What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-26 compared with 2024-02-28 · 345 added, 311 removed, 702 unchanged (48% of the section changed)

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• Critical accounting estimates that are most important to both the portrayal of the Company's financial condition and results of operations, and require management's most difficult, subjective, or complex judgments.

As you read this discussion and analysis, refer to NRG's Consolidated Statements of Operations in this Form 10-K, which present the results of the Company's operations for the years ended December 31, 2023 and 2022, and also refer to Item 1 — Business to this Form 10-K for more detail discussion about the Company's business.

A discussion and analysis of fiscal year 2021 may be found in Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

As you read this discussion and analysis, refer to NRG's Consolidated Statements of Operations in this Annual Report on Form 10-K, which present the results of the Company's operations for the years ended December 31, 2024 and 2023, and also refer to Item 1 — Business to this Annual Report on Form 10-K for more detail discussion about the Company's business.

Beginning in the third quarter of 2024, the Company is recording the amortization of capitalized contracts costs within depreciation and amortization.

This change, along with additional financial statement disclosures, is meant to address investor inquiries by enhancing transparency to easier match expenses with revenues.

The Company previously recorded amortization of capitalized contract costs related to fulfillment in cost of operations and amortization of capitalized contract costs related to customer acquisition primarily in selling, general and administrative costs in the consolidated statements of operations.

Amounts for prior years were adjusted for comparative purposes.

See Item 15 — Note 2 , Summary of Significant Accounting Policies for further detail.

The adjustments had no impact on the Company’s total operating costs and expenses, and total cash flows.

The Company has elected to omit discussion of the earliest of the three years covered by the consolidated financial statements presented.

A discussion and analysis of fiscal year 2022 may be found in Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 28, 2024, and is not materially impacted by the adjustments noted above.

The following discussion and analysis also contains forward-looking statements, including, without limitation, statements relating to NRG’s plans, strategies, objectives, expectations, intentions, and resources.

Such forward-looking statements should be read in conjunction with the disclosures under Item 1A — Risk Factors of this Annual Report on Form 10-K.

Executive Summary

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 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 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.

Business Environment

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Market Dynamics — The price of natural gas plays an important role in setting the price of electricity in many of the regions where NRG operates.

Natural gas prices are driven by variables including demand from the industrial, residential, and electric sectors, productivity across natural gas supply basins, costs of natural gas production, changes in pipeline infrastructure, global LNG demand, exports of natural gas, and the financial and hedging profile of natural gas customers and producers.

Natural gas prices are driven by variables including demand from the industrial, residential, and electric sectors, productivity across natural gas supply basins, costs of natural gas production, changes in pipeline infrastructure, global liquified natural gas demand, exports of natural gas, and the financial and hedging profile of natural gas customers and producers.

In 2024, the average natural gas price at Henry Hub was $2.27 per MMBtu compared to $2.74 per MMBtu in 2023, representing a decrease of 17%.

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The relative price of natural gas as compared to coal and prevailing power prices are the primary driver of coal demand.

Coal commodity prices decreased slightly in 2023.

Coal commodity prices remained relatively flat in 2024.

Electricity Prices — The price of electricity is a key determinant of the profitability of the Company.

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The following table summarizes average on-peak power prices for each of the major markets in which NRG operates.

For the year ended December 31, 2023, as compared to the same period in 2022, Texas, East and West average on-peak power prices decreased as a result of lower natural gas prices.

Average On-Peak Power Price ($/MWh)

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(b) Average on-peak power prices based on day-ahead settlement prices as published by the respective ISOs

Load Growth — The electric industry is expected to experience a surge in demand driven primarily by new manufacturing, industrial and data center facilities (inclusive of GenAI).

Energy Information Administration's 2023 Annual Energy Outlook, combined with external forecasts of GenAI, shows the potential for 500 TWh of incremental load across the U.S.

through 2030, as compared to 2023.

ERCOT's current long term load forecast shows peak demand increasing from 86 GW in 2024 to 137 GW in 2028.

This load growth will require significant planning and construction of new generation and transmission.

Increased Awareness of, and Action to Combat, Climate Change — Diverse groups of stakeholders, including investors, asset managers, financial institutions, non-government organizations, industry coalitions, individual companies, consumer groups and academic institutions, are increasingly engaged in efforts to limit global warming in the post-industrial era to 1.5 degrees Celsius.

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NRG is committed to providing transparent disclosures of its climate risks and opportunities to stakeholders.

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

Lower Carbon Infrastructure Development — Policy mechanisms at the state and federal level, including production and investment tax credits, cash grants, loan guarantees, accelerated depreciation tax benefits, RPS, and carbon trading plans, have supported and continue to support the development of renewable generation, demand-side and smart grid, and other lower carbon infrastructure technologies.

Inflation Reduction Act, signed into law in August 2022, is intended to further support the deployment of lower carbon energy technologies.

As costs associated with the development of lower carbon infrastructure, such as wind and solar generating facilities, continue to evolve and impact the development of lower carbon infrastructure in the markets where the Company participates, it may impact the ability of the Company's generating facilities to participate in those markets.

According to ERCOT, 43% of 2024 energy consumption in the ERCOT market was generated from carbon emission-free resources, with wind power contributing 24%.

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Technologies like smart thermostats, smart appliances and electric vehicles are giving individuals more choice and control over their electricity usage.

Power providers are starting to engage with customers who have transitioned to smart homes with new offerings, including but not limited to behind-the-meter demand

response, or virtual power plant products.

Companies with large customer bases in competitive market places are poised to create further engagement with their customer bases and help their customers further integrate their smart home into their daily lives.

Power providers are starting to engage with

customers who have transitioned to smart homes with new offerings, including but not limited to behind-the-meter demand response, or virtual power plant products.

Companies with large customer bases in competitive marketplaces are poised to create additional engagement with customers to help further integrate their smart home into their daily lives.

Weather — Weather conditions in the regions of the U.S.

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The following significant events occurred during 2024 and through the filing date, as further described within this Management's Discussion and Analysis and the Consolidated Financial Statements:

Vivint Smart Home Acquisition and related financings

On March 10, 2023, the Company completed the acquisition of Vivint Smart Home.

The Company paid $12 per share, or $2.6 billion in cash.

See Item 15 — Note 4, Acquisitions and Dispositions , to the Consolidated Financial Statements for further discussion.

On March 9, 2023, the Company issued 650,000 shares of 10.25% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock.

The proceeds, net of issuance costs, of $635 million were used to partially fund the Vivint Smart Home acquisition.

On March 9, 2023, the Company issued $740 million of aggregate principal amount of 7.000% senior secured first lien notes due 2033.

The net proceeds of $724 million, net of issuance costs, were used to partially fund the Vivint Smart Home acquisition.

On November 1, 2023, the Company closed on the previously announced sale of its 44% equity interest in STP to 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.

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.

On January 6, 2023, NRG closed on the sale of land and related 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.

NRG recognized a gain on the sale of $199 million.

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.

In May 2022, W.A.

Parish Unit 8 came offline as a result of damage to the steam turbine/generator.

The extended forced outage ended in September 2023 and the unit has returned to service.

During the second quarter of 2022, the Company announced the planned retirement of the Joliet generating facility in 2023.

On September 1, 2023, the Joliet generating facility fully retired.

On September 16, 2024, the Company closed on the sale of its 100% ownership in the Airtron business unit.

Proceeds of $500 million were reduced by working capital and other adjustments of $20 million, resulting in net proceeds of $480 million.

The Company recorded a gain on the sale of $204 million within the West/Services/Other region of operations.

Capital Allocation

In October 2024, the Board of Directors authorized an additional $1.0 billion for share repurchases as part of the existing share repurchase authorization, for a total of $3.7 billion.

As of January 31, 2025, $1.5 billion is remaining under the $3.7 billion authorization.

In the first quarter of 2024, NRG increased the annual common stock dividend to $1.63 from $1.51 per share, representing an 8% increase from 2023.

Beginning in the first quarter of 2025, NRG increased the annual common stock dividend by 8% to $1.76 per share.

The Company expects to target an annual common stock dividend growth rate of 7-9% per share in subsequent years.

On April 16, 2024, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Eighth Amendment to the Second Amended and Restated Credit Agreement (the “Eighth Amendment”) with, among others, Citicorp North America, Inc., as administrative agent (the “Agent”) and as collateral agent, and certain financial institutions, as lenders, which amended the Company’s Second Amended and Restated Credit Agreement, dated as of June 30, 2016 (as amended, restated, supplemented and/or otherwise modified from time to time, the “Credit Agreement”), in order to (i) establish a new Term Loan Facility with borrowings of $875 million in aggregate principal amount (the “Existing Term Loan B Facility” and the loans thereunder, the “Existing Term Loans”) and (ii) make certain other modifications to the Credit Agreement as set forth therein.

The proceeds from the Existing Term Loans were used to repay a portion of the Company’s Convertible Senior Notes, all of the Company's 3.750% senior secured first lien notes due 2024 and for general corporate purposes.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

On April 22, 2024, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Ninth Amendment to the Second Amended and Restated Credit Agreement (the “Ninth Amendment”) to the Credit Agreement to its Revolving Credit Facility to extend the maturity date of a portion of the revolving commitments thereunder to February 14, 2028.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

During the year ended December 31, 2024, the Company repurchased $343 million in aggregate principal amount of its Convertible Senior Notes, for $603 million, which included the payment of $3 million of accrued interest, using cash on hand and a portion of the proceeds from the Existing Term Loans.

For the year ended December 31, 2024, a $260 million loss on debt extinguishment was recorded in connection with the repurchases.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

During the second quarter of 2024, the Company entered into privately negotiated capped call transactions with certain counterparties to effectively lock in a conversion premium of $257 million on the remaining $232 million of the Convertible Senior Notes.

The option price of $257 million was incurred when the Company entered into the capped call transactions, which will be payable upon the earlier of settlement and expiration of the applicable Capped Call.

For further discussion see Item 15 — Note 15, Capital Structure .

On June 21, 2024, NRG Receivables, amended its existing Receivables Facility to, among other things, (i) extend the scheduled termination date to June 20, 2025, (ii) increase the aggregate commitments from $1.4 billion to $2.3 billion (adjusted seasonally) and (iii) add a new originator.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

During the second quarter of 2024, the Company repaid $600 million in aggregate principal amount of its 3.750% Senior Secured First Lien Notes due 2024.

Debt Refinancing Transactions

In the fourth quarter of 2024, the Company entered into the following debt transactions:

Issuance by NRG of 6.000% Senior Notes due 2033 $925 million Repayment of the Vivint Senior Secured Term Loan B $1.310 billion

Issuance by NRG of 6.250% Senior Notes due 2034 $950 million Cash tender offer for Vivint 6.750% Senior Secured Notes due 2027 (a)

Exchange offer for New NRG 5.750% Senior Notes due 2029 $798 million Exchange offer for Vivint 5.750% Senior Notes due 2029 (b)

Incremental Term Loan B issued by NRG $450 million Repayment of NRG 6.625% Senior Notes due 2027 $375 million

Transactions fees, expenses and premiums $40 million

Total $3.123 billion Total $3.123 billion

(a) On October 15, 2024, APX Group, Inc.

launched the Cash Tender Offer for the Vivint 6.750% Senior Secured Notes due 2027 and on October 30, 2024, delivered a notice of redemption with respect to the $11 million of the Vivint 6.750% Senior Secured Notes due 2027 that remained outstanding

(b) On October 15, 2024, APX Group, Inc.

launched an Exchange Offer for the Vivint 5.750% Senior Notes due 2029 and on November 4, 2024, delivered a notice of redemption with respect to the $2 million of the Vivint 5.750% Senior Notes due 2029 that remained outstanding following the Exchange Offer

As part of the above transactions, the Company entered into the Tenth and Eleventh Amendments to the Second Amended and Restated Credit Agreement (the “Tenth and Eleventh Amendments”) to the Credit Agreement to (i) include an incremental term loan B in an aggregate principal amount of $450 million (the “Incremental Term Loan B Facility” and the loans thereunder, the “Incremental Term Loans”), (ii) extend the maturity date of its revolving credit facility to October 30, 2029 and (iii) make certain other amendments to the Credit Agreement.

On November 26, 2024, the Company, as borrower, entered into the Twelfth Amendment to the Second Amended and Restated Credit Agreement (the “Twelfth Amendment”) to the Credit Agreement to (i) reprice both the Existing Term Loan B Facility and the Incremental Term Loan B Facility and (ii) make certain other modifications to the Credit Agreement as set forth therein.

On December 20, 2024, the Company, as borrower, entered into the Thirteenth Amendment to the Second Amended and Restated Credit Agreement (the “Thirteenth Amendment”) to the Credit Agreement to (i) add APX Group, Inc.

as an additional borrower of the loans under the Credit Agreement on a joint and several basis with the Company and (ii) make certain other modifications to the Credit Agreement as set forth therein.

In connection with the above transactions, a $122 million loss on debt extinguishment was recorded, which included the write-off of discounts and previously deferred financing costs and other fees.

For further discussion on these amendments and the debt transactions in the table above, see Item 15 — Note 12, Long-term Debt and Finance Leases.

In 2024, NRG entered into a definitive partnership agreement with Renew Home, a VPP platform 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.

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 tenor 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.

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

Capital Allocation

In June 2023, 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, the Company paid a total of $950 million and will receive shares of NRG's common stock on specified settlement dates.

During the year ended December 31, 2023, the Company completed $1.2 billion of share repurchases, including the $950 million ASR and $200 million of open market repurchases, under the $2.7 billion authorization.

See Item 15 - Note 16, Capital Structure , to the Consolidated Financial Statements for additional discussion.

In the first quarter of 2023, NRG increased the annual dividend on its common stock to $1.51 from $1.40 per share, representing an 8% increase from 2022.

Beginning in the first quarter of 2024, NRG increased the annual dividend by 8% to $1.63 per share.

The Company expects to target an annual dividend growth rate of 7-9% per share in subsequent years.

During 2023, the Company reduced its debt by $900 million using funds from cash from operations.

Additionally, the Company redeemed $620 million in aggregate principal amount of its 3.875% Senior Notes, due 2032, for $502 million using a portion of the proceeds from the sale of STP.

The Company intends to spend approximately $500 million reducing debt during 2024 to maintain its targeted credit metrics.

The Company intends to fund the debt reduction from cash from operations.

Site Development Updates

On February 13, 2025, NRG signed a strategic Project Development Agreement with GE Vernova (“GEV”) and Kiewit’s subsidiary, TIC, to develop and construct up to 5.4 GW of new gas-fired, combined cycle generation projects.

The generation facilities will be owned and operated by NRG.

Additionally, NRG has entered into a slot reservation agreement with GEV for the procurement of 1.2 GW of 7HA gas turbines.

The first projects under this comprehensive development agreement are expected to commence operations by the end of 2029.

Consolidated Results of Operations for the years ended December 31, 2024 and 2023

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Energy revenue (a)

553 1,250 (697)

Capacity revenue (a)

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Other revenues (a)(b)

336 494 (158)

Total revenue 28,130 28,823 (693)

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Impairment losses 36 26 (10)

Selling, general and administrative costs 1,968 1,228 (740)

Selling, general and administrative costs (excluding amortization of customer acquisition costs of $204, and $125, respectively, which are included in depreciation and amortization shown separately above)

2,031 1,843 (188)

Provision for credit losses 314 251 (63)

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Other income, net 44 47 (3)

Gain on debt extinguishment 109 — 109

(Loss)/Gain on debt extinguishment (382) 109 (491)

Interest expense (651) (667) 16

Total other expenses (976) (597) (379)

(Loss)/Income Before Income Taxes (213) 1,663 (1,876)

Income tax (benefit)/expense (11) 442 (453)

Net (Loss)/Income $ (202) $ 1,221 $ (1,423)

Income/(Loss) Before Income Taxes 1,448 (213) 1,661

Income tax expense/(benefit) 323 (11) 334

Net Income/(Loss) $ 1,125 $ (202) $ 1,327

(a) Includes realized gains and losses from financially settled transactions

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Economic Gross Margin

In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful

than the GAAP information provided elsewhere in this report.

Economic gross margin should be viewed as a supplement to and not a substitute for the Company's presentation of gross margin, which is the most directly comparable GAAP measure.

Economic gross margin is not intended to represent gross margin.

The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker.

The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's management.

Economic gross margin is defined as the sum of retail revenue, energy revenue, capacity revenue and other revenue, less cost of fuels, purchased energy and other cost of sales.

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

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

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

Year Ended December 31, 2023

($ in millions, except otherwise noted) Texas East West/Services/Other Corporate/Eliminations Total

($ in millions, except otherwise noted) Texas East West/Services/Other Vivint Smart Home (a)

Corporate/Eliminations Total

Retail revenue $ 10,030 $ 11,946 $ 3,943 $ 1,549 $ (1) $ 27,467

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Contract amortization — (32) — — — (32)

Other revenue (a)

Other revenue (b)

369 88 48 — (11) 494

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Cost of fuel (760) (112) (120) — — (992)

Purchased energy and other costs of sales (b)(c)(d)

Purchased energy and other costs of sales (c)(d)(e)

(6,288) (10,683) (3,532) (116) 9 (20,610)

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Economic gross margin $ 3,428 $ 1,727 $ 526 $ 1,433 $ (5) $ 7,109

(a) Includes trading gains and losses and ancillary revenues

(b) Includes capacity and emissions credits

(c) Includes $3.0 billion, $120 million and $1.1 billion of TDSP expense in Texas, East, and West/Services/Other respectively

(d) Excludes depreciation and amortization shown separately

Year Ended December 31, 2022

Business Metrics Texas East West/Services/Other Corporate/Eliminations Total

(a) Includes results of operations following the acquisition date of March 10, 2023

(b) Includes trading gains and losses and ancillary revenues

(d) Includes $3.1 billion, $244 million and $1.1 billion of TDSP expense in Texas, East, and West/Services/Other, respectively

(e) Excludes depreciation and amortization shown separately

Business Metrics Texas East West/Services/Other Vivint Smart Home Corporate/Eliminations Total

Home electricity sales volume (GWh) 40,032 12,838 2,243 — — 55,113

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2,928 2,137 762 — — 5,827

Average Vivint Smart Home subscriber count (in thousands) (b)

— — — 2,008 — 2,008

Ending Vivint Smart Home subscriber count (in thousands) (b)

— — — 2,043 — 2,043

GWh sold 30,776 5,396 5,903 — — 42,075

GWh generated (b)

GWh generated (c)

30,776 2,016 5,903 — — 38,695

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

(b) Includes owned and leased generation, excludes tolled generation and equity investments

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

The following table represents the weather metrics for 2024 and 2023:

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(a) The West/Services/Other weather metrics are comprised of the average of the CDD and HDD regional results for the West - California and West - South Central regions

(b) National Oceanic and Atmospheric Administration-Climate Prediction Center - A Cooling Degree Day ("CDD"), represents the number of degrees that the mean temperature for a particular day is above 65 degrees Fahrenheit in each region.

A Heating Degree Day ("HDD"), represents the number of degrees that the mean temperature for a particular day is below 65 degrees Fahrenheit in each region.

(b) National Oceanic and Atmospheric Administration-Climate Prediction Center - A CDD represents the number of degrees that the mean temperature for a particular day is above 65 degrees Fahrenheit in each region.

A HDD represents the number of degrees that the mean temperature for a particular day is below 65 degrees Fahrenheit in each region.

The CDDs/HDDs for a period of time are calculated by adding the CDDs/HDDs for each day during the period

Gross margin and economic gross margin

Gross margin decreased $2.3 billion and economic gross margin increased $2.3 billion, both of which include intercompany sales, during the year ended December 31, 2023, compared to the same period in 2022.

Gross margin increased $3.8 billion and economic gross margin increased $792 million, both of which include intercompany sales, during the year ended December 31, 2024, compared to the same period in 2023.

The detail by segment is as follows:

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Higher gross margin due to the net effect of:

• a 15%, or $548 million, decrease in cost to serve the retail load, primarily driven by lower supply costs which were a result of lower realized power pricing, the diversified supply strategy and improved plant performance coupled with the 2022 impact of the W.A.

Parish Unit 8 extended outage that began in May 2022, net of business interruption insurance proceeds;

• increased net revenue rates of $5.45 per MWh, or $523 million, partially offset by changes in customer term, product and mix of $61 million

Lower gross margin due to a decrease in load of 1.5 TWhs from weather (58)

Higher gross margin from market optimization activities 33

Increase in economic gross margin

• an increase in net revenue of $178 million, primarily driven by changes in customer term, product and mix

• a 5%, or $144 million increase in cost to serve the retail load driven by higher realized power prices associated with the Company’s diversified supply strategy including asset sales in 2023

Lower gross margin due to a decrease in load of 1.4 TWhs, or $46 million, due to weather, partially offset by an increase in load of 7 GWhs, or $8 million, driven by an increase in average customer counts (38)

Decrease in economic gross margin

Decrease in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges (999)

Increase in contract and emissions credit amortization (11)

Decrease in contract and emissions credit amortization 2

Decrease in depreciation and amortization 25

Increase in gross margin

Decrease in gross margin

(In millions)

Lower gross margin due to a decrease in generation and capacity as a result of asset retirements $ (116)

Lower natural gas gross margin including the impact of transportation and storage contract optimization, reflects lower net revenue rates from changes in customer term, product and mix of $2.35 per Dth, or $3.86 billion, partially offset by lower supply costs of $2.30 per Dth, or $3.78 billion (82)

Lower gross margin from the sales of NO x emissions credits

Lower natural gas gross margin from a decrease in load of 6.9 MMDth due to weather and changes in customer mix (16)

Lower electric gross margin from a decrease in load of 686 GWhs primarily due to weather (16)

Higher electric gross margin due to higher net revenue rates as a result of changes in customer term, product and mix of $2.50 per MWh, or $155 million, as well as lower supply costs of $1.50 per MWh, or $86 million driven primarily by decreases in power prices 241

Higher gross margin due to an increase in average realized pricing and a decrease in supply costs at Midwest Generation, offset by lower gross margin as a result of a 74% decrease in generation volumes due to dark spread contractions 56

Higher gross margin primarily due to net capacity performance penalties resulting from Winter Storm Elliott in 2022 and an increase in NYISO capacity pricing, partially offset by a decrease in PJM capacity prices 16

Lower gross margin due to a decrease in generation and capacity as a result of the Joliet and Astoria asset retirements $ (20)

Higher electric gross margin due to higher net revenue rates as a result of changes in customer term, product and mix of $2.00 per MWh, or $127 million as well as lower supply costs of $0.75 per MWh, or $54 million driven primarily by decreases in realized power prices 181

Higher electric gross margin due to an increase in customer count and change in customer mix 29

Higher natural gas gross margin including the impact of transportation and storage contract optimization, resulting in lower supply costs of $0.60 per Dth, or $992 million, driven by a decrease in gas costs, partially offset by lower net revenue rates of $0.55 per Dth, or $873 million, from changes in customer term, product and mix 119

Lower natural gas gross margin from a decrease in load due to a lower customer count and change in customer mix (14)

Lower gross margin due to a reduction in capacity prices along with a prior year reduction in capacity performance penalties resulting from Winter Storm Elliott in December 2022 (15)

Higher gross margin due to an increase in average realized price at Midwest Generation and toll facilities, partially offset by higher supply costs 45

Increase in economic gross margin

Decrease in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges

Increase in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges

Decrease in contract amortization 42

Decrease in depreciation and amortization 9

Decrease in gross margin

Increase in gross margin

West/Services/Other

(In millions)

Lower gross margin at Cottonwood driven by lower average realized power prices, planned outages in 2023 and capacity performance bonus resulting from PJM Winter Storm Elliott in 2022 $ (76)

Lower gross margin primarily due to lower Services sales (51)

Lower electric gross margin due to an increase in supply costs of $6.50 per MWh, or $82 million, partially offset by higher revenue rates of $5.25 per MWh, or $64 million, and changes in customer mix of $2 million (16)

Higher gross margin from market optimization activities 28

Higher natural gas gross margin due to a decrease in supply costs of $0.90 per Dth, or $228 million, and changes in customer mix of $4 million, partially offset by lower revenue rates of $0.85 per Dth, or $218 million 14

Decrease in economic gross margin

Decrease in mark-to-market for economic hedges primarily due to net unrealized gains/losses on open positions related to economic hedges

Higher electric gross margin due to lower supply costs of $18.25 per MWh, or $236 million, partially offset by lower revenue rates of $9.75 per MWh, or $124 million $ 112

Higher natural gas gross margin due to lower supply costs of $1.10 per Dth, or $284 million and changes in customer mix of $1 million, partially offset by lower revenue rates of $1.05 per Dth, or $272 million 13

Higher gross margin at Cottonwood driven by spark spread expansion, favorable current year capacity pricing and a prior year reduction in capacity performance bonus payments resulting from Winter Storm Elliott in December 2022 74

Lower gross margin primarily due to the Sale of Airtron in September 2024 (28)

Lower gross margin from market optimization activities (25)

Increase in economic gross margin

Increase in mark-to-market for economic hedges primarily due to net unrealized gains/losses on open positions related to economic hedges

Decrease in contract amortization 3

Increase in depreciation and amortization (15)

Decrease in gross margin

Increase in gross margin

Vivint Smart Home (a)

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Increase due to the acquisition of Vivint Smart Home $ 289

Higher gross margin driven by growth in subscribers, or $77 million, higher revenue rates of $1.55 per subscriber or $33 million, partially offset by lower non-recurring sales revenue of $37 million 73

Lower gross margin due to recognition of fees associated with licensing products and services (10)

Increase in economic gross margin

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Mark-to-market for economic hedging activities includes asset-backed hedges that have not been designated as cash flow hedges.

Total net mark-to-market results decreased by $4.1 billion during the year ended December 31, 2023, compared to the same period in 2022.

Total net mark-to-market results increased by $3.1 billion during the year ended December 31, 2024, compared to the same period in 2023.

The breakdown of gains and losses included in revenues and operating costs and expenses by segment is as follows:

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Mark-to-market results in revenues

Reversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges

Reversal of previously recognized unrealized (gains) on settled positions related to economic hedges

$ — $ (33) $ (1) $ 4 $ (30)

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Net unrealized gains on open positions related to economic hedges

— 84 47 (4) 127

Total mark-to-market gains in revenues

Total mark-to-market (losses)/gains in revenues

$ — $ (23) $ 16 $ 4 $ (3)

Mark-to-market results in operating costs and expenses

Reversal of previously recognized unrealized (gains) on settled positions related to economic hedges

Reversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges (a)

$ (663) $ 740 $ 63 $ (4) $ 136

Reversal of acquired loss/(gain) positions related to economic hedges

17 11 (6) — 22

Net unrealized gains/(losses) on open positions related to economic hedges

Net unrealized (losses)/gains on open positions related to economic hedges

(30) 348 (251) — 67

Total mark-to-market gains/(losses) in operating costs and expenses

Total mark-to-market (losses)/gains in operating costs and expenses

$ (684) $ 1,083 $ (186) $ (4) $ 209

(a) Includes $37 million, within the Texas segment, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis.

For further discussion, see Item 15 — Note 6, Accounting for Derivative Instruments and Hedging Activities

Year Ended December 31, 2023

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Mark-to-market results in revenues

Reversal of previously recognized unrealized losses/(gains) on settled positions related to economic hedges

Reversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges

$ — $ (25) $ 56 $ (12) $ 19

Reversal of acquired (gain) positions related to economic hedges — (2) — — (2)

Net unrealized (losses) on open positions related to economic hedges

Net unrealized gains on open positions related to economic hedges

— 84 47 (4) 127

Total mark-to-market gains/(losses) in revenues

Total mark-to-market gains in revenues

$ — $ 57 $ 103 $ (16) $ 144

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17 11 (6) — 22

Net unrealized gains on open positions related to economic hedges

Net unrealized gains/(losses) on open positions related to economic hedges

771 (1,670) (381) 4 (1,276)

Total mark-to-market gains in operating costs and expenses

Total mark-to-market gains/(losses) in operating costs and expenses

$ 315 $ (2,471) $ (867) $ 16 $ (3,007)

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The reversals of acquired gain or loss positions were valued based upon the forward prices on the acquisition date.

For the year ended December 31, 2024, the $3 million loss in revenues from economic hedge positions was driven by the reversal of previously recognized unrealized gains on contracts that settled during the period, largely offset by an increase in the value of open positions as a result of decreases in New York capacity and MISO power prices.

The $209 million gain in operating costs and expenses from economic hedge positions was driven primarily by the reversal of previously recognized unrealized losses on contracts that settled during the period, as well as an increase in the value of open positions as a result of increases in natural gas and Northeast power prices.

This was partially offset by a decrease in the value of open positions as a result of decreases in CAISO and Alberta power prices.

For the year ended December 31, 2023, the $144 million gain in revenues from economic hedge positions was driven by an increase in the value of open positions as a result of decreases in power prices.

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This was partially offset by an increase in the value of Texas open positions as a result of increases in ERCOT power prices.

For the year ended December 31, 2022, the $83 million loss in revenues from economic hedge positions was driven by a decrease in the value of open positions as a result of increases in power prices across all segments, partially offset by the reversal of previously recognized unrealized losses on contracts that settled during the period.

The $1.3 billion gain in operating costs and expenses from economic hedge positions was driven primarily by an increase in the value of open positions as a result of increases in natural gas and power prices across all segments partially offset by the reversal of previously recognized unrealized gains on contracts that settled during the period.

In accordance with ASC 815, the following table represents the results of the Company's financial and physical trading of energy commodities for the years ended December 31, 2024 and 2023.

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(In millions) 2024 2023

Trading gains/(losses)

Trading gains

Realized $ 31 $ 11

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(In millions)

Increase due to the acquisition of Vivint Smart Home $ 187

Increase in retail operation personnel costs primarily driven by an increase in accruals as part of the Company's annual incentive plan reflecting financial outperformance for the year 48

Increase in major maintenance expenditures associated with the scope and duration of outages at the Texas gas facilities and Cottonwood, partially offset by the Texas coal facilities (excluding W.A.

Parish Unit 8 included below) 21

Decrease due to the current year partial property insurance claim for the extended outage at W.A.

Parish Unit 8, as well as restoration expenses incurred in 2022, partially offset by the prior year Limestone property insurance claim (124)

Decrease driven by the disposition of STP and Gregory in 2023 (28)

Decrease in variable operation and maintenance expense due to a reduction in PJM generation volumes in 2023 (26)

Decrease due to change in estimates of environmental remediation costs at deactivated sites in the East in 2022 (23)

Decrease driven primarily by East asset retirements, partially offset by an increase in deactivation costs in the West (8)

Increase primarily due to the prior year partial property insurance claim for the extended outage at W.A.

Increase in planned major maintenance expenditures associated with the scope and duration of outages at the Texas coal and gas facilities, and Powerton 154

Increase due to the acquisition of Vivint Smart Home in March 2023 36

Increase driven by higher Vivint Smart Home operations costs 24

Increase driven by higher retail operations costs 16

Decrease primarily due to the sale of STP in November 2023 (125)

Decrease driven by a reduction in deactivation and asset retirement expenditures primarily in the East (33)

Decrease due to the sale of Airtron in September 2024 (15)

Increase in operations and maintenance expense

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(a) Includes results of operations following the acquisition date of March 10, 2023

Other cost of operations decreased by $21 million for the year ended December 31, 2023, compared to the same period in 2022, due to the following:

Other cost of operations increased by $2 million for the year ended December 31, 2024, compared to the same period in 2023, due to the following:

(In millions)

Decrease due to changes in current year ARO cost estimates, primarily at Jewett Mine $ (28)

Decrease in retail gross receipt taxes due to lower revenue in the East offset by higher revenues in Texas (10)

Decrease driven by the disposition of STP and Gregory in 2023 (5)

Increase due to higher property insurance premiums 18

Decrease in other cost of operations

Increase in retail gross receipt taxes in Texas and East $ 9

Increase due to changes in current year ARO cost estimates at Midwest Generation and Jewett Mine 6

Increase due to higher insurance premiums 6

Decrease primarily due to the sale of STP in November 2023 (21)

Increase in other cost of operations

Depreciation and Amortization

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(a) Includes results of operations following the acquisition date of March 10, 2023

Depreciation and amortization expense increased by $493 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to higher amortization of intangible assets due to the acquisition of Vivint Smart Home in March 2023, partially offset by lower depreciation at Midwest Generation as a result of asset impairments and retirements in 2022.

Depreciation and amortization expense increased by $108 million for the year ended December 31, 2024, compared to the same period in 2023, primarily due to an increase in amortization of capitalized contract costs, partially offset by a decrease in amortization driven by the expected roll of the acquired Vivint Smart Home intangibles.

Impairment Losses

During the year ended December 31, 2024, the Company recorded impairment losses related to property plant and equipment and other assets of $7 million, and $29 million in the Texas and West/Services/Other segments, respectively.

During the year ended December 31, 2023, the Company 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.

During the year ended December 31, 2022, the Company recorded impairment losses of $206 million, of which $150 million were related to the decline in PJM capacity prices and the near-term retirement date of the Joliet facility, $43 million related to the 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, and an additional $13 million in the East segment.

Refer to Item 15 — Note 10, Asset Impairments , to the Consolidated Financial Statements for further discussion .

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(In millions)

Increase due to the acquisition of Vivint Smart Home $ 499

Increase due to the acquisition of Vivint Smart Home in March 2023 $ 87

Increase due to reserves for legal matters in 2024 and partially offset by the favorable resolution of legal matters in 2023 58

Increase in personnel costs primarily driven by an increase in accruals as part of the Company's annual incentive plan reflecting financial outperformance for the year 46

Increase in broker fee and commissions expenses 49

Increase in equity linked compensation primarily driven by a higher share price in 2024 33

Increase in marketing and media expenses 24

Increase in consulting and legal expenses 17

Decrease in consulting and legal expenses (36)

Decrease driven by the sale of STP in November 2023 (10)

Increase in selling, general and administrative costs

7 unchanged sentences

(In millions)

Increase due to Winter Storm Uri loss mitigation recognized as income in 2022 $ 126

Increase due to higher Home retail revenues, deteriorated customer payment behavior and the longer duration of the Texas disconnect moratorium in 2023 as compared to 2022 80

Increase due to the acquisition of Vivint Smart Home 34

Increase primarily due to higher Texas Home retail revenues and customer payment behavior $ 54

Increase due to the acquisition of Vivint Smart Home in March 2023 9

Increase in provision for credit losses $ 63

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(In millions) 2024 2023

Vivint Smart Home acquisition costs $ 38 $ 17

Vivint Smart Home integration costs $ 23 $ 52

Vivint Smart Home acquisition costs — 38

Other integration costs, primarily related to Direct Energy 7 29

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Gain on Sale of Assets

The gain on sale of assets of $1.6 billion and $52 million recorded for the years ended December 31, 2023 and 2022, respectively, include:

The gain on sale of assets of $208 million and $1.6 billion recorded for the years ended December 31, 2024 and 2023, respectively, include:

As of December 31,

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Sale of the Company's 44% equity interest in STP

Sale of the Airtron business unit 204 —

Sale of Astoria land and related assets — 199

Sale of the Company's 100% ownership in the Gregory natural gas generating facility

Sale of the Company's 49% ownership in the Watson natural gas generating facility — 46

Sale of land and structures at the Company's deactivated Norwalk Harbor, LLC site — 38

Sale of the Company's 50% ownership in Petra Nova — 22

Sale of land at the Company's Indian River Power, LLC site — 19

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Impairment Losses on Investments

During the year ended December 31, 2023, the Company recorded other-than-temporary impairment losses of $102 million on the Company's equity method investment in Gladstone generation facility in Queensland, Australia, as further described in Item 15 — Note 11, Asset Impairments, to the Consolidated Financial Statements.

Gain on Debt Extinguishment

A gain on debt extinguishment of $109 million was recorded for the year ended December 31, 2023, driven by a partial redemption of the 3.875% Senior Notes, due 2032, as further discussed in Item 15 — Note 13, Long-term Debt and Finance Leases , to the Consolidated Financial Statements.

Interest Expense

Interest expense increased by $250 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to the Vivint Smart Home acquisition including the impact of newly issued Senior Secured First Lien Notes, the acquired debt of Vivint Smart Home, the borrowings on the Revolving Credit Facility and the Receivables Securitization Facilities, as well as the write-off of the deferred financing costs associated with the cancellation of the bridge facility.

Income Tax Expense

For the year ended December 31, 2023, NRG recorded an income tax benefit of $11 million on a pre-tax loss of $213 million.

For the same period in 2022, NRG recorded income tax expense of $442 million on pre-tax income of $1.7 billion.

During the years ended December 31, 2024 and 2023, the Company recorded impairment losses of $7 million and $102 million, respectively, on the Company's equity method investment in Gladstone generation facility, as further described in Item 15 — Note 10, Asset Impairments, to the Consolidated Financial Statements.

(Loss)/Gain on Debt Extinguishment

The (loss)/gain on debt extinguishment of $(382) million and $109 million recorded for the years ended December 31, 2024, and 2023, respectively, include:

As of December 31,

(In millions) 2024 2023

Repurchase of a portion of the Convertible Senior Notes

Exchange offer for the Vivint 5.750% Senior Notes, due 2029

Repayment of the Vivint Senior Secured Term Loan B

Redemption of the Vivint 6.750% Senior Secured Notes, due 2027 (13) —

Redemption of the 6.625% Senior Notes, due 2027

Partial redemption of the 3.875% Senior Notes, due 2032

(Loss)/Gain on Debt Extinguishment $ (382) $ 109

Refer to Item 15 — Note 12, Long-term Debt and Finance Leases , to the Consolidated Financial Statements for further discussion.

Income Tax Expense/(Benefit)

For the year ended December 31, 2024, NRG recorded an income tax expense of $323 million on pre-tax income of $1.4 billion.

For the same period in 2023, NRG recorded income tax benefit of $11 million on a pre-tax loss of $213 million.

The effective tax rate was 22.3% and 5.2% for the years ended December 31, 2024 and 2023, respectively.

For the year ended December 31, 2023, NRG's overall effective 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, 2024, NRG's overall effective tax rate was higher than the federal statutory tax rate of 21%, primarily due to permanent differences and state tax expense partially offset by tax benefits from the revaluation of deferred tax assets and decrease of certain state valuation allowances.

Year Ended December 31,

(In millions, except effective income tax rate) 2024 2023

(Loss)/Income before income taxes $ (213) $ 1,663

Income/(Loss) before income taxes $ 1,448 $ (213)

Tax at federal statutory tax rate 304 (45)

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Changes in state valuation allowances (110) 42

Nondeductible loss on Convertible Senior Notes repurchases 56 —

Permanent differences 23 31

Stock compensation (19) —

Recognition of uncertain tax benefits 1 12

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Return to provision adjustments (1) (5)

Carbon capture tax credits — (19)

Income tax (benefit)/expense $ (11) $ 442

Income tax expense/(benefit) $ 323 $ (11)

Effective income tax rate 22.3 % 5.2 %

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(b) Total capacity of Revolving Credit Facility and collective collateral facilities was $7.3 billion and $7.4 billion as of December 31, 2024 and December 31, 2023, respectively

As of December 31, 2023, total liquidity, excluding collateral funds deposited by counterparties, increased by $2.0 billion.

As of December 31, 2024, total liquidity, excluding collateral funds deposited by counterparties, increased by $600 million.

Changes in cash and cash equivalent balances are further discussed under the heading Cash Flow Discussion .

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Credit Ratings

On March 1, 2023, following the Vivint Smart Home acquisition financing launch, Standard and Poor's downgraded the Company's issuer credit to BB with a Stable outlook from BB+.

There was no change to Moody's and Fitch ratings at the time.

On March 18, 2024, S&P affirmed the Company's issuer credit rating of BB and changed the rating outlook from Stable to Positive.

The following table summarizes the Company's current credit ratings:

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NRG Energy, Inc.

BB Stable Ba1 Stable BB+ Stable

3.75% Senior Secured Notes, due 2024 BBB- Baa3 BBB-

2.00% Senior Secured Notes, due 2025 BBB- Baa3 BBB-

2.45% Senior Secured Notes, due 2027 BBB- Baa3 BBB-

6.625% Senior Notes, due 2027 BB Ba2 BB+

6.75% Vivint Smart Home Senior Secured Notes, due 2027 BB Ba2 n/a

5.75% Senior Notes, due 2028 BB Ba2 BB+

3.375% Senior Notes, due 2029 BB Ba2 BB+

4.45% Senior Secured Notes, due 2029 BBB- Baa3 BBB-

5.25% Senior Notes, due 2029 BB Ba2 BB+

5.75% Vivint Smart Home Senior Notes, due 2029 B Ba3 n/a

3.625% Senior Notes, due 2031 BB Ba2 BB+

3.875% Senior Notes, due 2032 BB Ba2 BB+

7.00% Senior Secured Notes, due 2033 BBB- Baa3 BBB-

Revolving Credit Facility, due 2028 BBB- Baa3 BBB-

Vivint Smart Home Senior Secured Term Loan, due 2028 BB Ba2 n/a

BB Positive Ba1 Stable BB+ Stable

Senior Secured Debt BBB- Baa3 BBB-

Senior Unsecured Debt BB Ba2 BB+

Preferred Stock B Ba3 BB-

The principal sources of liquidity for NRG's operating and capital expenditures are expected to be derived from cash on hand, cash flows from operations and financing arrangements.

As described in Item 15 — Note 12, Long-term Debt and Finance Leases, to the Consolidated Financial Statements, the Company's financing arrangements consist mainly of the Senior Notes, Convertible Senior Notes, Senior Secured First Lien Notes, Revolving Credit Facility, the Receivables Securitization Facilities and tax-exempt bonds.

The Company also issues letters of credit through bilateral letter of credit facilities and the P-Caps letter of credit facility.

As part of the acquisition of Vivint Smart Home on March 10, 2023, NRG acquired Vivint Smart Home's existing debt, which includes senior secured notes, senior notes and a senior secured term-loan.

The Company also issues letters of credit through bilateral letter of credit facilities and the pre-capitalized trust securities facility.

The Company's requirements for liquidity and capital resources, other than for operating its facilities, can generally be categorized by the following:

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and (iv) allocations in connection with acquisition opportunities, debt repayments, share repurchases and dividend payments to stockholders, as described in Item 15 — Note 15, Capital Structure , to the Consolidated Financial Statements.

The Company remains committed to maintaining a strong balance sheet and continues to work to achieve investment grade credit metrics over time primarily through debt reduction and the realization of growth initiatives.

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.

Proceeds of $1.75 billion were reduced by working capital and other adjustments of $96 million, resulting in net proceeds of $1.654 billion.

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.

Debt Reduction

During 2023, the Company reduced its debt by $900 million using funds from cash from operations.

Additionally, the Company redeemed $620 million in aggregate principal amount of its 3.875% Senior Notes, due 2032, for $502 million using a portion of the proceeds from the sale of STP.

The Company intends to spend approximately $500 million reducing debt during 2024 to maintain its targeted credit metrics.

The Company intends to fund the debt reduction from cash from operations.

Vivint Smart Home Acquisition

On March 10, 2023, the Company completed the acquisition of Vivint Smart Home.

The Company paid $12 per share, or $2.6 billion in cash.

The Company funded the acquisition using a combination of $740 million in newly-issued secured corporate debt, $650 million in newly-issued preferred stock, $900 million drawn from its Revolving Credit Facility and Receivables Facilities, and cash on hand.

Issuance of 2033 Senior Notes

On March 9, 2023, the Company issued $740 million of aggregate principal amount of 7.000% senior notes due 2033.

The 2033 Senior Notes are senior secured obligations of NRG and are guaranteed by certain of its subsidiaries.

Interest is paid semi-annually beginning on September 15, 2023 until the maturity date of March 15, 2033.

For further discussion, see Note 13, Long-term Debt and Finance Leases .

Series A Preferred Stock

On March 9, 2023, the Company issued 650,000 shares of 10.25% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock.

For further discussion, see Note 16, Capital Structure .

Revolving Credit Facility

On February 14, 2023, the Company amended its Revolving Credit Facility to:

(i) increase the existing revolving commitments thereunder by $600 million, (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 Company further amended its Revolving Credit Facility to increase the existing revolving commitments by an additional $45 million.

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.

Sale of Airtron

On September 16, 2024, the Company closed on the sale of its 100% ownership in the Airtron business unit.

Proceeds of $500 million were reduced by working capital and other adjustments of $20 million, resulting in net proceeds of $480 million.

Senior Credit Facility

On April 16, 2024, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Eighth Amendment, which amended the Credit Agreement, in order to (i) establish the Existing Term Loan B Facility with borrowings of $875 million in aggregate principal amount and the Existing Term Loans and (ii) make certain other modifications to the Credit Agreement as set forth therein.

The proceeds from the Existing Term Loans were used to repay a portion of the Company’s Convertible Senior notes, all of the Company’s 3.750% senior secured first lien notes due 2024 and for general corporate purposes.

On April 22, 2024, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Ninth Amendment to its Revolving Credit Facility to extend the maturity date of a portion of the revolving commitments thereunder to February 14, 2028.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

Debt Refinancing Transactions

In the fourth quarter of 2024, the Company entered into the following debt transactions:

Issuance by NRG of 6.000% Senior Notes due 2033 $925 million Repayment of the Vivint Senior Secured Term Loan B $1.310 billion

Issuance by NRG of 6.250% Senior Notes due 2034 $950 million Cash tender offer for Vivint 6.750% Senior Secured Notes due 2027 (a)

Exchange offer for New NRG 5.750% Senior Notes due 2029 $798 million Exchange offer for Vivint 5.750% Senior Notes due 2029 (b)

Incremental Term Loan B issued by NRG $450 million Repayment of NRG 6.625% Senior Notes due 2027 $375 million

Transactions fees, expenses and premiums $40 million

Total $3.123 billion Total $3.123 billion

(a) On October 15, 2024, APX Group, Inc.

(b) On October 15, 2024, APX Group, Inc.

As part of the above transactions, the Company entered into the Tenth and Eleventh Amendments to the Credit Agreement to (i) include the Incremental Term Loan B Facility in an aggregate principal amount of $450 million and the Incremental Term Loans, (ii) extend the maturity date of its revolving credit facility to October 30, 2029 and (iii) make certain other amendments to the Credit Agreement.

On November 26, 2024, the Company, as borrower, entered into the Twelfth Amendment to the Credit Agreement to (i) reprice both the Existing Term Loan B Facility and the Incremental Term Loan B Facility and (ii) make certain other modifications to the Credit Agreement as set forth therein.

On December 20, 2024, the Company, as borrower, entered into the Thirteenth Amendment to the Credit Agreement to (i) add APX Group, Inc.

as an additional borrower of the loans under the Credit Agreement on a joint and several basis with the Company and (ii) make certain other modifications to the Credit Agreement as set forth therein.

For further discussion on these amendments and the debt transactions in the table above, see Item 15 — Note 12, Long-term Debt and Finance Leases.

Convertible Senior Notes

As of January 1, 2025, the Company’s Convertible Senior Notes are convertible during the quarterly period ending March 31, 2025 due to the satisfaction of the Common Stock Sale Price Condition.

In addition, the Convertible Senior Notes are also convertible from December 1, 2024 until the close of business on the second scheduled trading day immediately before June 1, 2025.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

During the year ended December 31, 2024, the Company completed repurchases of a portion of the Convertible Senior Notes using cash on hand and a portion of the proceeds from the Existing Term Loans, as detailed in the table below.

For the year ended December 31, 2024, a $260 million loss on debt extinguishment was recorded.

(In millions, except percentages)

Settlement Period Principal Repurchased Cash Paid (a)

Average Repurchase Percentage

March 2024 $ 92 $ 151 162.356%

April 2024 251 452 179.454%

Total Repurchases $ 343 $ 603

(a) Includes accrued interest of $1 million and $2 million for the March and April repurchases, respectively

During the second quarter of 2024, the Company entered into privately negotiated capped call transactions with certain counterparties.

The Capped Calls have a cap price of $249.00 per share, subject to certain adjustments, and effectively lock in a conversion premium of $257 million on the remaining $232 million balance of the Convertible Senior Notes.

The option price of $257 million was incurred when the Company entered into the Capped Calls, which will be payable upon the earlier of settlement and expiration of the applicable Capped Calls.

For further discussion, see Item 15 - Note 15, Capital Structure , to the Consolidated Financial Statements for additional discussion.

Receivables Securitization Facilities

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.

As of December 31, 2024, there were no outstanding borrowings and there were $1.4 billion in letters of credit issued.

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 that provides short-term financing secured by a subordinated note issued by NRG Receivables LLC.

Such renewal, among other things, extends the maturity date to June 21, 2024 and joins 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.

As of December 31, 2023, there were no outstanding borrowings.

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, allowing 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.

Pre-Capitalized Trust Securities Facility

On August 29, 2023, the Company entered into a Facility Agreement with the Trust, in connection with the sale by the Trust of $500 million P-Caps.

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.

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.

The Facility Agreements allows for the issuance of the P-Caps Secured Notes by the Company to the Trust.

In addition, the Company entered into a LC Agreement for the issuance of letters of credit in an aggregate amount not to exceed $485 million.

Sale of Astoria

On January 6, 2023, the Company closed on the sale of land and related assets from the Astoria site, within the East region of operations, for proceeds of $212 million, subject to transactions fees of $3 million and certain indemnifications.

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.

Also on June 21, 2024, the Additional Originator entered into the Joinder Agreement to join as Additional Originator to the Receivables Sale Agreement, dated as of September 22, 2020, among Direct Energy, LP, Direct Energy Business, LLC, Green Mountain Energy Company, NRG Business Marketing, LLC, Reliant Energy Northeast LLC, Reliant Energy Retail Services, LLC, Stream SPE, Ltd., US Retailers LLC and XOOM Energy Texas, LLC, as Originators, NRG Retail, as the servicer, and the Receivables Sale Agreement.

Pursuant to the Joinder Agreement, the Additional Originator agrees to be bound by the terms of the Receivables Sale Agreement, will sell to NRG Receivables substantially all of its Receivables and in connection therewith have transferred to NRG Receivables the deposit accounts into which the proceeds of such Receivables are paid.

Concurrently with the amendments to the Receivables Facility, the Company and the originators thereunder terminated the existing uncommitted Repurchase Facility.

Senior Secured First Lien Note Repayment

During the second quarter of 2024, the Company repaid $600 million in aggregate principal amount of its 3.750% Senior Secured First Lien Notes due 2024.

Vivint Term Loan

On April 10, 2024, the Company’s wholly-owned indirect subsidiary, Vivint, entered into Amendment No.

2 (the “Second Amendment”) to the Second Amended and Restated Credit Agreement dated as of June 9, 2021 (the “Vivint Credit Agreement”) with, among others, Bank of America, N.A.

as administrative agent (the “Vivint Agent”), and certain financial institutions, as lenders, which amended the Vivint Credit Agreement in order to (i) reprice its term loan B facility (the term loans thereunder, the “Vivint Term Loans”) and (ii) make certain other modifications to the Vivint Credit Agreement as set forth therein.

On October 30, 2024, the Company repaid in full the outstanding Vivint Term Loans of approximately $1.3 billion and terminated the revolving credit facility under the Vivint Credit Agreement.

Liability Management

The Company executed $342 million in liability management in 2024 and achieved its targeted credit metrics.

The Company intends to spend approximately $270 million from cash from operations during 2025.

The Company remains committed to maintaining a strong balance sheet and its targeted credit metrics.

Pension and Other Postretirement Benefit Contributions

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3.875% Senior Notes, due 2032 — — — — — 480 480

6.000% Senior Notes, due 2033 — — — — — 925 925

6.250% Senior Notes, due 2034 — — — — — 950 950

2.750% Convertible Senior Notes, due 2048 232 — — — — — 232

Senior Secured First Lien Notes, due 2024 600 — — — — — 600

Senior Secured First Lien Notes, due 2025 — 500 — — — — 500

Senior Secured First Lien Notes, due 2027 — — — 900 — — 900

Senior Secured First Lien Notes, due 2029 — — — — — 500 500

Senior Secured First Lien Notes, due 2033 — 740 740

2.000% Senior Secured Notes, due 2025 500 — — — — — 500

2.450% Senior Secured Notes, due 2027 — — 900 — — — 900

4.450% Senior Secured Notes, due 2029 — — — — 500 — 500

7.00% Senior Secured Notes, due 2033 — — — — — 740 740

Tax-exempt bonds

247 — — 59 — 160 466

Subtotal Recourse Debt

Term Loan B, due 2031

11 14 13 13 13 1,253 1,317

Non-Recourse Debt:

Vivint Smart Home Senior Secured Notes, due 2027 — — — 600 — — 600

Vivint Smart Home Senior Notes, due 2029 — — — — — 800 800

Vivint Smart Home Senior Secured Term Loan, due 2028 14 14 14 14 1,264 — 1,320

Subtotal Vivint Smart Home Non-Recourse Debt

Subtotal Recourse Debt

990 14 913 893 2,544 5,538 10,892

Subtotal Debt 614 761 14 1,889 2,144 5,518 10,940

Finance Leases:

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As of December 31, 2024, total funds deposited by counterparties were $199 million in cash and $377 million of letters of credit.

The Company has entered into long-term contractual arrangements related to energy purchases, gas transportation and storage, and fuel and transportation services.

As of December 31, 2023, the Company had minimum payment obligations under such outstanding agreements of $3.4 billion, with $573 million payable within the next 12 months and an additional $978 million of short-term purchase energy commitments.

The Company has entered into long-term contractual arrangements related to energy purchases, gas transportation and storage, and fuel and transportation services and generation projects.

As of December 31, 2024, the Company had minimum payment obligations under such outstanding agreements of $9.0 billion, with $2.4 billion payable within the next 12 months and an additional $1.5 billion of short-term purchase energy commitments.

For further discussion, see Item 15 — Note 22, Commitments and Contingencies .

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NRG has the capacity to grant first liens to certain counterparties on a substantial portion of the Company's assets, subject to various exclusions including NRG's assets that have project-level financing and the assets of certain non-guarantor subsidiaries, 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 hedge agreements.

The first lien program does not limit the volume that can be hedged or the value of underlying out-of-the-money positions.

The first lien program does not limit the volume that

can be hedged or the value of underlying out-of-the-money positions.

The first lien program also does not require NRG to post collateral above any threshold amount of exposure.

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Capital Expenditures

The following table summarizes the Company's capital expenditures for maintenance, environmental and growth investments for the year ended December 31, 2023:

The following table summarizes the Company's capital expenditures for maintenance, environmental and investments and integration for the year ended December 31, 2024:

(In millions) Maintenance Environmental Investments and Integration Total

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West/Services/Other 15 — 1 16

Vivint Smart Home (a)

Vivint Smart Home 18 — 5 23

Corporate 19 — 42 61

Total cash capital expenditures for 2024

243 21 208 472

Integration operating expenses and cost to achieve — — 60 60

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$ 243 $ 21 $ 448 $ 712

(a) Includes expenditures following the acquisition date of March 10, 2023

Investments and Integration for the year ended December 31, 2024 include growth expenditures, integration, small book acquisitions and other investments.

Environmental Capital Expenditures Estimate

NRG estimates that environmental capital expenditures from 2024 through 2028 required to comply with environmental laws will be approximately $66 million.

The largest component is the cost of complying with ELG at the Company's coal units in Texas.

The table below summarizes the status of NRG's coal fleet with respect to air quality controls.

NRG estimates that environmental capital expenditures from 2025 through 2029 required to comply with environmental laws will be approximately $73 million, primarily driven by the cost of complying with ELG at the Company's coal units in Texas.

The table below summarizes the status of NRG's coal fleet with respect to air quality controls as of December 31, 2024.

NRG uses an integrated approach to fuels, controls and emissions markets to meet environmental requirements.

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Units State Control Equipment Install Date Control Equipment Install Date Control Equipment Install Date Control Equipment Install Date

Indian River 4 DE CDS 2011 LNBOFA/SCR 1999/2011 ACI/CDS/FF 2008/2011 ESP/FF 1980/2011

Indian River 4 (a)

DE CDS 2011 LNBOFA/SCR 1999/2011 ACI/CDS/FF 2008/2011 ESP/FF 1980/2011

Limestone 1-2 TX FGD 1985-86 LNBOFA 2002/2003 ACI 2015 ESP 1985-1986

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Parish 8 TX FGD 1982 SCR 2004 ACI 2015 FF 1988

(a) Indian River Unit 4 retired on February 23, 2025

ACI - Activated Carbon Injection

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(In millions) Total

Thereafter 12

Share Repurchases

In June 2023, 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, the Company paid a total of $950 million and will receive shares of NRG's common stock on specified settlement dates.

See Item 15 - Note 16, Capital Structure , to the Consolidated Financial Statements for additional discussion.

During the year ended December 31, 2024, the Company completed $925 million of open market share repurchases at an average price of $87.57 per share.

See Item 15 — Note 15, Capital Structure for additional discussion.

In October 2024, the Board of Directors authorized an additional $1.0 billion for share repurchases as part of the existing share repurchase authorization, for a total of $3.7 billion.

As of January 31, 2025, $1.5 billion is remaining under the $3.7 billion authorization.

Dividend Increase on Common Stock

In the first quarter of 2023, NRG increased the annual dividend on its common stock to $1.51 from $1.40 per share.

The Company returned $352 million of capital to shareholders in the year ended 2023 through a $1.51 dividend per common share.

In 2024, NRG further increased the annual dividend to $1.63 per share, representing an 8% increase from 2023.

The Company expects to target an annual dividend growth rate of 7-9% per share in subsequent years.

During the first quarter of 2024, NRG increased the annual dividend on its common stock to $1.63 from $1.51 per share.

The Company returned $343 million of capital to common shareholders in the year ended 2024 through a $1.63 dividend per common share.

Beginning in the first quarter of 2025, NRG increased the annual common stock dividend to $1.76 per share, representing an 8% increase from 2024.

The Company expects to target an annual common stock dividend growth rate of 7-9% per share in subsequent years.

On January 22, 2025, NRG declared a quarterly dividend on the Company's common stock of $0.44 per share, or $1.76 per share on an annualized basis, payable on February 18, 2025, to stockholders of record as of February 3, 2025.

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Series A Preferred Stock Dividends

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.

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 March and September 2024, the Company declared and paid semi-annual dividends of $51.25 per share on its outstanding Series A Preferred Stock, each totaling $33 million.

Additional Material Cash Requirements Not Discussed Above

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(In millions) 2024 2023 Change

Cash (used)/provided by operating activities $ (221) $ 360 $ (581)

Cash provided/(used) by operating activities $ 2,306 $ (221) $ 2,527

Cash used by investing activities (24) (910) 886

Cash (used)/provided by financing activities (400) 1,043 (1,443)

Cash (used)/provided by operating activities

Changes to cash (used)/provided by operating activities were driven by:

Cash used by financing activities (1,755) (400) (1,355)

Cash provided/(used) by operating activities

Changes to cash provided/(used) by operating activities were driven by:

(In millions)

Increase in operating income adjusted for other non-cash items $ 2,892

Changes in cash collateral in support of risk management activities due to change in commodity prices $ 2,051

Decrease due to receipt of uplift securitization proceeds from ERCOT in 2022 (689)

Decrease in working capital primarily driven by Vivint Smart Home capitalized contract costs partially offset by deferred revenues (361)

Increase in working capital related to accrued personnel costs primarily due to the Company's annual incentive plan reflecting financial outperformance for 2023 188

Increase in working capital related to accounts receivable and inventory primarily due to lower gas and power market pricing coupled with lower gas volumes, partially offset by a decrease in accounts payable 91

Increase in operating income adjusted for other non-cash items 645

Increase in working capital primarily due to lower gas pricing coupled with lower gas sales volumes 341

Decrease in working capital primarily driven by capitalized contract costs and deferred revenues (396)

Decrease in working capital primarily related to the payout of the Company's annual incentive plan in 2024 reflecting financial outperformance for 2023 (114)

Cash used by investing activities

Changes to cash (used)/provided by investing activities were driven by:

Changes to cash provided/(used) by investing activities were driven by:

(In millions)

Increase in cash paid for acquisitions primarily due to the acquisition of Vivint Smart Home in March 2023 $ (2,461)

Increase in proceeds from the sale of assets primarily due to the sale of the Company's 44% equity interest in STP in November 2023 1,898

Increase from insurance proceeds for property, plant and equipment, net, in 2023 240

Increase in capital expenditures (231)

Decrease in proceeds from sales of emissions allowances, net of purchases (18)

Increase due to fewer purchases of investments in nuclear decommissioning trust fund securities, net of sales (6)

Decrease in cash paid for acquisitions primarily due to the acquisition of Vivint Smart Home in March 2023 $ 2,485

Decrease in proceeds from the sale of assets primarily due to the sale of the Company's 44% equity interest in STP in November 2023 (1,506)

Decrease in insurance proceeds for property, plant and equipment, net (237)

Decrease in capital expenditures 126

Cash (used)/provided by financing activities

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(In millions)

Decrease due to repayments of long-term debt and finance leases $ (2,732)

Increase in proceeds due to the issuance of long-term debt in 2024 2,469

Decrease in proceeds due to the issuance of preferred stock in 2023 (635)

Decrease in net receipts from settlement of acquired derivatives (345)

Increase in proceeds from issuance of long-term debt in 2023 731

Increase in proceeds from issuance of preferred stock in 2023 635

Increase in share repurchase activity (566)

Increase of repayments of long-term debt and finance leases (518)

Increase in payments of dividends primarily due to preferred stock issued in 2023 (49)

Increase in payments of deferred issuance costs (23)

Decrease primarily due to debt extinguishment costs in 2024 (275)

Increase due to less payments for share repurchase activity in 2024 187

Increase in payments of dividends primarily due to preferred stock (24)

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications

For the year ended December 31, 2023, the Company had domestic pre-tax book income of $261 million and foreign pre-tax book loss of $474 million.

For the year ended December 31, 2024, the Company had domestic pre-tax book income of $1.5 billion and foreign pre-tax book loss of $37 million.

For the year ended December 31, 2024, the Company utilized U.S.

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NRG also has cumulative foreign NOL carryforwards of $394 million, most of which have no expiration date.

In addition to the above NOLs, NRG has a $517 million indefinite carryforward for interest deductions, as well as $317 million of tax credits to be utilized in future years.

As a result of the Company's tax position, including the utilization of federal and state NOLs, and based on current forecasts, the Company anticipates income tax payments, due to federal, state and foreign jurisdictions, of up to $160 million in 2024.

There is no impact on the Company's provision for income taxes from the CAMT for the year ended December 31, 2023.

In addition to the above NOLs, NRG has a $274 million indefinite carryforward for interest deductions, as well as $269 million of tax credits, inclusive of $61 million of CAMT credits to be utilized in future years.

As of December 31, 2024, NRG as an applicable corporation is subject to the CAMT, and has reflected the impact in its current and deferred taxes.

There is no impact on the Company’s provision for income taxes from the CAMT as of December 31, 2024.

The Company has $57 million of tax effected uncertain federal, state and foreign tax benefits for which the Company has recorded a non-current tax liability of $62 million (inclusive of accrued interest) until such final resolution with the related taxing authority.

On December 31, 2021, the OECD released rules which set forth a common approach to a global minimum tax at 15% for multinational companies, which has been enacted into law by certain countries effective for 2024.

The Company's preliminary analysis indicates that there is no material impact to the Company's financial statements from these rules.

The Company is no longer subject to U.S.

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Guarantor Financial Information

As of December 31, 2023, the Company's outstanding registered senior notes consisted of $375 million of the 2027 Senior Notes and $821 million of the 2028 Senior Notes, as shown in Note 13, Long-term Debt and Finance Leases .

As of December 31, 2024, the Company's outstanding registered senior notes consisted of $821 million of the 2028 Senior Notes as shown in Note 12, Long-term Debt and Finance Leases .

These Senior Notes are guaranteed by certain of NRG's current and future 100% owned domestic subsidiaries, or guarantor subsidiaries (the “Guarantors”).

See Exhibit 22.1 for a listing of the Guarantors.

See Exhibit 22.1 to this Annual Report on Form 10-K for a listing of the Guarantors.

These guarantees are both joint and several.

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There are no restrictions on the ability of any of the Guarantors to transfer funds to NRG.

Other subsidiaries of the Company do not guarantee the registered

debt securities of either NRG Energy, Inc.

Other subsidiaries of the Company do not guarantee the registered debt securities of either NRG Energy, Inc.

or the Guarantors (such subsidiaries are referred to as the “Non-Guarantors”).

The Non-Guarantors include all of NRG's foreign subsidiaries and certain domestic subsidiaries.

The tables below present summarized financial information of NRG Energy, Inc.

The following tables present summarized financial information of NRG Energy, Inc.

and the Guarantors in accordance with Rule 3-10 under the SEC's Regulation S-X.

The financial information may not necessarily be indicative of results of operations or financial position of NRG Energy, Inc.

The financial information may not necessarily be indicative of the results of operations or financial position of NRG Energy, Inc.

and the Guarantors in accordance with U.S.

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Net Income 1,411

(a) Intercompany transactions with Non-Guarantors include revenue of $9 million during the year ended December 31, 2023

(a) Intercompany transactions with Non-Guarantors of $5 million during the year ended December 31, 2024

(b) Intercompany transactions with Non-Guarantors including cost of operations of $26 million and selling, general and administrative of $349 million during the year ended December 31, 2024

The following table presents the summarized balance sheet information:

(In millions) December 31, 2023

(In millions) As of December 31, 2024

Current assets (a)

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(a) Includes intercompany receivables due from Non-Guarantors of $30 million as of December 31, 2024

(b) Includes intercompany payables due to Non-Guarantors of $4 million as of December 31, 2023

(b) Includes intercompany payables due to Non-Guarantors that were de minimis as of December 31, 2024

Fair Value of Derivative Instruments

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In addition, in order to mitigate foreign exchange rate risk primarily associated with the purchase of USD denominated natural gas for the Company's Canadian business, NRG enters into foreign exchange contract agreements.

Under Flex Pay, offered by Vivint Smart Home, subscribers pay for smart home products by obtaining financing from a third-party financing provider under the Consumer Financing Program.

Vivint Smart Home pays certain fees to the financing providers and shares in credit losses depending on the credit quality of the subscriber.

Under Flex Pay, offered by Vivint Smart Home, customers pay for smart home products by obtaining financing from a third-party financing provider under the Consumer Financing Program.

Vivint Smart Home pays certain fees to the financing providers and shares in credit losses depending on the credit quality of the customer.

NRG's trading activities are subject to limits in accordance with the Company's Risk Management Policy.

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For a full discussion of the Company's valuation methodology of its contracts, see Derivative Fair Value Measurements in Item 15 — Note 5, Fair Value of Financial Instruments , to the Consolidated Financial Statements.

Derivative Activity Gains/(Losses) (In millions)

Derivative Activity Gains (In millions)

Fair value of contracts as of December 31, 2023 $ 648

Contracts realized or otherwise settled during the period 165

Vivint Smart Home contracts acquired during the period (112)

Other changes in fair value 179

Fair value of contracts as of December 31, 2023 $ 648

Fair value of contracts as of December 31, 2024 (a)

(a) Includes $770 million of derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis.

For further discussion, see Item 15 — Note 6, Accounting for Derivative Instruments and Hedging Activities

Fair Value of Contracts as of December 31, 2024

(In millions) Maturity

Fair Value Hierarchy (Losses)/Gains 1 Year or Less Greater Than 1 Year to 3 Years Greater Than 3 Years to 5 Years Greater Than

Fair Value Hierarchy Gains/(Losses) (a)

1 Year or Less Greater Than 1 Year to 3 Years Greater Than 3 Years to 5 Years Greater Than

Level 1 $ 92 $ 7 $ (1) $ (2) $ 96

2 unchanged sentences

Total $ 103 $ 100 $ 12 $ 7 $ 222

(a) Excludes $770 million of derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis.

For further discussion, see Item 15 — Note 6, Accounting for Derivative Instruments and Hedging Activities

The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level.

1 unchanged sentence

Consequently, the magnitude of the changes in individual current and non-current derivative assets or liabilities is higher than the underlying credit and market risk of the Company's portfolio.

As discussed in Item 7A — Quantitative and Qualitative Disclosures About Market Risk, Commodity Price Risk , NRG measures the sensitivity of the Company's portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility.

As discussed in Item 7A — Quantitative and Qualitative Disclosures About Market Risk, Commodity Price Risk , NRG measures

the sensitivity of the Company's portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility.

NRG's risk management policy places a limit on one-day holding period VaR, which limits the Company's net open position.

As the Company's trade-by-trade derivative accounting results in a gross-up of the Company's derivative assets and liabilities, the net derivative assets and liability position is a better indicator of NRG's hedging activity.

As of December 31, 2023, NRG's net derivative asset was $648 million, a decrease to total fair value of $2.9 billion as compared to December 31, 2022.

This decrease was primarily driven by roll-off of trades that settled during the period, losses in fair value, and Vivint Smart Home contracts acquired during the period.

As of December 31, 2024, NRG's net derivative asset was $992 million, an increase to total fair value of $344 million as compared to December 31, 2023.

This increase was primarily driven by gains in fair value and roll-off of trades that settled during the period.

Based on a sensitivity analysis using simplified assumptions, the impact of a $0.50 per MMBtu increase or decrease in natural gas prices across the term of the derivative contracts would result in a change of approximately $1.0 billion in the net value of derivatives as of December 31, 2024.

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Ability to utilize tax benefits through carry backs to prior periods and carry forwards to future periods

Judgement about future realization of deferred tax assets

Evaluation of Assets for Impairment Regulatory and political environments and requirements

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Energy-Related Commodities

As of December 31, 2023, for purposes of measuring the fair value of derivative instruments, the Company primarily uses quoted exchange prices and consensus pricing.

As of December 31, 2024 and 2023, for purposes of measuring the fair value of derivative instruments, the Company primarily used quoted exchange prices and consensus pricing.

Consensus pricing is provided by independent pricing services which are compiled from market makers with longer dated tenors as compared to broker quotes.

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The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in the Company's financial statements or tax returns and forecasting future profitability by tax jurisdiction.

The Company evaluates its deferred tax assets quarterly on a jurisdictional basis to determine whether adjustments to the valuation allowance are appropriate considering changes in facts or circumstances.

The Company evaluates its deferred tax assets on a jurisdictional basis to determine whether adjustments to the valuation allowance are appropriate considering changes in facts or circumstances.

As of each reporting date, management considers new evidence, both positive and negative, when determining the future realization of the Company’s deferred tax assets.

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• Change in the Company's intent about an asset from an intent to hold to a greater than 50% likelihood that an asset will be sold, or disposed of before the end of its previously estimated useful life.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows expected to be generated by the asset, through considering project specific assumptions for long-term power and natural gas prices, escalated future project operating costs and expected plant operations.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets by factoring in the different courses of action available to the Company.

For assets to be held and used, recoverability is measured by a comparison of the carrying amount of the assets to the undiscounted future net cash flows expected to be generated by the asset, through considering project specific assumptions for long-term power and natural gas prices, escalated future project operating costs and expected plant operations.

If the Company determines that the undiscounted cash flows from the asset are less than the carrying amount of the asset, NRG must estimate fair value to determine the amount of any impairment loss.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets, factoring in the different courses of action available to the Company.

Generally, fair value will be determined using valuation techniques, such as the present value of expected future cash flows.

1 unchanged sentence

However, actual future market prices and project costs could vary from the assumptions used in the Company's estimates and the impact of such variations could be material.

For assets to be held and used, if the Company determines that the undiscounted cash flows from the asset are less than the carrying amount of the asset, NRG must estimate fair value to determine the amount of any impairment loss.

Assets held-for-sale are reported at the lower of the carrying amount or fair value less the cost to sell.

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The Company applies ASC 805, Business Combinations ("ASC 805"), and ASC 350, Intangibles-Goodwill and Other (" ASC 350") to account for its goodwill and intangible assets.

Under these standards, the Company amortizes all finite-lived intangible assets over their respective estimated weighted-average useful lives, while goodwill has an indefinite life and is not amortized.

Under these standards, the Company amortizes all finite-lived intangible assets over their respective estimated weighted-average useful lives.

Goodwill has an indefinite life and is not amortized.

Goodwill is tested for impairment at least annually, or more frequently whenever an event or change in circumstances occurs that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

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The Company may first assess qualitative factors to determine whether it is more likely than not that an impairment has occurred.

In the absence of sufficient qualitative factors, the Company performs a quantitative assessment by determining the fair value of the reporting unit and comparing to its book value.

In the absence of sufficient qualitative factors, the Company performs a

quantitative assessment by determining the fair value of the reporting unit and comparing to its book value.

If it is determined that the fair value of a reporting unit is below its carrying amount, the Company's goodwill will be impaired at that time.

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The acquired Vivint Smart Home debt was measured at fair value using observable market inputs based on interest rates at the acquisition closing date.

The difference between the fair value at the acquisition closing date and the principal outstanding is being amortized through interest expense over the remaining term of the debt.

The difference between the fair value at the acquisition closing date and the principal outstanding was being amortized through interest expense over the remaining term of the debt.

On October 30, 2024, the Company repaid in full the outstanding Vivint Term Loans and terminated the revolving credit facility under the Vivint Credit Agreement.

For further discussion, see Item 15 — Note 12, Long-term Debt and Finance Leases.

The derivative liabilities in connection with the contractual future payment obligations with the financing providers under Vivint Smart Home’s Consumer Financing Program were measured at fair value at the acquisition closing date 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.

8 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 7. Management’s Discussion and Analysis