v3.26.1
Derivatives
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives DERIVATIVES
We utilize derivative instruments, such as options, swaps, futures and forward contracts, to manage our exposure to commodity price and interest rate volatility. Counterparties to these transactions include energy companies, financial institutions, electric utilities, independent power producers, fuel oil and natural gas producers, local distribution companies, and energy marketing companies.

Commodity Derivatives

We utilize financial natural gas and financial and physical electricity derivatives to reduce exposure to changes in electricity prices primarily to hedge future revenues from electricity sales from our generation assets. Financial transmission rights and congestion revenue rights are derivative instruments we utilize to hedge electricity price differences between settlement points within regions. Gains and losses associated with these derivatives are reported in the condensed consolidated statements of operations in operating revenues.

We utilize physical natural gas, coal, emissions, and renewable energy certificate derivatives primarily to hedge future purchased power costs of our retail operations or fuel costs of our generation assets. Gains and losses associated with these derivatives are reported in the consolidated statements of operations in fuel, purchased power costs, and delivery fees.

Our Retail segment procures power from our generation segments to serve future load obligations. In locations and periods where our load service activities do not naturally offset existing generation portfolio risks, remaining commodity price exposure is managed through portfolio hedging activities.

Interest Rate Swaps

Interest rate swap agreements are used to reduce exposure to interest rate changes by converting floating-rate interest rates to fixed rates, thereby hedging future interest costs and related cash flows. Gains and losses associated with these derivatives are reported in the condensed consolidated statements of operations in interest expense and related charges.

Our interest rate swaps as of June 30, 2026 include:
Notional Amount (Net of Amortization)Expiration DateRate Range (b)
(in millions, except percentages)
Swapped to fixed (a)$414March, July and October 20453.95 %-4.09%
____________
(a)In March 2025, May 2025, and July 2025, BCOP entered into interest rate swaps with notional amounts of approximately $108 million, $70 million and $238 million, respectively. These swaps are effective as of April 2025, October 2025, and October 2026, and will expire in March 2045, October 2045, and July 2045, respectively. These swaps are intended to hedge BCOP's exposure on approximately $414 million of floating rate Construction/Term Loan Facility commitments issued under the BCOP Credit Agreement (see Note 12 for additional information).
(b)The rate range reflects the fixed leg of each swap at the applicable Term SOFR rate.

In April 2026, we settled and terminated Vistra Operations' $700 million of pay variable rate and receive fixed rate swaps and $3.0 billion pay fixed rate and receive variable rate swaps expiring July 2026 and $2.3 billion of pay fixed rate and receive variable rate swaps effective from August 2026 through December 2030. In the three months ended June 30, 2026, we recognized a settlement gain of $11 million on the settlement and termination recorded in interest expense and related charges in the condensed consolidated statements of operations.
Effect of Derivative Instruments on the Condensed Consolidated Balance Sheets

We maintain standardized master netting agreements with certain counterparties that allow for the right to offset accounts payable, accounts receivable, and cash collateral paid in order to reduce credit exposure. The following tables reconcile our gross derivative assets and liabilities as reported in the condensed consolidated balance sheets to the net value on a contract basis, after taking into consideration netting arrangements with counterparties and cash collateral recorded.
June 30, 2026
Derivative Contract AssetsDerivative Contract Liabilities
Commodity ContractsInterest Rate SwapsCommodity ContractsInterest Rate SwapsTotal
(in millions)
Current assets$3,646 $— $17 $— $3,663 
Noncurrent assets328 3 3 — 334 
Current liabilities(6)— (4,887)— (4,893)
Noncurrent liabilities(24)— (1,434)— (1,458)
Net assets (liabilities)$3,944 $3 $(6,301)$— $(2,354)
Offsetting instruments (a)(3,330)— 3,330 — — 
Financial collateral (received) pledged (b)(120)— 1,171 — 1,051 
Net amounts$494 $3 $(1,800)$— $(1,303)
December 31, 2025
Derivative Contract AssetsDerivative Contract Liabilities
Commodity ContractsInterest Rate SwapsCommodity ContractsInterest Rate SwapsTotal
(in millions)
Current assets$2,778 $10 $5 $— $2,793 
Noncurrent assets396 8 1 — 405 
Current liabilities— (1)(4,038)(10)(4,049)
Noncurrent liabilities(2)— (1,716)(11)(1,729)
Net assets (liabilities)$3,172 $17 $(5,748)$(21)$(2,580)
Offsetting instruments (a)(2,622)(10)2,622 10 — 
Financial collateral (received) pledged (b)(7)— 891 — 884 
Net amounts$543 $7 $(2,235)$(11)$(1,696)
____________
(a)Amounts presented exclude trade accounts receivable and payable related to settled financial instruments.
(b)Represents cash amounts received or pledged pursuant to a master netting arrangement, including initial and fair value-based margin requirements.
Effect of Derivative Instruments in the Condensed Consolidated Statements of Operations

The following table summarizes the location and amount of unrealized gains and losses from our derivative instruments recorded in the condensed consolidated statements of operations for the three and six months ended June 30, 2026 and 2025:
Derivative (condensed consolidated statements of operations presentation)Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(in millions)
Reversals of previously recognized unrealized (gain) loss on derivative instruments:
Commodity contracts unrealized (gain) loss in operating revenues (a)$81 $(69)$367 $143 
Commodity contracts unrealized (gain) loss in fuel, purchased power costs, and delivery fees (a)(19)15 26 (8)
Interest rate swaps unrealized (gain) loss in interest expense and related charges(13)(6)(14)(11)
Total reversals of previously recognized unrealized (gain) loss on derivative instruments$49 $(60)$379 $124 
Unrealized net gain (loss) from changes in fair value on derivative instruments:
Commodity contracts unrealized gain (loss) in operating revenues$(643)$119 $(293)$(606)
Commodity contracts unrealized gain (loss) in fuel, purchased power costs, and delivery fees109 (49)151 (80)
Interest rate swaps unrealized gain (loss) in interest expense and related charges4 (20)21 (63)
Total unrealized net gain (loss) from change in fair value on derivative instruments$(530)$50 $(121)$(749)
Net unrealized gain (loss) on derivative instruments$(481)$(10)$258 $(625)
____________
(a)Excludes the realized effects of changes in fair value in the month the position settled, amounts related to positions entered into and settled in the same month, and physical retail and wholesale contracts accounted for as derivatives that did not financially settle but were realized at the contract's notional and price. The realized effects of these items are included in operating revenues and fuel, purchased power costs, and delivery fees.

Derivative Volumes

The following table presents the gross notional amounts of derivative volumes by commodity, excluding our normal purchases and normal sales (NPNS) derivatives that are not recorded at fair value:
June 30, 2026December 31, 2025
Derivative typeNotional VolumeUnit of Measure
Natural gas3,799 3,742 Million MMBtu
Electricity951,495 996,777 GWh
Financial transmission rights / Congestion revenue rights284,597 249,400 GWh
Coal23 22 Million U.S. tons
Fuel oil24 8 Million gallons
Emissions22 13 Million U.S. tons
Renewable energy certificates27 31 Million certificates
Interest rate swaps – variable/fixed$414 $5,716 Million U.S. dollars
Interest rate swaps – fixed/variable$— $700 Million U.S. dollars
Credit Risk-Related Contingent Features of Derivatives

Our derivative contracts may contain certain credit risk-related contingent features that could trigger liquidity requirements in the form of cash collateral, letters of credit or some other form of credit enhancement. Certain of these agreements may require the posting of additional collateral if our credit rating is downgraded by one or more credit rating agencies or include cross-default contractual provisions that could result in the settlement of such contracts if there was a failure under other financing arrangements related to payment terms or other covenants.

The following table presents the commodity derivative liabilities subject to credit risk-related contingent features that are not fully collateralized:
June 30,
2026		December 31,
2025
(in millions)
Fair value of derivative contract liabilities (a)$(1,699)$(1,822)
Offsetting fair value under netting arrangements (b)443 528 
Cash collateral and letters of credit314 331 
Liquidity exposure$(942)$(963)
____________
(a)Excludes fair value of contracts that contain contingent features that do not provide specific amounts to be posted if features are triggered, including provisions that generally provide the right to request additional collateral (material adverse change, performance assurance and other clauses).
(b)Amounts include the offsetting fair value of in-the-money derivative contracts and net accounts receivable under master netting arrangements.

Concentrations of Credit Risk Related to Derivatives

We have concentrations of credit risk with the counterparties to our derivative contracts that increase the risk that a default by any of our counterparties could have a material effect on our financial condition, results of operations and liquidity. We maintain credit risk policies with regard to our counterparties to minimize overall credit risk. These policies authorize specific risk mitigation procedures including, but not limited to, (i) requiring counterparties to have investment grade credit ratings, (ii) use of standardized master agreements with our counterparties that allow for netting of positive and negative exposures, and (iii) credit enhancements (such as parent guarantees, letters of credit, surety bonds, liens on assets and margin deposits) that are required in the event of a material downgrade in their credit rating.
June 30, 2026
(in millions, except percentages)
Credit risk exposure to derivative contract counterparties:
Gross exposure$4,377 
Net exposure (a)$712 
Largest net exposure from any single counterparty (a)$235 
Percent of credit risk exposure to derivative contract counterparties related to banking and financial sector:
Gross exposure82 %
Net exposure (a)24 %
____________
(a)Exposure after taking into effect netting arrangements, setoff provisions, and collateral.