NRGNRG Energy

We note your disclosure under Regulatory Matters on page 158, indicating you had taken action to comply with the Retail Reset Order issued by the New York State Public Service Commission (NYSPSC) prior to the effective date of April 16, 2021. You explain that the order limited ESCO's offers for electric and natural gas to three products.

Rest of the question

However, you state that on January 8, 2024 the NYSPSC notified eight of your retail energy suppliers of alleged non-compliance, to include having not transitioned residential customers to one of the three compliant products as required by the order. You state that the matter has the potential to negatively impact your retail business in New York. Given the apparent significance of the retail business among your Operational Statistics on page 12, it appears that you should expand MD&A to clarify the nature and extent of your exposure, to include the reasonably likely impact on revenues and earnings of your New York retail business, the East operating segment, and consolidated results, to comply with Item 303 of Regulation S-K. Please also clarify the nature and extent of any actions 1. that you are undertaking to ensure compliance or to resolve non-compliance with the order, as well as the timeframe within which you expect the matter to resolve. Please expand the disclosures in the notes to your financial statements to similarly clarify the nature of your exposure and responsibility for compliance relative to the actions of your suppliers, and to include your estimate of reasonably possible loss or range of reasonably possible loss to comply with FASB ASC 450 as appropriate.

The Company respectfully acknowledges the Staff’s comment and advises the Staff that management considered and assessed the requirements of Item 303 of Regulation S-K with respect to the Notice of Apparent Violation (the “NOAV”) issued by the NYSPSC through that agency’s staff while preparing

MD&A for the Form 10-K. The Company concluded that receipt of the NOAV does not have a material impact on current operations and is not reasonably likely to have a material impact on future operations.

Rest of the answer

The most common consequences associated with a NOAV are financial in nature, require specific performance (such as modifying how a company operates prospectively) or a combination thereof.

The population of the existing customer base that could be impacted by this matter represent less than 1% of consolidated and 1.5% of East segment gross Retail revenue, respectively. It continues to be unclear what remedy would be imposed or penalty incurred, if any at all, as the Company’s position is that it did, and continues to, comply with the Retail Reset Order. Finally, the matter does not have a bearing on sales volumes and, therefore, has no impact on the Operational Statistics tables as noted by the

Staff.

Further, the Company respectfully notes that the Commission Guidance

Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations, Release No. 33-8350 Sections I.B.,

I.C. and III.B. (Dec. 19, 2003) (the “Commission Guidance”) specifically directing companies to, with respect to their MD&A, eliminate immaterial information and avoid unnecessary information that does not promote understanding of companies’ overall financial condition and operating performance. In an effort to comply with the Commission’s Guidance, following the determinations set forth above, management concluded that the discussion on the NOAV should not be contained within MD&A.

Although the NOAV did not rise to the level to require disclosure in

MD&A, additional considerations were given to the requirements of FASB ASC 450 (“ASC 450”). The Company considered ASC

450 and determined that the impact of the NOAV was uncertain because receipt of a NOAV is an initial indication of a possible issue but is not a firm or final indication that any enforcement action will be taken. As an initial matter, the staff of the NYSPSC, not the commission itself, asserted potential alleged violations but invited the Company to explain its position. The Company took advantage of this informal avenue of resolution and remains in that position as of the date of this response. The Company believes it has complied with the Retail

Reset Order and does not agree with the NYSPSC staff’s assertions made in the NOAV. Prior to the effective date of the Retail Reset

Order, the Company sought guidance from the the commission on how to comply with the Retail Reset Order, justifiably relied on guidance provided by the the Commission in how to treat existing and prospective customers, and further relied on approvals given by the NYSPSC staff on the Company’s marketing and operating plans. This background to the dispute makes the outcome of any negotiation on an ultimate resolution uncertain.

Discussions with the NYSPSC staff are ongoing and if we are unable to resolve the matter and/or the NYSPSC staff continues to believe a violation has occurred, there are additional procedural steps before the NYSPSC staff could impose a penalty, at which time the Company has the opportunity to seek judicial intervention.

The Company also has, at any time, the ability to litigate the matter to assert its positions, if necessary, and could prevail entirely through court proceedings. For clarity, to date, neither the NYSPSC staff or the commission has taken any further action with respect to the NOAV.

As such, management considered ASC 450-20-50-2 concluding at the time it was not probable that any proceedings or resolution would result in a loss or an additional loss that needed to be disclosed in the Company’s financial statements and therefore addressed the disclosure requirements, in Note 24 – Regulatory

Matters in the notes to the consolidated financial statements, under ASC 450-20-50-3 and ASC 450-20-50-4. The Company disclosed the nature of the contingency and that such estimate of the loss could not be made in accordance with ASC 450-20-50-4.The Company stated that such estimate of loss could not be made within Note 23 – Commitments and Contingencies, under the

Contingencies heading, by stating on Page 156 of the Form 10-K that “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” and also referenced Note 24 – Regulatory Matters as containing additional legal matters.

As detailed above, the timeframe to conclude on a path forward was unknown at the time of the Form 10-K filing and had remained unknown through the date of our subsequent Form 10-Q filings for the first and second quarters of 2024. As new information becomes available and additional developments occur, management will update the Company’s disclosures in accordance with ASC 450.

We hope that the foregoing has been responsive to your comments and await the Staff’s response. Please do not hesitate to contact the undersigned at Bruce.Chung@nrg.com or 609-524-5254 with any questions or comments concerning this letter.

Very yours truly,

NRG Energy Inc.

/s/ Woo-Sung Chung

Woo-Sung Chung

Chief Financial Officer

Read in the reply ↗

We note that you identify “economic gross margin” as a non-GAAP measure, and provide a reconciliation to “gross margin” on page 53 as the most directly comparable GAAP measure. You include a compilation of gross margin, which reflects various deductions from operating revenues to yield the measure for each period.

Rest of the question

However, the deductions for 2020 amount to $5,139 which is not consistent with the cost of sales that you report on page 52 of $4,920, nor the cost of operations that you report on page 92 of $6,540, and it appears that you have excluded depreciation and amortization from all three measures; the corresponding 2019 amounts reflect similar discrepancies. Please revise your compilation of gross margin and the related disclosures on pages 55 and 56 as necessary to reflect all costs of sales that would be attributable to operating revenues in accordance with GAAP, consistent with the reporting requirements in Rule 503.2 of Regulation S-X and the definition of gross margin in the FASB Master Glossary. If the cost of sales measure reported on page 52 does not reflect all costs and expenses that would be attributable to revenues in accordance with GAAP, the measure should be revised for completeness or relabeled to more clearly reflect its composition.

In the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, the deductions from total operating revenues to calculate gross margin were Cost of fuel,

Purchased power and Other costs of sales, which aggregate to $4,920 million and were presented as Cost of sales on page 52, in addition to Mark-to-market for economic hedge activities and Contract and emission credit amortization, which were shown separately on page 52.

In total, the deductions to calculate gross margin, which represented the costs applicable to total operating revenues, were $5,139 million in 2020

Rest of the answer

as presented in the reconciliation of gross margin to economic gross margin on page 53. The Company will revise its presentation on page 52 to show Cost of fuel, Purchased power and Other costs of sales as separate lines in lieu of the combined Cost of sales to make the presentation consistent.

In addition, the Company presented separately Operations and maintenance and Other cost of operations on page 52. Operations and maintenance costs primarily consist of preventative and corrective maintenance activities to ensure the safe and reliable operation of the Company’s generation portfolio, as well as costs associated with retaining and maintaining the Company’s customer base, such as call center support, portfolio maintenance, and data analytics. Other cost of operations primarily includes gross receipts taxes, insurance, property taxes and asset retirement obligation expense. These costs are not included in the reconciliation of gross margin to economic gross margin on page 53, as gross margin does not consider all operating costs, only the costs applicable to total operating revenues in accordance with the definition of gross margin in the FASB Master Glossary. Along with the costs detailed in the paragraph above, the aggregate Cost of operations that is presented on the Consolidated Statement of Operations on page 92 is $6,540 million.

While the Company presents Depreciation and amortization separately from Cost of operations in its Consolidated Statement of Operations, in consideration of the guidance in SAB Topic 11:B, Regulation

S-X Rule 5-03.2, and the definition of gross margin in the FASB Master Glossary, the Company will revise its presentation of Gross margin in MD&A on pages 53 through 56 to include Depreciation and amortization. Please see Attachment A for an illustrative presentation of the primary changes to be made by the Company in future filings. The illustrative presentation reflects the application of the foregoing proposed revisions to the financial data tables set forth on pages 52, 53 and 92 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Read in the reply ↗

We note that you disaggregate your Cost of Operations measure in MD&A to identify the components Cost of sales, Mark-to-market for economic hedging activities, Contract and emissions credit amortization, Operations and maintenance, and Other cost of operations.

Rest of the question

Given your presentation in the Statements of Operations on page 92, tell us how Cost of Operations may be similar to Cost of Sales, and how you considered the guidance in SAB Topic 11:B, as may be applied to your measure. Please expand your disclosures in financial statement Note 2 to include a description of the costs reported within Cost of Operations, including each of the subcategories identified in MD&A. Please also conform the labeling of the line caption on page 52 with that which appears on page 92, and provide some description of the measure as a subcategory of and in relation to “Total operating costs and expenses.”

to the Staff’s comment, the Company will expand its disclosures in Note 2 in future annual filings to include further description of the costs reported within Cost of operations, including each of the subcategories identified in MD&A; Cost of fuel, Purchased power, Other cost of sales, Mark-to-market for economic hedging activities, Contract and emission credit amortization, Operations and maintenance, and Other cost of operations. Please see Attachment

B for an illustrative disclosure to be used by the Company in future annual filings.

Rest of the answer

The illustrative disclosure reflects the application of the foregoing proposed revisions to Note 2 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Additionally, in consideration of the guidance in SAB Topic

11:B, the Company will revise in future filings its line caption of Cost of operations on page 92 to Cost of operations (excluding depreciation and amortization shown below) and will conform the labeling on page 52.

We hope that the foregoing has been responsive to your comments and await the Staff’s response. Please contact David Callen, Senior Vice President and Chief Accounting Officer, at (609) 524-4734,

Brian Curci, Executive Vice President and General Counsel, at (609) 524-5171, or me at (609) 524-5475 if you have questions regarding our responses or related matters.

Read in the reply ↗

We note that the during the fourth quarter of fiscal 2018 the Company offered to Clearway Energy, Inc. its ownership interest in Agua Caliente Borrower I, LLC, which owns a 35% interest in Agua Caliente. We also read the comments made by management in the fourth quarter 2018 earnings transcript regarding waiting for a “better environment” to monetize Agua Caliente after the unsuccessful sale to Clearway Energy, Inc.

Rest of the question

Summarize for us the circumstances with the current environment which prevented the sale of Agua Caliente. Furthermore, we have read your disclosure regarding Agua Caliente’s and Ivanpah’s PPA contract exposure related to the PG&E Bankruptcy filing. Please tell us whether Agua Caliente or Ivanpah were experiencing collection issues with PG&E in the fourth quarter of fiscal 2018 prior to the bankruptcy filing in January of 2019. In this regard, we note from your disclosure on page 62 that you recorded other-than-temporary impairment losses of $15 million in fiscal 2018. Please clarify whether these losses were recorded in connection with your investments in either Agua Caliente or Ivanpah. If the losses are related to these investments, then explain to us why you believe the remaining carrying value of these investments is recoverable as of December 31, 2018. If the losses are not related to these investments, then explain to us how you considered the guidance in ASC 323-10-35-32 in determining that your Agua Caliente and Ivanpah equity method investments were not other than temporarily impaired as of December 31, 2018. Please ensure that your response addresses the specific factors that you considered to support the recoverability of these equity method investments as of December 31, 2018 and your related accounting.

As a result of the deconsolidation of Ivanpah and its subsequent recognition as an equity method investment during the second quarter of 2018, the Company recorded its investment in Ivanpah at fair value and recognized a loss of $22 million, which was disclosed in Note 15 of the Company’s Form 10-K for the fiscal year ended December 31, 2018.

Rest of the answer

The other-than-temporary impairment losses of $15 million recognized in fiscal year 2018 related to other investments of the Company.

The Agua Caliente project is subject to a long-term power purchase agreement (“PPA”) with PG&E and the Ivanpah project is subject to three long-term PPAs, two of which are with PG&E. Neither Agua Caliente nor Ivanpah experienced collection issues from PG&E prior to their bankruptcy filing on January 29, 2019 and Agua Caliente and Ivanpah have collected all receivables outstanding as of December 31, 2018, in accordance with normal terms. Furthermore, PG&E continues to make timely payments to Agua Caliente and Ivanpah on post-petition billings. Only payments totaling approximately $6 million for Agua Caliente and approximately $3 million for Ivanpah were subject to pre-petition limitations. The bankruptcy court recently approved approximately 70% of these pre-petition billings for payment and the Company expects to fully collect the remaining amounts in the near term. As of December 31, 2018, there were no changes to the contracts or other operating conditions affecting the Agua Caliente or Ivanpah projects. The Company believed at December 31, 2018, and continues to believe, the Agua Caliente and Ivanpah PPAs with PG&E will not be rejected in the bankruptcy proceedings.

The Company offered its ownership interest in Agua Caliente Borrower I, LLC, which owns a 35% interest in Agua Caliente, to Clearway Energy, Inc. (“Clearway”) on November 1, 2018. The offer expired on January 31, 2019, with no action taken by Clearway. As Clearway stated in their press release on February 14, 2019, uncertainties surrounding the impact of the PG&E bankruptcy on Clearway made it less practical, at that point in time, for Clearway to increase their exposure to PG&E by acquiring Agua Caliente. There were no indicators during our negotiations with Clearway that either party believed there was an other-than-temporary impact to our investment in Agua Caliente.

Based on conditions that existed as of the Company’s December 31, 2018 balance sheet date, there was no evidence of loss in value of either investment that was other-than-temporary. The Company’s long-term view associated with the investments has not changed and the Company continues to believe it will recover the carrying value of the investments.

Read in the reply ↗

We note your disclosure regarding certain events related to Ivanpah which were considered to be a reconsideration event in accordance with ASC 810. Please summarize for us the circumstances surrounding the reconsideration event and provide us with your accounting analysis which led to you conclude you were not the primary beneficiary of Ivanpah.

The Ivanpah solar electric generating projects were funded in large part by loans guaranteed by the U.S. Department of Energy (“DOE”) and equity from the projects’ partners. All interested parties sought a restructuring of Ivanpah’s debt in order to avoid an event of default with respect to the loans in connection with several events, including the underperformance of the Ivanpah projects.

Rest of the answer

The negotiations culminated in a change to certain of Ivanpah’s governing documents, changes in the equity structure of the entity (including a reduction of equity at risk) and a restructured debt agreement during the second quarter of 2018. Given the material changes to certain of Ivanpah’s governing documents and changes in the equity structure, we concluded that a reconsideration event had occurred based on the following provisions of ASC 810-10-35-4:

a)

The legal entity’s governing documents or contractual arrangements are changed in a manner that changes the characteristics or adequacy of the legal entity’s equity at risk.

b)

The equity investment or some part thereof is returned to the equity investors, and other interests become exposed to expected losses of the legal entity.

Specifically, the Company concluded that a reconsideration event occurred due to:

•

The amendments to the projects’ governing documents which changed the characteristics and adequacy of the equity at risk in Ivanpah by:

◦

Waivers of certain events of default; and

Release of certain reserves and cash collateral requirements totaling $95 million, which provided for prepayments of debt outstanding totaling $48 million and distributions to the projects’ partners totaling $47 million.

The release of reserves and cash collateral requirements resulted in the first dividends distributed to the projects’ partners since the projects reached commercial operation, as Ivanpah did not have income available to distribute from ongoing operations. The distributions to the partners of $47 million reduced the equity at risk and increased the risk exposure to the DOE, as it reduced the cash available to pay down the balance of the debt.

Prior to the 2018 reconsideration event, we identified plant operations related to the transmission of energy from the facilities to customers as the activities that most significantly impacted the economics of Ivanpah. After concluding that a reconsideration event had occurred and given the continued operating and capital expenditure variances from the operating budget, the Company determined that the risks and activities that most significantly impacted the projects’ economics were associated with operating and capital design and deployment.

Given the significant nature of the operating and capital design and deployment activities, approval by the projects’ other primary partner was, and will continue to be, required. The operating budget of the projects was determined at inception and no substantive changes were anticipated due to the nature of the solar facility and its expected operations. As a result, we previously identified the budgetary approval rights of the projects’ other primary partner as protective rights as opposed to substantive participating rights. Given the Company’s expectation that the projects’ other primary partner will continue to be involved in operating and capital design and deployment decisions, including approval of significant variances from the operating budget, those rights have shifted from protective rights to substantive participating rights that allow the projects’ partner shared power to direct the activities that most significantly impact the economics of Ivanpah.

Based on the above analysis, due to the reconsideration event, the Company concluded that it no longer had control over the decision making of the projects and was no longer the primary beneficiary, as the power to direct the activities that most significantly impact the economics of Ivanpah is shared.

Read in the reply ↗

Please refer to your disclosure related to the Midwest Generation Asbestos Liabilities. We note the parties have agreed to the terms of a settlement that will resolve all of ComEd’s outstanding claims in this matter. Based on your O&M results discussion on page 64 it appears you previously accrued for this matter. Please clarify for us how you considered the disclosures required by ASC 450-20-50-1.

The Midwest Generation Asbestos liability was initially recognized in 2014 as part of the purchase accounting for the acquisition of Edison Mission Energy. Pursuant to ASC 450-20-50-1, the Company disclosed the nature of the claim, the aggregate amount of $61 million claimed by ComEd during 2018, and that the Company believed “that it has established an adequate reserve.” The Company believes that its disclosures were appropriate to ensure the financial statements were not misleading without including the amount of the accrual.

This claim was settled and paid during the quarter ended June

Rest of the answer

30, 2019 and the Company will disclose in its upcoming Form 10-Q “Pursuant to a settlement agreement dated as of May 29, 2019, the Company paid $26 million to ComEd, which was previously accrued.”

The Company will continue to consider the disclosures required by ASC 450-20-50-1 to ensure appropriate disclosures of its accruals for estimated liabilities are made to ensure the financial statements are not misleading.

We hope that the foregoing has been responsive to your comments and await the Staff’s response. Please contact David Callen, Senior Vice President and Chief Accounting Officer, at (609) 524-4734, Brian Curci, Senior Vice President and General Counsel, at (609) 524-5171, or me at (609) 524-5475 if you have questions regarding our responses or related matters.

Read in the reply ↗

We have read your response to comment 2. Please explain to us in further detail how you concluded that operating the plant was no longer an activity which most significantly impacted the economics of Ivanpah. Refer to ASC 810-10-25-38B.

Rest of the question

Additionally, summarize for us the primary partner's involvement in and rights with regard to operating and capital design and deployment activities and how you concluded such rights were now substantive rather than participating in nature. Please be detailed in your response.

At the inception of the Ivanpah projects in 2011, the Company identified plant operations related to the transmission of energy from the facilities to customers as the activities that most significantly impacted the economics of Ivanpah. Ivanpah has power purchase agreements (“PPAs”) to provide solar-generated electricity at a fixed price for terms extending 20 to 25 years.

Rest of the answer

The PPAs contain provisions for contract quantity and guaranteed energy production that, if not met during any performance measurement period, could result in liquidated damages or an event of default of the PPAs, with cross defaults to the financing agreements. As such, the risks associated with Ivanpah’s activities are primarily related to:

• production risk of the facilities meeting planned production and the guaranteed energy production amounts as prescribed under the long-term PPAs; and operating risks associated with operating the plant in a cost-effective manner.

Ivanpah’s economic performance is directly tied to the operations of the plant, including running the plant and general maintenance of the facilities, and the Company performs these activities in its role as construction manager, asset manager and operations and maintenance provider for Ivanpah. Plant operating decisions were expected to be made by the Company in the ordinary course of business and approvals from the projects’ other partners were not expected to be substantive (e.g. approve agreed upon annual budgets based on pre-determined production and operations and maintenance schedules) given the nature of the solar facilities.

This expectation was based on the significant efforts made to test the technology of the facilities prior to the full build out of the projects. The initial budgets and expected production for the projects were determined based on that testing, as well as the Company’s experience in the development and management of solar projects. Given this approach, no substantive changes from the approved budget were anticipated and the Company expected to make the operating decisions in the ordinary course of business without substantive involvement from the projects’ other partners. As a result, the budgetary approval rights of the projects’ other partners were identified as Protective Rights as opposed to Substantive Participating Rights at the projects’ inception, and the activities that most significantly impacted Ivanpah’s economic performance were considered to be the operation and maintenance of the facilities, which were controlled by the Company.

After Ivanpah reached commercial operation in 2014, the projects experienced significant unforeseen operational issues, including multiple forced outages and higher than expected damage to the facilities due to various causes, and the Company determined that the risk and activities that most significantly impacted the economics of the projects had changed, and were now associated with operating and capital design and deployment. Per the Limited Liability Company Agreement governing Ivanpah, approval from 80% of the projects’ partners (a “Super Majority”) is required for the following actions:

spending in excess of 110% of the operating budget in a fiscal year;

amendments to the annual operating budgets;

changes to material agreements; and certain other significant decisions.

As the Company cannot unilaterally control the decisions outlined above, the Company was required to seek approval for significant operating and capital budget variances, amendments and other changes on several occasions from 2015 through 2017, as well as subsequent to the deconsolidation of Ivanpah in 2018.

Specific examples of actions requiring approval from a Super Majority include:

February 2015

Budget variance related to the repair of a steam turbine generator

March 2015

Budget variance related to additional construction contractor costs

August 2015

Budget variance related to additional operations and maintenance costs

April 2016

Budget variance related to the repair of a failed steam turbine generator that caused a forced outage for approximately two and a half months

January 2017

Amending the PPAs with PG&E to provide, among other things, the ability to cure any failure to meet guaranteed energy production amounts through performance and liquidating damage provisions

June 2017

Budget variance related to performance improvement projects to increase the operating efficiency of the facilities’ technology in order to meet guaranteed energy production amounts and labor costs

May 2017 (post deconsolidation)

Budget variance related to repairing the facilities due to a significant hail storm that occurred in July 2018, which included making decisions to determine whether the facilities can perform at an acceptable capacity without further expenditures or inventory levels need to be increased to ensure that damaged materials can be replaced timely to maintain an appropriate level of efficiency at the facilities

In each case, approval was required from the projects’ other primary partner in order to proceed with the action. Such decisions involved significant deliberation and input from the projects’ other primary partner, which was not initially expected. Given the expectation that these activities would continue to be significant, the activities that most significantly impact the economic performance of Ivanpah were determined to have changed from the Company’s initial assessment. Specifically, the operating and capital decisions that will determine the nature and extent of performance enhancement programs, inventory management and capital repairs and maintenance have been determined to be the activities that will be most impactful going forward given the challenges experienced at the Ivanpah facilities and the unique nature of the technology.

In other words, the Company’s role as asset manager and operations and maintenance provider is now deemed to be that of an agent, given that the Company cannot unilaterally make the necessary operating and capital design and deployment decisions in its role as Ivanpah’s manager and the projects’ other primary partner is required to approve such decisions. As such, the rights of the projects’ other primary partner shifted from Protective Rights to Substantive Participating Rights that allow shared power to direct the activities that most significantly impact the economics of Ivanpah.

After concluding that a reconsideration event had occurred in 2018 following the changes to Ivanpah’s governing documents and the reduction of equity at risk as discussed in our previous letter to the Staff, the Company concluded that it no longer had control over the decision making of the projects and was no longer the primary beneficiary, as the power to direct these activities was shared.

We hope that the foregoing has been responsive to your comment and await the Staff’s response. Please contact David Callen, Senior Vice President and Chief Accounting Officer, at (609) 524-4734, Brian Curci, Senior Vice President and General Counsel, at (609) 524-5171, or me at (609) 524-5475 if you have questions regarding our responses or related matters.

Read in the reply ↗