What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-02-26 compared with 2024-02-28 · 242 added, 183 removed, 336 unchanged (56% of the section changed)

Item 1 — Business

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.

NRG Energy, Inc., or NRG or the Company, is a leading energy and smart home company fueled by market-leading brands, proprietary technologies and complementary sales channels.

Across the U.S.

and Canada, NRG delivers innovative, sustainable solutions, predominately under 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 as of December 31, 2023.

The Company has a customer base that includes approximately 8 million residential customers (comprised of 6 million retail energy customers and 2 million smart home customers) in addition to commercial, industrial, and wholesale customers, supported by approximately 13 GW of generation as of December 31, 2024.

NRG sold 154 TWhs of electricity and 1,833 MMDth of natural gas in 2024, making it one of the largest competitive energy retailers in the U.S.

As of the end of 2024, NRG had recurring electricity and/or natural gas sales in 25 U.S.

states, the District of Columbia, and 8 provinces in Canada, as well as Vivint served customers in all 50 U.S.

NRG's retail brands, collectively, have the largest share of competitively served residential electric customers in Texas and nationwide.

The following chart represents NRG's sales volumes for the year ended December 31, 2023:

NRG's strategy is to maximize stakeholder value by being a leader in the emerging convergence of energy and smart automation in the home and business.

states, the District of Columbia, and 8 provinces in Canada, and Vivint Smart Home served customers in all 50 U.S.

NRG's retail brands, collectively, have the largest share of competitively served residential electric customers in Texas and is one of the largest business-to-business providers of power and natural gas in North America, including to manufacturing, industrial, and data center facilities.

NRG's strategy is to maximize shareholder value by being a leader in the emerging convergence of energy and smart automation in the home and business.

Through a diversified supply strategy, the Company sells reliable electricity and natural gas to its customers in the markets it serves, while also providing innovative home solutions to customers.

1 unchanged sentence

This strategy is intended to enable the Company to optimize its unique integrated platform to delight customers, generate recurring cash flow, significantly strengthen earnings and cost competitiveness, and lower risk and volatility.

Sustainability is a philosophy that underpins and facilitates value creation across NRG's business for its stakeholders.

It is an integral piece of NRG's strategy and ties directly to business success, reduced risks and enhanced reputation.

Sustainability is a philosophy that underpins NRG’s strategy and facilitates value creation across NRG's business.

To effectuate the Company’s strategy, NRG is focused on:

(i) serving the energy needs of end-use residential, commercial and industrial, and wholesale counterparties in competitive markets and optimizing on additional revenue opportunities through its multiple brands and channels;

(ii) offering a variety of energy products and services, including renewable energy solutions and smart home products and services that are differentiated by innovative features, premium service, integrated platforms, sustainability and loyalty/affinity programs;

(ii) offering a variety of energy products and smart home products and services that are differentiated by innovative features, premium service, integrated platforms, sustainability and loyalty/affinity programs;

(iii) excellence in operating performance of its assets;

1 unchanged sentence

and (v) engaging in disciplined and transparent capital allocation.

The following transactions were completed during 2023 in furtherance of the Company’s strategy:

(i) the March 10, 2023 acquisition of Vivint Smart Home, a leading smart home platform company;

(ii) portfolio optimization, including the sale of the Company’s 44% equity interest in STP for $1.7 billion;

and (iii) disciplined capital allocation through the execution of $1.2 billion in share repurchases and $1.4 billion in debt reduction.

In 2024, NRG entered into a definitive partnership agreement with Renew Home, a Virtual Power Plant platform (“VPP”) formed by the combination of Google’s Nest Renew and OhmConnect.

Leveraging Google Cloud’s AI and cloud platforms, NRG and Renew Home plan to develop a VPP portfolio of up to 1 GW of load management capacity, with instantaneous dispatch value during peak events and tight supply conditions.

Business Overview

The Company’s core businesses are the sale of electricity and natural gas to residential, commercial and industrial and wholesale customers, supported by the Company's wholesale electric generation, as well as the sale of smart home products and services.

NRG manages its electricity and natural gas operations based on the combined results of the retail and wholesale generation businesses with a geographical focus.

NRG manages its electricity and natural gas operations based on the combined results of the retail, wholesale and generation businesses with a geographical focus.

Vivint Smart Home operations are reported within the Vivint Smart Home segment.

3 unchanged sentences

• West/Services/Other, which primarily 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;

(i) all activity related to customer, plant and market operations in the West and Canada, and (ii) activity related to the Cottonwood facility and other investments;

• Vivint Smart Home;

12 unchanged sentences

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

Home customers typically contract for terms ranging from one month to five years, while Business contracts are often between one year and five years in length.

Home customers typically contract for terms ranging from one month to five years, while Business customers typically contract for terms ranging from one year to five years in length and extended contractual terms are available.

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

Customer Operations comprises three end-use customer facing teams:

NRG Home, which serves residential customers, NRG Business, which serves business customers, and NRG Services, which primarily includes the Services businesses.

Customer Operations primarily comprises two end-use customer facing teams:

NRG Home, which serves residential customers, and NRG Business, which serves business customers.

Product Offerings

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

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

NRG sells a variety of products to residential and small commercial customers, in a wide variety of sales channels, including retail electricity and energy management, natural gas, line and surge protection products and home protection products, repair and maintenance, and carbon offsets.

Home customers make purchase decisions based on a variety of factors, including price, incentive, customer service, brand, innovative offers/features and referrals from friends and family.

Through its broad range of service offerings and value propositions, NRG seeks to attract, retain, and increase the value of its customer relationships.

NRG's brands are recognized for exemplary customer service, innovative smart energy and technology product offerings, and environmentally-friendly solutions.

NRG's brands are recognized for exemplary customer service, innovative smart energy and environmentally-friendly solutions.

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

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

These solutions include system power, distributed generation, renewable and low-carbon products, carbon management

and specialty services, backup generation, storage and distributed solar, demand response, and energy efficiency and advisory services.

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

These solutions include system power, distributed generation, renewable and low-carbon products, carbon management and specialty services, backup generation, storage and distributed solar, demand response, and energy efficiency and advisory services.

Market Operations

8 unchanged sentences

NRG trades power, natural gas, environmental, weather and other physical and financial commodity related products, including forwards, futures, options and swaps.

NRG enters into these instruments primarily to manage price and delivery risk, optimize physical and contractual assets in the portfolio, manage working capital requirements, reduce the carbon exposure in its business and to comply with laws and regulations.

NRG enters into these instruments primarily to manage price and delivery risk,

optimize physical and contractual assets in the portfolio, manage working capital requirements, reduce the carbon exposure in its business and comply with laws and regulations.

Fuel Supply and Transportation Contracts

11 unchanged sentences

As of December 31, 2024, NRG had purchased forward contracts to provide fuel for the Company's expected requirements for 2025.

For the domestic fleet, NRG purchased approximately 13 million tons of coal in 2023, almost all of which was Powder River Basin coal.

For fuel transport, NRG has entered into various rail transportation and rail car lease agreements with varying tenures, which will provide for the Company's transportation requirements of Powder River Basin coal for the next two years.

For the domestic fleet, NRG purchased approximately 13 million tons of coal in 2024, all of which was Powder River Basin coal.

Renewable PPAs

The Company's strategy is to procure mid to long-term renewable generation through power purchase agreements.

As of December 31, 2023, NRG has entered into Renewable PPAs totaling approximately 1.9 GW with third-party project developers and other counterparties, of which approximately 1.1 GW are operational.

The average tenure of these agreements is eleven years.

NRG has entered into Renewable PPAs totaling approximately 1.9 GW with third-party project developers and other counterparties, of which all are operational as of December 31, 2024.

The remaining average tenure of these agreements is nine years.

The Company expects to continue evaluating and executing similar agreements that support the needs of the business.

8 unchanged sentences

Plant Operations

The Company owns and leases a diversified wholesale generation portfolio with approximately 13 GW of fossil fuel, and renewable generation capacity at 19 plants as of December 31, 2023.

As of December 31, 2024, the Company owns and leases a diversified wholesale generation portfolio with approximately 13 GW of fossil fuel, and renewable generation capacity at 18 plants.

The Company's wholesale generation assets are diversified by fuel-type and dispatch level, which helps mitigate the risks associated with fuel price volatility and market demand cycles.

6 unchanged sentences

Utility Scale Solar — — 214 214

Battery Storage 2 — — 2

Total generation capacity 8,527 2,483 2,071 13,081

1 unchanged sentence

MW figures provided represent nominal summer net MW capacity of power generated as adjusted for the Company's owned interest

(b) Includes proportionate share of equity owned investments

Plant Operations is responsible for operating the Company's generation facilities at the highest standards of safety and regulatory compliance, and includes (i) operations and maintenance, (ii) asset management, and (iii) development, engineering and construction.

(b) Includes proportionate share of equity owned investments and the Cottonwood lease

Plant Operations is responsible for operating the Company's generation facilities at high standards of safety and regulatory compliance, and includes (i) operations and maintenance, (ii) asset management, and (iii) development, engineering and construction.

Operations & Maintenance

1 unchanged sentence

The Company follows a consistent set of operating requirements, including a solid base of training, required adherence to specific safety and environmental limits, procedure and checklist usage, and the implementation of continuous process improvement through incident investigations.

NRG uses best-in-class maintenance practices for preventive, predictive, and corrective maintenance planning.

NRG uses industry leading maintenance practices for preventive, predictive and corrective maintenance planning.

The Company’s strategic planning process evaluates equipment condition, performance, and obsolescence to support the development of a comprehensive work scope and schedule for long-term performance.

2 unchanged sentences

The Company evaluates capital projects required for continued operation and strategic enhancement of the assets, provides quality assurance on capital outlays, and assesses the impact of rules, regulations, and laws on business profitability.

In addition, the Company manages its long-term contracts, PPAs, and real estate holdings and provides third-party asset management services.

In addition, the Company manages its long-term contracts and real estate holdings and provides management services.

Development, Engineering & Construction

NRG develops, engineers and executes major plant modifications, “new build” generation and energy storage projects that enhance the value of its generation portfolio and provide options to meet generation growth needs in the retail markets it serves, in accordance with the Company’s strategic goals.

These projects have included gas-fired generation development and

construction, coal to gas conversions, grid scale energy storage development, grid scale renewable construction, and asset demolition, remediation and reclamation work.

NRG develops, engineers and executes major plant projects as well as “new build” generation and energy storage projects that enhance the value of its generation portfolio and provide options to meet generation growth needs in the retail markets it serves, in accordance with the Company’s strategic goals.

These projects have included gas-fired generation development and construction, coal to gas conversions, grid scale energy storage development, grid scale renewable construction, and asset demolition, remediation and reclamation work.

Texas Development Priorities — During 2024, NRG advanced progress on three new generation projects aimed at expanding its operational capacity to meet growing retail power supply needs in the ERCOT wholesale electric market.

These projects include a new 415 MW peaker plant at its T.H.

Wharton generating station in Texas, which is scheduled to be operational in 2026 and a new 689 MW combined cycle generating facility at its Cedar Bayou generating station in Texas, which is scheduled to be operational in 2028.

Both projects are under consideration for financing from the Texas Energy Fund.

NRG continues to explore its options for the 443 MW Greens Bayou 6 project.

These additions to NRG’s portfolio are strategically aligned with the Company’s commitment to meeting the growing energy needs of its customers.

Vivint Smart Home

In March 2023, NRG completed the acquisition of Vivint Smart Home, which is a leading smart home platform that provides subscribers with technology, products and services to create a smarter, greener, safer home.

A smart home has multiple devices integrated into a single expandable platform that incorporates artificial intelligence and machine-learning in its operating system allowing customers to interact with and manage their home from anywhere via the Vivint app on their smart device.

Vivint Smart Home enables a customized solution for the home using integrated smart cameras (indoor, outdoor and doorbell), locks, lights, thermostats, garage door control and a host of other safety and security sensors.

Vivint Smart Home is a leading smart home platform that provides customers with technology, products and services to create a smarter, greener, safer home.

A smart home has multiple devices integrated into a single expandable platform that incorporates artificial intelligence (“AI”) and machine-learning in its operating system, which allows customers to interact with and manage their home from anywhere via the Vivint app on their smart device.

Vivint Smart Home provides a customized

solution for the home using integrated smart cameras (indoor, outdoor and doorbell), locks, lights, thermostats, garage door controls and a host of other safety and security sensors.

Vivint Smart Home provides a fully integrated solution for consumers, including hardware, software, sales, installation by trained and experienced in-home service professionals, customer service, technical support and professional monitoring.

This seamless integration of high-quality products and services resulted in an average subscriber lifetime of approximately nine years as of December 31, 2023.

The Company believes its ability to offer related or adjacent products and services that leverage the existing smart home platform, as well as energy services, can extend the average subscriber lifetime and increase the lifetime value of subscribers.

Vivint Smart Home's cloud-based home platform currently manages more than 30 million in-home devices as of December 31, 2023.

The average subscriber on Vivint Smart Home's cloud-based home platform engages with the smart home app approximately 16 times per day and has approximately 15 devices in its home.

Through the addition of Vivint Smart Home, NRG identified opportunities to improve gross margin, customer retention and customer lifetime value.

This seamless integration of high-quality products and services resulted in an average customer lifetime of approximately nine years as of December 31, 2024.

The Company believes its ability to offer related or adjacent products and services that leverage the existing smart home platform, as well as energy services, can extend the average customer lifetime and increase the lifetime value of customers.

As of December 31, 2024, Vivint Smart Home's cloud-based home platform currently manages more than 33 million in-home devices, and the average customer on Vivint Smart Home's cloud-based home platform engages with the smart home app approximately 17 times per day and has approximately 16 devices in its home.

Operational Statistics

24 unchanged sentences

Home - West/Services/Other

Average retail (c)

Ending retail (c)

Average retail 395 393 383

Ending retail 373 404 390

Customer count - Natural gas customers (b) (in thousands)

6 unchanged sentences

Average retail - Home - Electricity and Natural gas 5,853 5,508 5,543

Average - Vivint Smart Home (d)

Average - Vivint Smart Home (c)

2,100 2,008 —

Ending retail - Home - Electricity and Natural gas 5,820 5,827 5,406

Ending - Vivint Smart Home (d)

Ending - Vivint Smart Home (c)

2,154 2,043 —

Total Ending retail and Vivint Smart Home 7,974 7,870 5,406

(a) Includes Services customers

(a) Home customer count includes recurring residential customers, services customers, and community choice

(b) Dual fuel customers are included within electricity customer counts only

The whole home warranty business was sold in January 2022

(d) Vivint Smart Home subscribers includes customers that also purchase other NRG products

The following are industry statistics for the Company's fossil and nuclear plants, as defined by the NERC:

Annual Equivalent Availability Factor, or EAF — Measures the percentage of maximum generation available over time as the fraction of net maximum generation that could be provided over a defined period of time after all types of outages and deratings, including seasonal deratings, are taken into account.

Net Heat Rate — The net heat rate represents the total amount of fuel in BTU required to generate one net kWh provided.

Net Capacity Factor — The net amount of electricity that a generating unit produces over a period of time divided by the net amount of electricity it could have produced if it had run at full power over that time period.

The net amount of electricity produced is the total amount of electricity generated minus the amount of electricity used during generation by the station.

The tables below present these performance metrics for the Company's generation portfolio, including leased facilities, for the years ended December 31, 2024 and 2023:

Year Ended December 31, 2024

Fossil and Nuclear Plants (a)

Fossil Plants (a)

Capacity (MW) Net Generation (In thousands of MWh) (a)

12 unchanged sentences

(a) Excludes equity method investments

The following are industry statistics for the Company's fossil and nuclear plants, as defined by the NERC:

Net Heat Rate — The net heat rate represents the total amount of fuel in BTU required to generate one net kWh provided.

The net amount of electricity produced is the total amount of electricity generated minus the amount of electricity used during generation by the station.

The generation performance by region for the three years ended December 31, 2024, 2023 and 2022 is shown below:

7 unchanged sentences

Gas 1 685 537

Total East (b)

2,016 7,282 7,494

Total East 2,372 2,016 7,282

West/Services/Other

1 unchanged sentence

Renewables 3 4 7

Total West/Services/Other (c)

5,903 6,676 7,949

Total West/Services/Other 5,977 5,903 6,676

Total generation performance 31,699 38,695 51,233

1 unchanged sentence

The Company sold its interest in STP on November 1, 2023

(b) Includes gas generation of 855 thousand MWh and oil generation of 199 thousand MWh for the year ended December 31, 2021, that was sold to Generation Bridge on December 1, 2021

(c) Includes gas generation of 2,445 thousand MWh for the year ended December 31, 2021, that was sold to Generation Bridge on December 1, 2021

While there has been consolidation in the competitive retail energy space over the past few years, there is still considerable competition for customers.

3 unchanged sentences

Wholesale generation is highly fragmented and diverse in terms of industry structure by region.

As such, there is wide variation in terms of the capabilities, resources, nature and identities of the Company’s competitors depending on the market.

As such, there is wide variation in the capabilities, resources, nature and identities of the Company’s competitors depending on the market.

Competitors include regulated utilities, municipalities, cooperatives, other independent power producers, and power marketers or trading companies, including those owned by financial institutions.

1 unchanged sentence

It is highly competitive and fragmented.

Major competitors range from large-cap technology companies seeking to expand their core market opportunity who predominantly offer do-it-yourself ("DIY") devices that put a large burden on homeowners to self-install and support many devices, to security-based providers, as well as industrial and telecommunications companies that offer connected home experiences.

Major competitors range from large-cap technology companies seeking to expand their core market opportunity who predominantly offer do-it-yourself devices that put a large burden on homeowners to self-install and support many devices, to security-based providers, as well as industrial and telecommunications companies that offer connected home experiences.

Vivint Smart Home provides the full smart home experience, with an end-to-end solution that includes a wide range of unique capabilities and use cases.

2 unchanged sentences

The sale of power and natural gas to retail customers are seasonal businesses with the demand for power generally peaking during the summer, and the demand for natural gas generally peaking during the winter.

As a result, net working capital requirements for the Company's retail operations generally increase during summer and winter months along with the higher revenues, and then decline during off-peak months.

As a result, net working capital requirements for the Company's retail operations generally increase during summer and winter months along with the

higher revenues, and then decline during off-peak months.

Weather may impact operating results and extreme weather conditions could have a material impact.

5 unchanged sentences

NRG sells electricity, natural gas and related products and services, and smart home products and services to customers throughout the U.S.

In most of the states and regions that have introduced retail consumer choice, NRG competitively offers electricity, natural gas, portable power and other value-enhancing services to customers.

In most of the states and regions that have introduced retail consumer choice, NRG competitively offers electricity, natural gas and other value-enhancing services to customers.

Each retail consumer choice state or province establishes its own retail competition laws and regulations, and the specific operational, licensing, and compliance requirements vary by state or province.

17 unchanged sentences

have introduced some level of retail consumer choice for electricity and/or natural gas, the incumbent utilities currently provide default service in most of the states and as a result typically serve the majority of residential customers.

NRG’s retail activities in the East are subject to standards and regulations adopted by the ISOs, state public utility commissions and legislators, including the requirement for retailers to be certified in each state in order to contract with end-users to sell electricity.

NRG’s retail activities in the East include both direct sales to end-use customers as well as sales through municipal aggregations, both of which are subject to standards and regulations adopted by the ISOs, state public utility commissions and legislators, including the requirement for retailers to be certified in each state in order to contract with end-users to sell electricity.

Power plants owned, operated or managed by NRG and NRG's demand response assets located in the East region of the U.S.

are within the control areas of PJM, NYISO and MISO.

are within the control areas of PJM, NYISO, ISO-NE and MISO.

Each of the market regions in the East region provides for robust competition in the day-ahead and real-time energy and ancillary services markets.

Additionally, the assets in the East region receive a significant portion of their revenues from capacity markets.

PJM uses a forward capacity auction, while NYISO uses a month-ahead capacity auction.

PJM and ISO-NE use a forward capacity auction, while NYISO uses a month-ahead capacity auction.

MISO has an annual auction.

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

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

In such markets, NRG’s actual capacity revenues will be the combination of cleared auction prices times the quantity of MW cleared, plus the net of any over-performance "bonus payments" and any under-performance charges.

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

In such markets, NRG’s actual capacity revenues will be the combination of cleared auction prices times the quantity of MW cleared, plus the net of any

1 The Cottonwood facility is located in Deweyville, Texas, but operates in the MISO market

over-performance "bonus payments" and any under-performance charges.

Additionally, bidding rules allow for the incorporation of a risk premium into generator bids.

In the West region of the U.S., NRG owns equity interests, operates or manages power plants located entirely within the CAISO footprint.

In the West region of the U.S., NRG is an LSE and sells electricity at retail in California’s Direct Access marketplace, as well as through community choice aggregations in the state.

Additionally, NRG sells natural gas as both a retail supplier and wholesaler principally in California.

NRG also owns equity interests in, operates, or manages power plants located entirely within the CAISO footprint.

The CAISO operates day-ahead and real-time locational markets for energy and ancillary services, while managing congestion primarily through nodal prices.

The CAISO system facilitates NRG's sale of power, ancillary services and capacity products at market-based rates, either within the CAISO's centralized energy and ancillary service markets or bilaterally.

The CAISO system facilitates NRG's sale and purchase of power, ancillary services and capacity products at market-based rates, either within the CAISO's centralized energy and ancillary service markets or bilaterally.

The CPUC also determines capacity requirements for LSEs and for specified local areas utilizing inputs from the CAISO.

6 unchanged sentences

Vivint Smart Home

Vivint Smart Home operates in states that regulate in some manner the sale, installation, servicing, monitoring or maintenance of smart home and electronic security systems.

Vivint Smart Home and Vivint Smart Home sales representatives are typically required to obtain and maintain licenses, certifications or similar permits from governmental entities as a condition to engaging in the smart home and security service business.

Vivint Smart Home operates in all states throughout the U.S.

that regulate in some manner the sale, installation, servicing, monitoring or maintenance of smart home and electronic security systems.

Vivint Smart Home and its sales representatives are typically required to obtain and maintain licenses, certifications or similar permits from governmental entities as a condition to engaging in the smart home and security service business.

Vivint Smart Home is subject to federal and state laws related to consumer financing which may include rules related to fees and charges, disclosures and regulation of the party extending consumer credit.

1 The Cottonwood facility is located in Deweyville, Texas, but operates in the MISO market

Energy Regulatory Matters

As participants in wholesale and retail energy markets and owners and operators of power plants, certain NRG entities are subject to regulation by various federal, state and provincial agencies.

These include the CFTC, FERC, and the PUCT, as well as other public utility commissions in certain states where NRG's generation or distributed generation assets are located.

As participants in wholesale and retail energy markets and owners and operators of power plants, certain NRG entities are subject to regulation by various federal and state government agencies.

These include the CFTC, FERC, NRC and the PUCT, as well as other public utility commissions in certain states where NRG's generation or distributed generation assets are located.

In addition, NRG is subject to the market rules, procedures and protocols of the various ISO and RTO markets in which it participates.

These power markets are subject to ongoing legislative and regulatory changes that may impact NRG's wholesale and retail operations.

Likewise, certain NRG entities participating in the retail markets are subject to rules and regulations established by the states and provinces in which NRG entities are licensed to sell at retail.

NRG must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability entities in the regions where NRG operates.

1 unchanged sentence

These operations are subject to regulation by the PUCT.

State and Provincial Energy Regulation

Maryland Legislation — On May 9, 2024, Maryland Governor Wes Moore signed Senate Bill 1 into law, which restricts the competitive retail electric and natural gas market in Maryland, affecting residential customers but not commercial and industrial customers.

Key provisions of the law took effect on January 1, 2025.

The legislation imposes a price cap on residential contracts tied to a trailing 12-month historical average of utility rates, with only a limited exception for renewable power products.

Renewable products must now have their price pre-approved by the Maryland Public Service Commission and source their renewable electricity certificates from within the PJM region.

The law also requires that any variable-price contract not contain a change in price more than once a year, except time-of-use contracts, and limits contract terms to 12 months.

It requires affirmative consent for the renewal of customer contracts for renewable power products.

The law also imposes licensing requirements on energy salespeople.

The law states that it does not impair existing contracts.

On October 1, 2024, Green Mountain Energy Company, NRG’s renewable electricity provider, along with a retail trade association to which NRG belongs, filed a lawsuit in federal court challenging the constitutionality of Senate Bill 1.

On November 18, 2024, the trial court denied the plaintiffs' motion for a preliminary injunction.

The plaintiffs, including Green Mountain, have filed an appeal to this denial to the Fourth Circuit Court of Appeals.

The appeal is pending.

Alberta Rate of Last Resort — On September 27, 2024, the government of Alberta legislative assembly adopted the Rate of Last Resort Regulation to transition the regulated electricity rate from a monthly, variable rate “Regulated Rate Option” to a two-year, fixed rate “Rate of Last Resort” effective January 1, 2025.

On November 29, 2024, the Alberta Utilities Commission approved a negotiated settlement between Direct Energy Regulated Services and the Utilities Consumer Advocate to establish the Rate of Last Resort price-setting methodology as well as the rate itself for the first two years of the four-year period.

Under the government’s regulation, customers may return to the Rate of Last Resort at any time, and the price for the second two-year term may only vary from the first two-year term by 10%.

The new rates may provide risks and benefits to the Company.

Regional Regulatory Developments

1 unchanged sentence

For further discussion on regulatory developments, see Item 15 — Note 23, Regulatory Matters, to the Consolidated Financial Statements.

Public Utility Commission of Texas’s Actions with Respect to Wholesale Pricing and Market Design — The PUCT continues to analyze and implement multiple options for promoting increased reliability in the wholesale electric market, including the adoption of a reliability standard for resource adequacy and market-based mechanisms to achieve this standard.

During the 88th Regular Session, the Texas Legislature authorized deployment of the Performance Credit Mechanism ("PCM"), which will measure real-time contribution to system reliability and provide compensation for resources to be available, subject to certain "guardrails" such as an annual net cost cap, as part of its adoption of the PUCT Sunset Bill (House Bill 1500).

Public Utility Commission of Texas’ Actions with Respect to Wholesale Pricing and Market Design — The PUCT continues to analyze and implement multiple options for promoting increased reliability in the wholesale electric market, including the adoption of a reliability standard for resource adequacy and market-based mechanisms to achieve this standard.

The Commission adopted a reliability standard that became effective in September 2024.

In 2023, the Texas Legislature authorized implementation of the Performance Credit Mechanism ("PCM"), which will measure real-time contribution to system reliability and provide compensation for resources to be available, subject to certain "guardrails" such as an absolute annual net cost cap, as part of its adoption of the PUCT Sunset Bill (House Bill 1500).

The Texas Legislature also directed the PUCT to implement additional market design changes such as the creation of a new ancillary service called Dispatchable Reliability Reserve Service ("DRRS") to further increase ERCOT's capability to manage net load variability and firming requirements for new generation resources which penalize poor performance during periods of low grid reserves.

The PUCT directed ERCOT to implement DRRS as a standalone product which will delay implementation until late 2025 or 2026.

Additionally, through Senate Bill 2627, the Texas Legislature created the Texas Energy Fund, which received voter approval in November 2023, and will provide grants and low-interest loans to incentivize the development of more dispatchable generation and smaller backup generation in ERCOT.

The PUCT has initiated a rulemaking proceeding to establish the process by which the Texas Energy fund loan proceeds will be distributed.

A final rule creating the general structure of the loan program is expected to be adopted in March 2024.

Operating Reserve Demand Curve ("ORDC") — On August 3, 2023, the PUCT approved implementation of an enhancement to the ORDC as a bridge solution that was recommended by the ERCOT Technical Advisory Committee and the ERCOT board of directors.

The ORDC enhancement will install price floors of $10 and $20 at reserve levels of 7,000 MW and 6,500 MW or below, respectively.

ERCOT completed implementation on November 1, 2023.

Ruling on Pricing during Winter Storm Uri — On March 17, 2023, the Third Court of Appeals issued a ruling in Luminant Energy Co.

PUCT, which is an appeal relating to the validity of two orders issued by the PUCT on February 15 and 16, 2021, respectively, governing scarcity pricing in the ERCOT wholesale electricity market during Winter Storm Uri.

The Third Court found that the PUCT exceeded its statutory authority by ordering the market price of energy to be set at the high system wide offer cap due to scarcity conditions as a result of firm load shed occurring in ERCOT.

The Third Court reversed the PUCT's orders and remanded the case.

On March 23, 2023, the PUCT filed a petition for review to the Supreme Court of Texas seeking reversal of the Third Court's decision, which was granted on September 29, 2023.

The Court received briefing on the merits and oral arguments occurred on January 30, 2024.

The outcome of this appeal could potentially require a retroactive repricing of the ERCOT market prices during the subject time period.

The PUCT directed ERCOT to implement DRRS as a standalone product which will delay implementation until 2026 or 2027.

Texas Energy Fund — Through Senate Bill 2627, the Texas Legislature created the Texas Energy Fund, which received voter approval in November 2023, and will provide grants and low-interest loans (3%) to incentivize the development of more dispatchable generation and smaller backup generation in ERCOT.

The PUCT adopted a rule in March 2024, which establishes the application and participation requirements and the process by which the Texas Energy Fund loan proceeds for dispatchable generation in ERCOT will be distributed.

The initial window for submitting loan applications was opened on June 1, 2024 and closed on July 27, 2024.

NRG, through its subsidiaries, filed for loan proceeds for three separate projects, totaling more than 1,500 MWs of capacity.

The PUCT also adopted a rule for the completion bonus grant program in April 2024, which provides for opportunities for grants of $120,000 per MW for dispatchable generation projects interconnected before June 1, 2026, or $80,000 per MW for dispatchable generation projects interconnected on or after June 1, 2026 but before June 1, 2029, subject to performance requirements.

Applications for completion bonus grants can be submitted beginning in January 2025.

Availability of grant funds may be impacted by the 10,000 MW collective cap on the ERCOT loan and grant program.

On August 29, 2024, the PUCT approved an initial portfolio of projects to move into a due diligence process with its third-party administrator.

NRG THW GT LLC's 415 MW gas peakers, which is projected to become commercially operational in 2026, was among the projects selected to move into diligence, and that process is underway.

On December 12, 2024, the PUCT approved two additional projects to move into due diligence, including Cedar Bayou Unit 5’s 689 MW combined cycle generating facility, which is projected to become commercially operational in 2028.

Approximately 9,700 MW of projects are currently approved to undergo due diligence.

Real-time Co-optimization of Energy and Ancillary Services ("RTC") — ERCOT is progressing with a multi-year project to upgrade its systems to co-optimize the dispatch of energy and ancillary services in real-time.

The RTC project will also replace the Operating Reserve Demand Curve with demand curves for each ancillary service product which will act as the primary scarcity pricing mechanism when energy or ancillary services are in shortage.

ERCOT anticipates commencing market trials for testing the RTC project in Spring 2025 with production to go-live on December 5, 2025.

Supreme Court of Texas Ruling on Pricing during Winter Storm Uri — On June 14, 2024, the Supreme Court of Texas affirmed the validity of two orders issued by the PUCT on February 15 and 16, 2021, respectively, governing scarcity pricing in the ERCOT wholesale electricity market during Winter Storm Uri.

The Supreme Court's order reversed the judgment of the Third Court of Appeals, which had held that the PUCT exceeded its statutory authority by ordering the market price of energy to be set at the high system wide offer cap due to scarcity conditions as a result of firm load shed occurring in ERCOT.

In addition to holding that the PUCT's orders were consistent with the agency's statutory authority, the Supreme Court of Texas found that the PUCT had substantially complied with the Administrative Procedure Act's procedural rulemaking requirements in issuing its orders.

Voluntary Mitigation Plan (“VMP”) Changes — On March 13, 2023, the PUCT Staff determined that a portion of NRG's VMP should be terminated due to the increase in procurement of ancillary services by ERCOT, specifically non-spin reserve services, following Winter Storm Uri.

2 unchanged sentences

At the March 23, 2023 open meeting, the PUCT approved the amended VMP.

On February 23, 2024, NRG filed a notice of intent with the PUCT to terminate its existing VMP as of March 1, 2024.

ERCOT Request for Proposals for Winter Capacity — On October 2, 2023, ERCOT issued a Request for Proposals for Capacity ("RFP") for Winter 2023-2024.

Proposals were due in early November to provide capacity for the December 1, 2023 to February 29, 2024 period.

The RFP requirements were limited to demand response resources that have not participated in ERCOT or price responsive products.

Ultimately, ERCOT cancelled the procurement due to lack of participation by qualified participants.

Lubbock, Texas Transition to Competition — The customers of Lubbock Power and Light ("LP&L"), a municipally owned utility, will enter the Texas retail competitive market in March 2024.

Starting in January 2024, LP&L customers can shop for a REP.

Customers who do not select a REP by February 15, 2024 will be assigned to one of three default REPs, one of which is Reliant.

LP&L customers will start transitioning to their chosen REP or a default REP on March 4, 2024.

Revisions to PJM Local Deliverability Area Reliability Requirement — The Base Residual Auction for the 2024/2025 delivery year commenced on December 7, 2022 and closed on December 13, 2022.

In February 2024, NRG filed a notice of intent with the PUCT and terminated its existing VMP as of March 1, 2024.

Lubbock, Texas Transition to Competition — The customers of Lubbock Power and Light ("LP&L"), a municipally owned utility, entered the Texas retail competitive market in March 2024.

Starting in January 2024, LP&L customers were able to shop for a REP.

Customers who did not select a REP by February 15, 2024 were assigned to one of three default REPs, one of which is Reliant.

LP&L customers started transitioning to their chosen REP or a default REP on March 4, 2024, which concluded in early April 2024.

Capacity Market Litigation and Reforms — On September 27, 2024, various public interest organizations filed a complaint at FERC against PJM seeking changes to the treatment of RMRs in the capacity market.

On November 18, 2024, various state consumer advocates filed a complaint at FERC against PJM seeking revisions to several aspects of PJM’s capacity market, including requiring resources previously subject to categorical exemptions to participate in capacity auctions, longer notice periods for deactivating generating resources, and several other changes.

On December 9, 2024, PJM submitted a filing at FERC proposing various capacity market updates regarding the treatment of qualifying resources that are retained under RMR agreements as capacity, retention of a dual-fuel fired combustion turbine plant as the reference resource, and updates to the Non-Performance Charge based on the RTO Net CONE for the 2026/2027 and 2027/2028 Delivery Years.

On February 14, 2025, FERC approved PJM’s filings.

On December 13, 2024, PJM filed tariff changes to add provisions enabling a one-time reliability-based expansion of the eligibility criteria for PJM’s interconnection process intended to allow a limited number of additional resources to participate in an upcoming interconnection queue.

On February 11, 2025, FERC approved PJM’s filing.

On December 20, 2024, PJM submitted tariff changes that propose to require all Existing Generation Capacity Resources to offer into the capacity auctions beginning with the 2026/2027 Delivery Year as well as certain enhancements to the Market Seller Offer Cap.

On February 20, 2025, FERC approved PJM’s filing.

On December 30, 2024, Pennsylvania Governor Josh Shapiro and the Commonwealth of Pennsylvania filed a complaint at FERC alleging that PJM’s demand curve cap is unjust and unreasonable.

The complaint seeks to lower the demand curve cap to be 1.5 times net CONE of the reference resource.

On January 28, 2025, PJM notified stakeholders that it had reached an agreement with Governor Shapiro, and on February 14, 2025, PJM and Governor Shapiro filed a join settlement agreement establishing the capacity market temporary price cap and price floor for the next two auctions and also filed a motion to dismiss the December 30, 2024 complaint.

Any changes approved by FERC could affect future capacity prices.

Revisions to PJM Locational Deliverability Area (“LDA”) Reliability Requirement — The Base Residual Auction ("BRA") for the 2024/2025 delivery year commenced on December 7, 2022 and closed on December 13, 2022.

On December 19, 2022, PJM announced that it would delay the publication of the auction results.

On December 23, 2022, PJM made a filing at FERC to revise the definition of Locational Deliverability Area Reliability Requirement in the Tariff.

This would allow PJM to exclude certain resources from the calculation of the Local Deliverability Area Reliability Requirement.

On December 23, 2022, PJM made a filing at FERC to revise the definition of LDA Reliability Requirement in the Tariff.

This would allow PJM to exclude certain resources from the calculation of the LDA Reliability Requirement.

On February 21, 2023, FERC accepted PJM's filing.

1 unchanged sentence

Rehearing was denied by operation of law, and multiple parties, including the Company, filed appeals to the Third Circuit Court of Appeals.

The price of the auction cleared significantly lower as a result of the PJM Tariff change.

Capacity Performance Penalties and Bonuses from Winter Storm Elliott — PJM experienced approximately 23 hours of Capacity Performance events from December 23-24, 2022 across PJM's entire footprint.

The Company is subject to penalty and bonus payments related to the events.

On April 3, 2023, FERC approved PJM's request to allow Winter Storm Elliott penalty payments to be spread over 9 months (with interest) and allow future penalties to have a 9 month window to be satisfied without interest.

Multiple generators filed various complaints against PJM at FERC alleging that PJM violated its Tariff in, among other things, the manner in which it operated the system during Winter Storm Elliott and the resulting assessment of capacity performance penalties.

On June 5, 2023, FERC issued an order setting the various complaints for settlement.

A settlement in principle was filed with FERC on September 29, 2023 and was approved on December 19, 2023.

PJM Base Residual Auction Revisions and Delay — On April 11, 2023, PJM filed, and FERC subsequently approved, to delay the Base Residual Auctions for the 2025/2026 to 2028/2029 delivery years.

On October 13, 2023, PJM made two filings proposing to develop market reforms to improve the operation of the capacity market through changes to the Market Seller Offer Cap rules, changes to PJM's resource adequacy risk modeling and capacity accreditation processes, and changes to capacity performance enhancements.

On January 30, 2024, FERC accepted certain reforms to PJM's resource adequacy risk modeling and accreditation processes;

on February 6, 2024, FERC rejected PJM's proposed changes to certain Market Seller Offer Cap rules and capacity performance enhancements.

The approved changes will be in effect for the 2025/2026 Base Residual Auction scheduled to occur in July 2024, and will impact both demand and supply characteristics.

PJM Files to Make Changes to the Performance Assessment Interval Trigger — On May 30, 2023, PJM filed proposed tariff revisions at FERC that narrow the definition of Emergency Actions used to determine Performance Assessment Intervals ("PAIs").

On July 28, 2023, FERC accepted the tariff revisions, and PJM made its compliance filing on August 28, 2023.

The new definition narrows the instances of when PAIs can occur and therefore decrease the instances of when capacity performance penalties are assessed.

Independent Market Monitor Market Seller Offer Cap Complaint — On March 18, 2021, finding that the calculation of the default Market Seller Offer Cap was unjust and unreasonable, FERC issued an Order, which permitted the PJM May 2021 capacity auction for the 2022/2023 delivery rule to continue under the existing rules and set a procedural schedule for parties to file briefs with possible solutions.

On March 12, 2024, the court vacated the portion of the FERC orders that allow PJM to apply the LDA Reliability Requirement to the 2024/2025 capacity auction.

On March 29, 2024, PJM filed a petition seeking confirmation as to the capacity commitments rules for the 2024/2025 auction.

On April 22, 2024, multiple parties filed a complaint seeking to find the revised rate unjust and unreasonable and implement rates consistent with FERC's February 2023 decision, which was denied on July 9, 2024.

Those parties filed an appeal to the Court of Appeals for the D.C.

Circuit on November 5, 2024.

On May 6, 2024, FERC directed PJM to recalculate the 2024/2025 auction results under the Initial LDA Reliability Requirement rules, and further directed PJM to rerun the Third Incremental Auction.

PJM published the revised BRA and Third Incremental Auction results on May 8, 2024 and May 23, 2024, respectively.

On June 14, 2024, multiple parties filed appeals to the Third Circuit Court of Appeals seeking review of the May 6, 2024 FERC orders approving PJM's petition to restore the original capacity commitment rules for PJM to recalculate the 2024/2025 BRA and the rerun of the 2024/2025 BRA.

As a result, the capacity for the 2024/2025 delivery year in the Delmarva Power and Light South zone resulted in higher prices.

This outcome may change depending upon the disposition of the outstanding complaint and appeals.

PJM Base Residual Auction Revisions and Delay — On October 13, 2023, PJM made two filings at FERC.

In the first filing, PJM proposed revisions to the Market Seller Offer Cap, which FERC rejected on February 6, 2024.

The second filing proposed to make changes to PJM’s resource adequacy risk modeling and capacity accreditation processes, which FERC approved, with condition, on January 20, 2024.

The approved changes were in effect for the 2025/2026 BRA that occurred in July 2024.

In November 2024, at PJM’s request, FERC approved delays to future BRAs.

The 2026/2027 BRA is currently scheduled for July 2025.

Indian River RMR Proceeding — On June 29, 2021, Indian River notified PJM that it intended to retire Unit 4, effective May 31, 2022, due to expected uneconomic operations.

On July 30, 2021, PJM responded to the deactivation notice and stated that PJM had identified reliability violations resulting from the proposed deactivation of Unit 4.

NRG filed a cost based RMR rate schedule at FERC on April 1, 2022.

FERC accepted the rate schedule with a June 1, 2022 effective date, subject to refund and established hearing and settlement procedures.

The Company reached settlement with a number of the intervening parties and the settlement agreement was filed at FERC on April 2, 2024.

On January 16, 2025, FERC issued an order approving the settlement agreement.

On February 14, 2025, the Independent Market Monitor and the Maryland Office of the People’s Counsel filed a request for a rehearing of the January 16, 2025 FERC order.

PJM announced the Delmarva Power transmission upgrades were completed in December 2024 and as a result, PJM sent NRG a termination notice.

Indian River Unit 4 retired on February 23, 2025.

Independent Market Monitor Market Seller Offer Cap Complaint — On March 18, 2021, finding that the calculation of the default Market Seller Offer Cap was unjust and unreasonable, FERC issued an order, which permitted the PJM May 2021 capacity auction for the 2022/2023 delivery year to continue under the existing rules and set a procedural schedule for parties to file briefs with possible solutions.

On September 2, 2021, FERC issued an order in response to a complaint filed by the PJM Independent Market Monitor's proposal, which eliminated the Cost of New Entry-based Market Seller Offer Cap, implemented a limited default cap for certain asset classes based on going-forward costs and provided for unit specific cost review by the Independent Market Monitor for all other non-zero offers into the auctions.

5 unchanged sentences

Supreme Court to overturn the August 15, 2023 judgment.

California Resource Planning Proceedings — As part of the Integrated Resource Procurement docket, the CPUC is requiring that all LSEs procure a pro rata share of 15.5 GW of new non-fossil resource adequacy ("RA") from 2023 to 2026.

The new RA program rules adopted in 2023 are now in an implementation phase with a compliance process likely to be continually recalibrated through the first quarter of 2024.

CPUC jurisdictional retail providers will be required to procure RA that meets their hourly load shape beginning in 2025.

The result of these changes may create upward pressure on RA prices through 2024, and if LSEs cannot meet their RA obligations, penalties and restrictions on serving new customers may be issued.

As relief to the tightness of the RA market, the CPUC adopted a final decision in December 2023 to extend PG&E's

Diablo Canyon nuclear facility.

The decision would allow the RA and GHG-free attributes of this 2-GW facility to be allocated to all LSEs to provide some relief to all LSEs' RA positions.

On May 28, 2024, the U.S Supreme Court denied the petition for review.

Final Rule on Reactive Power Payments — On October 17, 2024, FERC issued its final rule on reactive power, eliminating compensation for a generator’s reactive power within the standard power factor.

ISOs must make a compliance filing, but FERC will permit ISO-NE, NYISO, and PJM to request a later effective date.

This change affects the payments provided to generators providing reactive power service.

Change to Energy Efficiency in the PJM Capacity Auction — On November 5, 2024, FERC approved PJM’s proposal to terminate compensation paid through the PJM capacity market to energy efficiency resources beginning in the 2026/2027 auction year.

However, energy efficiency resources will be counted as a reduction in the PJM load forecast that is the basis of the PJM capacity auction.

FERC's action will eliminate wholesale market financial support for utility-run programs authorized by state utility commissions, as well as certain third-party providers of energy efficiency services.

NRG's demand-side programming is not significantly affected by the modification .

Other Regulatory Matters

From time to time, NRG entities may be subject to examinations, investigations and/or enforcement actions by federal, state and provincial licensing agencies and may face the risk of penalties for violation of financial services, consumer protections and other applicable laws and regulations.

From time to time, NRG entities may be subject to examinations, investigations and/or enforcement actions by federal, state and provincial licensing and regulatory agencies and may face the risk of penalties for violation of financial services, consumer protection and other applicable laws and regulations.

Environmental Regulatory Matters

1 unchanged sentence

These laws generally require that governmental permits and approvals be obtained before construction and maintained during operation of power plants.

Federal and state environmental laws have become more stringent over time.

Future laws may require the addition of emissions controls or other environmental controls or impose restrictions on the Company's operations including unit retirements.

Federal and state environmental laws generally have become more stringent over time.

Future laws may require the addition of emissions controls or other environmental controls, impose restrictions on the Company's operations including unit retirements or impose obligations related to historic coal ash use, storage and disposal.

Complying with environmental laws often involves specialized human resources and significant capital and operating expenses, as well as occasionally curtailing operations.

NRG decides to invest capital for environmental controls based on the relative certainty of the requirements, an evaluation of compliance options and the expected economic returns on capital.

A number of regulations that affect the Company have been and continue to be revised by the EPA, including requirements regarding coal ash, NAAQS revisions and implementation, and effluent limitation guidelines.

NRG will evaluate the impact of these regulations as they are revised but cannot fully predict the impact of each until anticipated revisions and legal challenges are finally resolved.

Several regulations that affect the Company have been and continue to be revised by the EPA, including requirements regarding coal ash, GHG emissions, NAAQS revisions and implementation, and effluent limitation guidelines.

NRG will evaluate the impact of these regulations as they are revised but cannot fully predict the impact of each until anticipated revisions, legal challenges and reconsiderations are resolved.

The CAA and related regulations (as well as similar state and local requirements) have the potential to affect air emissions, operating practices and pollution control equipment required at power plants.

2 unchanged sentences

The relevant NAAQS may become more stringent.

On February 7, 2024, the EPA released a prepublication version of a final rule that when published in the Federal Register will increase the stringency of the PM2.5 NAAQS.

In March 2024, the EPA increased the stringency of the PM2.5 NAAQS.

The Company maintains a comprehensive compliance strategy to address continuing and new requirements.

8 unchanged sentences

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.

On May 9, 2024, the EPA promulgated a rule that repealed the ACE rule and significantly revised the manner in which new combustion-turbine and existing steam EGU's GHG emissions will be regulated including capturing and storing/sequestering CO 2 in some instances.

This rule has been challenged by numerous parties in the D.C.

Circuit including 27 states with 22 states intervening in support of the rule.

The DC Circuit held oral arguments related to this rule in December 2024.

On February 5, 2025, the DOJ filed a motion asking the court to hold proceedings in abeyance while the new administration evaluates the rule.

The court granted the motion on February 19, 2025.

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.

On May 1, 2023, the U.S.

Court of Appeals for the Fifth Circuit stayed the EPA's disapproval of Texas' and Louisiana's state plans, which disapprovals are a condition precedent to the EPA imposing its plan on Texas and Louisiana.

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 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.

Nonetheless, on June 5, 2023, the EPA promulgated this rule.

On June 27, 2024, the U.S.

Supreme Court stayed the final rule in the 11 states where the rule had not already been stayed.

The Company cannot predict the outcome of the legal challenges to the:

2 unchanged sentences

and (iii) the interim final rule promulgated on July 31, 2023 that seeks to address the judicial orders.

The Company anticipates that the new U.S.

presidential administration will revisit this rule.

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.

1 unchanged sentence

The Company cannot predict the outcome of this proposal.

Greenhouse Gas Emissions — NRG emits CO 2 (and small quantities of other GHGs) when generating electricity at a majority of its facilities.

Greenhouse Gas Emissions — NRG emits CO 2 when generating electricity at its facilities.

Nearly all of NRG's domestic GHG emissions are subject to federal (U.S.

7 unchanged sentences

The decrease is attributed to reductions in fleet-wide annual net generation and an overall market-driven shift away from coal as a primary fuel to natural gas.

The achievement of NRG's 2025 emissions reduction targets could be impacted by volatility within the power markets, driven by market conditions and changes in regulatory policies.

continued achievement of NRG's 2025 emissions reduction targets could be impacted by volatility within the power markets, driven by market conditions and changes in regulatory policies.

As of December 31, 2024, less than 5% of the Company's consolidated revenues were derived from coal-fired operating assets.

3 unchanged sentences

generation was adjusted to remove divested assets.

In 2015, the EPA finalized a rule regulating byproducts of coal combustion (e.g., ash and gypsum) as solid wastes under the RCRA.

Mercury and Air Toxics Standards (“MATS”) — On May 7, 2024, the EPA promulgated a final rule that amends the MATS rule by, among other things, increasing the stringency of the filterable particulate matter standard at coal-burning units.

The deadline for complying with this more stringent standard is 2027.

Twenty three states have challenged this rule in the D.C.

Accordingly, the outcome of this rulemaking is uncertain.

The Company anticipates that the new U.S.

presidential administration will revisit this rule.

In April 2015, the EPA finalized the rule regulating byproducts of coal combustion (e.g., ash and gypsum) as solid wastes under the RCRA.

On July 30, 2018, the EPA promulgated a rule that amended the ash rule by extending some of the deadlines and providing more flexibility for compliance.

On August 21, 2018, the D.C.

5 unchanged sentences

Alternative Demonstration for Unlined Surface Impoundments," which further amended the April 2015 Rule to, among other things, provide procedures for requesting approval to operate existing ash impoundments with an alternate liner.

On May 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.

On May 8, 2024, the EPA promulgated a rule that establishes requirements for:

(i) inactive (or legacy) surface impoundments at inactive facilities and (ii) coal combustion residuals ("CCR") management units (regardless of how or when the CCR was placed) at regulated facilities.

The rule also creates an obligation to conduct site assessments (at all active and certain inactive facilities) to determine whether CCR management units are present.

The rule has been challenged in the D.C.

Circuit and the outcome of the legal challenges is uncertain.

The Company anticipates that the new U.S.

presidential administration will revisit this rule.

Domestic Site Remediation Matters

10 unchanged sentences

NRG may provide additional performance assurance if required by the Railroad Commission of Texas.

The Company is required under the CWA to comply with intake and discharge requirements, requirements for technological controls and operating practices.

The Company is required under the Clean Water Act to comply with intake and discharge requirements, requirements for technological controls and operating practices.

As with air quality regulations, federal and state water regulations have become more stringent and imposed new requirements.

Effluent Limitations Guidelines — In 2015, the EPA revised the Effluent Limitations Guidelines ("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.

ELG — In 2015, the EPA revised the ELG for Steam Electric Generating Facilities, which imposed more stringent requirements (as individual permits were renewed) for wastewater streams from FGD, fly ash, bottom ash and flue gas mercury control.

In 2017, the EPA promulgated a final rule that, among other things, postponed the compliance dates to preserve the status quo for FGD wastewater and bottom ash transport water by two years to November 2020 until the EPA amended the rule.

On October 13, 2020, the EPA amended the 2015 ELG rule by:

3 unchanged sentences

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.

On May 9, 2024, the EPA promulgated a rule that revises the ELG by, among other things, further restricting the discharge of (i) FGD wastewater, (ii) bottom ash transport water, and (iii) combustion residual leachate.

The rule was challenged in numerous courts, but the cases have been consolidated in the Eighth Circuit of the U.S.

Court of Appeals.

The outcome of the legal challenges is uncertain.

On February 19, 2025, the DOJ filed a motion asking the court to hold proceedings in abeyance while the new administration evaluates the rule.

The Company anticipates that the new U.S.

presidential administration will revisit this rule.

Regional Environmental Developments

1 unchanged sentence

On April 15, 2021, the state promulgated the implementing regulation, which became effective on April 21, 2021.

NRG has applied for initial operating permits and construction permits (for closure and retrofits) as required by the regulation and is waiting for permits to be issued by the Illinois EPA.

Houston Nonattainment for 2008 Ozone Standard — During the fourth quarter of 2022, the EPA changed the Houston area’s classification from Serious to Severe nonattainment for the 2008 Ozone Standard.

Accordingly, Texas is required to develop a new control strategy and submit it to the EPA, which is expected by May 2024.

NRG has applied for initial operating permits and construction permits (for closure and retrofits) as required by the regulation and is waiting for most of its permits to be issued by the Illinois EPA.

Houston Nonattainment for 2008 Ozone Standard — In 2022, the EPA changed the Houston area’s classification from Serious to Severe nonattainment for the 2008 Ozone Standard.

Accordingly, Texas is required to develop a new control strategy and submit it to the EPA.

NRG sells to a wide variety of customers, primarily end-use customers in the residential, commercial and industrial, and wholesale sectors.

7 unchanged sentences

NRG believes its employees are vital to its success and is committed to offering employees a rewarding career that provides opportunities for growth and the ability to make valuable contributions toward the achievement of the Company’s business objectives.

NRG focuses on safety, health and wellness, diversity, equity and inclusion, talent development and total rewards for its employees.

NRG focuses on safety, health and wellness, employee engagement, talent development and total rewards for its workforce.

Safety is embedded in the culture at NRG.

3 unchanged sentences

Health and Wellness

For several years, NRG has invested in the health and well-being of its employees and their families.

NRG provides programs that holistically support its employees’ physical, emotional and financial wellness, allowing employees the opportunity to take control of their well-being and focus on what matters most to them for a healthy, secure future.

For the 2023 plan year, the Company included well-being goals in the Annual Incentive Plan (AIP), ensuring participants are motivated to improve their physical, emotional and financial well-being.

Diversity, Equity and Inclusion

NRG is committed to diversity, equity and inclusion (DE&I) as an integral way the Company operates.

In 2023, NRG completed a gender and race pay equity study to analyze the Company's pay decisions in light of gender, race, or other similar factors.

The study demonstrated equitable pay practices after accounting for job level, experience, tenure and location.

The Company first conducted this study in 2020 and committed to conduct the study every three years.

In 2023, Forbes and Statista recognized NRG as one of The Best Employers for Diversity.

Also in 2023, NRG created designated reflection rooms in its headquarters to accommodate religious practices and reflection.

NRG held its first Lunar New Year's celebrations hosted by VIVIDH, the Company's Asian American Pacific Islander Business Resource Group.

The Company also hosted its inaugural listening session in recognition of Canada's National Day for Truth and Reconciliation sponsored by RISE, its Indigenous Communities Business Resource Group.

NRG has continued to invest in the health and well-being of its employees and their families by providing programs that holistically support its employees’ physical, emotional, social and financial wellness, allowing employees the opportunity to take control of their well-being and focus on what matters most to them for a healthy, secure future.

The Company includes well-being goals as a metric in the Annual Incentive Plan (AIP), ensuring participants are motivated to improve their overall well-being.

Employee Engagement

NRG seeks to create work environments where employees are treated fairly and respectfully and where each voice matters.

The Company seeks to build on that position by continually improving its hiring and promotion policies and supporting the growth of Business Resource Groups (“BRGs”).

In these BRGs, employees can share, learn, and receive support from colleagues with whom they have an affinity based on shared backgrounds or interests.

The Company strives to be a place that empowers employee growth that celebrates the individual employee and his or her unique backgrounds.

Talent Development

NRG deploys various talent development strategies and programs with the goal of ensuring a pipeline of leadership that can execute on the Company’s strategy and drive value for all stakeholders.

NRG deploys various talent development strategies and programs to develop leaders who can execute on the Company’s strategy and drive value for all stakeholders.

The Board of Directors regularly engages with management on leadership development and succession planning, including providing feedback on development plans and bench strength for key senior leader positions.

The Board of Directors also has a structured program that allows directors to interact directly with individuals deeper within the organization whom management, through a robust talent assessment program, as well as mentoring relationships, has identified as high potential future leaders.

In 2021, the Company launched an annual Emerging Leaders Program to strengthen the identified pipeline of future leaders and create a cohort of high potential candidates for leadership positions.

In 2023, the Company launched a front-line leader program called Peak Leadership with the intent to onboard first-level leaders into their leadership role in select business units and is planning to expand its impact in 2024.

The Company has a performance management tool that emphasizes a continuous feedback loop and a robust online training curriculum with topics including leadership, communication and productivity.

In 2024, the Company continued its annual Emerging Executive Leaders Program to strengthen the identified pipeline of future executives and create a cohort of high potential candidates to work on active company challenges or opportunities.

Additionally, the Company expanded a front-line leader program called Peak Leadership to the entire company with the intent to onboard first-level leaders into their leadership role in select business units, and will look to continue growing the initiative in 2025.

The Company has a performance management tool that emphasizes a continuous feedback loop and a robust online training curriculum covering topics such as leadership, communication and productivity.

Total Rewards

NRG seeks to provide market competitive compensation and benefits, benchmarked against direct peers, industry, and, where appropriate, general peers.

To ensure incentives are properly aligned with business needs and can attract and retain qualified employees, the Compensation Committee of the Board of Directors actively reviews the Company's total rewards programs, including benchmarking programs against peer groups, assessing the risks of programs and evaluating the design of the short-term and long-term incentive programs.

NRG continues to evaluate its benefits and offerings taking into consideration the needs of its employees to ensure they are competitive and best serve its employees.

NRG seeks to provide market competitive compensation and benefits benchmarked against the industries in which the Company operate:

energy, consumer services and, where appropriate, the entire market.

NRG offers full-time employees incentives designed to motivate and reward success, and it continues to evaluate its benefits and offerings taking into consideration the needs of its employees to ensure they are competitive and best serve its employees.

Every two years, the Company engages an independent third-party to benchmark its compensation and benefits programs against its peers and report the results to the Compensation Committee of the Board of Directors.

1 unchanged sentence

www.nrg.com .

Information included in these documents is not intended to be incorporated into this Form 10-K.

Information included in these documents is not intended to be incorporated into this Annual Report on Form 10-K.

Available Information

3 unchanged sentences

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

What changed 10-K

Item 1. Business