v3.26.1
Fair Value of Financial Assets and Liabilities
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Assets and Liabilities Fair Value of Financial Assets and Liabilities
We measure and classify fair value measurements in accordance with the hierarchy as defined by GAAP. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
•Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to liquidate as of the reporting date.
•Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.
•Level 3 — unobservable inputs, such as internally developed pricing models or third-party valuations for the asset or liability due to little or no market activity for the asset or liability.
Fair Value of Financial Liabilities Recorded at Amortized Cost
The following table presents the carrying amounts and fair values of our long-term debt and SNF obligation as of March 31, 2026 and December 31, 2025. We have no financial liabilities classified as Level 1. The carrying amounts of the short-term liabilities as presented in the Consolidated Balance Sheets are representative of their fair value (Level 2) because of the short-term nature of these instruments.
March 31, 2026December 31, 2025
Carrying AmountFair ValueCarrying AmountFair Value
Level 2Level 3TotalLevel 2Level 3Total
Long-Term Debt, including amounts due within one year$17,364 $13,994 $3,475 $17,469 $7,342 $6,995 $666 $7,661 
SNF Obligation(a)
1,440 1,308 — 1,308 1,426 1,406 — 1,406 
__________
(a)SNF Obligation is included in Other deferred credits and other liabilities in the Consolidated Balance Sheets.
Valuation Techniques Used to Determine Fair Value and Net Asset Value
Our valuation techniques used to measure the fair value and net asset value of the assets and liabilities are in accordance with the policies discussed in Note 17 — Fair Value of Financial Assets and Liabilities of our 2025 Form 10-K except for certain assumed variable rate project financings which are valued using a model that estimates pricing using an internal rate of return calculation and benchmark indices, which may be adjusted for company or security specific risks, resulting in these being classified as Level 3.
Recurring Fair Value Measurements
The following table presents assets and liabilities measured and recorded at fair value in the Consolidated Balance Sheets on a recurring basis and their level within the fair value hierarchy as of March 31, 2026 and December 31, 2025:
March 31, 2026December 31, 2025
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Cash equivalents(a)
$332 $— $— $332 $42 $— $— $42 
NDT fund investments
Cash equivalents(b)
290 163 — 453 72 165 — 237 
Equities6,000 1,072 — 7,072 6,245 1,426 — 7,671 
Fixed income2,536 1,478 401 4,415 2,201 1,566 395 4,162 
Private credit— — 133 133 — — 132 132 
Assets measured at NAV— — — 7,421 — — — 7,194 
NDT fund investments subtotal(c)
8,826 2,713 534 19,494 8,518 3,157 527 19,396 
Rabbi trust investments65 43 1 109 66 45 1 112 
Investments in equities60 — — 60 87 — — 87 
Derivative assets
Economic hedges2,102 11,063 8,994 22,159 1,114 7,449 3,830 12,393 
Effect of netting and allocation of collateral
(1,940)(10,361)(5,950)(18,251)(889)(6,853)(3,256)(10,998)
Derivative assets subtotal162 702 3,044 3,908 225 596 574 1,395 
Total assets measured at fair value9,445 3,458 3,579 23,903 8,938 3,798 1,102 21,032 
Liabilities
Derivative liabilities
Economic hedges(2,349)(11,613)(7,300)(21,262)(1,148)(8,021)(4,062)(13,231)
Effect of netting and allocation of collateral
2,222 11,283 6,429 19,934 1,065 7,657 3,628 12,350 
Derivative liabilities subtotal(127)(330)(871)(1,328)(83)(364)(434)(881)
Deferred compensation obligation— (110)— (110)— (124)— (124)
Total liabilities measured at fair value(127)(440)(871)(1,438)(83)(488)(434)(1,005)
Total net assets$9,318 $3,018 $2,708 $22,465 $8,855 $3,310 $668 $20,027 
__________
(a)CEG Parent has $352 million and $70 million of Level 1 cash equivalents as of March 31, 2026 and December 31, 2025, respectively. We exclude cash of $734 million and $3,621 million, and restricted cash of $70 million and $57 million as of March 31, 2026 and December 31, 2025, respectively. CEG Parent has excluded an additional $15 million of cash as of March 31, 2026 and no additional cash exclusions as of December 31, 2025.
(b)Includes net liabilities of $231 million and $166 million as of March 31, 2026 and December 31, 2025, respectively, which consist of receivables related to pending securities sales, interest and dividend receivables, repurchase agreement obligations, and payables related to pending securities purchases. The repurchase agreements are generally short-term in nature with durations generally of 30 days or less.
(c)Includes total NDT derivative assets and liabilities that are not material, which have notional amounts of $1,053 million and $810 million as of March 31, 2026 and December 31, 2025, respectively. The notional principal amounts provide one measure of the transaction volume outstanding as of the periods ended and do not represent the amount of our exposure to credit or market loss.
As of March 31, 2026, our NDTs have outstanding commitments to invest in private credit, private equity, and real assets of $493 million, $445 million, and $656 million, respectively. These commitments will be funded by our existing NDT funds.
Equity Security Investments without Readily Determinable Fair Values. We hold investments without readily determinable fair values with carrying amounts of $113 million and $109 million as of March 31, 2026 and December 31, 2025, respectively. Changes in fair value, cumulative adjustments, and impairments were not material for the three months ended March 31, 2026 and the year ended December 31, 2025.
Reconciliation of Level 3 Assets and Liabilities
The following tables present the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis during the three months ended March 31, 2026 and 2025:
Three Months Ended March 31, 2026
NDT Fund InvestmentsDerivativesRabbi Trust InvestmentsTotal
Balance as of January 1, 2026
$527 $140 $1 $668 
Contracts acquired at acquisition date
— 1,290 
(a)
— 1,290 
Total realized / unrealized gains (losses)
Included in net income (loss)2 848 
(b)
— 850 
Included in Payables related to Regulatory Agreement Units
5 — — 5 
Change in collateral— (102)— (102)
Purchases— 20 — 20 
Sales— (5)— (5)
Transfers into Level 3— 14 
(c)
— 14 
Transfers out of Level 3— 159 
(c)
— 159 
Amortization of acquired contracts
— (191)— (191)
Balance as of March 31, 2026
$534 $2,173 $1 $2,708 
The amount of total gains (losses) included in income attributed to the change in unrealized gains (losses) related to assets and liabilities as of March 31, 2026
$2 $568 $— $570 
Three Months Ended March 31, 2025
NDT Fund InvestmentsDerivativesRabbi Trust InvestmentsTotal
Balance as of January 1, 2025
$502 $(1)$1 $502 
Total realized / unrealized gains (losses)
Included in net income (loss)1 (131)
(b)
— (130)
Change in collateral— 67 — 67 
Purchases— 15 — 15 
Sales— (3)— (3)
Settlements(2)— — (2)
Transfers into Level 31 (1)
(c)
— — 
Transfers out of Level 3— 36 
(c)
— 36 
Balance as of March 31, 2025
$502 $(18)$1 $485 
The amount of total gains (losses) included in income attributed to the change in unrealized gains (losses) related to assets and liabilities as of March 31, 2025
$1 $(96)$— $(95)
__________
(a)Represents contracts acquired as part of the Calpine acquisition in January 2026. See Note 2 — Mergers, Acquisitions, and Dispositions for additional information.
(b)Includes an addition of $89 million for realized losses and reduction of ($35) million for realized gains due to the settlement of derivative contracts for the three months ended March 31, 2026 and 2025, respectively.
(c)Transfers into and out of Level 3 generally occur when the contract tenor becomes less and more observable, respectively, primarily due to changes in market liquidity or assumptions for certain commodity contracts.
The following table presents the income statement classification of the total realized and unrealized gains (losses) included in income for Level 3 assets and liabilities measured at fair value on a recurring basis during the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
Operating RevenuesPurchased Power and Fuel
Other, net
202620252026202520262025
Total gains (losses) included in net income$582 $38 $75 $(169)$2 $1 
Total unrealized gains (losses)528 (8)40 (88)2 1 
Derivatives
The following table presents the significant inputs to the forward curve used to value these positions:
Type of tradeFair Value as of March 31, 2026Fair Value as of December 31, 2025
Valuation Technique
Unobservable Input
2026 Range & Arithmetic Average
2025 Range & Arithmetic Average
Level 3 Derivatives—Economic hedges(a)(b)
$1,694 $(232)Discounted Cash FlowForward power price (Non-congestion)
$2.43 - $181
$49
$4.77 - $154
$54
Forward power price (Congestion)
$1.61 - $180
$52
$3.14 - $154
$50
Forward gas price
($2.93) - $21
$3.20
($0.46) - $15
$3.52
Option ModelVolatility percentage
10% - 110%
57%
14% - 197%
59%
__________
(a)The valuation techniques, unobservable inputs, ranges, and arithmetic averages are the same for the asset and liability positions.
(b)The fair values do not include cash collateral posted (received) on Level 3 positions of $479 million and $372 million as of March 31, 2026 and December 31, 2025, respectively.
The inputs listed above, which are as of the balance sheet date, would have a direct impact on the fair values of the above instruments if they were adjusted. The significant unobservable inputs used in the fair value measurement of our commodity derivatives are forward commodity prices and for options is price volatility. Increases (decreases) in the forward commodity price in isolation would result in significantly higher (lower) fair values for long positions (contracts that give us the obligation or option to purchase a commodity), with offsetting impacts to short positions (contracts that give us the obligation or right to sell a commodity). Increases (decreases) in volatility would increase (decrease) the value for the holder of the option (writer of the option). Generally, a change in the estimate of forward commodity prices is unrelated to a change in the estimate of volatility of prices. An increase to the heat rate or renewable factors would increase the fair value accordingly. Generally, interrelationships exist between market prices of natural gas and power. As such, an increase in natural gas pricing would potentially have a similar impact on forward power markets.