court of Appeals issued its opinion on July 22, 2025, upholding the trial court’s judgment. Following the decision, the Company increased the accrual for this matter as of June 30, 2025 to the amount of the judgment plus accrued interest. The Company is pursuing additional appellate remedies.
Patent Infringement Lawsuit
SB IP Holdings LLC (“Skybell”) v. Vivint Smart Home, Inc. — On October 23, 2023, a jury in the U.S. District Court, Eastern District of Texas, Sherman Division, issued a verdict against the Company in favor of Skybell for $45 million in damages for patent infringement. The patents that were the basis for the claims made by Skybell were ruled invalid by the U.S. International Trade Commission in November 2021. The Company did not believe the verdict was legally supported and pursued appellate remedies. During the second quarter of 2025, the parties entered into a settlement agreement and dismissed the matter and pending appeals.
Winter Storm Uri Lawsuits
The Company has been named in certain property damage and wrongful death claims that have been filed in connection with Winter Storm Uri in its capacity as a generator and a retail electric provider. Most of the lawsuits related to Winter Storm Uri are consolidated into a single multi-district litigation matter in Harris County District Court. NRG's retail electric providers have since been dismissed from the multi-district litigation. As a power generator, the Company is named in various cases with claims ranging from: wrongful death; personal injury only; property damage and personal injury; property damage only; and
subrogation. The First Court of Appeals conditionally granted the generators' mandamus relief, ordering the trial court to grant the generator defendants' Motion to Dismiss. The plaintiffs challenged the ruling and the matters are stayed pending appeals by the various parties. The Company intends to vigorously defend these matters.
Note 15 — Regulatory Matters
Environmental regulatory matters are discussed within Note 16, Environmental Matters.
NRG operates in a highly regulated industry and is subject to regulation by various federal, state and provincial agencies. As such, NRG is affected by regulatory developments at the federal, state and provincial levels and in the regions in which NRG operates. In addition, NRG is subject to the market rules, procedures, and protocols of the various ISO and RTO markets in which NRG participates. These power markets are subject to ongoing legislative and regulatory changes that may impact NRG's wholesale and retail operations.
In addition to the regulatory proceedings noted below, NRG and its subsidiaries are parties to other regulatory proceedings arising in the ordinary course of business or have other regulatory exposure. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect NRG's consolidated financial position, results of operations, or cash flows.
California Station Power — As the result of unfavorable final and non-appealable litigation, the Company accrued a liability associated with consumption of station power at the Company's Encina power plant facility in California after August 30, 2010. The Company believes it has established an appropriate accrual pending potential regulatory action by San Diego Gas & Electric regarding the Company's Encina facility.
NYSPSC - Notice of Apparent Violation — The NYSPSC issued an order referred to as the Retail Reset Order in December 2019 that limited ESCOs’ offers for electric and natural gas to three compliant products: guaranteed savings from the utility default rate, a fixed rate commodity product that is priced at no more than 5% greater than the trailing 12-month average utility supply rate or New York-sourced renewable energy that is at least 50% greater than the prevailing New York Renewable Energy Standard for load serving entities. The order effectively limited ESCOs offers to natural gas customers to only the guaranteed savings and capped fixed term compliant products because no equivalent renewable energy product exists for natural gas. NRG took action to comply with the order when it became effective April 16, 2021. On January 8, 2024, the NYSPSC notified eight of NRG's retail energy suppliers (serving both electricity and natural gas) of alleged non-compliance with New York regulatory requirements. Among other items, the notices allege that the NRG suppliers did not transition existing residential customers to one of the three compliant products authorized by the NYSPSC following the effective date of the order. NRG responded to the notices in February 2024. The Company believes it has complied with the Retail Reset Order and does not agree with the NYSPSC's assertions made in the notice. The outcome of this process has the potential to negatively impact the retail business in New York.
Note 16 — Environmental Matters
NRG is subject to a wide range of environmental laws in the development, construction, ownership and operation of power plants. These laws generally require that governmental permits and approvals be obtained before construction and maintained during operation of power plants. In general, the electric generation industry has faced increasingly stringent requirements regarding air quality, GHG emissions, combustion byproducts, water use and discharge, and threatened and endangered species including several rules promulgated in 2024. In general, future laws are expected to require the addition of emissions controls or other environmental controls or to impose additional restrictions on the operations of the Company's facilities, which could have a material effect on the Company's consolidated financial position, results of operations, or cash flows. At the federal level, the President has issued several Executive Orders that indicate that the current administration intends to ease the regulatory burden on the electric generation industry, which may affect the outcome of the rulemakings and related legal challenges described below. The Company has elected to use a $1 million disclosure threshold, as permitted, for environmental proceedings to which the government is a party.
Air
CPP/ACE Rules — The attention in recent years on GHG emissions has resulted in federal and state regulations. In 2019, the EPA promulgated the ACE rule, which rescinded the CPP, which had sought to broadly regulate CO2 emissions from the power sector. On January 19, 2021, the D.C. Circuit vacated the ACE rule (but on February 22, 2021, at the EPA's request, stayed the issuance of the portion of the mandate that would vacate the repeal of the CPP). On June 30, 2022, the U.S. Supreme Court held that the "generation shifting" approach in the CPP exceeded the powers granted to the EPA by Congress. On May 9, 2024, the EPA promulgated a rule that repealed the ACE rule and significantly revised the manner in which new combustion-turbine and existing steam EGU's GHG emissions will be regulated including capturing and storing/sequestering CO2 in some instances. This rule has been challenged by numerous parties in the D.C. Circuit including 27 states with 22 states intervening in support of the rule. The D.C. Circuit held oral arguments related to this rule in December 2024. On February 5, 2025, the
DOJ filed a motion asking the court to hold proceedings in abeyance while the EPA evaluates the rule. The court granted the motion on February 19, 2025. On June 17, 2025, the EPA proposed to repeal all GHG emission standards for fossil fuel-fired power plants under Section 111 of the CAA. The EPA is proposing to conclude that GHG emissions from domestic fossil fuel-fired EGUs do not contribute to dangerous air pollution at a level sufficient to invoke the EPA’s authority under CAA Section 111. In addition to its primary proposal to repeal all GHG emission standards for the power sector promulgated in both 2015 and 2024, the EPA has included an alternative proposal to repeal only specific portions.
Cross-State Air Pollution Rule (“CSAPR”) — On March 15, 2023, the EPA signed and released a prepublication version of a final rule that sought to significantly revise the CSAPR to address the good-neighbor obligations of the 2015 ozone NAAQS for 23 states (a Federal Implementation Plan or “FIP”) after earlier having disapproved numerous state plans to address the issue. Several states, including Texas, challenged the EPA's disapproval of their state plans. On May 1, 2023, the U.S. Court of Appeals for the Fifth Circuit stayed the EPA's disapproval of Texas' and Louisiana's state plans, which disapprovals are a condition precedent to the EPA imposing its plan on Texas and Louisiana. On March 25, 2025, the Fifth Circuit upheld the EPA’s disapproval of Texas’ and Louisiana’s state plans but did not address the FIP. On May 9, 2025, Texas and other parties petitioned the Fifth Circuit for a rehearing with the whole court. On June 5, 2023, the EPA promulgated the FIP. On June 27, 2024, the U.S. Supreme Court stayed the FIP in the 11 states where the rule had not already been stayed. On April 14, 2025, the D.C. Circuit granted the EPA’s request to hold the legal challenges in abeyance while the EPA revisits the rule. The Company cannot predict the outcome of the legal challenges to the various state disapprovals and the final rule promulgated on June 5, 2023.
Regional Haze Proposal — In May 2023, the EPA proposed to withdraw the existing Texas Sulfur Dioxide Trading Program and replace it with unit-specific SO2 limits for 12 units in Texas to address requirements to improve visibility at National Parks and Wilderness areas. If finalized as proposed, it would result in more stringent SO2 limits for two of the Company's coal-fired units in Texas. The Company cannot predict the outcome of this proposal.
Mercury and Air Toxics Standards (“MATS”) — On May 7, 2024, the EPA promulgated a final rule that amends the MATS rule by, among other things, increasing the stringency of the filterable particulate matter standard at coal-burning units. The deadline for complying with this more stringent standard had been 2027. On April 8, 2025, the President signed a Proclamation that creates a 2-year exemption for compliance beginning on July 8, 2027 and ending on July 8, 2029 for certain coal units including those owned by the Company. Twenty-three states have challenged this rule in the D.C. Circuit. On June 17, 2025, the EPA proposed to repeal the majority of the 2024 final rule amending the MATS rule. Accordingly, the outcome of this rulemaking is uncertain.
Water
ELG — In 2015, the EPA revised the ELG for Steam Electric Generating Facilities, which imposed more stringent requirements (as individual permits were renewed) for wastewater streams from FGD, fly ash, bottom ash and flue gas mercury control. In 2017, the EPA promulgated a final rule that, among other things, postponed the compliance dates to preserve the status quo for FGD wastewater and bottom ash transport water by two years to November 2020 until the EPA amended the rule. On October 13, 2020, the EPA amended the 2015 ELG rule by: (i) altering the stringency of certain limits for FGD wastewater; (ii) relaxing the zero-discharge requirement for bottom ash transport water; and (iii) changing several deadlines. In 2021, NRG informed its regulators that the Company intends to comply with the ELG by ceasing combustion of coal by the end of 2028 at its domestic coal units outside of Texas, and installing appropriate controls by the end of 2025 at its two plants that have coal-fired units in Texas. On May 9, 2024, the EPA promulgated a rule that revises the ELG by, among other things, further restricting the discharge of (i) FGD wastewater, (ii) bottom ash transport water, and (iii) combustion residual leachate. The rule was challenged in numerous courts, but the cases have been consolidated in the Eighth Circuit of the U.S. Court of Appeals. The outcome of the legal challenges is uncertain. On February 19, 2025, the DOJ filed a motion asking the court to hold proceedings in abeyance while the U.S. presidential administration evaluates the rule, which the court granted. During the second quarter of 2025, the EPA announced its intent to update the 2024 rule to advance the goals of the President Trump’s Unleashing American Energy Executive Order to support electric grid reliability and affordability while maintaining compliance with the Clean Water Act.
Byproducts
In 2015, the EPA finalized the rule regulating byproducts of coal combustion (e.g., ash and gypsum) as solid wastes under the RCRA. On August 21, 2018, the D.C. Circuit found, among other things, that the EPA had not adequately regulated unlined ponds and legacy surface impoundments. On August 28, 2020, the EPA finalized "A Holistic Approach to Close Part A: Deadline to Initiate Closure," which amended the April 2015 Rule to address the August 2018 D.C. Circuit decision and extend some of the deadlines. On November 12, 2020, the EPA finalized "A Holistic Approach to Closure Part B: Alternative Demonstration for Unlined Surface Impoundments," which further amended the April 2015 Rule to, among other things, provide procedures for requesting approval to operate existing ash impoundments with an alternate liner. On May 8, 2024, the EPA promulgated a rule that establishes requirements for: (i) inactive (or legacy) surface impoundments at inactive facilities
and (ii) coal combustion residual ("CCR") management units (regardless of how or when the CCR was placed) at regulated facilities. The rule also creates an obligation to conduct site assessments (at all active and certain inactive facilities) to determine whether CCR management units are present. The rule has been challenged in the D.C. Circuit and the outcome of the legal challenges is uncertain.
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