NRG Energy Inc.: Quarterly report which provides a continuing view of a company’s financial position

Tickers: NRG
UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

x

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended: September 30, 2018

o

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

(I.R.S. Employer

of incorporation or organization)

Identification No.)

804 Carnegie Center, Princeton, New Jersey

08540

(Address of principal executive offices)

(Zip Code)

(609) 524-4500

(Registrant's telephone number, including area code)

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 xNo o

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 xNo o

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 x

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o

Emerging growth company o

(Do not check if a smaller reporting 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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes oNo x

As of September 30, 2018, there were 289,930,024 shares of common stock outstanding, par value $0.01 per share.

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TABLE OF CONTENTS

Index

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION 3

GLOSSARY OF TERMS 5

PART I - FINANCIAL INFORMATION 10

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 10

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 67

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 102

ITEM 4 - CONTROLS AND PROCEDURES 104

PART II - OTHER INFORMATION 105

ITEM 1 - LEGAL PROCEEDINGS 105

ITEM 1A - RISK FACTORS 105

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 105

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 105

ITEM 4 - MINE SAFETY DISCLOSURES 105

ITEM 5 - OTHER INFORMATION 105

ITEM 6 - EXHIBITS 106

SIGNATURES 107

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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 Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or 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 Item 1A - Risk Factors Related to NRG Energy, Inc., in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2017, and the following:

  • • NRG's ability to achieve the expected benefits of its Transformation Plan;

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

  • • The potential adverse effects of the GenOn Entities' filings under Chapter 11 of the Bankruptcy Code and restructuring transactions on NRG's operations, management and employees and the risks associated with operating NRG's business during the restructuring process;

  • • Risks and uncertainties associated with the GenOn Entities' Chapter 11 Cases including the ability to achieve anticipated benefits therefrom;

  • • 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;

  • • 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 going forward;

  • • Operating and financial restrictions placed on NRG and its subsidiaries that are contained in the indentures governing NRG's outstanding notes, in NRG's 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 commercial initiatives, corporate efficiencies, asset strategy, and a range of other programs throughout NRG to reduce costs or generate revenues;

  • • NRG's ability to complete the sale of certain assets to Clearway Energy, Inc.;

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  • • NRG's ability to achieve its strategy of regularly returning capital to stockholders;

  • • NRG's ability to successfully evaluate investments and achieve intended financial results in new business and growth initiatives;

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

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

Forward-looking statements speak only as of the date they were made, and NRG Energy, Inc. 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 review of 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.

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GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:

2017 Form 10-K

NRG's Annual Report on Form 10-K for the year ended December 31, 2017

2023 Term Loan Facility

The Company's $1.9 billion term loan facility due 2023, a component of the Senior Credit Facility

Adjusted EBITDA

Adjusted earnings before interest, taxes, depreciation and amortization

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

Average realized prices

Volume-weighted average power prices, net of average fuel costs and reflecting the impact of settled hedges

BACT

Best Available Control Technology

Bankruptcy Code

Chapter 11 of Title 11 the U.S. Bankruptcy Code

Bankruptcy Court

United States Bankruptcy Court for the Southern District of Texas, Houston Division

BETM

Boston Energy Trading and Marketing LLC

BTU

British Thermal Unit

Business Solutions

NRG's business solutions group, which includes demand response, commodity sales, energy efficiency and energy

management services

CAA

Clean Air Act

CAIR

Clean Air Interstate Rule

CAISO

California Independent System Operator

Carlsbad

Collectively, Carlsbad Energy Holdings LLC and Carlsbad Energy Center LLC

CASPR

Competitive Auctions with Sponsored Resources

CDD

Cooling Degree Day

CDWR

California Department of Water Resources

CEC

California Energy Commission

CenterPoint

CenterPoint Energy Houston Electric, LLC

CFTC

U.S. Commodity Futures Trading Commission

Chapter 11 Cases

Voluntary cases commenced by the GenOn Entities under the Bankruptcy Code in the Bankruptcy Court

C&I

Commercial industrial and governmental/institutional

Cleco

Cleco Energy LLC

COD

Commercial Operation Date

ComEd

Commonwealth Edison

Company

NRG Energy, Inc.

CPUC

California Public Utilities Commission

CSAPR

Cross-State Air Pollution Rule

CVSR

California Valley Solar Ranch

CWA

Clean Water Act

D.C. Circuit

U.S. Court of Appeals for the District of Columbia Circuit

Distributed Solar

Solar power projects that primarily sell power to customers for usage on site, or are interconnected to sell power into a

local distribution grid

DNREC

Delaware Department of Natural Resources and Environmental Control

DSI

Dry Sorbent Injection

Economic gross margin

Sum of energy revenue, capacity revenue, retail revenue and other revenue, less cost of fuels and other cost of sales

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Disclaimer

NRG Energy Inc. published this content on 08 November 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 08 November 2018 20:14:01 UTC