Investments Accounted for by the Equity Method and Variable Interest Entities

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 impairments, unrealized gains and losses on derivatives and movements in foreign currency exchange rates, as well as other adjustments.

The following table summarizes NRG's equity method investments as of December 31, 2016:



Name	Economic Interest		Investment Balance
			(In millions)
Avenal Solar Holdings LLC ^(a)	50.0	%	$	(7	)
Community Wind North, LLC	99.0	%	21
Desert Sunlight Investment Holdings, LLC ^(a)	25.0	%	282
Elkhorn Ridge Wind, LLC ^(a)	47.0	%	85
GenConn Energy LLC ^(a)	50.0	%	106
Four Brothers Holdings^(c)	50.0	%	208
Granite Mountain Renewables ^(c)	50.0	%	90
Iron Springs Renewables^(c)	50.0	%	48
Midway-Sunset Cogeneration Company	50.0	%	22
Petra Nova Parish Holdings LLC	50.0	%	34
Saguaro Power Company	50.0	%	(14		)
San Juan Mesa Wind Project, LLC ^(a)	75.0	%	74
Sherbino I Wind Farm LLC	50.0	%	—
Watson Cogeneration Company	49.0	%	26
Gladstone Power Station ^(b)	37.5	%	132
Other	Various		13
Total equity investments in affiliates			$	1,120

(a) Equity method investments owned by NRG Yield

(b) Gladstone Power Station is located in Australia



	As of December 31,
	2016		2015
	(In millions)
Undistributed earnings from equity investments	$	101	$	55

Utility-Scale Solar Portfolio — As described in Note 3, Business Acquisitions and Dispositions, on November 2, 2016, the Company acquired equity interests in a tax equity portfolio, located in Utah, comprised of 530 MW of mechanically-complete solar assets. These equity interests in Four Brothers Holdings, Granite Mountain Renewables, and Iron Springs Renewables are accounted for as equity method investments.

Variable Interest Entities

NRG accounts for its interests in certain entities that are considered VIEs under ASC 810, for which NRG is not the primary beneficiary, under the equity method.

GenConn — NRG owns a 50% interest in GenConn, a limited liability company formed to construct, own and operate two 190 MW peaking generation facilities in Connecticut at NRG's Devon and Middletown sites.

GenConn has a $237 million note with an interest rate of 4.73% and a maturity date of July 2041 and a 5-year, $35 million working capital facility which can be used to issue letters of credit at an interest rate of 1.875%. As of December 31, 2016, $212 million was outstanding under the note and $14 million was drawn on the working capital facility. The note is secured by all of the GenConn assets. NRG's maximum exposure to loss is limited to its equity investment, which was $106 million as of December 31, 2016.

Sherbino — NRG owns a 50% interest in Sherbino, a joint venture with BP Wind Energy North America Inc. Sherbino is a 150 MW wind farm, which commenced commercial operations in October 2008. In December 2008, Sherbino entered into a 15-year term loan facility which is non-recourse to NRG. As of December 31, 2016, the outstanding principal balance of the term loan facility was $72 million, and is secured by substantially all of Sherbino's assets and membership interests. During the fourth quarter of 2016, the Company recorded an other-than-temporary impairment loss equal to the full value of its investment in Sherbino of $70 million as further described in Note 10, Asset Impairments.

Other Equity Investments

Gladstone — Through a joint venture, NRG owns a 37.5% interest in Gladstone, a 1,613 MW coal-fueled power generation facility in Queensland, Australia. The power generation facility is managed by the joint venture participants and the facility is operated by NRG. Operating expenses incurred in connection with the operation of the facility are funded by each of the participants in proportion to their ownership interests. Coal is sourced from local mines in Queensland. NRG and the joint venture participants receive their respective share of revenues directly from the off takers in proportion to the ownership interests in the joint venture. Power generated by the facility is primarily sold to an adjacent aluminum smelter, with excess power sold to the Queensland Government owned utility under long term supply contracts. NRG's investment in Gladstone was $132 million as of December 31, 2016.

Entities that are Consolidated

The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third-parties in order to finance the cost of solar energy systems under operating leases and wind facilities eligible for certain tax credits as further described in Note 2, Summary of Significant Accounting Policies. For one of the tax equity arrangements, the Company has a deficit restoration obligation equal to $88 million as of December 31, 2016, which would be required to be funded if the arrangement were to be dissolved.

The summarized financial information for the Company's consolidated VIEs consisted of the following:



(In millions)	December 31, 2016		December 31, 2015
Current assets	$	87	$	84
Net property, plant and equipment	1,534		1,807
Other long-term assets	954		863
Total assets	2,575		2,754
Current liabilities	59		56
Long-term debt	442		366
Other long-term liabilities	183		179
Total liabilities	684		601
Noncontrolling interests	529		493
Net assets less noncontrolling interests	$	1,362	$	1,660