What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-25 compared with 2021-02-26 · 244 added, 359 removed, 610 unchanged (50% of the section changed)

12 unchanged sentences

The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2021, 2020 and 2019 should be read in conjunction with our consolidated financial statements and the notes to those statements.

Results are impacted by the effects of the Ambit Transaction, the Crius Transaction and the Merger (see Note 2 to the Financial Statements).

The discussion and analysis of our financial condition and results of operations for the year ended December 31, 2019 and for the year ended December 31, 2020 compared to the year ended December 31, 2019 are included in Item 7.

Management's Discussion and Analysis of Financial Condition and Results in our 2019 Form 10-K and is incorporated herein by reference except for the operational results from the former ERCOT, PJM, NY/NE and MISO segments that were replaced by the Texas, East, West and Sunset segments in an update of our reportable segments in the third quarter of 2020.

Operational results for the Texas, East, West and Sunset segments for the year ended December 31, 2018 and for the year ended December 31, 2019 compared to the year ended December 31, 2018 are included in Results of Operations below to reflect this update of reportable segments.

Management's Discussion and Analysis of Financial Condition and Results in our 2020 Form 10-K and are incorporated herein by reference.

All dollar amounts in the tables in the following discussion and analysis are stated in millions of U.S.

1 unchanged sentence

Vistra is a holding company operating an integrated retail and electric power generation business primarily in markets throughout the U.S.

Through our subsidiaries, we are engaged in competitive energy market activities including power generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity and natural gas to end users.

Effective July 2, 2020, we changed our name from Vistra Energy Corp.

to Vistra Corp.

to distinguish from companies that are involved in the exploring for, producing, refining, or transporting fossil fuels (many of which use "energy" in their names) and to better reflect our integrated business model, which combines a retail electricity and natural gas business focused on serving its customers with new and innovative products and services and an electric power generation business powering the communities we serve with safe, reliable power.

Through our subsidiaries, we are engaged in competitive energy market activities including electricity generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity and natural gas to end users.

Operating Segments

1 unchanged sentence

(i) Retail, (ii) Texas, (iii) East (iv) West, (v) Sunset and (vi) Asset Closure.

In the third quarter of 2020, Vistra updated its reportable segments to reflect changes in how the Company's CODM makes operating decisions, assesses performance and allocates resources.

Management believes that the revised reportable segments provide enhanced transparency into the Company's long-term sustainable assets and its commitment to managing the retirement of economically and environmentally challenged plants.

See Notes 1 and 20 to the Financial Statements for further information concerning the updates to our reportable business segments.

See Note 20 to the Financial Statements for further information concerning our reportable business segments.

Significant Activities and Events and Items Influencing Future Performance

9 unchanged sentences

, involuntary outages to customers across the system for varying periods of time) that was ordered by ERCOT beginning on February 15, 2021 and continuing through February 18, 2021.

The biggest challenges to our plants throughout the storm were securing adequate natural gas supplies for our gas plants and the handling of frozen fuel at our coal plants.

Despite these challenges, we estimate that our fleet generated approximately 25 to 30% of the power on the grid during the height of the outages, as compared to our approximately 18% market share.

The overall financial impact from winter storm Uri is still being calculated, but Vistra expects it will have a material adverse impact on its financial results driven by generation output being constrained due to challenges with receiving a steady supply of fuel for some plants as well as challenges with handling fuel already on site given the freezing conditions.

As a result of these challenges, Vistra had to procure power in the ERCOT market at prices at or near the price cap to meet its supply obligations.

While the financial impacts of winter storm Uri to Vistra are not yet finalized, Vistra management preliminarily estimates the one-time adverse impact on pre-tax net income will be in the range of approximately $900 million to $1.3 billion.

This estimated range is preliminary and based on currently available information and management estimates.

The final amount of the estimated loss is subject to a variety of factors including, but not limited to, outstanding pricing, load, and settlement data from ERCOT (which is released at various intervals during a period of up to 180 days after the transaction day);

the outcome of potential litigation arising from this event (including any litigation that we may pursue or be a party to);

The weather event resulted in a $2.2 billion negative impact on the Company's pre-tax earnings in the year ended December 31, 2021 (see Note 1 to the Financial Statements), after taking into account approximately $544 million in securitization proceeds Vistra expects to receive from ERCOT as further described below.

The primary drivers of the loss were the need to procure power in ERCOT at market prices at or near the price cap due to lower output from our natural gas-fueled power plants driven by natural gas deliverability issues and our coal-fueled power plants driven by coal fuel handling challenges, high fuel costs, and high retail load costs.

As part of the 2021 regular Texas legislative sessions and in response to extraordinary costs incurred by electricity market participants during Winter Storm Uri, the Texas legislature passed House Bill (HB) 4492 for ERCOT to obtain financing to distribute to load-serving entities (LSEs) that were charged and paid to ERCOT exceptionally high price adders and ancillary service costs during Winter Storm Uri.

In October 2021, the PUCT issued a debt obligation order approving ERCOT's $2.1 billion financing and the methodology for allocation of proceeds to the LSEs.

In December 2021, ERCOT finalized the amount of allocations to the LSEs, and we expect to receive $544 million in proceeds from ERCOT in the second quarter of 2022.

We concluded that the threshold for recognizing a receivable was met in December 2021 as the amounts to be received are determinable and ERCOT was directed by its governing body, the PUCT, to take all actions required to effectuate the $2.1 billion funding approved in the debt obligation order.

Accordingly, we recognized the $544 million in expected proceeds as an expense reduction in the fourth quarter of 2021 within fuel, purchased power costs and delivery fees in our consolidated statements of operation.

We continue to be subject to the outcome of potential litigation arising from this event (including any litigation that we may pursue or be a party to);

or any corrective action taken by the State of Texas, ERCOT, the RCT, or the PUCT to resettle pricing across any portion of the supply chain that is currently being considered or may be considered by any such parties.

There have already been several announced efforts by the state and federal governments and regulatory agencies to investigate and determine the causes of this event and its impact on consumers.

We have received a civil investigative demand from the Attorney General of Texas as well as a request for information from ERCOT related to this event and may receive additional inquiries.

We are cooperating with these entities and are working to respond to these requests.

The Texas legislature also continues to consider potential legislation, such as Senate Bill (SB) 1580, which was passed in May 2021.

SB 1580 may impact the total amount of balances owed by electric cooperatives to the market.

The potential impact of this legislation is uncertain as the final details will be specific to each electric cooperative.

There have been several announced efforts by the state and federal governments and regulatory agencies to investigate and determine the causes of this event and its impact on consumers.

We have received a civil investigative demand from the Attorney General of Texas as well as requests for information from ERCOT, NERC and other regulatory bodies related to this event and may receive additional inquiries.

We are cooperating with these entities and have responded to these requests.

Those efforts may result in changes in regulations that impact our industry including but not limited to additional requirements for winterization of various facets of the electricity supply chain including generation, transmission, and fuel supply;

improvements in coordination among the various participants in the electricity supply chain during any future event;

potential revisions to the way in which the ERCOT market compensates and incentivizes the continued operation of assets that only run during times of scarcity;

and potential changes to the types of plans permitted to be marketed to residential customers.

We are continuing to monitor this situation as it develops but at this time cannot estimate any impacts of any legislative or regulatory changes or actions (including enforcement actions that may be brought against various market participants) that may occur as a result of the event on our business, financial condition, results of operations, or cash flows.

As of December 31, 2020, Vistra had total available liquidity of approximately $2.4 billion, which was primarily comprised of cash and availability under its revolving credit facility.

During this storm event, Vistra was required to post a significant amount of collateral, including to ERCOT, clearinghouses for natural gas and power transactions and other trading counterparties.

Despite these posting requirements, Vistra has consistently maintained, and it continues to maintain, sufficient liquidity to conduct its operations in the ordinary course.

As of February 25, 2021, Vistra had more than $1.5 billion of cash and availability under its revolving credit facility to meet any of its liquidity needs.

improvements in coordination among the various participants in the electricity and natural gas supply chains during any future event;

potential revisions to the method or calculation of market compensation and incentives relating to the continued operation of assets that only run periodically, including during extreme weather events or other times of scarcity;

and restrictions or limitations on the types of plans permitted to be offered to customers.

We are continuing to monitor this situation as it develops.

The full impact of litigation or any impacts of any legislative or regulatory changes or actions (including enforcement actions that may be brought against various market participants) that may occur as a result of the event could have a material impact on our business, financial condition, results of operations, or cash flows, but cannot be estimated at this time.

See Note 13 to the Financial Statements for further discussion of these matters.

In response to the storm, Vistra committed to donate $5 million to assist Texas communities and individuals meet their most pressing needs, including support for food banks and food pantries, critical needs, bill payment assistance, and more.

Vistra also assured residential customers across its retail brands that they will not see any near-term impact on their rates due to the winter weather event, though bills may increase due to high usage during the cold weather period in February.

Investments in Clean Energy and CO2 Reductions

In September 2020, we announced the planned development of up to 668 MW of solar photovoltaic power generation facilities and 260 MW of battery ESS in Texas.

Vistra also assured residential customers across its retail brands that they would not see any near-term impact on their rates due to the winter weather event, though bills could increase due to high usage during the cold weather period in February 2021.

Furthermore, Vistra has taken or intends to take various actions to improve its risk profile for future weather-driven volatility events, including investing in improvements to further harden its coal fuel handling capabilities and to further weatherize its ERCOT fleet for even colder temperatures and longer durations;

carrying more backup generation into the peak seasons after accounting for weatherization investments and ERCOT market improvements implemented going forward;

contracting for incremental gas storage to support its gas fleet;

adding additional dual fuel capabilities at its gas steam units and increasing fuel oil inventory at its existing dual fuel sites;

participating in processes with the PUCT and ERCOT for registration of gas infrastructure as critical resources with the transmission and distribution utilities and for enhanced winterization of both gas and power assets in the state;

and engaging in processes to evaluate potential market reforms.

Climate Change, Investments in Clean Energy and CO 2 Reductions

Environmental Regulations — We are subject to extensive environmental regulation by governmental authorities, including the EPA and the environmental regulatory bodies of states in which we operate.

Environmental regulations could have a material impact on our business, such as certain corrective action measures that may be required under the CCR rule and the ELG rule.

Business – Environmental Regulations and Related Considerations," and "Item 1A.

Risk Factors – Regulatory and Legislative Risks" and Note 13 to the Financial Statements.

However, such rules and the regulatory environment are continuing to evolve and change, and we cannot predict the ultimate effect that such changes may have on our business.

Emissions Reductions — Vistra is targeting to achieve a 60% reduction in Scope 1 and Scope 2 CO 2 equivalent emissions by 2030 as compared to a 2010 baseline with a long-term goal to achieve net-zero carbon emissions by 2050, assuming necessary advancements in technology and supportive market constructs and public policy.

In furtherance of Vistra's efforts to meet its net-zero target, Vistra expects to deploy multiple levers to transition the company to operating with net-zero emissions.

Green Finance Framework — In December 2021, we announced the publication of our Green Finance Framework, which allows us to issue green financial instruments to fund new or existing projects that support renewable energy and energy efficiency with alignment to our ESG initiatives.

See Preferred Stock Offerings below for discussion of the Series B Preferred Securities issued under our Green Finance Framework.

Solar Generation and Energy Storage Projects — In January 2022, we announced that, subject to approval by the CPUC, we would enter into a 15-year resource adequacy contract with PG&E to develop an additional 350 MW battery ESS at our Moss Landing Power Plant site.

In September 2021, we announced the planned development, at a cost of approximately $550 million, of up to 300 MW of solar photovoltaic power generation facilities and up to 150 MW of battery ESS at retired or to-be-retired plant sites in Illinois, based on the passage of Illinois Senate Bill 2408, the Energy Transition Act.

In September 2020, we announced the planned development, at a cost of approximately $850 million, of up to 668 MW of solar photovoltaic power generation facilities and 260 MW of battery ESS in Texas.

We will only invest in these growth projects if we are confident in the expected returns.

See Note 3 to the Financial Statements for a summary of our solar and battery energy storage projects.

In September 2020 and December 2020, we announced our intention to retire (a) all of our remaining coal generation facilities in Illinois and Ohio, (b) one coal generation facility in Texas and (c) one natural gas facility in Illinois, no later than year-end 2027 due to economic challenges, including incremental expenditures that would be required to comply with the CCR rule and ELG rule (see Note 13 to the Financial Statements), and in furtherance of our efforts to significantly reduce our carbon footprint.

See Note 4 to the Financial Statements for a summary of these planned generation retirements as well as our generation plant retirements in 2019.

CO 2 Reductions — In September 2020 and December 2020, we announced our intention to retire (a) all of our remaining coal generation facilities in Illinois and Ohio, (b) one coal generation facility in Texas and (c) one natural gas facility in Illinois no later than year-end 2027 due to economic challenges, including incremental expenditures that would be required to comply with the CCR rule and ELG rule (see Note 13 to the Financial Statements), and in furtherance of our efforts to significantly reduce our carbon footprint.

In April 2021, we announced we would retire the Joppa generation facilities by September 1, 2022, and in July 2021, we announced we would retire the Zimmer coal generation facility by May 31, 2022.

See Note 4 to the Financial Statements for a summary of these planned generation retirements.

Moss Landing Outages

In September 2021, Moss Landing Phase I experienced an incident impacting a portion of the battery ESS.

A review found that only a small, single digit-percentage of batteries at the facility were impacted and that the root cause originated in systems separate from the battery system.

The facility will be offline as we perform the work necessary to return the facility to service.

Moss Landing Phase II was not affected by this incident.

In February 2022, Moss Landing Phase II experienced an incident impacting a portion of the Battery ESS.

An investigation is underway to determine the root cause of the incident.

The facility will be offline as we perform the work necessary to return the facility to service.

Moss Landing Phase I was not affected by the incident, but the facility will remain offline during the assessment stage of the Moss Landing Phase II incident.

We do not expect these incidents to have a material impact on our results of operations.

Mining Reclamation Award

In October 2021, the Office of Surface Mining Reclamation and Enforcement (OSM) announced Luminant as a recipient of its 2021 Excellence in Surface Coal Mining Reclamation Award for the work done to reclaim and restore previously mined land at its Monticello-Winfield Mine.

The award recognizes companies that achieve the most exemplary coal mine reclamation in the nation.

Luminant has a long history of environmental stewardship, reclaiming land long before being required under federal or state law.

COVID-19 Pandemic

6 unchanged sentences

To date, as a result of these business continuity measures, the Company has not experienced material disruptions in our operations due to COVID-19.

The fundamentals of the Company remain strong.

Vistra believes it has sufficient available liquidity to continue business operations during this volatile period.

As described under Available Liquidity, the Company has total available liquidity of $2.399 billion as of December 31, 2020, consisting of cash on hand and available capacity under our revolving credit facility (Revolving Credit Facility) of the Vistra Operations Credit Facilities.

In addition, the maturities of our long-term debt are relatively modest until 2023.

If the Company experienced a significant reduction in revenues or increases in costs or collateral requirements, the Company believes it would have additional alternatives to maintain access to liquidity, including drawing upon available liquidity or reductions to capital expenditures, planned voluntary debt repayments or operating costs.

As a result of the Company's ongoing initiatives, the Company believes it is well-positioned to be able to respond to changes in customer demand, regulation or other factors impacting the Company's business related to the COVID-19 pandemic.

In response to the economic and employment impacts of the COVID-19 outbreak, various states have instituted moratoriums or other conditions on disconnections for retail electricity customers.

For example, in March and April 2020, the PUCT issued multiple orders requiring REPs in the ERCOT market to suspend late fees for residential customers through May 15, 2020, and to offer deferred payment plans to customers upon request.

The PUCT also enacted the COVID-19 Electricity Relief Program whereby REPs must forego disconnecting customers certified as experiencing COVID-19-related hardship, and if such customer would otherwise be subject to disconnection and meets other qualifications, such REP would request suppression of the delivery charges from the transmission and distribution utility and request a proxy energy charge reimbursement from the COVID-19 Electricity Relief Program of $0.04/kWh.

The PUCT ceased accepting new enrollments under the COVID-19 Electricity Relief Program after August 31, 2020, and the disconnection protections and financial assistance expired after September 30, 2020.

See Note 7 to the Financial Statements for a summary of certain anticipated tax-related impacts of the CARES Act to the Company.

See Note 7 to the Financial Statements for a summary of certain tax-related impacts of the CARES Act to the Company.

The COVID-19 pandemic has presented potential new risks to the Company's business.

Although there have been logistical and other challenges to date, there has been no material adverse impact on the Company's 2020 results of operations.

Although there have been logistical and other challenges to date, there has been no material adverse impact on the Company's results of operations for the years ended December 31, 2021 and 2020.

The situation surrounding COVID-19 remains fluid and the potential for a material impact on the Company's results of operations, financial condition and liquidity increases the longer the virus impacts the level of economic activity in the U.S.

2 unchanged sentences

See Part I, Item 1A Risk Factors — The outbreak of COVID-19, or the future outbreak of any other highly infectious or contagious diseases, could have a material and adverse effect on our business, financial condition, and results of operations .

Acquisitions and Merger

Ambit Transaction — On November 1, 2019 (Ambit Acquisition Date), Volt Asset Company, Inc., an indirect, wholly owned subsidiary of Vistra, completed the acquisition of Ambit (Ambit Transaction).

See Note 2 to the Financial Statements for a summary of the Ambit Transaction and business combination accounting.

Crius Transaction — On July 15, 2019, Vienna Acquisition B.C.

Ltd., an indirect, wholly owned subsidiary of Vistra, completed the acquisition of the equity interests of two wholly owned subsidiaries of Crius that indirectly own the operating business of Crius (Crius Transaction).

See Note 2 to the Financial Statements for a summary of the Crius Transaction and business combination accounting.

Dynegy Merger Transaction — On the Merger Date, Vistra and Dynegy completed the transactions contemplated by the Merger Agreement.

See Note 2 to the Financial Statements for a summary of the Merger transaction and business combination accounting.

Dividend Program

1 unchanged sentence

See Note 14 to the Financial Statements for more information about our dividend program.

Preferred Stock Offerings

On October 15, 2021, we issued 1,000,000 shares of Series A Preferred Stock in a private offering (Offering).

The net proceeds of the Offering were approximately $990 million, after deducting underwriting commissions and offering expenses.

We intend to use the net proceeds from the Offering to repurchase shares of our outstanding common stock under the Share Repurchase Program (discussed below).

On December 10, 2021, we issued 1,000,000 shares of Series B Preferred Stock in a private offering (Series B Offering) under our Green Finance Framework.

The net proceeds of the Series B Offering were approximately $985 million, after deducting underwriting commissions and offering expenses.

We intend to use the proceeds from the Series B Offering to pay for or reimburse existing and new eligible renewable and battery ESS developments.

See Note 14 to the Financial Statements for more information concerning the Series A Preferred Stock and the Series B Preferred Stock.

Share Repurchase Program

In September 2020, we announced that the Board had authorized a new share repurchase program (Share Repurchase Program) under which up to $1.5 billion of our outstanding common stock may be repurchased.

The Share Repurchase Program was effective January 1, 2021, at which time the Prior Share Repurchase Plan terminated.

In October 2021, we announced that the Board had authorized a new share repurchase program (Share Repurchase Program) under which up to $2.0 billion of our outstanding common stock may be repurchased.

The Share Repurchase Program became effective on October 11, 2021.

The Share Repurchase Program supersedes the $1.5 million share repurchase program previously announced in September 2020 (2020 Share Repurchase Program).

In the three months ended December 31, 2021, 19,330,365 shares of our common stock were repurchased under the Share Repurchase Program for approximately $409 million at an average price of $21.16 per share of common stock.

As of December 31, 2021, approximately $1.591 billion was available for additional repurchases under the Share Repurchase Program.

From January 1, 2022 through February 22, 2022, 16,059,290 shares of our common stock had been repurchased under the Share Repurchase Program for $355 million at an average price per share of common stock of $22.07, and at February 22, 2022, $1.236 billion was available for repurchase under the Share Repurchase Program.

See Note 14 to the Financial Statements for more information concerning the Share Repurchase Program and the Prior Share Repurchase Program.

See Note 14 to the Financial Statements for more information concerning the Share Repurchase Program and the 2020 Share Repurchase Program.

Debt Activity

1 unchanged sentence

We also intend to continue to simplify and optimize our capital structure, maintain adequate liquidity and pursue opportunities to refinance our long-term debt to extend maturities and/or reduce ongoing interest expense.

In 2019 and 2020, we completed several transactions, including the redemption and repayment of all of Parent's previously outstanding senior notes, that we believe, in the aggregate, advanced all of these goals.

See Note 11 to the Financial Statements for details of our long-term debt activity and Note 10 to the Financial Statements for details of our accounts receivable financing.

While the financial impacts resulting from Winter Storm Uri caused an increase in our consolidated net leverage, the Company remains committed to a strong balance sheet, and the anticipated securitization proceeds from ERCOT are expected to enable us to further execute this objective.

See Note 1 to the Financial Statements for details of the securitization proceeds receivable from ERCOT, Note 11 to the Financial Statements for details of our long-term debt activity, and Note 10 to the Financial Statements for details of our accounts receivable financing.

Commodity-Linked Revolving Credit Facility

On February 4, 2022, Vistra Operations entered into a credit agreement by and among Vistra Operations, Vistra Intermediate, the lenders, joint lead arrangers and joint bookrunners party thereto, and Citibank, N.A., as administrative agent and collateral agent.

The Credit Agreement provides for a $1.0 billion senior secured commodity-linked revolving credit facility (the Commodity-Linked Facility).

Vistra Operations intends to use the liquidity provided under the Commodity-Linked Facility to make cash postings as required under various commodity contracts to which Vistra Operations and its subsidiaries are parties as power prices increase from time-to time and for other working capital and general corporate purposes.

See Note 11 to the Financial Statements for more information concerning the Commodity-Linked Facility.

Capacity Markets

2 unchanged sentences

(average price per MW-day)

RTO zone (a) $ 88.32 $ 140.00

RTO zone $ 140.00 $ 50.00

ComEd zone 195.55 68.96

2 unchanged sentences

ATSI zone 171.33 50.00

PPL zone 86.04 140.00

(a) Planning Year 2020-2021 includes Duke Energy Ohio Kentucky (DEOK) zone, which cleared at $130.00 per MW-day.

RTO Zone excluding DEOK Zone was $76.53 per MW-day.

Our capacity sales, net of purchases, aggregated by planning year and capacity type through planning year 2022-2023, are as follows:

DEOK zone 140.00 71.69

Our capacity sales in PJM, net of purchases, aggregated by planning year and capacity type through planning year 2022-2023, are as follows:

2021-2022 2022-2023

East Segment Sunset Segment East Segment Sunset Segment

CP auction capacity sold, net (MW) 6,384 3,028 5,500 1,519

4 unchanged sentences

NYISO — The most recent seasonal auction results for NYISO's Rest-of-State zones, in which the capacity for our Independence plant clears, are as follows for each planning period:

2021 - 2022 Summer

Price per kW-month $ 1.00 $ —

22 unchanged sentences

MISO capacity sales through planning year 2024-2025 are as follows:

Sunset Segment

2021-2022 2022-2023 2023-2024 2024-2025

Bilateral capacity sold in MISO (MW) 3,012 1,075 569 265

CP auction capacity sold in PJM (MW) — 15 — —

Total MISO segment capacity sold (MW)

1 unchanged sentence

Average price per kW-month $ 2.31 $ 1.94 $ 2.58 $ 4.26

CAISO — Our capacity sales, aggregated by calendar year for 2021 through 2022 for Moss Landing, are as follows:

CAISO — Our capacity sales in CAISO, aggregated by calendar year for 2022 through 2023 for Moss Landing, are as follows:

Bilateral capacity sold (Avg MW) 1,287 1,275

25 unchanged sentences

We have engaged in natural gas hedging activities to mitigate the risk of lower wholesale electricity prices that have corresponded to declines in natural gas prices.

While current and forward natural gas prices are currently depressed, we continue to seek opportunities to manage our wholesale power price exposure through hedging activities, including forward wholesale and retail electricity sales.

Estimated hedging levels for generation volumes in our Texas, East, West and Sunset segments at December 31, 2020 were as follows:

When natural gas prices are depressed, we continue to seek opportunities to manage our wholesale power price exposure through hedging activities, including forward wholesale and retail electricity sales.

Estimated hedging levels for generation volumes in our Texas, East, West and Sunset segments as of December 31, 2021 were as follows:

Nuclear/Renewable/Coal Generation:

5 unchanged sentences

West 100 % 6 %

The following sensitivity table provides approximate estimates of the potential impact of movements in power prices and spark spreads (the difference between the power revenue and fuel expense of natural gas-fired generation as calculated using an assumed heat rate of 7.2 MMBtu/MWh) on realized pretax earnings (in millions) taking into account the hedge positions noted above for the periods presented.

The following sensitivity table provides approximate estimates of the potential impact of movements in power prices and spark spreads (the difference between the power revenue and fuel expense of natural gas-fired generation as calculated using an assumed heat rate of 7.2 MMBtu/MWh) on realized pre-tax earnings (in millions) taking into account the hedge positions noted above for the periods presented.

The residual gas position is calculated based on two steps:

1 unchanged sentence

and second, calculating the residual natural gas exposure that is not already included in the gas generation spark spread sensitivity shown in the table below.

The estimates related to price sensitivity are based on our expected generation, related hedges and forward prices as of December 31, 2020.

The estimates related to price sensitivity are based on our expected generation, related hedges and forward prices at December 31, 2021.

Nuclear/Renewable/Coal Generation:

32 unchanged sentences

Competitive retail activity in ERCOT has resulted in retail customer churn as customers switch retail electricity providers for various reasons.

Based on numbers of meters, our total retail customer counts increased approximately 1% in 2020 and approximately 2% in both 2019 and 2018.

Based on numbers of meters, our total retail customer counts increased approximately 3%, 1% and 2% in 2021, 2020 and 2019, respectively.

Based upon December 31, 2021 results discussed below in Results of Operations , a 1% decline in retail customers in ERCOT would result in a decline in annual revenues of approximately $56 million.

21 unchanged sentences

Cyber/Data Security and Infrastructure Protection Risk

A breach of cyber/data security measures that impairs our information technology infrastructure could disrupt normal business operations and affect our ability to control our generation assets, access retail customer information and limit communication with third parties.

Any loss of confidential or proprietary data through a breach could materially affect our reputation, including our TXU Energy TM , Ambit Energy, Value Based Brands, Dynegy Energy Services, Homefield Energy, TriEagle Energy, Public Power and U.S.

Gas & Electric brands, expose the company to legal claims and regulatory scrutiny or impair our ability to execute on business strategies.

A breach of cyber/data security measures that impairs our information technology infrastructure, operations technology systems, supporting components, and/or associated sites utilized by the Company or one of our service providers could disrupt normal business operations and affect our ability to control our generation assets, access retail customer information and limit communication with third parties.

Breaches and threats are becoming increasingly sophisticated, complex, change frequently and may be difficult to detect, and our increased use of remote work environments and virtual platforms in response to the COVID-19 pandemic may also increase our risk of cyber-attack or data security breaches.

Any loss of confidential or proprietary data through a breach could materially affect our reputation, including our TXU Energy, Ambit Energy, Value Based Brands, Dynegy Energy Services, Homefield Energy, TriEagle Energy, Public Power and U.S.

Gas & Electric brands, expose the company to legal claims, significant liabilities, reputational damage, regulatory action, and disrupt business operations, which could impair our ability to execute on business strategies.

We participate in industry groups and with regulators to remain current on emerging threats and mitigating techniques.

These groups include, but are not limited to, the U.S.

Cyber Emergency Response Team, the National Electric Sector Cyber Security Organization, the NRC and NERC.

While the Company has not experienced a cyber/data event causing any material operational, reputational or financial impact, we recognize the growing threat within the general market place and our industry, and are proactively making strategic investments in our perimeter and internal defenses, cyber/data security operations center and regulatory compliance activities.

We also apply the knowledge gained through industry and government organizations to continuously improve our technology, processes and services to detect, mitigate and protect our cyber and data assets.

These groups include, but are not limited to, the Federal Bureau of Investigation, Cybersecurity and Infrastructure Security Agency, U.S.

Department of Homeland Security, Electricity Information Sharing and Analysis Center, U.S.

Cyber Emergency Response Team, the NRC and NERC.

While the Company has not experienced a cyber/data event causing any material operational, reputational or financial impact, we recognize the growing threat within the general marketplace and our industry, and are proactively making strategic investments in our perimeter and internal defenses, cyber/data security operations center and regulatory compliance activities.

We have controls in place designed to protect our infrastructure, provide our employees awareness training of cybersecurity threats, routinely utilize information technology security experts to assist us in our evaluations of the effectiveness of our information technology systems and controls, and we regularly enhance our security measures to protect our systems and data, including encryption, tokenization and authentication technologies to mitigate cybersecurity risks and increasing our monitoring capabilities to enhance early detection and rapid response to potential cyber threats.

In response to the fact that a portion of our workforce continues to work remotely and within a hybrid work environment, we have reduced our attack surface process and technology, which removes remote network risk from our internal systems, assets, or data.

We also apply the knowledge gained through industry and government organizations, external partner cyber risk and maturity assessments to continuously improve our technology, processes and services to detect, mitigate and protect our cyber and data assets.

The demand for and market prices of electricity and natural gas are affected by weather.

3 unchanged sentences

The pattern of this fluctuation may change depending on, among other things, the retail load served and the terms of contracts to purchase or sell electricity.

Application of Critical Accounting Policies

Application of Critical Accounting Policies and Estimates

Our significant accounting policies are discussed in Note 1 to the Financial Statements.

2 unchanged sentences

The following is a summary of certain critical accounting policies that are impacted by judgments and uncertainties and under which different amounts might be reported using different assumptions or estimation methodologies.

Purchase Accounting

On November 1, 2019, an indirect, wholly owned subsidiary of Vistra completed the Ambit Transaction.

On July 15, 2019, an indirect, wholly owned subsidiary of Vistra completed the Crius Transaction.

Each of the Ambit Transaction and Crius Transaction, respectively, was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Ambit Acquisition Date and the Crius Acquisition Date, respectively.

See Note 2 to the Financial Statements for the purchase price allocations for both the Ambit Transaction and Crius Transaction as well as the related adjustments through the respective measurement periods.

Determining fair values of assets acquired and liabilities assumed requires significant estimates and judgments.

We determine fair value 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 that involved the most subjectivity in determining fair value consisted of the customer relationship intangible assets.

The assignment of fair value to the identifiable intangible assets requires judgment.

We apply an income-based valuation methodology in measuring the customer relationships acquired, which include certain assumptions such as forecasted future cash flows, customer attrition rates, and discount rates.

Customer relationship intangibles assets are generally amortized using an accelerated method based on historical customer attrition rates and reflecting the expected pattern in which the economic benefits are realized over their estimated useful lives.

On the Merger Date, Dynegy merged with and into Vistra, with Vistra continuing as the surviving corporation.

The Merger was accounted for in accordance with ASC 805, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Merger Date.

Vistra is the acquirer for both federal tax and accounting purposes.

The combined results of operations are reported in our consolidated financial statements beginning as of the Merger Date.

See Note 2 to the Financial Statements.

The acquired assets and liabilities that involved the most subjectivity in determining fair value consisted of property, plant and equipment and executory contracts, primarily long-term service agreements for maintenance of power plants, a unit-specific power sales agreement and rail transportation contracts.

The fair value of each power plant was estimated using a combination of an income approach and a market approach.

The income approach is the present value of future cash flows over the life of each power plant that are based on management’s estimates of revenues and operating expenses, and appropriate discount rates.

The estimate of long term prices of electricity and natural gas at each plant location that was used in developing forecasted revenues for the income approach was especially subjective, because as of the Merger Date, limited market information about future prices beyond the year 2022 was available.

The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the relevant market, with adjustments relating to any differences between the assets and locations.

The determination of deferred tax assets was complex as it required assessing income tax rules and regulations and proposed regulations that impose limitations on the future use of acquired net operating losses and other limitations on deductions.

Derivative Instruments and Mark-to-Market Accounting

34 unchanged sentences

Pursuant to the TRA, we issued the TRA Rights for the benefit of the first-lien creditors of TCEH entitled to receive such TRA Rights under the Plan of Reorganization.

Vistra reflected the obligation associated with TRA Rights at fair value in the amount of $574 million as of the Emergence Date related to these future payment obligations.

Vistra reflected the obligation associated with TRA Rights at fair value in the amount of $574 million as of the Effective Date related to these future payment obligations.

As of December 31, 2021, the TRA obligation has been adjusted to $395 million.

During the year ended December 31, 2020, we recorded a decrease to the carrying value of the TRA obligation totaling $69 million as a result of adjustments to forecasted taxable income, including the impacts of the CARES Act, changes to Section 163(j) percentage limitation amount, the impacts from the issuance of the final Section 163(j) regulations and the anticipated tax benefits from renewable development projects.

At December 31, 2020, expected undiscounted federal and state payments under the TRA is estimated to be approximately $1.4 billion.

During the year ended December 31, 2021, we recorded a decrease to the carrying value of the TRA obligation totaling $115 million as a result of adjustments to forecasted taxable income, including the financial impacts of Winter Storm Uri, and anticipated tax benefits available under current tax laws for planned additional renewable development projects.

As of December 31, 2021, expected undiscounted federal and state payments under the TRA is estimated to be approximately $1.4 billion.

The TRA obligation value is the discounted amount of projected payments to be made each year under the TRA, based on certain assumptions, including but not limited to:

4 unchanged sentences

• the Company generally expects to generate sufficient taxable income to be able to utilize the deductions arising out of (i) the tax basis step up attributable to the PrefCo Preferred Stock Sale, (ii) the entire tax basis of the assets acquired as a result of the Lamar and Forney Acquisition, and (iii) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the TRA in the tax year in which such deductions arise;

• a discount rate of 15%, which represented our view at the Emergence Date of the rate that a market participant would use based on the risk associated with the uncertainty in the amount and timing of the cash flows, at the time of Emergence;

• a discount rate of 15%, which represented our view at the Effective Date of the rate that a market participant would use based on the risk associated with the uncertainty in the amount and timing of the cash flows, at the time of Emergence;

• additional states that Vistra now operates in, the relevant tax rates of those states and how income will be apportioned to those states.

11 unchanged sentences

A significant portion of the estimate is associated with the Asset Closure Segment, thus related to closed facilities with changes in the estimate recorded to our consolidated statements of operations.

For the next five years, Vistra is projected to spend approximately $265 million (on a nominal basis) to achieve its reclamation objectives.

During the years ended December 31, 2020 and 2019, we transferred $15 million and $135 million, respectively, in ARO obligations to third parties for remediation.

Any remaining unpaid third-party obligation was reclassified to other current liabilities and other noncurrent liabilities and deferred credits in our consolidated balance sheets.

At December 31, 2020, the carrying value of our ARO related to our nuclear generation plant decommissioning totaled $1.585 billion and includes an assumption that Vistra receives a license extension of 20 years from the NRC to continue to operate the Comanche Peak facility.

As of December 31, 2021, the carrying value of our ARO related to our nuclear generation plant decommissioning totaled $1.635 billion and includes an assumption that Vistra receives a license extension of 20 years from the NRC to continue to operate the Comanche Peak facility.

The costs to ultimately decommission that facility are recoverable through the regulatory rate making process as part of Oncor's delivery fees and therefore changes in estimates of the ARO do not impact Vistra's earnings.

See Note 21 to the Financial Statements for additional discussion of ARO obligations and adjustments made to the ARO obligation estimates during the years ended 2020, 2019 and 2018.

See Note 21 to the Financial Statements for additional discussion of ARO obligations and adjustments made to the ARO obligation estimates during the years ended December 31, 2021, 2020 and 2019.

Impairment of Goodwill and Other Long-Lived Assets

3 unchanged sentences

Further, the unique nature of our property, plant and equipment, which includes a fleet of generation assets with a diverse fuel mix and individual generation units that have varying production or output rates, requires the use of significant judgments in determining the existence of impairment indications and the grouping of assets for impairment testing.

See Note 21 to the Financial Statements for discussion of impairments of long-lived assets recorded in 2020.

See Note 21 to the Financial Statements for discussion of impairments of long-lived assets recorded in the years ended December 31, 2021 and 2020.

Recoverability of long-lived assets is determined by a comparison of the carrying amount of the long-lived asset group to the net cash flows expected to be generated by the asset group, through considering specific assumptions for forward natural gas and electricity prices, forward capacity prices, the effects of enacted environmental rules, generation plant performance, forecasted capital expenditures, forecasted fuel prices and forecasted operating costs.

14 unchanged sentences

Goodwill impairment testing is performed at the reporting unit level.

Under this goodwill impairment analysis, if at the assessment date, a reporting unit's carrying value exceeds its estimated fair value (enterprise value), the estimated enterprise value of the reporting unit is compared to the estimated fair values of the reporting unit's assets (including identifiable intangible assets) and liabilities at the assessment date, and the resultant implied goodwill amount is then compared to the recorded goodwill amount.

Any excess of the recorded goodwill amount over the implied goodwill amount is written off as an impairment charge.

Under this goodwill impairment analysis, if at the assessment date, a reporting unit's carrying value exceeds its estimated fair value (enterprise value), the excess carrying value is written off as an impairment charge.

The determination of enterprise value of a reporting unit involves a number of assumptions and estimates.

7 unchanged sentences

RESULTS OF OPERATIONS

Vistra Consolidated Financial Results — Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 and Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Year Ended December 31, 2020 vs 2019

Favorable (Unfavorable)

$ Change 2019 vs 2018

Favorable (Unfavorable)

2020 2019 2018

Vistra Consolidated Financial Results — Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Year Ended December 31, Favorable (Unfavorable)

Operating revenues $ 12,077 $ 11,443 $ 634

3 unchanged sentences

Selling, general and administrative expenses (1,040) (1,035) (5)

Impairment of long-lived assets (356) — — (356) —

Operating income

Impairment of long-lived and other assets (71) (356) 285

Operating income (loss)

(1,515) 1,519 (3,034)

17 unchanged sentences

Selling, general and administrative expenses (718) (88) (75) (32) (55) (26) (46) (1,040)

Impairment of long-lived assets — — — — (356) — — (356)

Impairment of long-lived and other assets (33) — — — (38) — — (71)

Operating income (loss) 2,213 (2,601) (552) (8) (428) (56) (83) (1,515)

3 unchanged sentences

Impacts of Tax Receivable Agreement — — — — — — 53 53

Equity in earnings of unconsolidated investment — — 4 — — — — 4

Income (loss) before income taxes

2,198 (2,512) (567) 1 (413) (22) (407) (1,722)

Income tax expense — — — — — — (266) (266)

Income tax benefit (expense) (2) — — — — — 460 458

Net income (loss)

8 unchanged sentences

Selling, general and administrative expenses (675) (75) (89) (26) (71) (27) (72) (1,035)

Impairment of long-lived assets and other assets — — — — (356) — — (356)

Operating income (loss) 312 1,761 73 39 (420) (109) (137) 1,519

9 unchanged sentences

$ 309 $ 1,760 $ 41 $ 50 $ (414) $ (101) $ (1,021) $ 624

Year Ended December 31, 2018

Retail Texas East West Sunset Asset

Closure Eliminations / Corporate and Other Vistra Consolidated

Operating revenues $ 5,597 $ 2,497 $ 1,895 $ 208 $ 1,183 $ 371 $ (2,607) $ 9,144

Fuel, purchased power costs and delivery fees (4,126) (1,461) (1,131) (134) (505) (286) 2,607 (5,036)

Operating costs (39) (661) (164) (17) (305) (109) (2) (1,297)

Depreciation and amortization (318) (390) (519) (14) (81) — (72) (1,394)

Selling, general and administrative expenses (424) (88) (71) (8) (50) (39) (246) (926)

Operating income (loss) 690 (103) 10 35 242 (63) (320) 491

Other income 29 34 1 — — 2 (19) 47

Other deductions — (7) (1) — 1 (1) 3 (5)

Interest expense and related charges (7) (12) (10) (1) (1) — (541) (572)

Impacts of Tax Receivable Agreement — — — — — — (79) (79)

Equity in earnings of unconsolidated investment — — 18 — — — (1) 17

Income (loss) before income taxes

712 (88) 18 34 242 (62) (957) (101)

Income tax benefit — — — — — — 45 45

Net income (loss)

$ 712 $ (88) $ 18 $ 34 $ 242 $ (62) $ (912) $ (56)

In 2020, our operating segments delivered strong operating performance with a disciplined focus on cost management, while generating and selling essential electricity in a safe and reliable manner during a period of significant economic disruption.

Our performance reflected the stability of our integrated model, including a diversified generation fleet, retail and commercial and hedging activities in support of our integrated business, to produce results that exceeded expectations and generated significant cash from operations of $3.337 billion for the year ended December 31, 2020.

The increase of 22% versus 2019 was particularly strong given the general uncertainty in the overall economy and the challenges of dealing with COVID-19.

Consolidated results decreased $302 million to net income of $624 million in the year ended December 31, 2020 compared to the year ended December 31, 2019.

The change in results was driven by a $465 million pre-tax decrease in unrealized gains on commodity hedging transactions, a $356 million pre-tax impairment of assets related to our Kincaid, Zimmer and Joppa/EEI coal generation facilities and a $29 million pre-tax loss on disposal of our equity method investment in NELP, offset by strong operating results, particularly in the Texas segment, and the addition of Crius and Ambit.

See Note 21 to the Financial Statements.

Operating costs increased $92 million to $1.622 billion in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily driven by higher estimated costs for ARO, increased LTSA costs and COVID-related expenses and increased operating costs in Retail driven by the acquisition of Ambit and Crius, partially offset by lower property taxes.

SG&A expense increased $131 million to $1.035 billion in the year ended December 31, 2020 compared to the year ended December 31, 2019 primarily due to the increased expense resulting from the acquisition of Crius in July 2019 and Ambit in November 2019.

Interest expense and related charges decreased $167 million to $630 million in the year ended December 31, 2020 compared to the year ended December 31, 2019 driven by a $109 million decrease in interest paid/accrued reflecting the reduction in higher interest Vistra senior unsecured notes through the Redemptions and Tender Offers in 2019 and 2020 and a $65 million decrease in unrealized mark-to-market losses on interest rate swaps.

Debt extinguishment gains totaled $17 million and $21 million in the years ended December 31, 2020 and 2019, respectively.

In February 2021, Winter Storm Uri resulted in a $2.2 billion negative impact on the Company's pre-tax earnings in the year ended December 31, 2021, after taking into account approximately $544 million in securitization proceeds Vistra expects to receive from ERCOT as further described in Note 1 to the Financial Statements.

For the remainder of 2021, our operating segments delivered strong operating performance with a disciplined focus on cost management and self-help activities while generating and selling essential electricity in a safe and reliable manner.

Consolidated results decreased $3.034 billion to a net operating loss of $1.515 billion in the year ended December 31, 2021 compared to the year ended December 31, 2020.

The change in results was driven by the Winter Storm Uri impacts, including the need to procure power in ERCOT at market prices at or near the price cap due to lower output from our natural gas-fueled power plants driven by natural gas deliverability issues and our coal-fueled power plants driven by coal fuel handling challenges, high fuel costs, and high retail load costs including ancillary service costs and reliability deployment price adders.

Results were adversely impacted by $759 million in pre-tax unrealized losses on commodity hedging transactions in 2021 compared to $231 million in pre-tax unrealized gains on commodity hedging transactions in 2020.

Power, natural gas and coal forward market curves moved up during the year ended December 31, 2021, driving these net pre-tax unrealized losses on commodity hedging transactions.

Operating costs decreased $63 million to $1.559 billion in the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily driven by lower LTSA costs and lower property taxes.

Interest expense and related charges decreased $246 million to $384 million in the year ended December 31, 2021 compared to the year ended December 31, 2020 driven by $134 million in unrealized mark-to-market gains on interest rate swaps in 2021 compared to $155 million in unrealized mark-to-market losses on interest rate swaps in 2020.

See Note 21 to the Financial Statements.

For the years ended December 31, 2020 and 2019, the impacts of the TRA totaled income of $5 million and expense of $37 million, respectively.

For the years ended December 31, 2021 and 2020, the impacts of the TRA totaled income of $53 million and $5 million, respectively.

See Note 8 to the Financial Statements for discussion of the impacts of the TRA obligation.

For the year ended December 31, 2020, income tax expense totaled $266 million and the effective tax rate was 29.9%.

For the year ended December 31, 2021, income tax benefit totaled $458 million and the effective tax rate was 26.6%.

For the year ended December 31, 2020, income tax benefit totaled $266 million and the effective tax rate was 29.9%.

See Note 7 to the Financial Statements for reconciliation of the effective rates to the U.S.

federal statutory rate.

For the years ended December 31, 2020 and 2019, consolidated cash flows from operations totaled $3.337 billion and $2.736 billion, respectively.

Consolidated cash flows used in operations totaled $206 million for the year ended December 31, 2021 compared to consolidated cash flows provided by operations of $3.337 billion for the year ended December 31, 2020.

The unfavorable change of $3.543 billion was primarily driven by lower cash from operations due to Winter Storm Uri impacts and higher cash margin deposits posted with third-parties.

Cash margin deposits posted were driven by net pre-tax unrealized losses on commodity hedging transactions reflecting power, natural gas and coal forward market curves that moved up during the year ended December 31, 2021.

Discussion of Adjusted EBITDA

12 unchanged sentences

When EBITDA or Adjusted EBITDA is discussed in reference to performance on a consolidated basis, the most directly comparable GAAP financial measure to EBITDA and Adjusted EBITDA is Net income (loss).

Adjusted EBITDA — Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 and Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Year Ended December 31, 2020 vs 2019

Favorable (Unfavorable)

$ Change 2019 vs 2018

Favorable (Unfavorable)

2020 2019 2018

Adjusted EBITDA — Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Year Ended December 31, Favorable (Unfavorable)

Net income (loss) $ (1,264) $ 624 $ (1,888)

9 unchanged sentences

Transition and merger expenses (8) 16 (24)

Impairment of long-lived assets 356 — — 356 —

Other, including impairment of long-lived and other assets 80 375 (295)

Loss on disposal of investment in NELP — 29 (29)

COVID-19-related expenses (c) 8 25 (17)

Odessa earnout buybacks — — 18 — (18)

Other, net 19 11 (7) 8 18

Winter Storm Uri impacts (d) 698 — 698

Adjusted EBITDA $ 1,908 $ 3,685 $ (1,777)

(a) Includes unrealized mark-to-market net losses on interest rate swaps of $155 million, $220 million and $5 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(b) Includes nuclear fuel amortization in the Texas segment of $75 million, $73 million and $78 million for the years ended December 31, 2020, 2019 and 2018, respectively.

(a) Includes unrealized mark-to-market net gains on interest rate swaps of $134 million and unrealized mark-to-market net losses on interest rate swaps of $155 million for the years ended December 31, 2021 and 2020, respectively.

(b) Includes nuclear fuel amortization in the Texas segment of $78 million and $75 million for the years ended December 31, 2021 and 2020, respectively.

Vistra recorded its strongest performance in 2020 with Adjusted EBITDA of $3.685 billion, up nearly 11% versus 2019, despite economic challenges and uncertainties dealing with COVID-19.

This performance exceeded our expectations set prior to the onset of the pandemic.

Our balanced business was driven by strong performance in our Retail segment, delivering $983 million of Adjusted EBITDA, and our Texas generation segment, which delivered $1.646 billion of Adjusted EBITDA.

Our other segments, including East, West, Sunset, Asset Closure and Corp delivered $1.056 billion.

The performance of our Retail business on a variety of metrics, including customer satisfaction, customer count and margin are all strong.

In Generation, we exceeded our commercial availability and safety targets.

Our people drove strong results through our Operations Performance Initiative driving incremental gross margin and cost reduction opportunities, and our Best Defense safety program.

Finally, our Commercial team optimized our integrated operations through disciplined risk management and hedging activities to ensure we lock in value for our generation business, while cost effectively supplying our retail business.

This strong collaboration among our segments has produced consistent, strong results in each year since Vistra became a public company in 2016.

(d) For the year ending December 31, 2021, includes the following of the Winter Storm Uri impacts, which we believe are not reflective of our operating performance:

allocation of ERCOT default uplift charges which are expected to be paid over more than 90 years under current protocols;

accrual of Koch earn-out amounts that the Company will pay by the end of the second quarter of 2022;

future bill credits related to Winter Storm Uri (as further described below);

and Winter Storm Uri related legal fees and other costs.

The adjustment for future bill credits relates to large commercial and industrial customers that curtailed their usage during Winter Storm Uri and will reverse and impact Adjusted EBITDA in future periods as the credits are applied to customer bills.

We estimate the amounts to be applied in future periods are 2022 (approximately $150 million), 2023 (approximately $67 million), 2024 (approximately $11 million) and 2025 (approximately $4 million).

The Company believes the inclusion of the bill credits as a reduction to Adjusted EBITDA in the years in which such bill credits are applied more accurately reflects its operating performance.

Year Ended December 31, 2021

2 unchanged sentences

Net income (loss) $ 2,196 $ (2,512) $ (567) $ 1 $ (413) $ (22) $ 53 $ (1,264)

Income tax expense — — — — — — 266 266

Income tax expense (benefit) 2 — — — — — (460) (458)

Interest expense and related charges (a) 9 (14) 15 (9) 2 1 380 384

7 unchanged sentences

Transition and merger expenses (2) — — — — (15) 9 (8)

Impairment of long-lived assets — — — — 356 — — 356

Loss on disposal of investment in NELP — — 29 — — — — 29

Other, including impairment of long-lived and other assets 57 18 9 3 33 3 (43) 80

COVID-19-related expenses (c) — 4 1 — 2 — 1 8

Other, net 11 26 10 4 3 1 (36) 19

Winter Storm Uri impacts (d) 239 457 — — 1 — 1 698

Adjusted EBITDA $ 1,312 $ (236) $ 737 $ 93 $ 60 $ (33) $ (25) $ 1,908

(a) Includes $155 million of unrealized mark-to-market net losses on interest rate swaps.

(a) Includes $134 million of unrealized mark-to-market net gains on interest rate swaps.

(b) Includes nuclear fuel amortization of $78 million in the Texas segment.

(d) Includes the following of the Winter Storm Uri impacts, which we believe are not reflective of our operating performance:

allocation of ERCOT default uplift charges which are expected to be paid over more than 90 years under current protocols;

accrual of Koch earn-out amounts that the Company will pay by the end of the second quarter of 2022;

future bill credits related to Winter Storm Uri (as further described below);

and Winter Storm Uri related legal fees and other costs.

We estimate the amounts to be applied in future periods are 2022 (approximately $150 million), 2023 (approximately $67 million), 2024 (approximately $11 million) and 2025 (approximately $4 million).

The Company believes the inclusion of the bill credits as a reduction to Adjusted EBITDA in the years in which such bill credits are applied more accurately reflects its operating performance.

Year Ended December 31, 2020

12 unchanged sentences

Transition and merger expenses 5 2 1 — — (3) 11 16

Other, net 10 12 15 — 8 2 (36) 11

Adjusted EBITDA $ 807 $ 1,307 $ 925 $ 63 $ 308 $ (68) $ (17) $ 3,325

(a) Includes $220 million of unrealized mark-to-market net losses on interest rate swaps.

(b) Includes nuclear fuel amortization of $73 million in the Texas segment.

Year Ended December 31, 2018

Retail Texas East West Sunset Asset

Closure Eliminations / Corporate and Other Vistra

Net income (loss) $ 712 $ (88) $ 18 $ 34 $ 242 $ (62) $ (912) $ (56)

Income tax benefit — — — — — — (45) (45)

Interest expense and related charges (a) 7 12 10 (1) 1 — 543 572

Depreciation and amortization (b) 318 468 519 14 81 — 72 1,472

EBITDA 1,037 392 547 47 324 (62) (342) 1,943

Unrealized net (gain) loss resulting from commodity hedging transactions (206) 498 81 15 (8) — — 380

Fresh start/purchase accounting impacts 26 (4) 11 — 7 1 — 41

Impacts of Tax Receivable Agreement — — — — — — 79 79

Non-cash compensation expenses — — — — — — 73 73

Transition and merger expenses 1 9 16 1 9 2 195 233

Odessa earnout buybacks — 18 — — — — — 18

Other, net (13) (1) 25 2 9 (4) (25) (7)

Other, including impairment of long-lived and other assets 11 26 10 4 359 1 (36) 375

Loss on disposal of investment in NELP — — 29 — — — — 29

COVID-19-related expenses (c) — 15 3 — 5 — 2 25

Adjusted EBITDA $ 983 $ 1,646 $ 849 $ 73 $ 242 $ (81) $ (27) $ 3,685

1 unchanged sentence

(b) Includes nuclear fuel amortization of $75 million in the Texas segment.

Retail Segment — Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

4 unchanged sentences

Amortization expense (2) (5) 3

Other revenues (11) 8 (19)

Unrealized net losses on hedging activities (a) (325) (11) (314)

Total operating revenues $ 7,871 $ 8,270 $ (399)

1 unchanged sentence

Purchases from affiliates (4,002) (4,566) 564

Unrealized net losses on hedging activities with affiliates (329) (305) (24)

Unrealized net gains (losses) on hedging activities with affiliates 1,719 (329) 2,048

Unrealized net gains on hedging activities 9 — 9

Delivery fees (1,937) (1,893) (44)

Other costs (a) (69) (330) 261

Other costs (b) (357) (69) (288)

Total fuel, purchased power costs and delivery fees $ (4,568) $ (6,857) $ 2,289

6 unchanged sentences

Total retail electricity sales volumes 93,103 90,349 2,754

Weather (North Texas average) - percent of normal (b):

Weather (North Texas average) - percent of normal (c):

Cooling degree days 90.0 % 90.0 %

Heating degree days 92.0 % 91.0 %

(a) For the year ended December 31, 2020 and 2019, includes third-party fuel and power purchases of $69 million and $329 million, respectively.

(b) Weather data is obtained from Weatherbank, Inc.

(a) For the year ended December 31, 2021, a net loss of $298 million was recognized in operating revenues due to the third quarter 2021 discontinuance of normal purchase and sale accounting on a retail electric contract portfolio where physical settlement is no longer considered probable throughout the contract term.

(b) For the year ended December 31, 2021, includes $153 million of future bill credits to large commercial and industrial customers.

For the year ended December 31, 2021, normal is defined as the average over the 10-year period from December 2011 to December 2020.

For the year ended December 31, 2020, normal is defined as the average over the 10-year period from December 2010 to December 2019.

Net income increased by $175 million to $309 million and Adjusted EBITDA increased by $176 million to $983 million in the year ended December 31, 2020 compared to the year ended December 31, 2019.

The following table presents changes in net income (loss) and Adjusted EBITDA for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Year Ended December 31, 2021 Compared to 2020

Margin primarily driven by the addition of Crius acquired in July 2019 and Ambit acquired in November 2019 $ 339

Other driven by higher operating costs and SG&A expense (including bad debt expense) primarily due to the addition of Crius and Ambit

Winter Storm Uri, including securitization proceeds receivable from ERCOT and bill credits $ (75)

Monetization of certain commercial positions 207

Higher margins 228

Other driven by higher SG&A expense

Change in Adjusted EBITDA $ 329

Change in depreciation and amortization expenses driven by Crius/Ambit intangibles (11)

(Unfavorable) impact of higher unrealized net losses on commodity hedging activities (62)

Lower transition and merger and other expenses 71

Favorable impact of higher unrealized net gains on commodity hedging activities 1,743

Future bill credits and other costs related to Winter Storm Uri (245)

Decrease in depreciation and amortization expenses 91

Other, including impairment of long-lived and other assets (31)

Change in Net income $ 1,887

50 unchanged sentences

Favorable/(unfavorable) change in revenue net of fuel $ (447) $ (175) $ 34 $ (178)

Winter Storm Uri impact (1,535) 50 — 17

Favorable/(unfavorable) change in other operating costs 19 8 (7) (39)

Favorable/(unfavorable) change in SG&A expenses (7) (7) (6) (22)

Other (24) (19) 1 (1)

Favorable/(unfavorable) change in selling, general and administrative expenses — 10 (6) 8

Other (including other income and other deductions) (a) 81 (5) (1) 10

Change in Adjusted EBITDA $ (1,882) $ (112) $ 20 $ (182)

Unfavorable change in depreciation and amortization (5) (41) — (13)

Change in unrealized net gains/(losses) on commodity hedging activities 100 (211) (51) (241)

Fresh start/purchase accounting impacts 4 (18) (4) (5)

Transition and merger expenses 9 8 1 22

Impairment of long-lived assets — — — (356)

Favorable/(unfavorable) change in depreciation and amortization (136) 23 (41) (6)

Change in unrealized net losses on hedging activities (1,830) (640) (28) (235)

Other, including impairment of long-lived and other assets 25 (5) — 329

Generation plant retirement expenses — — — 25

Loss on disposal of investment in NELP — (29) — —

Other (including interest and COVID-19 related expenses) (29) 8 6 2

Change in Net income $ 418 $ (359) $ (38) $ (688)

The change in Texas segment results was driven by higher realized prices through hedging activities and plant optimization efforts and unrealized hedging gains, partially offset by lower insurance reimbursement and COVID-19 related expenses in the current year.

The change in East segment results was driven by lower capacity revenue, unrealized hedging losses in current year versus unrealized hedging gains in prior year, loss on disposal of equity method investment in NELP for 100% ownership of NJEA (see Note 21 to the Financial Statements) and COVID-19 related expenses in the current year.

The change in West segment results was driven by unrealized hedging losses in current year versus unrealized hedging gains in prior year, partially offset by higher realized prices through hedging activities and plant optimization efforts.

The change in Sunset segment results was driven by impairment of assets related to our Kincaid, Zimmer and Joppa/EEI coal generation facilities and related generation plant retirement expenses, unrealized hedging losses in current year versus unrealized hedging gains in prior year, lower capacity revenue, and higher operating costs.

Generation — Year Ended December 31, 2019 Compared to Year Ended December 31, 2018

Year Ended December 31,

Texas East West Sunset

2019 2018 2019 2018 2019 2018 2019 2018

Operating revenues:

Electricity sales $ 1,048 $ 1,162 $ 1,355 $ 990 $ 293 $ 193 $ 969 $ 769

Capacity revenue from ISO/RTO — — 170 375 — 30 197 258

Sales to affiliates 2,213 1,819 1,074 614 — — 285 168

Rolloff of unrealized net gains (losses) representing positions settled in the current period 371 404 59 3 (10) 20 (74) 60

Unrealized net gains (losses) on hedging activities 72 (689) (44) (43) 51 (35) 249 (87)

Unrealized net gains (losses) on hedging activities with affiliates 132 (198) 180 (36) — — (7) 16

Other revenues — (1) (4) (8) 4 — (17) (1)

Operating revenues 3,836 2,497 2,790 1,895 338 208 1,602 1,183

Fuel, purchased power costs and delivery fees:

Fuel for generation facilities and purchased power costs (1,117) (1,307) (1,381) (1,111) (187) (132) (739) (547)

Fuel for generation facilities and purchased power costs from affiliates — — (2) (8) — — 2 30

Unrealized (gains) losses from hedging activities 16 (15) 1 (5) — — (22) 19

Ancillary and other costs (182) (139) (11) (7) — (2) (8) (7)

Fuel, purchased power costs and delivery fees (1,283) (1,461) (1,393) (1,131) (187) (134) (767) (505)

Net income (loss) $ 1,342 $ (88) $ 400 $ 18 $ 88 $ 34 $ 274 $ 242

Adjusted EBITDA $ 1,307 $ 912 $ 925 $ 680 $ 63 $ 65 $ 308 $ 341

Production volumes (GWh):

Natural gas facilities 39,433 35,790 55,555 41,036 5,228 3,664

Lignite and coal facilities 24,558 26,243 34,424 29,734

Nuclear facilities 19,305 20,416

Solar/Battery facilities 439 344

Capacity factors:

CCGT facilities 55.0 % 58.8 % 58.4 % 59.1 % 58.5 % 56.1 %

Lignite and coal facilities 72.8 % 77.8 % 54.1 % 63.4 %

Nuclear facilities 95.8 % 101.3 %

Weather - percent of normal (a):

Cooling degree days 99 % 100 % 103 % 120 % 105 % 105 % 110 % 134 %

Heating degree days 111 % 113 % 101 % 103 % 105 % 86 % 99 % 97 %

(a) Reflects cooling degree days or heating degree days for the region based on Weather Services International (WSI) data.

Year Ended December 31, Year Ended December 31,

2019 2018 2019 2018

Market pricing Average Market On-Peak Power Prices ($MWh) (b):

Average ERCOT North power price ($/MWh) $ 35.93 $ 29.96 PJM West Hub $ 30.87 $ 41.79

AEP Dayton Hub $ 31.02 $ 40.47

Average NYMEX Henry Hub natural gas price ($/MMBtu) $ 2.51 $ 3.12 NYISO Zone C $ 25.90 $ 37.03

Massachusetts Hub $ 34.89 $ 50.11

Average natural gas price (a):

Indiana Hub $ 31.23 $ 39.01

TetcoM3 ($/MMBtu) $ 2.39 $ 3.69 Northern Illinois Hub $ 28.16 $ 34.46

Algonquin Citygates ($/MMBtu) $ 3.17 $ 4.84

(a) Reflects the average of daily quoted prices for the periods presented and does not reflect costs incurred by us.

(b) Reflects the average of day-ahead quoted prices for the periods presented and does not necessarily reflect prices we realized.

The following table presents changes in net income and Adjusted EBITDA for the year ended December 31, 2019 compared to the year ended December 31, 2018.

Year Ended December 31, 2019 Compared to 2018

Texas East West Sunset

Favorable impact related to operations acquired in the Merger (a) $ — $ 268 $ 20 $ 84

Favorable/(unfavorable) change in revenue net of fuel 421 10 (11) (159)

Favorable/(unfavorable) change in other operating costs (28) (13) (4) 41

Favorable/(unfavorable) change in SG&A expenses 9 (11) (7) 1

Other (7) (9) — —

Change in Adjusted EBITDA $ 395 $ 245 $ (2) $ (33)

Unfavorable change in depreciation and amortization (77) (161) (5) (39)

Change in unrealized net gains on commodity hedging activities 1,089 277 56 138

Fresh start/purchase accounting impacts 6 96 — 71

Transition and merger expenses 2 1 — —

Generation plant retirement expenses — — — (12)

Impact of Odessa earnout buybacks 18 — — —

Other (including interest) 7 7 1 (2)

Change in Net income $ 1,430 $ 382 $ 54 $ 32

The change in Texas segment results was driven by higher realized prices through hedging activities and plant optimization efforts, unrealized gains in 2019 versus unrealized losses in 2018, insurance reimbursement received in 2019, and the Odessa earnout buybacks in 2018.

The change in East segment results was driven by operations in the first quarter of 2019 acquired in the Merger, partially offset by lower generation in the second through fourth quarters.

The change in West segment results was driven by operations in the first quarter of 2019 acquired in the Merger and unrealized hedging gains in 2019 versus unrealized hedging losses in 2018.

The change in Sunset segment results was driven by operations in the first quarter of 2019 acquired in the Merger and unrealized hedging gains in 2019, partially offset by decrease in revenue net of fuel reflecting lower realized power prices and capacity revenue.

Winter Storm Uri impact (ERCOT default uplift and legal disputes) (457) — — (1)

Loss on disposal of investment in NELP — 29 — —

Change in Net income (loss) $ (4,272) $ (608) $ (49) $ 1

(a) For the year ended December 31, 2021, includes insurance proceeds of $80 million in the Texas segment and $7 million in the Sunset segment.

The change in Texas segment results was primarily driven by the Winter Storm Uri impacts, including the need to procure power in ERCOT at market prices at or near the price cap due to lower output from our natural gas-fueled power plants driven by natural gas deliverability issues, lower margins from our natural gas-fueled power plants due to extremely high fuel costs, and, to a lesser extent, operational challenges associated with Winter Storm Uri, and unrealized hedging losses in the year ended December 31, 2021 versus unrealized hedging gains in the year ended December 31, 2020, partially offset by insurance proceeds received in 2021.

The change in East segment results was driven by lower revenue net of fuel and larger unrealized hedging losses in the year ended December 31, 2021 versus the year ended December 31, 2020, partially offset by loss on disposal of equity method investment in NELP for 100% ownership of NJEA (see Note 21 to the Financial Statements) in 2020.

The change in West segment results was driven by larger unrealized hedging losses in year ended December 31, 2021 versus the year ended December 31, 2020, partially offset by higher realized prices through hedging activities and plant optimization efforts.

The change in Sunset segment results was driven by larger unrealized hedging losses in year ended December 31, 2021 versus the year ended December 31, 2020 and lower margins due to lower realized prices and higher operating costs, partially offset by higher impairment of long-lived assets generation plant retirement expenses related to our Joppa/EEI, Kincaid and Zimmer coal generation facilities in 2020.

Asset Closure Segment — Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

1 unchanged sentence

Operating revenues $ — $ 3 $ (3)

Fuel, purchased power costs and delivery fees — (267) 267

Operating costs (30) (63) 33

4 unchanged sentences

Other deductions — (2) 2

Interest expense and related charges (1) — (1)

Income (loss) before income taxes

(22) (101) 79

$ (22) $ (101) $ 79

Adjusted EBITDA $ (33) $ (81) $ 48

Production volumes (GWh) — 7,484 (7,484)

Results for the Asset Closure segment primarily reflect the retirement of the Coffeen, Duck Creek, Havana and Hennepin plants in November and December 2019, respectively, the retirement of the Northeastern waste coal plant in October 2018, retirement of the Stuart and Killen plants in May 2018 (acquired in the Merger), and the retirement of the Monticello, Sandow and Big Brown plants in January and February 2018, respectively (see Note 4 to the Financial Statements).

Operating costs for the years ended December 31, 2021 and 2020 included ongoing costs associated with the decommissioning and reclamation of retired plants and mines.

The year ended December 31, 2021 includes a gain on the settlement of rail transportation disputes (see Note 21 to the Financial Statements).

Energy-Related Commodity Contracts and Mark-to-Market Activities

The table below summarizes the changes in commodity contract assets and liabilities for the years ended December 31, 2021 and 2020.

The net change in these assets and liabilities, excluding "other activity" as described below, reflects $231 million and $696 million in unrealized net gains for the year ended December 31, 2020 and 2019, respectively, arising from mark-to-market accounting for positions in the commodity contract portfolio.

The net change in these assets and liabilities, excluding "other activity" as described below, reflects $759 million in unrealized net losses and $231 million in unrealized net gains for the years ended December 31, 2021 and 2020, respectively, arising from mark-to-market accounting for positions in the commodity contract portfolio.

Year Ended December 31,

2 unchanged sentences

Changes in fair value of positions in the portfolio (b) (464) 245

Acquired commodity contracts (c) — (28)

Other activity (d) (27) (97)

Other activity (c) (32) (27)

Commodity contract net liability at end of period $ (866) $ (75)

(a) Represents reversals of previously recognized unrealized gains and losses upon settlement/termination (offsets realized gains and losses recognized in the settlement period).

The years ended December 31, 2020 and 2019 include reversals of $1 million of previously recorded unrealized losses and $3 million of previously recorded unrealized gains related to Vistra beginning balances.

respectively.

The years ended December 31, 2021 and 2020 also include reversals of $3 million and $12 million, respectively, of previously recorded unrealized losses related to commodity contracts acquired in the Merger, Crius Transaction and Ambit Transaction.

The year ended December 31, 2020 includes reversals of $1 million of previously recorded unrealized losses related to Vistra beginning balances.

Excludes changes in fair value in the month the position settled as well as amounts related to positions entered into, and settled, in the same month.

1 unchanged sentence

Excludes changes in fair value in the month the position settled as well as amounts related to positions entered into, and settled, in the same month.

(c) Includes fair value of commodity contracts acquired on the Ambit Acquisition Date and the Crius Acquisition Date in 2019 (see Note 2 to the Financial Statements).

(d) Represents changes in fair value of positions due to receipt or payment of cash not reflected in unrealized gains or losses.

(c) Represents changes in fair value of positions due to receipt or payment of cash not reflected in unrealized gains or losses.

Amounts are generally related to premiums related to options purchased or sold as well as certain margin deposits classified as settlement for certain transactions executed on the CME.

10 unchanged sentences

Operating Cash Flows

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 — Cash provided by operating activities totaled $3.337 billion and $2.736 billion in the years ended December 31, 2020 and 2019, respectively.

The favorable change of $601 million reflects the strong operating performance of both the Texas and Retail segments.

Additionally, the increase in operating cash flows includes a lower increase in working capital, lower cash interest paid and increased income taxes received, partially offset by an increase in cash margin deposits posted with third-parties.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 — Cash used in operating activities totaled $206 million in the year ended December 31, 2021 compared to cash provided by operating activities of $3.337 billion in the year ended December 31, 2020.

The unfavorable change of $3.543 billion was primarily driven by lower cash from operations due to Winter Storm Uri impacts and higher cash margin deposits posted with third-parties.

Depreciation and amortization — Depreciation and amortization expense reported as a reconciling adjustment in the consolidated statements of cash flows exceeds the amount reported in the consolidated statements of operations by $297 million, $311 million and $236 million for the year ended December 31, 2021, 2020 and 2019, respectively.

1 unchanged sentence

Investing Cash Flows

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 — Cash used in investing activities totaled $1,572 million and $1.717 billion in the years ended December 31, 2020 and 2019, respectively.

Capital expenditures totaled $1.259 billion and $713 million in the years ended December 31, 2020 and 2019, respectively.

Cash used in investing activities in the year ended December 31, 2020 and 2019 also reflected net purchases of environmental allowances of $339 million and $125 million, respectively.

Cash used in investing activities in the year ended December 31, 2019 also reflected $880 million of net cash paid in the Crius and Ambit Transactions.

Capital Expenditures — In the years ended December 31, 2020 and 2019, capital expenditures consisted of:

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 — Cash used in investing activities totaled $1.153 billion and $1.572 billion in the years ended December 31, 2021 and 2020, respectively.

Capital expenditures totaled $1.033 billion and $1,259 million in the years ended December 31, 2021 and 2020, respectively, and.

consisted of the following:

Year Ended December 31,

3 unchanged sentences

Capital expenditures 1,033 $ 1,259

Cash used in investing activities in the year ended December 31, 2021 and 2020 also reflected net purchases of environmental allowances of $213 million and $339 million, respectively.

In the year ended December 31, 2021 and 2020, we received insurance proceeds of $89 million and $35 million, respectively.

Financing Cash Flows

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019 — Cash used in financing activities totaled $1.796 billion and $1.237 billion in the years ended December 31, 2020 and 2019, respectively.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 — Cash provided by financing activities totaled $2.274 billion in the year ended December 31, 2021 and cash used in financing activities totaled $1.796 billion in the year ended December 31, 2020.

The change was primarily driven by:

• issuance of $5.7 billion principal amount of Vistra Operations senior secured and unsecured notes in 2019;

• redemption of $747 million principal amount of outstanding Vistra Unsecured Senior Notes in 2020;

• net repayments of $350 million in short-term borrowings under the Revolving Credit Facility in 2020 compared to $350 million in net short-term borrowings under the Revolving Credit Facility in 2019;

• net repayments of $150 million under the Receivables Facility in 2020 compared to net borrowings of $111 million in 2019;

• proceeds of $1.975 billion from the issuance of preferred stock in 2021;

• the issuance of $1.250 billion principal amount of Vistra Operations senior unsecured notes in 2021;

• $500 million in cash received from the sale of a portion of the PJM capacity that cleared for Planning Years 2021-2022 in 2021;

• redemption of $747 million principal amount of outstanding of Vistra unsecured senior notes in 2020;

• net repayment of $350 million in short-term borrowings under the Revolving Credit Facility in 2020;

• repayment of $100 million of term loans under the Vistra Operations Credit Facilities in 2020;

partially offset by:

• cash tender offers and early redemptions to purchase approximately $3.0 billion of senior unsecured notes assumed in the Merger in 2019;

• repayment of approximately $3.1 billion of term loans under the Vistra Operations Credit Facilities in 2019;

• $656 million in cash paid for share repurchases in in 2019;

• $186 million decrease in debt tender offer and other financing fees in 2020 compared to 2019.

• $471 million in cash paid for share repurchases in 2021;

• net repayments of $300 million under the Receivables Facility in 2021 compared to net repayments of $150 million in 2020.

Debt Activity

8 unchanged sentences

(a) Excludes amounts available to be borrowed under the Receivables Facility and the Repurchase Facility, respectively.

See Note 10 to the Financial Statements for detail on our account receivable financing.

The $673 million increase in available liquidity for the year ended December 31, 2020 was primarily driven by cash from operations, repayments of cash borrowings under the Revolving Credit Facility and a reduction of letters of credit outstanding under the Revolving Credit Facility reflecting the issuance of $303 million of letters of credit under the Secured LOC Facilities, partially offset by $1.259 billion of capital expenditures (including LTSA prepayments, nuclear fuel and development and growth expenditures), $747 million principal amount of outstanding Vistra Unsecured Senior Notes redeemed in 2020, $266 million in dividends paid to stockholders, the maturity of a $250 million Alternate LOC Facility and $100 million of term loans under the Vistra Operation Credit Facility repaid in March 2020.

During the winter storm Uri event, Vistra was required to post a significant amount of collateral, including to ERCOT, clearinghouses for natural gas and power transactions and other trading counterparties.

Despite these posting requirements, Vistra has consistently maintained, and it continues to maintain, sufficient liquidity to conduct its operations in the ordinary course.

As of February 25, 2021, Vistra had more than $1.5 billion of cash and availability under its revolving credit facility to meet any of its liquidity needs.

In February 2021, we borrowed $600 million under the Revolving Credit Facility to fund our general corporate needs, including posting requirements in connection with the expected impacts of winter storm Uri.

Based upon our current internal financial forecasts, we believe that we will have sufficient liquidity to fund our anticipated cash requirements, including those related to our capital allocation initiatives, through at least the next 12 months.

See Note 10 to the Financial Statements for detail on our accounts receivable financing.

The $180 million increase in available liquidity for the year ended December 31, 2021 was primarily driven by proceeds of $1.975 billion from the issuance of preferred stock in 2021, cash received from the issuance of $1.250 billion principal amount of Vistra Operations senior unsecured notes in May 2021 and $500 million in cash received from the sale of a portion of the PJM capacity that cleared for Planning Years 2021-2022, partially offset by cash used in operations, including higher cash margin deposits posted with third parties, $1.033 billion of capital expenditures (including LTSA prepayments, nuclear fuel and development and growth expenditures), a $734 increase in letters of credit outstanding under the Revolving Credit Facility, $290 million in dividends paid to stockholders, $471 million in cash paid for share repurchases, $300 million in net cash repayments under the accounts receivable financing facilities and the maturity of a $250 million Alternate LOC Facility.

Additionally, in February 2022, we entered into a $1.0 billion senior secured commodity-linked revolving credit facility (the Commodity-Linked Facility) (see Note 11 to the Financial Statements).

Based upon our current internal financial forecasts, we believe that we will have sufficient liquidity to fund our anticipated cash requirements through at least the next 12 months.

Our operational cash flows tend to be seasonal and weighted toward the second half of the year.

If the Company experienced a significant reduction in revenues or increases in costs or collateral requirements, such as a result of Winter Storm Uri, the Company believes it would have additional alternatives to maintain access to liquidity, including drawing upon available liquidity, accessing additional sources of capital or reducing capital expenditures, planned voluntary debt repayments or operating costs.

The maturities of our long-term debt are relatively modest until 2023.

Interest payments on long-term debt are expected to total approximately $499 million in 2022, $946 million in 2023-2024, $753 million in 2025-2026 and $372 million thereafter.

See Note 11 to the Financial Statements for details of our long-term debt maturities.

Our obligations under commodity purchase and services agreements, including capacity payments, nuclear fuel and natural gas take-or-pay contracts, coal contracts, business services and nuclear-related outsourcing and other purchase commitments, are expected to total approximately $1.850 billion in 2022, $1.250 billion in 2023-2024, $700 million in 2025-2026 and $585 million thereafter.

See Note 12 to the Financial Statements for maturities of lease liabilities and Note 13 to the Financial Statements for commitments related to long-term service and maintenance contracts.

Capital Expenditures

Estimated capital expenditures and nuclear fuel purchases for 2021 are expected to total approximately $1.379 billion and include:

Estimated 2022 capital expenditures and nuclear fuel purchases as of November 5, 2021 total approximately $1.814 billion and include:

• $1.002 billion for solar and energy storage development;

• $570 million for investments in generation and mining facilities;

1 unchanged sentence

• $72 million for information technology and other corporate investments;

• $687 million for growth and development expenditures.

• $53 million for other growth expenditures.

Liquidity Effects of Commodity Hedging and Trading Activities

10 unchanged sentences

In such event, the cash collateral previously posted would be returned to such counterparties, which would reduce liquidity in the event the cash was not restricted.

At December 31, 2020, we received or posted cash and letters of credit for commodity hedging and trading activities as follows:

• $257 million in cash has been posted with counterparties as compared to $202 million posted at December 31, 2019;

As of December 31, 2021, we received or posted cash and letters of credit for commodity hedging and trading activities as follows:

• $1.263 billion in cash has been posted with counterparties as compared to $257 million posted at December 31, 2020;

• $39 million in cash has been received from counterparties as compared to $33 million received at December 31, 2020;

• $878 million in letters of credit have been posted with counterparties as compared to $1.150 billion posted at December 31, 2019;

• $1.558 billion in letters of credit have been posted with counterparties as compared to $878 million posted at December 31, 2020;

• $35 million in letters of credit have been received from counterparties as compared to $18 million received at December 31, 2020.

See Collateral Support Obligations below for information related to collateral posted in accordance with the PUCT and ISO/RTO rules.

Income Tax Payments

In the next 12 months, we do not expect to make federal income tax payments due to Vistra's use of NOL carryforwards.

We expect to make approximately $56 million in state income tax payments, offset by $9 million in state tax refunds, and $3 million in TRA payments in the next 12 months.

For the year ended December 31, 2020, we received refunds of $170 million related to AMT credits.

For the year ended December 31, 2020, there were no federal income tax payments, $40 million in state income tax payments, $10 million in state income tax refunds and less than $1 million in TRA payments.

In the next 12 months, we do not expect to make federal income tax payments due to Vistra's loss position in 2021 and use of NOL carryforwards.

We expect to make approximately $35 million in state income tax payments, offset by $11 million in state tax refunds, and less than $1 million in TRA payments in the next 12 months.

For the year ended December 31, 2021, there were no federal income tax payments, $52 million in state income tax payments, $2 million in state income tax refunds and $2 million in TRA payments.

Capitalization

3 unchanged sentences

The Credit Facilities Agreement includes a covenant, solely with respect to the Revolving Credit Facility and solely during a compliance period (which, in general, is applicable when the aggregate revolving borrowings and issued revolving letters of credit (in excess of $300 million) exceed 30% of the revolving commitments), that requires the consolidated first-lien net leverage ratio not exceed 4.25 to 1.00.

Although the period ended December 31, 2020 was not a compliance period, we would have been in compliance with this financial covenant if it was required to be tested at such date.

As of December 31, 2021, we were in compliance with this financial covenant.

See Note 11 to the Financial Statements for discussion of other covenants related to the Vistra Operations Credit Facilities.

9 unchanged sentences

Material Cross-Default/Acceleration Provisions

Certain of our contractual arrangements contain provisions that could result in an event of default if there was a failure under financing arrangements to meet payment terms or to observe covenants that could result in an acceleration of payments due.

Certain of our contractual arrangements contain provisions that could result in an event of default if there were a failure under financing arrangements to meet payment terms or to observe covenants that could result in an acceleration of payments due.

Such provisions are referred to as "cross-default" or "cross-acceleration" provisions.

A default by Vistra Operations or any of its restricted subsidiaries in respect of certain specified indebtedness in an aggregate amount in excess of $300 million may result in a cross default under the Vistra Operations Credit Facilities.

Such a default would allow the lenders to accelerate the maturity of outstanding balances (approximately $2.57 billion at December 31, 2020) under such facilities.

Such a default would allow the lenders to accelerate the maturity of outstanding balances under such facilities, which totaled approximately $2.54 billion at December 31, 2021.

Each of Vistra Operations' (or its subsidiaries') commodity hedging agreements and interest rate swap agreements that are secured with a lien on its assets on a pari passu basis with the Vistra Operations Credit Facilities lenders contains a cross-default provision.

10 unchanged sentences

Under the Secured LOC Facilities, a default under any document evidencing indebtedness for borrowed money by Vistra Operations or any Guarantor Subsidiary for failure to pay principal when due at final maturity or that results in the acceleration of such indebtedness in an aggregate amount of $300 million or more, may result in a termination of the Secured LOC Facilities.

Guarantor Summary Financial Information

During the year ended December 31, 2020, we fully redeemed the Vistra Senior Unsecured Notes that were previously guaranteed by substantially all of our wholly owned subsidiaries.

The following tables summarize the combined financial information of (i) Vistra Corp.

(Parent), which is the ultimate parent company and issuer of the Vistra Senior Unsecured Notes with effect as of the Merger Date, on a stand-alone, unconsolidated basis and (ii) the guarantor subsidiaries of Vistra (Guarantor Subsidiaries).

The Guarantor Subsidiaries consist of the wholly owned subsidiaries, which jointly, severally, fully and unconditionally, guaranteed the payment obligations under the Vistra Senior Unsecured Notes.

See Note 11 to the Financial Statements for discussion of the Vistra Senior Unsecured Notes and Note 14 to the Financial Statements for discussion of dividend restrictions of Vistra Operations (a guarantor subsidiary of Vistra) and Parent.

This financial information should be read in conjunction with the consolidated financial statements and notes thereto of Vistra.

Transactions between the Parent and the Guarantor Subsidiaries have been eliminated.

The inclusion of Vistra's subsidiaries as Guarantor Subsidiaries in the summary financial information is determined as of the most recent balance sheet date presented.

The Parent files a consolidated U.S.

federal income tax return.

All consolidated income tax expense or benefits and deferred tax assets and liabilities are included in the Guarantor summary financial information presented below, with no allocation made to the non-guarantor subsidiaries.

Additionally, all corporate shared service costs are included in the Guarantor summary financial information with no allocation to the non-guarantor subsidiaries.

December 31, 2020

Revenues $ 10,954

Operating income $ 1,592

Net income $ 678

Net income attributable to Vistra $ 678

December 31, 2020 December 31, 2020

Current assets $ 2,404 Current liabilities $ 1,828

Noncurrent assets 21,307 Noncurrent liabilities 13,599

Total assets $ 23,711 Total liabilities $ 15,427

Noncontrolling interest $ —

Contractual Obligations and Commitments

See Note 11 to the Financial Statements for long-term debt maturities, Note 12 to the Financial Statements for maturities of lease liabilities and Note 13 to the Financial Statements for commitments related to long-term service and maintenance contracts, energy-related contracts and other agreements.

Under the Commodity-Linked Facility, a default under any document evidencing indebtedness for borrowed money by Vistra Operations or any Guarantor Subsidiary for failure to pay principal when due at final maturity or that results in the acceleration of such indebtedness in an aggregate amount of $300 million or more, may result in a termination of the Commodity-Linked Facility.

See Note 13 to the Financial Statements for discussion of guarantees.

4 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis