v3.26.1
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
For cash and cash equivalents, funds deposited by counterparties, restricted cash, accounts and other receivables, accounts payable and cash collateral paid and received in support of energy risk management activities, the carrying amounts approximate fair values because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
The estimated carrying value and fair value of the Company’s long-term debt, including current portion, is as follows:
June 30, 2026December 31, 2025
(In millions)Carrying AmountFair ValueCarrying AmountFair Value
Total long-term debt, including current portion(a)
$23,388 $23,020 $16,565 $16,405 
(a)Excludes deferred financing costs, which are recorded as a reduction to long-term debt in the Company’s consolidated balance sheets
The fair value of the Company’s publicly-traded long-term debt, the Term Loan B and the Lightning Term Loan are based on quoted market prices and are classified as Level 2 within the fair value hierarchy. The estimated fair values of the T.H. Wharton TEF loan, the Cedar Bayou 5 TEF loan and the Greens Bayou 6 TEF loan are determined using discounted cash flow methodologies, and are classified as Level 3 within the fair value hierarchy. The estimated fair value of the borrowings under the Revolving Credit Facility approximates the carrying value because the interest rate vary with market interest rates, and is classified as Level 3 within the fair value hierarchy. The following table presents the level within the fair value hierarchy for long-term debt, including current portion, as of June 30, 2026 and December 31, 2025:
June 30, 2026December 31, 2025
(In millions)Level 2Level 3Level 2Level 3
Total long-term debt, including current portion$21,087 $1,933 $16,033 $372 
Recurring Fair Value Measurements
Debt securities, equity securities and derivative assets and liabilities are carried at fair market value.
The following tables present assets and liabilities measured and recorded at fair value on the Company’s condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:
June 30, 2026
Fair Value
(In millions)TotalLevel 1Level 2Level 3
Investments in securities (classified within other current and non-current assets)
$34 $— $34 $— 
Derivative assets:
Interest rate contracts10 — 10 — 
Foreign exchange contracts12 — 12 — 
Commodity contracts(a)
4,230 325 3,645 260 
Equity securities measured using net asset value practical expedient (classified within other non-current assets)
7 
Total assets$4,293 $325 $3,701 $260 
Derivative liabilities:
Commodity contracts(a)
$4,094 $476 $3,364 $254 
Consumer Financing Program271 — — 271 
Total liabilities$4,365 $476 $3,364 $525 
(a)Excludes $553 million of derivative assets and $82 million of derivative liabilities that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis
December 31, 2025
Fair Value
(In millions)TotalLevel 1Level 2Level 3
Investments in securities (classified within other current and non-current assets)
$33 $— $33 $— 
Derivative assets:
Foreign exchange contracts3 — 3 — 
Commodity contracts(a)
3,132 267 2,552 313 
Equity securities measured using net asset value practical expedient (classified within other non-current assets)
7 
Total assets$3,175 $267 $2,588 $313 
Derivative liabilities:
Interest rate contracts$4 $— $4 $— 
Foreign exchange contracts3 — 3 — 
Commodity contracts(a)
2,932 352 2,377 203 
Consumer Financing Program283 — — 283 
Total liabilities$3,222 $352 $2,384 $486 
(a)Excludes $622 million of derivative assets and $138 million of derivative liabilities that were elected as NPNS on October 1, 2024 and are no longer valued at fair value on a recurring basis
The following table reconciles, for the three and six months ended June 30, 2026 and 2025, the beginning and ending balances for financial instruments that are recognized at fair value in the condensed consolidated financial statements, using significant unobservable inputs, for commodity derivatives:
Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Commodity Derivatives(a)
(In millions)Three months ended June 30, 2026Three months ended June 30, 2025Six months ended June 30, 2026Six months ended June 30, 2025
Beginning balance $30 $49 $110 $39 
Contracts added from LSP Portfolio acquisition
— — 5 — 
Contracts added from Texas Generation Portfolio acquisition— (91)— (91)
    Total (losses)/gains realized/unrealized included in earnings
(32)22 (134)34 
Purchases10 37 22 37 
Transfers into Level 3(b)
(1)63 — 63 
Transfers out of Level 3(b)
(1)1 3 (1)
Ending balance$6 $81 $6 $81 
(Losses)/gains for the period included in earnings attributable to the change in unrealized gains or losses relating to assets or liabilities still held as of period end
$(31)$5 $(104)$47 
(a)Consists of derivative assets and liabilities, net, excluding derivatives liabilities from the Consumer Financing Program, which are presented in a separate table below
(b)Transfers into/out of Level 3 within the fair value hierarchy are related to the availability of consensus pricing and external broker quotes, including volatilities, and are valued as of the end of the reporting period. All transfers in/out of Level 3 are from/to Level 2

Realized and unrealized gains and losses included in earnings that are related to the commodity derivatives are recorded in revenues and cost of operations.
The following table reconciles, for the three and six months ended June 30, 2026 and 2025, the beginning and ending balances of the contractual obligations from the Consumer Financing Program that are recognized at fair value in the condensed consolidated financial statements, using significant unobservable inputs:
Fair Value Measurement Using Significant Unobservable Inputs (Level 3)
Consumer Financing Program
(In millions)Three months ended June 30, 2026Three months ended June 30, 2025Six months ended June 30, 2026Six months ended June 30, 2025
Beginning balance$(252)$(207)$(283)$(203)
New contractual obligations(60)(81)(86)(113)
Settlements42 31 102 67 
Total losses included in earnings(1)— (4)(8)
Ending balance$(271)$(257)$(271)$(257)
Gains and losses that are related to the Consumer Financing Program derivative are recorded in other income, net.
Derivative Fair Value Measurements
The fair value of the Company’s contracts primarily consist of non-exchange traded contracts based on consensus pricing provided by independent pricing services. As of June 30, 2026, contracts valued with prices provided by models and other valuation techniques made up 6% of derivative assets and 12% of derivative liabilities.
NRG’s significant positions classified as Level 3 include physical and financial natural gas, power, capacity contracts and RECs executed in illiquid markets, FTRs, certain power options and the Consumer Financing Program. The significant unobservable inputs used in developing fair value include illiquid natural gas and power location pricing, which is derived as a basis to liquid locations. The basis spread is based on observable market data when available or derived from historic prices and forward market prices from similar observable markets when not available. Forward capacity prices are based on market information, forecasted future electricity demand and supply, past auctions and internally developed pricing models. REC prices are based on market information and internally developed pricing models. Power options are valued using industry standard option models. The valuation of certain power options includes significant unobservable inputs such as forward volatilities. For FTRs, NRG uses the most recent auction prices to derive the fair value. The Consumer Financing Program derivatives are valued using a discounted cash flow model, with inputs consisting of available market data, such as market yield discount rates, as well as unobservable internally derived assumptions, such as collateral prepayment rates, collateral default rates and credit loss rates.
The following tables quantify the significant, unobservable inputs used in developing the fair value of the Company’s Level 3 positions as of June 30, 2026 and December 31, 2025:
June 30, 2026
Fair ValueInput/Range
(In millions, except as noted)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted Average
Natural Gas Contracts$25 $16 Discounted Cash FlowForward Market Price ($ per MMBtu)$1 $18 $5 
Power Contracts131 125 Discounted Cash FlowForward Market Price ($ per MWh)0 192 28 
Capacity Contracts22 19 Discounted Cash FlowForward Market Price ($ per MW/Day)54 625 331 
RECs18 35 Discounted Cash FlowForward Market Price ($ per Certificate)2 370 18 
FTRs44 25 Discounted Cash FlowAuction Prices ($ per MWh)(74)25,013 1 
Power Options20 34 Option ModelsVolatilities32%694%131%
Consumer Financing Program— 271 Discounted Cash FlowCollateral Default Rates0.74%43.50%8.58%
Discounted Cash FlowCollateral Prepayment Rates2.00%3.00%2.48%
Discounted Cash Flow
Credit Loss Rates
6.53%60.00%17.70%
$260 $525 

December 31, 2025
Fair ValueInput/Range
(In millions, except as noted)AssetsLiabilitiesValuation TechniqueSignificant Unobservable InputLowHighWeighted Average
Natural Gas Contracts$47 $40 Discounted Cash FlowForward Market Price ($ per MMBtu)$0 $17 $5 
Power Contracts168 64 Discounted Cash FlowForward Market Price ($ per MWh)0 125 29 
Capacity Contracts20 18 Discounted Cash FlowForward Market Price ($ per MW/Day)49 577 270 
RECs12 25 Discounted Cash FlowForward Market Price ($ per Certificate)2 370 17 
FTRs22 11 Discounted Cash FlowAuction Prices ($ per MWh)(50)19,100 0 
Power Options44 45 Option ModelsVolatilities22%517%110%
Consumer Financing Program— 283 Discounted Cash FlowCollateral Default Rates1.18%42.00%7.86%
Discounted Cash FlowCollateral Prepayment Rates2.00%3.00%2.52%
Discounted Cash FlowCredit Loss Rates 6.40%60.00%16.94%
$313 $486 
The following table provides sensitivity of fair value measurements to increases/(decreases) in significant, unobservable inputs as of June 30, 2026 and December 31, 2025:
Significant Unobservable InputPositionChange In InputImpact on Fair Value Measurement
Forward Market Price Natural Gas/Power/Capacity/RECsBuyIncrease/(Decrease)Higher/(Lower)
Forward Market Price Natural Gas/Power/Capacity/RECsSellIncrease/(Decrease)Lower/(Higher)
FTR PricesBuyIncrease/(Decrease)Higher/(Lower)
FTR PricesSellIncrease/(Decrease)Lower/(Higher)
VolatilitiesBuyIncrease/(Decrease)Higher/(Lower)
VolatilitiesSellIncrease/(Decrease)Lower/(Higher)
Collateral Default Ratesn/aIncrease/(Decrease)Higher/(Lower)
Collateral Prepayment Ratesn/aIncrease/(Decrease)Lower/(Higher)
Credit Loss Ratesn/aIncrease/(Decrease)Higher/(Lower)
The fair value of each contract is discounted using a risk-free interest rate. In addition, the Company applies a credit reserve to reflect credit risk, which is calculated based on published default probabilities. As of June 30, 2026, the credit reserve resulted in a $1 million increase in fair value, primarily within cost of operations. As of December 31, 2025, the credit reserve was immaterial.
Concentration of Credit Risk
In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, to the Company’s 2025 Form 10-K, the following is a discussion of the concentration of credit risk for the Company’s contractual obligations. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. NRG is exposed to counterparty credit risk through various activities including wholesale sales, fuel purchases and retail supply arrangements, as well as retail customer credit risk through its retail load activities.
Counterparty Credit Risk
The Company’s counterparty credit risk policies are disclosed in its 2025 Form 10-K. As of June 30, 2026, counterparty credit exposure, excluding credit exposure from RTOs, ISOs, registered commodity exchanges and certain long-term agreements, was $1.1 billion and NRG held collateral (cash and letters of credit) against those positions of $66 million, resulting in a Net Exposure of $1.1 billion. NRG periodically receives collateral from counterparties in excess of their exposure. Collateral amounts shown include such excess while Net Exposure shown excludes excess collateral received. Approximately 55% of the Company’s exposure before collateral is expected to roll off by the end of 2027. Counterparty credit exposure is valued through observable market quotes and discounted at a risk free interest rate. The following tables highlight net counterparty credit exposure by industry sector and by counterparty credit quality. Net counterparty credit exposure is defined as the aggregate net asset position for NRG with counterparties where netting is permitted under the enabling agreement and includes all cash flow, mark-to-market and NPNS, and non-derivative transactions. The exposure is shown net of collateral held and includes amounts net of receivables or payables.
Net Exposure(a)(b)
Category by Industry Sector(% of Total)
Utilities, energy merchants, marketers and other77%
Financial institutions23 
Total as of June 30, 2026100%
Net Exposure (a)(b)
Category by Counterparty Credit Quality(% of Total)
Investment grade74%
Non-investment grade/Non-Rated26 
Total as of June 30, 2026100%
(a)Counterparty credit exposure excludes coal transportation contracts because of the unavailability of market prices
(b)The figures in the tables above exclude potential counterparty credit exposure related to RTOs, ISOs, registered commodity exchanges and certain long-term contracts
The Company had no exposure to wholesale counterparties in excess of 10% of total Net Exposure as of June 30, 2026. Changes in hedge positions and market prices will affect credit exposure and counterparty concentration.
RTOs and ISOs
The Company participates in the organized markets of CAISO, ERCOT, AESO, IESO, ISO-NE, MISO, NYISO and PJM, known as RTOs or ISOs. Trading in the majority of these markets is approved by FERC, whereas in the case of ERCOT, it is approved by the PUCT, and whereas in the case of AESO and IESO, both exist provincially with AESO primarily subject to Alberta Utilities Commission and the IESO to the Ontario Energy Board. These ISOs may include credit policies that, under certain circumstances, require that losses arising from the default of one member on spot market transactions be shared by the remaining participants. As a result, the counterparty credit risk to these markets is limited to NRG’s share of the overall market and are excluded from the above exposures.
Exchange Traded Transactions
The Company enters into commodity transactions on registered exchanges, notably ICE, NYMEX and Nodal. These clearinghouses act as the counterparty and transactions are subject to extensive collateral and margining requirements. As a result, these commodity transactions have limited counterparty credit risk.
Long-Term Contracts
Counterparty credit exposure described above excludes credit risk exposure under certain long-term contracts, primarily solar under Renewable PPAs. As external sources or observable market quotes are not always available to estimate such exposure, the Company values these contracts based on various techniques including, but not limited to, internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of June 30, 2026, aggregate credit risk exposure managed by NRG to these counterparties was approximately $625 million for the next five years.
Retail Customer Credit Risk
The Company is exposed to retail credit risk through the Company’s retail electricity and gas providers as well as through Vivint Smart Home, which serve both Home and Business customers. Retail credit risk results in losses when a customer fails to pay for services rendered. The losses may result from both non-payment of customer accounts receivable and the loss of in-the-money forward value. The Company manages retail credit risk by using established credit policies, which include monitoring of the portfolio and the use of credit mitigation measures such as deposits or prepayment arrangements.
As of June 30, 2026, the Company’s retail customer credit exposure to Home and Business customers was diversified across many customers and various industries, as well as government entities. Current economic conditions may affect the Company’s customers’ ability to pay their bills in a timely manner or at all, which could increase customer delinquencies and may lead to an increase in credit losses.