What changed in this filing

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Item 1A. Risk Factors

2022-02-24 compared with 2021-03-01 · 116 added, 121 removed, 351 unchanged (40% of the section changed)

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NRG's risk factors are grouped into the following categories:

(i) Risks Related to Public Health Threats;

(ii) Risks Related to the Acquisition of Direct Energy;

(iii) Risks Related to the Operation of NRG's Business;

(iv) Risks Related to Governmental Regulation and Laws;

and (v) Risks Related to the Company's Indebtedness and Economic and Financial Market Conditions.

Risks Related to Public Health Threats

Public health threats or outbreaks of communicable diseases could have a material adverse effect on the Company’s operations and financial results .

The Company may face risks related to public health threats or outbreaks of communicable diseases.

A widespread healthcare crisis, such as an outbreak of a communicable disease, could adversely affect the global economy and the Company’s ability to conduct its business for an indefinite period of time.

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

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

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

This could have a material adverse effect on the Company’s results of operations, financial condition, risk exposure and liquidity.

In particular, the continued spread of COVID-19 and efforts to contain the virus could:

• adversely impact demand for the Company’s electricity services and other products and services and the ability of customers to pay their bills;

• cause an increase in costs for the Company as a result of emergency measures taken by state and local regulatory authorities in response to the COVID-19 crisis, including regulatory changes prohibiting customer disconnects and late fees;

• impact the ability of the Company's partners or counterparties to perform their obligations under existing arrangements, including development projects, power purchase and sale arrangements, hedging arrangements or other commercial activities;

• cause other unpredicted events which may have an adverse impact on the Company’s results of operations, financial condition, risk exposure and liquidity.

The situation surrounding COVID-19 remains fluid and the potential for a material impact on the Company’s results of operations, financial condition, risk exposure and liquidity increases the longer the virus, or any variants thereof, impacts the level of economic activity in the United States and abroad.

NRG cannot reasonably estimate with any degree of certainty the future impact of COVID-19, or any resurgence of COVID-19 or other pandemic may have on the Company’s results of operations, financial position, risk exposure and liquidity.

(i) Risks Related to the Acquisition of Direct Energy;

(ii) Risks Related to the Operation of NRG's Business;

(iii) Risks Related to Governmental Regulation and Laws;

(iv) Risks Related to Public Health Threats;

and (v) Risks Related to Economic and Financial Market Conditions, and the Company's Indebtedness.

Risks Related to the Acquisition of Direct Energy

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• the possibility of faulty assumptions underlying expectations regarding the integration process;

• the potential impairment of relationships with employees and partners as a result of any integration of new management personnel;

• the potential impairment of relationships with employees and partners;

• unforeseen expenses associated with the acquisition of Direct Energy, including delays to the integration of Direct Energy’s business as a result of the COVID-19 pandemic;

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• unanticipated changes in federal or state laws or regulations;

• the effect of any government regulations which relate to the business acquired.

• the effect of any government regulations that relate to the business acquired.

If the Company is not successful in addressing these risks effectively, the business could be impacted.

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Long and short-term power and gas prices may also fluctuate substantially due to other factors outside of the Company's control, including:

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

• environmental regulations and legislation;

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For example, serving retail power customers in ISOs that have a capacity market exposes the Company to the risk that capacity costs can change and may not be recoverable, or the Company may engage in sales of power at fixed prices.

Additionally, increases in wholesale costs to retail customers may cause additional customer defaults or increased customer attrition, or may be limited by regulatory rules.

Further, low natural gas prices can cause natural gas to be the more cost-competitive fuel compared to coal for generating electricity.

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

Additionally, increases in wholesale costs to retail customers may cause additional customer defaults or increased customer attrition, or may be impacted by regulatory rules.

Further, in low natural gas price environments, natural gas can be the more cost-competitive fuel compared to coal for generating electricity.

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

In addition, the Company may incur costs to terminate supply contracts for coal in excess of its generating requirements.

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All of the gas sold by the Company in retail and wholesale markets is purchased from third parties.

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

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

Consequently, the Company's earnings and cash flows could be adversely affected in any period in which the wholesale power or gas prices rise at a greater rate than the rates the Company can charge to customers.

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Competitors may also have better access to subsidies or other out-of-market payments that put NRG at a competitive disadvantage.

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

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

In addition, current and potential competitors may make strategic acquisitions or establish cooperative relationships among themselves or with third parties.

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Any such event could have a material adverse effect on the Company's financial performance.

NRG also buys significant quantities of electricity and fuel on a short-term or spot market basis.

NRG also buys significant quantities of energy and fuel on a short-term or spot market basis.

Prices sometimes rise or fall significantly over a relatively short period of time.

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An increase in the amount of letters of credit or cash collateral required to be provided to the Company's counterparties may negatively affect the Company's liquidity and financial condition.

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

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

Without adequate liquidity to meet margin and collateral requirements, the Company may be exposed to significant losses, may miss significant opportunities, and may have increased exposure to the volatility of spot markets.

NRG relies on storage, transportation assets and suppliers, which it does not own or control, to deliver natural gas.

The Company depends on natural gas pipelines and other transportation and storage facilities owned and operated by third parties to deliver natural gas to wholesale and retail markets and to provide retail energy services to customers.

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

Factors beyond the control of the Company and its suppliers may affect the Company's ability to deliver such supplies.

These factors include other parties' control over the drilling of new wells and the facilities to transport natural gas to the Company's receipt points, development of additional interstate pipeline infrastructure, availability of supply sources competition for the acquisition of natural gas, priority allocations, impact of severe weather disruptions to natural gas supplies and the regulatory and pricing policies of federal and state regulatory agencies, as well as the availability of Canadian reserves for export to the U.S.

Energy deregulation legislation may increase competition among natural gas utilities and impact the quantities of natural gas requirements needed for sales service.

If supply, transportation or storage is disrupted, including for reasons of force majeure, the ability of the Company to sell and deliver its products and services may be hindered.

As a result, the Company may be responsible for damages incurred by its customers, such as the additional cost of acquiring alternative supply at then-current market rates.

These conditions could have a material impact on the Company's financial condition, results of operations and cash flows.

Operation of power generation facilities involves significant risks and hazards customary to the power industry that could have a material adverse effect on NRG's revenues and results of operations, and NRG may not have adequate insurance to cover these risks and hazards.

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

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

Unplanned outages of generating units, including extensions of scheduled outages due to mechanical failures or other problems occur from time to time and are an inherent risk of the Company's business.

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

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

NRG's inability to operate the Company's plants efficiently, manage capital expenditures and costs, and generate earnings and cash flow from the Company's asset-based businesses could have a material adverse effect on the Company's results of operations, financial condition or cash flows.

In addition, NRG provides plant operations and commercial services to a variety of third-parties.

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

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

or penalties being assessed to NRG in connection with the services it offers, or that regulators could question whether NRG had the appropriate safeguards in place.

Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large pieces of rotating equipment and delivering electricity to transmission and distribution systems.

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A successful claim for which the Company is not fully insured or protected could hurt its financial results and materially harm NRG's financial condition.

NRG cannot provide any assurance that its insurance coverage will continue to be available at all or

at rates or on terms similar to those presently available.

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

Any losses not covered by insurance could have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Maintenance, expansion and refurbishment of power generation facilities involve significant risks that could result in unplanned power outages or reduced output and could have a material adverse effect on NRG's results of operations, cash flows and financial condition.

Many of NRG's facilities require periodic maintenance and repair.

Any unexpected failure, including failure associated with breakdowns, forced outages or any unanticipated capital expenditures could result in reduced profitability.

NRG cannot be certain of the level of capital expenditures that will be required due to changing environmental and safety laws (including changes in the interpretation or enforcement thereof) needed facility repairs and unexpected events (such as natural disasters or terrorist attacks).

The unexpected requirement of large capital expenditures could have a material adverse effect on the Company's liquidity and financial condition.

NRG and its subsidiaries have guaranteed the performance of third parties, which may result in substantial costs in the event of non-performance.

NRG and its subsidiaries have issued certain guarantees of the performance of others, which obligate NRG and its subsidiaries to perform in the event that the third parties do not perform.

In the event of non-performance by the third parties, NRG could incur substantial cost to fulfill their obligations under these guarantees.

Such performance guarantees could have a material impact on the operating results, financial condition, or cash flows of the Company.

Supplier and/or customer concentration may expose the Company to significant financial credit or performance risks.

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There can be no assurance that the marketplace can provide these services as, when and where required or at comparable prices.

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

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

The Company may also hedge a portion of its exposure to power and fuel price fluctuations through various physical or financial agreements with counterparties.

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NRG may not be able to enter into replacement agreements on terms as favorable as its existing agreements, or at all.

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

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

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

The failure of any supplier or customer to fulfill its contractual obligations to NRG could have a material adverse effect on the Company's financial results.

Consequently, the financial performance of the Company's facilities is dependent on the credit quality of, and continued performance by, suppliers and customers.

NRG's facilities require periodic maintenance and repair.

Any unexpected failure, including failure associated with breakdowns, forced outages or any unanticipated capital expenditures could result in reduced profitability.

The unexpected requirement of large capital expenditures could have a material adverse effect on the Company's liquidity and financial condition.

NRG and its subsidiaries have guaranteed the performance of third parties, which may result in substantial costs in the event of non-performance.

NRG and its subsidiaries have issued certain guarantees of the performance of others, which obligate NRG and its subsidiaries to perform in the event that the third parties do not perform.

In the event of non-performance by the third parties, NRG could incur substantial cost to fulfill their obligations under these guarantees.

Such performance guarantees could have a material impact on the operating results, financial condition, or cash flows of the Company.

NRG relies on power transmission and distribution facilities that it does not own or control and that are subject to transmission constraints within a number of the Company's core regions.

NRG depends on transmission and distribution facilities owned and operated by others to deliver power to its customers.

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

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

infrastructure is inadequate, NRG's ability to deliver power may be adversely impacted.

The Company also cannot predict whether transmission or distribution facilities will be expanded in specific markets to accommodate competitive access to those markets.

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If NRG were liable for such congestion costs, the Company's financial results could be adversely affected.

NRG relies on storage, transportation assets and suppliers, which they do not own or control, to deliver natural gas.

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

Factors beyond the control of the Company and its suppliers may affect the Company's ability to deliver such supplies.

Energy deregulation legislation may increase competition among natural gas utilities and impact the quantities of natural gas requirements needed for sales service.

If supply, transportation or storage is disrupted, including for reasons of force majeure, the ability of the Company to sell and deliver its products and services may be hindered.

As a result, the Company may be responsible for damages incurred by its customers, such as the additional cost of acquiring alternative supply at then-current market rates.

These conditions could have a material impact on the Company's financial condition, results of operations and cash flows.

Rates and terms for service of certain residential and commercial customers in Alberta are subject to regulatory review and approval.

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

The Company owns Direct Energy Regulated Services, which serves as a regulated rate supplier for residential and commercial energy customers in portions of the province of Alberta.

It is required to engage in regulatory approval proceedings as a part of the process of establishing the terms and rates for sales of power and natural gas.

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NRG may have difficulty addressing possible differences in corporate cultures and management philosophies.

Failure to achieve these anticipated benefits

could result in increased costs or decreases in the amount of expected revenues and could adversely affect NRG's future business, financial condition, operating results and prospects.

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

Future acquisition or disposition activities could involve unknown risks and may have materially adverse effects and NRG may be subject to trailing liabilities from businesses that it disposes of or that are inactive.

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The acquisition of companies and assets is subject to substantial risks, including the failure to identify material problems during due diligence, the risk of over-paying for assets or customers, the ability to retain customers and the inability to arrange financing for an acquisition as may be required or desired.

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

Further, the integration and consolidation of acquisitions requires substantial human, financial and other

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

In the case of dispositions, such risks may relate to employment matters, counterparties, regulators and other stakeholders in the disposed business, risks relating to separating the disposed assets from NRG’s business, risks related to the management of NRG’s ongoing business, risks unknown to NRG at the time, and other financial, legal and operational risks related to such disposition.

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The failure to realize the anticipated returns or benefits from an acquisition or disposition could adversely affect NRG's results of operations, cash flows and financial condition.

The Company has made investments, and may continue to make investments, in new business initiatives predominantly focused on consumer products and in markets that may not be successful, may not achieve the intended financial results or may result in product liability and reputational risk that could adversely affect the Company.

NRG continues to pursue growth in its existing businesses and markets and further diversification across the competitive energy value chain.

Such initiatives may involve significant risks and uncertainties, including distraction of management from current operations, inadequate return on capital, and unidentified issues not discovered in the diligence performed prior to launching an initiative or entering a market.

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

Where such work is performed by independent contractors, such as repairs performed under the Company's home warranty and protection plan products, the Company may nonetheless face claims and costs for damage.

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

The products that the Company sells or manufactures may expose the Company to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions.

Although the Company maintains liability insurance, the Company cannot be certain that its coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to the Company on economically reasonable terms, or at all.

Further, any product liability claim or damage caused by the Company could significantly impair the Company’s brand and reputation, which may result in a failure to maintain customers and achieve the Company’s desired growth initiatives in these new businesses.

NRG's business, financial condition and results of operations could be adversely impacted by strikes or work stoppages by its unionized employees or inability to replace employees as they retire.

As of December 31, 2020, approximately 23% of NRG's employees were covered by collective bargaining agreements.

In the event that the Company's union employees strike, participate in a work stoppage or slowdown or engage in other forms of labor strife or disruption, NRG would be responsible for procuring replacement labor or the Company could experience reduced power generation or outages.

Although NRG's ability to procure such labor is uncertain, contingency staffing planning is completed as part of each respective contract negotiations.

Strikes, work stoppages or the inability to negotiate future collective bargaining agreements on favorable terms could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.

In addition, a number of the Company's employees at NRG's plants are close to retirement.

The Company's inability to replace retiring workers could create potential knowledge and expertise gaps as such workers retire.

Changes in technology may impair the value of NRG's power plants and the attractiveness of its retail products, and the Company may potentially be affected by emerging technologies that may over time affect change in capacity markets and the energy industry overall with the inclusion of distributed generation and clean technology.

Research and development activities are ongoing in the industry to provide alternative and more efficient technologies to produce power, including wind, photovoltaic (solar) cells, hydrogen, energy storage, and improvements in traditional technologies and equipment, such as more efficient gas turbines.

Advances in these or other technologies could reduce the costs

of power production to a level below what the Company has currently forecasted, which could adversely affect its cash flows, results of operations or competitive position.

Technology, including distributed technology or changes in retail rate structures, may also have a material impact on the Company’s ability to retain retail customers.

Some emerging technologies, such as distributed renewable energy technologies, broad consumer adoption of electric vehicles and energy storage devices, could affect the price of energy.

These emerging technologies may affect the financial viability of utility counterparties and could have significant impacts on wholesale market prices, which could ultimately have a material adverse effect on NRG's financial condition, results of operations and cash flows.

Risks that are beyond NRG's control, including but not limited to acts of terrorism or related acts of war, natural disaster, hostile cyber intrusions, data breaches or other catastrophic events could have a material adverse effect on NRG's financial condition, results of operations and cash flows.

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If a significant breach occurs or if sensitive data that was entrusted to the Company were mishandled, the reputation of NRG and its businesses may be adversely affected, customer confidence may be diminished, or NRG and its retail operations may be subject to legal claims, any of which may contribute to the loss of customers and have a negative impact on the business and/or results of operations.

NRG continues to pursue growth in its existing businesses and markets and further diversification across the competitive energy value chain.

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

In addition, shortages of skilled labor for Company projects could significantly delay a

project or otherwise increase its costs.

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

Technology, including distributed technology or changes in retail rate structures, may also have a material impact on the Company’s ability to retain retail customers.

Some emerging technologies, such as distributed renewable energy technologies, broad consumer adoption of electric vehicles and energy storage devices, could affect the price of energy.

NRG's business, financial condition and results of operations could be adversely impacted by strikes or work stoppages by its unionized employees or inability to replace employees as they retire.

As of December 31, 2021, approximately 13% of NRG's employees were covered by collective bargaining agreements.

Although NRG's ability to procure such labor is uncertain, contingency staffing planning is completed as part of each respective contract negotiations.

In addition, a number of the Company's employees at NRG's plants are close to retirement.

The Company's inability to replace retiring workers could create potential knowledge and expertise gaps as such workers retire.

Risks Related to Governmental Regulation and Laws

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NRG's business is subject to extensive U.S.

federal, state and local laws and foreign and provincial laws.

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

federal, state and local laws and foreign laws.

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

Retail competition and home warranty services are regulated on a state-by-state or at the province-by-province level and are highly dependent on state and provincial laws, regulations and policies, which could change at any moment.

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Public utilities under the FPA are required to obtain FERC acceptance of their rate schedules for wholesale sales of electricity.

Except for ERCOT generation facilities and power marketers, all of NRG's non-qualifying facility generating

companies and power marketing affiliates in the U.S.

Except for ERCOT generation facilities and power marketers, all of NRG's non-qualifying facility generating companies and power marketing affiliates in the U.S.

make sales of electricity in interstate commerce and are public utilities for purposes of the FPA.

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In addition, NRG's market-based sales are subject to certain market behavior rules, and if any of NRG's generating and power marketing companies were deemed to have violated those rules, they are subject to potential disgorgement of profits associated with the violation and/or suspension or revocation of their market-based rate authority.

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

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

This could have a material adverse effect on the rates NRG charges for power from its facilities.

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These changes are ongoing, and the Company cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on NRG's business.

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

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

If competitive restructuring of the electric power markets is reversed, discontinued, or delayed, the Company's business prospects and financial results could be negatively impacted.

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The Company's retail operations may be materially impacted by rules or regulations that allow regulated utilities to participate in competitive retail markets or own and operate facilities that could be provided by competitive market participants.

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

Both ISO-NE and PJM operate a pay-for-performance model where capacity payments are modified based on real-time generator performance.

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

PJM operates a pay-for-performance model where capacity payments are modified based on real-time generator performance.

Capacity market prices are sensitive to design parameters, as well as additions of new capacity.

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Additionally, aging equipment may require more capital expenditures to keep each of these nuclear power plants operating efficiently.

This equipment is also likely to require periodic upgrading and improvement.

This equipment is also likely to require periodic

upgrading and improvement.

Any unexpected failure, including failure associated with breakdowns, forced outages, or any unanticipated capital expenditures, could result in reduced profitability.

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Nuclear Waste Policy Act of 1982 to accept and dispose of STP's spent nuclear fuel.

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

Costs associated with these risks could be substantial and could have a material adverse effect on NRG's results of operations, financial condition or cash flow to the extent not covered by the Decommissioning Trusts or recovered from ratepayers.

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Any increase in costs at a national, regional or state level could adversely affect NRG’s results of operations, financial condition and cash flows

Changes in data privacy and data protection laws and regulations, particularly in California, or any failure to comply with such laws and regulations, could adversely affect NRG’s business and financial results.

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

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

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

As new laws are created, NRG cannot determine the impact that they may have on the Company’s business.

Any failure or perceived failure to comply with laws may result in proceedings or actions against the Company by governmental entities or individuals.

Moreover, any inquiries or investigations, any other government actions, or any actions by individuals may be costly to comply with, result in negative publicity, increase operating costs, require significant management time and attention, and lead to remedies that may harm the business, including fines, demands or orders that existing business practices be modified or terminated.

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

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

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

Changes in data privacy and data protection laws and regulations or any non-compliance with such laws and regulations, could adversely affect NRG’s business and financial results.

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

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

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

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

As new laws and regulations are created, requiring businesses to implement processes to enable customer access to their data and enhanced data protection and management standards, NRG cannot forecast the impact that they may have on the Company’s business.

Any non-compliance with laws may result in proceedings or actions against the Company by governmental entities or individuals.

Moreover, any inquiries or investigations, government penalties or sanctions, or civil actions by individuals may be costly to comply with, resulting in negative publicity, increased operating costs, significant management time and attention, and may lead to remedies that harm the business, including fines, demands or orders that existing business practices be modified or terminated.

NRG's retail operations are subject to changing rules and regulations that could have a material impact on the Company's profitability.

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The Company's international operations depend on products manufactured, purchased and sold in the U.S.

and internationally, including in countries with political and economic instability.

In some cases, these countries have greater

political and economic volatility and greater vulnerability to infrastructure and labor disruptions than in NRG's other markets.

and internationally.

In some cases, these countries have greater political and economic volatility and greater vulnerability to infrastructure and labor disruptions than in NRG's other markets.

Operating a business in a number of different regions and countries exposes the Company to a number of risks, including:

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The occurrence of one or more of these events may negatively impact the Company's business, results of operations and financial condition.

Risks Related to the Company's Indebtedness and Economic and Financial Market Conditions

Risks Related to Public Health Threats

Public health threats or outbreaks of communicable diseases could have a material adverse effect on the Company’s operations and financial results .

The Company may face risks related to public health threats or outbreaks of communicable diseases.

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

Federal, state, and local governments had implemented various mitigation measures, including travel restrictions, border closings, restrictions on public gatherings, shelter-in-place orders and limitations on business activities.

Although the operations of the Company are considered an essential service, some of these measures may adversely impact the ability of NRG employees, contractors, suppliers, customers, and other business partners to conduct

business activities.

This could have a material adverse effect on the Company’s results of operations, financial condition, risk exposure and liquidity.

In particular, the continued spread of COVID-19 and efforts to contain the virus could:

• adversely impact demand for the Company’s electricity services and other products and services and the ability of customers to pay their bills;

• cause other unpredicted events which may have an adverse impact on the Company’s results of operations, financial condition, risk exposure and liquidity.

Risks Related to the Economic and Financial Market Conditions, and the Company's Indebtedness

NRG's level of indebtedness could adversely affect its ability to raise additional capital to fund its operations or return capital to stockholders.

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NRG's failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of the Company's indebtedness.

In addition, the Company recently amended its corporate credit agreement to include a sustainability-linked metric and issued sustainability-linked bonds, which could result in increased interest expense to the Company if the sustainability metrics set forth therein are not met.

The Company's corporate credit agreement includes a sustainability-linked metric and sustainability-linked bonds, which could result in increased interest expense to the Company if the sustainability metrics set forth therein are not met.

Furthermore, financial and other restrictive covenants contained in any project level subsidiary debt may limit the ability of NRG to receive distributions from such subsidiary.

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Reduced demand from negative economic conditions continues to impact the key domestic wholesale energy markets NRG serves.

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

In general, economic and commodity market conditions will continue to impact NRG’s unhedged future energy margins, liquidity, earnings growth and overall financial condition.

In addition, adverse economic conditions, declines in wholesale energy prices, reduced demand for power and other factors may negatively impact the trading price of NRG’s common stock and impact forecasted cash flows, which may require NRG to evaluate its goodwill and other long-lived assets for impairment.

In addition, adverse economic conditions, declines in wholesale energy prices, reduced demand for energy and other factors may negatively impact the trading price of NRG’s common stock and impact forecasted cash flows, which may require NRG to evaluate its goodwill and other long-lived assets for impairment.

Any such impairment could have a material impact on NRG’s financial statements.

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These factors, risks and uncertainties include the factors described under Item 1A — Risk Factors and the following:

• NRG's inability to estimate with any degree of certainty the future impact that COVID-19, any resurgence of COVID-19, or other pandemic may have on NRG's results of operations, financial position, risk exposure and liquidity;

• Business uncertainties related to the acquisition of Direct Energy and NRG's ability to integrate the operations of Direct Energy with its own;

• Business uncertainties related to the integration of the operations of Direct Energy with its own;

• NRG's ability to obtain and maintain retail market share;

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• Hazards customary to the power production industry and power generation operations, such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that NRG may not have adequate insurance to cover losses as a result of such hazards;

• NRG's ability to successfully integrate, realize cost savings and manage any acquired businesses;

• NRG's ability to engage in successful sales and divestitures, as well as mergers and acquisitions activity;

• The effectiveness of NRG's risk management policies and procedures and the ability of NRG's counterparties to satisfy their financial commitments;

• NRG's ability to enter into contracts to sell power or gas and procure fuel on acceptable terms and prices;

• NRG's ability to successfully integrate, realize cost savings and manage any acquired businesses;

• NRG's ability to engage in successful acquisitions and divestitures, as well as other mergers and acquisitions activity;

• Cyber terrorism and inadequate cybersecurity, data breaches or the occurrence of a catastrophic loss and the possibility that NRG may not have adequate insurance to cover losses resulting from such hazards or the inability of NRG's insurers to provide coverage;

• Counterparties' collateral demands and other factors affecting NRG's liquidity position and financial condition;

• NRG's ability to operate its businesses efficiently and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;

• NRG's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices;

• The liquidity and competitiveness of wholesale markets for energy commodities;

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• Price mitigation strategies and other market structures employed by ISOs or RTOs that result in a failure to adequately and fairly compensate NRG's generation units;

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

• NRG's ability to mitigate forced outage risk;

• NRG's ability to borrow funds and access capital markets, as well as NRG's substantial indebtedness and the possibility that NRG may incur additional indebtedness in the future;

• Operating and financial restrictions placed on NRG and its subsidiaries that are contained in the in NRG's corporate credit agreements, and in debt and other agreements of certain of NRG subsidiaries and project affiliates generally;

• NRG's ability to develop and build new power generation facilities;

• Operating and financial restrictions placed on NRG and its subsidiaries that are contained in NRG's corporate credit agreements, and in debt and other agreements of certain of NRG subsidiaries and project affiliates generally;

• The ability of NRG and its counterparties to develop and build new power generation facilities;

• NRG's ability to implement its strategy of finding ways to meet the challenges of climate change, clean air and protecting natural resources, while taking advantage of business opportunities;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors