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NRG Reports Higher Retail Margins

May 4, 2023

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Copyright 2010-21
Reporting by Paul Ring •

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In reporting first quarter of 2023 earnings, NRG reported that its Home Retail Energy business saw a ~7% increase in margins and stable customer count, year-over-year

NRG also reported, "strong retention and stable bad debt," in the Home Retail Energy business

NRG said that it launched a "state-of-the-art digital app experience" for the Home Retail Energy business

Reporting on integration of the Vivint Smart Home business, NRG said that Energy & Smart Home cross-selling was underway, with sales channel and product bundling optimization

Including Vivint, NRG said that it ended the first quarter of 2023 with 7.4 million Home Customers. As of December 31, 2022, prior to the close of the Vivint acquisition, NRG had 5.4 million Home customers, while Vivint added approximately 2 million customers effective in March 2023 upon the close of the transaction.

On a consolidated basis, NRG's Adjusted EBITDA for the first quarter of 2023 was $646 million, up from $536 million a year ago, driven in part by higher retail margins

For NRG's Texas segment, first quarter Adjusted EBITDA was $254 million, $43 million higher than the first quarter of 2022. This increase was primarily driven by higher margins, the April 2022 return of Limestone Unit 1 from an extended outage, and current-year optimization of realized lower market power prices, NRG said. The increase was partially offset by a decrease in retail load primarily driven by unfavorable weather and higher operating costs due to an increase in planned outages in the first quarter of 2023 compared to the first quarter of 2022, NRG said

For NRG's East segment, first quarter Adjusted EBITDA was $314 million, $18 million lower than the first quarter of 2022. This decrease was driven by PJM asset retirements in the second quarter of 2022 and lower capacity prices. This was partially offset by increased retail power margins, NRG said

NRG said that Vivint's Adjusted EBITDA included $73 million in March 2023; the acquisition closed in March 2023.

In discussing its 2023 capital allocation, NRG listed $25 million for the acquisition of small books, in a change from its previously disclosed allocation of $15 million for small books, as listed in its full-year 2022 earnings presentation from February 2023

In discussing its capital allocation, NRG said, "NRG is targeting additional asset sales with projected proceeds, net of any required deleveraging, of $500 million during 2023."

As of March 31, 2023, NRG's cash was at $407 million, and $3.1 billion was available under the Company’s credit facilities. Total liquidity was $3.5 billion, $739 million higher than at the end of 2022. This increase was due to planned additional liquidity related to the end of the winter season, specific initiatives to optimize the amount of collateral supporting our market operations activity, and the addition of Vivint Smart Home's revolving credit facility, NRG said

Providing an update on W.A. Parish Unit 8, NRG said that, based on work completed to date, NRG is targeting a return of W.A. Parish Unit 8 to service by the end of the second quarter of 2023. The Company expects lost revenues and expenditures incurred in 2023 to be offset by insurance recoveries.

NRG reported 1Q23 retail volumes as follows:

33 TWh Electricity

     11 TWh Home / Residential 
         (67% of volumes are in Texas)

     21 TWh Business / C&I  
         (40% of volumes are in Texas)

581 MMDth Natural Gas
    59 MMDth Home / Residential 
   522 MMDth Business / C&I


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