What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-24 compared with 2025-02-26 · 325 added, 376 removed, 671 unchanged (51% of the section changed)

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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, 2025 and 2024, 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.

A discussion and analysis of fiscal year 2023 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, 2024.

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.

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Executive Summary

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 customers (comprised of 6 million retail energy customers and 2 million smart home customers) in addition to commercial, industrial, and wholesale customers, supported by approximately 13 GW of generation as of December 31, 2024.

NRG Energy, Inc., or NRG or the Company, serves electricity, natural gas, and smart-home technology solutions to approximately 8 million residential customers (comprised of 6 million retail energy and 2 million smart home), in addition to large commercial and industrial, data center, and wholesale customers.

Across North America, NRG is redefining customers’ experience with energy under brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint.

As of December 31, 2025 the Company’s core power and natural gas business consists of approximately 12 GW of competitive power generation, primarily in Texas, and a natural gas portfolio that serves approximately 1,900 MMDth annually.

Business Environment

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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%.

In 2025, the average natural gas price at Henry Hub was $3.43 per MMBtu compared to $2.27 per MMBtu in 2024, representing an increase of 51%.

NRG may experience impacts to gross margins due to significant, rapid changes in current natural gas prices, the impact those prices have on power prices, and the lag in its ability to make a corresponding adjustment to the retail rates it charges customers on term and month to month contracts.

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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 remained relatively flat in 2024.

Coal commodity prices increased slightly in 2025.

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

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

Affordability — Rising customer bills, driven by rising regulated transmission and distribution charges along with load growth, have heightened customer and regulatory focus on energy affordability, eliciting evolving discussions regarding market design and frameworks.

NRG is monitoring and seeking to address these developments through its customer-focused business strategy and public policy advocacy efforts.

Tariffs — NRG’s business is affected by various macroeconomic factors, including tariffs.

has implemented, or is considering implementing, higher tariffs on imports into the U.S.

Any potential increases in capital and operational expenditures may impact the Company’s procurement and sourcing strategies.

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.

As a result, policymakers and regulators at regional, national, sub-national and local levels of government, both in the U.S.

and other parts of the world, are increasingly focused on actions to combat climate change.

Although federal policy in the U.S.

has recently shifted towards prioritizing domestic energy production and reducing climate-related regulatory requirements, policymakers and regulators at regional, national, sub-national and local levels of government, both in the U.S.

and other parts of the world, remain focused on actions to combat climate change.

NRG actively monitors climate change related developments that could impact its business and regularly engages with a diverse set of stakeholders on these issues.

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According to ERCOT, 46% of 2025 energy consumption in the ERCOT market was generated from carbon emission-free resources, with wind power contributing 24%.

In addition, as subsidies and incentives contribute to increases in renewable power sources, customer awareness and preferences are shifting toward sustainable solutions.

Increased demand for sustainable energy products from both residential and commercial customers creates opportunities for diversified product offerings in competitive retail markets.

In addition, subsidies and incentives may contribute to increases in renewable power sources, customer awareness and preferences are shifting toward sustainable solutions.

Any increase in demand for sustainable energy products from both residential and commercial customers creates opportunities for diversified product offerings in competitive retail markets.

Digitization and Customization — The electric industry is experiencing major technological changes in the way power is distributed and consumed by end-use customers.

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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.

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.

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The following significant events occurred during 2025 and through the filing date, as further described within this Management's Discussion and Analysis and the Consolidated Financial Statements:

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.

Acquisition of LSP Portfolio

On January 30, 2026, NRG completed the acquisition of the LSP Portfolio from LS Power, pursuant to the Purchase Agreement dated as of May 12, 2025.

The acquisition doubles NRG’s generation capacity with the addition of 18 natural gas-fired and dual fuel facilities totaling approximately 13 GW.

In addition, NRG acquired CPower, a leading demand response platform, which operates in all the country’s deregulated energy markets and has more than 2,000 commercial and industrial customers.

The consideration consisted of 24.25 million shares of NRG common stock and $6.4 billion in cash, plus preliminary working capital and certain other adjustments of $479 million.

The Company funded the cash consideration using a portion of the net proceeds of $4.4 billion from the New Unsecured Notes and the New Secured Notes and proceeds of $2.5 billion from the Company’s Revolving Credit Facility.

As part of the transaction, NRG also assumed approximately $3.2 billion of debt.

For further discussion, see Item 15 — Note 4, Acquisitions and Dispositions.

Acquisition of Texas Generation Portfolio

On April 10, 2025, the Company acquired all of the ownership interests of six power generation facilities from Rockland Capital, LLC, adding 738 MW of natural gas-fired assets in Texas to its portfolio for $560 million in consideration, less $2 million in working capital adjustments.

For further discussion, see Item 15 — Note 4, Acquisitions and Dispositions.

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.

The Company is actively repurchasing shares under its existing $3.7 billion share repurchase program, which began in 2023.

During the year ended December 31, 2025, the Company completed $1.3 billion of share repurchases at an average price of $129.23 per share.

On October 16, 2025, the Board of Directors authorized an additional share repurchase program of up to $3.0 billion, to be executed through 2028.

For further information regarding share repurchases, see Item 15 — Note 15 , Capital Structure.

In the first quarter of 2025, NRG increased the annual common stock dividend to $1.76 from $1.63 per share, representing an 8% increase from 2024.

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

Beginning in the first quarter of 2026, NRG increased the annual common stock dividend by 8% to

$1.90 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.

Issuance of Unsecured Notes and Secured Notes

On October 8, 2025, the Company issued $3.65 billion and $1.25 billion in aggregate principal amount of the New Unsecured Notes and New Secured Notes, respectively.

The New Unsecured Notes are senior unsecured obligations of the Company and are guaranteed by its wholly-owned U.S.

subsidiaries that guarantee the term loans under the Senior Credit Facility.

The New Secured Notes are senior secured obligations of the Company and are guaranteed by its wholly-owned U.S.

subsidiaries that guarantee the term loans under the Senior Credit Facility.

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.

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.

Texas Development Projects

On November 20, 2025, the Company entered into the Third TEF Loan to support the development of Greens Bayou 6, which is currently under construction.

Commercial operation of the 443 MW facility is expected mid-2028.

On September 26, 2025, the Company entered into the Second TEF Loan to support the development of Cedar Bayou 5, which is currently under construction.

Commercial operation of the 689 MW combined cycle facility is expected mid-2028.

On July 31, 2025, the Company entered into the First TEF Loan to support the development of T.H.

Wharton, which is currently under construction.

Commercial operation of the 415 MW facility is expected in June 2026.

Site Development Updates

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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.

Additionally, NRG has entered into slot reservation agreements with GEV for the procurement of 3.6 GW of 7HA gas turbines.

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

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Other revenues (a)(b)

336 494 (158)

Total revenue 30,713 28,130 2,583

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2,602 2,345 (257)

Provision for credit losses 314 251 (63)

Acquisition-related transaction and integration costs 74 30 (44)

Total operating costs and expenses 28,843 25,914 (2,929)

Gain on sale of assets 208 1,578 (1,370)

(Loss)/Gain on sale of assets (25) 208 (233)

Operating Income 1,845 2,424 (579)

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Other income, net 68 44 24

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

Loss on debt extinguishment (10) (382) 372

Interest expense (741) (651) (90)

Total other expenses (711) (976) 265

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

Income Before Income Taxes 1,134 1,448 (314)

Income tax expense 270 323 (53)

Net Income $ 864 $ 1,125 $ (261)

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

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Year Ended December 31, 2025

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

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

Retail revenue $ 10,896 $ 13,467 $ 3,054 $ 2,144 $ (18) $ 29,543

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(b) Includes capacity and emissions credits

(c) Includes $3.3 billion, $278 million and $1.2 billion of TDSP expense in Texas, East, and West/Services/Other, respectively

(d) Excludes depreciation and amortization shown separately

Year Ended December 31, 2025

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

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

Home electricity sales volume (GWh) 38,817 15,408 2,542 — — 56,767

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2,860 2,122 650 — — 5,632

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

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

— — — 2,327 — 2,327

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

Ending Vivint Smart Home customer count (in thousands) (b)(c)

— — — 2,419 — 2,419

GWh sold 28,728 5,970 2,118 — — 36,816

GWh generated (c)

GWh generated (d)

28,728 3,722 2,118 — — 34,568

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

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

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

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

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

Cottonwood lease ended in May 2025

Year Ended December 31, 2024

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

Corporate/Eliminations Total

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

Retail revenue $ 10,400 $ 11,247 $ 3,528 $ 1,991 $ (17) $ 27,149

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Contract amortization — (27) (2) — — (29)

Other revenue (b)

Other revenue (a)

210 114 24 — (12) 336

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Cost of fuel (647) (135) (108) — — (890)

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

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

(6,583) (9,579) (3,080) (151) 22 (19,371)

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Economic gross margin $ 3,421 $ 2,045 $ 617 $ 1,840 $ (22) $ 7,901

(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

(a) Includes trading gains and losses and ancillary revenues

(b) Includes capacity and emissions credits

(d) Excludes depreciation and amortization shown separately

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

Home electricity sales volume (GWh) 39,353 15,229 2,355 — — 56,937

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2,909 2,191 648 — — 5,748

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

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

— — — 2,171 — 2,171

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

Ending Vivint Smart Home customer count (in thousands) (b)(c)

— — — 2,226 — 2,226

GWh sold 23,350 4,442 5,977 — — 33,769

GWh generated (c)

GWh generated (d)

23,350 2,372 5,977 — — 31,699

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

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

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

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

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

The following table represents the weather metrics for 2025 and 2024:

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June 30, Quarter ended

Weather Metrics Texas East West/Services/Other (a)

Texas East West/Services/Other (a)

Weather Metrics Texas East West/Other (a)

Texas East West/Other (a)

3,369 1,256 1,988 456 72 208 1,659 773 1,123 1,102 379 592 152 32 65

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HDDs 1,603 4,575 2,039 610 1,605 747 5 45 9 56 525 196 932 2,400 1,087

(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

(a) The West/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 CDD represents the number of degrees that the mean temperature for a particular day is above 65 degrees Fahrenheit in each region.

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Gross margin and economic gross margin

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.

Gross margin decreased $119 million and economic gross margin increased $417 million, both of which include intercompany sales, during the year ended December 31, 2025, compared to the same period in 2024.

The detail by segment is as follows:

(In millions)

Higher gross margin due to the net effect of:

Higher gross margin due to the following:

• an increase in net revenue of $388 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)

Decrease in contract and emissions credit amortization 2

Decrease in depreciation and amortization 25

Decrease in gross margin

(In millions)

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

• a 3%, or $97 million decrease in cost to serve the retail load, driven by lower realized power prices associated with the Company’s diversified supply strategy

Lower gross margin due to a decrease in load of 1.9 TWhs, or $63 million, driven by changes in customer mix and attrition, partially offset by an increase in load of 0.4 TWhs, or $25 million attributed to weather (38)

Increase in economic gross margin

Increase in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges 314

Decrease in contract amortization 42

Decrease in depreciation and amortization 9

Increase in contract and emissions credit amortization (4)

Increase in depreciation and amortization (51)

Increase in gross margin

West/Services/Other

(In millions)

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)

Lower gross margin due to the deactivation of Indian River Unit 4 in February 2025 $ (52)

Higher natural gas gross margin including the impact of transportation and storage contract optimization, resulting in higher net revenue rates of $1.00 per Dth, or $1.62 billion, from changes in customer term, product and mix, partially offset by higher supply cost of $0.90 per Dth, or $1.47 billion, driven by an increase in gas costs 151

Lower electric gross margin due to higher supply costs of $12.95 per MWh, or $782 million driven primarily by increases in power prices, partially offset by higher net revenue rates as a result of changes in customer term, product and mix of $10.60 per MWh, or $620 million (162)

Higher gross margin due to an increase in generation volumes as a result of spark spread expansion in NYISO, partially offset by a decrease in average realized prices at Midwest Generation 25

Higher gross margin due to a 159% increase in PJM capacity prices and a 20% increase in NYISO capacity prices 81

Higher gross margin from demand response activities due to higher PJM auction clearing prices and curtailment events in 2025 17

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

Decrease in contract amortization 21

Decrease in depreciation and amortization 10

Decrease in gross margin

(In millions)

Lower gross margin due to the disposition of Services businesses $ (123)

Higher electric gross margin due to lower supply costs of $11.50 per MWh, or $174 million and customer mix of $35 million, partially offset by lower revenue rates of $9.15 per MWh, or $135 million 74

Higher natural gas gross margin due to higher revenue rates of $0.15 per Dth, or $34 million, partially offset by higher supply costs of $0.10 per Dth, or $24 million 10

Lower gross margin at Cottonwood driven by the termination of the facility lease in May 2025 (142)

Lower gross margin at Cottonwood is driven by spark spread contraction, partially offset by favorable capacity pricing (12)

Decrease 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 2

Increase in depreciation and amortization (15)

Decrease in depreciation and amortization 67

Increase in gross margin

Vivint Smart Home (a)

Vivint Smart Home

(In millions)

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)

Higher gross margin driven by growth in customers of $112 million and higher monthly revenue rates of $0.72 per customer, or $20 million $ 132

Lower gross margin due to a decrease in non-recurring sales revenue (30)

Higher gross margin primarily due to an increase in home protection plan sales 14

Lower gross margin due to an increase in personnel and related support costs (8)

Increase in economic gross margin

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Increase in gross margin

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

Mark-to-market for Economic Hedging Activities

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 increased by $3.1 billion during the year ended December 31, 2024, compared to the same period in 2023.

Total net mark-to-market results decreased by $552 million during the year ended December 31, 2025, compared to the same period in 2024.

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

Year Ended December 31, 2025

(In millions) Texas East West/Services/Other Eliminations Total

(In millions) Texas East West/Other Eliminations Total

Mark-to-market results in revenues

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

$ — $ (17) $ 6 $ — $ (11)

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Net unrealized gains on open positions related to economic hedges

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

— 25 4 (5) 24

Total mark-to-market gains in revenues

$ — $ 7 $ 10 $ (5) $ 12

Mark-to-market results in operating costs and expenses

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

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

51 (3) — — 48

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

83 85 (158) 5 15

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

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Year Ended December 31, 2024

(In millions) Texas East West/Services/Other Eliminations Total

(In millions) Texas East West/Other Eliminations Total

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

Mark-to-market results consist of unrealized gains and losses on contracts that are yet to be settled.

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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, 2025, the $12 million gain in revenues from economic hedge positions was driven primarily by an increase in the value of open positions as a result of decreases in natural gas prices, partially offset by the reversal of previously recognized unrealized gains on contracts that settled during the period.

The $358 million loss in operating costs and expenses from economic hedge positions was driven primarily by the reversal of previously recognized unrealized gains on contracts that settled during the period and a decrease in the value of open positions as a result of decreases in CAISO power prices.

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

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.

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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.

The $3.0 billion loss in operating costs and expenses from economic hedge positions was driven primarily by the reversal of previously recognized unrealized gains on contracts that settled during the period, as well as a decrease in the value of East and West/Other open positions as a result of decreases in natural gas and power prices.

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

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, 2025 and 2024.

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Operations and maintenance expenses are comprised of the following:

(In millions) Texas East West/Services/Other Vivint Smart Home (a)

Corporate Eliminations Total

(In millions) Texas East West/Other Vivint Smart Home Corporate Eliminations Total

Year Ended December 31, 2025 $ 790 $ 421 $ 81 $ 263 $ 18 $ (5) $ 1,568

Year Ended December 31, 2024 783 364 204 254 7 (5) 1,607

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

Operations and maintenance expenses increased by $216 million for the year ended December 31, 2024, compared to the same period in 2023, due to the following:

Operations and maintenance expenses decreased by $39 million for the year ended December 31, 2025, compared to the same period in 2024, due to the following:

(In millions)

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

Decrease due to the final property insurance claim for the extended outage at W.A.

Parish received in 2025 $ (100)

Decrease driven by the expiration of the Cottonwood facility lease in May 2025 (57)

Decrease due to the disposition of Services businesses (53)

Decrease driven by a favorable resolution of a regulatory matter in 2025 (21)

Increase in planned major maintenance expenditures associated with the scope of outages primarily in Texas and at Powerton 106

Increase driven by higher retail operations costs 27

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

Increase due to the acquisition of the Texas Generation Portfolio facilities in April 2025 22

Increase in variable operations and maintenance expenditures driven by higher generation at Powerton 13

Increase due to deactivation and site preparation costs associated with future development projects 11

Increase driven by higher Vivint Smart Home operations costs to support customer growth 7

Decrease in operations and maintenance expense

Other Cost of Operations

Other Cost of operations are comprised of the following:

(In millions) Texas East West/Services/Other Vivint Smart Home (a)

(In millions) Texas East West/Other Vivint Smart Home Total

Year Ended December 31, 2025 $ 246 $ 135 $ 7 $ 5 $ 393

Year Ended December 31, 2024 236 136 14 6 392

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

Other cost of operations increased by $1 million for the year ended December 31, 2025, compared to the same period in 2024, due to the following:

(In millions)

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 current year ARO cost estimates at Jewett Mine $ 7

Decrease in property taxes driven by the expiration of the Cottonwood facility lease in May 2025 (5)

Increase in other cost of operations

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Depreciation and amortization expenses are comprised of the following:

(In millions) Texas East West/Services/Other Vivint Smart Home (a)

Corporate Total

(In millions) Texas East West/Other Vivint Smart Home Corporate Total

Year Ended December 31, 2025 $ 374 $ 148 $ 32 $ 810 $ 42 $ 1,406

Year Ended December 31, 2024 323 158 99 782 41 1,403

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

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.

Depreciation and amortization expense increased by $3 million for the year ended December 31, 2025, compared to the same period in 2024, due to the following:

(In millions)

Increase in amortization of capitalized contract costs primarily in the Vivint Smart Home segment

Decrease in amortization driven by the expected roll off of the acquired Vivint Smart Home intangibles

Decrease in amortization due to the disposition of Services businesses (37)

Decrease in amortization primarily due to the roll off of intangibles in Texas, East and West

Increase in depreciation and amortization

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.

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

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Selling, general and administrative costs are comprised of the following:

(In millions) Texas East West/Services/Other Vivint Smart Home (a)

Corporate/ Eliminations Total

(In millions) Texas East West/Other Vivint Smart Home Corporate/ Eliminations Total

Year Ended December 31, 2025 $ 948 $ 668 $ 150 $ 809 $ 27 $ 2,602

Year Ended December 31, 2024 841 586 215 663 40 2,345

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

Selling, general and administrative costs increased by $257 million for the year ended December 31, 2025 compared to the same period in 2024, due to the following:

(In millions)

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

Increase due to legal matters in 2025 $ 191

Increase in equity linked compensation 60

Increase in personnel costs 59

Increase in marketing and media expenses 16

Decrease in consulting and legal expenses (36)

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

Decrease in provision for credit losses primarily due to improved customer payment behavior (42)

Decrease due to the disposition of Services businesses (38)

Increase in selling, general and administrative costs

Provision for Credit Losses

Provision for credit losses are comprised of the following:

(In millions) Texas East West/Services/Other Vivint Smart Home (a)

Year Ended December 31, 2024 $ 203 $ 25 $ 48 $ 38 $ 314

Year Ended December 31, 2023 159 28 30 34 251

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

Provision for credit losses increased by $63 million for the year ended December 31, 2024, compared to the same period in 2023, due to the following:

(In millions)

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

Acquisition-Related Transaction and Integration Costs

Acquisition-related transaction and integration costs were $30 million and $119 million for the years ended December 31, 2024 and 2023, respectively, include:

Acquisition-related transaction and integration costs of $74 million and $30 million for the years ended December 31, 2025 and 2024, respectively, include:

As of December 31,

(In millions) 2025 2024

LSP Portfolio acquisition costs $ 32 $ —

Vivint Smart Home integration costs 29 23

Vivint Smart Home acquisition costs — 38

Other integration costs, primarily related to Direct Energy 7 29

Texas Generation Portfolio acquisition costs 5 —

Acquisition-related transaction and integration costs

Gain on Sale of Assets

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:

(Loss)/Gain on Sale of Assets

The (loss)/gain on sale of assets of $(25) million and $208 million recorded for the years ended December 31, 2025 and 2024, respectively, include:

As of December 31,

(In millions) 2025 2024

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

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

Loss due to the resolution of a tax matter in connection with STP sales agreement (18) —

Other asset sales (7) 4

Gain on sale of assets $ 208 $ 1,578

(Loss)/Gain on sale of assets $ (25) $ 208

Impairment Losses on Investments

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:

During the years ended December 31, 2025 and 2024, the Company recorded impairment losses of $39 million and $7 million, respectively, on the Company's equity method investment in Gladstone generation facility.

Other Income, net

Other income, net of $68 million and $44 million recorded for the years ended December 31, 2025, and 2024, respectively, include:

As of December 31,

(In millions) 2025 2024

Interest income $ 83 $ 56

Derivative losses on the Consumer Financing Program (21) (14)

Other Income, net $ 68 $ 44

Loss on Debt Extinguishment

The loss on debt extinguishment of $10 million and $382 million recorded for the years ended December 31, 2025, and 2024, respectively, include:

As of December 31,

(In millions) 2025 2024

Repurchase of a portion of the Convertible Senior Notes

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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)

Loss on Debt Extinguishment $ (10) $ (382)

Interest Expense

Interest expense increased by $90 million for the year ended December 31, 2025, compared to the same period in 2024, primarily due to the impact of New Unsecured Notes and the New Secured Notes to partially fund acquisition of the LSP Portfolio and a realized loss on the treasury locks in the 2025 period.

Income Tax Expense

For the year ended December 31, 2025, NRG recorded an income tax expense of $270 million on pre-tax income of $1.1 billion.

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

For the same period in 2024, NRG recorded income tax expense of $323 million on a pre-tax income of $1.4 billion.

The effective tax rate was 23.8% and 22.3% for the years ended December 31, 2025 and 2024, respectively.

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

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

Tax at federal statutory tax rate 304 (45)

State taxes 92 (22)

Foreign rate differential 1 (10)

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

Deferred impact of state tax rate changes (24) 3

Foreign tax refunds — (17)

Return to provision adjustments (1) (5)

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

Effective income tax rate 22.3 % 5.2 %

For the year ended December 31, 2025, NRG's overall effective tax rate was higher than the federal statutory tax rate of 21%, primarily due to the state tax expense, partially offset by favorable permanent differences.

For the same period in 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.

Refer to Item 15 — Note 19, Income Taxes , to the Consolidated Financial Statements for further discussion.

The effective income tax rate may vary from period to period depending on, among other factors, the geographic and business mix of earnings and losses and changes in valuation allowances in accordance with ASC 740, Income Taxes ("ASC 740").

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Liquidity Position

As of December 31, 2024 and 2023, NRG's liquidity, excluding collateral funds deposited by counterparties, was approximately $5.4 billion and $4.8 billion, respectively, comprised of the following:

As of December 31,

As of January 31, 2026, December 31, 2025 and 2024, NRG's liquidity, excluding collateral funds deposited by counterparties, was approximately $3.0 billion, $9.6 billion and $5.4 billion, respectively, comprised of the following:

As of January 31, As of December 31,

(In millions) 2026 2025 2024

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Total availability under Revolving Credit Facility and collective collateral facilities (b)

2,688 4,890 4,469

Total liquidity, excluding collateral funds deposited by counterparties $ 3,040 $ 9,628 $ 5,443

(a) Includes reserves primarily for debt service, performance obligations and capital expenditures

(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, 2024, total liquidity, excluding collateral funds deposited by counterparties, increased by $600 million.

(a) Includes reserves primarily for capital expenditures

(b) Total capacity of Revolving Credit Facility and collective collateral facilities was $8.9 billion, $7.7 billion and $7.3 billion as of January 31, 2026, December 31, 2025 and December 31, 2024, respectively

As of December 31, 2025, total liquidity, excluding collateral funds deposited by counterparties, increased by $4.2 billion from December 31, 2024.

The increase was driven by $4.9 billion of newly-issued secured and unsecured corporate debt to partially fund the acquisition of the LSP Portfolio on January 30, 2026 and to repay the $500 million aggregate principal amount of 2.000% senior secured first lien notes.

As of January 31, 2026, NRG had $3.0 billion of liquidity available to continue to support its operations.

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

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Credit Ratings

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

On May 12, 2025, S&P affirmed the Company's issuer credit rating of BB and changed the rating outlook from Positive to Stable.

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

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NRG Energy, Inc.

BB Positive Ba1 Stable BB+ Stable

BB Stable Ba1 Stable BB+ Stable

Senior Secured Debt BBB- Baa3 BBB-

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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.

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, Senior Secured First Lien Notes, Senior Credit Facility, Receivables Facility, tax-exempt bonds and TEF loans.

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

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(i) market operations activities;

(ii) debt service obligations, as described more fully in Item 15 — Note 12, Long-term Debt and Finance Leases , to the Consolidated Financial Statements;

(ii) debt service obligations, as described in Item 15 — Note 12, Long-term Debt and Finance Leases , to the Consolidated Financial Statements;

(iii) capital expenditures, including maintenance, environmental, and investments and integration;

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.

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.

Acquisition of Texas Generation Portfolio

For further discussion, see Item 15 — Note 4, Acquisitions and Dispositions.

Issuance of Unsecured Notes and Secured Notes

On October 8, 2025, the Company issued $3.65 billion in aggregate principal amount of senior unsecured notes, consisting of (i) $1.25 billion aggregate principal amount of 5.750% senior notes due 2034 (the “2034 Notes”) and (ii) $2.4 billion aggregate principal amount of 6.000% senior notes due 2036 (the “2036 Notes” and, together with the 2034 Notes, the “New Unsecured Notes”).

On October 8, 2025, the Company also issued $1.25 billion in aggregate principal amount of senior secured first lien notes, consisting of (i) $625 million aggregate principal amount of 4.734% senior secured first lien notes due 2030 (the “2030 Notes”) and (ii) $625 million aggregate principal amount of 5.407% senior secured first lien notes due 2035 (the “2035 Notes” and, together with the 2030 Notes, the “New Secured Notes”).

The Company used a portion of the net proceeds from the 2035 Notes to repay in full its $500 million aggregate principal amount of 2.000% senior secured notes on the maturity date of December 2, 2025.

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.

Acquisition of LSP Portfolio

On January 30, 2026, NRG completed the acquisition of the LSP Portfolio from LS Power, pursuant to the Purchase Agreement dated as of May 12, 2025.

The consideration consisted of 24.25 million shares of NRG common stock and $6.4 billion in cash, plus preliminary working capital and certain other adjustments of $479 million.

The Company funded the cash consideration using a portion of the net proceeds from the New Unsecured Notes and the New Secured Notes of $4.4 billion and proceeds of $2.5 billion from the Company’s Revolving Credit Facility.

As part of the transaction, NRG also assumed approximately $3.2 billion of debt.

For further discussion, see Item 15 — Note 4, Acquisitions and Dispositions and Item 15 — Note 12, Long-term Debt and Finance Leases.

Amendment to Term Loan

On July 22, 2025, the Company and APX Group LLC, as borrowers, and certain subsidiaries of the Company, as guarantors, entered into the Fifteenth Amendment to the Second Amended and Restated Credit Agreement (the “Fifteenth Amendment”) with, among others, Citicorp North America, Inc., as administrative agent and as collateral agent (the “Agent”), and certain financial institutions, as lenders, which amended the Company’s Second Amended and Restated Credit Agreement, dated as of June 30, 2016 (the “Credit Agreement”) by adding a new incremental Term Loan B in an aggregate principal amount of $1.0 billion.

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

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

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.

Revolving Credit Facility

On May 27, 2025, the Company, as borrower, and certain of its subsidiaries, as guarantors, entered into the Fourteenth Amendment to the Credit Agreement in order to increase the commitments under the Revolving Credit Facility by $390 million (the “Incremental Commitments”) to an aggregate amount equal to $4.6 billion.

As of January 31, 2026, $2.8 billion of borrowings were outstanding.

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

Convertible Senior Notes Redemption

On July 8, 2025 (the “Redemption Date”), the Company used cash on hand to redeem $12 million in aggregate principal amount of the Convertible Senior Notes, at a redemption price equal to 100.000%.

The holders of the remaining outstanding Convertible Senior Notes elected to convert their Convertible Senior Notes prior to the Redemption Date and received $220 million in cash with respect to the remaining principal amount of the Convertible Senior Notes and a total of 3,986,335 shares for the conversion premium.

See Item 15 — Note 12, Long-term Debt and Finance Leases.

Capped Call Options

During the second quarter of 2024, the Company entered into privately negotiated capped call transactions with certain counterparties (the “Capped Calls”) to mitigate the impact of potential dilution of the Convertible Senior Notes.

Upon the exercise and settlement of the Capped Calls on July 8, 2025, the Company paid a total amount of $292 million.

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

Receivables Facility

On June 20, 2025, NRG Receivables amended its existing Receivables Facility to extend the scheduled termination date to June 18, 2026.

Texas Development Projects

On July 31, 2025, NRG THW GT LLC, an indirect wholly-owned subsidiary of the Company, entered into the First TEF Loan to support the development of T.H.

Wharton, which is currently under construction.

The loan bears interest at a fixed rate of 3.000% per annum and has a final maturity date of July 31, 2045.

As January 31, 2026, $187 million of disbursements for the First TEF Loan have occurred.

On September 26, 2025, NRG Cedar Bayou 5 LLC, an indirect wholly-owned subsidiary of the Company, entered into the Second TEF Loan to support the development of Cedar Bayou 5, which is currently under construction.

The loan bears interest at a fixed rate of 3.000% per annum and has a final maturity date of September 26, 2045.

As of January 31, 2026, $269 million of disbursements for the Second TEF Loan have occurred.

On November 20, 2025, NRG Greens Bayou 6 LLC, an indirect wholly-owned subsidiary of the Company, entered into the Third TEF Loan to support the development of Greens Bayou 6, which is currently under construction.

The loan bears interest at a fixed rate of 3.000% per annum and has a final maturity date of November 20, 2045.

As of January 31, 2026, $95 million of disbursements for the Third TEF Loan have occurred.

Indian River Bonds

On October 23, 2025, the Company remarketed $57 million aggregate principal amount of NRG Indian River 2020 4.000% tax-exempt refinancing bonds due 2040 (the “IR 2040 Bonds”) and $190 million aggregate principal amount of NRG Indian River Power 2020 4.000% tax-exempt refinancing bonds due 2045 (the “IR 2045 Bonds” and, together with the IR 2040 Bonds, the “IR Bonds”).

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

Bilateral Letter of Credit Facilities

In January and February 2026, the Company and certain of its subsidiaries, as guarantors, entered into amendments to its existing bilateral letter of credit facilities to increase the size of its bilateral credit facilities by $410 million and $90 million, respectively, to provide additional liquidity.

As of January 31, 2026, $1.0 billion was issued under these facilities.

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.

The Company executed $310 million in liability management in 2025 and remains committed to maintaining a strong balance sheet and achieving its targeted credit metrics.

Pension and Other Postretirement Benefit Contributions

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

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

5.750% Senior Notes, due 2034 — — — — — 1,250 1,250

6.000% Senior Notes, due 2036 — — — — — 2,400 2,400

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

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7.000% Senior Secured Notes, due 2033 — — — — — 740 740

Tax-exempt bonds

247 — — 59 — 160 466

5.407% Senior Secured Notes, due 2035 — — — — — 625 625

Term Loan B, due 2031 23 23 23 23 23 2,184 2,299

11 14 13 13 13 1,253 1,317

Tax-exempt bonds — — 59 — — 407 466

Wharton TEF loan, due 2045 — — — 8 10 171 189

3.000% Cedar Bayou 5 TEF loan, due 2045 — — — — 3 252 255

3.000% Greens Bayou 6 TEF loan, due 2045 — — — — — 90 90

Subtotal Recourse Debt

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(iii) timing of disbursements and receipts (e.g.

buying power before receiving retail revenues);

buying energy before receiving retail revenues);

and (iv) initial collateral for large structured transactions.

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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.

The first lien structure is not subject to unwind or termination upon a ratings downgrade of a counterparty and has no stated maturity date.

The Company's first lien counterparties may have a claim on its assets to the extent market prices exceed the hedged prices.

As of December 31, 2024, all hedges under the first liens were in-the-money on a counterparty aggregate basis.

As of December 31, 2025, counterparties’ net exposure to NRG of approximately $5 million on out-of-the-money hedges was secured by the first lien structure.

Capital Expenditures

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Texas $ 256 $ 38 $ 682 $ 976

West/Services/Other 15 — 1 16

East 17 — — 17

West/Other 7 — 2 9

Vivint Smart Home 17 — 7 24

Corporate 32 — 89 121

Total cash capital expenditures for 2024

Total cash capital expenditures for 2025 (a)

329 38 780 1,147

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$ 329 $ 38 $ 1,028 $ 1,395

(a) Capital expenditures exclude W.A.

Parish insurance proceeds of $100 million

Investments and Integration for the year ended December 31, 2025 include growth expenditures, integration, small book acquisitions and other investments.

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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 (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

CDS - Circulating Dry Scrubber

DSI - Dry Sorbent Injection with Trona

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Share Repurchases

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.

During the year ended December 31, 2025, the Company completed $1.3 billion of share repurchases at an average price of $129.23 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.

On October 16, 2025, the Board of Directors authorized an additional share repurchase program of up to $3.0 billion, to be executed through 2028.

Dividend Increase on Common Stock

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Variable Interest in Equity investments — NRG's investment in Ivanpah is a variable interest entity for which NRG is not the primary beneficiary.

See also Item 15 — Note 16, Investments Accounted for by the Equity Method and Variable Interest Entities, to the Consolidated Financial Statements for additional discussion.

NRG's pro-rata share of non-recourse debt was approximately $462 million as of December 31, 2025.

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(In millions) 2025 2024 Change

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

Cash provided by operating activities $ 1,913 $ 2,306 $ (393)

Cash used by investing activities (1,638) (24) (1,614)

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:

Cash provided/(used) by financing activities 3,546 (1,755) 5,301

Cash (used)/provided by operating activities

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

(In millions)

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

Decrease in working capital primarily related to accounts receivable due to increased rates $ (453)

Increase in working capital primarily driven by deferred revenues and changes in ARO cost estimates 428

Increase in operating income adjusted for other non-cash items 312

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 provided/(used) by investing activities were driven by:

Changes in cash collateral in support of risk management activities due to change in commodity prices (238)

Decrease in working capital due to the payment of the CPI Security Systems, Inc.

legal matter (224)

Decrease in working capital primarily due to timing of prepayments related to broker fees and insurance (218)

Cash (used)/provided by investing activities

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

(In millions)

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

Changes in cash (used)/provided by financing activities were driven by:

Increase in capital expenditures $ (675)

Increase in cash paid for acquisitions primarily due to the acquisition of the Texas Generation Portfolio in April 2025 (558)

Decrease in proceeds from sale of assets primarily due to the sale of the Airtron business unit in 2024 (495)

Increase in insurance proceeds for property, plant and equipment, net 97

Increase due to fewer purchases of emissions allowances, net of sales 17

Cash provided/(used) by financing activities

Changes in cash provided/(used) by financing activities were driven by:

(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)

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)

Increase in proceeds from issuance of long-term debt in 2025 $ 3,476

Increase due to lower repayments of long-term debt and finance leases 2,250

Decrease primarily due to higher payments for share repurchase activity in 2025 (418)

Decrease due to payment for settlement of capped call options in 2025 (292)

Increase primarily due to debt extinguishment costs in 2024 229

Increase in net receipts from settlement of acquired derivatives 62

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications

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, 2025, the Company had domestic pre-tax book income of $1.1 billion and foreign pre-tax book income of $47 million.

For the year ended December 31, 2025, the Company utilized U.S.

federal NOLs of $1.4 billion, and tax credits of $103 million.

federal NOLs of $247 million, and foreign NOLs of $25 million.

As of December 31, 2025, the Company has cumulative U.S.

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In addition to the above NOLs, NRG has a $58 million indefinite carryforward for interest deductions, as well as $288 million of tax credits, inclusive of $92 million of CAMT 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 $125 million in 2025, excluding the impact of the proposed CAMT regulations.

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.

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, of up to $90 million in 2026.

As of December 31, 2025, NRG as an applicable corporation is subject to the CAMT, however, there is no impact on the Company’s provision for income taxes from the CAMT as of December 31, 2025.

As of December 31, 2025, the Company has $53 million of tax effected uncertain federal, state and foreign tax benefits for which the Company has recorded a non-current tax liability of $59 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.

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With few exceptions, state and Canadian income tax examinations are no longer open for years before 2015.

On July 4, 2025, H.R.1 - One Big Beautiful Bill Act (“OBBB”) was enacted into law.

The OBBB includes changes to U.S.

tax law applicable to NRG beginning in 2025, such as the permanent extension of certain expiring provisions of the TCJA, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The impact of the OBBB on the Company’s consolidated financial statements has been reflected in its current and deferred taxes, however, there is no material impact to income tax expense for the year ended December 31, 2025.

Guarantor Financial Information

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 .

As of December 31, 2025, the Company's outstanding registered senior notes consisted of $821 million of the 2028 Senior Notes as shown in Item 15 — 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”).

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(a) Includes intercompany receivables due from Non-Guarantors of $152 million as of December 31, 2025

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

(b) Includes intercompany payables due to Non-Guarantors of $6 million as of December 31, 2025

Fair Value of Derivative Instruments

NRG may enter into energy purchase and sales contracts, fuel purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at power plants or retail load obligations.

In order to mitigate interest risk associated with the issuance of the Company's variable rate debt, NRG enters into interest rate swap agreements.

In order to mitigate interest risk associated with the issuance of the Company's debt, NRG enters into interest rate derivatives.

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, 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.

Under the Flex Pay plan (“Flex Pay”), offered by Vivint Smart Home, customers pay for smart home products by obtaining financing from a third-party financing provider (“Consumer Financing Program” or “CFP”).

Vivint Smart Home pays certain fees to the financing providers and shares in credit losses on some of the loans.

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 (In millions)

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

Derivative Activity Gains/(Losses) (In millions)

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

Contracts realized or otherwise settled during the period (338)

Texas Generation Portfolio contracts acquired during the period (83)

Other changes in fair value (174)

Fair value of contracts as of December 31, 2025 (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.

(a) As of December 31, 2024 and 2025, respectively, includes $770 million and $484 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

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(In millions) Maturity

Fair Value Hierarchy Gains/(Losses) (a)

Fair Value Hierarchy (Losses)/Gains (a)

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

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Also, collateral received or posted on the Company's derivative assets or liabilities are recorded on a separate line item on the balance sheet.

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.

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.

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, 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.

As of December 31, 2025, NRG's net derivative asset was $397 million, a decrease of $595 million to total fair value as compared to December 31, 2024.

This decrease was driven by the roll-off of trades that settled during the period, losses in fair value and the Texas Generation Portfolio contracts acquired.

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 $1.1 billion in the net value of derivatives as of December 31, 2025.

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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

Judgment about future realization of deferred tax assets

Evaluation of Assets for Impairment Regulatory and political environments and requirements

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

Prior to the fourth quarter of 2023, the Company valued derivatives based on price quotes from brokers in active markets who regularly facilitate those transactions.

The Company started using consensus pricing as it offers data from more market makers and for longer dated tenors as compared to broker quotes, enhances data integrity, and increases transparency.

When external prices are not available, NRG uses internal models to determine the fair value.

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These estimations are considered to be critical accounting estimates.

Interest Rate Swaps

NRG is exposed to changes in interest rate through the Company's issuance of variable rate debt.

To manage the Company's interest rate risk, NRG enters into interest rate swap agreements.

Interest Rate Derivatives

NRG is exposed to changes in interest rates through the Company's issuance of debt.

To manage the Company's interest rate risk, NRG enters into interest rate swap agreements and treasury locks.

In order to qualify the derivative instruments for hedged transactions, NRG estimates the forecasted borrowings for interest rate swaps occurring within a specified time period.

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federal NOL carryforwards and the majority of its state NOL carryforwards prior to their expiration.

The Company continues to maintain a valuation allowance of $144 million as of December 31, 2024 against deferred tax assets consisting of state NOL carryforwards and foreign NOL carryforwards in jurisdictions where the Company does not currently believe that the realization of deferred tax assets is more likely than not.

The Company continues to maintain a valuation allowance of $150 million as of December 31, 2025 against deferred tax assets consisting of state NOL carryforwards and foreign NOL, and capital loss carryforwards in jurisdictions where the Company does not currently believe that the realization of deferred tax assets is more likely than not.

As of December 31, 2024, the Company's valuation allowance balance was $144 million.

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Goodwill and Other Intangible Assets

At December 31, 2024, the Company reported goodwill of $5.0 billion, consisting of $3.5 billion from the acquisition of Vivint in 2023, $1.2 billion from the acquisition of Direct Energy in 2021 and $0.3 billion from other retail acquisitions.

At December 31, 2025, the Company reported goodwill of $5.0 billion, consisting of $3.5 billion from the acquisition of Vivint in 2023, $1.2 billion from the acquisition of Direct Energy in 2021 and $300 million from other retail acquisitions.

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.

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Fair value is determined based on the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The acquired assets and assumed liabilities from the Vivint Smart Home acquisition that involved the most subjectivity in determining fair value consisted of customer relationships, developed technology, trade names, acquired debt and derivative instruments.

The acquired assets and assumed liabilities from the Texas Generation Portfolio acquisition that involved the most subjectivity in determining fair value consisted of property, plant, and equipment and derivative instruments.

The fair values of the property, plant and equipment were measured using income-based valuation methodologies, which included certain assumptions, such as forecasted future cash flows, discount rates, market prices and asset lives.

The derivative instruments were measured using an income-based valuation approach, which included available market data, such as consensus pricing, as well as unobservable internally derived assumptions, such as volatility factors and credit exposure.

NRG describes in detail its acquisitions in Item 15 — Note 4, Acquisitions and Dispositions , to the Consolidated Financial Statements.

The fair value of the customer relationships, technology and trade names are measured using income-based valuation methodologies, which include certain assumptions such as forecasted future cash flows, customer attrition rates, royalty rates and discount rates.

Customer relationships and technology are amortized to depreciation and amortization, ratably based on discounted future cash flows.

Trade names are amortized to depreciation and amortization, on a straight line basis.

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 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.

Changes to the fair value are recorded each period through other income, net in the consolidated statement of operations.

Contingencies

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Such determinations are subject to interpretations of current facts and circumstances, forecasts of future events, and estimates of the financial impacts of such events.

NRG describes in detail its contingencies in Item 15 — Note 22, Commitments and Contingencies, to the Consolidated Financial Statements.

NRG describes in detail its contingencies in Item 15 — Note 22, Commitments and Contingencies, Note 23, Regulatory Matters , and Note 24, Environmental Matters to the Consolidated Financial Statements.

Recent Accounting Developments

1 unchanged sentence

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