Nrg Energy (NRG) Economic Moat Analysis38

Evidence

The majority of Vivint Smart Home's subscription contracts are five years and are generally non-cancelable.

Revenue recognition — Vivint subscription contract duration and cancellation · Filed 24/02/2026

These contracts generally convert into month-to-month agreements at the end of the initial term, while some customers are month-to-month from inception.

Revenue recognition — conversion to month-to-month contracts · Filed 24/02/2026

The Company has determined that certain contracts that do not require a long-term commitment for monitoring services by the customer contain a material right to renew the contract, because the customer does not have to purchase the products upon renewal.

Revenue recognition — renewal without repurchasing products · Filed 24/02/2026

The majority of Vivint Smart Home's subscription contracts are five years and are generally non-cancelable.

2024 revenue recognition — Vivint subscription commitments · Filed 26/02/2025

NRG's retail brands, collectively, have the largest share of competitively served residential electric customers in Texas and is a leading business-to-business provider of power and natural gas in North America.

Business — retail market position · Filed 24/02/2026

In Texas, the Company’s generation portfolio is fully integrated with its retail load and in early 2026, the Company adopted an integrated strategy in the East, expanding this model across a broader geographic footprint.

Strategy — generation and retail integration · Filed 04/08/2026

This strategy is intended to generate recurring cash flow, strengthen earnings and cost competitiveness, and reduce risk and volatility.

Strategy — intended cash flow, cost competitiveness and risk benefits · Filed 04/08/2026

Higher electric gross margin due to lower supply costs of $53 million and changes in customer mix of $15 million, partially offset by lower net revenue rates of $60 million

Results discussion — electric supply costs, customer mix and net revenue rates · Filed 04/08/2026

Higher gross margin primarily driven by growth in customers of $68 million and higher monthly revenue of $24 million

Results discussion — customer growth and monthly revenue contributions · Filed 04/08/2026

NRG provides energy and related services at either fixed, indexed or month-to-month prices.

Business — fixed, indexed and month-to-month prices · Filed 24/02/2026

Home customers typically contract for terms ranging from one month to five years, while Business customers typically contract for terms ranging from one year to five years in length and extended contractual terms are available.

Business — residential and business contract terms · Filed 24/02/2026

Energy Revenue Both physical and financial transactions consist of revenues billed to a third-party at either market or negotiated contract terms to optimize the financial performance of the Company's generating facilities.

Revenue recognition — market and negotiated energy transaction terms · Filed 24/02/2026

The legislation imposes a price cap on residential contracts tied to a trailing 12-month historical average of utility rates, with only a limited exception for renewable power products.

State regulation — Maryland residential price cap · Filed 04/08/2026

The law also requires that any variable-price contract not contain a change in price more than once a year, except time-of-use contracts, and limits contract terms to 12 months.

State regulation — Maryland price-change frequency and contract duration limits · Filed 04/08/2026

NYSPSC – Order to Show Cause — The NYSPSC issued an order referred to as the Retail Reset Order in December 2019 that limited the offers of ESCOs for electric and natural gas to three compliant products: guaranteed savings from the utility default rate, a fixed rate commodity product that is priced at no more than 5% greater than the trailing 12-month average utility supply rate or New York-sourced renewable energy that is at least 50% greater than the prevailing New York Renewable Energy Standard for load serving entities.

Regulatory matters — New York retail offer restrictions · Filed 24/02/2026

48 Consolidated Results of Operations for the years ended December 31, 2025 and 2024 The following table provides selected financial information for the Company: Year Ended December 31, (In millions) 2025 2024 Change Revenue Retail revenue $ 29,543 $ 27,149 $ 2,394 Energy revenue(a) 590 500 90 Capacity revenue(a) 280 177 103 Mark-to-market for economic hedging activities 12 (3) 15 Contract amortization (6) (29) 23 Other revenues(a)(b) 294 336 (42) Total revenue 30,713 28,130 2,583 Operating Costs and Expenses Cost of fuel 1,195 890 (305) Purchased energy and other cost of sales(c) 21,194 19,371 (1,823) Mark-to-market for economic hedging activities 358 (209) (567) Contract and emissions credit amortization(c) 53 49 (4) Operations and maintenance 1,568 1,607 39 Other cost of operations 393 392 (1) Cost of operations (excluding depreciation and amortization shown below) 24,761 22,100 (2,661) Depreciation and amortization 1,406 1,403 (3) Impairment losses — 36 36 Selling, general and administrative costs (excluding amortization of customer acquisition costs of $295, and $204, respectively, which are included in depreciation and amortization shown separately above) 2,602 2,345 (257) Acquisition-related transaction and integration costs 74 30 (44) Total operating costs and expenses 28,843 25,914 (2,929) (Loss)/Gain on sale of assets (25) 208 (233) Operating Income 1,845 2,424 (579) Other Income/(Expense) Equity in earnings of unconsolidated affiliates 11 20 (9) Impairment losses on investments (39) (7) (32) Other income, net 68 44 24 Loss on debt extinguishment (10) (382) 372 Interest expense (741) (651) (90) Total other expenses (711) (976) 265 Income Before Income Taxes 1,134 1,448 (314) Income tax expense 270 323 (53) Net Income $ 864 $ 1,125 $ (261) (a)Includes realized gains and losses from financially settled transactions (b)Includes trading gains and losses and ancillary revenues (c)Includes amortization of SO2 and NOx credits and excludes amortization of RGGI credits Gross Margin The Company calculates gross margin in order to evaluate operating performance as revenues less cost of fuel, purchased energy and other costs of sales, mark-to-market for economic hedging activities, contract and emission credit amortization and depreciation and amortization.

2025 consolidated results — revenue, costs and operating income · Filed 24/02/2026

Capital Allocation During the six months ended June 30, 2026, the Company completed $921 million of share repurchases at an average price of $156.52 per share.

Capital allocation — completed first-half 2026 repurchases · Filed 04/08/2026

The Company funded the cash consideration using a portion of the net proceeds of $4.4 billion from the 5.750% 2034 Senior Notes, the 2036 Senior Notes, Senior Secured First Lien Notes, due 2030 and the Senior Secured First Lien Notes, due 2035 and proceeds of $2.5 billion from the Company’s Revolving Credit Facility.

Acquisition financing — notes and revolving credit proceeds · Filed 04/08/2026

On January 30, 2026, as part of the purchase consideration for the LSP Portfolio acquisition, the Company issued 24.25 million shares of NRG common stock, par value $0.01 per share.

Capital structure — acquisition consideration paid in common shares · Filed 24/02/2026

​ 2025 AIP Results and Payments The following table details the quantitative financial and non-financial performance goals and results for 2025, as approved by the Compensation Committee: ​ Performance Metric ​ ​ Weight ​ ​ Threshold ​ ​ Target ​ ​ Maximum ​ ​ Result ​ ​ AIP Metric Result ​ ​ Adjusted FCFbG ($ in millions)(1) ​ ​ ​ ​ 45% ​ ​ ​ ​ ​ $ 1,575 ​ ​ ​ ​ ​ $ 2,100 ​ ​ ​ ​ ​ $ 2,352 ​ ​ ​ ​ ​ $ 2,232 ​ ​ ​ ​ ​ ​ 152% ​ ​ ​ ​ Adjusted EBITDA ($ in millions)(1) ​ ​ ​ ​ 45% ​ ​ ​ ​ ​ $ 2,887 ​ ​ ​ ​ ​ $ 3,850 ​ ​ ​ ​ ​ $ 4,234 ​ ​ ​ ​ ​ $ 4,106 ​ ​ ​ ​ ​ ​ 167% ​ ​ ​ ​ Non-Financial Metrics ​ ​ ​ ​ 10% ​ ​ ​ ​ 50% ​ ​ 100% ​ ​ 200% ​ ​ 146% ​ ​ ​ ​ 146% ​ ​ ​ ​ Final Weighted AIP Result for Performance Metrics ​ ​ ​ ​ 158% ​ ​ ​ ​ (1) Adjusted FCFbG and Adjusted EBITDA are non-GAAP financial metrics.

Executive compensation — actual 2025 financial results and incentive outcomes · Filed 18/03/2026

Adjusted FCFbG excludes changes in nuclear decommissioning trust liability, growth investments, net receipts from settlement of acquired derivatives that include financing elements, changes in collateral, acquisition and divestiture transaction and integration costs, and impacts of certain major transactions approved by the Compensation Committee.

Executive compensation — exclusions from adjusted free cash flow · Filed 18/03/2026

The Compensation Discussion and Analysis section beginning on page 72 describes our executive compensation program, which incorporates the following principles: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant portion of executive compensation is “at-risk” to align with stockholder interests and promote company business strategy through ties to performance metrics ​ ​ ​ Robust stock ownership guidelines, including one-year post-vest holding period for RPSUs granted in 2026 and beyond ​ ​ ​ Engage in a comprehensive performance evaluation process for all named executive officers (NEOs) and annual management succession and leadership development efforts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Require above-median performance for vesting of performance-based long-term incentive compensation awards at target ​ ​ ​ NYSE compliant clawback policy and clawback provisions in award agreements ​ ​ ​ Ensure our compensation practices do not encourage undue risk taking ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Written equity grant policy with predetermined schedule for routine equity grants ​ ​ ​ Double trigger for the payment of cash severance and the vesting of equity upon a change in control ​ ​ ​ Engage an independent compensation consultant to advise on compensation matters ​ ​ ​ ​ 2025 Year in Review​ ​ ​ ​ Pay for Performance Our strong performance in 2025 drove commensurate results in our Annual Incentive Plan (AIP) and Long Term Incentive Plan (LTIP), demonstrating alignment between Company performance and executive compensation.

Executive compensation highlights — ownership, performance vesting and clawback practices · Filed 18/03/2026

The Governance of the Company section beginning on page 10 describes our corporate governance framework, which incorporates the following principles: ​ ​ ​ ​ ​ ​ ​ ​ ​ Annual election of directors ​ ​ ​ ​ Majority voting for directors in uncontested elections ​ ​ ​ ​ 10 director nominees, of which 9 are independent ​ ​ ​ ​ Proxy access for stockholders to nominate directors ​ ​ ​ ​ Committees consisting solely of independent directors ​ ​ ​ ​ A lead independent director to be appointed in the event the roles of Chair and CEO are held by the same person ​ ​ ​ ​ Broad array of skills, experiences and backgrounds ​ ​ ​ ​ Regular executive sessions of independent directors ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk oversight by full Board and Committees ​ ​ ​ ​ Oversight by the Finance and Risk Management Committee of our data privacy and security practices, cybersecurity-related risks and our cybersecurity program ​ ​ ​ ​ Commitment to sustainability, and oversight of environmental, social and governance matters ​ ​ ​ ​ Anti-hedging and anti-pledging policies ​ ​ ​ ​ Annual Board and committee evaluation process, periodically using a third-party facilitator ​ ​ ​ ​ Robust director onboarding and continuing education programs ​ ​ ​ NRG Energy, Inc.

Governance highlights — elections, independent committees and shareholder rights · Filed 18/03/2026

During the 2025 fiscal year, each director attended more than 75% of the total number of Board meetings and meetings of the Committees on which they served (during the periods when they served).

Governance — actual 2025 director meeting attendance · Filed 18/03/2026

As part of this settlement, Vivint Smart Home paid $20 million and agreed to implement various additional compliance related measures ("Stipulated Order").

Contingencies — Vivint FTC settlement payment and compliance obligations · Filed 24/02/2026

Across all assessments, the Assessor reported no material findings of non-compliance and concluded that Vivint Smart Home’s Compliance Program remains substantially effective and comprehensive.

Contingencies — reported independent assessor compliance conclusions · Filed 24/02/2026

As reported in the Current Report on Form 8-K filed by the Company on May 1, 2026, at the Company’s 2026 annual meeting of stockholders held on April 30, 2026, the Company’s stockholders approved the 2026 LTIP.

Other information — April 30, 2026 shareholder approval of the incentive plan · Filed 06/05/2026

In the first quarter of 2026, the operations acquired from LS Power were integrated into the Company’s existing segment structure, enhancing scale and portfolio optimization across the platform.

Strategy — acquired operations integrated into segment structure · Filed 04/08/2026

Home customers make purchase decisions based on a variety of factors, including price, incentive, customer service, brand, innovative offers/features and referrals from friends and family.

Business — residential purchase decision factors · Filed 24/02/2026

Publication history

Sources

• filing-1 · Filed 24/02/2026
• filing-2 · Filed 04/08/2026
• filing-3 · Filed 18/03/2026
• filing-4 · Filed 26/02/2025
• filing-5 · Filed 28/02/2024
• filing-6 · Filed 06/05/2026