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NRG Energy Tells Investors Not to Worry, Then Warns of $100 Million Winter Storm Loss
New filing reveals potential loss equal to 20% of company’s 2020 operating profit.
March 5, 2021
NRG Energy (NRG), which provides electricity to 3.7 million residential and commercial customers in the U.S. and Canada, supplies Texas with electricity and recently quantified the potential fallout from the winter storm there in February 2021. Prolonged cold temperatures resulted in blackouts, a power emergency that nearly knocked out the Texas grid, and energy bills as high as $16,000 for those who didn’t lose power.

Exorbitant energy bills have resulted in bankruptcies, lawsuits from the Texas Attorney General, and promises of relief from state lawmakers. In its 2020 10-K, NRG indicates— at least initially— it expects no negative consequences:

“The estimated financial impact is still preliminary, due to customer meter and settlement data not being finalized, as well as potential customer and counterparty risk and expected ERCOT default allocations. Based on a preliminary analysis, Winter Storm Uri's financial impact is not expected to be adverse to NRG's financial results.”

One sentence later though, NRG reveals another analysis indicates the consequences may total millions of dollars in losses:

“The Company separately stress-tested assumptions and although at a lower probability, this stress-test analysis indicated a potential plus or minus $100 million to income from continuing operations in 2021.”

In 2020, NRG recorded net income from operations of $510 million, which means a $100 million storm related operating loss in 2021 would equal approximately 20% of the prior year’s operating income.
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