2013 Form 10-K Stockholder information STOCK TRANSFER AGENT AND REGISTRAR Shareholder correspondence should be mailed to: Computershare P.O. BOX 30170 College Station, TX 77842-3170 STOCKHOLDER INQUIRIES Overnight correspondence should be sent to: Computershare 211 Quality Circle, Suite 210 College Station, TX 77845 1.877.498.8861 - U.S./Canada 1.781.575.2725 - Outside the U.S./Canada 1.800.952.9245 - (Hearing Impaired – TDD Phone) Email: [email protected] Online inquires: https://www-us.computershare.com/investor/Contact Website: www.computershare.com/investor Send certificates for transfer and address changes to: Computershare P.O. BOX 30170 College Station, TX 77842-3170 STOCK LISTING NRG’s common stock is listed on the New York Stock Exchange under the ticker symbol NRG. FINANCIAL INFORMATION NRG’s Annual Report on Form 10-K, Proxy Statement and other SEC Filings are available at www.nrgenergy.com under the Investors section. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year ended December 31, 2013. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from to . Commission file No. 001-15891 NRG Energy, Inc. (Exact name of registrant as specified in its charter) Delaware 41-1724239 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 211 Carnegie Center Princeton, New Jersey 08540 (Address of principal executive offices) (Zip Code) (609) 524-4500 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Exchange on Which Registered Common Stock, par value $0.01 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of the last business day of the most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates was approximately $7,506,455,756 based on the closing sale price of $26.70 as reported on the New York Stock Exchange. Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date. Class Outstanding at February 26, 2014 Common Stock, par value $0.01 per share 325,217,179 Documents Incorporated by Reference: Portions of the Registrant's definitive Proxy Statement relating to its 2014 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K 1 TABLE OF CONTENTS GLOSSARY OF TERMS 2 PART I 6 Item 1 — Business 7 Item 1A — Risk Factors Related to NRG Energy, Inc. 37 Item 1B — Unresolved Staff Comments 51 Item 2 — Properties 52 Item 3 — Legal Proceedings 56 Item 4 — Mine Safety Disclosures 56 PART II 57 Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 57 Item 6 — Selected Financial Data 59 Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A — Quantitative and Qualitative Disclosures About Market Risk 100 Item 8 — Financial Statements and Supplementary Data 103 Item 9 — Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 104 Item 9A — Controls and Procedures 104 Item 9B — Other Information 104 PART III 105 Item 10 — Directors, Executive Officers and Corporate Governance 105 Item 11 — Executive Compensation 108 Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 109 Item 13 — Certain Relationships and Related Transactions, and Director Independence 109 Item 14 — Principal Accounting Fees and Services 109 PART IV 110 Item 15 — Exhibits, Financial Statement Schedules 110 EXHIBIT INDEX 213 2 Glossary of Terms When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below: 2012 Form 10-K NRG's Annual Report on Form 10-K for the year ended December 31, 2012 316(b) Rule Regulations promulgated by the EPA to implement a section of the Clean Water Act regulating cooling water intake structures ARO Asset Retirement Obligation ARRA American Recovery and Reinvestment Act ASC The FASB Accounting Standards Codification, which the FASB established as the source of authoritative U.S. GAAP ASU Accounting Standards Updates – updates to the ASC AZNMSN Arizona, New Mexico and Southern Nevada BACT Best Available Control Technology Baseload Units expected to satisfy minimum baseload requirements of the system and produce electricity at an essentially constant rate and run continuously BTU British Thermal Unit CAA Clean Air Act CAIR Clean Air Interstate Rule CAISO California Independent System Operator Capital Allocation Program NRG's plan of allocating capital between debt reduction, reinvestment in the business, investment in acquisition opportunities, share repurchases and shareholder dividends CCS-EOR Carbon Capture and Sequestration with Enhanced Oil Recovery project CDWR California Department of Water Resources C&I Commercial, industrial and governmental/institutional CFTC U.S. Commodity Futures Trading Commission CO Carbon dioxide 2 CPUC California Public Utilities Commission CSAPR Cross-State Air Pollution Rule CWA Clean Water Act Distributed Solar Solar power projects, typically less than 20 MW in size, that primarily sell power produced to customers for usage on site, or are interconnected to sell power into the local distribution grid DNREC Delaware Department of Natural Resources and Environmental Control DSU Deferred Stock Unit EME Edison Mission Energy Energy Plus Holdings Energy Plus Holdings LLC EPA United States Environmental Protection Agency EPC Engineering, Procurement and Construction ERCOT Electric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within Texas ESEC El Segundo Energy Center LLC ESPP Employee Stock Purchase Plan EWG Exempt Wholesale Generator Exchange Act The Securities Exchange Act of 1934, as amended FASB Financial Accounting Standards Board FCM Forward Capacity Market FERC Federal Energy Regulatory Commission FFB Federal Financing Bank FPA Federal Power Act 3 FRCC Florida Reliability Coordinating Council Fresh Start Reporting requirements as defined by ASC-852, Reorganizations GenOn GenOn Energy, Inc. GenOn Americas Generation GenOn Americas Generation, LLC GenOn Americas Generation GenOn Americas Generation's $850 million outstanding unsecured senior notes consisting Senior Notes of $450 million of 8.5% senior notes due 2021 and $400 million of 9.125% senior notes due 2031 GenOn Mid-Atlantic GenOn Mid-Atlantic, LLC and, except where the context indicates otherwise, its subsidiaries, which include the coal generation units at two generating facilities under operating leases GenOn Senior Notes GenOn's $2.0 billion outstanding unsecured senior notes consisting of $725 million of 7.875% senior notes due 2017, $675 million of 9.5% senior notes due 2018, and $550 million of 9.875% senior notes due 2020 ($575 million of 7.625% senior notes due 2014 were redeemed in June of 2013) GenOn Holdings GenOn Energy Holdings, Inc. GHG Greenhouse Gases Green Mountain Energy Green Mountain Energy Company GWh Gigawatt hour Heat Rate A measure of thermal efficiency computed by dividing the total BTU content of the fuel burned by the resulting kWh's generated. Heat rates can be expressed as either gross or net heat rates, depending whether the electricity output measured is gross or net generation and is generally expressed as BTU per net kWh High Desert TA - High Desert, LLC High Desert Facility High Desert's $82 million non-recourse project level financing facility under the Note Purchase and Private Shelf Agreement ISO Independent System Operator, also referred to as Regional Transmission Organizations, or RTO ISO-NE ISO New England Inc. Kansas South NRG Solar Kansas South LLC kWh Kilowatt-hours LIBOR London Inter-Bank Offered Rate LTIPs Collectively, the NRG Long-Term Incentive Plan and the NRG GenOn Long-Term Incentive Plan Marsh Landing NRG Marsh Landing, LLC (formerly known as GenOn Marsh Landing, LLC) Mass Residential and small business MATS Mercury and Air Toxics Standards promulgated by the EPA MD PSC Maryland Public Service Commission MDE Maryland Department of the Environment Merger The merger completed on December 14, 2012 by NRG and GenOn pursuant to the Merger Agreement Merger Agreement The agreement by and among NRG, GenOn Energy, Inc. and Plus Merger Corporation, dated as of July 20, 2012 Merit Order A term used for the ranking of power stations in order of ascending marginal cost MISO Midcontinent Independent System Operator, Inc. MMBtu Million British Thermal Units MOPR Minimum Offer Price Rule MSU Market Stock Unit MW Megawatts MWh Saleable megawatt hours net of internal/parasitic load megawatt-hours MWt Megawatts Thermal Equivalent NAAQS National Ambient Air Quality Standards NERC North American Electric Reliability Corporation 4 Net Capacity Factor The net amount of electricity that a generating unit produces over a period of time divided by the net amount of electricity it could have produced if it had run at full power over that time period. The net amount of electricity produced is the total amount of electricity generated minus the amount of electricity used during generation Net Exposure Counterparty credit exposure to NRG, net of collateral Net Generation The net amount of electricity produced, expressed in kWhs or MWhs, that is the total amount of electricity generated (gross) minus the amount of electricity used during generation. NINA Nuclear Innovation North America LLC NJDEP New Jersey Department of Environmental Protection NO Nitrogen oxide x NOL Net Operating Loss NOV Notice of Violation NPNS Normal Purchase Normal Sale NQSO Non-Qualified Stock Option NRC U.S. Nuclear Regulatory Commission NRG GenOn LTIP NRG 2010 Stock Plan for GenOn Employees (formerly the GenOn Energy, Inc. 2010 Omnibus Incentive Plan, which was assumed by NRG in connection with the Merger) NRG LTIP NRG Long-Term Incentive Plan NRG Yield Reporting segment including the following projects: Alpine, Avenal, Avra Valley, AZ DG Solar, Blythe, Borrego, CVSR, GenConn, Marsh Landing, PFMG DG Solar, Roadrunner, South Trent and Thermal. NRG Yield, Inc. NRG Yield, Inc., the owner of 34.5% of NRG Yield LLC with a controlling interest, and issuer of publicly held shares of Class A common stock NRG Yield LLC NRG Yield LLC, which owns, through its wholly owned subsidiary, NRG Yield Operating LLC, all of the assets contributed to NRG Yield LLC in connection with the initial public offering of Class A common stock of NRG Yield, Inc. NSPS New Source Performance Standards NSR New Source Review NYISO New York Independent System Operator NYSPSC New York State Public Service Commission OCI Other comprehensive income PADEP Pennsylvania Department of Environmental Protection Peaking Units expected to satisfy demand requirements during the periods of greatest or peak load on the system PG&E Pacific Gas & Electric PJM PJM Interconnection, LLC PPA Power Purchase Agreement PU Performance Unit PUCT Public Utility Commission of Texas PUHCA of 2005 Public Utility Holding Company Act of 2005 PURPA Public Utility Regulatory Policies Act of 1978 QF Qualifying Facility under PURPA RCRA Resource Conservation and Recovery Act of 1976 Reliant Energy Reliant Energy Retail Services, LLC Repowering Technologies utilized to replace, rebuild, or redevelop major portions of an existing electrical generating facility, not only to achieve a substantial emissions reduction, but also to increase facility capacity, and improve system efficiency Retail Business NRG's retail energy brands, including Reliant, Green Mountain, Energy Plus and NRG Residential Solutions 5 RGGI Regional Greenhouse Gas Initiative RMR Reliability Must-Run RPS Renewable Portfolio Standards RSS Reliability Support Service RSU Restricted Stock Unit Schkopau Kraftwerk Schkopau Betriebsgesellschaft mbH SEC United States Securities and Exchange Commission Securities Act The Securities Act of 1933, as amended Senior Credit Facility NRG's senior secured facility, comprised of the Term Loan Facility and the Revolving Credit Facility SIFMA Securities Industry and Financial Markets Association Senior Notes The Company's $5.9 billion outstanding unsecured senior notes consisting of, $1.2 billion of 7.625% senior notes due 2018, $700 million of 8.5% senior notes due 2019, $800 million of 7.625% senior notes due 2019, $1.1 billion of 8.25% senior notes due 2020, $1.1 billion of 7.875% senior notes due 2021, and $990 million of 6.625% senior notes due 2023 SERC Southeastern Electric Reliability Council/Entergy SO Sulfur dioxide 2 STP South Texas Project Electric Generating Station Units 1 & 2 — nuclear generating facility located near Bay City, Texas in which NRG owns a 44% interest STPNOC South Texas Project Nuclear Operating Company TEPCO The Tokyo Electric Power Company of Japan, Inc. Term Loan Facility The Company's $2.0 billion term loan facility due 2018, a component of the Senior Credit Facility Texas Genco Texas Genco LLC, now referred to as the Company's Texas Region Tonnes Metric tonnes, which are units of mass or weight in the metric system each equal to 2,205lbs and are the global measurement for GHG TSR Total Shareholder Return TWh Terawatt hour U.S. United States of America U.S. DOE United States Department of Energy U.S. GAAP Accounting principles generally accepted in the United States Utility Scale Solar Solar power projects, typically 20 MW or greater in size, that are interconnected into the transmission or distribution grid to sell power at a wholesale level VaR Value at Risk VIE Variable Interest Entity WCP WCP (Generation) Holdings, Inc. WECC Western Electricity Coordinating Council 6 PART I Item 1 — Business General NRG Energy, Inc., or NRG or the Company, is a competitive power and energy company that aspires to be a leader in the way residential, industrial and commercial consumers think about, use, produce and deliver energy and energy services in major competitive power markets in the United States. NRG engages in the ownership and operation of power generation facilities; the trading of energy, capacity and related products; the transacting in and trading of fuel and transportation services and the direct sale of energy, services, and innovative, sustainable products to retail customers. The Company sells retail electric products and services under the name “NRG” and various brands owned by NRG. Finally, NRG aspires to be a clean energy leader and is focused on the deployment and commercialization of potentially transformative technologies, like electric vehicles, Distributed Solar and smart meter/home automation technology that collectively have the potential to fundamentally change the nature of the power industry, including a substantial change in the role of the national electric transmission grid and distribution system. Wholesale Power Generation NRG's generation facilities are primarily located in the United States and comprise generation facilities across the merit order. The sale of capacity and power from baseload and intermediate generation facilities accounts for a majority of the Company's generation revenues. In addition, NRG's generation portfolio provides the Company with opportunities to capture additional revenues by selling power during periods of peak demand, offering capacity or similar products, and providing ancillary services to support system reliability. Retail The Retail Business provides energy and related services to residential, commercial and institutional customers primarily located in Texas and selected Northeast markets. Products and services range from system power to home services, to bundled products which combine system power with protection products, energy efficiency and renewable energy solutions. Based on metered locations, as of December 31, 2013, NRG's Retail Business served approximately 2.3 million residential, small business, commercial and industrial customers. Alternative Energy NRG's investment in, and development of, new technologies is focused on identifying significant commercial opportunities and creating a comparative advantage for the Company. The Company's development and investment initiatives are focused on Distributed Solar, solar thermal, solar photovoltaic and wind and also include other low-or no-GHG emitting energy generating sources, such as the fueling infrastructure for electric vehicle, or EV, ecosystems. 7 The map below shows the locations of NRG's U.S. power generation facilities as of December 31, 2013, (excluding Distributed Solar), both operating and under construction, as well as the states where NRG operates its Retail Business: 8