NRGNRG Energy

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.

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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.

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