About NRG Energy Inc

NRG Energy, Inc. (NRG) operates as a consumer services company. The company brings the power of energy to customers by producing and selling energy and related products and services, nation-wide in the U.S. and Canada. The company sells power, natural gas, and home and power services, and develops innovative, sustainable solutions, predominately under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, Stream, and XOOM Energy. The company had a customer base that includes approximately 5.4 million Home customers, as well as commercial, industrial, and wholesale customers, supported by approximately 16 GW of generation as of December 31, 2022. In December 2022, NRG and Vivint Smart Home, Inc. (Vivint) announced the entry into a definitive agreement under which the company will acquire Vivint, a smart home platform company, in an all-cash transaction. The acquisition will accelerate the realization of NRG’s consumer-focused growth strategy and create a leading essential home services platform fueled by market-leading brands, unparalleled insights, proprietary technologies and complementary sales channels. The close of the acquisition is targeted for the first quarter of 2023 and is subject to customary closing conditions. NRG sold 155 TWhs (Terawatt Hours) of electricity and 1,918 MMDth (Million Dekatherms) of natural gas in 2022, making it one of the largest competitive energy retailers in the U.S. As of December 31, 2022, NRG had recurring electricity and/or natural gas sales in 24 U.S. states, the District of Columbia, and 8 provinces in Canada. NRG's retail brands, collectively, have the largest share of competitively served residential electric customers in Texas and nationwide. The company’s core business is the sale of electricity and natural gas to residential, commercial and industrial and wholesale customers, supported by its wholesale generation. NRG manages its operations based on the combined results of the retail and wholesale generation businesses with a geographical focus. 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 primarily includes the following assets and activities: all activity related to customer, plant and market operations in the West and Canada; the services businesses, activity related to the Cottonwood facility; the remaining renewables activity, including the company’s equity method investment in Ivanpah Master Holdings, LLC; and activity related to the company’s equity method investment for the Gladstone power plant in Australia. In Texas, the company’s generation supply is fully integrated with its retail load. The integrated model provides the advantage of being able to supply a portion of the company’s retail customers with electricity from the company’s assets, which reduces the need to sell electricity to and buy electricity from other institutions and intermediaries. The company’s integrated model consists of three core functions: Customer Operations, Market Operations and Plant Operations, which directly support each other in each geographic region. Customer Operations Customer Operations is responsible for growing and retaining the customer base and delivering an outstanding customer experience. This includes acquisition and retention of all of NRG’s residential, small commercial, government and commercial and industrial customers. NRG employs a multi-brand strategy that leverages a wide array of sales and partnership channels, direct face-to-face sales channels, call centers, websites, and brokers. Go-to-market activities include market strategy planning and development, product innovation, offer design, campaign execution, marketing and creative services, and selling. Customer portfolio maintenance and retention activities include fulfillment, billing, payment processing, collections, customer service, issue resolution, and contract renewals. NRG provides energy and related services at either fixed, indexed or month-to-month prices. Home customers typically contract for terms ranging from one month to five years, while Business contracts are often between one year and five years in length. Throughout all Customer Operations activities, the customer experience is kept at the forefront to inform decision-making and optimize retention, while creating supporters and advocates for NRG’s brands in the market. Following the expansion of the customer base with the acquisition of Direct Energy in 2021, Customer Operations consists of three end-use customer facing teams: NRG Home, which serves residential customers; NRG Business, which serves business customers; and NRG Services, which primarily includes the services businesses acquired. Product Offerings NRG sells a variety of products to residential and small commercial customers, including retail electricity and energy management, natural gas, home security, line and surge protection products, HVAC installation, repair and maintenance, home protection products, carbon offsets, back-up power stations, portable power, portable solar and portable lighting. Home and Services customers make purchase decisions based on a variety of factors, including price, incentive, customer service, brand, innovative offers/features and referrals from friends and family. Through its broad range of service offerings and value propositions, NRG is able to attract, retain, and increase the value of its customer relationships. NRG's brands are recognized for exemplary customer service, innovative smart energy and technology product offerings, and environmentally-friendly solutions. The company provides power and natural gas to the business-to-business markets in North America, as well as retail services, including demand response, commodity sales, energy efficiency and energy management solutions to Business customers. The company is an integrated provider of supply and distributed energy resources and focuses on distributed products and services as businesses seek greater reliability, cleaner power and other benefits that they cannot obtain from the grid. These solutions include system power, distributed generation, renewable products, carbon management and specialty services, backup generation, storage and distributed solar, demand response, and energy efficiency and advisory services. Market Operations Power and natural gas are the two main commercial groups within market operations. Power The power commercial group is responsible for end-use electricity supply, including power plant optimization and certain fuel supply. NRG enters into supply, power and gas hedging agreements via a wide range of products and contracts, including physical and financial commodity instruments; fuel supply and transportation contracts; PPAs and Renewable PPAs; and capacity and other contracted revenue or supply sources. Physical and Financial Commodity Instruments NRG trades electric power, natural gas and related commodities, environmental products, weather products and financial products, including forwards, futures, options and swaps. NRG enters into these instruments primarily to manage price and delivery risk, optimize physical and contractual assets in the portfolio, manage working capital requirements, reduce the carbon exposure in its business and comply with laws. Renewable PPAs As of December 31, 2022, NRG entered into Renewable Power Purchase Agreements (PPAs) totaling approximately 2.4 Gigawatts (GW) with third-party project developers and other counterparties, of which approximately 45% are operational. The average tenure of these agreements is twelve years. The company expects to continue evaluating and executing similar agreements that support the needs of the business. Natural Gas The natural gas commercial group is responsible for all costing, logistics and supply for all of NRG's residential, commercial and industrial and wholesale customers. The Direct Energy acquisition, which closed on January 5, 2021, significantly increased the company's capabilities and scale across the natural gas value chain. NRG has contractual rights to natural gas transportation and storage assets across its footprint that allow for optimal supply economics in the support of its various businesses. NRG's diversified load coupled with this asset portfolio enables the company to deliver supply economically while providing incremental optimization activities when market conditions allow. The scale of the natural gas operation extends from the wellhead (through its producer services business) to end use customers (through NRG's various sales channels). This scale, coupled with the company's associated assets, gas system platform and people, create significant opportunity across North America. Plant Operations The company owned and leased a diversified wholesale generation portfolio with approximately 16 GW of fossil fuel, nuclear and renewable generation capacity at 23 plants as of December 31, 2022. The company's wholesale generation assets are diversified by fuel-type and dispatch level, which helps mitigate the risks associated with fuel price volatility and market demand cycles. NRG continually evaluates its generation portfolio to focus on asset optimization opportunities and the locational value of its generation assets in each of the markets where the company participates, as well as opportunities for the development of new generation. Plant Operations is responsible for operating the company's generation facilities at the highest standards of safety and reliability, and includes operations and maintenance, asset management, and development, engineering and construction. Operations & Maintenance NRG operated and maintained its generation portfolio, as well as approximately 7,800 MW of additional coal, natural gas and wind generation capacity at 12 plants operated on behalf of third parties, as of December 31, 2022, using prudent industry practices for the safe, reliable and economic generation of electricity in compliance with all local, state and federal requirements. Asset Management NRG manages all aspects of its generation portfolio to optimize the lifecycle value of the assets, consistent with the company’s goals. In addition, the company manages its long-term contracts, PPAs, and real estate holdings and provides third-party asset management services. Development, Engineering & Construction NRG develops, engineers and executes major plant modifications, ‘new build’ generation and energy storage projects that enhance the value of its generation portfolio and provide options to meet generation growth needs in the retail markets it serves. These projects have included gas-fired generation development and construction, coal to gas conversions, grid scale energy storage development, grid scale renewable construction, and asset demolition, remediation and reclamation work. Strategy NRG's strategy is to maximize stakeholder value through the safe production and sale of reliable electricity and natural gas to its customers in the markets it serves, while positioning the company to provide innovative solutions to the end-use energy or service customer. To effectuate the company’s strategy, NRG focuses on serving the energy needs of end-use residential, commercial and industrial, and wholesale counterparties in competitive markets through multiple brands and channels; offering a variety of energy products and services, including renewable energy solutions, that are differentiated by innovative features, premium service, sustainability, and loyalty/affinity programs; excellence in operating performance of its assets; and optimal hedging of its portfolio. The company's strategy is to procure mid to long-term renewable generation through power purchase agreements. Customers NRG sells to a wide variety of customers, primarily end-use customers in the residential, commercial and industrial sectors. The company owns and operates power plants to generate and sell power to wholesale customers, such as utilities and other intermediaries. Seasonality The sale of power and natural gas to retail customers are seasonal businesses with the demand for power generally peaking during the summer, and the demand for natural gas generally peaking during the winter. As a result, net working capital requirements for the company's retail operations generally increase during summer and winter months along with the higher revenues, and then decline during off-peak months. Regulation NRG's business in Texas is subject to standards and regulations adopted by the Public Utility Commission of Texas (PUCT) and Electric Reliability Council of Texas (ERCOT), including the requirement for retailers to be certified by the PUCT in order to contract with end-users to sell electricity. As participants in wholesale and retail energy markets and owners and operators of power plants, certain NRG entities are subject to regulation by various federal and state government agencies. These include the U.S. Commodity Futures Trading Commission (CFTC), Federal Energy Regulatory Commission (FERC), the U.S. Nuclear Regulatory Commission (NRC) and the PUCT, as well as other public utility commissions in certain states where NRG's generation or distributed generation assets are located. In addition, NRG is subject to the market rules, procedures and protocols of the various Independent System Operator (ISO) and Regional Transmission Organization (RTO) markets in which it participates. NRG must also comply with the mandatory reliability requirements imposed by North American Electric Reliability Corporation (NERC) and the regional reliability entities in the regions where NRG operates. NRG's operations within the Electric Reliability Council of Texas (ERCOT) footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within the ERCOT market and not in interstate commerce. These operations are subject to regulation by the PUCT, as well as to regulation by the NRC with respect to NRG's ownership interest in South Texas Project (STP). The company is required under the Clean Water Act (CWA) to comply with intake and discharge requirements, requirements for technological controls and operating practices. History NRG Energy, Inc. was founded in 1989. The company was incorporated as a Delaware corporation in 1992.