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NRG NRG Energy

Filed: 5 Nov 20, 5:00pm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended:September 30, 2020
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 001-15891
NRG Energy, Inc.
(Exact name of registrant as specified in its charter)

Delaware41-1724239
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)

804 Carnegie Center,PrincetonNew Jersey08540
(Address of principal executive offices)(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 Registered
Common Stock, par value $0.01NRGNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes       No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes       No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes       No
As of November 5, 2020, there were 244,220,834 shares of common stock outstanding, par value $0.01 per share.


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TABLE OF CONTENTS
Index


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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q of NRG Energy, Inc., or NRG or the Company, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause NRG's actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors, risks and uncertainties include the factors described under Risk Factors, in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2019 and the following:
NRG's inability to estimate with any degree of certainty the future impact that COVID-19, any resurgence of COVID-19, or other pandemic may have on NRG's results of operations, financial position, risk exposure and liquidity;
NRG's ability to obtain and maintain retail market share;
General economic conditions, changes in the wholesale power markets and fluctuations in the cost of fuel;
Volatile power supply costs and demand for power;
Changes in law, including judicial decisions;
Hazards customary to the power production industry and power generation operations, such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that NRG may not have adequate insurance to cover losses as a result of such hazards;
NRG's ability to engage in successful sales and divestitures, as well as mergers and acquisitions activity;
NRG's ability to successfully integrate, realize cost savings and manage any acquired businesses;
The effectiveness of NRG's risk management policies and procedures and the ability of NRG's counterparties to satisfy their financial commitments;
Counterparties' collateral demands and other factors affecting NRG's liquidity position and financial condition;
NRG's ability to operate its businesses efficiently and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;
NRG's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices;
The liquidity and competitiveness of wholesale markets for energy commodities;
Government regulation, including changes in market rules, rates, tariffs and environmental laws;
Price mitigation strategies and other market structures employed by ISOs or RTOs that result in a failure to adequately and fairly compensate NRG's generation units;
NRG's ability to mitigate forced outage risk for units subject to capacity performance requirements in PJM, performance incentives in ISO-NE, and scarcity pricing in ERCOT;
NRG's ability to borrow funds and access capital markets, as well as NRG's substantial indebtedness and the possibility that NRG may incur additional indebtedness in the future;
Operating and financial restrictions placed on NRG and its subsidiaries that are contained in the indentures governing NRG's Senior Notes, Senior Secured Notes and Senior Credit Facility, and in debt and other agreements of certain of NRG subsidiaries and project affiliates generally;
Cyber terrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss and the possibility that NRG may not have adequate insurance to cover losses resulting from such hazards or the inability of NRG's insurers to provide coverage;
NRG's ability to develop and build new power generation facilities;
NRG's ability to develop and innovate new products, as retail and wholesale markets continue to change and evolve;
NRG's ability to implement its strategy of finding ways to meet the challenges of climate change, clean air and protecting natural resources, while taking advantage of business opportunities;
NRG's ability to increase cash from operations through operational and market initiatives, corporate efficiencies, asset strategy, and a range of other programs throughout NRG to reduce costs or generate revenues;
NRG's ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives;
NRG's ability to achieve the expected benefits of its Transformation Plan; and

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NRG's ability to develop and maintain successful partnering relationships as needed.
Forward-looking statements speak only as of the date they were made and NRG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing factors that could cause NRG's actual results to differ materially from those contemplated in any forward-looking statements included in this Quarterly Report on Form 10-Q should not be construed as exhaustive.

4


GLOSSARY OF TERMS
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
2019 Form 10-KNRG’s Annual Report on Form 10-K for the year ended December 31, 2019
2023 Term Loan FacilityThe Company's term loan facility due 2023, a component of the Senior Credit Facility, which was repaid during the second quarter of 2019
ACEAffordable Clean Energy
Agua CalienteAgua Caliente Solar Project, a 290 MW photovoltaic power station located in Yuma County, Arizona in which NRG owns 35% interest
AROAsset Retirement Obligation
ASCThe FASB Accounting Standards Codification, which the FASB established as the source of authoritative GAAP
ASUAccounting Standards Updates - updates to the ASC
Average realized power pricesVolume-weighted average power prices, net of average fuel costs and reflecting the impact of settled hedges
Bankruptcy CodeChapter 11 of Title 11 the U.S. Bankruptcy Code
BTUBritish Thermal Unit
Business SolutionsNRG's business solutions group, which includes demand response, commodity sales, energy efficiency and energy management services
CAAClean Air Act
CAISOCalifornia Independent System Operator
California Bankruptcy CourtUnited States Bankruptcy Court for the Northern District of California, San Francisco Division
CARES ActCoronavirus Aid, Relief, and Economic Security Act
CarlsbadCarlsbad Energy Center, a 528 MW natural gas-fired project located in Carlsbad, CA
CCRCoal Combustion Residuals
CDDCooling Degree Day
CFTCU.S. Commodity Futures Trading Commission
C&ICommercial industrial and governmental/institutional
CentricaCentrica plc
CESClean Energy Standard
ClecoCleco Corporate Holdings LLC
CO2
Carbon Dioxide
ComEdCommonwealth Edison
CompanyNRG Energy, Inc.
Convertible Senior NotesAs of September 30, 2020, consists of NRG’s $575 million unsecured 2.75% Convertible Senior Notes due 2048
CottonwoodCottonwood Generating Station, a 1,153 MW natural gas-fueled plant
COVID-19Coronavirus Disease 2019
CPPClean Power Plan
CPUCCalifornia Public Utilities Commission
CWAClean Water Act
D.C. CircuitU.S. Court of Appeals for the District of Columbia Circuit
Distributed SolarSolar power projects that primarily sell power to customers for usage on site, or are interconnected to sell power into a local distribution grid
Economic gross marginSum of energy revenue, capacity revenue, retail revenue and other revenue, less cost of fuels and other cost of sales
EGUElectric Generating Unit
EPAU.S. Environmental Protection Agency
ERCOTElectric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within Texas
ESCOEnergy Service Companies
ESPPNRG Energy, Inc. Amended and Restated Employee Stock Purchase Plan

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Exchange ActThe Securities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FERCFederal Energy Regulatory Commission
FGDFlue gas desulfurization
FTRsFinancial Transmission Rights
GAAPGenerally accepted accounting principles in the U.S.
GenOnGenOn Energy, Inc.
GenOn 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 Texas Bankruptcy Court on June 14, 2017
GHGGreenhouse Gas
GIPGlobal Infrastructure Partners
Green Mountain EnergyGreen Mountain Energy Company
GWhGigawatt Hour
HDDHeating Degree Day
Heat 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 upon whether the electricity output measured is gross or net generation. Heat rates are generally expressed as BTU per net kWh
HLWHigh-level radioactive waste
HSR ActHart-Scott-Rodino Act
ICEIntercontinental Exchange
ISOIndependent System Operator, also referred to as RTOs
ISO-NEISO New England Inc.
IvanpahIvanpah Solar Electric Generation Station, a 393 MW solar thermal power plant located in California's Mojave Desert in which NRG owns 54.5% interest
kWhKilowatt-hour
LaGenLouisiana Generating, LLC
LIBORLondon Inter-Bank Offered Rate
LTIPsCollectively, the NRG long-term incentive plan ("LTIP") and the NRG GenOn LTIP
Mass MarketResidential and small commercial customers
MDthThousand Dekatherms
Midwest GenerationMidwest Generation, LLC
MISOMidcontinent Independent System Operator, Inc.
MMBtuMillion British Thermal Units
MWMegawatts
MWeMegawatt equivalent
MWhSaleable megawatt hour net of internal/parasitic load megawatt-hour
NAAQSNational Ambient Air Quality Standards
NEPOOLNew England Power Pool
NERCNorth American Electric Reliability Corporation
NJBPUNew Jersey Board of Public Utilities
Net ExposureCounterparty credit exposure to NRG, net of collateral
Net Revenue RateSum of retail revenues less TDSP transportation charges
NodalNodal Exchange is a derivatives exchange
NOLNet Operating Loss
NOxNitrogen Oxides
NPNSNormal Purchase Normal Sale
NRCU.S. Nuclear Regulatory Commission
NRGNRG Energy, Inc.

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NRG Yield, Inc.NRG Yield, Inc., which changed its name to Clearway Energy, Inc. following the sale by NRG of NRG Yield and the Renewables Platform to GIP
Nuclear Decommissioning Trust FundNRG's nuclear decommissioning trust fund assets, which are for the Company's portion of the decommissioning of the STP, Units 1 & 2
Nuclear Waste Policy ActU.S. Nuclear Waste Policy Act of 1982
NYISONew York Independent System Operator
NYMEXNew York Mercantile Exchange
NYSPSCNew York State Public Service Commission
OCI/OCLOther Comprehensive Income/(Loss)
ORDCOperating Reserve Demand Curve
Petra NovaPetra Nova Parish Holdings, LLC which is 50% owned by NRG and which owns and operates a 240 MWe carbon capture system and a 78 MW cogeneration facility, and owns an equity interest in an oilfield
PG&EPG&E Corporation (NYSE: PCG) and its primary operating subsidiary, Pacific Gas and Electric Company
PJMPJM Interconnection, LLC
PM2.5Particulate Matter that has a diameter of less than 2.5 micrometers
PPAPower Purchase Agreement
PUCTPublic Utility Commission of Texas
RCEResidential Customer Equivalent is a unit of measure used by the energy industry to denote the typical annual commodity consumption by a single-family residential customer. 1 RCE represents 1,000 therms of natural gas or 10,000 kWh of electricity
RCRAResource Conservation and Recovery Act of 1976
Reliant EnergyReliant Energy Retail Services, LLC
RenewablesConsists of the following projects in which NRG has an ownership interest: Agua Caliente, Ivanpah, and solar generating stations located at various NFL Stadiums
Renewables PlatformThe renewable operating and development platform sold by NRG to GIP with NRG's interest in NRG Yield, Inc.
Revolving Credit FacilityThe Company's $2.6 billion revolving credit facility, a component of the Senior Credit Facility, due 2024 was amended on May 28, 2019 and August 20, 2020
RGGIRegional Greenhouse Gas Initiative
RTORegional Transmission Organization, also referred to as ISOs
SECU.S. Securities and Exchange Commission
Securities ActThe Securities Act of 1933, as amended
Senior 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 2019
Senior NotesAs of September 30, 2020, 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 5.250% senior notes due 2029
Senior Secured NotesAs of September 30, 2020, 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 2029
SNFSpent Nuclear Fuel
SO2
Sulfur Dioxide
South 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 2025
STPSouth Texas Project — nuclear generating facility located near Bay City, Texas in which NRG owns a 44% interest
STPNOCSouth Texas Project Nuclear Operating Company
TDSPTransmission/distribution service provider
Texas Bankruptcy CourtUnited States Bankruptcy Court for the Southern District of Texas, Houston Division
Transformation PlanNRG's three-year plan announced in 2017, which includes targets related to operations and excellence, portfolio optimization, and capital structure and allocation enhancement

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TWCCTexas Westmoreland Coal Co.
U.S.United States of America
U.S. DOEU.S. Department of Energy
Utility 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 level
VaRValue at Risk
VIEVariable Interest Entity
ZECsZero Emissions Credits


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PART I — FINANCIAL INFORMATION

ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended September 30,Nine months ended September 30,
(In millions, except for per share amounts)2020201920202019
Operating Revenues
Total operating revenues$2,809 $2,996 $7,066 $7,626 
Operating Costs and Expenses
Cost of operations2,034 2,153 4,925 5,649 
Depreciation and amortization99 91 318 261 
Impairment losses29 29 
Selling, general and administrative costs253 210 670 615 
Reorganization costs16 
Development costs
Total operating costs and expenses2,416 2,456 5,951 6,547 
Gain on sale of assets
Operating Income393 540 1,121 1,081 
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates36 29 37 
Impairment losses on investments(107)(18)(107)
Other income, net11 17 52 49 
Loss on debt extinguishment, net(1)(47)
Interest expense(99)(99)(292)(318)
Total other expense(52)(160)(222)(415)
Income from Continuing Operations Before Income Taxes341 380 899 666 
Income tax expense92 216 
Income from Continuing Operations249 374 683 657 
(Loss)/income from discontinued operations, net of income tax(2)399 
Net Income249 372 683 1,056 
Less: Net income attributable to redeemable noncontrolling interests
Net Income Attributable to NRG Energy, Inc.$249 $372 $683 $1,055 
Earnings per Share
Weighted average number of common shares outstanding — basic244 254 246 266 
Income from continuing operations per weighted average common share — basic$1.02 $1.47 $2.78 $2.47 
(Loss)/income from discontinued operations per weighted average common share — basic$$(0.01)$$1.50 
Earnings per Weighted Average Common Share — Basic$1.02 $1.46 $2.78 $3.97 
Weighted average number of common shares outstanding — diluted245 256 247 268 
Income from continuing operations per weighted average common share — diluted$1.02 $1.46 $2.77 $2.45 
(Loss)/income from discontinued operations per weighted average common share — diluted$$(0.01)$$1.49 
Earnings per Weighted Average Common Share — Diluted$1.02 $1.45 $2.77 $3.94 
See accompanying notes to condensed consolidated financial statements.

9


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three months ended September 30,Nine months ended September 30,
(In millions)2020201920202019
Net Income$249 $372 $683 $1,056 
Other Comprehensive Income/(Loss)
Foreign currency translation adjustments(4)(4)
Available-for-sale securities(14)(13)
Defined benefit plans(41)(47)
Other comprehensive income/(loss)(59)(64)
Comprehensive Income253 313 685 992 
Less: Comprehensive income attributable to redeemable noncontrolling interest
Comprehensive Income Attributable to NRG Energy, Inc.$253 $313 $685 $991 
See accompanying notes to condensed consolidated financial statements.

10


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2020December 31, 2019
(In millions, except share data)(Unaudited)(Audited)
ASSETS
Current Assets
Cash and cash equivalents$697 $345 
Funds deposited by counterparties15 32 
Restricted cash
Accounts receivable, net1,126 1,025 
Inventory330 383 
Derivative instruments578 860 
Cash collateral paid in support of energy risk management activities77 190 
Prepayments and other current assets258 245 
Total current assets3,087 3,088 
Property, plant and equipment, net2,573 2,593 
Other Assets
Equity investments in affiliates376 388 
Operating lease right-of-use assets, net345 464 
Goodwill579 579 
Intangible assets, net721 789 
Nuclear decommissioning trust fund828 794 
Derivative instruments315 310 
Deferred income taxes3,087 3,286 
Other non-current assets314 240 
Total other assets6,565 6,850 
Total Assets$12,225 $12,531 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt88 
Current portion of operating lease liabilities69 73 
Accounts payable753 722 
Derivative instruments495 781 
Cash collateral received in support of energy risk management activities15 32 
Accrued expenses and other current liabilities651 663 
Total current liabilities1,986 2,359 
Other Liabilities
Long-term debt5,792 5,803 
Non-current operating lease liabilities297 483 
Nuclear decommissioning reserve311 298 
Nuclear decommissioning trust liability508 487 
Derivative instruments318 322 
Deferred income taxes17 17 
Other non-current liabilities1,062 1,084 
Total other liabilities8,305 8,494 
Total Liabilities10,291 10,853 
Redeemable noncontrolling interest in subsidiaries20 
Commitments and Contingencies
Stockholders' Equity
Common stock; $0.01 par value; 500,000,000 shares authorized; 423,041,349 and 421,890,790 shares issued and 244,147,420 and 248,996,189 shares outstanding at September 30, 2020 and December 31, 2019, respectively
Additional paid-in-capital8,511 8,501 
Accumulated deficit(1,157)(1,616)
Treasury stock, at cost - 178,893,929 and 172,894,601 shares at September 30, 2020 and December 31, 2019, respectively(5,234)(5,039)
Accumulated other comprehensive loss(190)(192)
Total Stockholders' Equity1,934 1,658 
Total Liabilities and Stockholders' Equity$12,225 $12,531 
See accompanying notes to condensed consolidated financial statements.

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NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
(In millions)20202019
Cash Flows from Operating Activities
Net Income$683 $1,056 
Income from discontinued operations, net of income tax399 
Income from continuing operations683 657 
Adjustments to reconcile net income to cash provided by operating activities:
Distributions from and equity in losses/(earnings) of unconsolidated affiliates(5)
Depreciation and amortization318 261 
Accretion of asset retirement obligations46 31 
Provision for credit losses74 87 
Amortization of nuclear fuel40 40 
Amortization of financing costs and debt discount/premiums23 20 
Loss on debt extinguishment, net47 
Amortization of emissions allowances and energy credits60 28 
Amortization of unearned equity compensation17 15 
Gain on sale and disposal of assets(22)(20)
Impairment losses47 108 
Changes in derivative instruments(7)36 
Changes in deferred income taxes and liability for uncertain tax benefits202 (3)
Changes in collateral deposits in support of energy risk management activities96 129 
Changes in nuclear decommissioning trust liability39 27 
Changes in other working capital(237)(569)
Cash provided by continuing operations1,386 889 
Cash provided by discontinued operations
Net Cash Provided by Operating Activities1,386 897 
Cash Flows from Investing Activities
Payments for acquisitions of assets and businesses(277)(348)
Capital expenditures(167)(183)
Net proceeds from notes receivable
Net (purchases)/sales of emission allowances(15)14 
Investments in nuclear decommissioning trust fund securities(360)(295)
Proceeds from the sale of nuclear decommissioning trust fund securities318 271 
Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees15 1,293 
Changes in investments in unconsolidated affiliates(94)
Contributions to discontinued operations(44)
Cash (used)/provided by continuing operations(484)616 
Cash used by discontinued operations(2)
Net Cash (Used)/Provided by Investing Activities(484)614 
Cash Flows from Financing Activities
Payments of dividends to common stockholders(221)(24)
Payments for share repurchase activity(229)(1,322)
Payments for debt extinguishment costs(24)
Purchase of and distributions to noncontrolling interests from subsidiaries(2)(1)
Proceeds from issuance of common stock
Proceeds from issuance of long-term debt59 1,833 
Payments of debt issuance costs(24)(34)
Repayments of long-term debt(62)(2,487)
Net (repayments)/proceeds of Revolving Credit Facility(83)215 
Other(6)
Cash used by continuing operations(567)(1,841)
Cash provided by discontinued operations43 
Net Cash Used by Financing Activities(567)(1,798)
Effect of exchange rate changes on cash and cash equivalents(2)
Change in Cash from discontinued operations49 
Net Increase/(Decrease) in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash333 (336)
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period385 613 
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period$718 $277 
See accompanying notes to condensed consolidated financial statements.

12


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)

(In millions)Common
Stock
Additional
Paid-In
Capital
Accumulated DeficitTreasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Stock-holders'
Equity
Balance at December 31, 2019$$8,501 $(1,616)$(5,039)$(192)$1,658 
Net income attributable to NRG Energy, Inc.121 121 
Other comprehensive loss(15)(15)
Repurchase of partners' equity interest in VIE18 18 
Share repurchases(150)(150)
Equity-based awards activity, net(21)(21)
Common stock dividends and dividend equivalents declared(a)
(75)(75)
Balance at March 31, 2020$$8,498 $(1,570)$(5,189)$(207)$1,536 
Net income attributable to NRG Energy, Inc.313 313 
Other comprehensive income13 13 
Shares reissuance for ESPP
Share repurchases(47)(47)
Equity-based awards activity, net
Issuance of common stock
Common stock dividends and dividend equivalents declared(a)
(74)(74)
Balance at June 30, 2020$$8,505 $(1,331)$(5,234)$(194)$1,750 
Net income attributable to NRG Energy, Inc.249 249 
Other comprehensive income
Equity-based awards activity, net
Common stock dividends and dividend equivalents declared(a)
(75)(75)
Balance at September 30, 2020$$8,511 $(1,157)$(5,234)$(190)$1,934 

(In millions)Common
Stock
Additional
Paid-In
Capital
Accumulated DeficitTreasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Stock-holders'
Equity
Balance at December 31, 2018$$8,510 $(6,022)$(3,632)$(94)$(1,234)
Net income attributable to NRG Energy, Inc.482 482 
Other comprehensive loss(2)(2)
Share repurchases(10)(739)(749)
Equity-based awards activity, net(32)(32)
Issuance of common stock
Common stock dividends and dividend equivalents declared(a)
(8)(8)
Balance at March 31, 2019$$8,473 $(5,548)$(4,371)$(96)$(1,538)
Net income attributable to NRG Energy, Inc.201 201 
Other comprehensive loss(3)(3)
Share repurchases10 (315)(305)
Equity-based awards activity, net
Common stock dividends and dividend equivalents declared(a)
(8)(8)
Balance at June 30, 2019$$8,488 $(5,355)$(4,686)$(99)$(1,648)
Net income attributable to NRG Energy, Inc.372 372 
Other comprehensive loss(59)(59)
Share repurchases(234)(234)
Equity-based awards activity, net
Issuance of common stock
Common stock dividends and dividend equivalents declared(a)
(8)(8)
Balance at September 30, 2019$$8,494 $(4,991)$(4,920)$(158)$(1,571)
(a) Dividends per common share were $0.30 for each of the quarters ended September 30, 2020, June 30, 2020 and March 31, 2020 and $0.03 for each of the quarters ended September 30, 2019, June 30, 2019 and March 31, 2019
See accompanying notes to condensed consolidated financial statements.

13


NRG ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 — Nature of Business and Basis of Presentation
General
NRG Energy, Inc., or NRG or the Company, is an integrated power company built on dynamic retail brands with diverse generation assets. NRG brings the power of energy to consumers by producing and selling electricity and related products and services in major competitive power markets in the U.S. and Canada in a manner that delivers value to all of NRG's stakeholders. NRG is a customer-driven business focused on perfecting the integrated model by balancing retail load with generation supply within its deregulated markets. The Company sells energy, services, and innovative, sustainable products and services directly to retail customers under the brand names NRG, Reliant, Green Mountain Energy, Stream, and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation as of September 30, 2020.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the SEC's regulations for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the condensed consolidated financial statements in the Company's 2019 Form 10-K and the Current Report on Form 8-K filed May 7, 2020, which provides retrospectively revised historical financial information to correspond with the Company's current segment structure. Interim results are not necessarily indicative of results for a full year.
In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of September 30, 2020, and the results of operations, comprehensive income, cash flows and statements of stockholders' equity for the three and nine months ended September 30, 2020 and 2019.
Segments
As part of perfecting the integrated model, in which the majority of the Company’s generation serves its retail customers, the Company began managing its operations based on the combined results of the retail and wholesale generation businesses with a geographical focus in 2020. As a result, the Company changed its business segments from Retail and Generation to Texas, East and West/Other beginning in the first quarter of 2020. The Company's updated segment structure reflects how management currently makes financial decisions and allocates resources.
The Company's businesses are segregated as follows:
Texas, which includes all activity related to customer, plant and market operations in Texas;
East, which includes the remaining activity related to customer operations and all activity related to plant and market operations in the East;
West/Other, which includes the following assets and activities: (i) all activity related to plant and market operations in the West, (ii) activity related to the Cottonwood power plant that was sold to Cleco on February 4, 2019 and is being leased back until 2025, (iii) the remaining renewables activity, including the Company’s equity method investments in Ivanpah Master Holdings, LLC and Agua Caliente, the remaining Home Solar assets and the NFL stadium solar generating assets, and (iv) activity related to the Company’s equity method investment for the Gladstone power plant in Australia; and
Corporate activities.
All affected disclosures have been recast to reflect these changes for all periods presented. For further discussion of segment reporting, refer to Note 14, Segment Reporting.
COVID-19
In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. Electricity was deemed a 'critical and essential business operation' under various state and federal governmental COVID-19 mandates. NRG had activated its Crisis Management Team ("CMT") in January 2020 to proactively manage the Company's response to the impacts of COVID-19.

14


NRG continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations. In June 2020, summer-critical office employees returned to the offices and safety protocols were successfully implemented. The Company will continue to evaluate additional return to normal work operations on a location-by-location basis as COVID-19 conditions evolve.
The Company continues to maintain certain restrictions on business travel and face-to-face sales channels, remote work practices remain in place and there are enhanced cleaning and hygiene protocols in all of its facilities. In addition, select essential employees and contractors are continuing to report to plant and certain office locations. The Company also continues to require pre-entry screening, including temperature checks, separation of work crews, additional personal protective equipment for employees and contractors when social distancing cannot be maintained, and a ban on all non-essential visitors. The Company has not experienced any material disruptions in its ability to continue its business operations to date.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Reclassifications
Certain prior year amounts have been reclassified for comparative purposes.

Note 2 — Summary of Significant Accounting Policies
Other Balance Sheet Information
The following table presents the accumulated depreciation included in property, plant and equipment, net and accumulated amortization included in intangible assets, net:
(In millions)September 30, 2020December 31, 2019
Property, plant and equipment accumulated depreciation$1,901 $1,752 
Intangible assets accumulated amortization1,314 1,262 
Credit Losses
On January 1, 2020, the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU No. 2016-13, using the modified retrospective approach. Following the adoption of the new standard, the Company’s process of estimating expected credit losses remains materially consistent with its historical practice. Information prior to January 1, 2020, which was previously referred to as the allowance and provision for bad debt, has not been restated and continues to be reported under the accounting standards in effect for that period.
Retail trade receivables are reported on the balance sheet net of the allowance for credit losses. The Company accrues an allowance for current expected credit losses based on (i) estimates of uncollectible revenues by analyzing accounts receivable aging and current and reasonable forecasts of expected economic factors including, but not limited to, unemployment rates and weather-related events, (ii) historical collections and delinquencies, and (iii) counterparty credit ratings for commercial and industrial customers.
The following table represents the activity in the allowance for credit losses for the three and nine months ended September 30, 2020:
(In millions)Three months ended September 30, 2020Nine months ended September 30, 2020
Beginning balance$47 $43 
Provision for credit losses26 74 
Write-offs(19)(71)
Recoveries collected11 
Ending balance$57 $57 


15


Restricted Cash
The following table provides a reconciliation of cash and cash equivalents, restricted cash and funds deposited by counterparties reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statements of cash flows:
(In millions)September 30, 2020December 31, 2019
Cash and cash equivalents$697 $345 
Funds deposited by counterparties15 32 
Restricted cash
Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statement of cash flows$718 $385 
Funds deposited by counterparties consist of cash held by the Company as a result of collateral posting obligations from its counterparties. Some amounts are segregated into separate accounts that are not contractually restricted but, based on the Company's intention, are not available for the payment of general corporate obligations. Depending on market fluctuations and the settlement of the underlying contracts, the Company will refund this collateral to the hedge counterparties pursuant to the terms and conditions of the underlying trades. Since collateral requirements fluctuate daily and the Company cannot predict if any collateral will be held for more than twelve months, the funds deposited by counterparties are classified as a current asset on the Company's balance sheet, with an offsetting liability for this cash collateral received within current liabilities.
Restricted cash consists primarily of funds held within the Company's projects that are restricted for specific uses.
Pension Plan Contributions
In the Company's 2019 Form 10-K, NRG had anticipated making contributions of $56 million to its pension plans in 2020. Cash contributions of $12 million were made during the nine months ended September 30, 2020 and the remaining planned contributions for 2020 were satisfied by available pre-funded pension balances (previous contributions in excess of required pension contributions). No additional contributions are planned in the fourth quarter of 2020.
Recent Accounting Developments - Guidance Adopted in 2020
ASU 2018-17 — In October 2018, the FASB issued ASU No. 2018-17, Consolidations (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities, or ASU No. 2018-17, in response to stakeholders’ observations that Topic 810, Consolidations, could be improved thereby improving general purpose financial reporting. Specifically, ASU No. 2018-17 requires application of the variable interest entity (VIE) guidance to private companies under common control and consideration of indirect interest held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. All entities are required to apply the amendments retrospectively. The adoption did not have a material impact on the Company's results of operations, cash flows, or statement of financial position.
ASU 2018-15 — In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in Cloud Computing Arrangement That Is a Service Contract, or ASU No. 2018-15. The amendments in ASU No. 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal-use software (and hosting arrangement that include an internal-use software license). The amendment also requires the customer to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The Company adopted the amendments effective January 1, 2020 using the prospective approach. The adoption did not have a material impact on the Company's results of operations, cash flows, or statement of financial position.
ASU 2018-13 — In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirement for Fair value Measurement), or ASU No. 2018-13. The amendments in ASU No. 2018-13 eliminate such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and add new disclosure requirements for Level 3 measurements. ASU No. 2018-13 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Certain disclosures in ASU No. 2018-13 are required to be applied on a retrospective basis and others on a prospective basis. The Company adopted the amendments effective January 1, 2020. As the amendments contemplates changes in disclosures only, it did not have an impact on the Company's results of operations, cash flows, or statement of financial position.

16


ASU 2016-13 — In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, or ASU No. 2016-13, which was further amended through various updates issued by the FASB thereafter. The guidance in ASU No. 2016-13 provides a new model for recognizing credit losses on financial assets carried at amortized cost using an estimate of expected credit losses, instead of the "incurred loss" methodology previously required for recognizing credit losses that delayed recognition until it was probable that a loss was incurred. The estimate of expected credit losses is to be based on consideration of past events, current conditions and reasonable and supportable forecasts of future conditions. The Company adopted the standard and its subsequent corresponding updates effective January 1, 2020 using the modified retrospective approach. Results for the reporting periods after January 1, 2020 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The Company's adoption of Topic 326 did not have a material impact on the Company's results of operations, cash flows, or statement of financial position.
Recent Accounting Developments - Guidance Not Yet Adopted
ASU 2020-06 — In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), or ASU No. 2020-06. The guidance in ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. In addition, ASU 2020-06 improves and amends the related earnings per share guidance. This standard is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. Early adoption is permitted in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently in the process of assessing the impact of this guidance on the consolidated financial statements and disclosures related to earnings per share.
ASU 2019-12 — In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, or ASU No. 2019-12, to simplify various aspects related to accounting for income taxes. The guidance in ASU 2019-12 amends the general principles in Topic 740 to eliminate certain exceptions for recognizing deferred taxes for investment, performing intraperiod allocation and calculating income taxes in interim periods. This ASU also includes guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years,. Early adoption is permitted, including adoption in an interim period. The Company is currently in the process of assessing the impact of this guidance on the consolidated financial statements.

Note 3 — Revenue Recognition
Performance Obligations
As of September 30, 2020, estimated future fixed fee performance obligations are $188 million for the remaining three months of fiscal year 2020, and $648 million, $281 million, $43 million and $8 million for the fiscal years 2021, 2022, 2023 and 2024, respectively. These performance obligations are for cleared auction MWs in the PJM, ISO-NE, NYISO and MISO capacity auctions and are subject to penalties for non-performance.

17


Disaggregated Revenues
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the three and nine months ended September 30, 2020 and 2019:
Three months ended September 30, 2020
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Retail revenue:
Mass Market$1,633 $354 $$$1,987 
Business Solutions288 27 315 
Total retail revenue1,921 381 2,302 
Energy revenue(a)
11 93 117 222 
Capacity revenue(a)
158 16 174 
Mark-to-market for economic hedging activities(b)
43 (10)39 
Other revenue(a)
59 18 (1)(4)72 
Total operating revenue1,992 693 122 2,809 
Less: Lease revenue
Less: Realized and unrealized ASC 815 revenue10 115 (10)120 
Total revenue from contracts with customers$1,982 $578 $127 $(3)$2,684 
(a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above:
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Energy revenue$$23 $13 $(1)$35 
Capacity revenue49 49 
Other revenue(13)(3)
(b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815
Three months ended September 30, 2019
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Retail revenue:
Mass Market$1,735 $337 $$$2,072 
Business Solutions397 19 416 
Total retail revenue2,132 356 2,488 
Energy revenue(a)
211 109 107 (1)426 
Capacity revenue(a)
185 194 
Mark-to-market for economic hedging activities(b)
(213)12 (9)(210)
Other revenue(a)
78 17 (1)98 
Total operating revenue2,208 679 111 (2)2,996 
Less: Lease revenue
Less: Realized and unrealized ASC 815 revenue420 69 (2)487 
Total revenue from contracts with customers$1,788 $610 $106 $$2,504 
(a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above:
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Energy revenue$613 $20 $21 $(2)$652 
Capacity revenue34 34 
Other revenue20 (12)11 
(b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815


18


Nine months ended September 30, 2020
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Retail revenue:
Mass Market$3,938 $992 $$(1)$4,929 
Business Solutions796 70 866 
Total retail revenue4,734 1,062 (1)5,795 
Energy revenue(a)
21 157 252 (1)429 
Capacity revenue(a)
471 47 518 
Mark-to-market for economic hedging activities(b)
63 78 
Other revenue(a)
172 45 36 (7)246 
Total operating revenue4,928 1,798 341 (1)7,066 
Less: Lease revenue14 15 
Less: Realized and unrealized ASC 815 revenue24 239 50 318 
Total revenue from contracts with customers$4,904 $1,558 $277 $(6)$6,733 
(a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above:
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Energy revenue$$60 $42 $(3)$99 
Capacity revenue114 114 
Other revenue23 27 
(b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815

Nine months ended September 30, 2019
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Retail revenue:
Mass Market$3,891 $892 $$(3)$4,780 
Business Solutions927 55 982 
Total retail revenue4,818 947 (3)5,762 
Energy revenue(a)
452 283 217 952 
Capacity revenue(a)
524 27 551 
Mark-to-market for economic hedging activities(b)
28 13 11 (1)51 
Other revenue(a)
213 45 55 (3)310 
Total operating revenue5,511 1,812 310 (7)7,626 
Less: Lease revenue14 15 
Less: Realized and unrealized ASC 815 revenue1,314 187 46 (2)1,545 
Total revenue from contracts with customers$4,197 $1,624 $250 $(5)$6,066 
(a) The following table represents the realized revenues related to derivative instruments that are accounted for under ASC 815 and included in the amounts above:
(In millions)TexasEastWest/OtherCorporate/EliminationsTotal
Energy revenue$1,239 $87 $28 $(2)$1,352 
Capacity revenue81 82 
Other revenue47 60 
(b) Revenue relates entirely to unrealized gains and losses on derivative instruments accounted for under ASC 815

19


Contract Balances
The following table reflects the contract assets and liabilities included in the Company’s balance sheet as of September 30, 2020 and December 31, 2019:
(In millions)September 30, 2020December 31, 2019
Deferred customer acquisition costs$122 $133 
Accounts receivable, net - Contracts with customers1,084 1,002 
Accounts receivable, net - Derivative instruments37 18 
Accounts receivable, net - Affiliate
Total accounts receivable, net$1,126 $1,025 
Unbilled revenues (included within Accounts receivable, net - Contracts with customers)$411 $402 
Deferred revenues(a)
60 82 
(a) Deferred revenues from contracts with customers for the three months ended September 30, 2020 and the year ended December 31, 2019 were approximately $31 million and $24 million, respectively
The revenue recognized from contracts with customers during both the nine months ended September 30, 2020 and 2019 relating to the deferred revenue balance at the beginning of each period was $13 million. The revenue recognized during the three months ended September 30, 2020 and 2019 relating to the deferred revenue balance at the beginning of each period was $31 million and $21 million, respectively. The change in deferred revenue balances during the three and nine months ended September 30, 2020 and 2019 was primarily due to the timing difference of when consideration was received and when the performance obligation was transferred.


20


Note 4 — Acquisitions, Discontinued Operations and Dispositions
Acquisitions
Direct Energy Acquisition
On July 24, 2020, the Company entered into a definitive purchase agreement with Centrica to acquire Direct Energy, a North American subsidiary of Centrica (the "Purchase Agreement"). Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America, with operations in all 50 U.S. states and 6 Canadian provinces. The acquisition will add over 3 million customers to NRG's business and build on and complement its integrated model, enabling better matching of power generation with customer demand. It will also broaden the Company's presence in the Northeast and into states and locales where it does not currently operate, supporting NRG's objective to diversify its business.
The Company will pay an aggregate purchase price of $3.625 billion in cash, subject to a purchase price adjustment, including a working capital adjustment. The Company expects to fund the purchase price using a combination of cash on hand and approximately $3 billion in newly-issued secured and unsecured corporate debt. The Company also expects to increase its collective collateral facilities by $3.5 billion through a combination of new letter of credit facilities and increases to its existing Revolving Credit Facility.
Through November 5, 2020, in preparation for the additional liquidity requirements related to the acquisition, the Company (i) amended its Revolving Credit Facility to, among other things, increase the existing revolving commitments in an aggregate amount of $802 million, and provide for a new tranche of revolving commitments in an aggregate amount of $273 million, as further discussed in Note 10, Long-term Debt, (ii) amended its credit default swap facility agreement to issue letters of credit to, among other things, increase the size of the facility to allow for the issuance of an additional $87 million of letters of credit, as further discussed in Note 10, Long-term Debt, (iii) entered into a revolving accounts receivable financing facility (the “ Receivables Facility”) for an amount up to $750 million, subject to adjustments on a seasonal basis, with issuers of asset-backed commercial paper and commercial banks, as further discussed in Note 9, Receivables Securitization and Repurchase Facility, (iv) entered into an uncommitted repurchase facility related to the Receivables Facility, under which the Company can borrow up to $75 million, as further discussed in Note 9, Receivables Securitization and Repurchase Facility, and (v) entered into $1.6 billion of interest rate hedges associated with anticipated financing needs, as further discussed in Note 20, Subsequent Events.
The shareholders of Centrica approved the acquisition on August 20, 2020. The transaction has received approvals under the Canadian Competition Act and early termination of the waiting period under the HSR Act has been granted. The transaction remains subject to customary closing conditions, including the receipt of approval under the Federal Power Act.
The acquisition is targeted to close by December 31, 2020. There are no assurances that the conditions to the consummation of the acquisition of Direct Energy will be satisfied or that the acquisition of Direct Energy will be consummated on the terms agreed to, or at all.
Midwest Generation Lease Purchase
On September 29, 2020, Midwest Generation acquired all of the ownership interests in the Powerton facility and Units 7 and 8 of the Joliet facility, which were being leased through 2034 and 2030, respectively, for approximately $260 million. The purchase was initially funded with cash-on-hand. The Company anticipates drawing on its Revolving Credit Facility in an amount equal to the previously existing operating lease liability of $148 million before December 31, 2020.

21


Stream Energy Acquisition
On August 1, 2019, the Company acquired Stream Energy's retail electricity and natural gas operating in 9 states and Washington, D.C. for $329 million, including working capital and other adjustments of approximately $29 million. The acquisition increased NRG's retail portfolio by approximately 600,000 RCEs or 450,000 customers. The purchase price was allocated as follows:
(In millions)
Account receivable$98 
Accounts payable(73)
Other net current and non-current working capital
Marketing partnership154 
Customer relationships85 
Trade name28 
Other intangible assets26 
Goodwill (a)
Stream Purchase Price$329 
(a) Goodwill arising from the acquisition is attributed to the value of the platform acquired and the synergies expected from combining the operations of Stream Energy with NRG's existing businesses. Goodwill of $5 million and $1 million was assigned to the Texas and East segments, respectively, and is not deductible for tax purposes
Discontinued Operations
Sale of South Central Portfolio
On February 4, 2019, the Company completed the sale of the South Central Portfolio to Cleco for cash consideration of $1 billion excluding working capital and other adjustments. The Company concluded that the divested business met the criteria for discontinued operations as of December 31, 2018, as the disposition represented a strategic shift in the business in which NRG operates and the criteria for held-for-sale were met. As such, all prior period results for the operations of the South Central Portfolio, except for the Cottonwood facility as discussed below, were reclassified as discontinued operations at December 31, 2018. In connection with the transaction, NRG also entered into a transition services agreement to provide certain corporate services to the divested business.
The South Central Portfolio includes the 1,153 MW Cottonwood natural gas generating facility. Upon the closing of the sale of the South Central Portfolio, NRG entered into an agreement with Cleco to leaseback the Cottonwood facility through 2025. Due to its continuing involvement with the Cottonwood facility, NRG did not use held-for-sale or discontinued operations treatment in accounting for the Cottonwood facility.
Summarized results of the South Central Portfolio discontinued operations were as follows:    
Three months endedNine months ended
(In millions)September 30, 2019September 30, 2019
Operating revenues$$31 
Operating costs and expenses(23)
Gain from operations of discontinued components0 8 
(Loss)/Gain on disposal of discontinued operations, net of tax(1)27 
(Loss)/Gain from discontinued operations, including disposal, net of tax$(1)$35 
Carlsbad
On February 6, 2018, NRG entered into an agreement with NRG Yield and GIP to sell 100% of its membership interests in Carlsbad Energy Holdings LLC, which owns the Carlsbad project, for $385 million of cash consideration, excluding working capital adjustments. The primary condition to close the Carlsbad transaction was the completion of the sale of NRG Yield and the Renewables Platform. At the time of the sale of NRG Yield and the Renewables Platform in August 2018, the Company concluded that the Carlsbad project met the criteria for discontinued operations and accordingly, all prior period results for Carlsbad were reclassified as discontinued operations. The transaction closed on February 27, 2019. Carlsbad continues to have a ground lease and easement agreement with NRG with an initial term ending in 2039 and 2, ten-year extensions. As a result of the transaction, additional commitments related to the project totaled approximately $23 million as of September 30, 2020 and December 31, 2019.

22


Summarized results of Carlsbad discontinued operations were as follows:    
Three months endedNine months ended
(In millions)September 30, 2019September 30, 2019
Operating revenues$$19 
Operating costs and expenses(9)
Other expenses(5)
Gain from discontinued operations, net of tax0 5 
(Loss)/gain on disposal of discontinued operations, net of tax(1)330 
Other Commitments, Indemnification and Fees27 
(Loss)/gain on disposal of discontinued operations, net of tax(1)357 
(Loss)/gain from discontinued operations, including disposal, net of tax$(1)$362 
GenOn
On June 14, 2017, the GenOn Entities filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Texas Bankruptcy Court. As a result of the bankruptcy filings, NRG concluded that it no longer controlled GenOn as it was subject to the control of the Texas Bankruptcy Court; and accordingly, NRG deconsolidated GenOn and its subsidiaries for financial reporting purposes as of such date.
Summarized results of GenOn discontinued operations were as follows:
Nine months ended
(In millions)September 30, 2019
Gain from discontinued operations, net of tax$

Dispositions
The Company completed other asset sales for cash proceeds of $15 million and $22 million during the nine months ended September 30, 2020 and 2019, respectively.

Note 5 — Fair Value of Financial Instruments
For cash and cash equivalents, funds deposited by counterparties, restricted cash, accounts and other receivables, accounts payable, and cash collateral paid and received in support of energy risk management activities, the carrying amounts approximate fair values because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying amounts and fair values of NRG's recorded financial instruments not carried at fair market value are as follows:
September 30, 2020December 31, 2019
(In millions)Carrying AmountFair ValueCarrying AmountFair Value
Assets:    
Notes receivable
$10 $$11 $
Liabilities:
Long-term debt, including current portion (a)
5,854 6,309 5,956 6,504 
(a) Excludes deferred financing costs, which are recorded as a reduction to long-term debt in the Company's consolidated balance sheets
The fair value of the Company's publicly-traded long-term debt is based on quoted market prices and is classified as Level 2 within the fair value hierarchy. The fair value of debt securities, non-publicly traded long-term debt and certain notes receivable of the Company are based on expected future cash flows discounted at market interest rates or current interest rates for similar instruments with equivalent credit quality and are classified as Level 3 within the fair value hierarchy. The following table presents the level within the fair value hierarchy for long-term debt, including current portion, as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
(In millions)Level 2Level 3Level 2Level 3
Long-term debt, including current portion$6,305 $$6,388 $116 


23


Recurring Fair Value Measurements
Debt securities, equity securities, and trust fund investments, which are comprised of various U.S. debt and equity securities, and derivative assets and liabilities, are carried at fair market value.
The following tables present assets and liabilities measured and recorded at fair value on the Company's condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:
September 30, 2020
(In millions)TotalLevel 1Level 2Level 3
Investments in securities (classified within other current and non-current assets)$15 $$15 $
Nuclear trust fund investments: 
Cash and cash equivalents25 25 
U.S. government and federal agency obligations49 48 
Federal agency mortgage-backed securities92 92 
Commercial mortgage-backed securities38 38 
Corporate debt securities144 144 
Equity securities402 402 
Foreign government fixed income securities
Other trust fund investments:
U.S. government and federal agency obligations
Derivative assets: 
Commodity contracts893 74 592 227 
Measured using net asset value practical expedient:
Equity securities — nuclear trust fund investments72 
       Equity securities
Total assets$1,744 $550 $888 $227 
Derivative liabilities: 
Commodity contracts$813 $70 $568 $175 
Total liabilities$813 $70 $568 $175 

December 31, 2019
(In millions)TotalLevel 1Level 2Level 3
Investments in securities (classified within other current and non-current assets)$20 $$20 $
Nuclear trust fund investments:
Cash and cash equivalents17 17 
U.S. government and federal agency obligations68 68 
Federal agency mortgage-backed securities100 100 
Commercial mortgage-backed securities29 29 
Corporate debt securities109 109 
Equity securities388 388 
Foreign government fixed income securities
Other trust fund investments:
U.S. government and federal agency obligations
Derivative assets: 
Commodity contracts1,170 84 893 193 
Measured using net asset value practical expedient:
Equity securities — nuclear trust fund investments78 
       Equity securities
Total assets$1,993 $558 $1,156 $193 
Derivative liabilities: 
Commodity contracts$1,103 $143 $805 $155 
Total liabilities$1,103 $143 $805 $155 

24



The following tables reconcile, for the three and nine months ended September 30, 2020 and 2019, the beginning and ending balances for financial instruments that are recognized at fair value in the condensed consolidated financial statements, using significant unobservable inputs:
Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Three months ended September 30, 2020Nine months ended September 30, 2020
(In millions)
Derivatives(a)
Derivatives(a)
Beginning balance$152 $38 
    Total (losses) realized/unrealized— included in earnings(92)(18)
Purchases(10)
Transfers into Level 3(b)
(11)22 
Transfers out of Level 3(b)
13 
Ending balance$52 $52 
Gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of period end$23 $50 
(a)Consists of derivative 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 in/out are with Level 2


Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Three months ended September 30, 2019Nine months ended September 30, 2019
(In millions)Debt Securities
Derivatives(a)
TotalDebt Securities
Derivatives(a)
Total
Beginning balance$19 $97 $116 $19 $20 $39 
Contracts added from acquisitions(2)(2)(3)(3)
Total (losses)/gains realized/unrealized:
Included in earnings(18)(18)(45)(44)
Included in OCI(14)(14)(14)(14)
Cash received(1)(1)
Purchases38 38 26 26 
Transfers into Level 3(b)
(126)(126)
Transfers out of Level 3(b)
24 24 11 11 
Ending balance$$13 $18 $$13 $18 
Gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of period end44 44 13 14 

(a)Consists of derivative 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 in/out are with Level 2

Derivative Fair Value Measurements
A portion of NRG's contracts are exchange-traded contracts with readily available quoted market prices. A majority of NRG's contracts are non-exchange-traded contracts valued using prices provided by external sources, primarily price quotations available through brokers or over-the-counter and on-line exchanges. The remainder of the assets and liabilities represent contracts for which external sources or observable market quotes are not available. These contracts are valued based on various valuation techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of the observable market data with similar characteristics. As of September 30, 2020, contracts valued with prices provided by models and other valuation techniques make up 25% of derivative assets and 22% of derivative liabilities.

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NRG's significant positions classified as Level 3 include physical and financial power executed in illiquid markets, as well as FTRs. The significant unobservable inputs used in developing fair value include illiquid power location pricing, which is derived as a basis to liquid locations. The basis spread is based on observable market data when available or derived from historic prices and forward market prices from similar observable markets when not available. For FTRs, NRG uses the most recent auction prices to derive the fair value.
The following tables quantify the significant unobservable inputs used in developing the fair value of the Company's Level 3 positions as of September 30, 2020 and December 31, 2019:
September 30, 2020
Fair ValueInput/Range
(In millions)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted Average
Power Contracts$196 $167 Discounted Cash FlowForward Market Price (per MWh)$10 $116 $24 
FTRs31 Discounted Cash FlowAuction Prices (per MWh)(50)43 0
$227 $175 

December 31, 2019
Fair ValueInput/Range
(In millions)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted Average
Power Contracts$151 $139 Discounted Cash FlowForward Market Price (per MWh)$$218 $24 
FTRs42 16 Discounted Cash FlowAuction Prices (per MWh)(105)213 0
$193 $155 

The following table provides sensitivity of fair value measurements to increases/(decreases) in significant unobservable inputs as of September 30, 2020 and December 31, 2019:
Significant Unobservable InputPositionChange In InputImpact on Fair Value Measurement
Forward Market Price PowerBuyIncrease/(Decrease)Higher/(Lower)
Forward Market Price PowerSellIncrease/(Decrease)Lower/(Higher)
FTR PricesBuyIncrease/(Decrease)Higher/(Lower)
FTR PricesSellIncrease/(Decrease)Lower/(Higher)
The fair value of each contract is discounted using a risk-free interest rate. In addition, the Company applies a credit reserve to reflect credit risk, which is calculated based on published default probabilities. As of September 30, 2020, the credit reserve resulted in a $1 million increase primarily within operating revenue. As of December 31, 2019, the credit reserve did not result in a significant change in fair value in operating revenue and cost of operations.
Concentration of Credit Risk
In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, to the Company's 2019 Form 10-K, the following is a discussion of the concentration of credit risk for the Company's contractual obligations. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. NRG is exposed to counterparty credit risk through various activities including wholesale sales, fuel purchases and retail supply arrangements, as well as retail customer credit risk through its retail load activities.

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Counterparty Credit Risk
The Company's counterparty credit risk policies are disclosed in its 2019 Form 10-K. As of September 30, 2020, counterparty credit exposure, excluding credit exposure from RTOs, ISOs, registered commodity exchanges and certain long-term agreements, was $232 million and NRG held collateral (cash and letters of credit) against those positions of $19 million, resulting in a net exposure of $214 million NRG periodically receives collateral from counterparties in excess of their exposure. Collateral amounts shown include such excess while net exposure shown excludes excess collateral received. Approximately 39% of the Company's exposure before collateral is expected to roll off by the end of 2021. Counterparty credit exposure is valued through observable market quotes and discounted at a risk free interest rate. The following tables highlight net counterparty credit exposure by industry sector and by counterparty credit quality. Net counterparty credit exposure is defined as the aggregate net asset position for NRG with counterparties where netting is permitted under the enabling agreement and includes all cash flow, mark-to-market and NPNS, and non-derivative transactions. The exposure is shown net of collateral held and includes amounts net of receivables or payables.
 
Net Exposure(a)(b)
Category by Industry Sector(% of Total)
Utilities, energy merchants, marketers and other88 %
Financial institutions12 
Total as of September 30, 2020100 %
 
Net Exposure (a)(b)
Category by Counterparty Credit Quality(% of Total)
Investment grade59 %
Non-investment grade/non-rated41 
Total as of September 30, 2020100 %
(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
The Company currently has $45 million of exposure to 2 wholesale counterparties in excess of 10% of total net exposure discussed above as of September 30, 2020. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration. Given the credit quality, diversification and term of the exposure in the portfolio, NRG does not anticipate a material impact on its financial position or results of operations from nonperformance by any of NRG's counterparties.
RTOs and ISOs
The Company participates in the organized markets of CAISO, ERCOT, ISO-NE, MISO, NYISO and PJM, known as RTOs or ISOs. Trading in these markets is approved by FERC, or in the case of ERCOT, approved by the PUCT, and includes credit policies that, under certain circumstances, require that losses arising from the default of one member on spot market transactions be shared by the remaining participants. As a result, the counterparty credit risk to these markets is limited to NRG’s share of the overall market and are excluded from the above exposures.
Exchange Traded Transactions
The Company enters into commodity transactions on registered exchanges, notably ICE, NYMEX and Nodal. These clearinghouses act as the counterparty and transactions are subject to extensive collateral and margining requirements. As a result, these commodity transactions have limited counterparty credit risk.
Long-Term Contracts
Counterparty credit exposure described above excludes credit risk exposure under certain long-term contracts, primarily solar PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company values these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of September 30, 2020, aggregate credit risk exposure managed by NRG to these counterparties was approximately $621 million for the next five years.

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Retail Customer Credit Risk
The Company is exposed to retail credit risk through the Company's retail electricity providers, which serve C&I customers and the Mass market. Retail credit risk results in losses when a customer fails to pay for services rendered. The losses may result from both non-payment of customer accounts receivable and the loss of in-the-money forward value. The Company manages retail credit risk through the use of established credit policies that include monitoring of the portfolio and the use of credit mitigation measures such as deposits or prepayment arrangements.
As of September 30, 2020, the Company's retail customer credit exposure to C&I and Mass customers was diversified across many customers and various industries, as well as government entities. The Company is also subject to risk with respect to its residential solar customers. Current economic conditions may affect the Company's customers' ability to pay bills in a timely manner, which could increase customer delinquencies and may lead to an increase in credit losses.

Note 6 — Nuclear Decommissioning Trust Fund
NRG's Nuclear Decommissioning Trust Fund assets, which are for the decommissioning of its 44% interest in STP, are comprised of securities classified as available-for-sale and recorded at fair value based on actively quoted market prices. NRG accounts for the Nuclear Decommissioning Trust Fund in accordance with ASC 980, Regulated Operations, because the Company's nuclear decommissioning activities are subject to approval by the PUCT with regulated rates that are designed to recover all decommissioning costs and that can be charged to and collected from the ratepayers per PUCT mandate. Since the Company is in compliance with PUCT rules and regulations regarding decommissioning trusts and the cost of decommissioning is the responsibility of the Texas ratepayers, not NRG, all realized and unrealized gains or losses (including other-than-temporary impairments) related to the Nuclear Decommissioning Trust Fund are recorded to the Nuclear Decommissioning Trust liability and are not included in net income or accumulated OCI, consistent with regulatory treatment.
The following table summarizes the aggregate fair values and unrealized gains and losses for the securities held in the trust funds, as well as information about the contractual maturities of those securities.
 As of September 30, 2020As of December 31, 2019
(In millions, except maturities)Fair ValueUnrealized GainsUnrealized LossesWeighted-average Maturities (In years)Fair ValueUnrealized GainsUnrealized LossesWeighted-average Maturities (In years)
Cash and cash equivalents$25 $$— $17 $$— 
U.S. government and federal agency obligations49 1268 11
Federal agency mortgage-backed securities92 24100 24
Commercial mortgage-backed securities38 2829 24
Corporate debt securities144 12 12109 11
Equity securities474 321 — 466 324 — 
Foreign government fixed income securities1010
Total$828 $347 $$794 $338 $

The following table summarizes proceeds from sales of available-for-sale securities held in the trust funds and the related realized gains and losses from these sales. The cost of securities sold is determined on the specific identification method.
 Nine months ended September 30,
(In millions)20202019
Realized gains$22 $
Realized losses(11)(7)
Proceeds from sale of securities318 271 


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Note 7 — Accounting for Derivative Instruments and Hedging Activities
Energy-Related Commodities
As of September 30, 2020, NRG had energy-related derivative instruments extending through 2034. The Company marks these derivatives to market through the statement of operations. NRG has executed power purchase agreements extending through 2037 that qualified for the NPNS exception and were therefore exempt from fair value accounting treatment.
Interest Rate Swaps
NRG was exposed to changes in interest rates through the Company's issuance of variable rate debt. In order to manage the Company's interest rate risk, NRG entered into interest rate swap agreements. As of September 30, 2020, NRG had no interest rate derivative instruments as a result of the early termination of such contracts in connection with the repayment of the 2023 Term Loan Facility during the second quarter of 2019. As of November 5, 2020, the Company entered into $1.6 billion of interest rate hedges associated with anticipated financing needs.
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of NRG's open derivative transactions broken out by category, excluding those derivatives that qualified for the NPNS exception, as of September 30, 2020 and December 31, 2019. Option contracts are reflected using delta volume. Delta volume equals the notional volume of an option adjusted for the probability that the option will be in-the-money at its expiration date.
  Total Volume (In millions)
CategoryUnitsSeptember 30, 2020December 31, 2019
EmissionsShort Ton
Renewable Energy CertificatesCertificates
CoalShort Ton10 
Natural GasMMBtu(264)(181)
PowerMWh51 38 
CapacityMW/Day(1)(1)

Fair Value of Derivative Instruments
The following table summarizes the fair value within the derivative instrument valuation on the balance sheets:
 Fair Value
 Derivative AssetsDerivative Liabilities
(In millions)September 30, 2020December 31, 2019September 30, 2020December 31, 2019
Derivatives Not Designated as Cash Flow or Fair Value Hedges:   
Commodity contracts current$578 $860 $495 $781 
Commodity contracts long-term315 310 318 322 
Total Derivatives Not Designated as Cash Flow or Fair Value Hedges$893 $1,170 $813 $1,103 

The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. In addition, collateral received or paid on the Company's derivative assets or liabilities are recorded on a separate line item on the balance sheet. The following table summarizes the offsetting of derivatives by counterparty master agreement level and collateral received or paid:
Gross Amounts Not Offset in the Statement of Financial Position
(In millions)Gross Amounts of Recognized Assets / LiabilitiesDerivative InstrumentsCash Collateral (Held) / PostedNet Amount
As of September 30, 2020
Commodity contracts:
Derivative assets$893 $(738)$(1)$154 
Derivative liabilities(813)738 (75)
Total commodity contracts$80 $$(1)$79 


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Gross Amounts Not Offset in the Statement of Financial Position
(In millions)Gross Amounts of Recognized Assets / LiabilitiesDerivative InstrumentsCash Collateral (Held) / PostedNet Amount
As of December 31, 2019
Commodity contracts:
Derivative assets$1,170 $(909)$(7)$254 
Derivative liabilities(1,103)909 73 (121)
Total commodity contracts$67 $$66 $133 

Impact of Derivative Instruments on the Statements of Operations
Unrealized gains and losses associated with changes in the fair value of derivative instruments not accounted for as cash flow and fair value hedges are reflected in current period results of operations.
The following table summarizes the pre-tax effects of economic hedges that have not been designated as cash flow hedges or fair value hedges and trading activity on the Company's statement of operations. The effect of commodity hedges is included within operating revenues and cost of operations and the effect of interest rate hedges is included in interest expense.
(In millions)Three months ended September 30,Nine months ended September 30,
Unrealized mark-to-market results2020201920202019
Reversal of previously recognized unrealized (gains) on settled positions related to economic hedges$(101)$(118)$(62)$(88)
Reversal of acquired (gain)/loss positions related to economic hedges(2)(3)(4)
Net unrealized (losses)/gains on open positions related to economic hedges(15)57 73 69 
Total unrealized mark-to-market (losses)/gains for economic hedging activities(118)(64)13 (23)
Reversal of previously recognized unrealized (gains) on settled positions related to trading activity(7)(1)(14)(8)
Net unrealized gains/(losses) on open positions related to trading activity(3)19 23 
Total unrealized mark-to-market (losses)/gains for trading activity(5)(4)15 
Total unrealized (losses)/gains$(123)$(68)$18 $(8)

Three months ended September 30,Nine months ended September 30,
(In millions)2020201920202019
Unrealized gains/(losses) included in operating revenues$34 $(214)$83 $66 
Unrealized (losses)/gains included in cost of operations(157)146 (65)(74)
Total impact to statement of operations — energy commodities$(123)$(68)$18 $(8)
Total impact to statement of operations — interest rate contracts$$$$(38)
    
The reversals of acquired gain or loss positions were valued based upon the forward prices on the acquisition date. The roll-off amounts were offset by realized gains or losses at the settled prices and are reflected in operating revenue or cost of operations during the same period.
For the nine months ended September 30, 2020, the $73 million unrealized gain from open economic hedge positions was primarily the result of an increase in value of forward positions as a result of decreases in New York capacity and power prices, as well as increases in ERCOT power prices.
For the nine months ended September 30, 2019, the $69 million unrealized gain from open economic hedge positions was primarily the result of an increase in value of forward purchases of ERCOT heat rate due to ERCOT heat rate expansion.
Credit Risk Related Contingent Features
Certain of the Company's hedging agreements contain provisions that require the Company to post additional collateral if the counterparty determines that there has been deterioration in credit quality, generally termed “adequate assurance” under the agreements, or require the Company to post additional collateral if there were a downgrade in the Company's credit rating. The collateral required for contracts with adequate assurance clauses that are in a net liability position as of September 30, 2020 was

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$35 million. The Company is also party to certain marginable agreements under which it has net liability position, but the counterparty has not called for the collateral due, which was $8 million as of September 30, 2020. If called for by the counterparty, $3 million of additional collateral would be required for all contracts with credit rating contingent features as of September 30, 2020.
See Note 5, Fair Value of Financial Instruments, for discussion regarding concentration of credit risk.

Note 8 — Impairments
2020 Impairment Losses
Home Solar — During the third quarter of 2020, the Company concluded its Home Solar business was held for sale as a result of advanced negotiations to sell the business. NRG recorded impairment losses of $29 million in the West/Other segment to adjust the carrying amount of the assets and liabilities to fair market value based on indicative sale prices. As of September 30, 2020, there were $88 million of other non-current assets and $44 million of other non-current liabilities classified as held for sale.
Petra Nova Parish Holdings — During the first quarter of 2020, due to the decline in oil prices, NRG determined that the carrying amount of the Company’s equity method investment exceeded the fair value of the investment and that the decline is considered to be other-than-temporary. In determining the fair value, the Company utilized an income approach to estimate future project cash flows. The Company recorded an impairment loss of $18 million in the Texas segment, which included the anticipated drawdown of the $12 million letter of credit posted in September 2019 to cover certain project debt reserve requirements.
2019 Impairment Losses
Petra Nova Parish Holdings — During the third quarter of 2019, NRG contributed $95 million in cash to Petra Nova and posted a $12 million letter of credit to cover certain project debt reserve requirements. The cash portion of the contribution was used by Petra Nova to prepay a significant portion of the project debt. As a result, the previously disclosed guarantee of up to $124 million related to the project level debt provided by NRG was canceled and the remaining project debt has now become non-recourse to NRG. In relation to this contribution, the Company evaluated the project for impairment and determined that the carrying amount of the Company's equity method investment exceeded the fair value of the investment and that the decline is considered to be other-than-temporary. In determining the fair value, the Company utilized an income approach and considered project specific assumptions for the estimated future project cash flows. The Company measured the impairments loss as the difference between the carrying amount and the fair value of the investment and recorded an impairment loss of $101 million.
Other Impairments — During the nine months ended September 30, 2019, the Company recorded $7 million of impairment losses of cost investments and intangible assets.

Note 9 — Receivables Securitization and Repurchase Facility
Receivables Securitization
On September 22, 2020, NRG Receivables LLC, a bankruptcy remote, special purpose, indirect wholly owned subsidiary, entered into the Receivables Facility for an amount up to $750 million, subject to adjustments on a seasonal basis, with issuers of asset-backed commercial paper and commercial banks (the "Lenders".) The assets of NRG Receivables LLC are first available to satisfy the claims of the Lenders before making payments on the subordinated note and equity issued by NRG Receivables LLC. The assets of NRG Receivables LLC are not available to the Company and its subsidiaries or creditors unless and until distributed by NRG Receivables LLC. Under the Receivables Facility, certain indirect subsidiaries of the Company sell their accounts receivables to NRG Receivables LLC, subject to certain terms and conditions. In turn, NRG Receivables LLC grants a security interest in the purchased receivables to the Lenders as collateral for cash borrowings and issuances of letters of credit. The accounts receivables remain on the Company's consolidated balance sheet and any amounts funded by the Lenders to NRG Receivables LLC will be reflected as short-term borrowings. Cash flows from the Receivables Facility are reflected as financing activities in the Company's consolidated statements of cash flows. The Company will continue to service the accounts receivables sold in exchange for a servicing fee. The Receivables Facility is scheduled to expire on September 21, 2021, unless renewed by the mutual consent of the parties in accordance with its terms. Borrowings by NRG Receivables LLC under the Receivables Facility bear interest as defined under the Receivables Financing Agreement. The weighted average interest rate related to usage under the Securitization Facility as of September 30, 2020 was 0.489%. As of September 30, 2020, there were 0 outstanding borrowings and there were $179 million in letters of credit issued under the Receivables Facility.

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Repurchase Facility
On September 22, 2020, the Company entered into an uncommitted repurchase facility (“Repurchase Facility”) related to the Receivables Facility. Under the Repurchase Facility, the Company can borrow up to $75 million, collateralized by a subordinated note issued by NRG Receivables LLC to NRG Retail LLC in favor of the originating entities representing a portion of the balance of receivables sold to NRG Receivables LLC under the Receivables Facility. The Repurchase Facility is scheduled to expire on September 22, 2021, unless renewed by the mutual consent of the parties in accordance with its terms. The Repurchase Facility has 0 commitment fee and borrowings will be drawn at LIBOR + 1.25%. As of September 30, 2020, there were 0 outstanding borrowings under the Repurchase Facility.

Note 10 — Long-term Debt
Long-term debt consisted of the following:
(In millions, except rates)September 30, 2020December 31, 2019Interest rate %
Recourse debt:
Senior Notes, due 2026$1,000 $1,000 7.250
Senior Notes, due 20271,230 1,230 6.625
Senior Notes, due 2028821 821 5.750
Senior Notes, due 2029733 733 5.250
Convertible Senior Notes, due 2048(a)
575 575 2.750
Senior Secured First Lien Notes, due 2024600 600 3.750
Senior Secured First Lien Notes, due 2029500 500 4.450
Revolving Credit Facility83 L + 1.750
Tax-exempt bonds466 466 1.30 - 6.00
Subtotal recourse debt5,925 6,008 
Non-recourse debt:
Other34 various
Subtotal all non-recourse debt34 
Subtotal long-term debt (including current maturities)5,929 6,042 
Less current maturities(3)(88)
Less debt issuance costs(59)(65)
Discounts(75)(86)
Total long-term debt$5,792 $5,803 
(a)As of the ex-dividend date of October 30, 2020, the Convertible Notes were convertible at a price of $46.24, which is equivalent to a conversion rate of approximately 21.62 shares of common stock per $1,000 principal amount

Recourse Debt
Revolving Credit Facility
The Company had $83 million outstanding under its Revolving Credit Facility as of December 31, 2019, which was used to repay the outstanding indebtedness on the Agua Caliente Borrower 1 notes on a leverage-neutral basis during the fourth quarter of 2019. Due to market conditions, primarily as a result of COVID-19, the Company drew upon the facility in the first quarter of 2020 as a precaution and to proportionally increase cash on hand, and fully repaid the outstanding borrowings during the second quarter of 2020.
During the third quarter of 2020, the Company amended its existing credit agreement to, among other things, (i) increase the existing revolving commitments in an aggregate amount of $802 million, and (ii) provide for a new tranche of revolving commitments in an aggregate amount of $273 million with a maturity date that is 30 months after the date of closing of the Direct Energy acquisition (the "Acquisition Closing Date"). The maturity date of the new revolving tranche of commitments may, upon request by the Company, and at the option of each applicable lender under the new tranche be extended by 12 months, but not beyond May 28, 2024, which is the maturity date of the existing and increased commitments. Other than with respect to the maturity date, the terms of all revolving commitments and loan made pursuant thereto are identical. The increase in the existing commitments, and the commitments with respect to the new tranche were effective on August 20, 2020 but will only become available upon the Acquisition Closing Date. For further discussion of the acquisition of Direct Energy see Note 4, Acquisitions, Discontinued Operations and Dispositions. Upon the Acquisition Closing Date, total revolving commitments available, subject to usage, under the amended credit agreement will be $3.7 billion.

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In addition, the amendment includes changes to, among other things, (i) permit the borrowing of up to the full amount of the revolving commitments in Canadian dollars, (ii) increase the swingline facility from $50 million to $100 million and provide a $10 million swingline facility in Canadian dollars, (iii) increase the credit facilities lien basket from the greater of $6 billion and 30% of total assets to the greater of $10 billion and 30% of total assets, (iv) increase the credit facilities debt basket from $6 billion to $10 billion, (v) increase the basket for securitization indebtedness from $750 million to $1.7 billion, (vi) provide an additional indebtedness basket equal to $600 million for certain liquidity facilities, and (vii) make certain other changes to the existing covenants and other provisions.
Tax-Exempt Bonds
On March 11, 2020, NRG issued $59 million in aggregate principal amount of NRG Dunkirk 2020 1.30% tax-exempt refinancing bonds due 2042 ("the Bonds"). The Bonds are guaranteed on a first-priority basis by each of NRG’s current and future subsidiaries that guarantee indebtedness under its credit agreement. The Bonds are secured by a first priority security interest in the same collateral that is pledged for the benefit of the lenders under NRG’s credit agreement, which consists of a substantial portion of the property and assets owned by NRG and the guarantors. The collateral securing the Bonds will, at the request of NRG, be released if NRG satisfies certain conditions, including receipt of an investment grade rating on its senior, unsecured debt securities from two out of the three rating agencies, subject to reversion if those rating agencies withdraw their investment grade rating of the Bonds or any of NRG’s senior, unsecured debt securities or downgrade such rating below investment grade. The Bonds are subject to mandatory tender and purchase on April 3, 2023 and have a final maturity date of April 1, 2042.
NRG used the net proceeds from the offering to redeem the existing principal amount of outstanding Dunkirk Power LLC 5.875% tax exempt bonds due 2042.
Non-Recourse Debt
Credit Default Swap Facility
On January 4, 2019, the Company entered into an $80 million credit agreement to issue letters of credit, which is currently supporting the Cottonwood facility lease. Annual fees of 1.33% on the facility were paid quarterly in advance. On August 13, 2020, the agreement was amended permitting the Company to increase the size of the facility and fees on the facility were adjusted to reflect the cost of the credit default swaps that serve as collateral for the facility. In order to increase the Company's collective collateral facilities in connection with the Direct Energy acquisition, NRG expanded the facility allowing for the issuance of an additional $50 million of letters of credit as of September 30, 2020. The Company has further expanded the facility to a total capacity of $167 million as of November 5, 2020. As of September 30, 2020, $80 million was issued under this facility.

Note 11 — Investments Accounted for Using the Equity Method and Variable Interest Entities, or VIEs
Entities that are not Consolidated
NRG accounts for the Company's significant investments using the equity method of accounting. NRG's carrying value of equity investments can be impacted by a number of elements including impairments, unrealized gains and losses on derivatives and movements in foreign currency exchange rates.
PG&E Bankruptcy — Agua Caliente and two of the three Ivanpah units are party to PPAs with PG&E. Both projects have project financing with the U.S. DOE. On January 29, 2019, PG&E Corp. and primary operating subsidiary utility PG&E filed for Chapter 11 relief in the California Bankruptcy Court. As a result of the bankruptcy filing, Agua Caliente and the two Ivanpah units were issued notices of events of default under their respective loan agreements. On September 9, 2019, PG&E filed a plan of reorganization that would assume all power purchase agreements, including those held by Agua Caliente and the two Ivanpah units. The California Bankruptcy Court approved the PG&E plan and the Confirmation Order was entered on June 19, 2020. The plan went effective, and PG&E emerged from bankruptcy on July 1, 2020. In July 2020, the U.S. DOE agreed to waivers of the bankruptcy-related events of default with respect to the Agua Caliente and Ivanpah projects. Subsequent to PG&E's emergence from bankruptcy, the Agua Caliente and the Ivanpah projects were allowed to resume distributions, and as of November 5, 2020, NRG received $50 million. NRG renewed its efforts to sell its 35% interest in Agua Caliente in July 2020, following PG&E's emergence from bankruptcy.
NRG's maximum exposure to loss is limited to its equity investment, which was $197 million for Agua Caliente and $26 million for Ivanpah as of September 30, 2020.

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Variable Interest Entities that are Consolidated
The Company has a controlling financial interest in certain entities that have been identified as VIEs under ASC 810. These arrangements are related to the Receivables Facility as further described in Note 9, Receivables Securitization and Repurchase Facility, and tax equity arrangements entered into with third-parties in order to finance the cost of solar energy systems under operating leases eligible for certain tax credits as further described in Note 2, Summary of Significant Accounting Policies, to the Company's 2019 Form 10-K. During the first quarter of 2020, the Company repurchased its partners' equity interest in one of the partnerships. As the Company retains control of its interest, the repurchase was recorded to equity. During the third quarter of 2020, the remaining Home Solar VIE was reclassified to held for sale as further discussed in Note 8, Impairments.
The summarized financial information for the Company's consolidated VIEs consisted of the following:
(In millions)September 30, 2020December 31, 2019
Accounts receivable$887 $
Other current assets
Net property, plant and equipment71 
Other long-term assets25 27 
Total assets916 101 
Current liabilities
Long-term debt24 
Other long-term liabilities27 
Total liabilities32 36 
Redeemable noncontrolling interest20 
Net assets less noncontrolling interest$884 $45 

Note 12 — Changes in Capital Structure
As of September 30, 2020 and December 31, 2019, the Company had 500,000,000 shares of common stock authorized. The following table reflects the changes in NRG's common stock issued and outstanding:
IssuedTreasuryOutstanding
Balance as of December 31, 2019421,890,790 (172,894,601)248,996,189 
Shares issued under LTIPs1,150,559 1,150,559 
Shares issued under ESPP63,455 63,455 
Shares repurchased(6,062,783)(6,062,783)
Balance as of September 30, 2020423,041,349 (178,893,929)244,147,420 
Shares issued under LTIPs5,400 5,400 
Shares issued under ESPP68,014 68,014 
Balance as of November 5, 2020423,046,749 (178,825,915)244,220,834 

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Share Repurchases
The Company adopted, in the fourth quarter of 2019, a long-term capital allocation policy that targets allocating 50% of cash available for allocation generated each year to growth investments and 50% to be returned to shareholders. The return of capital to shareholders is expected to be completed through the increased dividend discussed below, supplemented by share repurchases. The following repurchases have been made during the nine months ended September 30, 2020:
Total number of shares purchasedAverage price paid per share
Amounts paid for shares purchased (in millions)
2020 repurchases:
Repurchases6,062,783 $197 
Equivalent shares purchased in lieu of tax withholdings on equity compensation issuances(a)
711,248 27 
Total Share Repurchases during the nine months ended September 30, 20206,774,031 $33.05$224 
(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 $38.23
Employee Stock Purchase Plan
In March 2019, the Company reopened participation in the ESPP, which allows eligible employees to elect to withhold between 1% and 10% of their eligible compensation to purchase shares of NRG common stock at the lesser of 95% of its market value on the offering date or 95% of the fair market value on the exercise date. An offering date will occur each April 1 and October 1. An exercise date will occur each September 30 and March 31.
NRG Common Stock Dividends
Beginning in the first quarter of 2020, NRG increased the annual dividend to $1.20 from $0.12 per share and expects to target an annual dividend growth rate of 7-9% per share in subsequent years. A quarterly dividend of $0.30 per share was paid on the Company's common stock during the three months ended September 30, 2020. On October 23, 2020, NRG declared a quarterly dividend on the Company's common stock of $0.30 per share, payable on November 16, 2020 to stockholders of record as of November 2, 2020.
The Company's common stock dividends are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations.

Note 13 — Earnings Per Share
Basic income per common share is computed by dividing net income by the weighted average number of common shares outstanding. Shares issued and treasury shares repurchased during the year are weighted for the portion of the year that they were outstanding. Diluted income per share is computed in a manner consistent with that of basic income per share while giving effect to all potentially dilutive common shares that were outstanding during the period. The outstanding non-qualified stock options, non-vested restricted stock units, market stock units, and relative performance stock units are not considered outstanding for purposes of computing basic income per share. However, these instruments are included in the denominator for purposes of computing diluted income per share under the treasury stock method. The Convertible Senior Notes are convertible, under certain circumstances, into the Company’s common stock, cash or combination thereof (at NRG's option). There is no dilutive effect for the Convertible Senior Notes due to the Company’s expectation to settle the liability in cash.

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The reconciliation of NRG's basic and diluted income per share is shown in the following table:
Three months ended September 30,Nine months ended September 30,
(In millions, except per share data)2020201920202019
Basic income per share:
Net income available to common shareholders$249 $372 $683 $1,055 
Weighted average number of common shares outstanding - basic244 254 246 266 
Income per weighted average common share — basic$1.02 $1.46 $2.78 $3.97 
Diluted income per share:
Net income available to common shareholders$249 $372 $683 $1,055 
Weighted average number of common shares outstanding - basic244 254 246 266 
Incremental shares attributable to the issuance of equity compensation (treasury stock method)
Weighted average number of common shares outstanding - dilutive245 256 247 268 
Income per weighted average common share — diluted$1.02 $1.45 $2.77 $3.94 

As of September 30, 2020 and 2019, the Company had an insignificant number of outstanding equity instruments that are anti-dilutive and were not included in the computation of the Company’s diluted income per share.

Note 14 — Segment Reporting
As part of perfecting the integrated model, in which the majority of the Company’s generation serves its retail customers, the Company began managing its operations based on the combined results of the retail and wholesale generation businesses with a geographical focus in 2020. As a result, the Company changed its business segments from Retail and Generation to Texas, East and West/Other beginning in the first quarter of 2020, as further described in Note 1, Nature of Business. The Company's updated segment structure reflects how management currently makes financial decisions and allocates resources The financial information for the three and nine months ended September 30, 2019 was recast to reflect the current segment structure.
In February 2019, as described in Note 4, Acquisitions, Discontinued Operations and Dispositions, the Company completed the sales of the South Central Portfolio and Carlsbad. The financial information for the three and nine months ended September 30, 2019 presented below reflects the presentation of these entities as discontinued operations within the corporate segment.
NRG’s chief operating decision maker, its chief executive officer, evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, free cash flow and allocation of capital, as well as net income/(loss).
Three months ended September 30, 2020
(In millions)TexasEastWest/OtherCorporateEliminationsTotal
Operating revenues$1,992 $693 $122 $$$2,809 
Depreciation and amortization49 34 99 
Impairment losses29 29 
Equity in earnings of unconsolidated affiliates36 36 
Income/(loss) from continuing operations before income taxes288 149 17 (113)341 
Income/(loss) from continuing operations288 149 17 (205)249 
Net income/(loss) attributable to NRG Energy, Inc$288 $149 $17 $(205)$0 $249 


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Three months ended September 30, 2019
(In millions)TexasEastWest/OtherCorporateEliminationsTotal
Operating revenues$2,208 $679 $111 $$(2)$2,996 
Depreciation and amortization45 31 91 
Equity in earnings of unconsolidated affiliates28 29 
Income/(loss) from continuing operations before income taxes348 121 16 (106)380 
Income/(loss) from continuing operations348 121 15 (111)374 
Loss from discontinued operations, net of tax(2)(2)
Net income/(loss)348 121 15 (113)372 
Net income/(loss) attributable to NRG Energy, Inc.$348 $121 $15 $(113)$1 $372 

Nine months ended September 30, 2020
(In millions)TexasEastWest/OtherCorporateEliminationsTotal
Operating revenues$4,928 $1,798 $341 $$(1)$7,066 
Depreciation and amortization167 100 25 26 318 
Impairment losses29 29 
Gain on sale of assets
Equity in (losses)/earnings of unconsolidated affiliates(3)40 37 
Income/(loss) from continuing operations before income taxes800 319 84 (304)899 
Income/(loss) from continuing operations800 319 83 (519)683 
Net income/(loss) attributable to NRG Energy, Inc$800 $319 $83 $(519)$0 $683 

Nine months ended September 30, 2019
(In millions)TexasEastWest/OtherCorporateEliminationsTotal
Operating revenues$5,511 $1,812 $310 $$(7)$7,626 
Depreciation and amortization125 87 26 23 261 
Reorganization costs11 16 
Gain on sale of assets
Equity in (losses)/earnings of unconsolidated affiliates(5)13 
Loss on debt extinguishment, net(47)(47)
Income/(loss) from continuing operations before income taxes757 280 11 (382)666 
Income/(loss) from continuing operations757 280 10 (390)657 
Income from discontinued operations, net of tax399 399 
Net income757 280 10 1,056 
Net income attributable to NRG Energy, Inc.$757 $280 $9 $9 $0 $1,055 

Note 15 — Income Taxes
Effective Income Tax Rate
The income tax provision consisted of the following:
 Three months ended September 30,Nine months ended September 30,
(In millions, except rates)2020201920202019
Income from continuing operations before income taxes$341 $380 $899 $666 
Income tax expense from continuing operations92 216 
Effective income tax rate27.0 %1.6 %24.0 %1.4 %
For the three and nine months ended September 30, 2020, the effective tax rates were higher than the statutory rate of 21% due to state tax expense partially offset by an excess tax benefit related to share-based compensation. For the same periods in 2019, the effective tax rates were lower than the statutory rate of 21% primarily due to the tax benefit for the change in valuation allowance partially offset by state tax expense.

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On March 27, 2020, the Senate passed the CARES Act to provide emergency relief related to the COVID-19 pandemic. The CARES Act contains federal income tax provisions which, among other things: (i) increases the amount of interest expense that businesses are allowed to deduct by increasing the adjusted taxable income limitation from 30% to 50% for tax years that begin in 2019 and 2020; (ii) permits businesses to carry back to each of the five tax years NOLs arising from tax years beginning after December 31, 2017 and before January 1, 2020; and (iii) temporarily removes the 80% limitation on NOLs until tax years beginning after 2020. NRG does not expect the CARES Act provisions to have a material impact on the tax positions of the Company.
Uncertain Tax Benefits
As of September 30, 2020, NRG had a non-current tax liability of $21 million for uncertain tax benefits from positions taken on various state income tax returns and accrued interest. For the nine months ended September 30, 2020, NRG accrued an immaterial amount of interest relating to the uncertain tax benefits. As of September 30, 2020, NRG had cumulative interest and penalties related to these uncertain tax benefits of $3 million. The Company recognizes interest and penalties related to uncertain tax benefits in income tax expense.
NRG is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state and foreign jurisdictions including operations located in Australia and Canada. The Company is no longer subject to U.S. federal income tax examinations for years prior to 2016. With few exceptions, state and local income tax examinations are no longer open for years prior to 2011.

Note 16 — Related Party Transactions
NRG provides services to some of its equity method investments under operations and maintenance agreements. Fees for the services under these agreements include recovery of NRG's costs of operating the plants. Certain agreements also include fees for administrative service, a base monthly fee, profit margin and/or annual incentive bonus.
The following table summarizes NRG's material related party transactions with third party affiliates:
 Three months ended September 30,Nine months ended September 30,
(In millions)2020201920202019
Revenues from Related Parties Included in Operating Revenues   
Gladstone$$$$
Ivanpah(a)
11 34 25 
Midway-Sunset
Total$13 $11 $40 $32 
(a) Also includes fees under project management agreements with each project company

Note 17 — Commitments and Contingencies
Commitments
First Lien Structure
NRG has granted first liens to certain counterparties on a substantial portion of property and assets owned by NRG and the guarantors of its senior debt. NRG uses the first lien structure to reduce the amount of cash collateral and letters of credit that it would otherwise be required to post from time to time to support its obligations under out-of-the-money hedge agreements for forward sales of power or gas used as a proxy for power. To the extent that the underlying hedge positions for a counterparty are out-of-the-money to NRG, the counterparties would have a claim under the first lien program. As of September 30, 2020, all hedges under the first lien were in-the-money for NRG on a counterparty aggregate basis.
Jewett Mine Lignite Contract
The Company's Limestone facility historically burned lignite obtained from the Jewett mine, which was operated by TWCC. On or about March 15, 2019, the Jewett mine and related lignite supply agreement with NRG were acquired by Westmoreland Jewett Mining LLC ("Jewett Mining"), a subsidiary of Westmoreland Mining LLC pursuant to a plan of reorganization confirmed by the Texas Bankruptcy Court. Effective August 5, 2020, NRG's subsidiary, NRG Texas LLC, acquired all of the equity interests of Jewett Mining. Active mining under the lignite supply agreement ceased as of December 31, 2016; however, under the terms of the lignite supply agreement, Jewett Mining remains responsible for reclamation activities and NRG is responsible for all reclamation costs. NRG has recorded an adequate ARO liability. The Railroad Commission of Texas has imposed a bond obligation of approximately $99 million for the reclamation of the Jewett mine,

38


which NRG supports through surety bonds. The cost of the reclamation may exceed the value of the bonds. NRG may provide additional performance assurance if required by the Railroad Commission of Texas.
Contingencies
The Company's material legal proceedings are described below. The Company believes that it has valid defenses to these legal proceedings and intends to defend them vigorously. NRG records accruals for estimated losses from contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. As applicable, the Company has established an adequate accrual for the applicable legal matters, including regulatory and environmental matters as further discussed in Note 18, Regulatory Matters, and Note 19, Environmental Matters. In addition, legal costs are expensed as incurred. Management has assessed each of the following matters based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. Unless specified below, the Company is unable to predict the outcome of these legal proceedings or reasonably estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available, management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and contingencies could be at amounts that are different from its currently recorded accruals and that such difference could be material.
In addition to the legal proceedings noted below, NRG and its subsidiaries are party to other litigation or legal proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect NRG's consolidated financial position, results of operations, or cash flows.
Washington-St. Tammany and Claiborne Electric Cooperative v. LaGen — On June 28, 2017, plaintiffs Washington-St. Tammany Electric Cooperative, Inc. and Claiborne Electric Cooperative, Inc. filed a lawsuit against LaGen in the United States District Court for the Middle District of Louisiana. The plaintiffs claimed breach of contract against LaGen for allegedly improperly charging the plaintiffs for costs related to the installation and maintenance of certain pollution control technology. Plaintiffs sought damages for the alleged improper charges and a declaration as to which charges were proper under the contract. In February 2020, the court dismissed this lawsuit without prejudice for lack of subject matter jurisdiction. This matter had been appealed to the United States Court of Appeals for the Fifth Circuit, which dismissed the appeals on July 13, 2020. On March 17, 2020, plaintiffs filed a lawsuit in the Nineteenth Judicial District Court for the Parish of East Baton Rouge in Louisiana alleging substantially the same matters. On February 4, 2019, NRG sold the South Central Portfolio, including the entities subject to this litigation. However, NRG has agreed to indemnify the purchaser for certain losses suffered in connection therewith.
Sierra club et al. v. Midwest Generation LLC — In 2012, several environmental groups filed a complaint against Midwest Generation with the Illinois Pollution Control Board ("IPCB") alleging violations of environmental law resulting in groundwater contamination. In June 2019, the IPCB found that Midwest Generation violated the law because it had improperly handled coal ash at 4 facilities in Illinois and caused or allowed coal ash constituents to impact groundwater. On September 9, 2019, Midwest Generation filed a Motion to Reconsider numerous issues, which the court granted in part and denied in part on February 6, 2020. The IPCB will hold hearings to determine the appropriate relief. Midwest Generation has been working with the Illinois EPA to address the groundwater issues since 2010.
XOOM Energy Litigation — XOOM is a defendant in 2 purported class action lawsuits pending in Maryland and New York. The plaintiffs generally claim that they did not receive the savings they were promised in their natural gas and electricity bills. In the Maryland lawsuit, the district court denied plaintiffs' bid to certify the case as a class action on August 18, 2020. The court is resetting the discovery and trial schedule for the remaining plaintiffs' individual claims. In the New York case, XOOM filed a motion to dismiss, which the court granted on September 21, 2018, later entering judgment in XOOM's favor on September 24, 2018. The plaintiffs in the New York case appealed to the U.S. Court of Appeals for the Second Circuit. On July 26, 2019, the Second Circuit reversed the judgment of the district court and remanded to the district court with instructions that plaintiffs be permitted to proceed on their proposed amended complaint. This matter was known and accrued for at the time of the acquisition.

Note 18 — Regulatory Matters
Environmental regulatory matters are discussed within Note 19, Environmental Matters.
NRG operates in a highly regulated industry and is subject to regulation by various federal and state agencies. As such, NRG is affected by regulatory developments at both the federal and state levels and in the regions in which NRG operates. In addition, NRG is subject to the market rules, procedures, and protocols of the various ISO and RTO markets in which NRG participates. These power markets are subject to ongoing legislative and regulatory changes that may impact NRG's businesses.

39


In addition to the regulatory proceedings noted below, NRG and its subsidiaries are parties to other regulatory proceedings arising in the ordinary course of business or have other regulatory exposure. In management's opinion, the disposition of these ordinary course matters will not materially adversely affect NRG's consolidated financial position, results of operations, or cash flows.
California Station Power — As the result of unfavorable final and non-appealable litigation, the Company accrued a liability associated with consumption of station power at the Company's Encina power plant facility in California after August 30, 2010. The Company has established an appropriate accrual pending potential regulatory action by San Diego Gas & Electric regarding the Company's Encina facility.
South Central — On August 4, 2016, NRG received a document hold notice from FERC regarding conduct in the MISO and PJM markets. FERC Office of Enforcement Staff investigated potential violations of MISO rules involving bidding for the Big Cajun 2 facility, as well as other aspects of NRG’s operations in MISO. On August 18, 2020, FERC Office of Enforcement presented NRG with its preliminary findings. NRG will respond to the preliminary findings on January 15, 2021. FERC has the authority to require disgorgement of profits and to impose penalties and NRG retains any liability following the sale of the South Central Portfolio.
ISO-NE — On February 5, 2019, FERC informed the Company that it had made a preliminary finding that the Company violated FERC's market behavior rules in connection with offers made into the ISO-NE Forward Capacity Auction in 2016. On April 26, 2019, NRG responded to the preliminary findings. The investigation is awaiting further Commission action.

Note 19 — Environmental Matters
NRG is subject to a wide range of environmental laws in the development, construction, ownership and operation of projects. These laws generally require that governmental permits and approvals be obtained before construction and during operation of power plants. NRG is also subject to laws regarding the protection of wildlife, including migratory birds, eagles and threatened and endangered species. The electric generation industry has been facing requirements regarding GHGs, combustion byproducts, water discharge and use, and threatened and endangered species that have been put in place in recent years. However, under the current U.S. presidential administration, some of these rules are being reconsidered and reviewed. In general, future laws are expected to require the addition of emissions controls or other environmental controls or to impose certain restrictions on the operations of the Company's facilities, which could have a material effect on the Company's consolidated financial position, results of operations, or cash flows. Federal and state environmental laws generally have become more stringent over time, although this trend could slow or pause in the near term with respect to federal laws under the current U.S. presidential administration.
Air
On July 8, 2019, the EPA promulgated the ACE rule, which rescinded the CPP, which had sought to broadly regulate CO2 emissions from the power sector. The ACE rule requires states that have coal-fired EGUs to develop plans to seek heat rate improvements from coal-fired EGUs. Numerous parties have challenged the ACE rule in the D.C. Circuit and numerous parties have filed petitions for reconsideration with the EPA.
Water
Effluent Limitations Guidelines — In November 2015, the EPA revised the Effluent Limitations Guidelines for Steam Electric Generating Facilities, which imposed more stringent requirements (as individual permits were renewed) for wastewater streams from FGD, fly ash, bottom ash, and flue gas mercury control. On September 18, 2017, the EPA promulgated a final rule that, among other things, postponed the compliance dates to preserve the status quo for FGD wastewater and bottom ash transport water by two years to November 2020 until the EPA amended the rule. On October 13, 2020, the EPA amended the 2015 ELG rule by: (i) altering the stringency of certain limits for FGD wastewater; (ii) relaxing the zero-discharge requirement for bottom ash transport water; and (iii) changing several deadlines. The Company is in the process of estimating the environmental capital expenditures that will be required to comply.

40


Byproducts, Wastes, Hazardous Materials and Contamination
In April 2015, the EPA finalized the rule regulating byproducts of coal combustion (e.g., ash and gypsum) as solid wastes under the RCRA. In September 2017, the EPA agreed to reconsider the rule. On July 30, 2018, the EPA promulgated a rule that amends the existing ash rule by extending some of the deadlines and providing more flexibility for compliance. On August 21, 2018, the D.C. Circuit found, among other things, that the EPA had not adequately regulated unlined ponds and legacy ponds. On August 14, 2019, the EPA proposed targeted changes to the April 2015 Rule including changes to address the August 2018 D.C. Circuit decision. On December 2, 2019, the EPA released for comment "Closure Part A Proposal" to revise the CCR Rule to address the D.C. Circuit's 2018 decision regarding the adequacy of clay-lined impoundments, obligations to close all unlined impoundments and related deadlines. On February 20, 2020, the EPA proposed the framework for developing and implementing a federal permit program for states that are not approved to administer the CCR rule. On March 3, 2020, the EPA proposed for comment "A Holistic Approach to Closure Part B," which proposes procedures for obtaining approval to operate existing impoundments with alternative liners. On August 28, 2020, the EPA finalized "A Holistic Approach to Closure Part A: Deadline to Initiate Closure," which amended the April 2015 Rule to address the August 2018 D.C. Circuit decision and extend some of the deadlines. The Company anticipates that the EPA will promulgate additional regulations to further amend the existing rule. The Company has updated its estimates of required environmental capital expenditures.

Note 20 — Subsequent Events
As of November 5, 2020, the Company entered into $1.6 billion of interest rate hedges associated with anticipated financing needs.

Note 21 — Condensed Consolidating Financial Information
As of September 30, 2020, the Company had outstanding $4.4 billion of Senior Notes and Convertible Senior Notes due from 2026 to 2048 and outstanding $1.1 billion of Senior Secured Notes due from 2024 to 2029, as shown in Note 10, Long-term Debt. These Senior Notes and Senior Secured Notes are guaranteed by certain of NRG's current and future 100% owned domestic subsidiaries, or guarantor subsidiaries. These guarantees are both joint and several. The non-guarantor subsidiaries include all of NRG's foreign subsidiaries and certain domestic subsidiaries.
NRG conducts much of its business through and derives much of its income from its subsidiaries. Therefore, the Company's ability to make required payments with respect to its indebtedness and other obligations depends on the financial results and condition of its subsidiaries and NRG's ability to receive funds from its subsidiaries. There are no restrictions on the ability of any of the guarantor subsidiaries to transfer funds to NRG. However, there may be restrictions for certain non-guarantor subsidiaries.
The following condensed consolidating financial information presents the financial information of NRG Energy, Inc., the guarantor subsidiaries and the non-guarantor subsidiaries in accordance with Rule 3-10 of Regulation S-X of the Securities Act. The financial information may not necessarily be indicative of results of operations or financial position had the guarantor subsidiaries or non-guarantor subsidiaries operated as independent entities.
In this presentation, NRG Energy, Inc. consists of parent company operations. Guarantor subsidiaries and non-guarantor subsidiaries of NRG are reported on an equity basis. For companies acquired, the fair values of the assets and liabilities acquired have been presented on a push-down accounting basis.

41


Unless otherwise noted below, each of the following guarantor subsidiaries fully and unconditionally guaranteed the Senior Notes, Convertible Senior Notes and Senior Secured Notes as of September 30, 2020:
Ace Energy, Inc.NRG Distributed Energy Resources Holdings LLCReliant Energy Retail Services, LLC
Allied Home Warranty GP LLCNRG Distributed Generation PR LLCRERH Holdings, LLC
Allied Warranty LLCNRG Dunkirk Operations Inc.Saguaro Power LLC
Arthur Kill Power LLCNRG ECOKAP Holdings LLCSGE Energy Sourcing, LLC
Astoria Gas Turbine Power LLCNRG El Segundo Operations Inc.SGE Texas Holdco, LLC
BidURenergy, Inc.NRG Energy Labor Services LLCSomerset Operations Inc.
Cabrillo Power I LLCNRG Energy Services Group LLCSomerset Power LLC
Cabrillo Power II LLCNRG Energy Services LLCStream Energy Columbia, LLC
Carbon Management Solutions LLCNRG Generation Holdings Inc.Stream Energy Delaware, LLC
Cirro Energy Services, Inc.NRG Greenco LLCStream Energy Illinois, LLC
Cirro Group, Inc.NRG Home & Business Solutions LLCStream Energy Maryland, LLC
Connecticut Jet Power LLCNRG Home Services LLCStream Energy New Jersey, LLC
Devon Power LLCNRG Home Solutions LLCStream Energy New York, LLC
Dunkirk Power LLCNRG Home Solutions Product LLCStream Energy Pennsylvania, LLC
Eastern Sierra Energy Company LLCNRG Homer City Services LLCStream Georgia Gas SPE, LLC
El Segundo Power II LLCNRG HQ DG LLCStream Ohio Gas & Electric, LLC
El Segundo Power, LLCNRG Huntley Operations Inc.Stream SPE GP, LLC
Energy Alternatives Wholesale, LLCNRG Identity Protect LLCStream SPE, Ltd.
Energy Choice Solutions LLCNRG Ilion Limited PartnershipTexas Genco GP, LLC
Energy Plus Holdings LLCNRG Ilion LP LLCTexas Genco Holdings, Inc.
Energy Plus Natural Gas LLCNRG International LLCTexas Genco LP, LLC
Energy Protection Insurance CompanyNRG Maintenance Services LLCTexas Genco Services, LP
Everything Energy LLCNRG Mextrans Inc.US Retailers LLC
Forward Home Security, LLCNRG Middletown Operations Inc.Vienna Operations Inc.
GCP Funding Company, LLCNRG Montville Operations Inc.Vienna Power LLC
Green Mountain Energy CompanyNRG North Central Operations Inc.WCP (Generation) Holdings LLC
Gregory Partners, LLCNRG Norwalk Harbor Operations Inc.West Coast Power LLC
Gregory Power Partners LLCNRG Operating Services, Inc.XOOM Alberta Holdings, LLC
Huntley Power LLCNRG Oswego Harbor Power Operations Inc.XOOM British Columbia Holdings, LLC
Independence Energy Alliance LLCNRG Portable Power LLCXOOM Energy California, LLC
Independence Energy Group LLCNRG Power Marketing LLCXOOM Energy Connecticut, LLC
Independence Energy Natural Gas LLCNRG Reliability Solutions LLCXOOM Energy Delaware, LLC
Indian River Operations Inc.NRG Renter's Protection LLCXOOM Energy Georgia, LLC
Indian River Power LLCNRG Retail LLCXOOM Energy Global Holdings, LLC
Meriden Gas Turbines LLCNRG Retail Northeast LLCXOOM Energy Illinois LLC
Middletown Power LLCNRG Rockford Acquisition LLCXOOM Energy Indiana, LLC
Montville Power LLCNRG Saguaro Operations Inc.XOOM Energy Kentucky, LLC
NEO CorporationNRG Security LLCXOOM Energy Maine, LLC
New Genco GP, LLCNRG Services CorporationXOOM Energy Maryland, LLC
Norwalk Power LLCNRG SimplySmart Solutions LLCXOOM Energy Massachusetts, LLC
NRG Advisory Services LLCNRG South Central Operations Inc.XOOM Energy Michigan, LLC
NRG Affiliate Services Inc.NRG South Texas LPXOOM Energy New Hampshire, LLC
NRG Arthur Kill Operations Inc.NRG Texas Gregory LLCXOOM Energy New Jersey, LLC
NRG Astoria Gas Turbine Operations Inc.NRG Texas Holding Inc.XOOM Energy New York, LLC
NRG Business Services LLCNRG Texas LLCXOOM Energy Ohio, LLC
NRG Cabrillo Power Operations Inc.NRG Texas Power LLCXOOM Energy Pennsylvania, LLC
NRG California Peaker Operations LLCNRG Warranty Services LLCXOOM Energy Rhode Island, LLC
NRG Cedar Bayou Development Company, LLCNRG West Coast LLCXOOM Energy Texas, LLC
NRG Connected Home LLCNRG Western Affiliate Services Inc.XOOM Energy Virginia, LLC
NRG Construction LLCOswego Harbor Power LLCXOOM Energy Washington D.C., LLC
NRG Curtailment Solutions, Inc.Reliant Energy Northeast LLCXOOM Energy, LLC
NRG Development Company Inc.Reliant Energy Power Supply, LLCXOOM Ontario Holdings, LLC
NRG Devon Operations Inc.Reliant Energy Retail Holdings, LLCXOOM Solar, LLC
NRG Dispatch Services LLC


42


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the three months ended September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Operating Revenues
Total operating revenues$2,513 $297 $$(1)$2,809 
Operating Costs and Expenses
Cost of operations1,796 230 (1)2,034 
Depreciation and amortization72 21 99 
Impairment losses29 29 
Selling, general and administrative costs154 92 253 
Development costs(1)
Total operating costs and expenses2,022 286 109 (1)2,416 
Operating Income/(Loss)491 11 (109)393 
Other Income/(Expense)
Equity in earnings of consolidated subsidiaries540 (540)
Equity in earnings of unconsolidated affiliates36 36 
Other income, net11 
Interest expense(3)(96)(99)
Total other income/(expense)38 449 (540)(52)
Income from Continuing Operations Before Income Taxes492 49 340 (540)341 
Income tax expense91 92 
Net Income$492 $48 $249 $(540)$249 
(a)All significant intercompany transactions have been eliminated in consolidation


43


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the nine months ended September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Operating Revenues
Total operating revenues$6,346 $730 $$(10)$7,066 
Operating Costs and Expenses
Cost of operations4,357 586 (8)(10)4,925 
Depreciation and amortization232 60 26 318 
Impairment losses29 29 
Selling, general and administrative costs431 19 220 670 
Reorganization costs
Development costs
Total operating costs and expenses5,020 694 247 (10)5,951 
Gain on sale of assets
Operating Income/(Loss)1,326 37 (242)1,121 
Other Income/(Expense)
Equity in earnings of consolidated subsidiaries1,385 (1,391)
Equity in earnings of unconsolidated affiliates37 37 
Impairment losses on investments(18)(18)
Other income, net14 32 52 
Loss on debt extinguishment, net(1)(1)
Interest expense(12)(3)(277)(292)
Total other income/(expense)22 1,139 (1,391)(222)
Income from Continuing Operations Before Income Taxes1,334 59 897 (1,391)899 
Income tax expense214 216 
Net Income$1,334 $57 $683 $(1,391)$683 
(a)All significant intercompany transactions have been eliminated in consolidation


44


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
For the three months ended September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Net Income$492 $48 $249 $(540)$249 
Other Comprehensive Income
Foreign currency translation adjustments, net(8)
Defined benefit plans, net(2)
Other comprehensive income(10)
Comprehensive Income$499 $51 $253 $(550)$253 
(a)All significant intercompany transactions have been eliminated in consolidation


45


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the nine months ended September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Net Income$1,334 $57 $683 $(1,391)$683 
Other Comprehensive Income
Foreign currency translation adjustments, net(3)
Defined benefit plans, net(5)
Other comprehensive income(8)
Comprehensive Income$1,341 $58 $685 $(1,399)$685 
(a)All significant intercompany transactions have been eliminated in consolidation


46


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
ASSETS
Current Assets 
Cash and cash equivalents$$23 $674 $$697 
Funds deposited by counterparties15 15 
Restricted cash
Accounts receivable, net650 1,034 805 (1,363)1,126 
Inventory253 77 330 
Derivative instruments582 14 (18)578 
Cash collateral paid in support of energy risk management activities74 77 
Prepayments and other current assets238 16 258 
Total current assets1,817 1,167 1,484 (1,381)3,087 
Property, plant and equipment, net1,270 1,159 144 2,573 
Other Assets
Investment in subsidiaries28 4,981 (5,009)
Equity investments in affiliates376 376 
Operating lease right-of-use assets, net68 167 110 345 
Goodwill400 179 579 
Intangible assets, net684 37 721 
Nuclear decommissioning trust fund828 828 
Derivative instruments315 10 (10)315 
Deferred income taxes435 (32)2,684 3,087 
Other non-current assets168 110 36 314 
Total other assets2,926 847 7,811 (5,019)6,565 
Total Assets$6,013 $3,173 $9,439 $(6,400)$12,225 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities 
Current portion of long-term debt$$$$$
Current portion of operating lease liabilities18 33 18 69 
Accounts payable933 144 1,039 (1,363)753 
Derivative instruments505 (18)495 
Cash collateral received in support of energy risk management activities15 15 
Accrued expenses and other current liabilities275 71 305 651 
Total current liabilities1,749 256 1,362 (1,381)1,986 
Other Liabilities
Long-term debt245 5,547 5,792 
Non-current operating lease liabilities56 134 107 297 
Nuclear decommissioning reserve311 311 
Nuclear decommissioning trust liability508 508 
Derivative instruments326 (10)318 
Deferred income taxes17 17 
Other non-current liabilities307 266 489 1,062 
Total other liabilities1,753 419 6,143 (10)8,305 
Total Liabilities3,502 675 7,505 (1,391)10,291 
Stockholders’ Equity2,511 2,498 1,934 (5,009)1,934 
Total Liabilities and Stockholders’ Equity$6,013 $3,173 $9,439 $(6,400)$12,225 
(a)All significant intercompany transactions have been eliminated in consolidation

47


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2020
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Cash Flows from Operating Activities 
Net income$1,334 $57 $683 $(1,391)$683 
Adjustments to reconcile net income/(loss) to cash provided by operating activities:
Distributions from and equity in earnings/(losses) of unconsolidated affiliates and consolidated subsidiaries(6)(1,385)1,391 
Depreciation and amortization232 60 26 318 
Accretion of asset retirement obligations19 27 46 
Provision for credit losses66 74 
Amortization of nuclear fuel40 40 
Amortization of financing costs and debt discount/premiums23 23 
Loss on debt extinguishment, net
Amortization of emission allowances and energy credits46 14 60 
Amortization of unearned equity compensation17 17 
Net gain on sale of assets and disposal of assets(16)(1)(5)(22)
Impairment losses47 47 
Changes in derivative instruments(27)20 (7)
Changes in deferred income taxes and liability for uncertain tax benefits(52)11 243 202 
Changes in collateral deposits in support of energy risk management activities91 96 
Changes in nuclear decommissioning trust liability39 39 
Changes in other working capital355 (923)331 (237)
Net Cash Provided/(Used) by Operating Activities2,121 (669)(66)1,386 
Cash Flows from Investing Activities
Intercompany dividends2,591 (2,591)
Payments for acquisitions of businesses(15)(262)(277)
Capital expenditures(115)(28)(24)(167)
Net purchases of emission allowances(15)(15)
Investments in nuclear decommissioning trust fund securities(360)(360)
Proceeds from the sale of nuclear decommissioning trust fund securities318 318 
Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees15 
Net contributions to investments in unconsolidated affiliates
Net Cash (Used)/Provided by Investing Activities(179)(286)2,572 (2,591)(484)
Cash Flows from Financing Activities
Intercompany dividends and transfers(1,894)964 (1,661)2,591 
Payments of dividends to common stockholders(221)(221)
Payments for share repurchase activity(229)(229)
Purchase of and distributions to noncontrolling interests from subsidiaries(2)(2)
Proceeds from issuance of common stock
Proceeds from issuance of long-term debt59 59 
Payment of debt issuance costs(24)(24)
Repayments of long-term debt(59)(3)(62)
Net repayment of Revolving Credit Facility(83)(83)
Other(6)(6)
Net Cash (Used)/Provided by Financing Activities(1,959)959 (2,158)2,591 (567)
Effect of exchange rate changes on cash and cash equivalents(2)(2)
Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash(17)348 333 
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period37 21 327 385 
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period$20 $23 $675 $$718 
(a)All significant intercompany transactions have been eliminated in consolidation

48


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the three months ended September 30, 2019
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Operating Revenues
Total operating revenues$2,473 $525 $$(2)$2,996 
Operating Costs and Expenses
Cost of operations1,728 421 (2)2,153 
Depreciation and amortization52 32 91 
Selling, general and administrative costs132 28 50 210 
Reorganization costs
Development costs
Total operating costs and expenses1,912 481 65 (2)2,456 
Operating Income/(Loss)561 44 (65)540 
Other Income/(Expense)
Equity in earnings of consolidated subsidiaries20 537 (557)
Equity in earnings of unconsolidated affiliates29 29 
Impairment losses on investments(101)(6)(107)
Other income, net11 17 
Interest expense(4)(3)(92)(99)
Total other income/(expense)27 (74)444 (557)(160)
Income/(Loss) from Continuing Operations Before Income Taxes588 (30)379 (557)380 
Income tax expense
Income/(Loss) from Continuing Operations588 (31)374 (557)374 
Loss from discontinued operations, net of income tax(2)(2)
Net Income Attributable to NRG Energy, Inc.$588 $(31)$372 $(557)$372 
(a)All significant intercompany transactions have been eliminated in consolidation


49


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the nine months ended September 30, 2019
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Operating Revenues
Total operating revenues$6,382 $1,252 $$(8)$7,626 
Operating Costs and Expenses
Cost of operations4,676 956 25 (8)5,649 
Depreciation and amortization157 81 23 261 
Impairment losses
Selling, general and administrative costs366 56 193 615 
Reorganization costs16 16 
Development costs
Total operating costs and expenses5,200 1,094 261 (8)6,547 
Gain on sale of assets
Operating Income/(Loss)1,183 159 (261)1,081 
Other Income/(Expense)
Equity in earnings of consolidated subsidiaries32 1,266 (1,298)
Equity in earnings of unconsolidated affiliates
Impairment losses on investments(101)(6)(107)
Other income, net19 10 20 49 
Loss on debt extinguishment, net(47)(47)
Interest expense(11)(12)(295)(318)
Total other income/(expense)40 (95)938 (1,298)(415)
Income from Continuing Operations Before Income Taxes1,223 64 677 (1,298)666 
Income tax expense
Income from Continuing Operations1,223 62 670 (1,298)657 
Income from discontinued operations, net of income tax385 399 
Net Income1,232 67 1,055 (1,298)1,056 
Less: Net income attributable to noncontrolling interest and redeemable noncontrolling interest
Net Income Attributable to NRG Energy, Inc.$1,232 $66 $1,055 $(1,298)$1,055 
(a)All significant intercompany transactions have been eliminated in consolidation


50


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the three months ended September 30, 2019
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Net Income/(Loss)$588 $(31)$372 $(557)$372 
Other Comprehensive Loss
Foreign currency translation adjustments, net(5)(4)(4)(4)
Available-for-sale securities, net(14)(14)
Defined benefit plans, net(40)(41)40 (41)
Other comprehensive loss(45)(4)(59)49 (59)
Comprehensive Income/(Loss)$543 $(35)$313 $(508)$313 
(a)All significant intercompany transactions have been eliminated in consolidation

51


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the nine months ended September 30, 2019
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Net Income$1,232 $67 $1,055 $(1,298)$1,056 
Other Comprehensive Loss
Foreign currency translation adjustments, net(5)(4)(4)(4)
Available-for-sale securities, net(13)(13)
Defined benefit plans, net(40)(47)40 (47)
Other comprehensive loss(45)(4)(64)49 (64)
Comprehensive Income1,187 63 991 (1,249)992 
Less: Comprehensive income attributable to redeemable noncontrolling interest
Comprehensive Income Attributable to NRG Energy, Inc.$1,187 $62 $991 $(1,249)$991 
(a)All significant intercompany transactions have been eliminated in consolidation


52


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2019
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
ASSETS
Current Assets
Cash and cash equivalents$$20 $325 $$345 
Funds deposited by counterparties32 32 
Restricted cash
Accounts receivable, net1,293 239 233 (740)1,025 
Inventory272 111 383 
Derivative instruments856 45 (41)860 
Cash collateral paid in support of energy risk management activities182 190 
Prepayments and other current assets170 67 245 
Total current assets2,810 432 627 (781)3,088 
Property, plant and equipment, net1,483 952 158 2,593 
Other Assets
Investment in subsidiaries710 4,785 (5,495)
Equity investments in affiliates388 388 
Operating lease right-of-use assets, net81 261 122 464 
Goodwill359 220 579 
Intangible assets, net375 414 789 
Nuclear decommissioning trust fund794 794 
Derivative instruments308 15 (13)310 
Deferred income taxes421 (19)2,884 3,286 
Other non-current assets145 30 65 240 
Total other assets3,193 1,309 7,856 (5,508)6,850 
Total Assets$7,486 $2,693 $8,641 $(6,289)$12,531 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt$$$83 $$88 
Current portion of operating lease liabilities20 32 21 73 
Accounts payable918 141 403 (740)722 
Derivative instruments797 25 (41)781 
Cash collateral received in support of energy risk management activities32 32 
Accrued expenses and other current liabilities280 44 339 663 
Total current liabilities2,047 247 846 (781)2,359 
Other Liabilities
Long-term debt302 28 5,473 5,803 
Non-current operating lease liabilities64 301 118 483 
Nuclear decommissioning reserve298 298 
Nuclear decommissioning trust liability487 487 
Derivative instruments334 (13)322 
Deferred income taxes17 17 
Other non-current liabilities399 153 532 1,084 
Total other liabilities1,884 500 6,123 (13)8,494 
Total Liabilities3,931 747 6,969 (794)10,853 
Redeemable noncontrolling interest in subsidiaries20 20 
Stockholders’ Equity3,555 1,926 1,672 (5,495)1,658 
Total Liabilities and Stockholders’ Equity$7,486 $2,693 $8,641 $(6,289)$12,531 
(a)All significant intercompany transactions have been eliminated in consolidation

53


NRG ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 2019
(Unaudited)
(In millions)Guarantor SubsidiariesNon-Guarantor SubsidiariesNRG Energy, Inc.
(Note Issuer)
Eliminations(a)
Consolidated
Cash Flows from Operating Activities     
Net income$1,232 $67 $1,055 $(1,298)$1,056 
Income from discontinued operations385 — 399 
Income from continuing operations1,223 62 670 (1,298)657 
Adjustments to reconcile net income to cash provided by operating activities:
Distributions from and equity in losses of unconsolidated affiliates and consolidated subsidiaries(32)(5)(1,266)1,298 (5)
Depreciation and amortization156 82 23 261 
Accretion of asset retirement obligations25 31 
Provision for credit losses72 11 87 
Amortization of nuclear fuel40 40 
Amortization of financing costs and debt discount/premiums20 20 
Loss on debt extinguishment, net47 47 
Amortization of emission allowances and energy credits21 28 
Amortization of unearned equity compensation15 15 
Net loss on sale of assets and disposal of assets(25)(20)
Impairment losses101 108 
Changes in derivative instruments10 (12)38 36 
Changes in deferred income taxes and liability for uncertain tax benefits(1)(2)(3)
Changes in collateral deposits in support of energy risk management activities136 (7)129 
Changes in nuclear decommissioning trust liability27 27 
Changes in other working capital(401)(123)(45)(569)
Cash provided/(used) by continuing operations1,253 123 (487)889 
Cash provided/(used) by discontinued operations17 (9)
Net Cash Provided/(Used) by Operating Activities1,270 114 (487)897 
Cash Flows from Investing Activities 
Intercompany dividends3,866 (3,866)
Payments for acquisitions of businesses(348)(348)
Capital expenditures(135)(23)(25)(183)
Decrease in notes receivable
Net purchases of emission allowances14 14 
Investments in nuclear decommissioning trust fund securities(295)(295)
Proceeds from the sale of nuclear decommissioning trust fund securities271 271 
Proceeds from sale of assets, net of cash disposed and sale of discontinued operations, net of fees400 892 1,293 
Net distributions from investments in unconsolidated affiliates(94)(94)
Contributions to discontinued operations(44)(44)
Cash (used)/provided by continuing operations(492)239 4,735 (3,866)616 
Cash used by discontinued operations(2)(2)
Net Cash (Used)/Provided by Investing Activities(492)237 4,735 (3,866)614 
Cash Flows from Financing Activities
Intercompany dividends and transfers(824)(317)(2,725)3,866 
Payment of dividends to common stockholders(24)(24)
Payments for share repurchase activity(1,322)(1,322)
Payments for debt extinguishment(24)(24)
Net distributions to noncontrolling interests from subsidiaries(1)(1)
Proceeds from issuance of common stock
Proceeds from issuance of long-term debt1,833 1,833 
Payment of debt issuance costs(34)(34)
Payments for long-term debt(55)(2,432)(2,487)
Net proceeds of Revolving Credit Facility215 215 
Cash used by continuing operations(824)(373)(4,510)3,866 (1,841)
Cash provided by discontinued operations43 43 
Net Cash Used by Financing Activities(824)(330)(4,510)3,866 (1,798)
Change in cash from discontinued operations17 32 49 
Net Decrease in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash(63)(11)(262)(336)
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period95 38 480 613 
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period$32 $27 $218 $$277 
(a)All significant intercompany transactions have been eliminated in consolidation

54


ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As you read this discussion and analysis, refer to NRG's Condensed Consolidated Statements of Operations to this Form 10-Q, which present the results of operations for the three and nine months ended September 30, 2020 and 2019. Also refer to NRG's 2019 Form 10-K, which includes detailed discussions of various items impacting the Company's business, results of operations and financial condition, including: Introduction and Overview section; NRG's Business Strategy section; Business section, including how regulation, weather, and other factors affect NRG's business; and Critical Accounting Policies and Estimates section. In addition, refer to the Current Report on Form 8-K filed with the SEC on May 7, 2020, which provides retrospectively revised historical financial information to correspond with the Company's current segment structure.
The discussion and analysis below has been organized as follows:
Executive summary, including introduction and overview, business strategy, and changes to the business environment
during the period, including environmental and regulatory matters;
Results of operations;
Financial condition, addressing liquidity position, sources and uses of liquidity, capital resources and requirements,     
commitments, and off-balance sheet arrangements; and
Known trends that may affect NRG's results of operations and financial condition in the future.
The Company determined in prior years that the following businesses were discontinued operations and recast prior periods to present their results in the corporate segment:
South Central Portfolio
Carlsbad
GenOn

Executive Summary
Introduction and Overview
NRG Energy, Inc., or NRG or the Company, is an integrated power company built on dynamic retail brands with diverse generation assets. NRG brings the power of energy to customers by producing and selling electricity and related products and services in major competitive power markets in the U.S. and Canada in a manner that delivers value to all of NRG's stakeholders. NRG is a customer-driven business focused on perfecting the integrated model by balancing retail load with generation supply within its deregulated markets. The Company sells energy, services, and innovative, sustainable products and services directly to retail customers under the names NRG, Reliant, Green Mountain Energy, Stream, and XOOM Energy, as well as other brand names owned by NRG, supported by approximately 23,000 MW of generation as of September 30, 2020. NRG was incorporated as a Delaware corporation on May 29, 1992.
As part of perfecting the integrated model, in which the majority of the Company’s generation serves its retail customers, the Company began managing its operations based on the combined results of the retail and wholesale generation businesses with a geographical focus in 2020. As a result, the Company changed its business segments from Retail and Generation to Texas, East and West/Other beginning in the first quarter of 2020. The Company's updated segment structure reflects how management currently makes financial decisions and allocates resources.

55


The following table summarizes NRG's generation portfolio in MW as of September 30, 2020 by operating segment:
Generation TypeTexasEast
West/Other (a)(b)
Total
Natural gas4,774 2,686 2,308 9,768 
Coal4,174 3,140 605 7,919 
Oil— 3,600 — 3,600 
Nuclear1,132 — — 1,132 
Utility Scale Solar— — 321 321 
Battery Storage & Distributed Solar— 60 62 
Total generation capacity (c)
10,082 9,426 3,294 22,802 
(a) Includes 1,153 MW for the Cottonwood facility that was sold to Cleco on February 4, 2019, which the Company is leasing until 2025
(b) The Distributed Solar figure in West/Other includes the aggregate production capacity of installed and activated residential solar energy systems
(c) All Utility Scale Solar and Distributed Solar facilities are described in MW on an alternating current basis. MW figures provided represent nominal summer net MW capacity of power generated as adjusted for the Company's owned or leased interest excluding capacity from inactive/mothballed units
COVID-19
In March 2020, the World Health Organization categorized COVID-19 as a pandemic and the President of the United States declared the COVID-19 outbreak a national emergency. Electricity was deemed a ‘critical and essential business operation’ under various state and federal governmental COVID-19 mandates.
NRG continues to remain focused on protecting the health and well-being of its employees, while supporting its customers and the communities in which it operates and assuring the continuity of its operations. NRG contributed $2 million to COVID-19 relief efforts, including funding for urgently needed safety equipment supporting first responders, as well as funds that aided local communities and teachers. The Company also allocated funding to the NRG Employee Relief Fund to assist employees adversely impacted by natural disasters and other extraordinary events.
NRG had activated its Crisis Management Team ("CMT") in January 2020, which proactively began managing the Company's response to the impacts of COVID-19. The CMT implemented the business continuity plans for the Company and had taken a variety of measures to ensure the ongoing availability of the Company's services, while maintaining the Company's commitment to its core values of health and safety. Pursuant to the Company's Infectious Disease & Pandemic Policy, in March 2020, NRG implemented restrictions on business travel and face-to-face sales channels, instituted remote work practices and enhanced cleaning and hygiene protocols in all of its facilities.
In order to effectively serve the Company’s customers, select essential employees and contractors are continuing to report to plant and certain office locations and safety protocols were successfully implemented. In June 2020, summer-critical office employees also returned to the offices. The Company requires pre-entry screening, including temperature checks, separation of work crews, additional personal protective equipment for employees and contractors when social distancing cannot be maintained, and a ban on all non-essential visitors. As a result of these business continuity measures, the Company has not experienced any material disruptions in its ability to continue its business operations to date. The Company will continue to evaluate additional return to normal work operations on a location-by-location basis as COVID-19 conditions evolve.
The Company continues to utilize the communication protocol established in January 2020, including a central information hub on its intranet. The Company has also provided certain additional wellness programs to support employees, including no-cost access to telehealth services, a mindfulness and meditation program, center or home based backup child and elder care, and access to the Company's Emergency Relief Fund for financially-impacted employees.
While the pandemic may present new risks, as further described in Part II, Item 1A Risk Factors of this Form 10-Q, to the Company’s business, there was not a material adverse impact on the Company’s 2020 results of operations for the nine months ended September 30, 2020. NRG believes it has sufficient liquidity on hand to continue business operations. As disclosed in the Liquidity and Capital Resources section, the Company has total available liquidity of $3.5 billion as of September 30, 2020, consisting of cash on hand and its Revolving Credit Facility.
Following the President's declaration of COVID-19 outbreak being a national emergency, the Governors of the majority of states in which the Company operates issued executive orders that every person should, except where necessary to provide or obtain essential services, minimize social gatherings and minimize in-person contact with people who are not in the same household. The impact of these orders closed schools, restaurants and bars, except in certain cases for takeout, and other non-essential businesses. As state restrictions have been eased or lifted, loads have begun to recover in those markets in which the Company operates. The rebound in demand has varied across the Company's market footprint, as restrictions vary regionally. The Company expects demand uncertainty to continue in the near future. These restrictions have also created limitations to our face-to-face sales channels and are expected to negatively impact our customer count primarily in the East region.

56


In Texas, the PUCT adopted the COVID-19 Electricity Relief Program (“ERP”) to mitigate the impact of COVID-19 on Texas retail electric customers experiencing economic hardship as a result of the pandemic. The COVID-19 ERP provided temporary disconnection protection for eligible customers and established funds to offset some of the costs incurred by retail electric providers that continued service to those customers. The COVID-19 ERP disconnection protection and benefits ended on September 30, 2020. Consistent with the PUCT's orders, NRG is continuing to offer deferred payment plans to all residential and small commercial customers while the declaration of emergency in Texas is in place.
The situation surrounding COVID-19 remains fluid and the potential for a material adverse impact on the Company exists as long as the virus impacts the level of economic activity in the United States and globally. For this reason, NRG cannot reasonably estimate with any degree of certainty the full impact COVID-19, and any resurgence of COVID-19, may have on the Company’s results of operations, financial position, and liquidity. The extent to which the COVID-19 pandemic may impact the Company’s business, operating results, financial condition, risk exposure or liquidity will depend on future developments, including the duration of the outbreak, travel restrictions, business and workforce disruptions, any resurgence of the outbreak and the effectiveness of actions taken to contain, mitigate and treat the disease. See Part II, Item 1A Risk Factors of this Form 10-Q.

Strategy
NRG's strategy is to maximize stockholder value through the safe production and sale of reliable power to its customers in the markets served by the Company, while positioning the Company to provide innovative solutions to the end-use energy consumer. This strategy is intended to enable the Company to optimize the integrated model to generate stable and predictable cash flow, significantly strengthen earnings and cost competitiveness, and lower risk and volatility.
To effectuate the Company’s strategy, NRG is focused on: (i) serving the energy needs of end-use residential, commercial and industrial customers in competitive markets through multiple brands and channels with a variety of retail energy products and services differentiated by innovative features, premium service, sustainability, and loyalty/affinity programs; (ii) offering innovative and renewable energy solutions for customers; (iii) excellence in operating performance of its existing assets; (iv) optimal hedging of NRG's net retail and generation positions; and (v) engaging in disciplined and transparent capital allocation.
Sustainability is an integral part of NRG's strategy and ties directly to business success, reduced risks and brand value. In 2019, NRG announced the acceleration of its science-based GHG emissions reduction goals to align with prevailing climate science, limiting warming to a 1.5 degree Celsius increase. Under its new GHG emissions reduction timeline, NRG is targeting to achieve a 50% reduction by 2025 and net-zero emissions by 2050 from a 2014 baseline.

Energy Regulatory Matters
The Company’s regulatory matters are described in the Company’s 2019 Form 10-K in Item 1, Business — Regulatory Matters. These matters have been updated below and in Note 18, Regulatory Matters, of this Form 10-Q.
As participants in wholesale and retail energy markets and owners of power plants, certain NRG entities are subject to regulation by various federal and state government agencies. These include the CFTC, FERC, NRC, and the PUCT, as well as other public utility commissions in certain states where NRG's generating or distributed generation assets are located. In addition, NRG is subject to the market rules, procedures and protocols of the various ISO and RTO markets in which it participates. Likewise, certain NRG entities participating in the retail markets are subject to rules and regulations established by the states in which NRG entities are licensed to sell at retail. NRG must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability entities in the regions where NRG operates.
NRG's operations within the ERCOT footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within the ERCOT market and not in interstate commerce. These operations are subject to regulation by the PUCT, as well as to regulation by the NRC with respect to NRG's ownership interest in STP.
Federal Energy Regulation
D.C. Circuit Ruling on FERC's Use of Tolling Orders — On June 30, 2020, the U.S. Court of Appeals for the D.C. Circuit issued a decision stating that FERC's ability to "toll" actions on rehearing beyond the statutory 30-day period is unlawful. FERC has indicated that it will not seek Supreme Court review of the D.C. Circuit decision. On September 17, 2020, FERC staff presented an overview of changes to FERC's practice regarding rehearing requests. In Federal Power Act cases, FERC staff explained that it will no longer issue tolling orders but instead will issue either a Notice of Denial of Rehearing by Operation of Law or a Notice of Denial of Rehearing by Operation of Law and Providing for Further Consideration. The first indicates that FERC would not intend to issue a merits order and the second indicates that FERC intends to issue further action. Chairman Chatterjee and Commissioner Glick issued a joint statement asking Congress to give FERC a reasonable amount of time to make a decision on rehearing requests under the Natural Gas Act and the Federal Power Act. This decision impacts an array of appeals related to the PJM MOPR order and will impact how rehearings are decided and appeals filed.

57


Regional Regulatory Developments
NRG is affected by rule and tariff changes that occur in the ISO regions. For further discussion on regulatory developments see Note 18, Regulatory Matters.
East/West
PJM
Capacity Market Reforms Filing — On December 19, 2019, FERC issued an order on the pending proposals to reform the PJM market to mitigate subsidized resources in the capacity market. FERC directed PJM to apply the Minimum Offer Price Rule, or MOPR, to new and existing resources receiving state subsidies and subject them to default offer floor prices in their capacity bids. The Order provided for various category specific exemptions to the MOPR, as well as a unit specific exemption, which permits any resource that can justify an offer lower than the default offer price floor to submit such capacity bids to PJM for review. On April 16, 2020, FERC issued two orders on pending requests for rehearing. In those orders, FERC denied requests for rehearing with respect to its June 29, 2018 Order where it found PJM's then-existing Tariff to be unjust and unreasonable because it failed to address the price suppression of our-of-market payments from resources. FERC also affirmed its December 19, 2019 Order in which it directed PJM to apply the MOPR to state-subsidized resources. Multiple parties filed for appeal at various circuit courts. Under the host of Orders, PJM was required to make two compliance filings, one on March 18, 2020 and one on June 1, 2020. In the filings, PJM has stated, among other things, that it would hold its next capacity auction six and a half months after a ruling on the compliance filing. On October 15, 2020, FERC issued an order on the pending compliance filings, in which FERC, in part, accepted the MOPR as described in PJM's compliance filings and required PJM to submit another compliance filing within 30 days. Importantly, FERC approved PJM's proposed auction schedule, however, the timing of the auction remains dependent on a FERC order in the ORDC docket discussed below. Subjecting subsidized resources to default offer floors in the capacity market should protect the market from further price suppression. The impact of these changes on capacity market outcomes depends on, among other factors, bidding behavior, load forecast changes, new resource entry, and existing resource exit.
Indiana Municipal Power Agency and City of Lawrenceburg, Indiana Complaint on Station Power On September 17, 2020, FERC issued an order in response to a complaint and request for declaratory judgement challenging the station power wholesale netting provisions in PJM's tariff. FERC found that it does not have jurisdiction over the supply of station power and the provision of station power is a retail sale subject to state jurisdiction. The order establishes a Section 206 proceeding and requires PJM to submit a filing within 60 days to show why the station service netting provisions of its tariff are just and reasonable. Parties have filed requests for rehearing, which remain pending. This decision could affect the rates that plants pay for station power.
PJM's ORDC Filing and Compliance Directives — On March 29, 2019, PJM proposed energy and reserve market reforms to enhance price formation in reserve markets, which includes modifying its ORDC and aligning market-based reserve product in Day-Ahead and Real-Time markets. On May 21, 2020, FERC approved PJM's proposed energy and reserve market reforms. PJM proposes to implement these changes in May 2022, subject to FERC approval on compliance. In addition to approving PJM's proposal, FERC also directed PJM to implement a forward-looking Energy and Ancillary Services Offset to be used in PJM's capacity markets. PJM submitted a compliance filing to revise its tariff on August 5, 2020. This matter is pending at FERC. The changes are expected to be implemented for the 2022/2023 Base Residual Auction.
New Jersey Board of Public Utilities’ Investigation on Resource Adequacy Alternatives — On March 25, 2020, the NJBPU initiated a proceeding to investigate resource adequacy alternatives for New Jersey. NRG submitted initial comments on May 20, 2020, and subsequently filed reply comments on June 24, 2020. On September 18, 2020, the NJBPU held a technical conference, where an NRG representative participated on the panel. The proceeding is pending. Any actions taken by the NJBPU could affect market prices in PJM.
New England
ISO-NE Inventoried Energy Compensation Proposal — On March 25, 2019, ISO-NE proposed an interim measure to address near-term fuel security concerns. On August 6, 2019, FERC issued a notice stating that due to lack of quorum, ISO-NE's proposal became effective by operation of law. Multiple parties filed for rehearing. Those rehearings were denied. Subsequently, multiple parties filed an appeal of FERC's Order to the Court of Appeals for the D.C. Circuit. On April 14, 2020, FERC filed a motion for a voluntary remand. On April 21, 2020, the Court of Appeals for the D.C. Circuit remanded the case back to FERC. On June 18, 2020, FERC issued an order accepting the Inventoried Energy Compensation Proposal and by operation of law denied requests for rehearing on August 20, 2020. Multiple parties filed amended petitions for review to

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include FERC's order on remand. ISO-NE's proposal will affect future capacity market prices and the compensation that fuel secure units receive.
ISO-NE Fuel Security Improvements Proposal — On April 15, 2020, ISO-NE filed a compliance filing proposing improvements to the wholesale market design to address winter fuel security issues as directed by FERC. Multiple parties filed comments and protests. On October 30, 2020, FERC rejected ISO-NE's proposal and also rejected ISO-NE's request to sunset the Inventories Energy Program and the Fuel Security Retention Mechanism one year earlier than initially planned. The outcome of the matter will affect market prices in ISO-NE.
Mystic's Complaint on Transmission Reliability Review — On June 10, 2020, Constellation Mystic Power LLC filed a complaint at FERC against ISO-NE alleging that ISO-NE violated its Tariff in its addition of language to its planning procedure and in its conduct in carrying out a competitive transmission REP to address the retirements of Mystic Units 8 and 9. NRG, through its trade associations, filed comments on June 30, 2020. On August 17, 2020, FERC issued an order denying the complaint. On September 16, 2020, Constellation Mystic Power LLC filed for rehearing. The rehearing is pending. The outcome of this proceeding affects the retirement of the Mystic Units 8 and 9, thereby affecting capacity prices in ISO-NE.
Paper Hearing on ISO-NE's New Entrant Rule — On July 1, 2020, FERC issued an order establishing a Section 206 hearing initiated by FERC's preliminary finding that the "new entrant rules" may be unjust and unreasonable, specifically as it relates to the seven-year price-lock rule. This order is a result of the D.C. Circuit February 2, 2018 remand of a FERC order regarding how generators that previously received a seven-year "price lock" should be priced in future auctions. The price-lock mechanism permits qualified new resources that clear the auction to receive their first-year clearing price for seven years. On August 24, 2020, NRG filed an initial brief. Because several auctions have been held under the existing rules, any subsequent order from FERC could affect future capacity prices in ISO-NE, as well as affect the price that non-price locked resources could receive from prior capacity auctions.
Competitive Auctions with Sponsored Resources Proposal (CASPR) — On January 8, 2018, ISO-NE filed the CASPR proposal which attempts to accommodate state sponsored resources while maintaining competitive market pricing. On January 29, 2018, NRG protested certain aspects of the proposal and also supported ISO-NE's beginning attempts to address state sponsored resources entering the capacity market. On March 19, 2018, FERC issued an order approving CASPR. Several parties filed requests for rehearing, which are still pending. On August 31, 2020, parties filed an appeal to the D.C. Circuit. On October 19, 2020, FERC filed a motion at the D.C. Circuit to dismiss the appeal. The outcome of this proceeding will potentially affect future capacity market prices.
New York
New York State Public Service Commission Retail Energy Market Proceedings — On February 23, 2016, the NYSPSC issued an order referred to as the Retail Reset Order. Among other things, the Retail Reset Order placed a price cap on energy supply offers and imposed burdensome new regulations on customers. Various parties have challenged the NYSPSC's authority to regulate prices charged by competitive suppliers. On May 9, 2019 the New York Court of Appeals, the state’s highest tribunal, issued a decision affirming the NYSPSC’s authority to regulate ESCO’s prices as a condition of access to the utilities’ infrastructure. In conjunction with the court challenge, the NYSPSC also noticed an evidentiary proceeding. On December 12, 2019, the NYSPSC issued an order adopting changes to the retail access energy market based on the record in the evidentiary proceeding. The Order limits ESCO offers to three compliant products: guaranteed savings from the utility default rate, a fixed term capped at 5% of the rolling 12-month average utility default rate, or NY-sourced renewable energy that is at least 50% greater than the prevailing NY Renewable Energy Standard for load serving entities. The Order also establishes new ESCO eligibility criteria and certification process, as well as re-certification of current ESCOs. The NYSPSC ordered compliance effective February 10, 2020. On January 13, 2020, multiple parties filed motions for rehearing and a stay of the Order. On September 17, 2020, NYSPSC issued an Order denying all petitions for reconsideration or rehearing. That Order also extended the effective date for the three compliant products to February 16, 2021. The limited offerings imposed by the Order, as issued, may negatively impact the Company's retail sales in New York.
New York State Public Service Commission Resource Adequacy Proceeding — On August 8, 2019, the NYSPSC established an investigation into New York's resource adequacy market design. On November 8, 2019, NRG filed comments and recommendations, specifically putting forth NRG's Forward Clean Energy Market Proposal, that would allow New York to maintain a reliable system while advancing its environmental goals. The NYSPSC has engaged The Brattle Group to evaluate the multiple alternative resource adequacy structures that were recommended by the parties in the proceeding. The NYSPSC held a technical conference on July 10, 2020. The proceeding is pending. Any actions taken by the NYSPSC could affect market design and market prices in New York.

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New York Buyer Side Mitigation Proceedings — On February 20, 2020, FERC issued multiple orders pertaining to the NYISO capacity market. The orders narrowed certain exemptions to buyer side mitigation measures. Specifically, FERC stated that certain renewable and self-supply resources would be exempt from offer floor mitigation but rejected NYISO’s proposal of a 1,000 MW cap on renewable resources that could qualify for the exemption. FERC ordered NYISO to make a compliance filing narrowly tailoring its cap. On April 7, 2020, NYISO submitted its compliance filing proposing a formula that sets the Renewable Exemption Limit based generally on projected load growth and generator requirements. On April 28, 2020, the generator trade association filed comments seeking clarification related to the Renewable Exemption Limit formula. On July 16, 2020, FERC accepted a large part of NYISO's April compliance filing. FERC also rejected a complaint to exempt new electric storage resources. It also rejected a blanket exemption to demand response providers currently subject to mitigation but granted a request for new demand response to receive a blanket exemption from the buyer side mitigation measures. On June 18, 2020, the NYSPSC filed petitions for review with the D.C. Circuit regarding these buyer side mitigation orders. The D.C. Circuit issued an order holding the appeals in abeyance pending FERC's consideration of rehearing requests. Implementation of buyer side mitigation measures to address price suppression provides more accurate capacity price signals in the competitive market.
New York Generators' Complaint on Buyer Side Mitigation Rules — On October 14, 2020, two New York generators, Cricket Valley and Empire Generating, filed a complaint at FERC against the NYISO arguing that the NYISO's offer floor rules are unjust and unreasonable because they do not address price suppression in the market. The complaint requests that FERC order the NYISO to implement a MOPR that covers out-of-market support to new and existing resources, similar to that in PJM. The outcome of this proceeding could affect capacity market prices in New York.
Texas
Public Utility Commission of Texas’ Actions Related to COVID-19 — On March 26, 2020, the PUCT adopted the COVID-19 Electricity Relief Program ("ERP") aimed to mitigate the impact of COVID-19 on residential customers in the competitive retail electric market who are experiencing economic hardship as a result of the pandemic. The COVID-19 ERP protected residential customers deemed eligible by the PUCT’s third party administrator from disconnection for nonpayment until September 30, 2020. The COVID-19 ERP also established an emergency fund to allow Retail Electric Providers ("REPs") to recover a certain amount of credit losses incurred while continuing to serve these customers. REPs may recover from the fund a proxy for a portion of their costs (at a fixed rate of $0.04 per kWh) related to eligible residential customers with an unpaid, past due electric bill. Additional protections enacted by the PUCT included a separate March 26, 2020 order that required REPs to suspend charging residential and small commercial customers late fees as part of the response to the Governor's disaster declaration relating to COVID-19. On April 17, 2020, the PUCT narrowed the scope of the late fees waiver to just residential customers. The late fees waiver ended on May 15, 2020.
CAISO
Resource Adequacy Central Procurement Proceeding — On June 11, 2020, the CPUC adopted a decision mandating the central procurement of multi-year local resource adequacy capacity to begin for the 2023 compliance year for PG&E and Southern California Edison ("SCE") service areas, under which PG&E and SCE would be the respective central procurement entities. The decision declined to adopt a central procurement framework for the San Diego Gas and Electric service area and rejected a proposed settlement filed by various entities, including NRG, which included the expansion of multi-year requirements to all categories of resource adequacy (system, flexible and local) and a residual procurement model for the central procurement entity. The CPUC decision represents a retreat from market-based solutions ensuring reliable capacity in California.

Environmental Regulatory Matters
NRG is subject to numerous environmental laws in the development, construction, ownership and operation of power plants. These laws generally require that governmental permits and approvals be obtained before construction and during operation of power plants. Federal and state environmental laws historically have become more stringent over time. Future laws may require the addition of emissions controls or other environmental controls or impose restrictions on the Company's operations. Complying with environmental laws often involves specialized human resources and significant capital and operating expenses, as well as occasionally curtailing operations. The COVID-19 pandemic may prevent the Company from complying with certain of its environmental requirements, which federal and state regulators have recognized. NRG decides to invest capital for environmental controls based on the relative certainty of the requirements, an evaluation of compliance options, and the expected economic returns on capital.
A number of regulations that may affect the Company are under review by the EPA or have been revised recently, including ash storage and disposal requirements, NAAQS revisions and implementation and effluent limitation guidelines. NRG will evaluate the impact of these regulations as they are revised but cannot fully predict the impact of each until anticipated revisions and legal challenges are resolved. The Company’s environmental matters are described in the Company’s

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2019 Form 10-K in Item 1, Business - Environmental Matters and Item 1A, Risk Factors. These matters have been updated in Note 19, Environmental Matters, to the Condensed Consolidated Financial Statements of this Form 10-Q and as follows.
Air 
The CAA and the resulting regulations (as well as similar state and local requirements) have the potential to affect air emissions, operating practices and pollution control equipment required at power plants. Under the CAA, the EPA sets NAAQS for certain pollutants including SO2, ozone, and PM2.5. Many of the Company's facilities are located in or near areas that are classified by the EPA as not achieving certain NAAQS (non-attainment areas). The relevant NAAQS have become more stringent. The Company maintains a comprehensive compliance strategy to address continuing and new requirements. Complying with increasingly stringent air regulations could require the installation of additional emissions control equipment at some NRG facilities or retiring of units if installing such controls is not economic. Significant changes to air regulatory programs affecting the Company are described below.
Clean Power Plan — The attention in recent years on GHG emissions has resulted in federal regulations and state legislative and regulatory action. In October 2015, the EPA finalized the CPP, addressing GHG emissions from existing EGUs. On February 9, 2016, the U.S. Supreme Court stayed the CPP. In July 2019, EPA promulgated the ACE rule, which rescinded the CPP, which had sought to broadly regulate CO2 emissions from the power sector. The ACE rule requires states that have coal-fired EGUs to develop plans to seek heat rate improvements from coal-fired EGUs. Texas, Illinois and Delaware have started working on plans to comply with the ACE rule. Numerous parties have challenged the ACE rule in the D.C. Circuit and numerous parties have filed petitions for reconsideration with the EPA.
 Byproducts, Wastes, Hazardous Materials and Contamination
In April 2015, the EPA finalized the rule regulating byproducts of coal combustion (e.g., ash and gypsum) as solid wastes under the RCRA. In September 2017, the EPA agreed to reconsider the rule. On July 30, 2018, the EPA promulgated a rule that amends the existing ash rule by extending some of the deadlines and providing more flexibility for compliance. On August 21, 2018, the D.C. Circuit found, among other things, that the EPA had not adequately regulated unlined ponds and legacy ponds. On August 14, 2019, the EPA proposed targeted changes to the April 2015 Rule including changes to address the August 2018 D.C. Circuit decision. On December 2, 2019, the EPA released for comment "Closure Part A Proposal" to revise the CCR Rule to address the D.C. Circuit's 2018 decision regarding the adequacy of clay-lined impoundments, obligations to close all unlined impoundments and related deadlines. On February 20, 2020, the EPA proposed the framework for developing and implementing a federal permit program for states that are not approved to administer the CCR rule. On March 3, 2020, the EPA proposed for comment "A Holistic Approach to Closure Part B," which proposes procedures for obtaining approval to operate existing impoundments with alternative liners. On August 28, 2020, the EPA finalized "A Holistic Approach to Closure Part A: Deadline to Initiate Closure," which amended the April 2015 Rule to address the August 2018 D.C. Circuit decision and extend some of the deadlines. The Company anticipates that the EPA will promulgate additional regulations to further amend the existing rule. The Company has updated its estimates of required environmental capital expenditures.
Domestic Site Remediation Matters
Under certain federal, state and local environmental laws, a current or previous owner or operator of a facility, including an electric generating facility, may be required to investigate and remediate releases or threatened releases of hazardous or toxic substances or petroleum products. NRG may be responsible for property damage, personal injury and investigation and remediation costs incurred by a party in connection with hazardous material releases or threatened releases. These laws impose liability without regard to whether the owner knew of or caused the presence of the hazardous substances, and the courts have interpreted liability under such laws to be strict (without fault) and joint and several. Cleanup obligations can often be triggered during the closure or decommissioning of a facility, in addition to spills during its operations. Further discussions of affected NRG sites can be found in Note 17, Commitments and Contingencies, to the Condensed Consolidated Financial Statements.
Jewett Mine Lignite Contract The Company's Limestone facility historically burned lignite obtained from the Jewett mine, which was operated by TWCC. On or about March 15, 2019, the Jewett mine and related lignite supply agreement with NRG were acquired by Westmoreland Jewett Mining LLC ("Jewett Mining"), a subsidiary of Westmoreland Mining LLC pursuant to a plan of reorganization confirmed by the Texas Bankruptcy Court. Effective August 5, 2020, NRG's subsidiary, NRG Texas LLC, acquired all of the equity interests of Jewett Mining. Active mining under the lignite supply agreement ceased as of December 31, 2016; however, under the terms of the lignite supply agreement, Jewett Mining remains responsible for reclamation activities and NRG is responsible for all reclamation costs. NRG has recorded an adequate ARO liability. The Railroad Commission of Texas has imposed a bond obligation of approximately $99 million for the reclamation of the Jewett mine, which NRG supports through surety bonds. The cost of the reclamation may exceed the value of the bonds. NRG may provide additional performance assurance if required by the Railroad Commission of Texas.
Nuclear Waste — The federal government's program to construct a nuclear waste repository at Yucca Mountain, Nevada was discontinued in 2010. Since 1998, the U.S. DOE has been in default of the federal government's obligations to begin

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accepting spent nuclear fuel, or SNF, and high-level radioactive waste, or HLW, under the Nuclear Waste Policy Act. Owners of nuclear plants, including the owners of STP, had been required to enter into contracts setting out the obligations of the owners and the U.S. DOE, including the fees to be paid by the owners for the U.S. DOE's services to license a spent fuel repository. Effective May 16, 2014, the U.S. DOE stopped collecting the fees.
On February 5, 2013, STPNOC entered into a settlement agreement with the U.S. DOE for payment of damages relating to the U.S. DOE's failure to accept SNF and HLW under the Nuclear Waste Policy Act through December 31, 2013, which has been extended three times through addendums to cover payments through December 31, 2022. There are no facilities for the reprocessing or permanent disposal of SNF currently in operation in the U.S., nor has the NRC licensed any such facilities. STPNOC currently stores all SNF generated by its nuclear generating facilities on-site. STPNOC plans to continue to assert claims against the U.S. DOE for damages relating to the U.S. DOE's failure to accept SNF and HLW.
Under the federal Low-Level Radioactive Waste Policy Act of 1980, as amended in 1985, the state of Texas is required to provide, either on its own or jointly with other states in a compact, for the disposal of all low-level radioactive waste generated within the state. Texas is currently in a compact with the state of Vermont, and the compact low-level waste facility located in Andrews County in Texas has been operational since 2012.
Water 
The Company is required under the CWA to comply with intake and discharge requirements, requirements for technological controls and operating practices. As with air quality regulations, federal and state water regulations have become more stringent and imposed new requirements.
Effluent Limitations Guidelines — In November 2015, the EPA revised the Effluent Limitations Guidelines for Steam Electric Generating Facilities, which imposed more stringent requirements (as individual permits were renewed) for wastewater streams from FGD, fly ash, bottom ash, and flue gas mercury control. On September 18, 2017, the EPA promulgated a final rule that, among other things, postponed the compliance dates to preserve the status quo for FGD wastewater and bottom ash transport water by two years to November 2020 until the EPA amended the rule. On October 13, 2020, the EPA amended the 2015 ELG rule by: (i) altering the stringency of certain limits for FGD wastewater; (ii) relaxing the zero-discharge requirement for bottom ash transport water; and (iii) changing several deadlines. The Company is in the process of estimating the environmental capital expenditures that will be required to comply.
Regional Environmental Developments
NY NOx — On December 31, 2019, the New York State Department of Environmental Conservation finalized a more stringent NOx regulation that will result in the retirement of the Company's combustion turbines in Astoria, New York in 2023.
Ash Regulation in Illinois — On July 30, 2019, Illinois enacted legislation that requires the state to promulgate regulations regarding coal ash at surface impoundments. On March 30, 2020, the state released its proposed implementing regulations. The Company expects the state to promulgate the final implementing regulations in March 2021, at which time regulated entities will then prepare and submit permit applications.

Significant Events
The following significant events have occurred during 2020 as further described within this Management's Discussion and Analysis and the Condensed Consolidated Financial Statements:
Direct Energy Acquisition
On July 24, 2020, the Company entered into a definitive purchase agreement with Centrica to acquire Direct Energy, a North American subsidiary of Centrica (the "Purchase Agreement"). Direct Energy is a leading retail provider of electricity, natural gas, and home and business energy related products and services in North America, with operations in all 50 U.S. states and 6 Canadian provinces. The acquisition will add over 3 million customers to NRG's business and build on and complement its integrated model, enabling better matching of power generation with customer demand. It will also broaden the Company's presence in the Northeast and into states and locales where it does not currently operate, supporting NRG's objective to diversify its business.
The Company will pay an aggregate purchase price of $3.625 billion in cash, subject to a purchase price adjustment, including a working capital adjustment. The Company expects to fund the purchase price using a combination of cash on hand and approximately $3 billion of newly-issued secured and unsecured corporate debt. The Company also expects to increase its collective collateral facilities by $3.5 billion through a combination of new letter of credit facilities and increases to its existing Revolving Credit Facility.

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The shareholders of Centrica approved the acquisition on August 20, 2020. The transaction has received approvals under the Canadian Competition Act and early termination of the waiting period under the HSR Act has been granted. The transaction remains subject to customary closing conditions, including the receipt of approval under the Federal Power Act.
The acquisition is targeted to close by December 31, 2020. There are no assurances that the conditions to the consummation of the acquisition of Direct Energy will be satisfied or that the acquisition of Direct Energy will be consummated on the terms agreed to, or at all.
Receivables Securitization and Repurchase Facility
On September 22, 2020, NRG Receivables LLC, a bankruptcy remote, special purpose, indirect wholly owned subsidiary, entered into a revolving accounts receivable financing facility (the "Receivables Facility") for an amount up to $750 million, subject to adjustments on a seasonal basis, with issuers of asset-backed commercial paper and commercial banks (the "Lenders".) As of September 30, 2020, there were no outstanding borrowings and there were $179 million in letters of credit issued under the Receivables Facility.
On September 22, 2020, the Company entered into an uncommitted repurchase facility (the “Repurchase Facility”) related to the Receivables Facility. Under the Repurchase Facility, the Company can borrow up to $75 million, collateralized by a subordinated note issued by NRG Receivables LLC to NRG Retail LLC in favor of the originating entities representing a portion of the balance of receivables sold to NRG Receivables LLC under the Receivables Facility. As of September 30, 2020, there were no outstanding borrowings under the Repurchase Facility.
For further discussion on the Receivables Facility and Repurchase Facility, see Note 9, Receivables Securitization and Repurchase Facility.
Midwest Generation Lease Purchase
On September 29, 2020, Midwest Generation acquired all of the ownership interests in the Powerton facility and Units 7 and 8 of the Joliet facility, which were being leased through 2034 and 2030, respectively, for approximately $260 million. The purchase was initially funded with cash-on-hand. The Company anticipates drawing on its Revolving Credit Facility in an amount equal to the previously existing operating lease liability of $148 million before December 31, 2020. Upon closing, lease expense related to these facilities, which totaled approximately $14 million in 2019, has been eliminated.
Share Repurchases
During the nine months ended September 30, 2020, the Company completed $224 million of share repurchases at an average price of $33.05 per share, including $27 million of equivalent shares purchased in lieu of tax withholdings on equity compensation issuance.
Renewable Power Purchase Agreements
During 2019, NRG began execution of its strategy to procure mid to long-term generation through renewable power purchase agreements. As of September 30, 2020, NRG has entered into PPAs totaling approximately 1,700 MWs with third-party project developers and other counterparties. The tenor of these agreements is an average between eleven and twelve years. The Company expects to continue evaluating and executing similar agreements that support the needs of the business. Due to COVID-19, certain of these PPA contracts have been amended to allow for the delay of the project's completion date from mid-2021 into 2022. These amendments include improved terms for NRG.
COVID-19
For discussion of COVID-19 related considerations, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations – Executive Summary and Liquidity and Capital Resources.
Trends Affecting Results of Operations and Future Business Performance
The Company’s trends are described in the Company’s 2019 Form 10-K in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Business Environment.
Changes in Accounting Standards
See Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.


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Consolidated Results of Operations
The following table provides selected financial information for the Company:
 Three months ended September 30,Nine months ended September 30,
(In millions, except as otherwise noted)20202019Change20202019Change
Operating Revenues
Retail revenue$2,302 $2,488 $(186)$5,795 $5,762 $33 
Energy revenue(a)
222 426 (204)429 952 (523)
Capacity revenue(a)
174 194 (20)518 551 (33)
Mark-to-market for economic hedging activities39 (210)249 78 51 27 
Other revenues (a)(b)
72 98 (26)246 310 (64)
Total operating revenues2,809 2,996 (187)7,066 7,626 (560)
Operating Costs and Expenses
Cost of Sales (c)
1,515 1,948 433 3,799 4,562 763 
Mark-to-market for economic hedging activities157 (146)(303)65 74 
Contract and emissions credit amortization (c)
16 12 
Operations and maintenance265 263 (2)837 795 (42)
Other cost of operations95 83 (12)220 202 (18)
Total cost of operations2,034 2,153 119 4,925 5,649 724 
Depreciation and amortization99 91 (8)318 261 (57)
Impairment losses29 — (29)29 (28)
Selling, general and administrative costs253 210 (43)670 615 (55)
Reorganization costs— 16 13 
Development costs— (1)
Total operating costs and expenses2,416 2,456 40 5,951 6,547 596 
Gain on sale of assets— — — 
Operating Income393 540 (147)1,121 1,081 40 
Other Income/(Expense)
Equity in earnings of unconsolidated affiliates36 29 37 29 
Impairment losses on investments— (107)107 (18)(107)89 
Other income, net11 17 (6)52 49 
Loss on debt extinguishment, net