18 unchanged sentences
We strive to use consistent assumptions regarding forward market price curves in evaluating and recording the effects of commodity price risk.
−Removed: VaR Methodology — A VaR methodology is used to measure the amount of market risk that exists within the portfolio under a variety of market conditions.
+Added: VaR Methodology
+Added: A VaR methodology is used to measure the amount of market risk that exists within the portfolio under a variety of market conditions.
The resultant VaR produces an estimate of a portfolio's potential for loss given a specified confidence level and considers, among other things, market movements utilizing standard statistical techniques given historical and projected market prices and volatilities.
3 unchanged sentences
The table below details a VaR measure related to various portfolios of contracts.
−Removed: VaR for Underlying Generation Assets and Energy-Related Contracts — This measurement estimates the potential loss in value, due to changes in market conditions, of all underlying generation assets and contracts, based on a 95% confidence level and an assumed holding period of 60 days.
+Added: VaR for Underlying Generation Assets and Energy-Related Contracts
+Added: This measurement estimates the potential loss in value, due to changes in market conditions, of all underlying generation assets and contracts, based on a 95% confidence level and an assumed holding period of 60 days.
The forward period covered by this calculation includes the current and subsequent calendar year at the time of calculation.
3 unchanged sentences
Month-end low VaR $ 115 $ 283
−Removed: The month-end high VaR risk measure in 2022 is currently consistent with the prior year.
+Added: The month-end high VaR risk measure in 2023 is currently lower than the prior year due to lower prices and higher hedge levels.
+Added: Price Sensitivities
+Added: 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.
+Added: The residual natural gas position is calculated based on two steps:
+Added: first, calculating the difference between actual Heat Rates of our natural gas generation units and the assumed 7.2 Heat Rate used to calculate the sensitivity to spark spreads;
+Added: and second, calculating the residual natural gas exposure that is not already included in the natural gas generation spark spread sensitivity shown in the table below.
+Added: The estimates related to price sensitivity are based on our expected generation, related hedges and forward prices as of December 31, 2023.
+Added: Nuclear/Renewable/Coal Generation:
+Added: $2.50/MWh increase in power price $ 5 $ 9
+Added: Nuclear/Renewable/Coal Generation:
+Added: $2.50/MWh decrease in power price $ (4) $ (8)
+Added: Natural Gas Generation:
+Added: $1.00/MWh increase in spark spread $ 7 $ 10
+Added: Natural Gas Generation:
+Added: $1.00/MWh decrease in spark spread $ (6) $ (9)
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu increase in natural gas price $ (9) $ 8
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu decrease in natural gas price $ 3 $ (11)
+Added: Natural Gas Generation:
+Added: $1.00/MWh increase in spark spread $ 2 $ 11
+Added: Natural Gas Generation:
+Added: $1.00/MWh decrease in spark spread $ — $ (10)
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu increase in natural gas price $ (7) $ (25)
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu decrease in natural gas price $ 7 $ 25
+Added: Natural Gas Generation:
+Added: $1.00/MWh increase in spark spread $ — $ 1
+Added: Natural Gas Generation:
+Added: $1.00/MWh decrease in spark spread $ — $ (1)
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu increase in natural gas price $ 1 $ 2
+Added: Residual Natural Gas Position:
+Added: $0.25/MMBtu decrease in natural gas price $ (1) $ (2)
+Added: Coal Generation:
+Added: $2.50/MWh increase in power price $ 3 $ 27
+Added: Coal Generation:
+Added: $2.50/MWh decrease in power price $ (2) $ (27)
Interest Rate Risk
+Added: We manage our interest rate risk to limit the impact of interest rate changes on our results of operations and cash flows and to lower our overall borrowing costs.
+Added: To achieve these objectives, a majority of our borrowings have fixed interest rates.
+Added: The inflationary environment continues to drive elevated interest rates, resulting in increased expected refinancing or borrowing costs.
+Added: Management's Discussion and Analysis of Financial Condition, and Results of Operations – Significant Activities and Events, and Items Influencing Future Performance – Macroeconomic Conditions.
The following table provides information concerning our financial instruments at December 31, 2023 and 2022 that are sensitive to changes in interest rates.
14 unchanged sentences
(b) The weighted average interest rate presented is based on the rates in effect at December 31, 2023.
−Removed: (c) Interest rate swaps have maturity dates through July 2026.
−Removed: Excludes $2.12 billion of debt swapped to variable that is matched against the terms of $2.12 billion of debt swapped to fixed that effectively fix the out-of-the-money position of such swaps (see Note 10 to the Financial Statements).
+Added: (c) Interest rate swaps have maturity dates through December 2030, of which $1.625 billion become effective in July 2026.
+Added: Maturities are presented net of $600 million and $700 million of debt swapped to variable maturing in 2024 and 2026, respectively, that is matched against the terms of the equivalent amounts of debt swapped to fixed that effectively fix the out-of-the-money position of such swaps (see Note 12 to the Financial Statements).
As of December 31, 2023, the potential reduction of annual pretax earnings over the next twelve months due to a one percentage-point (100 basis points) increase in floating interest rates on long-term debt totaled approximately $2 million taking into account the interest rate swaps discussed in Note 12 to Financial Statements.
4 unchanged sentences
See Note 17 to the Financial Statements for further discussion of this exposure.
−Removed: Credit Exposure — Our gross credit exposure (excluding collateral impacts) associated with retail and wholesale trade accounts receivable and net derivative assets arising from commodity contracts and hedging and trading activities totaled $2.237 billion at December 31, 2022.
+Added: Credit Exposure
+Added: Our gross credit exposure (excluding collateral impacts) associated with retail and wholesale trade accounts receivable and net derivative assets arising from commodity contracts and hedging and trading activities totaled $1.976 billion at December 31, 2023.
As of December 31, 2023, Retail segment credit exposure totaled approximately $1.302 billion, including $1.241 billion of trade accounts receivable and $61 million related to derivatives.
Cash deposits and letters of credit held as collateral for these receivables totaled $54 million, resulting in a net exposure of $1.248 billion.
−Removed: Allowances for uncollectible accounts receivable are established for the potential loss from nonpayment by these customers based on historical experience, market or operational conditions and changes in the financial condition of large business customers.
−Removed: As of December 31, 2022, aggregate Texas, East, Sunset and Asset Closure segments credit exposure totaled $1.004 billion including $541 million related to derivative assets and $463 million of trade accounts receivable, after taking into account master netting agreement provisions but excluding collateral impacts.
−Removed: Including collateral posted to us by counterparties, our net Texas, East, Sunset and Asset Closure segments exposure was $936 million, as seen in the following table that presents the distribution of credit exposure by counterparty credit quality at December 31, 2022.
+Added: Allowances for uncollectible accounts receivable are established for the expected loss from nonpayment by these customers based on historical experience, market or operational conditions and changes in the financial condition of large business customers.
+Added: As of December 31, 2023, aggregate Texas, East, Sunset and Asset Closure segments credit exposure totaled $674 million including $545 million related to derivative assets and $129 million of trade accounts receivable, after taking into account master netting agreement provisions but excluding collateral impacts.
+Added: Including collateral posted to us by counterparties, our net Texas, East, Sunset and Asset Closure segments exposure was $551 million, as seen in the following table that presents the distribution of credit exposure by counterparty credit quality as of December 31, 2023.
Credit collateral includes cash and letters of credit but excludes other credit enhancements such as guarantees or liens on assets.
6 unchanged sentences
Significant ( i.e.
−Removed: , 10% or greater) concentration of credit exposure exists with one counterparty, which represented an aggregate $136 million, or 15%, of our total net exposure.
−Removed: We view exposure to this counterparty to be within an acceptable level of risk tolerance due to the counterparty's credit ratings, the counterparty's market role and deemed creditworthiness and the importance of our business relationship with the counterparty.
+Added: , 10% or greater) concentration of credit exposure exists with two counterparties, which represented an aggregate $293 million, or 53%, of our total net exposure as of December 31, 2023.
+Added: We view exposure to these counterparties to be within an acceptable level of risk tolerance due to the counterparties' credit ratings, the counterparties' market role and deemed creditworthiness and the importance of our business relationship with the counterparty.
An event of default by one or more counterparties could subsequently result in termination-related settlement payments that reduce available liquidity if amounts such as margin deposits are owed to the counterparties or delays in receipts of expected settlements owed to us.
1 unchanged sentence
Such contractual commitments may contain pricing that is favorable considering current market conditions and therefore represent economic risk if the counterparties do not perform.
−Removed: FORWARD-LOOKING STATEMENTS
−Removed: This report and other presentations made by us contain "forward-looking statements." All statements, other than statements of historical facts, that are included in this report, or made in presentations, in response to questions or otherwise, that address activities, events or developments that may occur in the future, including (without limitation) such matters as activities related to our financial or operational projections, capital allocation, capital expenditures, liquidity, dividend policy, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of power generation assets, market and industry developments and the growth of our businesses and operations (often, but not always, through the use of words or phrases such as "intends," "plans," "will likely," "unlikely," "expected," "anticipated," "estimated," "should," "may," "projection," "target," "goal," "objective" and "outlook"), are forward-looking statements.
−Removed: Although we believe that in making any such forward-looking statement our expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and risks and is qualified in its entirety by reference to the discussion under Item 1A.
−Removed: Risk Factors and Item 7.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations in this annual report on Form 10-K and the following important factors, among others, that could cause our actual results to differ materially from those projected in or implied by such forward-looking statements:
−Removed: • the actions and decisions of judicial and regulatory authorities;
−Removed: • prohibitions and other restrictions on our operations due to the terms of our agreements;
−Removed: • prevailing federal, state and local governmental policies and regulatory actions, including those of the legislatures and other government actions of states in which we operate, the U.S.
−Removed: Congress, the FERC, the NERC, the TRE, the public utility commissions of states and locales in which we operate, CAISO, ERCOT, ISO-NE, MISO, NYISO, PJM, the RCT, the NRC, the EPA, the environmental regulatory bodies of states in which we operate, the MSHA and the CFTC, with respect to, among other things:
−Removed: ▪ allowed prices;
−Removed: ▪ industry, market and rate structure;
−Removed: ▪ purchased power and recovery of investments;
−Removed: ▪ operations of nuclear generation facilities;
−Removed: ▪ operations of fossil-fueled generation facilities;
−Removed: ▪ operations of mines;
−Removed: ▪ acquisition and disposal of assets and facilities;
−Removed: ▪ development, construction and operation of facilities;
−Removed: ▪ decommissioning costs;
−Removed: ▪ present or prospective wholesale and retail competition;
−Removed: ▪ changes in federal, state and local tax laws, rates and policies, including additional regulation, interpretations, amendments, or technical corrections to the TCJA and/or the IRA;
−Removed: ▪ changes in and compliance with environmental and safety laws and policies, including the CCR Rule, National Ambient Air Quality Standards, the Cross-State Air Pollution Rule, the Mercury and Air Toxics Standard, regional haze program implementation and GHG and other climate change initiatives;
−Removed: ▪ clearing over-the-counter derivatives through exchanges and posting of cash collateral therewith;
−Removed: • expectations regarding, or impacts of, environmental matters, including costs of compliance, availability and adequacy of emission credits, and the impact of ongoing proceedings and potential regulations or changes to current regulations, including those relating to climate change, air emissions, cooling water intake structures, coal combustion byproducts, and other laws and regulations that we are, or could become, subject to, which could increase our costs, result in an impairment of our assets, cause us to limit or terminate the operation of certain of our facilities, or otherwise negatively impact our financial results or stock price;
−Removed: • legal and administrative proceedings and settlements;
−Removed: • general industry trends;
−Removed: • economic conditions, including the impact of any inflationary period, recession or economic downturn;
−Removed: • investor sentiment relating to climate change and utilization of fossil fuels in connection with power generation could reduce demand for, or increase potential volatility in the market price of, our common stock;
−Removed: • the severity, magnitude and duration of pandemics, including the COVID-19 pandemic, and the resulting effects on our results of operations, financial condition and cash flows;
−Removed: • the severity, magnitude and duration of extreme weather events, drought and limitations on access to water, and other weather conditions and natural phenomena, contingencies and uncertainties relating thereto, most of which are difficult to predict and many of which are beyond our control, and the resulting effects on our results of operations, financial condition and cash flows;
−Removed: • acts of sabotage, geopolitical conflicts, wars, or terrorist, cybersecurity, cybercriminal, or cyber-espionage threats or activities;
−Removed: • risk of contract performance claims by us or our counterparties, and risks of, or costs associated with, pursuing or defending such claims;
−Removed: • our ability to collect trade receivables from counterparties in the amount or at the time expected, if at all;
−Removed: • our ability to attract, retain and profitably serve customers;
−Removed: • restrictions on or prohibitions of competitive retail pricing or direct-selling businesses;
−Removed: • adverse publicity associated with our retail products or direct selling businesses, including our ability to address the marketplace and regulators regarding our compliance with applicable laws;
−Removed: • changes in wholesale electricity prices or energy commodity prices, including the price of natural gas;
−Removed: • changes in prices of transportation of natural gas, coal, fuel oil and other refined products;
−Removed: • sufficiency of, access to, and costs associated with coal, fuel oil, natural gas, and uranium inventories and transportation and storage thereof;
−Removed: • changes in the ability of counterparties and suppliers to provide or deliver commodities, materials, or services as needed;
−Removed: • beliefs and assumptions about the benefits of state- or federal-based subsidies to our market competition, and the corresponding impacts on us, including if such subsidies are disproportionately available to our competitors;
−Removed: • the effects of, or changes to, market design and the power, ancillary services and capacity procurement processes in the markets in which we operate;
−Removed: • changes in market heat rates in the CAISO, ERCOT, ISO-NE, MISO, NYISO and PJM electricity markets;
−Removed: • our ability to effectively hedge against unfavorable commodity prices, including the price of natural gas, market heat rates and interest rates;
−Removed: • population growth or decline, or changes in market supply or demand and demographic patterns;
−Removed: • our ability to mitigate forced outage risk, including managing risk associated with Capacity Performance in PJM and performance incentives in ISO-NE;
−Removed: • efforts to identify opportunities to reduce congestion and improve busbar power prices;
−Removed: • access to adequate transmission facilities to meet changing demands;
−Removed: • changes in interest rates, commodity prices, rates of inflation or foreign exchange rates;
−Removed: • changes in operating expenses, liquidity needs and capital expenditures;
−Removed: • commercial bank market and capital market conditions and the potential impact of disruptions in U.S.
−Removed: and international credit markets;
−Removed: • access to capital, the attractiveness of the cost and other terms of such capital and the success of financing and refinancing efforts, including availability of funds in capital markets;
−Removed: • our ability to maintain prudent financial leverage and achieve our capital allocation, performance, and cost-saving initiatives and objectives;
−Removed: • our ability to generate sufficient cash flow to make principal and interest payments in respect of, or refinance, our debt obligations;
−Removed: • our expectation that we will continue to pay (i) a consistent aggregate cash dividend amount to common stockholders on a quarterly basis and (ii) the applicable semiannual cash dividend to the Series A Preferred Stock and Series B Preferred Stock stockholders, respectively;
−Removed: • our expectation that we will continue to make repurchases under, and the possibility that we may fail to realize the anticipated benefits of, our share repurchase program, and the possibility that the program may be suspended, discontinued or not completed prior to its termination;
−Removed: • our ability to implement and successfully execute upon our strategic and growth initiatives, including the completion and integration of mergers, acquisitions and/or joint venture activity, the identification and completion of sales and divestitures activity, and the completion and commercialization of our other business development and construction projects;
−Removed: • competition for new energy development and other business opportunities;
−Removed: • inability of various counterparties to meet their obligations with respect to our financial instruments;
−Removed: • counterparties' collateral demands and other factors affecting our liquidity position and financial condition;
−Removed: • changes in technology (including large-scale electricity storage) used by and services offered by us;
−Removed: • changes in electricity transmission that allow additional power generation to compete with our generation assets;
−Removed: • our ability to attract and retain qualified employees;
−Removed: • significant changes in our relationship with our employees, including the availability of qualified personnel, and the potential adverse effects if labor disputes or grievances were to occur or changes in laws or regulations relating to independent contractor status;
−Removed: • changes in assumptions used to estimate costs of providing employee benefits, including medical and dental benefits, pension and OPEB, and future funding requirements related thereto, including joint and several liability exposure under ERISA;
−Removed: • hazards customary to the industry and the possibility that we may not have adequate insurance to cover losses resulting from such hazards;
−Removed: • the impact of our obligations under the TRA;
−Removed: • our ability to optimize our assets through targeted investment in cost-effective technology enhancements and operations performance initiatives;
−Removed: • our ability to effectively and efficiently plan, prepare for and execute expected asset retirements and reclamation obligations and the impacts thereof;
−Removed: • our ability to successfully complete the integration of businesses acquired by Vistra and our ability to successfully capture the full amount of projected operational and financial synergies relating to such transactions;
−Removed: • actions by credit rating agencies.
−Removed: Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events or circumstances.
−Removed: New factors emerge from time to time, and it is not possible for us to predict them.
−Removed: In addition, we may be unable to assess the impact of any such event or condition or the extent to which any such event or condition, or combination of events or conditions, may cause results to differ materially from those contained in or implied by any forward-looking statement.
−Removed: As such, you should not unduly rely on such forward-looking statements.
−Removed: INDUSTRY AND MARKET INFORMATION
−Removed: Certain industry and market data and other statistical information used throughout this report are based on independent industry publications, government publications, reports by market research firms or other published independent sources, including certain data published by CAISO, ERCOT, ISO-NE, MISO, NYISO, PJM, the environmental regulatory bodies of states in which we operate and NYMEX.
−Removed: We did not commission any of these publications, reports or other sources.
−Removed: Some data is also based on good faith estimates, which are derived from our review of internal surveys, as well as the independent sources listed above.
−Removed: Industry publications, reports and other sources generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information.
−Removed: While we believe that each of these studies, publications, reports and other sources is reliable, we have not independently investigated or verified the information contained or referred to therein and make no representation as to the accuracy or completeness of such information.
−Removed: Forecasts are particularly likely to be inaccurate, especially over long periods of time, and we do not know what assumptions were used in preparing such forecasts.
−Removed: Statements regarding industry and market data and other statistical information used throughout this report involve risks and uncertainties and are subject to change based on various factors.
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.