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:	June 30, 2023
☐	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)

Delaware	41-1724239
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

910 Louisiana Street	Houston	Texas	77002
(Address of principal executive offices)			(Zip Code)

(713) 537-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, par value $0.01	NRG	New 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 Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging 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 July 31, 2023, there were 229,117,430 shares of common stock outstanding, par value $0.01 per share.

1

TABLE OF CONTENTS

Index

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION	3
GLOSSARY OF TERMS	5
PART I — FINANCIAL INFORMATION	8
ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES	8
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	49
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	82
ITEM 4 — CONTROLS AND PROCEDURES	84
PART II — OTHER INFORMATION	85
ITEM 1 — LEGAL PROCEEDINGS	85
ITEM 1A — RISK FACTORS	85
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	85
ITEM 3 — DEFAULTS UPON SENIOR SECURITIES	85
ITEM 4 — MINE SAFETY DISCLOSURES	85
ITEM 5 — OTHER INFORMATION	85
ITEM 6 — EXHIBITS	86
SIGNATURES	87

2

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," "should," "forecasts," and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond NRG's control, 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. Forward-looking statements are not guarantees of future results. These factors, risks and uncertainties include the factors described under Risk Factors, in Part II, Item 1A of this Form 10-Q and the following:

•Business uncertainties related to NRG's ability to integrate the operations of Vivint Smart Home with its own;

•NRG's ability to obtain and maintain retail market share;

•General economic conditions, changes in the wholesale power and gas markets and fluctuations in the cost of fuel;

•Volatile power and gas supply costs and demand for power and gas;

•Changes in law, including judicial and regulatory 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;

•The effectiveness of NRG's risk management policies and procedures and the ability of NRG's counterparties to satisfy their financial commitments;

•NRG's ability to enter into contracts to sell power or gas and procure fuel on acceptable terms and prices;

•NRG's ability to successfully integrate, realize cost savings and manage any acquired businesses;

•NRG's ability to engage in successful acquisitions and divestitures, as well as other mergers and acquisitions activity;

•Cyber terrorism and cybersecurity risks, data breaches or the occurrence of a catastrophic loss and the possibility that NRG may not have sufficient insurance to cover losses resulting from such hazards or the inability of NRG's insurers to provide coverage;

•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;

•The liquidity and competitiveness of wholesale markets for energy commodities;

•Government regulation, including changes in market rules, rates, tariffs and environmental laws;

•NRG's ability to develop and innovate new products, as retail and wholesale markets continue to change and evolve;

•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;

•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 NRG's corporate credit agreements, and in debt and other agreements of certain of NRG subsidiaries and project affiliates generally;

•The ability of NRG and its counterparties to develop and build new power generation facilities;

•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; and

•NRG's ability to develop and maintain successful partnering relationships as needed.

3

In addition, unlisted factors may present significant additional obstacles to the realization of forward-looking statements. 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 except as otherwise required by applicable laws. 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:

2022 Form 10-K	NRG’s Annual Report on Form 10-K for the year ended December 31, 2022
ACE	Affordable Clean Energy
Adjusted EBITDA	Adjusted earnings before interest, taxes, depreciation and amortization
AESO	Alberta Electric System Operator
ARO	Asset Retirement Obligation
ASC	The FASB Accounting Standards Codification, which the FASB established as the source of authoritative GAAP
ASU	Accounting Standards Updates - updates to the ASC
BTU	British Thermal Unit
Business	NRG Business, which serves business customers
CAA	Clean Air Act
CAISO	California Independent System Operator
CDD	Cooling Degree Day
CFTC	U.S. Commodity Futures Trading Commission
CO2	Carbon Dioxide
Company	NRG Energy, Inc.
Convertible Senior Notes	As of June 30, 2023, consists of NRG’s $575 million unsecured 2.75% Convertible Senior Notes due 2048
Cottonwood	Cottonwood Generating Station, a natural gas-fueled plant located in Deweyville, Texas in which NRG is leasing back through May 2025
CPP	Clean Power Plan
CPUC	California Public Utilities Commission
CWA	Clean Water Act
D.C. Circuit	U.S. Court of Appeals for the District of Columbia Circuit
Dth	Dekatherms
Economic gross margin	Sum of retail revenue, energy revenue, capacity revenue and other revenue, less cost of fuels and purchased energy and other cost of sales
EGU	Electric Generating Unit
EPA	U.S. Environmental Protection Agency
ERCOT	Electric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within Texas
ESPP	NRG Energy, Inc. Amended and Restated Employee Stock Purchase Plan
Exchange Act	The Securities Exchange Act of 1934, as amended
FASB	Financial Accounting Standards Board
FERC	Federal Energy Regulatory Commission
FGD	Flue gas desulfurization
FTRs	Financial Transmission Rights
GAAP	Generally accepted accounting principles in the U.S.
GHG	Greenhouse Gas
Green Mountain Energy	Green Mountain Energy Company
GW	Gigawatts
GWh	Gigawatt Hour
HDD	Heating Degree Day
Heat Rate	A 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
Home	NRG Home, which serves residential customers
HLW	High-level radioactive waste

5

ICE	Intercontinental Exchange
IESO	Independent Electricity System Operator
ISO	Independent System Operator, also referred to as RTOs
ISO-NE	ISO New England Inc.
Ivanpah	Ivanpah Solar Electric Generation Station, a solar thermal power plant located in California's Mojave Desert in which NRG owns 54.5% interest
kWh	Kilowatt-hour
LaGen	Louisiana Generating, LLC
LIBOR	London Inter-Bank Offered Rate
LSEs	Load Serving Entities
LTIPs	Collectively, the NRG long-term incentive plan ("LTIP") and the NRG Vivint LTIP
MDth	Thousand Dekatherms
Midwest Generation	Midwest Generation, LLC
MISO	Midcontinent Independent System Operator, Inc.
MMBtu	Million British Thermal Units
MW	Megawatts
MWh	Saleable megawatt hour net of internal/parasitic load megawatt-hour
NAAQS	National Ambient Air Quality Standards
NEPOOL	New England Power Pool
NERC	North American Electric Reliability Corporation
Net Exposure	Counterparty credit exposure to NRG, net of collateral
Net Revenue Rate	Sum of retail revenues less TDSP transportation charges
Nodal	Nodal Exchange is a derivatives exchange
NOL	Net Operating Loss
NOx	Nitrogen Oxides
NPNS	Normal Purchase Normal Sale
NRC	U.S. Nuclear Regulatory Commission
NRG	NRG Energy, Inc.
Nuclear Decommissioning Trust Fund	NRG'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 Act	U.S. Nuclear Waste Policy Act of 1982
NYISO	New York Independent System Operator
NYMEX	New York Mercantile Exchange
OCI/OCL	Other Comprehensive Income/(Loss)
PG&E	Pacific Gas and Electric Company
PJM	PJM Interconnection, LLC
PM2.5	Particulate Matter that has a diameter of less than 2.5 micrometers
PPA	Power Purchase Agreement
PUCT	Public Utility Commission of Texas
RCRA	Resource Conservation and Recovery Act of 1976
Receivables Facility	NRG Receivables LLC, a bankruptcy remote, special purpose, wholly-owned indirect subsidiary of the Company's $1.4 billion accounts receivables securitization facility due 2024, which was last amended on June 22, 2023
Receivables Securitization Facilities	Collectively, the Receivables Facility and the Repurchase Facility
Renewable PPA	A third-party PPA entered into directly with a renewable generation facility for the offtake of the Renewable Energy Certificates or other similar environmental attributes generated by such facility, couple with the associated power generated by that facility
REP	Retail electric provider
Repurchase Facility	NRG's $150 million uncommitted repurchase facility related to the Receivables Facility due 2024, which was last amended on June 22, 2023

6

Revolving Credit Facility	The Company's $4.3 billion revolving credit facility due 2028, was last amended on March 13, 2023
RGGI	Regional Greenhouse Gas Initiative
RTO	Regional Transmission Organization, also referred to as ISOs
SEC	U.S. Securities and Exchange Commission
Securities Act	The Securities Act of 1933, as amended
Senior Notes	As of June 30, 2023, NRG's $4.6 billion outstanding unsecured senior notes consisting of $375 million of the 6.625% senior notes due 2027, $821 million of 5.75% senior notes due 2028, $733 million of the 5.25% senior notes due 2029, $500 million of the 3.375% senior notes due 2029, $1.0 billion of the 3.625% senior notes due 2031 and $1.1 billion of the 3.875% senior notes due 2032
Senior Secured First Lien Notes	As of June 30, 2023, NRG’s $3.2 billion outstanding Senior Secured First Lien Notes consists of $600 million of the 3.75% Senior Secured First Lien Notes due 2024, $500 million of the 2.0% Senior Secured First Lien Notes due 2025, $900 million of the 2.45% Senior Secured First Lien Notes due 2027, $500 million of the 4.45% Senior Secured First Lien Notes due 2029 and $740 million of the 7.000% Senior Secured First Lien Notes due 2033
Services	NRG Services, which primarily includes the services businesses acquired in the Direct Energy acquisition and the Goal Zero business
SNF	Spent Nuclear Fuel
SO2	Sulfur Dioxide
SOFR	Secured overnight financing rate
South Central Portfolio	NRG'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
STP	South Texas Project — nuclear generating facility located near Bay City, Texas in which NRG owns a 44% interest
STPNOC	South Texas Project Nuclear Operating Company
TDSP	Transmission/distribution service provider
TWh	Terawatt Hour
U.S.	United States of America
U.S. DOE	U.S. Department of Energy
VaR	Value at Risk
VIE	Variable Interest Entity
Winter Storm Elliott	A major winter storm that had impacts across the majority of the United States and parts of Canada occurring in December 2022
Winter Storm Uri	A major winter and ice storm that had widespread impacts across North America occurring in February 2021

7

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 June 30,				Six months ended June 30,
(In millions, except for per share amounts)	2023		2022		2023		2022
Revenue
Revenue	$	6,348	$	7,282	$	14,070	$	15,178
Operating Costs and Expenses
Cost of operations (excluding depreciation and amortization shown below)	4,962		5,887		13,740		10,817
Depreciation and amortization	315		157		505		340
Impairment losses	—		155		—		155
Selling, general and administrative costs	522		351		948		698
Acquisition-related transaction and integration costs	22		10		93		18
Total operating costs and expenses	5,821		6,560		15,286		12,028
Gain on sale of assets	3		32		202		29
Operating Income/(Loss)	530		754		(1,014)		3,179
Other Income/(Expense)
Equity in earnings/(losses) of unconsolidated affiliates	5		4		10		(11)
Other income, net	13		12		29		12
Interest expense	(151)		(105)		(299)		(208)
Total other expense	(133)		(89)		(260)		(207)
Income/(Loss) Before Income Taxes	397		665		(1,274)		2,972
Income tax expense/(benefit)	89		152		(247)		723
Net Income/(Loss)	$	308	$	513	$	(1,027)	$	2,249
Less: Cumulative dividends attributable to Series A Preferred Stock	17		—		21		—
Net Income/(Loss) Available for Common Stockholders	$	291	$	513	$	(1,048)	$	2,249
Income/(Loss) per Share
Weighted average number of common shares outstanding — basic	231		237		230		240
Income/(Loss) per Weighted Average Common Share — Basic	$	1.26	$	2.16	$	(4.56)	$	9.37
Weighted average number of common shares outstanding — diluted	232		237		230		240
Income/(Loss) per Weighted Average Common Share —Diluted	$	1.25	$	2.16	$	(4.56)	$	9.37

See accompanying notes to condensed consolidated financial statements.

8

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
(In millions)	2023		2022		2023		2022
Net Income/(Loss)	$	308	$	513	$	(1,027)	$	2,249
Other Comprehensive Income/(Loss)
Foreign currency translation adjustments	6		(22)		8		(13)
Defined benefit plans	—		20		(1)		19
Other comprehensive income/(loss)	6		(2)		7		6
Comprehensive Income/(Loss)	$	314	$	511	$	(1,020)	$	2,255

See accompanying notes to condensed consolidated financial statements.

9

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30, 2023		December 31, 2022
(In millions, except share data and liquidation preference on preferred stock)	(Unaudited)		(Audited)
ASSETS
Current Assets
Cash and cash equivalents	$	422	$	430
Funds deposited by counterparties	365		1,708
Restricted cash	26		40
Accounts receivable, net	3,274		4,773
Inventory	686		751
Derivative instruments	4,423		7,886
Cash collateral paid in support of energy risk management activities	270		260
Prepayments and other current assets	580		383
Current assets - held-for-sale	75		—
Total current assets	10,121		16,231
Property, plant and equipment, net	1,706		1,692
Other Assets
Equity investments in affiliates	139		133
Operating lease right-of-use assets, net	221		225
Goodwill	5,143		1,650
Customer relationships, net	2,446		943
Other intangible assets, net	1,897		1,189
Nuclear decommissioning trust fund	—		838
Derivative instruments	2,910		4,108
Deferred income taxes	2,711		1,881
Other non-current assets	536		251
Non-current assets - held-for-sale	1,161		5
Total other assets	17,164		11,223
Total Assets	$	28,991	$	29,146

10

	June 30, 2023		December 31, 2022
(In millions, except share data and liquidation preference on preferred stock)	(Unaudited)		(Audited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt and finance leases	$	1,319	$	63
Current portion of operating lease liabilities	91		83
Accounts payable	2,107		3,643
Derivative instruments	3,832		6,195
Cash collateral received in support of energy risk management activities	365		1,708
Deferred revenue current	731		176
Accrued expenses and other current liabilities	1,395		1,110
Current liabilities - held-for-sale	36		4
Total current liabilities	9,876		12,982
Other Liabilities
Long-term debt and finance leases	10,737		7,976
Non-current operating lease liabilities	165		180
Nuclear decommissioning reserve	—		340
Nuclear decommissioning trust liability	—		477
Derivative instruments	1,889		2,246
Deferred income taxes	130		134
Deferred revenue non-current	927		10
Other non-current liabilities	988		942
Non-current liabilities - held-for-sale	947		31
Total other liabilities	15,783		12,336
Total Liabilities	25,659		25,318
Commitments and Contingencies
Stockholders' Equity
Preferred stock; 10,000,000 shares authorized; 650,000 Series A shares issued and outstanding at June 30, 2023 (liquidation preference $1,000); 0 shares issued and outstanding at December 31, 2022	650		—
Common stock; $0.01 par value; 500,000,000 shares authorized; 424,675,214 and 423,897,001 shares issued and 230,425,759 and 229,561,030 shares outstanding at June 30, 2023 and December 31, 2022, respectively	4		4
Additional paid-in-capital	8,504		8,457
Retained earnings	205		1,408
Treasury stock, at cost 194,249,455 and 194,335,971 shares at June 30, 2023 and December 31, 2022, respectively	(5,861)		(5,864)
Accumulated other comprehensive loss	(170)		(177)
Total Stockholders' Equity	3,332		3,828
Total Liabilities and Stockholders' Equity	$	28,991	$	29,146

See accompanying notes to condensed consolidated financial statements.

11

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended June 30,
(In millions)	2023		2022
Cash Flows from Operating Activities
Net (Loss)/Income	$	(1,027)	$	2,249
Adjustments to reconcile net (loss)/income to cash (used)/provided by operating activities:
Distributions from and equity in (earnings)/losses of unconsolidated affiliates	(9)		16
Depreciation and amortization	505		340
Accretion of asset retirement obligations	5		16
Provision for credit losses	80		51
Amortization of nuclear fuel	26		28
Amortization of financing costs and debt discounts	31		11
Amortization of in-the-money contracts and emissions allowances	112		128
Amortization of unearned equity compensation	61		14
Net gain on sale of assets and disposal of assets	(187)		(46)
Impairment losses	—		155
Changes in derivative instruments	1,515		(3,918)
Changes in current and deferred income taxes and liability for uncertain tax benefits	(282)		672
Changes in collateral deposits in support of risk management activities	(1,355)		3,121
Changes in nuclear decommissioning trust liability	2		(5)
Uplift securitization proceeds received from ERCOT	—		689
Changes in other working capital	(505)		(332)
Cash (used)/provided by operating activities	(1,028)		3,189
Cash Flows from Investing Activities
Payments for acquisitions of businesses and assets, net of cash acquired	(2,498)		(53)
Capital expenditures	(324)		(150)
Net purchases of emission allowances	(25)		(19)
Investments in nuclear decommissioning trust fund securities	(185)		(271)
Proceeds from the sale of nuclear decommissioning trust fund securities	180		278
Proceeds from sales of assets, net of cash disposed	229		96
Proceeds from insurance recoveries for property, plant and equipment, net	121		—
Cash used by investing activities	(2,502)		(119)
Cash Flows from Financing Activities
Proceeds from issuance of preferred stock, net of fees	635		—
Payments of dividends to common stockholders	(174)		(168)
Payments for share repurchase activity(a)	(16)		(366)
Net receipts from settlement of acquired derivatives that include financing elements	318		950
Net proceeds of Revolving Credit Facility	700		—
Proceeds from issuance of long-term debt	731		—
Payments of debt issuance costs	(22)		—
Repayments of long-term debt and finance leases	(10)		(2)
Cash provided by financing activities	2,162		414
Effect of exchange rate changes on cash and cash equivalents	3		—
Net (Decrease)/Increase in Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash	(1,365)		3,484
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at Beginning of Period	2,178		1,110
Cash and Cash Equivalents, Funds Deposited by Counterparties and Restricted Cash at End of Period	$	813	$	4,594

(a)Includes $(16) million and $(6) million of equivalent shares purchased in lieu of tax withholdings on equity compensation issuances during the six months ended June 30, 2023 and June 30, 2022, respectively

See accompanying notes to condensed consolidated financial statements.

12

NRG ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

(In millions)	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stock-holders' Equity
Balance at December 31, 2022	$	—	$	4	$	8,457	$	1,408	$	(5,864)	$	(177)	$	3,828
Net loss							(1,335)						(1,335)
Issuance of Series A Preferred Stock	650				(14)								636
Other comprehensive income											1		1
Equity-based awards activity, net(a)					38								38
Common stock dividends and dividend equivalents declared(b)							(88)						(88)
Balance at March 31, 2023	$	650	$	4	$	8,481	$	(15)	$	(5,864)	$	(176)	$	3,080
Net income							308						308
Issuance of Series A Preferred Stock					(1)								(1)
Other comprehensive income											6		6
Shares reissuance for ESPP					1				3				4
Equity-based awards activity, net(a)					23								23
Common stock dividends and dividend equivalents declared(b)							(88)						(88)
Balance at June 30, 2023	$	650	$	4	$	8,504	$	205	$	(5,861)	$	(170)	$	3,332

(In millions)	Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Loss		Total Stock-holders' Equity
Balance at December 31, 2021	$	4	$	8,531	$	464	$	(5,273)	$	(126)	$	3,600
Net income					1,736						1,736
Other comprehensive income									8		8
Share repurchases							(187)				(187)
Equity-based awards activity, net(a)			2								2
Common stock dividends and dividend equivalents declared(b)					(86)						(86)
Adoption of ASU 2020-06			(100)		57						(43)
Balance at March 31, 2022	$	4	$	8,433	$	2,171	$	(5,460)	$	(118)	$	5,030
Net income					513						513
Other comprehensive loss									(2)		(2)
Shares reissuance for ESPP			1				2				3
Share repurchases							(168)				(168)
Equity-based awards activity, net			8								8
Common stock dividends and dividend equivalents declared(b)					(84)						(84)
Balance at June 30, 2022	$	4	$	8,442	$	2,600	$	(5,626)	$	(120)	$	5,300

(a)Includes $(8) million, $(8) million and $(6) million of equivalent shares purchased in lieu of tax withholding on equity compensation issuances for the quarters ended March 31, 2023, June 30, 2023 and March 31, 2022, respectively

(b)Dividends per common share were $0.3775 for the quarters ended June 30 and March 31, 2023 and $0.35 for the quarters ended June 30 and March 31, 2022

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 a leading energy, smart home and services company fueled by market-leading brands, proprietary technologies, and complementary sales channels. Across the United States and Canada, NRG delivers innovative, sustainable solutions, predominately under brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy and Vivint, while also advocating for competitive energy markets and customer choice. The Company has a customer base that includes approximately 7.5 million residential consumers in addition to commercial, industrial, and wholesale customers, supported by approximately 16 GW of generation.

The Company's business is segmented as follows:

•Texas, which includes all activity related to customer, plant and market operations in Texas, other than Cottonwood;

•East, which includes all activity related to customer, plant and market operations in the East;

•West/Services/Other, which includes the following assets and activities: (i) all activity related to customer, plant and market operations in the West and Canada, (ii) the Services businesses (iii) activity related to the Cottonwood facility, (iv) the remaining renewables activity, including the Company’s equity method investment in Ivanpah Master Holdings, LLC, and (v) activity related to the Company’s equity method investment for the Gladstone power plant in Australia;

•Vivint Smart Home; and

•Corporate activities.

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 consolidated financial statements in the Company's 2022 Form 10-K. 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 June 30, 2023, and the results of operations, comprehensive income, cash flows and statements of stockholders' equity for the three and six months ended June 30, 2023 and 2022.

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 period amounts have been reclassified for comparative purposes. The reclassifications did not affect consolidated results from operations, net assets or consolidated cash flows.

Note 2 — Summary of Significant Accounting Policies

Vivint Smart Home Flex Pay

Under the Flex Pay plan (“Flex Pay”), offered by Vivint Smart Home, subscribers pay separately for smart home products and smart home and security services. The subscriber has the ability to pay for Vivint Smart Home products in the following three ways: (i) qualified subscribers may finance the purchase through third-party financing providers ("Consumer Financing Program" or “CFP”), (ii) Vivint Smart Home generally offers a limited number of subscribers not eligible for the CFP, but who qualify under Vivint Smart Home underwriting criteria, the option to enter into a retail installment contract directly with Vivint Smart Home or (iii) subscribers may conduct purchases by check, automatic clearing house payments, credit or debit card or by obtaining short term financing (generally no more than six-month installment terms) through Vivint Smart Home.

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Although subscribers pay separately for products and services under Flex Pay, the Company has determined that the sale of products and services are one single performance obligation resulting in deferred revenue for the gross amount of products sold. For products financed through the CFP, gross deferred revenues are reduced by (i) any fees the third-party financing provider (“Financing Provider”) is contractually entitled to receive at the time of loan origination, and (ii) the present value of expected future payments due to the Financing Providers. Loans are issued on either an installment or revolving basis with repayment terms ranging from 6 to 60 months.

For certain Financing Provider loans:

•Vivint Smart Home pays a monthly fee based on either the average daily outstanding balance of the installment loans, or the number of outstanding loans.

•Vivint Smart Home incurs fees at the time of the loan origination and receives proceeds that are net of these fees.

•Vivint Smart Home also shares liability for credit losses, with Vivint Smart Home being responsible for between 2.6% and 100% of lost principal balances.

Due to the nature of these provisions, the Company records a derivative liability at its fair value when the Financing Provider originates loans to subscribers, which reduces the amount of estimated revenue recognized on the provision of the services. The derivative liability is reduced as payments are made by Vivint Smart Home to the Financing Provider. Subsequent changes to the fair value of the derivative liability are realized through other income, net in the consolidated statements of operations. For further discussion, see Note 7, Accounting for Derivative Instruments and Hedging Activities.

Capitalized Contract Costs

Capitalized contract costs represent the costs directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts. These costs include installed products, commissions, other compensation and cost of installation of new or upgraded customer contracts. The Company calculates amortization by accumulating all deferred contract costs into separate portfolios based on the initial month of service and amortizes those deferred contract costs on a straight-line basis over the expected period of benefit, consistent with the pattern in which the Company provides services to its customers. The expected period of benefit for customers is approximately five years. The Company updates its estimate of the period of benefit periodically and whenever events or circumstances indicate that the period of benefit could change significantly. Such changes, if any, are accounted for prospectively as a change in estimate. Amortization of capitalized contract costs are included in cost of operations and selling, general and administrative costs on the consolidated statements of operations. Contract costs not directly related and incremental to the origination of new contracts, modification of existing contracts or to the fulfillment of the related subscriber contracts are expensed as incurred.

Other Balance Sheet Information

The following table presents the accumulated depreciation included in property, plant and equipment, net and accumulated amortization included in customer relationships, net and other intangible assets, net:

(In millions)	June 30, 2023		December 31, 2022
Property, plant and equipment accumulated depreciation	$	1,351	$	1,478
Customer relationships and other intangible assets accumulated amortization	2,394		2,112

Credit Losses

Retail trade receivables are reported on the balance sheet net of the allowance for credit losses within accounts receivables, net. Long-term receivables are recorded net in other non-current assets in the consolidated balance sheets. The Company accrues a provision 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.

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The following table represents the activity in the allowance for credit losses for the three and six months ended June 30, 2023 and 2022:

	Three months ended June 30,				Six months ended June 30,
(In millions)	2023		2022		2023		2022
Beginning balance	$	121	$	666	$	133	$	683
Acquired balance from Vivint Smart Home	—		—		22		—
Provision for credit losses	45		26		80		51
Write-offs	(66)		(71)		(144)		(121)
Recoveries collected	12		6		21		14
Other	8		—		8		—
Ending balance	$	120	$	627	$	120	$	627

Cash and Cash Equivalents, Funds Deposited by Counterparties and 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)	June 30, 2023		December 31, 2022
Cash and cash equivalents	$	422	$	430
Funds deposited by counterparties	365		1,708
Restricted cash	26		40
Cash and cash equivalents, funds deposited by counterparties and restricted cash shown in the statement of cash flows	$	813	$	2,178

Funds deposited by counterparties consist of cash held by the Company as a result of collateral posting obligations from its counterparties related to NRG's hedging program. The decrease in funds deposited by counterparties is driven by the significant decrease in forward positions as a result of decreases in natural gas and power prices compared to December 31, 2022. Though some amounts are segregated into separate accounts, not all funds are contractually restricted. Based on the Company's intention, these funds are not available for the payment of general corporate obligations; however, they are available for liquidity management. Depending on market fluctuations and the settlement of the underlying contracts, the Company will refund this collateral to the 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 to satisfy the requirements of certain financing agreements and funds held within the Company's projects that are restricted in their uses.

Goodwill

The following table represents the changes in goodwill during the six months ended June 30, 2023:

(In millions)	Texas		East		West/Services/Other		Vivint Smart Home		Total
Balance as of December 31, 2022	$	710	$	723	$	217	$	—	$	1,650
Goodwill resulting from the acquisition of Vivint Smart Home	—		—		—		3,492		3,492
Sale of business	—		(2)		—		—		(2)
Foreign currency translation adjustments	—		—		3		—		3
Balance as of June 30, 2023	$	710	$	721	$	220	$	3,492	$	5,143

Recent Accounting Developments - Guidance Adopted in 2023

ASU 2021-08 — In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, or ASU 2021-08, which requires that an entity recognize and measure contract assets and contract liabilities acquired in a business combination as if it had originated the contracts in accordance with ASC 606, Revenue from Contracts with Customers. As a result, an acquirer should recognize and

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measure the acquired contract assets and contract liabilities consistently with how they were recognized and measured in the acquiree’s financial statements. The amendments per ASU 2021-08 apply only to contract assets and contract liabilities from contracts with customers, as defined in Topic 606, such as refund liabilities and upfront payments to customers. Assets and liabilities under related Topics, such as deferred costs under Subtopic 340-40, Other Assets and Deferred Costs — Contracts with Customers, are not within the scope of amendments per ASU 2021-08. The Company adopted ASU 2021-08 prospectively effective January 1, 2023 and applied the amended requirements to the acquisition of Vivint Smart Home.

Note 3 — Revenue Recognition

Vivint Smart Home Retail Revenue

Vivint Smart Home offers its subscribers combinations of smart home products and services, which together create an integrated smart home system that allows the Company's subscribers to monitor, control and protect their homes. As the products and services included in the subscriber's contract are integrated and highly interdependent, and because the products (including installation) and services must work together to deliver the monitoring, controlling and protection of their home, the Company has concluded that the products and services contracted for by the subscriber are generally not distinct within the context of the contract and, therefore, constitute a single, combined performance obligation. Revenues for this single, combined performance obligation are recognized on a straight-line basis over the subscriber's contract term, which is the period in which the parties to the contract have enforceable rights and obligations. The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the subscriber contain a material right to renew the contract, because the subscriber does not have to purchase the products upon renewal. Proceeds allocated to the material right are recognized over the period of the benefit. The majority of Vivint Smart Home's subscription contracts are five years and are generally non-cancelable. These contracts generally convert into month-to-month agreements at the end of the initial term, while some subscribers are month-to-month from inception. Payment for Vivint Smart Home services is generally due in advance on a monthly basis. Product sales and other one-time fees are invoiced to subscribers at time of sale. Revenues for any products or services that are considered separate performance obligations are recognized upon delivery. Payments received or billed in advance are reported as deferred revenues.

Performance Obligations

As of June 30, 2023, estimated future fixed fee performance obligations are $742 million for the remaining six months of fiscal year 2023, and $1.3 billion, $949 million, $622 million, $336 million and $42 million for the fiscal years 2024, 2025, 2026, 2027 and 2028, respectively. These performance obligations include Vivint Smart Home products and services as well as cleared auction MWs in the PJM, ISO-NE, NYISO and MISO capacity auctions. The cleared auction MWs are subject to penalties for non-performance.

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Disaggregated Revenues

The following tables represent the Company’s disaggregation of revenue from contracts with customers for the three and six months ended June 30, 2023 and 2022:

	Three months ended June 30, 2023
(In millions)	Texas		East		West/Services/Other		Vivint Smart Home		Corporate/Eliminations		Total
Retail revenue:
Home(a)	$	1,563	$	446	$	406	$	444	$	—	$	2,859
Business	832		1,912		424		—		—		3,168
Total retail revenue(b)	2,395		2,358		830		444		—		6,027
Energy revenue(b)	16		28		40		—		(1)		83
Capacity revenue(b)	—		49		—		—		—		49
Mark-to-market for economic hedging activities(c)	—		52		23		—		—		75
Contract amortization	—		(7)		(1)		—		—		(8)
Other revenue(b)	104		23		—		—		(5)		122
Total revenue	2,515