NRG Energy Annual Report 2019

Plain-text annual report

Form 10-KNRG Energy, Inc. | 2019 Form 10-KNRG Energy, Inc. 804 Carnegie Center Princeton, NJ 08540-6213t: 609.524.4500 f: 609.524.4501nrg.comNRG and the plus signs are registered servicemarks of NRG Energy, Inc. NRG is a registered trademark of NRG Energy, Inc. © 2020 NRG Energy, Inc. All rights reserved. 421558534910 Louisiana St. Houston, TX 77002-6929t: 713.537.3000Stockholder information STOCK TRANSFER AGENT AND REGISTRAR Shareholder correspondence should be mailed to: Computershare P.O. BOX 505000 Louisville, KY 40233-5000STOCKHOLDER INQUIRIES Overnight correspondence should be sent to: Computershare 462 South 4th Street, Suite 1600 Louisville, KY 40202 1.866.214.2213Email: shareholder@computershare.comOnline inquires: https://www-us.computershare.com/investor/ContactWebsite: www.computershare.com/investor Send certificates for transfer and address changes to: Computershare P.O. BOX 505000 Louisville, KY 40233-5000STOCK LISTING NRG’s common stock is listed on the New York Stock Exchange under the ticker symbol NRG.FINANCIAL INFORMATION NRG’s Annual Report on Form 10-K, Proxy Statement and other SEC Filings are available at www.nrg.com under the Investors section. UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-K☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year ended December 31, 2019.☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition period from to .Commission file No. 001-15891 NRG Energy, Inc.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction of incorporation or organization)41-1724239(I.R.S. Employer Identification No.)804 Carnegie Center , Princeton , New Jersey(Address of principal executive offices)08540(Zip Code)(609) 524-4500(Registrant's telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Title of Each ClassTrading Symbol(s)Name of Exchange on Which RegisteredCommon Stock, par value $0.01NRGNew York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:NoneIndicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule 405oftheSecuritiesAct. Yes☒No☐IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection 13orSection 15(d)oftheExchangeAct. Yes☐No ☒Indicatebycheckmarkwhethertheregistrant(1) hasfiledallreportstobefiledbySection 13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12 months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2) hasbeensubjecttosuchfilingrequirementsforthepast90 days. Yes☒No☐IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule 405ofRegulation S-T(§232.405ofthischapter)duringthepreceding12 months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles). Yes☒No☐Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oremerginggrowthcompany.Seethedefinitionsof"largeacceleratedfiler,""acceleratedfiler,""smallerreportingcompany,"and"emerginggrowthcompany"inRule 12b-2oftheExchangeAct.Large Accelerated Filer☒Acceleratedfiler☐Non-acceleratedfiler☐Smaller reporting company ☐Emerging growth company ☐Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwithanyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.☐Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule 12b-2oftheAct). Yes☐No☒Asofthelastbusinessdayofthemostrecentlycompletedsecondfiscalquarter,theaggregatemarketvalueofthecommonstockoftheregistrantheldbynon-affiliateswasapproximately$7,893,678,070basedontheclosingsalepriceof$35.12asreportedontheNewYorkStockExchange.Indicatethenumberofsharesoutstandingofeachoftheregistrant'sclassesofcommonstockasofthelatestpracticabledate.ClassOutstanding at February 27, 2020Common Stock, par value $0.01 per share247,656,747Documents Incorporated by Reference:Portions of the Registrant's definitive Proxy Statement relating to its 2020 Annual Meeting of Stockholdersare incorporated by reference into Part III of this Annual Report on Form 10-K1TABLE OF CONTENTSGLOSSARY OF TERMS3PART I8Item 1 — Business8Item 1A — Risk Factors23Item 1B — Unresolved Staff Comments38Item 2 — Properties39Item 3 — Legal Proceedings40Item 4 — Mine Safety Disclosures40PART II41Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities41Item 6 — Selected Financial Data43Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations45Item 7A — Quantitative and Qualitative Disclosures About Market Risk74Item 8 — Financial Statements and Supplementary Data76Item 9 — Changes in and Disagreements With Accountants on Accounting and Financial Disclosure77Item 9A — Controls and Procedures77Item 9B — Other Information80PART III80Item 10 — Directors, Executive Officers and Corporate Governance80Item 11 — Executive Compensation83Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters83Item 13 — Certain Relationships and Related Transactions, and Director Independence83Item 14 — Principal Accounting Fees and Services84PART IV85Item 15 — Exhibits, Financial Statement Schedules85Item 16 — Form 10-K Summary181EXHIBIT INDEX1782Glossary of Terms Whenthefollowingtermsandabbreviationsappearinthetextofthisreport,theyhavethemeaningsindicatedbelow:2023 Term Loan FacilityThe Company's $1.7 billion (as of December 31, 2018) term loan facility due 2023, a component of the Senior Credit Facility, which was repaid during the second quarter of 2019Adjusted EBITDAAdjusted earnings before interest, taxes, depreciation and amortizationAROAsset Retirement ObligationASCThe FASB Accounting Standards Codification, which the FASB established as the source of authoritative GAAPASUAccounting Standards Updates – updates to the ASCAverage realized pricesVolume-weighted average power prices, net of average fuel costs and reflecting the impact of settled hedgesBankruptcy CodeChapter 11 of Title 11 of the U.S. Bankruptcy CodeBankruptcy CourtUnited States Bankruptcy Court for the Southern District of Texas, Houston DivisionBaseloadUnits expected to satisfy minimum baseload requirements of the system and produce electricity at an essentially constant rate and run continuouslyBETMBoston Energy Trading and Marketing LLCBTUBritish Thermal UnitBusiness SolutionsNRG's business solutions group, which includes demand response, commodity sales, energy efficiency and energy management servicesCAAClean Air ActCAISOCalifornia Independent System OperatorCarlsbadCarlsbad Energy Center, a 528 MW natural gas-fired project located in Carlsbad, CACCFCarbon Capture FacilityCCRCoal Combustion ResidualsCDDCooling Degree DayCDWRCalifornia Department of Water ResourcesCFTCU.S. Commodity Futures Trading CommissionChapter 11 CasesVoluntary cases commenced by the GenOn Entities under the Bankruptcy Code in the Bankruptcy CourtC&ICommercial, industrial and governmental/institutionalCESClean Energy StandardClecoCleco Corporate Holdings LLCCO2Carbon DioxideCO2eCarbon Dioxide EquivalentsComEdCommonwealth EdisonCompanyNRG Energy, Inc.Convertible Senior NotesAs of December 31, 2019, consists of NRG’s $575 million unsecured 2.75% Convertible Senior Notes due 2048CottonwoodCottonwood Generating Station, a 1,153 MW natural gas-fueled plantCPPClean Power PlanCPUCCalifornia Public Utilities CommissionCWAClean Water ActD.C. CircuitU.S. Court of Appeals for the District of Columbia CircuitDistributed SolarSolar power projects that primarily sell power to customers for usage on site, or are interconnected to sell power into a local distribution gridDNRECDelaware Department of Natural Resources and Environmental ControlDSIDry Sorbent Injection DSUDeferred Stock Unit3Economic gross marginSum of energy revenue, capacity revenue, retail revenue and other revenue, less cost of fuels and other cost of salesEGUElectric Generating UnitEmaniEuropean Mutual Association for Nuclear InsuranceEMEEdison Mission EnergyEMAACEastern Mid-Atlantic Area CouncilEnergy Plus HoldingsEnergy Plus Holdings LLCEPAU.S. Environmental Protection AgencyEPCEngineering, Procurement and ConstructionERCOTElectric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within TexasESCOEnergy Service CompaniesESPElectrostatic PrecipitatorESPPNRG Energy, Inc. Amended and Restated Employee Stock Purchase PlanESPSExisting Source Performance StandardsExchange ActThe Securities Exchange Act of 1934, as amendedFASBFinancial Accounting Standards BoardFERCFederal Energy Regulatory CommissionFGDFlue gas desulfurizationFPAFederal Power ActFTRsFinancial Transmission RightsGAAPGenerally accepted accounting principles in the U.S.GenConnGenConn Energy LLCGenOnGenOn Energy, Inc.GenOn Americas GenerationGenOn Americas Generation, LLCGenOn EntitiesGenOn and certain of its wholly owned subsidiaries, including GenOn Americas Generation, that filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court on June 14, 2017GenOn Mid-AtlanticGenOn Mid-Atlantic, LLC and, except where the context indicates otherwise, its subsidiaries, which include the coal generation units at two generating facilities under operating leasesGHGGreenhouse GasGIPGlobal Infrastructure PartnersGreen Mountain EnergyGreen Mountain Energy CompanyGuamNRG's wholly owned subsidiary NRG Solar Guam, LLC that was sold during the first quarter of 2019GWGigawattGWhGigawatt HourHAPHazardous Air PollutantHDDHeating Degree DayHeat RateA measure of thermal efficiency computed by dividing the total BTU content of the fuel burned by the resulting kWhs generated. Heat rates can be expressed as either gross or net heat rates, depending whether the electricity output measured is gross or net generation and is generally expressed as BTU per net kWhHLBVHypothetical Liquidation at Book ValueHLWHigh-level radioactive wasteIPPNYIndependent Power Producers of New YorkISOIndependent System Operator, also referred to as RTOsISO-NEISO New England Inc.ITCInvestment Tax Credit4kWhKilowatt-hourLaGenLouisiana Generating LLCLIBORLondon Inter-Bank Offered RateLSELoad Serving EntitiesLTIPsCollectively, the NRG LTIP and the NRG GenOn LTIPLTSALong-Term Service AgreementMass MarketResidential and small commercial customersMATSMercury and Air Toxics Standards promulgated by the EPAMDthThousand DekathermsMergerThe merger completed on December 14, 2012 by NRG and GenOn pursuant to the Merger AgreementMidwest GenerationMidwest Generation, LLCMISOMidcontinent Independent System Operator, Inc.MMBtuMillion British Thermal UnitsMMDthMillion DekathermsMSUMarket Stock UnitMWMegawattsMWhSaleable megawatt hour net of internal/parasitic load megawatt-hourNAAQSNational Ambient Air Quality StandardsNEILNuclear Electric Insurance LimitedNEPOOLNew England Power PoolNERCNorth American Electric Reliability CorporationNet Capacity FactorThe net amount of electricity that a generating unit produces over a period of time divided by the net amount of electricity it could have produced if it had run at full power over that time period. The net amount of electricity produced is the total amount of electricity generated minus the amount of electricity used during generationNet ExposureCounterparty credit exposure to NRG, net of collateralNet GenerationThe net amount of electricity produced, expressed in kWhs or MWhs, that is the total amount of electricity generated (gross) minus the amount of electricity used during generationNJBPUNew Jersey Board of Public UtilitiesNOLNet Operating LossNOxNitrogen OxidesNPDESNational Pollutant Discharge Elimination SystemNPNSNormal Purchase Normal SaleNQSONon-Qualified Stock OptionNRCU.S. Nuclear Regulatory CommissionNRGNRG Energy, Inc.NRG GenOn LTIPNRG 2010 Stock Plan for GenOn Employees (formerly the GenOn Energy, Inc. 2010 Omnibus Incentive Plan, which was assumed by NRG in connection with the Merger)NRG LTIPNRG Energy, Inc. Amended and Restated Long-Term Incentive PlanNRG Yield, Inc.NRG Yield, Inc., which changed it's name to Clearway energy, Inc. following the sale by NRG or NRG Yield and the Renewables Platform to GIPNuclear Decommissioning Trust FundNRG's nuclear decommissioning trust fund assets, which are for the Company's portion of the decommissioning of the STP, units 1 & 2Nuclear Waste Policy ActU.S. Nuclear Waste Policy Act of 1982NYISONew York Independent System OperatorNYMEXNew York Mercantile ExchangeNYSDECNew York State Department of Environmental ConservationNYSPSCNew York State Public Service Commission5OCI/OCLOther Comprehensive Income/(Loss)ORDCOperating Reserve Demand Curve PeakingUnits expected to satisfy demand requirements during the periods of greatest or peak load on the systemPERPeak Energy RentPG&EPG&E Corporation (NYSE: PCG) and its primary operating subsidiary, Pacific Gas and Electric CompanyPipelineProjects that range from identified lead to shortlisted with an offtake, and represents a lower level of execution certaintyPJMPJM Interconnection, LLCPM2.5Particulate Matter that has a diameter of less than 2.5 micrometersPPAPower Purchase AgreementPPMParts per millionPSUPerformance Stock UnitPTCProduction Tax CreditPUCTPublic Utility Commission of TexasRCEResidential Customer Equivalent, a single RCE represents 10,000 kWh of electricityRCRAResource Conservation and Recovery Act of 1976RECsRenewable Energy CertificatesReliant EnergyReliant Energy Retail Services, LLCREMANRG REMA LLC, which leases a 100% interest in the Shawville generating facility and 16.7% and 16.5% interests in the Keystone and Conemaugh generating facilities, respectivelyRenewablesConsist of the following projects retained by NRG: Agua, Ivanpah, NFL stadiumsRenewables PlatformThe renewable operating and development platform sold to GIP with NRG's interest in NRG Yield.Restructuring Support AgreementRestructuring Support and Lock-Up Agreement, dated as of June 12, 2017 and as amended on October 2, 2017, by and among GenOn Energy, Inc., GenOn Americas Generation, LLC, and subsidiaries signatory thereto, NRG Energy, Inc. and the noteholders signatory theretoRetail Reporting segment that includes NRG's retail residential, commercial and industrial businessesRevolving Credit FacilityThe Company's $2.6 billion revolving credit facility, a component of the Senior Credit Facility, due 2024 was amended on May 28, 2019RGGIRegional Greenhouse Gas InitiativeRMRReliability Must-RunROFORight of First OfferROFO AgreementSecond Amended and Restated Right of First Offer Agreement by and between NRG Energy, Inc. and NRG Yield, Inc.RPMReliability Pricing ModelRPSRenewable Portfolio StandardsRPSURelative Performance Stock UnitRSURestricted Stock UnitRTORegional Transmission OrganizationSCESouthern California Edison CompanySCRSelective Catalytic Reduction Control SystemSDG&ESan Diego Gas & ElectricSECU.S. Securities and Exchange CommissionSecurities ActThe Securities Act of 1933, as amendedSenior Credit FacilityNRG's senior secured credit facility, comprised of the Revolving Credit Facility and the 2023 Term Loan Facility. The 2023 Term Loan Facility was repaid in the second quarter of 20196Senior NotesAs of December 31, 2019, NRG's $3.8 billion outstanding unsecured senior notes consisting of $1.0 billion of the 7.25% senior notes due 2026, $1.23 billion of the 6.625% senior notes due 2027, $821 million of 5.75% senior notes due 2028 and $733 million of the 5.25% senior notes due 2029Senior Secured NotesAs of December 31, 2019, NRG’s $1.1 billion outstanding Senior Secured First Lien Notes consists of $600 million of the 3.75% Senior Secured First Lien Notes due 2024 and $500 million of the 4.45% Senior Secured First Lien Notes due 2029Services AgreementNRG provided GenOn with various management, personnel and other services, which include human resources, regulatory and public affairs, accounting, tax, legal, information systems, treasury, risk management, commercial operations, and asset management, as set forth in the services agreement with GenOnSettlement AgreementA settlement agreement and any other documents necessary to effectuate the settlement among NRG, GenOn, and certain holders of senior unsecured notes of GenOn Americas Generations and GenOn, and certain of GenOn's direct and indirect subsidiariesSNFSpent Nuclear FuelSO2Sulfur DioxideSouth Central PortfolioNRG's South Central Portfolio, which owned and operated a portfolio of generation assets consisting of Bayou Cove, Big Cajun-I, Big Cajun-II, Cottonwood and Sterlington, was sold on February 4, 2019. NRG is leasing back the Cottonwood facility through May 2025SPPSolar Power PartnersS&PStandard & Poor'sSTPSouth Texas Project — nuclear generating facility located near Bay City, Texas in which NRG owns a 44% interestSTPNOCSouth Texas Project Nuclear Operating CompanyTax ActThe Tax Cuts and Jobs Act of 2017Texas GencoTexas Genco LLCTSATransportation Services AgreementTSRTotal Shareholder ReturnTWCCTexas Westmoreland Coal Co.TWhTerawatt HourUPMCUniversity of Pittsburgh Medical CenterU.S.United States of AmericaU.S. DOEU.S. Department of EnergyUtility-Scale SolarSolar power projects, typically 20 MW or greater in size (on an alternating current basis), that are interconnected into the transmission or distribution grid to sell power at a wholesale levelVaRValue at RiskVIEVariable Interest EntityWECCWestern Electricity Coordinating CouncilZECsZero Emissions Credits7PART IItem 1 — BusinessGeneralNRGEnergy,Inc.,orNRGortheCompany,isanintegratedpowercompanybuiltondynamicretailbrandswithdiversegenerationassets.NRGbringsthepowerofenergytocustomersbyproducingandsellingelectricityandrelatedproductsandservicesinmajorcompetitivepowermarketsintheU.S.andCanadainamannerthatdeliversvaluetoallofNRG'sstakeholders.NRGisacustomer-drivenbusinessfocusedonperfectingtheintegratedmodelbybalancingretailloadwithgenerationsupplywithinitsderegulatedmarkets.TheCompanysellsenergy,services,andinnovative,sustainableproductsandservicesdirectlytoretailcustomersunderthebrandnamesNRG,Reliant,GreenMountainEnergy,Stream,andXOOMEnergy,aswellasotherbrandnamesownedbyNRG,supportedbyapproximately23,000MWofgenerationasofDecember31,2019.NRGwasincorporatedasaDelawarecorporationonMay29,1992.NRGdivestednon-corebusinessesincluding,amongothers:(i)NRGYield,Inc.andtheRenewablesPlatformduring2018;and(ii)theSouthCentralPortfolioduring2019.TheCompanypreviouslyownedGenOnEnergy,Inc.whichfiledforbankruptcyonJune14,2017.Asaresultofthebankruptcyfiling,NRGdetermineditnolongercontrolledGenOnanddeconsolidatedGenOnanditssubsidiariesforfinancialreportingpurposes.OnDecember14,2018,GenOnemergedfrombankruptcyasastandalonecompanynolongerownedbyNRG.Since2017,theCompanyhasbeenexecutingitsthree-yearTransformationPlan,whichincludestargetsrelatedtooperationsandcostexcellence,portfoliooptimization,andcapitalstructureandallocationenhancement.SeeItem7–Management’sDiscussionandAnalysisofFinancialConditionsandResultsofOperationsforfurtherdiscussion.StrategyNRG'sstrategyistomaximizestockholdervaluethroughthesafeproductionandsaleofreliablepowertoitscustomersinthemarketsitserves,whilepositioningtheCompanytoprovideinnovativesolutionstotheend-useenergycustomer.ThisstrategyisintendedtoenabletheCompanytooptimizeitsintegratedmodeltogeneratestableandpredictablecashflow,significantlystrengthenearningsandcostcompetitiveness,andlowerriskandvolatility.ToeffectuatetheCompany’sstrategy,NRGisfocusedon:(i)servingtheenergyneedsofend-useresidential,commercialandindustrialcustomersincompetitivemarketsthroughmultiplebrandsandchannelswithavarietyofretailenergyproductsandservicesdifferentiatedbyinnovativefeatures,premiumservice,sustainability,andloyalty/affinityprograms;(ii)offeringinnovativeandrenewableenergysolutionsforcustomers;(iii)excellenceinoperatingperformanceofitsexistingassets;(iv)optimalhedgingofNRG'snetretailandgenerationpositions;and(v)engagingindisciplinedandtransparentcapitalallocation.SustainabilityisanintegralpieceofNRG'sstrategyandtiesdirectlytobusinesssuccess,reducedrisksandbrandvalue.OnSeptember24,2019,NRGannouncedtheaccelerationofitsscience-basedGHGemissionsreductiongoalstoalignwithprevailingclimatescience,limitingwarmingtoa1.5degreeCelsiusscenario.UnderitsnewGHGemissionsreductiontimeline,NRGistargetingtoachievea50%reductionby2025andnet-zeroemissionsby2050,froma2014baseline.Business OverviewTheCompany’scorebusinessisthesaleofelectricityandnaturalgastoresidential,commercialandindustrialcustomers,supportedbytheCompany'swholesalegeneration.Beginningin2020,theCompanyismanagingitsintegratedmodelbasedonthecombinedresultsoftheretailandwholesalegenerationbusinesses.TheCompany’sintegratedmodelconsistsofthreecorefunctions:CustomerOperations,MarketOperationsandPlantOperations,whichdirectlysupporteachotherineachgeographicregion.TheCompany’sintegratedmodelprovidestheadvantageofbeingabletosupplytheCompany’sretailcustomerswithelectricityfromtheCompany’sassets,whichreducestheneedtosellpowertoandbuypowerfromotherinstitutionsandintermediaries,resultinginstableearningsandcashflows,lowertransactioncostsandlesscreditexposure.Theintegratedmodelalsoresultsinareductioninactualandcontingentcollateralthroughoffsettingtransactions,therebyminimizingtransactionswiththirdparties.NRGprovidesenergyandrelatedservicestoresidential,industrialandcommercialcustomersateitherfixed,indexedorvariablepricesthroughvariousbrandsandsaleschannelsacrosstheU.S.andCanada.Residentialandsmallcommercial(Massmarket)customerstypicallycontractfortermsrangingfromonemonthtofiveyears,whileindustrialandlargecommercial(C&I)contractsareoftenbetweenoneyearandfiveyearsinlength.NRGsoldapproximately69TWhsofelectricityand23MMDthofnaturalgasin2019andservedapproximately3.7millioncustomersasofDecember31,2019,makingitoneofthelargestcompetitiveenergyretailersintheU.S.Inanygivenyear,thequantityofTWhsandMMDthsoldcanbeaffectedbyweather,economicconditionsandcompetition.Asoftheendof2019,NRGhadrecurringelectricityand/ornaturalgassalesin819U.S.states,theDistrictofColumbia,and2provincesinCanada.NRG'sretailbrands,collectively,havethelargestshareofcompetitivelyservedresidentialelectriccustomersinTexasandnationwide.ThevastmajorityoftheCompany’sbusinessisinTexas,wheretheCompany’sgenerationsupplyisfullyintegratedwithitsretailload.IntheEast,theCompany’sretailloadismoredispersethroughouttheregionandnotfullyintegratedwiththeCompany’sgenerationsupplyduetothelocationofitspowerplantsinthatregion.IntheWest,theCompany’sbusinessisprimarilygenerationsupply.ThechartsbelowillustrateNRG'sU.S.retailcapabilities,powergenerationandnetcapacityasofandfortheyearendedDecember 31,2019:CustomerOperationsCustomerOperationsisresponsibleforgrowingandretainingthecustomerbaseanddeliveringanoutstandingcustomerexperience.ThisincludesacquisitionandretentionofallofNRG’sresidential,smallcommercial,governmentandcommercial&industrialcustomers.NRGemploysamulti-brandstrategythatleveragesawidearrayofsalesandpartnershipchannels,directface-to-facesaleschannels,callcenters,websites,andbrokers.Go-to-marketactivitiesincludemarketstrategyplanninganddevelopment,productinnovation,offerdesign,campaignexecution,marketingandcreativeservices,andselling.Customerportfoliomaintenanceandretentionactivitiesincludefulfillment,billing,paymentprocessing,collections,customerservice,issueresolution,andcontractrenewals.ThroughoutallCustomerOperationsactivities,thecustomerexperienceiskeptattheforefronttoinformdecision-makingandoptimizeretention,whilecreatingsupportersandadvocatesforNRG’sbrandsinthemarket.ProductOfferingsNRGsellsavarietyofproductstoresidentialandsmallcommercialcustomersincludingretailelectricityandenergymanagement,naturalgas,homesecurity,lineandsurgeprotectionproducts,HVACinstallation,repairandmaintenance,carbonoffsets,back-uppowerstations,portablepower,portablesolarandportablelighting.Massmarketcustomersmakepurchasedecisionsbasedonavarietyoffactors,includingprice,incentive,customerservice,brand,innovativeoffers/featuresandreferralsfromfriendsandfamily.Throughitsbroadrangeofserviceofferingsandvaluepropositions,NRGisabletoattract,retain,andincreasethevalueofitscustomerrelationships.NRG'sbrandsarerecognizedforexemplarycustomerservice,innovativesmartenergyandtechnologyproductofferings,andenvironmentally-friendlysolutions.TheCompanyalsoprovidesretailservices,includingdemandresponse,commoditysales,energyefficiencyandenergymanagementsolutionstoC&Icustomers.TheCompanyisanintegratedproviderofsupplyanddistributedenergyresourcesandfocusesondistributedproductsandservicesasbusinessesseekgreaterreliability,cleanerpowerand/orotherbenefitsthattheycannotobtainfromthegrid.Thesesolutionsincludesystempower,distributedgeneration,renewableproducts,carbonmanagementandspecialtyservices,backupgeneration,storageanddistributedsolar,demandresponse,andenergyefficiencyandadvisoryservices.Inprovidingon-siteenergysolutions,theCompanyoftenbenefitsfromitsabilitytosupplyenergyproductsfromitswholesalegenerationportfoliotoC&Icustomers.In2019,theCompanysoldapproximately20TWhsofelectricitytoC&Icustomersandmanagedapproximately2,000MWsofdemandresponsepositionsacrossitsportfolio.9MarketOperationsMarketOperationshastwoprimaryobjectives:(i)tosupplyloadtoourcustomersinthemostcost-efficientmanner;and(ii)tomaximizethevalueofanyexcessgenerationaftersatisfyingtheCompany’scustomerloadrequirements.Theseobjectivesareintendedtoreducesupplycostsandmaximizeearningswithpredictablecashflows.Tomeettheseobjectives,NRGentersintosupply,powersalesandhedgingarrangementsviaawiderangeofproductsandcontracts,including(i)renewablePPAs,(ii)capacityauctionsandothercontractedrevenuesources,(iii)fuelsupplyandtransportationcontracts,and(iv)naturalgasderivativeinstrumentsandotherfinancialinstruments.Inaddition,becausechangesinpowerpricesinthemarketswhereNRGoperatesaregenerallycorrelatedtochangesinnaturalgasprices,NRGuseshedgingstrategiesthatmayincludepowerandnaturalgasforwardpurchasesandsalescontractstomanagethecommoditypricerisk.RenewablePPAsDuring2019,NRGbeganprocuringmidtolong-termrenewablegenerationthroughpowerpurchaseagreements.AsofDecember31,2019,NRGhasenteredintoPPAsinTexastotalingapproximately1,600MWswiththird-partyprojectdevelopersandothercounterparties.Theaveragetenoroftheseagreementsistenyears.TheCompanyexpectstocontinueevaluatingandexecutingagreements,suchasthese,thatsupporttheneedsofthebusiness.CapacityandOtherContractedRevenueSourcesNRG'srevenuesandcashflows,primarilyintheEastandWest,benefitfromcapacity/demandpaymentsandothercontractedrevenuesources,originatingfrommarketclearingcapacityprices,resourceadequacycontracts,tollingarrangementsandotherlong-termcontractualarrangements.TheCompany'slargestsourcesofcapacityrevenuesarecapacityauctionsinPJM,ISO-NEandNYISO.BothPJMandISO-NEoperateapay-for-performancemodelwherecapacitypaymentsaremodifiedbasedonreal-timeperformanceandNRG'sactualrevenueswillbethecombinationofrevenuesbasedontheclearedauctionMWsplusthenetofanyover-andunder-performanceofNRG'srespectivegenerationassets.TheCompanyprimarilysellsphysicalcapacityforwardthroughbilateralcontractsforourNewYorkassets.TotheextentNRGisnotabletoenterintoaphysicalbilateralcontract,NRGwillselltheremainingcapacityintotheNYISOsixmonthstrip,monthlyorspotauctions◦2023/2024ISO-NEAuctionResults-OnFebruary5,2020ISO-NEannouncedtheresultsofits2023/2024forwardcapacityauction.NRGcleared784MWofcapacity.NRG'sexpectedcapacityrevenuesfromtheauctionforthe2023/2024deliveryyearareapproximately$18million.◦PJMAuctionResults—PJMannouncedduring2019itwassuspendingallauctiondeadlinesrelatingtoBaseResidualAuctionsfor2022/2023and2023/2024deliveryyear,consistentwithFERC’sJuly25,2019Order.RefertotheCapacityMarketReformsFilingdiscussionwithintheRegionalRegulatoryDevelopmentssectionbelowforfurtherdiscussion.InCalifornia,thereisaresourceadequacyrequirementthatisprimarilysatisfiedthroughbilateralcontracts.Suchbilateralcontractsaretypicallyshort-termresourceadequacycontracts.Whenbilateralcontractingdoesnotsatisfytheresourceadequacyneed,suchshortfallscanbeaddressedthroughprocurementtoolsadministeredbytheCAISO,includingthecapacityprocurementmechanismorreliabilitymust-runcontracts.FuelSupplyandTransportationNRG'sfuelrequirementsconsistofvariousformsoffossilfuelandnuclearfuel.Thepricesoffossilfuelscanbevolatile.TheCompanyobtainsitsfossilfuelsfrommultiplesuppliersandthroughmultipletransporters.Althoughavailabilityisgenerallynotanissue,localizedshortages,transportationavailability,delaysarisingfromextremeweatherconditionsandsupplierfinancialstabilityissuescananddooccur.TheprecedingfactorsrelatedtothesourcesandavailabilityofrawmaterialsarefairlyuniformacrosstheCompany'sbusinessandfuelproductsused.NRG'sprimaryfuelrequirementsconsistofthefollowing:NaturalGas — NRGoperatesafleetofmid-meritandpeakingnaturalgasplantsacrossallitsU.S.wholesaleregions.Fuelneedsaremanagedonaspotbasis,especiallyforpeakingassets,astheCompanydoesnotbelieveitisprudenttoforwardpurchasenaturalgasforthesetypesofunitsasthedispatchishighlyunpredictable.TheCompanycontractsfornaturalgasstorageservices,aswellasnaturalgastransportationservicestodelivernaturalgaswhenneeded.10Coal — TheCompanybelievesitisadequatelyhedged,usingforwardcoalsupplyagreements,foritsdomesticcoalconsumptionfor2020.NRGactivelymanagesitscoalrequirementsbasedonforecastedgeneration,marketvolatilityanditsinventoryonsite.AsofDecember 31,2019,NRGhadpurchasedforwardcontractstoprovidefuelforapproximately58%oftheCompany'sexpectedrequirementsfor2020and2021perthetablebelow.NRGpurchasedapproximately17milliontonsofcoalin2019,almostallofwhichwasPowderRiverBasincoal.Forfueltransport,NRGhasenteredintovariousrailtransportationandrailcarleaseagreementswithvaryingtenuresthatwillprovideformostoftheCompany'stransportationrequirementsofPowderRiverBasincoalforthenext2years.ThefollowingtableshowsthepercentageoftheCompany'scoalrequirementsfor2020and2021thathavebeenpurchasedforwardasofDecember 31,2019:Percentage ofCompany'sRequirement 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100%2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16%NuclearFuel — STP'sownerssatisfytheirfuelsupplyrequirementsby:(i) acquiringuraniumconcentratesandcontractingforconversionoftheuraniumconcentratesintouraniumhexafluoride;(ii) contractingforenrichmentofuraniumhexafluoride;and(iii) contractingforfabricationofnuclearfuelassemblies.ThroughitsproportionateparticipationinSTPNOC,whichistheNRC-licensedoperatorofSTPthatisresponsibleforallaspectsoffuelprocurement,NRGispartytoanumberoflong-termforwardpurchasecontractswithmanyoftheworld'slargestsupplierscoveringSTP'srequirementsforuraniumconcentrateswithonlyapproximately25%ofSTP'srequirementsoutstandingforthedurationoftheoriginaloperatinglicense.Similarly,NRGispartytolong-termcontractstoprocureSTP'srequirementsforconversionandenrichmentservicesandfuelfabricationforthelifeoftheoperatinglicense.Sincetheoperatinglicensewasrenewedforanother20yearsin2017,STPNOChasbeguntoreviewasecondphaseoffuelpurchasing.NaturalGasDerivativeInstrumentsandOtherFinancialInstrumentsNRGalsotradeselectricpower,naturalgasandrelatedcommodityandfinancialproducts,includingforwards,futures,optionsandswaps.PlantOperationsTheCompanyownsadiversifiedpowergenerationportfoliowithapproximately23,000MWoffossilfuel,nuclearandrenewablegenerationcapacityat32plantsasofDecember 31,2019.TheCompany'spowergenerationassetsarediversifiedbyfuel-type,dispatchlevelandregion,whichhelpsmitigatetherisksassociatedwithfuelpricevolatilityandmarketdemandcycles.NRGcontinuallyevaluatesitsgenerationportfoliotofocusonassetoptimizationopportunitiesandthelocationalvalueofitsgenerationassetsineachofthemarketswheretheCompanyparticipates,aswellasopportunitiesforthedevelopmentofnewgeneration.ThefollowingtablesummarizesNRG'sgenerationportfolioasofDecember 31,2019:(In MW)(a)TypeTexasEast/West(b)(c)Other(d)TotalNatural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,7594,994—9,753Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,1743,745—7,919Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —3,600—3,600Nuclear . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,126——1,126Utility Scale Solar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—321—321Battery Storage & Distributed Solar . . . . . . . . . . . . . . . . . . . . . . .2—6062Total generation capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,06112,6606022,781(a)AllUtilityScaleSolarandDistributedSolarfacilitiesaredescribedinMWonanalternatingcurrentbasis.MWfiguresprovidedrepresentnominalsummernetMWcapacityofpowergeneratedasadjustedfortheCompany'sownedorleasedinterestexcludingcapacityfrominactive/mothballedunits(b)IncludestheremainingRenewablesgenerationassets(c)Includes1,153MWfortheCottonwoodfacilitythatwassoldtoClecoonFebruary4,2019,whichtheCompanyisleasinguntil2025(d)TheDistributedSolarfigureincludestheaggregateproductioncapacityofinstalledandactivatedresidentialsolarenergysystems11PlantOperationsisresponsibleforoperatingtheCompany'sgenerationfacilitiesatthehigheststandardsofsafetyandreliability,andincludes(i)operationsandmaintenance,(ii)assetmanagement,and(iii)development,engineeringandconstruction.Operations&MaintenanceNRGoperatesandmaintainsitsgenerationportfolio,aswellasapproximately8,100MWofadditionalcoalandnaturalgasgenerationcapacityat17plantsoperatedonbehalfofthirdpartiesasofDecember 31,2019usingprudentindustrypracticesforthesafe,reliableandeconomicgenerationofelectricityincompliancewithalllocal,stateandfederalrequirements.TheCompanyfollowsaconsistentsetofoperatingrequirements,includingasolidbaseoftraining,requiredadherencetospecificsafetyandenvironmentallimits,procedureandchecklistusage,andtheimplementationofcontinuousprocessimprovementthroughincidentinvestigations.NRGusesbest-in-classmaintenancepracticesforpreventive,predictive,andcorrectivemaintenanceplanning.TheCompany’sstrategicplanningprocessevaluatesequipmentcondition,performance,andobsolescencetosupportthedevelopmentofacomprehensiveworkscopeandscheduleforlong-termperformance.AssetManagementNRGmanagesallaspectsofitsgenerationportfoliotooptimizethelifecyclevalueoftheassets,consistentwiththeCompany’sgoals.TheCompanyevaluatescapitalprojectsrequiredforcontinuedoperationandstrategicenhancementoftheassets,providesqualityassuranceoncapitaloutlays,andassessestheimpactofrules,regulations,andlawsonbusinessprofitability.Inaddition,theCompanymanagesitslong-termcontracts,powerpurchaseagreements,andrealestateholdingsandprovidesthirdpartyassetmanagementservices.Development, Engineering & ConstructionNRGdevelops,engineersandexecutesmajorplantmodifications,“newbuild”generationandenergystorageprojectsthatenhancethevalueofitsgenerationportfolioandprovideoptionstomeetgenerationgrowthneedsintheretailmarketsweserve,inaccordancewiththeCompany’sstrategicgoals.Projectshaveincludedgas-firedgenerationdevelopmentandconstruction,coaltogasconversions,gridscaleenergystoragedevelopment,gridscalerenewableconstruction,andassetdemolition,remediationandreclamationwork.12Operational StatisticsThefollowingstatisticsrepresenttheCompany'sretailcustomercount,loadandcontractmix:Years ended December 31,201920182017Sales volumes (in GWh)Mass market electricity - Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38,95837,84636,169Mass market electricity - All other regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,9187,9686,221C&I electricity - Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,97620,19219,586C&I electricity - All other regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,214984814Total Load69,06666,99062,790Customer count - Electricity (in thousands) Mass market - Texas (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Average Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,3582,2092,177Ending Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,4502,3182,188 Mass market - All other regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Average Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 990790675Ending Retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,070903673(a) Includes customers of non-electric services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Customer count - Natural gas (in thousands)Average Retail Mass market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1226411Ending Retail Mass market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1589915Customer contract mixFixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67%65%70%Variable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24%25%22%Indexed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9%10%8%100%100%100%ThefollowingareindustrystatisticsfortheCompany'sfossilandnuclearplants,asdefinedbytheNERC,andaremorefullydescribedbelow:AnnualEquivalentAvailabilityFactor,orEAF — Measuresthepercentageofmaximumgenerationavailableovertimeasthefractionofnetmaximumgenerationthatcouldbeprovidedoveradefinedperiodoftimeafteralltypesofoutagesandderatings,includingseasonalderatings,aretakenintoaccount.NetHeatRate — ThenetheatraterepresentsthetotalamountoffuelinBTUrequiredtogenerateonenetkWhprovided.NetCapacityFactor— Thenetamountofelectricitythatageneratingunitproducesoveraperiodoftimedividedbythenetamountofelectricityitcouldhaveproducedifithadrunatfullpoweroverthattimeperiod.Thenetamountofelectricityproducedisthetotalamountofelectricitygeneratedminustheamountofelectricityusedduringgeneration.13ThetablesbelowpresenttheseperformancemetricsfortheCompany'sgenerationportfolio,includingleasedfacilitiesandthoseaccountedforthroughequitymethodinvestments,fortheyearsendedDecember 31,2019and2018:Year Ended December 31, 2019Fossil and Nuclear Plants (a)Net OwnedCapacity (MW)Net Generation (MWh) (In thousands)(a)Annual Equivalent Availability FactorAverage Net Heat Rate BTU/kWhNet CapacityFactorTexas . . . . . . . . . . . . . . . . . . . . 10,06137,99583.3%10,54243.2%East/West/Other (b)(c) . . . . . . . . 12,72016,37581.5%9,21516.2%Year Ended December 31, 2018Fossil and Nuclear Plants (a)Net OwnedCapacity (MW)Net Generation (MWh) (In thousands)(a)Annual Equivalent Availability FactorAverage Net Heat Rate BTU/kWhNet CapacityFactorTexas . . . . . . . . . . . . . . . . . . . . 10,16138,21485.2%10,42344.7%East/West/Other (b)(c) . . . . . . . . 13,09721,08982.8%9,71117.8%(a)Net generation excludes equity method investments(b)Includesthe1,263MWCottonwoodfacilitythatNRGleasedbackuponthesaleoftheSouthCentralPortfolioin2019.TheyearendedDecember31,2018alsoincludedSherbino,whichwassoldin2019(c)Includes the aggregate production capacity of installed and activated residential solar energy systemsThegenerationperformancebyregionforthethreeyearsendedDecember 31,2019,2018and2017isshownbelow:Net Generation (In thousands of MWh)201920182017TexasCoal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,98524,78124,757Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,3154,4154,428Nuclear (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9,6959,0189,509Total Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,99538,21438,694East/WestCoal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,4357,9658,403Oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209544319Gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11,71911,79710,949Renewables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127831,667Total East/West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16,37521,08921,338(a)Reflects the Company's undivided interest in total MWh generated by STPCompetitionWhiletherehasbeenconsolidationinthecompetitiveretailspaceoverthepastfewyears,thereisstillconsiderablecompetitionforcustomers.InTexas,thereishealthycompetitioninderegulatedareasandcustomerscanchooseprovidersbasedonthemostappealingoffers.OutsideofTexas,electricityretailerscompetewiththeincumbentutilities,inadditiontootherretailelectricproviders,whichcaninhibitcompetition,dependingonthemarketrulesofthestate.Mostmarketshavemorethan30retailerscompetingforcustomers,whileTexashasmorethan50retailers.Thereisahighdegreeoffragmentation,withbothlargeandsmallcompetitorsofferingarangeofvaluepropositions,includingvalue,rewards,andsustainability.Wholesalegenerationishighlyfragmentedanddiverseintermsofindustrystructurebyregion.Assuch,thereisawidevariationintermsofthecapabilities,resources,natureandidentitiesoftheCompany’scompetitorsdependingonthemarket.Competitorsincluderegulatedutilities,municipalities,cooperatives,otherindependentpowerproducers,andpowermarketersortradingcompanies,includingthoseownedbyfinancialinstitutions.14SeasonalityandPriceVolatilityThesaleofelectricpowertoretailcustomersisaseasonalbusinesswiththedemandforpowergenerallypeakingduringthesummermonths.Asaresult,networkingcapitalrequirementsfortheCompany'sretailoperationsgenerallyincreaseduringsummermonthsalongwiththehigherrevenues,andthendeclineduringoff-peakmonths.Weathermayimpactoperatingresultsandextremeweatherconditionscouldhaveamaterialimpact.Therateschargedtoretailcustomersmaybeimpactedbyfluctuationsintotalpowerpricesandmarketdynamics,suchasthepriceofnaturalgas,transmissionconstraints,competitoractions,andchangesinmarketheatrates.AnnualandquarterlyoperatingresultsoftheCompany'sgenerationportfoliocanbesignificantlyaffectedbyweatherandenergycommoditypricevolatility.Significantotherevents,suchasthedemandfornaturalgas,interruptionsinfuelsupplyinfrastructureandrelativelevelsofhydroelectriccapacitycanincreaseseasonalfuelandpowerpricevolatility.TheprecedingfactorsrelatedtoseasonalityandpricevolatilityarefairlyuniformacrosstheregionsinwhichtheCompanyoperates.Market Framework NRGsellsenergyandrelatedservices,aswellasportablepowerandbatterysolutions,tocustomersacrossthecountry.Inmostofthestatesthathaveintroducedretailconsumerchoice,NRGcompetitivelyofferselectricity,naturalgas,portablepowerandothervalue-enhancingservicestocustomers.Eachretailconsumerchoicestateestablishesitsownretailcompetitionlawsandregulations,andthespecificoperational,licensing,andcompliancerequirementsvarybystate.Regulatedtermsandconditionsofdefaultservice,aswellasanymovementtoreplacedefaultservicewithcompetitiveservices,asisdoneinERCOT,canaffectcustomerparticipationinretailcompetition.TheattractivenessofNRG'sretailofferingsmaybeimpactedbytherules,regulations,marketstructureandcommunicationrequirementsfrompublicutilitycommissionsineachstateacrossthecountry.NRG'sfleetoperatesinorganizedenergymarkets,knownasRTOsorISOs.Eachorganizedmarketadministersday-aheadandreal-timecentralizedbid-basedenergyandancillaryservicesmarketspursuanttotariffsapprovedbyFERC,orinthecaseofERCOT,marketrulesapprovedbythePUCT.Thesetariffsandrulesdictatehowtheenergymarketsoperate,howmarketparticipantsmakebilateralsaleswithoneanother,andhowentitieswithmarket-basedratesarecompensated.Establishedpricesreflectthevalueofenergyatthespecificlocationandtimeitisdelivered,whichisknownastheLocationalMarginalPrice.Eachmarketissubjecttomarketmitigationmeasuresdesignedtolimittheexerciseoflocationalmarketpower.ThesemarketstructuresfacilitateNRG'ssaleofpowerandcapacityproductsatmarket-basedrates.OtherthanERCOT,eachoftheISOregionsalsooperatesacapacityorresourceadequacymarketthatprovidesanopportunityforgeneratinganddemandresponseresourcestoearnrevenuestooffsettheirfixedcoststhatarenotrecoveredintheenergyandancillaryservicesmarkets.TheISOsarealsoresponsiblefortransmissionplanningandoperations.TexasNRG'sbusinessinTexasissubjecttostandardsandregulationsadoptedbythePUCTandERCOT(a),includingtherequirementforretailerstobecertifiedbythePUCTinordertocontractwithend-userstosellelectricity. TheERCOTmarketisoneofthenation'slargestand,historically,fastestgrowingpowermarkets. ERCOTisanenergy-onlymarketandhasimplementedmarketrulechangesreferredtoastheOperatingReserveDemandCurve(ORDC)toprovidepricingmorereflectiveofhigherenergyvaluewhenoperatingreservesarescarceorconstrained. ThePUCTdirectedtheimplementationoftheORDCin2014toactastheprimaryscarcitypricingmechanism.ThePUCTdirectedERCOTtoimplementchangesin2019.ThefirstphasebecameeffectiveonMarch1,2019andthesecondphasewillbecomeeffectiveonMarch1,2020.ThemajorityoftheretailloadintheERCOTmarketregionisservedbycompetitiveretailsuppliers,exceptcertainareasthathavenotoptedintocompetitiveconsumerchoiceandareservedbymunicipalutilitiesandelectriccooperatives.EastWhilemostofthestatesintheEastregionhaveintroducedsomelevelofretailconsumerchoiceforelectricityand/ornaturalgas,theincumbentutilitiescurrentlyprovidedefaultserviceinmostofthestatesandasaresulttypicallyservethemajorityofresidentialcustomers.NRG’sretailactivitiesintheEastaresubjecttostandardsandregulationsadoptedbytheISOsandstatepublicutilitycommissions,includingtherequirementforretailerstobecertifiedineachstateinordertocontractwithend-userstosellelectricity.(a) The Cottonwood facility is located in Deweyville, Texas, but operates in the MISO market15NRG'spowerplantsanddemandresponseassetslocatedintheEastregionoftheU.S.arewithinthecontrolareasofISO-NE,MISO,NYISOandPJM.EachofthemarketregionsintheEastregionprovidesforrobustcompetitionintheday-aheadandreal-timeenergyandancillaryservicesmarkets.Additionally,theEastregionreceivesasignificantportionofitsrevenuesfromcapacitymarkets.PJMandISO-NEuseathree-yearforwardcapacityauction,whileNYISOusesamonth-aheadcapacityauction.MISOhasanannualauction,knownasthePlanningResourceAuction.Capacitymarketpricesaresensitivetodesignparameters,aswellasadditionsofnewcapacity.BothISO-NEandPJMoperateapay-for-performancemodelwherecapacitypaymentsaremodifiedbasedonreal-timegeneratorperformance.Insuchmarkets,NRG’sactualcapacityrevenueswillbethecombinationofclearedauctionpricestimesthequantityofMWscleared,plusthenetofanyover-performance"bonuspayments"andanyunder-performancecharges.Additionally,biddingrulesallowfortheincorporationofariskpremiumintogeneratorbids.WestIntheWestregionoftheU.S.,NRGoperatesafleetofnaturalgas-firedpowerplantslocatedentirelywithintheCAISOfootprint.TheCAISOoperatesday-aheadandreal-timelocationalmarketsforenergyandancillaryservices,whilemanagingcongestionprimarilythroughnodalprices.TheCAISOsystemfacilitatesNRG'ssaleofpower,ancillaryservicesandcapacityproductsatmarket-basedrates,eitherwithintheCAISO'scentralizedenergyandancillaryservicemarketsorbilaterallypursuanttotollingarrangementsorothercapacitysaleswithCalifornia'sLSEs.TheCPUCalsodeterminescapacityrequirementsforLSEsandforspecifiedlocalareasutilizinginputsfromtheCAISO.BoththeCAISOandCPUCrulesrequireLSEstocontractwithsufficientgenerationresourcesinordertomaintainminimumlevelsofgenerationwithindefinedlocalareas.Additionally,theCAISOhasindependentauthoritytocontractwithneededresourcesundercertaincircumstances,typicallyeitherwhenLSEshavefailedtoprocuresufficientresources,orsystemconditionschangeunexpectedly.TheCompany’sAguaCalienteandIvanpahprojectsarepartytoPPAswithPG&E. BothprojectshaveprojectfinancingwiththeU.S.DOE.AguaCalienteBorrower1LLC,alongwithAguaCalienteBorrower2LLC,whichisownedbyClearwayEnergyInc.,werepartytoaback-leveragefinancingrelatedtotheAguaCalienteproject,whichwasrepaidin2019. OnJanuary29,2019,PG&ECorp.andsubsidiaryutilityPG&EfiledforChapter11bankruptcyprotection.ForfurtherdiscussionseeEnergyRegulatoryMatters,Item 15 — Note13,DebtandFinanceLeases,andItem 15 — Note17,InvestmentsAccountedforbytheEquityMethodandVariableInterestEntities,totheConsolidatedFinancialStatements.RegulatoryMattersAsparticipantsinwholesaleandretailenergymarketsandownersofpowerplants,certainNRGentitiesaresubjecttoregulationbyvariousfederalandstategovernmentagencies.TheseincludetheCFTC,FERC,NRCandthePUCT,aswellasotherpublicutilitycommissionsincertainstateswhereNRG'sgenerationordistributedgenerationassetsarelocated.Inaddition,NRGissubjecttothemarketrules,proceduresandprotocolsofthevariousISOandRTOmarketsinwhichitparticipates.Likewise,certainNRGentitiesparticipatingintheretailmarketsaresubjecttorulesandregulationsestablishedbythestatesinwhichNRGentitiesarelicensedtosellatretail.NRGmustalsocomplywiththemandatoryreliabilityrequirementsimposedbyNERCandtheregionalreliabilityentitiesintheregionswhereNRGoperates.NRG'soperationswithintheERCOTfootprintarenotsubjecttorateregulationbyFERC,astheyaredeemedtooperatesolelywithintheERCOTmarketandnotininterstatecommerce.TheseoperationsaresubjecttoregulationbythePUCT,aswellastoregulationbytheNRCwithrespecttoNRG'sownershipinterestinSTP.FederalEnergyRegulationPG&ECorporationBankruptcyFiling—OnJanuary18,2019,NextEraEnergy,Inc.,filedapetitionfordeclaratoryorderrequestingthatFERCassertitsjurisdictionoverPG&E'swholesalecontractspriortoPG&E'sformalbankruptcyfiling.ExelonCorporationandEDFRenewablesfiledsimilarcomplaints.OnJanuary25,2019,FERCfoundthatitandthebankruptcycourtshaveconcurrentjurisdictiontoreviewandaddressthedispositionofwholesalepowercontracts.Separately,thePG&EbankruptcycourtruledonJune7,2019thatitdoesnotshareconcurrentjurisdictionwithFERCandhasunilateraldiscretiontoaddressthedispositionofwholesalepowercontracts,whichrulingwasappealedbyFERCandvariouscounterpartiestosuchcontracts.OnJune26,2019,PG&EappealedtheFERCorderthatwasissuedonJanuary25,2019.BothsetsofappealsarecurrentlypendingbeforetheCourtofAppealsfortheNinthCircuitandtheissueofjurisdictionoverwholesalepowercontractsremainsinlitigation.OnSeptember9,2019,PG&Efiledaplanofreorganizationthatwouldassumeallpowerpurchaseagreements,includingthoseheldbytheAguaCalienteprojectandtwooftheIvanpahunits.OnOctober17,2019,agroupofunsecurednoteholdersfiledacompetingplanofreorganizationthatwouldalsoassumeallpowerpurchaseagreements,includingthoseheldbytheAguaCalienteprojectandthetwoIvanpahunits.16OnJanuary22,2020,PG&Eannouncedthatithadreachedanagreementwithcertainnoteholderplanproponentsand,onJanuary31,2020,thePG&Eplanwasamendedtoprovidefortheeventualimplementationofsuchsettlement.OnFebruary4,2020,theBankruptcyCourtapprovedsuchsettlement,andthenoteholdershaveaccordinglyagreedtosupportthePG&Eplan.OnFebruary5,2020,thenoteholderscausedthenoteholderplantobewithdrawn.TherearemanyconditionsthatmustbesatisfiedbeforethePG&Eplanandassumptionofthepowerpurchaseagreementscanbecomeeffective,including,butnotlimitedto,approvalsbyvariousclassesofcreditors,theBankruptcyCourt,andtheCPUC.AhearingbeforetheBankruptcyCourttoconsiderwhetherthePG&EplanwillbeapprovedandconfirmediscurrentlyexpectedtooccuronMay29,2020.StateEnergyRegulationStateOut-Of-MarketSubsidyProposals—NRGhasopposedeffortstoprovideout-of-marketsubsidiesfornucleargeneratorsandintendstocontinueopposingtheminthefuture. Nuclearsubsidyprogramshaveeitherbeenimplemented,areintheprocessofbeingimplemented,orhavebeenintroducedfordiscussioninConnecticut,Illinois,NewJersey,NewYork,OhioandPennsylvania.NRGandotherswereunsuccessfulinchallengingthelegalityofthesubsidiesinIllinoisandNewYork,andtheU.S.SupremeCourthasdeclinedtoreviewthelowercourtdecisions. ThroughourPJMtradeorganization,NRGisalsocurrentlyparticipatinginanappealofNJBPU'sOrderregardingZECs.IllinoisLegislatureConsidersChangestotheGeneratorBusinessModel—InIllinois,inadditiontolegislationtoprovidemoresubsidiestonuclearpowerplantsinthestate,theLegislatureisalsoconsideringseveralbillsthatmayaffectNRG’swholesaleandretailrevenues,includingabillthatwouldreplacethePJMcapacitymarketwithastate-runcapacitymarket.NRGcontinuestoopposetheongoinglegislativeeffortandsupportsacompetitivecleanenergymarketdesignthatwouldcompetitivelyreducegreenhousegasemissionthroughtheprocurementofcleanenergyresourceswithoutsacrificingtheconsumerbenefitsofthecompetitivePJMmarketdesign.NewYorkStateClimateLeadershipandCommunityProtectionAct—TheNewYorkStateLegislatureenactedclimatechangelegislationestablishingby2030,70percentofthestate'senergywillbegeneratedbyrenewablesandby2040,thestate'sentireelectricsystemmustbezero-emitting.ThelawincludesaprovisionthattheNYSPSCmaytemporarilysuspendormodifytheobligationsunderitsprogramifitfindsthattheprogramimpedessafeandadequateelectricservice,likelyimpairs"existingobligationsandagreements,"and/orincreasesconsumerlatepaymentsorservicedisconnections.Thelegislationincludesprovisionforoffsets,includingcarboncaptureandsequestration,butelectricgenerationsourcesarenoteligibletoparticipateintheoffsetsmechanism.RegionalRegulatoryDevelopmentsNRGisaffectedbyrule/tariffchangesthatoccurintheISOregions.ForfurtherdiscussiononregulatorydevelopmentsseeItem 15 — Note24,RegulatoryMatters,totheConsolidatedFinancialStatements.East/WestPJMCapacityMarketReformsFiling—OnDecember19,2019,FERCissuedanorderonthependingproposalstoreformthePJMmarkettomitigatesubsidizedresourcesinthecapacitymarket.FERCdirectedPJMtoapplytheMinimumOfferPriceRule,orMOPR,tonewandexistingresourcesreceivingstatesubsidiesandsubjectthemtodefaultofferfloorpricesintheircapacitybids.TheOrderprovidedforvariouscategoryspecificexemptionstotheMOPR,aswellasaunitspecificexemption,whichpermitsanyresourcethatcanjustifyanofferlowerthanthedefaultofferpricefloortosubmitsuchcapacitybidstoPJMforreview.AspartoftheDecember19,2019FERCOrder,FERCgavePJM90daystomakeacompliancefilingandsubmittarifflanguagetoreflecttherequirementsoftheOrderanddirectedPJMtoincludeinthisfilingatimetableforwhenitproposestoholdthepreviouslypostponedBaseResidualAuctionsforthe2022/2023and2023/2024deliveryyears.Multiplepartiesfiledforrehearing.Subjectingsubsidizedresourcestodefaultofferfloorsinthecapacitymarketshouldprotectthemarketfromfurtherpricesuppression.Theimpactofthesechangesoncapacitymarketsoutcomesisdependenton,amongotherfactors,biddingbehavior,loadforecastchanges,newresourceentry,andexistingresourceexit.PJM'sOperatingORDCFiling—OnMarch29,2019,PJMproposedenergyandreservemarketreformstoenhancepriceformationinreservemarkets,whichincludesmodifyingitsORDCandaligningmarket-basedreserveproductsinDay-AheadandReal-Timemarkets.ThematterispendingatFERC.Iftheproposalwereapprovedasfiled,energyandreservemarketpricescouldincrease.IndependentMarketMonitorMarketSellerOfferCapComplaint—OnFebruary21,2019,theIndependentMarketMonitorfiledacomplaintallegingthatthecurrentMarketSellerOfferCapistoohigh.OnApril9,2019,PJMfileditsanswerarguingthatasathresholdmattertheIndependentMarketMonitorisnotauthorizedtofileacomplaintagainstPJMandamongotherthings,thattheMarketMonitorfailedtosupportitsclaimthattheexpectednumberofperformanceassessmenthoursusedtocalculatethecapisoverstated.TheCompany’stradeorganizationfiledaprotestinthedocketechoingPJM’sconcerns.The17MarketMonitorsubsequentlyfiledanswersinthedocketandthedocketremainspending.Iftherequestisgranted,defaultmarketoffercapscouldbelower.PJM’sFastStartPricingFiling—OnApril19,2019,FERCorderedPJMtoimplementfaststartpricingbecauseitfoundthattheexistingfaststartpricingpracticesareunjustandunreasonablebecausetheydonotallowpricestoreflectthemarginalcostofservingload.PJMmadeitscompliancefilingonAugust30,2019.OnJanuary23,2020,FERCissuedanorderholdingtheproceedinginabeyanceuntilJuly31,2020,toallowPJMtoconsiderchangestoaddressFERC'sconcernaboutamismatchbetweendispatchandpricing.Thechangescouldprovidemoreaccuratepricingtoreflectthemarginalcostofservingload.NewEnglandISO-NERetentionofMysticUnits—ISO-NEiscurrentlyengagedinaproceedingatFERCregardinghowtoensuresystemreliabilityinagas-constrainedsystem.Inparticular,FERChasapprovedISO-NE'sproposaltoretainunitsattheMysticgeneratingstation,whichutilizesliquefiednaturalgasforfuelsecurity.Amongotherthings,FERCspecificallywillallowresourcesretainedforfuelsecuritytoenterazerobidintheForwardCapacityAuction,andalsoorderedISO-NEtoprovidealong-termmarket-basedsolutionforfuelsecurity.OnJanuary2,2019,multiplepartiesfiledforrehearing.ThemotionsforrehearingarependingatFERC.OnJanuary10,2020,FERCrejectedExelon'srequesttohavetheoptiontoterminatethesecondyearofitstwo-yearcostofserviceagreementforMysticunits8and9.Theoutcomeofthismattermayaffectfuturecapacitymarketprices.ISO-NEInventoriedEnergyCompensationProposal—OnMarch25,2019,ISO-NEproposedaninterimmeasuretoaddressnear-termfuelsecurityconcerns.Theproposalwouldprovidepaymentforinventoriedenergyduringwintermonths.NRGprotested,amongotherthings,thepaymentrateproposedbytheISOforinventoriedenergy.AfterISO-NEsupplementeditsfilingsduetoadeficiencynoticefromFERC,NRGfiledcommentstoISO-NE'sresponseonJune27,2019.OnAugust6,2019,FERCissuedanoticestatingthatduetolackofquorum,ISO-NE'sproposalbecameeffectivebyoperationoflaw.Multiplepartiesfiledforrehearing.Thoserehearingsweredenied.Subsequently,multiplepartiesfiledanappealofFERC'sOrdertotheCourtofAppealsfortheD.C.Circuit.Thecaseispending.ISO-NE'sproposalwillaffectfuturecapacitymarketpricesandthecompensationfuelsecureunitsreceive.ConnecticutDepartmentofEnergyandEnvironmentalProtectionIntegratedResourcePlanProceeding—InConnecticut'songoingproceedingrelatedtoitsIntegratedResourcePlan,theConnecticutDepartmentofEnergyandEnvironmentalProtectionissuedanoticeoftechnicalmeetingandopportunityforpubliccommentonJanuary8,2020seekingcommentontwoissues:(1)thecompatibilityofstategoalsandthoseofISO-NEand(2)thepossibilityofalternativemarketdesignsthatwouldbemoreinlinewiththestate'sgoals.OnJanuary22,2020,NRGpresenteditsthoughtsandonFebruary5,2020,NRGfiledcommentsadvocatingforcompetitivemarketsandproposeditscompetitivecleanenergymarketdesign.OnFebruary28,2020,theConnecticutDepartmentsofEnergyandEnvironmentalProtectionwillholdasecondtechnicalmeeting.NewYorkNewYorkStatePublicServiceCommissionRetailEnergyMarketProceedings—OnFebruary23,2016,theNYSPSCissuedanorderreferredtoastheRetailResetOrder.Amongotherthings,theRetailResetOrderplacedapricecaponenergysupplyoffersandimposedburdensomenewregulationsoncustomers.VariouspartieshavechallengedtheNYSPSC'sauthoritytoregulatepriceschargedbycompetitivesuppliers.OnMay9,2019theNewYorkCourtofAppeals,thestate’shighesttribunal,issuedadecisionaffirmingtheNYSPSC’sauthoritytoregulateESCO’spricesasaconditionofaccesstotheutilities’infrastructure.Inconjunctionwiththecourtchallenge,theNYSPSCalsonoticedanevidentiaryproceeding.OnDecember12,2019,theNYSPSCissuedanorderadoptingchangestotheretailaccessenergymarketbasedontherecordintheevidentiaryproceeding.TheOrderlimitsESCOofferstothreecompliantproducts:guaranteedsavingsfromtheutilitydefaultrate,afixedtermcappedat5%oftherolling12-monthaverageutilitydefaultrate,orNY-sourcedrenewableenergythatisatleast50%greaterthantheprevailingNYRenewableEnergyStandardforloadservingentities.TheOrderalsoestablishesnewESCOeligibilitycriteriaandcertificationprocess,aswellasre-certificationofcurrentESCOs.TheNYSPSCorderedcomplianceeffectiveFebruary10,2020.OnJanuary13,2020,multiplepartiesfiledmotionsforrehearingandastayoftheOrder.OnJanuary17,2020,NRGfiledarequestfora90-dayextensionoftheFebruary10,2020effectivedate,and,onJanuary22,2020,theNYSPSCgrantedanextensionforcompliancetoMay11,2020.ThelimitedofferingsimposedbytheOrder,asissued,maynegativelyimpacttheretailbusiness.NewYorkStatePublicServiceCommissionResourceAdequacyProceeding—OnAugust8,2019,theNYSPSCestablishedaninvestigationintoNewYork'sresourceadequacymarketdesign.OnNovember8,2019,NRGfiledcommentsandrecommendations,specificallyputtingforthNRG'sForwardCleanEnergyMarketProposal,thatwouldallowNewYorktomaintainareliablesystemwhileadvancingitsenvironmentalgoals.Theproceedingispending.AnyactionstakenbytheNYSPSCcouldaffectmarketdesignandmarketpricesinNewYork.18IndependentPowerProducersofNewYork(IPPNY)Complaint—OnFebruary20,2020,FERCrejectedarehearingrequestaskingFERCtodirectNYISOtorequirethatcapacityfromexistinggenerationresourcesthatwouldhaveexitedthemarketbutforout-of-marketpaymentsbemitigatedandfoundthatNYISOcompliedwiththeinitialordertoestablishastakeholderprocesstoconsiderwhetherbuyersidemitigationmeasuresareneededtoaddresstheseagreements.OnJanuary9,2017,EPSArequestedFERCtopromptlydirectNYISOtofiletariffprovisionstoaddresspendingmarketconcernsrelatedtoout-of-marketpaymentstoexistinggenerationinNYISO.OnApril5,2018,EPSAfiledamotionforrenewedrequestforexpeditedactionontheMOPR.Failuretoimplementbuyer-sidemitigationmeasurescouldresultinuneconomicentry,whichartificiallydecreasescapacitypricesbelowcompetitivemarketlevels.NewYorkBuyerSideMitigationProceedings—OnFebruary20,2020,FERCissuedmultipleorderspertainingtotheNYISOcapacitymarket.Theordersnarrowedcertainexemptionstobuyersidemitigationmeasures.Specifically,FERCstatedthatcertainrenewableandself-supplyresourceswouldbeexemptfromofferfloormitigationbutrejectedNYISO’sproposalofa1,000MWcaponrenewableresourcesthatcouldqualifyfortheexemption.FERCorderedNYISOtomakeacompliancefilingnarrowlytailoringitscap.FERCalsorejectedacomplainttoexemptnewelectricstorageresources.Italsorejectedablanketexemptiontodemandresponseproviderscurrentlysubjecttomitigationbutgrantedarequestfornewdemandresponsetoreceiveablanketexemptionfromthebuyersidemitigationmeasures.Implementationofbuyer-sidemitigationmeasurestoaddresspricesuppressionprovidesmoreaccuratecapacitypricesignalsinthecompetitivemarket.TexasORDCReforms—InJanuary2019,thePUCTdirectedERCOTtoimplementchangestoitsscarcitypricingstructure,knownastheORDC,whichisdesignedtoincreasethelikelihoodofscarcitypricingtosupportexistinggenerationandnewinvestment.ThePUCTdirectedORDCreformstobeimplementedintwophasesofgraduallyincreasingmagnitude.ThefirstphasebecameeffectiveonMarch1,2019andthesecondphasewillbecomeeffectiveonMarch1,2020.Todate,theORDCreformshaveproducedanoticeableimprovementinscarcitypricing.EnvironmentalRegulatoryMattersNRGissubjecttonumerousenvironmentallawsinthedevelopment,construction,ownershipandoperationofpowerplants.Theselawsgenerallyrequirethatgovernmentalpermitsandapprovalsbeobtainedbeforeconstructionandduringoperationofpowerplants.Federalandstateenvironmentallawshistoricallyhavebecomemorestringentovertime.FuturelawsmayrequiretheadditionofemissionscontrolsorotherenvironmentalcontrolsorimposerestrictionsontheCompany'soperations.Complyingwithenvironmentallawsofteninvolvessignificantcapitalandoperatingexpenses,aswellasoccasionallycurtailingoperations.NRGdecidestoinvestcapitalforenvironmentalcontrolsbasedontherelativecertaintyoftherequirements,anevaluationofcomplianceoptions,andtheexpectedeconomicreturnsoncapital.AnumberofregulationsthatmayaffecttheCompanyareunderreviewbytheEPA,includingashstorageanddisposalrequirements,NAAQSrevisionsandimplementationandeffluentlimitationguidelines.NRGwillevaluatetheimpactoftheseregulationsastheyarerevisedbutcannotfullypredicttheimpactofeachuntilanticipatedrevisionsandlegalchallengesareresolved.Air TheCAAandtheresultingregulations(aswellassimilarstateandlocalrequirements)havethepotentialtoaffectairemissions,operatingpracticesandpollutioncontrolequipmentrequiredatpowerplants.UndertheCAA,theEPAsetsNAAQSforcertainpollutantsincludingSO2,ozone,andPM2.5.ManyoftheCompany'sfacilitiesarelocatedinornearareasthatareclassifiedbytheEPAasnotachievingcertainNAAQS(non-attainmentareas).TherelevantNAAQShavebecomemorestringent.TheCompanymaintainsacomprehensivecompliancestrategytoaddresscontinuingandnewrequirements.ComplyingwithincreasinglystringentairregulationscouldrequiretheinstallationofadditionalemissionscontrolequipmentatsomeNRGfacilitiesorretiringofunitsifinstallingsuchcontrolsisnoteconomic.SignificantchangestoairregulatoryprogramsaffectingtheCompanyaredescribedbelow.CleanPowerPlan—TheattentioninrecentyearsonGHGemissionshasresultedinfederalregulationsandstatelegislativeandregulatoryaction.InOctober2015,theEPAfinalizedtheCPP,addressingGHGemissionsfromexistingEGUs.OnFebruary9,2016,theU.S.SupremeCourtstayedtheCPP.InJuly2019,EPApromulgatedtheACErule,whichrescindedtheCPP,whichsoughttobroadlyregulateCO2emissionsfromthepowersector.TheACErulerequiresstatesthathavecoal-firedEGUstodevelopplanstoseekheatrateimprovementsfromcoal-firedEGUs.Texas,IllinioisandDelawarehavestartedworkingonplanstocomplywiththeACErule.NumerouspartieshavechallengedtheACEruleintheD.C.CircuitandnumerouspartieshavefiledpetitionsforreconsiderationwiththeEPA.19GreenhouseGasEmissions—NRGemitsCO2(andsmallquantitiesofotherGHGs)whengeneratingelectricityatamajorityofitsfacilities.ThegraphspresentedbelowillustrateNRG'sdomesticemissionsofCO2eforthe2015through2019period.Nearlyall(>99%)ofNRG'sGHGemissionsaresubjecttofederal(U.S.EPA)GHGreportingrequirements.From2015to2019,theCompany'sCO2eemissionsdecreasedfrom56millionmetrictonsto37millionmetrictons,representinga34%reduction.Thefactorsleadingtothedecreasedemissionsincludereductionsinfleet-wideannualnetgenerationandamarket-drivenshiftfromcoalasaprimaryfueltonaturalgas.OnSeptember24,2019,NRGannouncedtheaccelerationofitsscience-basedGHGemissionsreductiongoalstoalignwithprevailingclimatescience,limitingwarmingtoa1.5degreeCelsiusscenario.UnderitsnewGHGemissionsreductiontimeline,NRGistargetingtoachievea50%reductionby2025andnet-zeroemissionsby2050,froma2014baseline.AsofDecember 31,2019,lessthan25%oftheCompany'sconsolidatedoperatingrevenueswerederivedfromcoal-firedoperatingassets.ThefollowingtablesreflecttheCompany’sgenerationportfolio,includingleasedfacilitiesandthoseaccountedforthroughequitymethodinvestments.Prioryearinformationwasadjustedtoremovedivestedassets.Byproducts, Wastes, Hazardous Materials and ContaminationInApril2015,theEPAfinalizedtheruleregulatingbyproductsofcoalcombustion(e.g.,ashandgypsum)assolidwastesundertheRCRA.InSeptember2017,theEPAagreedtoreconsidertherule.OnJuly30,2018,theEPApromulgatedarulethatamendstheexistingashrulebyextendingsomeofthedeadlinesandprovidingmoreflexibilityforcompliance.OnAugust21,2018,theD.C.Circuitfound,amongotherthings,thattheEPAhadnotadequatelyregulatedunlinedpondsandlegacyponds.OnAugust14,2019,theEPAproposedtargetedchangestotheApril2015RuleincludingchangestoaddresstheAugust2018D.C.Circuitdecision.OnDecember2,2019,theEPAreleasedforcomment"ClosurePartAProposal"torevisetheCCRRuletoaddresstheD.C.Circuit's2018decisionregardingtheadequacyofclay-linedimpoundments,obligationstocloseallunlinedimpoundmentsandrelateddeadlines.OnFebruary20,2020,theEPAproposedtheframeworkfordevelopingandimplementingafederalpermitprogramforstatesthatarenotapprovedtoadministertheCCRrule.WeanticipatethattheEPAwillpromulgatenewregulationstoaddresstheseissuesandothersasitreconsidersotheraspectsoftheexistingrule.TheCompanywillprovideestimatesofthecostofcomplianceaftertheEPAfinalizesrevisionstotherule.DomesticSiteRemediationMattersUndercertainfederal,stateandlocalenvironmentallaws,acurrentorpreviousowneroroperatorofafacility,includinganelectricgeneratingfacility,mayberequiredtoinvestigateandremediatereleasesorthreatenedreleasesofhazardousortoxicsubstancesorpetroleumproducts.NRGmayberesponsibleforpropertydamage,personalinjuryandinvestigationandremediationcostsincurredbyapartyinconnectionwithhazardousmaterialreleasesorthreatenedreleases.Theselawsimposeliabilitywithoutregardtowhethertheownerknewoforcausedthepresenceofthehazardoussubstances,andthecourtshaveinterpretedliabilityundersuchlawstobestrict(withoutfault)andjointandseveral.Cleanupobligationscanoftenbetriggeredduringtheclosureordecommissioningofafacility,inadditiontospillsduringitsoperations.FurtherdiscussionsofaffectedNRGsitescanbefoundinItem 15 — Note23,CommitmentsandContingencies,totheConsolidatedFinancialStatements.20NuclearWaste — Thefederalgovernment'sprogramtoconstructanuclearwasterepositoryatYuccaMountain,Nevadawasdiscontinuedin2010.Since1998,theU.S.DOEhasbeenindefaultofthefederalgovernment'sobligationstobeginacceptingspentnuclearfuel,orSNF,andhigh-levelradioactivewaste,orHLW,undertheNuclearWastePolicyAct.Ownersofnuclearplants,includingtheownersofSTP,hadbeenrequiredtoenterintocontractssettingouttheobligationsoftheownersandtheU.S.DOE,includingthefeestobepaidbytheownersfortheU.S.DOE'sservicestolicenseaspentfuelrepository.EffectiveMay16,2014,theU.S.DOEstoppedcollectingthefees.OnFebruary5,2013,STPNOCenteredintoasettlementagreementwiththeU.S.DOEforpaymentofdamagesrelatingtotheU.S.DOE'sfailuretoacceptSNFandHLWundertheNuclearWastePolicyActthroughDecember31,2013,whichhasbeenextendedtwicethroughaddendumstocoverpaymentsthroughDecember31,2019.STPNOCexpectsthesettlementtobeextendedforanotherthree-yearperiod.TherearenofacilitiesforthereprocessingorpermanentdisposalofSNFcurrentlyinoperationintheU.S.,norhastheNRClicensedanysuchfacilities.STPNOCcurrentlystoresallSNFgeneratedbyitsnucleargeneratingfacilitieson-site.STPNOCplanstocontinuetoassertclaimsagainsttheU.S.DOEfordamagesrelatingtotheU.S.DOE'sfailuretoacceptSNFandHLW.UnderthefederalLow-LevelRadioactiveWastePolicyActof1980,asamendedin1985,thestateofTexasisrequiredtoprovide,eitheronitsownorjointlywithotherstatesinacompact,forthedisposalofalllow-levelradioactivewastegeneratedwithinthestate.TexasiscurrentlyinacompactwiththestateofVermont,andthecompactlow-levelwastefacilitylocatedinAndrewsCountyinTexashasbeenoperationalsince2012.Water TheCompanyisrequiredundertheCWAtocomplywithintakeanddischargerequirements,requirementsfortechnologicalcontrolsandoperatingpractices.Aswithairqualityregulations,federalandstatewaterregulationshavebecomemorestringentandimposednewrequirements.EffluentLimitationsGuidelines—InNovember2015,theEPArevisedtheEffluentLimitationsGuidelinesforSteamElectricGeneratingFacilities,whichwouldhaveimposedmorestringentrequirements(asindividualpermitswererenewed)forwastewaterstreamsfromFGD,flyash,bottomash,andfluegasmercurycontrol.OnSeptember18,2017,theEPApromulgatedafinalrulethat,amongotherthings,postponesthecompliancedatestopreservethestatusquoforFGDwastewaterandbottomashtransportwaterbytwoyearstoNovember2020untiltheEPAcompletesitsnextrulemaking.OnApril12,2019,theUnitedStatesCourtofAppealsfortheFifthcircuitaddressedchallengestotherulebroughtbyseveralenvironmentalgroupsrelatedtolegacywastewatersandcoalashleachateandremandedportionsoftheruletotheEPA.OnNovember22,2019,theEPAproposedamendingthe2015ELGruleby:(x)decreasingthestringencyoftheseleniumlimit(butincreasingthestringencyofthenitrateandmercurylimits)forFGDwastewater;(y)relaxingthezero-dischargerequirementforbottomashtransportwater;and(z)changingseveraldeadlines.TheCompanyhaseliminateditsestimateoftheenvironmentalcapitalexpendituresthatwouldhavebeenrequiredtocomplywithpermitsincorporatingtherevisedguidelines.TheCompanywillrevisittheseestimatesaftertheEPAfinalizesrevisionstotherule.RegionalEnvironmentalDevelopmentsNYNOx—OnDecember31,2019,theNewYorkStateDepartmentofEnvironmentalConservationfinalizedamorestringentNOxregulationthatwillresultintheretirementoftheCompany'scombustionturbinesinAstoria,NewYorkin2023.AshRegulationinIllinois—OnJuly30,2019,Illinoisenactedlegislationthatrequiresthestatetopromulgateregulationsregardingcoalashatsurfaceimpoundments.WeexpectthestatetopromulgatetheimplementingregulationsinMarch2021,atwhichtimeregulatedentitieswillthenprepareandsubmitpermitapplications.CustomersNRGsellstoawidevarietyofcustomers,primarilyend-usecustomersintheresidential,commercialandindustrialsectors.TheCompanyownsandoperatespowerplantstogenerateandsellpowertowholesalecustomers,suchasutilitiesandotherintermediaries.TheCompanyhadnocustomerthatcomprisedmorethan10%oftheCompany'sconsolidatedrevenuesfortheyearendedDecember 31,2019.EmployeesAsofDecember 31,2019,NRGanditsconsolidatedsubsidiarieshad4,577employees,approximately24%ofwhomwerecoveredbyU.S.bargainingagreements.During2019,theCompanydidnotexperienceanylaborstoppagesorlabordisputesatanyofitsfacilities.21AvailableInformationNRG'sannualreportsonForm 10-K,quarterlyreportsonForm 10-Q,currentreportsonForm 8-K,andamendmentstothosereportsfiledorfurnishedpursuanttosection 13(a)or15(d)oftheExchangeActareavailablefreeofchargethroughtheSEC'swebsite,www.sec.gov,andthroughtheCompany'swebsite,www.nrg.com,assoonasreasonablypracticableaftertheyareelectronicallyfiledwith,orfurnishedto,theSEC.TheCompanyalsoroutinelypostspressreleases,presentations,webcasts,sustainabilityreportsandotherinformationregardingtheCompanyontheCompany'swebsite.TheinformationpostedontheCompany'swebsiteisnotapartofthisreport.22Item 1A — RiskFactorsRisksRelatedtotheOperationofNRG'sBusinessNRG'sfinancialperformancemaybeimpactedbypricefluctuationsintheretailandwholesalepowerandnaturalgasmarkets,aswellasfluctuationsincoalandoilmarketsandothermarketfactorsthatarebeyondtheCompany'scontrol.Marketpricesforpower,capacity,ancillaryservices,naturalgas,coalandoilareunpredictableandtendtofluctuatesubstantially.Unlikemostothercommodities,electricpowercanonlybestoredonaverylimitedbasisandgenerallymustbeproducedconcurrentlywithitsuse.Asaresult,powerpricesaresubjecttosignificantvolatilityduetosupplyanddemandimbalances,especiallyintheday-aheadandspotmarkets.Long-andshort-termpowerpricesmayalsofluctuatesubstantiallyduetootherfactorsoutsideoftheCompany'scontrol,including:•changes in generation capacity in the Company’s markets, including the addition of new supplies of power as a result of the development of new plants, expansion of existing plants, the continued operation of uneconomic power plants due to state subsidies, or additional transmission capacity;•environmental regulations and legislation;•electric supply disruptions, including plant outages and transmission disruptions;•changes in power transmission infrastructure;•fuel transportation capacity constraints or inefficiencies;•changes in law, including judicial decisions;•weather conditions, including extreme weather conditions and seasonal fluctuations, including the effects of climate change;•changes in commodity prices and the supply of commodities, including but not limited to natural gas, coal and oil;•changes in the demand for power or in patterns of power usage, including the potential development of demand-side management tools and practices, distributed generation, and more efficient end-use technologies;•development of new fuels, new technologies and new forms of competition for the production of power;•fuel price volatility;•economic and political conditions;•regulations and actions of the ISOs and RTOs; •federal and state power regulations and legislation;•changes in prices related to RECs; and•changes in capacity prices and capacity markets.Whileretailratesaregenerallydesignedtoallowretailsellersofelectricityandnaturalgastopassthroughpricefluctuations,theCompanymaynotbeabletopassthroughallsuchfluctuationstocustomers.Forexample,theCompanyengagesinsomesalesofpoweratfixedprices.Additionally,increasesinwholesalecoststoretailcustomersmaycauseadditionalcustomerdefaultsorincreasedcustomerattrition,ormaybelimitedbyregulatoryrules.SuchfactorsandtheassociatedfluctuationsinpowerpriceshaveaffectedtheCompany'swholesaleandretailprofitabilityinthepastandwillcontinuetodosointhefuture.VolatilepowersupplycostsanddemandforpowercouldadverselyaffectthefinancialperformanceofNRG'sretailbusinesses.AlthoughNRGistheprimaryproviderofitsretailbusinesses'wholesaleelectricitysupplyrequirements,theretailbusinessespurchaseasignificantportionoftheirsupplyrequirementsfromthirdparties.Asaresult,financialperformancedependsontheabilitytoobtainadequatesuppliesofelectricgenerationfromthirdpartiesatpricesbelowthepricesitchargesitscustomers.Consequently,theCompany'searningsandcashflowscouldbeadverselyaffectedinanyperiodinwhichtheretailbusinesses'wholesaleelectricitysupplycostsriseatagreaterratethantheratesitchargestocustomers.Thepriceofwholesaleelectricitysupplypurchasesassociatedwiththeretailbusinesses'energycommitmentscanbedifferentthanthatreflectedintherateschargedtocustomersdueto,amongotherfactors:•varying supply procurement contracts used and the timing of entering into related contracts;•subsequent changes in the overall price of natural gas;•daily, monthly or seasonal fluctuations in the price of natural gas relative to the 12-month forward prices;•transmission constraints and the Company's ability to move power to its customers; and•changes in market heat rate (i.e., the relationship between power and natural gas prices).23Theretailbusinesses'earningsandcashflowscouldalsobeadverselyaffectedinanyperiodinwhichitscustomers'actualusageofelectricitysignificantlyvariesfromtheforecastedusage,whichcouldoccurdueto,amongotherfactors,weatherevents,changesinusagepatterns,competitionandeconomicconditions.SomeofNRG'sbusinessesoperate,whollyorpartially,withoutlong-termpowersaleagreements.SomeofNRG'sbusinessesoperatewithoutlong-termcontracts.ManyofNRG’sretailcustomersarecontractedforaperiodofoneyearorless,andNRGmayormaynothedgeitsretailpowersalesexposure,ormayhedgeinamannerthatisnoteffectiveatmanagingquantityorpriceriskintheretailmarket.ManyofNRG’sgenerationfacilitiesoperateas"merchant"facilitieswithoutlong-termpowersalesagreementsforsomeoralloftheirgeneratingcapacityandoutputandthereforeareexposedtomarketfluctuations.Withoutthebenefitoflong-termpowersalesorpurchaseagreements,andwithoutlong-termloadobligations,NRGcannotbesurethatitwillbeabletosellorpurchasepoweratcommerciallyattractiveratesorthatitsgenerationfacilitieswillbeabletooperateprofitably.ThiscouldleadtofutureimpairmentsoftheCompany'sproperty,plantandequipment,theclosingofcertainofitsfacilitiesorthelossofretailcustomers,whichcouldhaveamaterialadverseeffectontheCompany'sresultsofoperations,financialconditionorcashflows.TheCompany'sretailbusinessesmayloseasignificantnumberofretailcustomersoracquirelesscustomersthanforecastedduetocompetitivemarketingactivitybyotherretailelectricityprovidersorcompetitionwithordisruptionstooursalespartners,whichcouldadverselyaffectthefinancialperformanceoftheCompany'sretailbusinesses.TheCompany'sretailbusinessesfacecompetitionforcustomers.Competitorsmayofferdifferentproducts,lowerprices,andotherincentives,whichmayattractcustomersawayfromNRG'sretailbusinesses.Insomeretailelectricitymarkets,theprincipalcompetitormaybetheincumbentutility.Theincumbentutilityhastheadvantageoflong-standingrelationshipswithitscustomersandstrongbrandrecognition.Furthermore,NRG'sretailbusinessesmayfacecompetitionfromanumberofotherenergyserviceproviders,otherenergyindustryparticipants,ornationallybrandedprovidersofconsumerproductsandservices,whomaydevelopbusinessesthatwillcompetewithNRGanditsretailbusinesses.NRG'scosts,resultsofoperations,financialconditionandcashflowscouldbeadverselyimpactedbydisruptionofitsfuelsupplies.NRGreliesonnaturalgas,coalandoiltofuelamajorityofitspowergenerationfacilities.Itsretailoperationscanlikewisebeaffectedbychangesincommoditycosts.Gridoperationsdependonthecontinuingfinancialviabilityofcontractualcounterparties,aswellastheinfrastructure(includingraillines,railcars,bargefacilities,roadways,riverwaysandnaturalgaspipelines)availabletoservegenerationfacilitiesandtoensurethatthereissufficientpowerproducedtomeetretaildemand.Asaresult,theCompany’swholesalegenerationfacilitiesaresubjecttotherisksofdisruptionsorcurtailmentsintheproductionofpoweratitsgenerationfacilitiesifnofuelisavailableatanyprice,ifacounterpartyfailstoperformorifthereisadisruptioninthefueldeliveryinfrastructure.TheCompany’sretailoperationsarelikewisesubjecttomanyofthesameconstraints.NRGroutinelyhedgesbothitswholesalesalesandpurchasestosupportitsretailloadobligations.Inordertohedgetheseobligations,theCompanymayenterintolong-termandshort-termcontractsforthepurchaseanddeliveryoffuel.ManyoftheforwardpowersalescontractsdonotallowtheCompanytopassthroughchangesinfuelcostsordischargethepowersaleobligationsinthecaseofadisruptioninfuelsupplyduetoforcemajeureeventsorthedefaultofafuelsupplierortransporter.DisruptionsintheCompany'sfuelsuppliesorpowersupplyarrangementsmaythereforerequireittofindalternativefuelsourcesathighercosts,tofindothersourcesofpowertodelivertoretailcustomersorothercounterpartiesatahighercost,ortopaydamagestocounterpartiesforfailuretodeliverpowerorsellelectricityornaturalgasascontracted.AnysucheventcouldhaveamaterialadverseeffectontheCompany'sfinancialperformance.24NRGalsobuyssignificantquantitiesofelectricityandfuelonashort-termorspotmarketbasis.Pricessometimesriseorfallsignificantlyoverarelativelyshortperiodoftime.ThepriceNRGcanobtainforthesaleofenergymaynotriseatthesamerate,ormaynotriseatall,tomatchariseinfuelordeliverycosts.Retailratesmayalsonotriseatthesamerateormaynotriseatall.ThismayhaveamaterialadverseeffectontheCompany'sfinancialperformance.Changesinmarketpricesforelectricity,naturalgas,coalandoilmayresultfromthefollowing:•weather conditions;•seasonality;•demand for energy commodities and general economic conditions;•disruption or other constraints or inefficiencies of electricity, gas or coal transmission or transportation;•additional generating capacity;•availability and levels of storage and inventory for fuel stocks;•natural gas, crude oil, refined products and coal production levels;•changes in market liquidity;•federal, state and foreign governmental regulation and legislation; and•the creditworthiness and liquidity and willingness of fuel suppliers/transporters to do business with the Company.NRG'splantoperatingcharacteristicsandequipment,particularlyatitscoal-firedplants,oftendictatethespecificfuelqualitytobecombusted.Theavailabilityandpriceofspecificfuelqualitiesmayvaryduetosupplierfinancialoroperationaldisruptions,transportationdisruptionsandforcemajeure.Attimes,coalofspecificqualitymaynotbeavailableatanypriceortheCompanymaynotbeabletotransportsuchcoaltoitsfacilitiesonatimelybasis.Inthiscase,theCompanymaynotbeabletorunthecoalfacilityevenifitwouldbeprofitable.Operatingacoalfacilitywithdifferentqualitycoalcanleadtoemissionoroperatingproblems.IftheCompanyhadsoldforwardthepowerfromsuchacoalfacility,itcouldberequiredtosupplyorpurchasepowerfromalternatesources,perhapsataloss.ThiscouldhaveamaterialadverseimpactonthefinancialresultsofspecificplantsandontheCompany'sresultsofoperations.ChangesinthepriceofcoalandnaturalgascouldcausetheCompanytoholdexcesscoalinventoriesandincurcontractterminationcosts.Lownaturalgaspricescancausenaturalgastobethemorecost-competitivefuelcomparedtocoalforgeneratingelectricity.BecausetheCompanyentersintoguaranteedsupplycontractstoprovidefortheamountofcoalneededtooperateitsbaseloadcoal-firedgeneratingfacilities,theCompanymayexperienceperiodswhereitholdsexcessamountsofcoaliffuelpricingresultsintheCompanyreducingoridlingcoal-firedgeneratingfacilities.Inaddition,theCompanymayincurcoststoterminatesupplycontractsforcoalinexcessofitsgeneratingrequirements.NRG'stradingoperationsanduseofhedgingagreementscouldresultinfinanciallossesthatnegativelyimpactitsresultsofoperations.TheCompanytypicallyentersintohedgingagreements,includingcontractstopurchaseorsellcommoditiesatfuturedatesandatfixedprices,tomanagethecommoditypricerisksinherentinitspowergenerationandretailoperations.TheCompany’sriskmanagementpoliciesandhedgingproceduresmaynotmitigateriskasplanned,andtheCompanymayfailtofullyoreffectivelyhedgeitscommoditysupplyandpricerisk.Inaddition,theseactivities,althoughintendedtomitigatepricevolatility,exposetheCompanytootherrisks.WhentheCompanysellsorbuyspowerforward,itgivesuptheopportunitytobuyorsellpoweratthefutureprice,whichnotonlymayresultinlostopportunitycostsbutalsomayrequiretheCompanytopostsignificantamountsofcashcollateralorothercreditsupporttoitscounterparties.TheCompanyalsoreliesoncounterpartyperformanceunderitshedgingagreementsandisexposedtothecreditqualityofitscounterpartiesunderthoseagreements.Further,ifthevaluesofthefinancialcontractschangeinamannerthattheCompanydoesnotanticipate,orifacounterpartyfailstoperformunderacontract,itcouldharmtheCompany'sbusiness,operatingresultsorfinancialposition.NRGdoesnottypicallyhedgetheentireexposureofitsoperationsagainstcommoditypricevolatility.Totheextentitdoesnothedgeagainstcommoditypricevolatility,theCompany'sresultsofoperationsandfinancialpositionmaybeimprovedordiminishedbaseduponmovementincommodityprices.NRGmayengageintradingactivities,includingthetradingofpower,fuelandemissionsallowancesthatarenotdirectlyrelatedtotheoperationoftheCompany'sgenerationfacilitiesorthemanagementofrelatedrisks.Thesetradingactivitiestakeplaceinvolatilemarketsandsomeofthesetradescouldbecharacterizedasspeculative.TheCompanywouldexpecttosettlethesetradesfinanciallyratherthanthroughtheproductionofpowerorthedeliveryoffuel.ThistradingactivitymayexposetheCompanytotheriskofsignificantfinanciallosseswhichcouldhaveamaterialadverseeffectonitsbusinessandfinancialcondition.25TheremaybeperiodswhenNRGwillnotbeabletomeetitscommitmentsunderforwardsaleorpurchaseobligationsatareasonablecostoratall.TheCompanymaysellfixedpricegasasaproxyforpower.BecausetheobligationsundermostoftheCompany'sforwardsaleagreementsarenotcontingentonaunitbeingavailabletogeneratepower,NRGisgenerallyrequiredtodeliverpowertothebuyer,evenintheeventofaplantoutage,fuelsupplydisruptionorareductionintheavailablecapacityoftheunit.TotheextentthattheCompanydoesnothavesufficientlower-costcapacitytomeetitscommitmentsunderitsforwardsaleobligations,theCompanywouldberequiredtosupplyreplacementpowereitherbyrunningitsother,highercostpowerplantsorbyobtainingpowerfromthird-partysourcesatmarketpricesthatcouldsubstantiallyexceedthecontractprice.IfNRGfailstodeliverthecontractedpower,itwouldberequiredtopaythedifferencebetweenthemarketpriceatthedeliverypointandthecontractprice,andtheamountofsuchpaymentscouldbesubstantial.NRGmaynothavesufficientliquiditytohedgemarketriskseffectively.TheCompanyisexposedtomarketrisksthroughitsretailandwholesaleoperations,whichinvolvethepurchaseofelectricityforresale,thesaleofenergy,capacityandrelatedproducts,andthepurchaseandsaleoffuel,transmissionservicesandemissionallowances.Thesemarketrisksinclude,amongotherrisks,volatilityarisingfromlocationandtimingdifferencesthatmaybeassociatedwithbuyingandtransportingfuel,convertingfuelintoenergyanddeliveringenergytoabuyer.NRGundertakesthesemarketactivitiesthroughagreementswithvariouscounterparties.ManyoftheCompany'sagreementswithcounterpartiesincludeprovisionsthatrequiretheCompanytoprovideguarantees,offsetornettingarrangements,lettersofcredit,afirstlienonassetsand/orcashcollateraltoprotectthecounterpartiesagainsttheriskoftheCompany'sdefaultorinsolvency.Theamountofsuchcreditsupportthatmustbeprovidedtypicallyisbasedonthedifferencebetweenthepriceofthecommodityinagivencontractandthemarketpriceofthecommodity.SignificantmovementsinmarketpricescanresultintheCompanybeingrequiredtoprovidecashcollateralandlettersofcreditinverylargeamounts.TheeffectivenessoftheCompany'sstrategymaydependontheamountofcollateralavailabletoenterintoormaintainthesecontracts,andliquidityrequirementsmaybegreaterthantheCompanyanticipatesorwillbeabletomeet.Withoutasufficientamountofworkingcapitaltopostascollateralinsupportofperformanceguaranteesorasacashmargin,theCompanymaynotbeabletomanagepricevolatilityeffectivelyortoimplementitsstrategy.AnincreaseintheamountoflettersofcreditorcashcollateralrequiredtobeprovidedtotheCompany'scounterpartiesmaynegativelyaffecttheCompany'sliquidityandfinancialcondition.Further,ifanyofNRG'sfacilitiesexperienceunplannedoutagesorifretailcustomersusemorepowerthanexpected,theCompanymayberequiredtoprocureadditionalpoweratspotmarketpricestofulfillcontractualcommitments.Withoutadequateliquiditytomeetmarginandcollateralrequirements,theCompanymaybeexposedtosignificantlosses,maymisssignificantopportunities,andmayhaveincreasedexposuretothevolatilityofspotmarkets.TheaccountingforNRG'shedgingactivitiesmayincreasethevolatilityintheCompany'squarterlyandannualfinancialresults.NRGengagesincommodity-relatedmarketingandprice-riskmanagementactivitiesinordertofinanciallyhedgeitsexposuretomarketriskwithrespecttoelectricitysalesfromitsgenerationassets,fuelutilizedbythoseassetsandemissionallowances,aswellasretailsalesofelectricity.NRGgenerallyattemptstobalanceitsfixed-pricephysicalandfinancialpurchasesandsalescommitmentsintermsofcontractvolumesandthetimingofperformanceanddeliveryobligationsthroughtheuseoffinancialandphysicalderivativecontracts.ThesederivativesareaccountedforinaccordancewiththeFASBASC815,DerivativesandHedging,orASC 815,whichrequirestheCompanytorecordallderivativesonthebalancesheetatfairvaluewithchangesinthefairvalueresultingfromfluctuationsintheunderlyingcommoditypricesimmediatelyrecognizedinearnings,unlessthederivativequalifiesforcashflowhedgeaccountingtreatment.Whetheraderivativequalifiesforcashflowhedgeaccountingtreatmentdependsuponitmeetingspecificcriteriausedtodetermineifthecashflowhedgeisandwillremainappropriateforthetermofthederivative.Alleconomichedgesmaynotnecessarilyqualifyforcashflowhedgeaccountingtreatment.Asaresult,theCompany'squarterlyandannualresultsaresubjecttosignificantfluctuationscausedbychangesinmarketprices.CompetitioninpowermarketsmayhaveamaterialadverseeffectonNRG'sresultsofoperations,cashflowsandthemarketvalueofitsassets.NRGhasnumerouscompetitorsinallaspectsofitsbusiness,andadditionalcompetitorsmayentertheindustry.NewpartiesmayofferretailelectricitybundledwithotherproductsoratpricesthatarebelowtheCompany’srates.BecausemanyoftheCompany'sfacilitiesareolder,newerplantsownedbytheCompany'scompetitorsareoftenmoreefficientthanNRG'sagingplants,whichmayputsomeoftheCompany'splantsatacompetitivedisadvantagetotheextenttheCompany'scompetitorsareabletoconsumethesameorlessfuelastheCompany'splantsconsume.Overtime,theCompany'splantsmaybesqueezedoutoftheirmarketsormaybeunabletocompetewiththesemoreefficientplants.26OthercompanieswithwhichNRGcompetesmayhavegreaterliquidity,greateraccesstocreditandotherfinancialresources,lowercoststructures,moreeffectiveriskmanagementpoliciesandprocedures,greaterabilitytoincurlosses,longer-standingrelationshipswithcustomers,greaterpotentialforprofitabilityfromretailsalesorgreaterflexibilityinthetimingoftheirsaleofgenerationcapacityandancillaryservicesthanNRGdoes.Competitorsmayalsohavebetteraccesstosubsidiesorotherout-of-marketpaymentsthatputNRGatacompetitivedisadvantage.NRG'scompetitorsmaybeabletorespondmorequicklytonewlawsorregulationsoremergingtechnologies,ortodevotegreaterresourcestomarketingofretailpowerthanNRGcan.Inaddition,currentandpotentialcompetitorsmaymakestrategicacquisitionsorestablishcooperativerelationshipsamongthemselvesorwiththirdparties.Accordingly,itispossiblethatnewcompetitorsoralliancesamongcurrentandnewcompetitorsmayemergeandrapidlygainsignificantmarketshare.TherecanbenoassurancethatNRGwillbeabletocompetesuccessfullyagainstcurrentandfuturecompetitors,andanyfailuretodosowouldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsofoperationsandcashflow.OperationofpowergenerationfacilitiesinvolvessignificantrisksandhazardscustomarytothepowerindustrythatcouldhaveamaterialadverseeffectonNRG'srevenuesandresultsofoperations,andNRGmaynothaveadequateinsurancetocovertheserisksandhazards.TheongoingoperationofNRG'sfacilitiesinvolvesrisksthatincludethebreakdownorfailureofequipmentorprocesses,performancebelowexpectedlevelsofoutputorefficiencyandtheinabilitytotransporttheCompany'sproducttoitscustomersinanefficientmannerduetoalackoftransmissioncapacity.Unplannedoutagesofgeneratingunits,includingextensionsofscheduledoutagesduetomechanicalfailuresorotherproblemsoccurfromtimetotimeandareaninherentriskoftheCompany'sbusiness.UnplannedoutagestypicallyincreasetheCompany'soperationandmaintenanceexpensesandmayreducetheCompany'srevenuesasaresultofsellingfewerMWhornon-performancepenaltiesorrequireNRGtoincursignificantcostsasaresultofrunningoneofitshighercostunitsorobtainingreplacementpowerfromthirdpartiesintheopenmarkettosatisfytheCompany'sforwardpowersalesobligations.NRG'sinabilitytooperatetheCompany'splantsefficiently,managecapitalexpendituresandcosts,andgenerateearningsandcashflowfromtheCompany'sasset-basedbusinessescouldhaveamaterialadverseeffectontheCompany'sresultsofoperations,financialconditionorcashflows.WhileNRGmaintainsinsurance,obtainswarrantiesfromvendorsandobligatescontractorstomeetcertainperformancelevels,theproceedsofsuchinsurance,warrantiesorperformanceguaranteesmaynotbeadequatetocovertheCompany'slostrevenues,increasedexpensesorliquidateddamagespaymentsshouldtheCompanyexperienceequipmentbreakdownornon-performancebycontractorsorvendors.Inaddition,NRGprovidesplantoperationsandcommercialservicestoavarietyofthird-parties.Thereisariskthatmistakes,mis-operations,oractionstakenbythesethird-partiescouldbeattributedtoNRG,includingtheriskofinvestigationorpenaltiesbeingassessedtoNRGinconnectionwiththeservicesitoffers,orthatregulatorscouldquestionwhetherNRGhadtheappropriatesafeguardsinplace.Powergenerationinvolveshazardousactivities,includingacquiring,transportingandunloadingfuel,operatinglargepiecesofrotatingequipmentanddeliveringelectricitytotransmissionanddistributionsystems.Inadditiontonaturalriskssuchasearthquake,flood,lightning,hurricaneandwind,otherhazards,suchasfire,explosion,structuralcollapseandmachineryfailureareinherentrisksintheCompany'soperations.Theseandotherhazardscancausesignificantpersonalinjuryorlossoflife,severedamagetoanddestructionofproperty,plantandequipment,contaminationof,ordamageto,theenvironmentandsuspensionofoperations.TheoccurrenceofanyoneoftheseeventsmayresultinNRGbeingnamedasadefendantinlawsuitsassertingclaimsforsubstantialdamages,includingforenvironmentalcleanupcosts,personalinjuryandpropertydamageandfinesand/orpenalties.NRGmaintainsanamountofinsuranceprotectionthatitconsidersadequate,buttheCompanycannotprovideanyassurancethatitsinsurancewillbesufficientoreffectiveunderallcircumstancesandagainstallhazardsorliabilitiestowhichitmaybesubject.A successfulclaimforwhichtheCompanyisnotfullyinsuredcouldhurtitsfinancialresultsandmateriallyharmNRG'sfinancialcondition.NRGcannotprovideanyassurancethatitsinsurancecoveragewillcontinuetobeavailableatalloratratesorontermssimilartothosepresentlyavailable.AnylossesnotcoveredbyinsurancecouldhaveamaterialadverseeffectontheCompany'sfinancialcondition,resultsofoperationsorcashflows.Maintenance,expansionandrefurbishmentofpowergenerationfacilitiesinvolvesignificantrisksthatcouldresultinunplannedpoweroutagesorreducedoutputandcouldhaveamaterialadverseeffectonNRG'sresultsofoperations,cashflowsandfinancialcondition.ManyofNRG'sfacilitiesrequireperiodicmaintenanceandrepair.Anyunexpectedfailure,includingfailureassociatedwithbreakdowns,forcedoutagesoranyunanticipatedcapitalexpenditurescouldresultinreducedprofitability.NRGcannotbecertainofthelevelofcapitalexpendituresthatwillberequiredduetochangingenvironmentalandsafetylaws(includingchangesintheinterpretationorenforcementthereof),neededfacilityrepairsandunexpectedevents(suchasnaturaldisastersorterroristattacks).TheunexpectedrequirementoflargecapitalexpenditurescouldhaveamaterialadverseeffectontheCompany'sliquidityandfinancialcondition.27IfNRGsignificantlymodifiesaunit,theCompanymayberequiredtoinstallthebestavailablecontroltechnologyortoachievethelowestachievableemissionratesassuchtermsaredefinedunderthenewsourcereviewprovisionsoftheCAA,whichwouldlikelyresultinsubstantialadditionalcapitalexpenditures.NRGanditssubsidiarieshaveguaranteedtheperformanceofthirdparties,whichmayresultinsubstantialcostsintheeventofnon-performance.NRGanditssubsidiarieshaveissuedcertainguaranteesoftheperformanceofothers,whichobligateNRGanditssubsidiariestoperformintheeventthatthethirdpartiesdonotperform.Intheeventofnon-performancebythethirdparties,NRGcouldincursubstantialcosttofulfilltheirobligationsundertheseguarantees.Suchperformanceguaranteescouldhaveamaterialimpactontheoperatingresults,financialcondition,orcashflowsoftheCompany.Supplierand/orcustomerconcentrationatcertainofNRG'sfacilitiesmayexposetheCompanytosignificantfinancialcreditorperformancerisks.NRGoftenreliesonasinglecontractedsupplierorasmallnumberofsuppliersfortheprovisionoffuel,transportationoffuel,chemicalsandotherservicesrequiredfortheoperationofcertainofitsfacilities.Ifthesesupplierscannotperform,theCompanyutilizesthemarketplacetoprovidetheseservices.Therecanbenoassurancethatthemarketplacecanprovidetheseservicesas,whenandwhererequiredoratcomparableprices.Attimes,NRGmayrelyonasinglecustomerorafewcustomerstopurchaseallorasignificantportionofafacility'soutput,insomecasesunderlong-termagreementsthataccountforasubstantialpercentageoftheanticipatedrevenuefromagivenfacility.TheCompanyhasalsohedgedaportionofitsexposuretopowerpricefluctuationsthroughforwardfixedpricepowersalesandnaturalgaspriceswapagreements.Counterpartiestotheseagreementsmaybreachormaybeunabletoperformtheirobligations.NRGmaynotbeabletoenterintoreplacementagreementsontermsasfavorableasitsexistingagreements,oratall.IftheCompanywasunabletoenterintoreplacementPPAs,theCompanywouldsellitsplants'poweratmarketprices.IftheCompanyisunabletoenterintoreplacementfuelorfueltransportationpurchaseagreements,NRGwouldseektopurchasetheCompany'sfuelrequirementsatmarketprices,exposingtheCompanytomarketpricevolatilityandtheriskthatfuelandtransportationmaynotbeavailableduringcertainperiodsatanyprice.ThefailureofanysupplierorcustomertofulfillitscontractualobligationstoNRGcouldhaveamaterialadverseeffectontheCompany'sfinancialresults.Consequently,thefinancialperformanceoftheCompany'sfacilitiesisdependentonthecreditqualityof,andcontinuedperformanceby,suppliersandcustomers.RelianceonpowerpurchaseagreementsforrenewablegenerationmayexposetheCompanytosignificantfinancialandperformancerisks.NRGmayrelyonafewcounterparties,insomecasesundermidtolong-termagreements,topurchaseallorasignificantportionoftheCompany'srenewablepowerrequirements.Inmanycases,thesepurchasesarespecifictoafacility,whichattimesmaybeintheearlystagesofdevelopment.Counterpartiestotheseagreementsmaybreachorbeunabletoperformtheirobligationsandmaybesubjecttoadditionalrisks,suchasafacilitydevelopmentandtransmissionrisks,unfavorableweatherandatmosphericconditions,andmechanicaloroperationalfailures.NRGmaynotbeabletoenterintoreplacementagreementsorreplaceexpectedgenerationontermsasfavorableasitsexistingagreements,oratall.NRGreliesonpowertransmissionanddistributionfacilitiesthatitdoesnotownorcontrolandthataresubjecttotransmissionconstraintswithinanumberoftheCompany'scoreregions.NRGdependsontransmissionanddistributionfacilitiesownedandoperatedbyotherstodeliverpowertoitscustomers.Iftransmissionordistributionisdisrupted,includingbyforcemajeureevents,orifthetransmissionordistributioninfrastructureisinadequate,NRG'sabilitytodeliverpowermaybeadverselyimpacted.TheCompanyalsocannotpredictwhethertransmissionordistributionfacilitieswillbeexpandedinspecificmarketstoaccommodatecompetitiveaccesstothosemarkets.Inaddition,incertainofthemarketsinwhichNRGoperates,energytransmissioncongestionmayoccurandtheCompanymaybedeemedresponsibleforcongestioncostsassociatedwithpowersalesorpurchases,orretailsales,particularlywheretheCompany’sloadisnotco-locatedwithitsretailsalesobligations.IfNRGwereliableforsuchcongestioncosts,theCompany'sfinancialresultscouldbeadverselyaffected.28NRGadoptedandsubstantiallycompletedtheTransformationPlan.IftheTransformationPlandoesnotachieveitsexpectedbenefits,therecouldbenegativeimpactstoNRG’sbusiness,resultsofoperationsandfinancialcondition.NRGadoptedtheTransformationPlanin2017,designedtosignificantlystrengthenearningsandcostcompetitiveness,lowerriskandvolatility,andcreatesignificantshareholdervalue.Thethree-part,three-yearplaniscomprisedofthefollowingcomponents:(i)operationsandcostexcellence;(ii)portfoliooptimization;and(iii)capitalstructureandallocationenhancements.NRGhassubstantiallycompletedtheTransformationPlan,withtheexceptionofthemarginenhancementactivitiesthatareongoingin2020.NRGmaybeunabletofullyimplementtheremainingmarginenhancementactivitiesundertheTransformationPlan,inwhichcase,NRGwouldnotrealizethefullanticipatedbenefits.Alternatively,componentsoftheTransformationPlanalreadyimplementedmaynotresultintheanticipatedbenefitstoNRG’sbusiness,resultsofoperationsandfinancialconditioninatimelymannerifatall.Further,NRGcouldexperienceunexpecteddelays,businessdisruptionsresultingfromsupportingtheseinitiativesduringandfollowingcompletionoftheseactivities,decreasedproductivity,adverseeffectsonemployeemoraleandemployeeturnoverasaresultofsuchinitiatives,anyofwhichmayimpairNRG’sabilitytoachieveanticipatedresultsorotherwiseharmNRG’sbusiness,resultsofoperationsandfinancialcondition.BecauseNRGownslessthanamajorityoftheownershipinterestsofsomeofitsprojectinvestments,theCompanycannotexercisecompletecontrolovertheiroperations.NRGhaslimitedcontrolovertheoperationofsomeprojectinvestmentsandjointventuresbecausetheCompany'sinvestmentsareinprojectswhereitbeneficiallyownslessthanamajorityoftheownershipinterests.NRGseekstoexertadegreeofinfluencewithrespecttothemanagementandoperationofprojectsinwhichitownslessthanamajorityoftheownershipinterestsbynegotiatingtoobtainpositionsonmanagementcommitteesortoreceivecertainlimitedgovernancerights,suchasrightstovetosignificantactions.However,theCompanymaynotalwayssucceedinsuchnegotiations.NRGmaybedependentonitsco-venturerstooperatesuchprojects.TheCompany'sco-venturersmaynothavethelevelofexperience,technicalexpertise,humanresourcesmanagementandotherattributesnecessarytooperatetheseprojectsoptimally.Theapprovalofco-venturersalsomayberequiredforNRGtoreceivedistributionsoffundsfromprojectsortotransfertheCompany'sinterestinprojects.NRGmaybeunabletointegratetheoperationsofacquiredentitiesinthemannerexpected.NRGentersintoacquisitionsthatresultinvariousbenefits,including,amongotherthings,costsavingsandoperatingefficiencies.AchievingtheanticipatedbenefitsoftheseacquisitionsdependsonwhetherthebusinessescanbeintegratedintoNRGinanefficientandeffectivemanner.Theintegrationprocesscouldtakelongerthananticipatedandcouldresultinthelossofvaluableemployees,thedisruptionofNRG'sbusinesses,processesandsystemsorinconsistenciesinstandards,controls,procedures,practices,policiesandcompensationarrangements,anyofwhichcouldadverselyaffecttheCompany'sabilitytoachievetheanticipatedbenefitsoftheacquisitions.NRGmayhavedifficultyaddressingpossibledifferencesincorporateculturesandmanagementphilosophies.FailuretoachievetheseanticipatedbenefitscouldresultinincreasedcostsordecreasesintheamountofexpectedrevenuesandcouldadverselyaffectNRG'sfuturebusiness,financialcondition,operatingresultsandprospects.FutureacquisitionordispositionactivitiescouldinvolveunknownrisksandmayhavemateriallyadverseeffectsandNRGmaybesubjecttotrailingliabilitiesfrombusinessesthatitdisposesoforthatareinactive.NRGmayinthefuturemakeacquisitionsordispositionsofbusinessesorassets,acquireorsellbooksofretailcustomers,orpursueotherbusinessactivities,directlyorindirectlythroughsubsidiaries,thatinvolveanumberofrisks.Theacquisitionofcompaniesandassetsissubjecttosubstantialrisks,includingthefailuretoidentifymaterialproblemsduringduediligence,theriskofover-payingforassetsorcustomers,theabilitytoretaincustomersandtheinabilitytoarrangefinancingforanacquisitionasmayberequiredordesired.Further,theintegrationandconsolidationofacquisitionsrequiressubstantialhuman,financialandotherresourcesand,ultimately,theCompany'sacquisitionsmaynotbesuccessfullyintegrated.Inthecaseofdispositions,suchrisksmayrelatetoemploymentmatters,counterparties,regulatorsandotherstakeholdersinthedisposedbusiness,risksrelatingtoseparatingthedisposedassetsfromNRG’sbusiness,risksrelatedtothemanagementofNRG’songoingbusiness,risksunknowntoNRGatthetime,andotherfinancial,legalandoperationalrisksrelatedtosuchdisposition.Inaddition,NRGmaybesubjecttomaterialtrailingliabilitiesfromdisposedbusinessessuchasNRGYield,Inc.,anditsRenewablesPlatform.Anysuchriskmayresultinoneormorecostlydisputesorlitigation.Therecanbenoassurancesthatanyfutureacquisitionswillperformasexpectedorthatthereturnsfromsuchacquisitionswillsupporttheindebtednessincurredtoacquirethemorthecapitalexpendituresneededtodevelopthem.TherecanalsobenoassurancesthatNRGwillrealizetheanticipatedbenefitsfromanysuchdispositions.ThefailuretorealizetheanticipatedreturnsorbenefitsfromanacquisitionordispositioncouldadverselyaffectNRG'sresultsofoperations,cashflowsandfinancialcondition.29NRG'sbusiness,financialconditionandresultsofoperationscouldbeadverselyimpactedbystrikesorworkstoppagesbyitsunionizedemployeesorinabilitytoreplaceemployeesastheyretire.AsofDecember 31,2019,approximately24%ofNRG'semployeeswerecoveredbycollectivebargainingagreements.IntheeventthattheCompany'sunionemployeesstrike,participateinaworkstoppageorslowdownorengageinotherformsoflaborstrifeordisruption,NRGwouldberesponsibleforprocuringreplacementlaborortheCompanycouldexperiencereducedpowergenerationoroutages.AlthoughNRG'sabilitytoprocuresuchlaborisuncertain,contingencystaffingplanningiscompletedaspartofeachrespectivecontractnegotiations.Strikes,workstoppagesortheinabilitytonegotiatefuturecollectivebargainingagreementsonfavorabletermscouldhaveamaterialadverseeffectontheCompany'sbusiness,financialcondition,resultsofoperationsandcashflows.Inaddition,anumberoftheCompany'semployeesatNRG'splantsareclosetoretirement.TheCompany'sinabilitytoreplaceretiringworkerscouldcreatepotentialknowledgeandexpertisegapsassuchworkersretire.ChangesintechnologymayimpairthevalueofNRG'spowerplantsandtheattractivenessofitsretailproducts.Researchanddevelopmentactivitiesareongoingintheindustrytoprovidealternativeandmoreefficienttechnologiestoproducepower,includingwind,photovoltaic(solar)cells,energystorage,andimprovementsintraditionaltechnologiesandequipment,suchasmoreefficientgasturbines.AdvancesintheseorothertechnologiescouldreducethecostsofpowerproductiontoalevelbelowwhattheCompanyhascurrentlyforecasted,whichcouldadverselyaffectitscashflows,resultsofoperationsorcompetitiveposition.Technology,includingdistributedtechnologyorchangesinretailratestructures,mayalsohaveamaterialimpactontheCompany’sabilitytoretainretailcustomers.TheCompanymaypotentiallybeaffectedbyemergingtechnologiesthatmayovertimeaffectchangeincapacitymarketsandtheenergyindustryoverallwiththeinclusionofdistributedgenerationandcleantechnology.Someemergingtechnologieslikedistributedrenewableenergytechnologies,broadconsumeradoptionofelectricvehiclesandenergystoragedevicescouldaffectthepriceofenergy.Theseemergingtechnologiesmayaffectthefinancialviabilityofutilitycounterpartiesandcouldhavesignificantimpactsonwholesalemarketprices,whichcouldultimatelyhaveamaterialadverseeffectonNRG'sfinancialcondition,resultsofoperationsandcashflows.RisksthatarebeyondNRG'scontrol,includingbutnotlimitedtoactsofterrorismorrelatedactsofwar,naturaldisaster,hostilecyberintrusionsorothercatastrophiceventscouldhaveamaterialadverseeffectonNRG'sfinancialcondition,resultsofoperationsandcashflows.NRG'sgenerationfacilitiesandthefacilitiesofthirdpartiesonwhichtheyrelymaybetargetsofterroristactivities,aswellaseventsoccurringinresponsetoorinconnectionwithsuchactivities,allofwhichcouldcauseenvironmentalrepercussionsand/orresultinfullorpartialdisruptionofthefacilitiesabilitytogenerate,transmit,transportordistributeelectricityornaturalgas.Strategictargets,suchasenergy-relatedfacilities,maybeatgreaterriskoffutureterroristactivitiesthanotherdomestictargets.Hostilecyberintrusions,includingthosetargetinginformationsystems,aswellaselectroniccontrolsystemsusedatthegenerationfacilitiesandforthedistributionsystems,couldseverelydisruptbusinessoperationsandresultinlossofservicetocustomers,aswellassignificantexpensetorepairsecuritybreachesorsystemdamage.Anysuchenvironmentalrepercussionsordisruptioncouldresultinasignificantdecreaseinrevenuesorsignificantreconstructionorremediationcostsbeyondwhatcouldberecoveredthroughinsurancepolicies,whichcouldhaveamaterialadverseeffectontheCompany'sfinancialcondition,resultsofoperationsandcashflows.Inaddition,significantweathereventsorterroristactionscoulddamageorshutdownthepowertransmissionanddistributionfacilitiesuponwhichtheCompanyisdependent,whichmayreduceretailvolumeforextendedperiodsoftime.Powersupplymaybesoldatalossiftheseeventscauseasignificantlossofretailcustomerload.TheoperationofNRG’sbusinessesissubjecttocyber-basedsecurityandintegrityrisk.NumerousfunctionsaffectingtheefficientoperationofNRG’sbusinessesdependonthesecureandreliablestorage,processingandcommunicationofelectronicdataandtheuseofsophisticatedcomputerhardwareandsoftwaresystems.TheoperationofNRG’sgenerationplants,includingSTP,andofNRG'senergyandfueltradingbusinessesrelyoncyber-basedtechnologiesand,therefore,aresubjecttotheriskthatsuchsystemscouldbethetargetofdisruptiveactions,particularlythroughcyberattackorcyberintrusion,includingbycomputerhackers,foreigngovernmentsandcyberterrorists,orotherwisebecompromisedbyunintentionalevents.Asaresult,operationscouldbeinterrupted,propertycouldbedamagedandsensitivecustomerinformationcouldbelostorstolen,causingNRGtoincursignificantlossesofrevenues,othersubstantialliabilitiesanddamages,coststoreplaceorrepairdamagedequipmentanddamagetoNRG'sreputation.Inaddition,NRGmayexperienceincreasedcapitalandoperatingcoststoimplementincreasedsecurityforitscybersystemsandplants.30TheCompany'sbusinessesaresubjecttotheriskthatsensitivedatamaybecompromised,whichcouldresultinanadverseimpacttotheCompany'sreputationand/oritsresultsofoperations.TheCompanyrequiresaccesstosensitivedataintheordinarycourseofbusiness.Examplesofsensitivedataarenames,addresses,accountinformation,historicalelectricityusage,expectedpatternsofuse,paymenthistory,creditbureaudata,creditanddebitcardaccountnumbers,driver'slicensenumbers,socialsecuritynumbersandbankaccountinformation.NRGmayneedtoprovidesensitivedatatovendorsandserviceproviders,whorequireaccesstothisinformationinordertoprovideservicestoNRG,suchascallcenteroperations.IfasignificantbreachoccurredorifsensitivedatathatwasentrustedtotheCompanywasmishandled,thereputationofNRGanditsbusinessesmaybeadverselyaffected,customerconfidencemaybediminished,orNRGanditsretailbusinessesmaybesubjecttolegalclaims,anyofwhichmaycontributetothelossofcustomersandhaveanegativeimpactonthebusinessand/orresultsofoperations.RisksRelatedtoGovernmentalRegulationandLawsNRG'sbusinessissubjecttosubstantialenergyregulationandmaybeadverselyaffectedbylegislativeorregulatorychanges,aswellasliabilityunder,oranyfutureinabilitytocomplywith,existingorfutureenergyregulationsorrequirements.NRG'sbusinessissubjecttoextensiveU.S.federal,stateandlocallawsandforeignlaws.Compliancewith,orchangesto,therequirementsundertheselegalandregulatoryregimesmaycausetheCompanytoincursignificantadditionalcosts,reducetheCompany'sabilitytohedgeexposureortosellretailpowerwithincertainstatesortocertainclassesofretailcustomers;orrestricttheCompany’smarketingpractices,itsabilitytopassthroughcoststoretailcustomers,oritsabilitytocompeteonfavorabletermswithcompetitors,includingtheincumbentutility.Retailcompetitionisregulatedonastate-by-statelevelandishighlydependentonstatelaws,regulationsandpolicies,whichcouldchangeatanymoment.Failuretocomplywithsuchrequirementscouldresultintheshutdownofanon-complyingfacility,theimpositionofliens,fines,and/orcivilorcriminalliability.PublicutilitiesundertheFPAarerequiredtoobtainFERCacceptanceoftheirrateschedulesforwholesalesalesofelectricity.ExceptforERCOTgenerationfacilitiesandpowermarketers,allofNRG'snon-qualifyingfacilitygeneratingcompaniesandpowermarketingaffiliatesintheU.S.makesalesofelectricityininterstatecommerceandarepublicutilitiesforpurposesoftheFPA.FERChasgrantedeachofNRG'sgeneratingandpowermarketingcompaniesthatmakesalesofelectricityoutsideofERCOTtheauthoritytosellelectricityatmarket-basedrates.FERC'sordersthatgrantNRG'sgeneratingandpowermarketingcompaniesmarket-basedrateauthorityreservetherighttorevokeorrevisethatauthorityifFERCsubsequentlydeterminesthatNRGcanexercisemarketpowerintransmissionorgeneration,createbarrierstoentry,orengageinabusiveaffiliatetransactions.Inaddition,NRG'smarket-basedsalesaresubjecttocertainmarketbehaviorrules,andifanyofNRG'sgeneratingandpowermarketingcompaniesweredeemedtohaveviolatedthoserules,theyaresubjecttopotentialdisgorgementofprofitsassociatedwiththeviolationand/orsuspensionorrevocationoftheirmarket-basedrateauthority.IfNRG'sgeneratingandpowermarketingcompaniesweretolosetheirmarket-basedrateauthority,suchcompanieswouldberequiredtoobtainFERC'sacceptanceofacost-of-serviceratescheduleandcouldbecomesubjecttotheaccounting,record-keeping,andreportingrequirementsthatareimposedonutilitieswithcost-basedrateschedules.ThiscouldhaveamaterialadverseeffectontheratesNRGchargesforpowerfromitsfacilities.SubstantiallyalloftheCompany'sgenerationassetsarealsosubjecttothereliabilitystandardspromulgatedbythedesignatedElectricReliabilityOrganization(currentlyNERC)andapprovedbyFERC.IfNRGfailstocomplywiththemandatoryreliabilitystandards,NRGcouldbesubjecttosanctions,includingsubstantialmonetarypenaltiesandincreasedcomplianceobligations.NRGisalsoaffectedbylegislativeandregulatorychanges,aswellaschangestomarketdesign,marketrules,tariffs,costallocations,andbiddingrulesthatoccurintheexistingISOs.TheISOsthatoverseemostofthewholesalepowermarketsimpose,andinthefuturemaycontinuetoimpose,mitigation,includingpricelimitations,offercaps,non-performancepenaltiesandothermechanismstoaddresssomeofthevolatilityandthepotentialexerciseofmarketpowerinthesemarkets.ThesetypesofpricelimitationsandotherregulatorymechanismsmayhaveamaterialadverseeffectontheprofitabilityofNRG'sgenerationfacilitiesthatsellenergyandcapacityintothewholesalepowermarkets.31Theregulatoryenvironmenthasundergonesignificantchangesinthelastseveralyearsduetostateandfederalpoliciesaffectingwholesaleandretailcompetitionandthecreationofincentivesfortheadditionoflargeamountsofnewrenewablegenerationand,insomecases,transmission.Thesechangesareongoing,andtheCompanycannotpredictthefuturedesignofthewholesalepowermarketsortheultimateeffectthatthechangingregulatoryenvironmentwillhaveonNRG'sbusiness.Inaddition,insomeofthesemarkets,interestedpartieshaveproposedmaterialmarketdesignchanges,includingtheeliminationofasingleclearingpricemechanism,aswellasproposalstoreinstatetheverticalmonopolyutilityofthemarketsorrequiredivestiturebygeneratingcompaniestoreducetheirmarketshare.Ifcompetitiverestructuringoftheelectricpowermarketsisreversed,discontinued,ordelayed,theCompany'sbusinessprospectsandfinancialresultscouldbenegativelyimpacted.Inaddition,since2010,therehavebeenanumberofreformstotheregulationofthederivativesmarkets,bothintheUnitedStatesandinternationally.Theseregulations,andanyfurtherchangesthereto,oradoptionofadditionalregulations,includinganyregulationsrelatingtopositionlimitsonfuturesandotherderivativesormarginforderivatives,couldnegativelyimpactNRG’sabilitytohedgeitsportfolioinanefficient,cost-effectivemannerby,amongotherthings,potentiallydecreasingliquidityintheforwardcommodityandderivativesmarketsorlimitingNRG’sabilitytoutilizenon-cashcollateralforderivativestransactions.NRG’sbusinessmaybeaffectedbystateinterferenceinthecompetitivewholesalemarketplace.NRG’sgenerationandcompetitiveretailbusinessesrelyonacompetitivewholesalemarketplace.Thecompetitivewholesalemarketplacemaybeimpactedbyout-of-marketsubsidiesprovidedbystatesorstateentities,includingbailoutsofuneconomicnuclearplants,importsofpowerfromCanada,renewablemandatesorsubsidies,mandatestosellpowerbelowitscostofacquisitionandassociatedcosts,aswellasout-of-marketpaymentstoneworexistinggenerators.Theseout-of-marketsubsidiestoexistingornewgenerationunderminethecompetitivewholesalemarketplace,whichcanleadtoprematureretirementofexistingfacilities,includingthoseownedbytheCompany.Ifthesemeasurescontinue,capacityandenergypricesmaybesuppressed,andtheCompanymaynotbesuccessfulinitseffortstoinsulatethecompetitivemarketfromthisinterference.TheCompany'sretailbusinessesmaybemateriallyimpactedbyrulesorregulationsthatallowregulatedutilitiestoparticipateincompetitiveretailmarketsorownandoperatefacilitiesthatcouldbeprovidedbycompetitivemarketparticipants.TheintegrationoftheCapacityPerformanceproductintothePJMmarketandthePay-for-PerformancemechanisminISO-NEcouldleadtosubstantialchangesincapacityincomeandnon-performancepenalties,whichcouldhaveamaterialadverseeffectonNRG’sresultsofoperations,financialconditionandcashflows.BothISO-NEandPJMoperateapay-for-performancemodelwherecapacitypaymentsaremodifiedbasedonreal-timegeneratorperformance.Capacitymarketpricesaresensitivetodesignparameters,aswellasadditionsofnewcapacity.NRGmayexperiencesubstantialchangesincapacityincomeandnon-performancepenalties,whichcouldhaveamaterialadverseeffectonNRG’sresultsofoperations,financialconditionandcashflows.NRG'sownershipinterestinanuclearpowerfacilitysubjectstheCompanytoregulations,costsandliabilitiesuniquelyassociatedwiththesetypesoffacilities.UndertheAtomicEnergyActof 1954,asamended,orAEA,ownershipandoperationofSTP,ofwhichNRGindirectlyownsa44%interest,issubjecttoregulationbytheNRC.Suchregulationincludeslicensing,inspection,enforcement,testing,evaluationandmodificationofallaspectsofnuclearreactorpowerplantdesignandoperation,environmentalandsafetyperformance,technicalandfinancialqualifications,decommissioningfundingassuranceandtransferandforeignownershiprestrictions.ThecurrentfacilityoperatinglicensesforSTPexpireonAugust20,2047(Unit1)andDecember15,2048(Unit2).32Thereareuniqueriskstoowningandoperatinganuclearpowerfacility.Theseincludeliabilitiesrelatedtothehandling,treatment,storage,disposal,transport,releaseanduseofradioactivematerials,particularlywithrespecttospentnuclearfuel,anduncertaintiesregardingtheultimate,andpotentialexposureto,technicalandfinancialrisksassociatedwithmodifyingordecommissioninganuclearfacility.TheNRCcouldrequiretheshutdownoftheplantforsafetyreasonsorrefusetopermitrestartoftheunitafterunplannedorplannedoutages.NeworamendedNRCsafetyandregulatoryrequirementsmaygiverisetoadditionaloperationandmaintenancecostsandcapitalexpenditures.Additionally,agingequipmentmayrequiremorecapitalexpenditurestokeepeachofthesenuclearpowerplantsoperatingefficiently. Thisequipmentisalsolikelytorequireperiodicupgradingandimprovement. Anyunexpectedfailure,includingfailureassociatedwithbreakdowns,forcedoutages,oranyunanticipatedcapitalexpenditures,couldresultinreducedprofitability. STPwillbeobligatedtocontinuestoringspentnuclearfueliftheU.S.DOEcontinuestofailtomeetitscontractualobligationstoSTPmadepursuanttotheU.S.NuclearWastePolicyActof1982toacceptanddisposeofSTP'sspentnuclearfuel.SeealsoItem1—RegulatoryMatters — NuclearOperations- DecommissioningTrustsandItem1—EnvironmentalMatters — FederalEnvironmentalInitiatives — NuclearWasteforfurtherdiscussion.CostsassociatedwiththeseriskscouldbesubstantialandcouldhaveamaterialadverseeffectonNRG'sresultsofoperations,financialconditionorcashflowtotheextentnotcoveredbytheDecommissioningTrustsorrecoveredfromratepayers.Inaddition,totheextentthatallorapartofSTPisrequiredbytheNRCtopermanentlyortemporarilyshutdownormodifyitsoperations,orisotherwisesubjecttoaforcedoutage,NRGmayincuradditionalcoststotheextentitisobligatedtoprovidepowerfrommoreexpensivealternativesources — eitherNRG'sownplants,thirdpartygeneratorsortheERCOT — tocovertheCompany'sthenexistingforwardsaleobligations.Suchshutdownormodificationcouldalsoleadtosubstantialcostsrelatedtothestorageanddisposalofradioactivematerialsandspentnuclearfuel.WhileSTPmaintainspropertyandliabilityinsuranceforlossesrelatedtonuclearoperations,theremaybelimitationsontheamountsandtypesofinsurancecommerciallyavailable.SeealsoItem15—Note23,CommitmentsandContingencies,NuclearInsurance.AnaccidentatSTPoranothernuclearfacilitycouldhaveamaterialadverseeffectonNRG'sfinancialcondition,itsoperationalresults,orliquidityaslossesmayexceedtheinsurancecoverageavailableand/ormayresultintheobligationtopayretrospectivepremiumobligations.NRGissubjecttoenvironmentallawsthatimposeextensiveandincreasinglystringentrequirementsontheCompany'songoingoperations,aswellaspotentiallysubstantialliabilitiesarisingoutofenvironmentalcontamination.TheseenvironmentalrequirementsandliabilitiescouldadverselyimpactNRG'sresultsofoperations,financialconditionandcashflows.NRGissubjecttotheenvironmentallawsofforeignandU.S.,federal,stateandlocalauthorities.TheCompanymustcomplywithnumerousenvironmentallawsandobtainnumerousgovernmentalpermitsandapprovalstobuildandoperatetheCompany'splants.Federalandstateenvironmentallawsgenerallyhavebecomemorestringentovertime.ShouldNRGfailtocomplywithanyenvironmentalrequirementsthatapplytoitsoperations,theCompanycouldbesubjecttoadministrative,civiland/orcriminalliabilityandfines,andregulatoryagenciescouldtakeotheractionsseekingtocurtailtheCompany'soperations.Inaddition,whennewrequirementstakeeffectorwhenexistingenvironmentalrequirementsarerevised,reinterpretedorsubjecttochangingenforcementpolicies,NRG'sbusiness,resultsofoperations,financialconditionandcashflowscouldbeadverselyaffected.NRG'sbusinessesaresubjecttophysical,marketandeconomicrisksrelatingtopotentialeffectsofclimatechange.Fluctuationsinweatherandotherenvironmentalconditions,includingtemperatureandprecipitationlevels,mayaffectconsumerdemandforelectricity.Inaddition,thepotentialphysicaleffectsofclimatechange,suchasincreasedfrequencyandseverityofstorms,floodsandotherclimaticevents,coulddisruptNRG'soperationsandsupplychain,andcausethemtoincursignificantcostsinpreparingfororrespondingtotheseeffects.Theseorothermeteorologicalchangescouldleadtoincreasedoperatingcosts,capitalexpensesorpowerpurchasecosts.NRG'scommercialandresidentialcustomersmayalsoexperiencethepotentialphysicalimpactsofclimatechangeandmayincursignificantcostsinpreparingfororrespondingtotheseefforts,includingincreasingthemixandresiliencyoftheirenergysolutionsandsupply.Hazardscustomarytothepowerproductionindustryincludethepotentialforunusualweatherconditions,whichcouldaffectfuelpricingandavailability,theCompany'sroutetomarketoraccesstocustomers,i.e.,transmissionanddistributionlines,orcriticalplantassets.Thecontributionofclimatechangetothefrequencyorintensityofweather-relatedeventscouldaffectNRG'soperationsandplanningprocess.Climatechangecouldalsoaffecttheavailabilityofasecureandeconomicalsupplyofwaterinsomelocations,whichisessentialforthecontinuedoperationofNRG'sgenerationplants.NRGmonitorswaterriskcarefully.Ifitisdeterminedthatawatersupplyriskexiststhatcouldimpactprojectedgenerationlevelsatanyplantriskmitigationeffortsareidentifiedandevaluatedforimplementation.Also,demandforNRG'senergy-relatedservicescouldbesimilarlyimpactedbyconsumers’preferencesormarketfactorsfavoringenergyefficiency,low-carbonpowersourcesorreducedelectricityusage.33Policiesatthenational,regionalandstatelevelstoregulateGHGemissionsandmitigateclimatechangecouldadverselyimpactNRG'sresultsofoperations,financialconditionandcashflows.NRG'sGHGemissionsfor2019canbefoundinItem1,Business—EnvironmentalRegulatoryMatters.GHGregulationcouldincreasethecostofelectricitygeneratedbyfossilfuels,andsuchincreasescouldreducedemandforthepowerNRGgeneratesandmarkets.In2015,theEPApromulgatedthefinalGHGemissionsrulesfornewandexistingfossil-fuel-firedelectricgeneratingunits,whichhavebeenstayedbytheU.S.SupremeCourtandtheEPAhasproposedrepealing.TheCompanyoperatesgeneratingunitsinConnecticut,Delaware,Maryland,andNewYorkwhicharesubjecttoRGGI,whichisaregionalcapandtradesystemforCO2.In2013,eachofthesestatesfinalizedarulethatreducedandwillcontinuetoreducethenumberofallowancesthrough2020.ThenineRGGIstatesre-evaluatedtheprogramandpublishedamodelruletofurtherreducethenumberofallowances.TherevisionsbeingcurrentlycontemplatedcouldadverselyimpactNRG'sresultsofoperations,financialconditionandcashflows.CaliforniahasaCO2capandtradeprogramforelectricgeneratingunitsgreaterthan25MW.TheimpactontheCompanydependsonthecostoftherelatedallowancesandtheabilitytopassthesecoststhroughtocustomers.NRG'sretailbusinessesaresubjecttochangingstaterulesandregulationsthatcouldhaveamaterialimpactontheprofitabilityofitsbusinesslines.ThecompetitivenessofNRG'sretailbusinessespartiallydependsonstateregulatorypoliciesthatestablishthestructure,rules,termsandconditionsonwhichservicesareofferedtoretailcustomers.Thesestatepolicies,whichcanincludecontrolsontheretailratesNRG'sretailbusinessescancharge,theimpositionofadditionalcostsonsales,restrictionsontheCompany'sabilitytoobtainnewcustomersthroughvariousmarketingchannelsanddisclosurerequirements,whichcanaffectthecompetitivenessofNRG'sretailbusinesses.TheCompany'sretailbusinessesmaybemateriallyimpactedbyrulesorregulationsthatallowregulatedutilitiestoparticipateincompetitiveretailmarketsorownandoperatefacilitiesthatcouldbeprovidedbycompetitivemarketparticipants.Additionally,stateorfederalimpositionofnetmeteringorRPSprogramscanmakeitmoreorlessexpensiveforretailcustomerstosupplementorreplacetheirrelianceongridpower. NRG'sretailbusinesseshavelimitedabilitytoinfluencedevelopmentofthesepolicies,anditsbusinessmodelmaybemoreorlesseffective,dependingonchangestotheregulatoryenvironment. TheCompany'sinternationaloperationsareexposedtopoliticalandeconomicrisks,commercialinstabilityandeventsbeyondtheCompany'scontrolinthecountriesinwhichitoperates,whichrisksmaynegativelyimpacttheCompany'sbusiness.TheCompany'sinternationaloperationsdependonproductsmanufactured,purchasedandsoldintheU.S.andinternationally,includingincountrieswithpoliticalandeconomicinstability.Insomecases,thesecountrieshavegreaterpoliticalandeconomicvolatilityandgreatervulnerabilitytoinfrastructureandlabordisruptionsthaninNRG'sothermarkets.OperatingandseekingtoexpandbusinessinanumberofdifferentregionsandcountriesexposestheCompanytoanumberofrisks,including:•multiple and potentially conflicting laws, regulations and policies that are subject to change;•imposition of currency restrictions on repatriation of earnings or other restraints;•imposition of burdensome tariffs or quotas;•national and international conflict, including terrorist acts; and•political and economic instability or civil unrest that may severely disrupt economic activity in affected countries.TheoccurrenceofoneormoreoftheseeventsmaynegativelyimpacttheCompany'sbusiness,resultsofoperationsandfinancialcondition.34RisksRelatedtoEconomicandFinancialMarketConditionsNRG'slevelofindebtednesscouldadverselyaffectitsabilitytoraiseadditionalcapitaltofunditsoperationsorreturncapitaltostockholders.Itcouldalsoexposeittotheriskofincreasedinterestratesandlimititsabilitytoreacttochangesintheeconomyoritsindustry.NRG'ssubstantialdebtcouldhavenegativeconsequences,including:•increasing NRG's vulnerability to general economic and industry conditions;•requiring a substantial portion of NRG's cash flow from operations to be dedicated to the payment of principal and interest on its indebtedness, therefore reducing NRG's ability to pay dividends to holders of its preferred or common stock or to use its cash flow to fund its operations, capital expenditures and future business opportunities;•limiting NRG's ability to enter into long-term power sales or fuel purchases which require credit support;•exposing NRG to the risk of increased interest rates because certain of its borrowings, including borrowings under its Senior Credit Facility are at variable rates of interest;•limiting NRG's ability to obtain additional financing for working capital including collateral postings, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and•limiting NRG's ability to adjust to changing market conditions and placing it at a competitive disadvantage compared to its competitors who have less debt.TheindenturesforNRG'sSeniorNotes,SeniorSecuredNotesandSeniorCreditFacilitycontainfinancialandotherrestrictivecovenantsthatmaylimittheCompany'sabilitytoreturncapitaltostockholdersorotherwiseengageinactivitiesthatmaybeinitslong-termbestinterests.Furthermore,financialandotherrestrictivecovenantscontainedinanyprojectlevelsubsidiarydebtmaylimittheabilityofNRGtoreceivedistributionsfromsuchsubsidiary.NRG'sfailuretocomplywiththosecovenantscouldresultinaneventofdefaultwhich,ifnotcuredorwaived,couldresultintheaccelerationofalloftheCompany'sindebtedness.Inaddition,NRG'sabilitytoarrangefinancing,eitheratthecorporatelevel,anon-recourseproject-levelsubsidiaryorotherwise,andthecostsofsuchcapital,aredependentonnumerousfactors,including:•general economic and capital market conditions;•credit availability from banks and other financial institutions;•investor confidence in NRG, its partners and the regional wholesale power markets;•NRG's financial performance and the financial performance of its subsidiaries;•NRG's level of indebtedness and compliance with covenants in debt agreements;•maintenance of acceptable credit ratings;•cash flow; and•provisions of tax and securities laws that may impact raising capital.NRGmaynotbesuccessfulinobtainingadditionalcapitalfortheseorotherreasons.Thefailuretoobtainadditionalcapitalfromtimetotimemayhaveamaterialadverseeffectonitsbusinessandoperations.AdverseeconomicconditionscouldadverselyaffectNRG’sbusiness,financialcondition,resultsofoperationsandcashflows.Adverseeconomicconditionsanddeclinesinwholesaleenergyprices,partiallyresultingfromadverseeconomicconditions,mayimpactNRG'sresultsofoperations.Thebreadthanddepthofnegativeeconomicconditionsmayhaveawide-rangingimpactontheU.S.businessenvironment,includingNRG’sbusinesses.Inaddition,adverseeconomicconditionsalsoreducethedemandforenergycommodities.ReduceddemandfromnegativeeconomicconditionscontinuestoimpactthekeydomesticwholesaleenergymarketsNRGserves.Thecombinationoflowerdemandforpowerandincreasedsupplyofnaturalgashasputdownwardpricepressureonwholesaleenergymarketsingeneral,furtherimpactingNRG’senergymarketingresults.Ingeneral,economicandcommoditymarketconditionswillcontinuetoimpactNRG’sunhedgedfutureenergymargins,liquidity,earningsgrowthandoverallfinancialcondition.Inaddition,adverseeconomicconditions,declinesinwholesaleenergyprices,reduceddemandforpowerandotherfactorsmaynegativelyimpactthetradingpriceofNRG’scommonstockandimpactforecastedcashflows,whichmayrequireNRGtoevaluateitsgoodwillandotherlong-livedassetsforimpairment.AnysuchimpairmentcouldhaveamaterialimpactonNRG’sfinancialstatements.35GoodwillandotherintangibleassetsthatNRGhasrecordedinconnectionwithitsacquisitionsaresubjecttoimpairmentevaluationsand,asaresult,theCompanycouldberequiredtowriteoffsomeorallofthisgoodwillandotherintangibleassets,whichmayadverselyaffecttheCompany'sfinancialconditionandresultsofoperations.Goodwillisnotamortizedbutisreviewedannuallyormorefrequentlyforimpairment.Otherintangiblesarealsoreviewedatleastannuallyormorefrequently,ifcertainconditionsexist,andareamortized.Anyreductioninorimpairmentofthevalueofgoodwillorotherintangibleassetswillresultinachargeagainstearnings,whichcouldmateriallyadverselyaffectNRG'sreportedresultsofoperationsandfinancialpositioninfutureperiods.TheCompanyhasmadeinvestments,andmaycontinuetomakeinvestments,innewbusinessinitiativespredominantlyfocusedonconsumerproductsandinmarketsthatmaynotbesuccessful,maynotachievetheintendedfinancialresultsormayresultinproductliabilityandreputationalriskthatcouldadverselyaffecttheCompany.NRGcontinuestopursuegrowthinitsexistingbusinessesandmarketsandfurtherdiversificationacrossthecompetitiveenergyvaluechain.NRGiscontinuingtopursueinvestmentopportunitiesinrenewables,consumerproductsanddistributedgeneration.Suchinitiativesmayinvolvesignificantrisksanduncertainties,includingdistractionofmanagementfromcurrentoperations,inadequatereturnoncapital,andunidentifiedissuesnotdiscoveredinthediligenceperformedpriortolaunchinganinitiativeorenteringamarket.Aspartoftheseinitiatives,theCompanymaybeliabletocustomersforanydamagecausedtocustomers’homes,facilities,belongingsorpropertyduringtheinstallationofCompanyproductsandsystems,suchasresidentialsolarsystemsandmassmarketback-upgenerators.Inaddition,shortagesofskilledlaborforCompanyprojectscouldsignificantlydelayaprojectorotherwiseincreaseitscosts.TheproductsthattheCompanysellsormanufacturesmayexposetheCompanytoproductliabilityclaimsrelatingtopersonalinjury,death,orenvironmentalorpropertydamage,andmayrequireproductrecallsorotheractions.AlthoughtheCompanymaintainsliabilityinsurance,theCompanycannotbecertainthatitscoveragewillbeadequateforliabilitiesactuallyincurredorthatinsurancewillcontinuetobeavailabletotheCompanyoneconomicallyreasonableterms,oratall.Further,anyproductliabilityclaimordamagecausedbytheCompanycouldsignificantlyimpairtheCompany’sbrandandreputation,whichmayresultinafailuretomaintaincustomersandachievetheCompany’sdesiredgrowthinitiativesinthesenewbusinesses.36CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATIONThisAnnualReportonForm 10-KofNRGEnergy,Inc.,orNRGortheCompany,includesforward-lookingstatementswithinthemeaningofSection 27AoftheSecuritiesActof1933,asamended,orSecuritiesAct,andSection 21EoftheSecuritiesExchangeActof1934,asamended,orExchangeAct.Thewords"believes,""projects,""anticipates,""plans,""expects,""intends,""estimates"andsimilarexpressionsareintendedtoidentifyforward-lookingstatements.Theseforward-lookingstatementsinvolveknownandunknownrisks,uncertaintiesandotherfactorsthatmaycauseNRG'sactualresults,performanceandachievements,orindustryresults,tobemateriallydifferentfromanyfutureresults,performanceorachievementsexpressedorimpliedbysuchforward-lookingstatements.Thesefactors,risksanduncertaintiesincludethefactorsdescribedunderItem 1A — RiskFactorsandthefollowing:•NRG'sabilitytoobtainandmaintainretailmarketshare;•NRG'sabilitytoengageinsuccessfulsalesanddivestitures,aswellasmergersandacquisitionsactivity;•NRG'sabilitytoachievetheexpectedbenefitsofitsTransformationPlan;•Generaleconomicconditions,changesinthewholesalepowermarketsandfluctuationsinthecostoffuel;•Volatilepowersupplycostsanddemandforpower;•Changesinlaw,includingjudicialdecisions;•Hazardscustomarytothepowerproductionindustryandpowergenerationoperations,suchasfuelandelectricitypricevolatility,unusualweatherconditions,catastrophicweather-relatedorotherdamagetofacilities,unscheduledgenerationoutages,maintenanceorrepairs,unanticipatedchangestofuelsupplycostsoravailabilityduetohigherdemand,shortages,transportationproblemsorotherdevelopments,environmentalincidents,orelectrictransmissionorgaspipelinesystemconstraintsandthepossibilitythatNRGmaynothaveadequateinsurancetocoverlossesasaresultofsuchhazards;•TheeffectivenessofNRG'sriskmanagementpoliciesandproceduresandtheabilityofNRG'scounterpartiestosatisfytheirfinancialcommitments;•Counterparties'collateraldemandsandotherfactorsaffectingNRG'sliquiditypositionandfinancialcondition;•NRG'sabilitytooperateitsbusinessesefficientlyandgenerateearningsandcashflowsfromitsasset-basedbusinessesinrelationtoitsdebtandotherobligations;•NRG'sabilitytoenterintocontractstosellpowerandprocurefuelonacceptabletermsandprices;•Theliquidityandcompetitivenessofwholesalemarketsforenergycommodities;•Governmentregulation,includingchangesinmarketrules,rates,tariffsandenvironmentallaws;•PricemitigationstrategiesandothermarketstructuresemployedbyISOsorRTOsthatresultinafailuretoadequatelyandfairlycompensateNRG'sgenerationunits;•NRG'sabilitytomitigateforcedoutageriskforunitssubjecttocapacityperformancerequirementsinPJM,performanceincentivesinISO-NE,andscarcitypricinginERCOT;•NRG'sabilitytoborrowfundsandaccesscapitalmarkets,aswellasNRG'ssubstantialindebtednessandthepossibilitythatNRGmayincuradditionalindebtednessinthefuture;•OperatingandfinancialrestrictionsplacedonNRGanditssubsidiariesthatarecontainedintheindenturesgoverningNRG'sSeniorNotes,SeniorSecuredNotes,andSeniorCreditFacility,andindebtandotheragreementsofcertainofNRGsubsidiariesandprojectaffiliatesgenerally;•Cyberterrorismandinadequatecybersecurity,ortheoccurrenceofacatastrophiclossandthepossibilitythatNRGmaynothaveadequateinsurancetocoverlossesresultingfromsuchhazardsortheinabilityofNRG'sinsurerstoprovidecoverage;•NRG'sabilitytodevelopandbuildnewpowergenerationfacilities;•NRG'sabilitytodevelopandinnovatenewproducts,asretailandwholesalemarketscontinuetochangeandevolve;•NRG'sabilitytoimplementitsstrategyoffindingwaystomeetthechallengesofclimatechange,cleanairandprotectingnaturalresources,whiletakingadvantageofbusinessopportunities;•NRG'sabilitytoincreasecashfromoperationsthroughoperationalandcommercialinitiatives,corporateefficiencies,assetstrategy,andarangeofotherprogramsthroughoutNRGtoreducecostsorgeneraterevenues;•NRG'sabilitytosuccessfullyevaluateinvestmentsandachieveintendedfinancialresultsinnewbusinessandgrowthinitiatives;•NRG'sabilitytosuccessfullyintegrate,realizecostsavingsandmanageanyacquiredbusinesses;and•NRG'sabilitytodevelopandmaintainsuccessfulpartneringrelationshipsasneeded.37Forward-lookingstatementsspeakonlyasofthedatetheyweremade,andNRGEnergy, Inc.undertakesnoobligationtopubliclyupdateorreviseanyforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.TheforegoingreviewoffactorsthatcouldcauseNRG'sactualresultstodiffermateriallyfromthosecontemplatedinanyforward-lookingstatementsincludedinthisAnnualReportonForm 10-Kshouldnotbeconstruedasexhaustive.Item 1B — UnresolvedStaffCommentsNone.38Item 2 — PropertiesListedbelowaredescriptionsofNRG'sinterestsinfacilities,operationsand/orprojectsownedorleasedasofDecember 31,2019.TheratedMWcapacityfiguresprovidedrepresentnominalsummerMWcapacityofpowergenerated.NetMWcapacityisadjustedfortheCompany'sownedorleasedinterest,excludingcapacityfrominactive/mothballedunitsasofDecember 31,2019.ThefollowingtablesummarizesNRG'spowerproductionandcogenerationfacilitiesbyregion:Name of FacilityPower MarketPlant TypePrimary FuelLocationRated MW Capacity(a)Net MW Capacity(b)% OwnedTexasCedar BayouERCOTFossilNatural GasTX1,4941,494100.0Cedar Bayou 4ERCOTFossilNatural GasTX50425250.0Elbow CreekERCOTOtherBattery StorageTX22100.0Greens BayouERCOTFossilNatural GasTX330330100.0GregoryERCOTFossilNatural GasTX385385100.0LimestoneERCOTFossilCoalTX1,6601,660100.0Petra Nova CogenERCOTFossilNatural GasTX381950.0San JacintoERCOTFossilNatural GasTX160160100.0South Texas ProjectERCOTNuclearUraniumTX2,5591,12644.0T.H. WhartonERCOTFossilNatural GasTX1,0011,001100.0W.A. ParishERCOTFossilCoalTX2,5142,514100.0W.A. ParishERCOTFossilNatural GasTX1,1181,118100.0Total Texas11,76510,061 East/West/OtherAgua CalienteWECCRenewableSolarAZ29010235.0Arthur KillNYISOFossilNatural GasNY866866100.0Astoria TurbinesNYISOFossilNatural GasNY423423100.0Chalk PointPJMFossilNatural GasMD8080100.0Connecticut Jet PowerISO-NEFossilOilCT142142100.0CottonwoodMISOFossilNatural GasTX1,1531,153___(c)DevonISO-NEFossilOilCT133133100.0FiskPJMFossilOilIL171171100.0GladstoneFossilCoalAUS1,61360537.5Indian RiverPJMFossilCoalDE410410100.0Indian RiverPJMFossilOilDE1616100.0IvanpahCAISORenewableSolarCA39321454.5JolietPJMFossilNatural GasIL1,3171,317___(c)Long BeachCAISOFossilNatural GasCA252252100.0MiddletownISO-NEFossilOilCT762762100.0Midway-SunsetCAISOFossilNatural GasCA22611350.0MontvilleISO-NEFossilOilCT491491100.0OswegoNYISOFossilOilNY1,6171,617100.0PowertonPJMFossilCoalIL1,5381,538___(c)Residential solar(d)RenewableSolarvarious6060100.0StadiumsRenewableSolarvarious55100.0SunriseCAISOFossilNatural GasCA586586100.0ViennaPJMFossilOilMD167167100.0WatsonCAISOFossilNatural GasCA41620449.0WaukeganPJMFossilCoalIL682682100.0WaukeganPJMFossilOilIL101101100.0Will CountyPJMFossilCoalIL510510100.0Total East/West/Other14,42012,720Total Fleet26,18522,781(a)MW capacity of the facility, without taking into account NRG ownership percentage(b)Actual capacity can vary depending on factors including weather conditions, operational conditions, and other factors. Additionally, ERCOT requires periodic demonstration of capability, and the capacity may vary individually and in the aggregate from time to time(c)NRG leases 100% interests in the Cottonwood facility, Units 7 and 8 of the Joliet facility, and the Powerton facility, through facility lease agreements expiring in 2025, 2030 and 2034 respectively. NRG owns 100% interest in Joliet Unit 6. NRG operates the Cottonwood, Joliet and Powerton facilities.(d)Included in the Retail segment39OtherPropertiesNRGownsseveralrealpropertiesandfacilitiesrelatedtoitsgenerationassets,othervacantrealpropertyunrelatedtoitsgenerationassets,andpropertiesnotusedforoperationalpurposes.NRGbelievesithassatisfactorytitletoitsplantsandfacilitiesinaccordancewithstandardsgenerallyacceptedintheelectricpowerindustry,subjecttoexceptionsthat,intheCompany'sopinion,wouldnothaveamaterialadverseeffectontheuseorvalueofitsportfolio.NRGleasesitsfinancialandcommercialcorporateheadquartersat804CarnegieCenter,Princeton,NewJersey,itsoperationalheadquartersat910LouisianaStreet,Houston,Texas,aswellasitsretailbusinessofficesandcallcenters,andvariousotherofficespace.Item 3 — LegalProceedingsSee Item 15 — Note 23, Commitments and Contingencies, to the Consolidated Financial Statements for discussion of the material legal proceedings to which NRG is a party.Item 4 — MineSafetyDisclosuresNot applicable.40PART IIItem 5 — MarketforRegistrant'sCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities.MarketInformationandHoldersNRG'scommonstocktradesontheNewYorkStockExchangeunderthesymbol"NRG."NRG'sauthorizedcapitalstockconsistsof500,000,000sharesofcommonstockand10,000,000sharesofpreferredstock.Atotalof25,000,000sharesoftheCompany'scommonstockareauthorizedforissuanceundertheNRGLTIP.NosharesofNRGcommonstockwereavailableforfutureissuanceundertheNRGGenOnLTIP.FormoreinformationabouttheNRGLTIPandtheNRGGenOnLTIP,refertoItem12—SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMattersandItem 15 —Note21,Stock-BasedCompensation,totheConsolidatedFinancialStatements.AsofJanuary31,2020,therewere18,378commonstockholdersofrecord.Beginninginthefirstquarterof2020,NRGincreasedtheannualdividendto$1.20persharefrom$0.12pershareandexpectstotargetanannualdividendgrowthrateof7-9%pershareinsubsequentyears.IssuerPurchasesofEquitySecuritiesThetablebelowsetsforththeinformationwithrespecttopurchasesmadebyoronbehalfofNRGorany"affiliatedpurchaser"(asdefinedinRule10b-18(a)(3)undertheExchangeAct)ofNRG'scommonstockduringthequarterendedDecember 31,2019.For the three months ended December 31, 2019Total Number of Shares PurchasedAverage Price Paid per Share(b)Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(c)Month #1 . . . . . . . . . . . . . . . . . . . .(October 1, 2019 to October 31, 2019, . . . . . . . . . . . . . . . . . . . . . . . 441,112$39.10441,112$194,832,497Month #2 . . . . . . . . . . . . . . . . . . . .(November 1, 2019 to November 30, 2019, . . . . . . . . . . . . . . . . . . . . 1,639,846$39.191,639,846$130,537,517Month #3 . . . . . . . . . . . . . . . . . . . .(December 1, 2019 to December 31, 2019) . . . . . . . . . . . . . . . . . . . .985,444$39.35985,444$91,738,742Total at December 31, 2019 . . . . . 3,066,402$39.233,066,402(a)In2019,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchase$1.25billionofitscommonstock.A$1.0billionprogramwasannouncedonFebruary28,2019anda$0.25billionprogramwasannouncedonAugust7,2019.Underthe2019programs,theCompanycompleted$1.25billionsharerepurchasesthroughFebruary27,2020(b)The average price paid per share excludes commissions of $0.02 per share paid in connection with the open market share repurchases(c)Includes commissions of $0.02 per share paid in connection with the open market share repurchases41StockPerformanceGraphTheperformancegraphbelowcomparesthecumulativetotalstockholderreturnonNRG'scommonstockfortheperiodDecember 31,2014throughDecember 31,2019withthecumulativetotalreturnoftheStandard &Poor's500CompositeStockPriceIndex,orS&P 500,andthePhiladelphiaUtilitySectorIndex,orUTY.Theperformancegraphshownbelowisbeingfurnishedandcompareseachperiodassumingthat$100wasinvestedonDecember 31,2014,ineachofthecommonstockofNRG,thestocksincludedintheS&P 500andthestocksincludedintheUTY,andthatalldividendswerereinvested.Comparison of Cumulative Total Return12/31/201412/31/201512/31/201612/31/201712/31/201812/31/2019NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . .$100.00$44.97$47.85$111.82$156.09$157.16S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.00101.38113.51138.29132.23173.86UTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.0093.75110.05124.16128.53163.0042Item 6 — SelectedFinancialDataThefollowingtablepresentsNRG'shistoricalselectedfinancialdata.ThishistoricaldatashouldbereadinconjunctionwiththeConsolidatedFinancialStatementsandtherelatednotestheretoinItem 15andItem 7,Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations.TheCompanyhascompletedseveralacquisitionsanddispositionsduringtheyearsshownbelow,asdescribedinItem15—Note4,Acquisitions,DiscontinuedOperationsandDispositions,totheConsolidatedFinancialStatements.Year Ended December 31,(In millions except ratios and per share data)20192018201720162015Statement of income data:Total operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9,821$9,478$9,074$8,915$10,842Total operating costs and other expenses (a) . . . . . . . . . . . . . . .(8,922)(8,897)(8,850)(9,095)(10,796)Impairment losses(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(5)(99)(1,534)(483)(4,823)Operating income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,290982(741)33(4,347)Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . . (108)(15)(79)(268)(40)Income/(loss) from continuing operations, net . . . . . . . . . . . . .4,120460(1,345)(956)(6,379)Income/(loss) from discontinued operations, net . . . . . . . . . . .321(192)(992)65(57)Net income/(loss) attributable to NRG Energy, Inc. . . . . . . . .$4,438$268$(2,153)$(774)$(6,382)Common share data:Basic shares outstanding — average . . . . . . . . . . . . . . . . . . . . 262304317316329Diluted shares outstanding — average . . . . . . . . . . . . . . . . . . .264308317316329Shares outstanding — end of year . . . . . . . . . . . . . . . . . . . . . . 249284317315314Per share data:Net income/(loss) attributable to NRG — basic . . . . . . . . . . . $16.94$0.88$(6.79)$(2.22)$(19.46)Net income/(loss) attributable to NRG — diluted . . . . . . . . . . 16.810.87(6.79)(2.22)(19.46)Dividends declared per common share . . . . . . . . . . . . . . . . . . .0.120.120.120.240.58Book value (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6.66$(4.35)$6.20$14.09$17.29Business metrics:Cash flow from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,413$1,377$1,610$1,908$1,419Liquidity position (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,1471,9772,7601,7682,102Return on equity (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .267.67%(21.72)%(109.40)%(17.41)%(117.45)%Ratio of debt to total capitalization (f) . . . . . . . . . . . . . . . . . . . .76.99%126.12%81.40%68.26%63.96%Balance sheet data:Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,088$3,600$4,437$6,747$8,231Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,3592,3983,3544,7365,215Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . .2,5933,0485,9747,8778,283Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12,53110,62823,35530,71633,738Long-term debt, including current maturities, and finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,8916,5219,38410,07110,867Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,658$(1,234)$1,968$4,446$5,434(a)Excludes impairment losses and impairment losses on investments(b)IncludesgoodwillimpairmentsrecordedasdescribedinItem15—Note12,GoodwillandOtherIntangibles,totheConsolidatedFinancialStatements(c)Totalstockholders'equity,dividedbysharesoutstandingasoftheendoftheyear(d)Liquidity position is determined as disclosed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources, Liquidity Position. It excludes collateral funds deposited by counterparties of $32 million, $33 million, $37 million, $2 million and $91 million as of December 31, 2019, 2018 , 2017, 2016 and 2015 respectively, which represents cash held as collateral from hedge counterparties in support of energy risk management activities. It is the Company's intention to limit the use of these funds for repayment of the related current liability for collateral received in support of energy risk management activities(e)Net income attributable to NRG Energy Inc., divided by total stockholders' equity(f)Total debt and capital leases minus cash and cash equivalents, divided by total capitalization (total debt and capital leases plus total stockholders' equity and non-controlling interest) minus cash and cash equivalents43ThefollowingtableprovidesthedetailsofNRG'soperatingrevenues:Year Ended December 31,(In millions)20192018201720162015Retail revenue$7,680$7,110$6,374$6,332$6,907Energy revenue2,7202,6772,7253,2434,131Capacity revenue606670618642781Mark-to-market for economic hedging activities234(209)33(566)(138)Contract amortization——(1)(1)(1)Other revenues 287298235313202Corporate/Eliminations(1,706)(1,068)(910)(1,048)(1,040)Total operating revenues(a)$9,821$9,478$9,074$8,915$10,842(a) Inter-segment sales and net derivative gains and losses included in operating revenuesRetailrevenueconsistsofrevenuesfromretailsalestoresidential,smallbusiness,commercial,industrialandgovernmental/institutionalcustomers,revenuesfromthesaleofexcesssupplyintovariousmarkets,primarilyinTexas,aswellasproductsales.Energyrevenueconsistsofrevenuesreceivedfrombothphysicalandfinancialtransactionsbilledtothirdpartiesateithermarketornegotiatedcontractterms,aswellasfromtheCompany'sretailbusinesses,forsalesofelectricityintheday-aheadandreal-timemarketsandbilateralsales.Energyrevenuein2018andprioryearsalsoincludedenergysoldthroughlong-termPPAsforrenewablefacilitiespriortothedeconsolidationofIvanpahandAguaCaliente,during2018.Inaddition,energyrevenueincludesrevenuesfromthesettlementoffinancialinstrumentsandnetrealizedtradingrevenues.Capacityrevenueconsistsofrevenuesbilledtoathirdpartyateithermarketornegotiatedcontracttermsformakinginstalledgenerationanddemandresponsecapacityavailableinordertosatisfysystemintegrityandreliabilityrequirements.Capacityrevenuealsoincludesrevenuesfromthesettlementoffinancialinstrumentswherepriceisderivedfromcapacitymarkets.Inaddition,capacityrevenueincludesrevenuesreceivedundertollingarrangements,whichentitlethirdpartiestodispatchNRG'sfacilitiesandassumetitletotheelectricalgenerationproducedfromthatfacility.Mark-to-marketforeconomichedgingactivitiesincludesasset-backedhedgesthathavenotbeendesignatedascashflowhedgesandineffectivenessoncashflowhedges.Otherrevenuesconsistsofoperationsandmaintenancefees,orO&Mfees,constructionmanagementservices,orCMAfees,saleofemissionallowances,andrevenuesfromancillaryservices.O&Mfeesconsistofrevenuesreceivedfromprovidingcertainthirdpartyandunconsolidatedaffiliateswithservicesunderlong-termoperatingagreements.CMAfeesareearnedwhereNRGprovidescertainmanagementandoversightofconstructionprojectspursuanttonegotiatedagreements.Ancillaryservicesarecomprisedofthesaleofenergy-relatedproductsassociatedwiththegenerationofelectricalenergysuchasspinningreserves,reactivepowerandothersimilarproducts.Otherrevenuesalsoincludeunrealizedtradingactivities.44Item 7 — Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperationsThediscussionandanalysisbelowhasbeenorganizedasfollows:•Executive Summary, including the business environment in which the Company, operates, a discussion of regulation, weather, competition and other factors that affect the business, Transformation Plan update, and other significant events that are important to understanding the results of operations and financial condition;•Results of operations for years ending December 31, 2019 and December 31, 2018, including an explanation of significant differences between the periods in the specific line items of NRG's Consolidated Statements of Operations;•Financial condition addressing credit ratings, liquidity position, sources and uses of cash, capital resources and requirements, commitments, and off-balance sheet arrangements; and•Critical accounting policies that are most important to both the portrayal of the Company's financial condition and results of operations, and require management's most difficult, subjective or complex judgments.Asyoureadthisdiscussionandanalysis,refertoNRG'sConsolidatedStatementsofOperationstothisForm 10-K,whichpresentstheresultsoftheCompany'soperationsfortheyearsendedDecember 31,2019and2018,andalsorefertoItem 1tothisForm 10-KformoredetaileddiscussionabouttheCompany'sbusiness.Adiscussionandanalysisoffiscalyear2017maybefoundinPartII,Item7—Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperationsoftheAnnualReportonForm10-KforthefiscalyearendedDecember31,2018.AsfurtherdescribedinItem15—Note4,Acquisitions,DiscontinuedOperationsandDispositions,totheConsolidatedFinancialStatements,theCompanydeterminedinprioryearsthatthefollowingbusinesseswerediscontinuedoperationsandrecasttopresenttheirresultsinthecorporatesegment:•South Central Portfolio•NRG Yield, Inc. and its Renewables Platform•Carlsbad•GenOnExecutiveSummaryNRGisanintegratedpowercompanybuiltondynamicretailbrandswithdiversegenerationassets.NRGbringsthepowerofenergytocustomersbyproducingandsellingelectricityandrelatedproductsandservicesinmajorcompetitivepowermarketsintheU.S.andCanadainamannerthatdeliversvaluetoallofNRG'sstakeholders.TheCompanysellsenergy,services,andinnovative,sustainableproductsandservicesdirectlytoretailcustomersunderthebrandnamesNRG,Reliant,GreenMountainEnergy,StreamandXOOMEnergy,aswellasotherbrandnamesownedbyNRG,supportedbyapproximately23,000MWofgenerationasofDecember31,2019.BusinessEnvironmentTheindustrydynamicsandexternalinfluencesaffectingtheCompanyanditsbusinesses,andthepowergenerationandretailenergyindustryin2019andforthefuturemediumterminclude:CommoditiesMarkets — ThepriceofnaturalgasplaysanimportantroleinsettingthepriceofelectricityinmanyoftheregionswhereNRGoperates. Naturalgaspricesaredrivenbyvariablesincludingdemandfromtheindustrial,residential,andelectricsectors,productivityacrossnaturalgassupplybasins,costsofnaturalgasproduction,changesinpipelineinfrastructure,andthefinancialandhedgingprofileofnaturalgascustomersandproducers.In2019,theaveragenaturalgaspricesatHenryHubwas15.0%lowerthanin2018.Iflong-termgaspricesincrease,theCompanyislikelytoencounterhigherrealizedenergyprices,leadingtohigherenergyrevenuesaslowerpricedhedgecontractsmatureandarereplacedbycontractswithhighergasandpowerprices.Thisimpactispartiallyoffsetbytheretailbusiness,asNRG'sretailgrossmarginshavehistoricallydecreasedasnaturalgaspricesincrease.NRG'sretailgrossmarginshavehistoricallyimprovedasnaturalgaspricesdecline.Thiswouldbepartiallyoffsetbylowerrealizedenergyprices,leadingtolowerenergyrevenuesashigherpricedhedgecontractsmatureandarereplacedbycontractswithlowergasandpowerprices.Tofurthermitigatethisimpact,NRGmayincreaseitspercentageofcoalandnuclearcapacitysoldforwardusingavarietyofhedginginstruments,asdescribedundertheheading"Energy-RelatedCommodities"inItem15—Note6,AccountingforDerivativeInstrumentsandHedgingActivities,totheConsolidatedFinancialStatements.45Naturalgaspricesareaprimarydriverofcoaldemand. Thelow-pricedcommodityenvironmenthasstressedcoalequities,leadingcoalsupplierstofileforbankruptcyprotection,launchdebtexchanges,rationalizeassets,andcutproduction.Ifmultiplepartieswithdrawfromthemarket,liquiditycouldbechallengedintheshortterm. Inventoryoverhangwillbeutilizedtooffsetproductionlosses.Coalpricesaretypicallyaffectedbythepriceofnaturalgas.ElectricityPrices — ThepriceofelectricityisakeydeterminantoftheprofitabilityoftheCompany.Manyvariablessuchasthepriceofdifferentfuels,weather,loadgrowthandunitavailabilityallcoalescetoimpactthefinalpriceforelectricityandtheCompany'sprofitability.Anincreaseinsupplycostvolatilityinthecompetitiveretailmarketsmayresultinsmallercompanieschoosingtoexitthemarket,whichmayresultinfurtherconsolidationinthecompetitiveretailspace.Thefollowingtablesummarizesaverageon-peakpowerpricesforeachofthemajormarketsinwhichNRGoperatesfortheyearsendedDecember 31,2019andDecember 31,2018. ERCOTpowerpriceswerehigherprimarilyduetothecontinuedeffectoflowerreservemarginsasaresultofassetretirementsintheregion.PowerpricesinEastregiondecreasedfortheyearendedDecember31,2019ascomparedtothesameperiodin2018.Average On-Peak Power Price ($/MWh)Year Ended December 312019 vs 2018Region20192018Change %Texas (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ERCOT - Houston(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $51.44$37.2938%ERCOT - North(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.8036.2640%East/West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .MISO - Louisiana Hub(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.5843.70(30)%NY J/NYC(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33.7347.19(29)%NEPOOL(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.8949.96(30)%COMED (PJM)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28.2834.60(18)%PJM West Hub(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30.8541.66(26)%CAISO - SP15(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.1547.33(19)% (a) Average on-peak power prices based on real time settlement prices as published by the respective ISOs (b) Average on-peak power prices based on day-ahead settlement prices as published by the respective ISOsThe following table summarizes average realized power prices for each region in which NRG operates, including the impact of settled hedges, for the years ended December 31, 2019 and December 31, 2018:Average Realized Power Price ($/MWh)Year Ended December 312019 vs 2018Region20192018Change %Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$46.58$37.1225%East/West . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35.0337.00(5)%TheaveragerealizedpowerpricesforDecember 31,2019,ascomparedtothesameperiodin2018,increasedinTexasasaresultofhigherpowerprices,anddecreasedinEast/Westasaresultoftherolloffofhedges.CleanInfrastructureDevelopment— Policymechanismsatthestateandfederallevel,includingproductionandinvestmenttaxcredits,cashgrants,loanguarantees,accelerateddepreciationtaxbenefits,RPS,andcarbontradingplans,havesupportedandcontinuetosupportthedevelopmentofrenewablegeneration,demand-sideandsmartgrid,andothercleaninfrastructuretechnologies.Inaddition,thecostsassociatedwiththedevelopmentofcleaninfrastructure,suchaswindandsolargeneratingfacilities,continuetodecline.ThesefactorscontinuetodriveincreasesinthedevelopmentofcleaninfrastructureinthemarketswheretheCompanyparticipates,whichmayimpacttheabilityoftheCompany'sgeneratingfacilitiestoparticipateinthosemarkets.AccordingtoERCOT,Inc.,morethan30%of2019energyconsumptionintheERCOTmarketwasgeneratedfromcarbon-freeresourceswithwindpowercontributing20%.Inaddition,subsidiesandincentiveshavecontributedtotheincreaseinrenewablepowersources,andcustomerawarenessandpreferenceshaveshiftedtowardsustainablesolutions.Increaseddemandforsustainableenergyproductsfrombothresidentialandcommercialcustomerscreatesopportunitiesfordiversifiedproductofferingsincompetitiveretailmarkets.46DigitizationandCustomization —Theelectricindustryisexperiencingmajortechnologychangesinthewaypowerisdistributedandusedbyend-usecustomers.Theelectricgridisshiftingfromacentralizedanalogsystem,wherepowerisgeneratedfromlimitedsourcesandflowsinonedirection,toadecentralizedmultidirectionalsystem,wherepowercanbegeneratedfromanumberofdistributedresourcesandstoredordispatchedonanas-neededbasis.Inaddition,customersareseekingnewwaystoengagewiththeirpowerproviders.Technologieslikesmartthermostats,appliancesandelectricvehiclesaregivingindividualsmorechoiceandcontrolovertheirelectricityusage.Weather—WeatherconditionsintheregionsoftheU.S.inwhichNRGdoesbusinessinfluencetheCompany'sfinancialresults.WeatherconditionscanaffectthesupplyanddemandforelectricityandfuelsandmayalsoimpacttheavailabilityoftheCompany'sgeneratingassets.Changesinenergysupplyanddemandmayimpactthepriceoftheseenergycommoditiesinboththespotandforwardmarkets,whichmayaffecttheCompany'sresultsinanygivenperiod.Typically,demandforandthepriceofelectricityishigherinthesummerandthewinterseasons,whentemperaturesaremoreextreme.Thedemandforandpriceofnaturalgasisalsogenerallyhigherinthewinter.However,allregionsoftheU.S.typicallydonotexperienceextremeweatherconditionsatthesametime,thusNRG'soperationsaretypicallynotexposedtotheeffectsofextremeweatherinallpartsofitsbusinessatonce.AsignificantportionoftheCompany'sbusinessislocatedwithinTexas,andextremeweatherconditionsoccurringinTexasmayhaveamaterialimpactontheCompany'sfinancialposition.OtherFactors—AnumberofotherfactorssignificantlyinfluencethelevelandvolatilityofpricesforenergycommoditiesandrelatedderivativeproductsforNRG'sbusiness.Thesefactorsinclude:•seasonal, daily and hourly changes in demand;•extreme peak demands;•available supply resources;•transportation and transmission availability and reliability within and between regions;•location of NRG's generating facilities relative to the location of its load-serving opportunities;•procedures used to maintain the integrity of the physical electricity system during extreme conditions; and•changes in the nature and extent of federal and state regulations.Thesefactorscanaffectenergycommodityandderivativepricesindifferentwaysandtodifferentdegrees.Theseeffectsmayvarythroughoutthecountryasaresultofregionaldifferencesin:•weather conditions;•market liquidity;•capability and reliability of the physical electricity and gas systems;•local transportation systems; and•the nature and extent of electricity deregulation.EnvironmentalMatters,RegulatoryMattersandLegalProceedings—DetailsofenvironmentalmattersarepresentedinItem 15 — Note25,EnvironmentalMatters,totheConsolidatedFinancialStatementsandItem 1—Business, EnvironmentalMatters.DetailsofregulatorymattersarepresentedinItem 15 — Note24,RegulatoryMatters,totheConsolidatedFinancialStatementsandItem 1—Business, RegulatoryMatters.DetailsoflegalproceedingsarepresentedinItem 15 — Note23,CommitmentsandContingencies,totheConsolidatedFinancialStatements.SomeofthisinformationrelatestocoststhatmaybematerialtotheCompany'sfinancialresults.47TransformationPlanNRGhassubstantiallycompleteditsthree-yearTransformationPlanandexpectstofullycompletetheremainingmarginenhancementactivitiesbytheendof2020.TheTransformationPlan'stargetsandtheCompany'sachievementstowardssuchtargetsareasfollows:OperationsandCostExcellenceTheCompanytargetedrecurringcostsavingsandmarginenhancementof$1,065million,whichconsistsof$590millionofcumulativecostsavings,a$215millionnetmarginenhancementprogram,$50millionannualreductioninmaintenancecapitalexpenditures,and$210millioninpermanentselling,generalandadministrativeexpensereductionassociatedwithassetsales.TheCompanyrealizedannualcostsavingsof$532millionand$32millionofmarginenhancementsduring2018and$590millionofcostsavingsand$135millionofmarginenhancementsduring2019.UndertheTransformationPlan,byDecember31,2019,theCompanyfullyrealized$370millionofnon-recurringworkingcapitalimprovementsand$278millionofone-timecoststoachieve.PortfolioOptimizationTheCompanytargetedandcompleted$3.0billionofassetsalecashproceedsreceivedthroughDecember31,2019asdescribedbelow:•In 2017 and 2018, NRG executed asset sales for aggregate cash of $1.6 billion, which includes the sale of its interest in NRG Yield, Inc and its Renewables Platform, BETM, Buckthorn Solar, and various other assets.•On February 4, 2019, NRG sold the South Central portfolio, a 3,555 MW portfolio of generation assets, for cash consideration of $1.0 billion, excluding working capital and other adjustments•On February 20, 2019, NRG completed the sale of Guam for cash consideration of approximately $8 million •On February 27, 2019, NRG sold the Carlsbad project, a 528 MW natural gas-fired power plant, for cash consideration of $385 million, excluding working capital and other adjustments CapitalStructureandAllocationAsofDecember31,2018,theCompanyachievedtheplannedcreditratioof3.0xnetdebt/adjustedEBITDA(a).Duringthefirstquarterof2019,theCompanyreviseditscreditmetricstargetinordertofurtherstrengthenitsbalancesheetandimprovecreditratingsbyreducingleverage.(a)adjustedEBITDAasdefinedpertheSeniorCreditFacility48OtherSignificantEventsThefollowingadditionalsignificanteventsoccurredduring2019:StreamEnergyAcquisition•OnAugust1,2019,theCompanycompletedtheacquisitionofStreamEnergy'sretailelectricityandnaturalgasbusinessoperatingin9statesandWashington,D.C.for$329million,includingworkingcapitalandotheradjustmentsofapproximately$29million.TheacquisitionincreasedNRG'sretailportfoliobyapproximately600,000RCEsor450,000customers.FinancingActivities•OnMay14,2019,NRGissued$733millionofaggregateprincipalamountatparof5.25%seniorunsecurednotesdue2029.Theproceedsfromtheissuanceofthe2029SeniorNoteswereutilizedtoredeemtheremainingCompany's$733millionof6.25%SeniorNotesdue2024.•OnMay28,2019,NRGamendeditsexistingcreditagreementto,amongotherthings,providefora$184millionincreaseinrevolvingcommitments,resultinginaggregaterevolvingcommitmentsundertheamendedcreditagreementequalto$2.6billion.SeeNote13,DebtandFinanceLeases,forfurtherdiscussion.•OnMay28,2019,NRGissued$1.1billionofaggregateprincipalamountofseniorsecuredfirstliennotes,consistingof$600million3.75%seniorsecuredfirstliennotesdue2024and$500million4.45%seniorsecuredfirstliennotesdue2029,ortheSeniorSecuredNotes,atadiscount.TheproceedsfromtheissuanceoftheSeniorSecuredNotes,aswellascashonhand,wereusedtorepaytheCompany's$1.7billion2023TermLoanfacility,resultinginadecreaseof$594milliontolong-termdebtoutstanding.ShareRepurchases•In2018,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchase$1.5billionofitscommonstock.$1.25 billionwasexecutedin2018withtheremaining$0.25 billioncompletedinthefirstquarterof2019.•In2019,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchaseanadditional$1.25billionofitscommonstock,whichwascompletedasofFebruary27,2020.RenewablePowerPurchaseAgreements•During2019,NRGbeganexecutionofitsstrategytoprocuremidtolong-termgenerationthroughpowerpurchaseagreements.AsofDecember31,2019,NRGhasenteredintoPPAstotalingapproximately1,600MWswiththird-partyprojectdevelopersandothercounterparties.Thetenoroftheseagreementsisanaverageoftenyears.TheCompanyexpectstocontinueevaluatingandexecutingsimilaragreementsthatsupporttheneedsofthebusiness.DividendIncrease•Beginninginthefirstquarterof2020,NRGincreasedtheannualdividendto$1.20persharefrom$0.12pershareandexpectstotargetanannualdividendgrowthrateof7-9%pershareinsubsequentyears.ValuationAllowanceforNetDeferredTaxAssets•DuringtheyearendedDecember31,2019,NRGreleasedthemajorityofitsvaluationallowanceagainstitsU.S.federalandstatedeferredtaxassets,resultinginanon-cashbenefittoincometaxexpenseofapproximately$3.5billion.RefertoItem15–Note20,IncomeTaxes,totheConsolidatedFinancialStatementsforfurtherdiscussionofthereleaseinvaluationallowance.49ConsolidatedResultsofOperationsfortheyearsendedDecember 31,2019and2018ThefollowingtableprovidesselectedfinancialinformationfortheCompany:Year Ended December 31,(In millions, except otherwise noted)20192018ChangeOperating RevenuesEnergy revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,222$1,548$(326)Capacity revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .607670(63)Retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,6767,105571Mark-to-market for economic hedging activities . . . . . . . . . . . . . . . . . . . 33(130)163Other revenues (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .283285(2)Total operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9,8219,478343Operating Costs and ExpensesCost of sales (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,8785,878—Mark-to-market for economic hedging activities . . . . . . . . . . . . . . . . . . . 53(144)(197)Contract and emissions credit amortization (c) . . . . . . . . . . . . . . . . . . . . . 19278Operations and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,0821,0831Other cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271264(7)Total cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,3037,108(195)Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37342148Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59994Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 827799(28)Reorganization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .239067Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7114Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .8,5388,528(10)Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 732(25)Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,290982308Other Income/(Expense)Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . .29(7)Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(108)(15)(93)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661848Net loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(51)(44)(7)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(413)(483)70Total other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(504)(515)11Income from Continuing Operations Before Income Taxes . . . . . . . . . 786467319Income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,334)7(3,341)Income from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,1204603,660Income/(loss) from discontinued operations, net of income tax . . . . . . . .321(192)513Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,4412684,173Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3—3Net Income Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . $4,438$268$4,170Business MetricsAverage natural gas price — Henry Hub ($/MMBtu) . . . . . . . . . . . . . . . . .$2.63$3.09(15)%(a)Includes realized gains and losses from financially settled transactions(b)Includes unrealized trading gains and losses(c)Includes amortization of SO2and NOxcredits and excludes amortization of RGGI credits50Economic Gross MarginInadditiontogrossmargin,theCompanyevaluatesitsoperatingperformanceusingthemeasureofeconomicgrossmargin,whichisnotaGAAPmeasureandmaynotbecomparabletoothercompanies’presentationsordeemedmoreusefulthantheGAAPinformationprovidedelsewhereinthisreport.EconomicgrossmarginshouldbeviewedasasupplementtoandnotasubstitutefortheCompany'spresentationofgrossmargin,whichisthemostdirectlycomparableGAAPmeasure.Economicgrossmarginisnotintendedtorepresentgrossmargin.TheCompanybelievesthateconomicgrossmarginisusefultoinvestorsasitisakeyoperationalmeasurereviewedbytheCompany'schiefoperatingdecisionmaker.Economicgrossmarginisdefinedasthesumofenergyrevenue,capacityrevenueandotherrevenue,lesscostoffuelsandothercostofsales.Economicgrossmargindoesnotincludemark-to-marketgainsorlossesoneconomichedgingactivities,contractamortization,emissioncreditamortization,orotheroperatingcosts.ThetablesbelowpresentthecompositionandreconciliationofgrossmarginandeconomicgrossmarginfortheyearsendedDecember 31,2019and2018basedontheCompany'sreportingsegmentsasofDecember31,2019:Year Ended December 31, 2019Generation (In millions, except otherwise noted)RetailTexasEast/West/Other(a)SubtotalCorporate/EliminationsTotalEnergy revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$1,987$733$2,720$(1,498)$1,222Capacity revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——6066061607Retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,680———(4)7,676Mark-to-market for economic hedging activities . . . . —19836234(201)33Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —90197287(4)283Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .7,6802,2751,5723,847(1,706)9,821Cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(723)(384)(1,107)(54)(1,161)Other costs of sales(b) . . . . . . . . . . . . . . . . . . . . . . . . (5,821)(168)(283)(451)1,555(4,717)Mark-to-market for economic hedging activities . . . (267)10313201(53)Contract and emission credit amortization . . . . . . . . —(19)—(19)—(19)Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,592$1,375$908$2,283$(4)$3,871Less: Mark-to-market for economic hedging activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (267)20839247—(20)Less: Contract and emission credit amortization . . . . .—(19)—(19)—(19)Economic gross margin . . . . . . . . . . . . . . . . . . . . . . .$1,859$1,186$869$2,055$(4)$3,910Business MetricsMWh sold (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42,66220,924MWh generated (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . 37,99416,375(a) Includes Renewables and eliminations within Generation(b) Includes purchased energy, capacity and emissions credits 51Year Ended December 31, 2018Generation (In millions, except otherwise noted)RetailTexasEast/West/Other(a)(b)SubtotalCorporate/EliminationsTotalEnergy revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$1,585$1,092$2,677$(1,129)$1,548Capacity revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . —1669670—670Retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,110———(5)7,105Mark-to-market for economic hedging activities . . .(7)(174)(28)(202)79(130)Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—84214298(13)285Operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . 7,1031,4961,9473,443(1,068)9,478Cost of fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(734)(557)(1,291)(44)(1,335)Other costs of sales(c) . . . . . . . . . . . . . . . . . . . . . . .(5,308)(133)(275)(408)1,173(4,543)Mark-to-market for economic hedging activities . 2602(39)(37)(79)144Contract and emission credit amortization . . . . . . —(26)(1)(27)—(27)Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,055$605$1,075$1,680$(18)$3,717Less: Mark-to-market for economic hedging activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253(172)(67)(239)—14Less: Contract and emission credit amortization . . .—(26)(1)(27)—(27)Economic gross margin . . . . . . . . . . . . . . . . . . . . . $1,802$803$1,143$1,946$(18)$3,730Business MetricsMWh sold (thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42,70124,988MWh generated (thousands) . . . . . . . . . . . . . . . . . . . . . . . . 38,21421,089(a) Includes Renewables and eliminations within Generation (b) Includes Agua, BETM and Ivanpah which were sold or deconsolidated as of August, July and April 2018, respectively(c) Includes purchased energy, capacity and emissions creditsThe table below represents the weather metrics for 2019 and 2018:Years ended December 31,Quarters ended December 31,Quarters ended September 30,Quarters ended June 30,Quarters ended March 31,Weather MetricsTexasEast/West/OtherTexasEast/West/OtherTexasEast/West/OtherTexasEast/West/OtherTexasEast/West/Other2019CDDs(a)3,1151,7152661231,8401,1029344587532HDDs(a)1,8683,0047571,091—16702831,0411,6142018CDDs3,1301,7932281201,6571,0991,10152114453HDDs1,8752,9738151,112118913259681,51810 year averageCDDs3,0531,6752661251,6721,0211,00948710642HDDs1,7422,9467051,068628603109711,540(a)NationalOceanicandAtmosphericAdministration-ClimatePredictionCenter-ACoolingDegreeDay,orCDD,representsthenumberofdegreesthatthemeantemperatureforaparticulardayisabove65degreesFahrenheitineachregion.AHeatingDegreeDay,orHDD,representsthenumberofdegreesthatthemeantemperatureforaparticulardayisbelow65degreesFahrenheitineachregion.TheCDDs/HDDsforaperiodoftimearecalculatedbyaddingtheCDDs/HDDsforeachdayduringtheperiod.52Retail gross margin and economic gross marginThefollowingisadiscussionofgrossmarginandeconomicgrossmarginforRetail.Years ended December 31,(In millions, except otherwise noted)20192018Retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,369$6,775Supply management revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215174Capacity revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96161Customer mark-to-market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(7)Operating revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,6807,103Cost of sales (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,821)(5,308)Mark-to-market for economic hedging activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (267)260Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,592$2,055Less: Mark-to-market for economic hedging activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(267)253Economic gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,859$1,802Business MetricsMass electricity sales volume (GWh) - Texas38,95837,846Mass electricity sales volume (GWh) - All other regions9,9187,968C&I electricity sales volume (GWh) All regions (b)20,19021,176Natural gas sales volumes (MDth)23,35911,253Average Retail Mass customer count (in thousands) 3,4703,063Ending Retail Mass customer count (in thousands) 3,6783,320(a)Includes intercompany sales of $4 million and $5 million in 2019 and 2018, respectively, representing sales from Retail to the Texas region of Generation(b)Includes intercompany purchases of $1,554 million and $1,163 million in 2019 and 2018, respectivelyRetailgrossmargindecreased$463millionandretaileconomicgrossmarginincreased$57millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018,dueto:(In millions)Lower gross margin due to weather driven by a decrease in load of 144,000 MWh, unfavorable impact of purchasing incremental supply during extreme weather conditions in Summer 2019 at escalated prices above $1,000/MWh and the impact of selling back excess supply in 2019 as compared to 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(34)Lower gross margin from demand response activities due to lower auction clearing prices and fewer MW sold in PJM in 2019 compared to 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29)Higher gross margin from Mass due to higher revenues primarily driven by margin enhancement initiatives of approximately $4.50 per MWh or $278 million, partially offset by higher supply costs driven by an increase in power prices of approximately $4.40 per MWh or $272 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Higher gross margin driven by higher volume from XOOM and Stream acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114Increase in economic gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$57Decrease in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (520)Decrease in gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(463)53Generation gross margin and economic gross marginGenerationgrossmarginincreased$603millionandgenerationeconomicgrossmarginincreased$109million,bothofwhichincludeintercompanysales,duringtheyearendedDecember 31,2019,comparedtothesameperiodin2018.The tables below describe the change in Generation gross margin and generation economic gross margin:TexasRegion(In millions)Higher gross margin due to a 25% increase in average realized prices due to heat rate expansion . . . . . . . . . . . . . . . . . . . . . . $285Higher gross margin due to a 6% increase in generation volumes driven by a planned outage at STP and a forced outage at T.H. Wharton in 2018, partially offset by current year forced outages at coal facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Higher gross margin due to Gregory return to service in June 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38Higher gross margin from commercial optimization activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Higher gross margin due to margin enhancement initiatives from reduced fuel supply cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Lower gross margin due to lower sales of NOx emission credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2)Increase in economic gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$383Increase in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380Increase in contract and emission credit amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Increase in gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $770East/WestRegion(In millions)Lower gross margin due to the sale of BETM, Keystone and Conemaugh in the third quarter of 2018, the sale of Guam in the first quarter of 2019 and the retirement of Encina in December 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(122)Lower gross margin due to Ivanpah and Agua deconsolidations in April 2018 and August 2018, respectively . . . . . . . . . . . . (118)Lower gross margin due to a 17% decrease in economic generation volumes due to dark spread and spark spread contractions and outages in 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(56)Lower gross margin driven by a decrease in New York realized capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29)Lower gross margin from commercial optimization activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16)Lower gross margin due to insurance proceeds from outages in 2018, partially offset by business interruption proceeds . . . . (6)Higher gross margin mainly due to 7% increase in weighted average realized prices, primarily at Midwest Generation . . . . . 38Higher gross margin due to lower supply costs coupled with an increase in load contract volumes . . . . . . . . . . . . . . . . . . . . . 21Higher gross margin due to a 10% increase in PJM capacity prices and a 42% increase in West capacity prices, partially offset by an 8% decrease in New England capacity prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)Decrease in economic gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(274)Increase in mark-to-market for economic hedging primarily due to net unrealized gains/losses on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106Increase in contract and emission credit amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Decrease in gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(167)54Mark-to-marketforEconomicHedgingActivitiesMark-to-marketforeconomichedgingactivitiesincludesasset-backedhedgesthathavenotbeendesignatedascashflowhedges.Totalnetmark-to-marketresultsdecreasedby$34millionduringtheyearendedDecember 31,2019,comparedtothesameperiodin2018.Thebreakdownofgainsandlossesincludedinoperatingrevenuesandoperatingcostsandexpensesbyregionwasasfollows:Year Ended December 31, 2019Generation(In millions)RetailTexasEast/West/OtherElimination (a)TotalMark-to-market results in operating revenuesReversal of previously recognized unrealized losses on settled positions related to economic hedges . . . . . . . . . . . . . . . . . . . .$1$187$30$(171)$47Net unrealized (losses)/gains on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)116(30)(14)Total mark-to-market gains in operating revenues . . . . . . . . .$—$198$36$(201)$33Mark-to-market results in operating costs and expensesReversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges . . . . . . . . . . . . . . $(293)$5$2$171$(115)Reversal of acquired loss positions related to economic hedges. .6———6Net unrealized gains on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20513056Total mark-to-market (losses)/gains in operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(267)$10$3$201$(53)(a)RepresentstheeliminationoftheintercompanyactivitybetweenRetailandGenerationThebreakdownofgainsandlossesincludedinoperatingrevenuesandoperatingcostsandexpensesbyregionwasasfollows:Year Ended December 31, 2018Generation(In millions)RetailTexasEast/West/OtherElimination (a)TotalMark-to-market results in operating revenuesReversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges . . . . . . . . . . . . . . $(2)$32$(3)$(104)$(77)Net unrealized (losses) on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(5)(206)(25)183(53)Total mark-to-market (losses) in operating revenues . . . . . . . $(7)$(174)$(28)$79$(130)Mark-to-market results in operating costs and expensesReversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges . . . . . . . . . . . . . . $(81)$(6)$(13)$104$4Reversal of acquired gain positions related to economic hedges.(10)———(10)Net unrealized gains/(losses) on open positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3518(26)(183)150Total mark-to-market gains/(losses) in operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $260$2$(39)$(79)$144(a)RepresentstheeliminationoftheintercompanyactivitybetweenRetailandGenerationMark-to-marketresultsconsistofunrealizedgainsandlossesoncontractsthatareyettobesettled.Thesettlementofthesetransactionsisreflectedinthesamerevenueorcostcaptionastheitemsbeinghedged.Thereversalsofacquiredgainorlosspositionswerevaluedbasedupontheforwardpricesontheacquisitiondate.55FortheyearendedDecember 31,2019the$33milliongaininoperatingrevenuesfromeconomichedgepositionswasdrivenprimarilybythereversalofpreviouslyrecognizedunrealizedlossesoncontractsthatsettledduringtheperiod.The$53millionlossinoperatingcostsandexpensesfromeconomichedgepositionswasdrivenprimarilybythereversalofpreviouslyrecognizedunrealizedgains,partiallyoffsetbyanincreaseinthevalueofopenpositionsasaresultofgainsonERCOTheatratepositionsduetoheatrateexpansion.FortheyearendedDecember31,2018the$130millionlossinoperatingrevenuesfromeconomichedgepositionswasdrivenprimarilybythereversalofpreviouslyrecognizedunrealizedgainsoncontractsthatsettledduringtheperiod,aswellasadecreaseinvalueofopenpositionsasaresultoflossesonERCOTheatratepositionsduetoheatrateexpansion.The$144milliongaininoperatingcostsandexpensesfromeconomichedgepositionswasdrivenprimarilybyanincreaseinthevalueofopenpositionsasaresultofincreasesinERCOTheatrate,partiallyoffsetbythereversalofacquiredgainpositions.InaccordancewithASC815,thefollowingtablerepresentstheresultsoftheCompany'sfinancialandphysicaltradingofenergycommoditiesfortheyearsendedDecember 31,2019and2018.Therealizedandunrealizedfinancialandphysicaltradingresultsareincludedinoperatingrevenue.TheCompany'stradingactivitiesaresubjecttolimitswithintheCompany'sRiskManagementPolicy.Year ended December 31,(In millions)20192018Trading gainsRealized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$57$77Unrealized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2017Total trading gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $77$94OperationsandMaintenanceExpensesOperationsandmaintenanceexpensesarecomprisedofthefollowing:GenerationCorporateEliminations(In millions)Retail TexasEast/West/Other (a)TotalYear Ended December 31, 2019 . . . . . . . . . . . . . . .$242$441$393$9$(3)$1,082Year Ended December 31, 2018 . . . . . . . . . . . . . . .$209$437$440$3$(6)$1,083(a)Includes Renewables and eliminations within GenerationOperations and maintenance expenses decreased by $1 million for the year ended December 31, 2019, compared to the same period in 2018, due to the following:(In millions)Increase primarily related to the lease of the Cottonwood facility from February 4, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$37Increase in investments in Texas plants in preparation for summer operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Increase due to XOOM and Stream Energy acquisitions in June 2018 and August 2019, respectively . . . . . . . . . . . . . . . . . . .21Increase in operations and maintenance expenses due to margin enhancement initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8Increase in outages primarily due to both planned and forced outages in 2019, partially offset by planned STP outages in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Decrease due to the final settlement of the asbestos liability and resulting reduction of the accrual for Midwest Generation . (27)Decrease due to the deconsolidations of Ivanpah and Agua Caliente in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20)Decrease in variable chemical costs due to reduction in East generation volumes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(18)Decrease due to retirement of Encina and the sale of Keystone and Conemaugh in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14)Decrease due to payments in settlement of certain legal matters in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Increase in operations and maintenance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(1)56OtherCostofOperationsOtherCostofoperationsarecomprisedofthefollowing:Generation(In millions)RetailTexasEast/West/OtherTotalYear Ended December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . .$120$76$75$271Year Ended December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .$109$76$79$264Othercostofoperationsincreasedby$7millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018,duetothefollowing:(In millions)Increase in ARO accretion expense due to Encina decommissioning and Jewett Mine accretion in 2019, partially offset by a decrease due to prior year write-off of S.R. Bertron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$15Increase in gross receipts tax due to the Stream Energy acquisition and higher revenue from increased rates and customer counts10Decrease due to deconsolidation of Ivanpah and Agua Caliente in 2018(8)Decrease due to resolution of favorable property tax disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7)Decrease in other cost of operations due to cost efficiencies as a result of the Transformation Plan . . . . . . . . . . . . . . . . . . .(5)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Increase in other cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7DepreciationandAmortizationDepreciationandamortizationexpensesarecomprisedofthefollowing:GenerationCorporate(In millions)Retail TotalYear Ended December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . .$157$185$31$373Year Ended December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .$116$272$33$421Depreciationandamortizationexpensedecreasedby$48millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018,duetothedeconsolidationsofIvanpahandAguaCalienteinAprilandAugust2018,respectively,andthesaleoftheCottonwoodfacilityinFebruary2019,partiallyoffsetbytheacquisitionsofStreamEnergyandXOOM.ImpairmentLossesFortheyearendedDecember31,2019theCompanyrecordedanimpairmentlossof$5millioncomparedtoimpairmentlossesof$99 millionforthesameperiodin2018,asfurtherdescribedinItem15—Note11,AssetImpairments,totheConsolidatedFinancialStatements.Selling,GeneralandAdministrativeExpensesSelling,generalandadministrativeexpensesarecomprisedofthefollowing:(In millions)RetailGenerationCorporate TotalYear Ended December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . $576$227$24$827Year Ended December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . $538$215$46$799Selling, general and administrative expenses increased by $28 million for the year ended December 31, 2019, compared to the same period in 2018, due to the following:(In millions)Increase in selling and marketing expenses for margin enhancement initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $56Increase in selling expense due to the acquisitions of XOOM and Stream Energy in June 2018 and August 2019, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31Increase in bad debt expense primarily due to higher customer attrition and increased revenue due to acquisitions . . . . . .10Decrease in general and administrative expense from cost efficiencies as a result of the Transformation Plan . . . . . . . . . .(51)Decrease due to the sale of BETM in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Increase in selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2857Reorganization Costs Reorganizationcosts,primarilyrelatedtoseveranceandcontractmodifications,decreasedby$67millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018.TheCompanyhassubstantiallycompleteditsthree-yearTransformationPlanandexpectsthisexpensetodecreasefurtheraswecompletetheimplementationbytheendof2020.GainonSaleofAssetsGainonsaleofassetsfortheyearendedDecember 31,2019representsagainonthesaleofaninvestment,whilethegainfortheyearendedDecember 31,2018representsgainsonthesalesofBETMandCanal3.ImpairmentLossesonInvestmentsFortheyearendedDecember 31,2019,theCompanyrecordedother-than-temporaryimpairmentlossesof$108million,comparedto$15 millionrecordedinthesameperiodin2018,asfurtherdescribedinItem15—Note11,AssetImpairments,totheConsolidatedFinancialStatements.OtherIncome,NetOtherincomeincreasedby$48 millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018,primarilyduetothelossondeconsolidationofIvanpahin2018.LossonDebtExtinguishmentAlossondebtextinguishmentof$51 millionwasrecordedfortheyearendedDecember 31,2019,drivenbytheredemptionoftheSeniorNotes,due2024,andtherepaymentofthe2023TermLoanFacility.Alossondebtextinguishmentof$44millionwasrecordedfortheyearendedDecember 31,2018,primarilydrivenbytheredemptionofSeniorNotes,due2022,atapriceaboveparvalue.InterestExpenseInterestexpensedecreasedby$70 millionfortheyearendedDecember 31,2019,comparedtothesameperiodin2018,duetothefollowing:(In millions)Decrease related to the debt reduction of $1.2 billion and refinancing $2.4 billion of debt at lower interest rates in 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(66)Decrease related to the deconsolidations of Ivanpah and Agua Caliente in 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(27)Increase in derivative interest expense due to the termination of interest rate swaps in 2019 of $39 million partially offset by settlement of in-the-money interest rate swaps of $25 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Increase due to California property tax indemnification accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Increase due to the amortization of the premium on the Convertible Senior Notes due 2048 that were issued in the second quarter of 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)Decrease in interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(70)58Income Tax (Benefit)/ExpenseFortheyearendedDecember 31,2019,NRGrecordedanincometaxbenefitof$3.3billiononpre-taxincomeof$786million.Forthesameperiodin2018,NRGrecordedincometaxexpenseof$7milliononpre-taxincomeof$467million.Theeffectivetaxratewas(424.2)%and1.5%fortheyearsendedDecember 31,2019and2018,respectively.ThelargebenefitfortheyearendedDecember31,2019isduetoa$3.5billionreleaseoftheCompany’svaluationallowance.RefertothesectionentitledCriticalAccountingPoliciesandEstimates–IncomeTaxesandValuationAllowanceforDeferredTaxAssetsandItem15–Note20,IncomeTaxes,totheConsolidatedFinancialStatementsforfurtherdiscussionofthereleaseinvaluationallowance.FortheyearendedDecember 31,2019,NRG'soveralleffectivetaxratewasdifferentthanthefederalstatutorytaxrateof21%primarilyduetoataxbenefitfromthereleaseofthevaluationallowance.Year Ended December 31,(In millions, except effective income tax rate)20192018Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $786$467Tax at federal statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16598State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1318Deferred impact of state tax rate changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12—Valuation allowance - current period activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,492)(106)Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9)7Production tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(7)Recognition of uncertain tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(10)1Alternative minimum tax ("AMT") refundable credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(4)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13)—Income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(3,334)$7Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (424.2)%1.5%Theeffectiveincometaxratemayvaryfromperiodtoperioddependingon,amongotherfactors,thegeographicandbusinessmixofearningsandlossesandchangesinvaluationallowancesinaccordancewithASC740,IncomeTaxes,orASC 740.Thesefactorsandothers,includingtheCompany'shistoryofpre-taxearningsandlosses,aretakenintoaccountinassessingtheabilitytorealizedeferredtaxassets.Income/(Loss)fromDiscontinuedOperations,NetofIncomeTaxYear Ended December 31,(In millions)20192018ChangeSouth Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$28$66$(38)Yield Renewables Platform & Carlsbad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .296(292)588Genon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)34(37)Income/(Loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . .$321$(192)$513Refer to Item 15 —Note 4, Acquisitions, Discontinued Operations and Dispositions, to the Consolidated Financial Statements for further discussion.59LiquidityandCapitalResourcesLiquidityPositionAsofDecember 31,2019and2018,NRG'sliquidity,excludingcollateralfundsdepositedbycounterparties,wasapproximately$2.1billionand$2.0billion,respectively,comprisedofthefollowing:As of December 31,(In millions)20192018Cash and cash equivalents: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$345$563Restricted cash - operating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Restricted cash - reserves(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353580Total credit facility availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,7941,397Total liquidity, excluding collateral funds deposited by counterparties . . . . . . . . . . . . . . . . . . . . . . .$2,147$1,977(a)Includes reserves primarily for debt service, performance obligations, and capital expendituresFortheyearendedDecember 31,2019,totalliquidity,excludingcollateralfundsdepositedbycounterparties,increasedby$170million.ChangesincashandcashequivalentbalancesarefurtherdiscussedhereinafterundertheheadingCashFlowDiscussion.CashandcashequivalentsatDecember 31,2019werepredominantlyheldinmoneymarketfundsinvestedintreasurysecurities,treasuryrepurchaseagreementsorgovernmentagencydebt.ManagementbelievesthattheCompany'sliquiditypositionandcashflowsfromoperationswillbeadequatetofinanceoperatingandmaintenancecapitalexpenditures,tofunddividendstoNRG'scommonstockholders,andtofundotherliquiditycommitments.ManagementcontinuestoregularlymonitortheCompany'sabilitytofinancetheneedsofitsoperating,financingandinvestingactivitywithinthedictatesofprudentbalancesheetmanagement.CreditRatingsOnDecember13,2019,Moody'supgradedtheNRGcorporatefamilyratingtoBa1andseniorunsecuredratingtoBa2.Theagencyaffirmedthecompany'sseniorsecuredratingatBaa3.ThefollowingtablesummarizestheCompany'scurrentcreditratings:S&PMoody'sNRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BB PositiveBa1 Positive3.75% Senior Secured Notes, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBB-Baa37.25% Senior Notes, due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBBa26.625% Senior Notes, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBBa25.75% Senior Notes, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBBa24.45% Senior Secured Notes, due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBB-Baa35.25% Senior Notes, due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BBBa2Revolving Credit Facility, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . BBB-Baa3LiquidityTheprincipalsourcesofliquidityforNRG'soperatingandcapitalexpendituresareexpectedtobederivedfromcashonhand,cashflowsfromoperationsandfinancingarrangements.AsdescribedinItem 15 — Note13, DebtandFinanceLeases,totheConsolidatedFinancialStatements,theCompany'sfinancingarrangementsconsistmainlyoftheSeniorCreditFacility,theSeniorNotesandtheSeniorSecuredNotes.TheCompany'srequirementsforliquidityandcapitalresources,otherthanforoperatingitsfacilities,cangenerallybecategorizedbythefollowing:(i) commercialoperationsactivities;(ii) debtserviceobligations,asdescribedmorefullyinItem 15 — Note13,DebtandFinanceLeases,totheConsolidatedFinancialStatements;(iii) capitalexpenditures,includingenvironmental;and(iv) allocationsinconnectionwithreturnofcapitalanddividendpaymentstoshareholdersasdescribedinItem 15 — Note16,CapitalStructure,totheConsolidatedFinancialStatements,acquisitionopportunities,anddebtrepayments.Issuanceof2029SeniorNotesOnMay14,2019,NRGissued$733millionofaggregateprincipalamountatparof5.25%seniorunsecurednotesdue2029.Theproceedsfromtheissuanceofthe2029SeniorNoteswereutilizedtoredeemtheCompany'sremaining$733millionof6.25%SeniorNotesdue2024.60Issuanceof2024and2029SeniorSecuredNotesOnMay28,2019,NRGissued$1.1billionofaggregateprincipalamountofseniorsecuredfirstliennotes,consistingof$600million3.75%seniorsecuredfirstliennotesdue2024and$500million4.45%seniorsecuredfirstliennotesdue2029,atadiscount.TheproceedsfromtheissuanceoftheSeniorSecuredNotes,togetherwithcashonhand,wereusedtorepaytheCompany's2023TermLoanFacility.2023TermLoanFacilityOnMay28,2019,theCompanyrepaidits$1.7billion2023TermLoanFacilityusingtheproceedsfromtheissuanceoftheSeniorSecuredNotes,aswellascashonhand,resultinginadecreaseof$594 milliontolong-termdebtoutstanding.TheCompanyrecordedalossondebtextinguishmentof$17million,whichincludedthewrite-offofpreviouslydeferreddebtissuancecostsof$13million.Asaresultoftherepaymentoftheoutstanding2023TermLoanFacility,theCompanyterminatedtherelatedinterestrateswapagreements,whichwerein-the-money,andreceived$25millionthatwasrecordedasareductiontointerestexpense.RevolvingCreditFacilityModificationOnMay28,2019,theCompanyamendeditsexistingcreditagreementto,amongotherthings,(i)providefora$184millionincreaseinrevolvingcommitments,resultinginaggregaterevolvingcommitmentsundertheamendedcreditagreementequalto$2.6billion,(ii)extendthematuritydateoftherevolvingloansandcommitmentsundertheamendedcreditagreementtoMay28,2024,(iii)provideforareleaseofthecollateralsecuringtheamendedcreditagreementifNRGobtainsaninvestmentgraderatingfromtwooutofthethreeratingagencies,subjecttoanobligationtoreinstatethecollateralifsuchratingagencieswithdrawNRG’sinvestmentgraderatingordowngradeNRG’sratingbelowinvestmentgrade,(iv)reducetheapplicablemarginsforborrowingsunder(a)ABRRevolvingLoansfrom1.25%to0.75%and(b)EurodollarRevolvingLoansfrom2.25%to1.75%,(v)addasustainability-linkedpricingmetricthatpermitsaninterestrateadjustmenttiedtoNRGmeetingtargetsrelatedtoenvironmentalsustainabilityand(vi)makecertainotherchangestotheexistingcovenants.AsofDecember 31,2019,$83 millionofborrowingswereoutstandingundertheRevolvingCreditFacility.AguaCalienteBorrowerI-Non-RecourseDebtOnOctober21,2019,theCompanyrepaidtheoutstandingamountontheAguaCalienteBorrowerInotesat102%plusaccruedinterestthroughthepaymentdate.BalanceSheetTargetRatioNRGreviseditscreditmetricstargetto2.5x-2.75xnetdebt/adjustedEBITDA(a)inthefirstquarterof2019inordertofurtherstrengthenitsbalancesheetandimprovecreditratingsbyreducingleverage.Asdiscussedabove,duringthesecondquarterof2019,theCompanyreducedtotaloutstandingdebtby$594millionwiththerepaymentofthe2023TermLoanfacility.PetraNovaDebtRepaymentDuringthethirdquarterof2019,NRGcontributedapproximately$95 millionincashtoPetraNovaandposteda$12 millionletterofcredittocovercertainprojectdebtreserverequirements.ThecashportionofthecontributionwasusedbyPetraNovatoprepayasignificantportionoftheprojectdebt.Asaresult,thefinancialguaranteespreviouslyprovidedbyNRGwerecanceledandtheremainingprojectdebtbecamenon-recoursetoNRG.(a)adjustedEBITDAasdefinedpertheSeniorCreditFacility61DebtServiceObligationsPrincipal payments on debt as of December 31, 2019 are due in the following periods:(In millions)Description20202021202220232024ThereafterTotal Recourse Debt:Senior notes, due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$—$—$—$—$1,000$1,000Senior notes, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—————1,2301,230Senior notes, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—————821821Senior notes, due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—————733733Convertible Senior Notes, due 2048 . . . . . . . . . . . . . . . . . . . . . —————575575Senior Secured First Lien Notes, due 2024 . . . . . . . . . . . . . . . .————600—600Senior Secured First Lien Notes, due 2029 . . . . . . . . . . . . . . . .—————500500Revolving Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83—————83Tax-exempt bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—————466466Subtotal Recourse Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 83———6005,3256,008 Non-Recourse Debt:Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565441034Subtotal Non-Recourse Debt . . . . . . . . . . . . . . . . . . . . . . .565441034Total Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $88$6$5$4$604$5,335$6,0425,3356,042Inadditiontothedebtshownintheabovetable,NRGhadissued$723millionoflettersofcreditundertheCompany's$2.6billionRevolvingCreditFacilityasofDecember 31,2019.CommercialOperationsTheCompany'scommercialoperationsactivitiesrequireasignificantamountofliquidityandcapitalresources.Theseliquidityrequirementsareprimarilydrivenby:(i) marginandcollateralpostedwithcounterparties;(ii)marginandcollateralrequiredtoparticipateinphysicalmarketsandcommodityexchanges;(iii) timingofdisbursementsandreceipts(e.g. buyingfuelbeforereceivingenergyrevenues);(iv) initialcollateralforlargestructuredtransactions;and(v)collateralforprojectdevelopment.AsofDecember 31,2019,commercialoperationshadtotalcashcollateraloutstandingof$190millionand$694millionoutstandinginlettersofcredittothirdpartiesprimarilytosupportitscommercialactivitiesforbothwholesaleandretailtransactions.AsofDecember 31,2019,totalfundsdepositedbycounterpartieswas$32millionincashand$102millionoflettersofcredit.FutureliquidityrequirementsmaychangebasedontheCompany'shedgingactivitiesandstructures,powerpurchasesandsales,fuelpurchases,andfuturemarketconditions,includingforwardpricesforenergyandfuelandmarketvolatility.Inaddition,liquidityrequirementsaredependentontheCompany'screditratingsandgeneralperceptionofitscreditworthiness.FirstLienStructureNRGhasgrantedfirstlienstocertaincounterpartiesonasubstantialportionofpropertyandassetsownedbyNRGandtheguarantorsofitsseniordebt.NRGusesthefirstlienstructuretoreducetheamountofcashcollateralandlettersofcreditthatitwouldotherwiseberequiredtopostfromtimetotimetosupportitsobligationsunderout-of-the-moneyhedgeagreementsforforwardsalesofpowerorgasusedasaproxyforpower.Totheextentthattheunderlyinghedgepositionsforacounterpartyareout-of-the-moneytoNRG,thecounterpartywouldhaveaclaimunderthefirstlienprogram.Thefirstlienprogramlimitsthevolumethatcanbehedged,notthevalueofunderlyingout-of-the-moneypositions.ThefirstlienprogramdoesnotrequireNRGtopostcollateralaboveanythresholdamountofexposure.Withinthefirstlienstructure,theCompanycanhedgeupto80%ofitscoalandnuclearcapacityand10%ofitsotherassetswiththesecounterpartiesforthefirst60 monthsandthendecliningthereafter.Netexposuretoacounterpartyonalltradesmustbepositivelycorrelatedtothepriceoftherelevantcommodityforthefirstlientobeavailabletothatcounterparty.Thefirstlienstructureisnotsubjecttounwindorterminationuponaratingsdowngradeofacounterpartyandhasnostatedmaturitydate.The Company's first lien counterparties may have a claim on its assets to the extent market prices exceed the hedged prices. As of December 31, 2019, all hedges under the first liens were in-the-money on a counterparty aggregate basis.62ThefollowingtablesummarizestheamountofMWhedgedagainsttheCompany'scoalandnuclearassetsandasapercentagerelativetotheCompany'scoalandnuclearcapacityunderthefirstlienstructureasofDecember 31,2019:Equivalent Net Sales Secured by First Lien Structure (a) . . . . . . . . . . . . . . . . . .2020202120222023In MW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642644699753As a percentage of total net coal and nuclear capacity (b) . . . . . . . . . . . . . . . . . . . . 14%14%15%16%(a)Equivalent Net Sales include natural gas swaps converted using a weighted average heat rate by region(b)Net coal and nuclear capacity represents 80% of the Company's total coal and nuclear assets eligible under the first lien, which excludes coal assets acquired in the Midwest Generation acquisitionStreamEnergyAcquisitionOnAugust 1,2019,theCompanycompletedtheacquisitionofStreamEnergy'sretailelectricityandnaturalgasbusinessoperatingin9statesandWashington,D.C.for$329million,includingworkingcapitalandotheradjustmentsofapproximately$29million.TheacquisitionincreasedNRG'sretailportfoliobyapproximately600,000RCEsor450,000customers.SmallBookAcquisitionsDuring2019,theCompanyacquiredseveralbooksofcustomerstotalingapproximately72,000customersfor$17million,ofwhich$13millionwaspaidin2019.During2018,theCompanyacquiredseveralbooksofcustomerstotalingapproximately115,000customers,alongwithbrandnames,for$44million,ofwhich$40 millionwaspaidin2018,$2millionwaspaidin2019and$2 millionwasprepaidin2017.Themajorityofthepurchasepriceforthe2019and2018bookacquisitionswereallocatedtoacquiredintangibles.AssetSaleProceedsThefollowingtablesummarizestheapproximatecashproceedsreceivedfromsaletransactionsandrelatedfinancings,netofworkingcapitalandotheradjustments,completedbytheCompanyduringtheyearsendedDecember31,2019and2018:(In millions)20192018South Central Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$962$—Carlsbad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396—Guam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8—NRG Yield, Inc and Renewables Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1,348Canal 3 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —167UPMC Thermal Project (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —84BETM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—70Buckthorn Solar (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —42Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1412Cash proceeds from sales transactions$1,380$1,723(a)Inadditiontocashproceedsfromsale,amountincludes$151millionrelatedtoafinancingarrangementpriortothesale(b)SaleofassetstoNRGYield,Inc.,priortodiscontinuedoperations63CapitalExpendituresThefollowingtablesummarizestheCompany'scapitalexpendituresformaintenance,environmental,andgrowthinvestmentsfortheyearendedDecember 31,2019:(In millions)MaintenanceEnvironmentalGrowth InvestmentsTotalRetail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13$—$47$60Generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .911—92East/West/Other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402—42Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12—2234Total cash capital expenditures for the year ended December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156369228 Stream acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——326326 Other investments(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——240240Total capital expenditures and investments, net of financings . . . . . . . . .$156$3$635$794(a)IncludesRenewablesandtheCottonwoodfacility(b)Otherinvestmentsincludesacquisitions,cost-to-achieveexpenses,integrationcosts,andequityinvestments•Growth Investments capital expenditures — For the year ended December 31, 2019, the Company's growth investment capital expenditures included $51 million for cost-to-achieve projects associated with the Transformation Plan and $18 million for the Company's other growth projects. EnvironmentalCapitalExpendituresEstimateNRGestimatesthatenvironmentalcapitalexpendituresfrom2020through2024requiredtocomplywithenvironmentallawswillbeapproximately$40million.ThesecostsareprimarilyassociatedwiththecostofaddingNOxcontrolsinConnecticutandwaterandlandfillprojectsatW.A.Parish.ThetablebelowsummarizesthestatusofNRG'scoalfleetwithrespecttoairqualitycontrols.NRGusesanintegratedapproachtofuels,controlsandemissionsmarketstomeetenvironmentalrequirements.SO2NOxMercuryParticulateUnitsStateControl EquipmentInstall DateControl EquipmentInstall DateControl EquipmentInstall DateControl EquipmentInstall DateIndian River 4 . . . . . .DECDS2011LNBOFA/SCR1999/2011ACI/CDS/FF2008/2011ESP/FF1980/2011Limestone 1-2 . . . . . .TXFGD1985-86LNBOFA2002/2003ACI2015ESP1985-1986Powerton 5 . . . . . . . .ILDSI2016OFA/SNCR2003/2012ACI2009ESP/upgrade1973/2016Powerton 6 . . . . . . . .ILDSI2014OFA/SNCR2002/2012ACI2009ESP/upgrade1976/2014W.A. Parish 5, 6, 7 . .TXFF co-benefit1988SCR2004ACI2015FF1988W.A. Parish 8 . . . . . .TXFGD1982SCR2004ACI2015FF1988Waukegan 7 . . . . . . . ILDSI2014LNBOFA2002ACI2008ESP/upgrade1958/2002, 2014Waukegan 8 . . . . . . . ILDSI2015LNBOFA1999ACI2008ESP/upgrade1962/1999, 2015Will County 4 . . . . . .ILDSI2017LNBOFA/SNCR1999,2001/2012ACI2009ESP/upgrade1963,72/2000ACI - Activated Carbon InjectionCDS - Circulating Dry ScrubberDSI - Dry Sorbent Injection with TronaESP - Electrostatic PrecipitatorFGD - Flue Gas Desulfurization (wet)FF- Fabric FilterLNBOFA - Low NOx Burner with Overfire AirOFA - Overfire AirSCR - Selective Catalytic ReductionSNCR - Selective Non-Catalytic Reduction64Thefollowingtablesummarizestheestimatedenvironmentalcapitalexpendituresbyregion:(In millions)TexasEast/WestTotal2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3$4$72021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1412262022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65112023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—112024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .———Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $23$22$45ShareRepurchasesIn2018,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchase$1.5billionofitscommonstock.Repurchasesof$1.25 billionwereexecutedin2018withtheremaining$0.25 billioncompletedinthefirstquarterof2019.In2019,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchaseadditional$1.25billionofitscommonstock,whichwascompletedasofFebruary27,2020.SeeItem15—Note16,CapitalStructure,totheConsolidatedFinancialStatementsforadditionaldiscussion.CommonStockDividendsTheCompanyreturned$32millionofcapitaltoshareholdersintheyearended2019througha$0.12dividendpercommonshare.Beginninginthefirstquarterof2020,NRGincreasedtheannualdividendto$1.20persharefrom$0.12pershareandexpectstotargetanannualdividendgrowthrateof7-9%pershareinsubsequentyears.OnJanuary 21,2020,NRGdeclaredaquarterlydividendontheCompany'scommonstockof$0.30pershare,or$1.20pershareonanannualizedbasis,payableonFebruary 18,2020,tostockholdersofrecordasofFebruary 3,2020.TheCompany'scommonstockdividendsaresubjecttoavailablecapital,marketconditions,andcompliancewithassociatedlawsandregulations.CashFlowDiscussion2019comparedto2018Thefollowingtablereflectsthechangesincashflowsforthecomparativeyears:Year ended December 31,(In millions)20192018ChangeNet cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,413$1,377$36Net cash provided/(used) by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556(205)761Net cash used by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2,148)(1,526)(622)NetCashProvidedByOperatingActivitiesChanges to net cash provided by operating activities were driven by:(In millions)Change in cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(366)Increase in operating income adjusted for other non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230Changes in cash collateral in support of risk management activities due to change in commodity prices . . . . . . . 210GenOn settlement in July 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63Other changes in working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(101)$3665NetCashProvidedByInvestingActivitiesChangestonetcashprovidedbyinvestingactivitiesweredrivenby:(In millions)Decrease in cash used by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$724Cash removed in 2018 due to deconsolidation of Agua Caliente and Ivanpah projects . . . . . . . . . . . . . . . . . . . . . .268Decrease in capital expenditures primarily driven by construction projects in 2018 . . . . . . . . . . . . . . . . . . . . . . . .160Increase in proceeds received from sales of nuclear decommissioning trust fund securities, net of purchases . . . .24Decrease in contributions to discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Decrease in proceeds from sale of assets and discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (271)Increase in cash paid for acquisitions primarily due to Stream Energy acquisition in 2019 . . . . . . . . . . . . . . . . . . (112)Change in investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (52)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4$761NetCashUsedByFinancingActivitiesChangesinnetcashusedbyfinancingactivitiesweredrivenby:(In millions)Increase in payments of short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(837)Change in cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (428)Increase in payments for treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(190)Increase in payments of debt extinguishment costs and deferred issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . .(10)Increase in proceeds from issuance of short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .816Decrease in distributions to noncontrolling interests from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13$(622)NOLs,DeferredTaxAssetsandUncertainTaxPositionImplicationsAsofDecember 31,2019,theCompanyhaddomesticpre-taxbookincomeof$771millionandforeignpre-taxbookincomeof$15million.FortheyearendedDecember 31,2019,theCompanyutilizedNOLsof$593millionduetocurrentyeartaxableincome.AsofDecember 31,2019,theCompanyhascumulativeU.S.federalNOLcarryforwardsof$10.1billion,whichwillbeginexpiringin2031andcumulativestateNOLcarryforwardsof$5.5billion.NRGalsohascumulativeforeignNOLcarryforwardsof$357million,whichdonothaveanexpirationdate.InadditiontotheaboveNOLs,NRGhasa$361millionindefinitecarryforwardforinterestdeductions,aswellas$384millionoftaxcreditstobeutilizedinfutureyears.AsaresultoftheCompany'staxposition,includingtheutilizationoffederalandstateNOLs,andbasedoncurrentforecasts,theCompanyanticipatesincometaxpayments,primarilyduetostateandlocaljurisdictions,ofupto$16millionin2020.SeeItem15—Note20,IncomeTaxes,forfurtherdiscussionregardingthereleaseofthevaluationallowance.TheCompanyhasrecordedasofDecember31,2019short-termandlong-termreceivablesof$35millionand$34million,respectively,representingrefundableAMTcreditsfromtheIRS,whichareanticipatedtobereceivedfrom2020through2022pursuanttothe50%annuallimitationasenactedbytheTaxActuponrepealofcorporateAMTeffectiveJanuary1,2018.Oftheseamounts,short-termandlong-termpayablesof$11millioneachareduetoGenOnfortheirshareoftheminimumtaxcredits.Inadditiontotheseamounts,theCompanyhas$15millionoftaxeffecteduncertainstatetaxbenefitsforwhichtheCompanyhasrecordedanon-currenttaxliabilityof$17million(includingaccruedinterest)untilsuchfinalresolutionwiththerelatedtaxingauthority.TheCompanyisnolongersubjecttoU.S.federalincometaxexaminationsforyearspriorto2016.Withfewexceptions,stateandlocalincometaxexaminationsarenolongeropenforyearsbefore2011.66Off-BalanceSheetArrangementsObligationsunderCertainGuaranteeContractsNRGandcertainofitssubsidiariesenterintoguaranteearrangementsinthenormalcourseofbusinesstofacilitatecommercialtransactionswiththirdparties.Thesearrangementsincludefinancialandperformanceguarantees,stand-bylettersofcredit,debtguarantees,suretybondsandindemnifications.SeealsoItem 15 — Note27,Guarantees,totheConsolidatedFinancialStatementsforadditionaldiscussion.RetainedorContingentInterestsNRGdoesnothaveanymaterialretainedorcontingentinterestsinassetstransferredtoanunconsolidatedentity.ObligationsArisingOutofaVariableInterestinanUnconsolidatedEntityVariableinterestinEquityinvestments— AsofDecember 31,2019,NRGhasseveralinvestmentswithanownershipinterestpercentageof50%orlessinenergyandenergy-relatedentitiesthatareaccountedforundertheequitymethodofaccounting.IvanpahisconsideredavariableinterestentityforwhichNRGisnottheprimarybeneficiary.NRG'spro-ratashareofnon-recoursedebtheldbyunconsolidatedaffiliateswasapproximately$866millionasofDecember 31,2019.ThisindebtednessmayrestricttheabilityofthesesubsidiariestoissuedividendsordistributionstoNRG.SeealsoItem 15 — Note17,InvestmentsAccountedforbytheEquityMethodandVariableInterestEntities,totheConsolidatedFinancialStatementsforadditionaldiscussion.ContractualObligationsandCommercialCommitmentsNRGhasavarietyofcontractualobligationsandothercommercialcommitmentsthatrepresentprospectivecashrequirementsinadditiontotheCompany'scapitalexpenditureprograms.ThefollowingtablessummarizeNRG'scontractualobligationsandcontingentobligationsforguarantees.SeealsoItem 15 — Note13,DebtandFinanceLeases,Note23,CommitmentsandContingencies,andNote27,Guarantees,totheConsolidatedFinancialStatementsforadditionaldiscussion.By Remaining Maturity at December 31,(In millions)2019Contractual Cash ObligationsUnder1 Year1-3 Years3-5 YearsOver5 YearsTotal(a)Long-term debt (including estimated interest) . . . . . . . . . . . . . . . . . . . $436$705$1,281$6,912$9,334Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96174160296726Fuel purchase and transportation obligations . . . . . . . . . . . . . . . . . . . . 124198115139576Purchased power commitments(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35117112349613Pension minimum funding requirement (c) . . . . . . . . . . . . . . . . . . . . . . 54544253203Other postretirement benefits minimum funding requirement (d) . . . . . 711111746Other liabilities (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455740125267Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $797$1,316$1,761$7,891$11,765(a)Excludes $15 million non-current payable relating to NRG's uncertain tax benefits under ASC 740 as the period of payment cannot be reasonably estimated. Also excludes $728 million of asset retirement obligations that are discussed in Item 15 — Note 14, Asset Retirement Obligations, to the Consolidated Financial Statements(b)Includes purchase power commitments and renewable minimum purchase power commitments under PPAs (c)These amounts represent the Company's estimated minimum pension contributions required under the Pension Protection Act of 2006. These amounts represent estimates based on assumptions that are subject to change(d)These amounts represent estimates based on assumptions that are subject to change. The minimum required contribution for years after 2027 are currently not available(e)Includes water right agreements, service and maintenance agreements, stadium naming rights, stadium sponsorships, LTSA commitments and other contractual obligationsBy Remaining Maturity at December 31,(In millions)2019GuaranteesUnder1 Year1-3 Years3-5 YearsOver5 YearsTotalLetters of credit and surety bonds(a) . . . . . . . . . . . . . . . . . . . . .$878$115$31$—$1,024Asset sales guarantee obligations . . . . . . . . . . . . . . . . . . . . . . .4490—204698Other guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .775—206288Total guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$959$610$31$410$2,010(a)Guarantees as of December 31, 2019 include $14 million of letter of credit and surety bonds for the benefit of GenOn where NRG holds cash or letter of credit to back stop the liability67FairValueofDerivativeInstrumentsNRGmayenterintopowerpurchaseandsalescontracts,fuelpurchasecontractsandotherenergy-relatedfinancialinstrumentstomitigatevariabilityinearningsduetofluctuationsinspotmarketpricesandtohedgefuelrequirementsatpowerplantsorretailloadobligations.NRG'stradingactivitiesaresubjecttolimitsinaccordancewiththeCompany'sRiskManagementPolicy.Thesecontractsarerecognizedonthebalancesheetatfairvalueandchangesinthefairvalueofthesederivativefinancialinstrumentsarerecognizedinearnings.Thetablesbelowdisclosetheactivitiesthatincludebothexchangeandnon-exchangetradedcontractsaccountedforatfairvalueinaccordancewithASC820,FairValueMeasurementsandDisclosures,orASC820.Specifically,thesetablesdisaggregaterealizedandunrealizedchangesinfairvalue;disaggregateestimatedfairvaluesatDecember 31,2019,basedontheirlevelwithinthefairvaluehierarchydefinedinASC820;andindicatethematuritiesofcontractsatDecember 31,2019.ForafulldiscussionoftheCompany'svaluationmethodologyofitscontracts,seeDerivativeFairValueMeasurementsinItem 15 — Note5,FairValueofFinancialInstruments,totheConsolidatedFinancialStatements.Derivative Activity Gains/(Losses)(In millions)Fair value of contracts as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$104Contracts realized or otherwise settled during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105)Contracts acquired during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(12)Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80Fair value of contracts as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$67Fair Value of Contracts as of December 31, 2019(In millions)MaturityFair value hierarchy (Losses)/Gains1 Year or LessGreater Than 1 Year to 3 Years Greater Than 3 Years to 5 YearsGreater Than5 YearsTotal FairValueLevel 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(31)$(27)$(2)$1$(59)Level 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5649(7)(10)88Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54(2)1(15)38Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$79$20$(8)$(24)$67TheCompanyhaselectedtodisclosederivativeassetsandliabilitiesonatrade-by-tradebasisanddoesnotoffsetamountsatthecounterpartymasteragreementlevel.Also,collateralreceivedorpostedontheCompany'sderivativeassetsorliabilitiesarerecordedonaseparatelineitemonthebalancesheet.Consequently,themagnitudeofthechangesinindividualcurrentandnon-currentderivativeassetsorliabilitiesishigherthantheunderlyingcreditandmarketriskoftheCompany'sportfolio.AsdiscussedinItem 7A— QuantitativeandQualitativeDisclosuresAboutMarketRisk,CommodityPriceRisk,NRGmeasuresthesensitivityoftheCompany'sportfoliotopotentialchangesinmarketpricesusingVaR,astatisticalmodelwhichattemptstopredictriskoflossbasedonmarketpriceandvolatility.NRG'sriskmanagementpolicyplacesalimitonone-dayholdingperiodVaR,whichlimitstheCompany'snetopenposition.AstheCompany'strade-by-tradederivativeaccountingresultsinagross-upoftheCompany'sderivativeassetsandliabilities,thenetderivativeassetsandliabilitypositionisabetterindicatorofNRG'shedgingactivity.AsofDecember 31,2019,NRG'snetderivativeassetwas$67million,adecreasetototalfairvalueof$37millionascomparedtoDecember 31,2018.Thisdecreasewasprimarilydrivenbylossesintradessettledandcontractsacquiredduringtheperiod,partiallyoffsetbyincreasesinchangeinfairvalueduringtheperiod.Basedonasensitivityanalysisusingsimplifiedassumptions,theimpactofa$0.50perMMBtuincreaseinnaturalgaspricesacrossthetermofthederivativecontractswouldresultinanincreaseofapproximately$41millioninthenetvalueofderivativesasofDecember 31,2019.The impact of a $0.50 per MMBtu decrease in natural gas prices across the term of the derivative contracts would result in a decrease of approximately $36 million in the net value of derivatives as of December 31, 2019.68CriticalAccountingPoliciesandEstimatesNRG'sdiscussionandanalysisofthefinancialconditionandresultsofoperationsarebasedupontheConsolidatedFinancialStatements,whichhavebeenpreparedinaccordancewith GAAP.Thepreparationofthesefinancialstatementsandrelateddisclosuresincompliancewith GAAPrequirestheapplicationofappropriatetechnicalaccountingrulesandguidanceaswellastheuseofestimatesandjudgmentsthataffectthereportedamountsofassets,liabilities,revenuesandexpenses,andrelateddisclosuresofcontingentassetsandliabilities.Theapplicationofthesepoliciesinvolvesjudgmentsregardingfutureevents,includingthelikelihoodofsuccessofparticularprojects,legalandregulatorychallenges,andthefairvalueofcertainassetsandliabilities.Thesejudgments,inandofthemselves,couldmateriallyaffectthefinancialstatementsanddisclosuresbasedonvaryingassumptions,whichmaybeappropriatetouse.Inaddition,thefinancialandoperatingenvironmentmayalsohaveasignificanteffect,notonlyontheoperationofthebusiness,butontheresultsreportedthroughtheapplicationofaccountingmeasuresusedinpreparingthefinancialstatementsandrelateddisclosures,evenifthenatureoftheaccountingpolicieshavenotchanged.Onanongoingbasis,NRGevaluatestheseestimates,utilizinghistoricexperience,consultationwithexpertsandothermethodstheCompanyconsidersreasonable.Inanyevent,actualresultsmaydiffersubstantiallyfromtheCompany'sestimates.AnyeffectsontheCompany'sbusiness,financialpositionorresultsofoperationsresultingfromrevisionstotheseestimatesarerecordedintheperiodinwhichtheinformationthatgivesrisetotherevisionbecomesknown.NRG'ssignificantaccountingpoliciesaresummarizedinItem 15 — Note2,SummaryofSignificantAccountingPolicies,totheConsolidatedFinancialStatements.TheCompanyidentifiesitsmostcriticalaccountingpoliciesasthosethatarethemostpervasiveandimportanttotheportrayaloftheCompany'sfinancialpositionandresultsofoperations,andrequirethemostdifficult,subjectiveand/orcomplexjudgmentsbymanagementregardingestimatesaboutmattersthatareinherentlyuncertain.Accounting PolicyJudgments/Uncertainties Affecting ApplicationDerivative Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assumptions used in valuation techniquesAssumptions used in forecasting generationAssumptions used in forecasting borrowingsMarket maturity and economic conditionsContract interpretationMarket conditions in the energy industry, especially the effects of price volatility on contractual commitmentsIncome Taxes and Valuation Allowance for Deferred Tax Assets . .Ability to be sustained upon audit examination of taxing authoritiesInterpret existing tax statute and regulations upon application to transactionsAbility to utilize tax benefits through carry backs to prior periods and carry forwards to future periodsImpairment of Long-Lived Assets and Investments . . . . . . . . . . . . .Recoverability of investment through future operationsRegulatory and political environments and requirementsEstimated useful lives of assetsEnvironmental obligations and operational limitationsEstimates of future cash flowsEstimates of fair valueJudgment about impairment triggering eventsGoodwill and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . Estimated useful lives for finite-lived intangible assetsJudgment about impairment triggering eventsEstimates of reporting unit's fair valueFair value estimate of intangible assets acquired in business combinationsContingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Estimated financial impact of event(s)Judgment about likelihood of event(s) occurringRegulatory and political environments and requirements69DerivativeInstrumentsTheCompanyfollowstheguidanceofASC815toaccountforderivativeinstruments.ASC815requirestheCompanytomark-to-marketallderivativeinstrumentsonthebalancesheetandrecognizechangesinthefairvalueofnon-hedgederivativeinstrumentsimmediatelyinearnings.Incertaincases,NRGmayapplyhedgeaccountingtotheCompany'sderivativeinstruments.Thecriteriausedtodetermineifhedgeaccountingtreatmentisappropriateare:(i) thedesignationofthehedgetoanunderlyingexposure;(ii) whethertheoverallriskisbeingreduced;and(iii) ifthereisacorrelationbetweenthechangesinfairvalueofthederivativeinstrumentandtheunderlyinghedgeditem.ChangesinthefairvalueofderivativesinstrumentsaccountedforashedgesaredeferredandrecordedasacomponentofOCIandsubsequentlyrecognizedinearningswhenthehedgedtransactionsoccur.Forpurposesofmeasuringthefairvalueofderivativeinstruments,NRGusesquotedexchangepricesandbrokerquotes.Whenexternalpricesarenotavailable,NRGusesinternalmodelstodeterminethefairvalue.Theseinternalmodelsincludeassumptionsofthefuturepricesofenergycommoditiesbasedonthespecificmarketinwhichtheenergycommodityisbeingpurchasedorsold,usingexternallyavailableforwardmarketpricingcurvesforallperiodspossibleunderthepricingmodel.Theseestimationsareconsideredtobecriticalaccountingestimates.UponrepaymentoftheTermLoanin2019,alloftheCompany'sinterestrateswapswereterminated.Inordertoqualifythederivativeinstrumentsforhedgedtransactionspriortotermination,NRGestimatedtheforecastedborrowingsforinterestrateswapsoccurringwithinaspecifiedtimeperiod.Judgmentsrelatedtotheprobabilityofforecastedborrowingswerebasedontheestimatedtimingofprojectconstruction,whichcanvarybasedonvariousfactors.TheprobabilitythatforecastedborrowingswilloccurbytheendofaspecifiedtimeperiodcouldchangetheresultsofoperationsbyrequiringamountscurrentlyclassifiedinOCItobereclassifiedintoearnings,creatingincreasedvariabilityintheCompany'searnings.Certainderivativeinstrumentsthatmeetthecriteriaforderivativeaccountingtreatmentalsoqualifyforascopeexceptiontoderivativeaccounting,astheyareconsideredtobeNPNS.TheavailabilityofthisexceptionisbasedupontheassumptionthatNRGhastheabilityanditisprobabletodeliverortakedeliveryoftheunderlyingitem.Theseassumptionsarebasedonexpectedloadrequirements,availablebaseloadcapacity,internalforecastsofsalesandgenerationandhistoricalphysicaldeliveryoncontracts.DerivativesthatareconsideredtobeNPNSareexemptfromderivativeaccountingtreatmentandareaccountedforunderaccrualaccounting.IfitisdeterminedthatatransactiondesignatedasNPNSnolongermeetsthescopeexceptionduetochangesinestimates,therelatedcontractwouldberecordedonthebalancesheetatfairvaluecombinedwiththeimmediaterecognitionthroughearnings.IncomeTaxesandValuationAllowanceforDeferredTaxAssetsAsofDecember 31,2019,NRG’sdeferredtaxassetswereprimarilytheresultofU.S.federalandstateNOLs,thedifferencebetweenbookandtaxbasisinproperty,plant,andequipment,andtaxcreditcarryforwards.TherealizationofdeferredtaxassetsisdependentupontheCompany'sabilitytogeneratesufficientfuturetaxableincomeduringtheperiodsinwhichthosetemporarydifferencesbecomedeductible,priortotheexpirationofthetaxattributes.TheevaluationofdeferredtaxassetsrequiresjudgmentinassessingthelikelyfuturetaxconsequencesofeventsthathavebeenrecognizedintheCompany'sfinancialstatementsortaxreturnsandforecastingfutureprofitabilitybytaxjurisdiction.Avaluationallowanceof$242millionand$3.8billionwasrecordedagainstNRG’sgrossdeferredtaxassetbalanceasofDecember31,2019,andDecember31,2018,respectively.DuringtheyearendedDecember31,2019,NRGreleasedthemajorityofitsvaluationallowanceagainstitsU.S.federalandstatedeferredtaxassets,resultinginanon-cashbenefittoincometaxexpenseofapproximately$3.5billion.TheCompanyevaluatesitsdeferredtaxassetsquarterlyonajurisdictionalbasistodeterminewhetheradjustmentstothevaluationallowanceareappropriateconsideringchangesinfactsorcircumstances.Asofeachreportingdate,managementconsidersnewevidence,bothpositiveandnegative,whendeterminingthefuturerealizationoftheCompany’sdeferredtaxassets.InmakingthedeterminationtoreleasethemajorityofthevaluationallowanceasofDecember31,2019,theCompanyevaluatedanumberoffactors,includingitsrecenthistoryofpre-taxearnings,utilizationof$593millionofNOLsin2019,aswellasitsforecastedfuturepre-taxearnings.Basedonthisevaluation,theCompanydeterminedthatitsfutureU.S.federaltaxbenefitsaremore-likely-than-nottoberealized.GiventheCompany’scurrentlevelofpre-taxearningsandforecastedfuturepre-taxearnings,theCompanyexpectstogenerateincomebeforetaxesintheU.S.infutureperiodsatalevelthatwouldfullyutilizeitsU.S.federalNOLcarryforwardsandthemajorityofitsstateNOLcarryforwardspriortotheirexpiration.NRGcontinuestomaintainavaluationallowanceofapproximately$242millionasofDecember31,2019againstnetdeferredtaxassetsconsistingofstatenetoperatinglossesandforeignNOLcarryforwardsinjurisdictionswheretheCompanydoesnotcurrentlybelievethattherealizationofitsdeferredtaxassetsismorelikelythannot.NRGcontinuestobeunderauditformultipleyearsbytaxingauthoritiesinotherjurisdictions.Considerablejudgmentisrequiredtodeterminethetaxtreatmentofaparticularitemthatinvolvesinterpretationsofcomplextaxlaws,includingthe70impactoftheTaxActeffectiveDecember22,2017.NRGissubjecttoexaminationbytaxingauthoritiesforincometaxreturnsfiledintheU.S.federaljurisdictionandvariousstateandforeignjurisdictions,includingoperationslocatedinAustralia.TheCompanyisnolongersubjecttoU.S.federalincometaxexaminationsforyearspriorto2016.Withfewexceptions,stateandlocalincometaxexaminationsarenolongeropenforyearsbefore2011.EvaluationofAssetsforImpairmentandOther-Than-TemporaryDeclineinValueInaccordancewithASC360,Property,Plant,andEquipment,orASC360,NRGevaluatesproperty,plantandequipmentandcertainintangibleassetsforimpairmentwheneverindicatorsofimpairmentexist.Examplesofsuchindicatorsoreventsare:•Significant decrease in the market price of a long-lived asset;•Significant adverse change in the manner an asset is being used or its physical condition;•Adverse business climate;•Accumulation of costs significantly in excess of the amount originally expected for the construction or acquisition of an asset;•Current period loss combined with a history of losses or the projection of future losses; and•Change in the Company's intent about an asset from an intent to hold to a greater than 50% likelihood that an asset will be sold, or disposed of before the end of its previously estimated useful life.Recoverabilityofassetstobeheldandusedismeasuredbyacomparisonofthecarryingamountoftheassetstothefuturenetcashflowsexpectedtobegeneratedbytheasset,throughconsideringprojectspecificassumptionsforlong-termpowerprices,escalatedfutureprojectoperatingcostsandexpectedplantoperations.Ifsuchassetsareconsideredtobeimpaired,theimpairmenttoberecognizedismeasuredbytheamountbywhichthecarryingamountoftheassetsexceedsthefairvalueoftheassetsbyfactoringinthedifferentcoursesofactionavailabletotheCompany.Generally,fairvaluewillbedeterminedusingvaluationtechniques,suchasthepresentvalueofexpectedfuturecashflows.NRGusesitsbestestimatesinmakingtheseevaluationsandconsidersvariousfactors,includingforwardpricecurvesforenergy,fuelandoperatingcosts.However,actualfuturemarketpricesandprojectcostscouldvaryfromtheassumptionsusedintheCompany'sestimatesandtheimpactofsuchvariationscouldbematerial.Forassetstobeheldandused,iftheCompanydeterminesthattheundiscountedcashflowsfromtheassetarelessthanthecarryingamountoftheasset,NRGmustestimatefairvaluetodeterminetheamountofanyimpairmentloss.Assetsheld-for-salearereportedatthelowerofthecarryingamountorfairvaluelessthecosttosell.Theestimationoffairvalue,whetherinconjunctionwithanassettobeheldandusedorwithanassetheld-for-sale,andtheevaluationofassetimpairmentare,bytheirnature,subjective.NRGconsidersquotedmarketpricesinactivemarketstotheextenttheyareavailable.Intheabsenceofsuchinformation,theCompanymayconsiderpricesofsimilarassets,consultwithbrokers,oremployothervaluationtechniques.NRGwillalsodiscounttheestimatedfuturecashflowsassociatedwiththeassetusingasingleinterestraterepresentativeoftheriskinvolvedwithsuchaninvestmentoremployanexpectedpresentvaluemethodthatprobability-weightsarangeofpossibleoutcomes.Theuseofthesemethodsinvolvesthesameinherentuncertaintyoffuturecashflowsaspreviouslydiscussedwithrespecttoundiscountedcashflows.ActualfuturemarketpricesandprojectcostscouldvaryfromthoseusedintheCompany'sestimatesandtheimpactofsuchvariationscouldbematerial.Annually,duringthefourthquarter,theCompanyrevisesitsviewsofpowerandfuelpricesincludingtheCompany'sfundamentalviewforlong-termprices,forecastedgenerationandoperatingandcapitalexpenditures,inconnectionwiththepreparationofitsannualbudget.ChangestotheCompany'sviewsoflong-termpowerandfuelpricesimpacttheCompany’sprojectionsofprofitability,basedonmanagement'sestimateofsupplyanddemandwithinthesub-marketsforitsoperationsandthephysicalandeconomiccharacteristicsofeachofitsbusinesses.AsofDecember31,2019,theCompanyrecordedimpairmentlossesofapproximately$5million,excludingimpairmentlossesonequityandcostmethodinvestmentsdiscussedbelow.Theseimpairmentlosseswereprimarilytorecordthevalueofcertainlong-livedassets,includingproperty,plantandequipmentandintangibleassets,atfairmarketvalueinconnectionwithanimpairmentindicator.EquityandCostMethodInvestmentsNRGisalsorequiredtoevaluateitsequitymethodandcostmethodinvestmentstodeterminewhetherornottheyareimpairedinaccordancewithASC323,Investments-EquityMethodandJointVentures,orASC323.ThestandardfordeterminingwhetheranimpairmentmustberecordedunderASC323iswhetheradeclineinthevalueisconsideredanother-than-temporarydeclineinvalue.TheevaluationandmeasurementofimpairmentsunderASC323involvesthesameuncertaintiesasdescribedforlong-livedassetsthattheCompanyownsdirectlyandaccountsforinaccordancewithASC360.71Similarly,theestimatesthatNRGmakeswithrespecttoitsequityandcostmethodinvestmentsaresubjective,andtheimpactofvariationsintheseestimatescouldbematerial.Additionally,iftheprojectsinwhichtheCompanyholdstheseinvestmentsrecognizeanimpairmentundertheprovisionsofASC360,NRGwouldrecorditsproportionateshareofthatimpairmentlossandwouldevaluateitsinvestmentforanother-than-temporarydeclineinvalueunderASC323.DuringtheyearendedDecember31,2019,theCompanyrecordedimpairmentlossesonitsequityandcostmethodinvestments,primarilyPetraNova,of$108 millionduetodeclinesinvalue.GoodwillandOtherIntangibleAssetsAtDecember 31,2019,NRGreportedgoodwillof$579million,consistingof$165millionassociatedwiththeacquisitionofMidwestGenerationand$414millionforretailbusinessacquisitions,includingTexasnon-commodity,XOOMandStreamEnergy.TheCompanyappliesASC805,BusinessCombinations,orASC805,andASC350,toaccountforitsgoodwillandintangibleassets.Underthesestandards,theCompanyamortizesallfinite-livedintangibleassetsovertheirrespectiveestimatedweighted-averageusefullives,whilegoodwillhasanindefinitelifeandisnotamortized.Goodwillistestedforimpairmentatleastannually,ormorefrequentlywheneveraneventorchangeincircumstancesoccursthatwouldmorelikelythannotreducethefairvalueofareportingunitbelowitscarryingamount.TheCompanytestsgoodwillforimpairmentatthereportingunitlevel,whichisidentifiedbyassessingwhetherthecomponentsoftheCompany'soperatingsegmentsconstitutebusinessesforwhichdiscretefinancialinformationisavailableandwhethersegmentmanagementregularlyreviewstheoperatingresultsofthosecomponents.TheCompanyperformstheannualgoodwillimpairmentassessmentasofDecember31orwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.TheCompanyfirstassessesqualitativefactorstodeterminewhetheritismorelikelythannotthatanimpairmenthasoccurred.Intheabsenceofsufficientqualitativefactors,theCompanyperformsaquantitativeassessmentbydeterminingthefairvalueofthereportingunitandcomparingtoitsbookvalue.Ifitisdeterminedthatthefairvalueofareportingunitisbelowitscarryingamount,wherenecessary,theCompany'sgoodwillwillbeimpairedatthattime.TheCompanyperformeditsqualitativeassessmentofmacroeconomic,industryandmarketeventsandcircumstances,andtheoverallfinancialperformanceoftheNRGBusinessSolutionsandRetailMassreportingunits.TheCompanydetermineditwasmore-likely-than-notthatthefairvalueofthegoodwillattributedtothesereportingunitsweremorethantheircarryingamountandaccordingly,noimpairmentexistedfortheyearendedDecember31,2019.TheCompanyperformedaquantitativeassessmentforthereportingunitsinthefollowingtable.TheCompanydeterminedthefairvalueofthesereportingunitsusingprimarilyanincomeapproach.Undertheincomeapproach,theCompanyestimatedthefairvalueofthereportingunits'investedcapitalexceedsitscarryingvalueand,assuch,theCompanyconcludedthatgoodwillassociatedwiththereportingunitsinthefollowingtableisnotimpairedasofDecember 31,2019:Reporting Unit% Fair Value Over Carrying ValueMidwest Generation (Generation Segment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112%Texas Non-Commodity (Retail Segment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140%TheCompanybelievesthemethodologyandassumptionsusedinitsquantitativeassessmentareconsistentwiththeviewsofmarketparticipants.Significantinputstothedeterminationoffairvaluewereasfollows:•The Company applied a discounted cash flow methodology to the long-term forecasts for the Midwest Generation plants. The significant assumptions used to derive the long-term budgets used in the income approach are affected by the following key inputs: ◦The Company's views of power and fuel prices consider market prices for the next five years and the Company's fundamental view for the longer term, driven by the Company's long-term view of the price of natural gas. The Company's fundamental view for the longer term reflects the implied power price and heat rate that would support new build of a combined cycle gas plant. The price of natural gas plays an important role in setting the price of electricity in many of the regions where NRG operates power plants. Hedging is included to the extent of contracts already in place; ◦The Company's estimate of generation, fuel costs, capital expenditure requirements and the existing and anticipated impact of environmental regulations; ◦The Company's fundamental view for the longer term, cash flows for the plants in the region were included in the fair value calculation through the end of each plants' estimated useful life; and◦Projected generation and resulting energy gross margin in the long-term forecasts is based on an hourly dispatch that simulates dispatch of each unit into the power market. The dispatch simulation is based on power prices, fuel prices, and the physical and economic characteristics of each plant 72•The Company applied a discounted cash flow methodology to the long-term budget for the Texas Non-Commodity reporting unit. The significant assumptions used to derive the long-term budgets used in the income approach are affected by the following key inputs: a terminal value utilizing assumed growth rates and discount rates that reflect the inherent cash flow risk. Fairvaluedeterminationsrequireconsiderablejudgmentandaresensitivetochangesinunderlyingassumptionsandfactors.Asaresult,therecanbenoassurancethattheestimatesandassumptionsmadeforpurposesoftheannualgoodwillimpairmenttestwillprovetobeaccuratepredictionsofthefuture.ContingenciesNRGrecordsreservesforestimatedlossesfromcontingencieswheninformationavailableindicatesthatalossisprobableandtheamountoftheloss,orrangeofloss,canbereasonablyestimated.Gaincontingenciesarenotrecordeduntilmanagementdeterminesitiscertainthatthefutureeventwillbecomeordoesbecomeareality.Suchdeterminationsaresubjecttointerpretationsofcurrentfactsandcircumstances,forecastsoffutureevents,andestimatesofthefinancialimpactsofsuchevents.NRGdescribesindetailitscontingenciesinItem 15 — Note23,CommitmentsandContingencies,totheConsolidatedFinancialStatements.RecentAccountingDevelopmentsSeeItem 15 — Note2,SummaryofSignificantAccountingPolicies,totheConsolidatedFinancialStatementsforadiscussionofrecentaccountingdevelopments.73Item 7A — QuantitativeandQualitativeDisclosuresAboutMarketRiskNRGisexposedtoseveralmarketrisksintheCompany'snormalbusinessactivities.MarketriskisthepotentiallossthatmayresultfrommarketchangesassociatedwiththeCompany'sretailbusinesses,merchantpowergeneration,orwithanexistingorforecastedfinancialorcommoditytransaction.ThetypesofmarketriskstheCompanyisexposedtoarecommoditypricerisk,interestraterisk,liquidityrisk,creditriskandcurrencyexchangerisk.Inordertomanagetheserisks,theCompanyusesvariousfixed-priceforwardpurchaseandsalescontracts,futuresandoptioncontractstradedonNYMEX,andswapsandoptionstradedintheover-the-counterfinancialmarketsto:•Manage and hedge fixed-price purchase and sales commitments;•Reduce exposure to the volatility of cash market prices, and•Hedge fuel requirements for the Company's generating facilities.CommodityPriceRiskCommoditypricerisksresultfromexposurestochangesinspotprices,forwardprices,volatilities,andcorrelationsbetweenvariouscommodities,suchasnaturalgas,electricity,coal,oil,andemissionscredits.NRGmanagesthecommoditypriceriskoftheCompany'smerchantgenerationoperationsandloadservingobligationsbyenteringintovariousderivativeornon-derivativeinstrumentstohedgethevariabilityinfuturecashflowsfromforecastedsalesandpurchasesofelectricityandfuel.Theseinstrumentsincludeforwards,futures,swaps,andoptioncontractstradedonvariousexchanges,suchasNYMEXandICE,aswellasover-the-countermarkets.Theportionofforecastedtransactionshedgedmayvarybaseduponmanagement'sassessmentofmarket,weather,operationandotherfactors.WhilesomeofthecontractstheCompanyusestomanageriskrepresentcommoditiesorinstrumentsforwhichpricesareavailablefromexternalsources,othercommoditiesandcertaincontractsarenotactivelytradedandarevaluedusingotherpricingsourcesandmodelingtechniquestodetermineexpectedfuturemarketprices,contractquantities,orboth.NRGusestheCompany'sbestestimatestodeterminethefairvalueofthosederivativecontracts.However,itislikelythatfuturemarketpricescouldvaryfromthoseusedinrecordingmark-to-marketderivativeinstrumentvaluationandsuchvariationscouldbematerial.NRGmeasurestheriskoftheCompany'sportfoliousingseveralanalyticalmethods,includingsensitivitytests,scenariotests,stresstests,positionreports,andVaR.NRGusesaMonteCarlosimulationbasedVaRmodeltoestimatethepotentiallossinthefairvalueoftheCompany'senergyassetsandliabilities,whichincludesgenerationassets,loadobligations,andbilateralphysicalandfinancialtransactions.ThekeyassumptionsfortheCompany'sVaRmodelinclude:(i)lognormaldistributionofprices;(ii) one-dayholdingperiod;(iii)95%confidenceinterval;(iv)rolling36-monthforwardlookingperiod;and(v) marketimpliedvolatilitiesandhistoricalpricecorrelations.AsofDecember 31,2019,theVaRforNRG'scommodityportfolio,includinggenerationassets,loadobligationsandbilateralphysicalandfinancialtransactionscalculatedusingtheVaRmodelwas$42million.Thefollowingtablesummarizesaverage,maximumandminimumVaRforNRGfortheyearsendedDecember 31,2019and2018:(In millions)20192018VaR as of December 31,$42$44For the year ended December 31,Average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$44$59Maximum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5575Minimum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3344DuetotheinherentlimitationsofstatisticalmeasuressuchasVaR,theevolvingnatureofthecompetitivemarketsforelectricityandrelatedderivatives,andtheseasonalityofchangesinmarketprices,theVaRcalculationmaynotcapturethefullextentofcommoditypriceexposure.Asaresult,actualchangesinthefairvalueofmark-to-marketenergyassetsandliabilitiescoulddifferfromthecalculatedVaR,andsuchchangescouldhaveamaterialimpactontheCompany'sfinancialresults.Inordertoprovideadditionalinformation,theCompanyalsousesVaRtoestimatethepotentiallossofderivativefinancialinstrumentsthataresubjecttomark-to-marketaccounting.Thesederivativeinstrumentsincludetransactionsthatwereenteredintoforbothassetmanagementandtradingpurposes.TheVaRforthederivativefinancialinstrumentscalculatedusingthediversifiedVaRmodelfortheentiretermoftheseinstrumentsenteredintoforbothassetmanagementandtradingwas$11millionasofDecember 31,2019,primarilydrivenbyasset-backedtransactions.74RetailCustomerCreditRiskNRGisexposedtoretailcreditriskrelatedtoitsC&IandMasscustomers.Retailcreditriskresultsinlosseswhenacustomerfailstopayforservicesrendered.Thelossesmayresultfrombothnonpaymentofcustomeraccountsreceivableandthelossofin-the-moneyforwardvalue.NRGmanagesretailcreditriskthroughtheuseofestablishedcreditpoliciesthatincludemonitoringoftheportfolioandtheuseofcreditmitigationmeasures,suchasdepositsorprepaymentarrangements.AsofDecember 31,2019,theCompany'sretailcustomercreditexposuretoC&IandMasscustomerswasdiversifiedacrossmanycustomersandvariousindustries,aswellasgovernmententities.TheCompany'sbaddebtexpenseresultingfromcreditriskwas$95 million,$85 million,and$68 millionfortheyearsendingDecember31,2019,2018,and2017,respectively.CurrenteconomicconditionsmayaffecttheCompany'scustomers'abilitytopaybillsinatimelymanner,whichcouldincreasecustomerdelinquenciesandmayleadtoanincreaseinbaddebtexpense.LiquidityRiskLiquidityriskarisesfromthegeneralfundingneedsoftheCompany'sactivitiesandthemanagementoftheCompany'sassetsandliabilities.TheCompanyiscurrentlyexposedtoadditionalcollateralpostingifnaturalgaspricesdecline,primarilyduetothelongnaturalgasequivalentpositionatvariousexchangesusedtohedgeNRG'sretailsupplyloadobligations.BasedonasensitivityanalysisforpowerandgaspositionsundermarginablecontractsasofDecember 31,2019,a$0.50perMMBtudecreaseinnaturalgaspricesacrossthetermofthemarginablecontractswouldcauseanincreaseinmargincollateralpostedofapproximately$194millionanda1.00MMBtu/MWhdecreaseinheatratesforheatratepositionswouldresultinanincreaseinmargincollateralpostedofapproximately$121million.Thisanalysisusessimplifiedassumptionsandiscalculatedbasedonportfoliocompositionandmargin-relatedcontractprovisionsasofDecember 31,2019.CounterpartyCreditRiskCreditriskrelatestotheriskoflossresultingfromnon-performanceornon-paymentbycounterpartiespursuanttothetermsoftheircontractualobligations.TheCompanymonitorsandmanagescreditriskthroughcreditpoliciesthatinclude:(i) anestablishedcreditapprovalprocess;(ii) adailymonitoringofcounterparties'creditlimits;(iii) theuseofcreditmitigationmeasuressuchasmargin,collateral,prepaymentarrangements,orvolumetriclimits;(iv) theuseofpaymentnettingagreements;and(v) theuseofmasternettingagreementsthatallowforthenettingofpositiveandnegativeexposuresofvariouscontractsassociatedwithasinglecounterparty.Riskssurroundingcounterpartyperformanceandcreditcouldultimatelyimpacttheamountandtimingofexpectedcashflows.TheCompanyseekstomitigatecounterpartyriskbyhavingadiversifiedportfolioofcounterparties.TheCompanyalsohascreditprotectionwithinvariousagreementstocallonadditionalcollateralsupportifandwhennecessary.CashmarginiscollectedandheldattheCompanytocoverthecreditriskofthecounterpartyuntilpositionssettle.AsofDecember 31,2019,aggregatecounterpartycreditexposuretoasignificantportionoftheCompany'scounterpartiestotaled$239million,ofwhichtheCompanyheldcollateral(cashandlettersofcredit)againstthosepositionsof$51millionresultinginanetexposureof$233million.NRGperiodicallyreceivescollateralfromcounterpartiesinexcessoftheirexposure.Collateralamountsshownincludesuchexcesswhilenetexposureshownexcludesexcesscollateralreceived.Approximately67%oftheCompany'sexposurebeforecollateralisexpectedtorolloffbytheendof2021.Thefollowingtablehighlightsthenetcounterpartycreditexposurebyindustrysectorandbycounterpartycreditquality.NetcounterpartycreditexposureisdefinedastheaggregatenetassetpositionforNRGwithcounterpartieswherenettingispermittedundertheenablingagreementandincludesallcashflow,mark-to-market,NPNS,andnon-derivativetransactions.AsofDecember 31,2019,theaggregatecreditexposureisshownnetofcollateralheld,andincludesamountsnetofreceivablesorpayables.CategoryNet Exposure (a)(b)(% of Total)Utilities, energy merchants, marketers and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84%Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100%CategoryNet Exposure (a)(b)(% of Total)Investment grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56%Non-Investment grade/Non-Rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100%(a)Counterparty credit exposure excludes uranium and coal transportation contracts because of the unavailability of market prices(b)The figures in the tables above exclude potential counterparty credit exposure related to RTOs, ISOs, registered commodity exchanges and certain long-term contracts75TheCompanyhas$33 millionofexposuretoonewholesalecounterpartyinexcessof10%ofthetotalnetexposurediscussedaboveasofDecember 31,2019.Changesinhedgepositionsandmarketpriceswillaffectcreditexposureandcounterpartyconcentration.Giventhecreditquality,diversificationandtermoftheexposureintheportfolio,theCompanydoesnotanticipateamaterialimpactonitsfinancialpositionorresultsofoperationsfromnonperformancebyanycounterparty.RTOsandISOsTheCompanyparticipatesintheorganizedmarketsofCAISO,ERCOT,ISO-NE,MISO,NYISOandPJM,knownasRTOsorISOs.TradinginthesemarketsisapprovedbyFERC,orinthecaseofERCOT,approvedbythePUCTandincludecreditpoliciesthat,undercertaincircumstances,requirethatlossesarisingfromthedefaultofonememberonspotmarkettransactionsbesharedbytheremainingparticipants.Asaresult,thecounterpartycreditrisktothesemarketsislimitedtoNRG’sapplicableshareoftheoverallmarketandareexcludedfromtheaboveexposures.ExchangeTradedTransactionsTheCompanyentersintocommoditytransactionsonregisteredexchanges,notablyICE,NYMEXandNodal.Theseclearinghousesactasthecounterpartyandtransactionsaresubjecttoextensivecollateralandmarginingrequirements.Asaresult,thesecommoditytransactionshavelimitedcounterpartycreditrisk.Long-TermContractsCounterpartycreditexposuredescribedaboveexcludescreditriskexposureundercertainlong-termcontracts,primarilysolarPPAs.Asexternalsourcesorobservablemarketquotesarenotavailabletoestimatesuchexposure,theCompanyvaluesthesecontractsbasedonvarioustechniquesincluding,butnotlimitedto,internalmodelsbasedonafundamentalanalysisofthemarketandextrapolationofobservablemarketdatawithsimilarcharacteristics.Basedonthesevaluationtechniques,asofDecember 31,2019,aggregatecreditriskexposuremanagedbyNRGtothesecounterpartieswasapproximately$548millionforthenextfiveyears,includingexposuretoPG&EthroughitsunconsolidatedaffiliatesIvanpahandAguaCaliente.InterestRateRiskNRGwaspreviouslyexposedtofluctuationsininterestratesthroughitsissuanceofvariableratedebt.Exposurestointerestratefluctuationsmaybemitigatedbyenteringintoderivativeinstrumentsknownasinterestrateswaps,caps,collarsandputorcalloptions.Thesecontractsreduceexposuretointerestratevolatilityandresultinprimarilyfixedratedebtobligationswhentakingintoaccountthecombinationofthevariableratedebtandtheinterestratederivativeinstrument.NRG'sriskmanagementpoliciesallowtheCompanytoreduceinterestrateexposurefromvariableratedebtobligations.TheCompanypreviouslyenteredintointerestrateswaps.AsofDecember 31,2019,NRGhadnointerestratederivativeinstruments,asaresultoftheearlyterminationofsuchcontractsinconnectionwiththerepaymentofthe2023TermLoanFacilityduringthesecondquarterof2019.SeeItem15—Note13,DebtandFinanceLeases,totheConsolidatedFinancialStatementsforfurtherdiscussion.AsofDecember 31,2019,theCompany'sdebtfairvaluewas$6.5 billionandcarryingvaluewas$6.0 billion.NRGestimatesthata1%decreaseinmarketinterestrateswouldhaveincreasedthefairvalueoftheCompany'slong-termdebtby$560 million.CreditRiskRelatedContingentFeaturesCertainoftheCompany'shedgingagreementscontainprovisionsthatrequiretheCompanytopostadditionalcollateralifthecounterpartydeterminesthattherehasbeendeteriorationincreditquality,generallytermed"adequateassurance"undertheagreements,orrequiretheCompanytopostadditionalcollateraliftherewereaonenotchdowngradeintheCompany'screditrating.ThecollateralrequiredforcontractsthathaveadequateassuranceclausesthatareinanetliabilitypositionasofDecember 31,2019,was$14million.ThecollateralrequiredforcontractswithcreditratingcontingentfeaturesthatareinanetliabilitypositionasofDecember 31,2019was$24million.TheCompanyisalsoapartytocertainmarginableagreementsunderwhichithasanetliabilityposition,butthecounterpartyhasnotcalledforthecollateraldue,whichwasapproximately$3millionasofDecember 31,2019.CurrencyExchangeRiskNRG'sforeignearningsandinvestmentsmaybesubjecttoforeigncurrencyexchangerisk,whichNRGgenerallydoesnothedge.AstheseearningsandinvestmentsarenotmaterialtoNRG'sconsolidatedresults,theCompany'sforeigncurrencyexposureislimited.Item 8 — FinancialStatementsandSupplementaryDataThefinancialstatementsandschedulesareincludedinPart IV,Item 15ofthisForm 10-K.76Item 9 — ChangesinandDisagreementsWithAccountantsonAccountingandFinancialDisclosureNone.Item 9A — ControlsandProceduresConclusionRegardingtheEffectivenessofDisclosureControlsandProceduresandInternalControlOverFinancialReportingUnderthesupervisionandwiththeparticipationofNRG'smanagement,includingitsprincipalexecutiveofficer,principalfinancialofficerandprincipalaccountingofficer,NRGconductedanevaluationoftheeffectivenessofthedesignandoperationofitsdisclosurecontrolsandprocedures,assuchtermisdefinedinRules 13a-15(e)or15d-15(e)oftheExchangeAct.Basedonthisevaluation,theCompany'sprincipalexecutiveofficer,principalfinancialofficerandprincipalaccountingofficerconcludedthatthedisclosurecontrolsandprocedureswereeffectiveasoftheendoftheperiodcoveredbythisAnnualReportonForm 10-K.Management'sreportontheCompany'sinternalcontroloverfinancialreportingandthereportoftheCompany'sindependentregisteredpublicaccountingfirmareincorporatedunderthecaption"Management'sReportonInternalControloverFinancialReporting"andunderthecaption"ReportofIndependentRegisteredPublicAccountingFirm"inthisAnnualReportonForm 10-KforthefiscalyearendedDecember 31,2019.ChangesinInternalControloverFinancialReportingTherewerenochangesinNRG’sinternalcontroloverfinancialreporting(assuchtermisdefinedinRule13a-15(f)undertheExchangeAct)thatoccurredinthefourthquarterof2019thatmateriallyaffected,orarereasonablylikelytomateriallyaffect,NRG’sinternalcontroloverfinancialreporting.InherentLimitationsoverInternalControlsNRG'sinternalcontroloverfinancialreportingisdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationofconsolidatedfinancialstatementsforexternalpurposesinaccordancewithGAAP.TheCompany'sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat:1.Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets;2.Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with GAAP, and that the Company's receipts and expenditures are being made only in accordance with authorizations of its management and directors; and3.Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the consolidated financial statements.Internalcontroloverfinancialreportingcannotprovideabsoluteassuranceofachievingfinancialreportingobjectivesbecauseofitsinherentlimitations,includingthepossibilityofhumanerrorandcircumventionbycollusionoroverridingofcontrols.Accordingly,evenaneffectiveinternalcontrolsystemmaynotpreventordetectmaterialmisstatementsonatimelybasis.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditionsorthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.Management'sReportonInternalControloverFinancialReportingTheCompany'smanagementisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting,assuchtermisdefinedinExchangeActRule 13a-15(f).UnderthesupervisionandwiththeparticipationoftheCompany'smanagement,includingitsprincipalexecutiveofficer,principalfinancialofficerandprincipalaccountingofficer,theCompanyconductedanevaluationoftheeffectivenessofitsinternalcontroloverfinancialreportingbasedontheframeworkinInternalControl — IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.BasedontheCompany'sevaluationundertheframeworkinInternalControl — IntegratedFramework(2013),theCompany'smanagementconcludedthatitsinternalcontroloverfinancialreportingwaseffectiveasofDecember 31,2019.OnAugust1,2019,weacquiredStreamEnergy,asfurtherdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions.StreamEnergycomprisedapproximately2.8%oftheCompany'stotalassetsasofDecember 31,2019andapproximately3.2%oftheCompany'stotalrevenuesfortheyearendedDecember 31,2019.AsofDecember 31,2019,weareintheprocessofevaluatingtheinternalcontrolsoftheacquiredbusinessandintegratingitintoourexistingoperations.Theacquiredbusinesshas,therefore,beenexcludedfrommanagement'sassessmentofinternalcontroloverfinancialreportingfortheyearendedDecember 31,2019.77TheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember 31,2019hasbeenauditedbyKPMG LLP,theCompany'sindependentregisteredpublicaccountingfirm,asstatedinitsreportwhichisincludedinthisAnnualReportonForm 10-K.78REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and StockholdersNRG Energy, Inc.:OpiniononInternalControlOverFinancialReportingWehaveauditedNRGEnergy,Inc.andsubsidiaries'(theCompany)internalcontroloverfinancialreportingasofDecember 31,2019,basedoncriteriaestablishedinInternalControl—IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Inouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember 31,2019,basedoncriteriaestablishedinInternalControl—IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theconsolidatedbalancesheetsoftheCompanyasofDecember 31,2019and2018,andtherelatedconsolidatedstatementsofoperations,comprehensiveincome/(loss),stockholders’equity,andcashflowsforeachoftheyearsinthethree-yearperiodendedDecember 31,2019,andtherelatednotesandfinancialstatementscheduleII(collectively,theconsolidatedfinancialstatements),andourreportdatedFebruary 27,2020expressedanunqualifiedopiniononthoseconsolidatedfinancialstatements.ManagementexcludedStreamEnergy(Stream),acquiredbytheCompanyduring2019,fromtheirassessmentoftheeffectivenessoftheCompany'sinternalcontroloverfinancialreportingasofDecember 31,2019.Stream'sassetscomprisedapproximately2.8%oftheCompany'stotalassetsasofDecember31,2019andStream'srevenuescomprisedapproximately3.2%oftheCompany'stotalrevenuesfortheyearendedDecember 31,2019.OurauditoftheCompany'sinternalcontroloverfinancialreportingalsoexcludedStream.BasisforOpinionTheCompany'smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreporting,includedintheaccompanyingManagement’sReportonInternalControloverFinancialReporting.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S.federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditofinternalcontroloverfinancialreportingincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,andtestingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk.Ourauditalsoincludedperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.DefinitionandLimitationsofInternalControlOverFinancialReportingAcompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1) pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2) providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3) providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate./s/ KPMG LLPPhiladelphia, PennsylvaniaFebruary 27, 2020 79Item 9B — OtherInformationNone.PART IIIItem 10 — Directors,ExecutiveOfficersandCorporateGovernanceDirectorsE.SpencerAbrahamhasbeenadirectorofNRGsinceDecember2012.Previously,heservedasadirectorofGenOnEnergy,Inc.fromJanuary2012toDecember2012.HeisChairmanandChiefExecutiveOfficerofTheAbrahamGroup,aninternationalstrategicconsultingfirmbasedinWashington,D.C.whichhefoundedin2005.Priortothat,SecretaryAbrahamservedasSecretaryofEnergyunderPresidentGeorgeW.Bushfrom2001throughJanuary2005andwasaU.S.SenatorfortheStateofMichiganfrom1995to2001.SecretaryAbrahamservesontheboardsofthefollowingpubliccompanies:OccidentalPetroleumCorporation,PBFEnergyandTwoHarborsInvestmentCorp.,aswellaschairmanoftheboardofUraniumEnergyCorp.SecretaryAbrahampreviouslyservedasthenon-executivechairmanofAREVA,Inc.,theU.S.subsidiaryoftheFrench-ownednuclearcompany,andasadirectorofDeepwaterWindLLC,InternationalBattery,C3IoT,GreenRockEnergy,ICxTechnologies,PetroTigerandSindicatumSustainableResources.HealsopreviouslyservedontheadvisoryboardorcommitteesofMidasMedici(Utilipoint),MillenniumPrivateEquity,SunoviaandWetherlyCapital.AntonioCarrillohasbeenadirectorofNRGsinceOctober2019.Mr.CarrillocurrentlyservesasArcosaInc.’sPresidentandChiefExecutiveOfficersinceNovember2018andisamemberofitsBoardofDirectors.FromApril2018toNovember2018,Mr.CarrilloservedasSeniorVicePresidentandGroupPresidentofConstruction,Energy,MarineandComponentsofTrinityIndustries,Inc.(Trinity).From2012toFebruary2018,Mr.CarrilloservedastheChiefExecutiveOfficerofOrbiaAdvanceCorporation(formerlyknownasMexichemS.A.B.deC.V.)(Orbia),apublicly-tradedglobalspecialtychemicalcompany.PriortojoiningOrbia,Mr.Carrillospent16yearsatTrinitywhereheservedasSeniorVicePresidentandGroupPresidentofTrinity’sEnergyEquipmentGroupandwasresponsibleforTrinity’sMexicooperations.Mr.CarrillopreviouslyservedasadirectorofTrinityfrom2014untilNovember2018andadirectorofDrPepperSnappleGroup,Inc.from2015to2018.MatthewCarter,Jr.hasbeenadirectorofNRGsinceMarch2018.Mr.CartercurrentlyservesasChiefExecutiveOfficerofAryakaNetworks,Inc.Mr.CarterservedasPresidentandChiefExecutiveOfficerandadirectorofInteliquent,Inc.,apubliclytradedproviderofvoicetelecommunicationsservices,fromJune2015untilFebruary2017whenInteliquent,Inc.wasacquired.HeservedasPresidentoftheSprintEnterpriseSolutionsbusinessunitofSprintCorporation,apubliclytradedtelecommunicationscompany,fromSeptember2013untilJanuary2015and,previoustothatposition,servedasPresident,SprintGlobalWholesale&EmergingSolutionsatSprintNextelCorporation.Mr.CarteralsoservesasadirectorofJonesLangLasalleIncorporated.HepreviouslyservedasadirectorofUSGCorporationfrom2012to2018,ApolloEducationGroup,Inc.from2012to2017andInteliquent,Inc.fromJune2015toFebruary2017andhassignificantmarketing,technologyandinternationalexperience,includingpreviousmanagementoversightforallofInteliquent,Inc.’soperations.LawrenceS.CobenhasservedasChairmanoftheBoardsinceFebruary2017,andhasbeenadirectorofNRGsinceDecember2003.HewasChairmanandChiefExecutiveOfficerofTremisisEnergyCorporationLLCuntilDecember2017.Dr.CobenwasChairmanandChiefExecutiveOfficerofbothTremisisEnergyAcquisitionCorporationII,apubliclyheldcompany,fromJuly2007throughMarch2009andofTremisisEnergyAcquisitionCorporationfromFebruary2004toMay2006.FromJanuary2001toJanuary2004,hewasaSeniorPrincipalofSunriseCapitalPartnersL.P.,aprivateequityfirm.From1997toJanuary2001,Dr.Cobenwasanindependentconsultant.From1994to1996,Dr.CobenwasChiefExecutiveOfficerofBolivianPowerCompany.Dr.CobenservesontheboardofFreshpet,Inc.andservedontheadvisoryboardofMorganStanleyInfrastructureII,L.P.fromSeptember2014throughDecember2016.Dr.CobenisalsoExecutiveDirectoroftheSustainablePreservationInitiativeandaConsultingScholarattheUniversityofPennsylvaniaMuseumofArchaeologyandAnthropology.HeatherCoxhasbeenadirectorofNRGsinceMarch2018.Ms.CoxcurrentlyservesasChiefDigitalHealthandAnalyticsOfficeratHumanaInc.Ms.CoxwasExecutiveVicePresident,ChiefTechnology&DigitalOfficerofUnitedServicesAutomobileAssociation,Inc.fromOctober2016toMarch2018. Ms.CoxservedasChiefExecutiveOfficer,FinancialTechnologyDivisionandHeadofCitiFinTechofCitigroup,Inc.fromNovember2015toSeptember2016,andasChiefClientExperience,DigitalandMarketingOfficer,GlobalConsumerBankofCitigroup,Inc.fromApril2014toNovember2015.Priortothat,Ms.CoxservedatCapitalOneFinancialCorporationforsixyears,mostrecentlyasExecutiveVicePresident,USCardOperations,CapitalOnefromAugust2011toAugust2014. Ms.CoxalsoservedinvariousmanagerialandexecutiverolesatE*TradeBankfortenyears.TerryG.DallashasbeenadirectorofNRGsinceDecember2012.Previously,heservedasadirectorofGenOnEnergy,Inc.fromDecember2010toDecember2012.Mr.DallasservedasadirectorofMirantCorporationfrom2006untilDecember2010.Mr.DallaswasalsotheformerExecutiveVicePresidentandChiefFinancialOfficerofUnocalCorporation,anoiland80gasexplorationandproductioncompanypriortoitsmergerwithChevronCorporation,from2000to2005.Priortothat,Mr.Dallasheldvariousexecutivefinancepositionsinhis21-yearcareerwithAtlanticRichfieldCorporation,anoilandgascompanywithmajoroperationsintheUnitedStates,LatinAmerica,Asia,EuropeandtheMiddleEast.Mr.Dallasisan“auditcommitteefinancialexpert”asdefinedbytheSECrules.MauricioGutierrezhasservedasPresidentandChiefExecutiveOfficerofNRGsinceDecember2015andasadirectorofNRGsinceJanuary2016.PriortoDecember2015,Mr.GutierrezwastheExecutiveVicePresidentandChiefOperatingOfficerofNRGfromJuly2010toDecember2015.Mr.GutierrezalsoservedastheInterimPresidentandChiefExecutiveOfficerofClearwayEnergy,Inc.fromDecember2015toMay2016andExecutiveVicePresidentandChiefOperatingOfficerofClearwayEnergy,Inc.fromDecember2012toDecember2015. Mr.GutierrezhasalsoservedontheboardofClearwayEnergy,Inc.fromDecember2012untilAugust2018. Mr.GutierrezhasbeenwithNRGsinceAugust2004andservedinmultipleexecutivepositionswithinNRGincludingExecutiveVicePresident-CommercialOperationsfromJanuary2009toJuly2010andSeniorVicePresident-CommercialOperationsfromMarch2008toJanuary2009. PriortojoiningNRGinAugust2004,Mr.GutierrezheldvariouscommercialpositionswithinDynegy,Inc.PaulW.HobbyhasbeenadirectorofNRGsinceMarch2006.Mr. HobbyistheManagingPartnerofGenesisPark, L.P.,aHouston-basedprivateequitybusinessspecializingintechnologyandcommunicationsinvestmentswhichhefoundedin1999.Mr.HobbyroutinelyprovidesmanagementandgovernanceservicestoGenesisParkportfoliocompanies.HepreviouslyservedastheChiefExecutiveOfficerofAlpheusCommunications, Inc.,aTexaswholesaletelecommunicationsproviderfrom2004to2011,andasFormerChairmanofCapRockServicesCorp.,thelargestproviderofsatelliteservicestotheglobalenergybusinessfrom2002to2006.FromNovember1992untilJanuary2001,heservedasChairmanandChiefExecutiveOfficerofHobbyMediaServicesandwasChairmanofColumbineJDSSystems, Inc.from1995until1997.Mr.HobbycurrentlyservesontheboardofdirectorsofFlotekIndustriesInc.Mr. HobbyisformerChairmanoftheHoustonBranchoftheFederalReserveBankofDallasandtheGreaterHoustonPartnershipandisformerChairmanoftheTexasEthicsCommission.HewasanAssistantU.S.AttorneyfortheSouthernDistrictofTexasfrom1989to1992,ChiefofStafftotheLieutenantGovernorofTexas,BobBullockandanAssociateatFulbright &Jaworskifrom1986to1989.AlexandraPrunerhasbeenadirectorofNRGsinceOctober2019.Ms.PrunerisaSeniorAdvisorofPerellaWeinbergPartners,aglobalindependentadvisoryfirmprovidingstrategicandfinancialadviceandasset-managementservices,anditsenergydivision,Tudor,Pickering,Holt&Co.,sinceDecember2018.ShepreviouslyservedasPartnerandChiefFinancialOfficerofPerellaWeinbergPartnersfromDecember201throughNovember2018.SheservedasChiefFinancialOfficerandamemberoftheManagementCommitteeatTudor,Pickering,Holt&Co.fromthefirm'sfoundingin2007untilitscombinationwithPerellaWeinbergin2016.Ms.PrunerservesontheBoardofDirectorsandasamemberoftheauditcommitteesofPlainsAllAmericanPipeline,L.P.anditsgeneralpartnerPAAGPHoldingsLLC,andservedontheAnadarkoPetroleumCorporationBoarduntilitsmergerwithOccidentalPetroleum.SheisthefounderandaBoardmemberofWomen'sGlobalLeadershipConferenceinEnergy&Technology,isanEmeritusDirectoroftheAmegyBankDevelopmentBoard,andistheChairofBrownUniversity'sPresident'sAdvisoryCouncilontheEconomicsDepartment.Ms.PrunerischairoftheauditcommitteeandmemberoftheexecutivecommitteeoftheUnitedWayofGreaterHouston,ontheBoardoftheHoustonZooandservesontheHoustonadvisoryBoardofTheNatureConservancy,amongothervolunteerefforts.AnneC.SchaumburghasbeenadirectorofNRGsinceApril2005.From1984untilherretirementinJanuary2002,shewasManagingDirectorofCreditSuisseFirstBostonandaseniorbankerintheGlobalEnergyGroup.Ms.SchaumburghasworkedintheInvestmentBankingindustryfor28yearsspecializinginthepowersector.SheranCreditSuisse'sPowerGroupfrom1994-1999,priortoitsconsolidationwithNaturalResourcesandProjectFinance,whereshewasresponsibleforassistingclientsonadvisoryandfinanceassignments.Hertransactionexpertise,acrossthespectrumofutilityandunregulatedpower,includesmergersandacquisitions,debtandequitycapitalmarketfinancings,projectfinanceandleasing,utilitydisaggregationandprivatizations.Ms.SchaumburgisalsoadirectorofBrookfieldInfrastructurePartnerssince2008andchairoftheirauditcommittee.Ms.Schaumburgisan"auditcommitteefinancialexpert"asdefinedbytheSECrules.ThomasH.WeidemeyerhasbeenadirectorofNRGsinceDecember2003.UntilhisretirementinDecember2003,Mr.WeidemeyerservedasDirector,SeniorVicePresidentandChiefOperatingOfficerofUnitedParcelService,Inc.,theworld'slargesttransportationcompanyandPresidentofUPSAirlines.Mr.WeidemeyerbecameManageroftheAmericasInternationalOperationin1989,andinthatcapacitydirectedthedevelopmentoftheUPSdeliverynetworkthroughoutCentralandSouthAmerica.In1990,Mr.WeidemeyerbecameVicePresidentandAirlineManagerofUPSAirlinesand,in1994,waselecteditsPresidentandChiefOperatingOfficer.Mr.WeidemeyerbecameSeniorVicePresidentandamemberoftheManagementCommitteeofUnitedParcelService,Inc.thatsameyear,andhebecameChiefOperatingOfficerofUnitedParcelService,Inc.inJanuary2001.Mr.WeidemeyeralsoservesasadirectorofTheGoodyearTire&RubberCo.,WasteManagement,Inc.andAmstedIndustriesIncorporated.81ExecutiveOfficersMauricioGutierrezhasservedasPresidentandChiefExecutiveOfficerofNRGsinceDecember2015andasadirectorofNRGsinceJanuary2016.ForadditionalbiographicalinformationforMr.Gutierrez,seeaboveunder"Directors."KirklandAndrewshasservedasExecutiveVicePresidentandChiefFinancialOfficerofNRGEnergysinceSeptember2011.Mr.AndrewsalsoservedasExecutiveVicePresident,ChiefFinancialOfficerofClearwayEnergy,Inc.fromDecember2012toNovember2016.PriortojoiningNRG,heservedasManagingDirectorandCo-HeadInvestmentBanking,PowerandUtilities-AmericasatDeutscheBankSecuritiesfromJune2009toSeptember2011.Priortothis,heservedinseveralcapacitiesatCitigroupGlobalMarketsInc.,includingManagingDirector,GroupHead,NorthAmericanPowerfromNovember2007toJune2009,andHeadofPowerM&A,MergersandAcquisitionsfromJuly2005toNovember2007.Mr.AndrewsservesontheboardofRPMInternationalInc.andpreviouslyservedontheboardofClearwayEnergy,Inc.fromDecember2012untilAugust2018.Inhisbankingcareer,Mr.Andrewsledmultiplelargeandinnovativestrategic,debt,equityandcommoditiestransactions.DavidCallenhasservedasSeniorVicePresidentandChiefAccountingOfficersinceFebruary2016andVicePresidentandChiefAccountingOfficerfromMarch2015toFebruary2016.Inthiscapacity,Mr.CallenisresponsiblefordirectingNRG'sfinancialaccountingandreportingactivities.Mr.CallenalsohasservedasVicePresidentandChiefAccountingOfficerofClearwayEnergy,Inc.sinceMarch2015.Priortothis,Mr.CallenservedastheCompany'sVicePresident,FinancialPlanning&AnalysisfromNovember2010toMarch2015.HepreviouslyservedasDirector,FinancefromOctober2007throughOctober2010,Director,FinancialReportingfromFebruary2006throughOctober2007,andManager,AccountingResearchfromSeptember2004throughFebruary2006.PriortoNRG,Mr.CallenwasanauditorforKPMGLLPinbothNewYorkCityandTelAvivIsraelfromOctober1996throughApril2001.BrianCurcihasservedasSeniorVicePresident,GeneralCounselofNRGsinceMarch2018.PriortoMarch2018,Mr.CurciservedasDeputyGeneralCounselandhasservedinvariousrolesinovertenyearswithNRG,includingasCorporateSecretaryfromOctober2011toJuly2018.PriortoNRG,Mr.CurciwasacorporateassociatewiththelawfirmSaulEwingLLPinPhiladelphia.RobertGaudettehasservedasSeniorVicePresident,BusinessSolutionsofNRGsinceDecember2013. Inthisrole,Mr.GaudetteoverseesNRG'sbroadportfolioofproductsandservicesforthecommercialandindustrialcustomers.PriortoDecember2013,Mr.GaudettewasSeniorVicePresidentC&IandOrigination,startinginAugust2013,andSeniorVicePresident-ProductDevelopment&OriginationfollowingtheacquisitionofGenOninDecember2012. Mr.GaudetteservedasSeniorVicePresidentandChiefCommercialOfficeratGenOnfromDecember2010toDecember2012andservedasVicePresidentofMirant'sMid-AtlanticbusinessunitfromAugust2009toDecember2010.DuringhiscareeratMirant,whichbeganin2001,Mr.GaudetteworkedinvariousothercapacitiesincludingDirectorofWestPower,DirectorofNYMEXTrading,AssistanttotheChiefOperatingOfficerandNYMEXnaturalgastrader.ElizabethKillingerhasservedasExecutiveVicePresidentandPresident,NRGRetailandReliantofNRGsinceFebruary2016. Ms.KillingerwasSeniorVicePresidentandPresident,NRGRetailfromJune2015toFebruary2016andSeniorVicePresidentandPresident,NRGTexasRetailfromJanuary2013toJune2015.Ms.KillingerhasalsoservedasPresidentofReliant,asubsidiaryofNRG,sinceOctober2012.Priortothat,Ms.KillingerwasSeniorVicePresidentofRetailOperationsandReliantResidentialfromJanuary2011toOctober2012. Ms.KillingerhasbeenwiththeCompanyanditspredecessorssince2002andhasheldvariousoperationalandbusinessleadershippositionswithintheretailorganization. PriortojoiningtheCompany,Ms.Killingerspentadecadeprovidingstrategy,managementandsystemsconsultingtoenergy,oilfieldservicesandretaildistributioncompaniesacrosstheU.S.andinEurope.ChristopherMoserhasservedasExecutiveVicePresident,OperationsofNRGsinceJanuary2018.Mr.MoserpreviouslyservedasSeniorVicePresident,OperationsofNRG,withresponsibilityforPlantOperations,CommercialOperations,BusinessOperationsandEngineeringandConstruction,beginninginMarch2016.FromJune2010toMarch2016,Mr.MoserservedasSeniorVicePresident,CommercialOperations.Inthiscapacity,hewasresponsiblefortheoptimizationoftheCompany'swholesalegenerationfleet.82Code of EthicsNRG has adopted a code of ethics entitled "NRG Code of Conduct" that applies to directors, officers and employees, including the chief executive officer and senior financial officers of NRG. It may be accessed through the "Governance" section of the Company's website at www.nrg.com. NRG also elects to disclose the information required by Form 8-K, Item 5.05, "Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics," through the Company's website, and such information will remain available on this website for at least a 12-month period. A copy of the "NRG Code of Conduct" is available in print to any stockholder who requests it.OtherinformationrequiredbythisItemwillbeincorporatedbyreferencetothesimilarlynamedsectionofNRG'sDefinitiveProxyStatementforits2020AnnualMeetingofStockholders.Item 11 — ExecutiveCompensationInformationrequiredbythisItemwillbeincorporatedbyreferencetothesimilarlynamedsectionofNRG'sDefinitiveProxyStatementforits2020AnnualMeetingofStockholders.Item 12 — SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMattersSecuritiesAuthorizedforIssuanceunderEquityCompensationPlansPlan Category(a)Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights(b)Weighted-Average ExercisePrice of OutstandingOptions, Warrants andRights(c)Number of SecuritiesRemaining Availablefor Future IssuanceUnder Equity CompensationPlans (ExcludingSecurities Reflectedin Column (a)Equity compensation plans approved by security holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,166,785(1)$20.9112,820,810Equity compensation plans not approved by security holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319,264(2)26.21—(4)Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,486,049$24.0612,820,810(3)(1)ConsistsofsharesissuableundertheNRGLTIPandtheESPP.TheNRGLTIPbecameeffectiveupontheCompany'semergencefrombankruptcy.OnApril 27,2017,theNRGLTIPwasamendedandrestatedtoincreasethenumberofsharesavailableforissuanceto25,000,000.TheESPP,asamendedandrestated,wasapprovedbytheCompany'sstockholdersonApril27,2017,andbecameeffectiveApril28,2017.AsofDecember 31,2019,therewere2,885,060sharesreservedfromtheCompany'streasurysharesfortheESPP(2)ConsistsofsharesissuableundertheNRGGenOnLTIP.Theplansislistedas“notapproved”becauseitwasnotsubjecttoseparatelineitemapprovalbyNRG'sstockholderswhentheMergerwasapproved.SeeItem15—Note21,Stock-BasedCompensation,toConsolidatedFinancialStatementsforadiscussionoftheNRGGenOnLTIP(3)Consistsof9,935,750sharesofcommonstockunderNRG'sLTIPand2,885,060sharesoftreasurystockreservedforissuanceundertheESPP.(4)UponadoptionoftheNRGAmendedandRestatedLTIPeffectiveApril27,2017,nosecuritiesremainavailableforfutureissuanceundertheNRGGenOnLTIP.SeeNote21,Stock-BasedCompensation,foradditionalinformationNRGLTIPcurrentlyprovidesforgrantsofrestrictedstockunits,relativeperformancestockunits,deferredstockunitsanddividendequivalentrights.NRG'sdirectors,officersandemployees,aswellasotherindividualsperformingservicesfor,ortowhomanofferofemploymenthasbeenextendedbytheCompany,areeligibletoreceivegrantsundertheNRGLTIP.ThepurposeoftheNRGLTIPistopromotetheCompany'slong-termgrowthandprofitabilitybyprovidingtheseindividualswithincentivestomaximizestockholdervalueandotherwisecontributetotheCompany'ssuccessandtoenabletheCompanytoattract,retainandrewardthebestavailablepersonsforpositionsofresponsibility.TheCompensationCommitteeoftheBoardofDirectorsadministerstheNRGLTIP.OtherinformationrequiredbythisItemwillbeincorporatedbyreferencetothesimilarlynamedsectionofNRG'sDefinitiveProxyStatementforits2020AnnualMeetingofStockholders.Item 13 — CertainRelationshipsandRelatedTransactions,andDirectorIndependenceInformationrequiredbythisItemwillbeincorporatedbyreferencetothesimilarlynamedsectionofNRG'sDefinitiveProxyStatementforits2020AnnualMeetingofStockholders.83Item 14 — PrincipalAccountingFeesandServicesInformationrequiredbythisItemwillbeincorporatedbyreferencetothesimilarlynamedsectionofNRG'sDefinitiveProxyStatementforits2020AnnualMeetingofStockholders.84PART IVItem 15 — Exhibits,FinancialStatementSchedules(a)(1)FinancialStatementsThefollowingconsolidatedfinancialstatementsofNRGEnergy, Inc.andrelatednotesthereto,togetherwiththereportsthereonofKPMG LLP,areincludedherein:ConsolidatedStatementsofOperations — YearsendedDecember 31,2019,2018,and2017ConsolidatedStatementsofComprehensiveIncome/(Loss)— YearsendedDecember 31,2019,2018,and2017ConsolidatedBalanceSheets — AsofDecember 31,2019and2018ConsolidatedStatementsofCashFlows — YearsendedDecember 31,2019,2018,and2017ConsolidatedStatementsofStockholders'Equity— YearsendedDecember 31,2019,2018,and2017NotestoConsolidatedFinancialStatements(a)(2)FinancialStatementScheduleThefollowingConsolidatedFinancialStatementScheduleofNRGEnergy, Inc.isfiledaspartofItem 15ofthisreportandshouldbereadinconjunctionwiththeConsolidatedFinancialStatements.Schedule II — ValuationandQualifyingAccountsAllotherschedulesforwhichprovisionismadeintheapplicableaccountingregulationoftheSecuritiesandExchangeCommissionarenotrequiredundertherelatedinstructionsorareinapplicable,andtherefore,havebeenomitted.(a)(3)Exhibits:SeeExhibitIndexsubmittedasaseparatesectionofthisreport.(b)ExhibitsSeeExhibitIndexsubmittedasaseparatesectionofthisreport.(c)Notapplicable85REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders NRG Energy, Inc.: OpinionontheConsolidatedFinancialStatementsWehaveauditedtheaccompanyingconsolidatedbalancesheetsofNRGEnergy,Inc.and subsidiaries(theCompany)asofDecember 31,2019and2018,therelatedconsolidatedstatementsofoperations,comprehensiveincome/(loss),stockholders'equity,andcashflowsforeachoftheyearsinthethree-yearperiodendedDecember 31,2019,andtherelatednotesandfinancialstatementscheduleII(collectively,theconsolidatedfinancialstatements).Inouropinion,theconsolidatedfinancialstatementspresentfairly,inallmaterialrespects,thefinancialpositionoftheCompanyasofDecember 31,2019and2018,andtheresultsofitsoperationsanditscashflowsforeachoftheyearsinthethree-yearperiodendedDecember 31,2019,inconformitywithU.S. generallyacceptedaccountingprinciples.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany'sinternalcontroloverfinancialreportingasofDecember 31,2019,basedoncriteriaestablishedinInternalControl-IntegratedFramework(2013)issuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission,andourreportdatedFebruary 27,2020expressedanunqualifiedopinionontheeffectivenessoftheCompany'sinternalcontroloverfinancialreporting.ChangesinAccountingPrincipleAsdiscussedinNote2totheconsolidatedfinancialstatements,effectiveJanuary1,2019,theCompanyadoptedFinancialAccountingStandardBoard(FASB)AccountingStandardsCodification(ASC)Topic842,Leases,andrelatedamendments.AsdiscussedinNote3totheconsolidatedfinancialstatements,effectiveJanuary1,2018,theCompanyadoptedFASBASCTopic606,RevenuefromContractswithCustomers,andrelatedamendments.BasisforOpinionTheseconsolidatedfinancialstatementsaretheresponsibilityoftheCompany'smanagement.Ourresponsibilityistoexpressanopinionontheseconsolidatedfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeU.S. federalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethertheconsolidatedfinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresintheconsolidatedfinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationoftheconsolidatedfinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.CriticalAuditMattersThecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrentperiodauditoftheconsolidatedfinancialstatementsthatwerecommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat:(1)relatetoaccountsordisclosuresthatarematerialtotheconsolidatedfinancialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplexjudgments.Thecommunicationofcriticalauditmattersdoesnotalterinanywayouropinionontheconsolidatedfinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmattersbelow,providingseparateopinionsonthecriticalauditmattersorontheaccountsordisclosurestowhichtheyrelate.EvaluationofthesufficiencyofauditevidenceobtainedoveroperatingrevenuesAsdiscussedinNote3totheconsolidatedfinancialstatements,theCompanyhad$9,821millionofoperatingrevenues.OperatingrevenueisderivedfromvariousrevenuestreamsindifferentgeographicmarketsandtheCompany’sprocessesandrelatedinformationtechnology(IT)systemsusedtorecordrevenuedifferforeachoftheserevenuestreams.86WeidentifiedtheevaluationofthesufficiencyofauditevidenceoveroperatingrevenuesasacriticalauditmatterwhichrequiredahighdegreeofauditorjudgmentduetothenumberofrevenuestreamsandITsystemsinvolvedintherevenuerecognitionprocess.Thisincludeddeterminingtherevenuestreamsoverwhichproceduresweretobeperformedandevaluatingthenatureandextentofevidenceobtainedovertheindividualrevenuestreamsaswellasoperatingrevenueintheaggregate.ItalsoincludedtheinvolvementofITprofessionalswithspecializedskillsandknowledgetoassistintheperformanceofcertainprocedures.We,withtheassistanceofITprofessionals,appliedauditorjudgmenttodeterminetherevenuestreamsoverwhichprocedureswereperformedaswellasthenatureandextentofsuchprocedures.Foreachrevenuestreamoverwhichprocedureswereperformed,wetestedcertaininternalcontrolsovertheCompany’srevenuerecognitionprocesses;involvedITprofessionals,whoassistedintestingcertainITapplicationsusedbytheCompanyinitsrevenuerecognitionprocesses;andassessedtherecordedrevenuebyselectingtransactionsandcomparingtheamountsrecognizedtounderlyingdocumentation,includingcontractswithcustomers.Inaddition,weevaluatedtheoverallsufficiencyofauditevidenceobtainedoveroperatingrevenues.EvaluationoftherealizabilityofdeferredtaxassetsrelatedtonetoperatinglosscarryforwardsAsdiscussedinNotes2and20totheconsolidatedfinancialstatements,theCompanydecreaseditsvaluationallowanceby$3.5billionduringtheyearendedDecember31,2019resultingin$3.3billionofnetdeferredtaxassetsasofDecember31,2019.TheCompanyrecordsavaluationallowancetoreduceitsdeferredtaxassetstoanamountthatismorethan50%likelyofbeingrealized.TheCompanyconsidersbothpositiveandnegativeevidenceinevaluatingtheneedforavaluationallowance,includingcumulativepre-taxearningsorlossesandforecastedfuturetaxableincomeineachtaxjurisdiction.Weidentifiedtheevaluationoftherealizabilityofdeferredtaxassetsrelatedtonetoperatinglosscarryforwardsasacriticalauditmatter.Ahighdegreeofauditorjudgmentwasnecessarytoassesstheconsiderationofpositiveandnegativeevidence,specificallytheCompany’scumulativelossesinrecentyearsandtherelevanceofsuchlossestoforecastedfuturetaxableincome.Inaddition,specializedskillswererequiredtoevaluatetheCompany’sinterpretationofincometaxregulations.Theprimaryproceduresweperformedtoaddressthiscriticalauditmatterincludedthefollowing.WetestedcertaininternalcontrolsovertheCompany’sincometaxprocess,includingcontrolsrelatedtotheapplicationofincometaxregulationsandtheCompany'sconsiderationofpositiveandnegativeevidence.Weassessedtheutilizationofnetoperatinglosscarryforwardsineachtaxjurisdictionbeforetheirscheduledexpiration.Weinvolvedincometaxprofessionalswithspecializedskillsandknowledge,whoassistedinevaluatingtheCompany'sinterpretationofincometaxregulationsappliedinitsrealizabilityanalysis.WeevaluatedtheCompany’sconsiderationofpositiveandnegativeevidenceindeterminingwhethernetdeferredtaxassetsweremorethan50%likelyofbeingrealized.Thisevaluationincludedconsideringthecumulativelossesinrecentyearsandevaluatingthelikelihoodthatthoselosseswouldreoccurandimpactforecastedfuturetaxableincome./s/ KPMG LLPWe have served as the Company's auditor since 2004.Philadelphia, PennsylvaniaFebruary 27, 2020 87NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSFor the Year Ended December 31,(In millions, except per share amounts)201920182017Operating RevenuesTotal operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$9,821$9,478$9,074Operating Costs and ExpensesCost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,3037,1086,886Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373421596Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5991,534Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .827799836Reorganization costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239044Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71122Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8,5388,5289,918Other income - affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——87Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73216Operating Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,290982(741)Other Income/(Expense)Equity in earnings/(losses) of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . 29(14)Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(108)(15)(79)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661851Loss on debt extinguishment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (51)(44)(49)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(413)(483)(557)Total other expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(504)(515)(648)Income/(Loss) from Continuing Operations Before Income Taxes . . . . . . . . . . . . . . . . . 786467(1,389)Income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3,334)7(44)Income/(Loss) from Continuing Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,120460(1,345)Income/(loss) from discontinued operations, net of income tax . . . . . . . . . . . . . . . . . . . . 321(192)(992)Net Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,441268(2,337)Less: Net income/(loss) attributable to noncontrolling interest and redeemable interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3—(184)Net Income/(Loss) Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . $4,438$268$(2,153)Earnings/(Loss) Per Share Attributable to NRG Energy, Inc. Common StockholdersWeighted average number of common shares outstanding — basic . . . . . . . . . . . . . . . . . .262304317Income/(loss) from continuing operations per weighted average common share — basic . $15.71$1.51$(3.66)Income/(loss) from discontinued operations per weighted average common share — basic$1.23$(0.63)$(3.13)Net Income/(Loss) per Weighted Average Common Share — Basic . . . . . . . . . . . . .$16.94$0.88$(6.79)Weighted average number of common shares outstanding — diluted . . . . . . . . . . . . . . . . 264308317Income/(loss) from continuing operations per weighted average common share — diluted$15.59$1.49$(3.66)Income/(loss) from discontinued operations per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.22$(0.62)$(3.13)Net Income/(Loss) per Weighted Average Common Share — Diluted . . . . . . . . . . .$16.81$0.87$(6.79)(741)(413)(483)(557)(504)(515)(648)(3,334)(44) See notes to Consolidated Financial Statements88NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)For the Year Ended December 31,(In millions)201920182017Net Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$4,441$268$(2,337)Other Comprehensive (Loss)/Income, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Unrealized gain on derivatives, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . .—2313Foreign currency translation adjustments, net of income tax(1)(11)12Available-for-sale securities, net of income tax(19)1(8)Defined benefit plans, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (78)(35)46Other comprehensive (loss)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(98)(22)63Comprehensive Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,343246(2,274)Less: Comprehensive income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 314(179)Comprehensive Income/(Loss) Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . $4,340$232$(2,095)See notes to Consolidated Financial Statements89NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAs of December 31,(In millions)20192018ASSETSCurrent AssetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$345$563Funds deposited by counterparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3233Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .817Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,0251,024Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .383412Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860764Cash collateral posted in support of energy risk management activities . . . . . . . . . . . . . . .190287Prepayments and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245302Current assets - held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1Current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—197Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,0883,600Property, plant and equipment, net2,5933,048Other AssetsEquity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .388412Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .464—Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579573Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .789591Nuclear decommissioning trust fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .794663Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310317Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,28646Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240289Non-current assets - held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—77Non-current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —1,012Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,8503,980Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12,531$10,628See notes to Consolidated Financial Statements90NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS (Continued)As of December 31,(In millions, except share data)20192018LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesCurrent portion of long-term debt and finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$88$72Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73—Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .722863Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 781673Cash collateral received in support of energy risk management activities . . . . . . . . . . . . .3233Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663680Current liabilities - held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—5Current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —72Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,3592,398Other LiabilitiesLong-term debt and finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,8036,449Non-current operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .483—Nuclear decommissioning reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .298282Nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487371Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322304Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1765Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,0841,274Non-current liabilities - held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —65Non-current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —635Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,4949,445Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10,85311,843Redeemable noncontrolling interest in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2019Commitments and ContingenciesStockholders' EquityCommon stock; $0.01 par value; 500,000,000 shares authorized; 421,890,790 and 420,288,886 shares issued; and 248,996,189 and 283,650,039 shares outstanding at December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,5018,510Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,616)(6,022)Treasury stock, at cost; 172,894,601 and 136,638,847 shares at December 31, 2019 and 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,039)(3,632)Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192)(94)Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,658(1,234)Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,531$10,628See notes to Consolidated Financial Statements91NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Year Ended December 31,(In millions)201920182017Cash Flows from Operating ActivitiesNet income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,441$268$(2,337)Income/(loss) from discontinued operations, net of income tax 321(192)(992)Income/(loss) from continuing operations4,120460(1,345)Adjustments to reconcile net income/(loss) to net cash provided by operating activities:Distributions and equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1446102Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .373421596Accretion of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513844Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958568Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524851Amortization of financing costs and debt discount/premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262929Loss on debt extinguishment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514449Amortization of emission allowances and out-of-market contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384554Amortization of unearned equity compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202535Net gain on sale of assets and disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(23)(49)(9)Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1131141,614Changes in derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3437(170)Changes in deferred income taxes and liability for uncertain tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,353)513Changes in collateral deposits in support of risk management activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105(105)(80)Changes in nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376011GenOn settlement, net of insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(63)—Net loss on deconsolidation of Agua Caliente and Ivanpah projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —13—Cash provided/(used) by changes in other working capital, net of acquisition and disposition effects:Accounts receivable - trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5(83)(83)Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2231143Prepayments and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29(41)(187)Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(177)11344Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41)(166)(88)Other assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(186)(104)(35)Cash provided by continuing operations1,4051,003856Cash provided by discontinued operations8374754Net Cash Provided by Operating Activities1,4131,3771,610Cash Flows from Investing ActivitiesPayments for acquisitions of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (355)(243)(14)Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (228)(388)(254)Net proceeds from sale of emission allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111966Investments in nuclear decommissioning trust fund securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(416)(572)(512)Proceeds from sales of nuclear decommissioning trust fund securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381513501Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees . . . . . . . . . . . 1,2941,564430Deconsolidations of Agua Caliente and Ivanpah projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(268)—Net contributions to investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(91)(39)(57)Net (contributions to)/distributions from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44)(60)150Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6(6)30Cash provided by continuing operations558520340Cash used by discontinued operations(2)(725)(979)Net Cash Provided/(Used) by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .556(205)(639)92For the Year Ended December 31,(In millions)201920182017Cash Flows from Financing ActivitiesPayments of dividends to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(32)(37)(38)Payments for share repurchase activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1,440)(1,250)—Payments for debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (26)(32)(42)Net distributions to noncontrolling interest from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2)(16)(30)Proceeds/(payments) from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321(2)Proceeds from issuance of short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,9161,1001,178Payments of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35)(19)(18)Payments for short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,571)(1,734)(1,884)Receivable from affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(26)(125)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4)(4)(8)Cash used by continuing operations(2,191)(1,997)(969)Cash provided/(used) by discontinued operations43471(169)Net Cash Used by Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2,148)(1,526)(1,138)Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1(1)Change in Cash from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49120(394)Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (228)(473)226Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period . 6131,086860Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period . . . . . . $385$613$1,086See notes to Consolidated Financial Statements93NRG ENERGY, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(In millions)CommonStockAdditionalPaid-InCapitalAccumulated DeficitTreasuryStockAccumulatedOtherComprehensiveLossNoncon- trollingInterestTotalStock-holders'EquityBalances at December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . .$4$8,358$(3,787)$(2,399)$(135)$2,405$4,446Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,153)(98)(2,251)Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . .5151Sale of assets to NRG Yield, Inc. . . . . . . . . . . . . . . . . . . . . .(25)20(5)ESPP share purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)(4)136Equity-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . 2525Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .44Common stock dividends(a) . . . . . . . . . . . . . . . . . . . . . . . . . .(38)(38)Distributions to noncontrolling interests . . . . . . . . . . . . . . . .(65)(65)Dividends paid to NRG Yield, Inc. . . . . . . . . . . . . . . . . . . . .(108)(108)Contributions from noncontrolling interests . . . . . . . . . . . . .160160Early adoption of new accounting standards . . . . . . . . . . . . 17(286)12(257)Balances at December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . .$4$8,376$(6,268)$(2,386)$(72)$2,314$1,968Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26826294Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . .(22)(22)Sale of assets to NRG Yield, Inc. . . . . . . . . . . . . . . . . . . . . .8816ESPP share purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2)42Share repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,250)(1,250)Equity-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . 66Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .2121Common stock dividends(a) . . . . . . . . . . . . . . . . . . . . . . . . . .(37)(37)Distributions to noncontrolling interests . . . . . . . . . . . . . . . .(43)(43)Dividends paid to NRG Yield, Inc. . . . . . . . . . . . . . . . . . . . .(61)(61)Contributions from noncontrolling interests . . . . . . . . . . . . .304304 Adoption of new accounting standards 1515Sale of NRG Yield and other business . . . . . . . . . . . . . . . . .(2,548)(2,548)Equity component of convertible senior notes . . . . . . . . . . . 101101Balances at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . .$4$8,510$(6,022)$(3,632)$(94)$—$(1,234)Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,4384,438Other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . .(98)(98)ESPP share purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123Share repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,409)(1,409)Equity-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . (16)(16)Issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . 66Common stock dividends(a) . . . . . . . . . . . . . . . . . . . . . . . . . .(32)(32)Balance at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . .$4$8,501$(1,616)$(5,039)$(192)$—$1,658(a) Dividends per common share were $0.12 for each of the years ended December 31, 2019, 2018 and 2017See notes to Consolidated Financial Statements94NRG ENERGY, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSNote1 —NatureofBusinessGeneralNRGEnergy,Inc.,orNRGortheCompany,isanenergycompanybuiltondynamicretailbrandswithdiversegenerationassets.NRGbringsthepowerofenergytocustomersbyproducing,sellinganddeliveringelectricityandrelatedproductsandservicesinmajorcompetitivepowermarketsintheU.S.inamannerthatdeliversvaluetoallofNRG'sstakeholders.NRGisperfectingtheintegratedmodelbybalancingretailloadwithgenerationsupplywithinitsderegulatedmarkets,whileevolvingtoacustomer-drivenbusiness.TheCompanysellsenergy,services,andinnovative,sustainableproductsandservicesdirectlytoretailcustomersunderthenamesNRG,Reliant,GreenMountainEnergy,StreamandXOOMEnergy,aswellasotherbrandnamesownedbyNRGsupportedbyapproximately23,000MWofgenerationasofDecember31,2019.Retailisaconsumerfacingbusinessthatincludesresidentialandsmallcommercial(Massmarket)customersandindustrialandlargecommercial(C&I)customers,includingdemandresponse,commoditysales,energyefficiencyandenergymanagementsolutions.Productsandservicesrangefromretailenergy,portablesolarandbatteryproductshomeservices,andavarietyofbundledproducts,whichcombineenergywithprotectionproducts,energyefficiencyandrenewableenergysolutions,aswellasotherdistributedandreliabilityproducts.TheCompany'sGenerationbusinessincludesplantoperations,commercialoperations,development,engineeringandconstruction,assetmanagement,energyservicesandothercriticalrelatedfunctions.InadditiontothetraditionalfunctionsfromNRG'swholesalepowergenerationbusiness,GenerationalsoincludesNRG'sretainedrenewablegenerationbusiness.Discontinued OperationsOnDecember31,2018,asdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,theCompany concludedthatthesaleofitsSouthCentralPortfoliotoCleco, excludingtheCottonwoodfacility,metheld-for-salecriteria andshouldbepresentedasadiscontinuedoperation,asthesalerepresentedastrategicshiftinthebusinessinwhichNRGoperates.Thefinancialinformationforallhistoricalperiodswasrecastin2018toreflectthepresentationoftheseentitiesasdiscontinuedoperations.OnAugust31,2018,asdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,theCompanydeconsolidatedNRGYield,Inc.anditsRenewablesPlatformforfinancialreportingpurposes.Thefinancialinformationforallhistoricalperiodswasrecastin2018toreflectthepresentationoftheseentities,aswellastheCarlsbadproject,asdiscontinuedoperations.AsaresultofthesaleofNRGYield,theCompanynolongercontrolstheAguaCalienteproject.Duetothischangeincontrol,theCompanydeconsolidatedtheAguaCalienteprojectfromitsfinancialresultsandbeganaccountingfortheprojectasanequitymethodinvestment.OnJune14,2017,orthePetitionDate,GenOn,alongwithGenOnAmericasGenerationandcertainoftheirdirectlyandindirectly-ownedsubsidiaries,orcollectivelytheGenOnEntities,filedvoluntarypetitionsforreliefundertheChapter11Cases,oftheU.S.BankruptcyCode.AsaresultofthebankruptcyfilingsandbeginningonJune14,2017,GenOnanditssubsidiariesweredeconsolidatedfromNRG'sconsolidatedfinancialstatements.NRGdeterminedthatthisdisposalofGenOnanditssubsidiarieswasadiscontinuedoperationand,accordingly,thefinancialinformationforallhistoricalperiodswasrecasttoreflectGenOnasadiscontinuedoperation.GenOn'splanofreorganizationwasconfirmedonDecember14,2018.95Note2 —SummaryofSignificantAccountingPoliciesBasisofPresentationandPrinciplesofConsolidationTheCompany'sconsolidatedfinancialstatementshavebeenpreparedinaccordancewithU.S.GAAP.TheASC,establishedbytheFASB,isthesourceofauthoritativeU.S.GAAPtobeappliedbynongovernmentalentities.Inaddition,therulesandinterpretativereleasesoftheSECunderauthorityoffederalsecuritieslawsarealsosourcesofauthoritativeU.S.GAAPforSECregistrants.TheconsolidatedfinancialstatementsincludeNRG'saccountsandoperationsandthoseofitssubsidiariesinwhichtheCompanyhasacontrollinginterest.Allsignificantintercompanytransactionsandbalanceshavebeeneliminatedinconsolidation.Theusualconditionforacontrollingfinancialinterestisownershipofamajorityofthevotinginterestsofanentity.However,acontrollingfinancialinterestmayalsoexistthrougharrangementsthatdonotinvolvecontrollingvotinginterests.Assuch,NRGappliestheguidanceofASC810,Consolidations,orASC810,todeterminewhenanentitythatisinsufficientlycapitalizedornotcontrolledthroughitsvotinginterests,referredtoasaVIE,shouldbeconsolidated.NetIncome/(Loss)attributabletoNRGEnergy,Inc.Thefollowingtablereflectsthenetincome/(loss)attributabletoNRGEnergy,Inc.afterremovingthenetlossattributabletothenoncontrollinginterestandredeemablenoncontrollinginterest:Year Ended December 31,(In millions)201920182017Income/(loss) from continuing operations, net of income tax . . . . . . . . . . . . . . . . . . . . . . $4,117$465$(977)Income/(loss) from discontinued operations, net of income tax . . . . . . . . . . . . . . . . . . . . .321(197)(1,176)Net income/(loss) attributable to NRG Energy, Inc. stockholders . . . . . . . . . . . . . . . . . . .$4,438$268$(2,153)SegmentReportingAsofDecember 31,2019,theCompany'sreportablesegmentswereGeneration,RetailandCorporate.RetailincludesMasscustomersandBusinessSolutions,whichincludesC&Icustomersandotherdistributedandreliabilityproducts.Intersegmentsalesareaccountedforatmarket.Generationincludesallpowerplantactivities,aswellasRenewables.ForfurtherdiscussionofSegmentReporting,pleaserefertoNote19,SegmentReporting.AsdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,theCompanyhasdeterminedthattheSouthCentralPortfolio,NRGYieldInc.anditsRenewablesPlatform,Carlsbad,andGenOnallqualifiedfortreatmentasdiscontinuedoperations.Thefinancialinformationforallhistoricalperiodswasrecastinprioryearstoreflectthepresentationofdiscontinuedoperationswithinthecorporatesegment.CashandCashEquivalentsCashandcashequivalentsincludehighlyliquidinvestmentswithanoriginalmaturityofthreemonthsorlessatthetimeofpurchase.FundsDepositedbyCounterpartiesFundsdepositedbycounterpartiesconsistofcashheldbytheCompanyasaresultofcollateralpostingobligationsfromitscounterparties.Someamountsaresegregatedintoseparateaccountsthatarenotcontractuallyrestrictedbut,basedontheCompany'sintention,arenotavailableforthepaymentofgeneralcorporateobligations.Dependingonmarketfluctuationsandthesettlementoftheunderlyingcontracts,theCompanywillrefundthiscollateraltothehedgecounterpartiespursuanttothetermsandconditionsoftheunderlyingtrades.SincecollateralrequirementsfluctuatedailyandtheCompanycannotpredictifanycollateralwillbeheldformorethantwelvemonths,thefundsdepositedbycounterpartiesareclassifiedasacurrentassetontheCompany'sbalancesheet,withanoffsettingliabilityforthiscashcollateralreceivedwithincurrentliabilities.96RestrictedCashThefollowingtableprovidesareconciliationofcashandcashequivalents,restrictedcashandfundsdepositedbycounterpartiesreportedwithintheconsolidatedbalancesheetsthatsumtothetotalofthesamesuchamountsshowninthestatementsofcashflows.Year Ended December 31,(In millions)201920182017Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$345$563$770Funds deposited by counterparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323337Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .817279Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$385$613$1,086RestrictedcashconsistsprimarilyoffundsheldtosatisfytherequirementsofcertaindebtagreementsandfundsheldwithintheCompany'sprojectsthatarerestrictedintheiruse.TradeReceivablesandAllowanceforDoubtfulAccountsTradereceivablesarereportedinthebalancesheetatoutstandingprincipaladjustedforanywrite-offsandtheallowancefordoubtfulaccounts.Foritsretailbusiness,theCompanyaccruesanallowancefordoubtfulaccountsbasedonestimatesofuncollectiblerevenuesbyanalyzingcounterpartycreditratings(forcommercialandindustrialcustomers),historicalcollections,accountsreceivableagingandotherfactors.Theretailbusinesswrites-offaccountsreceivablebalancesagainsttheallowancefordoubtfulaccountswhenitdeterminesareceivableisuncollectible.Inaddition,theCompanyconsidersareservefordoubtfulaccountsbasedonthecreditworthinessofthecustomersandcontinuallyreviewsandadjustsforcurrenteconomictrendsthatmightimpacttheleveloffuturecreditlosses.Thereserverepresentsmanagement'sbestestimateofuncollectibleamounts.AsofDecember 31,2019and2018,theallowancefordoubtfulaccountswas$43millionand$32million,respectively.InventoryInventoryisvaluedatthelowerofweightedaveragecostormarket,andconsistsprincipallyoffueloil,coalandrawmaterialsusedtogenerateelectricityorsteam.TheCompanyremovestheseinventoriesastheyareusedintheproductionofelectricityorsteam.Sparepartsinventoryisvaluedatweightedaveragecost.TheCompanyremovestheseinventorieswhentheyareusedforrepairs,maintenanceorcapitalprojects.TheCompanyexpectstorecoverthefueloil,coal,rawmaterials,andsparepartscostsintheordinarycourseofbusiness.Finishedgoodsinventoryisvaluedatthelowerofcostornetrealizablevaluewithcostbeingdeterminedonafirst-infirst-outbasis.TheCompanyremovestheseinventoriesastheyaresoldtocustomers.Salesofinventoryareclassifiedasanoperatingactivityintheconsolidatedstatementsofcashflows.Property,PlantandEquipmentProperty,plantandequipmentarestatedatcostor,inthecaseofbusinessacquisitions,fairvalue;however,impairmentadjustmentsarerecordedwhenevereventsorchangesincircumstancesindicatethattheircarryingvaluesmaynotberecoverable.NRGalsoclassifiesnuclearfuelrelatedtotheCompany's44%ownershipinterestinSTPaspartoftheCompany'sproperty,plant,andequipment.Significantadditionsorimprovementsextendingassetlivesarecapitalizedasincurred,whilerepairsandmaintenancethatdonotimproveorextendthelifeoftherespectiveassetarechargedtoexpenseasincurred.Depreciation,otherthannuclearfuel,iscomputedusingthestraight-linemethod,whilenuclearfuelisamortizedbasedonunitsofproductionovertheestimatedusefullives.Certainassetsandtheirrelatedaccumulateddepreciationamountsareadjustedforassetretirementsanddisposalswiththeresultinggainorlossincludedincostofoperationsintheconsolidatedstatementsofoperations.AssetImpairmentsLong-livedassetsthatareheldandusedarereviewedforimpairmentwhenevereventsorchangesincircumstancesindicatecarryingvaluesmaynotberecoverable.SuchreviewsareperformedinaccordancewithASC360.Animpairmentlossisindicatedifthetotalfutureestimatedundiscountedcashflowsexpectedfromanassetarelessthanitscarryingvalue.Animpairmentchargeismeasuredbythedifferencebetweenanasset'scarryingamountandfairvaluewiththedifferencerecordedinoperatingcostsandexpensesintheconsolidatedstatementsofoperations.Fairvaluesaredeterminedbyavarietyofvaluationmethods,includingthird-partyappraisals,salespricesofsimilarassets,andpresentvaluetechniques.97InvestmentsaccountedforbytheequitymethodarereviewedforimpairmentinaccordancewithASC323,Investments-EquityMethodandJointVentures,orASC323,whichrequiresthatalossinvalueofaninvestmentthatisanother-than-temporarydeclineshouldberecognized.TheCompanyidentifiesandmeasureslossesinthevalueofequitymethodinvestmentsbaseduponacomparisonoffairvaluetocarryingvalue.Forfurtherdiscussionofthesematters,refertoNote11,AssetImpairments.DevelopmentCostsandCapitalizedInterestDevelopmentcostsincludeprojectdevelopmentcosts,whichareexpensedinthepreliminarystagesofaprojectandcapitalizedwhentheprojectisdeemedtobecommerciallyviable.Commercialviabilityisdeterminedbyoneoraseriesofactionsincluding,amongothers,BoardofDirectorapprovalpursuanttoaformalprojectplanthatsubjectstheCompanytosignificantfutureobligationsthatcanonlybedischargedbytheuseofaCompanyasset.Whenaprojectisavailableforoperations,capitalizedinterestandcapitalizedprojectdevelopmentcostsarereclassifiedtoproperty,plantandequipmentanddepreciatedonastraight-linebasisovertheestimatedusefullifeoftheproject'srelatedassets.Capitalizedcostsarechargedtoexpenseifaprojectisabandonedormanagementotherwisedeterminesthecoststobeunrecoverable.Interestincurredonfundsborrowedtofinancecapitalprojectsiscapitalizeduntiltheprojectunderconstructionisreadyforitsintendeduse.TheamountofinterestcapitalizedfortheyearsendedDecember 31,2019,2018,and2017,was$3million,$7million,and$20million,respectively.DebtIssuanceCostsDebtissuancecostsarecapitalizedandamortizedasinterestexpenseonabasiswhichapproximatestheeffectiveinterestmethodoverthetermoftherelateddebt.Debtissuancecostsarepresentedasadirectdeductionfromthecarryingamountoftherelateddebt.IntangibleAssetsIntangibleassetsrepresentcontractualrightsheldbytheCompany.TheCompanyrecognizesspecificallyidentifiableintangibleassetsincludingcustomercontracts,customerrelationships,energysupplycontracts,marketingpartnerships,powerpurchaseagreements,tradenames,emissionallowances,andfuelcontractswhenspecificrightsandcontractsareacquired.Theseintangibleassetsareamortizedbasedonexpectedvolumes,expecteddelivery,expecteddiscountedfuturenetcashflows,straightlineorunitsofproductionbasis.AsofDecember 31,2019and2018,theCompanyhadaccumulatedamortizationrelatedtoitsintangibleassetsof$1.3billionand$1.2billion,respectively.Emissionallowancesheld-for-sale,whichareincludedinothernon-currentassetsontheCompany'sconsolidatedbalancesheet,arenotamortized;theyarecarriedatthelowerofcostorfairvalueandreviewedforimpairmentinaccordancewithASC360.GoodwillInaccordancewithASC350,Intangibles-GoodwillandOther,orASC350,theCompanyrecognizesgoodwillfortheexcesscostofanacquiredentityoverthenetvalueassignedtoassetsacquiredandliabilitiesassumed.NRGperformsgoodwillimpairmenttestsannually,duringthefourthquarter,andwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.TheCompanyfirstassessesqualitativefactorstodeterminewhetheritismorelikelythannotthatthefairvalueofareportingunitislessthanitscarryingamount.Themore-likely-than-notthresholdisdefinedashavingalikelihoodofmorethan50percent.Ifitisnotmore-likely-than-notthatthefairvalueofareportingunitislessthanitscarryingamount,thereisnogoodwillimpairment.Intheabsenceofsufficientqualitativefactorsindicatingthatitismore-likely-than-notthatnoimpairmentoccurred,theCompanyperformsaquantitativeassessmentbydeterminingthefairvalueofthereportingunitandcomparingthefairvaluetoitsbookvalue.Ifthefairvalueofthereportingunitexceedsitsbookvalue,goodwillofthereportingunitisnotconsideredimpaired.Ifthebookvalueexceedsfairvalue,theCompanyrecognizesanimpairmentlossequaltothedifferencebetweenbookvalueandfairvalue.ForfurtherdiscussionofgoodwillandgoodwillimpairmentlossesrecognizedrefertoNote12,GoodwillandOtherIntangibles.IncomeTaxesTheCompanyaccountsforincometaxesusingtheliabilitymethodinaccordancewithASC740,IncomeTaxes,orASC 740,whichrequiresthattheCompanyusetheassetandliabilitymethodofaccountingfordeferredincometaxesandprovidedeferredincometaxesforallsignificanttemporarydifferences.98TheCompanyhastwocategoriesofincometaxexpenseorbenefit — currentanddeferred,asfollows:•Current income tax expense or benefit consists solely of current taxes payable less applicable tax credits, and•Deferred income tax expense or benefit is the change in the net deferred income tax asset or liability, excluding amounts charged or credited to accumulated other comprehensive incomeTheCompanyreportssomeofitsrevenuesandexpensesdifferentlyforfinancialstatementpurposesthanforincometaxreturnpurposes,resultingintemporaryandpermanentdifferencesbetweentheCompany'sfinancialstatementsandincometaxreturns.ThetaxeffectsofsuchtemporarydifferencesarerecordedaseitherdeferredincometaxassetsordeferredincometaxliabilitiesintheCompany'sconsolidatedbalancesheets.TheCompanymeasuresitsdeferredincometaxassetsanddeferredincometaxliabilitiesusingincometaxratesthatareexpectedtobeineffectwhenthedeferredtaxisrealized.TheCompanyaccountsforuncertaintaxpositionsinaccordancewithASC740,whichappliestoalltaxpositionsrelatedtoincometaxes.UnderASC740,taxbenefitsarerecognizedwhenitismore-likely-than-notthatataxpositionwillbesustaineduponexaminationbytheauthorities.Thebenefitrecognizedfromapositionistheamountofbenefitthathassurpassedthemore-likely-than-notthreshold,asitismorethan50%likelytoberealizeduponsettlement.TheCompanyrecognizesinterestandpenaltiesaccruedrelatedtouncertaintaxbenefitsasacomponentofincometaxexpense.InaccordancewithASC805andasdiscussedfurtherinNote20,IncomeTaxes,changestoexistingnetdeferredtaxassetsorvaluationallowancesorchangestouncertaintaxbenefits,arerecordedtoincometax(benefit)/expense.ContractAmortizationAssetsandliabilitiesrecognizedthroughacquisitionsrelatedtothesaleofelectriccapacityandenergyinfutureperiodsforwhichthefairvaluehasbeendeterminedtobesignificantlylessormorethanmarketareamortizedtorevenueoverthetermofeachunderlyingcontractbasedonactualgenerationand/orcontractedvolumes.LeaseRevenueCertainoftheCompany’srevenuesareobtainedthroughleasesofrooftopresidentialsolarsystems,whichareaccountedforasoperatingleasesinaccordancewithASC842,Leases.Pursuanttotheleaseagreements,thecustomers’monthlypaymentsarepre-determinedfixedmonthlyamountsandmayincludeanannualfixedpercentageescalationtoreflecttheimpactofutilityrateincreasesovertheleaseterm,whichis20years.TheCompanyrecordsoperatingleaserevenueonastraight-linebasisoverthelifeoftheleaseterm.Certaincustomersmadeinitialdownpaymentsthatarebeingamortizedoverthelifeofthelease.Thedifferencebetweenthepaymentsreceivedandtherevenuerecognizedisrecordedasdeferredrevenue.LessorAccountingCertainoftheCompany'srevenuesareobtainedthroughPPAsorothercontractualagreements.ManyoftheseagreementsareaccountedforasoperatingleasesunderASC842.Certainoftheseleaseshavenominimumleasepaymentsandalloftherentisrecordedascontingentrentonanactualbasiswhentheelectricityisdelivered.Judgmentisrequiredbymanagementindeterminingtheeconomiclifeofeachgeneratingfacility,inevaluatingwhethercertainleaseprovisionsconstituteminimumpaymentsorrepresentcontingentrentandotherfactorsindeterminingwhetheracontractcontainsaleaseandwhethertheleaseisanoperatingleaseorfinancelease.ContingentrentalincomerecognizedintheyearsendedDecember 31,2019,2018,and2017was$5million,$104million,and$253million,respectively.GrossReceiptsandSalesTaxesInconnectionwithitsretailbusiness,theCompanyrecordsgrossreceiptstaxesonagrossbasisinrevenuesandcostofoperationsinitsconsolidatedstatementsofoperations.DuringtheyearsendedDecember 31,2019,2018,and2017,theCompany'srevenuesandcostofoperationsincludedgrossreceiptstaxesof$109million,$99million,and$92million,respectively.Additionally,theretailbusinessrecordssalestaxescollectedfromitstaxablecustomersandremittedtothevariousgovernmentalentitiesonanetbasis;thus,thereisnoimpactontheCompany'sconsolidatedstatementofoperations.CostofEnergyforRetailOperationsThecostofenergyforelectricitysalesandservicestoretailcustomersisincludedincostofoperationsandisbasedonestimatedsupplyvolumesfortheapplicablereportingperiod.Aportionofthecostofenergy,$103million,$105million,and$107millionasofDecember 31,2019,2018,and2017,respectively,wasaccruedandconsistedofestimatedtransmissionanddistributionchargesnotyetbilledbythetransmissionanddistributionutilities.Inestimatingsupplyvolumes,theCompanyconsiderstheeffectsofhistoricalcustomervolumes,weatherfactorsandusagebycustomerclass.Transmissionanddistributiondeliveryfeesareestimatedusingthesamemethodusedforelectricitysalesandservicestoretailcustomers.Inaddition,ISOfeesareestimatedbasedonhistoricaltrends,estimatedsupplyvolumesandinitialERCOTISOsettlements.Volumeestimatesarethenmultipliedbythesupplyrateandrecordedascostofoperationsintheapplicablereportingperiod.99DerivativeFinancialInstrumentsTheCompanyaccountsforderivativefinancialinstrumentsunderASC815,whichrequirestheCompanytorecordallderivativesonthebalancesheetatfairvalueunlesstheyqualifyforaNPNSexception.Changesinthefairvalueofnon-hedgederivativesareimmediatelyrecognizedinearnings.Changesinthefairvalueofderivativesaccountedforascashflowhedges,ifelectedforhedgeaccounting,aredeferredandrecordedasacomponentofaccumulatedOCIuntilthehedgedtransactionsoccurandarerecognizedinearnings.TheCompany'sprimaryderivativeinstrumentsarepowerpurchaseorsalescontracts,fuelspurchasecontracts,andotherenergyrelatedcommoditiesusedtomitigatevariabilityinearningsduetofluctuationsinmarketpricesandinterestrates.Onanongoingbasis,theCompanyassessestheeffectivenessofallderivativesthataredesignatedashedgesforaccountingpurposesinordertodeterminethateachderivativecontinuestobehighlyeffectiveinoffsettingchangesinfairvaluesorcashflowsofhedgeditems.Internalanalysesthatmeasurethestatisticalcorrelationbetweenthederivativeandtheassociatedhedgeditemdeterminetheeffectivenessofsuchacontractdesignatedasahedge.Ifitisdeterminedthatthederivativeinstrumentisnothighlyeffectiveasahedge,hedgeaccountingwillbediscontinuedprospectively.Inthiscase,thegainorlosspreviouslydeferredinaccumulatedOCIwouldbefrozenuntiltheunderlyinghedgedinstrumentisdeliveredunlessthetransactionsbeinghedgedarenolongerprobableofoccurringinwhichcasetheamountinOCIwouldbeimmediatelyreclassifiedintoearnings.Ifthederivativeinstrumentisterminated,theeffectiveportionofthisderivativedeferredinaccumulatedOCIwillbefrozenuntiltheunderlyinghedgeditemisdelivered.TheCompanyhadnocashflowhedgesasofDecember31,2019.RevenuesandexpensesoncontractsthatqualifyfortheNPNSexceptionarerecognizedwhentheunderlyingphysicaltransactionisdelivered.WhilethesecontractsareconsideredderivativefinancialinstrumentsunderASC815,theyarenotrecordedatfairvalue,butonanaccrualbasisofaccounting.IfitisdeterminedthatatransactiondesignatedasNPNSnolongermeetsthescopeexception,thefairvalueoftherelatedcontractisrecordedonthebalancesheetandimmediatelyrecognizedthroughearnings.NRG'stradingactivitiesaresubjecttolimitsinaccordancewiththeCompany'sRiskManagementPolicy.Thesecontractsarerecognizedonthebalancesheetatfairvalueandchangesinthefairvalueofthesederivativefinancialinstrumentsarerecognizedinearnings.ForeignCurrencyTranslationandTransactionGainsandLossesThelocalcurrenciesaregenerallythefunctionalcurrencyofNRG'sforeignoperations.Foreigncurrencydenominatedassetsandliabilitiesaretranslatedatend-of-periodratesofexchange.Revenues,expenses,andcashflowsaretranslatedattheweighted-averageratesofexchangefortheperiod.TheresultingcurrencytranslationadjustmentsarenotincludedintheCompany'sconsolidatedstatementsofoperationsfortheperiod,butareaccumulatedandreportedasaseparatecomponentofstockholders'equityuntilsaleorcompleteorsubstantiallycompleteliquidationofthenetinvestmentintheforeignentitytakesplace.Foreigncurrencytransactiongainsorlossesarereportedwithinotherincome/(expense)intheCompany'sconsolidatedstatementsofoperations.FortheyearsendedDecember 31,2019,2018,and2017,amountsrecognizedasforeigncurrencytransactiongains/(losses)wereimmaterial.TheCompany'scumulativetranslationadjustmentbalancesasofDecember 31,2019,2018,and2017were$(13)million,$(13)millionand$(2)million,respectively.ConcentrationsofCreditRiskFinancialinstrumentswhichpotentiallysubjecttheCompanytoconcentrationsofcreditriskconsistprimarilyoftrustfunds,accountsreceivable,notesreceivable,derivatives,andinvestmentsindebtsecurities.Trustfundsareheldinaccountsmanagedbyexperiencedinvestmentadvisors.Certainaccountsreceivable,notesreceivable,andderivativeinstrumentsareconcentratedwithinentitiesengagedintheenergyindustry.TheseindustryconcentrationsmayimpacttheCompany'soverallexposuretocreditrisk,eitherpositivelyornegatively,inthatthecustomersmaybesimilarlyaffectedbychangesineconomic,industryorotherconditions.Receivablesandothercontractualarrangementsaresubjecttocollateralrequirementsunderthetermsofenablingagreements.However,theCompanybelievesthatthecreditriskposedbyindustryconcentrationisoffsetbythediversificationandcreditworthinessofitscustomerbase.SeeNote5,FairValueofFinancialInstruments,forafurtherdiscussionofderivativeconcentrations.FairValueofFinancialInstrumentsThecarryingamountofcashandcashequivalents,fundsdepositedbycounterparties,receivables,accountspayable,andaccruedliabilitiesapproximatefairvaluebecauseoftheshort-termmaturityoftheseinstruments.SeeNote5,FairValueofFinancialInstruments,forafurtherdiscussionoffairvalueoffinancialinstruments.100AssetRetirementObligationsTheCompanyaccountsforAROsinaccordancewithASC 410-20,AssetRetirementObligations,orASC 410-20.Retirementobligationsassociatedwithlong-livedassetsincludedwithinthescopeofASC 410-20arethoseforwhichalegalobligationexistsunderenactedlaws,statutes,andwrittenororalcontracts,includingobligationsarisingunderthedoctrineofpromissoryestoppel,andforwhichthetimingand/ormethodofsettlementmaybeconditionalonafutureevent.ASC 410-20requiresanentitytorecognizethefairvalueofaliabilityforanAROintheperiodinwhichitisincurredandareasonableestimateoffairvaluecanbemade.UponinitialrecognitionofaliabilityforanARO,theCompanycapitalizestheassetretirementcostbyincreasingthecarryingamountoftherelatedlong-livedassetbythesameamount.Overtime,theliabilityisaccretedtoitsfuturevalue,whilethecapitalizedcostisdepreciatedovertheusefullifeoftherelatedasset.SeeNote14,AssetRetirementObligations,forafurtherdiscussionof AROs.PensionsandOtherPostretirementBenefitsTheCompanyofferspensionbenefitsthroughadefinedbenefitpensionplan.Inaddition,theCompanyprovidespostretirementhealthandwelfarebenefitsforcertaingroupsofemployees.TheCompanyaccountsforpensionandotherpostretirementbenefitsinaccordancewithASC 715,Compensation —RetirementBenefits,orASC715.TheCompanyrecognizesthefundedstatusoftheCompany'sdefinedbenefitplansinthestatementoffinancialpositionandrecordsanoffsetforgainsandlossesaswellasallpriorservicecoststhathavenotbeenincludedaspartoftheCompany'snetperiodicbenefitcosttoothercomprehensiveincome.ThedeterminationoftheCompany'sobligationandexpensesforpensionbenefitsisdependentontheselectionofcertainassumptions.Theseassumptionsdeterminedbymanagementincludethediscountrate,theexpectedrateofreturnonplanassetsandtherateoffuturecompensationincreases.TheCompany'sactuarialconsultantsassistindeterminingassumptionsforsuchitemsasretirementage.Theassumptionsusedmaydiffermateriallyfromactualresults,whichmayresultinasignificantimpacttotheamountofpensionobligationorexpenserecordedbytheCompany.TheCompanymeasuresthefairvalueofitspensionassetsinaccordancewithASC 820,FairValueMeasurementsandDisclosures,orASC 820.Stock-BasedCompensationTheCompanyaccountsforitsstock-basedcompensationinaccordancewithASC 718,Compensation —StockCompensation,orASC718.ThefairvalueoftheCompany'snon-qualifiedstockoptionsandmarketstockunitsareestimatedonthedateofgrantusingtheBlack-Scholesoption-pricingmodelandtheMonteCarlovaluationmodel,respectively.NRGusestheCompany'scommonstockpriceonthedateofgrantasthefairvalueoftheCompany'srestrictedstockunitsanddeferredstockunits.ForfeitureratesareestimatedbasedonananalysisoftheCompany'shistoricalforfeitures,employmentturnover,andexpectedfuturebehavior.TheCompanyrecognizescompensationexpenseforbothgradedandcliffvestingawardsonastraight-linebasisovertherequisiteserviceperiodfortheentireaward.InvestmentsAccountedforbytheEquityMethodTheCompanyhasinvestmentsinvariousdomesticenergyprojects,aswellasoneAustralianproject.Theequitymethodofaccountingisappliedtosuchinvestmentsinaffiliates,whichincludejointventuresandpartnerships,becausetheownershipstructurepreventstheCompanyfromexercisingacontrollinginfluenceovertheoperatingandfinancialpoliciesoftheprojects.Underthismethod,equityinpre-taxincomeorlossesofdomesticpartnershipsand,generally,inthenetincomeorlossesofitsAustralianproject,arereflectedasequityinearningsofunconsolidatedaffiliates.DistributionsfromequitymethodinvestmentsthatrepresentearningsontheCompany'sinvestmentareincludedwithincashflowsfromoperatingactivitiesanddistributionsfromequitymethodinvestmentsthatrepresentareturnoftheCompany'sinvestmentareincludedwithincashflowsfrominvestingactivities.101TaxEquityArrangementsTheCompany’sredeemablenoncontrollinginterestinsubsidiariesrepresentsthird-partyinterestsinthenetassetsundercertaintaxequityarrangements,whichareconsolidatedbytheCompany,thathavebeenenteredintotofinancethecostofsolarenergysystemsunderoperatingleases.TheCompanyhasdeterminedthattheprovisionsinthecontractualagreementsofthesestructuresrepresentsubstantiveprofitsharingarrangements.Further,theCompanyhasdeterminedthattheappropriatemethodologyforcalculatingtheredeemablenoncontrollinginterestthatreflectsthesubstantiveprofitsharingarrangementsisabalancesheetapproachutilizingtheHLBVmethod.UndertheHLBVmethod,theamountsreportedasredeemablenoncontrollinginterestsrepresenttheamountstheinvestorsthatarepartytothetaxequityarrangementswouldhypotheticallyreceiveateachbalancesheetdateundertheliquidationprovisionsofthecontractualagreements,assumingthenetassetsofthefundingstructureswereliquidatedattheirrecordedamounts.Theinvestors’interestsintheresultsofoperationsofthefundingstructuresaredeterminedasredeemablenoncontrollinginterestsatthestartandendofeachreportingperiod,aftertakingintoaccountanycapitaltransactionsbetweenthestructuresandthefunds’investors.ThecalculationsutilizedtoapplytheHLBVmethodincludeestimatedcalculationsoftaxableincomeorlossesforeachreportingperiod.RedeemableNoncontrollingInterestTotheextentthatthethird-partyhastherighttoredeemtheirinterestsforcashorotherassets,theCompanyhasincludedthenoncontrollinginterestattributabletothethirdpartyasacomponentoftemporaryequityinthemezzaninesectionoftheconsolidatedbalancesheet.ThefollowingtablereflectsthechangesintheCompany'sredeemablenoncontrollinginterestbalancefortheyearsendedDecember 31,2019,2018,and2017.(In millions)Balance as of December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $46Distributions to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2)Contributions from redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99Non-cash adjustments to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7Comprehensive loss attributable to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(72)Balance as of December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78Distributions to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3)Contributions from redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Non-cash adjustments to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(8)Net income attributable to redeemable noncontrolling interest - continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Net loss attributable to redeemable noncontrolling interest - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(27)Sale of NRG Yield and the Renewables Platform (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(48)Balance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Distributions to redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(2)Net income attributable to redeemable noncontrolling interest - continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20(a) See Note 4, Acquisitions, Discontinued Operations and Dispositions, for further information regarding the sale of NRG Yield and its Renewables PlatformSale-LeasebackArrangementsNRGispartytosale-leasebackarrangementsthatprovideforthesaleofcertainassetstoathirdpartyandsimultaneouslyleasesbackthesameassettotheCompany.Iftheseller-lesseetransferscontroloftheunderlyingassetstothebuyer-lessor,thearrangementisaccountedforunderASC842-40,Sale-LeasebackTransactions.ThesearrangementsareclassifiedasoperatingleasesontheCompany'sconsolidatedbalancesheets.SeeNote10,Leases,forfurtherdiscussion.MarketingandAdvertisingCostsTheCompanyexpensesitsmarketingandadvertisingcostsasincurredandincludesthemwithinselling,generalandadministrativeexpenses.Thecostsoftangibleassetsusedinadvertisingcampaignsarerecordedasfixedassetsordeferredadvertisingcostsandamortizedasadvertisingcostsovertheshorteroftheusefullifeoftheassetortheadvertisingcampaign.TheCompanyhasseverallong-termsponsorshiparrangements.Paymentsrelatedtothesearrangementsaredeferredandexpensedoverthetermofthearrangement.AdvertisingexpensesfortheyearsendedDecember 31,2019,2018,and2017were$66million,$73million,and$66million,respectively.102ReorganizationCostsReorganizationcostsincludecostsincurredbytheCompanyrelatedtotheTransformationPlanimplementationandprimarilyreflectseveranceandcontractmodifications.ReorganizationcostsfortheyearsendedDecember 31,2019,2018and2017were$23million,$90millionand$44million,respectively.BusinessCombinationsTheCompanyaccountsforitsbusinesscombinationsinaccordancewithASC 805,BusinessCombinations,orASC 805,whichrequiresanacquirertorecognizeandmeasureinitsfinancialstatementstheidentifiableassetsacquired,theliabilitiesassumed,andanynoncontrollinginterestintheacquireeatfairvalueattheacquisitiondate.TheCompanyalsorecognizesandmeasuresthegoodwillacquiredoragainfromabargainpurchaseinthebusinesscombination.Inaddition,transactioncostsareexpensedasincurred.UseofEstimatesThepreparationoffinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesrequiresmanagementtomakeestimatesandassumptionsthataffectthereportedamountsofassetsandliabilitiesatthedateofthefinancialstatements,disclosureofcontingentassetsandliabilitiesatthedateofthefinancialstatements,andthereportedamountsofrevenuesandexpensesduringthereportingperiod.Actualresultscoulddifferfromtheseestimates.Inrecordingtransactionsandbalancesresultingfrombusinessoperations,theCompanyusesestimatesbasedonthebestinformationavailable.Estimatesareusedforsuchitemsasplantdepreciablelives,taxprovisions,uncollectibleaccounts,actuariallydeterminedbenefitcosts,thevaluationofenergycommoditycontracts,environmentalliabilities,legalcostsincurredinconnectionwithrecordedlosscontingencies,andassetsacquiredandliabilitiesassumedinbusinesscombinations,amongothers.Inaddition,estimatesareusedtotestlong-livedassetsandgoodwillforimpairmentandtodeterminethefairvalueofimpairedassets.Asbetterinformationbecomesavailableoractualamountsaredeterminable,therecordedestimatesarerevised.Consequently,operatingresultscanbeaffectedbyrevisionstoprioraccountingestimates.ReclassificationsCertainprioryearamountshavebeenreclassifiedforcomparativepurposes.Thereclassificationsdidnotaffectresultsfromoperations,netassetsorcashflows.Recent Accounting Developments - Guidance Adopted in 2019ASU2016-02-InFebruary2016,theFASBissuedASUNo.2016-02,Leases(Topic842),orTopic842,whichwasfurtheramendedthroughvariousupdatesissuedbytheFASBthereafter,withtheobjectivetoincreasetransparencyandcomparabilityamongorganizationsbyrecognizingleaseassetsandleaseliabilitiesonthebalancesheetandtoimprovefinancialreportingbyexpandingtherelateddisclosures.TheguidanceinTopic842providesthatalesseethatmayhavepreviouslyaccountedforaleaseasanoperatingleaseundercurrentGAAPshouldrecognizetheassetsandliabilitiesthatarisefromaleaseonthebalancesheet.Inaddition,Topic842expandstherequiredquantitativeandqualitativedisclosureswithregardstoleasearrangements.TheCompanyadoptedthestandardanditssubsequentcorrespondingupdateseffectiveJanuary1,2019usingthemodifiedretrospectiveapproach,asfurtherdescribedinNote10,Leases.TheCompanyrecognizedoperatingleaseliabilitiesof$404 millionandrightofuseassetsof$321 millionuponadoption.103RecentAccountingDevelopments-GuidanceNotYetAdoptedASU2019-12-InDecember2019,theFASBissuedASUNo.2019-12,IncomeTaxes(Topic740):SimplifyingtheAccountingforIncomeTaxes,tosimplifyvariousaspectsrelatedtoaccountingforincometaxes.TheguidanceinASU2019-12amendsthegeneralprinciplesinTopic740toeliminatecertainexceptionsforrecognizingdeferredtaxesforinvestment,performingintraperiodallocationandcalculatingincometaxesininterimperiods.ThisASUalsoincludesguidancetoreducecomplexityincertainareas,includingrecognizingdeferredtaxesfortaxgoodwillandallocatingtaxestomembersofaconsolidatedgroup.ASU2019-12iseffectiveforfiscalyearsbeginningafterDecember15,2020,andinterimperiodswithinthosefiscalyears,.Earlyadoptionispermitted,includingadoptioninaninterimperiod.TheCompanyiscurrentlyintheprocessofassessingtheimpactofthisguidanceontheconsolidatedfinancialstatements.ASU2018-17-InOctober2018,theFASBissuedASUNo.2018-17,Consolidations(Topic810):TargetedImprovementstoRelatedPartyGuidanceforVariableInterestEntities,orASUNo.2018-17,inresponsetostakeholders’observationsthatTopic810,Consolidations,couldbeimprovedtherebyimprovinggeneralpurposefinancialreporting.Specifically,ASUNo.2018-17requiresapplicationofthevariableinterestentity(VIE)guidancetoprivatecompaniesundercommoncontrolandconsiderationofindirectinterestheldthroughrelatedpartiesundercommoncontrolfordeterminingwhetherfeespaidtodecisionmakersandserviceprovidersarevariableinterests.TheamendmentsareeffectiveforfiscalyearsbeginningafterDecember15,2019,andinterimperiodswithinthosefiscalyears.Allentitiesarerequiredtoapplytheamendmentsretrospectivelywithacumulative-effectadjustmenttoopeningretainedearningsoftheearliestperiodpresented.TheCompanywilladopttheamendmentsduringthefirstquarterof2020anddoesnotexpecttheadoptiontohaveamaterialimpactonitsresultsofoperations,cashflows,orstatementoffinancialposition.ASU2018-13-InAugust2018,theFASBissued ASUNo.2018-13,FairValueMeasurement(Topic820):DisclosureFramework-ChangestotheDisclosureRequirementforFairvalueMeasurement),orASUNo.2018-13.TheamendmentsinASUNo.2018-13eliminatesuchdisclosuresastheamountofandreasonsfortransfersbetweenLevel1andLevel2ofthefairvaluehierarchyandaddnewdisclosurerequirementsforLevel3measurements.ASUNo.2018-13iseffectiveforfiscalyearsbeginningafterDecember15,2019,andinterimperiodswithinthosefiscalyears.CertaindisclosuresinASUNo.2018-13arerequiredtobeappliedonaretrospectivebasisandothersonaprospectivebasis.TheCompanywilladopttheamendmentsduringthefirstquarterof2020.Astheamendmentscontemplateschangesindisclosuresonly,itwillhavenoimpactontheCompany'sresultsofoperations,cashflows,orstatementoffinancialposition.ASU2016-13-InJune2016,theFASBissuesASUNo.2016-13,FinancialInstruments-CreditLosses(Topic326):MeasurementofCreditLossesonFinancialInstruments,orASUNo.2016-13,whichwasfurtheramendedthroughvariousupdatesissuedbytheFASBthereafter.TheguidanceinASUNo.2016-13providesanewmodelforrecognizingcreditlossesonfinancialassetscarriedatamortizedcostusinganestimateofexpectedcreditlosses,insteadofthe"incurredloss"methodologypreviouslyrequiredforrecognizingcreditlossesthatdelayedrecognitionuntilitwasprobablethatalosswasincurred.Theestimateofexpectedcreditlossesistobebasedonconsiderationofpastevents,currentconditionsandreasonableandsupportableforecastsoffutureconditions.ASUNo.2016-13iseffectiveforfiscalyearsbeginningafterDecember15,2019,andinterimperiodswithinthosefiscalyears.Theguidanceisrequiredtobeadoptedusingamodifiedretrospectiveapproachthroughacumulative-effectadjustmenttoopeningretainedearningsasoftheeffectivedateandrequiresadditionaldisclosures.TheCompanywilladopttheguidanceduringthefirstquarterof2020anddoesnotexpecttheadoptiontohaveamaterialimpactonitsresultsofoperations,cashflows,orstatementoffinancialposition.Note3—RevenueRecognitionRevenuefromContractswithCustomersOnJanuary1,2018,theCompanyadoptedtheguidanceinASC606,RevenuefromContracts,orASC606,withcustomersusingthemodifiedretrospectivemethodappliedtocontractsthatwerenotcompletedasoftheadoptiondate.TheCompanyrecognizedthecumulativeeffectofinitiallyapplyingthenewstandardasacredittotheopeningbalanceofaccumulateddeficit,resultinginadecreaseof$15 million.Theadjustmentprimarilyrelatedtocostsincurredtoobtainacontractwithcustomersandcustomerincentives.Followingtheadoptionofthenewstandard,theCompany’srevenuerecognitionofitscontractswithcustomersremainsmateriallyconsistentwithitshistoricalpractice.The2017comparativeinformationwasnotrestatedandcontinuestobereportedundertheaccountingstandardsineffectforthatperiod.TheCompany'spolicieswithrespecttoitsvariousrevenuestreamsaredetailedbelow.TheCompanygenerallyappliestheinvoicingpracticalexpedienttorecognizerevenuefortherevenuestreamsdetailedbelow,exceptincircumstanceswheretheinvoicedamountdoesnotrepresentthevaluetransferredtothecustomer.RetailRevenuesGrossrevenuesforenergysalesandservicestoretailcustomersarerecognizedastheCompanytransfersthepromisedgoodsandservicestothecustomer.Forthemajorityofitselectricitycontracts,theCompany’sperformanceobligationwiththe104customerissatisfiedovertimeandperformanceobligationsforitselectricityproductsarerecognizedasthecustomertakespossessionoftheproduct.TheCompanyalsoallocatesthecontractconsiderationtodistinctperformanceobligationsinacontractforwhichthetimingoftherevenuerecognizedisdifferent.Additionally,customerdiscountsandincentivesreducethecontractconsiderationandarerecognizedoverthetermofthecontract.Energysalesandservicesthathavebeendeliveredbutnotbilledbyperiodendareestimated.Accruedunbilledrevenuesarebasedonestimatesofcustomerusagesincethedateofthelastmeterreadingprovidedbytheindependentsystemoperatorsorelectricdistributioncompanies.Volumeestimatesarebasedondailyforecastedvolumesandestimatedcustomerusagebyclass.Unbilledrevenuesarecalculatedbymultiplyingthesevolumeestimatesbytheapplicableratebycustomerclass.Estimatedamountsareadjustedwhenactualusageisknownandbilled.Ascontractsforretailelectricitycanbeformulti-yearperiods,theCompanyhasperformanceobligationsunderthesecontractsthathavenotyetbeensatisfied.Theseperformanceobligationshavetransactionpricesthatarebothfixedandvariable,andthatvarybasedonthecontractduration,customertype,inceptiondateandothercontract-specificfactors.Forthefixedpricecontracts,theamountofanyunsatisfiedperformanceobligationswillvarybasedoncustomerusage,whichwilldependonfactorssuchasweatherandcustomeractivityandthereforeitisnotpracticabletoestimatesuchamounts.EnergyRevenueBothphysicalandfinancialtransactionsconsistofrevenuesbilledtoathirdpartyateithermarketornegotiatedcontracttermstooptimizethefinancialperformanceoftheCompany'sgeneratingfacilities.Electricenergyrevenueisrecognizedupontransmissiontothecustomerovertime,usingtheoutputmethodformeasuringprogressofsatisfactionofperformanceobligations.Physicaltransactions,orthesaleofgeneratedelectricitytomeetsupplyanddemand,arerecordedonagrossbasisintheCompany'sconsolidatedstatementsofoperations.TheCompanyappliestheinvoicingpracticalexpedientinrecognizingenergyrevenue.Underthepracticalexpedient,revenueisrecognizedbasedontheinvoicedamountwhichisequaltothevaluetothecustomerofNRG’sperformanceobligationcompletedtodate.Financialtransactions,orthebuyingandsellingofenergyfortradingpurposes,arerecordednetwithinoperatingrevenuesintheconsolidatedstatementsofoperationsinaccordancewithASC815.CapacityRevenueCapacityrevenuesconsistofrevenuesbilledtoathirdpartyateithermarketornegotiatedcontracttermsformakinginstalledgenerationanddemandresponsecapacityavailableinordertosatisfysystemintegrityandreliabilityrequirements.Capacityrevenuesarerecognizedovertime,usingtheoutputmethodformeasuringprogressofsatisfactionofperformanceobligations.TheCompanyappliestheinvoicingpracticalexpedientinrecognizingcapacityrevenue.Underthepracticalexpedient,revenueisrecognizedbasedontheinvoicedamountwhichisequaltothevaluetothecustomerofNRG’sperformanceobligationcompletedtodate.PerformanceObligationsAsofDecember 31,2019,estimatedfuturefixedfeeperformanceobligationsare$564 million,$604 million,$303 million,$42 million,and$8 millionforfiscalyears2020,2021,2022,2023,and2024,respectively.TheseperformanceobligationsareforclearedauctionMWsinthePJM,ISO-NE,NYISOandMISOcapacityauctionsandaresubjecttopenaltiesfornonperformance.RenewableEnergyCreditsRenewableenergycreditsareusuallysoldthroughlong-termcontracts.Revenuefromthesaleofself-generatedRECsisrecognizedwhenrelatedenergyisgeneratedandsimultaneouslydeliveredevenincaseswherethereisacertificationlagasithasbeendeemedtobeperfunctory.Inabundledcontracttosellenergy,capacityand/orself-generatedRECs,allperformanceobligationsaredeemedtobedeliveredatthesametimeandhence,timingofrecognitionofrevenueforallperformanceobligationsisthesameandoccursovertime.Insuchcases,itisoftenunnecessarytoallocatetransactionpricetomultipleperformanceobligations.SaleofEmissionAllowancesTheCompanyrecordsitsinventoryofemissionallowancesaspartofintangibleassets.Fromtimetotime,managementmayauthorizethetransferofemissionallowancesinexcessofexpectedusagefromtheCompany'semissionbanktointangibleassetsheld-for-salefortradingpurposes.TheCompanyrecordsthesaleofemissionallowancesonanetbasiswithinoperatingrevenueintheCompany'sconsolidatedstatementsofoperations.105DisaggregatedRevenuesThefollowingtablesrepresenttheCompany’sdisaggregationofrevenuefromcontractswithcustomersfortheyearsendedDecember 31,2019and2018:For the Year Ended December 31, 2019Generation(In millions)RetailTexasEast/West/OtherSubtotalCorporate/EliminationsTotalEnergy revenue(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$1,987$733$2,720$(1,498)$1,222Capacity revenue(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——6066061607Retail revenueMass market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,277———(4)6,273Business Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,403————1,403Total retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . 7,680———(4)7,676Mark-to-market for economic hedging activities(b) . . . . . .—19836234(201)33Other revenue(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —90197287(4)283Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .7,6802,2751,5723,847(1,706)9,821Less: Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12—88—20Less: Realized and unrealized ASC 815 revenue . . . . . . . —3,1453643,509(1,699)1,810Total revenue from contracts with customers . . . . . . . .$7,668$(870)$1,200$330$(7)$7,991(a) The following amounts of energy, capacity and other revenue relate to derivative instruments and are accounted for under ASC 815:(In millions)RetailTexasEast/West/OtherSubtotalCorporate/EliminationsTotalEnergy revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$2,917$231$3,148$(1,499)$1,649Capacity revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——1071071108Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—30(10)20(1)19(b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 For the Year Ended December 31, 2018Generation(In millions)RetailTexasEast/West/OtherSubtotalCorporate/EliminationsTotalEnergy revenue(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$1,585$1,092$2,677$(1,129)$1,548Capacity revenue(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1669670—670Retail revenueMass market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,618———(5)5,613Business Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,492————1,492Total retail revenue . . . . . . . . . . . . . . . . . . . . . . . . . 7,110———(5)7,105Mark-to-market for economic hedging activities(b) . . . . . .(7)(174)(28)(202)79(130)Other revenue(a)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—84214298(13)285Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .7,1031,4961,9473,443(1,068)9,478Less: Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13—88—21Less: Realized and unrealized ASC 815 revenue . . . . . . . (7)2,1601932,353(1,037)1,309Total revenue from contracts with customers . . . . . . . .$7,097$(664)$1,746$1,082$(31)$8,148(a) The following amounts of energy, capacity and other revenue relate to derivative instruments and are accounted for under ASC 815:(In millions)RetailTexasEast/West/OtherSubtotalCorporate/EliminationsTotalEnergy revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$2,332$69$2,401$(1,117)$1,284Capacity revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——138138—138Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —21416—16 (b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815 (c) Included in other revenue is lease revenue of $17 million and $5 million for Retail and East/West/Other, respectively106ContractBalancesThefollowingtablereflectsthecontractassetsandliabilitiesincludedintheCompany'sbalancesheetasofDecember 31,2019and2018:(In millions)December 31, 2019December 31, 2018Deferred customer acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$133$111Accounts receivable, net - Contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . . . .1,002999Accounts receivable, net - Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1820Accounts receivable, net - Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Total accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,025$1,024Unbilled revenues (included within Accounts receivable, net - Contracts with customers) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$402$392Deferred revenues (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$82$67(a)DeferredrevenuesfromcontractswithcustomersfortheyearsendedDecember 31,2019and2018wereapproximately$24 millionand$19 million,respectively.TherevenuerecognizedfromcontractswithcustomersduringyearsendedendedDecember 31,2019and2018relatingtothedeferredrevenuebalanceatthebeginningofeachperiodwas$13 millionand$16 million,respectively.ThechangeindeferredrevenuebalancesduringtheyearsendedDecember 31,2019and2018wasprimarilyduetothetimingdifferenceofwhenconsiderationwasreceivedandwhentheperformanceobligationwastransferred.TheCompany'scustomeracquisitioncostsconsistofbrokerfees,commissionpaymentsandothercoststhatrepresentincrementalcostsofobtainingthecontractwithcustomersforwhichtheCompanyexpectstorecover.TheCompanyamortizestheseamountsovertheestimatedlifeofthecustomercontract.Asapracticalexpedient,theCompanyexpensestheincrementalcostsofobtainingacontractiftheamortizationperiodoftheassetwouldhavebeenoneyearorless.WhentheCompanyreceivesconsiderationfromthecustomerthatisinexcessoftheamountdue,suchconsiderationisreclassifiedtodeferredrevenue,whichrepresentsacontractliability.Generally,theCompanywillrecognizerevenuefromcontractliabilitiesinthenextperiodastheCompanysatisfiesitsperformanceobligations.Note4 —Acquisitions,DiscontinuedOperationsandDispositionsAcquisitionsStreamEnergyAcquisition—OnAugust 1,2019,theCompanycompletedtheacquisitionofStreamEnergy'sretailelectricityandnaturalgasbusinessoperatingin9statesandWashington,D.C.for$329million,includingworkingcapitalandotheradjustmentsofapproximately$29 million.TheacquisitionincreasedNRG'sretailportfoliobyapproximately600,000RCEsor450,000customersandsupportsNRG'songoingeffortstoincreasetheCompany'sretailpositioninTexasandtheNortheast.Thepurchasepricewasallocatedasfollows:(In millions)Account receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$98Accounts payable(73)Other net current and non-current working capital5Marketing partnership154Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85Trade name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28Other intangible assets26Goodwill (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Stream Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$329(a)GoodwillarisingfromtheacquisitionisattributedtothevalueoftheplatformacquiredandthesynergiesexpectedfromcombiningtheoperationsofStreamEnergywithNRG'sexistingbusinesses.GoodwillisassignedtotheRetailsegmentandisnotdeductiblefortaxpurposes.107XOOMEnergyAcquisition—OnJune1,2018,theCompanycompletedtheacquisitionofXOOMEnergy,LLC,anelectricityandnaturalgasretaileroperatingin19states,Washington,D.C.andCanada,forapproximately$213million,includingworkingcapitalandotheradjustmentsof$48million.TheacquisitionincreasedNRG'sretailportfoliobyapproximately395,000RCEsor300,000customers.Thepurchasepricewasallocatedasfollows:(In millions)Net current and non-current working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$46Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34XOOM Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $213SmallBookAcquisitions—During2019,theCompanyacquiredseveralbooksofcustomerstotalingapproximately72,000customersfor$17million,ofwhich$13millionwaspaidin2019.During2018,theCompanyacquiredseveralbooksofcustomerstotalingapproximately115,000customers,alongwithbrandnames,for$44million,ofwhich$40 millionwaspaidin2018,$2millionwaspaidin2019and$2 millionwasprepaidin2017.Themajorityofthepurchasepriceforthe2019and2018bookacquisitionswereallocatedtoacquiredintangibles.Discontinued OperationsSale of South Central PortfolioOnFebruary4,2019,theCompanycompletedthesaleofitsSouthCentralPortfoliotoClecoforcashconsiderationof$1billionexcludingworkingcapitalandotheradjustments.TheCompanyconcludedthatthedivestedbusinessmetthecriteriafordiscontinuedoperations,asthedispositionrepresentsastrategicshiftinthebusinessinwhichNRGoperatesandheld-for-salecriteriaasofDecember31,2018.Assuch,allpriorperiodresultsfortheoperationsoftheSouthCentralPortfoliowerereclassifiedasdiscontinuedoperationsatDecember31,2018.Inconnectionwiththetransaction,NRGalsoenteredintoatransitionservicesagreementtoprovidecertaincorporateservicestothedivestedbusiness.TheSouthCentralPortfolioincludesthe1,153MWCottonwoodnaturalgasgeneratingfacility.UpontheclosingofthesaleoftheSouthCentralPortfolio,NRGenteredintoaleaseagreementwithClecotoleasebacktheCottonwoodfacilitythrough2025.DuetoitscontinuinginvolvementwiththeCottonwoodfacility,NRGdidnotuseheld-for-saleordiscontinuedoperationstreatmentinaccountingfortheCottonwoodfacility.SummarizedresultsofSouthCentraldiscontinuedoperationswereasfollows:Year Ended December 31,(In millions)201920182017Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$31$410$422Operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(23)(346)(335)Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —2—Gain from operations of discontinued components . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86687Gain on disposal of discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .20——Gain from discontinued operations, including disposal, net of tax . . . . . . . . . . . . . . . . $28$66$87108The following table summarizes the major classes of assets and liabilities classified as discontinued operations of South Central:(In millions)December 31, 2018Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$89Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Non-current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .409Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24Out-of-market contracts, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11Non-current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$61SaleofOwnershipinNRGYield,Inc.anditsRenewablesPlatformOnAugust31,2018,theCompanycompletedthesaleofitsownershipinterestsinNRGYield,Inc.anditsRenewablesPlatformtoGIPfortotalcashconsiderationof$1.348billion.TheCompanyconcludedthatthedivestedbusinessesmetthecriteriafordiscontinuedoperations,asthedispositionsrepresentedastrategicshiftinthebusinessinwhichNRGoperates.Assuch,allpriorperiodresultsforthetransactionwerereclassifiedasdiscontinuedoperations.Inconnectionwiththetransaction,NRGenteredintoatransitionservicesagreementtoprovidecertaincorporateservicestothedivestedbusinessesin2018.DuringtheyearendedDecember 31,2019,theCompanyrecordedanadjustmenttoreducethepurchasepriceby$15 millioninconnectionwiththecompletionofthePatriotWindproject.TheCompanyexpectstorecoveraportionofthisadjustmentinthefuture.DuringtheyearendedDecember 31,2019,theCompanyreducedtheliabilityrelatedtotheindemnificationofNRGYieldforanyincreaseinpropertytaxesforcertainsolarpropertiesby$22 millionduetoupdatedestimates.CarlsbadOnFebruary6,2018,NRGenteredintoanagreementwithNRGYieldandGIPtosell100%ofitsmembershipinterestsinCarlsbadEnergyHoldingsLLC,whichownstheCarlsbadproject,for$385millionofcashconsideration,excludingworkingcapitaladjustments.TheprimaryconditiontoclosetheCarlsbadtransactionwasthecompletionofthesaleofNRGYieldandtheRenewablesPlatform.AtthetimeofthesaleofNRGYieldandtheRenewablesPlatforminAugust2018,theCompanyconcludedthattheCarlsbadprojectmetthecriteriafordiscontinuedoperationsandaccordingly,allcurrentandpriorperiodresultsforCarlsbadwerereclassifiedasdiscontinuedoperations.ThetransactionclosedonFebruary27,2019.CarlsbadwillcontinuetohaveagroundleaseandeasementagreementwithNRGwithaninitialtermendingin2039andtwoten-yearextensions.Asaresultofthetransaction,additionalcommitmentsrelatedtotheprojecttotaled$23millionasofDecember 31,2019andDecember 31,2018.109SummarizedresultsofNRGYield,Inc.andRenewablesPlatformandCarlsbaddiscontinuedoperationswereasfollows:Year Ended December 31,(In millions)201920182017Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$19$909$1,164Operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(9)(661)(1,114)Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5)(174)(288)Gain/(loss) from operations of discontinued components, before tax . . . . . . . . . . . . . . . . . 574(238)Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —452Gain/(loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .570(290)Gain/(loss) on disposal of discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . .265(134)—Income/(expense) from California property tax indemnification . . . . . . . . . . . . . . . . . . . . .22(153)—Income/(expense) from other commitments, indemnification and fees . . . . . . . . . . . . . . . .4(75)—Income/(loss) on disposal of discontinued operations, net of tax . . . . . . . . . . . . . . . . . .291(362)—Income/(loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . $296$(292)$(290)The following table summarizes the major classes of assets and liabilities classified as discontinued operations:(In millions)December 31, 2018 (a)Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$4Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .590Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4Non-current assets - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603Current portion of long term debt and capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1Current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48Long-term debt and capital leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .572Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Non-current liabilities - discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$574(a)RepresentstheCarlsbadprojectSale of Assets to NRG Yield, Inc. Prior to Discontinued OperationsOnJune 19,2018,theCompanycompletedtheUPMCThermalProjectandreceivedcashconsiderationfromNRGYieldof$84million,plusanadditional$3millionreceivedatfinalcompletioninJanuary2019.OnMarch 30,2018,aspartoftheTransformationPlan,theCompanysoldtoNRGYield,Inc.100%ofNRG'sinterestsinBuckthornRenewables,LLC,whichownsa154MWconstruction-stageutility-scalesolargenerationproject,locatedinTexas.NRGYield,Inc.paidcashconsiderationofapproximately$42million,excludingworkingcapitaladjustments,andassumednon-recoursedebtof$183million.OnMarch27,2017,theCompanysoldtoNRGYield,Inc.:(i)a16%interestintheAguaCalientesolarproject,representingownershipofapproximately46netMWofcapacityand(ii)NRG'sinterestsinsevenutility-scalesolarprojectslocatedinUtahrepresenting265netMWofcapacity,whichreachedcommercialoperations.NRGYield,Inc.paidcashconsiderationof$130million,plus$1millioninworkingcapitaladjustments,andassumednon-recoursedebtof$328million.110GenOnOnJune14,2017,theGenOnEntitiesfiledvoluntarypetitionsforreliefunderChapter11oftheBankruptcyCodeintheBankruptcyCourt.Asaresultofthebankruptcyfilings,NRGconcludedthatitnolongercontrolledGenOnasitwassubjecttothecontroloftheBankruptcyCourt;and,accordingly,NRGdeconsolidatedGenOnanditssubsidiariesforfinancialreportingpurposesasofsuchdate.ByeliminatingalargeportionofitsoperationsinthePJMmarketwiththedeconsolidationofGenOn,NRGconcludedthatGenOnmetthecriteriafordiscontinuedoperations,asthisrepresentedastrategicshiftinthebusinessinwhichNRGoperated.Assuch,allpriorperiodresultsforGenOnwerereclassifiedin2017asdiscontinuedoperations.Summarizedresultsofdiscontinuedoperationswereasfollows:Year Ended December 31, (In millions)201920182017Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$—$646Operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(702)Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(98)Loss from operations of discontinued components, before tax . . . . . . . . . . . . . .——(154)Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——9Loss from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(163)Interest income - affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—38Income/(loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . .—3(155)Pre-tax loss on deconsolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(208)Settlement consideration, insurance and services credit . . . . . . . . . . . . . . . . . . .—63(289)Pension and post-retirement liability assumption . . . . . . . . . . . . . . . . . . . . . . . . —21(131)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)(53)(6)(Loss)/income on disposal of discontinued operations, net of tax . . . . . . . . .(3)31(634)(Loss)/income from discontinued operations, net of tax . . . . . . . . . . . . . . . . $(3)$34$(789)GenOnSettlementandPlanConfirmationEffectiveJuly16,2018,NRGandGenOnconsummatedtheGenOnSettlementwherebytheCompanypaidGenOnapproximately$125million,whichincluded(i)thesettlementconsiderationof$261million,(ii)thetransitionservicescreditof$28millionand(iii)thereturnof$15millionofcollateralpostedtoNRG;offsetbythe(i)$151millioninborrowingsundertheintercompanysecuredrevolvingcreditfacility,(ii)relatedaccruedinterestandfeesof$12million,(iii)remainingpaymentsdueunderthetransitionservicesagreementof$10million,(iv)$4millionreductionofthesettlementpaymentrelatedtoNRGassigningtoGenOnapproximately$8millionofhistoricalclaimsagainstREMAand(v)certainotherbalancesduetoNRGtotaling$2million.GenOn'splanofreorganizationwasconfirmedonDecember14,2018.Pursuanttotheconfirmedplan,NRGretainedthepensionliabilityforGenOnemployeesforserviceprovidedpriortothecompletionofthereorganization.NRGalsoretainedtheliabilityforGenOn'spost-employmentandretireehealthandwelfarebenefits.AsaresultofGenOn'semergencefrombankruptcy,NRGtookadeductionforGenOntaxlossesof$9.5billion,includingaworthlessstockdeduction.Otherthanthoseobligationswhichsurviveorareindependentofthereleasesdescribedherein,theGenOnSettlementandtheGenOnChapter11planprovideNRGreleasesfromGenOnandeachofitsdebtorandnon-debtorsubsidiaries.REMAPlanofReorganizationOnOctober16,2018,REMAanditssubsidiariesfiledvoluntarypetitionsforchapter11reliefandaprepackagedplanofreorganizationintheUnitedStatesBankruptcyCourtfortheSouthernDistrictofTexas.TheREMAdebtors'planofreorganizationhasbeenformallyacceptedbyREMA'svotingcreditorsandisconsistentwiththereleasesNRGreceivedundertheGenOnSettlementandtheGenOnplan.111GenMASettlementTheBankruptcyCourtorderconfirmingtheplanofreorganizationalsoapprovedthesettlementtermsagreedtoamongtheGenOnEntities,NRG,theConsentingHolders,GenOnMid-Atlantic,andcertainofGenOnMid-Atlantic’sstakeholders,ortheGenMASettlement,anddirectedthesettlementpartiestocooperateingoodfaithtonegotiatedefinitivedocumentationconsistentwiththeGenMASettlementtermsheetinordertopursueconsummationoftheGenMASettlement.ThedefinitivedocumentationeffectuatingtheGenMASettlementwasfinalizedandeffectiveasofApril27,2018.CertaintermsofthecompromisewithrespecttoNRGandGenOnMid-Atlanticareasfollows:•Settlement of all pending litigation and objections to the Plan (including with respect to releases and feasibility);•NRG provided $38 million in letters of credit as new qualifying credit support to GenOn Mid-Atlantic; such letters of credit were never drawn and were returned and canceled on December 17, 2019 and•NRG paid approximately $6 million as reimbursement of professional fees incurred by certain of GenOn Mid-Atlantic's stakeholders in connection with the GenMA Settlement.DispositionsOnAugust1,2018,theCompanycompletedthesaleof100%ofitsownershipinterestsinBETMtoDiamondEnergyTradingandMarketing,LLCfor$71million,netofworkingcapitaladjustments,whichresultedinagainof$15milliononthesale.Thesalealsoresultedinthereleaseandreturnofapproximately$119millionoflettersofcredit,$32millionofparentguarantees,and$4millionofnetcashcollateraltoNRG.OnJune29,2018,theCompanycompletedthesaleofCanal3toStonepeakKestrelforcashproceedsofapproximately$16millionandrecordedagainof$17million.Priortothesale,Canal3enteredintoafinancingarrangementandreceivedcashproceedsof$167million,ofwhich$151millionwasdistributedtotheCompany.Therelateddebtwasnon-recoursetoNRGandwastransferredtoStonepeakKestrelinconnectionwiththesaleofCanal3.TheCompanyenteredintoaprojectmanagementagreementin2018tomanageconstructionofCanal3andsubstantialcompletionwasreachedinJune2019.TheCompanycompletedotherassetsalesforcashproceedsof$22 millionand$28millionduringtheyearsendedDecember 31,2019and2018,respectively.Note5 —FairValueofFinancialInstrumentsForcashandcashequivalents,fundsdepositedbycounterparties,accountsandotherreceivables,accountspayable,restrictedcash,andcashcollateralpostedandreceivedinsupportofenergyriskmanagementactivities,thecarryingamountapproximatesfairvaluebecauseoftheshort-termmaturityofthoseinstrumentsandareclassifiedasLevel1withinthefairvaluehierarchy.TheestimatedcarryingvaluesandfairvaluesoftheCompany'srecordedfinancialinstrumentsnotcarriedatfairmarketvalueareasfollows:As of December 31,20192018(In millions)Carrying AmountFair ValueCarrying AmountFair ValueAssetsNotes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11$8$17$14LiabilitiesLong-term debt, including current portion (a) . . . . . . . . .$5,956$6,504$6,591$6,697(a)Excludesdeferredfinancingcosts,whicharerecordedasareductiontolong-termdebtontheCompany'sconsolidatedbalancesheetsThefairvalueoftheCompany'spublicly-tradedlong-termdebtisbasedonquotedmarketpricesandisclassifiedasLevel2withinthefairvaluehierarchy.Thefairvalueofdebtsecurities,non-publiclytradedlong-termdebt,andcertainnotesreceivableoftheCompanyarebasedonexpectedfuturecashflowsdiscountedatmarketinterestratesorcurrentinterestratesforsimilarinstrumentswithequivalentcreditqualityandareclassifiedasLevel3withinthefairvaluehierarchy.Thefollowingtablepresentsthelevelwithinthefairvaluehierarchyforlong-termdebt,includingcurrentportionasofDecember 31,2019and2018:As of December 31, 2019As of December 31, 2018(In millions)Level 2Level 3Level 2Level 3Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . . . . .$6,388$116$6,528$169112Fair Value Accounting under ASC 820ASC 820establishesafairvaluehierarchythatprioritizestheinputstovaluationtechniquesusedtomeasurefairvalueintothreelevelsasfollows:•Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. NRG's financial assets and liabilities utilizing Level 1 inputs include active exchange-traded securities, energy derivatives, and trust fund investments.•Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. NRG's financial assets and liabilities utilizing Level 2 inputs include fixed income securities, exchange-based derivatives, and over the counter derivatives such as swaps, options and forward contracts.•Level 3 — unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. NRG's financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.InaccordancewithASC 820,theCompanydeterminesthelevelinthefairvaluehierarchywithinwhicheachfairvaluemeasurementinitsentiretyfalls,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementinitsentirety.RecurringFairValueMeasurementsDebtsecurities,equitysecurities,andtrustfundinvestments,whicharecomprisedofvariousU.S.debtandequitysecurities,andderivativeassetsandliabilities,arecarriedatfairmarketvalue.ThefollowingtablespresentassetsandliabilitiesmeasuredandrecordedatfairvalueontheCompany'sconsolidatedbalancesheetsonarecurringbasisandtheirlevelwithinthefairvaluehierarchy:As of December 31, 2019Fair Value(In millions)TotalLevel 1Level 2Level 3Investments in securities (classified within other current and non-current assets)$20$—$20$—Nuclear trust fund investments:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1717——U.S. government and federal agency obligations . . . . . . . . . . . . . . . . . . .6868——Federal agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . .100—100—Commercial mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 29—29—Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .109—109—Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388388——Foreign government fixed income securities . . . . . . . . . . . . . . . . . . . . . . 5—5—Other trust fund investments:U.S. government and federal agency obligations . . . . . . . . . . . . . . . . . . .11——Derivative assets:Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,17084893193Measured using net asset value practical expedient:Equity securities-nuclear trust fund investments . . . . . . . . . . . . . . . . . . . 78———Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8———Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,993$558$1,156$193Derivative liabilities:Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,103$143$805$155Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,103$143$805$1551,9931,156113As of December 31, 2018Fair Value(In millions)TotalLevel 1Level 2Level 3Investments in securities (classified within other current or non-current assets)$39$2$18$19Nuclear trust fund investments:Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1919——U.S. government and federal agency obligations . . . . . . . . . . . . . . . . . . .4646——Federal agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . .100—100—Commercial mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . 22—22—Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96—96—Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312312——Foreign government fixed income securities . . . . . . . . . . . . . . . . . . . . . . 4—4—Other trust fund investments:U.S. government and federal agency obligations . . . . . . . . . . . . . . . . . . .11——Derivative assets:Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,042137796109Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39—39—Measured using net asset value practical expedient:Equity securities-nuclear trust fund investments . . . . . . . . . . . . . . . . . . . 64———Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8———Total assets$1,792$517$1,075$128Derivative liabilities:Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $977$224$664$89Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $977$224$664$891,7921,075114Thefollowingtablesreconcile,fortheyearsendedDecember 31,2019and 2018,thebeginningandendingbalancesforfinancialinstrumentsthatarerecognizedatfairvalueintheconsolidatedfinancialstatementsatleastannuallyusingsignificantunobservableinputs:For the Year Ended December 31, 2019Fair Value Measurement Using Significant Unobservable Inputs (Level 3)(In millions)DebtSecuritiesDerivatives(a)TotalBeginning balance as of January 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$19$20$39Contracts added from acquisitions—(3)(3)Total gains/(losses) — realized/unrealized:Included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(26)(26)Included in OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ———Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—4040Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (19)—(19)Transfers into Level 3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—22Transfers out of Level 3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —55Ending balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$38$38GainsfortheperiodincludedinearningsattributabletothechangeinunrealizedgainsorlossesrelatingtoassetsorliabilitiesstillheldasofDecember 31,2019$—$17$17(a)Consists of derivatives assets and liabilities, net(b)Transfers into/out of Level 3 are related to the availability of external broker quotes, and are valued as of the end of the reporting period. All transfers into/out of Level 3 are from/to Level 2For the Year Ended December 31, 2018Fair Value Measurement Using Significant Unobservable Inputs (Level 3)(In millions)DebtSecuritiesDerivatives (a)TotalBeginning balance as of January 1, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$19$(15)$4Contracts acquired in XOOM acquisition—12$12Total gains realized/unrealized included in earnings—(21)(21)Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—4141Transfers into Level 3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—55 Transfer out of Level 3 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(2)(2)Ending balance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19$20$39LossesfortheperiodincludedinearningsattributabletothechangeinunrealizedgainsorlossesrelatingtoassetsorliabilitiesstillheldasofDecember 31,2018$—$(17)$(17)(a)Consists of derivatives assets and liabilities, net(b)Transfers into/out of Level 3 are related to the availability of external broker quotes, and are valued as of the end of the reporting period. All transfers into/out of Level 3 are from/to Level 2Realized and unrealized gains and losses included in earnings that are related to the energy derivatives are recorded in operating revenues and cost of operations.115Non-derivativefairvaluemeasurementsNRG'sinvestmentsindebtsecuritiesareclassifiedasLevel 3andconsistofnon-tradeddebtinstrumentsthatarevaluedbasedonthird-partymarketvalueassessments.ThetrustfundinvestmentsareheldprimarilytosatisfyNRG'snucleardecommissioningobligations.Thesetrustfundinvestmentsholddebtandequitysecuritiesdirectlyandequitysecuritiesindirectlythroughcommingledfunds.ThefairvaluesofequitysecuritieshelddirectlybythetrustfundsarebasedonquotedpricesinactivemarketsandarecategorizedinLevel 1.Inaddition,U.S.governmentandfederalagencyobligationsarecategorizedasLevel 1becausetheytradeinahighlyliquidandtransparentmarket.Thefairvaluesofcorporatedebtsecuritiesarebasedonevaluatedpricesthatreflectobservablemarketinformation,suchasactualtradeinformationofsimilarsecurities,adjustedforobservabledifferencesandarecategorizedinLevel 2.Certainequitysecurities,classifiedascommingledfunds,areanalogoustomutualfunds,aremaintainedbyinvestmentcompanies,andholdcertaininvestmentsinaccordancewithastatedsetoffundobjectives.Thefairvalueoftheequitysecuritiesclassifiedascommingledfundsarebasedonnetassetvaluesperfundshare(theunitofaccount),derivedfromthequotedpricesinactivemarketsoftheunderlyingequitysecurities.However,becausethesharesinthecommingledfundsarenotpubliclyquoted,nottradedinanactivemarketandaresubjecttocertainrestrictionsregardingtheirpurchaseandsale,thecommingledfundsaremeasuredusingnetassetvaluepracticalexpedient.SeealsoNote7,NuclearDecommissioningTrustFund.DerivativefairvaluemeasurementsAportionoftheCompany'scontractsareexchange-tradedcontractswithreadilyavailablequotedmarketprices.AmajorityofNRG'scontractsarenon-exchange-tradedcontractsvaluedusingpricesprovidedbyexternalsources,primarilypricequotationsavailablethroughbrokersorover-the-counterandon-lineexchanges.ForthemajorityofNRGmarkets,theCompanyreceivesquotesfrommultiplesources.TotheextentthatNRGreceivesmultiplequotes,theCompany'spricesreflecttheaverageofthebid-askmid-pointpricesobtainedfromallsourcesthatNRGbelievesprovidethemostliquidmarketforthecommodity.IftheCompanyreceivesonequote,thenthemid-pointofthebid-askspreadforthatquoteisused.Thetermsforwhichsuchpriceinformationisavailablevarybycommodity,regionandproduct.AsignificantportionofthefairvalueoftheCompany'sderivativeportfolioisbasedonpricequotesfrombrokersinactivemarketswhoregularlyfacilitatethosetransactionsandtheCompanybelievessuchpricequotesareexecutable.TheCompanydoesnotusethirdpartysourcesthatderivepricebasedonproprietarymodelsormarketsurveys.Theremainderoftheassetsandliabilitiesrepresentscontractsforwhichexternalsourcesorobservablemarketquotesarenotavailable.Thesecontractsarevaluedbasedonvariousvaluationtechniquesincludingbutnotlimitedtointernalmodelsbasedonafundamentalanalysisofthemarketandextrapolationofobservablemarketdatawithsimilarcharacteristics.Contractsvaluedwithpricesprovidedbymodelsandothervaluationtechniquesmakeup16%ofderivativeassetsand14%ofderivativeliabilities.Thefairvalueofeachcontractisdiscountedusingariskfreeinterestrate.Inaddition,theCompanyappliesacreditreservetoreflectcreditrisk,whichforinterestrateswapsiscalculatedutilizingthebilateralmethodbasedonpublisheddefaultprobabilities.Forcommodities,totheextentthatNRG'snetexposureunderaspecificmasteragreementisanasset,theCompanyusesthecounterparty'sdefaultswaprate.Iftheexposureunderaspecificmasteragreementisaliability,theCompanyusesNRG'sdefaultswaprate.Forinterestrateswapsandcommodities,thecreditreserveisaddedtothediscountedfairvaluetoreflecttheexitpricethatamarketparticipantwouldbewillingtoreceivetoassumeNRG'sliabilitiesorthatamarketparticipantwouldbewillingtopayforNRG'sassets.AsofDecember 31,2019andDecember 31,2018thecreditreservedidnotresultinasignificantchangeinfairvalue.ThefairvaluesineachcategoryreflectthelevelofforwardpricesandvolatilityfactorsasofDecember 31,2019,andmaychangeasaresultofchangesinthesefactors.ManagementusesitsbestestimatestodeterminethefairvalueofcommodityandderivativecontractsNRGholdsandsells.Theseestimatesconsidervariousfactorsincludingclosingexchangeandover-the-counterpricequotations,timevalue,volatilityfactorsandcreditexposure.Itispossible,however,thatfuturemarketpricescouldvaryfromthoseusedinrecordingassetsandliabilitiesfromenergymarketingandtradingactivitiesandsuchvariationscouldbematerial.NRG'ssignificantpositionsclassifiedasLevel3includephysicalandfinancialpowerexecutedinilliquidmarketsaswellasfinancialtransmissionrights,orFTRs.Thesignificantunobservableinputsusedindevelopingfairvalueincludeilliquidpowerlocationpricingwhichisderivedasabasistoliquidlocations.Thebasisspreadisbasedonobservablemarketdatawhenavailableorderivedfromhistoricpricesandforwardmarketpricesfromsimilarobservablemarketswhennotavailable.ForFTRs,NRGusesthemostrecentauctionpricestoderivethefairvalue.116ThefollowingtablesquantifythesignificantunobservableinputsusedindevelopingthefairvalueoftheCompany'sLevel3positionsasofDecember 31,2019and2018:Significant Unobservable InputsDecember 31, 2019Fair ValueInput/Range(In millions)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted AveragePower Contracts . . . . . $151$139Discounted Cash FlowForward Market Price (per MWh)$8$218$24FTRs . . . . . . . . . . . . . .4216Discounted Cash FlowAuction Prices (per MWh)(105)2130$193$155Significant Unobservable InputsDecember 31, 2018Fair ValueInput/Range(In millions)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted AveragePower Contracts . . . $89$75Discounted Cash FlowForward Market Price (per MWh)$1$214$31FTRs . . . . . . . . . . . . 2014Discounted Cash FlowAuction Prices (per MWh)(90)340$109$89 The following table provides sensitivity of fair value measurements to increases/(decreases) in significant unobservable inputs as of December 31, 2019 and 2018:Significant Unobservable InputPositionChange In InputImpact on Fair Value MeasurementForward Market Price Power . . . . . . . . . . . . . . . . . . BuyIncrease/(Decrease)Higher/(Lower)Forward Market Price Power . . . . . . . . . . . . . . . . . . SellIncrease/(Decrease)Lower/(Higher)FTR Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .BuyIncrease/(Decrease)Higher/(Lower)FTR Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .SellIncrease/(Decrease)Lower/(Higher)UndertheguidanceofASC 815,entitiesmaychoosetooffsetcashcollateralpostedorreceivedagainstthefairvalueofderivativepositionsexecutedwiththesamecounterpartiesunderthesamemasternettingagreements.TheCompanyhaschosennottooffsetpositionsasdefinedinASC 815.AsofDecember 31,2019,theCompanyrecorded$190millionofcashcollateralpostedand$32millionofcashcollateralreceivedonitsbalancesheet.ConcentrationofCreditRiskInadditiontothecreditriskdiscussionasdisclosedinNote2,SummaryofSignificantAccountingPolicies,thefollowingitemisadiscussionoftheconcentrationofcreditriskfortheCompany'sfinancialinstruments.Creditriskrelatestotheriskoflossresultingfromnon-performanceornon-paymentbycounterpartiespursuanttothetermsoftheircontractualobligations.TheCompanymonitorsandmanagescreditriskthroughcreditpoliciesthatinclude:(i) anestablishedcreditapprovalprocess;(ii) adailymonitoringofcounterparties'creditlimits;(iii) theuseofcreditmitigationmeasuressuchasmargin,collateral,prepaymentarrangements,orvolumetriclimits;(iv) theuseofpaymentnettingagreements;and(v) theuseofmasternettingagreementsthatallowforthenettingofpositiveandnegativeexposuresofvariouscontractsassociatedwithasinglecounterparty.Riskssurroundingcounterpartyperformanceandcreditcouldultimatelyimpacttheamountandtimingofexpectedcashflows.TheCompanyseekstomitigatecounterpartyriskbyhavingadiversifiedportfolioofcounterparties.TheCompanyalsohascreditprotectionwithinvariousagreementstocallonadditionalcollateralsupportifandwhennecessary.CashmarginiscollectedandheldattheCompanytocoverthecreditriskofthecounterpartyuntilpositionssettle.117CounterpartyCreditRiskAsofDecember 31,2019,counterpartycreditexposure,excludingcreditexposurefromRTOs,ISOs,andregisteredcommodityexchangesandcertainlong-termagreements,was$239millionandNRGheldcollateral(cashandlettersofcredit)againstthosepositionsof$51million,resultinginanetexposureof$233million.NRGperiodicallyreceivescollateralfromcounterpartiesinexcessoftheirexposure.Collateralamountsshownincludesuchexcesswhilenetexposureshownexcludesexcesscollateralreceived.Approximately67%oftheCompany'sexposurebeforecollateralisexpectedtorolloffbytheendof2021.Counterpartycreditexposureisvaluedthroughobservablemarketquotesanddiscountedatariskfreeinterestrate.Thefollowingtableshighlightnetcounterpartycreditexposurebyindustrysectorandbycounterpartycreditquality.NetcounterpartycreditexposureisdefinedastheaggregatenetassetpositionforNRGwithcounterpartieswherenettingispermittedundertheenablingagreementandincludesallcashflow,mark-to-marketandNPNS,andnon-derivativetransactions.Theexposureisshownnetofcollateralheld,andincludesamountsnetofreceivablesorpayables.CategoryNet Exposure (a)(b)(% of Total)Utilities, energy merchants, marketers and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84%Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100%CategoryNet Exposure(a)(b)(% of Total)Investment grade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56%Non-Investment grade/Non-Rated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100%(a)Counterparty credit exposure excludes uranium and coal transportation contracts because of the unavailability of market prices.(b)The figures in the tables above exclude potential counterparty credit exposure related to RTOs, ISOs, registered commodity exchanges and certain long term contracts.TheCompanycurrentlyhas$33 millionexposuretoonewholesalecounterpartyinexcessof10%ofthetotalnetexposurediscussedaboveasofDecember 31,2019.Changesinhedgepositionsandmarketpriceswillaffectcreditexposureandcounterpartyconcentration.Giventhecreditquality,diversificationandtermoftheexposureintheportfolio,NRGdoesnotanticipateamaterialimpactontheCompany'sfinancialpositionorresultsofoperationsfromnonperformancebyanyofNRG'scounterparties.RTOsandISOsTheCompanyparticipatesintheorganizedmarketsofCAISO,ERCOT,ISO-NE,MISO,NYISOandPJM,knownasRTOsorISOs.TradinginthesemarketsisapprovedbyFERC,orinthecaseofERCOT,approvedbythePUCTandincludescreditpoliciesthat,undercertaincircumstances,requirethatlossesarisingfromthedefaultofonememberonspotmarkettransactionsbesharedbytheremainingparticipants.Asaresult,thecounterpartycreditrisktothesemarketsislimitedtoNRG’sshareofoverallmarketandareexcludedfromtheaboveexposures.ExchangeTradedTransactionsTheCompanyentersintocommoditytransactionsonregisteredexchanges,notablyICEandNYMEX.Theseclearinghousesactasthecounterpartyandtransactionsaresubjecttoextensivecollateralandmarginingrequirements.Asaresult,thesecommoditytransactionshavelimitedcounterpartycreditrisk.Long-TermContractsCounterpartycreditexposuredescribedaboveexcludescreditriskexposureundercertainlongtermcontracts,primarilysolarPPAs.Asexternalsourcesorobservablemarketquotesarenotavailabletoestimatesuchexposure,theCompanyvaluesthesecontractsbasedonvarioustechniquesincluding,butnotlimitedto,internalmodelsbasedonafundamentalanalysisofthemarketandextrapolationofobservablemarketdatawithsimilarcharacteristics.Basedonthesevaluationtechniques,asofDecember 31,2019,aggregatecreditriskexposuremanagedbyNRGtothesecounterpartieswasapproximately$548millionforthenextfiveyears,includingexposuretoPG&Ethroughitsunconsolidatedaffiliates,IvanpahandAguaCaliente.118RetailCustomerCreditRiskTheCompanyisexposedtoretailcreditriskthroughtheCompany'sretailelectricityproviders,whichserveC&IcustomersandtheMassmarket.Retailcreditriskresultsinlosseswhenacustomerfailstopayforservicesrendered.Thelossesmayresultfrombothnonpaymentofcustomeraccountsreceivableandthelossofin-the-moneyforwardvalue.TheCompanymanagesretailcreditriskthroughtheuseofestablishedcreditpoliciesthatincludemonitoringoftheportfolioandtheuseofcreditmitigationmeasuressuchasdepositsorprepaymentarrangements.AsofDecember 31,2019,theCompany'sretailcustomercreditexposuretoC&IandMasscustomerswasdiversifiedacrossmanycustomersandvariousindustries,aswellasgovernmententities.TheCompanyisalsosubjecttoriskwithrespecttoitsresidentialsolarcustomers.TheCompany'sbaddebtexpensewas$95 million,$85 million,and$68 millionfortheyearsendingDecember31,2019,2018,and2017,respectively.CurrenteconomicconditionsmayaffecttheCompany'scustomers'abilitytopaybillsinatimelymanner,whichcouldincreasecustomerdelinquenciesandmayleadtoanincreaseinbaddebtexpense.Note6 —AccountingforDerivativeInstrumentsandHedgingActivitiesASC 815requirestheCompanytorecognizeallderivativeinstrumentsonthebalancesheetaseitherassetsorliabilitiesandtomeasurethematfairvalueeachreportingperiodunlesstheyqualifyforaNPNSexception.TheCompanymayelecttodesignatecertainderivativesascashflowhedges,ifcertainconditionsaremet,anddeferthechangeinfairvalueofthederivativestoaccumulatedOCI,untilthehedgedtransactionsoccurandarerecognizedinearnings.Forderivativesthatarenotdesignatedascashflowhedgesordonotqualifyforhedgeaccountingtreatment,thechangesinthefairvaluewillbeimmediatelyrecognizedinearnings.CertainderivativeinstrumentsmayqualifyfortheNPNSexceptionandarethereforeexemptfromfairvalueaccountingtreatment.ASC 815appliestoNRG'senergyrelatedcommoditycontracts,interestrateswaps,andequitycontracts.AstheCompanyengagesprincipallyinthetradingandmarketingofitsgenerationassetsandretailbusinesses,someofNRG'scommercialactivitiesqualifyforNPNSaccounting.MostoftheretailloadcontractseitherqualifyfortheNPNSexceptionorfailtomeetthecriteriaforaderivativeandthemajorityoftheretailsupplyandfuelssupplycontractsarerecordedundermark-to-marketaccounting.AllofNRG'shedgingandtradingactivitiesaresubjecttolimitswithintheCompany'sRiskManagementPolicy.Energy-RelatedCommoditiesTomanagethecommoditypriceriskassociatedwiththeCompany'scompetitivesupplyactivitiesandthepriceriskassociatedwithwholesalepowersalesfromtheCompany'selectricgenerationfacilitiesandretailpowersalesfromNRG'sretailbusinesses,NRGentersintoavarietyofderivativeandnon-derivativehedginginstruments,utilizingthefollowing:•Forward contracts, which commit NRG to purchase or sell energy commodities or purchase fuels in the future;•Futures contracts, which are exchange-traded standardized commitments to purchase or sell a commodity or financial instrument;•Swap agreements, which require payments to or from counterparties based upon the differential between two prices for a predetermined contractual, or notional, quantity;•Option contracts, which convey to the option holder the right but not the obligation to purchase or sell a commodity;•Extendable swaps, which include a combination of swaps and options executed simultaneously for different periods. This combination of instruments allows NRG to sell out-year volatility through call options in exchange for natural gas swaps with fixed prices in excess of the market price for natural gas at that time. The above-market swap combined with its later-year call option are priced in aggregate at market at the trade's inception; and•Weather derivative products used to mitigate a portion of lost revenue due to weather.119Theobjectivesforenteringintoderivativecontractsdesignatedashedgesinclude:•Fixing the price of a portion of anticipated power purchases for the Company's retail sales;•Fixing the price for a portion of anticipated future electricity sales that provides an acceptable return on the Company's electric generation operations; and•Fixing the price of a portion of anticipated fuel purchases for the operation of the Company's power plants.NRG'stradingandhedgingactivitiesaresubjecttolimitswithintheCompany'sRiskManagementPolicy.Thesecontractsarerecognizedonthebalancesheetatfairvalueandchangesinthefairvalueofthesederivativefinancialinstrumentsarerecognizedinearnings.AsofDecember 31,2019,NRG'sderivativeassetsandliabilitiesconsistedprimarilyofthefollowing:•Forward and financial contracts for the purchase/sale of electricity and related products economically hedging NRG's generation assets' forecasted output or NRG's retail load obligations through 2034;•Forward and financial contracts for the purchase of fuel commodities relating to the forecasted usage of NRG's generation assets through 2020; and•Other energy derivatives instruments extending through 2029.Also,asofDecember 31,2019,NRGhadotherenergy-relatedcontractsthatdidnotmeetthedefinitionofaderivativeinstrumentorqualifiedfortheNPNSexceptionandwerethereforeexemptfromfairvalueaccountingtreatmentasfollows:•Load-following forward electric sale contracts extending through 2034;•Power tolling contracts through 2036;•Coal purchase contracts through 2021;•Power transmission contracts through 2025;•Natural gas transportation contracts and storage agreements through 2030; and•Coal transportation contracts through 2029.InterestRateSwapsNRGwasexposedtochangesininterestratesthroughtheCompany'sissuanceofvariableratedebt.InordertomanagetheCompany'sinterestraterisk,NRGenteredintointerestrateswapagreements.AsofDecember 31,2019,NRGhadnointerestratederivativeinstrumentsasaresultoftheearlyterminationofsuchcontractsinconnectionwiththerepaymentofthe2023TermLoanFacilityduringthesecondquarterof2019.SeeNote13,DebtandFinanceLeases,forfurtherdiscussion.VolumetricUnderlyingDerivativeTransactionsThefollowingtablesummarizesthenetnotionalvolumebuy/(sell)ofNRG'sopenderivativetransactionsbrokenoutbycommodity,excludingthosederivativesthatqualifiedfortheNPNSexceptionasofDecember 31,2019and2018.Optioncontractsarereflectedusingdeltavolume.Deltavolumeequalsthenotionalvolumeofanoptionadjustedfortheprobabilitythattheoptionwillbein-the-moneyatitsexpirationdate.(In millions)Total VolumeCommodityUnitsDecember 31, 2019December 31, 2018EmissionsShort Ton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3(2)Renewables Energy CertificatesCertificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11CoalShort Ton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1013Natural GasMMBtu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(181)(330)OilBarrels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1PowerMWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .381CapacityMW/Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)(1)InterestDollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$1,000Thedecreaseinthenaturalgaspositionwasprimarilytheresultofadditionalretailhedgepositionsandsettlementofgenerationhedges.Theincreaseinthepowerpositionwasprimarilytheresultofadditionalretailhedgepositionsandthesettlementofgenerationhedges.Thedecreaseintheinterestpositionwastheresultoftheearlysettlementoftheinterestrateswaps.120FairValueofDerivativeInstrumentsThefollowingtablesummarizesthefairvaluewithinthederivativeinstrumentvaluationonthebalancesheet:Fair ValueDerivative AssetsDerivative Liabilities(In millions)December 31, 2019December 31, 2018December 31, 2019December 31, 2018Derivatives Not Designated as Cash Flow or Fair Value Hedges:Interest rate contracts current . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$17$—$—Interest rate contracts long-term . . . . . . . . . . . . . . . . . . . . . . . . . . —22——Commodity contracts current . . . . . . . . . . . . . . . . . . . . . . . . . . . . 860747781673Commodity contracts long-term . . . . . . . . . . . . . . . . . . . . . . . . . . 310295322304Total Derivatives Not Designated as Cash Flow or Fair Value Hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,170$1,081$1,103$977TheCompanyhaselectedtopresentderivativeassetsandliabilitiesonthebalancesheetonatrade-by-tradebasisanddoesnotoffsetamountsatthecounterpartymasteragreementlevel.Inaddition,collateralreceivedorpaidontheCompany'sderivativeassetsorliabilitiesarerecordedonaseparatelineitemonthebalancesheet.Thefollowingtablesummarizestheoffsettingderivativesbycounterpartymasteragreementlevelandcollateralreceivedorpaid:Gross Amounts Not Offset in the Statement of Financial Position(In millions)Gross Amounts of Recognized Assets/LiabilitiesDerivative InstrumentsCash Collateral (Held)/PostedNet AmountAs of December 31, 2019Commodity contracts:Derivative assets . . . . . . . . . . . . . . . . . . .$1,170$(909)$(7)$254Derivative liabilities . . . . . . . . . . . . . . . .(1,103)90973(121)Total commodity contracts . . . . . . . . . . . .$67$—$66$133Gross Amounts Not Offset in the Statement of Financial Position(In millions)Gross Amounts of Recognized Assets/LiabilitiesDerivative InstrumentsCash Collateral (Held)/PostedNet AmountAs of December 31, 2018Commodity contracts:Derivative assets . . . . . . . . . . . . . . . . . . .$1,042$(778)$(31)$233Derivative liabilities . . . . . . . . . . . . . . . .(977)778114(85)Total commodity contracts . . . . . . . . . . . .65—83148Interest rate contracts:Derivative assets . . . . . . . . . . . . . . . . . . .39——39Total interest rate contracts . . . . . . . . . . . 39——39Total derivative instruments . . . . . . . . . . .$104$—$83$187121AccumulatedOtherComprehensiveIncomeThefollowingtablesummarizestheeffectsonNRG'saccumulatedOCIbalanceattributabletocashflowhedgederivatives,netoftax,fortheyears2018and2017.AsofDecember 31,2019,NRGhadnointerestratederivativeinstrumentsasaresultoftheearlyterminationofsuchcontractsinconnectionwiththerepaymentofthe2023TermLoanFacility,asfurtherdiscussedinNote13,DebtandFinanceLeases.Interest Rate Contracts(In millions)20182017Accumulated OCI beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(54)$(66)Reclassified from accumulated OCI to income:Due to realization of previously deferred amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812Mark-to-market of cash flow hedge accounting contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21—Sale of NRG Yield and Renewables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$25$—Accumulated OCI ending balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$(54)Amounts reclassified from accumulated OCI into income were recorded in discontinued operations.ImpactofDerivativeInstrumentsontheStatementofOperationsUnrealizedgainsandlossesassociatedwithchangesinthefairvalueofderivativeinstrumentsnotaccountedforascashflowhedgesarereflectedincurrentperiodearnings.Thefollowingtablesummarizesthepre-taxeffectsofeconomichedgesthathavenotbeendesignatedascashflowhedges,andtradingactivityontheCompany'sstatementofoperations.Theeffectofcommodityhedgesisincludedwithinoperatingrevenuesandcostofoperationsandtheeffectofinterestratehedgesisincludedininterestexpense.Year Ended December 31,(In millions)201920182017Unrealized mark-to-market resultsReversal of previously recognized unrealized (gains)/losses on settled positions related to economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(68)$(73)$47Reversal of acquired loss/(gain) positions related to economic hedges . . . . . . . . . .6(10)—Net unrealized gains on open positions related to economic hedges . . . . . . . . . . . . 4297159Total unrealized mark-to-market (losses)/gains for economic hedging activities . . (20)14206Reversal of previously recognized unrealized (gains) on settled positions related to trading activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)(12)(25)Net unrealized gains on open positions related to trading activity . . . . . . . . . . . . . .312914Total unrealized mark-to-market gains/(losses) for trading activity . . . . . . . . . . . . .2017(11)Total unrealized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $—$31$195Year Ended December 31,(In millions)201920182017Unrealized gains/(losses) included in operating revenues . . . . . . . . . . . . . . . . . . . . . .$53$(113)$241Unrealized (losses)/gains included in cost of operations . . . . . . . . . . . . . . . . . . . . . . .(53)144(46)Total impact to statement of operations — energy commodities . . . . . . . . . . . . . .$—$31$195Total impact to statement of operations — interest rate contracts . . . . . . . . . . . . $(38)$—$4Thereversalofgainorlosspositionsacquiredaspartofacquisitionswerevaluedbasedupontheforwardpricesontheacquisitiondates.Theroll-offamountswereoffsetbyrealizedgainsorlossesatthesettledpricesandarereflectedinrevenueorcostofoperationsduringthesameperiod.FortheyearendedDecember 31,2019,2018and2017the$42million,$97 million,and$159 milliongainsfromeconomichedgepositionswereprimarilytheresultofanincreaseinthevalueofforwardpurchasesofERCOTheatratecontractsduetoERCOTheatrateexpansion.122CreditRiskRelatedContingentFeaturesCertainoftheCompany'shedgingagreementscontainprovisionsthatrequiretheCompanytopostadditionalcollateralifthecounterpartydeterminesthattherehasbeendeteriorationincreditquality,generallytermed"adequateassurance"undertheagreements,orrequiretheCompanytopostadditionalcollateraliftherewereaonenotchdowngradeintheCompany'screditrating.ThecollateralrequiredforcontractsthathaveadequateassuranceclausesthatareinnetliabilitypositionsasofDecember 31,2019was$14million.ThecollateralrequiredforcontractswithcreditratingcontingentfeaturesthatareinanetliabilitypositionasofDecember 31,2019was$24million.TheCompanyisalsoapartytocertainmarginableagreementsunderwhichithasanetliabilityposition,butthecounterpartyhasnotcalledforthecollateraldue,whichwasapproximately$3millionasofDecember 31,2019.SeeNote5,FairValueofFinancialInstruments,fordiscussionregardingconcentrationofcreditrisk.Note7 —NuclearDecommissioningTrustFundNRG'sNuclearDecommissioningTrustFundassets,whichareforthedecommissioningofSTP,arecomprisedofsecuritiesclassifiedasavailable-for-saleandrecordedatfairvaluebasedonactivelyquotedmarketprices.AlthoughNRGisresponsibleformanagingthedecommissioningofits44%interestinSTP,thepredecessorutilitiesthatownedSTPareauthorizedbythePUCTtocollectdecommissioningfundsfromtheirratepayerstocoverdecommissioningcostsonbehalfofNRG.NRCrequirementsdeterminethedecommissioningcostestimatewhichistheminimumrequiredleveloffunding.IntheeventthatfundsfromtheratepayersthataccumulateinthenucleardecommissioningtrustareultimatelydeterminedtobeinadequatetodecommissiontheSTPfacilities,theutilitieswillberequiredtocollectthroughrateschargedtoratepayersalladditionalamounts,withnoobligationfromNRG,providedthatNRGhascompliedwithPUCTrulesandregulationsregardingdecommissioningtrusts.Followingcompletionofthedecommissioning,ifsurplusfundsremaininthedecommissioningtrusts,anyexcesswillberefundedtotherespectiveratepayersoftheutilities.NRGaccountsfortheNuclearDecommissioningTrustFundinaccordancewithASC980,RegulatedOperations,orASC980,becausetheCompany'snucleardecommissioningactivitiesaresubjecttoapprovalbythePUCT,withregulatedratesthataredesignedtorecoveralldecommissioningcostsandthatcanbechargedtoandcollectedfromtheratepayersperPUCTmandate.SincetheCompanyisincompliancewithPUCTrulesandregulationsregardingdecommissioningtrustsandthecostofdecommissioningistheresponsibilityoftheTexasratepayers,notNRG,allrealizedandunrealizedgainsorlosses(includingother-than-temporaryimpairments)relatedtotheNuclearDecommissioningTrustFundarerecordedtotheNuclearDecommissioningTrustliabilityandarenotincludedinnetincomeoraccumulatedothercomprehensiveincome,consistentwithregulatorytreatment.Thefollowingtablesummarizestheaggregatefairvaluesandunrealizedgainsandlossesforthesecuritiesheldinthetrustfunds,aswellasinformationaboutthecontractualmaturitiesofthosesecurities.As of December 31, 2019As of December 31, 2018(In millions, except otherwise noted)FairValueUnrealizedGainsUnrealizedLossesWeighted-averagematurities(in years)FairValueUnrealizedGains UnrealizedLossesWeighted-averagematurities(in years)Cash and cash equivalents . . . . . . . . . . . $17$—$——$19$—$——U.S. government and federal agency obligations . . . . . . . . . . . . . . . . . . . . . 684—11461—12Federal agency mortgage-backed securities . . . . . . . . . . . . . . . . . . . . . . .1003—241001223Commercial mortgage-backed securities29112422—122Corporate debt securities . . . . . . . . . . . . 1096—11961211Equity securities . . . . . . . . . . . . . . . . . . .466324——3762311—Foreign government fixed income securities . . . . . . . . . . . . . . . . . . . . . . .5——104——9Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $794$338$1$663$234$6123Thefollowingtablesummarizesproceedsfromsalesofavailable-for-salesecuritiesandtherelatedrealizedgainsandlossesfromthesesales.Thecostofsecuritiessoldisdeterminedusingthespecificidentificationmethod.Year Ended December 31,(In millions)201920182017Realized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$18$17$22Realized (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9)(13)(8)Proceeds from sale of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381513501Note8 —InventoryInventoryconsistedof:As of December 31,(In millions)20192018Fuel oil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$73$74Coal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9397Natural gas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2128Spare parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196213Total Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$383$412Note9 —Property,PlantandEquipmentTheCompany'smajorclassesofproperty,plant,andequipmentwereasfollows:As of December 31,Depreciable(In millions)20192018LivesFacilities and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,262$3,7631-40 yearsLand and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324347Nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2352125 yearsHardware and office equipment and furnishings . . . . . . . . . . . . . . . . . . . . . . . . . 4224312-10 yearsConstruction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102106Total property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,3454,859Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1,752)(1,811)Net property, plant, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,593$3,048The Company recorded long-lived asset impairments during the years ended December 31, 2019 and 2018, as further described in Note 11, Asset Impairments. Note 10— Leases2019 LeasesTheCompanyleasesgeneratingfacilities,land,officeandequipment,railcars,andstorefrontspaceatretailstores.Operatingleaseswithaninitialtermgreaterthantwelvemonthsarerecognizedasright-of-useassetsandleaseliabilitiesintheconsolidatedbalancesheets.TheCompanyrecognizesleaseexpenseforalloperatingleasesonastraight-linebasisovertheleaseterm.Inthefuture,shouldanothersystematicbasisbecomemorerepresentativeofthepatterninwhichthelesseeexpectstoconsumetheremainingeconomicbenefitoftheright-of-useasset,theCompanywillusethatbasisforleaseexpense.TheCompanyconsidersacontracttobeortocontainaleasewhenbothofthefollowingconditionsapply:1)anassetiseitherexplicitlyorimplicitlyidentifiedinthecontractand2)thecontractconveystotheCompanytherighttocontroltheuseoftheidentifiedassetforaperiodoftime.TheCompanyhastherighttocontroltheuseoftheidentifiedassetwhentheCompanyhasboththerighttoobtainsubstantiallyalltheeconomicbenefitsfromtheuseoftheidentifiedassetandtherighttodirecthowandforwhatpurposetheidentifiedassetisusedthroughouttheperiodofuse.Leasepaymentsaretypicallyfixedandpayableonamonthly,quarterly,semi-annualorannualbasis.Leasepaymentsundercertainagreementsmayescalateovertheleasetermeitherbyafixedpercentageorafixeddollaramount.Certainleases124mayprovideforvariableleasepaymentsintheformofpaymentsbasedonusage,apercentageofsalesfromthelocationunderlease,orindex-based(e.g.,theU.S.ConsumerPriceIndex)adjustmentstoleasepayments.TheCompanyhasnoleaseswhichcontainresidualvalueguaranteesprovidedbytheCompanyasalessee.TheCompany’sleasesmaygranttheCompanyanoptiontorenewaleaseforanadditionalterm(s)ortoterminatetheleaseafteracertainperiod.AspartofitstransitionfromtheguidancecontainedinASC840totheupdatedguidanceinASC842,theCompanyelectednottousethepracticalexpedientofusinghindsighttodeterminetheleasetermandinassessingimpairmentoftheright-of-useassets.AspermittedbyASC842,theCompanymadeanaccountingpolicyelectionforallassetclassesnottorecognizeright-of-useassetsandleaseliabilitiesintheconsolidatedbalancesheetsforitsshort-termleases,whichareleasesthathavealeasetermoftwelvemonthsorless.Fortheinitialmeasurementofleaseliabilities,theCompanyusesasthediscountrateeithertherateimplicitinthelease,ifknown,oritsincrementalborrowingrate,whichistherateofinterestthattheCompanywouldhavetopaytoborrow,onacollateralizedbasis,overasimilartermanamountequaltothepaymentsforthelease.IntransitiontoASC842,theCompanyelectedtoapplytheeffectivedatetransitionmethodasoftheJanuary1,2019adoptiondate.Inaccordancewiththismethod,theCompany’sreportingforcomparativeperiodspriortoJanuary1,2019presentedinthefinancialstatementscontinuestobeinconformitywiththeguidanceinASC840.TheCompanyelectedthefollowingpracticalexpedients,whichallowentitiesto:•Not reassess whether any contracts that existed prior to the January 1, 2019 implementation date are or contain leases;•Not reassess the lease classification for any leases that commenced prior to the January 1, 2019 implementation date, meaning that all commenced capital leases under ASC 840 will be classified as finance leases under ASC 842 and all commenced operating leases under ASC 840 will be classified as operating leases under ASC 842;•Not reassess initial direct costs for any leases;•Not reassess whether existing land easements, which were not previously accounted as leases under ASC 840, are or contain leases; and•Not separate lease and non-lease components for all asset classes, except office space leases and generation facilities leases.AsdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,uponthecloseoftheSouthCentralPortfoliosale,theCompanyenteredintoanagreementtoleasebacktheCottonwoodfacilitythroughMay2025.TheleasewasaccountedforinaccordancewithASC842-40,SaleandLeasebackTransactions,asanoperatingleaseandaccordingly,aright-of-useassetandleaseliabilitywereestablishedontheleasecommencementdateandwillbeamortizedthroughtheendofthelease.Lease Cost:(In millions)For the Year Ended December 31, 2019Operating lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $109Short-term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Variable lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Sublease income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(17)Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $101Other information:(In millions) For the Year Ended December 31, 2019Cash paid for amounts included in the measurement of lease liabilities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$104Right-of-use assets obtained in exchange for new operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215Lease Term and Discount Rate for operating leases:December 31, 2019Weighted average remaining lease term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8Weighted average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.72%125As of December 31, 2019, annual payments based on the maturities of NRG's leases are expected to be as follows:(In millions)2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $962021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 872023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 852024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296Total undiscounted lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $726Less: present value adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(170)Total discounted lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $556 2018 Operating Lease CommitmentsThebelowdescribestheCompany'soperatingleasecommitmentsasreportedintheCompany'sAnnualReportonForm10-KfortheyearendedDecember 31,2018,underNote21,CommitmentsandContingencies,priortotheadoptionofASC842.TheCompanyleases100%interestsinthePowertonfacilityandUnit7andUnit8oftheJolietfacilitythrough2034and2030,respectively,throughitsindirectsubsidiary,MidwestGeneration,LLC.TheCompanyaccountedfortheseleasesasoperatingleasesandrecordedleaseexpenseonastraight-linebasisovertheleaseterm.InconnectionwiththeacquisitionofMidwestGeneration,theCompanyrecordedtheout-of-marketvalueasaliabilityof$159 millionin2014.Theliabilitywasbeingamortizedthroughrentexpenseonastraight-linebasisoverthetermofthelease.TheCompanyrecordedleaseexpense,netofamortizationoftheout-of-marketliability,ofapproximately$14 millionperyear.Theaccountingfortheseout-of-marketcontractschangedeffectiveJanuary1,2019,upontheadoptionofASC842.FutureminimumleasecommitmentsunderthePowertonandJolietoperatingleasesasofDecember 31,2018wereasfollows:Period(In millions)2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222Total (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $239(a)Termination of leases could be at a significant premium to the remaining lease payments OtherOperatingLeasesNRGleasescertainCompanyfacilitiesandequipmentunderoperatingleases,someofwhichincludeescalationclauses,expiringonvariousdatesthrough2036.Leaseexpenseunderoperatingleases,otherthanPowertonandJoliet,was$66 millionand$69 millionfortheyearsendedDecember 31,2018and2017,respectively.126Futureminimumleasecommitmentsunderoperatingleases,otherthanPowertonandJoliet,asofDecember 31,2018wereasfollows:Period(a)(In millions)2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$602020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .552021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .432022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .402023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39Thereafter95Total$332(a) Amounts in the table exclude future sublease income of $29 million associated with long-term leases for office locationsNote 11 —Asset Impairments2019 Impairment LossesPetraNovaParishHoldings—Duringthethirdquarterof2019,NRGcontributed$95 millionincashtoPetraNovaandposteda$12 millionletterofcredittocovercertainprojectdebtreserverequirements.ThecashportionofthecontributionwasusedbyPetraNovatoprepayasignificantportionoftheprojectdebt.Asaresult,thepreviouslydisclosedguaranteeofupto$124 millionrelatedtotheprojectleveldebtprovidedbyNRGwascanceledandtheremainingprojectdebtbecamenon-recoursetoNRG.Inrelationtothiscontribution,theCompanyevaluatedtheprojectforimpairmentanddeterminedthatthecarryingamountoftheCompany’sequitymethodinvestmentexceededthefairvalueoftheinvestmentandthatthedeclineisconsideredtobeother-than-temporary.Indeterminingthefairvalue,theCompanyutilizedanincomeapproachandconsideredprojectspecificassumptionsfortheestimatedfutureprojectcashflows.TheCompanymeasuredtheimpairmentlossasthedifferencebetweenthecarryingamountandthefairvalueoftheinvestmentandrecordedanimpairmentlossof$101 million.OtherImpairments—FortheyearendedDecember 31,2019,theCompanyrecorded$12 millionofimpairmentlossesprimarilyrelatedtoinvestmentsandintangibles.2018 Impairment LossesGuam—Duringthefourthquarterof2018,theCompanyconcludeditswholly-ownedsubsidiary,NRGSolarGuam,LLC,washeldforsaleafterboardapprovalandadvancednegotiationstosellthebusiness.Accordingly,theCompanyrecordedtheassetsandliabilitiesatfairmarketvalueasofDecember31,2018basedonthecontractualsaleprice,whichresultedinanimpairmentlossof$12million.OnFebruary20,2019,theCompanycompletedthesaleofGuamforcashconsiderationofapproximately$8million.KeystoneandConemaugh—OnSeptember5,2018,theCompanysolditsapproximately3.7%interestsintheKeystoneandConemaughgeneratingstations.NRGrecordedimpairmentlossesof$14 millionforKeystoneand$14 millionforConemaughtoadjustthecarryingamountoftheassetstofairvaluebasedonthecontractualsaleprice.Dunkirk—Duringthesecondquarterof2018,NRGceaseditsdevelopmentoftheprojecttoaddgascapabilityattheDunkirkgeneratingstation.Theprojectwasputonholdin2015pendingtheresolutionofalawsuitfiledbyEntergyCorporationagainsttheNYPSC,whichchallengedthelegalityofitscontractwithDunkirk.Thelawsuitwaslaterdroppedanddevelopmentcontinued,butthedelayimposedanewrequirementonDunkirktoenterintotheNYISOinterconnectionstudyprocess.TheNYISOstudieshaveconcludedthatextensiveelectricsystemupgradeswouldbenecessaryforthestationtoreturntoservice.ThiswouldcausetheCompanytoincuramaterialincreaseincostanddelaytheprojectschedulethatwouldrendertheprojectimpractical.Consequently,theCompanyhasrecordedanimpairmentlossof$46 million,reducingthecarryingamountoftherelatedassetsto$0.OtherImpairments—AsofDecember 31,2018,theCompanyrecordedadditionalassetimpairmentlossesof$13millionandimpairmentlossesonequitymethodinvestmentsof$15million.2017 Impairment LossesSouthTexasProject—TheCompanyrecognizedanimpairmentlossof$1,248millionrelatedtoitsinterestinSTPasaresultofthedecreaseintheCompany'sviewoflong-termpowerpricesinERCOT.IndianRiver—TheCompanyrecognizedanimpairmentlossof$36millionforIndianRiverasaresultofthedecreaseintheCompany'sviewoflong-termpowerpricesinPJM.127KeystoneandConemaugh—TheCompanyrecognizedimpairmentlossesof$35millionforKeystoneand$35millionforConemaughasaresultofthedecreaseintheCompany'sviewoflong-termpowerpricesinPJM.BacliffProject—OnJune16,2017,NRGTexasPowerLLCprovidednoticetoBTECNewAlbany,LLCthatitwasexercisingitsrighttoterminatetheAmendedandRestatedMembershipInterestPurchaseAgreement,orMIPA,duetotheBacliffProject,anewpeakingfacilityattheformerP.H.RobinsonElectricGeneratingStation,notachievingcommercialcompletionbythecontractualexpirationdateofMay31,2017.AsaresultoftheMIPAtermination,theCompanyrecordedanimpairmentlossof$41milliontoreducethecarryingamountoftherelatedconstructioninprogressto$0duringthesecondquarterof2017.SubsequenttotheMIPAtermination,BTECfiledclaimsagainstNRGTexasPowerLLCwithrespecttotheterminationoftheMIPAandNRGfiledcounterclaimsagainstBTEC.OnJune7,2018,thepartiesresolvedallclaimsandcounterclaimsinthelawsuit.PetraNovaParishHoldings—Inconnectionwiththepreparationoftheannualbudgetduringthefourthquarterof2017,managementreviseditsviewofoilproductionexpectationswithrespecttoPetraNovaParishHoldings.Asaresult,theCompanyreviewedits50%interestinPetraNovaParishHoldingsforimpairmentutilizingtheother-than-temporaryimpairmentmodel.Indeterminingfairvalue,theCompanyutilizedanincomeapproachandconsideredprojectspecificassumptionsforthefutureprojectcashflows.ThecarryingamountoftheCompany'sequitymethodinvestmentexceededthefairvalueoftheinvestmentandtheCompanyconcludedthatthedeclineisconsideredtobeother-than-temporary.Asaresult,theCompanymeasuredtheimpairmentlossasthedifferencebetweenthecarryingamountandthefairvalueoftheinvestmentandrecordedanimpairmentlossof$69million.OtherImpairments—Duringtheyearended2017,theCompanyrecordedimpairmentlossesof$29millioninconnectionwithrenewableassetsthatwerenotdivestedaspartofthesaleofNRGYieldandtheRenewablesPlatform.Inaddition,theCompanyrecordedanimpairmentlossof$20millionrelatedtoexcessSO2allowancesand$10millioninimpairmentlossesforotherinvestments.Note12 —GoodwillandOtherIntangiblesGoodwillNRG'sgoodwillbalancewas$579millionand$573millionasofDecember 31,2019and2018,respectively.TheincreaseingoodwillisduetotheacquisitionofStreamEnergy.AsofDecember 31,2019,goodwillconsistedof$165millionassociatedwiththeacquisitionofMidwestGenerationand$414millionforretailbusinessacquisitions,includingTexasnon-commodity,XOOMandStreamEnergy.2017ImpairmentsofGoodwillBETM—Duringthefourthquarterof2017,theCompanyconcludedthatBETMwasheldforsalefollowingboardapprovalandadvancednegotiationstosellthebusiness.Accordingly,theCompanyrecordedtheassetsandliabilitiesatfairmarketvalueasofDecember 31,2018,whichresultedinanimpairmentlossof$90milliontorecordBETM'sgoodwillatfairmarketvalue.TheremaininggoodwillbalanceforBETMof$21millionwasincludedwithinnon-currentassetsheld-for-saleasofDecember 31,2018.IntangibleAssetsTheCompany'sintangibleassetsasofDecember 31,2019,primarilyreflectintangibleassetsestablishedwiththeacquisitionsofvariouscompanies,includingStreamEnergy,XOOM,otherretailacquisitions,andTexasGenco.Intangibleassetsarecomprisedofthefollowing:•EmissionAllowances — TheseintangiblesprimarilyconsistofSO2emissionallowancesestablishedwiththe2006TexasGencoacquisitionandalsoincludeRGGIemissioncreditswhichNRGbeganpurchasingin2009.Theseemissionallowancesareheld-for-useandareamortizedtocostofoperations,withSO2allowancesandRGGIcreditsamortizedbasedonunitsofproduction.DuringtheyearendedDecember 31,2018,theCompanyrecordedanimpairmentlossof$5milliontoreducethevalueofexcessSO2allowancestozero.DuringtheyearendedDecember 31,2019,therewerenoimpairmentlossesrelatedtoSO2emissionsallowances.•In-market nuclear fuel contracts — These intangibles were established with the Texas Genco acquisition in 2006 and are amortized to cost of operations over expected volumes over the life of each contract.•Customer relationships — These intangibles represent the fair value at the acquisition date of acquired businesses' customer base. The customer relationships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year.128•Marketing partnerships — These intangibles represent the fair value at the acquisition date of existing agreements with marketing vendors and loyalty and affinity partners for customer acquisition. The marketing partnerships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year.•Trade names — These intangibles are amortized to depreciation and amortization expense on a straight-line basis.•Other — Consists of renewable energy credits, costs to extend the operating license for STP Units 1 and 2, and energy supply contracts acquired with Stream Energy that represent the fair value at the acquisition date of in-market contracts for the purchase of energy to serve retail electric customers. Renewable energy credits are amortized to cost of operations as they are retired for usage. Energy supply contracts are amortized to depreciation and amortization based on the expected delivery under the respective contracts.ThefollowingtablessummarizethecomponentsofNRG'sintangibleassetssubjecttoamortization:(In millions)Year Ended December 31, 2019EmissionAllowancesFuel ContractsCustomerRelationshipsMarketing PartnershipsTradeNamesOtherTotalJanuary 1, 2019 . . . . . . . . . . . . . . . . . . $659$49$478$131$345$80$1,742Purchases . . . . . . . . . . . . . . . . . . . . . . . 13————2942Acquisition of businesses (a) . . . . . . . . .——1101542826318Usage . . . . . . . . . . . . . . . . . . . . . . . . . . (4)————(17)(21)Write-off of fully amortized balances . (8)—(13)——(9)(30)Impairment . . . . . . . . . . . . . . . . . . . . . .——(2)———(2)Other . . . . . . . . . . . . . . . . . . . . . . . . . . .2—————2December 31, 2019 . . . . . . . . . . . . . . . 662495732853731092,051Less accumulated amortization . . . . . . (539)(45)(345)(75)(220)(38)(1,262)Net carrying amount . . . . . . . . . . . . . . .$123$4$228$210$153$71$789(a)The weighted average life of acquired intangibles was: customer relationships 7 years, marketing partnerships 9 years, trade names 12 years, and energy supply contracts 2 years(In millions)Year Ended December 31, 2018EmissionAllowancesFuel ContractsCustomerRelationshipsMarketing PartnershipsTradeNamesOtherTotalJanuary 1, 2018 . . . . . . . . . . . . . . . . . . $755$49$768$88$342$78$2,080Purchases . . . . . . . . . . . . . . . . . . . . . . . 33————2861Acquisition of businesses(a) . . . . . . . . .——1224313—178Usage . . . . . . . . . . . . . . . . . . . . . . . . . . (1)————(26)(27)Write-off of fully amortized balances . (107)—(411)—(10)—(528)Impairment . . . . . . . . . . . . . . . . . . . . . .(5)—(1)———(6)Other . . . . . . . . . . . . . . . . . . . . . . . . . . .(16)—————(16)December 31, 2018 . . . . . . . . . . . . . . . 65949478131345801,742Less accumulated amortization . . . . . . (515)(45)(314)(61)(195)(21)(1,151)Net carrying amount . . . . . . . . . . . . . . .$144$4$164$70$150$59$591(a)The weighted average life of acquired intangibles was: customer relationships 6 years, trade names 7 years, and marketing partnerships 14 yearsThefollowingtablepresentsNRG'samortizationofintangibleassetsforeachofthepastthreeyears:Years Ended December 31,(In millions)201920182017Emission allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32$39$71Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .443234Marketing partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1595Trade names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .252323Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .353033Total amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $151$133$166129ThefollowingtablepresentsestimatedamortizationofNRG'sintangibleassetsasofDecember31,2019foreachofthenextfiveyears:(In millions)Year Ended December 31,EmissionAllowancesFuel ContractsCustomerRelationshipsMarketing PartnershipsTradeNamesOtherTotal2020 . . . . . . . . . . . . . . . . . . . . . . . .$36$1$68$24$27$33$1892021 . . . . . . . . . . . . . . . . . . . . . . . .35—52242731412022 . . . . . . . . . . . . . . . . . . . . . . . .38—36232731272023 . . . . . . . . . . . . . . . . . . . . . . . .40135232631282024 . . . . . . . . . . . . . . . . . . . . . . . .35—152317393Intangibleassetsheld-for-sale— Fromtimetotime,managementmayauthorizethetransferfromtheCompany'semissionbankofemissionallowancesheld-for-usetointangibleassetsheld-for-sale.Emissionallowancesheld-for-saleareincludedinothernon-currentassetsontheCompany'sconsolidatedbalancesheetandarenotamortized,butratherexpensedassold.AsofDecember 31,2019and2018,thevalueofemissionallowancesheld-for-salewas$6millionand$12million,respectively,withintheCorporatesegment.Oncetransferredtoheld-for-sale,theseemissionallowancesareprohibitedfrommovingbacktoheld-for-use.Out-of-marketcontracts— Dueprimarilytobusinessacquisitions,NRGacquiredcertainout-of-marketcontracts,whichwereclassifiedasnon-currentliabilitiesonNRG'sconsolidatedbalancesheet.Theseincludedout-of-marketleasecontractsacquiredwithMidwestGenerationof$121millionasofDecember 31,2018.AsaresultoftheCompany'sadoptionofASC842onJanuary1,2019,out-of-marketleasecontractsarenowincludedasacomponentofoperatingleaseright-of-useassets.PriortoJanuary1,2019,theseout-of-marketcontractswereamortizedtocostofoperations.130Note13 —DebtandFinanceLeasesLong-termdebtandfinanceleasesconsistedofthefollowing:(In millions, except rates)December 31, 2019December 31, 2018December 31, 2019 Interest rate %Recourse debt:Senior Notes, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$7336.250Senior Notes, due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,0001,0007.250Senior Notes, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,2301,2306.625Senior Notes, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8218215.750Senior Notes, due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .733—5.250Convertible Senior Notes, due 2048(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5755752.750Senior Secured First Lien Notes, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600—3.750Senior Secured First Lien Notes, due 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500—4.4502023 Term Loan Facility(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —1,698L+ 1.75Revolving Credit Facility (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83—L+ 1.75Tax-exempt bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4664664.125 - 6.00Subtotal recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6,0086,523Non-recourse debt:Agua Caliente Borrower 1, due 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—865.430Midwest Generation, due 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—484.390Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3434variousSubtotal all non-recourse debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34168Subtotal long-term debt (including current maturities) . . . . . . . . . .6,0426,691Finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—1variousSubtotal long-term debt and finance leases (including current maturities)6,0426,692Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(88)(72)Less debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (65)(70)Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(86)(101)Total long-term debt and finance leases . . . . . . . . . . . . . . . . . . . . . . . . . . $5,803$6,4496,0086,5236,0426,692(86)(101)$5,803$6,449(a)Theeffectiveinterestratewas5.05%and5.02%fortheyearsendedDecember31,2019and2018,respectively(b)AsofDecember31,2018,theinterestratewas1-monthLIBORplus1.75%(c)AsofDecember31,2019,theinterestratewas1-weekLIBORplus1.75%Debt includes the following discounts:As of December 31,(In millions)20192018Term loan facility, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$(4)Midwest Generation, due 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(1)Senior Secured First Lien Notes, due 2024 and 2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1)—Convertible Senior Notes, due 2048 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (85)(96)Total discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(86)$(101)(86)(101)ConsolidatedAnnualMaturitiesAsofDecember 31,2019,annualpaymentsbasedonthematuritiesofNRG'sdebtareexpectedtobeasfollows:(In millions)2020(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $882021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,335Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,0426,042(a) Includes $83 million of Revolving Credit Facility balance outstanding as of December 31, 2019131Recourse DebtSeniorNotesIssuanceof2029SeniorNotesOnMay14,2019,NRGissued$733 millionofaggregateprincipalamountatparof5.25%seniorunsecurednotesdue2029,orthe2029SeniorNotes.The2029SeniorNotesareseniorunsecuredobligationsofNRGandareguaranteedbycertainofitssubsidiaries.Interestwillbepaidsemi-annuallybeginningonDecember15,2019,untilthematuritydateofJune15,2029.Theproceedsfromtheissuanceofthe2029SeniorNoteswereutilizedtoredeemtheCompany'sremaining6.25%SeniorNotesdue2024.Issuanceof2024and2029SeniorSecuredFirstLienNotesOnMay28,2019,NRGissued$1.1billionofaggregateprincipalamountofseniorsecuredfirstliennotes,consistingof$600million3.75%seniorsecuredfirstliennotesdue2024and$500million4.45%seniorsecuredfirstliennotesdue2029,ortheSeniorSecuredFirstLienNotes,atadiscount.TheSeniorSecuredFirstLienNotesareguaranteedonafirst-prioritybasisbyeachofNRG’scurrentandfuturesubsidiariesthatguaranteeindebtednessunderitscreditagreement.TheSeniorSecuredFirstLienNoteswillbesecuredbyafirstprioritysecurityinterestinthesamecollateralthatispledgedforthebenefitofthelendersunderNRG’screditagreement,whichconsistsofasubstantialportionofthepropertyandassetsownedbyNRGandtheguarantors.ThecollateralsecuringtheSeniorSecuredFirstLienNoteswillbereleasediftheCompanyobtainsaninvestmentgraderatingfromtwooutofthethreeratingagencies,subjecttoanobligationtoreinstatethecollateralifsuchratingagencieswithdrawtheCompany'sinvestmentgraderatingordowngradeitsratingbelowinvestmentgrade.Interestwillbepaidsemi-annuallybeginningonDecember15,2019,untilthematuritydatesofJune15,2024andJune15,2029.TheproceedsfromtheissuanceoftheSeniorSecuredFirstLienNotes,togetherwithcashonhand,wereusedtorepaytheCompany's2023TermLoanFacility.Issuanceof2048ConvertibleSeniorNotesDuringthesecondquarterof2018,NRGissued$575 millioninaggregateprincipalamountof2.75%ConvertibleSeniorNotesdue2048,ortheConvertibleNotes.TheConvertibleNotesareconvertible,undercertaincircumstances,intotheCompany'scommonstock,cashoracombinationthereof(atNRG'soption)ataninitialconversionpriceof$47.74percommonshare,whichisequivalenttoaninitialconversionrateofapproximately20.9479sharesofcommonstockper$1,000principalamountofConvertibleNotes.InterestontheConvertibleNotesispayablesemi-annuallyinarrearsonJune1andDecember1ofeachyear,commencingonDecember1,2018.TheConvertibleNotesmatureonJune1,2048,unlessearlierrepurchased,redeemedorconvertedinaccordancewiththeirterms.TheConvertibleNotesareguaranteedbycertainNRGsubsidiaries.PriortothecloseofbusinessonthebusinessdayimmediatelyprecedingDecember1,2024,theConvertibleNoteswillbeconvertibleonlyupontheoccurrenceofcertaineventsandduringcertainperiods,andthereafterduringspecifiedperiodsasfollows:•from December 1, 2024 until the close of business on the second scheduled trading day immediately before June 1, 2025; and•from December 1, 2047 until the close of business on the second scheduled trading day immediately before the maturity date.TheConvertibleNotesareaccountedforinaccordancewithASC470-20,DebtwithConversionandOtherOptions.UnderASC470-20,issuersofconvertibledebtinstrumentsthatmaybesettledincashuponconversion,includingpartialcashsettlement,arerequiredtoseparatelyaccountfortheliability(debt)andequity(conversionoption)components.Thecarryingamountoftheliabilitycomponentatissuancedateof$472 millionwascalculatedbyestimatingthefairvalueofsimilarliabilitieswithoutaconversionfeature.Theresidualprincipalamountofthenotesof$103 millionwasallocatedtotheequitycomponentwithoffsettodebtdiscount.ThedebtdiscountwillbeamortizedtointerestexpenseusingtheeffectiveinterestmethodoversevenyearswhichisdeterminedtobetheexpectedlifeoftheConvertibleNotes.TheCompanyincurredapproximately$12 millionintransactioncostsinconnectionwiththeissuanceofthenotes.Thesecostswereallocatedtotheliabilityandequitycomponentsinproportiontotheallocationofproceeds.Transactioncostsof$10 million,allocatedtotheliabilitycomponent,wererecognizedasdeferredfinancingcostsandareamortizedoverthesevenyears.Transactioncostsof$2 million,allocatedtotheequitycomponent,wererecognizedasareductionofadditionalpaid-incapital.2019SeniorNoteRedemptionsDuringtheyearendedDecember 31,2019,theCompanyredeemed$733millionofits6.25%SeniorNotesdue2024andrecordedalossondebtextinguishmentof$29million,whichincludedthewrite-offofpreviouslydeferreddebtissuancecostsof$5million.1322018SeniorNoteRepurchasesDuringtheyearendedDecember31,2018,theCompanycompletedseniornoterepurchases,asdetailedinthetablebelow.Inaddition,duringtheyearendedDecember 31,2018,a$38millionlossondebtextinguishmentwasrecordedfortheserepurchases,whichincludedthewrite-offofpreviouslydeferredfinancingcostsof$7million.(In millions, except percentages)Principal RepurchasedCash Paid(a)Average Early Redemption Percentage5.750% senior notes due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$29$3099.24%6.250% senior notes due 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1415103.25%Total at June 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $43$456.250% senior notes due 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493512103.13%5.750% senior notes due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202099.13%6.625% senior notes due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2021103.06%Total at September 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $576$5986.250% senior notes due 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485508103.13%Total at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,061$1,106(a)Includesaccruedinterestof$14millionSeniorNotesEarlyRedemptionAsofDecember 31,2019,NRGhadthefollowingoutstandingissuancesofseniornoteswithanearlyredemptionfeature,orSeniorNotes:i.7.250% senior notes, issued May 23, 2016 and due May 15, 2026, or the 2026 Senior Notes;ii.6.625% senior notes, issued August 2, 2016 and due January 15, 2027, or the 2027 Senior Notes;iii.5.750% senior notes, issued December 7, 2017 and due January 15, 2028, or the 2028 Senior Notes; andiv.5.250% senior notes, issued May 24, 2019 and due June 15, 2029 , or the 2029 Senior NotesTheCompanyperiodicallyentersintosupplementalindenturesforthepurposeofaddingentitiesundertheSeniorNotesasguarantors.Theindenturesandtheformsofnotesprovide,amongotherthings,thattheSeniorNoteswillbeseniorunsecuredobligationsofNRG.Theindenturesalsoprovideforcustomaryeventsofdefault,whichinclude,amongothers:nonpaymentofprincipalorinterest;breachofotheragreementsintheindentures;defaultsinfailuretopaycertainotherindebtedness;therenderingofjudgmentstopaycertainamountsofmoneyagainstNRGanditssubsidiaries;thefailureofcertainguaranteestobeenforceable;andcertaineventsofbankruptcyorinsolvency.Generally,ifaneventofdefaultoccurs,theTrusteeortheHoldersofatleast25%inprincipalamountofthethenoutstandingseriesofSeniorNotesmaydeclarealloftheSeniorNotesofsuchseriestobedueandpayableimmediately.Thetermsoftheindentures,amongotherthings,limitNRG'sabilityandcertainofitssubsidiaries'abilitytoreturncapitaltostockholders,grantliensonassetstolendersandincuradditionaldebt.Interestispayablesemi-annuallyontheSeniorNotesuntiltheirmaturitydates.2026SeniorNotesAtanytimepriortoMay15,2021,NRGmayredeemallorapartofthe2026SeniorNotes,ataredemptionpriceequalto100%oftheprincipalamount,accruedandunpaidinteresttotheredemptiondate,plusapremium.Thepremiumisthegreaterof:(i)1%oftheprincipalamountofthenotes;or(ii)theexcessoftheprincipalamountofthenoteoverthefollowing:thepresentvalueof103.625%ofthenote,plusinterestpaymentsdueonthenotefromthedateofredemptionthroughMay15,2021computedusingadiscountrateequaltotheTreasuryRateasofsuchredemptiondateplus0.50%.Inaddition,onorafterMay15,2021,NRGmayredeemsomeorallofthenotesatredemptionpricesexpressedaspercentagesofprincipalamountassetforthinthefollowingtable,plusaccruedandunpaidinterestonthenotesredeemedtothefirstapplicableredemptiondate:Redemption PeriodRedemptionPercentageMay 15, 2021 to May 14, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103.625%May 15, 2022 to May 14, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.417%May 15, 2023 to May 14, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101.208%May 15, 2024 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.000%1332027 Senior NotesAtanytimepriortoJuly15,2021,NRGmayredeemallorapartofthe2027SeniorNotes,ataredemptionpriceequalto100%oftheprincipalamount,accruedandunpaidinteresttotheredemptiondate,plusapremium.Thepremiumisthegreaterof:(i)1%oftheprincipalamountofthenotes;or(ii)theexcessoftheprincipalamountofthenoteoverthefollowing:thepresentvalueof103.313%ofthenote,plusinterestpaymentsdueonthenotefromthedateofredemptionthroughJuly15,2021computedusingadiscountrateequaltotheTreasuryRateasofsuchredemptiondateplus50%Inaddition,onorafterJuly15,2021,NRGmayredeemsomeorallofthenotesatredemptionpricesexpressedaspercentagesofprincipalamountassetforthinthefollowingtable,plusaccruedandunpaidinterestonthenotesredeemedtothefirstapplicableredemptiondate:Redemption PeriodRedemptionPercentageJuly 15, 2021 to July14, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103.313%July 15, 2022 to July 14, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102.208%July 15, 2023 to July 14, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.104%July 15, 2024 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%2028 Senior NotesAtanytimepriortoJanuary15,2021,NRGmayredeemupto35%oftheaggregateprincipalamountofthe2028SeniorNotes,ataredemptionpriceequalto105.750%oftheprincipalamountofthenotesredeemed,plusaccruedandunpaidinterest,withanamountequaltothenetcashproceedsofcertainequityofferings.AtanytimepriortoJanuary15,2023,NRGmayredeemallorapartofthe2028SeniorNotes,ataredemptionpriceequalto100%oftheprincipalamount,accruedandunpaidinteresttotheredemptiondate,plusapremium.Thepremiumisthegreaterof:(i)1%oftheprincipalamountofthenotes;or(ii)theexcessoftheprincipalamountofthenoteoverthefollowing:thepresentvalueof102.875%ofthenote,plusinterestpaymentsdueonthenotefromthedateofredemptionthroughJanuary15,2023computedusingadiscountrateequaltotheTreasuryRateasofsuchredemptiondateplus50%Inaddition,onorafterJanuary15,2023,NRGmayredeemsomeorallofthenotesatredemptionpricesexpressedaspercentagesofprincipalamountassetforthinthefollowingtable,plusaccruedandunpaidinterestonthenotesredeemedtothefirstapplicableredemptiondate:Redemption PeriodRedemptionPercentageJanuary 15, 2023 to January 14, 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.875%January 15, 2024 to January 14, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101.917%January 15, 2025 to January 14, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.958%January 15, 2026 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%Percentage2029 Senior NotesAtanytimepriortoJune15,2022,NRGmayredeemupto40%oftheaggregateprincipalamountofthe2029SeniorNotes,ataredemptionpriceequalto105.250%oftheprincipalamountofthenotesredeemed,plusaccruedandunpaidinterest,withanamountequaltothenetcashproceedsofcertainequityofferings,providedthatatleast50%oftheaggregateprincipalamountremainsoutstandingimmediatelyaftertheoccurrenceofsuchredemption.AtanytimepriortoJune15,2024,NRGmayredeemallorapartofthe2029SeniorNotes,ataredemptionpriceequalto100%oftheprincipalamountaccruedandunpaidinteresttotheredemptiondate,plusapremium.Thepremiumisthegreaterof:(i)1%oftheprincipalamountofthenotes;or(ii)theexcessoftheprincipalamountofthenoteoverthefollowing:thepresentvalueof102.625%ofthenote,plusinterestpaymentsdueonthenotethroughJune15,2024(excludingaccruedbutunpaidinteresttotheredemptiondate),computedusingadiscountrateequaltotheTreasuryRateasofsuchredemptiondateplus0.50%.Inaddition,onorafterJune15,2024,NRGmayredeemsomeorallofthenotesatredemptionpricesexpressedaspercentagesofprincipalamountassetforthinthefollowingtable,plusaccruedandunpaidinterestonthenotesredeemedtothefirstapplicableredemptiondate:Redemption PeriodRedemption PercentageJune 15, 2024 to June 14, 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102.625%June 15, 2025 to June 14, 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101.750%June 15, 2026 to June 14, 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.875%June 15, 2027 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100.000%134SeniorCreditFacilityOnJune30,2016,NRGreplaceditspreviousseniorcreditfacilitywithanewseniorsecuredfacility,ortheSeniorCreditFacility,whichincludedthefollowing:•A$1.9billiontermloanfacility,orthe2023TermLoanFacility,withamaturitydateofJune30,2023,whichwillpayinterestatarateofLIBORplus2.75%,withaLIBORfloorof0.75%.Thedebtwasissuedat99.50%offacevalue;thediscountwillbeamortizedtointerestexpenseoverthetermoftheloan.Repaymentsunderthe2023TermLoanFacilitywillconsistof0.25%ofprincipalperquarter,withtheremainderdueatmaturity.OnJanuary24,2017,NRGrepricedthe2023TermLoanFacility,reducingtheinterestratemarginby50basispointstoLIBORplus2.25%,theLIBORfloorremains0.75%.OnMarch21,2018,NRGagainrepricedthe2023TermLoanFacility,reducingtheinterestratemarginby50basispointstoLIBORplus1.75%andreducingtheLIBORfloorto0.00%.•A$289millionrevolvingseniorcreditfacility,ortheTrancheARevolvingFacility,withamaturitydateofJuly1,2018anda$2.2billionrevolvingseniorcreditfacility,ortheTrancheBRevolvingFacility,withamaturitydateofJune30,2021,whichbothpayinterestatarateofLIBORplus2.25%.OnMay7,2018,NRGenteredintothethirdamendmentagreementextendingthematuritydateoftheTrancheArevolvingfacilitytoJune30,2021,fortheTrancheAacceptinglender.InaccordancewiththetermsoftheCreditAgreement,onOctober5,2018,theCompanyinitiatedanassetsaleoffertopurchaseaportionofitsTermLoanfollowingthesaleofNRGYieldandtheRenewablesPlatform.TheofferexpiredonNovember5,2018and$260millionofTermLoanholdersacceptedtheoffer.Asaresult,theCompanyprepaid$155millionofTermLoansaspartofitsde-leveragingplan,aswellasestablishedanincrementalfirstliensecuredtermloanfacilityundertheSeniorCreditFacilityintheaggregateprincipalamountof$105milliononthesametermsandconditionstostaywithinitsdebtreductiontarget.Inaddition,a$3millionlossondebtextinguishmentwasrecorded,whichincludedthewrite-offofpreviouslydeferredfinancingcostsof$2million.2023TermLoanFacilityRepaymentOnMay28,2019,theCompanyrepaidits$1.7 billion2023TermLoanFacilityusingtheproceedsfromtheissuanceoftheSeniorFirstLienNotes,aswellascashonhand,resultinginadecreaseof$594 milliontolong-termdebtoutstanding.TheCompanyrecordedalossondebtextinguishmentof$17 million,whichincludedthewrite-offofpreviouslydeferreddebtissuancecostsof$13 million.Asaresultoftherepaymentoftheoutstanding2023TermLoanFacility,theCompanyterminatedtherelatedinterestrateswapagreements,whichwerein-the-money,andreceived$25 millionthatwasrecordedasareductiontointerestexpense.RevolvingCreditFacilityModificationOnMay28,2019,theCompanyamendeditsexistingcreditagreementto,amongotherthing,(i)providefora$184 millionincreaseinrevolvingcommitments,resultinginaggregaterevolvingcommitmentsundertheamendedcreditagreementequalto$2.6 billion,(ii)extendthematuritydateoftherevolvingloansandcommitmentsundertheamendedcreditagreementtoMay28,2024,(iii)provideforareleaseofthecollateralsecuringtheamendedcreditagreementifNRGobtainsaninvestmentgraderatingformtwooutofthethreeratingagencies,subjecttoanobligationtoreinstatethecollateralifsuchratingagencieswithdrawNRG'sinvestmentgraderatingordowngradeNRG'sratingbelowinvestmentgrade,(iv)reducetheapplicablemarginsforborrowingsunder(a)ABRRevolvingLoansfrom1.25%to0.75%and(b)EurodollarRevolvingLoansfrom2.25%to1.75%,(v)addasustainabilityand(vi)makecertainotherchangestotheexistingcovenants.AsofDecember 31,2019,$83 millionofborrowingswereoutstanding.TaxExemptBondsAs of December 31,(In millions, except rates)20192018Interest Rate % Indian River Power, tax exempt bonds, due 2040 . . . . . . . . . . . . . . . . . .$57$576.000Indian River Power LLC, tax exempt bonds, due 2045 . . . . . . . . . . . . . . 1901905.375Dunkirk Power LLC, tax exempt bonds, due 2042 . . . . . . . . . . . . . . . . . 59595.875City of Texas City, tax exempt bonds, due 2045 . . . . . . . . . . . . . . . . . . .33334.125Fort Bend County, tax exempt bonds, due 2038 . . . . . . . . . . . . . . . . . . . .54544.750Fort Bend County, tax exempt bonds, due 2042 . . . . . . . . . . . . . . . . . . . .73734.750Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $466$466135Non-RecourseDebtThefollowingaredescriptionsofcertainindebtednessofNRG'ssubsidiaries.AllofNRG'snon-recoursedebtissecuredbytheassetsintherespectiveprojectsubsidiariesasfurtherdescribedbelow.MidwestGenerationOnApril7,2016,MidwestGeneration,LLC,orMWG,enteredintoanagreementtosellcertainquantitiesofunforcedcapacitythathasclearedvariousPJMReliabilityPricingModelauctionstoatradingcounterpartyfornetproceedsof$253million.MWGcontinuedtooperatetheapplicablegenerationfacilitiesandremainedresponsibleforperformancepenaltiesandeligibleforperformancebonuspayments,ifany.Accordingly,MWGcontinuedtoaccountforallrevenuesandcostsasbefore;however,theproceedswererecordedasafinancingobligationwhilecapacitypaymentsbyPJMtothecounterpartywasreflectedasdebtamortizationandinterestexpensethroughtheendofthe2018/19deliveryyear.MWGamortizedtheupfrontdiscounttointerestexpense,ataneffectiveinterestrateof4.39%,throughJune2019.AguaCalienteBorrowerIOnJanuary22,2019,thelendersoftheAguaBorrowerIdebtnotifiedAguaCalienteBorrower1,asubsidiaryoftheCompany,ofcertaindefaultsunderthefinancingagreementasitrelatestothebankruptcyfilingmadebyPG&EonJanuary29,2019.PG&Eistheofftakeroftheunderlyingcontracts,whicharematerialtotheproject.ThefinancingwasenteredintoalongwithAguaCalienteBorrower2,LLC,asubsidiaryofClearwayEnergyInc.,whichisjointandseveraltotheparties.OnOctober21,2019,theCompanyrepaidtheoutstandingamountonthenotesat102%plusaccruedinterestthroughthepaymentdate.Cottonwood—LettersofCreditOnJanuary4,2019,theCompanyenteredintoan$80 millioncreditagreementtoissuelettersofcredit,whichiscurrentlysupportingtheCottonwoodfacilitylease.Annualfeesof1.33%onthefacilityarepaidquarterlyinadvance.AsofDecember31,2019,thefull$80 millionwasissued.Note14 —AssetRetirementObligationsTheCompany'sAROsareprimarilyrelatedtotheenvironmentalobligationsfornucleardecommissioning,ashdisposal,siteclosures,fuelstoragefacilitiesandfuturedismantlementofequipmentonleasedproperty.Inaddition,theCompanyhasalsoidentifiedconditionalAROsforasbestosremovalanddisposal,whicharespecifictocertainpowergenerationoperations.SeeNote7,NuclearDecommissioningTrustFund,forafurtherdiscussionoftheCompany'snucleardecommissioningobligations.AccretionforthenucleardecommissioningAROandamortizationoftherelatedAROassetarerecordedtotheNuclearDecommissioningTrustLiabilitytotheratepayersandarenotincludedinnetincome,consistentwithtreatmentperASC980,RegulatedOperations.ThefollowingtablerepresentsthebalanceofAROobligationsasofDecember 31,2019and 2018,alongwiththeadditions,reductionsandaccretionrelatedtotheCompany'sAROobligationsfortheyearendedDecember 31,2019:(In millions)Nuclear DecommissionOtherTotalBalance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $282$397$679Revisions in estimates for current obligations(a) . . . . . . . . . . . . . . . . . . . . . . .—2727Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—99Spending for current obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(33)(33)Accretion (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .163046Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $298$430$728(a) Total ARO accretion expense includes non-Nuclear Decommissioning Trust accretion and revised asset retirement liabilities on non-operating plantsNote15 —BenefitPlansandOtherPostretirementBenefitsNRGsponsorsandoperatesdefinedbenefitpensionandotherpostretirementplans.NRGpensionbenefitsareavailabletoeligiblenon-unionandunionemployeesthroughvariousdefinedbenefitpensionplans.Thesebenefitsarebasedonpay,servicehistoryandageatretirement.Mostpensionbenefitsareprovidedthroughtax-136qualifiedplans.NRGalsoprovidespostretirementhealthandwelfarebenefitsforcertaingroupsofemployees.Costsharingprovisionsvarybythetermsofanyapplicablecollectivebargainingagreements.NRGmaintainstwoseparatequalifiedpensionplans,theNRGPensionPlanforBargainedEmployeesandtheNRGPensionPlan.ParticipationintheNRGPensionPlanforBargainedEmployeesdependsuponwhetheranemployeeiscoveredbyabargainingagreement.NRGandGenOnenteredintoaRestructuringSupportAgreementinwhichNRGagreedtoretainGenOn'spensionliabilityforserviceprovidedbyGenOnemployeespriortothecompletionoftheGenOnreorganization.NRGdeterminedthattheretentionofthisliabilitywasprobableandrecordedtheestimatedaccumulatedpensionbenefitobligationasofDecember31,2017of$92million,whichreflectsa$13millioncontributionmadebyNRGtotheplanin2017,inothernon-currentliabilitieswithacorrespondinglossfromdiscontinuedoperations.NRGalsoagreedtoretaintheliabilityforGenOn'spost-employmentandretireehealthandwelfarebenefits.NRG'sobligationforbothoftheseliabilitieswasrevalueduponGenOn'semergencefrombankruptcyresultinginanobligationof$23 millionasofDecember31,2018.NRGexpectstocontribute$56milliontotheCompany'spensionplansin 2020,ofwhich$21millionrelatestoGenOn.NRGDefinedBenefitPlansTheannualnetperiodicbenefitcost/(credit)relatedtoNRG'spensionandotherpostretirementbenefitplansincludethefollowingcomponents:Year Ended December 31,Pension Benefits (In millions)201920182017Service cost benefits earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10$23$26Interest cost on benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .464443Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (59)(62)(58)Amortization of unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3—4Settlement/curtailment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—7—Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$12$15Year Ended December 31,Other Postretirement Benefits(In millions)201920182017Service cost benefits earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1$1$1Interest cost on benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .344Amortization of unrecognized prior service credit . . . . . . . . . . . . . . . . . . . . . . . .(13)(10)(9)Amortization of unrecognized net (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(1)Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(10)—Net periodic benefit (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(9)$(15)$(5)(9)(15)(5)137Acomparisonofthepensionbenefitobligation,otherpostretirementbenefitobligationsandrelatedplanassetsforNRG'splansonacombinedbasisisasfollows:As of December 31,Pension BenefitsOther PostretirementBenefits(In millions)2019201820192018Benefit obligation at January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,222$1,329$83$128Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102311Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .464434Plan amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—17(2)(28)Actuarial (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207(95)16(6)Employee and retiree contributions . . . . . . . . . . . . . . . . . . . . . . . .——43Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(20)—(7)Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(88)(76)(12)(12)Benefit obligation at December 31 . . . . . . . . . . . . . . . . . .1,3971,2229383Fair value of plan assets at January 1 . . . . . . . . . . . . . . . . . . . . . . 9811,104——Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216(80)——Employee and retiree contributions . . . . . . . . . . . . . . . . . . . . . . . .——43Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .413379Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(88)(76)(11)(12)Fair value of plan assets at December 31 . . . . . . . . . . . . .1,150981——Funded status at December 31 — excess of obligation over assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(247)$(241)$(93)$(83)AmountsrecognizedinNRG'sbalancesheetswereasfollows:As of December 31,Pension BenefitsOther PostretirementBenefits(In millions)2019201820192018Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$—$7$7Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 2472418676Amounts recognized in NRG's accumulated OCI that have not yet been recognized as components of net periodic benefit cost were as follows:As of December 31,Pension BenefitsOther PostretirementBenefits(In millions)2019201820192018Net loss/(gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$138$90$7$(9)Prior service cost/(credit) . . . . . . . . . . . . . . . . . . . . . . . . . . 23(43)(53)Total accumulated OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . .$140$93$(36)$(62)Net accumulated OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $140$93$(36)$(62)138OtherchangesinplanassetsandbenefitobligationsrecognizedinOCIwereasfollows:Year Ended December 31,PensionBenefitsOther PostretirementBenefits(In millions)2019201820192018Net actuarial loss/(gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . $50$47$16$(5)Amortization of net actuarial (gain)/loss . . . . . . . . . . . . . . (3)———Curtailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(27)—2Prior service credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —17(2)(28)Amortization of prior service cost . . . . . . . . . . . . . . . . . . . ——1210Total recognized in OCI . . . . . . . . . . . . . . . . . . . . . . . . . . .$47$37$26$(21)Net periodic benefit cost/(credit) . . . . . . . . . . . . . . . . . . . . —12(9)(15)Net recognized in net periodic pension cost/(credit) and OCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $47$49$17$(36)TheCompany'sestimatedunrecognizedlossforNRG'spensionplanasofDecember31,2019thatwillbeamortizedfromaccumulatedOCItonetperiodiccostoverthenextfiscalyearis$5million.TheCompany'sestimatedunrecognizedlossandunrecognizedpriorservicecreditforNRG'spostretirementplanasofDecember31,2019thatwillbeamortizedfromaccumulatedOCItonetperiodiccostoverthenextfiscalyearis$1millionand$14million,respectively.ThefollowingtablepresentsthebalancesofsignificantcomponentsofNRG'spensionplan:As of December 31,Pension Benefits(In millions)20192018Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,397$1,222Accumulated benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,3621,188Fair value of plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,150981NRG'smarket-relatedvalueofitsplanassetsisthefairvalueoftheassets.ThefairvaluesoftheCompany'spensionplanassetsbyassetcategoryandtheirlevelwithinthefairvaluehierarchyareasfollows:Fair Value Measurements as of December 31, 2019(In millions)Quoted Prices inActive Markets forIdentical Assets(Level 1)SignificantObservable Inputs(Level 2)TotalCommon/collective trust investment — U.S. equity . . . . . . . . . . . . . . . .$—$233$233Common/collective trust investment — non-U.S. equity . . . . . . . . . . . . —7373Common/collective trust investment — non-core assets . . . . . . . . . . . . —143143Common/collective trust investment — fixed income . . . . . . . . . . . . . . —272272Short-term investment fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12—12Subtotal fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12$721$733Measured at net asset value practical expedient: . . . . . . . . . . . . . . . . . . .Common/collective trust investment — non-U.S. equity . . . . . . . . . . . . 84Common/collective trust investment — fixed income . . . . . . . . . . . . . . 279Common/collective trust investment — non-core assets . . . . . . . . . . . . 24Partnerships/joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Total fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,1501,150139Fair Value Measurements as of December 31, 2018(In millions)Quoted Prices inActive Markets forIdentical Assets(Level 1)SignificantObservable Inputs(Level 2)TotalCommon/collective trust investment — U.S. equity . . . . . . . . . . . . . . . .$—$183$183Common/collective trust investment — non-U.S. equity . . . . . . . . . . . . —5353Common/collective trust investment — non-core assets . . . . . . . . . . . . —117117Common/collective trust investment — fixed income . . . . . . . . . . . . . . —256256Short-term investment fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12—12Subtotal fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$12$609$621Measured at net asset value practical expedient: . . . . . . . . . . . . . . . . . . .Common/collective trust investment — non-U.S. equity . . . . . . . . . . . . 70Common/collective trust investment — fixed income . . . . . . . . . . . . . . 249Common/collective trust investment — non-core assets . . . . . . . . . . . . 16Partnerships/joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Total fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $981InaccordancewithASC 820,theCompanydeterminesthelevelinthefairvaluehierarchywithinwhicheachfairvaluemeasurementinitsentiretyfalls,basedonthelowestlevelinputthatissignificanttothefairvaluemeasurementinitsentirety.Thefairvalueofthecommon/collectivetrustinvestmentsisvaluedatfairvaluewhichisequaltothesumofthemarketvalueofallofthefund'sunderlyinginvestments.Certaincommon/collectivetrustinvestmentshavereadilydeterminablefairvalueastheypublishdailynetassetvalue,orNAV,pershareandarecategorizedasLevel 2.Certainothercommon/collectivetrustinvestmentsandpartnerships/jointventuresuseNAVpershare,oritsequivalent,asapracticalexpedientforvaluation,andthushavebeenremovedfromthefairvaluehierarchytable.ThefollowingtablepresentsthesignificantassumptionsusedtocalculateNRG'sbenefitobligations:As of December 31,Pension BenefitsOther Postretirement BenefitsWeighted-Average Assumptions2019201820192018Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.26%4.38%3.26%4.37%Rate of compensation increase . . . . . . . . . . . . . . 3.00%3.00%—%—%Health care trend rate . . . . . . . . . . . . . . . . . . . . . ——7.5% grading to 4.5% in 2028 7.8% grading to 4.5% in 2025ThefollowingtablepresentsthesignificantassumptionsusedtocalculateNRG'sbenefitexpense:As of December 31,Pension BenefitsOther Postretirement BenefitsWeighted-Average Assumptions201920182017201920182017Discount rate . . . . . . .4.38%/4.2%3.71%/4.04%4.26%4.37%3.71% /4.08%4.29%Expected return on plan assets . . . . . . . 6.35%6.17%6.85%———Rate of compensation increase . . . . . . . . . 3.00%3.00%3.00%———Health care trend rate———7.8% grading to 4.5% in 20258.2% grading to 4.5% in 20257.0% grading to 5.0% in 2025NRGusesDecember 31ofeachrespectiveyearasthemeasurementdatefortheCompany'spensionandotherpostretirementbenefitplans.TheCompanysetsthediscountrateassumptionsonanannualbasisforeachofNRG'sdefinedbenefitretirementplansasofDecember31.ThediscountrateassumptionsrepresentthecurrentrateatwhichtheassociatedliabilitiescouldbeeffectivelysettledatDecember31.TheCompanyutilizestheAonAAAboveMedian,orAA-AM,yieldcurvetoselecttheappropriatediscountrateassumptionforeachretirementplan.TheAA-AMyieldcurveisahypotheticalAAyieldcurverepresentedbyaseriesofannualizedindividualspotdiscountratesfrom6monthsto99years.Eachbondissueusedtobuildthisyieldcurvemustbenon-callable,andhaveanaverageratingofAAwhenaveragingavailableMoody'sInvestorServices,Standard&Poor'sandFitchratings.140NRGemploysatotalreturninvestmentapproach,wherebyamixofequitiesandfixedincomeinvestmentsareusedtomaximizethelong-termreturnofplanassetsforaprudentlevelofrisk.Risktoleranceisestablishedthroughcarefulconsiderationofplanliabilities,planfundedstatus,andcorporatefinancialcondition.TheInvestmentCommitteereviewstheassetmixperiodicallyandastheplanassetsincreaseinfutureyears,theInvestmentCommitteemayexamineotherassetclassessuchasrealestateorprivateequity.NRGemploysabuildingblockapproachtodeterminingthelong-termrateofreturnassumptionforplanassets,withproperconsiderationgiventodiversificationandrebalancing.Historicalmarketsarestudiedandlong-termhistoricalrelationshipsbetweenequitiesandfixedincomearepreserved,consistentwiththewidelyacceptedcapitalmarketprinciplethatassetswithhighervolatilitygenerateagreaterreturnoverthelongrun.Currentfactorssuchasinflationandinterestratesareevaluatedbeforelong-termcapitalmarketassumptionsaredetermined.Peerdataandhistoricalreturnsarereviewedtocheckforreasonablenessandappropriateness.ThetargetallocationsofNRG'spensionplanassetswereasfollowsfortheyearendedDecember 31,2019:U.S. equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20%Non-U.S. equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13%Non-core assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17%U.S. fixed income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50%Planassetsarecurrentlyinvestedinadiversifiedblendofequityandfixed-incomeinvestments.Furthermore,equityinvestmentsarediversifiedacrossU.S.,non-U.S.,global,andemergingmarketequities,aswellasamonggrowth,value,smallandlargecapitalizationstocks.Investmentriskandperformancearemonitoredonanongoingbasisthroughquarterlyportfolioreviewsofeachassetfundclasstoarelatedperformancebenchmark,ifapplicable,andannualpensionliabilitymeasurements.Performancebenchmarksarecomposedofthefollowingindices:Asset ClassIndexU.S. equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dow Jones U.S. Total Stock Market IndexNon-U.S. equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MSCI All Country World Ex-U.S. IMI IndexNon-core assets(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Various (per underlying asset class)Fixed income securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Barclays Capital Long Term Government/Credit Index & Barclays Strips 20+ Index(a)Non-Core Assets are defined as diversifying asset classes approved by the Investment Committee that are intended to enhance returns and/or reduce volatility of the U.S. and non-U.S. equities. Asset classes considered Non-Core include, but may not be limited to: Emerging Market Equity, Emerging Market Debt, Non-US Developed Market Small Cap, High Yield Fixed Income, Real Estate, Bank Loans, Global Infrastructure and other Alternatives. NRG'sexpectedfuturebenefitpaymentsforeachofthenextfiveyears,andintheaggregateforthefiveyearsthereafter,areasfollows:Other Postretirement Benefit (In millions)PensionBenefit PaymentsBenefit PaymentsMedicare Prescription Drug Reimbursements2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$84$7$—2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .866—2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .866—2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .866—2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .866—2025-2029 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402192Assumedhealthcarecosttrendrateshaveasignificanteffectontheamountsreportedforthehealthcareplans.Theimpactofaone-percentage-pointchangeinassumedhealthcarecosttrendratesisimmaterialontotalserviceandinterestcostscomponentsbutwouldhavethefollowingeffect:(In millions)1-Percentage-Point Increase1-Percentage-Point DecreaseEffect on postretirement benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7$(5)141STPDefinedBenefitPlansNRGhasa44%undividedownershipinterestinSTP,asdiscussedfurtherinNote28,JointlyOwnedPlants.STPNOC,whichoperatesandmaintainsSTP,providesitsemployeesadefinedbenefitpensionplan,aswellaspostretirementhealthandwelfarebenefits.AlthoughNRGdoesnotsponsortheSTPplan,itreimbursesSTPNOCfor44%ofthecontributionsmadetowardsitsretirementplanobligations.Duringthethirdquarterof2019,STPNOCannouncedthatthedefinedbenefitpensionplanwillbefrozenfornon-unionemployeesonDecember31,2021,Thisresultedinthecurtailmentofbenefits,therebyrequiringaremeasurement,includinganupdatetothediscountrateusedtodeterminebenefitobligations.Asaresult,NRGrecognizedagainof$8 millionrelatedtothecurtailmentofbenefitsandanincreaseof$32 milliontothepensionliabilitywasrecordedtoothercomprehensiveincome.TheCompanymeasuresthefairvalueofitspensionassetsinaccordancewithASC 820,FairValueMeasurementsandDisclosures,orASC 820.FortheyearsendedDecember 31,2019andDecember 31,2018,NRGreimbursedSTPNOC$24millionand$13million,respectively,foritscontributiontotheplans.In2020,NRGexpectstoreimburseSTPNOC$7millionforitscontributiontotheplan.TheCompanyhasrecognizedthefollowinginitsstatementoffinancialposition,statementofoperationsandaccumulatedOCIrelatedtoits44%interestinSTP:As of December 31,Pension BenefitsOther Postretirement Benefits(In millions)2019201820192018Funded status — STPNOC benefit plans . . . . . . . . . .$(77)$(78)$(20)$(19)Net periodic benefit cost/(credit) . . . . . . . . . . . . . . . . 98(4)(7)Other changes in plan assets and benefit obligations recognized in other comprehensive (loss)/income . (13)(7)62DefinedContributionPlansNRG'semployeesarealsoeligibletoparticipateindefinedcontribution401(k)plans.TheCompany'scontributionstotheseplanswereasfollows:Year Ended December 31,(In millions)201920182017Company contributions to defined contribution plans . . . . . . . . . . . .$22$28$56Note16 — CapitalStructureFortheperiodfromDecember 31,2016toDecember 31,2019,theCompanyhad10,000,000sharesofpreferredstockauthorizedand500,000,000sharesofcommonstockauthorized.ThefollowingtablereflectsthechangesinNRG'scommonsharesissuedandoutstandingforeachperiodpresented:CommonIssuedTreasuryOutstandingBalance as of December 31, 2016 . . . . . . . . . . . . . . . . . . . 417,583,825(102,140,814)315,443,011Shares issued under ESPP . . . . . . . . . . . . . . . . . . . . . . . . .—560,769560,769Shares issued under LTIPs . . . . . . . . . . . . . . . . . . . . . . . . 739,309—739,309Balance as of December 31, 2017 . . . . . . . . . . . . . . . . . . .418,323,134(101,580,045)316,743,089Shares issued under ESPP . . . . . . . . . . . . . . . . . . . . . . . . .—175,862175,862Shares issued under LTIPs . . . . . . . . . . . . . . . . . . . . . . . . 1,965,752—1,965,752Share repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(35,234,664)(35,234,664)Balance as of December 31, 2018 . . . . . . . . . . . . . . . . . . . 420,288,886(136,638,847)283,650,039Shares issued under ESPP . . . . . . . . . . . . . . . . . . . . . . . . .—46,12846,128Shares issued under LTIPs . . . . . . . . . . . . . . . . . . . . . . . . 1,601,904—1,601,904Share repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(36,301,882)(36,301,882)Balance as of December 31, 2019 . . . . . . . . . . . . . . . . . . . 421,890,790(172,894,601)248,996,189142CommonStockAsofDecember 31,2019,NRGhad16,029,127sharesofcommonstockreservedforthemaximumnumberofsharespotentiallyissuablebasedontheconversionandredemptionfeaturesofthelong-termincentiveplans.Commonstockdividends—TheCompanypaid$0.03quarterlydividendpercommonshare,or$0.12pershareonanannualizedbasis,foryears2017,2018and2019.TheCompany'scommonstockdividendsaresubjecttoavailablecapital,marketconditions,andcompliancewithassociatedlaws,regulationsandothercontractualobligations.Beginninginthefirstquarterof2020,NRGincreasedtheannualdividendto$1.20pershareandexpectstotargetanannualdividendgrowthrateof7-9%pershareinsubsequentyears.OnJanuary21,2020,NRGdeclaredaquarterlydividendontheCompany'scommonstockof$0.30pershare,or$1.20pershareonanannualizedbasis,payableonFebruary18,2020,tostockholdersofrecordasofFebruary3,2020.EmployeeStockPurchasePlan— InMarch2019,theCompanyreopenedparticipationintheESPPundertheAmendedandRestatedEmployeeStockPurchasePlan,whichallowseligibleemployeestoelecttowithholdbetween1%and10%oftheireligiblecompensationtopurchasesharesofNRGcommonstockatthelesserof95%ofitsmarketvalueontheofferingdateor95%ofthefairmarketvalueontheexercisedate.AnofferingdatewilloccureachApril1andOctober1.AnexercisedatewilloccureachSeptember30andMarch31.TheESPPplan,thatwassuspendedin2018,allowedeligibleemployeestoelecttowithholdupto10%oftheireligiblecompensationtopurchasesharesofNRGcommonstockatthelesserof85%ofitsfairmarketvalueontheofferingdateor85%ofthefairmarketvalueontheexercisedate.AnofferingdateoccurredeachJanuary1andJuly1.AnexercisedateoccurredeachJune 30andDecember 31.AsofDecember31,2019,thereremained2,885,060sharesoftreasurystockreservedforissuanceundertheESPP.ShareRepurchases —In2018,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchase$1.5billionofitscommonstock.TheCompanyexecuted$1.25 billionofthesesharerepurchasesin2018,withtheremaining$0.25 billioncompletedinthefirstquarterof2019.In2019,theCompany'sboardofdirectorsauthorizedtheCompanytorepurchaseanadditional$1.25 billionofitscommonstock.TheCompanyexecuted$1.194 billionofthesesharerepurchasesin2019,withtheremaining$56 millioncompletedbyFebruary27,2020.Inaddition,theCompanyadoptedinthefourthquarterof2019along-termcapitalallocationpolicythattargetsallocating50%ofcashavailableforallocationgeneratedeachyeartogrowthinvestmentsand50%tobereturnedtoshareholders.Thereturnofcapitaltoshareholdersisexpectedtobecompletedthroughtheincreaseddividenddiscussedabove,supplementedbysharerepurchases.Thefollowingtablesummarizesthesharesrepurchasesmadefrom2018throughFebruary27,2020:Total number of shares and share equivalents purchasedAverage price paid per share and share equivalentAmounts paid for shares and share equivalents purchased (in millions)2018 repurchases: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Shares repurchased under May 24, 2018 Accelerated Repurchase Agreement . . . 10,829,903354Shares repurchased under September 5, 2018 Accelerated Repurchase Agreement13,307,130500Other repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,097,631396Total Share Repurchases during 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,234,664$35.48$1,2502019 repurchases: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchases under February 28, 2019 Accelerated Share Repurchase Agreement9,438,671400Other repurchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,863,2111,008Equivalent shares purchased in lieu of tax withholdings on equity compensation issuances(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .936,92836Total Share Repurchases during 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37,238,810$38.79$1,4442020 repurchases: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Repurchases made subsequent to December 31, 2019 . . . . . . . . . . . . . . . . . . . . . .2,428,54592Equivalent shares purchased in lieu of tax withholdings on equity compensation issuances(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .709,53627Total share repurchases January 1, 2020 through February 27, 2020 . . . . . . . . . . .3,138,081$37.87$119(a)NRG elected to pay cash for tax withholding on equity awards instead of issuing actual shares to management. The average price per equivalent shares withheld was $38.24 and $38.78 in 2020 and 2019, respectively. See Note 21, Stock-Based Compensation, for further discussion of the equity awards143Note17 — InvestmentsAccountedforbytheEquityMethodandVariableInterestEntitiesEntitiesthatarenotConsolidatedNRGaccountsfortheCompany'ssignificantinvestmentsusingtheequitymethodofaccounting.NRG'scarryingvalueofequityinvestmentscanbeimpactedbyanumberofelementsincludingimpairments,unrealizedgainsandlossesonderivativesandmovementsinforeigncurrencyexchangerates.ThefollowingtablesummarizesNRG'sequitymethodinvestmentsasofDecember 31,2019:(In millions, except percentages)NameEconomicInterestInvestment BalanceAgua Caliente . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.0%213Gladstone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37.5%124Ivanpah Master Holdings, LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54.5%20Watson Cogeneration Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.0%15Midway-Sunset Cogeneration Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0%9Other(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Various7Total equity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $388(a) Refer to Note 11, Asset Impairments, for discussion of NRG's investment in Petra Nova Parish Holdings, LLC As of December 31,(In millions)20192018Undistributed earnings from equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $42$34PG&EBankruptcy—TheAguaCalienteprojectandtwoofthethreeIvanpahunitsarepartytoPPAswithPG&E.BothprojectshaveprojectfinancingwiththeU.S.DOE.OnJanuary29,2019,PG&ECorp.andsubsidiaryutilityPG&EfiledforChapter11bankruptcyprotection.Aspartoftheirfiling,PG&EaskedtheBankruptcyCourttoconfirmexclusivejurisdictionovertheir"rightstoreject"PPAsorothercontractsregulatedbyFERC.Asaresultofthebankruptcyfiling,theAguaCalienteandIvanpahprojectshaveissuednoticesofeventsofdefaultundertheirrespectiveloanagreements.TheIvanpahprojectsignedaforbearanceagreementwiththeDepartmentofEnergyonOctober25,2019.TheCompany'ssubsidiariesareworkingwiththeirpartnersontheprojectsandtheloancounterparties.OnSeptember9,2019,PG&Efiledaplanofreorganizationthatwouldassumeallpowerpurchaseagreements,includingthoseheldbytheAguaCalienteprojectandthetwoIvanpahunits.OnJanuary22,2020thenoteholdersagreedtosupportthePG&Eplan,whichwillcontinuetoprovideforassumptionofallpowerpurchaseagreements.Theplanwassubsequentlyamended,andahearingbeforetheBankruptcyCourttoconsiderwhetherthePG&EplanwillbeapprovedandconfirmediscurrentlyexpectedtooccuronMay27,2020.NRG'smaximumexposuretolossislimitedtoitsequityinvestment,whichwas$213 millionforAguaCalienteand$20 millionforIvanpahasofDecember 31,2019.SeeNote13,DebtandFinanceLeasesforfurtherdiscussiononAguaCaliente.VariableInterestEntitiesNRGaccountsforitsinterestsincertainentitiesthatareconsideredVIEsunderASC810,Consolidation,forwhichNRGisnottheprimarybeneficiary,undertheequitymethod.Throughitsconsolidatedsubsidiary,NRGSolarIvanpahLLC,NRGownsa54.5%interestinIvanpahMasterHoldings,LLC,orIvanpah,theownerofthreesolarelectricgeneratingprojectslocatedintheMojaveDesertwithatotalcapacityof393MW.NRGconsidersthisinvestmentaVIEunderASC810andNRGisnotconsideredtheprimarybeneficiary.TheCompanyaccountsforitsinterestundertheequitymethodofaccounting.144TheIvanpahsolarelectricgeneratingprojectswerefundedinlargepartbyloansguaranteedbytheU.S.DOEandequityfromtheprojects'partners.Duringthefirstquarterof2018,allinterestedpartiessoughtarestructuringofIvanpah'sdebtinordertoavoidapotentialeventofdefaultwithrespecttotheloansinconnectionwithseveralrecentevents.Ensuingnegotiationsculminatedinasettlementduringthesecondquarterof2018betweenthepartieswhichresultedincertaintransactions,includingthereleaseofreservestotaling$95milliontofundequitydistributionstothepartners,whichreducedtheequityatrisk,andtheprepaymentofcertainofthedebtbalanceoutstanding,andtheamendmentofcertainofIvanpah'sgoverningdocuments.Theequitydistributionsandprepaymentofdebtwerefundedbytheagreeduponreleaseofreservefunds.TheseeventswereconsideredtobeareconsiderationeventinaccordancewithASC810.Asaresult,NRGdeterminedthatitisnottheprimarybeneficiaryanddeconsolidatedIvanpah.NRGrecognizedalossof$22milliononthedeconsolidationandsubsequentrecognitionofIvanpahasanequitymethodinvestment.ThedeconsolidationofIvanpahreducedtheCompany'sassetsbyapproximately$1.3billion,whichwasprimarilyproperty,plantandequipment,andreducedtheCompany'sliabilitiesby$1.2billion,whichwasprimarilylong-termdebt.OtherEquityInvestmentsGladstone— Throughajointventure,NRGownsa37.5%interestinGladstone,a1,613MWcoal-fueledpowergenerationfacilityinQueensland,Australia.ThepowergenerationfacilityismanagedbythejointventureparticipantsandthefacilityisoperatedbyNRG.Operatingexpensesincurredinconnectionwiththeoperationofthefacilityarefundedbyeachoftheparticipantsinproportiontotheirownershipinterests.CoalissourcedfromlocalminesinQueensland.NRGandthejointventureparticipantsreceivetheirrespectiveshareofrevenuesdirectlyfromtheofftakersinproportiontotheownershipinterestsinthejointventure.Powergeneratedbythefacilityisprimarilysoldtoanadjacentaluminumsmelter,withexcesspowersoldtotheQueenslandGovernment-ownedutilityunderlong-termsupplycontracts.NRG'sinvestmentinGladstonewas$124millionasofDecember 31,2019.EntitiesthatareConsolidatedTheCompanyhasacontrollingfinancialinterestincertainentitieswhichhavebeenidentifiedasVIEsunderASC810.Thesearrangementsarerelatedtotaxequityarrangementsenteredintowiththird-partiesinordertofinancethecostofsolarenergysystemsunderoperatingleaseseligibleforcertaintaxcreditsasfurtherdescribedinNote2,SummaryofSignificantAccountingPolicies.The summarized financial information for the Company's consolidated VIEs consisted of the following:(In millions)December 31, 2019December 31, 2018Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3$3Net property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7176Other long-term assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2728Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101107Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2429Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3638Redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2019Net assets less noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $45$50Note18 — Earnings/(Loss)PerShareBasicincome/(loss)percommonshareiscomputedbydividingnetincome/(loss)bytheweightedaveragenumberofcommonsharesoutstanding.Sharesissuedandtreasurysharesrepurchasedduringtheyearareweightedfortheportionoftheyearthattheywereoutstanding.Dilutedincome/(loss)pershareiscomputedinamannerconsistentwiththatofbasicincome/(loss)pershare,whilegivingeffecttoallpotentiallydilutivecommonsharesthatwereoutstandingduringtheperiod.Dilutiveeffectforequitycompensationandotherequityinstruments— Theoutstandingnon-qualifiedstockoptions,non-vestedrestrictedstockunits,andmarketstockunitsandrelativeperformancestockunitsarenotconsideredoutstandingforpurposesofcomputingbasicincome/(loss)pershare.However,theseinstrumentsareincludedinthedenominatorforpurposesofcomputingdilutedincome/(loss)pershareunderthetreasurystockmethod.The2048ConvertibleSeniorNotesareconvertible,undercertaincircumstances,intotheCompany’scommonstock,cashorcombinationthereof(atNRG'soption).Thereisnodilutiveeffectforthe2048ConvertibleSeniorNotesduetotheCompany’sexpectationtosettletheliabilityincash.145ThereconciliationofNRG'sbasicincome/(loss)persharetodilutedincome/(loss)pershareisshowninthefollowingtable:Year Ended December 31, (In millions, except per share amounts)201920182017Basic income/(loss) per share attributable to NRG, Inc; Net income/(loss) attributable to NRG Energy, Inc. common stockholders . . . . .$4,438$268$(2,153)Weighted average number of common shares outstanding-basic . . . . . . . . . . . . . . . . . . . .262304317Income/(Loss) per weighted average common share — basic . . . . . . . . . . . . . . . . . . . . . $16.94$0.88$(6.79)Diluted income/(loss) per share attributable to NRG, Inc; Net income/(loss) attributable to NRG Energy, Inc. common stockholders . . . . .$4,438$268$(2,153)Weighted average number of common shares outstanding-basic . . . . . . . . . . . . . . . . . . . .262304317 Incremental shares attributable to the issuance of equity compensation (treasury stock method) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24—Weighted average number of common shares outstanding-diluted . . . . . . . . . . . . . . . . . . .264308317Income/(Loss) per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . .$16.81$0.87$(6.79)ThefollowingtablesummarizesNRG'soutstandingequityinstrumentsthatareanti-dilutiveandwerenotincludedinthecomputationoftheCompany'sdilutedincome/(loss)pershare:Year Ended December 31,(In millions)201920182017Equity compensation plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——5Note19 — SegmentReportingAsofDecember31,2019,theCompany'sreportablesegmentswereGeneration,RetailandCorporatesegments.RetailincludesMassmarketandC&Icustomers,aswellasotherdistributedandreliabilityproducts.Generationincludesallpowerplantactivities,aswellasrenewables.Intersegmentsalesareaccountedforatmarket.OnFebruary4,2019,theCompanycompletedthesaleanddeconsolidationofSouthCentralPortfolio.OnAugust31,2018,NRGdeconsolidatedNRGYieldInc.,itsRenewablesPlatformandCarlsbadforfinancialreportingpurposes.In2018,thefinancialinformationforhistoricalperiodswasrecasttoreflectthepresentationofdiscontinuedoperationswithinthecorporatesegment.RefertoNote4,Acquisitions,DiscontinuedOperationsandDispositions,forfurtherdiscussion.NRG'schiefoperatingdecisionmaker,itschiefexecutiveofficer,evaluatestheperformanceofitssegmentsbasedonoperationalmeasuresincludingadjustedearningsbeforeinterest,taxes,depreciationandamortization,orAdjustedEBITDA,freecashflowandcapitalforallocation,aswellasnetincome/(loss)andnetincome/(loss)attributabletoNRGEnergy,Inc.TheCompanyhadnocustomerthatcomprisedmorethan10%oftheCompany'sconsolidatedrevenuesduringtheyearsendedDecember 31,2019and2017.ThecompanyhadonecustomerintheGenerationsegmentthatcomprised11%oftheCompany'sconsolidatedrevenuesduringtheyearendedDecember31,2018.146For the Year Ended December 31, 2019(In millions)RetailGenerationCorporate(a)EliminationsTotalOperating revenues(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,680$3,847$—$(1,706)$9,821Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7,0312,77750(1,705)8,153Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .15718531—373Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14——5Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—7——7Total operating cost and expenses . . . . . . . . . . . . . . . . . 7,1892,97381(1,705)8,538(Loss)/Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . (1)26—7Operating income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . .490876(75)(1)1,290Equity in earnings of unconsolidated affiliates . . . . . . . . . . . —2——2Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . —(101)(7)—(108)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23232—66Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . —(3)(48)—(51)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)(24)(386)—(413)Income/(loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489782(484)(1)786Income tax expense/(benefit) . . . . . . . . . . . . . . . . . . . . . . . . .22(3,338)—(3,334)Net income from continuing operations . . . . . . . . . . . . .4877802,854(1)4,120Gain from discontinued operations, net of income tax . . . . . ——321—321Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4877803,175(1)4,441Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . .3———3Net income attributable to NRG Energy, Inc. . . . . . . . .$484$780$3,175$(1)$4,438Balance sheetEquity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . $—$388$—$—$388Capital expenditures6013434—228Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .414165——579Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,573$5,467$8,531$(5,040)$12,531(a) Inter-segment sales and inter-segment net derivative gains and losses included in operating revenues . . . . . . . . $10$1,602$94$—$1,706147For the Year Ended December 31, 2018(In millions)RetailGenerationCorporate(a)Eliminations TotalOperating revenues(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,103$3,443$—$(1,068)$9,478Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,9193,021126(1,069)7,997Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .11627233—421Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198——99Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .192(1)11Total operating cost and expenses . . . . . . . . . . . . . . . . . 6,0373,400161(1,070)8,528Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—230—32Operating income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . .1,06645(131)2982Equity in earnings of unconsolidated affiliates . . . . . . . . . . . —104(5)9Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . —(15)——(15)Other income/(loss), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—20(1)(1)18Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . ——(44)—(44)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)(58)(422)—(483)Income/(loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,0632(594)(4)467Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1—6—7Net income/(loss) from continuing operations . . . . . . . .1,0622(600)(4)460Loss from discontinued operations, net of income tax . . . . . .——(192)—(192)Net Income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,0622(792)(4)268Less: Net income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . 19(5)(5)—Net income/(loss) attributable to NRG Energy, Inc. . . .$1,061$(7)$(787)$1$268Balance sheetEquity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . $—$412$—$—$412Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9026731—388Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .408165——573Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,291$5,735$7,006$(5,404)$10,628(a) Inter-segment sales and inter-segment net derivative gains and losses included in operating revenues$9$1,085$(26)$—$1,068148For the Year Ended December 31, 2017(In millions)RetailGenerationCorporate(a)Eliminations TotalOperating revenues(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$6,369$3,615$13$(923)$9,074Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,3773,071243(925)7,766Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .11045435(3)596Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81,526——1,534Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3136—22Total operating costs and expenses . . . . . . . . . . . . . . . . 5,4985,064284(928)9,918Other income - affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——87—87Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—151—16Operating income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . .871(1,434)(183)5(741)Equity in (losses)/earnings of unconsolidated affiliates . . . . .—(14)5(5)(14)Impairment losses on investments . . . . . . . . . . . . . . . . . . . . . —(75)(4)—(79)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—2328—51Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . ——(49)—(49)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6)(100)(451)—(557)Income/(loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 865(1,600)(654)—(1,389)Income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . .(8)2(38)—(44)Net income/(loss) from continuing operations . . . . . . . .873(1,602)(616)—(1,345)Loss from discontinued operations, net of income tax . . . . . .——(992)—(992)Net Income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 873(1,602)(1,608)—(2,337)Less: Net income/(loss) attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . 14(189)—(184)Net income/(loss) attributable to NRG Energy, Inc. . . .$872$(1,606)$(1,419)$—$(2,153)(a) Inter-segment sales and inter-segment net derivative gains and losses included in operating revenues . . . . . . . . $4$877$42$—$923Note20 — IncomeTaxesTheincometaxprovisionfromcontinuingoperationsconsistedofthefollowingamounts:Year Ended December 31,(In millions, except effective income tax rate)201920182017CurrentState . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2$6$19Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4——Total — current6619DeferredU.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(3,000)(16)(60)State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(340)16(5)Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—12Total — deferred(3,340)1(63)Total income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(3,334)$7$(44)Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (424.2)%1.5%3.2%149DuringtheyearendedDecember31,2019,NRGreleasedthemajorityofitsvaluationallowanceagainstitsU.S.federalandstatedeferredtaxassets,resultinginanon-cashbenefittoincometaxexpenseofapproximately$3.5 billion.InmakingthedeterminationtoreleasethemajorityofthevaluationallowanceasofDecember31,2019,theCompanyevaluatedanumberoffactors,includingitsrecenthistoryofpre-taxearnings,utilizationof$593 millionofNOLsin2019,aswellasitsforecastedfuturepre-taxearnings.Basedonthisevaluation,theCompanydeterminedthatthemajorityofitsfuturetaxbenefitsaremore-likely-than-nottoberealized.GiventheCompany’scurrentlevelofpre-taxearningsandforecastedfuturepre-taxearnings,theCompanyexpectstogenerateincomebeforetaxesintheU.S.infutureperiodsatalevelthatwouldfullyutilizeitsU.S.federalNOLcarryforwardsandthemajorityofitsstateNOLcarryforwardspriortotheirexpiration.Thefollowingrepresentedthedomesticandforeigncomponentsofincome/(loss)fromcontinuingoperationsbeforeincometaxes:Year Ended December 31,(In millions)201920182017U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $771$468$(1,406)Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15(1)17Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$786$467$(1,389)ReconciliationsoftheU.S.federalstatutorytaxratetoNRG'seffectivetaxratewereasfollows:Year Ended December 31,(In millions, except effective income tax rate)201920182017Income/(loss) from continuing operations before income taxes . . . . . . . $786$467$(1,389)Tax at federal statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16598(486)State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131819Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——2Permanent differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(9)7—Valuation allowance - current period activities . . . . . . . . . . . . . . . . . . .(3,492)(106)455Book goodwill impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——30Deferred impact of state tax rate changes . . . . . . . . . . . . . . . . . . . . . . . 12——Production tax credits ("PTC") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(7)(8)Recognition of uncertain tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . . (10)1(5)Alternative minimum tax ("AMT") refundable credit . . . . . . . . . . . . . .—(4)(64)Tax Act - corporate income tax rate change . . . . . . . . . . . . . . . . . . . . . ——665Valuation allowance due to corporate income tax rate change . . . . . . .——(660)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)—8Income tax (benefit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(3,334)$7$(44)Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (424.2)%1.5%3.2%(1,389)(13)(3,334)(44)For the year ended December 31, 2019, NRG's effective income tax rate was lower than the federal statutory tax rate of 21%primarily due to the tax benefit from the release of the valuation allowance.FortheyearendedDecember 31,2018,NRG'seffectiveincometaxratewaslowerthanthefederalstatutorytaxrateof21%primarilyduetoataxbenefitforthechangeinvaluationallowance,thegenerationofPTCsfromvariouswindfacilitiesandestablishmentofthepreviouslysequesteredAMTcreditreceivable,partiallyoffsetbycurrentstatetaxexpense.FortheyearendedDecember 31,2017,NRG'seffectiveincometaxratewaslowerthanthefederalstatutorytaxrateof35%primarilyduetotaxexpenserecordedfromtherevaluationoftheexistingnetdeferredtaxassetandstatetaxes,partiallyoffsetbythechangeinvaluationallowance,establishingtheAMTcreditandthegenerationofPTCsfromvariouswindfacilities.Thetaxexpenserecordedforrevaluationofthenetdeferredtaxassetisrequiredtoreflectthereductioninthecorporateincometaxratefrom35%to21%inaccordancewiththeTaxAct.150Thetemporarydifferences,whichgaverisetotheCompany'sdeferredtaxassetsandliabilitiesconsistedofthefollowing:As of December 31,(In millions)20192018Deferred tax assets:Deferred compensation, accrued vacation and other reserves$81$134Difference between book and tax basis of property548554Goodwill—11Differences between book and tax basis of contracts—38Pension and other postretirement benefits8687Equity compensation119Bad debt reserve1314U.S. Federal net operating loss carryforwards2,1162,241Foreign net operating loss carryforwards10563State net operating loss carryforwards360379Federal and state tax credit carryforwards384381Federal benefit on state uncertain tax positions46Intangibles amortization (excluding goodwill)—21Interest disallowance carryforward per §163(j) of the Tax Act82102Inventory obsolescence77Other3—Discontinued operations—17Total deferred tax assets3,8004,064Deferred tax liabilities:Emissions allowances1915Derivatives, net2737Goodwill8—Intangibles amortization (excluding goodwill)15—Equity method investments201180Convertible Debt1921Other—1Discontinued operations—36Total deferred tax liabilities289290Total deferred tax assets less deferred tax liabilities 3,5113,774Valuation allowance(242)(3,812)Discontinued operations—19Total deferred tax assets/(liabilities), net of valuation allowance$3,269$(19)3,269(19)ThefollowingtablesummarizesNRG'snetdeferredtaxpositionaspresentedintheconsolidatedbalancesheets:As of December 31,(In millions)20192018Deferred tax asset $3,286$46Deferred tax liability(17)(65)Net deferred tax asset/(liability)$3,269$(19)(17)(65)Theprimarydriverforthechangefroma$19millionnetdeferredtaxliabilityasofDecember31,2018toanetdeferredtaxassetof$3.3billionasofDecember31,2019isthereleaseintheCompany’svaluationallowance,partiallyoffsetbyutilizationoffederalandstateNOLs.DeferredtaxassetsandvaluationallowanceNetdeferredtaxbalance— AsofDecember 31,2019and2018,NRGrecordedanetdeferredtaxasset,excludingvaluationallowance,of$3.5billionand$3.8billion,respectively.TheCompanybelievescertainstatenetoperatinglossesmaynotberealizableunderthemore-likely-than-notmeasurementandassuch,avaluationallowancewasrecordedasofDecember31,2019asdiscussedbelow.151NOLcarryforwards— AsofDecember 31,2019,theCompanyhadtaxeffectedcumulativeU.S.NOLsconsistingofcarryforwardsforfederalandstateincometaxpurposesof$2.1billionand$360million,respectively.TheCompanyestimatesitwillneedtogeneratefuturetaxableincometofullyrealizethenetfederaldeferredtaxassetbeforetheexpirationofcertaincarryforwardscommencesin2031.Inaddition,NRGhascumulativeforeignNOLcarryforwardsof$105millionwithnoexpirationdate.Valuationallowance— AsofDecember 31,2019,theCompany'stax-effectedvaluationallowancewas$242million,consistingofstateNOLcarryforwardsandforeignNOLcarryforwards.Thevaluationallowancewasrecordedbasedontheassessmentofcumulativeandforecastedpre-taxbookearningsandthefuturereversalofexistingtaxabletemporarydifferences.TaxesReceivableandPayableAsofDecember 31,2019,NRGrecordedacurrenttaxpayableof$13millionthatrepresentsataxliabilitydueforstateincometaxesthatisprimarilycomprisedofTexasmargintax.NRGhasataxreceivableof$1million,comprisedofrefundsduefromstateincometaxestimatedpaymentsandreturnfilings.UncertaintaxbenefitsNRGhasidentifieduncertaintaxbenefitswithafter-taxvalueof$15millionand$26millionasofDecember 31,2019and2018,forwhichNRGhasrecordedanon-currenttaxliabilityof$17millionand$30million,respectively.TheCompanyrecognizesinterestandpenaltiesrelatedtouncertaintaxbenefitsinincometaxexpense.TheCompanyrecognizedexpenseof$1millionrelatedtointerestineachoftheyearsendedDecember 31,2019,2018and2017.AsofDecember 31,2019and2018,NRGhadcumulativeinterestandpenaltiesrelatedtotheseuncertaintaxbenefitsof$2millionand$4million,respectively.Taxjurisdictions— NRGissubjecttoexaminationbytaxingauthoritiesforincometaxreturnsfiledintheU.S.federaljurisdictionandvariousstateandforeignjurisdictionsincludingoperationslocatedinAustralia.TheCompanyisnolongersubjecttoU.S.federalincometaxexaminationsforyearspriorto2016.Withfewexceptions,stateandlocalincometaxexaminationsarenolongeropenforyearsbefore2011.Thefollowingtablesummarizesuncertaintaxbenefitsactivity:As of December 31,(In millions)20192018Balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26$30Increase due to current year positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Settlements, payments and statute closure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(13)(8)Uncertain tax benefits as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$15$26Note21 — Stock-BasedCompensationNRGEnergy,Inc.Long-TermIncentivePlanOnApril27,2017,theNRGLTIPwasamendedtoincreasethenumberofsharesavailableforissuanceby3,000,000.AsofDecember 31,2019and2018,atotalof25,000,000sharesofNRGcommonstockwereauthorizedforissuanceundertheNRGLTIP.Therewere9,935,750and8,564,611sharesofcommonstockremainingavailableforgrantsundertheNRGLTIPasofDecember 31,2019and2018,respectively.TheNRGLTIPissubjecttoadjustmentsintheeventofreorganization,recapitalization,stocksplit,reversestocksplit,stockdividend,andacombinationofshares,mergerorsimilarchangeinNRG'sstructureoroutstandingsharesofcommonstock.UponadoptionoftheamendedNRGLTIPeffectiveApril27,2017,nosharesofNRGcommonstockremainavailableforfutureissuanceundertheNRGGenOnLTIP.AsofDecember 31,2019and2018,therewere319,264and520,182sharesofcommonstockremainingavailableforgrantsundertheNRGGenOnLTIP,respectively.152RestrictedStockUnitsAs of December 31, 2019, RSUs granted under the Company's LTIPs typically have three-year graded vesting schedules beginning on the grant date. Fair value of the RSUs granted during 2019 is derived from the closing price of NRG common stock on the grant date.The following table summarizes the Company's non-vested RSU awards and changes during the year:UnitsWeighted Average Grant Date Fair Value per UnitNon-vested at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,458,082$16.16Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .266,93837.37Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (73,905)24.73Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(933,876)14.20Non-vested at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717,23925.56(933,876)717,239ThetotalfairvalueofRSUsvestedduringtheyearsendedDecember 31,2019,2018,and2017was$36million,$42million,and$19million,respectively.TheweightedaveragegrantdatefairvalueofRSUsgrantedduringtheyearsendedDecember 31,2019,2018,and2017was$37.37,$28.90,and$12.44,respectively.DeferredStockUnitsDSUsrepresenttherightofaparticipanttobepaidoneshareofNRGcommonstockattheendofadeferralperiodestablishedunderthetermsoftheaward.DSUsgrantedundertheCompany'sLTIPsarefullyvestedatthedateofissuance.FairvalueoftheDSUs,whichisbasedontheclosingpriceofNRGcommonstockonthedateofgrant,isrecordedascompensationexpenseintheperiodofgrant.ThefollowingtablesummarizestheCompany'soutstandingDSUawardsandchangesduringtheyear:UnitsWeighted Average Grant Date Fair Value per UnitOutstanding at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .331,915$22.94Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57,63034.84Converted to Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(58,322)28.93Outstanding at December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331,22323.98Date Fair Value per Unit331,223TheaggregateintrinsicvaluesforDSUsoutstandingasofDecember 31,2019,2018,and2017wereapproximately$13million,$13million,and$12million,respectively.TheaggregateintrinsicvaluesforDSUsconvertedtocommonstockfortheyearsendedDecember 31,2019,2018,and2017were$2million,$6million,and$4million,respectively.TheweightedaveragegrantdatefairvalueofDSUsgrantedduringtheyearsendedDecember 31,2019,2018,and2017was$34.84,$33.43,and$16.76,respectively.PerformanceStockUnitsPSUsentitletherecipienttostockuponvesting.TheamountoftheawardissubjecttotheCompany'sachievementofcertainperformancemeasuresoverthevestingperiod.PSUsincludeRPSUsandMSUs.AsofDecember 31,2019,non-vestedPSUsconsistprimarilyofRPSUs.RelativePerformanceStockUnits—RPSUsarerestrictedgrantswherethequantityofsharesincreasesanddecreasesalongsidetheCompany'sTotalShareholderReturn,orTSR,relativetotheTSRoftheCompany'scurrentproxypeergroupandthetotalreturnsofselectindexes,orPeerGroup.EachRPSUrepresentsthepotentialtoreceiveNRGcommonstockafterthecompletionoftheperformanceperiod,typicallythreeyearsofservicefromthedateofgrant.ThenumberofsharesofNRGcommonstocktobepaid(ifany)asofthevestingdateforeachRPSUwilldependontheCompany’spercentilerankwithinthePeerGroup.ThenumberofsharesofcommonstocktobepaidasofthevestingdateforeachRPSUislinearlyinterpolatedforTSRperformancebetweenthefollowingpoints:(i) 0%ifrankedbelowthe25thpercentile;(ii) 25%ifrankedatthe25thpercentile;(iii) 100%ifrankedatthe55thpercentile(orthe65thpercentileiftheCompany'sabsoluteTSRislessthannegative15%);and(iv)200%ifrankedatthe75thpercentileorabove.ThevalueofthecommonstockonthedateofgrantisbasedontheclosingpriceofNRGcommonstockonthedateofgrant.153MarketStockUnits—MSUsarerestrictedgrantswherethequantityofsharesincreasesanddecreasesalongsidetheCompany'sTSR.EachMSUrepresentsthepotentialtoreceiveNRGcommonstockafterthecompletionoftheperformanceperiod,typicallythreeyearsofservicefromthedateofgrant.ThenumberofsharesofcommonstocktobepaidasofthevestingdateforeachMSUis:(i) zeroshares,iftheTSRhasdecreasedbymorethan25%overtheperformanceperiod,(ii)three-quartersofoneshare,iftheTSRhasdecreasedby25%overtheperformanceperiod;(iii)interpolatedbetweenthree-quartersofoneshareandoneshare,iftheTSRhasdecreasedlessthan25%overtheperformanceperiod;(iv) oneshare,ifthereisnochangeinTSRovertheperformanceperiod;(v)interpolatedbetweenoneshareandtwoshares,ifTSRincreaseslessthan100%duringtheperformanceperiod;and(vi) twoshares,iftheTSRincreases100%overtheperformanceperiod.ThevalueofthecommonstockonthedateofgrantwasbasedontheclosingpriceofNRGcommonstockonthedateofgrant.TheCompanylastgrantedMSUsduringtheyearendedDecember31,2016.ThefollowingtablesummarizestheCompany'snon-vestedPSUawardsandchangesduringtheyear:UnitsWeighted Average Grant-Date Fair Value per UnitNon-vested at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,710,634$19.12Granted(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 936,88922.50Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (37,526)23.04Vested(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,409,456)14.72Non-vested at December 31, 2019(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,200,54126.65Date Fair Value per Unit(1,409,456)1,200,541(a) The weighted average grant date fair value per unit includes RPSUs that were granted during 2019 with grant date fair value of $45.77 and MSUs with 2016 grant date fair value of $14.72, that due to vesting at 200%, were considered additional grants in 2019(b) MSUs granted during 2016 vested during 2019 at 200%(c) Non-vested units includes 8,645 MSUsTheweightedaveragegrantdatefairvalueofPSUsgrantedduringtheyearsendedDecember 31,2019,2018,and2017,was$22.50,$35.36,and$15.91,respectively.ThefairvalueofPSUsisestimatedonthedateofgrantusingaMonteCarlosimulationmodelandexpensedovertheserviceperiod,whichequalsthevestingperiod.SignificantassumptionsusedinthefairvaluemodelwithrespecttotheCompany'sPSUsaresummarizedbelow:2019201820172016RPSUsRPSUsRPSUsMSUsExpected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.72%47.52%43.96%34.33%Expected term (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . .3333Risk free rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.45%2.01%1.5%1.31%FortheyearsendedDecember 31,2019and2018,expectedvolatilityiscalculatedbasedonNRG'shistoricalstockpricevolatilitydataovertheperiodcommensuratewiththeexpectedtermofthePSU,whichequalsthevestingperiod.Non-QualifiedStockOptionsAll NQSOs granted under the Company's LTIP were fully vested as of December 31, 2019, 2018, and 2017. No NQSOs were granted in 2019, 2018 or 2017. NRG recognizes compensation costs for NQSOs over the requisite service period for the entire award. No compensation expense was recognized during 2019, 2018 and 2017 as it was fully recognized in prior years. The maximum contractual term is 10 years for NRG's outstanding NQSOs. ThefollowingtablesummarizestheCompany'sNQSOactivityandchangesduringtheyear:SharesWeighted AverageExercise PriceWeighted Average Remaining Contractual Term (in years)Aggregate Intrinsic Value (in millions)Outstanding at December 31, 2018 . . . . . . . . . . . . 279,934$25.042$4Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(8,254)26.76Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (137,282)24.67Outstanding at December 31, 2019 . . . . . . . . . . .134,39825.3112Exercisable at December 31, 2019 . . . . . . . . . . . .134,39825.3112(137,282)134,398154The following table summarizes the total intrinsic value of options exercised and the cash received from the exercises of options:Year Ended December 31,(In millions)201920182017Total intrinsic value of options exercised . . . . . . . . . . . . . . . . . . . . . . . . .$2$10$1Cash received from options exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . 3244SupplementalInformationThefollowingtablesummarizesNRG'stotalcompensationexpenserecognizedfortheyearspresented,aswellastotalnon-vestedcompensationcostsnotyetrecognizedandtheperiodoverwhichthisexpenseisexpectedtoberecognizedasofDecember 31,2019,foreachofthetypesofawardsissuedundertheLTIPs.Minimumtaxwithholdingsof$36million,$19million,and$5millionfortheyearsendedDecember 31,2019,2018,and2017,respectively,arereflectedasareductiontoadditionalpaid-incapitalontheCompany'sconsolidatedbalancesheets.Non-vested Compensation Cost (In millions, except weighted average data)Compensation ExpenseUnrecognizedTotal CostWeighted Average Recognition Period Remaining (In years)Year Ended December 31,As of December 31,Award20192018201720192019RSUs . . . . . . . . . . . . . . . . . . . . . . . . . 9121581.06DSUs . . . . . . . . . . . . . . . . . . . . . . . . . 222—0.00MSUs . . . . . . . . . . . . . . . . . . . . . . . . .—45—0.50RPSUs . . . . . . . . . . . . . . . . . . . . . . . . 107390.71PRSUs(a) . . . . . . . . . . . . . . . . . . . . . . .111613101.05Total(b) . . . . . . . . . . . . . . . . . . . . . . . . $32$41$38$27Tax detriment recognized . . . . . . . . . $(12)$(4)$(5)(12)(4)(5)(a) Phantom Restricted Stock Units, PRSUs, are liability-classified time-based awards that typically vest ratably over a three-year period. The amount to be paid upon vesting is based on NRG's closing stock price for the period (b) Does not include compensation expense of $1 million, and $6 million for the years ended 2018, and 2017, respectively, which was recorded in loss from discontinued operations in the Company's consolidated statements of operationsNote22 — RelatedPartyTransactionsNRGprovidesservicestosomeofitsequitymethodinvestmentsunderoperationsandmaintenanceagreements.FeesfortheservicesundertheseagreementsincluderecoveryofNRG'scostsofoperatingtheplants.Certainagreementsalsoincludefeesforadministrativeservice,abasemonthlyfee,profitmarginand/orannualincentivebonus.The following table summarizes NRG's material related party transactions with third party affiliates:Year Ended December 31,(In millions)201920182017Revenues from Related Parties Included in Operating RevenuesGladstone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$4$3$3GenConn(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—45Ivanpah(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3520—Midway-Sunset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55—Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$44$32$8(a) As of August 31, 2018,NRG no longer had an ownership interest in GenConn as a result of the sale of its ownership interests in NRG Yield, Inc. and its Renewables Platform(b) Also includes fees under project management agreements with each project company. Ivanpah became a related party to NRG upon deconsolidation in the second quarter of 2018155Services Agreement and Transition Services Agreement with GenOnTheCompanyprovidedGenOnwithvariousmanagement,personnelandotherservices,whichincludedhumanresources,regulatoryandpublicaffairs,accounting,tax,legal,informationsystems,treasury,riskmanagement,commercialoperations,andassetmanagement,assetforthintheservicesagreementwithGenOn,ortheServicesAgreement.TheannualfeesundertheServicesAgreementwasapproximately$193millionandmanagementhadconcludedthatthismethodofchargingoverheadcostswasreasonable.InconnectionwiththeRestructuringSupportAgreementin2017,NRGagreedtoprovidesharedservicestoGenOnundertheServicesAgreementforanadjustedannualizedfeeof$84million.InDecember2017,inconjunctionwiththeconfirmationoftheGenOnEntities'planofreorganization,theServicesAgreementwasterminatedandreplacedbythetransitionservicesagreement.Underthetransitionservicesagreement,NRGprovidedthesharedservicesandotherseparationservicesatanannualizedrateof$84million,subjecttocertaincreditsandadjustments.GenOnprovidednoticetoNRGofitsintenttoterminatethetransitionservicesagreementeffectiveAugust15,2018andinconnectionwiththesettlementagreementdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,allamountsowedandpayabletoNRGweresettledagainstthe$28millioncreditprovidedforintheRestructuringSupportAgreement.FortheyearendedDecember 31,2018,NRGrecordedapproximately$53million,underthetransitionservicesagreementagainstselling,generalandadministrativeexpensespost-Chapter11Filing.FortheyearendedDecember 31,2017,NRGrecordedotherincome-affiliaterelatedtotheseservicesof$87millionpriortotheChapter11Filingand$42millionagainstselling,generalandadministrativeexpensespost-Chapter11Filing.CreditAgreementwithGenOnNRGandGenOnwerepartytoasecuredintercompanyrevolvingcreditagreement. Theintercompanyrevolvingcreditagreementprovidedfora$500millionrevolvingcreditfacility,allofwhichwasavailableforrevolvingloansandlettersofcredit.AsaresultoftheGenOnbankruptcy,noadditionalrevolvingloansorlettersofcreditwereavailabletoGenOn.AsofDecember 31,2017,$92millionoflettersofcreditwereissuedandoutstanding.AsaresultoftheGenOnSettlement,asfurtherdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions,outstandingborrowingswererepaidtoNRG,exceptforcertainLCsissuedwhicharefurtherdiscussedbelow.ThefacilitywasterminatedonDecember14,2018.OnDecember7,2018,NRG,GenOnandREMAenteredintoanagreementtosupporttheoutstandingLCsfromtheintercompanyrevolvingcreditagreementpreviouslyissued.AsofDecember 31,2019,$14millionwasoutstanding.GenOnandREMAhaveprovidedsupportfortheseoutstandingLCsthroughback-to-backlettersofcreditandcashcollateral.Theoutstandinglettersofcreditwillcontinuetoaccrueanycontractualfeesandexpensesuntiltheyareterminated.Note23 — CommitmentsandContingenciesCoal,GasandTransportationCommitmentsNRGhasenteredintolong-termcontractualarrangementstoprocurefuelandtransportationservicesfortheCompany'sgenerationassets.AsofDecember 31,2019,theCompany'sminimumcommitmentsundersuchoutstandingagreementsareestimatedasfollows:Period(In millions)2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1242021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1252022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .732023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .532024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139Total(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$576(a) Actual coal, gas and transportation purchases are significantly higher than these estimated minimum unconditional long- term firm commitments FortheyearsendedDecember 31,2019,2018,and2017,theCompanypurchased$1.2 billion,$1.2 billion,and$1.1 billion,respectivelyundersucharrangements.PurchasedPowerCommitmentsNRGhaspurchasedpowercontractsofvariousquantitiesanddurations,includingrenewablepurchasedpoweragreementsunderPPAswiththird-partyprojectdevelopers,thatarenotclassifiedasderivativeassetsandliabilitiesanddonot156qualifyasoperatingleases.ThesecontractsarenotincludedintheconsolidatedbalancesheetasofDecember 31,2019.MinimumpurchasecommitmentobligationsareasfollowsasofDecember 31,2019:Period(In millions)2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$352021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .492022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .682023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .562024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$613First Lien StructureNRGhasgrantedfirstlienstocertaincounterpartiesonasubstantialportionofpropertyandassetsownedbyNRGandtheguarantorsofitsseniordebt.NRGusesthefirstlienstructuretoreducetheamountofcashcollateralandlettersofcreditthatitwouldotherwiseberequiredtopostfromtimetotimetosupportitsobligationsunderout-of-the-moneyhedgeagreementsforforwardsalesofpowerorgasusedasaproxyforpower.Totheextentthattheunderlyinghedgepositionsforacounterpartyareout-of-the-moneytoNRG,thecounterpartywouldhaveaclaimunderthefirstlienprogram.AsofDecember 31,2019,hedgesunderthefirstlienwerein-the-moneyforNRGonacounterpartyaggregatebasis. Jewett Mine Lignite Contract TheCompany'sLimestonefacilityhistoricallyburnedligniteobtainedfromtheJewettmine,whichwasoperatedbyTexasWestmorelandCoalCo.,orTWCC.OnoraboutMarch15,2019,theJewettmineandrelatedlignitesupplyagreementwithNRGwereacquiredbyWestmorelandMiningLLCpursuanttoaplanofreorganizationconfirmedbytheU.S.BankruptcyCourtfortheSouthernDistrictofTexas.ActiveminingunderthelignitesupplyagreementceasedasofDecember31,2016;however,underthetermsofthelignitesupplyagreement,themineoperatorremainsresponsibleforundertakingreclamationactivitiesandNRGisresponsibleforreclamationcosts.NRGhasrecordedanadequateAROliability.TheRailroadCommissionofTexashasimposedabondobligationofapproximately$99 millionforthereclamationoftheJewettmine,whichNRGsupportsthroughsuretybonds.Thecostofthereclamationmayexceedthevalueofthebonds.Additionally,thelignitesupplyagreementobligatesNRGtoprovideadditionalperformanceassuranceifrequiredbytheRailroadCommissionofTexas.NuclearInsuranceSTPmaintainsrequiredinsurancecoverageforliabilityclaimsarisingfromnuclearincidentspursuanttothePrice-AndersonAct.Thecurrentliabilitylimitperincidentis$13.9 billion,subjecttochangetoaccountfortheeffectsofinflationandthenumberoflicensedreactors.AninflationadjustmentmustbemadeatleastonceeveryfiveyearswiththenextduenolaterthanSeptember10,2023.UnderthePrice-AndersonAct,ownersofnuclearpowerplantsintheU.S.arerequiredtopurchaseprimaryinsurancelimitsof$450millionforeachoperatingsite.Inaddition,thePrice-AndersonActrequiresanadditionallayerofprotectionthroughmandatoryparticipationinaretrospectiveratingplanforpowerreactorsresultinginanadditional$13.5billioninfundsavailableforpublicliabilityclaims.Thecurrentmaximumassessmentperincident,perreactor,isapproximately$138million,takingintoaccounta5%adjustmentforadministrativefees,payableatapproximately$21millionperyear,perreactor.NRGwouldberesponsiblefor44%ofthemaximumassessment,or$9millionperyear,perreactor,andamaximumof$61millionperincident.Inaddition,theU.S.Congressretainstheabilitytoimposeadditionalfinancialrequirementsonthenuclearindustrytopayliabilityclaimsthatexceed$14 billionforasingleincident.Theliabilitiesoftheco-ownersofSTPwithrespecttotheretrospectivepremiumassessmentsfornuclearliabilityinsurancearejointandseveral.157STPpurchasesinsuranceforpropertydamageandsitedecontaminationcleanupcostsfromNuclearElectricInsuranceLimited,orNEIL,andEuropeanMutualAssociationforNuclearInsurance,orEMANI,bothofwhichareindustrymutualinsurancecompanies,ofwhichSTPisamember.STPhaspurchased$2.75billioninlimitsfornucleareventsand$1.0billioninlimitsfornon-nuclearevents.ThenucleareventlimitremainsthemaximumavailablefromNEIL.Theupper$1.25billioninnucleareventslimits(excessofthefirst$1.5billioninnucleareventslimits)isasinglelimitblanketpolicysharedwithtwoDiabloCanyonnuclearreactors,whichhavenoaffiliationwiththeCompany.Thissharedlimitisnotsubjecttoautomaticreinstatementintheeventofaloss.TheNEILprimarypolicycoversbothnuclearandnon-nuclearpropertydamageevents,andaNEILcompanionpolicyprovidesAccidentalOutagecoveragefortheco-ownersofSTP'slostrevenuefollowingapropertydamageevent,ataweeklyindemnitylimitof$2.5millionperunituptoamaximumof$274millionnuclearperunitand$184millionnon-nuclearperunit,andissubjecttoaneight-weekwaitingperiod.NRGalsopurchasesanAccidentalOutagepolicyfromNEIL,whichprovidesprotectionforlostrevenueduetoaninsurableevent.Thiscoverageallowsforreimbursementupto$1.98millionperweekperunituptoamaximumof$216millionnuclearand$144millionnon-nuclear,andissubjecttoaneight-weekwaitingperiod.UnderthetermsoftheNEILandEMANIpolicies,membercompaniesmaybeassesseduptotenandsixtimestheirannualpremiumsrespectivelyiftheNEILorEMANIBoardofDirectorsdeterminestheirsurplushasbeendepletedduetothepaymentofpropertylossesatanyofthelicensedreactorsinasinglepolicyyear.NEILandEMANIrequirethattheirmembersmaintainaninvestmentgradecreditratingorinsuretheirannualretrospectiveobligationbyprovidingafinancialguarantee,letterofcredit,depositpremium,oraninsurancepolicy.NRGhaspurchasedaninsurancepolicyfromNEILandEMANItoguaranteetheCompany'sobligation;howevernotetheNEILaspectofthisinsurancewillonlyrespondtoretrospectivepremiumadjustmentsassessedwithintwenty-fourmonthsafterthepolicyterm,whereasNEIL'sBoardofDirectorscanmakesuchanadjustmentupto6yearsafterthepolicyexpires.ContingenciesTheCompany'smateriallegalproceedingsaredescribedbelow.TheCompanybelievesthatithasvaliddefensestotheselegalproceedingsandintendstodefendthemvigorously.NRGrecordsaccrualsforestimatedlossesfromcontingencieswheninformationavailableindicatesthatalossisprobableandtheamountoftheloss,orrangeofloss,canbereasonablyestimated.Asapplicable,theCompanyhasestablishedanadequateaccrualfortheapplicablelegalmatters,includingregulatoryandenvironmentalmattersasfurtherdiscussedinNote24,RegulatoryMatters,andNote25,EnvironmentalMatters.Inaddition,legalcostsareexpensedasincurred.Managementhasassessedeachofthefollowingmattersbasedoncurrentinformationandmadeajudgmentconcerningitspotentialoutcome,consideringthenatureoftheclaim,theamountandnatureofdamagessought,andtheprobabilityofsuccess.Unlessspecifiedbelow,theCompanyisunabletopredicttheoutcomeoftheselegalproceedingsorreasonablyestimatethescopeoramountofanyassociatedcostsandpotentialliabilities.Asadditionalinformationbecomesavailable,managementadjustsitsassessmentandestimatesofsuchcontingenciesaccordingly.Becauselitigationissubjecttoinherentuncertaintiesandunfavorablerulingsordevelopments,itispossiblethattheultimateresolutionoftheCompany'sliabilitiesandcontingenciescouldbeatamountsthataredifferentfromitscurrentlyrecordedaccrualsandthatsuchdifferencecouldbematerial.Inadditiontothelegalproceedingsnotedbelow,NRGanditssubsidiariesarepartytootherlitigationorlegalproceedingsarisingintheordinarycourseofbusiness.Inmanagement'sopinion,thedispositionoftheseordinarycoursematterswillnotmateriallyadverselyaffectNRG'sconsolidatedfinancialposition,resultsofoperations,orcashflows.MidwestGenerationAsbestosLiabilities—TheCompany,throughitssubsidiaries,settledtheindemnificationclaimsbroughtbyCommonwealthEdisonCompanyandExelonGenerationCompanyLLC(collectively,"ComEd")asaresultoftheCompany'sacquisitionofEME.PursuanttoasettlementagreementdatedasofMay29,2019,theCompanypaid$26 milliontoComEdduringthesecondquarterof2019,whichwaspreviouslyaccrued.Inaddition,ComEdreleasedallclaimsthatwereorcouldhavebeenassertedinitsclaimsintheEMEbankruptcycaseandcertainoftheCompany'ssubsidiariesreleasedallpermissiveandcompulsorycounterclaimstheycouldhaveassertedinresponsetotheComEdclaims.Washington-St.TammanyandClaiborneElectricCooperativev.LaGen—OnJune28,2017,plaintiffsWashington-St.TammanyElectricCooperative,Inc.andClaiborneElectricCooperative,Inc.filedalawsuitagainstLouisianaGenerating,L.L.C.,orLaGen,intheUnitedStatesDistrictCourtfortheMiddleDistrictofLouisiana.TheplaintiffsclaimbreachofcontractagainstLaGenforallegedlyimproperlychargingtheplaintiffsforcostsrelatedtotheinstallationandmaintenanceofcertainpollutioncontroltechnology.Plaintiffsseekdamagesfortheallegedimproperchargesandadeclarationastowhichchargesareproperunderthecontract.InFebruary2020,thecourtdismissedthislawsuitwithoutprejudiceforlackofsubjectmatterjurisdiction.OnFebruary4,2019,NRGsoldtheSouthCentralPortfolio,includingtheentitiessubjecttothislitigation.However,NRGhasagreedtoindemnifythepurchaserforcertainlossessufferedinconnectiontherewith.Sierraclubetal.v.MidwestGenerationLLC—In2012,severalenvironmentalgroupsfiledacomplaintagainstMidwestGenerationwiththeIllinoisPollutionControlBoard("IPCB")allegingviolationsofenvironmentallawresultingingroundwatercontamination.InJune2019,theIPCBfoundthatMidwestGenerationviolatedthelawbecauseithadimproperlyhandledcoalashatfourfacilitiesinIllinoisandcausedorallowedcoalashconstituentstoimpactgroundwater.OnSeptember9,2019,MidwestGenerationfiledaMotiontoReconsidernumerousissues,whichthecourtgrantedinpartanddeniedinpart158onFebruary6,2020.TheIPCBwillholdhearingstodeterminetheappropriaterelief.MidwestGenerationhasbeenworkingwiththeIllinoisEPAtoaddressthegroundwaterissuessince2010.XOOMEnergyLitigation—XOOMisadefendantintwopurportedclassactionlawsuitspendinginMarylandandNewYork.Theplaintiffsgenerallyclaimthattheydidnotreceivethesavingstheywerepromisedintheirnaturalgasandelectricitybills.ThepartiesintheMarylandlawsuitarebriefingsummaryjudgmentandclasscertification.IntheNewYorkcase,XOOMfiledamotiontodismiss,whichthecourtgrantedonSeptember21,2018,laterenteringjudgmentinXOOM'sfavoronSeptember24,2018.TheplaintiffsintheNewYorkcaseappealedtotheU.S.CourtofAppealsfortheSecondCircuit.OnJuly26,2019,theSecondCircuitreversedthejudgmentofthedistrictcourtandremandedtothedistrictcourtwithinstructionsthatplaintiffsbepermittedtoproceedontheirproposedamendedcomplaint.Thismatterwasknownandaccruedforatthetimeoftheacquisition.Note24 — RegulatoryMattersNRGoperatesinahighlyregulatedindustryandissubjecttoregulationbyvariousfederalandstateagencies.Assuch,NRGisaffectedbyregulatorydevelopmentsatboththefederalandstatelevelsandintheregionsinwhichNRGoperates.Inaddition,NRGissubjecttothemarketrules,procedures,andprotocolsofthevariousISOandRTOmarketsinwhichNRGparticipates.ThesepowermarketsaresubjecttoongoinglegislativeandregulatorychangesthatmayimpactNRG'swholesaleandretailbusinesses.Inadditiontotheregulatoryproceedingsnotedbelow,NRGanditssubsidiariesarepartiestootherregulatoryproceedingsarisingintheordinarycourseofbusinessorhaveotherregulatoryexposure.Inmanagement'sopinion,thedispositionoftheseordinarycoursematterswillnotmateriallyadverselyaffectNRG'sconsolidatedfinancialposition,resultsofoperations,orcashflows.CaliforniaStationPower—Astheresultofunfavorablefinalandnon-appealablelitigation,theCompanyaccruedaliabilityassociatedwithconsumptionofstationpowerattheCompany'sEncinapowerplantfacilityinCaliforniaafterAugust30,2010.TheCompanyhasestablishedanappropriateaccrualpendingpotentialregulatoryactionbySDG&EregardingtheCompany'sEncinafacility.SouthCentral —OnAugust4,2016,NRGreceivedadocumentholdnoticefromFERCregardingconductintheMISOandPJMmarkets.ItrequiredNRGtoretaincommunicationsrelatedtomultiplegeneratingunitsintheSouthCentralregion.Sincesendingthenotice,FERChasbeeninvestigatingpotentialviolationsofMISOrulesinvolvingbiddingfortheBigCajun2facility,aswellasotheraspectsofNRG’soperationsinMISO.FERChastheauthoritytorequiredisgorgementofprofitsandtoimposepenaltiesandNRGretainsanyliabilityfollowingthesaleoftheSouthCentralPortfolio.WeexpectapreliminaryfindingfromFERCin2020.ISO-NE—OnFebruary5,2019,FERChasinformedtheCompanythatithasmadeapreliminaryfindingthattheCompanyviolatedFERC'smarketbehaviorrulesinconnectionwithoffersmadeintotheISO-NEForwardCapacityAuctionin2016. OnApril26,2019,NRGrespondedtothepreliminaryfindings.TheCompanyunderstandsthatFERCisconcernedthattheCompanywasinaccurateinitscommunicationswiththeMarketMonitorregardingthecostsandrisksassociatedwithoperatingcertainunitsintheforwardtimeframe.NRGwithdrewthebidspriortothe2016auctioninthenormalcourseofourcommercialbusinessdecisionmaking.Note25 — EnvironmentalMattersNRGissubjecttoawiderangeofenvironmentallawsinthedevelopment,construction,ownershipandoperationofpowerplants.Theselawsgenerallyrequirethatgovernmentalpermitsandapprovalsbeobtainedbeforeconstructionandduringoperationofpowerplants.NRGisalsosubjecttolawsregardingtheprotectionofwildlife.TheelectricgenerationindustryhasbeenfacingrequirementsregardingGHGs,combustionbyproducts,waterdischargeanduse,andthreatenedandendangeredspeciesthathavebeenputinplaceinrecentyears.However,underthecurrentU.S.presidentialadministration,someoftheserulesarebeingreconsideredandreviewed.Ingeneral,futurelawsareexpectedtorequiretheadditionofemissionscontrolsorotherenvironmentalcontrolsortoimposecertainrestrictionsontheoperationsoftheCompany'sfacilities,whichcouldhaveamaterialeffectontheCompany'sconsolidatedfinancialposition,resultsofoperations,orcashflows.Federalandstateenvironmentallawsgenerallyhavebecomemorestringentovertime,althoughthistrendcouldsloworpauseintheneartermwithrespecttofederallawsunderthecurrentU.S.presidentialadministration.159AirOnJuly8,2019,theEPApromulgatedtheAffordableCleanEnergy(ACE)rule,whichrescindedtheCleanPowerPlan(CPP),whichsoughttobroadlyregulateCO2emissionsfromthepowersector.TheACErulerequiresstatesthathavecoal-firedEGUstodevelopplanstoseekheatrateimprovementsfromcoal-firedEGUs.NumerouspartieshavechallengedtheACEruleintheD.C.CircuitandnumerouspartieshavefiledpetitionsforreconsiderationwiththeEPA.WaterEffluentLimitationsGuidelines—InNovember2015,theEPArevisedtheEffluentLimitationsGuidelinesforSteamElectricGeneratingFacilities,whichwouldhaveimposedmorestringentrequirements(asindividualpermitswererenewed)forwastewaterstreamsfromfluegasdesulfurization(FGD),flyash,bottomash,andfluegasmercurycontrol.OnSeptember18,2017,theEPApromulgatedafinalrulethat,amongotherthings,postponesthecompliancedatestopreservethestatusquoforFGDwastewaterandbottomashtransportwaterbytwoyearstoNovember2020untiltheEPAcompletesitsnextrulemaking.OnApril12,2019,theUnitedStatesCourtofAppealsfortheFifthCircuitaddressedchallengestotherulebroughtbyseveralenvironmentalgroupsrelatedtolegacywastewatersandcoalashleachateandremandedportionsoftheruletotheEPA.OnNovember22,2019,theEPAproposedamendingthe2015ELGruleby:(x)decreasingthestringencyoftheselenuimlimit(butincreasingthestringencyofthenitrateandmercurylimits)forFGDwastewater;(y)relaxingthezero-dischargerequirementforbottomashtransportwater;and(z)changingseveraldeadlines.TheCompanyhaseliminateditsestimateoftheenvironmentalcapitalexpendituresthatwouldhavebeenrequiredtocomplywithpermitsincorporatingtherevisedguidelines.TheCompanywillrevisittheseestimatesaftertheEPAfinalizesrevisionstotherule. Byproducts,Wastes,HazardousMaterialsandContaminationInApril2015,theEPAfinalizedtheruleregulatingbyproductsofcoalcombustion(e.g.,ashandgypsum)assolidwastesundertheRCRA.In2017,theEPAagreedtoreconsidertherule.OnJuly30,2018,theEPApromulgatedarulethatamendstheexistingashrulebyextendingsomeofthedeadlinesandprovidingmoreflexibilityforcompliance.OnAugust21,2018,theD.C.Circuitfound,amongotherthings,thattheEPAhadnotadequatelyregulatedunlinedpondsandlegacyponds.OnAugust14,2019,theEPAproposedtargetedchangestotheApril2015RuleincludingchangestoaddresstheAugust2018D.C.Circuitdecision.OnDecember2,2019,theEPAreleasedforcomment"ClosurePartAProposal"torevisetheCCRRuletoaddresstheD.C.Circuit's2018decisionregardingtheadequacyofclay-linedimpoundments,obligationstocloseallunlinedimpoundmentsandrelateddeadlines.OnFebruary20,2020,theEPAproposedtheframeworkfordevelopingandimplementingafederalpermitprogramforstatesthatarenotapprovedtoadministertheCCRrule.WeanticipatethattheEPAwillpromulgatenewregulationstoaddresstheseandotherissuesasitreconsidersotheraspectsoftheexistingrule.TheCompanywilldetermineestimatesofthecostofcomplianceaftertheruleisrevised.Note26 — CashFlowInformationDetailofsupplementaldisclosuresofcashflowandnon-cashinvestingandfinancinginformationwas:Year Ended December 31, (In millions)201920182017Interest paid, net of amount capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$372$436$543Income taxes paid, net of refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899Non-cash investing activities:Additions to fixed assets for accrued capital expenditures . . . . . . . . . . . . . . . .12019Note 27 — GuaranteesNRGanditssubsidiariesenterintovariouscontractsthatincludeindemnificationandguaranteeprovisionsasaroutinepartoftheCompany'sbusinessactivities.Examplesofthesecontractsincludeassetpurchasesandsaleagreements,commoditysaleandpurchaseagreements,retailcontracts,jointventureagreements,EPCagreements,operationandmaintenanceagreements,serviceagreements,settlementagreements,andothertypesofcontractualagreementswithvendorsandotherthirdparties,aswellasaffiliates.Thesecontractsgenerallyindemnifythecounterpartyfortax,environmentalliability,litigationandothermatters,aswellasbreachesofrepresentations,warrantiesandcovenantssetforthintheseagreements.TheCompanyisobligatedwithrespecttocustomerdepositsassociatedwiththeCompany'sretailbusinesses.Insomecases,NRG'smaximumpotentialliabilitycannotbeestimated,sincetheunderlyingagreementscontainnolimitsonpotentialliability.160ThefollowingtablesummarizesthemaximumpotentialexposuresthatcanbeestimatedforNRG'sguarantees,indemnities,andothercontingentliabilitiesbymaturity:By Remaining Maturity at December 31,(In millions)2019GuaranteesUnder1 Year1-3 Years3-5 YearsOver5 YearsTotal2018 TotalLetters of credit and surety bonds(a) . . . . . . . . .$878$115$31$—$1,024$1,253Asset sales guarantee obligations . . . . . . . . . . 4490—204698793Other guarantees . . . . . . . . . . . . . . . . . . . . . . . 775—206288721Total guarantees . . . . . . . . . . . . . . . . . . . . . . . .$959$610$31$410$2,010$2,767(a)December 31, 2019 includes $14 million of letter of credit and surety bonds for the benefit of GenOn where NRG holds cash or letter of credit to back stop the liabilityLettersofcreditandsuretybonds— AsofDecember 31,2019,NRGanditsconsolidatedsubsidiarieswerecontingentlyobligatedforatotalof$1.0billionunderlettersofcreditandsuretybonds.MostoftheselettersofcreditandsuretybondsareissuedinsupportoftheCompany'sobligationstoperformundercommodityagreementsandobligationsassociatedwithfutureclosureandmaintenanceofashsites,aswellasforfinancingorotherarrangements.Amajorityoftheselettersofcreditandsuretybondsexpirewithinoneyearofissuance,anditistypicalfortheCompanytorenewthemonsimilarterms.Thematerialindemnities,withinthescopeofASC460,areasfollows:Assetsales— ThepurchaseandsaleagreementswhichgovernNRG'sassetorshareinvestmentsanddivestiturescustomarilycontainguaranteesandindemnificationsofthetransactiontothirdparties.Thecontractsindemnifythepartiesforliabilitiesincurredasaresultofabreachofarepresentationorwarrantybytheindemnifyingparty,orasaresultofachangeintaxlaws.Theseobligationsgenerallyhaveadiscretetermandareintendedtoprotectthepartiesagainstrisksthataredifficulttopredictorestimateatthetimeofthetransaction.Inseveralcases,thecontractlimitstheliabilityoftheindemnifier.NRGhasnoreasontobelievethattheCompanycurrentlyhasanymaterialliabilityrelatingtosuchroutineindemnificationobligations,exceptasdescribedinNote4,Acquisitions,DiscontinuedOperationsandDispositions.Otherguarantees— NRGhasissuedotherguaranteesofobligationsincludingpaymentsundercertainagreementswithrespecttocertainofitsunconsolidatedsubsidiaries,paymentorperformancebyfuelprovidersandpaymentorreimbursementofcreditsupportanddeposits.TheCompanydoesnotbelievethatitwillberequiredtoperformundertheseguarantees.Otherindemnities— OtherindemnificationsNRGhasprovidedcoveroperational,tax,litigationandbreachesofrepresentations,warrantiesandcovenants.NRGhasalsoindemnified,onaroutinebasisintheordinarycourseofbusiness,consultantsorothervendorswhohaveprovidedservicestotheCompany.NRG'smaximumpotentialexposureundertheseindemnificationscanrangefromaspecifieddollaramounttoanindeterminateamount,dependingonthenatureofthetransaction.Totalmaximumpotentialexposureundertheseindemnificationsisnotestimableduetouncertaintyastowhetherclaimswillbemadeorhowtheywillberesolved.NRGdoesnothaveanyreasontobelievethattheCompanywillberequiredtomakeanymaterialpaymentsundertheseindemnityprovisions.BecausemanyoftheguaranteesandindemnitiesNRGissuestothirdpartiesandaffiliatesdonotlimittheamountordurationofitsobligationstoperformunderthem,thereexistsariskthattheCompanymayhaveobligationsinexcessoftheamountsdescribedabove.ForthoseguaranteesandindemnitiesthatdonotlimittheCompany'sliabilityexposure,itmaynotbeabletoestimatewhattheCompany'sliabilitywouldbe,untilaclaimismadeforpaymentorperformance,duetothecontingentnatureofthesecontracts.161Note28 — JointlyOwnedPlantsCertainNRGsubsidiariesownundividedinterestsinjointly-ownedplants,asdescribedbelow.Theseplantsaremaintainedandoperatedpursuanttotheirjointownershipparticipationandoperatingagreements.NRGisresponsibleforitssubsidiaries'shareofoperatingcostsanddirectexpensesandincludesitsproportionateshareofthefacilitiesandrelatedrevenuesanddirectexpensesinthesejointly-ownedplantsinthecorrespondingbalancesheetandincomestatementcaptionsoftheCompany'sconsolidatedfinancialstatements.ThefollowingtablesummarizesNRG'sproportionateownershipinterestintheCompany'sjointly-ownedfacilities:(In millions unless otherwise stated)As of December 31, 2019OwnershipInterestProperty, Plant &EquipmentAccumulatedDepreciationConstruction inProgressSouth Texas Project Units 1 and 2, Bay City, TX . . . 44.00%$413$(206)$8Cedar Bayou Unit 4, Baytown, TX . . . . . . . . . . . . . . 50.00%218(93)7Note29 — UnauditedQuarterlyFinancialDataRefertoNote4,Acquisitions,DiscontinuedOperationsandDispositions,Note11,AssetImpairments,andNote20,IncomeTaxes,foradescriptionoftheeffectofunusualorinfrequentlyoccurringeventsduringthequarterlyperiods.Summarizedunauditedquarterlyfinancialdataisasfollows:Quarter Ended2019 (In millions, except per share data)December 31September 30June 30March 31Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2,195$2,996$2,465$2,165Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209540320221Net income from continuing operations . . . . . . . . . . . . . . .3,46337418994(Loss)/income from discontinued operations . . . . . . . . . . .(78)(2)13388Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,385372202482Less: Net income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . 2—1—Income available to Common Stockholders . . . . . . . . . . . .$3,383$372$201$482Weighted average number of common shares outstanding — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251254265278(Loss)/income from discontinued operations per weighted average common share — basic . . . . . . . . . . . . . . . . . . . . .$(0.31)$(0.01)$0.05$1.39Net Income per weighted average common share — basic$13.48$1.46$0.76$1.73Weighted average number of common shares outstanding — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . .253256267280(Loss)/income from discontinued operations per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . $(0.31)$(0.01)$0.05$1.38Net income per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$13.37$1.45$0.75$1.72162Quarter Ended2018(In millions, except per share data)December 31September 30June 30March 31Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,992$2,960$2,461$2,065Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49398174361Net (loss)/income from continuing operations . . . . . . . . . .(93)28727238Income/(loss) from discontinued operations . . . . . . . . . . . .80(336)69(5)Net (loss)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)(49)96233Less: Net (loss)/income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . (2)2324(46)(Loss)/income available to Common Stockholders . . . . . . $(11)$(72)$72$279Weighted average number of common shares outstanding — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289299310318Income/(loss) from discontinued operations per weighted average common share — basic . . . . . . . . . . . . . . . . . . . . .$0.28$(1.12)$0.22$(0.02)Net (loss)/income per weighted average common share — basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(0.04)$(0.24)$0.23$0.88Weighted average number of common shares outstanding — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . .289299314322Income/(loss) from discontinued operations per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . $0.28$(1.12)$0.22$(0.02)Net (loss)/income per weighted average common share — diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$(0.04)$(0.24)$0.23$0.87163Note30 — CondensedConsolidatingFinancialInformationAsofDecember 31,2019,theCompanyhadoutstanding$4.4billionofSeniorNotesdue2026to2048andoutstanding$1.1billionofSeniorSecuredFirstLienNotesduefrom2024to2029,asshowninNote13,DebtandFinanceLeases.TheseSeniorNotesandSeniorSecuredFirstLienNotesareguaranteedbycertainofNRG'scurrentandfuture100%owneddomesticsubsidiaries,orguarantorsubsidiaries.Theseguaranteesarebothjointandseveral.Thenon-guarantorsubsidiariesincludeallofNRG'sforeignsubsidiariesandcertaindomesticsubsidiaries.Unlessotherwisenotedbelow,eachofthefollowingguarantorsubsidiariesfullyandunconditionallyguaranteedtheSeniorNotesandSeniorSecuredFirstLienNotesasofDecember 31,2019:Ace Energy, Inc.NRG Astoria Gas Turbine Operations Inc.NRG Oswego Harbor Power Operations Inc.Allied Home Warranty GP LLCNRG Business Services LLCNRG PacGen Inc.Allied Warranty LLCNRG Cabrillo Power Operations Inc.NRG Portable Power LLCArthur Kill Power LLCNRG California Peaker Operations LLCNRG Power Marketing LLCAstoria Gas Turbine Power LLCNRG Cedar Bayou Development Company, LLCNRG Reliability Solutions LLCBidURenergy, Inc.NRG Connected Home LLCNRG Renter's Protection LLCCabrillo Power I LLCNRG Connecticut Affiliate Services Inc.NRG Retail LLCCabrillo Power II LLCNRG Construction LLCNRG Retail Northeast LLCCarbon Management Solutions LLCNRG Curtailment Solutions, IncNRG Rockford Acquisition LLCCirro Group, Inc.NRG Development Company Inc.NRG Saguaro Operations Inc.Cirro Energy Services, Inc.NRG Devon Operations Inc.NRG Security LLCConnecticut Jet Power LLCNRG Dispatch Services LLCNRG Services CorporationDevon Power LLCNRG Distributed Energy Resources Holdings NRG SimplySmart Solutions LLCDunkirk Power LLCNRG Distributed Generation PR LLCNRG South Central Affiliate Services Inc.Eastern Sierra Energy Company LLCNRG Dunkirk Operations Inc.NRG South Central Operations Inc.El Segundo Power, LLCNRG ECOKAP Holdings LLCNRG South Texas LPEl Segundo Power II LLCNRG El Segundo Operations Inc.NRG Texas Gregory LLCEnergy Alternatives Wholesale, LLCNRG Energy Labor Services LLCNRG Texas Holding Inc.Energy Choice Solutions LLCNRG Energy Services Group LLCNRG Texas LLCEnergy Plus Holdings LLCNRG Energy Services International Inc.NRG Texas Power LLCEnergy Plus Natural Gas LLCNRG Energy Services LLCNRG Warranty Services LLCEnergy Protection Insurance CompanyNRG Generation Holdings, Inc.NRG West Coast LLCEverything Energy LLCNRG Greenco LLCNRG Western Affiliate Services Inc.Forward Home Security, LLCNRG Home & Business Solutions LLCO'Brien Cogeneration, Inc. IIGCP Funding Company, LLCNRG Home Services LLCOswego Harbor Power LLCGreen Mountain Energy CompanyNRG Home Solutions LLCReliant Energy Northeast LLCGregory Partners, LLCNRG Home Solutions Product LLCReliant Energy Power Supply, LLCGregory Power Partners LLCNRG Homer City Services LLCReliant Energy Retail Holdings, LLCHuntley Power LLCNRG HQ DG LLCReliant Energy Retail Services, LLCIndependence Energy Alliance LLCNRG Huntley Operations Inc.RERH Holdings, LLCIndependence Energy Group LLCNRG Identity Protect LLCSaguaro Power LLCIndependence Energy Natural Gas LLCNRG Ilion Limited PartnershipSomerset Operations Inc.Indian River Operations Inc.NRG Ilion LP LLCSomerset Power LLCIndian River Power LLCNRG International LLCTexas Genco GP, LLCMeriden Gas Turbines LLCNRG Maintenance Services LLCTexas Genco Holdings, Inc.Middletown Power LLCNRG Mextrans Inc.Texas Genco LP, LLCMontville Power LLCNRG MidAtlantic Affiliate Services Inc.Texas Genco Services, LPNEO CorporationNRG Middletown Operations Inc.US Retailers LLCNew Genco GP, LLCNRG Montville Operations Inc.Vienna Operations Inc.Norwalk Power LLCNRG North Central Operations Inc.Vienna Power LLCNRG Advisory Services LLCNRG Northeast Affiliate Services Inc.WCP (Generation) Holdings LLCNRG Affiliate Services Inc.NRG Norwalk Harbor Operations Inc.West Coast Power LLCNRG Arthur Kill Operations Inc.NRG Operating Services, Inc.NRGconductsmuchofitsbusinessthroughandderivesmuchofitsincomefromitssubsidiaries.Therefore,theCompany'sabilitytomakerequiredpaymentswithrespecttoitsindebtednessandotherobligationsdependsonthefinancialresultsandconditionofitssubsidiariesandNRG'sabilitytoreceivefundsfromitssubsidiaries.TherearenorestrictionsontheabilityofanyoftheguarantorsubsidiariestotransferfundstoNRG.Inaddition,theremayberestrictionsforcertainnon-guarantorsubsidiaries.164ThefollowingcondensedconsolidatingfinancialinformationpresentsthefinancialinformationofNRGEnergy, Inc.,theguarantorsubsidiariesandthenon-guarantorsubsidiariesinaccordancewithRule 3-10undertheSEC'sRegulation S-X.Thefinancialinformationmaynotnecessarilybeindicativeofresultsofoperationsorfinancialpositionhadtheguarantorsubsidiariesornon-guarantorsubsidiariesoperatedasindependententities.Inthispresentation,NRGEnergy, Inc.consistsofparentcompanyoperations.Guarantorsubsidiariesandnon-guarantorsubsidiariesofNRGarereportedonanequitybasis.Forcompaniesacquired,thefairvaluesoftheassetsandliabilitiesacquiredhavebeenpresentedonapush-downaccountingbasis.Inaddition,thecondensedparentcompanyfinancialstatementsareprovidedinaccordancewithRule12-04,Schedule IofRegulation S-X,astherestrictednetassetsofNRGEnergy,Inc.'ssubsidiariesexceed25 percentoftheconsolidatednetassetsofNRGEnergy,Inc.ThesestatementsshouldbereadinconjunctionwiththeconsolidatedstatementsandnotestheretoofNRGEnergy,Inc.ForadiscussionofNRGEnergy,Inc.'slong-termdebt,seeNote13,DebtandFinanceLeases,totheconsolidatedfinancialstatements.ForadiscussionofNRGEnergy,Inc.'scontingencies,seeNote23,CommitmentsandContingencies,totheconsolidatedfinancialstatements.ForadiscussionofNRGEnergy,Inc.'sguarantees,seeNote27,Guarantees,totheconsolidatedfinancialstatements.165NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSFor the Year Ended December 31, 2019(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc.(Note Issuer)Eliminations(a)ConsolidatedBalanceOperating RevenuesTotal operating revenues . . . . . . . . . . . . . . . . . . . .$8,041$1,791$—$(11)$9,821Operating Costs and Expenses . . . . . . . . . . . . . . .Cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . 5,9361,35127(11)7,303Depreciation and amortization . . . . . . . . . . . . . . . 21213031—373Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . 14——5Selling, general and administrative . . . . . . . . . . . .46683278—827Reorganization costs . . . . . . . . . . . . . . . . . . . . . . .——23—23Development costs . . . . . . . . . . . . . . . . . . . . . . . . ——7—7Total operating costs and expenses . . . . . . . . . . .6,6151,568366(11)8,538Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . 1—6—7Operating Income/(Loss) . . . . . . . . . . . . . . . . . . . .1,427223(360)—1,290Other Income/(Expense)Equity in earnings of consolidated subsidiaries . . 48—1,562(1,610)—Equity in earnings of unconsolidated affiliates . . .—2——2Impairment losses on investments . . . . . . . . . . . . .—(101)(7)—(108)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . 231231—66Loss on debt extinguishment, net . . . . . . . . . . . . . —(3)(48)—(51)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)(14)(385)—(413)Total other income/(expense) . . . . . . . . . . . . . . . .57(104)1,153(1,610)(504)Income from Continuing Operations Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,484119793(1,610)786Income tax expense/(benefit) . . . . . . . . . . . . . . . .—4(3,338)—(3,334)Income from Continuing Operations . . . . . . . . . .1,4841154,131(1,610)4,120Income from discontinued operations, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95307—321Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,4931204,438(1,610)4,441Less: Net income attributable to redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . .—3——3Net Income Attributable to NRG Energy, Inc. . .$1,493$117$4,438$(1,610)$4,438(a)All significant intercompany transactions have been eliminated in consolidation166NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOMEFor the Year Ended December 31, 2019(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)Consolidated BalanceNet Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,493$120$4,438$(1,610)$4,441Other Comprehensive Loss, net of taxForeign currency translation adjustments, net .—(1)(1)1(1)Available-for-sale securities, net . . . . . . . . . . .——(19)—(19)Defined benefit plan, net . . . . . . . . . . . . . . . . .(17)—(78)17(78)Other comprehensive loss . . . . . . . . . . . . . .(17)(1)(98)18(98)Comprehensive Income1,4761194,340(1,592)4,343Less: Comprehensive income attributable to redeemable noncontrolling interests . . . . . . —3——3Comprehensive Income Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,476$116$4,340$(1,592)$4,340(a)All significant intercompany transactions have been eliminated in consolidation167NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING BALANCE SHEETSDecember 31, 2019(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc.Eliminations(a)Consolidated BalanceASSETSCurrent AssetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$—$20$325$—$345Funds deposited by counterparties . . . . . . . . . . . . . . . . . . . . . . 32———32Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .512—8Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,293239233(740)1,025Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .272111——383Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85645—(41)860Cash collateral posted in support of energy risk management activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1828——190Prepayments and other current assets . . . . . . . . . . . . . . . . . . . . 170867—245 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,810432627(781)3,088Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . 1,483952158—2,593Other AssetsInvestment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .710—4,785(5,495)—Equity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . .—388——388Operating lease right-of-use assets, net . . . . . . . . . . . . . . . . . . .81261122—464Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359220——579Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375414——789Nuclear decommissioning trust fund . . . . . . . . . . . . . . . . . . . . .794———794Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30815—(13)310Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .421(19)2,884—3,286Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1453065—240 Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,1931,3097,856(5,508)6,850Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,486$2,693$8,641$(6,289)$12,531LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesCurrent portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . .$—$5$83$—$88Current portion of operating lease liabilities . . . . . . . . . . . . . . .203221—73Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918141403(740)722Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79725—(41)781Cash collateral received in support of energy risk management activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32———32Accrued expenses and other current liabilities . . . . . . . . . . . . . 28044339—663 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,047247846(781)2,359Other LiabilitiesLong-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302285,473—5,803Non-current operating lease liabilities . . . . . . . . . . . . . . . . . . . 64301118—483Nuclear decommissioning reserve . . . . . . . . . . . . . . . . . . . . . . .298———298Nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . 487———487Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3341—(13)322Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—17——17Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 399153532—1,084 Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,8845006,123(13)8,494Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3,9317476,969(794)10,853Redeemable noncontrolling interest in subsidiaries . . . . . . . . —20——20Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,5551,9261,672(5,495)1,658Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . .$7,486$2,693$8,641$(6,289)$12,5311,084(a)All significant intercompany transactions have been eliminated in consolidation168NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSFor the Year Ended December 31, 2019(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)ConsolidatedBalanceCash Flows from Operating ActivitiesNet income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,493$120$4,438$(1,610)$4,441Income from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95307—321Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,4841154,131(1,610)4,120Adjustments to reconcile net income to net cash provided by operating activities: . . .Distributions and equity in earnings of unconsolidated affiliates and consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (48)14(1,562)1,61014Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21213031—373Accretion of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .438——51Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7817——95Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52———52Amortization of financing costs and debt discount/premiums . . . . . . . . . . . . . .——26—26Adjustment for debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —348—51Amortization of emission allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2414——38Amortization of unearned equity compensation . . . . . . . . . . . . . . . . . . . . . . . . .——20—20Net gain on sale and disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(20)—(3)—(23)Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11057—113Changes in derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20(24)38—34Changes in deferred income taxes and liability for uncertain tax benefits . . . . .(525)(168)(2,660)—(3,353)Changes in collateral deposits in support of energy risk management activities1014——105Changes in nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . . . . .37———37Changes in other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(220)(118)(10)—(348)Cash provided by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,23910066—1,405Cash provided/(used) by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . .17(9)——8Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,2569166—1,413Cash Flows from Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intercompany dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——2,513(2,513)—Payments for acquisitions of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(355)———(355)Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(164)(27)(37)—(228)Net proceeds from sale of emission allowances . . . . . . . . . . . . . . . . . . . . . . . . .11———11Investments in nuclear decommissioning trust fund securities . . . . . . . . . . . . . (416)———(416)Proceeds from sales of nuclear decommissioning trust fund securities . . . . . . .381———381Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1400893—1,294Changes in investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . —(91)——(91)Net contributions to discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . .—(44)——(44)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——6—6Cash (used)/provided by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . (542)2383,375(2,513)558Cash used by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(2)——(2)Net Cash (Used)/Provided by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . .(542)2363,375(2,513)556Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intercompany dividends and transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (751)(214)(1,548)2,513—Payments of dividends to common stockholders . . . . . . . . . . . . . . . . . . . . . . . .——(32)—(32)Payments for share repurchase activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(1,440)—(1,440)Payments for debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(26)—(26)Net distributions to redeemable noncontrolling interests from subsidiaries . . . —(2)——(2)Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——3—3Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——1,916—1,916Payments of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(35)—(35)Payments for short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(139)(2,432)—(2,571)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(4)———(4)Cash used by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(755)(355)(3,594)2,513(2,191)Cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —43——43Net Cash Used by Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(755)(312)(3,594)2,513(2,148)Change in cash from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1732——49Net Decrease in Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(58)(17)(153)—(228)Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9538480—613Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$37$21$327$—$385(220)(118)(10)(348)(9)1,2561,413(2)(2)(542)3,375(2,513)(4)(4)(755)(312)(3,594)2,513(2,148)(a)All significant intercompany transactions have been eliminated in consolidation169NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSFor the Year Ended December 31, 2018(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc.(Note Issuer)Eliminations(a)ConsolidatedBalanceOperating RevenuesTotal operating revenues . . . . . . . . . . . . . . . . . . . .$8,119$1,385$—$(26)$9,478Operating Costs and Expenses . . . . . . . . . . . . . . . Cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . 6,14795928(26)7,108Depreciation and amortization . . . . . . . . . . . . . . . .23815033—421Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . 693——99Selling, general and administrative . . . . . . . . . . . .46263348(74)799Reorganization costs . . . . . . . . . . . . . . . . . . . . . . . 4—86—90Development costs . . . . . . . . . . . . . . . . . . . . . . . . .—111(1)11Total operating costs and expenses . . . . . . . . . . .6,8571,266506(101)8,528Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . 428——32Operating Income/(Loss) . . . . . . . . . . . . . . . . . . . .1,266147(506)75982Other Income/(Expense)Equity in earnings of consolidated subsidiaries . . 23—1,291(1,314)—Equity in earnings/(losses) of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —10(1)—9Impairment losses on investments . . . . . . . . . . . . .—(15)——(15)Other income/(expense), net . . . . . . . . . . . . . . . . . 32(13)(1)—18Loss on debt extinguishment, net . . . . . . . . . . . . . ——(44)—(44)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)(49)(420)—(483)Total other income/(expense) . . . . . . . . . . . . . . .41(67)825(1,314)(515)Income from Continuing Operations Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,30780319(1,239)467Income tax expense/(benefit) . . . . . . . . . . . . . . . .37219(384)—7Income from Continuing Operations . . . . . . . . . .93561703(1,239)460Income/(loss) from discontinued operations, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 6275(329)—(192)Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 997136374(1,239)268Less: Net (loss)/income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . —(181)10675—Net Income Attributable to NRG Energy, Inc. . .$997$317$268$(1,314)$268(a)All significant intercompany transactions have been eliminated in consolidation170NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOMEFor the Year Ended December 31, 2018(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)Consolidated BalanceNet Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $997$136$374$(1,239)$268Other Comprehensive Income/(Loss), net of taxUnrealized gain on derivatives, net . . . . . . . . . .—299(15)23Foreign currency translation adjustments, net . (10)(10)(13)22(11)Available-for-sale securities, net . . . . . . . . . . . .——1—1Defined benefit plan, net . . . . . . . . . . . . . . . . . .(9)—(35)9(35)Other comprehensive (loss)/income . . . . . . .(19)19(38)16(22)Comprehensive Income978155336(1,223)246Less: Comprehensive (loss)/income attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . —(166)1047614Comprehensive Income Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$978$321$232$(1,299)$232(a)All significant intercompany transactions have been eliminated in consolidation171NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING BALANCE SHEETSDecember 31, 2018(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc.Eliminations(a)ConsolidatedBalanceASSETSCurrent AssetsCash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55$28$480$—$563Funds deposited by counterparties . . . . . . . . . . . . . . . . . . . . . . 33———33Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .710——17Accounts receivable. net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,354115309(754)1,024Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .278134——412Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7795016(81)764Cash collateral posted in support of energy risk management activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27512——287Prepayments and other current assets . . . . . . . . . . . . . . . . . . . . 1803290—302Current assets - held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . .—1——1Current assets - discontinued operations . . . . . . . . . . . . . . . . . .17720——197Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,138402895(835)3,600Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . 1,938957153—3,048Other AssetsInvestment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .446—4,707(5,153)—Equity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . .—412——412Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359214——573Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422169——591Nuclear decommissioning trust fund . . . . . . . . . . . . . . . . . . . . .663———663Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296422(5)317Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6(143)183—46Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1337197(12)289Non-current assets - held-for-sale . . . . . . . . . . . . . . . . . . . . . . .—77——77Non-current assets - discontinued operations . . . . . . . . . . . . . . 405607——1,012Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,7301,4115,009(5,170)3,980Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$7,806$2,770$6,057$(6,005)$10,628LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesCurrent portion of long-term debt and finance leases . . . . . . . .$—$55$17$—$72Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,368(185)434(754)863Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71341—(81)673Cash collateral received in support of energy risk management activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33———33Accrued expenses and other current liabilities . . . . . . . . . . . . . 29136353—680Current liabilities - held-for-sale . . . . . . . . . . . . . . . . . . . . . . . .—5——5Current liabilities - discontinued operations . . . . . . . . . . . . . . .2448——72Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,429—804(835)2,398Other LiabilitiesLong-term debt and finance leases . . . . . . . . . . . . . . . . . . . . . . 2441926,025(12)6,449Nuclear decommissioning reserve . . . . . . . . . . . . . . . . . . . . . . .282———282Nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . 371———371Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3063—(5)304Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11261(108)—65Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 402320552—1,274Non-current liabilities - held-for-sale . . . . . . . . . . . . . . . . . . . . —65——65Non-current liabilities - discontinued operations . . . . . . . . . . . 58577——635Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,7751,2186,469(17)9,445Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4,2041,2187,273(852)11,843Redeemable noncontrolling interest in subsidiaries . . . . . . . . —19——19Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,6021,533(1,216)(5,153)(1,234)Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . .$7,806$2,770$6,057$(6,005)$10,6283,138(835)3,6001,9383,0481,0122,7301,4115,009(5,170)3,9802,429(835)2,3981,7751,2186,469(17)9,4454,2041,2187,273(852)11,843(a)All significant intercompany transactions have been eliminated in consolidation172NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSFor the Year Ended December 31, 2018(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)ConsolidatedBalanceCash Flows from Operating ActivitiesNet income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $997$136$374$(1,239)$268Income/(loss) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6275(329)—(192)Net income from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93561703(1,239)460Adjustments to reconcile net income to net cash provided by operating activities: . . .Distributions and equity in earnings of unconsolidated affiliates and consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23)47(1,231)1,25346Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23815033—421Accretion of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2810——38Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .796——85Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48———48Amortization of financing costs and debt discount/premiums . . . . . . . . . . . . . .—623—29Adjustment for debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——44—44Amortization of emission allowances and out-of-market contracts . . . . . . . . . . 369——45Amortization of unearned equity compensation . . . . . . . . . . . . . . . . . . . . . . . . .——25—25Net (gain)/loss on sale and disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . .(30)(20)1—(49)Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5109——114Changes in derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251511(14)37Changes in deferred income taxes and liability for uncertain tax benefits . . . . .3725(372)—5Changes in collateral deposits in support of energy risk management activities(94)(11)——(105)Changes in nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . . . . .60———60GenOn settlement, net of insurance proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .——(63)—(63)Net loss on deconsolidation of Agua Caliente and Ivanpah projects . . . . . . . . . —13——13Changes in other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(100)(166)16—(250)Cash provided/(used) by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,579234(810)—1,003Cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89285——374Net Cash Provided/(Used) by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . 1,668519(810)—1,377Cash Flows from Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intercompany dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——2,006(2,006)—Payments for acquisitions of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(40)(203)——(243)Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (192)(151)(45)—(388)Net proceeds from sale of emission allowances . . . . . . . . . . . . . . . . . . . . . . . . .19———19Investments in nuclear decommissioning trust fund securities . . . . . . . . . . . . . .(572)———(572)Proceeds from sales of nuclear decommissioning trust fund securities . . . . . . . 513———513Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1481,542—1,564Deconsolidation of Agua Caliente and Ivanpah projects . . . . . . . . . . . . . . . . . . —(268)——(268)Changes in investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . —(39)——(39)Net contributions to discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . .—(60)——(60)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(6)—(6)Cash (used)/provided by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .(258)(713)3,497(2,006)520Cash used by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(725)——(725)Net Cash (Used)/Provided by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . .(258)(1,438)3,497(2,006)(205)Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Intercompany dividends and transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,267)86(825)2,006—Payments of dividends to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . ——(37)—(37)Payments for treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(1,250)—(1,250)Payments for debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(32)—(32)Net distributions to noncontrolling interests from subsidiaries . . . . . . . . . . . . . —(16)——(16)Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——21—21Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —163937—1,100Payments of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(19)—(19)Payments for short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(138)(1,596)—(1,734)Receivable from affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——(26)—(26)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(4)——(4)Cash (used)/provided by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1,267)91(2,827)2,006(1,997)Cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—471——471Net Cash (Used)/Provided by Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . (1,267)562(2,827)2,006(1,526)Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . .—1——1Change in cash from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8931——120Net Increase/(Decrease) in Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54(387)(140)—(473)Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41425620—1,086Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $95$38$480$—$613(329)(192)(100)(166)(250)1,668(810)1,377(6)(6)(725)(725)(258)(1,438)3,497(2,006)(205)(4)(4)(1,267)(2,827)2,006(1,526)(a) All significant intercompany transactions have been eliminated in consolidation173NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSFor the Year Ended December 31, 2017(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc.Eliminations(a)ConsolidatedBalanceOperating RevenuesTotal operating revenues . . . . . . . . . . . . . . . . . . . .$7,818$1,304$—$(48)$9,074Operating Costs and Expenses . . . . . . . . . . . . . . .Cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . 5,99886272(46)6,886Depreciation and amortization . . . . . . . . . . . . . . . 34322132—596Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . 1,346188——1,534Selling, general and administrative . . . . . . . . . . . .41064364(2)836Reorganization costs . . . . . . . . . . . . . . . . . . . . . . .6—38—44Development costs . . . . . . . . . . . . . . . . . . . . . . . . —418—22Total operating costs and expenses . . . . . . . . . . 8,1031,339524(48)9,918Other income - affiliate . . . . . . . . . . . . . . . . . . . ——87—87Gain on sale of assets . . . . . . . . . . . . . . . . . . . . .412——16Operating Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .(281)(23)(437)—(741)Other Income/(Expense)Equity in earnings of consolidated subsidiaries . . 18—28(46)—Equity in losses of unconsolidated affiliates . . . . .—(10)(4)—(14)Impairment losses on investments . . . . . . . . . . . . .—(75)(4)—(79)Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . 91428—51Loss on debt extinguishment, net . . . . . . . . . . . . . ——(49)—(49)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)(91)(452)—(557)Total other income/(expense) . . . . . . . . . . . . . . 13(162)(453)(46)(648)Loss from Continuing Operations Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (268)(185)(890)(46)(1,389)Income tax (benefit)/expense . . . . . . . . . . . . . . . .(598)(62)616—(44)Income/(Loss) from Continuing Operations . . . .330(123)(1,506)(46)(1,345)Income/(loss) from discontinued operations, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . . .91(420)(663)—(992)Net Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . 421(543)(2,169)(46)(2,337)Less: Net loss attributable to noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(168)(16)—(184)Net Income/(Loss) Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$421$(375)$(2,153)$(46)$(2,153)(a)All significant intercompany transactions have been eliminated in consolidation174NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)For the Year Ended December 31, 2017(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)Consolidated BalanceNet Income/(Loss) . . . . . . . . . . . . . . . . . . . . . . . . . .$421$(543)$(2,169)$(46)$(2,337)Other Comprehensive Income/(Loss), net of taxUnrealized gain on derivatives, net . . . . . . . . . .11325(26)13Foreign currency translation adjustments, net . .67—(1)12Available-for-sale securities, net . . . . . . . . . . . .——(8)—(8)Defined benefit plan, net . . . . . . . . . . . . . . . . . . (13)3046(17)46Other comprehensive (loss)/income . . . . . . . (6)5063(44)63Comprehensive Income/(Loss) . . . . . . . . . . . . . . . .415(493)(2,106)(90)(2,274)Less: Comprehensive loss attributable to noncontrolling interest and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . —(103)(16)(60)(179)Comprehensive Income/(Loss) Attributable to NRG Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . $415$(390)$(2,090)$(30)$(2,095)(a)All significant intercompany transactions have been eliminated in consolidation175NRG ENERGY, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWSFor the Year Ended December 31, 2017(In millions)GuarantorSubsidiariesNon-GuarantorSubsidiariesNRG Energy, Inc. (Note Issuer)Eliminations(a)ConsolidatedBalanceCash Flows from Operating ActivitiesNet income/(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $421$(543)$(2,169)$(46)$(2,337)Income/(loss) from discontinued operations91(420)(663)—(992)Net income/(loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .330(123)(1,506)(46)(1,345)Adjustments to reconcile net income/(loss) to net cash provided by operating activities:Distributions and equity in earnings of unconsolidated affiliates and consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18)126048102Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34322132—596Accretion of asset retirement obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .377——44Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56—12—68Amortization of nuclear fuel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51———51Amortization of financing costs and debt discount/premiums . . . . . . . . . . . . . .—1316—29Adjustment for debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——49—49Amortization of emission allowances and out-of-market contracts . . . . . . . . . .4212——54Amortization of unearned equity compensation . . . . . . . . . . . . . . . . . . . . . . . . .——35—35Net loss/(gain) on sale and disposal of assets . . . . . . . . . . . . . . . . . . . . . . . . . . .2(11)——(9)Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,3462644—1,614Changes in derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (214)50(4)(2)(170)Changes in deferred income taxes and liability for uncertain tax benefits . . . . .(300)(9)322—13Changes in collateral deposits in support of energy risk management activities(98)18——(80)Changes in nuclear decommissioning trust liability . . . . . . . . . . . . . . . . . . . . . .11———11Changes in other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(15)(396)205—(206)Cash provided/(used) by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,57358(775)—856Cash provided by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116638——754Net Cash Provided/(Used) by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . .1,689696(775)—1,610Cash Flows from Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intercompany dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .——1,665(1,665)—Payments for acquisitions of businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(14)———(14)Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(180)(43)(31)—(254)Net proceeds from sale of emission allowances . . . . . . . . . . . . . . . . . . . . . . . . .66———66Investments in nuclear decommissioning trust fund securities . . . . . . . . . . . . . (512)———(512)Proceeds from sales of nuclear decommissioning trust fund securities . . . . . . .501———501Proceeds from sale of assets, net of cash disposed . . . . . . . . . . . . . . . . . . . . . . .3354343—430Changes in investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . —(57)——(57)Net distributions from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . .——150—150Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1812——30Cash (used)/provided by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . (88)(34)2,127(1,665)340Cash used by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13)(966)——(979)Net Cash (Used)/Provided by Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . .(101)(1,000)2,127(1,665)(639)Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Intercompany dividends and transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,447)(4)(214)1,665—Payment of dividends to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . .——(38)—(38)Payments for debt extinguishment costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(42)—(42)Net distributions to noncontrolling interests from subsidiaries . . . . . . . . . . . . . —(30)——(30)Payments for issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(2)—(2)Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—941,084—1,178Payment of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(2)(16)—(18)Payments for short and long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —(183)(1,701)—(1,884)Receivable from affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ——(125)—(125)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .—(8)——(8)Cash used by continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1,447)(133)(1,054)1,665(969)Cash used by discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109)(60)——(169)Net Cash Used by Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(1,556)(193)(1,054)1,665(1,138)Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . —(1)——(1)Change in cash from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6)(388)——(394)Net Increase/(Decrease) in Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38(110)298—226Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3535322—860Cash and Cash Equivalents, Restricted Cash, and Funds Deposited by Counterparties at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$41$425$620$—$1,086(420)(663)(992)(15)(396)(206)1,689(775)1,610(13)(966)(979)(101)(1,000)2,127(1,665)(639)(8)(8)(109)(60)(169)(1,556)(193)(1,054)1,665(1,138)(1)(1)(6)(388)(394)(a) All significant intercompany transactions have been eliminated in consolidation176SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTSFor the Years Ended December 31, 2019, 2018, and 2017(In millions)Balance atBeginning ofPeriodCharged toCosts andExpensesCharged toOther AccountsDeductionsBalance atEnd of PeriodAllowance for doubtful accounts, deducted from accounts receivableYear Ended December 31, 2019 . . . . . . . . . . . . . . . .$32$95$—$(84)(a)$43Year Ended December 31, 2018 . . . . . . . . . . . . . . . .2883—(79)(a)32Year Ended December 31, 2017 . . . . . . . . . . . . . . . .2857—(57)(a)28Income tax valuation allowance, deducted from deferred tax assetsYear Ended December 31, 2019 . . . . . . . . . . . . . . . .$3,794$(3,543)$(9)$—$242Year Ended December 31, 2018 . . . . . . . . . . . . . . . .1,8631,934(128)125(b)3,794Year Ended December 31, 2017 . . . . . . . . . . . . . . . .4,116(151)(15)(2,087)(c)1,863(a)Represents principally net amounts charged as uncollectible(b)Represents removal of NRG Yield, Inc. and its Renewables Platform due to their sale on August 31, 2018(c) Represents deconsolidation of GenOn due to its petition for bankruptcy on June 14, 2017177EXHIBIT INDEXNumberDescriptionMethod of Filing2.1Third Amended Joint Plan of Reorganization of NRG Energy, Inc., NRG Power Marketing, Inc., NRG Capital LLC, NRG Finance Company I LLC, and NRGenerating Holdings (No. 23) B.V.Incorporated herein by reference to Exhibit 99.1 to the Registrant's current report on Form 8-K filed on November 19, 2003.2.2First Amended Joint Plan of Reorganization of NRG Northeast Generating LLC (and certain of its subsidiaries), NRG South Central Generating (and certain of its subsidiaries) and Berrians I Gas Turbine Power LLC.Incorporated herein by reference to Exhibit 99.2 to the Registrant's current report on Form 8-K filed on November 19, 2003.2.3Acquisition Agreement, dated as of September 30, 2005, by and among NRG Energy, Inc., Texas Genco LLC and the Direct and Indirect Owners of Texas Genco LLC.Incorporated herein by reference to Exhibit 2.1 to the Registrant's current report on Form 8-K filed on October 3, 2005.2.4Asset Purchase Agreement, dated October 18, 2013, by and among NRG Energy, Inc., Edison Mission Energy and NRG Energy Holdings Inc.Incorporated herein by reference to Exhibit 2.2 to Amendment No. 1 to the Registrant’s current report on Form 8-K filed on October 21, 2013.2.5Third Amended Joint Plan of Reorganization of GenOn Energy, Inc. and its Debtor Affiliates.Incorporated herein by reference to Exhibit 2.1 to the Registrant's current report on Form 8-K filed on December 18, 2017.2.6†^Purchase and Sale Agreement, dated as of February 6, 2018, by and among NRG Energy, Inc. and NRG Repowering Holdings LLC, and GIP III Zephyr Acquisition Partners, L.P.Incorporated herein by reference to Exhibit 2.9 to the Registrant's annual report on Form 10-K filed on March 1, 2018.2.7^Purchase and Sale Agreement, dated as of February 6, 2018, by and between NRG Energy, Inc., NRG South Central Generating LLC, and Cleco Energy LLC.Incorporated herein by reference to Exhibit 2.10 to the Registrant's annual report on Form 10-K filed on March 1, 2018.3.1Amended and Restated Certificate of Incorporation.Incorporated herein by reference to Exhibit 3.1 to the Registrant's quarterly report on Form 10-Q filed on May 3, 2012.3.2Certificate of Amendment to Amended and Restated Certificate of Incorporation.Incorporated herein by reference to Exhibit 3.1 to the Registrant's current report on Form 8-K filed on December 14, 2012.3.3Fourth Amended and Restated By-Laws.Incorporated herein by reference to Exhibit 3.1 to the Registrant's current report on Form 8-K filed on February 13, 2017.4.1Specimen of Certificate representing common stock of NRG Energy, Inc.Incorporated herein by reference to Exhibit 4.3 to the Registrant's quarterly report on Form 10-Q filed on August 4, 2006.4.2Indenture, dated May 23, 2016, between NRG Energy, Inc. and Law Debenture Trust Company of New YorkIncorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on May 23, 2016. 4.3Supplemental Indenture, dated May 23, 2016, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on May 23, 2016.4.4Form of 7.250% Senior Notes due 2026Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on May 23, 2016.4.5Registration Rights Agreement,dated May 23,2016, among NRG Energy, Inc., the guarantors named therein and Deutsche Bank Securities Inc., as representative to the initial purchasers listed in Schedule I theretoIncorporated herein by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed on May 23, 2016.4.6Second Supplemental Indenture, dated as of July 19, 2016, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.Incorporated herein by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed on July 25, 2016. 4.7Third Supplemental Indenture, dated August 2, 2016, among NRG Energy, Inc., the guarantors named therein and Law Debenture Trust Company of New York.Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on August 3, 2016.1784.8Form of 6.625% Senior Note due 2027.Incorporated herein by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed on August 3, 2016.4.9Registration Rights Agreement, dated August 2, 2016, among NRG Energy, Inc., the guarantors named therein and Morgan Stanley & Co. LLC, as representative to the initial purchasers listed in Schedule I thereto.Incorporated herein by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed on August 3, 2016.4.10Supplemental Indenture, dated December 7, 2017, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee.Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on December 8, 2017.4.11Form of 5.75% Senior Notes due 2028 Incorporated herein by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K, filed on December 8, 2017.4.12Registration Rights Agreement, dated December 7, 2017, among NRG Energy, Inc., the guarantors named therein and Citigroup Global Markets, Inc., as representative to the initial purchasers listed in Schedule I thereto.Incorporated herein by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K, filed on December 8, 2017.4.13Indenture, dated May 24, 2018, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee.Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed on May 25, 2018.4.14Form of 2.75% Convertible Senior Notes due 2048. Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K, filed on May 25, 2018.4.15Description of NRG Energy, Inc. securities registered pursuant to section 12 of the Securities Exchange Act of 1934Filed herewith.10.1*Form of NRG Energy Inc. Long-Term Incentive Plan Deferred Stock Unit Agreement for Officers and Key Management.Incorporated herein by reference to Exhibit 10.14 to the Registrant's annual report on Form 10-K filed on March 30, 2005.10.2*Form of NRG Energy, Inc. Long-Term Incentive Plan Deferred Stock Unit Agreement for Directors.Incorporated herein by reference to Exhibit 10.15 to the Registrant's annual report on Form 10-K filed on March 30, 2005.10.3*Form of NRG Energy, Inc. Long-Term Incentive Plan Non-Qualified Stock Option Agreement.Incorporated herein by reference to Exhibit 10.1 to the Registrant's quarterly report on Form 10-Q filed on November 9, 2004.10.4*Form of NRG Energy, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement for Officers.Incorporated herein by reference to Exhibit 10.6 to the Registrant's annual report on Form 10-K filed on March 1, 2018.10.5*Form of NRG Energy, Inc. Long-Term Incentive Plan Restricted Stock Unit Agreement for Non-Officers.Incorporated herein by reference to Exhibit 10.7 to the Registrant's annual report on Form 10-K filed on March 1, 2018.10.6*Form of NRG Energy, Inc. Long-Term Incentive Plan Performance Stock Unit Agreement.Incorporated herein by reference to Exhibit 10.7 to the Registrant's annual report on Form 10-K filed on February 23, 2010.10.7*Second Amended and Restated Annual Incentive Plan for Designated Corporate Officers.Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on May 7, 2015.10.8†LLC Membership Interest Purchase Agreement between Reliant Energy, Inc. and NRG Retail LLC, dated as of February 28, 2009.Incorporated herein by reference to Exhibit 10.1 to the Registrant's quarterly report on Form 10-Q filed on April 30, 2009.10.9*The NRG Energy, Inc. Amended and Restated Long-Term Incentive Plan.Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on April 28, 2017.10.10*NRG 2010 Stock Plan for GenOn Employees.Incorporated herein by reference to Exhibit 10.49 to the Registrant’s annual report on Form 10-K filed on February 27, 2013.10.11*NRG Energy, Inc. Long-Term Incentive Plan Market Stock Unit Agreement.Incorporated herein by reference to Exhibit 10.53 to the Registrant's annual report on Form 10-K filed on February 28, 2014.10.12*NRG Energy, Inc. 2010 Stock Plan For GenOn Employees Market Stock Unit AgreementIncorporated herein by reference to Exhibit 10.54 to the Registrant's annual report on Form 10-K filed on February 28, 2014.17910.13*Amended and Restated Employee Stock Purchase Plan.Incorporated herein by reference to Exhibit 10.2 to the Registrant's current report on Form 8-K filed on April 28, 2017.10.14Employment Agreement, dated December 21, 2015, by and between NRG Energy, Inc. and Mauricio Gutierrez.Incorporated herein by reference to Exhibit 10.1 to the Registrant's current report on Form 8-K filed on December 24, 2015.10.15Amendment and Restatement Agreement, dated as of June 30, 2016, to the Amended and Restated Credit Agreement, the Second Amended and Restated Collateral Trust Agreement and the Amended and Restated Guarantee and Collateral Agreement.Incorporated herein by reference to Exhibit 10.1 to the Registrant's quarterly report on Form 10-Q filed on August 9, 2016.10.16Second Amended and Restated Credit Agreement, dated as of June 30, 2016, by and among NRG Energy, Inc., the lenders party thereto, the joint lead arrangers and joint lead bookrunners party thereto, Citicorp North America, Inc., Commerzbank AG, New York Branch, Keybank Capital Markets Inc. and CIT Bank, N.A.Incorporated herein by reference to Exhibit 10.2 to the Registrant's quarterly report on Form 10-Q filed on August 9, 2016.10.17First Amendment Agreement, dated as of January 24, 2017, dated as of January 24, 2017, by and among NRG Energy, Inc., the lenders from time to time parties thereto and Citicorp North America, Inc., as administrative agent and collateral agent.Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on January 24, 2017.10.18Settlement Agreement, dated as of December 14, 2017, by and between NRG Energy, Inc. on behalf of itself and the NRG Parties, GenOn Energy, Inc. on behalf of itself and the Debtors.Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.19Transition Services Agreement, dated as of December 14, 2017, by and between GenOn Energy, Inc. and NRG Energy, Inc.Incorporated herein by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.20Cooperation Agreement, dated as of December 14, 2017, by and between GenOn Energy, Inc. and NRG Energy, Inc.Incorporated herein by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.21Pension Indemnity Agreement, dated as of December 14, 2017, by and between NRG Energy, Inc. and GenOn Energy, Inc.Incorporated herein by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.22Employee Matters Agreement, dated as of December 14, 2017, by and between NRG Energy, Inc. and GenOn Energy, Inc.Incorporated herein by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.23Tax Matters Agreement, initially dated as of December 14, 2017, by and between NRG Energy, Inc. and GenOn Energy, Inc. and by Reorganized GenOn upon the Effective Date.Incorporated herein by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K filed on December 18, 2017.10.24*Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Officers. Incorporated herein by reference to Exhibit 10.73 to the Registrant's annual report on Form 10-K filed on March 1, 2018.10.25*Form of NRG Energy, Inc. Long-Term Incentive Plan Relative Performance Stock Unit Agreement for Senior Vice Presidents.Incorporated herein by reference to Exhibit 10.74 to the Registrant's annual report on Form 10-K filed on March 1, 2018.10.26†Consent and Indemnity Agreement, dated as of February 6, 2018, by and among NRG Energy, Inc., NRG Repowering Holdings LLC, NRG Yield, Inc., and GIP III Zephyr Acquisition Partners, L.P., and NRG Yield Operating LLC (solely with respect to Sections E.5, E.6 and G.12).Incorporated herein by reference to Exhibit 10.34 to NRG Yield, Inc.'s Annual Report on Form 10-K filed on March 1, 2018.10.27Second Amendment Agreement, dated as of March 21, 2018, by and among NRG Energy, Inc., the lenders from time to time parties thereto and Citicorp North America, Inc., as administrative agent and collateral agent.Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on March 22, 2018.10.28Third Amendment Agreement, dated as of May 7, 2018, by and among NRG Energy, Inc., its subsidiaries parties thereto, the lenders from time to time parties thereto and Citicorp North America, Inc., as administrative agent and collateral agent.Incorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on May 7, 2018.10.29* Amended and Restated Employee Stock Purchase PlanIncorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on May 7, 2018.10.30Indenture, dated May 23, 2016, between NRG Energy, Inc. and Delaware Trust Company (as successor in interest to Law Debenture Trust Company of New York), as trustee.Incorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on May 23, 2016.18010.31Fifth Supplemental Indenture, dated May 14, 2019, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee.Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 16, 2019.10.32 Form of 5.250% Senior Notes due 2029.Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 14, 2019.10.33Indenture, dated May 28, 2019, between NRG Energy, Inc. and Delaware Trust Company, as trusteeIncorporated herein by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed on May 30, 2019.10.34Supplemental Indenture, dated May 28, 2019, among NRG Energy, Inc., the guarantors named therein and Delaware Trust Company, as trustee.Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 30, 2019.10.35 Form of 3.750% Senior Secured First Lien Notes due 2024Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 30, 2019.10.36Form of 4.450% Senior Secured First Lien Notes due 2029Incorporated herein by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K filed on May 30, 2019.10.37Fourth Amendment dated as of May 28, 2019 to the Second Amended and Restated Credit Agreement dated as of June 30, 2016, included as Annex A thereto a clean, conformed copy of the Second Amended and Restated Credit AgreementIncorporated herein by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on November 7, 2019.10.38*NRG Energy, Inc. Amended and Restated Executive Change-in-Control and General Severance Plan for Tier IA and Tier IIA Executives (Amended and Restated Effective April 1, 2018).Incorporated herein by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q filed on August 2, 2018.21.1Subsidiaries of NRG Energy, Inc.Filed herewith.23.1Consent of KPMG LLP.Filed herewith.31.1Rule 13a-14(a)/15d-14(a) certification of Mauricio Gutierrez.Filed herewith.31.2Rule 13a-14(a)/15d-14(a) certification of Kirkland B. Andrews.Filed herewith.31.3Rule 13a-14(a)/15d-14(a) certification of David Callen.Filed herewith.32Section 1350 Certification.Furnished herewith.101 INSInline XBRL Instance Document.The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.101 SCHInline XBRL Taxonomy Extension Schema.Filed herewith.101 CALInline XBRL Taxonomy Extension Calculation Linkbase.Filed herewith.101 DEFInline XBRL Taxonomy Extension Definition Linkbase.Filed herewith.101 LABInline XBRL Taxonomy Extension Label Linkbase.Filed herewith.101 PREInline XBRL Taxonomy Extension Presentation Linkbase.Filed herewith.104Cover Page Interactive Data File (the cover page interactive data file does not appear in Exhibit 104 because it's Inline XBRL tags are embedded within the Inline XBRL document).Filed herewith.*Exhibitrelatestocompensationarrangements.†Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.^This filing excludes schedules pursuant to Item 601(b)(2) of Regulation S-K, which the registrant agrees to furnish supplementary to the Securities and Exchange Commission upon request by the Commission.Item 16. Form 10-K SummaryNone.181SIGNATURESPursuanttotherequirementsofSection 13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbytheundersignedthereuntodulyauthorized.NRG ENERGY, INC.(Registrant)By:/s/ MAURICIO GUTIERREZMauricio GutierrezChief Executive OfficerDate: February 27, 2020182POWER OF ATTORNEYEachpersonwhosesignatureappearsbelowconstitutesandappointsBrianE.CurciandChristineA.Zoino,eachoranyofthem,suchperson'strueandlawfulattorney-in-factandagentwithfullpowerofsubstitutionandresubstitutionforsuchpersonandinsuchperson'sname,placeandstead,inanyandallcapacities,tosignanyandallamendmentstothisreportonForm 10-K,andtofilethesamewithallexhibitsthereto,andotherdocumentsinconnectiontherewith,withtheSecuritiesandExchangeCommission,grantinguntosaidattorneys-in-factandagents,andeachofthem,fullpowerandauthoritytodoandperformeachandeveryactandthingnecessaryordesirabletobedoneinandaboutthepremises,asfullytoallintentsandpurposesassuchperson,herebyratifyingandconfirmingallthatsaidattorneys-in-factandagents,oranyofthemorhisortheirsubstituteorsubstitutes,maylawfullydoorcausetobedonebyvirtuehereof.InaccordancewiththeExchangeAct,thisreporthasbeensignedbythefollowingpersonsonbehalfoftheregistrantinthecapacitiesindicatedonFebruary 27,2020.SignatureTitleDate/s/ MAURICIO GUTIERREZ President, Chief Executive Officer andFebruary 27, 2020Mauricio GutierrezDirector (Principal Executive Officer)/s/ KIRKLAND B. ANDREWS Chief Financial OfficerFebruary 27, 2020Kirkland B. Andrews(Principal Financial Officer)/s/ DAVID CALLENChief Accounting OfficerFebruary 27, 2020David Callen(Principal Accounting Officer)/s/ LAWRENCE S. COBEN Chairman of the BoardFebruary 27, 2020Lawrence S. Coben/s/ E. SPENCER ABRAHAMDirectorFebruary 27, 2020E. Spencer Abraham/s/ ANTONIO CARRILLODirectorFebruary 27, 2020Antonio Carrillo/s/ MATTHEW CARTER, JR.DirectorFebruary 27, 2020Matthew Carter, Jr./s/ HEATHER COXDirectorFebruary 27, 2020Heather Cox/s/ TERRY G. DALLASDirectorFebruary 27, 2020Terry G. Dallas/s/ PAUL W. HOBBY DirectorFebruary 27, 2020Paul W. Hobby/s/ ALEXANDRA PRUNERDirectorFebruary 27, 2020Alexandra Pruner/s/ ANNE C. SCHAUMBURG DirectorFebruary 27, 2020Anne C. Schaumburg/s/ THOMAS H. WEIDEMEYER DirectorFebruary 27, 2020Thomas H. Weidemeyer183(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(cid:3)(This(cid:3)page(cid:3)intentionally(cid:3)left(cid:3)blank)(cid:3)Stockholder information STOCK TRANSFER AGENT AND REGISTRAR Shareholder correspondence should be mailed to: Computershare P.O. BOX 505000 Louisville, KY 40233-5000STOCKHOLDER INQUIRIES Overnight correspondence should be sent to: Computershare 462 South 4th Street, Suite 1600 Louisville, KY 40202 1.866.214.2213Email: shareholder@computershare.comOnline inquires: https://www-us.computershare.com/investor/ContactWebsite: www.computershare.com/investor Send certificates for transfer and address changes to: Computershare P.O. BOX 505000 Louisville, KY 40233-5000STOCK LISTING NRG’s common stock is listed on the New York Stock Exchange under the ticker symbol NRG.FINANCIAL INFORMATION NRG’s Annual Report on Form 10-K, Proxy Statement and other SEC Filings are available at www.nrg.com under the Investors section. Form 10-KNRG Energy, Inc. | 2019 Form 10-KNRG Energy, Inc. 804 Carnegie Center Princeton, NJ 08540-6213t: 609.524.4500 f: 609.524.4501nrg.comNRG and the plus signs are registered servicemarks of NRG Energy, Inc. NRG is a registered trademark of NRG Energy, Inc. © 2020 NRG Energy, Inc. All rights reserved. 421558534910 Louisiana St. Houston, TX 77002-6929t: 713.537.3000

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