NRG Increases Cost Reduction Program to $250 Million (Includes Retail), Starts Strategic Process To Find Majority Partner For Green Businesses

NRG in reporting earnings today said that it has begun implementation of a company-wide cost reduction program of $150 million across its general and administrative, marketing and development expenses.

In connection with the cost reduction program, the company expects to incur one-time severance and associated costs of approximately $60 million in 2015 and 2016.

In addition, to supplement this cost reduction program, NRG is announcing today an additional $100 million per year cost reduction initiative associated with the O&M spend across its wholesale/business, retail and renewable businesses to be achieved on a recurring basis beginning in 2016, measured against projected 2015 aggregate O&M spend. This program brings the aggregate cost savings expected in 2016 to $250 million, NRG said

NRG said that its "GreenCo" Runway for the clean energy businesses included within the Runway (NRG Home Solar, NRG Renew C&I solar business and NRG EVgo), which will operate under a $125 million defined limit of financial support from NRG beginning in 2016 is established and will be effective January 1, 2016. As previously reported, under GreenCo, NRG is separating out the listed GreenCo businesses to limit the prior cash-burn of the businesses (click here for story)

In addition, NRG said that it has launched strategic processes with respect to the 'GreenCo' businesses aimed at attracting a majority partner that can further enhance those businesses prospects for short, medium and long term success.

NRG said that it continues to make progress with respect to the asset rebalancing component of the "NRG Reset" program, which is aimed at freeing up the balance of the $1.1 billion in 2016 available capital for allocation through the elimination of capital expenditures, asset dispositions, and targeted non-recourse financings. NRG has already reduced 2016 growth capital expenditures by over $100 million by suspending or modifying its fuel conversion plans at two coal facilities.

NRG reported that its NRG Home Retail division recorded third quarter Adjusted EBITDA of $225 million, $58 million higher than third quarter 2014 driven primarily by favorable supply costs as well as effective margin and cost management across the portfolio.