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Fresh Start Accounting (Tables)
 12 Months Ended
Dec. 31, 2024
Plan of Reorganization [Abstract]  
Reorganization, Chapter 11 The following table reconciles the Company’s enterprise value to the estimated reorganization value at Emergence:
May 17, 2023
Enterprise value (a)
$4,500 
Plus: Cash and cash equivalents and Restricted cash and cash equivalents (b)
701 
Plus: Current liabilities excluding long-term debt due within one year514 
Plus: Non-current liabilities excluding long-term debt and liability-classified warrants1,234 
Plus: Fair value of noncontrolling interest110 
Reorganization value to be allocated$7,059 
__________________
(a)Excludes any value associated with noncontrolling interest.
(b)Excludes $52 million for payment of professional fees.

The following table reconciles TES’s enterprise value to the estimated fair value at Emergence:
May 17, 2023
Enterprise value (a)
$4,500 
Plus: Cash and cash equivalents and Restricted cash and cash equivalents (b)
701 
Less: Fair value of debt(2,845)
Less: Liability-classified warrants(35)
Fair value of member’s equity (c)
2,321 
Plus: Fair value of noncontrolling interest110 
Fair value of equity$2,431 
__________________
(a)Excludes any value associated with noncontrolling interest.
(b)Excludes $52 million for payment of professional fees.
(c)Issued in accordance with the Plan of Reorganization. Includes 59,028,843 shares of TEC common stock and $8 million of equity-classified warrants.
The “Reorganization Adjustments” on the fresh start Consolidated Balance Sheet as of Emergence present the aggregate effect of the transactions contemplated by the Plan of Reorganization. The “Fresh Start Adjustments” present the preliminary fair value and other required adjustments as a result of applying fresh start accounting. The explanatory notes provide additional information related to the adjustments, the methods used to determine fair values, and significant assumptions.
May 17, 2023
AssetsPredecessor
Reorganization
Adjustments (a)
Fresh Start
Adjustments		Successor
Cash and cash equivalents $1,302 $(1,133)(b)$— $169 
Restricted cash and cash equivalents240 426 (c)(81)(q)585 
Accounts receivable, net 148 (3)(d)— 145 
Inventory, net 448 — (141)(r)307 
Derivative instruments 818 — (632)(q)186 
Other current assets 135 — (5)(s)130 
Total current assets 3,091 (710)(859)1,522 
Property, plant and equipment, net4,322 — (458)(t)3,864 
Nuclear decommissioning trust funds1,465 — — 1,465 
Derivative instruments 37 — (37)(q)— 
Other noncurrent assets 146 (12)(e)74 (u)208 
Total Assets $9,061 $(722)$(1,280)$7,059 
Liabilities and Equity
Revolving credit facilities $848 $(848)(f)$— $— 
Long-term debt, due within one year1,005 (1,000)(g)— 5 
Accrued interest 288 (284)(h)— 4 
Accounts payable and other accrued liabilities 382 3 (i)— 385 
Derivative instruments 711 — (654)(q)57 
Other current liabilities 414 (349)(j)3 (v)68 
Total current liabilities 3,648 (2,478)(651)519 
Long-term debt 2,504 281 (k)55 (w)2,840 
Liabilities subject to compromise2,788 (2,788)(l)— — 
Derivative instruments 135 — (93)(q)42 
Postretirement benefit obligations(1)302 (m)34 (x)335 
Asset retirement obligations and accrued environmental costs 580 202 (m)(340)(y)442 
Deferred income taxes 82 283 (n)(8)(z)357 
Other noncurrent liabilities 19 60 (o)14 (aa)93 
Total Liabilities 9,755 (4,138)(989)4,628 
Member’s equity (818)3,416 (p)(277)(bb)2,321 
Noncontrolling interests 124 — (14)(cc)110 
Total Equity (694)3,416 (291)2,431 
Total Liabilities and Equity $9,061 $(722)$(1,280)$7,059 
The reorganization adjustments required in connection with the application of fresh start accounting and the allocation of the enterprise value were:
(a)Emergence adjustments for the implementation of the Plan of Reorganization. Such adjustments include: (i) settlement of prepetition liabilities subject to compromise; (ii) payment of certain prepetition indebtedness; (iii) issuances of member’s equity; (iv) recognition of new indebtedness and related restricted cash; and (v) other items.
(b)The uses of “Cash and cash equivalents” at Emergence resulting from the implementation of the Plan of Reorganization were:
Proceeds from rights offering $1,400 
Proceeds from TLB-1 and TLC 1,019 
Proceeds from Secured Notes 1,200 
Release of restricted cash 89 
Payment of claims under prepetition senior secured revolving credit facility(1,029)
Payment of claims under other prepetition secured indebtedness(2,136)
Payment of debtor-in-possession term loan(1,012)
Restriction of cash relating to TLC LCF(470)
Payment of debt issuance costs on exit financing (TLB-1, TLC, and Secured Notes)(54)
Funding of professional fees escrow account (52)
Payment of hedge rejections (42)
Payment to general unsecured creditors trust (26)
Payment of professional fees (22)
Other (a)
2 
Total uses of Cash and cash equivalents $(1,133)
__________________
(a)Includes $1 million of proceeds from Riverstone for payment to general unsecured creditors trust.
(c)“Restricted cash and cash equivalents” net change:
Restriction of cash relating to TLC LCF$470 
Funding of professional fees escrow account52 
Release of restricted cash(89)
Payment of professional fees(7)
Net change in Restricted cash and cash equivalents$426 
(d)“Accounts receivable, net” net change related to settlement of affiliate receivables.
(e)“Other noncurrent assets” net change:
Write-off of debt issuance costs associated with prepetition senior secured revolving credit facility$(22)
Reclassification of previously capitalized debt issuance costs to Long-term debt(14)
Capitalization of debt issuance costs24 
Net change in Other noncurrent assets$(12)
(f)Payment of principal amounts owed under prepetition senior secured revolving credit facility.
(g)Repayment of debtor-in-possession credit facilities.
(h)“Accrued interest” net change:
Payment of accrued interest on prepetition senior secured revolving credit facility$(183)
Payment of accrued interest on other prepetition secured indebtedness(89)
Payment of accrued interest on debtor-in-possession credit facilities(12)
Net change in Accrued interest$(284)
(i)“Accounts payable and other accrued liabilities” net change:
Payment of hedge contract rejections$(42)
Payment of professional fees(6)
Reinstatement of liabilities subject to compromise38 
Accrual for professional fees incurred at Emergence13 
Net change in Accounts payable and other accrued liabilities$3 
(j)“Other current liabilities” net change:
Issuance of equity for backstop premium$(380)
Reinstatement of liabilities subject to compromise31 
Net change in Other current liabilities$(349)
(k)“Long-term debt” net change:
Payment of claims under prepetition secured indebtedness$(2,048)
Borrowings of $1.2 billion under the Secured Notes (a)
1,179 
Borrowings of $580 million under TLB-1 (b)
548 
Borrowings of $470 million under TLC (c)
446 
Reinstatement of PEDFA 2009B Bonds and PEDFA 2009C Bonds (d)
130 
Write-off of prepetition secured indebtedness issuance costs26 
Net change in Long-term debt$281 
______________
(a)Net of an aggregate initial purchaser discount and debt issuance costs of $21 million.
(b)Net of an aggregate original issue discount and debt issuance costs of $32 million.
(c)Net of an aggregate original issue discount and debt issuance costs of $24 million.
(d)Includes recognition of $4 million of interest expense.
(l)“Liabilities subject to compromise” settled or reinstated at Emergence in accordance with the Plan of Reorganization:
Liabilities subject to compromise prior to Emergence
Debt$1,555 
Termination of retail contracts447 
Postretirement benefit obligations305 
Asset retirement obligations and accrued environmental costs220 
Other liabilities92 
Deferred tax liabilities77 
Accounts payable and accrued liabilities51 
Accrued interest41 
Total2,788 
Reinstatement and settlements of certain Liabilities subject to compromise
Reinstatement of liabilities subject to compromise (a)
(801)
Excess fair value ascribed to lenders participating in rights offering(315)
Issuance of member’s equity to holders of claims under prepetition unsecured notes and PEDFA 2009A Bonds(186)
Payment to general unsecured creditors trust(24)
Total(1,326)
Gain on derecognition of certain Liabilities subject to compromise (b)
$1,462 
______________
(a)Primarily includes postretirement benefit obligations, AROs, and deferred income taxes.
(b)Represents liabilities subject to compromise that were discharged in accordance with the Plan of Reorganization.
(m)Reinstatement of “Liabilities subject to compromise.”
(n)“Deferred income taxes” net change:
Increase in deferred tax liabilities primarily due to estimated tax attribute reduction from the recognition of cancellation of debt income, partially offset by change in valuation allowance$206 
Reinstatement of liabilities subject to compromise77 
Net change in Deferred income taxes$283 
(o)“Other noncurrent liabilities” net change:
Issuance of liability-classified warrants$35 
Reinstatement of liabilities subject to compromise25 
Net change in Other noncurrent liabilities $60 

The estimated fair value of liability-classified warrants was determined using a Black-Scholes Option Pricing Model with the following assumptions at Emergence:
Expected volatility30 %
Expected term (years)5
Expected dividend yield— %
Risk-free interest rate3.6 %
Strike price per share$52.92 
Fair value per share$11.29 
(p)“Member’s equity” net change:
Gain on settlement of liabilities subject to compromise$1,462 
Other losses attributable to gain on debt discharge(3)
Gain on debt discharge1,459 
Write-off of deferred financing cost(46)
Professional fees expensed at Emergence(27)
Restructuring-related compensation expense(8)
Total reorganization items from reorganization adjustments1,378 
Interest expense incurred at Emergence(4)
Income from reorganization adjustments before income taxes1,374 
Income tax expense(206)
Net income from reorganization adjustments1,168 
Issuance of member’s equity in connection with rights offering1,715 
Issuance of member’s equity for backstop premium380 
Issuance of member’s equity to holders of claims under prepetition unsecured notes and PEDFA 2009A Bonds186 
Issuance of equity-classified warrants8 
Issuance of liability-classified warrants(35)
Other (a)
(6)
Net change in Member’s equity $3,416 
______________
(a)Includes $1 million of proceeds from Riverstone for payment to general unsecured creditors trust.
Fresh Start Adjustments
(q)Net presentation of derivatives on the Consolidated Balance Sheets. See Note 2 for additional information on the related accounting policy.
(r)“Inventory, net” fair value adjustments:
Coal$(33)
Oil products11 
Materials and supplies(133)
Environmental products14 
Total adjustment to Inventory, net $(141)
The fair values for oil, coal and environmental products were estimated using current market prices. The fair values of materials and supplies were estimated using an indirect cost approach. The cost approach estimates fair value by considering the amount required to construct or purchase a new asset of equal utility at current prices, with adjustments for asset function, age, physical deterioration, and obsolescence.
(s)“Other current assets” primarily represents miscellaneous fair value adjustments.
(t)“Property, plant and equipment, net” fair value adjustments:
Electric generation$(350)
Other property and equipment(80)
Intangible assets(65)
Capitalized software(3)
Construction work in progress40 
Total adjustment to Property, plant and equipment, net $(458)
The fair value of “Property, plant and equipment, net” was estimated using the income approach, market approach and cost approach, as applicable. The fair value of land was estimated utilizing the market approach, which considered comparable market-based transactions within a defined area based on size, use and utility.
(u)“Other noncurrent assets” fair value adjustments:
Favorable supply contracts (a)
$109 
Fair value adjustment to equity method investments3 
Eliminate debt issuance costs associated with debtor-in-possession credit facilities(29)
Fair value reduction to other miscellaneous assets(9)
Total adjustment to Other noncurrent assets $74 
__________________
(a)The fair value of supply contracts was determined utilizing the present value of the after-tax difference between the pricing of actual contracts in place and a current market benchmark.
(v)“Other current liabilities” fair value adjustments, primarily related to short-term AROs.
(w)“Long-term debt” fair value adjustments:
Eliminate debt issuance costs associated with prepetition secured notes, prepetition TLB and LMBE-MC TLB$48 
Fair value adjustment to Cumulus Digital TLF11 
Fair value adjustment to LMBE-MC TLB(4)
Total adjustment to Long-term debt $55 

Fair value adjustments to “Long-term debt” were determined using a lattice model, given that the debt can be prepaid by the borrower prior to the maturity date.
(x)Change in accounting policy for discount rates used to estimate postretirement obligations from a bond-matching model to yield curve approach. See Note 2 for additional information.
(y)Adjustment to present at fair value AROs using assumptions as of Emergence, including an inflation factor of 2%-3% and an estimated 5- to 20-year credit-adjusted risk-free rate of 8%-12%based on timing of cash flows for each underlying obligation.
(z)Adjustment to “Deferred income taxes” for the change in financial reporting basis of assets and liabilities as a result of the adoption of fresh start accounting.
(aa)Fair value adjustments primarily related to unfavorable supply contracts of $13 million and the recognition of unfavorable lease liabilities. The fair value of supply contracts was determined utilizing the present value of the after-tax difference between the pricing of actual contracts in place and current market benchmarks.
(bb)Cumulative impact of fresh start accounting adjustments presented herein.
(cc)“Noncontrolling interests” fair value adjustments for certain subsidiaries
As of December 31, 2022 (Predecessor), prepetition liabilities and obligations whose treatment and satisfaction were dependent on the outcome of the Restructuring were presented as “Liabilities subject to compromise” on the Consolidated Balance Sheets. The carrying value of prepetition liabilities that were subject to compromise are presented at the best estimate of the claim amount permitted by the Bankruptcy Court. Such amounts presented as “Liabilities subject to compromise” on the Consolidated Balance Sheets were subject to adjustments depending on bankruptcy court actions, developments with respect to disputed claims, determination of secured status of certain claims, the determination as to the value of any collateral securing claims, proof of claims and (or) other events.
Predecessor
December 31, 2022
Debt (a)
$1,558 
Termination of retail power and other contracts447 
Postretirement benefit obligations (a)
309 
Asset retirement obligations and accrued environmental costs (a)
219 
Other liabilities (a)
114 
Deferred tax liabilities 83 
Accounts payable and accrued liabilities53 
Accrued interest41 
Derivatives (a)
1 
Liabilities Subject to Compromise $2,825 
__________________
(a)Includes both current and noncurrent amounts.
“Reorganization income (expense), net” for the relevant periods were:
Predecessor
January 1 through May 17, 2023Year Ended December 31, 2022
Backstop premium$(70)$(310)
Gain (loss) on debt discharge1,459 — 
Gain (loss) on revaluation adjustments(460)— 
Professional fees(56)(210)
Make-whole premiums and accrued interest on certain indebtedness(21)(183)
Professional fees incurred to obtain the debtor-in-possession credit facilities— (70)
Write-off of deferred financing cost and original issue discount(46)(30)
Other(7)(9)
Reorganization Income (Expense), net $799 $(812)