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What changed in Vistra Corp.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Vistra Corp.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+805 added−875 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in Vistra Corp.'s 2023 10-K

805 paragraphs added · 875 removed · 146 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

109 edited+71 added−446 removed91 unchanged
Biggest changeIn July 2017, California enacted legislation extending its GHG cap-and-trade program through 2030 and the CARB adopted amendments to its cap-and-trade regulations that, among other things, established a framework for extending the program beyond 2020 and linking the program to the new cap-and-trade program in Ontario, Canada beginning in January 2018.
Biggest changeIn July 2017, California enacted legislation extending its GHG cap-and-trade program through 2030 and the CARB adopted amendments to its cap-and-trade regulations that, among other things, established a framework for extending the program beyond 2020 and linking the program to the new cap-and-trade program in Ontario, Canada beginning in January 2018. 11 Table of Contents Air Emissions The Clean Air Act (CAA) The CAA and comparable state laws and regulations relating to air emissions impose various responsibilities on owners and operators of sources of air emissions, which include requirements to obtain construction and operating permits, pay permit fees, monitor emissions, submit reports and compliance certifications, and keep records.
ISO-NE offers a forward capacity market where capacity prices are determined through auctions. Performance incentive rules have the potential to increase capacity payments for those resources that are providing excess energy or reserves during a shortage event, while penalizing those that produce less than the required level.
ISO-NE offers the Forward Capacity Market where capacity prices are determined through auctions. Performance incentive rules have the potential to increase capacity payments for those resources that are providing excess energy or reserves during a shortage event, while penalizing those that produce less than the required level.
We have also acquired the trade names for Ambit Energy, Dynegy Energy Services, Homefield Energy, TriEagle Energy, Public Power and U.S. Gas & Electric through the Ambit Transaction, Crius Transaction and the Merger, as the case may be.
We have also acquired the trade names for Ambit Energy, Dynegy Energy Services, Homefield Energy, TriEagle Energy, Public Power and U.S. Gas & Electric through the Ambit Transaction, Crius Transaction and the Dynegy Merger, as the case may be.
In August 2021, we submitted a request to transfer our conversion application for the Zimmer facility to a retirement application following announcement that Zimmer will close by May 31, 2022. In January 2022, the EPA determined that our conversion and retirement applications for our CCR facilities were complete but has not yet proposed action on any of those applications.
In August 2021, we submitted a request to transfer our conversion application for the Zimmer facility to a retirement application following the announcement that Zimmer will close by May 31, 2022. In January 2022, the EPA determined that our conversion and retirement applications for our CCR facilities were complete but has not yet proposed action on any of those applications.
Intermediate/load-following generating units, which can more efficiently change their output to satisfy increases in demand, typically satisfy a large proportion of changes in intraday load as they respond to daily increases in demand or unexpected changes in supply created by reduced generation from renewable resources or other generator outages. Peak daily loads may be satisfied by peaking units.
Intermediate/load-following generation units, which can more efficiently change their output to satisfy increases in demand, typically satisfy a large proportion of changes in intraday load as they respond to daily increases in demand or unexpected changes in supply created by reduced generation from renewable resources or other generator outages. Peak daily loads may be satisfied by peaking units.
Brand Value Our TXU Energy brand, which has been used to sell electricity to customers in the competitive retail electricity market in Texas for approximately 20 years, is registered and protected by trademark law and is the only material intellectual property asset that we own.
Our TXU Energy brand, which has been used to sell electricity to customers in the competitive retail electricity market in Texas for approximately 20 years, is registered and protected by trademark law and is the only material intellectual property asset that we own.
An independent market monitor continually monitors PJM markets to ensure a robust, competitive market and to identify improper behavior by any entity. ISO-NE — ISO-NE is an ISO that manages the flow of electricity from approximately 32,600 MW of winter generation capacity to approximately 15 million customers in the states of Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island and Maine.
An independent market monitor continually monitors PJM markets to ensure a robust, competitive market and to identify improper behavior by any entity. ISO-NE — ISO-NE is an ISO that manages the flow of electricity from approximately 32,400 MW of winter generation capacity to approximately 15 million customers in the states of Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island and Maine.
The Water Infrastructure Improvements for the Nation Act (the WIIN Act), which was enacted in December 2016, provides for EPA review and approval of state CCR permit programs. 16 Table of Contents In August 2018, the D.C. Circuit Court issued a decision that vacates and remands certain provisions of the 2015 CCR rule, including an applicability exemption for legacy impoundments.
The Water Infrastructure Improvements for the Nation Act (the WIIN Act), which was enacted in December 2016, provides for EPA review and approval of state CCR permit programs. 14 Table of Contents In August 2018, the D.C. Circuit Court issued a decision that vacates and remands certain provisions of the 2015 CCR rule, including an applicability exemption for legacy impoundments.
Regular full-time employees are eligible for short-term disability benefits, and all employees are eligible for the employee assistance program, parental leave, maternity leave and a 401(k) plan through which the Company matches employee contributions up to 6%. 11 Table of Contents Wellness We believe a healthy workforce leads to greater well-being at work and at home.
Regular full-time employees are eligible for short-term disability benefits, and all employees are eligible for the employee assistance program, parental leave, maternity leave and a 401(k) plan through which the Company matches employee contributions up to 6%. 8 Table of Contents Wellness We believe a healthy workforce leads to greater well-being at work and at home.
The ACE rule developed emission guidelines that states must use when developing plans to regulate GHG emissions from existing coal-fueled electric generating units. In response to challenges brought by environmental groups and certain states, the U.S. Court of Appeals for the District of Columbia Circuit (D.C.
The ACE rule developed emission guidelines that states must use when developing plans to regulate GHG emissions from existing coal-fueled electric generation units. In response to challenges brought by environmental groups and certain states, the U.S. Court of Appeals for the District of Columbia Circuit (D.C.
Creating and maintaining an environment where differences are valued and respected enhances our ability to recruit and retain the best talent in the marketplace and to provide a work environment that allows all employees to be their best. 10 Table of Contents Vistra's diversity is evolving, and our Board and management are leading by example.
Creating and maintaining an environment where differences are valued and respected enhances our ability to recruit and retain the best talent in the marketplace and to provide a work environment that allows all employees to be their best. 7 Table of Contents Vistra's diversity is evolving, and our Board and management are leading by example.
For SO 2 , the rule established an intrastate Texas emission allowance trading program as a "BART alternative" that operates in a similar fashion to a CSAPR trading program. The program includes 39 generating units (including the Martin Lake, Big Brown, Monticello, Sandow 4, Coleto Creek, Stryker 2 and Graham 2 plants).
For SO 2 , the rule established an intrastate Texas emission allowance trading program as a "BART alternative" that operates in a similar fashion to a CSAPR trading program. The program includes 39 generation units (including the Martin Lake, Big Brown, Monticello, Sandow 4, Coleto Creek, Stryker 2 and Graham 2 plants).
There is a certain baseline demand for electricity across an electric power system that occurs throughout the day, which is typically satisfied by baseload generating units with low variable operating costs. Baseload generating units can also increase output to satisfy certain incremental demand and reduce output when demand is unusually low.
There is a certain baseline demand for electricity across an electric power system that occurs throughout the day, which is typically satisfied by baseload generation units with low variable operating costs. Baseload generation units can also increase output to satisfy certain incremental demand and reduce output when demand is unusually low.
Further, in the third year of Vistra's $10 million five-year commitment to support underserved communities, Vistra provided funding to educational and economic development nonprofits around the country working to transform underserved communities for the better. Training and Development We believe the development of employees at all levels is critical to Vistra's current and future success.
Further, in the fourth year of Vistra's $10 million five-year commitment to support underserved communities, Vistra provided funding to educational and economic development nonprofits around the country working to transform underserved communities for the better. Training and Development We believe the development of employees at all levels is critical to Vistra's current and future success.
NYISO — NYISO is an ISO that manages the flow of electricity from approximately 37,500 MW of installed summer generation capacity to approximately 20 million New York customers. NYISO dispatches power plants to meet system energy and reliability needs and settles physical power deliveries at LMPs.
NYISO — NYISO is an ISO that manages the flow of electricity from approximately 37,000 MW of installed summer generation capacity to approximately 20 million New York customers. NYISO dispatches power plants to meet system energy and reliability needs and settles physical power deliveries at LMPs.
During 2022, we continued our efforts to unlock the full potential of our people by launching multiple new initiatives within our diversity, equity, and inclusion efforts. Our Chief Diversity Officer continued to develop and lead Vistra's employee-led Diversity, Equity and Inclusion Advisory Council, established in 2020.
During 2023, we continued our efforts to unlock the full potential of our people by launching multiple new initiatives within our diversity, equity, and inclusion efforts. Our Chief Diversity Officer continued to develop and lead Vistra's employee-led Diversity, Equity and Inclusion Advisory Council, established in 2020.
We continued to utilize our thirteen Employee Resource Groups (ERGs) to promote the appreciation of and communicate awareness of diverse employee groups and communities and their contribution to the overall success of the organization, both internally and externally. ERGs represent not only diverse cultures, but also employees with disabilities, the LGBTQ+ community and employees engaged in innovation.
We continued to utilize our fifteen Employee Resource Groups (ERGs) to promote the appreciation of and communicate awareness of diverse employee groups and communities and their contribution to the overall success of the organization, both internally and externally. ERGs represent not only diverse cultures, but also employees with disabilities, the LGBTQ+ community and employees engaged in innovation and analytics.
Currently, four of the eleven Board members are women, and two of the eleven are ethnically diverse. Overall, 32% of the Company's workforce is ethnically diverse. Women currently hold 25% of the Company's senior management positions, and ethnically diverse employees represent 27% of senior management.
Currently, four of the eleven Board members are women, and two of the eleven are ethnically diverse. Overall, 32% of the Company's workforce is ethnically diverse. Women currently hold 24% of the Company's senior management positions, and ethnically diverse employees represent 27% of senior management.
In June 2019, New Jersey adopted two rules that govern New Jersey's reentry into the RGGI auction and distribution of the RGGI auction proceeds. 13 Table of Contents Pennsylvania — In April 2022, the Pennsylvania Environmental Quality Board finalized regulations that would establish Pennsylvania's participation in RGGI.
In June 2019, New Jersey adopted two rules that govern New Jersey's reentry into the RGGI auction and distribution of the RGGI auction proceeds. Pennsylvania — In April 2022, the Pennsylvania Environmental Quality Board finalized regulations that would establish Pennsylvania's participation in RGGI.
In April 2019, PRN also filed a complaint against DMG before the Illinois Pollution Control Board (IPCB), alleging that groundwater flows allegedly associated with the ash impoundments at the Vermilion site have resulted in exceedances both of surface water standards and Illinois groundwater standards dating back to 1992.
In April 2019, PRN also filed a complaint against DMG before the Illinois Pollution Control Board (IPCB), alleging that groundwater flows allegedly associated with the ash impoundments at the Vermilion site have resulted in exceedances both of surface water standards and Illinois groundwater standards dating back to 1992. We answered that complaint in July 2021.
As required under the CAA, in October 2018, the State of Texas submitted a State Implementation Plan (SIP) to the EPA demonstrating that emissions from Texas sources do not contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the revised ozone NAAQS. In February 2023, the EPA disapproved Texas's SIP.
As required under the CAA, in October 2018, the State of Texas submitted a State Implementation Plan (SIP) to the EPA demonstrating that emissions from Texas sources do not contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the revised ozone NAAQS.
In furtherance of Vistra's efforts to meet its net-zero target, Vistra expects to deploy multiple levers to transition the company to operating with net-zero emissions, including decarbonization of existing business lines and further diversification into low-to-no emission businesses, primarily renewables and energy storage.
In furtherance of Vistra's efforts to meet its net-zero target, Vistra expects to deploy multiple levers to transition the company to operating with net-zero emissions, including decarbonization of existing business lines and further diversification into low-to-no emission businesses, primarily renewables and battery ESS.
In October 2021, we filed operating permit applications for 18 impoundments as required by the Illinois coal ash rule, and filed construction permit applications for three of our sites in January 2022 and five of our sites in July 2022. One additional closure construction application will be filed for our Baldwin facility in 2023.
In October 2021, we filed operating permit applications for 18 impoundments as required by the Illinois coal ash rule, and filed construction permit applications for three of our sites in January 2022 and five of our sites in July 2022. One additional closure construction application was filed for our Baldwin facility in August 2023.
In 2022, Vistra continued its formal mentoring program available to all employees to focus on topics like organizational knowledge, career development, individual development, collaboration and leadership. Over 600 employees participated in 2022. In addition, all full-time employees, other than those in a collective bargaining unit, receive a formal performance review guiding development and improving results of the business.
In 2024, Vistra continued its formal mentoring program available to all employees to focus on topics like organizational knowledge, career development, individual development, collaboration and leadership. Over 500 employees participated in 2023. In addition, all full-time employees, other than those in a collective bargaining unit, receive a formal performance review guiding development and improving results of the business.
We estimate that our generation facilities produced approximately 104 million short tons of CO 2 in the year ended 2022. To manage our environmental impact from our business activities and reduce our emissions profile, Vistra set emissions reduction targets.
We estimate that our generation facilities produced approximately 95 million short tons of CO 2 in the year ended 2023. To manage our environmental impact from our business activities and reduce our emissions profile, Vistra set emissions reduction targets.
We have announced our plans to develop: ◦ additional solar generation facilities in Texas, with expected commercial operation dates beginning in 2024, and ◦ 300 MW of solar generation facilities at retired or to-be retired plant sites in Illinois with expected commercial operation dates ranging from 2024 to 2025. • Battery Energy Storage Projects — We operate battery ESSs totaling 270 MW in Texas and 400 MW in California.
We have announced our plans to develop: ◦ additional solar generation facilities in Texas, with expected commercial operation dates beginning in 2025, and ◦ up to 300 MW of solar generation facilities at retired or to-be retired plant sites in Illinois with expected commercial operation dates ranging from 2024 to 2026. • Battery Energy Storage Projects — We operate battery ESS totaling 270 MW in Texas and 750 MW in California.
However, the currently anticipated CCR surface impoundment and landfill closure costs, as reflected in our existing ARO liabilities, reflect the costs of closure methods that our operations and environmental services teams believe are appropriate and protective of the environment for each location.
However, the CCR surface impoundment and landfill closure costs currently reflected in our existing ARO liabilities, reflect the costs of closure methods that our operations and environmental services teams believe are appropriate based on existing closure requirements and protective of the environment for each location.
Its energy markets allow market participants to buy and sell energy and ancillary services at prices established through real-time and day-ahead auctions. Energy prices vary among the regional zones and locations in the NYISO and are largely influenced by transmission constraints and fuel supply. NYISO offers a forward capacity market where capacity prices are determined through auctions.
Its energy markets allow market participants to buy and sell energy and ancillary services at prices established through real-time and day-ahead auctions. Energy prices vary among the regional zones and locations in the NYISO and are largely influenced by transmission constraints and fuel supply.
See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Significant Activities and Events and Items Influencing Future Performance - Macroeconomic Conditions .
Management's Discussion and Analysis of Financial Condition, and Results of Operations – Significant Activities and Events, and Items Influencing Future Performance – Macroeconomic Conditions .
Risk Factors for additional discussion of risks posed to us regarding regulatory requirements. See Note 12 to the Financial Statements for a discussion of litigation related to EPA reviews. Climate Change There is continuing attention and interest domestically and internationally about global climate change and how GHG emissions, such as CO 2 , contribute to global climate change.
Risk Factors for additional discussion of risks posed to us regarding regulatory requirements. See Note 14 to the Financial Statements for a discussion of litigation related to EPA reviews. Climate Change There is continuing emphasis domestically and internationally on global climate change and how GHG emissions, such as CO 2 , contribute to global climate change.
PJM's Capacity Performance (CP) rules were designed to improve system reliability and include penalties for under-performing units and reward for over-performing units during shortage events. Full transition of the capacity market to CP rules occurred in planning year 2020-2021.
We also enter into bilateral capacity transactions. PJM's Capacity Performance (CP) rules were designed to improve system reliability and include penalties for under-performing units and reward for over-performing units during shortage events. Full transition of the capacity market to CP rules occurred in planning year 2020-2021.
We, along with many other companies, trade groups, states and ISOs, including ERCOT, PJM and MISO, filed responsive comments to the EPA's proposal in June 2022, expressing concerns about certain elements of the proposal, particularly those that may result in challenges to electric reliability under certain conditions. The EPA is expected to finalize the proposed FIP in March 2023.
We, along with many other companies, trade groups, states and ISOs, including ERCOT, PJM and MISO, filed responsive comments to the EPA's proposal in June 2022, expressing concerns about certain elements of the proposal, particularly those that may result in challenges to electric reliability under certain conditions. In March 2023, the EPA administrator signed its final FIP.
Due to the short-term nature of the NYISO-operated capacity auctions and a relatively liquid bilateral market for NYISO capacity products, our Independence facility sells a significant portion of its capacity through bilateral transactions. The balance is cleared through the seasonal and monthly capacity auctions.
Due to the short-term nature of the NYISO-operated capacity auctions and a relatively liquid bilateral market for NYISO capacity products, our Independence facility sells a significant portion of its capacity through bilateral transactions.
We have announced our plans to develop: ◦ 150 MW of battery ESS at retired or to-be-retired plant sites in Illinois with expected commercial operation dates ranging from 2024 to 2025, and ◦ 350 MW of battery ESS in California with an expected commercial operation date in 2023. • Acquisition of CCGTs — In 2016 and 2017, we acquired 4,042 MW of CCGTs in Texas.
We have announced our plans to develop up to 150 MW of battery ESS at retired or to-be-retired plant sites in Illinois with expected commercial operation dates ranging from 2024 to 2026. • Acquisition of CCGTs — In 2016 and 2017, we acquired 4,042 MW of CCGTs in Texas.
In June 2018, the IEPA issued a violation notice for alleged seep discharges claimed to be coming from the surface impoundments at our retired Vermilion facility, which is owned by our subsidiary DMG, and that notice was referred to the Illinois Attorney General.
We are addressing these CCR surface impoundments in accordance with the federal CCR rule. In June 2018, the IEPA issued a violation notice for alleged seep discharges claimed to be coming from the surface impoundments at our retired Vermilion facility, which is owned by our subsidiary DMG, and that notice was referred to the Illinois Attorney General.
Coal Combustion Residuals The EPA's CCR rule, which took effect in October 2015, establishes minimum federal requirements for the construction, retrofitting, operation and closure of, and corrective action with respect to, existing and new CCR landfills and surface impoundments, as well as inactive CCR surface impoundments.
Each of our coal-fueled plants has at least one CCR surface impoundment. Coal Combustion Residuals The EPA's CCR rule, which took effect in October 2015, establishes minimum federal requirements for the construction, retrofitting, operation and closure of, and corrective action with respect to, existing and new CCR landfills and surface impoundments, as well as inactive CCR surface impoundments.
In July 2022, the Commonwealth Court took action to uphold a preliminary injunction over Pennsylvania's RGGI regulations. The Pennsylvania Supreme Court denied a request for emergency relief from the injunction in August 2022 and review of the legality of the injunction is now pending before the Pennsylvania Supreme Court.
In July 2022, the Commonwealth Court of Pennsylvania (Commonwealth Court) took action to uphold a preliminary injunction over Pennsylvania's RGGI regulations. The Pennsylvania Supreme Court denied a request for emergency relief from the injunction in August 2022.
Our commodity risk management group also enters into electricity, gas and other commodity derivative contracts to reduce exposure to changes in prices primarily to hedge future revenues and fuel costs for our generation facilities and purchased power costs for our Retail segment. Seasonality The demand for and market prices of electricity and natural gas are affected by weather.
Our commodity risk management group also enters into electricity, natural gas and other commodity derivative contracts to reduce exposure to changes in prices primarily to mitigate the volatility of future revenues and fuel costs for our generation facilities and purchased power costs for our Retail segment.
Market Discussion The operations of Vistra are aligned into six reportable business segments: (i) Retail, (ii) Texas, (iii) East, (iv) West, (v) Sunset and (vi) Asset Closure.
Market Discussion The operations of Vistra, as an integrated retail electricity and power generation company, are further aligned into six reportable business segments: (i) Retail, (ii) Texas, (iii) East, (iv) West, (v) Sunset and (vi) Asset Closure.
CAISO — CAISO is an ISO that manages the flow of electricity to approximately 32 million customers primarily in California, representing approximately 80% percent of the state's electric load. 7 Table of Contents Energy is priced in CAISO utilizing an LMP methodology.
The balance is cleared through the seasonal and monthly capacity auctions. 4 Table of Contents CAISO — CAISO is an ISO that manages the flow of electricity to approximately 32 million customers primarily in California, representing approximately 80% percent of the state's electric load. Energy is priced in CAISO utilizing an LMP methodology.
PJM also administers a forward capacity auction, the Reliability Pricing Model (RPM), which establishes a long-term market for capacity. We have participated in RPM auctions for years up to and including PJM's planning year 2024-2025, which ends May 31, 2025. We also enter into bilateral capacity transactions.
PJM also administers a forward capacity auction, the Reliability Pricing Model (RPM), which establishes a long-term market for capacity. We have participated in RPM auctions for years up to and including PJM's planning year 2024-2025, which ends May 31, 2025. PJM's RPM auction for planning year 2025-2026 was delayed and is expected to be run in June 2024.
In 2018, we acquired 15,448 MW of CCGTs across various ISOs/RTOs in connection with the Merger. • Retirements of Fossil Fuel Generation — Since 2018, lignite/coal-fueled generation facilities retired include 4,167 MW in Texas, 3,455 MW in Illinois (including the Edwards facility that was retired on January 1, 2023) and 1,300 MW in Ohio.
In 2018, we acquired 15,448 MW of CCGTs across various ISOs/RTOs in connection with the Dynegy Merger. • Retirements of Fossil Fuel Generation — Since 2018, lignite/coal-fueled generation facilities retired include 4,167 MW in Texas, 4,040 MW in Illinois and 1,300 MW in Ohio.
The legislation addresses state requirements for the proper closure of coal ash ponds in the state of Illinois. The law tasks the IEPA and the IPCB to set up a series of guidelines, rules and permit requirements for closure of ash ponds.
The law tasks the IEPA and the IPCB to set up a series of guidelines, rules and permit requirements for closure of ash ponds.
Strip auctions occur one to two months prior to the commencement of a six-month seasonal planning period. Subsequent auctions provide an opportunity to sell excess capacity for the balance of the seasonal planning period or the upcoming month.
NYISO offers the Installed Capacity Market, a forward capacity market where capacity prices are determined through auctions. Strip auctions occur one to two months prior to the commencement of a six-month seasonal planning period. Subsequent auctions provide an opportunity to sell excess capacity for the balance of the seasonal planning period or the upcoming month.
In February 2017, the State of Texas and Luminant filed challenges to the nonattainment designations in the Fifth Circuit Court. In August 2019, the EPA issued a proposed Error Correction Rule for all three areas, which, if finalized, would have revised its previous nonattainment designations and each area at issue would be designated unclassifiable.
In August 2019, the EPA issued a proposed Error Correction Rule for all three areas, which, if finalized, would have revised its previous nonattainment designations and each area at issue would be designated unclassifiable.
The spot market price of RGGI allowances required to operate these facilities as of December 31, 2022 was approximately $13.57 per allowance. The spot market price of RGGI allowances required to operate our affected facilities during 2023 was approximately $12.63 per allowance on February 23, 2023.
The spot market price of RGGI allowances required to operate these facilities as of December 31, 2023 was approximately $15.35 per allowance. The spot market price of RGGI allowances required to operate our affected facilities during 2024 was approximately $16.21 per allowance on February 23, 2024.
Item 1. BUSINESS References in this report to "we," "our," "us" and "the Company" are to Vistra and/or its subsidiaries, as apparent in the context. See Glossary for defined terms. Business Vistra is a holding company operating an integrated retail and electric power generation business primarily in markets throughout the U.S.
Item 1. BUSINESS References in this report to "we," "our," "us" and "the Company" are to Vistra and/or its subsidiaries, as apparent in the context. See Glossary of Terms and Abbreviations for defined terms. General Vistra is an integrated retail electricity and power generation company.
As a result, RGGI is not being implemented or enforced in Pennsylvania at this time. California — Our assets in California are subject to the California Global Warming Solutions Act, which required the California Air Resources Board (CARB) to develop a GHG emission control program to reduce emissions of GHGs in the state to 1990 levels by 2020.
California — Our assets in California are subject to the California Global Warming Solutions Act, which required the California Air Resources Board (CARB) to develop a GHG emission control program to reduce emissions of GHGs in the state to 1990 levels by 2020.
Since 2010, Vistra has retired more than 14,500 MW of coal and gas power plants resulting in a 45% reduction in carbon dioxide (CO 2 ) emissions, a 61% reduction in nitrogen oxide (NO X ) emissions, and a 81% reduction in sulfur dioxide (SO 2 ) emissions through year-end 2022, compared to a 2010 baseline.
Since 2010, Vistra has retired more than 15,100 MW of coal and natural gas power plants resulting in a 50% reduction in carbon dioxide (CO 2 ) emissions, a 68% reduction in nitrogen oxide (NO X ) emissions, and an 89% reduction in sulfur dioxide (SO 2 ) emissions through year-end 2023, compared to a 2010 baseline.
We expect to retire an additional 4,578 MW of coal-fueled generation facilities in Illinois, Ohio and Texas no later than year-end 2027.
We expect to retire an additional 4,578 MW of coal-fueled generation facilities in Illinois, Ohio and Texas no later than year-end 2027. • Acquisition of Nuclear Generation Facilities — In 2023, we announced the acquisition of 4,048 MW of nuclear generation facilities in PJM from Energy Harbor.
RGGI is currently conducting its third program review to be completed by the end of 2023 which may include an updated model rule. Our generating facilities in Connecticut, Maine, Massachusetts, New Jersey, New York and Virginia emitted approximately 9 million tons of CO 2 during 2022.
RGGI is currently conducting its third program review which may include an updated model rule. 10 Table of Contents Our generation facilities in Connecticut, Maine, Massachusetts, New Jersey, New York and Virginia emitted approximately 10 million short tons of CO 2 during 2023.
Vistra subsidiaries filed comments on that rulemaking in December 2020, and the EPA published a final rule in the Federal Register on April 30, 2021 that reduces ozone season NO X budgets in certain states.
Vistra subsidiaries filed comments on that rulemaking in December 2020, and the EPA published a final rule in the Federal Register on April 30, 2021 that reduces ozone season NO X budgets in certain states. We do not believe that the final rule causes a material adverse impact on our future financial results.
The launch of the new and improved online learning platform in 2022 further supports employees in completing thousands of hours of professional training to support continuing education requirements for their respective professional licenses, including accounting, legal and nuclear.
The Vistra Learning Community is our online platform that strategically supports employees in completing thousands of hours of professional training to support continuing education requirements for their respective professional licenses, including accounting, legal and nuclear.
We have launched key programs to develop leaders at all levels of the organization. Vistra's Essentials in Leadership provides first time managers with skills to lead organizations in situational leadership, business acumen, identification of communication styles and inclusive communication practices, and exposes them to best practices from across the company.
We have launched key programs to develop leaders at all levels of the organization. Vistra's Essentials of Leadership provides new managers with skills to lead organizations in situational leadership, business acumen, inclusive leadership, and exposes them to best practices from across the company. We continue to evaluate and refine our programs as the development needs of our employees change.
Effluent Limitation Guidelines (ELGs) — In November 2015, the EPA revised the ELGs for steam electricity generation facilities, which will impose more stringent standards (as individual permits are renewed) for wastewater streams, such as FGD, fly ash, bottom ash and flue gas mercury control wastewaters.
We also believe we can satisfy the requirements necessary to obtain any required permits or renewals. 16 Table of Contents Effluent Limitation Guidelines (ELGs) — In November 2015, the EPA revised the ELGs for steam electricity generation facilities, which will impose more stringent standards (as individual permits are renewed) for wastewater streams, such as FGD, fly ash, bottom ash and flue gas mercury control wastewaters.
See Note 2 to the Financial Statements for a summary of our solar and battery energy storage projects. 6 Table of Contents PJM — PJM is an RTO that manages the flow of electricity from approximately 185,000 MW of generation capacity to approximately 65 million customers in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
PJM — PJM is an RTO that manages the flow of electricity from approximately 183,000 MW of generation capacity to approximately 65 million customers in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
Vistra also provides many other training and development programs to help grow and develop employees at every level, including online learning platform courses, learning management system courses, recorded webinars and presentations, self-paced development and employee-specific skill training.
In 2023, Vistra refreshed our Front-Line Leader development program focusing on the development of supervisors and managers at our plants. Vistra also provides many other training and development programs to help grow and develop employees at every level, including online learning platform courses, learning management system courses, recorded webinars and presentations, self-paced development and employee-specific skill training.
In April 2022, prior to the EPA's disapproval of Texas's SIP, the EPA proposed a Federal Implementation Plan (FIP) to address the 2015 ozone NAAQS. The proposed FIP would apply to 25 states beginning with the 2023 ozone seasons.
In April 2022, prior to the EPA's disapproval of Texas' SIP, the EPA proposed a Federal Implementation Plan (FIP) to address the 2015 ozone NAAQS.
Competition Competition in the markets in which we operate is impacted by electricity and fuel prices, congestion along the power grid, subsidies provided by state and federal governments for new and existing generation facilities, including renewables generation and battery ESS, new market entrants, construction of new generating assets, technological advances in power generation, the actions of environmental and other regulatory authorities, and other factors.
The pattern of this fluctuation may change depending on, among other things, the retail load served and the terms of contracts to purchase or sell electricity. 5 Table of Contents Competition Competition in the markets in which we operate is impacted by electricity and fuel prices, congestion along the power grid, subsidies provided by state and federal governments for new and existing generation facilities, including renewables generation and battery ESS, new market entrants, construction of new generation assets, technological advances in power generation, the actions of environmental and other regulatory authorities, and other factors.
Circuit Court have been held in abeyance pending the EPA's action on reconsideration. National Ambient Air Quality Standards (NAAQS) The CAA requires the EPA to regulate emissions of pollutants considered harmful to public health and the environment. The EPA has established NAAQS for six such pollutants, including SO 2 and ozone.
We submitted comments to the EPA on this proposal in August 2023. National Ambient Air Quality Standards (NAAQS) The CAA requires the EPA to regulate emissions of pollutants considered harmful to public health and the environment. The EPA has established NAAQS for six such pollutants, including SO 2 and ozone.
These plans may result in the imposition of emission limits on our facilities. 15 Table of Contents SO 2 Designations for Texas In November 2016, the EPA finalized its nonattainment designations for counties surrounding our Martin Lake generation plant and our now retired Big Brown and Monticello plants. The final designations require Texas to develop nonattainment plans for these areas.
Each state is responsible for developing a SIP that will attain and maintain the NAAQS. These plans may result in the imposition of emission limits on our facilities. SO 2 Designations for Texas In November 2016, the EPA finalized its nonattainment designations for counties surrounding our Martin Lake generation plant and our now retired Big Brown and Monticello plants.
ERCOT also calculates the "peaker net margin" based on revenues a hypothetical unhedged peaking unit would collect in the market. If the peaker net margin exceeds a certain threshold, the system-wide offer cap is reduced to the low system-wide offer cap of $2,000/MWh for the remainder of the calendar year.
If the peaker net margin exceeds a certain threshold, the system-wide offer cap is reduced to the low system-wide offer cap of $2,000/MWh for the remainder of the calendar year.
The State of Texas and the TCEQ have intervened in support of the petitions filed by the Vistra subsidiaries and USWAG, and various environmental groups have intervened on behalf of the EPA. Briefing on this petition will be complete by May 2023.
The State of Texas and the TCEQ have intervened in support of the petitions filed by the Vistra subsidiaries and USWAG, and various environmental groups have intervened on behalf of the EPA. Briefing before the D.C. Circuit Court is complete, and the court will hear argument in March 2024.
In February 2022, the State of Texas, Luminant, certain trade groups, and others filed legal challenges to the EPA's disapproval of Texas's SIP in the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit Court).
In February 2023, the EPA disapproved Texas' SIP and the State of Texas, Luminant, certain trade groups, and others challenged that disapproval in the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit Court).
As a result, our operating results are impacted by extreme or sustained weather conditions and may fluctuate on a seasonal basis. Typically, demand for and the price of electricity is higher in the summer and winter seasons, when the temperatures are more extreme, and the demand for and price of natural gas is also generally higher in the winter.
Seasonality The demand for and market prices of electricity and natural gas are affected by weather. As a result, our operating results are impacted by extreme or sustained weather conditions and may fluctuate on a seasonal basis.
See Note 2 to the Financial Statements for discussion of our solar and battery ESS projects and Note 3 to the Financial Statements for discussion of our retirement of generation facilities. 12 Table of Contents GHG Emissions In July 2019, the EPA finalized a rule that repealed the Clean Power Plan (CPP) that had been finalized in 2015 and established new regulations addressing GHG emissions from existing coal-fueled electric generation units, referred to as the Affordable Clean Energy (ACE) rule.
GHG Emissions In July 2019, the EPA finalized a rule that repealed the Clean Power Plan (CPP) and established new regulations addressing GHG emissions from existing coal-fueled electric generation units, referred to as the Affordable Clean Energy (ACE) rule.
Regional Haze — Reasonable Progress and Best Available Retrofit Technology (BART) for Texas The Regional Haze Program of the CAA establishes "as a national goal the prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I federal areas which impairment results from man-made pollution." There are two components to the Regional Haze Program.
In July 2023, the Fifth Circuit Court ruled that the FIP challenge would be held in abeyance pending the resolution of the litigation on the SIP disapproval and denied the motion to stay as not needed given the EPA's administrative stay. 12 Table of Contents Regional Haze — Reasonable Progress and Best Available Retrofit Technology (BART) for Texas The Regional Haze Program of the CAA establishes "as a national goal the prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I federal areas which impairment results from man-made pollution." There are two components to the Regional Haze Program.
The voluntary Competitive Solicitation Process, which FERC approved in October 2015, is a modification to the Capacity Procurement Mechanism (CPM) and provides another avenue to sell RA capacity. Sunset Segment Our Sunset segment is comprised of six power generation facilities totaling 5,163 MW of generating capacity in MISO, PJM and ERCOT.
The voluntary Competitive Solicitation Process, which FERC approved in October 2015, is a modification to the Capacity Procurement Mechanism (CPM) and provides another avenue to sell RA capacity.
We believe we hold all required permits relating to these activities for facilities in operation and have applied for or obtained necessary permits for facilities under construction. We also believe we can satisfy the requirements necessary to obtain any required permits or renewals.
We believe our facilities are presently in material compliance with applicable federal and state requirements relating to these activities. We believe we hold all required permits relating to these activities for facilities in operation and have applied for or obtained necessary permits for facilities under construction.
States where Vistra operates generation units that would be subject to this proposed rule are Illinois, New Jersey, New York, Ohio, Pennsylvania, Texas, Virginia and West Virginia. The revised Group 3 trading program (previously established in the Revised CSAPR Update Rule) would include emission budgets for 2023 that the EPA says are achievable through existing controls installed at power plants.
Texas would be moved into the revised Group 3 trading program previously established in the Revised CSAPR Update Rule that includes emission budgets for 2023 that the EPA says are achievable through existing controls installed at power plants.
In addition, we work closely with our suppliers and contractors to ensure our safety practices are upheld. All of our power plant facilities have effective health and safety programs and comply with OSHA regulations.
All of our power plant facilities have effective health and safety programs and comply with OSHA regulations.
In 2022, safety learning calls were held every week where 128 near-miss and safety events were reviewed by our operating teams to promote learning across the fleet. All Vistra employees are covered by our safety program. Corporate and retail employees are required to complete periodic training on safety topics through our online learning management system.
We encourage near-miss reporting and review of events to promote a learning environment. In 2023, safety learning calls were held every week where near-miss and safety events were reviewed by our operating teams to promote learning across the fleet. All Vistra employees are covered by our safety program.
We are in compliance with the rule, and the retirements of our Monticello, Big Brown and Sandow 4 plants have enhanced our ability to comply. The EPA has stated it is starting a proceeding for reconsideration of the BART rule, which we expect in 2023. The challenges in the D.C.
We are in compliance with the rule, and the retirements of our Monticello, Big Brown and Sandow 4 plants have enhanced our ability to comply. The EPA is in the process of reconsidering the BART rule, and the challenges in the D.C. Circuit Court have been held in abeyance pending the EPA's final action on reconsideration.
The interim order was modified in December 2022 to require certain amendments to the Safety Emergency Response Plan. These proposed closure costs are reflected in the ARO in our consolidated balance sheets (see Note 20 to the Financial Statements). 17 Table of Contents In July 2019, coal ash disposal and storage legislation in Illinois was enacted.
These proposed closure costs are reflected in the ARO in our consolidated balance sheets (see Note 22 to the Financial Statements). In July 2019, coal ash disposal and storage legislation in Illinois was enacted. The legislation addresses state requirements for the proper closure of coal ash ponds in the state of Illinois.
Our retail business also offers a comprehensive suite of green products and services, including 100% wind and solar options, as well as thermostats, dashboards and other programs designed to encourage reduced consumption and increased energy efficiency. Our integrated power generation and wholesale operation allows us to efficiently obtain the electricity needed to serve our customers at the lowest cost.
Our retail business also offers a comprehensive suite of green products and services, including 100% wind and solar options, as well as thermostats, dashboards and other programs designed to encourage reduced consumption and increased energy efficiency. 1 Table of Contents Electricity Generation Operations Vistra is the largest competitive power generator in the U.S. as measured by MWh.
These changes are currently being evaluated by the PUCT and the Texas legislature and have not been implemented as of the date hereof. In 2014, ERCOT implemented the Operating Reserve Demand Curve (ORDC), pursuant to which wholesale electricity prices in the real-time electricity market increase automatically as available operating reserves decrease below defined threshold levels, creating a price adder.
In 2014, ERCOT implemented the Operating Reserve Demand Curve (ORDC), pursuant to which wholesale electricity prices in the real-time electricity market increase automatically as available operating reserves decrease below defined threshold levels, creating a price adder. The slope of the ORDC curve is determined through a mathematical loss of load probability calculation using forecasted reserves and historical data.
Prior to the November 2020 deadline, we submitted applications to the EPA requesting compliance extensions under both conversion and retirement scenarios. In November 2020, environmental groups petitioned for review of this rule in the D.C. Circuit Court, and Vistra subsidiaries filed a motion to intervene in support of the EPA in December 2020.
Prior to the November 2020 deadline, we submitted applications to the EPA requesting compliance extensions under both conversion and retirement scenarios. In 2022 and 2023, we withdrew the applications for Coffeen, Martin Lake, Joppa and Zimmer stations because extensions were no longer needed. In November 2020, environmental groups petitioned for review of this rule in the D.C.
To facilitate a learning environment, our various operating plants share their investigations and learnings of all safety events with all operations employees on weekly calls. The information is presented by front-line employees and supported by management. The lessons from each event are shared across the fleet to prevent similar incidents at other locations.
We place a high importance on continuous improvement, along with a keen focus on numerous learning and error-prevention tools. To facilitate a learning environment, our various operating plants share their investigations and learnings of all safety events with all operations employees on weekly calls. The information is presented by front-line employees and supported by management.
The integrated model enables us to structure products and contracts in a way that offers significant value compared to stand-alone retail electric providers.
The integrated model enables us to structure products and contracts in a way that offers significant value compared to stand-alone retail electric providers. The Company brings its products and services to market in 20 states and the District of Columbia, including all major competitive wholesale power markets in the U.S.
ERCOT — ERCOT is an ISO that manages the flow of electricity from approximately 98,000 MW of expected Summer 2023 peak generation capacity to approximately 26 million Texas customers, representing approximately 90% of the state's electric load. 5 Table of Contents As an energy-only market, ERCOT's market design is distinct from other competitive electricity markets in the U.S.
Generators will receive the location-based marginal price for their output. ERCOT — ERCOT is an ISO that manages the flow of electricity from approximately 98,000 MW of expected Summer 2023 peak generation capacity to approximately 26 million Texas customers, representing approximately 90% of the state's electric load.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeImpairment of Goodwill and Other Long-Lived Assets We evaluate long-lived assets (including intangible assets with finite lives) for impairment, in accordance with accounting standards related to impairment or disposal of long-lived assets, whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Biggest changeAdditionally, we review goodwill, our intangible assets and long-lived assets for impairment when events or changes in circumstances indicate the carrying value of the asset may not be recoverable. Factors that may be considered include a decline in future cash flows, slower growth rates in the energy industry, and a sustained decrease in the price of our common stock.
While the Company has not experienced a cyber/data event causing any material operational, reputational or financial impact, we recognize the growing threat within the general marketplace and our industry, and are proactively making strategic investments in our perimeter and internal defenses, cyber/data security operations center and regulatory compliance activities.
As of the date of this report, the Company has not identified a cyber/data event causing any material operational, reputational or financial impact. However, we recognize the growing threat within the general marketplace and our industry, especially as generative AI becomes more widely used by threat actors.
For the next five years, Vistra is projected to spend approximately $432 million (on a nominal basis) to achieve its mining reclamation and other coal ash remediation objectives. During the years ended December 31, 2022, 2021 and 2020, we transferred $61 million, zero and $15 million, respectively, in ARO obligations to third parties for remediation.
For the next five years, Vistra is projected to spend approximately $245 million (on a nominal basis) to achieve its mining reclamation objectives. Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us.
Risk Factors in this annual report on Form 10-K for additional discussion on risks that could have a material effect on our results of operations, liquidity, financial condition, cash flows, reputation, prospects and the market price for our securities (including our common stock).
These factors, in addition to others specifically addressed in Item 7. Management's Discussion and Analysis of Financial Condition, and Results of Operations (MD&A) , provide important information for the understanding of our forward-looking statements in this annual report on Form 10-K.
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Item 1A. Risk Factors – Regulatory and Legislative Risks and Note 12 to the Financial Statements. However, such rules and the regulatory environment are continuing to evolve and change, and we cannot predict the ultimate effect that such changes may have on our business.
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Item 1A. RISK FACTORS Summary of Risk Factors The following summarizes the principal factors that make an investment in our company speculative or risky, all of which are more fully described in the Risk Factors section below.
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Emissions Reductions — Vistra is targeting to achieve a 60% reduction in Scope 1 and Scope 2 CO 2 equivalent emissions by 2030 as compared to a 2010 baseline with a long-term goal to achieve net-zero carbon emissions by 2050, assuming necessary advancements in technology and supportive market constructs and public policy.
Added
This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business.
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In furtherance of Vistra's efforts to meet its net-zero target, Vistra expects to deploy multiple levers to transition the Company to operating with net-zero emissions.
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The following factors could result in harm to our business, financial condition, results of operations, cash flows, and prospects, among other impacts: Market, Financial and Economic Risks • Our revenues, results of operations and operating cash flows are affected by price fluctuations in the wholesale power market and other market factors beyond our control. • We purchase natural gas, coal, fuel oil, and nuclear fuel for our generation facilities, and higher than expected fuel costs or disruptions in these fuel markets may have an adverse impact on, our costs, revenues, results of operations, financial condition and cash flows. • We have retired, announced planned retirements of, and may be forced to retire or idle additional underperforming generation units which could result in significant costs and have an adverse effect on our operating results. • Our assets or positions cannot be fully hedged against changes in commodity prices and Market Heat Rates, and hedging transactions may not work as planned or hedge counterparties may default on their obligations. • Competition, changes in market structure, and/or state or federal interference in the wholesale and retail power markets, together with subsidized generation, may have a material adverse effect on our financial condition, results of operations and cash flows. • Our results of operations and financial condition could be materially and adversely affected by energy market participants continuing to construct new generation facilities or expanding or enhancing existing generation facilities despite relatively low power prices and such additional generation capacity results in a reduction in wholesale power prices. • Our liquidity needs could be difficult to satisfy, particularly during times of uncertainty in the financial markets or during times of significant fluctuation in commodity prices, and we may be unable to access capital on favorable terms or at all in the future, which could have a material adverse effect on us. • The agreements and instruments governing our debt, including the Vistra Operations Credit Facilities and indentures, contain restrictions and limitations that could affect our ability to operate our business, our liquidity, and our results of operations, and any failure to comply with these restrictions could have a material adverse effect on us. • We may not be able to complete future acquisitions on favorable terms or at all, successfully integrate future acquisitions into our business, or effectively identify and invest in value-creating businesses, assets or projects, which could result in unanticipated expenses and losses or otherwise hinder or delay our growth strategy. • Our ability to achieve the expected growth of our Vistra Zero portfolio, consisting of our solar generation, battery ESS, and other renewables development projects, is subject to substantial capital requirements and other significant uncertainties. • Tax legislation initiatives or challenges to our tax positions, or potential future legislation or the imposition of new or increased taxes or fees, could have a material adverse effect on our financial condition, results of operations and cash flows.
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Green Finance Framework — In December 2021, we announced the publication of our Green Finance Framework, which allows us to issue green financial instruments to fund new or existing projects that support renewable energy and energy efficiency with alignment to our ESG strategy.
Added
Regulatory and Legislative Risks • Our businesses are subject to ongoing complex governmental regulations and legislation that have adversely impacted, and may in the future adversely impact, our businesses, results of operations, liquidity and financial condition. • Our cost of compliance with existing and new environmental laws could have a material adverse effect on us. 18 Table of Contents • Pending or proposed laws or regulations, or the repeal of existing beneficial laws or regulations, including those proposed or implemented under the Biden administration, could have a material adverse effect on our businesses, results of operations, liquidity and financial condition. • Changes to laws, rules or regulations related to market structures in the markets in which we participate may have a material adverse effect on our businesses, results of operation, liquidity and financial condition. • We could be materially and adversely affected if current regulations are implemented or if new federal or state legislation or regulations are adopted to address global climate change, or if we are subject to lawsuits for alleged damage to persons or property resulting from greenhouse gas emissions. • Litigation, legal proceedings, regulatory investigations or other administrative proceedings could expose us to significant liabilities and reputational damage that could have a material adverse effect on us.
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See Preferred Stock Offerings below for discussion of the Series B Preferred Securities issued under our Green Finance Framework. 52 Table of Contents Solar Generation and Energy Storage Projects — • In September 2020, we announced the planned development, at a cost of approximately $850 million, of up to 668 MW of solar photovoltaic power generation facilities and 260 MW of battery ESS in Texas.
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Operational Risks • Volatile power supply costs and demand for power have and could in the future adversely affect the financial performance of our retail businesses. • Our retail operations are subject to significant competition from other REPs, which could result in a loss of existing customers and the inability to attract new customers. • Cybersecurity attacks or technology systems failures could disrupt business operations and expose us to significant liabilities, reputational damage, loss of customers, and regulatory action. • The operation of our businesses is subject to information security and operational technology risks, including cybersecurity breaches and failure of critical information and operations technology systems.
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Of this planned development in Texas, 158 MW of solar generation and the 260 MW of battery ESS came online in 2022. • In September 2021, we announced the planned development, at a cost of approximately $550 million, of up to 300 MW of solar photovoltaic power generation facilities and up to 150 MW of battery ESS at retired or to-be-retired plant sites in Illinois, based on the passage of Illinois Senate Bill 2408, the Energy Transition Act. • In January 2022, we announced that, subject to approval by the CPUC, we would enter into a 15-year resource adequacy and energy settlement contract with PG&E to develop an additional 350 MW battery ESS at our Moss Landing Power Plant site.
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Attacks on our infrastructure that breach cyber/data security measures could expose us to significant liabilities, reputational damage, regulatory action, and disrupt business operations, which could have a material adverse effect on us. • We may suffer material losses, costs and liabilities due to operational risks, regulatory risks, and the risk of nuclear accidents arising from the ownership and operation of the Comanche Peak nuclear generation facility. • The operation and maintenance of power generation facilities and related mining operations are capital intensive and involve significant risks that could adversely affect our results of operations, liquidity and financial condition. • We may be materially and adversely affected by obligations to comply with federal and state regulations, laws, and other legal requirements that govern the operations, assessments, storage, closure, corrective action, disposal and monitoring relating to CCR. • We have been and may in the future be materially and adversely affected by the effects of extreme weather conditions and seasonality. • Events outside of our control, including an epidemic or outbreak of an infectious disease may materially adversely affect our business. • Changes in technology, increased electricity conservation efforts, or energy sustainability efforts may reduce the value of our business, introduce new or emerging risks and may otherwise have a material adverse effect on us.
Removed
The CPUC approved the resource adequacy and energy settlement contract in April 2022. We will only invest in these growth projects if we are confident in the expected returns. See Note 2 to the Financial Statements for a summary of our solar and battery ESS projects.
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Risks Related to Our Structure and Ownership of our Common Stock • Evolving expectations from stakeholders, including investors, on ESG issues, including climate change and sustainability matters, and erosion of stakeholder trust or confidence could influence actions or decisions about our company and our industry and could adversely affect our business, operations, financial results, or stock price. • We may not pay any dividends on our common stock in the future, and we may not realize the anticipated benefits of our share repurchase program. 19 Table of Contents Please carefully consider the following discussion of significant factors, events, and uncertainties that make an investment in our securities risky.
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CO 2 Reductions — In September 2020 and December 2020, we announced our intention to retire (a) all of our remaining coal generation facilities in Illinois and Ohio, (b) one coal generation facility in Texas and (c) one natural gas facility in Illinois no later than year-end 2027 due to economic challenges, including incremental expenditures that would be required to comply with the CCR rule and ELG rule (see Note 12 to the Financial Statements), and in furtherance of our efforts to significantly reduce our carbon footprint.
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If one or more of the factors, events and uncertainties discussed below or in the MD&A were to materialize, our business, results of operations, liquidity, financial condition, cash flows, reputation or prospects could be materially adversely affected.
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In June 2022, September 2022 and January 2023, we retired the Zimmer coal-fueled generation facility, the Joppa generation facilities and the Edwards coal-fueled generation facility, respectively. See Note 3 to the Financial Statements for a summary of these planned generation retirements.
Added
In addition, if one or more of such factors, events and uncertainties were to materialize, it could cause results or outcomes to differ materially from those contained in or implied by any forward-looking statement in this annual report on Form 10-K.
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Comanche Peak Nuclear Plant License Renewal In October 2022, we announced the submission of our application to the NRC for license renewal at our two-unit Comanche Peak Nuclear Plant. The current licenses for Units 1 and 2 extend into 2030 and 2033, respectively, and we are applying to renew the licenses into 2050 and 2053, respectively.
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There may be further risks and uncertainties that are not currently known or that are not currently believed to be material that may adversely affect our business, results of operations, liquidity, financial condition and prospects and the market price of our common stock in the future.
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Inflation Reduction Act of 2022 In August 2022, the U.S. enacted the Inflation Reduction Act of 2022 (IRA), which, among other things, implements substantial new and modified energy tax credits, including a nuclear production tax credit (PTC), a solar PTC, a first-time stand-alone battery storage investment tax credit, a 15% corporate alternative minimum tax (CAMT) on book income of certain large corporations, and a 1% excise tax on net stock repurchases.
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The realization of any of these factors could cause investors in our securities (including our common stock) to lose all or a substantial portion of their investment. Market, Financial and Economic Risks Our revenues, results of operations and operating cash flows generally are affected by price fluctuations in the wholesale power market and other market factors beyond our control.
Removed
Treasury regulations are expected to define the scope of the legislation in many important respects over the next twelve months. Vistra is not subject to the CAMT in the next fiscal year since it applies only to corporations that have a three-year average annual adjusted financial statement income in excess of $1 billion.
Added
We are not guaranteed any rate of return on capital investments in our businesses. We conduct integrated power generation and retail electricity activities, focusing on power generation, wholesale electricity sales and purchases, retail sales of electricity and natural gas to end users and commodity risk management.
Removed
The excise tax is not expected to have a material impact on our financial statements.
Added
Our wholesale and retail businesses are to some extent countercyclical in nature, particularly for the wholesale power and ancillary services supplied to the retail business. However, we do have a wholesale power position that is subject to wholesale power price moves, which may be significant.
Removed
As of December 31, 2022, we have taken the CAMT and relevant extensions or expansions of existing tax credits applicable to projects in our immediate development pipeline into account when forecasting cash taxes for periods after the law takes effect and for estimating the TRA liability.
Added
As a result, our revenues, results of operations and operating cash flows depend in large part upon wholesale market prices for electricity, natural gas, uranium, lignite, coal, fuel oil, and transportation in our regional markets and other competitive markets in which we operate and upon prevailing retail electricity rates, which may be impacted by, among other things, actions of regulatory authorities.
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Macroeconomic Conditions Global market demand, geopolitical events and high natural gas price volatility have resulted in increased market prices for energy and other commodities, and we expect these conditions to persist, in particular in the near term.
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Market prices for power, capacity, ancillary services, natural gas, coal and fuel oil are unpredictable and may fluctuate substantially over relatively short periods of time. Unlike most other commodities, electric power can only be stored on a very limited basis and generally must be produced concurrently with its use.
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Due in large part to the Russia and Ukraine conflict as well as other factors, we have experienced substantial shifts in commodity prices, which in turn have (i) facilitated our comprehensive hedging strategy which we believe has positioned us to lock in significant revenues and Adjusted EBITDA opportunities in 2023 through 2025, (ii) led to significant mark-to-market impacts on forward commodity derivative instruments, and (iii) combined with our comprehensive hedging strategy, resulted in significant increases in our collateral posting obligations and required substantial liquidity to support such obligations.
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As a result, power prices are subject to significant volatility due to supply and demand imbalances, especially in the day-ahead and spot markets. Demand for electricity can fluctuate dramatically, creating periods of substantial under- or over-supply. Over-supply can occur as a result of the construction of new power generation sources, as we have observed in recent years.
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Additionally, we continue to monitor domestic drivers of gas prices, including the pace of investment and buildout of liquefied natural gas (LNG) export capabilities, which have the potential to more closely align U.S. natural gas pricing with the further elevated international gas markets over the next couple of years.
Added
During periods of over-supply, electricity prices might be depressed. For example, the cost of electricity from renewable resources, such as solar, wind and battery ESS, has dropped substantially in recent years.
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See also Financial Condition for further discussion of our collateral posting obligations and liquidity management activities. 53 Table of Contents We continue to monitor the impacts of energy volatility on the retail and associated default service markets.
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In many instances, energy from these sources are bid into the relevant spot market at a price of zero or close to zero during certain times of the day, lowering the clearing price for all power wholesalers in such market.
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As electricity pricing trended higher in 2022, we experienced increased customer migration to the default service provider in territories outside of Texas, where default service rates do not yet fully reflect the higher commodity pricing environment.
Added
Also, at times there is political pressure, or pressure from regulatory authorities with jurisdiction over wholesale and retail energy commodity and transportation rates, to impose price limitations, bidding rules and other mechanisms to address volatility and other issues in these markets.
Removed
Generators (including Vistra) with contracts to serve a percentage of the resultingly higher than planned default service load (previously awarded through the default service auction process) are likely to incur losses on these particular default service contracts, as estimates of the potential migration were lower than the level of migration that was realized and the underlying cost to provide the incremental power rose above the contracted revenue rate.
Added
Extreme weather events can also materially impact power prices or otherwise exacerbate conditions or circumstances that result in volatility of power prices. For example, in February 2021, the U.S. experienced Winter Storm Uri and extreme cold temperatures in the central U.S., including Texas.
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As a result of this customer migration, we incurred losses in 2022 and anticipate these losses will continue to have a negative impact on our East segment through the end of these default service contracts in mid-2023. With forward power and natural gas curves increasing materially in 2022, we have increased our hedging for future periods.
Added
This severe weather event substantially increased the demand for natural gas used in our electric power generation business, and the cold further limited the availability of renewable generation across the region contributing to extremely high market prices for natural gas and electricity, which resulted in substantial increases in the costs to procure sufficient fuel supply and increased collateral posting requirements.
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As of December 31, 2022, we have hedged approximately 73% of our expected generation volumes on average for the three-year period 2023 to 2025 (with approximately 90% hedged for 2023 and approximately 76% hedged for 2024).
Added
Winter Storm Elliott, in December 2022, and Winter Storm Heather, in January 2024, were other examples of extreme weather across the U.S. that resulted in widespread wholesale power market volatility. 20 Table of Contents The majority of our facilities operate as "merchant" facilities without long-term power sales agreements.
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Changes to the geopolitical situation and the inflationary environment, among other factors, have also created supply chain constraints that have reduced the availability and increased the costs of certain fuels, such as coal, reduced the availability of certain equipment and supply relevant to construction of renewables projects, and increased the lead time to procure certain materials necessary to maintain our natural gas, nuclear and coal fleet.
Added
As a result, we largely sell electric energy, capacity and ancillary services into the wholesale energy spot market or into other wholesale and retail power markets on a short-term basis and are not guaranteed any rate of return on our capital investments.
Removed
We are proactively managing the increased costs of materials and supply chain disruptions and continuing to prudently re-evaluate the business cases and timing of our planned development projects, which has resulted in a deferral of some of our planned capital spend for our renewables projects from 2022 to 2023 and beyond.
Added
Consequently, there can be no assurance that we will be able to sell any or all of the electric energy, capacity or ancillary services from those facilities at commercially attractive rates or that our facilities will be able to operate profitably. We depend, in large part, upon prevailing market prices for power, capacity and fuel.
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In addition, we have proactively engaged our suppliers to secure key materials needed to maintain our existing generation facilities prior to future planned outages, and our Vistra Zero operational and development projects are anticipated to benefit from the impact of the recently passed IRA.
Added
Given the volatility of commodity power prices, to the extent we are unable to hedge or otherwise secure long-term power sales agreements for the output of our power generation facilities, our revenues and profitability will be subject to volatility, and our financial condition, results of operations and cash flows could be materially adversely affected.
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The inflationary environment has also led to, and is expected to cause further increases in, interest rates, resulting in increased refinancing or borrowing costs, including project financing for our development projects.
Added
We purchase natural gas, coal, fuel oil, and nuclear fuel for our generation facilities, and higher than expected fuel costs, volatility, or disruption in these fuel markets may have an adverse impact on our costs, revenues, results of operations, financial condition and cash flows.
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Additionally, we have been monitoring, and will continue to closely monitor, developments of the Russia and Ukraine conflict, including sanctions (or potential sanctions) against Russian energy exports and Russian nuclear fuel supply and enrichment activities, as well as actions by Russia to limit energy deliveries, which may further impact commodity prices in Europe and globally.
Added
We rely on natural gas, coal, fuel oil, and nuclear fuel for the majority of our power generation facilities.
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Our 2022 refueling has not been affected by the Russia and Ukraine conflict. We work with a diverse set of global nuclear fuel cycle suppliers to procure our nuclear fuel, and therefore, we expect to have enough nuclear fuel to support all our refueling needs through 2025.
Added
Delivery of these fuels to the facilities is dependent upon the continuing availability of such fuels and financial viability of contractual counterparties as well as upon the infrastructure (including mines, rail lines, rail cars, barge facilities, roadways, riverways and natural gas pipelines) available and functioning to serve each generation facility, and geopolitical risk, including the current Russia and Ukraine conflict and the potential for additional U.S. sanctions against Russia or other potential restrictions on Russian energy deliveries.
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We are taking affirmative action by including mitigating strategies in our procurement portfolio to ensure we can secure the nuclear fuel needed to continue to operate our nuclear facility. If imports from Russia were restricted, U.S. merchant nuclear power generators could be challenged in their refueling operations in future years.
Added
See Item 7. Management's Discussion and Analysis of Financial Condition, and Results of Operations – Significant Activities and Events, and Items Influencing Future Performance - Macroeconomic Conditions .
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Winter Storm Uri In February 2021, a severe winter storm with extremely cold temperatures affected much of the U.S., including Texas. This severe weather resulted in surging demand for power, gas supply shortages, operational challenges for generators, and a significant load shed event that was ordered by ERCOT beginning on February 15, 2021 and continuing through February 18, 2021.
Added
As a result, we have experienced, and remain subject to the risks of disruptions or curtailments in the production of power at our generation facilities if no fuel is available at any price, if a counterparty fails to perform or if there is a disruption in the fuel delivery infrastructure.
Removed
Winter Storm Uri had a material adverse impact on our results of operations and operating cash flows. The weather event resulted in a $2.2 billion negative impact on the Company's pre-tax earnings in the year ended December 31, 2021 after taking into account approximately $544 million in securitization proceeds Vistra received from ERCOT as further described below.
Added
Certain of our generation facilities rely on a limited number of counterparties, such as natural gas suppliers and railcar companies, to provide the necessary fuel. Disputes relating to or non-performance of contractual arrangements have resulted in, and may continue to result in adverse impacts to our costs, revenues, results of operations, financial condition, and cash flows.
Removed
The primary drivers of the loss were the need to procure power in ERCOT at market prices at or near the price cap due to lower output from our natural gas-fueled power plants driven by natural gas deliverability issues and our coal-fueled power plants driven by coal fuel handling challenges, high fuel costs, and high retail load costs. 54 Table of Contents As part of the 2021 regular Texas legislative sessions and in response to extraordinary costs incurred by electricity market participants during Winter Storm Uri, the Texas legislature passed House Bill (HB) 4492 for ERCOT to obtain financing to distribute to load-serving entities (LSEs) that were charged and paid to ERCOT exceptionally high price adders and ancillary service costs during Winter Storm Uri.
Added
As part of our strategy to mitigate the potential negative effects of commodity price volatility, we have sold forward a substantial portion of our expected power sales in the next few years in order to lock in long-term prices.
Removed
In October 2021, the PUCT issued a debt obligation order approving ERCOT's $2.1 billion financing and the methodology for allocation of proceeds to the LSEs. In December 2021, ERCOT finalized the amount of allocations to the LSEs, and we received $544 million in proceeds from ERCOT in the second quarter of 2022.
Added
In order to hedge our obligations under these forward power sales contracts, we have entered into long-term and short-term contracts for the purchase and delivery of fuel.
Removed
We concluded that the threshold for recognizing a receivable was met in December 2021 as the amounts to be received were determinable and ERCOT was directed by its governing body, the PUCT, to take all actions required to effectuate the $2.1 billion funding approved in the debt obligation order.
Added
Many of the forward power sales contracts do not allow us to pass through changes in fuel costs or discharge the power sale obligations in the case of a disruption in fuel supply due to force majeure events or the default of a fuel supplier or transporter.
Removed
Accordingly, we recognized the $544 million in expected proceeds as an expense reduction in the fourth quarter of 2021 within fuel, purchased power costs and delivery fees in our consolidated statements of operation. The final financial impact of Winter Storm Uri continues to be subject to the outcome of litigation arising from the event.
Added
Fuel costs (including diesel, natural gas, lignite, coal and nuclear fuel) are volatile, and the wholesale price for power does not always change at the same rate as changes in fuel costs, and disruptions in our fuel supplies may therefore require us to find alternative fuel sources at costs which may be higher than planned, to find other sources of power to deliver to counterparties at a higher cost, or to pay damages to counterparties for failure to deliver power as contracted.
Removed
Vistra has taken various actions to improve its risk profile for future weather-driven volatility events, including investing in improvements to further harden its coal fuel handling capabilities and to further weatherize its ERCOT fleet for even colder temperatures and longer durations; carrying more backup generation into the peak seasons after accounting for weatherization investments and ERCOT market improvements implemented going forward; contracting for incremental gas storage to support its gas fleet; adding additional dual fuel capabilities at its gas steam units and increasing fuel oil inventory at its existing dual fuel sites; participating in processes with the PUCT and ERCOT for registration of gas infrastructure as critical resources with the transmission and distribution utilities and for enhanced winterization of both gas and power assets in the state; and engaging in processes to evaluate potential market reforms.
Added
Long-term and short-term contracts are subject to risk of non-delivery or claims of force majeure, which may impact our ability to economically recover the value of the contract. In addition, we purchase and sell natural gas and other energy related commodities, and volatility in these markets may affect costs incurred in meeting our obligations.
Removed
Dividend Program In November 2018, we announced that the Board had adopted a dividend program which we initiated in the first quarter of 2019. During the years ended December 31, 2022, 2021 and 2020, we paid dividends to common stockholders totaling $302 million, $290 million and $266 million, respectively.
Added
Further, any changes in the costs of natural gas, coal, fuel oil, nuclear fuel or transportation rates and changes in the relationship between such costs and the market prices of power will affect our financial results.
Removed
See Note 13 to the Financial Statements for more information about our dividend program. Share Repurchase Program In October 2021, we announced that the Board had authorized a share repurchase program (Share Repurchase Program) under which up to $2.0 billion of our outstanding common stock may be repurchased. The Share Repurchase Program became effective on October 11, 2021.
Added
If we are unable to procure fuel for physical delivery at prices we consider favorable, or if we are unable to procure these fuels at all, our financial condition, results of operations and cash flows could be materially adversely affected.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Luminant's asset fleet as of December 31, 2022, all of which are 100% (fee simple) owned, consists of power generation and battery ESS units in six ISOs/RTOs, with the location, ISO/RTO, technology, primary fuel type and net capacity for each generation facility shown in the table below: Facility Location ISO/RTO Technology Primary Fuel (a) Net Capacity (MW) (b) Ennis Ennis, TX ERCOT CCGT Natural Gas 366 Forney Forney, TX ERCOT CCGT Natural Gas 1,912 Hays San Marcos, TX ERCOT CCGT Natural Gas 1,047 Lamar Paris, TX ERCOT CCGT Natural Gas 1,076 Midlothian Midlothian, TX ERCOT CCGT Natural Gas 1,596 Odessa Odessa, TX ERCOT CCGT Natural Gas 1,054 Wise Poolville, TX ERCOT CCGT Natural Gas 787 Martin Lake Tatum, TX ERCOT ST Coal 2,250 Oak Grove Franklin, TX ERCOT ST Coal 1,600 DeCordova Granbury, TX ERCOT CT Natural Gas 260 Graham Graham, TX ERCOT ST Natural Gas 630 Lake Hubbard Dallas, TX ERCOT ST Natural Gas 921 Morgan Creek Colorado City, TX ERCOT CT Natural Gas 390 Permian Basin Monahans, TX ERCOT CT Natural Gas 325 Stryker Creek Rusk, TX ERCOT ST Natural Gas 685 Trinidad Trinidad, TX ERCOT ST Natural Gas 244 Comanche Peak Glen Rose, TX ERCOT Nuclear Nuclear 2,400 Brightside Live Oak County, TX ERCOT Solar Renewable 50 Emerald Grove Crane County, TX ERCOT Solar Renewable 108 Upton 2 Upton County, TX ERCOT Solar/Battery Renewable 180 DeCordova Granbury, TX ERCOT Battery Renewable 260 Total Texas Segment 18,141 Fayette Masontown, PA PJM CCGT Natural Gas 726 Hanging Rock Ironton, OH PJM CCGT Natural Gas 1,430 Hopewell Hopewell, VA PJM CCGT Natural Gas 370 Kendall Minooka, IL PJM CCGT Natural Gas 1,288 Liberty Eddystone, PA PJM CCGT Natural Gas 607 Ontelaunee Reading, PA PJM CCGT Natural Gas 600 Sayreville Sayreville, NJ PJM CCGT Natural Gas 349 Washington Beverly, OH PJM CCGT Natural Gas 711 Calumet Chicago, IL PJM CT Natural Gas 380 Dicks Creek Monroe, OH PJM CT Natural Gas 155 Miami Fort (CT) North Bend, OH PJM CT Fuel Oil 77 Pleasants Saint Marys, WV PJM CT Natural Gas 388 Richland Defiance, OH PJM CT Natural Gas 423 Stryker Stryker, OH PJM CT Fuel Oil 16 Bellingham Bellingham, MA ISO-NE CCGT Natural Gas 566 Blackstone Blackstone, MA ISO-NE CCGT Natural Gas 544 Casco Bay Veazie, ME ISO-NE CCGT Natural Gas 543 Lake Road Dayville, CT ISO-NE CCGT Natural Gas 827 Masspower Indian Orchard, MA ISO-NE CCGT Natural Gas 281 47 Table of Contents Facility Location ISO/RTO Technology Primary Fuel (a) Net Capacity (MW) (b) Milford Milford, CT ISO-NE CCGT Natural Gas 600 Independence Oswego, NY NYISO CCGT Natural Gas 1,212 Total East Segment 12,093 Moss Landing 1 & 2 Moss Landing, CA CAISO CCGT Natural Gas 1,020 Moss Landing Moss Landing, CA CAISO Battery Renewable 400 Oakland Oakland, CA CAISO CT Fuel Oil 110 Total West Segment 1,530 Coleto Creek Goliad, TX ERCOT ST Coal 650 Baldwin Baldwin, IL MISO ST Coal 1,185 Edwards (c) Bartonville, IL MISO ST Coal 585 Newton Newton, IL MISO ST Coal 615 Kincaid Kincaid, IL PJM ST Coal 1,108 Miami Fort 7 & 8 North Bend, OH PJM ST Coal 1,020 Total Sunset Segment 5,163 Total capacity 36,927 ___________ (a) Renewable represents generation assets fueled by renewable sources including energy storage and solar, which do not have significant fuel costs.
Biggest changeFacility Location ISO/RTO Technology Primary Fuel Net Capacity (MW) (a) Texas Segment Ennis Ennis, TX ERCOT CCGT Natural Gas 366 Forney Forney, TX ERCOT CCGT Natural Gas 1,912 Hays San Marcos, TX ERCOT CCGT Natural Gas 1,047 Lamar Paris, TX ERCOT CCGT Natural Gas 1,076 Midlothian Midlothian, TX ERCOT CCGT Natural Gas 1,596 Odessa Odessa, TX ERCOT CCGT Natural Gas 1,054 Wise Poolville, TX ERCOT CCGT Natural Gas 787 Martin Lake Tatum, TX ERCOT ST Coal 2,250 Oak Grove Franklin, TX ERCOT ST Coal 1,600 DeCordova Granbury, TX ERCOT CT Natural Gas 260 Graham Graham, TX ERCOT ST Natural Gas 630 Lake Hubbard Dallas, TX ERCOT ST Natural Gas 921 Morgan Creek Colorado City, TX ERCOT CT Natural Gas 390 Permian Basin Monahans, TX ERCOT CT Natural Gas 325 Stryker Creek Rusk, TX ERCOT ST Natural Gas 685 Trinidad Trinidad, TX ERCOT ST Natural Gas 244 Comanche Peak (b) Glen Rose, TX ERCOT Nuclear Nuclear 2,400 Brightside Live Oak County, TX ERCOT Solar Renewable 50 Emerald Grove Crane County, TX ERCOT Solar Renewable 108 Upton 2 Upton County, TX ERCOT Solar/Battery Renewable 190 DeCordova Granbury, TX ERCOT Battery Renewable 260 Total Texas Segment 18,151 46 Table of Contents Facility Location ISO/RTO Technology Primary Fuel Net Capacity (MW) (a) East Segment Fayette Masontown, PA PJM CCGT Natural Gas 726 Hanging Rock Ironton, OH PJM CCGT Natural Gas 1,430 Hopewell Hopewell, VA PJM CCGT Natural Gas 370 Kendall Minooka, IL PJM CCGT Natural Gas 1,288 Liberty Eddystone, PA PJM CCGT Natural Gas 607 Ontelaunee Reading, PA PJM CCGT Natural Gas 600 Sayreville Sayreville, NJ PJM CCGT Natural Gas 349 Washington Beverly, OH PJM CCGT Natural Gas 711 Calumet Chicago, IL PJM CT Natural Gas 380 Dicks Creek Monroe, OH PJM CT Natural Gas 155 Miami Fort (CT) North Bend, OH PJM CT Fuel Oil 77 Pleasants Saint Marys, WV PJM CT Natural Gas 388 Richland (c) Defiance, OH PJM CT Natural Gas 423 Stryker (c) Stryker, OH PJM CT Fuel Oil 16 Bellingham Bellingham, MA ISO-NE CCGT Natural Gas 566 Blackstone Blackstone, MA ISO-NE CCGT Natural Gas 544 Casco Bay Veazie, ME ISO-NE CCGT Natural Gas 543 Lake Road Dayville, CT ISO-NE CCGT Natural Gas 827 Masspower Indian Orchard, MA ISO-NE CCGT Natural Gas 281 Milford Milford, CT ISO-NE CCGT Natural Gas 600 Independence Oswego, NY NYISO CCGT Natural Gas 1,212 Total East Segment 12,093 West Segment Moss Landing 1 & 2 Moss Landing, CA CAISO CCGT Natural Gas 1,020 Moss Landing Moss Landing, CA CAISO Battery Renewable 750 Oakland Oakland, CA CAISO CT Fuel Oil 110 Total West Segment 1,880 Sunset Segment Coleto Creek Goliad, TX ERCOT ST Coal 650 Baldwin Baldwin, IL MISO ST Coal 1,185 Newton Newton, IL MISO ST Coal 615 Kincaid Kincaid, IL PJM ST Coal 1,108 Miami Fort 7 & 8 North Bend, OH PJM ST Coal 1,020 Total Sunset Segment 4,578 Total capacity 36,702 ___________ (a) Approximate net generation capacity.
Our wholesale commodity risk management group also procures renewable energy credits from renewable generation in ERCOT to support our electricity sales to wholesale and retail customers to satisfy the increasing demand for renewable resources from such customers. As of December 31, 2022, Vistra had long-term agreements to procure renewable energy credits from approximately 885 MW of renewable generation.
Our wholesale commodity risk management group also procures renewable energy credits from renewable generation in ERCOT to support our electricity sales to wholesale and retail customers to satisfy the increasing demand for renewable resources from such customers. As of December 31, 2023, Vistra had long-term agreements to procure renewable energy credits from approximately 885 MW of renewable generation.
Because they cannot be relied upon to meet demand continuously due to their dependence on weather and time of day, these generation sources are categorized as non-dispatchable and create the need for intermediate/load-following resources to respond to changes in their output.
Because they cannot be relied upon to meet demand continuously due to their dependence on weather and time of day, these generation sources are categorized as non-dispatchable and create the need for intermediate/load-following resources to respond to changes in their output. Item 3.
(b) Approximate net generation capacity. Actual net generation capacity may vary based on a number of factors, including ambient temperature. We have not included units that have been retired or are out of operation. (c) Final day of operation was December 31, 2022. Retired on January 1, 2023.
Actual net generation capacity may vary based on a number of factors, including ambient temperature. We have not included units that have been retired or are out of operation. (b) In October 2022, we announced the submission of our application to the NRC for license renewal at our two-unit Comanche Peak Nuclear Plant.
See Note 2 to the Financial Statements for discussion of our solar and battery energy storage projects currently under development and Note 3 to the Financial Statements for discussion of our retirement of certain generation facilities.
(c) We have entered into an agreement to sell the Richland and Stryker generation facilities, and closing is expected in early March 2024. 47 Table of Contents See Note 3 to the Financial Statements for discussion of our solar and battery energy storage projects currently under development and Note 4 to the Financial Statements for discussion of our retirement of certain generation facilities, including the Zimmer, Joppa and Edwards generation facilities that we retired in June 2022, September 2022 and January 2023, respectively, that are reported in our Asset Closure segment and excluded from the table above.
Removed
Fuel Supply Nuclear — We own and operate two nuclear generation units at the Comanche Peak plant site in ERCOT, each of which is designed for a capacity of 1,200 MW. Comanche Peak Unit 1 and Unit 2 went into commercial operation in 1990 and 1993, respectively, and are generally operated at full capacity.
Added
Item 2. PROPERTIES The following table presents our asset fleet as of December 31, 2023 by segment. All of our facilities are 100% (fee simple) owned.
Removed
Refueling (nuclear fuel assembly replacement) outages for each unit are scheduled to occur every eighteen months during the spring or fall off-peak demand periods. Every three years, the refueling cycle results in the refueling of both units during the same year, which occurred in 2020.
Added
The current licenses for Units 1 and 2 extend into 2030 and 2033, respectively, and we are applying to renew the licenses into 2050 and 2053, respectively.
Removed
While one unit is undergoing a refueling outage, the remaining unit is intended to operate at full capacity. During a refueling outage, other maintenance, modification and testing activities are completed that cannot be accomplished when the unit is in operation. The Comanche Peak facility operated at a capacity factor of 94%, 96% and 97% in 2022, 2021 and 2020, respectively.
Added
LEGAL PROCEEDINGS See Note 14 to the Financial Statements for discussion of material litigation matters to which Vistra is a party.
Removed
We have contracts in place for all of our 2023 through 2025 nuclear fuel requirements. We do not anticipate any significant difficulties in acquiring uranium and contracting for associated conversion, enrichment and fabrication services in the foreseeable future.
Removed
Natural Gas — Our natural gas-fueled generation fleet is comprised of 23 CCGT generating facilities totaling 19,512 MW and 11 peaking generation facilities totaling 4,801 MW. We satisfy our fuel requirements at these facilities through a combination of spot market and near-term purchase contracts.
Removed
Additionally, we have near-term natural gas transportation agreements in place to ensure reliable fuel supply. 48 Table of Contents Coal/Lignite — Our coal/lignite-fueled generation fleet is comprised of eight generation facilities totaling 9,013 MW of generation capacity, including the 585 MW Edwards facility that was retired on January 1, 2023.
Removed
Maintenance outages at these units are scheduled during the spring or fall off-peak demand periods. We meet our fuel requirements at our coal-fueled generation facilities in PJM and MISO with coal purchased from multiple suppliers under contracts of various lengths and transported to the facilities by either railcar or barges.
Removed
We meet our fuel requirements in ERCOT using lignite that we mine at the Oak Grove generation facility and coal purchased and transported by railcar at the Coleto Creek and Martin Lake generation facilities. Item 3. LEGAL PROCEEDINGS See Note 12 to the Financial Statements for discussion of litigation, including matters related to our generation facilities and EPA reviews.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeSuch citations and orders can be contested and appealed, which often results in a reduction of the severity and amount of fines and assessments and sometimes results in dismissal. Disclosure of MSHA citations, orders and proposed assessments are provided in Exhibit 95.1 to this annual report on Form 10-K. 49 Table of Contents PART II
Biggest changeSuch citations and orders can be contested and appealed, which often results in a reduction of the severity and amount of fines and assessments and sometimes results in dismissal. Disclosure of MSHA citations, orders and proposed assessments are provided in Exhibit 95.1 to this annual report on Form 10-K. 48 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph below compares the return in each period assuming that $100 was invested at May 10, 2017 in Vistra's common stock, the S&P 500 and the S&P Utilities, and that all dividends were reinvested. 50 Table of Contents Share Repurchase Program The following table provides information about our repurchase of equity securities that are registered by us pursuant to Section 12 of the Exchange Act, as amended, during the quarter ended December 31, 2022.
Biggest changeThe graph below compares the return in each period assuming that $100 was invested at December 31, 2018 in Vistra's common stock, the S&P 500 and the S&P Utilities, and that all dividends were reinvested.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Vistra's authorized capital stock consists of 1,800,000,000 shares of common stock with a par value of $0.01 per share. Since May 10, 2017, Vistra's common stock has been listed on the NYSE under the symbol "VST".
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Vistra's common stock is listed and traded on the NYSE under the symbol "VST". Vistra's authorized capital stock consists of 1,800,000,000 shares of common stock with a par value of $0.01 per share. As of February 23, 2024, there were 472 stockholders of record.
Stock Performance Graph The performance graph below compares Vistra's cumulative total return on common stock for the period from May 10, 2017 (the date we were listed on the NYSE) through December 31, 2022 with the cumulative total returns of the S&P 500 Stock Index (S&P 500) and the S&P Utility Index (S&P Utilities).
Stock Performance Graph The performance graph below compares Vistra's cumulative total return on common stock during the five-year period from December 31, 2018 through December 31, 2023 with the cumulative total returns of the S&P 500 Stock Index (S&P 500) and the S&P Utility Index (S&P Utilities).
The Share Repurchase Program became effective on October 11, 2021. In August 2022, the Board authorized an incremental $1.25 billion for repurchases to bring the total authorized under the Share Repurchase Program to $3.25 billion. We expect to complete repurchases under the Share Repurchase Program by the end of 2023.
The Share Repurchase Program became effective on October 11, 2021. In August 2022, March 2023 and February 2024, the Board authorized incremental amounts of $1.25 billion, $1.0 billion and $1.5 billion, respectively, for repurchases to bring the total authorized under the Share Repurchase Program to $5.75 billion.
See Note 13 to the Financial Statements for more information concerning the Share Repurchase Program. Item 6. [RESERVED] Not applicable.
We expect to complete repurchases under the Share Repurchase Program by the end of 2025. See Note 15 to the Financial Statements for more information concerning the Share Repurchase Program. Item 6. [RESERVED] Not applicable.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Maximum Dollar Amount of Shares that may yet be Purchased under the Program (in millions) October 1 - October 31, 2022 6,876,619 $ 22.01 6,876,619 $ 1,197 November 1 - November 30, 2022 6,022,173 $ 23.46 6,022,173 $ 1,055 December 1 - December 31, 2022 2,112,632 $ 23.91 2,112,632 $ 1,005 For the quarter ended December 31, 2022 15,011,424 $ 22.86 15,011,424 $ 1,005 In October 2021, we announced that the Board had authorized a share repurchase program (Share Repurchase Program) under which up to $2.0 billion of our outstanding common stock may be repurchased.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Program Maximum Dollar Amount of Shares that may yet be Purchased under the Program (in millions) October 1 - October 31, 2023 4,246,310 $ 32.15 4,246,310 $ 993 November 1 - November 30, 2023 3,682,876 $ 34.81 3,682,876 $ 865 December 1 - December 31, 2023 3,061,650 $ 37.55 3,061,650 $ 750 For the quarter ended December 31, 2023 10,990,836 $ 34.54 10,990,836 $ 750 In October 2021, we announced that the Board had authorized a share repurchase program (Share Repurchase Program) under which up to $2.0 billion of our outstanding common stock may be repurchased.
Each dividend under the program is subject to declaration by the Board and, thus, may be subject to numerous factors in existence at the time of any such declaration including, but not limited to, prevailing market conditions, Vistra's results of operations, financial condition and liquidity, Delaware law and contractual limitations. For additional details, see Item 1A.
The declaration and payment of future dividends, however, will be at the discretion of the Board and will depend on numerous factors in existence at the time of any such declaration including, but not limited to, prevailing market conditions, Vistra's results of operations, financial condition and liquidity, Delaware law and contractual limitations.
Removed
As of February 23, 2023, there were 381,453,001 shares of common stock issued and outstanding and 554 stockholders of record. In November 2018, we announced that the Board had adopted a common stock dividend program which we initiated in the first quarter of 2019. Our common stockholders are entitled to receive any such dividends or other distributions ratably.
Added
The Board has authority to declare dividends to the holders of our common stock. The Board intends to continue the payment of dividends to the holders of the Company's common stock in the future.
Removed
In February 2023, our Board declared a quarterly dividend of $0.1975 per share that will be paid in March 2023.
Added
December 31, 2018 2019 2020 2021 2022 2023 Vistra Corp. $ 100.00 $ 102.48 $ 90.41 $ 108.08 $ 113.57 $ 193.89 S&P 500 $ 100.00 $ 131.47 $ 155.65 $ 200.59 $ 163.98 $ 207.04 S&P Utilities $ 100.00 $ 126.35 $ 127.01 $ 149.46 $ 151.79 $ 141.05 The stock price performance included in this graph is not necessarily indicative of future stock price performance. 49 Table of Contents Purchases of Equity Securities by the Issuer The following table provides information about our repurchase of common stock, during the three months ended December 31, 2023.
Removed
Risk Factors and Note 13 to the Financial Statements.
Removed
Under the Share Repurchase Program, any purchases of shares of the Company's stock may be repurchased from time to time in open-market transactions at prevailing market prices, in privately negotiated transactions, pursuant to plans complying with the Exchange Act or by other means in accordance with federal securities laws.
Removed
The actual timing, number and value of shares repurchased under the Share Repurchase Program or otherwise will be determined at our discretion and will depend on a number of factors, including our capital allocation priorities, the market price of our stock, general market and economic conditions, applicable legal requirements and compliance with the terms of our debt agreements and the certificate of designation of the Series A Preferred Stock and the Series B Preferred Stock, respectively.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

3 edited+205 added−13 removed0 unchanged
Biggest changeThis discussion should be read in conjunction with those consolidated financial statements and the related notes and is qualified by reference to them. 51 Table of Contents The following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2022, 2021 and 2020 should be read in conjunction with our consolidated financial statements and the notes to those statements.
Biggest changeItem 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included in Item 8. Financial Statements and Supplementary Data . See Item 7.
Management's Discussion and Analysis of Financial Condition and Results in our 202 1 Form 10-K and are incorporated herein by reference. All dollar amounts in the tables in the following discussion and analysis are stated in millions of U.S. dollars unless otherwise indicated.
All dollar amounts in the tables in the following discussion and analysis are stated in millions of U.S. dollars unless otherwise indicated.
The discussion and analysis of our financial condition and results of operations for the year ended December 31, 2020 and for the year ended December 31, 2021 compared to the year ended December 31, 2020 are included in Item 7.
Management's Discussion and Analysis of Financial Condition, and Results of Operations in our 202 2 Form 10-K for a discussion of our financial condition and results of operations for the year ended December 31, 2021 and for the year ended December 31, 2022 compared to the year ended December 31, 2021, which is incorporated here by reference.
Removed
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The discussion below, as well as other portions of this annual report on Form 10-K, contain forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995.
Added
Significant Activities and Events, and Items Influencing Future Performance Proposed Merger with Energy Harbor On March 6, 2023, Vistra Operations and its wholly-owned subsidiary (Merger Sub) entered into a Transaction Agreement with Energy Harbor pursuant to which, upon the terms and subject to the conditions thereof, Merger Sub will be merged with and into Energy Harbor, with Energy Harbor surviving as an indirect subsidiary of Vistra.
Removed
In addition, management may make forward-looking statements orally or in other writing, including, but not limited to, in press releases, quarterly earnings calls, executive presentations, in the annual report to stockholders and in other filings with the SEC.
Added
The Transaction Agreement, the Merger and the other Transactions were approved by each of Vistra's Board and Energy Harbor's board of directors. On February 16, 2024, we received approval from FERC to acquire Energy Harbor. FERC's approval was the last regulatory approval needed, and we anticipate closing on March 1, 2024.
Removed
Readers can usually identify these forward-looking statements by the use of such words as “may,” “will,” “should,” “likely,” “plans,” “projects,” “expects,” “anticipates,” “believes” or similar words. These statements involve a number of risks and uncertainties. Actual results could materially differ from those anticipated by such forward-looking statements.
Added
See Note 2 to the Financial Statements for more information concerning the Transaction Agreement. 50 Table of Contents Inflation Reduction Act of 2022 In August 2022, the U.S. enacted the IRA, which, among other things, implements substantial new and modified energy tax credits, including a nuclear PTC, a solar PTC, a first-time stand-alone battery storage investment tax credit, a 15% corporate alternative minimum tax (CAMT) on book income of certain large corporations, and a 1% excise tax on net stock repurchases.
Removed
For more discussion about risk factors that could cause or contribute to such differences, see Part I, Item 1A "Risk Factors" and other risks discussed herein. Forward-looking statements reflect the information only as of the date on which they are made.
Added
Treasury regulations are expected to further define the scope of the legislation in many important respects over the next twelve months. The excise tax on stock repurchases is not expected to have a material impact on our financial statements.
Removed
The Company does not undertake any obligation to update any forward-looking statements to reflect future events, developments, or other information. If Vistra does update one or more forward-looking statements, no inference should be drawn that additional updates will be made regarding that statement or any other forward-looking statements.
Added
Vistra is not subject to the CAMT in the 2023 tax year since it only applies to corporations that have a three-year average annual adjusted financial statement income in excess of $1 billion.
Removed
This discussion is intended to clarify and focus on our results of operations, certain changes in our financial position, liquidity, capital structure and business developments for the periods covered by the consolidated financial statements included under Part II, Item 8 of this annual report on Form 10-K for the year ended December 31, 2022.
Added
We have taken the CAMT and relevant extensions or expansions of existing tax credits applicable to projects in our immediate development pipeline into account when forecasting cash taxes for periods after the law takes effect. See Note 1 for our accounting policy related to refundable and transferable PTCs and ITCs.
Removed
Business Vistra is a holding company operating an integrated retail and electric power generation business primarily in markets throughout the U.S. Through our subsidiaries, we are engaged in competitive energy market activities including electricity generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity and natural gas to end users.
Added
Repurchase of TRA Rights and Preferred Stock Issuance On December 29, 2023, Vistra repurchased (Repurchase) approximately 74% of the outstanding beneficial interests in the TRA Rights to receive payments under the TRA from a select group of registered holders of the TRA Rights (Selling Holders) in exchange for consideration of $1.50 per repurchased TRA Right, totaling an aggregate purchase price for the Repurchase of approximately $476 million.
Removed
Operating Segments Vistra has six reportable segments: (i) Retail, (ii) Texas, (iii) East, (iv) West, (v) Sunset and (vi) Asset Closure. See Note 19 to the Financial Statements for further information concerning our reportable business segments.
Added
The shares of Series C Preferred Stock were issued (see Note 15 to the Financial Statements) to the Selling Holders in exchange for the TRA Rights in a transaction exempt from registration pursuant to Section 4(a)(2) of the Securities Act.
Removed
CEO Transition In March 2022, Vistra announced that the Board had named Jim Burke as its next Chief Executive Officer (CEO), effective August 1, 2022. Mr. Burke, who previously served as President and Chief Financial Officer, also joined the Company's Board upon assuming his new role.
Added
As part of the transaction, on January 29, 2024, the Company filed a shelf registration statement on Form S-3 registering the resale of the shares by the Selling Holders of Series C Preferred Stock from time to time under Rule 415 of the Securities Act.
Removed
Vistra's previous CEO and director, Curt Morgan, will serve as a special advisor to Mr. Burke and the Board until April 30, 2023. The transition from Mr. Morgan to Mr. Burke was a product of the Company's formal succession planning process.
Added
If the Company repurchases TRA Rights at any time during the 180 days following December 29, 2023 at a price per TRA Right greater than $1.50, the Company will pay the Selling Holders an amount equal to such excess purchase price per TRA Right sold by the Selling Holders.
Removed
In July 2022, the Company announced the appointment of Kris Moldovan as the Company's Executive Vice President and Chief Financial Officer, effective August 1, 2022.
Added
On January 11, 2024, Vistra repurchased an additional 43,494,944 TRA Rights from a select group of registered holders of TRA Rights in exchange for consideration of $1.50 per repurchased TRA Right. Total consideration of $65 million was paid using cash on hand.
Removed
Significant Activities and Events and Items Influencing Future Performance Climate Change, Investments in Clean Energy and CO 2 Reductions Environmental Regulations — We are subject to extensive environmental regulation by governmental authorities, including the EPA and the environmental regulatory bodies of states in which we operate.
Added
On January 31, 2024, Vistra announced a cash tender offer to purchase any and all outstanding TRA Rights in exchange for consideration of $1.50 per tendered TRA Right accepted for purchase prior to close of business on February 13, 2024 (Early Tender Date), which included an early tender premium of $0.05 per TRA Right accepted for purchase.
Removed
Environmental regulations could have a material impact on our business, such as certain corrective action measures that may be required under the CCR rule and the Effluent Limitation Guidelines (ELG) rule. See Item 1. Business – Environmental Regulations and Related Considerations , and
Added
As of the Early Tender Date, 55,056,931 TRA Rights were accepted for purchase for total consideration of $83 million, which was paid using cash on hand.
Added
TRA Rights accepted for purchase after the Early Tender Date, but prior to the close of business on February 28, 2024, will receive consideration of $1.45 per TRA Right accepted for purchase, which will be paid in March 2024 using cash on hand.
Added
As of the Early Tender Date, we have repurchased an aggregate 98% of the original outstanding TRA Rights, of which 10,430,083 TRA Rights remain outstanding. See Note 8 to the Financial Statements for details of the TRA and Note 15 to the Financial Statements for details of the Series C Preferred Stock.
Added
Financial and Operating Performance The following are financial and operating highlights we achieved in the execution of our four strategic priorities: Long-term, attractive earnings profile through the integrated business model. • We continued to execute our integrated business model through exceptional operational performance and capitalization of market opportunities which drove strong earnings during the year ended December 31, 2023, highlighting our competitive advantage of coupling retail with our reliable and efficient generation fleet and wholesale commodity risk management capabilities which reduces the effects of commodity price movements and contributes to the stability and predictability of our cash flows. • Our commercial team focused on effectively and efficiently managing risk by opportunistically hedging for 2023 and beyond and optimizing our assets and business positions which led to strong plant operating performance and energy margins. 51 Table of Contents • Our retail brands served the retail electricity and natural gas needs of end-use residential, small business and commercial and industrial electricity customers through multiple sales and marketing channels through products and solutions that differentiate from our competitors leading to an increase in residential customer counts within markets we continue to operate.
Added
Strategic energy transition that supports the reliability and affordability of electricity. • In June 2023, an additional 350 MW battery ESS at our Moss Landing Power Plant site commenced commercial operations. • As of June 30, 2023, the net proceeds of our Series B Preferred Stock were fully allocated to eligible solar and battery projects, pursuant to our Green Finance Framework. • We continued development and construction activities on the planned development of up to 300 MW of solar photovoltaic power generation facilities and up to 150 MW of battery ESS at retired or to-be-retired plant sites in Illinois. • We retired our Edwards coal generation plant on January 1, 2023.
Added
Significant and consistent shareholder return of capital. • During the year ended December 31, 2023, we paid dividends to common stockholders totaling $313 million. • During the year ended December 31, 2023, we repurchased 45 million shares for $1.3 billion under our stock repurchase program.
Added
Total shares repurchased under the program established in October 2021 are 143 million shares for $3.5 billion. See Note 15 to the Financial Statements for more information about our dividend and Share Repurchase Program.
Added
Maintaining a strong balance sheet. • In December 2023, we issued $400 million of 6.950% Senior Secured Notes due 2033 and $350 million of 7.750% Senior Unsecured Notes due 2031 in which the net proceeds were used to fund the tender offer (Senior Secured Notes Tender Offer) to purchase for cash $759 million aggregate principal amount of certain notes in January 2024, including $58 million of 4.875% Senior Secured Notes due 2024, $345 million of 3.550% Senior Secured Notes due 2024 and $356 million of the 5.125% Senior Secured Notes due 2025.
Added
During the year ended December 31, 2023, our operating segments delivered strong operating performance with a disciplined focus on cost management, while generating and selling essential electricity in a safe and reliable manner.
Added
Our performance reflected strong plant operating performance, summer scarcity pricing events in Texas and effectiveness of our comprehensive hedging strategy and the value we were able to lock in as forward power and natural gas curves increased beginning in 2022.
Added
Macroeconomic Conditions With forward power and natural gas curves increasing during 2022 and the continued volatility in 2023, we have increased our hedging for future periods.
Added
As of December 31, 2023, we have hedged approximately 91% of our expected generation volumes on average for the two-year period 2024 through 2025 (with approximately 98% hedged for 2024 and approximately 83% hedged for 2025).
Added
The industry continues to experience supply chain constraints that have reduced the availability of certain equipment and supply relevant to construction of renewables projects, and increased the lead time to procure certain materials necessary to maintain our natural gas, nuclear and coal fleet.
Added
We are proactively managing the increased costs of materials and supply chain disruptions and continuing to prudently re-evaluate the business cases and timing of our planned development projects, which has resulted in a deferral of some of our planned capital spend for our renewables projects.
Added
In addition, we have proactively engaged our suppliers to secure key materials needed to maintain our existing generation facilities prior to future planned outages, and our Vistra Zero operational and development projects are anticipated to benefit from the impact of the IRA.
Added
The inflationary environment continues to drive elevated interest rates, resulting in increased expected refinancing or borrowing costs, including project financing for our development projects and refinancing expected in connection with debt due in 2024 and beyond. 52 Table of Contents We are closely monitoring developments in the Russia and Ukraine conflict, specifically with regards to, (i) sanctions (or potential sanctions) against Russian energy exports and Russian nuclear fuel supply and enrichment activities, and (ii) actions by Russia to limit energy deliveries, which may further impact commodity prices in Europe and globally.
Added
In addition, current policies being considered by the U.S. Congress, namely H.R. 1042 the Prohibiting Russian Uranium Imports Act, would restrict imports of uranium if signed into law. The bill passed out of the House of Representatives in December 2023, and the future of the bill remains uncertain as it awaits consideration in the Senate.
Added
Our 2024 refueling has not been affected by the Russia and Ukraine conflict, nor have we seen any disruption to the delivery of nuclear fuel.
Added
We are taking affirmative action by building strategic inventory and deploying mitigating strategies in our procurement portfolio to ensure we can secure the nuclear fuel needed to continue to operate our nuclear facility through potential Russian supply disruption.
Added
We work with a diverse set of global nuclear fuel cycle suppliers to procure our nuclear fuel years in advance, and therefore, we expect to have enough nuclear fuel to support all our refueling needs, including the Energy Harbor facilities following the expected closing of the Transactions, through 2027.
Added
If imports from Russia are restricted, refueling operations of U.S. merchant nuclear power generators could be challenged in future years.
Added
Capacity Markets PJM, NYISO, ISO-NE, MISO and CAISO ensure long-term grid reliability through monthly, semiannual, annual and multi-year capacity auctions or bilateral transactions where power suppliers commit to making the generation resources available to the ISO as needed for a specific time period.
Added
We participate in these capacity market auctions and also enter into bilateral capacity sales, and a portion of our East, West and Sunset segment revenues are impacted by the capacity auction results or bilateral contracts.
Added
The following information summarizes the auction pricing for zones in which we operate as well as our capacity auction and bilateral capacity sales by planning period. Performance incentive rules increase capacity payments for those resources that are providing excess energy or reserves during a shortage event, while penalizing those that produce less than the required level.
Added
PJM Reliability Pricing Model (RPM) auction results, for the zones in which our assets are located, are as follows for each planning year: 2023-2024 2024-2025 (average price per MW-day) RTO zone $ 34.13 $ 28.92 ComEd zone 34.13 28.92 MAAC zone 49.49 49.49 EMAAC zone 49.49 54.95 ATSI zone 34.13 28.92 DEOK zone 34.13 96.24 Our capacity sales in PJM, net of purchases, aggregated by planning year and capacity type through planning year 2024-2025, are as follows: 2023-2024 2024-2025 East Segment Sunset Segment East Segment Sunset Segment CP auction capacity sold, net (MW) 5,811 1,667 5,567 1,338 Bilateral capacity sold, net (MW) 378 166 400 38 Total segment capacity sold, net (MW) 6,189 1,833 5,967 1,376 Average price per MW-day $ 38.61 $ 36.82 $ 36.80 $ 75.11 53 Table of Contents NYISO The most recent seasonal auction results for NYISO's Rest-of-State zones, in which the capacity for our Independence plant clears, are as follows for each planning period: Winter 2023 - 2024 Price per kW-month $ 3.83 Due to the short-term, seasonal nature of the NYISO capacity auctions, we monetize the majority of our capacity through bilateral trades.
Added
Our capacity sales, aggregated by season through winter 2025-2026, are as follows: East Segment Winter 2023 - 2024 Summer 2024 Winter 2024 - 2025 Summer 2025 Winter 2025 - 2026 Auction capacity sold (MW) 12 — — — — Bilateral capacity sold (MW) 1,132 873 591 175 59 Total capacity sold (MW) 1,144 873 591 175 59 Average price per kW-month $ 2.27 $ 3.80 $ 3.44 $ 4.10 $ 4.10 ISO-NE The most recent Forward Capacity Auction results for ISO-NE Rest-of-Pool, in which most of our assets are located, are as follows for each planning year: 2023-2024 2024-2025 2025-2026 2026-2027 2027-2028 Price per kW-month $ 2.00 $ 2.61 $ 2.59 $ 2.59 $ 3.58 We continue to market and pursue longer term multi-year capacity transactions that extend through planning year 2027-2028.
Added
East Segment 2023-2024 2024-2025 2025-2026 2026-2027 2027-2028 Auction capacity sold (MW) 3,213 3,103 3,032 2,836 3,261 Bilateral capacity sold (MW) 22 78 78 58 8 Total capacity sold (MW) 3,235 3,181 3,110 2,894 3,269 Average price per kW-month $ 2.22 $ 3.12 $ 2.72 $ 2.60 $ 3.58 MISO The capacity auction results for MISO Local Resource Zone 4, in which our assets are located, are as follows for each planning year: 2023-2024 Price per MW-day $ 9.25 MISO capacity sales through planning year 2026-2027 are as follows: Sunset Segment 2023-2024 2024-2025 2025-2026 2026-2027 Bilateral capacity sold in MISO (MW) 1,702 984 423 101 Total MISO segment capacity sold (MW) 1,702 984 423 101 Average price per kW-month $ 4.36 $ 4.34 $ 4.94 $ 4.59 54 Table of Contents CAISO Our capacity sales as part of the California Public Utilities Commission Resource Adequacy (RA) Program in California, aggregated by calendar year for 2024 through 2027 for Moss Landing, are as follows: West Segment 2024 2025 2026 2027 Bilateral capacity sold (Avg MW) 1,880 1,770 1,250 750 Electricity Prices The price of electricity has a significant impact on our operating revenues and purchased power costs.
Added
Electricity prices are typically set by the cost to fuel a generation facility and the amount of fuel needed to generate one unit of electricity (Heat Rate) from the generation facility. Market Heat Rate is the implied relationship between wholesale electricity prices and the commodity price of the marginal supplier (generally natural gas plants).
Added
Wholesale electricity prices generally track to increases or decreases in the price of natural gas, with exceptions such as when ERCOT power prices rise significantly during weather events as a result of the scarcity of available generation resources relative to power demand.
Added
The price of natural gas is volatile; therefore, the costs to operate a natural gas-fueled generation facility can be volatile as well.
Added
In contrast to our natural gas-fueled generation facilities, changes in natural gas prices have no significant effect on the cost of generating power at our nuclear-, lignite- and coal-fueled facilities; however, all other factors being equal, changes in natural gas prices affect our operating margins on these facilities as electricity prices generally track to natural gas prices.
Added
Other variables that could impact electricity prices include, but are not limited to, the price of other fuels, generation resources in the region, weather, on-going competition, emerging technologies, and macroeconomic and regulatory factors. The wholesale market price of electricity divided by the market price of natural gas represents the Market Heat Rate.
Added
Market Heat Rate can be affected by a number of factors, including generation availability, mix of assets and the efficiency of the marginal supplier (generally natural gas-fueled generation facilities) in generating electricity. Our Market Heat Rate exposure is impacted by changes in the availability of generation resources, such as additions and retirements of generation facilities, and mix of generation assets.
Added
For example, increasing renewable (wind and solar) generation capacity generally depresses Market Heat Rates, particularly during periods when total demand is relatively low. However, increasing penetration of renewable generation capacity may also contribute to greater volatility of wholesale market prices independent of changes in the price of natural gas, given their intermittent nature.
Added
As a result of our exposure to the variability of natural gas prices and Market Heat Rates, retail sales and hedging activities are critical to our operating results and maintaining consistent cash flow levels. Our integrated power generation and retail electricity business provides us opportunities to hedge our generation position utilizing retail electricity markets as a sales channel.
Added
Our approach to managing electricity price risk focuses on the following: • employing disciplined, liquidity-efficient hedging and risk management strategies through physical and financial energy-related contracts intended to partially hedge gross margins; • continuing focus on cost management to better withstand gross margin volatility; • following a retail pricing strategy that appropriately reflects the value of our product offering to customers, the magnitude and costs of commodity price, liquidity risk and retail demand variability; and • improving retail customer service to attract and retain high-value customers.
Added
Critical Accounting Estimates We follow accounting principles generally accepted in the U.S. Application of these accounting policies in the preparation of our consolidated financial statements requires management to make estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and revenues and expenses during the periods covered.
Added
The following is a summary of certain critical accounting estimates that are impacted by judgments and uncertainties and under which different amounts might be reported using different assumptions or estimation methodologies. 55 Table of Contents Derivative Instruments and Mark-to-Market Accounting We enter into contracts for the purchase and sale of energy-related commodities, and also enter into other derivative instruments such as options, swaps, futures and forwards primarily to manage commodity price and interest rate risks.
Added
Under accounting standards related to derivative instruments and hedging activities, these instruments are subject to mark-to-market accounting, and the determination of market values for these instruments is based on numerous assumptions and estimation techniques. Mark-to-market accounting recognizes changes in the fair value of derivative instruments in the financial statements as market prices change.
Added
Such changes in fair value are accounted for as unrealized mark-to-market gains and losses in net income with an offset to derivative assets and liabilities. The availability of quoted market prices in energy markets is dependent on the type of commodity (e.g., natural gas, electricity, etc.), time period specified and delivery point.
Added
Where quoted market prices are not available, the fair value is based on unobservable inputs, which require significant judgment. Derivative instruments valued based on unobservable inputs primarily include (i) forward sales and purchases of electricity (including certain retail contracts), natural gas and coal, (ii) electricity, natural gas and coal options, and (iii) financial transmission rights.
Added
In computing fair value for derivatives, each forward pricing curve is separated into liquid and illiquid periods. The liquid period varies by delivery point and commodity. Generally, the liquid period is supported by exchange markets, broker quotes and frequent trading activity.
Added
For illiquid periods, fair value is estimated based on forward price curves developed using proprietary modeling techniques that take into account available market information and other inputs that might not be readily observable in the market.
Added
Any significant changes to these inputs could result in a material change to the value of the assets or liabilities recorded on our consolidated balance sheets and could result in a material change to the unrealized gains or losses recorded in our consolidated statements of operations. We estimate fair value as described in Note 16 to the Financial Statements.
Added
Accounting standards related to derivative instruments and hedging activities allow for normal purchase or sale elections, which generally eliminate the requirement for mark-to-market recognition in net income.
Added
Normal purchases and sales (NPNS) are contracts that provide for physical delivery of quantities expected to be used or sold over a reasonable period in the normal course of business and are not subject to mark-to-market accounting if the NPNS election is made and are accounted for on an accrual basis.
Added
Determining whether a contract qualifies for the normal purchase or sale election requires judgment as to whether or not the contract will physically deliver and requires that management ensure compliance with all associated qualification and documentation requirements.
Added
If it is determined that a transaction designated as a normal purchase or sale no longer meets the scope exception due to changes in estimates, the related contract would be recorded on the balance sheet at fair value with immediate recognition through earnings. See Note 17 to the Financial Statements for further discussion regarding derivative instruments.
Added
Accounting for Income Taxes Our income tax expense and related consolidated balance sheet amounts involve significant management estimates and judgments. Amounts of deferred income tax assets and liabilities, as well as current and noncurrent accruals, involve estimates and judgments of the timing and probability of recognition of income and deductions by taxing authorities.
Added
Further, we assess the likelihood that we will be able to realize or utilize our deferred tax assets. If realization is not more likely than not, we would record a valuation allowance against such deferred tax assets for the amount we would not expect to utilize, which would reduce the carrying value of the deferred tax amounts.
Added
When evaluating the need for a valuation allowance, we consider all available positive and negative evidence, including the following: • the creation and timing of future income associated with the reversal of deferred tax liabilities in excess of deferred tax assets; • the existence, or lack thereof, of statutory limitations on the period that net operating losses may be carried forward; and • the amounts and history of income or losses, adjusted for certain non-recurring items.
Added
Actual income taxes could vary from estimated amounts due to the future impacts of various items, including changes in income tax laws, our forecasted financial condition and results of operations in future periods, as well as final review of filed tax returns by taxing authorities. 56 Table of Contents Income tax returns are regularly subject to examination by applicable tax authorities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

17 edited+5 added−13 removed15 unchanged
Biggest changeAs of December 31, 2022, aggregate Texas, East, Sunset and Asset Closure segments credit exposure totaled $1.004 billion including $541 million related to derivative assets and $463 million of trade accounts receivable, after taking into account master netting agreement provisions but excluding collateral impacts. 84 Table of Contents Including collateral posted to us by counterparties, our net Texas, East, Sunset and Asset Closure segments exposure was $936 million, as seen in the following table that presents the distribution of credit exposure by counterparty credit quality at December 31, 2022.
Biggest changeAs of December 31, 2023, aggregate Texas, East, Sunset and Asset Closure segments credit exposure totaled $674 million including $545 million related to derivative assets and $129 million of trade accounts receivable, after taking into account master netting agreement provisions but excluding collateral impacts.
We also employ certain risk mitigation practices, including utilization of standardized master agreements that provide for netting and setoff rights, as well as credit enhancements such as margin deposits and customer deposits, letters of credit, parental guarantees and surety bonds. See Note 15 to the Financial Statements for further discussion of this exposure.
We also employ certain risk mitigation practices, including utilization of standardized master agreements that provide for netting and setoff rights, as well as credit enhancements such as margin deposits and customer deposits, letters of credit, parental guarantees and surety bonds. See Note 17 to the Financial Statements for further discussion of this exposure.
The table below details a VaR measure related to various portfolios of contracts. VaR for Underlying Generation Assets and Energy-Related Contracts — This measurement estimates the potential loss in value, due to changes in market conditions, of all underlying generation assets and contracts, based on a 95% confidence level and an assumed holding period of 60 days.
The table below details a VaR measure related to various portfolios of contracts. 73 Table of Contents VaR for Underlying Generation Assets and Energy-Related Contracts This measurement estimates the potential loss in value, due to changes in market conditions, of all underlying generation assets and contracts, based on a 95% confidence level and an assumed holding period of 60 days.
As of December 31, 2022, the potential reduction of annual pretax earnings over the next twelve months due to a one percentage-point (100 basis points) increase in floating interest rates on long-term debt totaled approximately $2 million taking into account the interest rate swaps discussed in Note 10 to Financial Statements.
As of December 31, 2023, the potential reduction of annual pretax earnings over the next twelve months due to a one percentage-point (100 basis points) increase in floating interest rates on long-term debt totaled approximately $2 million taking into account the interest rate swaps discussed in Note 12 to Financial Statements.
We view exposure to this counterparty to be within an acceptable level of risk tolerance due to the counterparty's credit ratings, the counterparty's market role and deemed creditworthiness and the importance of our business relationship with the counterparty.
We view exposure to these counterparties to be within an acceptable level of risk tolerance due to the counterparties' credit ratings, the counterparties' market role and deemed creditworthiness and the importance of our business relationship with the counterparty.
Interest rate risk is managed centrally by our treasury function. Market risks are monitored by risk management groups that operate independently of the wholesale commercial operations, utilizing defined practices and analytical methodologies.
Market risks are monitored by risk management groups that operate independently of the wholesale commercial operations, utilizing defined practices and analytical methodologies.
Expected Maturity Date 2022 Total Carrying Amount 2022 Total Fair Value 2021 Total Carrying Amount 2021 Total Fair Value 2023 2024 2025 2026 2027 There-after Long-term debt, including current maturities (a): Variable rate debt amount $ 28 $ 28 $ 2,458 $ — $ — $ — $ 2,514 $ 2,486 $ 2,543 $ 2,518 Average interest rate (b) 6.13 % 6.13 % 6.12 % — % — % — % 6.12 % 1.85 % Debt swapped to fixed (c): Notional amount $ 2,300 $ — $ — $ 2,300 $ — $ — $ 4,600 $ 4,600 Average pay rate 4.18 % 4.77 % 4.77 % 4.77 % — % — % Average receive rate 6.44 % 6.89 % 6.89 % 6.89 % — % — % ___________ (a) Unamortized premiums, discounts and debt issuance costs are excluded from the table.
Expected Maturity Date 2023 Total Carrying Amount 2023 Total Fair Value 2022 Total Carrying Amount 2022 Total Fair Value 2024 2025 2026 2027 2028 There-after Long-term debt, including current maturities (a): Variable rate debt amount $ 25 $ 25 $ 25 $ 25 $ 25 $ 2,375 $ 2,500 $ 2,500 $ 2,514 $ 2,486 Average interest rate (b) 7.36 % 7.36 % 7.36 % 7.36 % 7.36 % 7.36 % 7.36 % 6.12 % Debt swapped to fixed (c): Notional amount $ — $ — $ 2,300 $ — $ — $ 1,625 $ 3,925 $ 4,600 Average pay rate 5.42 % 5.41 % 5.37 % 5.28 % 5.28 % 5.28 % Average receive rate 7.36 % 7.36 % 7.36 % 7.36 % 7.36 % 7.36 % ___________ (a) Unamortized premiums, discounts and debt issuance costs are excluded from the table.
(b) The weighted average interest rate presented is based on the rates in effect at December 31, 2022. (c) Interest rate swaps have maturity dates through July 2026.
(b) The weighted average interest rate presented is based on the rates in effect at December 31, 2023. (c) Interest rate swaps have maturity dates through December 2030, of which $1.625 billion become effective in July 2026.
Allowances for uncollectible accounts receivable are established for the potential loss from nonpayment by these customers based on historical experience, market or operational conditions and changes in the financial condition of large business customers.
Cash deposits and letters of credit held as collateral for these receivables totaled $54 million, resulting in a net exposure of $1.248 billion. Allowances for uncollectible accounts receivable are established for the expected loss from nonpayment by these customers based on historical experience, market or operational conditions and changes in the financial condition of large business customers.
Credit Exposure — Our gross credit exposure (excluding collateral impacts) associated with retail and wholesale trade accounts receivable and net derivative assets arising from commodity contracts and hedging and trading activities totaled $2.237 billion at December 31, 2022.
Credit Exposure Our gross credit exposure (excluding collateral impacts) associated with retail and wholesale trade accounts receivable and net derivative assets arising from commodity contracts and hedging and trading activities totaled $1.976 billion at December 31, 2023. 75 Table of Contents As of December 31, 2023, Retail segment credit exposure totaled approximately $1.302 billion, including $1.241 billion of trade accounts receivable and $61 million related to derivatives.
Excludes $2.12 billion of debt swapped to variable that is matched against the terms of $2.12 billion of debt swapped to fixed that effectively fix the out-of-the-money position of such swaps (see Note 10 to the Financial Statements).
Maturities are presented net of $600 million and $700 million of debt swapped to variable maturing in 2024 and 2026, respectively, that is matched against the terms of the equivalent amounts of debt swapped to fixed that effectively fix the out-of-the-money position of such swaps (see Note 12 to the Financial Statements).
Our exposure to market risk is affected by several factors, including the size, duration and composition of our energy and financial portfolio, as well as the volatility and liquidity of markets.
Our exposure to market risk is affected by several factors, including the size, duration and composition of our energy and financial portfolio, as well as the volatility and liquidity of markets. Instruments used to manage this exposure include interest rate swaps to hedge debt costs, as well as exchange-traded, over-the-counter contracts and other contractual arrangements to hedge commodity prices.
Contracts classified as "normal" purchase or sale and non-derivative contractual commitments are not marked-to-market in the financial statements and are excluded from the detail above.
Contracts classified as "normal" purchase or sale and non-derivative contractual commitments are not marked-to-market in the financial statements and are excluded from the detail above. Such contractual commitments may contain pricing that is favorable considering current market conditions and therefore represent economic risk if the counterparties do not perform. 76 Table of Contents
Instruments used to manage this exposure include interest rate swaps to hedge debt costs, as well as exchange-traded, over-the-counter contracts and other contractual arrangements to hedge commodity prices. 82 Table of Contents Risk Oversight We manage the commodity price, counterparty credit and commodity-related operational risk related to the competitive energy business within limitations established by senior management and in accordance with overall risk management policies.
Risk Oversight We manage the commodity price, counterparty credit and commodity-related operational risk related to the competitive energy business within limitations established by senior management and in accordance with overall risk management policies. Interest rate risk is managed centrally by our treasury function.
Debt amounts consist of the Vistra Operations Credit Facilities. See Note 10 to the Financial Statements for further discussion of these financial instruments.
The following table provides information concerning our financial instruments at December 31, 2023 and 2022 that are sensitive to changes in interest rates. Debt amounts consist of the Vistra Operations Credit Facilities. See Note 12 to the Financial Statements for further discussion of these financial instruments.
Exposure Before Credit Collateral Credit Collateral Net Exposure Investment grade $ 689 $ 20 $ 669 Below investment grade or no rating 315 48 267 Totals $ 1,004 $ 68 $ 936 Significant ( i.e. , 10% or greater) concentration of credit exposure exists with one counterparty, which represented an aggregate $136 million, or 15%, of our total net exposure.
Exposure Before Credit Collateral Credit Collateral Net Exposure Investment grade $ 539 $ 26 $ 513 Below investment grade or no rating 135 97 38 Totals $ 674 $ 123 $ 551 Significant ( i.e. , 10% or greater) concentration of credit exposure exists with two counterparties, which represented an aggregate $293 million, or 53%, of our total net exposure as of December 31, 2023.
Year Ended December 31, 2022 2021 Month-end average VaR $ 489 $ 424 Month-end high VaR $ 686 $ 684 Month-end low VaR $ 283 $ 222 The month-end high VaR risk measure in 2022 is currently consistent with the prior year. 83 Table of Contents Interest Rate Risk The following table provides information concerning our financial instruments at December 31, 2022 and 2021 that are sensitive to changes in interest rates.
Year Ended December 31, 2023 2022 Month-end average VaR $ 190 $ 489 Month-end high VaR $ 423 $ 686 Month-end low VaR $ 115 $ 283 The month-end high VaR risk measure in 2023 is currently lower than the prior year due to lower prices and higher hedge levels.
Removed
As of December 31, 2022, Retail segment credit exposure totaled approximately $1.233 billion, including $1.211 billion of trade accounts receivable and $22 million related to derivatives. Cash deposits and letters of credit held as collateral for these receivables totaled $65 million, resulting in a net exposure of $1.168 billion.
Added
Price Sensitivities The following sensitivity table provides approximate estimates of the potential impact of movements in power prices and spark spreads (the difference between the power revenue and fuel expense of natural gas-fired generation as calculated using an assumed Heat Rate of 7.2 MMBtu/MWh) on realized pre-tax earnings (in millions) taking into account the hedge positions noted above for the periods presented.
Removed
Such contractual commitments may contain pricing that is favorable considering current market conditions and therefore represent economic risk if the counterparties do not perform. 85 Table of Contents FORWARD-LOOKING STATEMENTS This report and other presentations made by us contain "forward-looking statements." All statements, other than statements of historical facts, that are included in this report, or made in presentations, in response to questions or otherwise, that address activities, events or developments that may occur in the future, including (without limitation) such matters as activities related to our financial or operational projections, capital allocation, capital expenditures, liquidity, dividend policy, business strategy, competitive strengths, goals, future acquisitions or dispositions, development or operation of power generation assets, market and industry developments and the growth of our businesses and operations (often, but not always, through the use of words or phrases such as "intends," "plans," "will likely," "unlikely," "expected," "anticipated," "estimated," "should," "may," "projection," "target," "goal," "objective" and "outlook"), are forward-looking statements.
Added
The residual natural gas position is calculated based on two steps: first, calculating the difference between actual Heat Rates of our natural gas generation units and the assumed 7.2 Heat Rate used to calculate the sensitivity to spark spreads; and second, calculating the residual natural gas exposure that is not already included in the natural gas generation spark spread sensitivity shown in the table below.
Removed
Although we believe that in making any such forward-looking statement our expectations are based on reasonable assumptions, any such forward-looking statement involves uncertainties and risks and is qualified in its entirety by reference to the discussion under Item 1A. Risk Factors and Item 7.
Added
The estimates related to price sensitivity are based on our expected generation, related hedges and forward prices as of December 31, 2023. 2024 2025 Texas: Nuclear/Renewable/Coal Generation: $2.50/MWh increase in power price $ 5 $ 9 Nuclear/Renewable/Coal Generation: $2.50/MWh decrease in power price $ (4) $ (8) Natural Gas Generation: $1.00/MWh increase in spark spread $ 7 $ 10 Natural Gas Generation: $1.00/MWh decrease in spark spread $ (6) $ (9) Residual Natural Gas Position: $0.25/MMBtu increase in natural gas price $ (9) $ 8 Residual Natural Gas Position: $0.25/MMBtu decrease in natural gas price $ 3 $ (11) East: Natural Gas Generation: $1.00/MWh increase in spark spread $ 2 $ 11 Natural Gas Generation: $1.00/MWh decrease in spark spread $ — $ (10) Residual Natural Gas Position: $0.25/MMBtu increase in natural gas price $ (7) $ (25) Residual Natural Gas Position: $0.25/MMBtu decrease in natural gas price $ 7 $ 25 West: Natural Gas Generation: $1.00/MWh increase in spark spread $ — $ 1 Natural Gas Generation: $1.00/MWh decrease in spark spread $ — $ (1) Residual Natural Gas Position: $0.25/MMBtu increase in natural gas price $ 1 $ 2 Residual Natural Gas Position: $0.25/MMBtu decrease in natural gas price $ (1) $ (2) Sunset: Coal Generation: $2.50/MWh increase in power price $ 3 $ 27 Coal Generation: $2.50/MWh decrease in power price $ (2) $ (27) 74 Table of Contents Interest Rate Risk We manage our interest rate risk to limit the impact of interest rate changes on our results of operations and cash flows and to lower our overall borrowing costs.
Removed
Management's Discussion and Analysis of Financial Condition and Results of Operations in this annual report on Form 10-K and the following important factors, among others, that could cause our actual results to differ materially from those projected in or implied by such forward-looking statements: • the actions and decisions of judicial and regulatory authorities; • prohibitions and other restrictions on our operations due to the terms of our agreements; • prevailing federal, state and local governmental policies and regulatory actions, including those of the legislatures and other government actions of states in which we operate, the U.S.
Added
To achieve these objectives, a majority of our borrowings have fixed interest rates. The inflationary environment continues to drive elevated interest rates, resulting in increased expected refinancing or borrowing costs. See Item 7. Management's Discussion and Analysis of Financial Condition, and Results of Operations – Significant Activities and Events, and Items Influencing Future Performance – Macroeconomic Conditions.
Removed
Congress, the FERC, the NERC, the TRE, the public utility commissions of states and locales in which we operate, CAISO, ERCOT, ISO-NE, MISO, NYISO, PJM, the RCT, the NRC, the EPA, the environmental regulatory bodies of states in which we operate, the MSHA and the CFTC, with respect to, among other things: ▪ allowed prices; ▪ industry, market and rate structure; ▪ purchased power and recovery of investments; ▪ operations of nuclear generation facilities; ▪ operations of fossil-fueled generation facilities; ▪ operations of mines; ▪ acquisition and disposal of assets and facilities; ▪ development, construction and operation of facilities; ▪ decommissioning costs; ▪ present or prospective wholesale and retail competition; ▪ changes in federal, state and local tax laws, rates and policies, including additional regulation, interpretations, amendments, or technical corrections to the TCJA and/or the IRA; ▪ changes in and compliance with environmental and safety laws and policies, including the CCR Rule, National Ambient Air Quality Standards, the Cross-State Air Pollution Rule, the Mercury and Air Toxics Standard, regional haze program implementation and GHG and other climate change initiatives; and ▪ clearing over-the-counter derivatives through exchanges and posting of cash collateral therewith; • expectations regarding, or impacts of, environmental matters, including costs of compliance, availability and adequacy of emission credits, and the impact of ongoing proceedings and potential regulations or changes to current regulations, including those relating to climate change, air emissions, cooling water intake structures, coal combustion byproducts, and other laws and regulations that we are, or could become, subject to, which could increase our costs, result in an impairment of our assets, cause us to limit or terminate the operation of certain of our facilities, or otherwise negatively impact our financial results or stock price; • legal and administrative proceedings and settlements; • general industry trends; • economic conditions, including the impact of any inflationary period, recession or economic downturn; • investor sentiment relating to climate change and utilization of fossil fuels in connection with power generation could reduce demand for, or increase potential volatility in the market price of, our common stock; • the severity, magnitude and duration of pandemics, including the COVID-19 pandemic, and the resulting effects on our results of operations, financial condition and cash flows; • the severity, magnitude and duration of extreme weather events, drought and limitations on access to water, and other weather conditions and natural phenomena, contingencies and uncertainties relating thereto, most of which are difficult to predict and many of which are beyond our control, and the resulting effects on our results of operations, financial condition and cash flows; • acts of sabotage, geopolitical conflicts, wars, or terrorist, cybersecurity, cybercriminal, or cyber-espionage threats or activities; 86 Table of Contents • risk of contract performance claims by us or our counterparties, and risks of, or costs associated with, pursuing or defending such claims; • our ability to collect trade receivables from counterparties in the amount or at the time expected, if at all; • our ability to attract, retain and profitably serve customers; • restrictions on or prohibitions of competitive retail pricing or direct-selling businesses; • adverse publicity associated with our retail products or direct selling businesses, including our ability to address the marketplace and regulators regarding our compliance with applicable laws; • changes in wholesale electricity prices or energy commodity prices, including the price of natural gas; • changes in prices of transportation of natural gas, coal, fuel oil and other refined products; • sufficiency of, access to, and costs associated with coal, fuel oil, natural gas, and uranium inventories and transportation and storage thereof; • changes in the ability of counterparties and suppliers to provide or deliver commodities, materials, or services as needed; • beliefs and assumptions about the benefits of state- or federal-based subsidies to our market competition, and the corresponding impacts on us, including if such subsidies are disproportionately available to our competitors; • the effects of, or changes to, market design and the power, ancillary services and capacity procurement processes in the markets in which we operate; • changes in market heat rates in the CAISO, ERCOT, ISO-NE, MISO, NYISO and PJM electricity markets; • our ability to effectively hedge against unfavorable commodity prices, including the price of natural gas, market heat rates and interest rates; • population growth or decline, or changes in market supply or demand and demographic patterns; • our ability to mitigate forced outage risk, including managing risk associated with Capacity Performance in PJM and performance incentives in ISO-NE; • efforts to identify opportunities to reduce congestion and improve busbar power prices; • access to adequate transmission facilities to meet changing demands; • changes in interest rates, commodity prices, rates of inflation or foreign exchange rates; • changes in operating expenses, liquidity needs and capital expenditures; • commercial bank market and capital market conditions and the potential impact of disruptions in U.S. and international credit markets; • access to capital, the attractiveness of the cost and other terms of such capital and the success of financing and refinancing efforts, including availability of funds in capital markets; • our ability to maintain prudent financial leverage and achieve our capital allocation, performance, and cost-saving initiatives and objectives; • our ability to generate sufficient cash flow to make principal and interest payments in respect of, or refinance, our debt obligations; • our expectation that we will continue to pay (i) a consistent aggregate cash dividend amount to common stockholders on a quarterly basis and (ii) the applicable semiannual cash dividend to the Series A Preferred Stock and Series B Preferred Stock stockholders, respectively; • our expectation that we will continue to make repurchases under, and the possibility that we may fail to realize the anticipated benefits of, our share repurchase program, and the possibility that the program may be suspended, discontinued or not completed prior to its termination; • our ability to implement and successfully execute upon our strategic and growth initiatives, including the completion and integration of mergers, acquisitions and/or joint venture activity, the identification and completion of sales and divestitures activity, and the completion and commercialization of our other business development and construction projects; • competition for new energy development and other business opportunities; • inability of various counterparties to meet their obligations with respect to our financial instruments; • counterparties' collateral demands and other factors affecting our liquidity position and financial condition; • changes in technology (including large-scale electricity storage) used by and services offered by us; • changes in electricity transmission that allow additional power generation to compete with our generation assets; • our ability to attract and retain qualified employees; • significant changes in our relationship with our employees, including the availability of qualified personnel, and the potential adverse effects if labor disputes or grievances were to occur or changes in laws or regulations relating to independent contractor status; • changes in assumptions used to estimate costs of providing employee benefits, including medical and dental benefits, pension and OPEB, and future funding requirements related thereto, including joint and several liability exposure under ERISA; • hazards customary to the industry and the possibility that we may not have adequate insurance to cover losses resulting from such hazards; 87 Table of Contents • the impact of our obligations under the TRA; • our ability to optimize our assets through targeted investment in cost-effective technology enhancements and operations performance initiatives; • our ability to effectively and efficiently plan, prepare for and execute expected asset retirements and reclamation obligations and the impacts thereof; • our ability to successfully complete the integration of businesses acquired by Vistra and our ability to successfully capture the full amount of projected operational and financial synergies relating to such transactions; and • actions by credit rating agencies.
Added
Including collateral posted to us by counterparties, our net Texas, East, Sunset and Asset Closure segments exposure was $551 million, as seen in the following table that presents the distribution of credit exposure by counterparty credit quality as of December 31, 2023.
Removed
Any forward-looking statement speaks only at the date on which it is made, and except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of unanticipated events or circumstances.
Removed
New factors emerge from time to time, and it is not possible for us to predict them.
Removed
In addition, we may be unable to assess the impact of any such event or condition or the extent to which any such event or condition, or combination of events or conditions, may cause results to differ materially from those contained in or implied by any forward-looking statement. As such, you should not unduly rely on such forward-looking statements.
Removed
INDUSTRY AND MARKET INFORMATION Certain industry and market data and other statistical information used throughout this report are based on independent industry publications, government publications, reports by market research firms or other published independent sources, including certain data published by CAISO, ERCOT, ISO-NE, MISO, NYISO, PJM, the environmental regulatory bodies of states in which we operate and NYMEX.
Removed
We did not commission any of these publications, reports or other sources. Some data is also based on good faith estimates, which are derived from our review of internal surveys, as well as the independent sources listed above.
Removed
Industry publications, reports and other sources generally state that they have obtained information from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information.
Removed
While we believe that each of these studies, publications, reports and other sources is reliable, we have not independently investigated or verified the information contained or referred to therein and make no representation as to the accuracy or completeness of such information.
Removed
Forecasts are particularly likely to be inaccurate, especially over long periods of time, and we do not know what assumptions were used in preparing such forecasts. Statements regarding industry and market data and other statistical information used throughout this report involve risks and uncertainties and are subject to change based on various factors. 88 Table of Contents

Other VST 10-K year-over-year comparisons