NRG Now Estimates $750 Million Loss From Winter Storm Uri; Withdraws Prior Financial Guidance

NRG Energy, Inc. today announced the Company is providing an interim financial impact update, "reflecting the unprecedented effect on the ERCOT system and settlement data from the winter storm."

"As a result of this new information and the ongoing regulatory uncertainties where the impacts of proposed changes cannot be reasonably estimated, the Company is withdrawing previously announced 2021 financial guidance," NRG said

"Based on the new information available to us today, we are unable to provide financial guidance due to the unprecedented and unpredictable market outcomes resulting from winter storm Uri," said Mauricio Gutierrez, NRG President and Chief Executive Officer.

"The full financial impact of Winter Storm Uri still remains uncertain as it is subject to recently proposed regulatory changes including repricing, finalizing Commercial and Industrial meter and settlement data, and potential customer and counterparty risk including ERCOTs’ [sic] shortfall payments and uplift charges," NRG said

"Based on the information known to date, which is not complete and subject to change, Winter Storm Uri’s financial impact is estimated to be a $750 million loss compared to the prior guidance range provided on March 1, 2021," NRG said

The impact is driven by the following elements received from ERCOT since NRG’s last earnings call:

• Resettlement data

• Latest system-wide default of $3.1 billion

• Increased uplift charges to load

• Ancillary and other estimates including results in other regions

As of March 15, 2021, NRG had $3.3 billion of liquidity available to continue to support its operations.

"Given the evolving nature of the impacts regarding the extreme weather event in Texas in February 2021, including the uncertainty related to the financial effects on other operators and a certain number of counterparties as well as the pending and proposed legislative and regulatory responses, it is impossible to predict with precision the cumulative impact of these events on future financial results. As such, NRG is withdrawing its Adjusted EBITDA, Adjusted Cash from Operations and Free Cash Flow before Growth Investments guidance for 2021 previously issued on March 1, 2021," NRG said

"The Company remains committed to achieving investment grade credit metrics of 2.50-2.75x net debt to adjusted EBITDA and will continue to work closely with the rating agencies to achieve investment grade credit ratings. In light of this financial update, the Company’s debt reduction program may extend into 2022," NRG said

During an investor call, Gutierrez said that the winter weather event still presents an opportunity to "get additional customers", both from Provider of Last Resort transitions, as well as from customers seeking out more "known" brands due to recent events.