NRG ENERGY, INC. 10-K

Item 9A — Controls and Procedures Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial Reporting Under the supervision and with the participation of NRG's management, including its principal executive officer, principal financial officer and principal accounting officer, NRG conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act. Based on this evaluation, the Company's principal executive officer, principal financial officer and principal accounting officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K. Management's report on the Company's internal control over financial reporting and the report of the Company's independent registered public accounting firm are incorporated under the caption "Management's Report on Internal Control over Financial Reporting" and under the caption "Report of Independent Registered Public Accounting Firm" in this Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Changes in Internal Control over Financial Reporting During the year ended December 31, 2023, the Company completed its acquisition of Vivint Smart Home, Inc. As part of integration, the Company designed and implemented a control structure over Vivint Smart Home's operations. Other than the Vivint Smart Home acquisition, there were no changes in NRG’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred in the fourth quarter of 2023 that materially affected, or are reasonably likely to materially affect, NRG’s internal control over financial reporting. Inherent Limitations over Internal Controls NRG's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with GAAP. The Company's internal control over financial reporting includes those policies and procedures that: 1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets; 2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that the Company's receipts and expenditures are being made only in accordance with authorizations of its management and directors; and 3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements. Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. Management's Report on Internal Control over Financial Reporting The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of the Company's management, including its principal executive officer, principal financial officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the Company's evaluation under the framework in Internal Control — Integrated Framework (2013) , the Company's management concluded that its internal control over financial reporting was effective as of December 31, 2023. On March 10, 2023, NRG acquired Vivint Smart Home, Inc., and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, Vivint Smart Home, Inc.'s internal control over financial reporting associated with total assets (excluding acquired goodwill and intangible assets) of 5% and total revenues of 5% included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023. The effectiveness of the Company's internal control over financial reporting as of December 31, 2023 has been audited by KPMG LLP, the Company's independent registered public accounting firm, as stated in its report which is included in this Annual Report on Form 10-K. 75 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders NRG Energy, Inc.: Opinion on Internal Control Over Financial Reporting We have audited NRG Energy, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission . In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss)/income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated February 28, 2024 expressed an unqualified opinion on those consolidated financial statements. The Company acquired Vivint Smart Home, Inc. during 2023, and management excluded from its assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2023, Vivint Smart Home, Inc.'s internal control over financial reporting associated with total assets (excluding acquired goodwill and intangible assets) of 5% and total revenues of 5% included in the consolidated financial statements of the Company as of and for the year ended December 31, 2023. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Vivint Smart Home, Inc. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Philadelphia, Pennsylvania February 28, 2024 76 Item 9B — Other Information Director and Officer Trading Arrangements During the three months ended December 31, 2023, the following directors or officers of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement,' as each term is defined in Item 408(a) of Regulation S-K, as described in the table below: Name Title Date Adopted Character of Trading Arrangement Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement (a) Duration Date Terminated Elizabeth Killinger Executive Vice President 12/15/2023 Rule 10b5-1 Trading Arrangement 65,583 shares to be Sold (b) 3/15/2024-1/31/2025 N/A Rasesh Patel Executive Vice President, Smart Home 12/15/2023 Rule 10b5-1 Trading Arrangement Up to 73,638 shares to be Sold 3/14/2024-11/01/2024 N/A (a) Potential sales may be subject to certain price limitations set forth in the 10b5-1 plans and therefore actual number of shares sold could vary if certain minimum stock prices are not met (b) Represents approximate number of shares to be sold based on outstanding awards expected to vest during the period, where any underlying performance share awards are being calculated at target. Actual number of shares to be sold will depend on actual vesting, the number of shares withheld by NRG to satisfy tax withholding obligations and vesting of dividend equivalent rights Item 9C — Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 77 PART III Item 10 — Directors, Executive Officers and Corporate Governance Directors and Executive Officers Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. Code of Ethics NRG has adopted a code of ethics entitled "NRG Code of Conduct" that applies to directors, officers and employees, including the chief executive officer and senior financial officers of NRG. It may be accessed through the "Governance" section of the Company's website at www.nrg.com. NRG also elects to disclose the information required by Form 8-K, Item 5.05, "Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics," through the Company's website, and such information will remain available on this website for at least a 12-month period. A copy of the "NRG Code of Conduct" is available in print to any stockholder who requests it. Other information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. Item 11 — Executive Compensation Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans Plan Category (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders 2,997,640 (1) $ — 14,419,264 Equity compensation plans not approved by security holders 3,970,872 (2) $ — 12,749,736 Total 6,968,512 $ — 27,169,000 (3) (1) Consists of shares issuable under the NRG LTIP and the ESPP. On April 27, 2023, NRG stockholders approved an increase of 4,400,000 shares available for issuance under the ESPP. As of December 31, 2023, there were 6,702,125 shares reserved from the Company's treasury shares for the ESPP (2) Consists of shares issuable under the Vivint LTIP. On March 10, 2023, in connection with the Acquisition, NRG assumed the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan. While the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan was previously approved by stockholders of Vivint Smart Home, Inc., the plan is listed as "not approved" because it was assumed as part of the Acquisition and not subject to approval by NRG stockholders. The Company intends to make subsequent grants under the Vivint LTIP. See Note 21, Stock-Based Compensation for a discussion of the Vivint LTIP (3) Consists of 7,717,139 shares of common stock under the NRG LTIP, 12,749,736 shares of common stock under the Vivint LTIP and 6,702,125 shares of treasury stock reserved for issuance under the ESPP The NRG LTIP currently provides for grants of restricted stock units, relative performance stock units, deferred stock units and dividend equivalent rights. The Vivint LTIP currently provides for grants of restricted stock units and performance stock units. The Company's directors, officers and employees, as well as other individuals performing services for, or to whom an offer of employment has been extended by the Company, are eligible to receive grants under the LTIPs. The purpose of the LTIPs is to promote the Company's long-term growth and profitability by providing these individuals with incentives to maximize stockholder value and otherwise contribute to the Company's success and to enable the Company to attract, retain and reward the best available persons for positions of responsibility. The Compensation Committee of the Board of Directors administers the LTIPs. Other information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. 78 Item 13 — Certain Relationships and Related Transactions, and Director Independence Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. Item 14 — Principal Accounting Fees and Services Information required by this Item is incorporated by reference to the similarly named section of NRG's Definitive Proxy Statement for its 2024 Annual Meeting of Stockholders. 79 PART IV Item 15 — Exhibits, Financial Statement Schedules (a)(1) Financial Statements The following consolidated financial statements of NRG Energy, Inc. and related notes thereto, together with the reports thereon of KPMG LLP , Philadelphia, PA , Auditor Firm ID: 185 , are included herein: Consolidated Statements of Operations — Years ended December 31, 2023, 2022, and 2021 Consolidated Statements of Comprehensive (Loss)/Income — Years ended December 31, 2023, 2022, and 2021 Consolidated Balance Sheets — As of December 31, 2023 and 2022 Consolidated Statements of Cash Flows — Years ended December 31, 2023, 2022, and 2021 Consolidated Statements of Stockholders' Equity — Years ended December 31, 2023, 2022, and 2021 Notes to Consolidated Financial Statements (a)(2) Financial Statement Schedule The following Consolidated Financial Statement Schedule of NRG Energy, Inc. is filed as part of Item 15 of this report and should be read in conjunction with the Consolidated Financial Statements. Schedule II — Valuation and Qualifying Accounts All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been omitted. (a)(3) Exhibits: See Exhibit Index submitted as a separate section of this report. (b) Exhibits See Exhibit Index submitted as a separate section of this report. (c) Not applicable 80 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders NRG Energy, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of NRG Energy, Inc. and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss)/income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2024 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of the sufficiency of audit evidence over revenues As discussed in Note 3 to the consolidated financial statements, the Company had $ 28,823 million of revenues. Revenue is derived from various revenue streams in different geographic markets and the Company’s processes and related information technology (IT) systems used to record revenue differ for each of these revenue streams. We identified the evaluation of the sufficiency of audit evidence over revenues as a critical audit matter which required a high degree of auditor judgment due to the number of revenue streams and IT systems involved in the revenue recognition process. This included determining the revenue streams over which procedures were to be performed and evaluating the nature and extent of evidence obtained over the individual revenue streams as well as revenue in the aggregate. It also included the involvement of IT professionals with specialized skills and knowledge to assist in the performance of certain procedures. The following are the primary procedures we performed to address this critical audit matter. We, with the assistance of IT professionals, applied auditor judgment to determine the revenue streams over which procedures were performed as well as the nature and extent of such procedures. For certain revenue streams over which procedures were performed, 81 we evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s revenue recognition processes. For certain revenue streams, we involved IT professionals, who assisted in testing certain IT applications used by the Company in its revenue recognition processes. In addition, we assessed recorded revenue for a selection of transactions by comparing the amounts recognized to underlying documentation, including contracts with customers, and for certain revenue streams, we performed a software-assisted data analysis to assess certain relationships among revenue transactions. In addition, we evaluated the sufficiency of audit evidence obtained over revenues by assessing the results of procedures performed, including the appropriateness of such evidence. Fair value of certain acquired intangible assets As discussed in Note 4 to the consolidated financial statements, the Company acquired Vivint Smart Home, Inc. on March 10, 2023 for total consideration of $ 2,623 million. In connection with the business combination, the Company recorded various intangible assets, which included customer relationships and technology intangible assets with an acquisition-date fair value of $ 1,740 million and $ 860 million, respectively. We identified the evaluation of the acquisition-date fair value of the customer relationships and technology intangible assets as a critical audit matter. A high degree of subjective and complex auditor judgment was required to evaluate key assumptions used to value these acquired intangible assets. We performed sensitivity analyses to determine the key assumptions used to value the intangible assets acquired which required challenging auditor judgment. Specifically, key assumptions included the customer attrition for the customer relationships intangible asset and the discount rate for the customer relationships and technology intangible assets. Changes to these assumptions could have had a significant impact on the fair value of such assets. In addition, valuation professionals with specialized skills and knowledge were needed to assist in the evaluation of the discount rate. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the selection of the customer attrition used in the customer relationships intangible asset and the discount rate used in the customer relationships and technology intangible assets. We evaluated the customer attrition used by the Company by comparing it to historical attrition experienced by the acquired company and comparable company attrition. We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the discount rate by assessing the relative risk profile of the customer relationships and technology intangible assets compared to the required rate of return of all acquired assets in the business combination. /s/ KPMG LLP We have served as the Company's auditor since 2004. Philadelphia, Pennsylvania February 28, 2024 82 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Year Ended December 31, (In millions, except per share amounts) 2023 2022 2021 Revenue Revenue $ 28,823 $ 31,543 $ 26,989 Operating Costs and Expenses Cost of operations (excluding depreciation and amortization shown below) 26,526 27,446 20,482 Depreciation and amortization 1,127 634 785 Impairment losses 26 206 544 Selling, general and administrative costs 1,968 1,228 1,293 Provision for credit losses 251 11 698 Acquisition-related transaction and integration costs 119 52 93 Total operating costs and expenses 30,017 29,577 23,895 Gain on sale of assets 1,578 52 247 Operating Income 384 2,018 3,341 Other Income/(Expense) Equity in earnings of unconsolidated affiliates 16 6 17 Impairment losses on investments ( 102 ) — — Other income, net 47 56 63 Gain/(Loss) on debt extinguishment 109 — ( 77 ) Interest expense ( 667 ) ( 417 ) ( 485 ) Total other expense ( 597 ) ( 355 ) ( 482 ) (Loss)/Income Before Income Taxes ( 213 ) 1,663 2,859 Income tax (benefit)/expense ( 11 ) 442 672 Net (Loss)/Income ( 202 ) 1,221 2,187 Less: Cumulative dividends attributable to Series A Preferred Stock 54 — — Net (Loss)/Income Available for Common Stockholders $ ( 256 ) $ 1,221 $ 2,187 (Loss)/Income Per Share Weighted average number of common shares outstanding — basic and diluted 228 236 245 (Loss)/Income per Weighted Average Common Share — Basic and Diluted $ ( 1.12 ) $ 5.17 $ 8.93 See notes to Consolidated Financial Statements 83 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME For the Year Ended December 31, (In millions) 2023 2022 2021 Net (Loss)/Income $ ( 202 ) $ 1,221 $ 2,187 Other Comprehensive Income/(Loss), net of tax Foreign currency translation adjustments 9 ( 35 ) ( 5 ) Defined benefit plans 30 ( 16 ) 85 Other comprehensive income/(loss) 39 ( 51 ) 80 Comprehensive (Loss)/Income $ ( 163 ) $ 1,170 $ 2,267 See notes to Consolidated Financial Statements 84 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS As of December 31, (In millions) 2023 2022 ASSETS Current Assets Cash and cash equivalents $ 541 $ 430 Funds deposited by counterparties 84 1,708 Restricted cash 24 40 Accounts receivable, net 3,542 4,773 Inventory 607 751 Derivative instruments 3,862 7,886 Cash collateral paid in support of energy risk management activities 441 260 Prepayments and other current assets 626 383 Total current assets 9,727 16,231 Property, plant and equipment, net 1,763 1,692 Other Assets Equity investments in affiliates 42 133 Operating lease right-of-use assets, net 179 225 Goodwill 5,079 1,650 Customer relationships, net 2,164 943 Other intangible assets, net 1,763 1,189 Nuclear decommissioning trust fund — 838 Derivative instruments 2,293 4,108 Deferred income taxes 2,251 1,881 Other non-current assets 777 256 Total other assets 14,548 11,223 Total Assets $ 26,038 $ 29,146 85 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued) As of December 31, (In millions, except share data) 2023 2022 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion of long-term debt and finance leases $ 620 $ 63 Current portion of operating lease liabilities 90 83 Accounts payable 2,325 3,643 Derivative instruments 4,019 6,195 Cash collateral received in support of energy risk management activities 84 1,708 Deferred revenue current 720 176 Accrued expenses and other current liabilities 1,642 1,114 Total current liabilities 9,500 12,982 Other Liabilities Long-term debt and finance leases 10,133 7,976 Non-current operating lease liabilities 128 180 Nuclear decommissioning reserve — 340 Nuclear decommissioning trust liability — 477 Derivative instruments 1,488 2,246 Deferred income taxes 22 134 Deferred revenue non-current 914 10 Other non-current liabilities 947 973 Total other liabilities 13,632 12,336 Total Liabilities 23,132 25,318 Commitments and Contingencies Stockholders' Equity Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at December 31, 2023 (aggregate liquidation preference $ 650 ); 0 shares issued and outstanding at December 31, 2022 650 — Common stock; $ 0.01 par value; 500,000,000 shares authorized; 267,330,470 and 423,897,001 shares issued; and 208,130,950 and 229,561,030 shares outstanding at December 31, 2023 and 2022, respectively 3 4 Additional paid-in capital 3,416 8,457 Retained earnings 820 1,408 Treasury stock, at cost; 59,199,520 and 194,335,971 shares at December 31, 2023 and 2022, respectively ( 1,892 ) ( 5,864 ) Accumulated other comprehensive loss ( 91 ) ( 177 ) Total Stockholders' Equity 2,906 3,828 Total Liabilities and Stockholders' Equity $ 26,038 $ 29,146 See notes to Consolidated Financial Statements 86 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Year Ended December 31, (In millions) 2023 2022 2021 Cash Flows from Operating Activities Net (loss)/income $ ( 202 ) $ 1,221 $ 2,187 Adjustments to reconcile net income to net cash provided by operating activities: Equity in and distributions from (earnings)/losses of unconsolidated affiliates ( 6 ) 7 20 Depreciation and amortization 1,127 634 785 Accretion of asset retirement obligations 27 55 30 Provision for credit losses 251 11 698 Amortization of nuclear fuel 47 54 51 Amortization of financing costs and debt discounts 52 23 39 (Gain)/Loss on debt extinguishment ( 109 ) — 77 Amortization of in-the-money contracts and emissions allowances 137 158 106 Amortization of unearned equity compensation 101 28 21 Net gain on sale of assets and disposal of assets ( 1,559 ) ( 102 ) ( 261 ) Impairment losses 128 206 544 Changes in derivative instruments 2,455 ( 3,221 ) ( 3,626 ) Changes in deferred income taxes and liability for uncertain tax benefits ( 92 ) 382 604 Changes in collateral deposits in support of risk management activities ( 1,806 ) 896 797 Changes in nuclear decommissioning trust liability — 9 40 Uplift securitization proceeds received/(receivable) from ERCOT — 689 ( 689 ) Cash (used)/provided by changes in other working capital, net of acquisition and disposition effects: Accounts receivable - trade 840 ( 1,560 ) ( 1,232 ) Inventory 189 ( 252 ) ( 61 ) Prepayments and other current assets ( 233 ) 17 31 Accounts payable ( 1,455 ) 1,295 476 Accrued expenses and other current liabilities 360 ( 29 ) ( 55 ) Other assets and liabilities ( 473 ) ( 161 ) ( 89 ) Cash (used)/provided by operating activities $ ( 221 ) $ 360 $ 493 Cash Flows from Investing Activities Payments for acquisitions of businesses and assets, net of cash acquired $ ( 2,523 ) $ ( 62 ) $ ( 3,559 ) Capital expenditures ( 598 ) ( 367 ) ( 269 ) Net purchases of emissions allowances ( 24 ) ( 6 ) — Investments in nuclear decommissioning trust fund securities ( 367 ) ( 454 ) ( 751 ) Proceeds from sales of nuclear decommissioning trust fund securities 355 448 710 Proceeds from sale of assets, net of cash disposed 2,007 109 830 Proceeds from insurance recoveries for property, plant and equipment, net 240 — — Cash used by investing activities $ ( 910 ) $ ( 332 ) $ ( 3,039 ) 87 For the Year Ended December 31, (In millions) 2023 2022 2021 Cash Flows from Financing Activities Proceeds from issuance of preferred stock, net of fees $ 635 $ — $ — Net receipts from settlement of acquired derivatives that include financing elements 342 1,995 938 Payments for share repurchase activity (a) ( 1,172 ) ( 606 ) ( 48 ) Payments of dividends to preferred and common stockholders ( 381 ) ( 332 ) ( 319 ) Proceeds from issuance of long-term debt 731 — 1,100 Payments for short and long-term debt ( 523 ) ( 5 ) ( 1,861 ) Payments for debt extinguishment costs — — ( 65 ) Payments of debt issuance costs ( 32 ) ( 9 ) ( 18 ) Proceeds from issuance of common stock — — 1 Proceeds from credit facilities 3,020 — 1,415 Repayments to credit facilities ( 3,020 ) — ( 1,415 ) Cash (used)/provided by financing activities $ ( 400 ) $ 1,043 $ ( 272 ) Effect of exchange rate changes on cash and cash equivalents 2 ( 3 ) ( 2 ) Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash ( 1,529 ) 1,068 ( 2,820 ) Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period 2,178 1,110 3,930 Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period $ 649 $ 2,178 $ 1,110 (a) Includes $( 22 ) million, $( 6 ) million and $( 9 ) million of equivalent shares purchased in lieu of tax withholdings on equity compensation issuances for the years ended December 31, 2023, 2022 and 2021, respectively For further discussion of supplemental cash flow information see Note 26, Cash Flow Information See notes to Consolidated Financial Statements 88 NRG ENERGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In millions) Preferred Stock Common Stock Additional Paid-In Capital (Accumulated Deficit)/Retained Earnings Treasury Stock Accumulated Other Comprehensive Loss Total Stock-holders' Equity Balance at December 31, 2020 $ — $ 4 $ 8,517 $ ( 1,403 ) $ ( 5,232 ) $ ( 206 ) $ 1,680 Net income 2,187 2,187 Other comprehensive income 80 80 Shares reissuance for ESPP 1 3 4 Share repurchases ( 44 ) ( 44 ) Equity-based awards activity, net (a) 12 12 Issuance of common stock 1 1 Common stock dividends and dividend equivalents declared (b) ( 320 ) ( 320 ) Balance at December 31, 2021 $ — $ 4 $ 8,531 $ 464 $ ( 5,273 ) $ ( 126 ) $ 3,600 Net income 1,221 1,221 Other comprehensive loss ( 51 ) ( 51 ) Shares reissuance for ESPP 2 4 6 Share repurchases ( 595 ) ( 595 ) Equity-based awards activity, net (a) 24 24 Common stock dividends and dividend equivalents declared (b) ( 334 ) ( 334 ) Adoption of ASU 2020-06 $ ( 100 ) 57 ( 43 ) Balance at December 31, 2022 $ — $ 4 $ 8,457 $ 1,408 $ ( 5,864 ) $ ( 177 ) $ 3,828 Net loss ( 202 ) ( 202 ) Issuance of Series A Preferred Stock 650 ( 15 ) 635 Other comprehensive income 39 39 Shares reissuance for ESPP 2 6 8 Share repurchases (c) ( 117 ) ( 1,043 ) ( 1,160 ) Retirement of treasury stock ( 1 ) ( 5,008 ) 5,009 — Equity-based awards activity, net (a) 97 97 Common stock dividends and dividend equivalents declared (b) ( 352 ) ( 352 ) Series A Preferred Stock dividends (d) ( 34 ) ( 34 ) Sale of the 44 % equity interest in STP 47 47 Balance at December 31, 2023 $ 650 $ 3 $ 3,416 $ 820 $ ( 1,892 ) $ ( 91 ) $ 2,906 (a) Includes $( 22 ) million, $( 6 ) million and $( 9 ) million of equivalent shares purchased in lieu of tax withholding on equity compensation issuances for the years ended December 31, 2023, 2022 and 2021, respectively (b) Dividends per common share were $ 1.51 , $ 1.40 and $ 1.30 for each of the years ended December 31, 2023, 2022 and 2021, respectively (c) Includes excise tax accrued of $ 10 million as of December 31, 2023 (d) Dividend per Series A Preferred Stock was $ 52.96 See notes to Consolidated Financial Statements 89 NRG ENERGY, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Nature of Business General NRG Energy, Inc., or NRG or the Company, sits at the intersection of energy and home services. NRG is a leading energy and home services company fueled by market-leading brands, proprietary technologies, and complementary sales channels. Across the United States and Canada, NRG delivers innovative, sustainable solutions, predominately under the brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy and Vivint, while also advocating for competitive energy markets and customer choice. The Company has a customer base that includes approximately 8 million residential consumers in addition to commercial, industrial, and wholesale customers, supported by approximately 13 GW of generation. 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, (ii) the Services businesses (iii) activity related to the Cottonwood facility and other investments; • Vivint Smart Home; and • Corporate activities. Note 2 — Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The Company's consolidated financial statements have been prepared in accordance with U.S. GAAP. The ASC, established by the FASB, is the source of authoritative U.S. GAAP to be applied by nongovernmental entities. In addition, the rules and interpretative releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The consolidated financial statements include NRG's accounts and operations and those of its subsidiaries in which the Company has a controlling interest. All significant intercompany transactions and balances have been eliminated in consolidation. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity. However, a controlling financial interest may also exist through arrangements that do not involve controlling voting interests. As such, NRG applies the guidance of ASC 810, Consolidations, or ASC 810, to determine when an entity that is insufficiently capitalized or not controlled through its voting interests, referred to as a VIE, should be consolidated. The Company identified an error in the previously issued consolidated financial statements for the year ended December 31, 2021 related to the presentation of cash flows associated with certain borrowings and repayments related to the Revolving Credit Facility. The statement of cash flows for the year ended December 31, 2021 has been adjusted to present on a gross basis the borrowings from the Revolving Credit Facility of $ 1.4 billion and the related repayments of $ 1.4 billion. The change had no impact to the total cash used by financing activities for the year ended December 31, 2021. We evaluated the materiality of this error both qualitatively and quantitatively and have concluded it is immaterial to the impacted period. Winter Storm Uri Uplift Securitization Proceeds The Texas Legislature passed HB 4492 in May 2021 for ERCOT to mitigate exceptionally high price adders and ancillary service costs incurred by LSEs during Winter Storm Uri. HB 4492 authorized ERCOT to obtain $2.1 billion of financing to distribute to LSEs that were charged and paid to ERCOT those highly priced ancillary service and ORDPA during Winter Storm Uri. In December 2021, ERCOT filed with the PUCT a calculation of each LSE’s share of proceeds based on the settlement methodology. The Company accounted for the proceeds by analogy to the contribution model within ASC 958-605, Not-for-Profit Entities- Revenue Recognition and the grant model within IAS 20, Accounting for Government Grants and Disclosure of Government Assistance , as a reduction to expenses in the consolidated statements of operations in the 2021 annual period for which the proceeds were intended to compensate. The Company received proceeds of $ 689 million from ERCOT in June 2022. 90 Credit Losses In accordance with ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , or ASU No. 2016-13, retail trade receivables are reported on the balance sheet net of the allowance for credit losses within accounts receivables, net. Long-term receivables are recorded net in other non-current assets on the consolidated balance sheet. The Company accrues an allowance 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 Company writes off customer contract receivable balances against the allowance for credit losses when it is determined a receivable is uncollectible. The following table represents the activity in the allowance for credit losses for the years ended December 31, 2023, 2022, and 2021: Year Ended December 31, (In millions) 2023 2022 2021 Beginning balance $ 133 $ 683 $ 67 Acquired balance from Vivint Smart Home 22 — — Acquired balance from Direct Energy — — 112 Provision for credit losses (a) 251 11 698 Write-offs ( 313 ) ( 593 ) ( 224 ) Recoveries collected 39 32 30 Other 13 — — Ending balance (a) $ 145 $ 133 $ 683 (a) Includes bilateral finance hedging risk of $( 70 ) million and $ 403 million accounted for under ASC 815 for the years ended December 31, 2022 and December 31, 2021, respectively During the year ended December 31, 2022, the provision for credit losses included the Company's loss mitigation efforts recognized as income of $ 126 million related to Winter Storm Uri. During the year ended December 31, 2021, the provision for credit losses included $ 596 million of expense due to the impacts of Winter Storm Uri. The increase in write-offs for the periods ended December 31, 2022 and 2021 were primarily due to the resolution of credit losses that occurred during Winter Storm Uri. Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with an original maturity of three months or less at the time of purchase. Funds Deposited by Counterparties 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. The decrease in funds deposited by counterparties is driven by the significant decrease in forward positions as a result of decreases in natural gas and power prices compared to December 31, 2022. 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 hedge 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. 91 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. Year Ended December 31, (In millions) 2023 2022 2021 Cash and cash equivalents $ 541 $ 430 $ 250 Funds deposited by counterparties 84 1,708 845 Restricted cash 24 40 15 Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statements of cash flows $ 649 $ 2,178 $ 1,110 Restricted cash consists primarily of funds held to satisfy the requirements of certain financing agreements and funds held within the Company's projects that are restricted in their use. Inventory Inventory is valued at the lower of weighted average cost or market, and consists principally of natural gas, fuel oil, coal, spare parts and finished goods. The Company removes natural gas inventory as goods are delivered to customers and as they are used in the production of electricity or steam. The Company removes fuel oil and coal inventories as they are used in the production of electricity. The Company removes spare parts inventories when they are used for repairs, maintenance or capital projects. The Company expects to recover the natural gas, fuel oil, coal and spare parts costs in the ordinary course of business. Inventory is valued at the lower of cost or net realizable value with cost being determined on a first in first out basis for finished goods and weighted average cost method for all other inventories. The Company removes finished goods inventories as they are sold to customers. Inventories sold to customers as part of a smart home system are generally capitalized as contract costs. Sales of inventory are classified as an operating activity in the consolidated statements of cash flows. Property, Plant and Equipment Property, plant and equipment are stated at cost or, in the case of business acquisitions, fair value; however, impairment adjustments are recorded whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Significant additions or improvements extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the respective asset are charged to expense as incurred. Depreciation, other than nuclear fuel, is computed using the straight-line method, while nuclear fuel was amortized based on units of production over the estimated useful lives. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in cost of operations in the consolidated statements of operations. For further discussion, see Note 9, Property, Plant and Equipment . Business Interruption Insurance The Company carries insurance policies to cover insurable risks including, but not limited to, business interruption. As a result of damage at the Limestone 1 and W.A. Parish 8 units, the Company recorded business interruption insurance settlements of $ 7 million and $ 81 million during the year ended December 31, 2023 and December 31, 2022, respectively. Business interruption insurance is recorded to cost of operations in the consolidated statements of operations and cash provided by operating activities in the consolidated statement of cash flows. Asset Impairments Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. Such reviews are performed in accordance with ASC 360. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured by the difference between an asset's carrying amount and fair value with the difference recorded in operating costs and expenses in the consolidated statements of operations. Fair values are determined by a variety of valuation methods, including third-party appraisals, sales prices of similar assets and present value techniques. Investments accounted for by the equity method are reviewed for impairment in accordance with ASC 323, Investments-Equity Method and Joint Ventures , or ASC 323, which requires that a loss in value of an investment that is an other-than-temporary decline should be recognized. The Company identifies and measures losses in the value of equity method investments based upon a comparison of fair value to carrying value. For further discussion of these matters, refer to Note 11, Asset Impairments . 92 Debt Issuance Costs Debt issuance costs are capitalized and amortized as interest expense on a basis that approximates the effective interest method over the term of the related debt. Debt issuance costs are presented as a direct deduction from the carrying amount of the related debt, or as an asset if the issuance costs relate to revolving debt agreements or certain other financing arrangements. Intangible Assets Intangible assets represent contractual rights held by the Company. The Company recognizes specifically identifiable intangible assets including emissions allowances, customer and supply contracts, customer relationships, marketing partnerships, technologies, trade names and fuel contracts when specific rights and contracts are acquired. These intangible assets are amortized based on expected volumes, expected delivery, expected discounted future net cash flows, straight line or units of production basis. As of December 31, 2023 and 2022, the Company had accumulated amortization related to its intangible assets of $ 3.0 billion and $ 2.1 billion, respectively. Emission allowances held-for-sale, which are included in other non-current assets on the Company's consolidated balance sheet, are not amortized; they are carried at the lower of cost or fair value and reviewed for impairment in accordance with ASC 360. For further discussion, see Note 12, Goodwill and Other Intangibles . Goodwill In accordance with ASC 350, Intangibles-Goodwill and Other , or ASC 350, the Company recognizes goodwill for the excess cost of an acquired entity over the net value assigned to assets acquired and liabilities assumed. NRG performs goodwill impairment tests annually, during the fourth quarter, and when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company may first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, there is no goodwill impairment. In the absence of sufficient qualitative factors indicating that it is more-likely-than-not that no impairment occurred, the Company performs a quantitative assessment by determining the fair value of the reporting unit and comparing the fair value to its book value. If the fair value of the reporting unit exceeds its book value, goodwill of the reporting unit is not considered impaired. If the book value exceeds fair value, the Company recognizes an impairment loss equal to the difference between book value and fair value. For further discussion of goodwill impairment losses recognized refer to Note 11, Asset Impairments . Capitalized Contract Costs Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These costs include installed products, commissions, other compensation and the cost of installation of new or upgraded customer contracts. The Company calculates amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortizes those deferred contract costs on a straight-line basis over the expected period of benefit, consistent with the pattern in which the Company provides services to its customers. The expected period of benefit for customers is approximately five years . The Company updates its estimate of the expected period of benefit periodically and whenever events or circumstances indicate that the expected period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs related to fulfillment are included in cost of operations and amortization of capitalized contract costs related to customer acquisition are included in selling, general and administrative costs in the consolidated statements of operations. Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred. Income Taxes The Company accounts for income taxes using the liability method in accordance with ASC 740, Income Taxes, or ASC 740, which requires that the Company use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences. 93 The Company has two categories of income tax expense or benefit — current and deferred, as follows: • Current income tax expense or benefit consists solely of current taxes payable less applicable tax credits, and • Deferred income tax expense or benefit is the change in the net deferred income tax asset or liability, excluding amounts charged or credited to accumulated other comprehensive income The Company reports some of its revenues and expenses differently for financial statement purposes than for income tax return purposes, resulting in temporary and permanent differences between the Company's financial statements and income tax returns. The tax effects of such temporary differences are recorded as either deferred income tax assets or deferred income tax liabilities in the Company's consolidated balance sheets. The Company measures its deferred income tax assets and deferred income tax liabilities using income tax rates that are expected to be in effect when the deferred tax is realized. The Company accounts for uncertain tax positions in accordance with ASC 740, which applies to all tax positions related to income taxes. Under ASC 740, tax benefits are recognized when it is more-likely-than-not that a tax position will be sustained upon examination by the authorities. The benefit recognized from a position is the amount of benefit that has surpassed the more-likely-than-not threshold, as it is more than 50% likely to be realized upon settlement. The Company recognizes interest and penalties accrued related to uncertain tax benefits as a component of income tax expense. In accordance with ASC 740 and as discussed further in Note 20, Income Taxes , changes to existing net deferred tax assets or valuation allowances or changes to uncertain tax benefits, are recorded to income tax (benefit)/expense. Contract and Emission Credit Amortization Assets and liabilities recognized through acquisitions related to the purchase and sale of energy and energy-related products in future periods for which the fair value has been determined to be significantly less or more than market are amortized to revenues or cost of operations over the term of each underlying contract based on actual generation and/or contracted volumes. Emission credits represent the right to emit a specified amount of certain pollutants, including sulfur dioxide, nitrogen oxides and carbon dioxide, over a compliance period. Emission credits held for use are amortized to cost of operations based on the weighted average cost of the allowances held. Gross Receipts and Sales Taxes In connection with its retail sales, the Company records gross receipts taxes on a gross basis in revenues and cost of operations in its consolidated statements of operations. During the years ended December 31, 2023, 2022, and 2021, the Company's revenues and cost of operations included gross receipts taxes of $ 212 million, $ 218 million, and $ 184 million, respectively. Additionally, the Company records sales taxes collected from its taxable retail customers and remitted to the various governmental entities on a net basis; thus, there is no impact on the Company's consolidated statement of operations. Cost of Operations Cost of operations includes cost of fuel, purchased energy and other costs of sales, mark-to-market for economic hedging activities, contract and emission credit amortization, operations and maintenance, and other cost of operations. Cost of Fuel, Purchased Energy and Other Cost of Sales Cost of fuel is primarily the costs associated with procurement, transportation and storage of natural gas, nuclear fuel, oil and coal to operate the generation portfolio, which is expensed as the fuel is consumed. Purchased energy primarily relates to purchases to supply the Company's customer base, which includes spot market purchases, as well as contracts of various quantities and durations, including Renewable PPAs with third-party developers, which are primarily accounted for as NPNS (see further discussion in Derivative Instruments below). Other cost of sales primarily consists of TDSP expenses. The cost of fuel is based on actual and estimated fuel usage for the applicable reporting period. The cost to deliver energy and related services to customers is based on actual and estimated supply volumes for the applicable reporting period. A portion of the cost of energy, $ 240 million, $ 202 million, and $ 189 million as of December 31, 2023, 2022, and 2021, respectively, was accrued and consisted of estimated transmission and distribution charges not yet billed by the transmission and distribution utilities. In estimating supply volumes, the Company considers the effects of historical customer volumes, weather factors and usage by customer class. Transmission and distribution delivery fees are estimated using the same method used for electricity sales and services to retail customers. In addition, ISO fees are estimated based on historical trends, estimated supply volumes and initial ISO settlements. Volume estimates are then multiplied by the supply rate and recorded as cost of operations in the applicable reporting period. 94 Vivint Smart Home Flex Pay Under the Flex Pay plan (“Flex Pay”), offered by Vivint Smart Home, subscribers pay separately for smart home products and services (smart home and security). The subscriber has the ability to pay for Vivint Smart Home products in the following three ways: (i) qualified subscribers may finance the purchase through third-party financing providers ("Consumer Financing Program" or “CFP”), (ii) Vivint Smart Home generally offers a limited number of subscribers not eligible for the CFP, but who qualify under Vivint Smart Home underwriting criteria, the option to enter into a retail installment contract directly with Vivint Smart Home or (iii) subscribers may conduct purchases by check, automatic clearing house payments, credit or debit card or by obtaining short term financing (generally no more than six-month installment terms) through Vivint Smart Home. Although subscribers pay separately for products and services under Flex Pay, the Company has determined that the sale of products and services are one single performance obligation resulting in deferred revenue for the gross amount of products sold. For products financed through the CFP, gross deferred revenues are reduced by (i) any fees the third-party financing provider (“Financing Provider”) is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to the Financing Providers . Loans are issued on either an installment or revolving basis with repayment terms ranging from 6 to 60 months. For certain Financing Provider loans: • Vivint Smart Home pays a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding 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 liability for credit losses, with Vivint Smart Home being responsible for between 2.6 % and 100 % of lost principal balances. Due to the nature of these provisions, the Company records a derivative liability ("CFP Derivative") at its fair value when the Financing Provider originates loans to subscribers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by Vivint Smart Home to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other income, net in the consolidated statements of operations. For further discussion, see Note 6, Accounting for Derivative Instruments and Hedging Activities . Derivative Instruments The Company accounts for derivative instruments under ASC 815, which requires the Company to record all derivatives on the balance sheet at fair value and changes in fair value in earnings, unless they qualify for the NPNS exception. The Company's primary derivative instruments are power and natural gas purchase or sales contracts, fuels purchase contracts, the CFP and other energy related commodities used to mitigate variability in earnings due to fluctuation in market prices. In order to mitigate interest rate risk associated with the issuance of the Company's variable rate debt, NRG enters into interest rate swap agreements. In addition, in order to mitigate foreign exchange risk associated with the purchase of USD denominated natural gas for the Company's Canadian business, NRG enters into foreign exchange contract agreements. As of December 31, 2023 and 2022 the Company did not have derivative instruments that were designated as cash flow or fair value hedges. Revenues and expenses on contracts that qualify for the NPNS exception are recognized when the underlying physical transaction is delivered. While these contracts are considered derivative instruments under ASC 815, they are not recorded at fair value, but on an accrual basis of accounting. If it is determined that a transaction designated as NPNS no longer meets the scope exception, the fair value of the related contract is recorded on the balance sheet and immediately recognized through earnings. NRG's trading activities are subject to limits in accordance with the Company's Risk Management Policy. These contracts are recognized on the balance sheet at fair value and changes in the fair value of these derivative instruments are recognized in earnings. Mark-to-Market for Economic Hedging Activities NRG enters into derivative instruments to manage price and delivery risk, optimize physical and contractual assets in the portfolio and manage working capital requirements. The mark-to-market for economic hedging activities are recognized to revenues or cost of operations during the reporting period. Operations and Maintenance and Other Cost of Operations Operations and maintenance costs include major and other routine preventative (planned outage) and corrective (forced outage) maintenance activities to ensure the safe and reliable operation of the Company's generation portfolio in compliance 95 with all local, state and federal requirements. Operations and maintenance costs are also costs associated with retaining and maintaining the Company's customer base, such as call center support, portfolio maintenance and data analytics. Other cost of operations primarily includes gross receipts taxes, insurance, property taxes and asset retirement obligation expense. Foreign Currency Translation and Transaction Gains and Losses The local currencies are generally the functional currency of NRG's foreign operations. Foreign currency denominated assets and liabilities are translated at end-of-period rates of exchange. Revenues, expenses, and cash flows are translated at the weighted-average rates of exchange for the period. The resulting currency translation adjustments are not included in the Company's consolidated statements of operations for the period, but are accumulated and reported as a separate component of stockholders' equity until sale or complete or substantially complete liquidation of the net investment in the foreign entity takes place. Foreign currency transaction gains or losses are reported within other income, net in the Company's consolidated statements of operations. For the years ended December 31, 2023, 2022 and 2021, amounts recognized as foreign currency transaction gains/(losses) were immaterial. The Company's cumulative translation adjustment balances as of December 31, 2023, 2022, and 2021 were $( 43 ) million, $( 55 ) million, and $( 8 ) million, respectively. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trust funds, accounts receivable, notes receivable, derivatives and investments in debt securities. Trust funds are held in accounts managed by experienced investment advisors. Certain accounts receivable, notes receivable, and derivative instruments are concentrated within entities engaged in the energy industry. These industry concentrations may impact the Company's overall exposure to credit risk, either positively or negatively, in that the customers may be similarly affected by changes in economic, industry or other conditions. Receivables and other contractual arrangements are subject to collateral requirements under the terms of enabling agreements. However, the Company believes that the credit risk posed by industry concentration is offset by the diversification and creditworthiness of its customer base. See Note 5, Fair Value of Financial Instruments, for a further discussion of derivative concentrations. Asset Retirement Obligations The Company accounts for AROs in accordance with ASC 410-20, Asset Retirement Obligations, or ASC 410-20. Retirement obligations associated with long-lived assets included within the scope of ASC 410-20 are those for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, including obligations arising under the doctrine of promissory estoppel, and for which the timing and/or method of settlement may be conditional on a future event. ASC 410-20 requires an entity to recognize the fair value of a liability for an ARO in the period in which it is incurred and a reasonable estimate of fair value can be made. Upon initial recognition of a liability for an ARO, the Company capitalizes the asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount. Over time, the liability is accreted to its future value, while the capitalized cost is depreciated over the useful life of the related asset. See Note 14, Asset Retirement Obligations, for a further discussion of AROs. Pensions and Other Postretirement Benefits The Company offers pension benefits through a defined benefit pension plan. In addition, the Company provides postretirement health and welfare benefits for certain groups of employees. The Company accounts for pension and other postretirement benefits in accordance with ASC 715, Compensation — Retirement Benefits , or ASC 715 . The Company recognizes the funded status of the Company's defined benefit plans in the statement of financial position and records an offset for gains and losses as well as all prior service costs that have not been included as part of the Company's net periodic benefit cost to other comprehensive income. The determination of the Company's obligation and expenses for pension benefits is dependent on the selection of certain assumptions. These assumptions determined by management include the discount rate, the expected rate of return on plan assets and the rate of future compensation increases. The Company's actuarial consultants assist in determining assumptions for such items as retirement age. The assumptions used may differ materially from actual results, which may result in a significant impact to the amount of pension obligation or expense recorded by the Company. The Company measures the fair value of its pension assets in accordance with ASC 820, Fair Value Measurements and Disclosures, or ASC 820. For further discussion, see Note 15, Benefit Plans and Other Postretirement Benefits . Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation, or ASC 718 . The fair value of the Company's performance stock units is estimated on the date of grant using a Monte Carlo valuation model. NRG uses the Company's common stock price on the date of grant as the fair value of the Company's deferred stock units. Forfeiture rates are estimated based on an analysis of the Company's historical forfeitures, employment turnover, and expected future behavior. The Company recognizes compensation expense for both graded and cliff 96 vesting awards on a straight-line basis over the requisite service period for the entire award. For further discussion, see Note 21, Stock-Based Compensation . Investments Accounted for by the Equity Method The Company has investments in various domestic energy projects, as well as one Australian project. The equity method of accounting is applied to such investments in affiliates, which include joint ventures and partnerships, because the ownership structure prevents the Company from exercising a controlling influence over the operating and financial policies of the projects. Under this method, equity in pre-tax income or losses of domestic partnerships and, generally, in the net income or losses of its Australian project, are reflected as equity in earnings of unconsolidated affiliates. Distributions from equity method investments that represent earnings on the Company's investment are included within cash flows from operating activities and distributions from equity method investments that represent a return of the Company's investment are included within cash flows from investing activities. For further discussion, see Note 17, Investments Accounted for by the Equity Method and Variable Interest Entities . Sale-Leaseback Arrangements NRG is party to sale-leaseback arrangements that provide for the sale of certain assets to a third-party and simultaneously leases back the same asset to the Company. If the seller-lessee transfers control of the underlying assets to the buyer-lessor, the arrangement is accounted for under ASC 842-40, Sale-Leaseback Transactions. These arrangements are classified as operating leases on the Company's consolidated balance sheets. Marketing and Advertising Costs The Company expenses its marketing and advertising costs as incurred and includes them within selling, general and administrative costs. The costs of tangible assets used in advertising campaigns are recorded as fixed assets or deferred advertising costs and amortized as advertising costs over the shorter of the useful life of the asset or the advertising campaign. The Company has several long-term sponsorship arrangements. Payments related to these arrangements are deferred and expensed over the term of the arrangement. Advertising expenses for the years ended December 31, 2023, 2022, and 2021 were $ 185 million, $ 82 million, and $ 109 million, respectively. Business Combinations The Company accounts for its business combinations in accordance with ASC 805, Business Combinations, or ASC 805, which requires an acquirer to recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at fair value at the acquisition date. The Company also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination. In addition, transaction costs are expensed as incurred. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. In recording transactions and balances resulting from business operations, the Company uses estimates based on the best information available. Estimates are used for such items as plant depreciable lives, tax provisions, uncollectible accounts, actuarially determined benefit costs, the valuation of energy commodity contracts, environmental liabilities, legal costs incurred in connection with recorded loss contingencies, and assets acquired and liabilities assumed in business combinations, among others. In addition, estimates are used to test long-lived assets and goodwill for impairment and to determine the fair value of impaired assets. As better information becomes available or actual amounts are determinable, the recorded estimates are revised. Consequently, operating results can be affected by revisions to prior accounting estimates. Reclassifications Certain prior period amounts have been reclassified for comparative purposes. The reclassifications did not affect results from operations, net assets or cash flows. Recent Accounting Developments - Guidance Adopted in 2023 ASU 2021-08 — In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , or ASU 2021-08, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination as if it had originated the contracts in accordance with ASC 606, Revenue from Contracts with Customers . As a result, an acquirer should recognize and measuring the acquired contract assets and contract liabilities consistently with how they were recognized and measured in the 97 acquiree’s financial statements. The amendments per ASU 2021-08 apply only to contract assets and contract liabilities from contracts with customers, as defined in Topic 606, such as refund liabilities and upfront payments to customers. Assets and liabilities under related Topics, such as deferred costs under Subtopic 340-40, Other Assets and Deferred Costs — Contracts with Customers, are not within the scope of amendments per ASU 2021-08. The Company adopted ASU 2021-08 prospectively effective January 1, 2023 and applied the amended requirements to the acquisition of Vivint Smart Home. Recent Accounting Developments - Guidance Not Yet Adopted ASU 2023-07 – In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , or ASU 2023-07. The guidance in ASU 2023-07 enhances reportable segment disclosure requirements by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. The amendments of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and should be applied retrospectively for all prior periods presented in the financial statements. The Company is currently evaluating the impact of adopting ASU 2023-07 on its disclosures. 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. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments of ASU 2023-09 may be applied on a prospective or retrospective basis. The Company is currently evaluating the impact of adopting ASU 2023-09 on its disclosures. Note 3 — Revenue Recognition The Company's policies with respect to its various revenue streams are detailed below. The Company generally applies the invoicing practical expedient to recognize revenue for the revenue streams detailed below, except in circumstances where the invoiced amount does not represent the value transferred to the customer. Retail Revenue Gross revenues for energy sales and services to retail customers are recognized as the Company transfers the promised goods and services to the customer. Payment terms are generally 15 to 60 days. For the majority of its electricity and natural gas contracts, the Company’s performance obligation with the customer is satisfied over time and performance obligations for its electricity and natural gas products are recognized as the customer takes possession of the product. The Company also allocates the contract consideration to distinct performance obligations in a contract for which the timing of the revenue recognized is different. Additionally, customer discounts and incentives reduce the contract consideration and are recognized over the term of the contract. Energy sales and services that have been delivered but not billed by period end are estimated. Accrued unbilled revenues are based on estimates of customer usage since the date of the last meter reading provided by the independent system operators, utilities, or electric distribution companies. Volume estimates are based on daily forecasted volumes and estimated customer usage by class. Unbilled revenues are calculated by multiplying these volume estimates by the applicable rate by customer class. Estimated amounts are adjusted when actual usage is known and billed. As contracts for retail electricity and natural gas can be for multi-year periods, the Company has performance obligations under these contracts that have not yet been satisfied. These performance obligations have transaction prices that are both fixed and variable, and that vary based on the contract duration, customer type, inception date and other contract-specific factors. For the fixed price contracts, the amount of any unsatisfied performance obligations will vary based on customer usage, which will depend on factors such as weather and customer activity and therefore it is not practicable to estimate such amounts. Vivint Smart Home Retail Revenue Vivint Smart Home offers its subscribers combinations of smart home products and services, which together create an integrated smart home system that allows the Company's subscribers to monitor, control and protect their homes. As the products and services included in the subscriber's contract are integrated and highly interdependent, and because the products (including installation) and services must work together to deliver the monitoring, controlling and protection of their home, the Company has concluded that the products and services contracted for by the subscriber are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the subscriber's contract term, which is the period in which the parties to the contract have enforceable rights and obligations. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the subscriber contain a material right to renew the contract, 98 because the subscriber does not have to purchase the products upon renewal. Proceeds allocated to the material right are recognized over the expected period of benefit. The majority of Vivint Smart Home's subscription contracts are five years and are generally non-cancelable. These contracts generally convert into month-to-month agreements at the end of the initial term, while some subscribers are month-to-month from inception. Payment for Vivint Smart Home services is generally due in advance on a monthly basis, with payment terms up to 30 days. Product sales and other one-time fees are invoiced to subscribers at time of sale. Revenues for any products or services that are considered separate performance obligations are recognized upon delivery. Payments received or billed in advance are reported as deferred revenues. Energy Revenue Both physical and financial transactions consist of revenues billed to a third-party at either market or negotiated contract terms to optimize the financial performance of the Company's generating facilities. Payment terms vary from 5 to 55 days. Electric energy revenue is recognized upon transmission to the customer over time, using the output method for measuring progress of satisfaction of performance obligations. Physical transactions, or the sale of generated electricity to meet supply and demand, are recorded on a gross basis in the Company's consolidated statements of operations. The Company applies the invoicing practical expedient in recognizing energy revenue. Under the practical expedient, revenue is recognized based on the invoiced amount which is equal to the value to the customer of NRG’s performance obligation completed to date. Financial transactions used to hedge the sale of electricity are recorded net within revenues in the consolidated statements of operations in accordance with ASC 815. Ancillary revenues, included in Other revenue, are recognized over time as the obligation is fulfilled, using the output method for measuring progress of satisfaction of performance obligations. Capacity Revenue The Company's largest sources of capacity revenues are capacity auctions in PJM and NYISO. Capacity revenues also include revenues billed to a third-party at either market or negotiated contract terms for making installed generation and demand response capacity available in order to satisfy system integrity and reliability requirements. Payment terms vary from 15 to 55 days. Capacity revenues are recognized over time, using the output method for measuring progress of satisfaction of performance obligations. The Company applies the invoicing practical expedient in recognizing capacity revenue. Under the practical expedient, revenue is recognized based on the invoiced amount which is equal to the value to the customer of NRG’s performance obligation completed to date. Performance Obligations As of December 31, 2023, estimated future fixed fee performance obligations are $ 1.4 billion, $ 1.0 billion, $ 756 million, $ 468 million and $ 176 million for fiscal years 2024, 2025, 2026, 2027 and 2028, respectively. These performance obligations include Vivint Smart Home products and services as well as cleared auction MWs in the PJM, NYISO and MISO capacity auctions. The cleared auction MWs are subject to penalties for non-performance. 99 Disaggregated Revenue The following tables represent the Company’s disaggregation of revenue from contracts with customers for the years ended December 31, 2023, 2022, and 2021: For the Year Ended December 31, 2023 (In millions) Texas East West/Services/Other Vivint Smart Home (a) Corporate/Eliminations Total Retail revenue Home (b) $ 6,538 $ 2,195 $ 1,890 $ 1,549 $ ( 1 ) $ 12,171 Business 3,492 9,751 2,053 — — 15,296 Total retail revenue (b) 10,030 11,946 3,943 1,549 ( 1 ) 27,467 Energy revenue (c) 77 291 185 — — 553 Capacity revenue (c) — 197 2 — ( 2 ) 197 Mark-to-market for economic hedging activities (d) — 57 103 — ( 16 ) 144 Contract amortization — ( 32 ) — — — ( 32 ) Other revenue (c) 369 88 48 — ( 11 ) 494 Total revenue 10,476 12,547 4,281 1,549 ( 30 ) 28,823 Less: Revenues accounted for under topics other than ASC 606 and ASC 815 — 17 35 — — 52 Less: Realized and unrealized ASC 815 revenue 29 364 138 — ( 16 ) 515 Total revenue from contracts with customers $ 10,447 $ 12,166 $ 4,108 $ 1,549 $ ( 14 ) $ 28,256 (a) Includes results of operations following the acquisition date of March 10, 2023 (b) Home includes Services and Vivint Smart Home (c) The following amounts of retail, energy, capacity and other revenue relate to derivative instruments and are accounted for under ASC 815: (In millions) Texas East West/Services/Other Vivint Smart Home Corporate/Eliminations Total Retail revenue $ — $ 74 $ — $ — $ — $ 74 Energy revenue — 162 13 — 1 176 Capacity revenue — 73 — — — 73 Other revenue 29 ( 2 ) 22 — ( 1 ) 48 (d) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 100 For the Year Ended December 31, 2022 (In millions) Texas East West/Services/Other Corporate/Eliminations Total Retail revenue Home (a) $ 6,388 $ 2,088 $ 2,286 $ ( 1 ) $ 10,761 Business 3,229 13,768 1,964 — 18,961 Total retail revenue (b) 9,617 15,856 4,250 ( 1 ) 29,722 Energy revenue (b) 111 641 466 32 1,250 Capacity revenue (b) — 232 40 — 272 Mark-to-market for economic hedging activities (c) 2 ( 30 ) ( 56 ) 1 ( 83 ) Contract amortization — ( 40 ) 1 — ( 39 ) Other revenue (b) 327 104 5 ( 15 ) 421 Total revenue 10,057 16,763 4,706 17 31,543 Less: Revenues accounted for under topics other than ASC 606 and ASC 815 — ( 7 ) 41 1 35 Less: Realized and unrealized ASC 815 revenue ( 2 ) 84 ( 93 ) 31 20 Total revenue from contracts with customers $ 10,059 $ 16,686 $ 4,758 $ ( 15 ) $ 31,488 (a) Home includes Services (b) The following amounts of energy, capacity and other revenue relate to derivative instruments and are accounted for under ASC 815: (In millions) Texas East West/Services/Other Corporate/Eliminations Total Retail revenue $ — $ 110 $ — $ — $ 110 Energy revenue — ( 31 ) ( 8 ) 31 ( 8 ) Capacity revenue — 33 — — 33 Other revenue ( 4 ) 2 ( 29 ) ( 1 ) ( 32 ) (c) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 101 For the Year Ended December 31, 2021 (In millions) Texas East West/Services/Other Corporate/Eliminations Total Retail revenue Home (a) $ 5,659 $ 1,832 $ 2,059 $ ( 1 ) $ 9,549 Business 2,745 10,030 1,237 — 14,012 Total retail revenue 8,404 11,862 3,296 ( 1 ) 23,561 Energy revenue (c) 329 508 371 7 1,215 Capacity revenue (c) — 718 57 — 775 Mark-to-market for economic hedging activities (d) ( 3 ) ( 88 ) ( 86 ) 13 ( 164 ) Contract amortization — ( 26 ) ( 4 ) — ( 30 ) Other revenue (b)(c) 1,565 51 25 ( 9 ) 1,632 Total revenue 10,295 13,025 3,659 10 26,989 Less: Revenues accounted for under topics other than ASC 606 and ASC 815 — ( 25 ) 3 — ( 22 ) Less: Realized and unrealized ASC 815 revenue 130 184 ( 96 ) 16 234 Total revenue from contracts with customers $ 10,165 $ 12,866 $ 3,752 $ ( 6 ) $ 26,777 (a) Home includes Services (b) Other Revenue in Texas includes ancillary revenues of $ 1.3 billion driven by high pricing during Winter Storm Uri (c) The following amounts of energy, capacity and other revenue relate to derivative instruments and are accounted for under ASC 815: (In millions) Texas East West/Services/Other Corporate/Eliminations Total Energy revenue $ — $ 131 $ 2 $ 3 $ 136 Capacity revenue — 149 — — 149 Other revenue 133 ( 8 ) ( 12 ) — 113 (d) 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 December 31, 2023 and 2022: (In millions) December 31, 2023 December 31, 2022 Capitalized contract costs (a) $ 706 $ 126 Accounts receivable, net - Contracts with customers 3,395 4,704 Accounts receivable, net - Accounted for under topics other than ASC 606 136 64 Accounts receivable, net - Affiliate 11 5 Total accounts receivable, net $ 3,542 $ 4,773 Unbilled revenues (included within Accounts receivable, net - Contracts with customers) $ 1,493 $ 1,952 Deferred revenues (b) $ 1,634 $ 186 (a) Amortization of capitalized contract costs for the years ended December 31, 2023, 2022 and 2021 were $ 168 million, $ 86 million and $ 95 million, respectively (b) Deferred revenues from contracts with customers for the years ended December 31, 2023 and 2022 were approximately $ 1.6 billion and $ 175 million, respectively. The increase in deferred revenue balances from December 31, 2023 to 2022 was primarily due to the acquisition of Vivint Smart Home The revenue recognized from contracts with customers during the years ended December 31, 2023 and 2022 relating to the deferred revenue balance at the beginning of each period was $ 168 million and $ 184 million, respectively. The change in the revenue recognized from contracts with customers relating to the deferred revenue balances at the beginning of the years ended December 31, 2023 and 2022 was primarily due to the timing difference of when consideration was received and when the performance obligation was transferred. 102 The Company's capitalized contract costs consist of commission payments, broker fees and other costs that represent incremental costs of obtaining the contract with customers for which the Company expects to recover. Capitalized contract costs are amortized on a straight-line basis over the expected period of benefit of five years . As a practical expedient, the Company expenses the incremental costs of obtaining a contract if the amortization period of the asset would have been one year or less. When the Company receives consideration from the customer that is in excess of the amount due, such consideration is reclassified to deferred revenue, which represents a contract liability. Smart home products and services performance obligations are recognized over the customer's contract term, which is generally three to five years . Energy contract liabilities are generally recognized to revenue in the next period as the Company satisfies its performance obligations. Note 4 — Acquisitions and Dispositions Acquisitions 2023 Acquisitions Vivint Smart Home Acquisition On March 10, 2023 (the "Acquisition Closing Date"), the Company completed the acquisition of Vivint Smart Home, Inc., pursuant to the Agreement and Plan of Merger, dated as of December 6, 2022, by and among the Company, Vivint Smart Home, Inc. and Jetson Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”) pursuant to which Merger Sub merged with and into Vivint Smart Home, Inc., with Vivint Smart Home, Inc. surviving the merger as a wholly-owned subsidiary of the Company. Dedicated to redefining the home experience with intelligent products and services, Vivint Smart Home brought approximately two million subscribers to NRG. Vivint Smart Home's single, expandable platform incorporates artificial intelligence and machine learning into its operating system and its vertically integrated business model includes hardware, software, sales, installation, customer service and technical support and professional monitoring, enabling superior subscriber experiences and a complete end-to-end smart home experience. The acquisition accelerated the realization of NRG's consumer-focused growth strategy and creates a leading essential home services platform fueled by market-leading brands, unparalleled insights, proprietary technologies and complementary sales channels. NRG paid $ 12 per share, or approximately $ 2.6 billion in cash. The Company funded the acquisition using: • proceeds of $ 724 million from newly issued $ 740 million 7.000 % Senior Secured First Lien Notes due 2033, net of issuance costs and discount; • proceeds of $ 635 million from newly issued $ 650 million 10.25 % Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, net of issuance costs; • proceeds of approximately $ 900 million drawn from its Revolving Credit Facility and Receivables Securitization Facilities; and • cash on hand. In February 2023, the Company increased its Revolving Credit Facility by $ 600 million to meet the additional liquidity requirements related to the acquisition. For further discussion, see Note 13, Long-term Debt and Finance Leases. Acquisition costs of $ 38 million and $ 17 million for the years ended December 31, 2023 and 2022, respectively, 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 and liabilities acquired recorded at their estimated Acquisition Closing Date fair value. The total consideration of $ 2.623 billion includes: (In millions) Vivint Smart Home, Inc. common shares outstanding as of March 10, 2023 of 216,901,639 at $ 12.00 per share $ 2,603 Other Vivint Smart Home, Inc. equity instruments (Cash out RSUs and PSUs, Stock Appreciation Rights, Private Placement Warrants) 6 Total Cash Consideration $ 2,609 Fair value of acquired Vivint Smart Home, Inc. equity awards attributable to pre-combination service 14 Total Consideration $ 2,623 103 The purchase price was allocated as follows as of December 31, 2023: (In millions) Current Assets Cash and cash equivalents $ 120 Accounts receivable, net 60 Inventory 113 Prepayments and other current assets 37 Total current assets 330 Property, plant and equipment, net 49 Other Assets Operating lease right-of-use assets, net 35 Goodwill (a) 3,494 Intangible assets, net (b) : Customer relationships 1,740 Technology 860 Trade names 160 Sales channel contract 10 Intangible assets, net 2,770 Deferred income taxes 382 Other non-current assets 14 Total other assets 6,695 Total Assets $ 7,074 Current Liabilities Current portion of long-term debt and finance leases $ 14 Current portion of operating lease liabilities 13 Accounts payable 109 Derivative instruments 80 Deferred revenue current 518 Accrued expenses and other current liabilities 207 Total current liabilities 941 Other Liabilities Long-term debt and finance leases 2,572 Non-current operating lease liabilities 28 Derivative instruments 32 Deferred income taxes 18 Deferred revenue non-current 837 Other non-current liabilities 23 Total other liabilities 3,510 Total Liabilities $ 4,451 Vivint Smart Home Purchase Price $ 2,623 (a) Goodwill arising from the acquisition is attributed to the value of the platform acquired, cross-selling opportunities, subscriber growth and the synergies expected from combining the operations of Vivint Smart Home with NRG's existing businesses. None of the goodwill recorded will be deductible for tax purposes (b) The weighted average amortization period for total amortizable intangible assets is approximately ten years 104 Fair Value Measurement of Intangible Assets The fair values of intangible assets as of the Acquisition Closing Date were measured primarily based on significant inputs that are observable and unobservable in the market and thus represent Level 2 and Level 3 measurements, respectively. Significant inputs were as follows: Customer relationships – Customer relationships, reflective of Vivint Smart Home’s subscriber base, were valued using an excess earning method of the income approach, and is classified as Level 3. Under this approach, the Company estimated the present value of expected future cash flows resulting from existing subscriber relationships, considering attrition and charges for contributory assets (such as net working capital, fixed assets, workforce, trade names and technology) utilized in the business, discounted based on the required rate of return on the acquired intangible asset. The subscriber relationships are amortized to depreciation and amortization, ratably based on discounted future cash flows. The weighted average amortization period is twelve years . Technology – Developed technology was valued using a "relief from royalty" method of the income approach, and is classified as Level 3. Under this approach, the fair value was estimated to be the present value of royalties saved which assumed the value of the asset based on discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed the asset from another company. The estimated cash flows from the developed technology considered the obsolescence factor and was discounted based on the required rate of return on the acquired intangible asset. The developed technology is amortized to depreciation and amortization, ratably based on discounted future cash flows. The weighted average amortization period is five years . Trade names – Trade names were valued using a "relief from royalty" method of the income approach, and is classified as Level 3. Under this approach, the fair value is estimated to be the present value of royalties saved which assumed the value of the asset based on discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the asset and instead licensed the asset from another company. The estimated cash flows from the trade names considered the expected probable use of the asset and was discounted based on the required rate of return on the acquired intangible asset. The trade names are amortized to depreciation and amortization, on a straight line basis, over an amortization period of ten years . Fair Value Measurement of Acquired Vivint Smart Home Debt The Company acquired $ 2.7 billion in aggregate principal of Vivint Smart Home’s 2027 Senior Secured Notes, 2029 Senior notes and 2028 Senior Secured Term Loan (together, the "Acquired Vivint Smart Home Debt") which were recorded at fair value as of the Acquisition Closing Date. The difference between the fair value at the Acquisition Closing Date and the principal outstanding of the Acquired Vivint Smart Home Debt, of $ 152 million, is being amortized through interest expense over the remaining term of the debt. The Acquired Vivint Smart Home Debt is classified as Level 2 and were measured at fair value using observable market inputs based on interest rates at the Acquisition Closing Date. For additional discussion, see Note 13, Long-term Debt and Finance Leases. Fair Value Measurement of Derivatives Liabilities The derivative liabilities are recorded in connection with the contractual future payment obligations with the financing providers under Vivint Smart Home’s Consumer Financing Program. The fair values of the derivatives liabilities as of the Acquisition Closing Date were 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. These derivatives are classified as Level 3 and changes to the fair value are recorded through other income, net in the consolidated statement of operations. For additional discussion, see Note 6, Accounting for Derivative Instruments and Hedging Activities. Supplemental Pro Forma Financial Information The following table provides unaudited pro forma combined financial information of NRG and Vivint Smart Home, after giving effect to the Vivint Smart Home acquisition and related financing transactions as if they had occurred on January 1, 2021. The pro forma financial information has been prepared for illustrative and informational purposes only, and is not intended to project future operating results or be indicative of what the Company's financial performance would have been had the transactions occurred on the date indicated. No effect has been given to prospective operating synergies. For the Year Ended December 31, (In millions) 2023 2022 2021 Total operating revenues $ 29,109 $ 33,225 $ 28,468 Net (loss)/income ( 3 ) 1,136 1,574 105 Amounts above reflect certain pro forma adjustments that were directly attributable to the Vivint Smart Home acquisition. These adjustments include the following: (i) Income statement effects of fair value adjustments based on the purchase price allocation including amortization of intangible assets, reversal of historical Vivint Smart Home amortization of capitalized contract costs and reversal of historical Vivint Smart Home other income recorded for the change in fair value of warrant derivative liabilities, as the warrants are assumed to be cashed out upon the Acquisition Closing Date. (ii) One-time expenses directly related to the acquisition. (iii) Adjustments to reflect all acquisition and related transactions costs in the year ended December 31, 2021. (iv) Interest expense assumes the financing transactions directly attributable to the Vivint Smart Home acquisition occurred on January 1, 2021. (v) Adjustments related to recording Vivint Smart Home's historical debt at Acquisition Closing Date fair value. (vi) Adjustments to reflect the write-off of short-term deferred financing costs related to the bridge facility put in place for the acquisition prior to securing permanent financing during the year ended December 31, 2021 instead of the year ended December 31, 2023. (vii) Income tax effect of the acquisition accounting adjustments and financing adjustments (adjusted for permanent book/tax differences) based on combined blended federal/state tax rate for all periods presented. 2021 Acquisitions Direct Energy Acquisition On January 5, 2021, the Company acquired all of the issued and outstanding common shares of Direct Energy, which had been a North American subsidiary of Centrica plc. Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America, with operations in all 50 U.S. states and 8 Canadian provinces. The acquisition increased NRG's retail portfolio by over 3 million customers and strengthened its integrated model. It also broadened the Company's presence in the Northeast and into states and locales where it did not previously operate, supporting NRG's objective to diversify its business. The Company paid an aggregate purchase price of $ 3.625 billion in cash and total purchase price adjustment of $ 99 million, resulting in an adjusted purchase price of $ 3.724 billion. Acquisition costs of $ 25 million for the year ended December 31, 2021 are included in acquisition-related transaction and integration costs in the Company's consolidated statement of operations. 106 The acquisition has been recorded as a business combination under ASC 805 with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The purchase price was allocated as follows as of December 31, 2021: (In millions) Current Assets Cash and cash equivalents $ 152 Funds deposited by counterparties 21 Restricted cash 9 Accounts receivable, net 1,802 Inventory 106 Derivative instruments 1,014 Cash collateral paid in support of energy risk management activities 233 Prepayments and other current assets 173 Total current assets 3,510 Property, plant and equipment, net 151 Other Assets Goodwill (a) 1,250 Intangible assets, net: Customer relationships (b) 1,277 Customer and supply contracts (b) 610 Trade names (b) 310 Renewable energy credits 124 Total intangible assets, net 2,321 Derivative instruments 531 Other non-current assets 31 Total other assets 4,133 Total Assets $ 7,794 Current Liabilities Accounts payable $ 1,116 Derivative instruments 1,266 Cash collateral received in support of energy risk management activities 21 Accrued expenses and other current liabilities 670 Total current liabilities 3,073 Other Liabilities Derivative instruments 562 Deferred income taxes 320 Other non-current liabilities 115 Total other liabilities 997 Total Liabilities $ 4,070 Direct Energy Purchase Price $ 3,724 (a) Goodwill arising from the acquisition was attributed to the value of the platform acquired and the synergies expected from combining the operations of Direct Energy with NRG's existing businesses. Goodwill was allocated to the Texas, East, and West/Services/Other segments of $ 427 million, $ 648 million and $ 175 million, respectively. Goodwill deductible for tax purposes was $ 322 million (b) As of January 5, 2021, the weighted average amortization period for total amortizable intangible assets was 12 years 107 Dispositions 2023 Dispositions Sale of the 44 % equity interest in STP On November 1, 2023, the Company closed on the sale of its 44 % equity interest in STP to Constellation Energy Generation ("Constellation"). Proceeds of $ 1.75 billion were reduced by working capital and other adjustments of $ 96 million, resulting in net proceeds of $ 1.654 billion. The Company recorded a gain on the sale of $ 1.2 billion within the Texas region of operations. For discussion of the litigation matter related to the transaction, see Note 23, Commitments and Contingencies. The Company recorded income before income taxes from its 44 % equity interest in STP as follows: For the Year Ended December 31, (In millions) 2023 2022 2021 Income before income taxes (a) $ 206 $ 362 $ 829 (a) Excludes the impact of the Company's hedges at the portfolio level Sale of Gregory On October 2, 2023, the Company closed on the sale of its 100 % ownership in the Gregory natural gas generating facility in Texas for $ 102 million. The Company recorded a gain on the sale of $ 82 million . Sale of Astoria On January 6, 2023, the Company closed on the sale of land and related generation assets from the Astoria site, within the East region of operations, for proceeds of $ 212 million, subject to transaction fees of $ 3 million and certain indemnifications, resulting in a $ 199 million gain. As part of the transaction, NRG entered into an agreement to lease the land back for the purpose of operating the Astoria gas turbines. Decommissioning was completed in December 2023 and the lease agreement has been terminated. 2022 Dispositions Sale of Watson On June 1, 2022, the Company closed on the sale of its 49 % ownership in the Watson natural gas generating facility for $ 59 million. The Company recorded a gain on the sale of $ 46 million. 2021 Dispositions Sale of 4,850 MW of Fossil generating assets On December 1, 2021, the Company closed the previously announced sale of approximately 4,850 MWs of fossil generating assets from its East and West regions to Generation Bridge, an affiliate of ArcLight Capital Partners. Proceeds of $ 760 million were reduced by working capital and other adjustments of $ 140 million, resulting in net proceeds of $ 620 million. The Company recorded a gain of $ 207 million from the sale, which includes the $ 39 million indemnification liability recorded as discussed below. As part of the transaction, NRG entered into a tolling agreement for the 866 MW Arthur Kill plant in New York City through April 2025. As part of the agreement to sell the fossil generating assets, NRG has agreed to indemnify Generation Bridge for certain future environmental compliance costs up to $ 39 million. The indemnity term will expire on December 1, 2028. The Company has recorded the liability within accrued expenses and other current liabilities and other non-current liabilities. Sale of Agua Caliente On February 3, 2021, the Company closed on the sale of its 35 % ownership in the Agua Caliente solar project to Clearway Energy, Inc. for $ 202 million. NRG recognized a gain on the sale of $ 17 million, including cash disposed of $ 7 million. 108 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 amount approximates fair value 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: As of December 31, 2023 2022 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Convertible Senior Notes $ 575 $ 739 $ 575 $ 576 Other long-term debt, including current portion 10,219 9,835 7,523 6,432 Total long-term debt, including current portion (a) $ 10,794 $ 10,574 $ 8,098 $ 7,008 (a) Excludes deferred financing costs, which are recorded as a reduction to long-term debt on the Company's consolidated balance sheets The fair value of the Company's publicly-traded long-term debt and the Vivint Smart Home Senior Secured Term Loan are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. Fair Value Accounting under ASC 820 ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: • Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. NRG's financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities, energy derivatives, and trust fund investments. • Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. NRG's financial assets and liabilities utilizing Level 2 inputs include fixed income securities, exchange-based derivatives, and over the counter derivatives such as swaps, options and forward contracts. • Level 3 — unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. NRG's financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models. In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement in its entirety. 109 Recurring Fair Value Measurements Derivative assets and liabilities, debt securities, equity securities and trust fund investments, which were comprised of various U.S. debt and equity securities, are carried at fair market value. The following tables present assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy: As of December 31, 2023 Fair Value (In millions) Total Level 1 Level 2 Level 3 Investments in securities (classified within other current and non-current assets) $ 21 $ — $ 21 $ — Derivative assets: Interest rate contracts 12 — 12 — Foreign exchange contracts 5 — 5 — Commodity contracts 6,138 1,334 4,470 334 Equity securities measured using net asset value practical expedient (classified within other non-current assets) 6 Total assets $ 6,182 $ 1,334 $ 4,508 $ 334 Derivative liabilities: Interest rate contracts $ 8 $ — $ 8 $ — Foreign exchange contracts 9 — 9 — Commodity contracts 5,356 1,413 3,728 215 Consumer Financing Program 134 — — 134 Total liabilities $ 5,507 $ 1,413 $ 3,745 $ 349 110 As of December 31, 2022 Fair Value (In millions) Total Level 1 Level 2 Level 3 Investments in securities (classified within other current and non-current assets) $ 19 $ — $ 19 $ — Nuclear trust fund investments: Cash and cash equivalents 15 15 — — U.S. government and federal agency obligations 86 84 2 — Federal agency mortgage-backed securities 101 — 101 — Commercial mortgage-backed securities 35 — 35 — Corporate debt securities 114 — 114 — Equity securities 403 403 — — Foreign government fixed income securities 1 — 1 — Other trust fund investments (classified within other non-current assets): U.S. government and federal agency obligations 1 1 — — Derivative assets: Foreign exchange contracts 18 — 18 — Commodity contracts 11,976 1,929 8,796 1,251 Measured using net asset value practical expedient: Equity securities - nuclear trust fund investments 83 Equity securities (classified within other non-current assets) 6 Total assets $ 12,858 $ 2,432 $ 9,086 $ 1,251 Derivative liabilities: Foreign exchange contracts $ 2 $ — $ 2 $ — Commodity contracts 8,439 1,244 6,449 746 Total liabilities $ 8,441 $ 1,244 $ 6,451 $ 746 The following table reconciles, for the years ended December 31, 2023 and 2022, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated financial statements using significant unobservable inputs, for commodity derivatives: Fair Value Measurement Using Significant Unobservable Inputs (Level 3) Commodity Derivatives (a) For the Year Ended December 31, (In millions) 2023 2022 Beginning balance $ 505 $ 293 Total (losses)/gains realized/unrealized included in earnings ( 164 ) 53 Purchases 42 ( 110 ) Transfers into Level 3 (b) 78 264 Transfers out of Level 3 (b)(c) ( 342 ) 5 Ending balance $ 119 $ 505 (Losses)/gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of year-end $ ( 46 ) $ 204 (a) Consists of derivatives assets and liabilities, net, excluding derivative liabilities from Consumer Financing Program, which are presented in a separate table below (b) Transfers into/out of Level 3 are related to the availability of consensus pricing and external broker quotes, and are valued as of the end of the reporting period. All transfers into/out of Level 3 are from/to Level 2 (c) For the year ended December 31, 2023, due to the change to use consensus pricing, there was a decrease in the number of contracts valued with prices provided by models and other valuation techniques, which resulted in a large transfer out of Level 3 Realized and unrealized gains and losses included in earnings that are related to the commodity derivatives are recorded in revenues and cost of operations. 111 The following table reconciles, for the year ended December 31, 2023, 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) For the Year Ended December 31, 2023 Beginning balance $ — Contractual obligations added from the acquisition of Vivint Smart Home ( 112 ) New contractual obligations ( 68 ) Settlements 62 Total losses included in earnings ( 16 ) Ending balance $ ( 134 ) Gains and losses that are related to the Consumer Financing Program derivative are recorded in other income, net. Non-derivative fair value measurements For the year ended December 31, 2022 and through the sale of STP on November 1, 2023, the trust fund investments were held primarily to satisfy NRG's nuclear decommissioning obligations. These trust fund investments held debt and equity securities directly and equity securities indirectly through commingled funds. The fair values of equity securities held directly by the trust funds were based on quoted prices in active markets and were categorized in Level 1. In addition, U.S. government and federal agency obligations were categorized as Level 1 because they traded in a highly liquid and transparent market. The fair values of corporate debt securities were based on evaluated prices that reflected observable market information, such as actual trade information of similar securities, adjusted for observable differences and were categorized in Level 2. Certain equity securities, classified as commingled funds, were analogous to mutual funds, were maintained by investment companies, and held certain investments in accordance with a stated set of fund objectives. The fair value of the equity securities classified as commingled funds were based on net asset values per fund share (the unit of account), derived from the quoted prices in active markets of the underlying equity securities. However, because the shares in the commingled funds were not publicly quoted and not traded in an active market, the commingled funds were measured using net asset value practical expedient. See also Note 7, Nuclear Decommissioning Trust Fund. Derivative fair value measurements The Company's contracts consist of non-exchange-traded contracts valued using prices provided by external sources and exchange-traded contracts with readily available quoted market prices. Beginning in of the fourth quarter of 2023 and as of December 31, 2023, the fair value of non-exchange traded contracts were based on consensus pricing provided by independent pricing services. The pricing data was compiled from market makers with longer dated tenors as compared to broker quotes, enhancing reliability and increasing transparency. Prior to the fourth quarter of 2023, the Company valued derivatives based on price quotes from brokers in active markets who regularly facilitate those transactions. For the majority of markets that NRG participates in, the Company would receive broker quotes from multiple sources and reflected the average of the bid-ask mid-point prices. The terms for which such price information is available vary by commodity, region and product. The Company believes both sources of price quotes are executable. The remainder of the assets and liabilities represents contracts for which external sources or observable market quotes are not available. These contracts are valued based on various valuation 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. As of December 31, 2023, contracts valued with prices provided by models and other valuation techniques make up 5 % of derivative assets and 6 % of derivative liabilities. As a result of NRG switching to consensus pricing as of December 31, 2023, there was a significant decrease in the number of contracts valued with prices provided by models and other valuation techniques. 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 for foreign exchange contracts and interest rate swaps is calculated utilizing the bilateral method based on published default probabilities. For commodities, to the extent that NRG's net exposure under a specific master agreement is an asset, the Company uses the counterparty's default swap rate. If the exposure under a specific master agreement is a liability, the Company uses NRG's default swap rate. For foreign exchange contracts, interest rate swaps, and commodities, the credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume NRG's liabilities or that a market participant would be willing to pay for NRG's assets. As of December 31, 2023, the credit reserve resulted in a $ 18 million decrease primarily within cost of operations. As of December 31, 2022, the credit reserve resulted in $ 9 million decrease primarily within cost of operations. 112 The fair values in each category reflect the level of forward prices and volatility factors as of December 31, 2023 and may change as a result of changes in these factors. Management uses its best estimates to determine the fair value of commodity and derivative contracts NRG holds and sells. These estimates consider various factors including closing exchange, consensus and over-the-counter price quotations, time value, volatility factors and credit exposure. It is possible, however, that future market prices could vary from those used in recording assets and liabilities from energy marketing and trading activities and such variations could be material. NRG's significant positions classified as Level 3 include physical and financial natural gas, power, capacity contracts and renewable energy certificates executed in illiquid markets as well as financial transmission rights ("FTRs"). 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. Renewable energy certificate prices are based on market information and internally developed pricing models. 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 December 31, 2023 and 2022: Significant Unobservable Inputs December 31, 2023 Fair Value Input/Range (in millions, except as noted) Assets Liabilities Valuation Technique Significant Unobservable Input Low High Weighted Average Natural Gas Contracts $ 39 $ 65 Discounted Cash Flow Forward Market Price ($ per MMBtu) $ 1 $ 15 $ 3 Power Contracts 197 66 Discounted Cash Flow Forward Market Price ($ per MWh) 1 210 47 Capacity Contracts 21 33 Discounted Cash Flow Forward Market Price ($ per MW/Day) 49 658 285 Renewable Energy Certificates 58 14 Discounted Cash Flow Forward Market Price ($ per Certificate) 2 320 15 FTRs 19 37 Discounted Cash Flow Auction Prices ($ per MWh) ( 58 ) 252 0 Consumer Financing Program — 134 Discounted Cash Flow Collateral Default Rates 0.43 % 93.30 % 8.12 % Discounted Cash Flow Collateral Prepayment Rates 2.00 % 3.00 % 2.95 % Discounted Cash Flow Credit Loss Rates 6.00 % 60.00 % 12.57 % $ 334 $ 349 113 Significant Unobservable Inputs December 31, 2022 Fair Value Input/Range (in millions, except as noted) Assets Liabilities Valuation Technique Significant Unobservable Input Low High Weighted Average Natural Gas Contracts $ 340 $ 448 Discounted Cash Flow Forward Market Price ($ per MMBtu) $ 2 $ 48 $ 6 Power Contracts 843 216 Discounted Cash Flow Forward Market Price ($ per MWh) 3 431 48 FTRs 68 82 Discounted Cash Flow Auction Prices ($ per MWh) ( 32 ) 610 0 $ 1,251 $ 746 The following table provides sensitivity of fair value measurements to increases/(decreases) in significant unobservable inputs as of December 31, 2023 and 2022: Significant Unobservable Input Position Change In Input Impact on Fair Value Measurement Forward Market Price Natural Gas/Power/Capacity/Renewable Energy Certificates Buy Increase/(Decrease) Higher/(Lower) Forward Market Price Natural Gas/Power/Capacity/Renewable Energy Certificates Sell Increase/(Decrease) Lower/(Higher) FTR Prices Buy Increase/(Decrease) Higher/(Lower) FTR Prices 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) Under the guidance of ASC 815, entities may choose to offset cash collateral posted or received against the fair value of derivative positions executed with the same counterparties under the same master netting agreements. The Company has chosen not to offset positions as defined in ASC 815. As of December 31, 2023, the Company recorded $ 441 million of cash collateral posted and $ 84 million of cash collateral received on its balance sheet. Concentration of Credit Risk In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies , the following item is a discussion of the concentration of credit risk for the Company's financial instruments. 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. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) a daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties. The Company also has credit protection within various agreements to call on additional collateral support if and when necessary. Cash margin is collected and held at the Company to cover the credit risk of the counterparty until positions settle. 114 Counterparty Credit Risk As of December 31, 2023, counterparty credit exposure, excluding credit exposure from RTOs, ISOs, and registered commodity exchanges and certain long-term agreements, was $ 1.6 billion and NRG held collateral (cash and letters of credit) against those positions of $ 426 million, resulting in a net exposure of $ 1.2 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 63 % of the Company's exposure before collateral is expected to roll off by the end of 2025. 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. Category Net Exposure (a) (b) (% of Total) Utilities, energy merchants, marketers and other 80 % Financial institutions 20 Total 100 % Category Net Exposure (a) (b) (% of Total) Investment grade 44 % Non-Investment grade/Non-Rated 56 Total 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 currently has exposure to one wholesale counterparty in excess of 10 % of the total net exposure discussed above as of December 31, 2023. 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 subject 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 December 31, 2023, aggregate credit risk exposure managed by NRG to these counterparties was approximately $ 882 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, which serve 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 nonpayment of customer accounts receivable and the loss of in-the-money forward value. The Company manages retail credit risk through the use of established credit policies that include monitoring of the portfolio and the use of credit mitigation measures such as deposits or prepayment arrangements. 115 As of December 31, 2023, 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 bills in a timely manner, which could increase customer delinquencies and may lead to an increase in credit losses. The Company's provision for credit losses was $ 251 million, $ 11 million, and $ 698 million for the years ended December 31, 2023, 2022, and 2021, respectively. During the year ended December 31, 2022, the provision for credit losses included the Company's loss mitigation efforts recognized as income of $ 126 million related to Winter Storm Uri. During the year ended December 31, 2021, the provision for credit losses included $ 596 million of expenses due to the impacts of Winter Storm Uri. Note 6 — Accounting for Derivative Instruments and Hedging Activities ASC 815 requires the Company to recognize all derivative instruments on the balance sheet as either assets or liabilities and to measure them at fair value each reporting period unless they qualify for a NPNS exception. The Company may elect to designate certain derivatives as cash flow hedges, if certain conditions are met, and defer the change in fair value of the derivatives to accumulated OCI, until the hedged transactions occur and are recognized in earnings. For derivatives that are not designated as cash flow hedges or do not qualify for hedge accounting treatment, the changes in the fair value will be immediately recognized in earnings. Certain derivative instruments may qualify for the NPNS exception and are therefore exempt from fair value accounting treatment. ASC 815 applies to NRG's energy related commodity contracts, foreign exchange contracts, interest rate swaps and Consumer Financing Program. As the Company engages principally in the trading and marketing of its generation assets and retail operations, some of NRG's commercial activities qualify for NPNS accounting. Most of the retail load contracts either qualify for the NPNS exception or fail to meet the criteria for a derivative and the majority of the retail supply and fuels supply contracts are recorded under mark-to-market accounting. All of NRG's hedging and trading activities are subject to limits within the Company's Risk Management Policy. Energy-Related Commodities To manage the commodity price risk associated with the Company's competitive supply activities and the price risk associated with wholesale power sales from the Company's electric generation facilities and retail power and gas sales from NRG's retail operations, NRG enters into a variety of derivative and non-derivative hedging instruments, utilizing the following: • Forward contracts, which commit NRG to purchase or sell energy commodities or fuels in the future; • Futures contracts, which are exchange-traded standardized commitments to purchase or sell a commodity or financial instrument; • Swap agreements, which require payments to or from counterparties based upon the differential between two prices for a predetermined contractual, or notional, quantity; • Option contracts, which convey to the option holder the right but not the obligation to purchase or sell a commodity; and • Weather derivative products used to mitigate a portion of lost revenue due to weather. The objectives for entering into derivative contracts designated as hedges include: • Fixing the price of a portion of anticipated power and gas purchases for the Company's retail sales; • Fixing the price for a portion of anticipated future electricity sales that provides an acceptable return on the Company's electric generation operations; and • Fixing the price of a portion of anticipated fuel purchases for the operation of the Company's power plants. These contracts are recognized on the balance sheet at fair value and changes in the fair value of these derivative financial instruments are recognized in earnings. As of December 31, 2023, NRG's derivative assets and liabilities consisted primarily of the following: • Forward and financial contracts for the purchase/sale of electricity and related products economically hedging NRG's generation assets' forecasted output or NRG's retail load obligations through 2036; • Forward and financial contracts for the purchase of fuel commodities relating to the forecasted usage of NRG's generation assets through 2025; • Other energy derivatives instruments extending through 2029. 116 Also, as of December 31, 2023, NRG had other energy-related contracts that did not meet the definition of a derivative instrument or qualified for the NPNS exception and were therefore exempt from fair value accounting treatment as follows: • Load-following forward electric sale contracts extending through 2036; • Load-following forward natural gas purchase and sale contracts extending through 2032; • Power tolling contracts through 2036; • Coal purchase contracts through 2024; • Power transmission contracts through 2029; • Natural gas transportation contracts through 2034; • Natural gas storage agreements through 2030; and • Coal transportation contracts through 2029. Foreign Exchange Contracts In order to mitigate foreign exchange risk primarily associated with the purchase of USD denominated natural gas for the Company's Canadian business, NRG enters into foreign exchange contract agreements through 2027. Interest Rate Swaps NRG is exposed to changes in interest rate through the Company's issuance of variable rate debt. To manage the Company's interest rate risk, NRG enters into interest rate swap agreements. In the first quarter of 2023, the Company entered into $ 1.0 billion of interest rate swaps through 2027 to hedge the floating rate on the Term Loan acquired with the Vivint Smart Home acquisition. Additionally, in the first quarter of 2023, the Company had entered into interest rate swaps to hedge the floating rate on the Revolving Credit Facility extending through 2024, which was fully terminated in conjunction with the pay down of the Revolving Credit Facility. 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 subscriber. 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 subscriber; and • Vivint Smart Home pays transactional fees associated with subscriber 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 Provider for each component of the derivative. 117 Volumetric Underlying Derivative Transactions The following table summarizes the net notional volume buy/(sell) of NRG's open derivative transactions broken out by commodity, excluding those derivatives that qualified for the NPNS exception as of December 31, 2023 and 2022. 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 December 31, 2023 December 31, 2022 Emissions Short Ton — 1 Renewables Energy Certificates Certificates 12 15 Coal Short Ton 9 11 Natural Gas MMBtu 838 422 Oil Barrels — 1 Power MWh 201 192 Interest Dollars 1,000 — Foreign Exchange Dollars 548 569 Consumer Financing Program Dollars 1,116 — Fair Value of Derivative Instruments The following table summarizes the fair value within the derivative instrument valuation on the balance sheet: Fair Value Derivative Assets Derivative Liabilities (In millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Derivatives Not Designated as Cash Flow or Fair Value Hedges : Interest rate contracts - current $ 12 $ — $ — $ — Interest rate contracts - long-term — — 8 — Foreign exchange contracts - current 3 11 4 1 Foreign exchange contracts - long-term 2 7 5 1 Commodity contracts- current 3,847 7,875 3,922 6,194 Commodity contracts- long-term 2,291 4,101 1,434 2,245 Consumer Financing Program - current — — 93 — Consumer Financing Program - long-term — — 41 — Total Derivatives Not Designated as Cash Flow or Fair Value Hedges $ 6,155 $ 11,994 $ 5,507 $ 8,441 118 The Company has elected to present derivative assets and liabilities on the 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 balance sheet. The following table summarizes the offsetting 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 December 31, 2023 Interest rate contracts: Derivative assets $ 12 $ ( 8 ) $ — $ 4 Derivative liabilities ( 8 ) 8 — — Total interest rate contracts 4 — — 4 Foreign exchange contracts: Derivative assets $ 5 $ ( 5 ) $ — $ — Derivative liabilities ( 9 ) 5 — ( 4 ) Total foreign exchange contracts $ ( 4 ) $ — $ — $ ( 4 ) Commodity contracts: Derivative assets $ 6,138 $ ( 4,926 ) $ ( 74 ) $ 1,138 Derivative liabilities ( 5,356 ) 4,926 145 ( 285 ) Total commodity contracts $ 782 $ — $ 71 $ 853 Consumer Financing Program: Derivative liabilities $ ( 134 ) $ — $ — $ ( 134 ) Total derivative instruments $ 648 $ — $ 71 $ 719 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, 2022 Foreign exchange contracts: Derivative assets $ 18 $ ( 2 ) $ — $ 16 Derivative liabilities ( 2 ) 2 — — Total foreign exchange contracts $ 16 $ — $ — $ 16 Commodity contracts: Derivative assets $ 11,976 $ ( 7,897 ) $ ( 1,659 ) $ 2,420 Derivative liabilities ( 8,439 ) 7,897 20 ( 522 ) Total commodity contracts $ 3,537 $ — $ ( 1,639 ) $ 1,898 Total derivative instruments $ 3,553 $ — $ ( 1,639 ) $ 1,914 119 Impact of Derivative Instruments on the Statement of Operations Unrealized gains and losses associated with changes in the fair value of derivative instruments that are not accounted for as cash flow 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 statement of operations. The effect of foreign exchange and commodity hedges is 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. Year Ended December 31, (In millions) 2023 2022 2021 Unrealized mark-to-market results Reversal of previously recognized unrealized (gains) on settled positions related to economic hedges $ ( 1,734 ) $ ( 1,232 ) $ ( 41 ) Reversal of acquired loss positions related to economic hedges 20 2 256 Net unrealized (losses)/gains on open positions related to economic hedges ( 1,149 ) 2,478 2,501 Total unrealized mark-to-market (losses)/gains for economic hedging activities ( 2,863 ) 1,248 2,716 Reversal of previously recognized unrealized losses/(gains) on settled positions related to trading activity 13 13 ( 18 ) Reversal of acquired (gain) positions related to trading activity — — ( 1 ) Net unrealized gains/(losses) on open positions related to trading activity 25 ( 17 ) ( 13 ) Total unrealized mark-to-market gains/(losses) for trading activity 38 ( 4 ) ( 32 ) Total unrealized (losses)/gains - commodities and foreign exchange $ ( 2,825 ) $ 1,244 $ 2,684 Year Ended December 31, (In millions) 2023 2022 2021 Total impact to statement of operations - interest rate contracts $ 4 $ — $ — Unrealized gains/(losses) included in revenues - commodities $ 182 $ ( 87 ) $ ( 196 ) Unrealized (losses)/gains included in cost of operations - commodities ( 2,988 ) 1,315 2,880 Unrealized (losses)/gains included in cost of operations - foreign exchange ( 19 ) 16 — Total impact to statement of operations - commodities and foreign exchange $ ( 2,825 ) $ 1,244 $ 2,684 Total impact to statement of operations - Consumer Financing Program $ ( 16 ) $ — $ — The reversals of acquired loss/(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. The loss from open economic hedge positions of $ 1.1 billion for the year ended December 31, 2023 was primarily the result of a decrease in the value of forward positions as a result of decreases in natural gas and power prices in the East and West. The gains from open economic hedge positions of $ 2.5 billion for the years ended December 31, 2022 and 2021 were primarily the result of an increase in value of forward positions as a result of increases in natural gas and power prices. Credit Risk Related Contingent Features Certain of the Company's hedging and 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 contracts with adequate assurance clauses that are in net liability positions as of December 31, 2023 was $ 600 million. The Company is also a party to certain marginable agreements under which it has a net liability position, but the counterparty has not called for the collateral due, which was approximately $ 80 million as of December 31, 2023. In the event of a downgrade in the Company's credit rating and 120 if called for by the counterparty, $ 8 million of additional collateral would be required for all contracts with credit rating contingent features as of December 31, 2023. See Note 5, Fair Value of Financial Instruments, for discussion regarding concentration of credit risk. Note 7— Nuclear Decommissioning Trust Fund Through the sale of the Company's 44 % equity interest in STP on November 1, 2023, NRG's Nuclear Decommissioning Trust Fund assets, which were for the decommissioning of STP, were comprised of securities classified as available-for-sale and recorded at fair value based on actively quoted market prices. NRG accounted for the Nuclear Decommissioning Trust Fund in accordance with ASC 980, Regulated Operations , or ASC 980, because the Company's nuclear decommissioning activities were subject to approval by the PUCT, with regulated rates that are designed to recover all decommissioning costs and that can be charged to and collected from the ratepayers per PUCT mandate. Since the Company was in compliance with PUCT rules and regulations regarding decommissioning trusts and the cost of decommissioning was the responsibility of the Texas ratepayers, not NRG, all realized and unrealized gains or losses (including other-than-temporary impairments) related to the Nuclear Decommissioning Trust Fund were recorded to the Nuclear Decommissioning Trust liability and were not included in net income or accumulated other comprehensive income, consistent with regulatory treatment. Following the sale of the Company's 44 % equity interest in STP on November 1, 2023, the Company is no longer responsible for the decommissioning of STP and no longer holds the Nuclear Decommissioning Trust Fund assets. For further discussion of the sale, see Note 4, Acquisitions and Dispositions. The following table summarizes the aggregate fair values and unrealized gains and losses for the securities held in the trust funds as of December 31, 2022, as well as information about the contractual maturities of those securities as of that date. As of December 31, 2022 (In millions, except otherwise noted) Fair Value Unrealized Gains Unrealized Losses Weighted- average maturities (in years) Cash and cash equivalents $ 15 $ — $ — — U.S. government and federal agency obligations 86 — 5 11 Federal agency mortgage-backed securities 101 — 11 26 Commercial mortgage-backed securities 35 — 4 30 Corporate debt securities 114 — 13 12 Equity securities 486 346 3 — Foreign government fixed income securities 1 — — 17 Total $ 838 $ 346 $ 36 The following table summarizes proceeds from sales of available-for-sale securities and the related realized gains and losses from these sales for the ten months ended October 31, 2023, and for the years ended December 31, 2022 and 2021. The cost of securities sold was determined using the specific identification method. (In millions) 2023 2022 2021 Realized gains $ 11 $ 14 $ 47 Realized losses ( 19 ) ( 25 ) ( 9 ) Proceeds from sale of securities 355 448 710 121 Note 8 — Inventory Inventory consisted of: As of December 31, (In millions) 2023 2022 Fuel oil $ 8 $ 8 Coal 178 114 Natural gas 189 385 Spare parts 68 136 Finished goods 164 108 Total Inventory $ 607 $ 751 Note 9 — Property, Plant and Equipment The Company's major classes of property, plant, and equipment were as follows: As of December 31, Depreciable (In millions) 2023 2022 Lives Facilities and equipment $ 1,918 $ 1,727 1 - 40 years Land and improvements 256 263 Nuclear fuel — 271 5 years Hardware and office equipment and furnishings 732 712 2 - 10 years Construction in progress 152 197 Total property, plant, and equipment 3,058 3,170 Accumulated depreciation ( 1,295 ) ( 1,478 ) Net property, plant, and equipment $ 1,763 $ 1,692 Depreciation expense of property, plant and equipment recorded during the years ended December 31, 2023, 2022 and 2021 was $ 257 million, $ 291 million and $ 384 million, respectively. Note 10 — Leases The Company leases generating facilities, land, office and equipment, railcars, fleet vehicles and storefront space at retail stores. Operating leases with an initial term greater than twelve months are recognized as right-of-use assets and lease liabilities in the consolidated balance sheets. The Company made an accounting policy election, as permitted by ASC 842, for all asset classes not to recognize right-of-use assets and lease liabilities in the consolidated balance sheets for its short-term leases, which are leases that have a lease term of twelve months or less. For the initial measurement of lease liabilities, the discount rate that the Company uses is either the rate implicit in the lease, if known, or its incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, over a similar term an amount equal to the payments for the lease. The Company recognizes lease expense for all operating leases on a straight-line basis over the lease term. In the future, should another systematic basis become more representative of the pattern in which the lessee expects to consume the remaining economic benefit of the right-of-use asset, the Company will use that basis for lease expense. The Company considers a contract to be or to contain a lease when both of the following conditions apply: 1) an asset is either explicitly or implicitly identified in the contract and 2) the contract conveys to the Company the right to control the use of the identified asset for a period of time. The Company has the right to control the use of the identified asset when the Company has both the right to obtain substantially all the economic benefits from the use of the identified asset and the right to direct how and for what purpose the identified asset is used throughout the period of use. Lease payments are typically fixed and payable on a monthly, quarterly, semi-annual or annual basis. Lease payments under certain agreements may escalate over the lease term either by a fixed percentage or a fixed dollar amount. Certain leases may provide for variable lease payments in the form of payments based on unit availability, usage, a percentage of sales from the location under lease, or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments. The Company has no leases which contain residual value guarantees provided by the Company as a lessee. 122 Lease Cost: For the Year Ended December 31, (In millions) 2023 2022 2021 Finance lease cost $ 8 $ 4 $ 4 Amortization of right-of-use assets 7 4 4 Interest on lease liabilities 1 — — Operating lease cost 93 85 91 Short-term lease cost 42 7 3 Variable lease cost 91 86 9 Sublease income ( 2 ) ( 2 ) ( 2 ) Total lease cost $ 232 $ 180 $ 105 Other information: For the Year Ended December 31, (In millions) 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 195 $ 183 $ 102 Financing cash flows from finance leases 7 5 6 Right-of-use assets obtained in exchange for new finance lease liabilities 17 3 16 Right-of-use assets obtained in exchange for new operating lease liabilities 52 28 47 Lease Term and Discount Rate for leases: December 31, 2023 December 31, 2022 Finance leases: Weighted average remaining lease term (in years) 2.9 2.6 Weighted average discount rate 4.87 % 2.82 % Operating leases: Weighted average remaining lease term (in years) 3.6 4.3 Weighted average discount rate 6.00 % 5.37 % As of December 31, 2023, annual payments based on the maturities of the Company's operating leases are expected to be as follows: In millions 2024 $ 118 2025 86 2026 34 2027 24 2028 17 Thereafter 32 Total undiscounted lease payments $ 311 Less: present value adjustment ( 93 ) Total discounted lease payments $ 218 123 Note 11 — Asset Impairments 2023 Impairment Losses During the fourth quarter of 2023, the Company completed its annual budget and analyzed the corresponding impact on estimated cash flows associated with its long-lived assets. The fair value of the assets was determined using an income approach by applying a discounted cash flow methodology to the long-term budget for each facility. The income approach utilized estimates of after-tax cash flows, which were Level 3 fair value measurements, and included key inputs such as forecasted power prices, fuel costs, operating and maintenance costs, plant investment capital expenditures and discount rates. Gladstone — The Company recorded impairment losses of $ 102 million on its equity method investment in Gladstone within the West/Services/Other segment as a result of changes in the long-term outlook of the Gladstone facility, prompted by evolving energy policy conditions in Australia and an assessment of the long-term operational landscape of the facility, which concluded with the annual budget process. For further discussion of the Gladstone investment, see Note 17, Investments Accounted for by the Equity Method and Variable Interest Entities. Other Impairments — The Company additionally recorded impairment losses related to property plant and equipment and leases of $ 2 million, $ 4 million and $ 20 million in the Texas, East and West/Services/Other segments, respectively. 2022 Impairment Losses Astoria Redevelopment Impairment — During the third quarter of 2022, the Company entered into a purchase and sale agreement for the sale of the land and related assets at the Astoria generating site and the planned withdrawal and cancellation of its proposed Astoria redevelopment project. As a result, the Company impaired $ 43 million of Astoria project spend in the East segment. For further discussion of the transaction, see Note 4, Acquisitions and Dispositions . PJM Asset Impairments — During the second quarter of 2022, the results of the PJM Base Residual Auction for the 2023/2024 delivery year were released leading the Company to revise its long-term view of certain facilities and announce the planned retirement of the Joliet generating facility. The Company considered the near-term retirement date of Joliet and the decline in PJM capacity prices to be a trigger for impairment and performed impairment tests on the PJM generating assets and the goodwill associated with Midwest Generation. The Company measured the impairment losses on the PJM generating assets and Midwest Generation goodwill as the difference between the carrying amount and the fair value of the PJM generating assets and Midwest Generation reporting unit, respectively. Fair values were determined using an income approach in which the Company applied a discounted cash flow methodology to the long-term budgets for the plants and reporting unit. Significant inputs impacting the income approach include the Company's long-term view of capacity and fuel prices, projected generation, the physical and economic characteristics of each plant and the reporting unit as a whole, and the discount rate applied to the after-tax cash flow projections. Impairment losses of $ 20 million and $ 130 million were recorded in the East segment on the PJM generating assets and Midwest Generation goodwill, respectively. Other Impairments — The Company additionally recorded impairment losses of $ 13 million in the East segment. 2021 Impairment Losses During the fourth quarter of 2021, the Company completed its annual budget and analyzed the corresponding impact on estimated cash flows associated with its long-lived assets. The fair value of the assets was determined using an income approach by applying a discounted cash flow methodology to the long-term budget for the facility. The income approach utilized estimates of after-tax cash flows, which were Level 3 fair value measurements, and included key inputs such as forecasted power prices, fuel costs, operating and maintenance costs, plant investment capital expenditures and discount rates. Joliet —The Company recognized an impairment loss of $ 213 million in the East segment as a result of changes in the long-term outlook of the Joliet facility prompted by market conditions and an assessment of various alternatives for the long-term operational landscape of the facility including the impact of the CEJA in Illinois, which concluded with the annual budget process. Other Impairments — The Company additionally recorded impairment losses of $ 16 million and $ 9 million related to various power plants in the East and West/Service/Other segments, respectively. The Company also recorded the following impairment in 2021 based on a specific triggering event that occurred using the same methodology previously discussed: PJM Asset Impairments — During the second quarter of 2021, the results of the PJM Base Residual Auction for the 2022/2023 delivery year were released leading the Company to announce the near-term retirement of a significant portion of its PJM coal generating assets in June 2022. The Company considered the decline in PJM capacity prices and the near-term retirement dates of certain assets to be a trigger for impairment and performed impairment tests on the PJM generating assets and the goodwill associated with Midwest Generation. Impairment losses of $ 271 million and $ 35 million were recorded in the East segment on the PJM generating assets and Midwest Generation goodwill, respectively. 124 Note 12 — Goodwill and Other Intangibles Goodwill The table below presents the changes of goodwill for the years ended December 31, 2023 and 2022 based on the Company's reportable segments. (in millions) Texas East West/Services/Other Vivint Smart Home Total Balance as of January 1, 2022 $ 716 $ 853 $ 226 $ — $ 1,795 Impairment losses — ( 130 ) — — ( 130 ) Asset sales ( 6 ) — — — ( 6 ) Foreign currency translation — — ( 9 ) — ( 9 ) Balance as of December 31, 2022 $ 710 $ 723 $ 217 $ — $ 1,650 Goodwill resulted from the acquisition of Vivint — — — 3,494 3,494 Asset sales ( 67 ) ( 2 ) — — ( 69 ) Foreign currency translation — — 4 — 4 Balance as of December 31, 2023 $ 643 $ 721 $ 221 $ 3,494 $ 5,079 Intangible Assets The Company's intangible assets as of December 31, 2023, primarily reflect intangible assets established with the acquisitions of various companies, including Vivint Smart Home, Direct Energy, Stream Energy, other retail acquisitions and Texas Genco. Intangible assets are comprised of the following: • Emission Allowances — These intangibles primarily consist of SO 2 emission allowances, including those established with the 2006 acquisition of Texas Genco, RGGI emission credits and California carbon allowances. These emission allowances are held-for-use and are amortized to cost of operations based on units of production. • Customer and supply contracts — These intangibles include the fair value at the acquisition date of in-market and out-of-market customer and supply contracts from the acquisition of Direct Energy and are amortized to revenue and cost of operations, respectively, based upon the fair market value, as of the acquisition date, for each delivery month. • Customer relationships — These intangibles represent the fair value at the acquisition date of acquired businesses' customer base from the acquisition of Vivint, Direct Energy and other acquisitions. Customer relationships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year. • Marketing partnerships — These intangibles represent the fair value at the acquisition date of existing agreements with marketing vendors and loyalty and affinity partners for customer acquisition. Marketing partnerships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year. • Technology — These intangibles represent the fair value at the acquisition date of developed technology for Vivint Smart Home integrated software and products. Technology is amortized to depreciation and amortization expense, ratably based on the expected discounted future net cash flows by year. • Trade names — These intangibles are amortized to depreciation and amortization expense on a straight-line basis. • Other — These intangibles primarily include renewable energy credits. RECs are retired, as required, for the applicable compliance period. RECs are expensed to cost of operations based on NRG’s customer usage. Other also included in-market nuclear fuel contracts established from the Texas Genco acquisition in 2006 which were amortized to cost of operations over expected volumes over the life of each contract, costs to extend the operating license for STP Units 1 and 2 and intellectual property related to Goal Zero, which is amortized to depreciation and amortization expense. 125 The following tables summarize the components of NRG's intangible assets: (In millions) Year Ended December 31, 2023 Emission Allowances Customer and Supply Contracts Customer Relationships Marketing Partnerships Technology Trade Names Other (a) Total January 1, 2023 $ 624 $ 635 $ 1,730 $ 284 $ — $ 679 $ 292 $ 4,244 Purchases 10 — — — — — 465 475 Acquisition of businesses (b) — — 1,773 10 860 160 — 2,803 Usage/Sales/Retirements — — — — — — ( 474 ) ( 474 ) Write-off of fully amortized balances ( 1 ) ( 28 ) ( 43 ) — — — — ( 72 ) Sale of STP (c) — — — — — — ( 59 ) ( 59 ) Other ( 5 ) 2 4 1 — 2 — 4 December 31, 2023 628 609 3,464 295 860 841 224 6,921 Less accumulated amortization ( 533 ) ( 328 ) ( 1,300 ) ( 170 ) ( 230 ) ( 401 ) ( 32 ) ( 2,994 ) Net carrying amount $ 95 $ 281 $ 2,164 $ 125 $ 630 $ 440 $ 192 $ 3,927 (a) RECs are not subject to amortization and had a carrying value of $ 177 million (b) The weighted average amortization period for total amortizable intangible assets is approximately 10 years. See Note 4, Acquisitions and Dispositions , for weighted average life of acquired amortizable intangibles for each intangible asset type (c) Includes $ 47 million of intangibles that were amortized (In millions) Year Ended December 31, 2022 Emission Allowances Customer and Supply Contracts Customer Relationships Marketing Partnerships Trade Names Other (a) Total January 1, 2022 $ 634 $ 638 $ 1,679 $ 284 $ 683 $ 229 $ 4,147 Purchases 26 — — — — 404 430 Acquisition of businesses (b) — — 55 — — — 55 Usage/Retirements ( 33 ) — — — — ( 341 ) ( 374 ) Write-off of fully amortized balances ( 14 ) — — — — — ( 14 ) Other 11 ( 3 ) ( 4 ) — ( 4 ) — — December 31, 2022 624 635 1,730 284 679 292 4,244 Less accumulated amortization ( 528 ) ( 235 ) ( 787 ) ( 146 ) ( 341 ) ( 75 ) ( 2,112 ) Net carrying amount $ 96 $ 400 $ 943 $ 138 $ 338 $ 217 $ 2,132 (a) RECs are not subject to amortization and had a carrying value of $ 186 million (b) The weighted average life of acquired amortizable intangibles was six years for customer relationships 126 The following table presents NRG's amortization of intangible assets for each of the past three years: Years Ended December 31, (In millions) 2023 2022 2021 Emission allowances $ 6 $ 6 $ 24 Customer and supply contracts 121 141 66 Customer relationships 556 269 327 Marketing partnerships 24 23 24 Technology 230 — — Trade names 60 47 47 Other (a) 4 4 7 Total amortization $ 1,001 $ 490 $ 495 (a) For the year ended December 31, 2023, 2022 and 2021, other intangibles amortized to depreciation and amortization expense were de minimis, $ 4 million and $ 3 million, respectively The following table presents estimated amortization of NRG's intangible assets as of December 31, 2023 for each of the next five years: (In millions) Year Ended December 31, Emission Allowances Customer and Supply Contracts Customer Relationships Marketing Partnerships Technology Trade Names Other Total 2024 $ 17 $ 73 $ 478 $ 24 $ 227 $ 54 $ 3 $ 876 2025 14 50 371 23 176 47 3 684 2026 9 52 300 23 130 39 3 556 2027 8 30 233 23 89 39 3 425 2028 9 13 189 15 9 39 2 276 Intangible assets held-for-sale — From time to time, management may authorize the transfer from the Company's emission bank of emission allowances held-for-use to intangible assets held-for-sale. Emission allowances held-for-sale are included in other non-current assets on the Company's consolidated balance sheet and are not amortized, but rather expensed as sold. As of December 31, 2023 and 2022, the value of emission allowances held-for-sale was $ 4 million and $ 8 million, respectively, within the Corporate segment. Once transferred to held-for-sale, these emission allowances are prohibited from moving back to held-for-use. 127 Note 13 — Long-term Debt and Finance Leases Long-term debt and finance leases consisted of the following: As of December 31, (In millions, except rates) 2023 2022 Interest rate % Recourse debt: Senior Notes, due 2027 $ 375 $ 375 6.625 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 2031 1,030 1,030 3.625 Senior Notes, due 2032 480 1,100 3.875 Convertible Senior Notes, due 2048 (a) 575 575 2.750 Senior Secured First Lien Notes, due 2024 600 600 3.750 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 — 7.000 Tax-exempt bonds 466 466 1.250 - 4.750 Subtotal recourse debt 8,220 8,100 Non-recourse debt: Vivint Smart Home Senior Notes, due 2029 800 — 5.750 Vivint Smart Home Senior Secured Notes, due 2027 600 — 6.750 Vivint Smart Home Senior Secured Term Loan, due 2028 1,320 — SOFR + 3.51 Subtotal all non-recourse debt 2,720 — Subtotal long-term debt (including current maturities) 10,940 8,100 Finance leases 19 11 various Subtotal long-term debt and finance leases (including current maturities) 10,959 8,111 Less current maturities ( 620 ) ( 63 ) Less debt issuance costs ( 60 ) ( 70 ) Discounts ( 146 ) ( 2 ) Total long-term debt and finance leases $ 10,133 $ 7,976 (a) As of the ex-dividend date of January 31, 2024, the Convertible Senior Notes were convertible at a price of $ 41.53 , which is equivalent to a conversion rate of approximately 24.0763 shares of common stock per $1,000 principal amount Debt includes the following discounts: As of December 31, (In millions) 2023 2022 Senior Secured First Lien Notes, due 2024, 2025, 2027, 2029 and 2033 $ ( 10 ) $ ( 2 ) Vivint Smart Home Senior Notes, due 2029 ( 103 ) — Vivint Smart Home Senior Secured Notes, due 2027 ( 12 ) — Vivint Smart Home Senior Secured Term Loan, due 2028 ( 21 ) — Total discounts $ ( 146 ) $ ( 2 ) 128 Consolidated Annual Maturities As of December 31, 2023, annual payments based on the maturities of NRG's debt and finance leases are expected to be as follows: (In millions) 2024 $ 620 2025 769 2026 16 2027 1,890 2028 2,145 Thereafter 5,519 Total $ 10,959 Recourse Debt Revolving Credit Facility On February 14, 2023 (the “Revolving Credit Facility Sixth Amendment Effective Date”), the Company amended its Revolving Credit Facility to: (i) increase the existing revolving commitments thereunder by $ 600 million (the “Initial Incremental Commitment”), (ii) extend the maturity date of a portion of the revolving commitments thereunder to February 14, 2028, (iii) transition the benchmark rate applicable to revolving loans from LIBOR to SOFR and (iv) make certain other amendments to the terms of the Revolving Credit Facility for purposes of, among other things, providing additional flexibility. On March 13, 2023 (the “Revolving Credit Facility Seventh Amendment Effective Date”), the Company further amended its Revolving Credit Facility to increase the existing revolving commitments by an additional $ 45 million (together with the Initial Incremental Commitment, the "Incremental Commitment"). After giving effect to the Incremental Commitment, the Company had a total of $ 4.305 billion of revolving commitments available under the Revolving Credit Facility. The full amount of the Initial Incremental Commitment was made available from and after the Revolving Credit Facility Sixth Amendment Effective Date and the full amount of the Incremental Commitment was made available from and after the Revolving Credit Facility Seventh Amendment Effective Date. A portion of the non-extended revolving commitments terminated on July 5, 2023, with the remaining portion thereof terminating on May 28, 2024, unless otherwise extended. The Revolving Credit Facility is guaranteed by NRG’s existing and future direct and indirect subsidiaries, with customary and agreed-upon exceptions for, among other exceptions, unrestricted subsidiaries, foreign subsidiaries, project subsidiaries, immaterial subsidiaries, captive insurance subsidiaries and securitization vehicles. The Revolving Credit Facility is also secured by a first priority (subject to certain customary permitted liens) perfected security interest in a substantial portion of the property and assets owned by NRG and its subsidiaries that are guarantors under the Revolving Credit Facility, subject to certain exceptions that include, among other things, the capital stock of certain specified subsidiaries, including unrestricted subsidiaries and certain excluded subsidiaries, equity interests in excess of 66 % of the total outstanding voting equity interests of certain foreign subsidiaries, equity interests the pledge of which is prohibited by applicable agreements binding on such subsidiaries and other assets that may be designated by NRG as excluded from the collateral that, when taken together with all other assets so designated since the Revolving Credit Facility Sixth Amendment Effective Date, have an aggregate fair market value not exceeding $ 750 million. The Revolving Credit Facility is secured on a pari passu basis with certain interest rate, foreign currency and commodity hedging obligations of NRG, the Senior Secured First Lien Notes and certain other indebtedness. The collateral securing the Revolving Credit Facility will be released at the Company's request if both the senior unsecured long-term debt securities of the Company and the revolving loans under the Revolving Credit Facility are rated investment grade by any two of the three rating agencies and the satisfaction of certain other conditions, subject to reversion if such rating agencies withdraw such investment grade rating or downgrade such rating below investment grade (or, with respect to the revolving loans, crease to publish a rating). The Revolving Credit Facility contains customary covenants, which, among other things, require NRG to maintain a maximum first lien leverage ratio on a consolidated basis when amounts outstanding under the Revolving Credit Facility (subject to certain exceptions) exceed a certain threshold and limit, subject to certain exceptions, NRG’s ability to: • incur indebtedness and liens and enter into sale and lease-back transactions; • make investments, loans and advances; • return capital to shareholders; • repay material subordinated indebtedness; • consummate mergers, consolidations and asset sales; 129 • enter into affiliate transactions; and • change its fiscal year-end. As of December 31, 2023, there were no outstanding borrowings and there were $ 883 million in letters of credit issued under the Revolving Credit Facility. Senior Notes Issuance of 2033 Senior Secured First Lien Notes On March 9, 2023, the Company issued $ 740 million of aggregate principal amount of 7.000 % senior secured first lien notes due 2033 (the "2033 Senior Secured First Lien Notes"). The 2033 Senior Secured First Lien Notes are senior secured obligations of NRG and are guaranteed by certain of its subsidiaries that guarantee indebtedness under the Revolving Credit Facility. The 2033 Senior Secured First Lien Notes are secured by a first priority security interest in the same collateral that is pledged for the benefit of the lenders under the Revolving Credit Facility, which collateral consists of a substantial portion of the property and assets owned by the Company and the guarantors. The collateral securing the 2033 Senior Secured First Lien Notes will be released at the Company’s request if the senior unsecured long-term debt securities of the Company are rated investment grade by any two of the three rating agencies and the satisfaction of certain other conditions, subject to reversion if such rating agencies withdraw such investment grade rating or downgrade such rating below investment grade. Interest is paid semi-annually beginning on September 15, 2023 until the maturity date of March 15, 2033. The proceeds of the 2033 Senior Secured First Lien Notes, along with cash on hand and proceeds from certain other financings, were used to fund the acquisition of Vivint Smart Home. Senior Note Redemptions During the year ended December 31, 2023, the Company redeemed $ 620 million in aggregate principal amount of its 3.875 % Senior Notes, due 2032, for $ 509 million, which included the payment of $ 7 million of accrued interest, using cash on hand at an average early redemption percentage of 81 %. In connection with the redemption, a $ 109 million gain on debt extinguishment was recorded, which included the write-off of previously deferred financing costs and other fees of $ 9 million. During the year ended December 31, 2021, the Company redeemed approximately $ 1.9 billion in aggregate principal amount of its Senior Notes for $ 1.9 billion using the proceeds of the 2032 Senior Notes and cash on hand, as detailed in the table below. In connection with the redemptions, a $ 77 million loss on debt extinguishment was recorded, which included the write-off of previously deferred financing costs of $ 12 million. (In millions, except percentages) Principal Repurchased Cash Paid (a) Average Early Redemption Percentage 7.250 % Senior Notes, due 2026 $ 1,000 $ 1,056 103.625 % 6.625 % Senior Notes, due 2027 855 893 103.313 % Total $ 1,855 $ 1,949 (a) Includes accrued interest of $ 29 million for redemptions for the year ended December 31, 2021 2048 Convertible Senior Notes Accounting for Convertible Senior Notes — Upon issuance in 2018, the Convertible Senior Notes were separated into liability and equity components for accounting purposes. The carrying amount of the liability component was initially calculated by measuring the fair value of similar liabilities that do not have an associated convertible feature. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the Convertible Senior Notes. This difference represented the debt discount that was amortized to interest expense over seven years , which was determined to be the expected life of the Convertible Senior Notes, using the effective interest rate method. The equity component was recorded in additional paid-in capital and was not remeasured as it continued to meet the conditions for equity classification. Following the adoption of ASU 2020-06 as of January 1, 2022, the Company no longer records the conversion feature of its convertible senior notes in equity. Instead, the Company combined the previously separated equity component with the liability component, which together is now classified as debt, thereby eliminating the subsequent amortization of the debt discount as interest expense. As a result of the provisions of the amended guidance, the Company recorded a $ 100 million decrease to additional paid-in capital, a $ 57 million decrease to debt discount, a $ 57 million increase to retained earnings, and a $ 14 million decrease to long-term deferred tax liabilities. Modification to Convertible Senior Notes — On February 22, 2022, the Company irrevocably elected to eliminate the right to settle conversions only in shares of the Company's common stock, such that any conversion after such date, the Company will pay cash per $1,000 principal amount and will settle in cash or a combination of cash and the Company's common stock for the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount. 130 Convertible Senior Notes Features — As of December 31, 2023, the Convertible Senior Notes were convertible, under certain circumstances, into cash or a combination of cash and the Company’s common stock at a price of $ 41.83 per common share, which is equivalent to a conversion rate of approximately 23.9079 shares of common stock per $1,000 principal amount of Convertible Senior Notes. As of December 31, 2022, the Convertible Senior Notes were convertible at a price of $ 43.46 per common share, which is equivalent to a conversion rate of approximately 23.0116 shares of common stock per $1,000 principal amount of Convertible Senior Notes. The net carrying amounts of the Convertible Senior Notes as of December 31, 2023 and December 31, 2022 were $ 572 million and $ 570 million, respectively. The Convertible Senior Notes mature on June 1, 2048, unless earlier repurchased, redeemed or converted in accordance with their terms. The Convertible Senior Notes are convertible at the option of the holders under certain circumstances. Prior to the close of business on the business day immediately preceding December 1, 2024, the Convertible Senior Notes will be convertible only upon the occurrence of certain events and during certain periods, including, among others, during any calendar quarter (and only during such calendar quarter) if the last reported sales price per share of the Company's common stock exceeds 130 % of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter. Thereafter during specified periods as follows: • from December 1, 2024 until the close of business on the second scheduled trading day immediately before June 1, 2025; and • from December 1, 2047 until the close of business on the second scheduled trading day immediately before the maturity date All conversions with a conversion date that occurs within the specific periods above will be settled after such period pursuant to the terms of the indenture. The following table details the interest expense recorded in connection with the Convertible Senior Notes, due 2048: For the years ended December 31, ($ In millions) 2023 2022 2021 Contractual interest expense $ 16 $ 16 $ 16 Amortization of discount and deferred finance costs (a) 2 1 15 Total $ 18 $ 17 $ 31 Effective Interest Rate 3.18 % 3.01 % 5.34 % (a) Upon adoption of ASU 2020-06 on January 1, 2022, which resulted in the removal of the debt discount, no further debt discount amortization is being recorded Senior Notes Early Redemption As of December 31, 2023, NRG had the following outstanding issuances of senior notes with an early redemption feature, or Senior Notes: i. 6.625 % senior notes, issued August 2, 2016 and due January 15, 2027, or the 2027 Senior Notes; ii. 5.750 % senior notes, issued December 7, 2017 and due January 15, 2028, or the 2028 Senior Notes; iii. 5.250 % senior notes, issued May 24, 2019 and due June 15, 2029, or the 2029 Senior Notes; iv. 3.375 % senior notes, issued December 2, 2020 and due February 15, 2029, or the 3.375 % 2029 Senior Notes; v. 3.625 % senior notes, issued December 2, 2020 and due February 15, 2031, or the 2031 Senior Notes; and vi. 3.875 % senior notes, issued August 23, 2021 and due February 15, 2032, or the 2032 Senior Notes. The indentures and the forms of notes provide, among other things, that the Senior Notes will be senior unsecured obligations of the Company. The indentures also provide for customary events of default, which include, among others: nonpayment of principal or interest; breach of other agreements in the indentures; defaults in failure to pay certain other indebtedness; the rendering of judgments to pay certain amounts of money against the Company and its subsidiaries; the failure of certain guarantees to be enforceable; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs, the trustee or the holders of at least 25 % or 30 % (depending on the series of Senior Notes) in principal amount of the then outstanding series of Senior Notes may declare all of the Senior Notes of such series to be due and payable immediately. The terms of the indentures, among other things, limit the Company's ability and certain of its subsidiaries' ability to return capital to stockholders, grant liens on assets to lenders and incur additional debt. Interest is payable semi-annually on the Senior Notes until their maturity dates. 131 2027 Senior Notes The Company may redeem some or all of the 2027 Senior Notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage July 15, 2023 to July 14, 2024 101.104 % July 15, 2024 and thereafter 100.000 % 2028 Senior Notes The Company may redeem some or all of the 2028 Senior Notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage January 15, 2024 to January 14, 2025 101.917 % January 15, 2025 to January 14, 2026 100.958 % January 15, 2026 and thereafter 100.000 % 5.250 % 2029 Senior Notes At any time prior to June 15, 2024, the Company may redeem all or a part of the 5.250 % 2029 Senior Notes, at a redemption price equal to 100 % of the principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1 % of the principal amount of the notes; or (ii) the excess of the principal amount of the note over the following: the present value of 102.625 % of the note, plus interest payments due on the note through June 15, 2024 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50 % over the principal amount of the note. In addition, on or after June 15, 2024, the Company may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage June 15, 2024 to June 14, 2025 102.625 % June 15, 2025 to June 14, 2026 101.750 % June 15, 2026 to June 14, 2027 100.875 % June 15, 2027 and thereafter 100.000 % 3.375 % 2029 Senior Notes On or after February 15, 2024, the Company may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage February 15, 2024 to February 14, 2025 101.688 % February 15, 2025 to February 14, 2026 100.844 % February 15, 2026 and thereafter 100.000 % 132 2031 Senior Notes At any time prior to February 15, 2026, the Company may redeem all or a part of the 2031 Senior Notes, at a redemption price equal to 100 % of the principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1 % of the principal amount of the note; or (ii) the excess of the present value of 101.813 % of the note, plus interest payments due on the note through February 15, 2026 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50 % over the principal amount of the note. In addition, on or after February 15, 2026, the Company may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage February 15, 2026 to February 14, 2027 101.813 % February 15, 2027 to February 14, 2028 101.208 % February 15, 2028 to February 14, 2029 100.604 % February 15, 2029 and thereafter 100.000 % 2032 Senior Notes At any time prior to August 15, 2024, the Company may redeem up to 40 % of the aggregate principal amount of the 2032 Senior Notes, at a redemption price equal to 103.875 % of the principal amount of the notes redeemed, plus accrued and unpaid interest, with an amount equal to the net cash proceeds of certain equity offerings, provided that at least 50 % of the aggregate principal amount remains outstanding immediately after the occurrence of such redemption. At any time prior to February 15, 2027, the Company may redeem all or a part of the 2032 Senior Notes, at a redemption price equal to 100 % of the principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1 % of the principal amount of the notes; or (ii) the excess of (A) the present value of (1) the redemption price of the note at February 15, 2027 (such redemption price being set forth in the table appearing below in the column “Redemption Percentage (If Sustainability Performance Target has not been satisfied and/or confirmed by External Verifier)” unless the Sustainability Performance Target has been satisfied in respect of the year ended December 31, 2025 and the Company has provided confirmation thereof to the trustee together with a related confirmation by the External Verifier by the date that is at least 15 days prior to August 15, 2026 in which case the redemption price shall be as set forth in the column “Redemption Percentage (If Sustainability Performance Target has been satisfied and confirmed by External Verifier)”) plus (2) interest payments due on the note through February 15, 2027 (excluding accrued but unpaid interest to the redemption date) computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50 %, over (B) the principal amount of the note. In addition, on or after February 15, 2027, the Company may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table during the twelve-month period beginning on February 15 of the years indicated below, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Year Redemption Percentage (If Sustainability Performance Target has been satisfied and confirmed by External Verifier) Redemption Percentage (If Sustainability Performance Target has not been satisfied and/or confirmed by External Verifier) 2027 101.938 % 102.188 % 2028 101.292 % 101.458 % 2029 100.646 % 100.729 % 2030 and thereafter 100.000 % 100.000 % Receivables Facility In 2020, NRG Receivables LLC, a bankruptcy remote, special purpose, indirect wholly owned subsidiary, ("NRG Receivables") entered into the Receivables Facility, subject to adjustments on a seasonal basis, with issuers of asset-backed commercial paper and commercial banks (the "Lenders"). The assets of NRG Receivables are first available to satisfy the claims of the Lenders before making payments on the subordinated note and equity issued by NRG Receivables. The assets of NRG Receivables are not available to the Company and its subsidiaries or creditors unless and until distributed by NRG Receivables. Under the Receivables Facility, certain indirect subsidiaries of the Company sell their accounts receivables to NRG Receivables, subject to certain terms and conditions. In turn, NRG Receivables grants a security interest in the purchased receivables to the Lenders as collateral for cash borrowings and issuances of letters of credit. Pursuant to the Performance Guaranty, the Company has guaranteed, for the benefit of NRG Receivables and the Lenders, the payment and performance by each indirect subsidiary of its respective obligations under the Receivables Facility. The accounts receivables remain on the 133 Company's consolidated balance sheet and any amounts funded by the Lenders to NRG Receivables will be reflected as short-term borrowings. Cash flows from the Receivables Facility are reflected as financing activities in the Company's consolidated statements of cash flows. The Company continues to service the accounts receivables sold in exchange for a servicing fee. On June 22, 2023, NRG Receivables amended its existing Receivables Facility to, among other things, (i) extend the scheduled termination date to June 21, 2024, (ii) increase the aggregate commitments from $ 1.0 billion to $ 1.4 billion (adjusted seasonally) and (iii) add a new originator. On October 6, 2023, the Receivables Facility was further amended to replace the benchmark interest rate of the Receivable Facility's subordinated note from LIBOR to SOFR. The weighted average interest rate related to usage under the Receivables Facility as of December 31, 2023 was 0.841 %. As of December 31, 2023, there were no outstanding borrowings and there were $ 1.0 billion in letters of credit issued under the Receivables Facility. Repurchase Facility In 2020, the Company entered into the Repurchase Facility related to the Receivables Facility. Under the Repurchase Facility, the Company can currently borrow up to $ 150 million, collateralized by a subordinated note issued by NRG Receivables to NRG Retail LLC in favor of the originating entities representing a portion of the balance of receivables sold to NRG Receivables under the Receivables Facility. In addition, in connection with the amendments to the Receivables Facility, on June 22, 2023, the Company and the originators thereunder renewed the existing uncommitted Repurchase Facility. Such renewal, among other things, extended the maturity date to June 21, 2024 and joined an additional originator to the Repurchase Facility. On October 6, 2023, the Repurchase Facility was further amended to reflect the concurrent amendment to the Receivables Facility's subordinated note. The Repurchase Facility has no commitment fee and borrowings will be drawn at SOFR + 1.55 %. As of December 31, 2023, there were no outstanding borrowings under the Repurchase Facility. Bilateral Letter of Credit Facilities On May 19, 2023, May 30, 2023 and October 17, 2023 the Company increased the size of its bilateral letter of credit facilities by $ 25 million, $ 100 million and $ 50 million, respectively, to provide additional liquidity and to allow for the issuance of up to $ 850 million of letters of credit. These facilities are uncommitted. As of December 31, 2023, $ 671 million was issued under these facilities. Tax Exempt Bonds As of December 31, (In millions, except rates) 2023 2022 Interest Rate % NRG Indian River Power 2020, tax exempt bonds, due 2040 $ 57 $ 57 1.250 NRG Indian River Power 2020, tax exempt bonds, due 2045 190 190 1.250 NRG Dunkirk 2020, tax exempt bonds, due 2042 59 59 4.250 City of Texas City, tax exempt bonds, due 2045 33 33 4.125 Fort Bend County, tax exempt bonds, due 2038 54 54 4.750 Fort Bend County, tax exempt bonds, due 2042 73 73 4.750 Total $ 466 $ 466 Dunkirk Bonds On April 3, 2023, NRG remarketed $ 59 million in aggregate principal amount of 4.25 % tax-exempt refinancing bonds of the Chautauqua County Capital Resource Corporation (the "Dunkirk Bonds"). The Dunkirk Bonds are guaranteed on a first-priority basis by each of NRG's current and future subsidiaries that guarantee indebtedness under the Revolving Credit Facility. The Dunkirk Bonds are secured by a first priority security interest in the same collateral that is pledged for the benefit of the lenders under the Revolving Credit Facility, which consists of a substantial portion of the property and assets owned by NRG and the guarantors. The collateral securing the Dunkirk Bonds will, at the request of NRG, be released if NRG satisfies certain conditions, including receipt of an investment grade rating on its senior, unsecured debt securities from two out of the three rating agencies, subject to reversion if those rating agencies withdraw their investment grade rating of the Dunkirk Bonds or any of NRG's senior, unsecured debt securities or downgrade such ratings below investment grade. The Dunkirk Bonds are subject to mandatory tender and purchase on April 3, 2028 and have a final maturity date of April 1, 2042. 134 Pre-Capitalized Trust Securities Facility On August 29, 2023, the Company entered into a Facility Agreement (as defined below) with Alexander Funding Trust II, a newly-formed Delaware statutory trust (the “Trust”), in connection with the sale by the Trust of $ 500 million pre-capitalized trust securities redeemable July 31, 2028 (the “P-Caps”). The Trust invested the proceeds from the sale of the P-Caps in a portfolio of principal and interest strips of U.S. Treasury securities (the “Eligible Treasury Assets”). The P-Caps replaced the Company’s existing pre-capitalized trust securities redeemable 2023 issued by Alexander Funding Trust, which matured on November 15, 2023. In connection with the sale of the P-Caps, the Company and the guarantors named therein entered into a facility agreement, dated August 29, 2023 (the “Facility Agreement”), with the Trust and Deutsche Bank Trust Company Americas, as notes trustee (the “Notes Trustee”). Under the Facility Agreement, the Company has the right, from time to time, to issue to the Trust, and to require the Trust to purchase from the Company, on one or more occasions (the “Issuance Right”), up to $ 500 million aggregate principal amount of the Company’s 7.467 % Senior Secured First Lien Notes due 2028 (the “P-Caps Secured Notes”) in exchange for all or a portion of the Eligible Treasury Assets corresponding to the portion of the Issuance Right under the Facility Agreement being exercised at such time. The Company pays to the Trust a facility fee equal to 3.13427 % applied to the unexercised portion of the Issuance Right on a semi-annual basis. The P-Caps are to be redeemed by the Trust on July 31, 2028 or earlier upon an early redemption of the P-Caps Secured Notes. Following any distribution of P-Caps Secured Notes to the holders of the P-Caps, the Company may similarly redeem such P-Caps Secured Notes, in whole or in part, at the redemption price described in the P-Caps Indenture (as defined below), plus accrued but unpaid interest to, but excluding, the date of redemption. Any P-Caps Secured Notes outstanding and held by the Trust as a result of the exercise of the Issuance Right that remain outstanding will also mature on July 31, 2028. The Issuance Right will be exercised automatically in full if (i) the Company fails to pay the facility fee when due or any amount due and owing under the trust expense reimbursement agreement or fails to purchase and pay for any Eligible Treasury Assets that are due and not paid on their payment date and such failure is not cured within 30 days or (ii) upon certain bankruptcy events of the Company. The Company will be required to mandatorily exercise the Issuance Right if certain mandatory exercise events occur upon the terms and conditions set forth in the Facility Agreement. The P-Caps Secured Notes that may be sold to the Trust from time to time will be governed by the base indenture, dated August 29, 2023 (the “Base Indenture”), between the Company and the Notes Trustee, as supplemented by the supplemental indenture, dated August 29, 2023 (the “Supplemental Indenture” and, together with the Base Indenture, the “P-Caps Indenture”), among the Company, the guarantors named therein and the Notes Trustee. The P-Caps Secured Notes will, if sold to the Trust, be guaranteed on a first-priority basis by each of the Company’s subsidiaries that guarantee indebtedness under the Revolving Credit Facility. The P-Caps Secured Notes will, if sold to the Trust, be secured by a first priority security interest in the same collateral that is pledged for the benefit of the lenders under the Revolving Credit Facility, which consists of a substantial portion of the property and assets owned by the Company and the guarantors. The collateral securing the P-Caps Secured Notes will be released at the Company’s request if the senior unsecured long-term debt securities of the Company are rated investment grade by any two of the three rating agencies, subject to reversion if such rating agencies downgrade such rating below investment grade or withdraw such investment grade rating. In connection with the issuance of the P-Caps, on August 29, 2023, the Company entered into a letter of credit facility agreement (the “LC Agreement”) with Deutsche Bank Trust Company Americas, as collateral agent (the “Collateral Agent”) and administrative agent, and certain financial institutions (the “LC Issuers”) for the issuance of letters of credit in an aggregate amount not to exceed $ 485 million. The LC Agreement replaced the Company’s existing letter of credit facility agreement, effective August 29, 2023. In addition, on August 29, 2023, the Trust entered into a pledge and control agreement (the “Pledge Agreement”), among the Company, the Trust and the Collateral Agent, under which the Company and the Trust agreed to grant a security interest over the Eligible Treasury Assets in favor of the Collateral Agent for the benefit of the LC Issuers. Pursuant to the LC Agreement and the Pledge Agreement, the Collateral Agent is entitled to withdraw Eligible Treasury Assets in the amount of any drawn letters of credit issued pursuant to the LC Agreement from the Company's and the Trust’s pledged accounts, following notice to the Company, in the event the Company has failed to reimburse such drawn amounts and the LC Issuers have the right to instruct the Collateral Agent to enforce the pledge over the Eligible Treasury Assets upon the occurrence of any event of default under the LC Agreement. Non-recourse Debt The following are descriptions of certain indebtedness of NRG's subsidiaries. All of NRG's non-recourse debt is secured by the assets in the subsidiaries as further described below. 135 Acquired Vivint Smart Home Debt On March 10, 2023, in connection with the Vivint Smart Home acquisition, Vivint Smart Home's indirect wholly owned subsidiary, APX Group, Inc. ("APX"), retained its 6.750 % senior secured notes due 2027, 5.750 % senior notes due 2029, senior secured term loan credit agreement and senior secured revolving credit facility. Vivint Smart Home 2027 Senior Secured Notes Vivint Smart Home has outstanding $ 600 million aggregate principal amount of 6.750 % senior secured notes due 2027 (the "Vivint Smart Home 2027 Senior Secured Notes"). The Vivint Smart Home 2027 Senior Secured Notes are senior secured obligations of APX and are guaranteed by APX Group Holdings, Inc., each of APX's existing and future wholly owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications) and Vivint Smart Home. Interest on the Vivint Smart Home 2027 Senior Secured Notes is paid semi-annually in arrears on February 15 and August 15 until the maturity date of February 15, 2027. Vivint Smart Home 2029 Senior Notes Vivint Smart Home has outstanding $ 800 million aggregate principal amount of 5.750 % senior notes due 2029 (the "Vivint Smart Home 2029 Senior Notes"). The Vivint Smart Home 2029 Senior Notes are senior unsecured obligations of APX and are guaranteed by APX Group Holdings, Inc., each of APX's existing and future wholly owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications) and Vivint Smart Home. Interest on the Vivint Smart Home 2029 Senior Notes is paid semi-annually in arrears on January 15 and July 15 until the maturity date of July 15, 2029. Vivint Smart Home Senior Secured Credit Facilities The Vivint Smart Home senior secured credit agreement (the “Vivint Smart Home Credit Agreement”) provides for (i) a term loan facility in an initial aggregate principal amount of $ 1.4 billion (the “Vivint Smart Home Term Loan Facility”, and the loans thereunder, the “Vivint Smart Home Term Loans”) and (ii) a revolving credit facility in an initial aggregate principal amount of $ 370 million (the “Vivint Smart Home Revolving Credit Facility,” and the loans thereunder, the “Vivint Smart Home Revolving Loans”). All of APX’s obligations under the Vivint Smart Home Credit Agreement are guaranteed by APX Group Holdings, Inc. and each of APX’s existing and future wholly-owned U.S. restricted subsidiaries (subject to customary exclusions and qualifications). The obligations under the Vivint Smart Home Credit Agreement are secured by a first priority (subject to certain customary permitted liens) perfected security interest in (i) substantially all of the present and future tangible and intangible assets of APX, and the guarantors, including without limitation equipment, subscriber contracts and communication paths, intellectual property, general intangibles, investment property, material intercompany notes and proceeds of the foregoing, subject to permitted liens and other customary exceptions, (ii) substantially all personal property of APX and the guarantors consisting of accounts receivable arising from the sale of inventory and other goods and services (including related contracts and contract rights, inventory, cash, deposit accounts, other bank accounts and securities accounts), inventory and intangible assets to the extent attached to the foregoing books and records of APX and the guarantors, and the proceeds thereof, subject to permitted liens and other customary exceptions, in each case held by APX and the guarantors and (iii) a pledge of all of the capital stock of APX, each of its subsidiary guarantors and each restricted subsidiary of APX and its subsidiary guarantors (subject to customary exclusions and qualifications), in each case other than certain excluded assets and subject to the limitations and exclusions provided in the applicable collateral documents. The Vivint Smart Home Credit Agreement contains customary covenants, which, among other things, require APX to maintain a maximum first lien net leverage ratio when amounts outstanding under the Vivint Smart Home Revolving Facility exceed a certain threshold and restrict, subject to certain exceptions, APX and its restricted subsidiaries’ ability to: • incur or guarantee additional debt or issue disqualified stock or preferred stock; • pay dividends and make other distributions on, or redeem or repurchase, capital stock; • make certain investments; • incur certain liens; • enter into transactions with affiliates; • merge or consolidate; • materially change the nature of their business; • enter into agreements that restrict the ability of restricted subsidiaries to make dividends or other payments to APX or grant liens on their assets; • designate restricted subsidiaries as unrestricted subsidiaries; 136 • amend, prepay, redeem or purchase certain material contractually subordinated debt; and • transfer or sell certain assets. On June 9, 2023, Vivint Smart Home entered into an amendment to the Vivint Smart Home Credit Agreement which transitioned the benchmark rate applicable to the Vivint Smart Home Term Loans and the Vivint Smart Home Revolving Loans from LIBOR to SOFR. As of December 31, 2023, the aggregate outstanding principal amount of the Vivint Term Loans was $ 1.3 billion. As of December 31, 2023, Vivint Smart Home had no outstanding borrowings under the Vivint Smart Home Revolving Credit Facility. Vivint Smart Home Notes Early Redemption 2027 Senior Secured Notes APX may redeem some or all of the 2027 Senior Secured Notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage February 15, 2024 to February 14, 2025 101.688 % February 15, 2025 and thereafter 100.000 % 2029 Senior Notes At any time prior to July 15, 2024 and from time to time, APX may redeem the notes in whole or in part, at a redemption price equal to 100 % of the principal amount of the notes redeemed, plus accrued and unpaid interest to the redemption date, plus a premium. The premium is the greater of: (i) 1 % of the principal amount of the note; and (ii) the excess , if any, of (a) the present value at such redemption date of (i) the redemption price of such note at July 15, 2024, plus (ii) interest payments due on the note through July 15, 2024 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 0.50 % over the then outstanding principal amount of such note. In addition, on or after July 15, 2024, APX may redeem some or all of the notes at redemption prices expressed as percentages of principal amount as set forth in the following table, plus accrued and unpaid interest on the notes redeemed to the first applicable redemption date: Redemption Period Redemption Percentage July 15, 2024 to July 14, 2025 102.875 % July 15, 2025 to July 14, 2026 101.438 % July 15, 2026 and thereafter 100.100 % Note 14 — Asset Retirement Obligations The Company's AROs are primarily related to the environmental obligations for mine reclamation, ash disposal, site closures, fuel storage facilities and future dismantlement of equipment on leased property. In addition, the Company has also identified conditional AROs for asbestos removal and disposal, which are specific to certain power generation operations. Following the sale of the Company's 44 % equity interest in STP on November 1, 2023, the Company no longer has asset retirement obligations related to nuclear decommissioning. Prior to the sale, accretion for the nuclear decommissioning ARO and amortization of the related ARO asset were recorded to the Nuclear Decommissioning Trust Liability and were not included in net income, consistent with regulatory treatment per ASC 980, Regulated Operations . 137 The following table represents the balance of ARO obligations as of December 31, 2023 and 2022, along with the activity related to the Company's ARO obligations for the year ended December 31, 2023: (In millions) Nuclear Decommission Other (a) Total Balance as of December 31, 2022 $ 340 $ 418 $ 758 Revisions in estimates for current obligations ( 13 ) 3 ( 10 ) Additions — 13 13 Spending for current obligations — ( 42 ) ( 42 ) Accretion 16 23 39 Dispositions ( 343 ) ( 8 ) ( 351 ) Balance as of December 31, 2023 $ — $ 407 $ 407 (a) Total accretion expense related to asset retirement obligations included in the consolidated statement of cash flows includes accretion and revisions in estimates for asset retirement liabilities on non-operating plants Note 15 — Benefit Plans and Other Postretirement Benefits NRG sponsors and operates defined benefit pension and other postretirement plans. NRG pension benefits are available to eligible non-union and union employees through various defined benefit pension plans. These benefits are based on pay, service history and age at retirement. Most pension benefits are provided through tax-qualified plans. NRG also provides postretirement health and welfare benefits for certain groups of employees. Cost sharing provisions vary by the terms of any applicable collective bargaining agreements. NRG maintains three separate qualified pension plans, the NRG Pension Plan for Bargained Employees, the NRG Pension Plan and the Pension Plan for Employees of Direct Energy Marketing Limited ("DEML"). Participation in the NRG Pension Plan for Bargained Employees depends upon whether an employee is covered by a bargaining agreement. The NRG Pension plan was frozen for non-union employees on December 31, 2018. The Pension Plan for Employees of DEML is closed to new participants. NRG expects to contribute $ 43 million to the Company's pension plans in 2024, of which $ 23 million relates to the GenOn plan. NRG Defined Benefit Plans The annual net periodic benefit cost/(credit) related to NRG's pension and other postretirement benefit plans include the following components: Year Ended December 31, Pension Benefits (In millions) 2023 2022 2021 Service cost benefits earned $ 5 $ 7 $ 9 Interest cost on benefit obligation 50 41 27 Expected return on plan assets ( 39 ) ( 47 ) ( 66 ) Amortization of unrecognized net loss 6 3 1 Curtailment and special termination benefits (income)/expense ( 1 ) 14 2 Net periodic benefit cost/(credit) $ 21 $ 18 $ ( 27 ) Year Ended December 31, Other Postretirement Benefits (In millions) 2023 2022 2021 Interest cost on benefit obligation $ 4 $ 2 $ 2 Amortization of unrecognized prior service cost ( 8 ) ( 8 ) ( 10 ) Amortization of unrecognized net loss 1 2 1 Curtailment expense — — 1 Net periodic benefit credit $ ( 3 ) $ ( 4 ) $ ( 6 ) 138 A comparison of the pension benefit obligation, other postretirement benefit obligations and related plan assets for NRG's plans on a combined basis is as follows: As of December 31, Pension Benefits Other Postretirement Benefits (In millions) 2023 2022 2023 2022 Benefit obligation at January 1 $ 1,036 $ 1,452 $ 84 $ 105 Service cost 5 7 — — Interest cost 50 41 4 2 Actuarial loss/(gain) 22 ( 289 ) ( 5 ) ( 11 ) Employee and retiree contributions — — 4 3 Curtailment and special termination benefit loss ( 2 ) — ( 1 ) — Benefit payments ( 89 ) ( 171 ) ( 11 ) ( 15 ) Foreign exchange translation 1 ( 4 ) — — Benefit obligation at December 31 1,023 1,036 75 84 Fair value of plan assets at January 1 844 1,336 — — Actual return on plan assets 93 ( 317 ) — — Employee and retiree contributions — — 4 3 Employer contributions 2 — 7 12 Benefit payments ( 89 ) ( 171 ) ( 11 ) ( 15 ) Foreign exchange translation 1 ( 4 ) — — Fair value of plan assets at December 31 851 844 — — Funded status at December 31 — excess of obligation over assets $ ( 172 ) $ ( 192 ) $ ( 75 ) $ ( 84 ) During the year ended December 31, 2023, the actuarial loss of $ 22 million on pension benefits was primarily driven by decreasing discount rates. During the year ended December 31, 2022, the actuarial gain of $ 289 million on pension benefits was primarily driven by increasing discount rates. Amounts recognized in NRG's balance sheets were as follows: As of December 31, Pension Benefits Other Postretirement Benefits (In millions) 2023 2022 2023 2022 Other current liabilities $ — $ — $ 5 $ 7 Other non-current liabilities 172 192 70 77 Amounts recognized in NRG's accumulated OCI that have not yet been recognized as components of net periodic benefit cost were as follows: As of December 31, Pension Benefits Other Postretirement Benefits (In millions) 2023 2022 2023 2022 Net loss/(gain) $ 73 $ 110 $ ( 14 ) $ ( 7 ) Prior service cost/(credit) — 1 ( 4 ) ( 12 ) Total accumulated OCI $ 73 $ 111 $ ( 18 ) $ ( 19 ) 139 Other changes in plan assets and benefit obligations recognized in OCI were as follows: Year Ended December 31, Pension Benefits Other Postretirement Benefits (In millions) 2023 2022 2023 2022 Net actuarial (gain)/loss $ ( 31 ) $ 74 $ ( 5 ) $ ( 11 ) Amortization of net actuarial loss ( 6 ) ( 3 ) ( 1 ) ( 2 ) Amortization of prior service cost — — 8 8 Effect of settlement/curtailment ( 1 ) ( 14 ) ( 1 ) — Total recognized in OCI $ ( 38 ) $ 57 $ 1 $ ( 5 ) Net periodic benefit cost/(credit) 21 18 ( 3 ) ( 4 ) Net recognized in net periodic pension (credit)/cost and OCI $ ( 17 ) $ 75 $ ( 2 ) $ ( 9 ) The following table presents the balances of significant components of NRG's pension plan: As of December 31, Pension Benefits (In millions) 2023 2022 Projected benefit obligation $ 1,023 $ 1,036 Accumulated benefit obligation 1,015 1,022 Fair value of plan assets 851 844 NRG's market-related value of its plan assets is the fair value of the assets. The fair values of the Company's pension plan assets by asset category and their level within the fair value hierarchy are as follows: Fair Value Measurements as of December 31, 2023 (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Total Common/collective trust investment — U.S. equity $ — $ 156 $ 156 Common/collective trust investment — non-U.S. equity — 58 58 Common/collective trust investment — non-core assets — 81 81 Common/collective trust investment — fixed income — 188 188 Short-term investment fund 19 — 19 Subtotal fair value $ 19 $ 483 $ 502 Measured at net asset value practical expedient: Common/collective trust investment — non-U.S. equity 32 Common/collective trust investment — fixed income 243 Common/collective trust investment — non-core assets 47 Partnerships/joint ventures 27 Total fair value $ 851 140 Fair Value Measurements as of December 31, 2022 (In millions) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Observable Inputs (Level 2) Total Common/collective trust investment — U.S. equity $ — $ 155 $ 155 Common/collective trust investment — non-U.S. equity — 65 65 Common/collective trust investment — non-core assets — 90 90 Common/collective trust investment — fixed income — 181 181 Short-term investment fund 22 — 22 Subtotal fair value $ 22 $ 491 $ 513 Measured at net asset value practical expedient: Common/collective trust investment — non-U.S. equity 33 Common/collective trust investment — fixed income 220 Common/collective trust investment — non-core assets 55 Partnerships/joint ventures 23 Total fair value $ 844 In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement in its entirety. The fair value of the common/collective trust investments is valued at fair value which is equal to the sum of the market value of all of the fund's underlying investments. Certain common/collective trust investments have readily determinable fair value as they publish daily net asset value, or NAV, per share and are categorized as Level 2. Certain other common/collective trust investments and partnerships/joint ventures use NAV per share, or its equivalent, as a practical expedient for valuation, and thus have been removed from the fair value hierarchy table. The following table presents the significant assumptions used to calculate NRG's benefit obligations: As of December 31, Pension Benefits Other Postretirement Benefits Weighted-Average Assumptions 2023 2022 2023 2022 Discount rate 4.97 % 5.18 % 4.96 % 5.19 % Interest crediting rate 5.67 % 5.21 % 4.66 % 4.00 % Rate of compensation increase 3.06 % 3.06 % — — Health care trend rate — — 7.7 % grading to 4.5 % in 2033 7 % grading to 4.4 % in 2031 The following table presents the significant assumptions used to calculate NRG's benefit expense: As of December 31, Pension Benefits Other Postretirement Benefits Weighted-Average Assumptions 2023 2022 2021 2023 2022 2021 Discount rate 5.18 % 2.89 %/ 4.71 %/ 5.41 % 2.55 % 5.19 % 2.82 % 2.81 % Interest crediting rate 5.21 % 3.07 % 3.13 % 4.00 % 1.94 % 1.62 % Expected return on plan assets 5.55 % 4.99 % 5.62 % — — — Rate of compensation increase 3.06 % 3.06 % 3.06 % — — — Health care trend rate — — — 7.2 % grading to 4.5 % in 2028 6.9 % grading to 4.4 % in 2028 7.0 % grading to 4.4 % in 2028 141 NRG uses December 31 of each respective year as the measurement date for the Company's pension and other postretirement benefit plans. The Company sets the discount rate assumptions on an annual basis for each of NRG's defined benefit retirement plans as of December 31. The discount rate assumptions represent the current rate at which the associated liabilities could be effectively settled at December 31. The Company utilizes the Aon AA Above Median, or AA-AM, yield curve and the AON Canada yield curve to select the appropriate discount rate assumption for its retirement plans. The AA-AM yield curve is a hypothetical AA yield curve represented by a series of annualized individual spot discount rates from 6 months to 99 years. Under the AA-AM yield curve, each bond issue used to build this yield curve must be non-callable, and have an average rating of AA when averaging available Moody's Investor Services, Standard & Poor's and Fitch ratings. The AON Canada yield curve is based on high quality corporate bonds. Under the AON Canada yield curve, expected plan cash flows were discounted using the yield curve, and then a single rate is determined which produces an equivalent present value. NRG employs a total return investment approach, whereby a mix of equities and fixed income investments are used to maximize the long-term return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and corporate financial condition. The Investment Committee reviews the asset mix periodically and as the plan assets increase in future years, the Investment Committee may examine other asset classes such as real estate or private equity. NRG employs a building block approach to determining the long-term rate of return assumption for plan assets, with proper consideration given to diversification and rebalancing. Historical markets are studied and long-term historical relationships between equities and fixed income are preserved, consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. Peer data and historical returns are reviewed to check for reasonableness and appropriateness. The target allocations of NRG's pension plan assets were as follows for the year ended December 31, 2023: U.S. equity 19 % Non-U.S. equity 12 % Non-core assets 17 % Fixed Income 52 % Plan assets are currently invested in a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across U.S., non-U.S., global, and emerging market equities, as well as among growth, value, small and large capitalization stocks. Investment risk and performance are monitored on an ongoing basis through quarterly portfolio reviews of each asset fund class to a related performance benchmark, if applicable, and annual pension liability measurements. Performance benchmarks are composed of the following indices: Asset Class Index U.S. equities Dow Jones U.S. Total Stock Market Index Non-U.S. equities MSCI All Country World Index Non-core assets (a) Various (per underlying asset class) Fixed income securities Barclays Short, Intermediate and Long Credits/Barclays Strips 20+ Index and FTSE Canada Universe Bond Index (a) Non-Core Assets are defined as diversifying asset classes approved by the Investment Committee that are intended to enhance returns and/or reduce volatility of the U.S. and non-U.S. equities. Asset classes considered Non-Core include, but may not be limited to: Emerging Market Equity, Emerging Market Debt, Non-US Developed Market Small Cap, High Yield Fixed Income, Real Estate, Bank Loans, Global Infrastructure and other Alternatives 142 NRG's expected future benefit payments for each of the next five years, and in the aggregate for the five years thereafter, are as follows: Pension Other Postretirement Benefit (In millions) Benefit Payments Benefit Payments Medicare Prescription Drug Reimbursements 2024 $ 82 $ 5 $ — 2025 81 5 — 2026 79 5 — 2027 78 5 — 2028 76 5 — 2029-2033 360 27 2 STP Defined Benefit Plans STPNOC, which operates and maintains STP, provides its employees a defined benefit pension plan, as well as postretirement health and welfare benefits. Although NRG did not sponsor the STP plan, it reimbursed STPNOC for 44 % of the contributions made towards its retirement plan obligations. For the years ended December 31, 2023 and December 31, 2022, NRG reimbursed STPNOC $ 3 million and $ 18 million, respectively, for its contribution to the plans. On November 1, 2023, the Company closed on the sale of its 44 % equity interest in STP. Following the sale, the Company is no longer responsible for further reimbursements to the STP pension plan. The Company recognized the following in its statement of financial position, statement of operations and accumulated OCI related to its former 44 % interest in STP: As of December 31, Pension Benefits Other Postretirement Benefits (In millions) 2022 2022 Funded status — STPNOC benefit plans $ ( 7 ) $ ( 13 ) Net periodic benefit cost/(credit) 2 ( 4 ) Other changes in plan assets and benefit obligations recognized in other comprehensive income ( 27 ) 1 Defined Contribution Plans NRG's employees are also eligible to participate in defined contribution 401(k) plans. The Company's costs related to these plans were as follows: Year Ended December 31, (In millions) 2023 2022 2021 Cost recognized for defined contribution plans $ 61 $ 37 $ 35 The Company's costs, which are primarily related to employer matching of a portion of employee contributions to defined contribution plans, increased during 2023 primarily due to an increase in retirement saving plan match and the Vivint acquisition. 143 Note 16 — Capital Structure For the period from December 31, 2020 to December 31, 2023, 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 shares issued and outstanding for each period presented: Preferred Shares Common Shares Issued and Outstanding Issued Treasury Outstanding Balance as of December 31, 2020 — 423,057,848 ( 178,825,915 ) 244,231,933 Shares issued under ESPP — — 117,392 117,392 Shares issued under LTIPs — 489,326 — 489,326 Share repurchases — — ( 1,084,752 ) ( 1,084,752 ) Balance as of December 31, 2021 — 423,547,174 ( 179,793,275 ) 243,753,899 Shares issued under ESPP — — 142,825 142,825 Shares issued under LTIPs — 349,827 — 349,827 Share repurchases — — ( 14,685,521 ) ( 14,685,521 ) Balance as of December 31, 2022 — 423,897,001 ( 194,335,971 ) 229,561,030 Issuance of Series A Preferred Stock 650,000 — — — Shares issued under ESPP — — 191,249 191,249 Shares issued under LTIPs — 1,109,611 — 1,109,611 Share repurchases — — ( 22,730,940 ) ( 22,730,940 ) Retirement of treasury stock — ( 157,676,142 ) 157,676,142 — Balance as of December 31, 2023 650,000 267,330,470 ( 59,199,520 ) 208,130,950 Shares issued under LTIPs — 660,267 — 660,267 Share repurchases — — ( 770,205 ) ( 770,205 ) Retirement of treasury stock — ( 770,205 ) 770,205 — Balance as of February 1, 2024 650,000 267,220,532 ( 59,199,520 ) 208,021,012 Common Stock As of December 31, 2023, NRG had 27,362,083 shares of common stock reserved for the maximum number of shares potentially issuable based on the conversion and redemption features of the long-term incentive plans. Common Stock Dividends The Company declared and paid $ 0.3775 , $ 0.350 and $ 0.325 quarterly dividend per common share, or $ 1.51 , $ 1.40 and $ 1.30 per share on an annualized basis for 2023, 2022 and 2021 respectively. In 2021, 2022 and 2023, NRG increased the annual dividend on its common stock to $ 1.30 , $ 1.40 and $ 1.51 per share, respectively, representing an 8 % increase each year. The long-term capital allocation policy targets an annual dividend growth rate of 7 %- 9 % per share in subsequent years. Beginning in the first quarter of 2024, NRG will increase the annual dividend by 8 % to $ 1.63 per share. The Company's common stock dividends are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. On January 19, 2024, NRG declared a quarterly dividend on the Company's common stock of $ 0.4075 per share, or $ 1.63 per share on an annualized basis, payable on February 15, 2024, to stockholders of record as of February 1, 2024. 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. On April 27, 2023, NRG stockholders approved the adoption of the Amended and Restated Employee Stock Purchase Plan, effective April 1, 2023, which included a reduction in the price at which eligible employees may purchase shares of NRG common stock from 95 % to 90 % of the fair market value of the shares on the applicable date. NRG stockholders also approved an increase of 4,400,000 shares available for the issuance under the ESPP. As of December 31, 2023, there remained 6,702,125 shares of treasury stock reserved for issuance under the ESPP. 144 Share Repurchases Share repurchases in 2021 and 2022 were made under the December 6, 2021 $ 1 billion authorization, as part of NRG’s capital allocation policy. On June 22, 2023, following the acquisition of Vivint Smart Home, NRG revised its long-term capital allocation policy to target allocating approximately 80 % of cash available for allocation, after debt reduction, to be returned to shareholders. As part of the revised capital allocation framework, the Company announced an increase to its share repurchase authorization to $ 2.7 billion, to be executed through 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. Under the ASR agreements, the Company paid a total of $ 950 million and will receive shares of NRG's common stock on specified settlement dates. The total number of shares purchased pursuant to the ASR agreements will generally be based on the volume-weighted average prices of NRG's common stock during the term of each ASR agreement, less a discount. The Company received initial shares of 4,494,224 on November 8, 2023 and an additional 13,181,918 shares on December 27, 2023, which were recorded in treasury stock at fair value based on the volume-weighted average 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. On January 30, 2024, an additional 770,205 shares were delivered. The ASR period will end in March of 2024 and additional shares may be delivered upon final settlement of the remaining agreements. The total number of shares delivered and the average price paid for all of the shares delivered under the ASR agreements will be determined at the end of the ASR period. During the year ended December 31, 2023, the Company completed $ 1.2 billion of share repurchases under the $ 2.7 billion authorization, including $ 950 million through the ASR and $ 200 million through open market repurchases at an average price of $ 39.56 . As of February 1, 2024, $ 1.5 billion is remaining under the $ 2.7 billion authorization. The following table summarizes the share repurchases made from 2021 through February 1, 2024: Total number of shares purchased Average price paid per share Amounts paid for shares purchased (in millions) 2021 Repurchases: Open market repurchases (a) 1,084,752 $ 40.85 $ 44 2022 Repurchases: Open market repurchases 14,685,521 40.48 595 2023 Repurchases: Open market repurchases 5,054,798 200 Repurchases made under the accelerated share repurchase agreements (b) 17,676,142 950 Total Share Repurchases during 2023 22,730,940 (e) $ 1,150 (c) Repurchases made subsequent to December 31, 2023 under the accelerated share repurchase agreements (d) 770,205 — Total Share Repurchases January 1, 2023 through February 1, 2024 23,501,145 (e) $ 1,150 (a) Includes $ 5 million accrued as of December 31, 2021 (b) Initial and interim shares delivered under the November 6, 2023 accelerated share repurchase agreements (c) Excludes $ 10 million accrued for excise tax owed as of December 31, 2023 (d) Additional shares delivered under the November 6, 2023 accelerated share repurchase agreements (e) The total number of shares delivered and the average price per share under the ASR agreements will be determined at the end of the ASR period Retirement of Treasury Stock In the fourth quarter of 2023, the Company retired 157,676,142 shares of treasury stock. These retired shares are now included in NRG's pool of authorized but unissued shares. The retired stock had a carrying value of approximately $ 5.0 billion. 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. Preferred Stock Series A Preferred Stock On March 9, 2023 ("Series A Issuance Date"), the Company issued 650,000 shares of 10.25 % Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock. The net proceeds of $ 635 million, net of issuance costs, were used to partially fund the Vivint Smart Home acquisition. The Series A Preferred Stock is not convertible into or exchangeable for any other securities or property and has limited voting rights. The Series A Preferred Stock may be redeemed, in whole or in part, on one or more occasions, at the option of the 145 Company at any time after March 15, 2028 ("Series A First Reset Date") and in certain other circumstances prior to the Series A First Reset Date. The Series A Preferred Stock has a liquidation preference of $ 1,000 per share, plus accumulated but unpaid dividends. Series A Preferred Stock Dividends The annual dividend rate on each share of Series A Preferred Stock is 10.25 % from the Series A Issuance Date to, but excluding the Series A First Reset Date. On and after the Series A First Reset Date, the dividend rate on each share of Series A Preferred Stock shall equal the five-year U.S. Treasury rate as of the most recent reset dividend determination date (subject to a floor of 1.00 %), plus a spread of 5.92 % per annum. Cumulative cash dividends on the Series A Preferred Stock are payable semiannually, in arrears, on each March 15 and September 15, when, as and if declared by the Board of Directors. In September 2023, the Company declared and paid a semi-annual dividend of $ 52.96 per share on its outstanding Series A Preferred Stock, totaling $ 34 million. Note 17 — Investments Accounted for by the Equity Method and Variable Interest Entities 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. The following table summarizes NRG's equity method investments as of December 31, 2023: (In millions, except percentages) Name: Economic Interest Investment Balance Gladstone 37.5 % $ 34 Midway-Sunset Cogeneration Company 50.0 % 8 Total equity investments in affiliates $ 42 The following table summarizes the undistributed earnings from NRG's equity method investments as of December 31, 2023: As of December 31, (In millions) 2023 2022 Undistributed earnings $ — $ 42 Other Equity Investments Gladstone — Through a joint venture, NRG owns a 37.5 % interest in Gladstone, a 1,613 MW coal-fueled power generation facility in Queensland, Australia. The power generation facility is managed by the joint venture participants and the facility is operated by NRG. Operating expenses incurred in connection with the operation of the facility are funded by each of the participants in proportion to their ownership interests. Coal is sourced from local mines in Queensland. NRG and the joint venture participants receive their respective share of revenues directly from the off takers in proportion to the ownership interests in the joint venture. Power generated by the facility is primarily sold to an adjacent aluminum smelter, with excess power sold to the Queensland Government-owned utility under long-term supply contracts. NRG's investment in Gladstone was $ 34 million as of December 31, 2023. Entities that are Consolidated The Company has a controlling financial interest that has been identified as a VIE under ASC 810 in NRG Receivables LLC, which has entered into financing transactions related to the Receivables Facility as further described in Note 13, Long-term Debt and Finance Leases. The summarized financial information for the Company's consolidated VIEs consisted of the following: (In millions) December 31, 2023 December 31, 2022 Accounts receivable and Other current assets $ 1,541 $ 2,108 Current liabilities 153 152 Net assets $ 1,388 $ 1,956 146 Note 18 — (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 year are weighted for the portion of the year 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. Dilutive effect for equity compensation and other equity instruments — The relative performance stock units, non-vested restricted stock units, market stock units and non-qualified stock options 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 (loss)/income per share under the treasury stock method for periods when there is net income. The Convertible Senior Notes are convertible, under certain circumstances, into cash or combination of cash and Company’s common stock. Prior to adoption of ASU 2020-06, there was no dilutive effect for the Convertible Senior Notes due to the Company’s expectation to settle the liability in cash. Upon adoption of ASU 2020-06, on January 1, 2022, the Company is including the potential share settlements, if any, in the denominator for purposes of computing diluted (loss)/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. For the year ended December 31, 2023, there was no dilutive effect for the Convertible Senior Note since there was a net loss. For the year ended December 31, 2022, there was no dilutive effect for the Convertible Senior Notes since there were no potential share settlements for the period. The reconciliation of NRG's basic and diluted (loss)/income per share is shown in the following table: Year Ended December 31, (In millions, except per share amounts) 2023 2022 2021 Basic and diluted (loss)/income per share: Net (loss)/income $ ( 202 ) $ 1,221 $ 2,187 Less: Cumulative dividends attributable to Series A Preferred Stock 54 — — (Loss)/Income Available to Common Stockholders $ ( 256 ) $ 1,221 $ 2,187 Weighted average number of common shares outstanding - basic and diluted 228 236 245 (Loss)/Income per weighted average common share — basic and diluted $ ( 1.12 ) $ 5.17 $ 8.93 As of December 31, 2023, the Company had 6 million of outstanding equity instruments that are anti-dilutive and were not included in the computation of the Company's diluted loss per share. As of December 31, 2022 and 2021, the Company had an insignificant number of outstanding equity instruments that are anti-dilutive and were not included in the computation of the Company’s diluted income per share. Note 19 — 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. Vivint Smart Home operations are reported within the Vivint Smart Home segment. NRG's chief operating decision maker, its interim chief executive officer, evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, free cash flow and allocation of capital, as well as net income/(loss). 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 . The Company had no customer that comprised more than 10% of the Company's consolidated revenues during the years ended December 31, 2023, 2022 and 2021. Intersegment sales are accounted for at market. 147 For the Year Ended December 31, 2023 (In millions) Texas East West/Services/Other Vivint Smart Home (a) Corporate (b) Eliminations Total Revenue (b) $ 10,476 $ 12,547 $ 4,281 $ 1,549 $ — $ ( 30 ) $ 28,823 Operating expenses 8,407 14,412 5,025 917 133 ( 30 ) 28,864 Depreciation and amortization 294 116 95 586 36 — 1,127 Impairment losses 2 4 20 — — — 26 Total operating cost and expenses 8,703 14,532 5,140 1,503 169 ( 30 ) 30,017 Gain on sale of assets 1,319 259 — — — — 1,578 Operating income/(loss) 3,092 ( 1,726 ) ( 859 ) 46 ( 169 ) — 384 Equity in earnings of unconsolidated affiliates — — 16 — — — 16 Impairment losses on investments — — ( 102 ) — — — ( 102 ) Other income, net 2 11 6 ( 12 ) 56 ( 16 ) 47 Gain on debt extinguishment — — — — 109 — 109 Interest expense ( 3 ) ( 3 ) ( 31 ) ( 177 ) ( 469 ) 16 ( 667 ) Income/(loss) before income taxes 3,091 ( 1,718 ) ( 970 ) ( 143 ) ( 473 ) — ( 213 ) Income tax (benefit)/expense (c) — — ( 111 ) ( 32 ) 132 — ( 11 ) Net income/(loss) $ 3,091 $ ( 1,718 ) $ ( 859 ) $ ( 111 ) $ ( 605 ) $ — $ ( 202 ) Balance sheet Equity investments in affiliates $ — $ — $ 42 $ — $ — $ — $ 42 Capital expenditures 495 5 27 18 53 — 598 Goodwill 643 721 221 3,494 — — 5,079 Total assets $ 8,236 $ 13,712 $ 3,626 $ 7,043 $ 19,919 $ ( 26,498 ) $ 26,038 (a) Includes results of operations following the acquisition date of March 10, 2023 (b) Inter-segment sales and inter-segment net derivative gains and losses included in revenues $ 5 $ 9 $ 16 $ — $ — $ — $ 30 (c) Consolidated domestic federal and state income taxes are recorded to the Corporate segment, except for Vivint Smart Home which is recorded directly to the Vivint Smart Home segment. West/Services/Other amounts represent foreign income taxes 148 For the Year Ended December 31, 2022 (In millions) Texas East West/Services/Other Corporate (a) Eliminations Total Revenue (a) $ 10,057 $ 16,763 $ 4,706 $ — $ 17 $ 31,543 Operating expenses 8,495 16,031 4,108 86 17 28,737 Depreciation and amortization 310 208 85 31 — 634 Impairment losses — 206 — — — 206 Total operating cost and expenses 8,805 16,445 4,193 117 17 29,577 Gain/(loss) on sale of assets 10 — 45 ( 3 ) — 52 Operating income/(loss) 1,262 318 558 ( 120 ) — 2,018 Equity in (losses)/earnings of unconsolidated affiliates ( 2 ) — 8 — — 6 Other income, net 5 10 3 54 ( 16 ) 56 Interest expense — ( 1 ) ( 32 ) ( 400 ) 16 ( 417 ) Income/(loss) before income taxes 1,265 327 537 ( 466 ) — 1,663 Income tax expense (b) — 1 57 384 — 442 Net income/(loss) $ 1,265 $ 326 $ 480 $ ( 850 ) $ — $ 1,221 Balance sheet Equity investments in affiliates $ — $ — $ 133 $ — $ — $ 133 Capital expenditures 273 7 37 50 — 367 Goodwill 710 723 217 — — 1,650 Total assets $ 11,475 $ 19,526 $ 8,139 $ 35,780 $ ( 45,774 ) $ 29,146 (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues $ 4 $ ( 26 ) $ 5 $ — $ — $ ( 17 ) (b) Consolidated domestic federal and state income taxes are recorded to the Corporate segment. West/Services/Other amounts represent foreign income taxes For the Year Ended December 31, 2021 (In millions) Texas East West/Services/Other Corporate (a) Eliminations Total Revenue (a) $ 10,295 $ 13,025 $ 3,659 $ — $ 10 $ 26,989 Operating expenses 8,692 10,256 3,467 141 10 22,566 Depreciation and amortization 336 333 88 28 — 785 Impairment losses — 535 9 — — 544 Total operating cost and expenses 9,028 11,124 3,564 169 10 23,895 Gain on sale of assets 19 — 17 211 — 247 Operating income 1,286 1,901 112 42 — 3,341 Equity in (losses)/earnings of unconsolidated affiliates ( 3 ) — 20 — — 17 Other income, net 8 7 3 59 ( 14 ) 63 Loss on debt extinguishment — — — ( 77 ) — ( 77 ) Interest expense ( 1 ) ( 1 ) ( 28 ) ( 469 ) 14 ( 485 ) Income/(loss) before income taxes 1,290 1,907 107 ( 445 ) — 2,859 Income tax expense (b) — — 19 653 — 672 Net income/(loss) $ 1,290 $ 1,907 $ 88 $ ( 1,098 ) $ — $ 2,187 (a) Inter-segment sales and inter-segment net derivative gains and losses included in revenues $ 5 $ ( 18 ) $ 3 $ — $ — $ ( 10 ) (b) Consolidated domestic federal and state income taxes are recorded to the Corporate segment. West/Services/Other amounts represent foreign income taxes 149 Note 20 — Income Taxes The income tax provision consisted of the following amounts: Year Ended December 31, (In millions, except effective income tax rate) 2023 2022 2021 Current U.S. Federal $ 26 $ 3 $ — State 84 65 48 Foreign ( 12 ) 3 3 Total — current 98 71 51 Deferred U.S. Federal 50 258 569 State ( 61 ) 59 36 Foreign ( 98 ) 54 16 Total — deferred ( 109 ) 371 621 Total income tax (benefit)/expense $ ( 11 ) $ 442 $ 672 Effective income tax rate 5.2 % 26.6 % 23.5 % The IRA enacted on August 16, 2022, introduced new provisions including a 15% corporate alternative minimum tax and a 1% excise tax on net share repurchases with both taxes effective beginning in fiscal year 2023 for NRG. There is no impact on the Company's provision for income taxes from the CAMT for the year ended December 31, 2023. The Company will reevaluate the impact of the corporate alternative minimum tax upon the potential release of guidance by the U.S. Treasury and the IRS regarding the treatment of unrealized gains and losses on derivative instruments. The following represented the domestic and foreign components of income before income taxes: Year Ended December 31, (In millions) 2023 2022 2021 U.S. $ 261 $ 1,436 $ 2,759 Foreign ( 474 ) 227 100 Total $ ( 213 ) $ 1,663 $ 2,859 Reconciliations of the U.S. federal statutory tax rate to NRG's effective tax rate were as follows: Year Ended December 31, (In millions, except effective income tax rate) 2023 2022 2021 (Loss)/Income before income taxes $ ( 213 ) $ 1,663 $ 2,859 Tax at federal statutory tax rate ( 45 ) 349 600 State taxes ( 22 ) 69 111 Foreign rate differential ( 10 ) 7 ( 3 ) Changes in state valuation allowances 42 ( 3 ) ( 29 ) Permanent differences 31 17 8 Recognition of uncertain tax benefits 12 8 ( 10 ) Deferred impact of state tax rate changes 3 14 ( 10 ) Foreign tax refunds ( 17 ) — — Return to provision adjustments ( 5 ) — 5 Carbon capture tax credits — ( 19 ) — Income tax (benefit)/expense $ ( 11 ) $ 442 $ 672 Effective income tax rate 5.2 % 26.6 % 23.5 % For the year ended December 31, 2023, NRG's effective income tax rate was lower than the federal statutory tax rate of 21%, primarily due to permanent differences and changes in state valuation allowances. For the year ended December 31, 2022, NRG's effective income tax rate was higher than the federal statutory tax rate of 21% primarily due to state tax expense partially offset by the recognition of carbon capture tax credits. 150 For the year ended December 31, 2021, NRG's effective income tax rate was higher than the federal statutory tax rate of 21% primarily due to state tax expense partially offset by tax benefits from the revaluation of state deferred tax assets, valuation allowance, and settlements of uncertain tax positions. The temporary differences, which gave rise to the Company's deferred tax assets and liabilities consisted of the following: As of December 31, (In millions) 2023 2022 Deferred tax assets: U.S. Federal net operating loss carryforwards $ 1,762 $ 1,717 State net operating loss carryforwards 367 315 Foreign net operating loss carryforwards 110 104 Deferred revenues 347 — Difference between book and tax basis of property 353 399 Federal and state tax credit carryforwards 317 393 Deferred compensation, accrued vacation and other reserves 141 93 Interest disallowance carryforward per §163(j) of the Tax Act 132 65 Pension and other postretirement benefits 48 62 Allowance for credit losses 35 33 Equity compensation 24 8 Federal benefit on state uncertain tax positions 13 5 Inventory obsolescence 11 10 U.S. capital loss 1 15 Other 33 22 Total deferred tax assets 3,694 3,241 Deferred tax liabilities: Intangibles amortization (excluding goodwill) 726 269 Derivatives 156 874 Capitalized contract costs 131 — Equity method investments 93 82 Goodwill 40 26 Debt discount amortization 26 — Emissions allowances 18 19 Total deferred tax liabilities 1,190 1,270 Total deferred tax assets less deferred tax liabilities 2,504 1,971 Valuation allowance ( 275 ) ( 224 ) Total net deferred tax assets, net of valuation allowance $ 2,229 $ 1,747 The following table summarizes NRG's net deferred tax position as presented in the consolidated balance sheets: As of December 31, (In millions) 2023 2022 Deferred tax asset $ 2,251 $ 1,881 Deferred tax liability ( 22 ) ( 134 ) Net deferred tax asset $ 2,229 $ 1,747 The primary drivers for the increase in the net deferred tax asset from $ 1.7 billion as of December 31, 2022 to $ 2.2 billion as of December 31, 2023 is due to unrealized mark-to-market book losses and deferred revenues, partially offset by capitalized contract costs and a step-up in basis of book intangibles associated with the acquisition of Vivint Smart Home. 151 Deferred tax assets and valuation allowance Net deferred tax balance — As of December 31, 2023 and 2022, NRG recorded a net deferred tax asset, excluding valuation allowance, of $ 2.5 billion and $ 2.0 billion, respectively. The Company believes certain state net operating losses may not be realizable under the more-likely-than-not measurement and as such, a valuation allowance was recorded as of December 31, 2023 as discussed below. NOL carryforwards — As of December 31, 2023, the Company had tax-effected cumulative U.S. NOLs consisting of carryforwards for federal and state income tax purposes of $ 1.8 billion and $ 367 million, respectively. In addition, NRG has tax-effected cumulative foreign NOL carryforwards of $ 110 million. The majority of NRG's NOL carryforwards have no expiration date. Valuation allowance — As of December 31, 2023, the Company's tax-effected valuation allowance was $ 275 million, consisting of state NOL carryforwards and foreign NOL carryforwards. The valuation allowance was recorded based on the assessment of cumulative and forecasted pre-tax book earnings and the future reversal of existing taxable temporary differences. Taxes Receivable and Payable As of December 31, 2023, NRG recorded a current federal payable of $ 20 million, a current net state payable of $ 3 million and a current net foreign receivable of $ 7 million. Uncertain tax benefits NRG has identified uncertain tax benefits with after-tax value of $ 73 million and $ 22 million as of December 31, 2023 and 2022, for which NRG has recorded a non-current tax liability of $ 76 million and $ 24 million, respectively. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense. The Company recognized $ 1 million of interest expense for the year ended December 31, 2023, $ 1 million for the year ended 2022 and an immaterial amount for the year ended 2021. As of December 31, 2023 and 2022, NRG had cumulative interest and penalties related to these uncertain tax benefits of $ 3 million and $ 2 million, respectively. Tax jurisdictions — 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 2020. With few exceptions, state and Canadian income tax examinations are no longer open for years before 2015. The following table summarizes uncertain tax benefits activity: As of December 31, (In millions) 2023 2022 Balance as of January 1 $ 22 $ 13 Increase due to current year positions 28 9 Increase due to acquired balance from Vivint Smart Home 23 — Uncertain tax benefits as of December 31 $ 73 $ 22 Note 21 — Stock-Based Compensation The Company's stock-based compensation consists of awards granted under the NRG LTIP and following the Acquisition in March 2023, the Vivint LTIP. NRG Energy, Inc. Long-Term Incentive Plan As of December 31, 2023 and 2022, a total of 25,000,000 shares of NRG common stock were authorized for issuance under the NRG LTIP. There were 7,717,139 and 8,179,771 shares of common stock remaining available for grants under the NRG LTIP as of December 31, 2023 and 2022, respectively. The NRG LTIP is subject to adjustments in the event of reorganization, recapitalization, stock split, reverse stock split, stock dividend, and a combination of shares, merger or similar change in NRG's structure or outstanding shares of common stock. As of December 31, 2023, the outstanding awards under the NRG LTIP include restricted stock units, deferred stock units and relative performance stock units. 152 Restricted Stock Units As of December 31, 2023, RSUs granted under the NRG LTIP typically have three -year graded vesting schedules beginning on the grant date. Fair value of the RSUs granted during 2023 and 2022 is derived from the closing price of NRG common stock on the grant date. The following table summarizes the Company's non-vested RSU awards and changes during the year: Units Weighted Average Grant Date Fair Value per Unit Non-vested at December 31, 2022 856,917 $ 40.25 Granted 1,031,469 35.71 Forfeited ( 284,076 ) 34.70 Vested ( 393,470 ) 39.67 Non-vested at December 31, 2023 1,210,840 37.88 The total fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 20 million, $ 10 million and $ 12 million, respectively. The weighted average grant date fair value of RSUs granted during the years ended December 31, 2023, 2022 and 2021 was $ 35.71 , $ 41.26 and $ 39.00 , respectively. Deferred Stock Units DSUs represent the right of a participant to be paid one share of NRG common stock at the end of a deferral period established under the terms of the award. DSUs granted under the NRG LTIP are fully vested at the date of issuance. Fair value of the DSUs, which is based on the closing price of NRG common stock on the date of grant, is recorded as compensation expense in the period of grant. The following table summarizes the Company's outstanding DSU awards and changes during the year: Units Weighted Average Grant Date Fair Value per Unit Outstanding at December 31, 2022 418,014 $ 27.63 Granted 79,072 34.40 Converted to Common Stock ( 53,799 ) 25.11 Outstanding at December 31, 2023 443,287 29.07 The aggregate intrinsic values for DSUs outstanding as of December 31, 2023, 2022 and 2021 were approximately $ 23 million, $ 13 million and $ 17 million, respectively. The aggregate intrinsic values for DSUs converted to common stock for the years ended December 31, 2023, 2022 and 2021 were $ 3 million, $ 1 million and $ 1 million, respectively. The weighted average grant date fair value of DSUs granted during the years ended December 31, 2023, 2022 and 2021 was $ 34.40 , $ 45.49 and $ 32.27 , respectively. Relative Performance Stock Units RPSUs entitle the recipient to stock upon vesting. The amount of the award is subject to the Company's achievement of certain performance measures over the vesting period. RPSUs are restricted grants where the quantity of shares increases and decreases alongside the Company's Total Shareholder Return ("TSR"), relative to the TSR of the Company's current proxy peer group and the total returns of select indexes, or Peer Group. For RPSU's granted in 2022 and forward, the peer group consists of the companies that comprise the Standard & Poor’s 500 Index on the first day of the performance period. Each RPSU represents the potential to receive NRG common stock after the completion of the performance period, typically three years of service from the date of grant. The number of shares of NRG common stock to be paid (if any) as of the vesting date for each RPSU will depend on the Company’s percentile rank within the Peer Group. The number of shares of common stock to be paid as of the vesting date for each RPSU is linearly interpolated for TSR performance between the following points: (i) 0 % if ranked below the 25th percentile; (ii) 25 % if ranked at the 25th percentile; (iii) 100 % if ranked at the 55th percentile (or the 65th percentile if the Company's absolute TSR is less than negative 15 %); and (iv) 200 % if ranked at the 75th percentile or above. 153 The following table summarizes the Company's non-vested RPSU awards and changes during the year: Units Weighted Average Grant-Date Fair Value per Unit Non-vested at December 31, 2022 795,335 $ 50.23 Granted 617,510 39.46 Forfeited (a) ( 737,227 ) 45.61 Vested ( 3,729 ) 50.28 Non-vested at December 31, 2023 671,889 46.27 (a) Includes January 2023 vestings that occurred at a 0 % payout as well as forfeitures due to the departure of certain officers The weighted average grant date fair value of RPSUs granted during the years ended December 31, 2023, 2022 and 2021, was $ 39.46 , $ 57.41 and $ 46.78 , respectively. The fair value of RPSUs is estimated on the date of grant using a Monte Carlo simulation model and expensed over the service period, which equals the vesting period. Significant assumptions used in the fair value model with respect to the Company's RPSUs are summarized below: 2023 2022 2021 (a) Expected volatility 41.35 % 37.54 % 34.05 % Expected term (in years) 3 3 3 Risk free rate 4.18 % 0.97 % 0.17 % (a) Assumptions pertain to the main award granted in January 2021. Additional 60,815 RPSUs were granted in September 2021 with a risk free rate of 0.42 % and expected volatility of 37.38 % The expected volatility is calculated based on NRG's historical stock price volatility data over the period commensurate with the expected term of the RPSU, which equals the vesting period. Vivint Smart Home Long-Term Incentive Plan Effective March 10, 2023, in connection with the Vivint Smart Home Acquisition, as discussed in Note 4, Acquisitions and Dispositions, NRG assumed the Vivint Smart Home, Inc. Long-Term Incentive Plan, or Vivint LTIP. In addition to the rollover awards converted as part of the Acquisition, the Vivint LTIP provides for issuances of time-based restricted stock units and performance-based restricted stock units. As of December 31, 2023, 17,500,000 shares of NRG common stock were authorized for issuance under the Vivint LTIP, and there were 12,749,736 shares of common stock remaining available for grants. Restricted Stock Units As of December 31, 2023, RSUs under the Vivint LTIP include RSUs which were granted prior to the Acquisition and were converted into awards that will vest as NRG common stock ("Rollover RSUs"). These awards typically had four-year graded vesting schedules beginning on the grant date. The fair value of the Rollover RSUs is based on the fair value of NRG common stock on the Acquisition date after applying the conversion ratio as per the Merger Agreement. The RSUs that were granted following the Acquisition date are typically subject to the same terms as the RSUs under the NRG LTIP. The following table summarizes the non-vested RSUs under the Vivint LTIP and changes during the year: Rollover RSUs RSUs granted following the Acquisition Units Weighted Average Grant Date Fair Value per Unit Units Weighted Average Grant Date Fair Value per Unit Non-vested at December 31, 2022 — $ — — $ — Rollover RSUs at the Acquisition date 4,553,998 31.63 — — Granted following the Acquisition date — — 895,827 35.24 Forfeited ( 288,776 ) 31.63 ( 110,531 ) 35.21 Vested ( 1,280,321 ) 31.63 ( 4,998 ) 35.21 Non-vested at December 31, 2023 2,984,901 31.63 780,298 35.24 The total fair value of RSUs vested during the year ended December 31, 2023 was $ 66 million. 154 Performance Stock Units As of December 31, 2023, PSUs granted under the Vivint LTIP are generally granted under the same terms as the PSUs granted under the NRG LTIP, and are valued using the same methods and assumptions. During the year ended December 31, 2023, 102,837 PSUs were granted at a weighted average grant date fair value per unit of $ 44.96 and remain outstanding as of year end. Supplemental Information The following table summarizes NRG's total compensation expense recognized for the years presented, as well as total non-vested compensation costs not yet recognized and the period over which this expense is expected to be recognized as of December 31, 2023, for each of the types of awards issued under the LTIPs. Minimum tax withholdings of $ 22 million, $ 6 million, and $ 9 million for the years ended December 31, 2023, 2022, and 2021, respectively, are reflected as a reduction to additional paid-in capital on the Company's consolidated balance sheets. Non-vested Compensation Cost (In millions, except weighted average data) Compensation Expense Unrecognized Total Cost Weighted Average Recognition Period Remaining (In years) Year Ended December 31, As of December 31, Award 2023 2022 2021 2023 2023 RSUs under NRG LTIP $ 20 $ 15 $ 9 $ 29 1.61 RSUs under Vivint LTIP 76 — — 69 1.82 PSUs under Vivint LTIP 2 — — 3 2.25 DSUs 2 2 2 — 0.00 RPSUs 3 11 9 17 1.69 PRSUs under NRG LTIP (a) 12 6 7 15 1.74 PRSUs under Vivint LTIP (a) 8 — — 14 2.29 Total $ 123 $ 34 $ 27 $ 147 Tax detriment recognized $ 2 $ 3 $ 2 (a) Phantom Restricted Stock Units, PRSUs, are liability-classified time-based awards that typically vest ratably over a three -year period. The amount to be paid upon vesting is based on NRG's closing stock price for the period Note 22 — Related Party Transactions NRG provides services to some of its related parties, who 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 service, 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: Year Ended December 31, (In millions) 2023 2022 2021 Revenues from Related Parties Included in Revenues Gladstone $ 4 $ 4 $ 4 Ivanpah (a) 78 42 39 Midway-Sunset 2 6 6 Total $ 84 $ 52 $ 49 (a) Includes fees under project management agreements with each project company 155 Note 23 — Commitments and Contingencies Commitments NRG has entered into long-term contractual arrangements related to energy products, including power purchases, gas transportation and storage, and fuel and transportation services. These contracts are not included in the consolidated balance sheet as of December 31, 2023. As of December 31, 2023, the Company's minimum commitments under such outstanding agreements are estimated as follows: Period (In millions) 2024 $ 573 2025 836 2026 540 2027 364 2028 292 Thereafter 823 Total (a) $ 3,428 (a) The year 2024 does not include an additional $ 978 million of short-term commitments The Company's actual costs may be significantly higher than these estimated minimum unconditional long-term firm commitments with remaining term in excess of one year. For the years ended December 31, 2023, 2022 and 2021, the costs of fuel and purchased energy were $ 13.4 billion, $ 19.6 billion and $ 13.4 billion, respectively. 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 December 31, 2023, all hedges under the first liens were in-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 has established an adequate accrual for the applicable legal matters, including regulatory and environmental matters as further discussed in Note 24, Regulatory Matters , and Note 25, 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 to determine the appropriate relief. Midwest Generation has been working with the Illinois EPA to address the groundwater issues since 2010. 156 Consumer Lawsuits Similar to other energy service 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 and electricity. Variable Price Cases — In the cases set forth below, referred to as the Variable Price Cases, such actions involve consumers alleging that one of the Company’s ESCOs promised that consumers would pay the same or less than they would have paid if they stayed with their default utility or previous energy supplier. The underlying claims of each case are similar and the Company continues to deny the allegations and is vigorously defending these matters. These matters were known and accrued for at the time of each acquisition. XOOM Energy Mirkin v. XOOM Energy (E.D.N.Y. Aug. 2019) is a defendant in a putative class action lawsuit pending in New York. 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 plans to challenge Mirkin's expert testimony to further hamper Mirkin's ability to support its case. Direct Energy There was one putative class action pending against Direct Energy: Richard Schafer v. Direct Energy (W.D.N.Y. Dec. 2019; on appeal 2nd Cir. N.Y.) - The Second Circuit sent the matter back to the trial court in December 2021. After discovery, Direct Energy filed summary judgment. Direct Energy won summary judgment and Schafer appealed. The appeal is fully briefed. Oral argument occurred on October 25, 2023. The Second Circuit upheld the trial court's grant of summary judgment in favor of Direct Energy. 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 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 October 19, 2022, Direct Energy filed a Motion to Transfer Venue asking the Court to transfer the case to the Southern District where the Burk case was filed. On April 12, 2023, the Court granted Direct Energy’s Motion to Transfer Venue, moving to the case to the Southern District of Texas; 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. The Sixth Circuit found that Dickson has standing and reversed the trial court's dismissal of the case. The matter is back at the trial court. The parties will conduct further fact discovery and expert discovery and are likely to resubmit motions for further review by the Court. Sales Practice Lawsuits There are three litigation matters relating to claims made by Vivint Smart Home competitors against Vivint Smart Home alleging, among other things, that Vivint Smart Home's sales representatives used deceptive sales practices. These matters were known and accrued for at the time of the acquisition. The three matters are: (1) CPI Security Systems, Inc. ("CPI") v. Vivint Smart Home, Inc. (W.D.N.C. Sept. 2020). The CPI matter that 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 has filed its notice of appeal and is awaiting a briefing schedule. While Vivint Smart Home believes the CPI jury verdict is not legally or factually supported and intends to pursue post judgment remedies and file an appeal, there can be no assurance that such defense efforts will be successful; (2) ADT LLC, et al. ("ADT") v. Vivint Smart Home, Inc. f/k/a Mosaic Acquisition Corporation, et al.(S.D.Fl. Aug. 2020). The parties mediated in May 2023 and agreed on a settlement. In June 2023, the Court granted final approval of the settlement, which was paid in June 2023; and (3) Alert 360 Opco, Inc, et al. ("Alert 360") v. Vivint Smart Home, Inc., et al (N.D.Ok. March 2023). On March 1, 2023, Alert 360 filed a complaint against Vivint Smart Home alleging, among other things, deceptive sales practices. The parties settled the dispute in October 2023 and the case was dismissed. 157 Patent Infringement Lawsuits SB IP Holdings LLC (“Skybell”) v. Vivint Smart Home, Inc. — O n 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. In accordance with advice by legal counsel, the Company does not believe the verdict is legally supported and will pursue post-judgment and appellate remedies along with any other legal options available. Contract Disputes Alarm.com — In September 2022, Vivint Smart Home sent Alarm.com a notice asserting that it was no longer obligated to pay certain license fees under the Patent Cross License Agreement between the parties on the basis that Vivint Smart Home no longer practices any claim under any valid Alarm.com patent and, therefore, no license fees are due. Alarm.com filed an arbitration demand against Vivint Smart Home alleging, among other things, breach of the agreement due to continued use of the patents in question. The parties have resolved all outstanding litigation and entered into a long-term intellectual property licensing agreement. STP — In July 2023, the partners in STP, CPS and Austin Energy, initiated a lawsuit and filed to intervene in the license transfer application with the NRC, claiming a right of first refusal exists in relation to the proposed sale of NRG South Texas' 44 % interest in STP to Constellation. NRG believes the claims set forth by CPS and Austin Energy in the lawsuit and the NRC proceedings are without merit and intends to vigorously defend against them. For further discussion of the transaction, see Note 4, Acquisitions and Dispositions. 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 REP. 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 REPs have since been severed from the multi-district litigation and will be seeking dismissal in any remaining cases. 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' mundamus relief, ordering the trial court to grant the generator defendents' Motions to Dismiss. The Company expected the Plaintiffs to challenge this ruling. The Company intends to vigorously defend these matters. Indemnifications and Other Contractual Arrangements Washington-St. Tammany and Claiborne Electric Cooperative v. LaGen — On June 28, 2017, plaintiffs Washington-St. Tammany Electric Cooperative, Inc. and Claiborne Electric Cooperative, Inc. filed a lawsuit against LaGen in the United States District Court for the Middle District of Louisiana. The plaintiffs claimed breach of contract against LaGen for allegedly improperly charging the plaintiffs for costs related to the installation and maintenance of certain pollution control technology. Plaintiffs sought damages for the alleged improper charges and a declaration as to which charges were proper under the contract. On February 4, 2019, NRG sold the South Central Portfolio, including the entities subject to this litigation. However, NRG has agreed to indemnify the purchaser for certain losses suffered in connection with this litigation. In February 2020, the federal court dismissed this lawsuit without prejudice for lack of subject matter jurisdiction. On March 17, 2020, plaintiffs filed a lawsuit in the Nineteenth Judicial District Court for the Parish of East Baton Rouge in Louisiana alleging substantially the same matters, which was dismissed on October 2, 2023 pursuant to a settlement agreement. Note 24 — Regulatory 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 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 has established an appropriate accrual pending potential regulatory action by San Diego Gas & Electric regarding the Company's Encina facility. 158 Federal Trade Commission Investigation — In 2019, Vivint Smart Home received a civil investigative demand from the staff of the Federal Trade Commission (“FTC”) concerning potential violations of the Fair Credit Reporting Act and the “Red Flags Rule” thereunder, and the FTC Act. In April 2021, Vivint Smart Home entered into a settlement with the FTC that resolved this investigation. As part of this settlement, which was approved by a federal court on May 3, 2021, Vivint Smart Home paid $ 20 million and agreed to implement various additional compliance related measures ("Stipulated Order"). The Company is currently in the process of administering the terms of the Stipulated Order, which includes multiple undertakings by the Company. The Company is engaged in ongoing discussions with the staff of the FTC regarding the Company’s compliance with the terms of the Stipulated Order. Under the terms of the Stipulated Order, Vivint Smart Home is required to undertake biennial assessments by an independent third-party assessor (the "Assessor"), which reviews Vivint Smart Home’s compliance program and provides a report on Vivint Smart Home’s ongoing compliance with the Stipulated Order. Since its inception until December 31, 2023, Vivint Smart Home has completed its initial assessment and its first biennial assessment as required by the Stipulated Order. In addition, Vivint Smart Home has voluntarily undertaken six quarterly audits by the appointed Assessor. In all the assessments, Vivint Smart Home received a report from the Assessor with no findings of non-compliance of any kind. New York State Public Service Commission ("NYSPSC") - Notice of Apparent Violation — The NYSPSC issued an order referred to as the Retail Reset Order in December 2019 that limited ESCO's offers for electric and natural gas to three compliant products: guaranteed savings from the utility default rate, a fixed term capped at 5% of the rolling 12-month average utility default rate, or NY-sourced renewable energy that is at least 50% greater than the prevailing NY Renewable Energy Standard for load serving entities. The order effectively limited ESCO 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 outcome of this process has the potential to negatively impact the retail business in New York. Note 25 — 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. The electric generation industry has been facing increasingly stringent requirements regarding air quality, GHG emissions, combustion byproducts, water discharge and use, and threatened and endangered species. 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. 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 — In 2019, the EPA promulgated the ACE rule, which rescinded the CPP, which had sought to broadly regulate CO 2 emissions from the power sector. The ACE rule required states that have coal-fired EGUs to develop plans to seek heat rate improvements from coal-fired EGUs. 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. The Court did not address the related issues of whether the EPA may adopt only measures applied at each source. On May 23, 2023, the EPA proposed significantly revising the manner in which new and existing EGU's GHG emissions should be regulated including using hydrogen as a fuel, capturing and storing/sequestering CO 2 and requiring new units to be more efficient. The EPA has stated that it intends to finalize these revisions in 2024. The Company expects that the final rule will be challenged in the courts and accordingly uncertain over the next several years. Cross-State Air Pollution Rule ("CSAPR") — On March 15, 2023, the EPA signed and released a prepublication 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 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 United States 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. Several other states are also similarly situated because of similar stays. Nonetheless, on June 5, 2023, the EPA published this rule in the Federal Register. On July 31, 2023, the EPA promulgated an interim final rule that addresses the various judicial orders that have stayed several State-Implementation-Plan disapprovals by limiting the effectiveness of certain requirements of the final rule promulgated on June 5, 2023 in Texas and five other states. The final rule decreases, over time, the ozone-season NOx allowances allocated to generators in the states not affected by the judicial stays 159 beginning in 2023 by assuming that participants in this cap-and-trade program had or would optimize existing NOx controls and later install additional NOx controls. The Company cannot predict the outcome of the legal challenges to the: (i) various state disapprovals; (ii) the final rule promulgated on June 5, 2023; and (iii) the interim final rule promulgated on July 31, 2023 that seeks to address the judicial orders. Regional Haze Proposal — On May 2023, the EPA proposed to withdraw the existing Texas Sulfur Dioxide Trading Program and replace it with unit-specific SO 2 limits for 12 units in Texas to address requirements to improve visibility at National Parks and Wilderness areas. If finalized as proposed, the rule would result in more stringent SO 2 limits for two of the Company's coal-fired units in Texas. The Company cannot predict the outcome of this proposal. Water Effluent Limitations Guidelines — 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. On September 18, 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 October 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 March 29, 2023, the EPA proposed revisions to the ELG and sought comments, which the EPA is analyzing. Byproducts In 2015, the EPA finalized a 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 alternative liner. On May 23, 2023, the EPA proposed establishing requirements for: (i) inactive (or legacy) surface impoundments at inactive facilities and (ii) all CCR management units (regardless of how or when the CCR was placed) at regulated facilities. NRG anticipates further rulemaking related to legacy surface impoundments and the Federal Permit Program. Note 26 — Cash Flow Information Detail of supplemental disclosures of cash flow and non-cash investing and financing information was: Year Ended December 31, (In millions) 2023 2022 2021 Interest paid, net of amount capitalized $ 548 $ 383 $ 433 Income taxes paid, net of refunds 48 66 32 Non-cash investing activities: Decreases to fixed assets for accrued capital expenditures — ( 68 ) ( 16 ) Note 27 — Guarantees NRG and its subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine part of the Company's business activities. Examples of these contracts include asset purchases and sale agreements, commodity sale and purchase agreements, retail contracts, joint venture agreements, EPC agreements, operation and maintenance agreements, service agreements, settlement agreements, and other types of contractual agreements with vendors and other third parties, as well as affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and covenants set forth in these agreements. The Company is obligated with respect to customer deposits associated with the Company's retail operations. In some cases, NRG's maximum potential liability cannot be estimated, since the underlying agreements contain no limits on potential liability. 160 The following table summarizes the maximum potential exposures that can be estimated for NRG's guarantees, indemnities, and other contingent liabilities by maturity: By Remaining Maturity at December 31, (In millions) 2023 Guarantees Under 1 Year 1-3 Years 3-5 Years Over 5 Years Total 2022 Total Letters of credit and surety bonds $ 4,555 $ 37 $ — $ — $ 4,592 $ 5,211 Asset sales guarantee obligations 13 24 22 67 126 409 Other guarantees — — — 27 27 15 Total guarantees $ 4,568 $ 61 $ 22 $ 94 $ 4,745 $ 5,635 Letters of credit and surety bonds — As of December 31, 2023, NRG and its consolidated subsidiaries were contingently obligated for a total of $ 4.6 billion under letters of credit and surety bonds. Most of these letters of credit and surety bonds are issued in support of the Company's obligations to perform under commodity agreements and obligations associated with future closure and maintenance of ash sites, as well as for financing or other arrangements. A majority of these letters of credit and surety bonds expire within one year of issuance, and it is typical for the Company to renew them on similar terms. The material indemnities, within the scope of ASC 460, are as follows: Asset sales — The purchase and sale agreements which govern NRG's asset or share investments and divestitures customarily contain guarantees and indemnifications of the transaction to third parties. The contracts indemnify the parties for liabilities incurred as a result of a breach of a representation or warranty by the indemnifying party, changes in tax laws or for pre-existing environmental matters. These obligations generally have a discrete term and are intended to protect the parties against risks that are difficult to predict or estimate at the time of the transaction. In several cases, the contract limits the liability of the indemnifier. NRG has no reason to believe that the Company currently has any material liability relating to such routine indemnification obligations included in the table above, except for the California property tax indemnity for estimated increases in California property taxes of certain solar properties that the Company agreed to indemnify, as part of the agreement to sell NRG Yield and the Renewables Platform. The California property tax indemnity is estimated to be $ 126 million as of December 31, 2023 and is included in the above table under asset sales guarantee obligations. Other guarantees — NRG has issued other guarantees of obligations including payments under certain agreements with respect to certain of its unconsolidated subsidiaries, payment or performance by fuel providers and payment or reimbursement of credit support and deposits. The Company does not believe that it will be required to perform under these guarantees. Other indemnities — Other indemnifications NRG has provided cover operational, tax, litigation and breaches of representations, warranties and covenants. NRG has also indemnified, on a routine basis in the ordinary course of business, consultants or other vendors who have provided services to the Company. NRG's maximum potential exposure under these indemnifications can range from a specified dollar amount to an indeterminate amount, depending on the nature of the transaction. Total maximum potential exposure under these indemnifications is not estimable due to uncertainty as to whether claims will be made or how they will be resolved. NRG does not have any reason to believe that the Company will be required to make any material payments under these indemnity provisions. Because many of the guarantees and indemnities NRG issues to third parties and affiliates do not limit the amount or duration of its obligations to perform under them, there exists a risk that the Company may have obligations in excess of the amounts described above. For those guarantees and indemnities that do not limit the Company's liability exposure, it may not be able to estimate what the Company's liability would be, until a claim is made for payment or performance, due to the contingent nature of these contracts. Note 28 — Jointly Owned Plant NRG owns an undivided interest in Cedar Bayou. Cedar Bayou is maintained and operated pursuant to its joint ownership participation and operating agreement. NRG is responsible for its subsidiaries' share of operating costs and direct expenses and includes its proportionate share of the facility and related revenues and direct expenses in the jointly-owned plant in the corresponding balance sheet and income statement captions of the Company's consolidated financial statements. The following table summarizes NRG's proportionate ownership interest in the Company's jointly-owned facility: (In millions unless otherwise stated) As of December 31, 2023 Ownership Interest Property, Plant & Equipment Accumulated Depreciation Construction in Progress Cedar Bayou Unit 4, Baytown, TX 50.00 % $ 222 $ ( 115 ) $ 2 161 SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS For the Years Ended December 31, 2023, 2022 and 2021 (In millions) Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period Allowance for credit losses, deducted from accounts receivable and other non-current assets Year Ended December 31, 2023 $ 133 $ 251 $ 35 $ ( 274 ) (a) $ 145 Year Ended December 31, 2022 683 11 — ( 561 ) (a) 133 Year Ended December 31, 2021 67 698 112 ( 194 ) (a) 683 Income tax valuation allowance, deducted from deferred tax assets Year Ended December 31, 2023 $ 224 $ 42 $ 9 $ — $ 275 Year Ended December 31, 2022 248 ( 20 ) ( 4 ) — 224 Year Ended December 31, 2021 266 ( 29 ) 11 — 248 (a) Represents principally net amounts charged as uncollectible 162 EXHIBIT INDEX Number Description Method of Filing 2.1 Third Amended Joint Plan of Reorganization of GenOn Energy, Inc. and its Debtor Affiliates. Incorporated herein by reference to Exhibit 2.1 to the Registrant's current report on Form 8-K filed on December 18, 2017. 2.2†^ Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, Inc. and NRG Repowering Holdings LLC, and GIP III Zephyr Acquisition Partners, L.P. Incorporated herein by reference to Exhibit 2.9 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 2.3^ Purchase and Sale Agreement, dated as of February 6, 2018, by and between NRG Energy, Inc., NRG South Central Generating LLC, and Cleco Energy LLC. Incorporated herein by reference to Exhibit 2.10 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 2.4‡ Purchase and Sale Agreement dated as of February 28, 2021 by and between NRG Energy, Inc., and Generation Bridge Acquisition, LLC, as a Purchaser Incorporated herein by reference to Exhibit 2.1 to the Registrant's quarterly report on Form 10-Q filed on May 6, 2021. 2.5^ Agreement and Plan of Merger dated as of December 6, 2022, by and among the Company, Merger Sub and Vivint . Incorporated herein by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed on December 6, 2022. 2.6 Equity Purchase Agreement, dated May 31, 2023 by and among Constellation Energy Generation, LLC, as Buyer and Texas Genco GP, LLC, Texas Genco LP, LLC, together, Seller. Incorporated herein by reference to Exhibit 2.1 to the Registrant's current report on Form 8-K filed on June 1, 2023. 2.7 Amendment No.1 to Equity Purchase Agreement dated September 29, 2023 by and among Constellation Energy Generation, LLC. as Buyer and Texas Genco GP, LLC, together, Seller Filed herewith. 2.8 Amendment No. 2 to Equity Purchase Agreement dated November 1, 2023 by and among Constellation Energy Generation, LLC. as Buyer and Texas Genco GP, LLC, together, Seller Filed herewith. 2.9 Amendment No. 3 to Equity Purchase Agreement dated November 1, 2023 by and among Constellation Energy Generation, LLC. as Buyer and Texas Genco GP, LLC, together, Seller Filed herewith. 3.1 Amended and Restated Certificate of Incorporation. Incorporated herein by reference to Exhibit 3.1 to the Registrant's quarterly report on Form 10-Q filed on May 3, 2012. 3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation. Incorporated herein by reference to Exhibit 3.1 to the Registrant's current report on Form 8-K filed on December 14, 2012. 3.3 Sixth Amended and Restated By-Laws. Incorporated herein by reference to Exhibit 3.2 to the Registrant's current report on Form 8-K filed on December 2, 2022. 3.4 Series A Preferred Stock Certificate of Designation filed with the Secretary of the State of Delaware on March 9, 2023. Incorporated herein by reference to Exhibit 3.1 to the Registrant's current report on Form 8-K filed on March 10, 2023. 4.1 Specimen of Certificate representing common stock of NRG Energy, Inc. Incorporated herein by reference to Exhibit 4.3 to the Registrant's quarterly report on Form 10-Q filed on August 4, 2006. 4.2 Base Indenture, dated May 28, 2019, between NRG Energy, Inc. and Delaware Trust Company, as trustee Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on May 30, 2019. 4.3 Supplemental Indenture, dated May 28, 2019, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee, containing Form 3.750% Senior Secured First Lien Notes due 2024 and Form of 4.440% Senior Secured First Lien Notes due 2029 Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 30, 2019. 4.4 Base Indenture, dated December 2, 2020, between NRG Energy, Inc. and Deutsche Bank Trust Company Americas, as trustee, pertaining to the Secured Notes. Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on December 4, 2020. 4.5 Supplemental Indenture, dated December 2, 2020, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee, containing Form of 2.000% Senior Secured First Lien Notes due 2025 and Form of 2.450% Senior Secured First Lien Notes due 2027 Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on December 4, 2020. 163 4.6 Supplemental Indenture, dated March 9, 2023, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee, containing Form of 7.000% Senior Secured First Lien Notes Due 2033 Incorporated herein by reference to Exhibit 4.2 to the Registrant's current report on Form 8-K filed on March 10, 2023. 4.7 Base Indenture, dated May 23, 2016, between NRG Energy, Inc. and Delaware Trust Company (as successor in interest to Law Debenture Trust Company of New York), as trustee. Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on May 23, 2016. 4.8 Third Supplemental Indenture, dated August 2, 2016, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York containing Form of 6.625% Senior Notes due 2027. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on August 3, 2016. 4.9 Fourth Supplemental Indenture, dated December 7, 2017, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee, containing Form of 5.750% Senior Notes due 2028. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on December 8, 2017. 4.10 Fifth Supplemental Indenture, dated May 14, 2019, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee, containing Form of 5.250% Senior Notes due 2029. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 16, 2019. 4.11 Base Indenture, dated December 2, 2020, between NRG Energy, Inc. and Deutsche Bank Trust Company Americas, as trustee, pertaining to the Unsecured notes. Incorporated herein by reference to Exhibit 4.5 to the Registrant's Current Report on Form 8-K, filed on December 4, 2020. 4.12 Supplemental Indenture, dated December 2, 2020, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee, containing Form of 3.375% Senior Notes due 2029 and Form of 3.625% Senior Notes due 2031. Incorporated herein by reference to Exhibit 4.6 to the Registrant's Current Report on Form 8-K, filed on December 4, 2020. 4.13 Second Supplemental Indenture, dated August 23, 2021, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee, containing Form of 3.875% Senior Notes due 2032. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on August 23, 2021. 4.14 Indenture, dated May 24, 2018, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee, containing Form of 2.750% Convertible Senior Notes due 2048. Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on May 25, 2018. 4.15 Supplemental Indenture (Additional Subsidiary Guarantees-2.750% Convertible Senior Notes due 2048) dated January 5, 2021, among NRG Energy, Inc., each of its guarantor subsidiaries, and Delaware Trust Company as trustee. Incorporated herein by reference to Exhibit 4.1 to the Registrant's quarterly report on Form 10-Q filed on May 6, 2021. 4.16 Supplemental Indenture (Additional Subsidiary Guarantees-2.750% Convertible Senior Notes due 2048) dated February 17, 2022, among NRG Energy, Inc., each of its guarantor subsidiaries, and Delaware Trust Company as trustee. Incorporated herein by reference to Exhibit 4.53 to the Registrant's annual report on Form 10-K filed on February 24, 2022. 4.17 Supplemental Indenture (Settlement Elections - 2.750% Convertible Senior Notes due 2048) dated February 22, 2022, among NRG Energy, Inc., each of its guarantor subsidiaries, and Delaware Trust Company as trustee. Incorporated herein by reference to Exhibit 4.52 to the Registrant's annual report on Form 10-K filed on February 24, 2022. 4.18 Base Indenture, dated August 29, 2023, between NRG Energy, Inc. and Deutsche Bank Trust Company Americas, as trustee, pertaining to the Alexander Funding Trust II Pre-Capitalized Trust Securities. Incorporated herein by reference to Exhibit 4.4 to the Registrant's current report on Form 8-K filed on August 29, 2023. 4.19 Supplemental Indenture, dated August 29, 2023, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Trust Company Americas, as trustee, containing Form 7.467% Senior Secured First Lien Notes due 2028. Incorporated herein by reference to Exhibit 4.5 to the Registrant's current report on Form 8-K filed on August 29, 2023. 4.20 Indenture, dated as of February 14, 2020, among APX Group, Inc., the guarantors party thereto and Wilmington Trust, National Association as trustee and collateral agent relating to APX Group, Inc.’s 6.75% Senior Secured Notes due 2027. Incorporated herein by reference to Exhibit 10.1 to Vivint Smart Home, Inc.'s Current Report on Form 8-K filed on February 19, 2020). 4.21 Indenture, dated as of July 9, 2021, between APX Group, Inc., as the Issuer, the guarantors party hereto, and Wilmington Trust, National Association, as trustee, payment agent and registrar, relating to the Company's 5.75% Senior Notes due 2029. Incorporated herein by reference to Exhibit 10.1 to Vivint Smart Home, Inc.'s Current Report on Form 8-K filed on July 12, 2021. 164 4.22 Description of NRG Energy, Inc. securities registered pursuant to section 12 of the Securities Exchange Act of 1934 Incorporated herein by reference to Exhibit 4.15 to the Registrant's Annual Report on Form 10-K, filed on February 27, 2020. 10.1* Form of NRG Energy, Inc. Long-Term Incentive Plan Deferred Stock Unit Agreement for Directors. Incorporated herein by reference to Exhibit 10.15 to the Registrant's annual report on Form 10-K filed on March 30, 2005. 10.2* Form of NRG Energy, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement for Officers. Incorporated herein by reference to Exhibit 10.6 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 10.3* Form of NRG Energy, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement for Non-Officers. Incorporated herein by reference to Exhibit 10.7 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 10.4* Second Amended and Restated Annual Incentive Plan for Designated Corporate Officers. Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on May 7, 2015. 10.5* The NRG Energy, Inc. Amended and Restated Long-Term Incentive Plan. Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on April 28, 2017. 10.6* NRG 2010 Stock Plan for GenOn Employees. Incorporated herein by reference to Exhibit 10.49 to the Registrant’s annual report on Form 10-K filed on February 27, 2013. 10.7* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Officers. Incorporated herein by reference to Exhibit 10.73 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 10.8* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Senior Vice Presidents. Incorporated herein by reference to Exhibit 10.74 to the Registrant's annual report on Form 10-K filed on March 1, 2018. 10.9† Consent and Indemnity Agreement, dated as of February 6, 2018, by and among NRG Energy, Inc., NRG Repowering Holdings LLC, NRG Yield, Inc., and GIP III Zephyr Acquisition Partners, L.P., and NRG Yield Operating LLC (solely with respect to Sections E.5, E.6 and G.12). Incorporated herein by reference to Exhibit 10.34 to NRG Yield, Inc.'s Annual Report on Form 10-K filed on March 1, 2018. 10.10* NRG Energy, Inc. Amended and Restated Executive Change-in-Control and General Severance Plan for Tier IA and Tier IIA Executives (Amended and Restated Effective January 1, 2024). Filed herewith 10.11 Sixth Amendment to Second Amended and Restated Credit Agreement, dated as of February 14, 2023, by and among NRG Energy, Inc., its subsidiaries party thereto, the lenders and issuing banks party thereto, Citicorp North America, Inc., as administrative agent and collateral agent, and Deutsche Bank Trust Company Americas, as collateral trustee, and included as Exhibit A-2 thereto a clean conformed copy of the Second Amended and Restated Credit Agreement Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on February 15, 2023. 10.12 Seventh Amendment to Second Amended and Restated Credit Agreement, dated as of March 13, 2023, by and among NRG Energy, Inc., its subsidiaries party thereto, the lenders and issuing banks party thereto, Citicorp North America, Inc., as administrative agent and collateral agent, and Deutsche Bank Trust Company Americas, as collateral trustee. Incorporated herein by reference to Exhibit 4.2 to the Registrant's quarterly report on Form 10-Q filed on May 4, 2023. 10.13 Second Amended and Restated Credit Agreement, dated as of July 9, 2021, among APX Group Holdings, Inc., as Holdings, APX Group, Inc., as the borrower, the guarantors party hereto from time to time, Bank of America, N.A., as administrative agent, swing line lender and an L/C issuer. Incorporated herein by reference to Exhibit 10.2 to Vivint Smart Home, Inc.'s Current Report on Form 8-K filed on July 12, 2021. 10.14 Amendment No.1 to the Second Amended and Restated Credit Agreement, dated as of June 9, 2023, by and between AXP Group, Inc. as borrower and the Bank of America, N.A., as administrative agent. Incorporated herein by reference to Exhibit 4.1 to the Registrant's quarterly report on Form 10-Q filed on August 8, 2023. 165 10.15 Facility Agreement, dated August 29, 2023, among NRG Energy, Inc., the guarantors party thereto, Alexander Funding Trust II and Deutsche Bank Trust Company Americas, as the notes trustee Incorporated herein by reference to Exhibit 4.1 to the Registrant's current report on Form 8-K filed on August 29, 2023. 10.16 Letter of Credit Facility Agreement, dated August 29, 2023, among NRG Energy, Inc., the financial institutions from time to time party thereto as letter of credit issuers, and Deutsche Bank Trust Company Americas, as administrative agent and as collateral agent Incorporated herein by reference to Exhibit 4.2 to the Registrant's current report on Form 8-K filed on August 29, 2023. 10.17 Amended and Restated Declaration of Trust of Alexander Funding Trust II, dated August 29, 2023, among NRG Energy, Inc. as depositor and in its own capacity, Deutsche Bank Trust Company Americas, as trustee, and Deutsche Bank Trust Company Delaware, as Delaware trustee Incorporated herein by reference to Exhibit 4.3 to the Registrant's current report on Form 8-K filed on August 29, 2023. 10.18 Receivables Sale Agreement, dated as of September 22, 2020, among the Originators from time to time parties thereto, NRG Retail LLC, as Servicer, and NRG Receivables LLC. Incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 22, 2020. 10.19 Amendment No. 3 to Receivables Loan and Servicing Agreement, dated as of June 22, 2023, among NRG Retail LLC, as Servicer, NRG Receivables LLC, as Borrower, NRG Energy, Inc., as Performance Guarantor, the Conduit Lenders, Committed Lenders, Facility Agents and LC Issuers party thereto, and Royal Bank of Canada, as administrative Agent, and included as Exhibit A-2 thereto a clean, conformed copy of the Receivables Loan and Servicing Agreement. Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on June 27, 2023. 10.20* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Chief Executive Officer Incorporated herein by reference to Exhibit 10.21 to the Registrant's annual report on Form 10-K filed on February 24, 2022. 10.21* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Executive Vice Presidents Incorporated herein by reference to Exhibit 10.22 to the Registrant's annual report on Form 10-K filed on February 24, 2022. 10.22* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Senior Vice Presidents. Incorporated herein by reference to Exhibit 10.23 to the Registrant's annual report on Form 10-K filed on February 24, 2022. 10.23* Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Senior Vice Presidents. Filed herewith 10.24* Form of NRG Energy, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement. Filed herewith 10.25* Restricted Stock Unit Agreement, dated December 15 , 2023, between NRG Energy, Inc. and Lawrence S. Coben Filed herewith 10.26* Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan Incorporated herein by reference to Exhibit 4.4 to Vivint Smart Home's Post-Effective Amendment on Form S-8 to Registration Statement on Form S-4 filed with the Securities and Exchange Commission on March 24, 2020 10.27* Vivint Smart Home, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement and Notice of Grant under the Vivint Smart Home, Inc. Omnibus Incentive Plan. Incorporated herein by reference to Exhibit 10.2 to the Registrant's quarterly report on Form 10-Q filed on May 4, 2023. 10.28* Vivint Smart Home, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement and Notice of Grant under the Vivint Smart Home, Inc. Omnibus Incentive Plan. Incorporated herein by reference to Exhibit 10.3 to the Registrant's quarterly report on Form 10-Q filed on May 4, 2023. 10.29* Vivint Smart Home, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement and Notice of Grant under the Vivint Smart Home, Inc. Omnibus Incentive Plan for Executive Vice President Filed herewith 10.30* Vivint Smart Home, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement and Notice of Grant under the Vivint Smart Home, Inc. Omnibus Incentive Plan for Executive Vice Presidents. Filed herewith 166 10.31* Amended and Restated Employee Stock Purchase Plan Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on May 2, 2023. 10.32* Retention letter, dated December 6, 2022, between Vivint Smart Home, Inc. and Rasesh Patel. Incorporated herein by reference to Exhibit 10.45 to Vivint Smart Home, Inc.'s Annual Report on Form 10-K for the annual period ended December 31, 2022. 10.33* Amended and Restated Employment Agreement, dated June 20, 2022, between Vivint Smart Home, Inc. and Rasesh Patel Incorporated by reference to Exhibit 10.5 to Vivint Smart Home, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 10.34* Amendment to the Vivint Smart Home, Inc. 2020 Omnibus Incentive Plan Incorporated herein by reference to Exhibit 10.1 to the Registrant's quarterly report on Form 10-Q filed on August 8, 2023. 10.35 Cooperation Agreement, dated as of November 20, 2023, by and among NRG Energy, Inc., Elliott Investment Management L.P., Elliott Associates, L.P., and Elliott International, L.P. Incorporated herein by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed on November 20, 2023 21.1 Subsidiaries of NRG Energy, Inc. Filed herewith. 22.1 List of Guarantor Subsidiaries Filed herewith. 23.1 Consent of KPMG LLP. Filed herewith. 24.1 Power of Attorney Included on signature page 31.1 Rule 13a-14(a)/15d-14(a) certification of Lawrence Coben Filed herewith. 31.2 Rule 13a-14(a)/15d-14(a) certification of Woo-Sung Chung Filed herewith. 31.3 Rule 13a-14(a)/15d-14(a) certification of G . Alfred Spencer Filed herewith. 32 Section 1350 Certification. Furnished herewith. 97 NRG Energy, Inc. Clawback Policy Filed herewith. 101 INS Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. 101 SCH Inline XBRL Taxonomy Extension Schema. Filed herewith. 101 CAL Inline XBRL Taxonomy Extension Calculation Linkbase. Filed herewith. 101 DEF Inline XBRL Taxonomy Extension Definition Linkbase. Filed herewith. 101 LAB Inline XBRL Taxonomy Extension Label Linkbase. Filed herewith. 101 PRE Inline XBRL Taxonomy Extension Presentation Linkbase. Filed herewith. 104 Cover Page Interactive Data File (the cover page interactive data file does not appear in Exhibit 104 because it's Inline XBRL tags are embedded within the Inline XBRL document). Filed herewith. * Exhibit relates to compensation arrangements. † Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. ^ This filing excludes schedules pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementary to the Securities and Exchange Commission upon request by the Commission. ‡ Portions of this exhibit have been excluded because they are both not material and would likely cause competitive harm to the registrant if publicly disclosed. Information that has been omitted has been noted in this document with a placeholder identified by the mark “[***]”. Item 16. Form 10-K Summary None. 167 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NRG ENERGY, INC. (Registrant) By: /s/ LAWRENCE S. COBEN Lawrence S. Coben Interim President and Chief Executive Officer Date: February 28, 2024 168 POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Brian E. Curci and Christine A. Zoino, each or any of them, such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution for such person and in such person's name, place and stead, in any and all capacities, to sign any and all amendments to this report on Form 10-K, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as such person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. In accordance with the Exchange Act, this report has been signed by the following persons on behalf of the registrant in the capacities indicated on February 28, 2024. Signature Title Date /s/ LAWRENCE S. COBEN Interim President and Chief Executive Officer and February 28, 2024 Lawrence S. Coben Director (Principal Executive Officer, Chair of the Board) /s/ WOO-SUNG CHUNG Chief Financial Officer February 28, 2024 Woo-Sung Chung (Principal Financial Officer) /s/ G. ALFRED SPENCER Chief Accounting Officer February 28, 2024 G. Alfred Spencer (Principal Accounting Officer) /s/ E. SPENCER ABRAHAM Director February 28, 2024 E. Spencer Abraham /s/ ANTONIO CARRILLO Director February 28, 2024 Antonio Carrillo /s/ MATTHEW CARTER, JR. Director February 28, 2024 Matthew Carter, Jr. /s/ HEATHER COX Director February 28, 2024 Heather Cox /s/ ELISABETH B. DONOHUE Director February 28, 2024 Elisabeth B. Donohue /s/ MARWAN FAWAZ Director February 28, 2024 Marwan Fawaz /s/ PAUL W. HOBBY Director February 28, 2024 Paul W. Hobby /s/ ALEX POURBAIX Director February 28, 2024 Alex Pourbaix /s/ ALEXANDRA PRUNER Director February 28, 2024 Alexandra Pruner /s/ ANNE C. SCHAUMBURG Director February 28, 2024 Anne C. Schaumburg /s/ MARCIE C. ZLOTNIK Director February 28, 2024 Marcie C. Zlotnik 169