NRG 10-K & 10-Q changes, risk factors and insider trading

NRG's risk factors are grouped into the following categories: (i) Risks Related to the Acquisition of the LSP Portfolio; (ii) Risks Related to the Operation of NRG's Business; (iiiii) Risks Related to Governmental Regulation and Laws; and (iiiiv) Risks Related to Economic and Financial Market Conditions and the Company's Indebtedness.

•development of new fuels, new technologies and new forms of competition for the production of power; and

The electricity industry is expected to experience a surge in demand driven primarily by new manufacturing, industrial and data center facilities (inclusiveincluding ofto support the expected increase in demand for AI and generative AI (“GenAI”)). The U.S. Energy Information Administration's 2023 Annual Energy Outlook, combined with external forecasts, shows the potential for 500 TWh of incremental load across the U.S. through 2030, as compared to 2023. ERCOT's current long term load forecast shows peak demand increasing from 86 GW in 2024 to 137139 GW in 2028.2030.

NRG's facilities require periodic maintenance and repair. Any unexpected failure, including failure associated with breakdowns, forced outagesoutages, or any unanticipated capital expenditures could result in reduced profitability. NRG cannot be certain of the level of capital expenditures that will be required due to changing environmental and safety laws (including changes in the interpretation or enforcement thereof), needed facility repairs and unexpected events (such as natural disasters or terrorist attacks). The unexpected requirement of large capital expenditures could have a material adverse effect on the Company's liquidity and financial condition.

•unforeseen engineering, environmental and geological problems; and

Any of these risks could cause NRG's financial returns on such new investments to be lower than expected, or could cause the Company to operate below expected capacity or availability levels, which could result in loss of revenues, increase in expenses, higher maintenance costs and penalties. Furthermore, the risk of significant cost overruns may be exacerbated in the current environment of elevated inflation, supply chain disruption and changing tariff and trade policies, which may cause actual construction costs to be significantly higher than initial estimates, and the Company may be unable to pass these increased costs through to its customers. To protect against thesecertain risks, the Company obtains insurance is maintained,and warranties are generally obtained for limited periods relating to the construction of each project and its equipment in varying degrees,equipment, and obligates its contractors and equipment suppliers are obligated to meet certain performance levels. TheHowever, such insurance, warranties or performance guarantees, however,guarantees may not be adequate to cover increased expenses. As a result, a project may cost more than projected and the Company may be unable to fund principal and interest payments under construction financing obligations, if any. In addition, the Company’s failure to meet project-specific financing requirements under its TEF Loans could result in default or acceleration of debt repayment.

The Company may be liable to customers for any damage caused to customers’ homes, facilities, belongings or property during the installation of Company products and systems, such as smart home systems. Where such work is performed by the Company’s employees and independent contractors, such as repairs performed under the Company's home protection plan products, the Company may nonetheless face claims and costs for damage. In addition, shortages of skilled labor for Company projects could significantly delay a project or otherwise increase its costs. The products that the Company sells or manufactures may expose the Company to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions. Although the Company maintains liability insurance and its service contracts limit Company liability, the Company cannot be certain that its coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to the Company on economically reasonable terms, or at all, or that contractual limitations will be enforced. The laws of some states limit or prohibit insurance coverage for certain liabilities and actions, and any significant uninsured damages could have a material adverse effect on the Company’s business, financial condition and cash flows. Further, any product liability claims or damage caused by the Company could significantly impair the Company’s brand and reputation, which may result in a failure to maintain customers and achieve the Company’s desired growth initiatives in these new businesses.

Changes in technology may impair the value of, and the attractiveness of, NRG’s retail products, smart home servicesproducts or services, and generation facilities.

Numerous functions affecting the efficient operation of NRG’s businesses depend on the secure and reliable storage, processing and communication of electronic data and the use of sophisticated computer hardware and software systems, much of which is connected (directly or indirectly) to the internet. As a result, NRG's information technology systems and infrastructure, and those of its vendors and suppliers, are vulnerable to cyber-based security threats which could compromise confidentiality, integrity or availability. While the Company has controls in place designed to protect its infrastructure, such breaches and threats are becoming increasingly sophisticated and complex, requiring continuing evolution and constant improvements in security programs and technology. Furthermore, NRG’s operations can be additionally impaired by disruptions or security failures of third-party vendors and suppliers over which NRG lacks direct control or oversight. Any such breach, disruption or similar event that impairs NRG's information technology infrastructure could disrupt normal business operations and affect the Company's ability to control its generation assets, provide smart home services, maintain confidentiality, availability and integrity of restricted data, access retail customer information and limit communication with customers and third parties, which could have a material adverse effect on the Company.

Further, the Company's retail and Home businesses, as well as Vivint Smart Home's smart home platform, require accessing, collecting, storing and transmitting sensitive customer data in the ordinary course of business. Concerns about data privacy have led to increased regulation and other actions that could impact NRG's businesses and changesChanges in data privacy and data protection laws and regulationsregulations, or any failure to comply with such laws and regulationsregulations, could adversely affect the Company'sCompany’s business and financial results. NRG's retail, Home and smart home businesses access and store sensitive customer data. Additionally, NRG relies on vendors and service providers, such as call centers, that may require access to sensitive data, which increase the risk of data breaches through third-party action or errors.errors that the Company may be unable to foresee, prevent, or mitigate. The services and theservices, networks and information systems utilized by the Company may be at risk for breaches as a result of third-party actions, employee or vendor error, malfeasance or other factors.

Although the Company takes precautions and has adopted procedures to protect its infrastructure, itthe effectiveness of such measures may be limited by insufficient employee awareness or their noncompliance with established protocols. Furthermore, despite such precautions, the Company has been, and will likely continue to be, subject to attempts at phishingphishing, social engineering, identity-based attacks, and other cybersecurity intrusions. International conflict increases the risk of state-sponsored or ideologically motivated cyber threats and escalated use of cybercriminal and cyber-espionage activities. In particular, the current geopolitical climate has further escalated cybersecurity risk, with various government agencies, including the U.S. Cybersecurity & Infrastructure Security Agency, issuing warnings of increased cyber threats, particularly for U.S. critical infrastructure.infrastructure companies such as the Company. Additionally, the rapid advancement and integration of AI and machine learning technologies present new and evolving risks. These technologies can be exploited by malicious actors to enhance the sophistication and scale of cyberattacks, making it more challenging to detect and mitigate such threats. While the Company has not experienced a cyber/data breach or event causing any material operational, reputational or financial harm, it recognizes the growing threat within the general marketplace and the industry,industry in which it operates, and there is no assurance that NRG will be able to prevent any such harm in the future. If a material breach of the Company's information technology systems were to occur, the critical operational capabilities and reputation of its business may be adversely affected, customer confidence may be diminished, and NRG may be subject to substantial legal or regulatory scrutiny and claims, any of which may contribute to potential legal or regulatory actions against the Company, loss of customers, fines, penalties or other sanctions and otherwise have a material adverse effect. Any loss or disruption of critical operational capabilities to support the Company's generation, commercial or retail operations, loss of customers, or loss of confidential or proprietary data through a breach, unauthorized access, disruption, misuse or disclosure could adversely affect NRG's reputation, expose the Company to material legal or regulatory claims and impair the Company's ability to execute its business strategy, which could have a material adverse effect. In addition, NRG may experience increased capital and operating costs to implement enhanced security for its information technology infrastructure. NRG cannot provide any assurance that such events and impacts will not be material in the future, and the Company's efforts to deter, identify and mitigate future breaches may require additional significant capital and may not be successful. As a result, the Company could incur substantial losses in connection with a cybersecurity incident.

The Company’s growing use ofof, or failure to effectively adopt, AI systems in its operations, services and products poses inherentoperational, risks,competitive, whichcybersecurity, may cause operationallegal and reputationalcompliance harm.risks that could adversely affect the Company.

The Company has incorporatedused and intendsexpects to continueexpand tothe incorporateuse of AI technologies, such asincluding GenAI, in its operations. services and products. Because GenAI is an emerging technology, ineffective or inadequatedeficient AI development, governance, or deployment practices by NRG or third-party vendors and service providers could result in unintended consequences, and the desired efficiencies and other intended benefits couldmay fail to materialize. Due to its non-deterministic nature, GenAI technologies can create accuracyinaccurate, issues,offensive, unintendedincomplete, or misleading outputs; reflect or exacerbate biases and discriminatory outcomes,outcomes; or mayoperate createoutside contentintended thatparameters appears correct but is actually inaccurate or flawed. If the recommendations, content, or analyses that AI applications produce are or are allegeddue to bemodel drift, deficient ortraining inaccurate, NRG could be subjected to potential legal liabilitydata, and businessincorrect harm, including brand or reputational harm and operational interruptions and ultimately have a material adverse effect on NRG’s results of operations. In addition, the evolving nature of AI may cause new laws and regulations to be enacted which may require significant resources and costs to modify and maintain business practices in order to comply with these new laws and regulations.prompting.

NRG’s reputation and brands could be damaged for numerous reasons, including negative views of the Company’s environmental impact, sustainability goals, supply chain practices, product and service offerings, sponsorship relationships, charitable giving programs and public statements made by Company officials. Additionally, the Company is from time to time named in investigations, claims and lawsuits arising in the ordinary course of business, and customers have in the past communicated complaints to consumer protection organizations, regulators or the media. Negative claims or publicity regarding the Company or its operations, offerings, practices or customer service may damage its brands or reputation, even if such claims are untrue. The Company may also experience criticism or backlash from media, customers, employees, government entities, advocacy groups and other stakeholders that disagree with positions taken by the Company or its executives. IfNegative publicity may result in changes in consumer preferences, increased costs in countering the narrative, or undue scrutiny. As a result, if the Company’s brands or reputation are damaged, it could negatively impact the Company’s business, financial condition, results of operations, and ability to attract and retain highly qualified employees.

As of December 31, 2024,2025, approximately 4% of NRG's employees were covered by U.S collective bargaining agreements. In the event that the Company's union employees strike, participate in a work stoppage or slowdown or engage in other forms of labor strife or disruption, NRG would be responsible for procuring replacement labor or the Company could experience reduced power generation or outages. Although NRG's ability to procure such labor is uncertain, contingency staffing planning is completed as part of each respective contract negotiation. Strikes, work stoppages or the inability to negotiate future collective bargaining agreements on favorable terms could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. In addition, a number of the Company's employees at NRG's plants are close to retirement. The Company's inability to replace retiring workers could create potential knowledge and expertise gaps as such workers retire.

NRG is subject to various types of tax arising from normal business operations in the jurisdictions in which the Company operates. Any additions or changes to tax legislation, or their interpretation and application, including those with retroactive effect, could have a material adverse effect on NRG’s financial condition and results of operations, including income tax provision and accruals reflected in the consolidated financial statements. TheFor example, in July 2025, the One Big Beautiful Bill Act was signed into law. To date, the law has not had a materially adverse effect on the Company’s operations; however, revisions or new interpretations of the law may impact its future financial condition. Further, the Company is subject to a 15% corporate alternative minimum tax as a result of the Inflation Reduction Act. The CAMT may lead to volatility in the Company’s cash tax payment obligations, particularly inif periodsfinal Treasury regulations substantially depart from proposed regulations and interim guidance, especially with regard to the treatment of significant commodity or currency variability resulting from potential changes in the fair value of derivative instruments. The Company continuously monitors and assesses proposed tax legislation that could negatively impact its business.

NRG's GHG emissions reduction targets can be found in Item 1, Business —Environmental Regulatory Matters. The Company's ability to achieve theseits GHG emissions reduction targets depends on many factors, including the ability to retire high emitting assets, ability to reduce emissions based on technological advances and innovation, and ability to source energy from less carbon intense resources. In addition, any future decarbonization efforts may increase costs, or NRG may otherwise be limited in its ability to apply them. The cost associated with NRG's GHG emissions reduction goals could be significant. Failure to achieve the Company's emissions targets could result in a negative impact on access to and cost of capital, changing investor sentiment regarding investment in the Company or reputation harm.

The Company’s retail and smart home services focus on transactions with residential customers, subjecting itthem to a variety of laws, regulations and licensing requirements governing interactions with residential consumers, including those pertaining to privacy and data security, telemarketing, in-person solicitations, online marketing, consumer financial and credit transactions, home improvements, warranties and door-to-door solicitation. In certain jurisdictions, the Company is required to obtain licenses or permits to comply with standards governing marketing and sales efforts, installation of equipment or servicing of customers and monitoring station employee selection and training. Increased regulation of matters relating to interactions with residential consumers could require modification to the Company’s retail and smart home services operations and the incurrence of additional expenses. Further, any expansion of the scope of products or services into new markets may require additional licenses and expenditures to otherwise maintain compliance with additional laws, regulations or licensing requirements. These laws and regulations, as well as their interpretation, and any new laws, regulations or licensing requirements could negatively affect the Company’s ability to acquire new residential customers. Any of these measures could increase costs for providing, or reduce customer satisfaction with respect to, retail and smart home services.

The Federal Trade Commission ("FTC") and the Federal Communications Commission have issued regulations that restrict direct-to-home marketing, telemarketing, email marketing and other sales practices, including limitations on methods of communication, requirements to maintain a “do not call” list, cancellation rights and required training for personnel to comply with these restrictions. Any noncompliance, or alleged noncompliance, of applicable regulations by the Company, third-party vendors used for marketing, telemarketing or lead generation activities or independent, third-party authorized dealers of retail or smart home services could result in private rights of actions or enforcement actions for civil or criminal penalties. Changes in regulations or interpretations that further restrict lead generating activities also could result in a reduction in the number of new retail or smart home services customers.

The Company’s retail and smart home businessbusinesses exposesexpose it to risks of liability for the acts or omissions of its employees, including with respect to sales practices.

As you read this discussion and analysis, refer to NRG's Consolidated Statements of Operations in this Annual Report on Form 10-K, which present the results of the Company's operations for the years ended December 31, 20242025 and 2023,2024, and also refer to Item 1 — Business to this Annual Report on Form 10-K for more detail discussion about the Company's business. A discussion and analysis of fiscal year 2023 may be found in Part II, Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Market Dynamics — The price of natural gas plays an important role in setting the price of electricity in many of the regions where NRG operates. Natural gas prices are driven by variables including demand from the industrial, residential, and electric sectors, productivity across natural gas supply basins, costs of natural gas production, changes in pipeline infrastructure, global liquified natural gas demand, exports of natural gas, and the financial and hedging profile of natural gas customers and producers. In 2024,2025, the average natural gas price at Henry Hub was $2.27$3.43 per MMBtu compared to $2.74$2.27 per MMBtu in 2023,2024, representing aan decreaseincrease of 17%.51%.

The relative price of natural gas as compared to coal and prevailing power prices are the primary driver of coal demand. Coal commodity prices remainedincreased relatively flatslightly in 2024.2025.

Increased Awareness of, and Action to Combat, Climate Change — Diverse groups of stakeholders, including investors, asset managers, financial institutions, non-government organizations, industry coalitions, individual companies, consumer groups and academic institutions, are increasingly engaged in efforts to limit global warming in the post-industrial era to 1.5 degrees Celsius. AsAlthough afederal result,policy in the U.S. has recently shifted towards prioritizing domestic energy production and reducing climate-related regulatory requirements, policymakers and regulators at regional, national, sub-national and local levels of government, both in the U.S. and other parts of the world, are increasinglyremain focused on actions to combat climate change.

Lower Carbon Infrastructure Development — Policy mechanisms at the state and federal level, including production and investment tax credits, cash grants, loan guarantees, accelerated depreciation tax benefits, RPS, and carbon trading plans, have supported and continue to support the development of renewable generation, demand-side and smart grid, and other lower carbon infrastructure technologies. According to ERCOT, 43%46% of 20242025 energy consumption in the ERCOT market was generated from carbon emission-free resources, with wind power contributing 24%. In addition, as subsidies and incentives may contribute to increases in renewable power sources, customer awareness and preferences are shifting toward sustainable solutions. IncreasedAny increase in demand for sustainable energy products from both residential and commercial customers creates opportunities for diversified product offerings in competitive retail markets.

On February 13, 2025, NRG signed a strategic Project Development Agreement with GE Vernova (“GEV”) and Kiewit’s subsidiary, TIC, to develop and construct up to 5.4 GW of new gas-fired, combined cycle generation projects. The generation facilities will be owned and operated by NRG. Additionally, NRG has entered into a slot reservation agreementagreements with GEV for the procurement of 1.23.6 GW of 7HA gas turbines. The first projects under this comprehensive development agreement are expected to commence operations by the end of 2029.

(a)The West/Services/Other weather metrics are comprised of the average of the CDD and HDD regional results for the West - California and West - South Central regions (b)National Oceanic and Atmospheric Administration-Climate Prediction Center - A CDD represents the number of degrees that the mean temperature for a particular day is above 65 degrees Fahrenheit in each region. A HDD represents the number of degrees that the mean temperature for a particular day is below 65 degrees Fahrenheit in each region. The CDDs/HDDs for a period of time are calculated by adding the CDDs/HDDs for each day during the period

Gross margin increaseddecreased $3.8$119 billionmillion and economic gross margin increased $792$417 million, both of which include intercompany sales, during the year ended December 31, 2024,2025, compared to the same period in 2023.2024. The detail by segment is as follows:

West/Services/Other

Mark-to-market for economic hedging activities includes asset-backed hedges that have not been designated as cash flow hedges. Total net mark-to-market results increaseddecreased by $3.1$552 billionmillion during the year ended December 31, 2024,2025, compared to the same period in 2023.2024.

(a)Includes $37$(286) million, within the Texas segment, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis. For further discussion, see Item 15 — Note 6, Accounting for Derivative Instruments and Hedging Activities

(a)Includes $37 million, within the Texas segment, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis. For further discussion, see Item 15 — Note 6, Accounting for Derivative Instruments and Hedging Activities Mark-to-market results consist of unrealized gains and losses on contracts that are yet to be settled. The settlement of these transactions is reflected in the same revenue or cost caption as the items being hedged.

Operations and maintenance expenses increaseddecreased by $216$39 million for the year ended December 31, 2024,2025, compared to the same period in 2023,2024, due to the following:

Depreciation and amortization expense increased by $108$3 million for the year ended December 31, 2024,2025, compared to the same period in 2023, primarily2024, due to an increase in amortization of capitalized contract costs, partially offset by a decrease in amortization driven by the expected roll of the acquired Vivint Smart Home intangibles.following:

During the year ended December 31, 2024, the Company recorded impairment losses related to property plant and equipment and other assets of $7 million, and $29 million in the Texas and West/Services/Other segments, respectively. Refer to Item 15 — Note 10, Asset Impairments, to the Consolidated Financial Statements for further discussion.

Acquisition-related transaction and integration costs wereof $30$74 million and $119$30 million for the years ended December 31, 20242025 and 2023,2024, respectively, include:

(Loss)/Gain on Sale of Assets

The (loss)/gain on sale of assets of $208$(25) million and $1.6$208 billionmillion recorded for the years ended December 31, 20242025 and 2023,2024, respectively, include:

During the threesix months ended MarchJune 31,30, 2026, there were no material changes to the Risk Factors disclosed in Part I, Item 1A, Risk Factors, of the Company’s 2025 Form 10-K.

As you read this discussion and analysis, refer to NRG’s condensed consolidated statements of operations to this Form 10-Q, which present the results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025. Also refer to NRG’s 2025 Form 10-K, which includes detailed discussions of various items impacting the Company’s business, results of operations and financial condition, including: General section; Strategy section; Business Overview section, including how regulation, weather, and other factors affect NRG’s business; and Critical Accounting Estimates section.

NRG Energy, Inc., or NRG or the Company, provides electricity, natural gas, and smart-home technology solutions to approximately 8 million residential customers (comprised of 6 million retail energy and 2 million smart home), in addition to large commercial and industrial, data centercenter, and wholesale customers. Across North America, NRG is redefining customer’s experience with energy under brand names such as NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. As of MarchJune 31,30, 2026, the Company’s core power and natural gas business consists of approximately 25 GW of competitive power generation, including approximately 13 GW from the LSP portfolio, and a natural gas portfolio that serves approximately 1,900 MMDth annually.

NRG’s strategy is to maximize shareholder value by delivering integrated energy and smart home solutions, supported by an owned generation fleet and a diversified supply strategy. The Company generates power and sells electricity and natural gas to residential, commercial, industrial, and wholesale customers in the markets it serves. The Company also provides smart home security and automation services that deepen customer relationships and support long-term engagement. NRG operates a customer-first platform that promotes reliability and affordability amid rapid transformation in the energy sector. The Company is advancing opportunities to meet growing demand, including from data centers, other large load customers, and electrification. This includes (i) flexible load products like demand response and virtual power plants (“VPP”), which help manage costs and improve affordability for customers, (ii) completing the Texas Development Projects, (iii) long-term, contract-backed generation and related infrastructure, supported by strategic partnerships with equipment manufacturers and engineering, procurement, and construction companies, and (iv) increasing capacity at existing facilities. The Company’s differentiated model is built to meet North America’s evolving needs while delivering affordable, reliable solutions for customers and long-term growth for shareholders. This strategy is intended to generate recurring cash flow, strengthen earnings and cost competitiveness, and reduce risk and volatility.

Maryland Legislation — On May 9, 2024, Maryland Governor Wes Moore signed Senate Bill (“SB”) 1 into law, which restricts the competitive retail electric and natural gas market in Maryland, affecting residential customers but not commercial and industrial customers. Key provisions of the law took effect on January 1, 2025. The legislation imposes a price cap on residential contracts tied to a trailing 12-month historical average of utility rates, with only a limited exception for renewable power products. Renewable products must now have their price pre-approved by the Maryland Public Service Commission and source their renewable electricity certificates from within the PJM region. The law also requires that any variable-price contract not contain a change in price more than once a year, except time-of-use contracts, and limits contract terms to 12 months. It requires affirmative consent for the renewal of customer contracts for renewable power products. The law also imposes licensing requirements on energy salespeople. While the law states that it does not impair existing contracts, the Maryland Public Service Commission has ruled that grandfathering of existing contracts will end as of December 31, 2025, and that suppliers must issue separate bills for their charges for all new and renewing contracts as of January 1, 2026. On October 1, 2024, Green Mountain Energy Company, NRG’s renewable electricity provider, along with a retail trade association to which NRG belongs, filed a lawsuit in federal court challenging the constitutionality of SB 1. On November 18, 2024, the trial court denied the plaintiffs’ motion for a preliminary injunction.injunction Theand plaintiffs,plaintiffs includingappealed. GreenOn Mountain,May filed15, an appeal to this denial in2026, the Court of Appeals for the Fourth Circuit reversed the district court’s ruling in part and oralremanded argumentthe occurredcase with instructions to (i) enjoin the part of the law relating to renewable power products and (ii) conduct further proceedings on Octoberthe 24,constitutionality 2025.of required customer disclosures. The appealprovisions ismandating pending.a price cap on non-renewable power products, limiting price changes throughout the year, restricting energy sales people, and billing customers separately were not impacted by the ruling and remain in effect while the litigation continues.

In 2023, the Texas Legislature authorized implementation of the Performance Credit Mechanism (“PCM”), which will measure real-time contribution to system reliability and provide compensation for resources to be available, subject to certain “guardrails” such as an absolute annual net cost cap, as part of its adoption of the PUCT Sunset Bill (House Bill 1500). In December 2024, the PUCT decided to shelve implementation of the PCM indefinitely. The Texas Legislature also directed the PUCT to implement a new ancillary service called Dispatchable Reliability Reserve Service (“DRRS”) to further increase ERCOT’s capability to manage net load variability and firming requirements for new generation resources which penalize poor performance during periods of low grid reserves. In November 2025, ERCOT published an updated design proposal for DRRS that includes the ability for the PUCT to configure it to support resource adequacy through stronger financial incentives for dispatchable thermal generation. TheIn July 2026, the PUCT willapproved evaluatean initial design that does not include a resource adequacy mechanism, but may further refine the final design of DRRS as part of the review of the reliability standard inbe 2026.the end of the year. The PUCT adopted a final rule to implement the firming requirement in December 2025, which requires new generation resources with signed interconnection agreements on or after January 1, 2027, to acquire additional capacity to meet a minimum requirement during low reserve hours on the ERCOT system.

NRG, through its subsidiaries, filed and received approval from the PUCT for loan proceeds for three separate projects, totaling more than 1,500 MWs of capacity. Specifically, on July 31, 2025, the Company entered into a $216 million loan agreement with the PUCT under the TEF to support the development of T.H. Wharton, a 415 MW facility. On December 12, 2025, the PUCT approved the notice of eligibility for the completion bonus grant for T.H. Wharton. On September 26, 2025, the Company entered into a $562 million loan agreement with the PUCT under the TEF to support the development of Cedar Bayou 5, a 689 MW facility. Lastly, on November 20, 2025, the Company entered into a $370 million loan agreement with the PUCT under the TEF to support the development of Greens Bayou 6, a 443 MW facility. AllCedar threeBayou projects5 and Greens Bayou 6 are currently under construction. Commercial operations at T.H. Wharton iscommenced expectedon byMay 26, 2026. On June 17, 2026, the endCompany entered into a completion bonus grant agreement with the PUCT for T.H. Wharton for up to $54.72 million, to be paid in ten annual installments, subject to performance of the facility. T. H. Wharton’s first test period runs from June 1, 2026 through May 2026.31, 2027, after which the Company will be eligible for its first grant payment.

Senate Bill 6 — On June 20, 2025, the Governor of Texas signed SB 6 into law, which includes various provisions that concern how both ERCOT, transmission and distribution utilities, and power generation companies plan for and serve large loads (defined as 75 MWs and above) in the ERCOT market. SB 6 improves load forecasting accuracy by requiring criteria for inclusion into the forecast and by requiring financial commitments upon a request for a large load customer seeking interconnection to begin engineering studies. In addition, SB 6 includes processes by which large loads should be required or incentivized to curtail their operations. At the same time, SB 6 establishes a PUCT regulatory procedure to minimize potential reliability and stranded-cost impacts that may be associated with new large load co-locations with power generators that were interconnected to ERCOT and operating as stand-alone generators as of September 1, 2025. Generators connected to the grid after this date are exempt from this procedure. Finally, SB 6 requires the PUCT to investigate revising the cost allocation and rate design that governs the ERCOT transmission system. The PUCT rulemaking process for these components of SB 6 is in progress. On March 27, 2026, the PUCT published its proposed rule relating to large load interconnection standards, which establishes the standards and criteria to interconnect a large load customer to the ERCOT system, as well as the financial security large load customers would need to provide. A final rule is anticipated inby the end of the third quarter of 2026. ERCOT ishas also developingdeveloped revisions to the interconnection study process to more efficiently review large load interconnection requests.requests, which the PUCT approved on June 18, 2026.

PJM’s Reforms to Large Load Additions — On September 15, 2025, PJM began a formal stakeholder process called the Critical Issue Fast Path (“CIFP”) to address needed reforms to accommodate large load additions. On January 16, 2026, the National Energy Dominance Council within the White House released a Statement of Principles, signed by all 13 governors in the PJM region, urging PJM to address revenue certainty for new generation through an auction process for new capacity, allocate the costs of these new resources to data centers, improve load forecasting, and accelerate ongoing generation interconnection studies. Also on January 16, 2026, the PJM Board issued a decisional letter on the CIFP process. The Board letter directed PJM staff to implement changes to load forecasting, implement a bring your own new generation program and associated expedited interconnection track, initiate immediately a Reliability Backstop Auction to obtain commitments of additional generation for a longer term, and undertake a holistic review of the PJM markets to analyze how they can evolve to provide appropriate incentives for investment and performance. On February 27, 2026, PJM made two filings at FERC. In its first filing, PJM proposed an expedited interconnection track for up to ten qualified large load projects.projects, Thiswhich filingwas isapproved pendingby atFERC FERC.on June 9, 2026. In its second filing, PJM proposed an extension of the price cap and price floor for all capacity auctions through the 2028/2029 and 2029/2030 delivery years.years, Onwhich was approved by FERC on April 28, 2026, FERC approved PJM’s second filing to extend the price cap and price floor.2026.

On AprilMay 10,27, 2026, PJM published a revised Reliability Backstop Procurement proposal in response to the January 16, 2026 Board directive. PJM proposes a one-time, transitional procurement of capacity inthrough two-stages.two Anparallel initialprocesses. processOn June 9, 2026, Charles River Associates, on behalf of PJM, issued a Request for facilitatingProposals to facilitate bilateral contractscontracting between large loads and eligible supply, beginningthrough inMarch 2027. On July 27, 2026, the PJM Board issued a decisional letter on the Reliability Backstop Procurement proposal and directed PJM to make a filing at FERC to implement the necessary changes. Specifically, from September 30, 2026 andthrough endingOctober in21, March2026, 2027,PJM followedwill byopen a central procurement processwindow to commenceprocure capacity for the approximately 6,800 MW shortfall identified in March2028/2029 2027.BRA, with the selection process and release of results occurring from October 22, 2026 and December 2, 2026. On July 31, 2026, PJM expects to filefiled at FERC to implement these changes in June 2026,changes, following an abbreviated stakeholder process. The implementation of these market changes could have material impacts on the PJM market.

The CAA and related regulations (as well as similar state and local requirements) have the potential to affect air emissions, operating practices and pollution control equipment required at power plants. Under the CAA, the EPA sets NAAQS for certain pollutants including SO2, ozone, and PM2.5. Many of the Company’s facilities are located in or near areas that are classified by the EPA as not achieving certain NAAQS (non-attainment areas). The relevant NAAQS may become more stringent. In March 2024, the EPA increased the stringency of the PM2.5 NAAQS butand numerous legal challenges were filed in the D.C. Circuit. In November 2025, the EPA asked the DC Circuit to vacate the March 2024 rule. On June 26, 2026, the D.C. Circuit upheld the March 2024 Rule denying the legal challenges and the EPA’s request to vacate the rule. The Company maintains a comprehensive compliance strategy to address continuing and new requirements. Complying with increasingly stringent requirements could require the installation of additional emissions control equipment at some NRG facilities or retiring of units if installing such controls is not economic. Significant changes to air regulatory programs affecting the Company are described below.

MATS — On May 7, 2024, the EPA promulgated a final rule that amendsamended the MATS rule by, among other things, increasing the stringency of the filterable particulate matter standard at coal-burning units. The deadline for complying with this more stringent standard had been 2027. On April 8, 2025, the President signed a Proclamation that createscreated a 2-year exemption for compliance beginning on July 8, 2027 and ending on July 8, 2029 for certain coal units including those owned by the Company. Twenty-three states have challenged this rule in the D.C. Circuit. On June 17, 2025, the EPA proposed to repeal the majority of the 2024 final rule amending the MATS rule. On February 24, 2026, the EPA promulgated a final rule repealing the majority of the 2024 rule amending the MATS rule.rule, which also has been challenged in the D.C. Circuit.

ELG — In 2015, the EPA revised the ELG for Steam Electric Generating Facilities, which imposed more stringent requirements (as individual permits were renewed) for wastewater streams from FGD, fly ash, bottom ash and flue gas mercury control. On October 13, 2020, the EPA amended the 2015 ELG rule by: (i) altering the stringency of certain limits for FGD wastewater; (ii) relaxing the zero-discharge requirement for bottom ash transport water; and (iii) changing several deadlines. In 2021, NRG informed its regulators that the Company intendsintended to comply with the ELG by ceasing combustion of coal by the end of 2028 at its domestic coal units outside of Texas, and installing appropriate controls by the end of 2025 at its two plants that have coal-fired units in Texas.Texas, which the Company completed by the end of 2025. However, PJM has requested that two coal-fueled units at Powerton continue to operate until at least September 2030 to address reliability concerns. On May 9, 2024, the EPA promulgated a rule that again revises the ELG by, among other things, further restricting the discharge of (i) FGD wastewater, (ii) bottom ash transport water, and (iii) combustion residual leachate. The rule was challenged in numerous courts, but the cases were consolidated in the U.S. Court of Appeals for the Eighth Circuit. The outcome of the legal challenges is uncertain. On February 19, 2025, the DOJ filed a motion asking the court to hold proceedings in abeyance while the U.S. presidential administration evaluates the rule, which the court granted. On December 31, 2025, the EPA promulgated a rule that extends several deadlines and provides greater flexibility regarding decisions to invest in more stringent controls.

Virginia Rejoining the Regional Greenhouse Gas Initiative (“RGGI”) — On February 20, 2026, Virginia enacted legislation to rejoin the RGGI. During the second quarter of 2026, Virginia is working on promulgatingpromulgated the implementing regulationsregulations, and is seeking towhich require complianceparticipation beginningin onRGGI as of July 1, 2026. Virginia’s decision to rejoin RGGI coincided with a significant increase in the price of RGGI allowances.

During the threesix months ended MarchJune 31,30, 2026, the Company completed $481$921 million of share repurchases at an average price of $161.16$156.52 per share. Through AprilJuly 30,31, 2026, an additional $338$14 million of share repurchases were executed at an average price of $156.52$136.23 per share. See Note 9, Changes in Capital Structure for additional discussion.

In January and February 2026, the Company and certain of its subsidiaries, as guarantors, entered into amendments to its existing bilateral letter of credit facilities to increase the size of its bilateral credit facilities by $410 million and $90 million, respectively, to provide additional liquidity. As of MarchJune 31,30, 2026, $739$784 million was issued under these facilities.

Lightning Notes and Lightning Tender Offer and Redemption

OnDuring Aprilthe 14,second quarter of 2026, Lightning commencedcompleted the Tender Offer.Offer and Redemption. For further discussion, see Note 7, Long-term Debt and Finance Leases.

Management’s discussion of the results of operations for the three months ended MarchJune 31,30, 2026 and 2025

The following table summarizes average on peak power prices for each of the major markets in which NRG operates for the three months ended MarchJune 31,30, 2026 and 2025:

The following table summarizes the average Henry Hub natural gas price for the three months ended MarchJune 31,30, 2026 and 2025:

The following tables present the composition and reconciliation of gross margin and economic gross margin for the three months ended MarchJune 31,30, 2026 and 2025:

The following table represents the weather metrics for the three months ended MarchJune 31,30, 2026 and 2025:

Gross margin decreasedincreased $561$773 million and economic gross margin increased $62$340 million during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025.

Mark-to-market for economic hedging activities includes asset-backed hedges that have not been designated as cash flow hedges. Total net mark-to-market results decreasedincreased by $536$572 million during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025.

(a)Includes $(51)$38 million, within the Texas segment, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis

(a)Includes $(83)$30 million, within the Texas segment, related to derivative contracts that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis Mark-to-market results consist of unrealized gains and losses on contracts that are not yet settled. The settlement of these transactions is reflected in the same revenue or cost caption as the items being hedged.

For the three months ended MarchJune 31,30, 2026, the $42$18 million lossgain in revenues from economic hedge positions was driven primarily by an increase in the value of open positions in East as a result of decreases in NYISO capacity prices. The $271 million gain in operating costs and expenses from economic hedge positions was driven primarily by the reversal of previously recognized unrealized gainslosses on contracts that settled during the period.period Theas $163well millionas lossan in operating costs and expenses from economic hedge positions was driven primarily by a decreaseincrease in the value of open positions in East as a result of decreasesincreases in natural gas prices and CAISO and Alberta powerRGGI prices.

In accordance with ASC 815, the following table represents the results of the Company’s financial and physical trading of energy commodities for the three months ended MarchJune 31,30, 2026 and 2025. The realized and unrealized financial and physical trading results are included in revenue. The Company’s trading activities are subject to limits based on the Company’s Risk Management Policy.

Operations and maintenance expense increased by $145$28 million for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, due to the following:

Other cost of operations for the three months ended MarchJune 31,30, 2026 increaseddecreased by $26$5 million, when compared to the same period in 2025, due to the following:

Depreciation and amortization increased by $106$150 million for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, due to the following:

Selling, general and administrative costs increaseddecreased by $44$162 million for the three months ended MarchJune 31,30, 2026, compared to the same period in 2025, due to the following:

Acquisition-related transaction and integration costs of $45$16 million and $8$43 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, include: