VISTRA CORP., 10-Q filed on 11/4/2020
Quarterly Report
v3.20.2
Cover Page - shares
9 Months Ended
Sep. 30, 2020
Oct. 30, 2020
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2020  
Document Transition Report false  
Entity File Number 001-38086  
Entity Registrant Name Vistra Corp.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 36-4833255  
Entity Address, Address Line One 6555 Sierra Drive,  
Entity Address, City or Town Irving,  
Entity Address, State or Province TX  
Entity Address, Postal Zip Code 75039  
City Area Code (214)  
Local Phone Number 812-4600  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   489,133,516
Entity Central Index Key 0001692819  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2020  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Common stock, par value $0.01 per share    
Document Information [Line Items]    
Title of 12(b) Security Common stock, par value $0.01 per share  
Trading Symbol VST  
Security Exchange Name NYSE  
Warrants    
Document Information [Line Items]    
Title of 12(b) Security Warrants  
Trading Symbol VST.WS.A  
Security Exchange Name NYSE  
v3.20.2
Condensed Consolidated Statements of Operations - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Income Statement [Abstract]        
Operating revenues $ 3,552 $ 3,194 $ 8,919 $ 8,949
Fuel, purchased power costs and delivery fees (1,469) (1,687) (3,832) (4,287)
Operating costs (457) (397) (1,249) (1,153)
Depreciation and amortization (410) (424) (1,284) (1,213)
Selling, general and administrative expenses (268) (246) (755) (637)
Impairment of long-lived assets (272) 0 (356) 0
Operating income 676 440 1,443 1,659
Other income 8 6 19 45
Other deductions 0 (4) (35) (9)
Interest expense and related charges (101) (224) (541) (720)
Impacts of Tax Receivable Agreement 58 (62) 44 (26)
Equity in earnings of unconsolidated investments 0 3 4 13
Income before income taxes 641 159 934 962
Income tax expense (199) (45) (283) (270)
Net income 442 114 651 692
Net (income) loss attributable to noncontrolling interest 1 (1) 14 2
Net income attributable to Vistra $ 443 $ 113 $ 665 $ 694
Weighted average shares of common stock outstanding:        
Weighted average shares of common stock outstanding - basic 488,824,580 490,562,179 488,484,441 486,215,356
Weighted average shares of common stock outstanding - diluted 491,025,940 493,670,295 490,914,478 490,226,743
Net income per weighted average share of common stock outstanding:        
Net income per weighted average share of common stock outstanding - basic $ 0.91 $ 0.23 $ 1.36 $ 1.43
Net income per weighted average share of common stock outstanding - diluted $ 0.90 $ 0.23 $ 1.35 $ 1.42
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net income $ 442 $ 114 $ 651 $ 692
Other comprehensive income, net of tax effects:        
Effects related to pension and other retirement benefit obligations (net of tax benefit of $1, $4, $8 and $4) (4) (13) (26) (12)
Total other comprehensive income (loss) (4) (13) (26) (12)
Comprehensive income 438 101 625 680
Comprehensive income (loss) attributable to noncontrolling interest 1 (1) 14 2
Comprehensive income attributable to Vistra $ 439 $ 100 $ 639 $ 682
v3.20.2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Sep. 30, 2020
Sep. 30, 2019
Statement of Comprehensive Income [Abstract]        
Effect related to pension and other retirement benefit obligations (tax) $ 1 $ 4 $ 8 $ 4
v3.20.2
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2020
Sep. 30, 2019
Cash flows — operating activities:    
Net income $ 651 $ 692
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 1,512 1,394
Deferred income tax expense, net 264 254
Impairment of long-lived assets 356 0
Loss on disposal of investment in NELP 29 0
Unrealized net gain from mark-to-market valuations of commodities (444) (625)
Unrealized net loss from mark-to-market valuations of interest rate swaps 181 275
Asset retirement obligation accretion expense 33 40
Impacts of Tax Receivable Agreement (44) 26
Stock-based compensation 46 35
Other, net 115 12
Changes in operating assets and liabilities:    
Margin deposits, net 60 129
Accrued interest (97) 15
Accrued taxes (35) (31)
Accrued employee incentive (20) (53)
Other operating assets and liabilities (257) (340)
Cash provided by operating activities 2,350 1,823
Cash flows — investing activities:    
Capital expenditures, including nuclear fuel purchases and LTSA prepayments (838) (474)
Crius acquisition (net of cash acquired) 0 (374)
Proceeds from sales of nuclear decommissioning trust fund securities 291 354
Investments in nuclear decommissioning trust fund securities (307) (370)
Proceeds from sales of environmental allowances 91 32
Purchases of environmental allowances (210) (169)
Proceeds from sale of assets 23 6
Other, net 23 16
Cash used in investing activities (927) (979)
Cash flows — financing activities:    
Issuances of long-term debt 0 4,600
Repayments/repurchases of debt (955) (4,668)
Net borrowings under accounts receivable securitization program 175 261
Borrowings under Revolving Credit Facility 1,075 100
Repayments under Revolving Credit Facility (1,425) (100)
Stock repurchase 0 (632)
Dividends paid to stockholders (198) (181)
Debt tender offer and other financing fees (17) (170)
Other, net (3) 6
Cash used in financing activities (1,348) (784)
Net change in cash, cash equivalents and restricted cash 75 60
Cash, cash equivalents and restricted cash — beginning balance 475 693
Cash, cash equivalents and restricted cash — ending balance $ 550 $ 753
v3.20.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Sep. 30, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 500 $ 300
Restricted cash 28 147
Trade accounts receivable — net 1,372 1,365
Inventories 508 469
Commodity and other derivative contractual assets 883 1,333
Margin deposits related to commodity contracts 155 202
Prepaid expense and other current assets 311 298
Total current assets 3,757 4,114
Restricted cash 22 28
Investments 1,632 1,537
Investment in unconsolidated subsidiary 0 124
Property, plant and equipment — net 13,564 13,914
Operating lease right-of-use assets 45 44
Goodwill 2,583 2,553
Identifiable intangible assets — net 2,464 2,748
Commodity and other derivative contractual assets 321 136
Accumulated deferred income taxes 805 1,066
Other noncurrent assets 306 352
Total assets 25,499 26,616
Current liabilities:    
Short-term borrowings 0 350
Accounts receivable securitization program 625 450
Long-term debt due currently 127 277
Trade accounts payable 897 947
Commodity and other derivative contractual liabilities 858 1,529
Margin deposits related to commodity contracts 11 8
Accrued income taxes 0 1
Accrued taxes other than income 171 200
Accrued interest 53 151
Asset retirement obligations 115 141
Operating lease liabilities 10 14
Other current liabilities 516 506
Total current liabilities 3,383 4,574
Long-term debt, less amounts due currently 9,253 10,102
Operating lease liabilities 39 41
Commodity and other derivative contractual liabilities 532 396
Accumulated deferred income taxes 2 2
Tax Receivable Agreement obligation 411 455
Asset retirement obligation 2,353 2,097
Other noncurrent liabilities and deferred credits 1,095 989
Total liabilities 17,068 18,656
Commitments and Contingencies
Total equity:    
Common stock (par value — $0.01; number of shares authorized — 1,800,000,000) (shares outstanding: September 30, 2020 — 488,874,505; December 31, 2019 — 487,698,111) 5 5
Treasury stock, at cost (shares: September 30, 2020 — 41,043,224; December 31, 2019 — 41,043,224) (973) (973)
Additional paid-in-capital 9,771 9,721
Retained deficit (303) (764)
Accumulated other comprehensive loss (56) (30)
Stockholders' equity 8,444 7,959
Noncontrolling interest in subsidiary (13) 1
Total equity 8,431 7,960
Total liabilities and equity $ 25,499 $ 26,616
Common stock, par or stated value per share $ 0.01  
Common stock, shares authorized 1,800,000,000  
Common stock, shares, outstanding 488,874,505 487,698,111
Treasury stock, held in treasury 41,043,224 41,043,224
v3.20.2
Business And Significant Accounting Policies
9 Months Ended
Sep. 30, 2020
Accounting Policies [Abstract]  
Business And Significant Accounting Policies BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Description of 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.

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 power generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity and natural gas to end users. Effective July 2, 2020, we changed our name from Vistra Energy Corp. to Vistra Corp. (Vistra) to distinguish from companies that are involved in exploring for, producing, refining, or transporting fossil fuels (many of which use "energy" in their names) and to better reflect our integrated business model, which combines a retail electricity and natural gas business focused on serving its customers with new and innovative products and services and an electric power generation business powering the communities we serve with safe, reliable power.

Vistra has six reportable segments: (i) Retail, (ii) Texas, (iii) East, (iv) West, (v) Sunset and (vi) Asset Closure. In the third quarter of 2020, Vistra updated its reportable segments to reflect changes in how the Company's Chief Operating Decision Maker (CODM) makes operating decisions, assesses performance and allocates resources. Management believes that the revised reportable segments provide enhanced transparency into the Company's long-term sustainable assets and its commitment to managing the retirement of economically and environmentally challenged plants. The following is a summary of the updated segments:

The East segment represents Vistra's electricity generation operations in the Eastern Interconnection of the U.S. electric grid, other than assets that are now part of the Sunset or Asset Closure segments, and includes operations in PJM, ISO-NE and NYISO that were previously reported in the PJM and NY/NE segments.
The West segment represents Vistra's electricity generation operations in CAISO and was previously reported in the Corporate and Other non-segment. As reflected by the Moss Landing and Oakland ESS projects (see Note 3), the company expects to expand its operations in the West.
The Sunset segment represents plants with announced retirement dates that were previously reported in the PJM and MISO segments. No separate segment previously existed to differentiate operating plants with defined retirement dates from operating plants without defined retirement plans.

In addition, the ERCOT segment was renamed the Texas segment. There were no changes to the Retail and Asset Closure segments. All historical segment results within these condensed consolidated financial statements have been recast to be in alignment with our new segmentation. See Note 17 for further information concerning reportable business segments.

Ambit Transaction

On November 1, 2019, an indirect, wholly owned subsidiary of Vistra completed the acquisition of Ambit (Ambit Transaction). Because the Ambit Transaction closed on November 1, 2019, Vistra's condensed consolidated financial statements and the notes related thereto do not include the financial condition or the operating results of Ambit and its subsidiaries prior to November 1, 2019. See Note 2 for a summary of the Ambit Transaction.

Crius Transaction

On July 15, 2019, an indirect, wholly owned subsidiary of Vistra completed the acquisition of the equity interests of two wholly owned subsidiaries of Crius that indirectly owned the operating business of Crius (Crius Transaction). Because the Crius Transaction closed on July 15, 2019, Vistra's condensed consolidated financial statements and the notes related thereto do not include the financial condition or the operating results of Crius and its subsidiaries prior to July 15, 2019. See Note 2 for a summary of the Crius Transaction.
COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and the President of the United States (the President) declared the COVID-19 outbreak a national emergency. The U.S. government has deemed electricity generation, transmission and distribution as “critical infrastructure” providing essential services during this global emergency. As a provider of critical infrastructure, Vistra has an obligation to provide critically needed power to homes, businesses, hospitals and other customers. Vistra remains focused on protecting the health and well-being of its employees and the communities in which it operates while assuring the continuity of its business operations.

The Company's condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there have been no material adverse impacts on the Company's results of operations for the three or nine months ended September 30, 2020.

In response to the global pandemic related to COVID-19, the President signed into law the CARES Act on March 27, 2020. See Note 7 for a summary of certain anticipated tax-related impacts of the CARES Act to the Company.

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and on the same basis as the audited financial statements included in our 2019 Form 10-K. The condensed consolidated financial information herein reflects all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. All such adjustments are of a normal nature. All intercompany items and transactions have been eliminated in consolidation. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the SEC. Because the condensed consolidated interim financial statements do not include all of the information and footnotes required by U.S. GAAP, they should be read in conjunction with the audited financial statements and related notes contained in our 2019 Form 10-K. The results of operations for an interim period may not give a true indication of results for a full year. All dollar amounts in the financial statements and tables in the notes are stated in millions of U.S. dollars unless otherwise indicated.

Use of Estimates

Preparation of financial statements requires estimates and assumptions about future events that affect the reporting of assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense, including fair value measurements, estimates of expected obligations, judgments related to the potential timing of events and other estimates. In the event estimates and/or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information.

Adoption of Accounting Standards

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). The ASU enhances and simplifies various aspects of the income tax accounting guidance including the elimination of certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We adopted all provisions of this ASU in the first quarter of 2020, and it did not have a material impact on our financial statements.

In August 2018, the FASB issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The ASU removes disclosure requirements for (a) the reasons for transfers between Level 1 and Level 2, (b) the policy for timing of transfers between levels and (c) the valuation processes for Level 3. The ASU requires new disclosures around (a) the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period and (b) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. We adopted this ASU in the first quarter of 2020, and the updated disclosures are included in Note 14.
In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU requires a customer in a cloud hosting arrangement that is a service contract to determine which implementation costs to capitalize and which costs to expense based on the project stage of the implementation. The ASU also requires the customer to expense the capitalized implementation costs over the term of the hosting arrangement. The customer is required to apply the existing impairment and abandonment guidance on the capitalized implementation costs. We adopted this ASU in the first quarter of 2020, and it did not have a material impact on our financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses. The ASU requires organizations to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. We adopted this ASU in the first quarter of 2020, and it did not have a material impact on our financial statements.

Changes in Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in the ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of this guidance did not have a material impact on our financial statements.

In March 2020, the SEC amended Rule 3-10 of Regulation S-X regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. This rule is effective January 4, 2021 with earlier adoption permitted. We elected to adopt this rule in the first quarter of 2020. Accordingly, summarized financial information has been presented only for the issuer and guarantors of the Company's registered debt securities, and the location of the required disclosures has been moved outside the Notes to the Consolidated Financial Statements and is provided in Part I, Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations under Financial Condition - Guarantor Summary Financial Information.
v3.20.2
Acquisitions, Merger Transaction and Business Combination Accounting
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
Acquisitions, Merger Transaction and Business Combination Accounting ACQUISITIONS, MERGER TRANSACTION AND BUSINESS COMBINATION ACCOUNTING
Ambit Transaction

On November 1, 2019 (Ambit Acquisition Date), Volt Asset Company, Inc., an indirect, wholly owned subsidiary of Vistra, completed the Ambit Transaction. Ambit is an energy retailer selling both electricity and natural gas products to residential and small business customers in 17 states. Vistra funded the purchase price of $555 million (including cash acquired and net working capital) using cash on hand. All of Ambit's outstanding debt was repaid from the purchase price at closing and not assumed by Vistra.

Crius Transaction

On July 15, 2019 (Crius Acquisition Date), Vienna Acquisition B.C. Ltd., an indirect, wholly owned subsidiary of Vistra, completed the acquisition of the equity interests of two wholly owned subsidiaries of Crius that indirectly own the operating business of Crius. Crius is an energy retailer selling both electricity and natural gas products to residential and small business customers in 19 states. Vistra funded the purchase price of $400 million (including $382 million for outstanding trust units) using cash on hand. In addition, Vistra assumed $140 million of outstanding debt and acquired $26 million of cash at the closing of the Crius Transaction.

Ambit and Crius Business Combination Accounting

We believe the Ambit Transaction has (i) augmented Vistra's existing retail marketing capabilities with additional direct selling capability and a proprietary technology platform, (ii) reduced risk and aided expansion into higher margin channels by improving Vistra's match of its generation to load profile due to a high degree of overlap of Vistra's generation fleet with Ambit's approximately 11 TWh of annual load, primarily in ERCOT and PJM and (iii) enhanced the integrated value proposition through collateral and transaction efficiencies, particularly via Ambit's retail electric portfolio.
We believe the Crius Transaction has (i) reduced risk and aided expansion into higher margin channels by improving Vistra's match of its generation to load profile due to a high degree of overlap of Vistra's generation fleet with Crius' approximately 10 TWh of annual electricity load, (ii) established a platform for growth by leveraging Vistra's existing retail marketing capabilities and Crius' experienced team and (iii) enhanced the integrated value proposition through collateral and transaction efficiencies, particularly via Crius' retail electric portfolio.

Each of the Ambit Transaction and Crius Transaction, respectively, was accounted for in accordance with ASC 805, Business Combinations (ASC 805), with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the Ambit Acquisition Date and Crius Acquisition Date, respectively. The combined results of operations are reported in our condensed consolidated financial statements beginning as of the respective Ambit Acquisition Date and Crius Acquisition Date. A summary of the techniques used to estimate the fair value of the identifiable assets and liabilities, as well as their classification within the fair value hierarchy (see Note 14), is listed below:

Working capital was valued using available market information (Level 2).
Acquired derivatives were valued using the methods described in Note 14 (Level 2 or Level 3).
Acquired retail customer relationship was valued based on discounted cash flow analysis of acquired customers and estimated attrition rates (Level 3).
Crius' long-term debt was valued using a market approach (Level 2).

The following table summarizes the allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Ambit Transaction and Crius Transaction, respectively, as of the Ambit Acquisition Date and Crius Acquisition Date, respectively. The Ambit Transaction purchase price was $555 million (including cash acquired and net working capital) and the Crius Transaction purchase price was $400 million. The final purchase price allocations were completed in the second quarter of 2020 for the Crius Transaction and the third quarter of 2020 for the Ambit Transaction.
Ambit Transaction and Crius Transaction Final Purchase Price Allocations
Ambit
Transaction
Crius Transaction
Final
Purchase Price Allocation
Measurement Period Adjustments recorded through
September 30, 2020
Final
Purchase Price Allocation
Cash and cash equivalents$49 $— $26 
Net working capital32 (9)
Accumulated deferred income taxes— — — 
Identifiable intangible assets218 (45)317 
Goodwill258 44 243 
Commodity and other derivative contractual assets23 — 18 
Other noncurrent assets13 — 17 
Total assets acquired593 612 
Identifiable intangible liabilities— — 
Long-term debt, including amounts due currently— — 140 
Commodity and other derivative contractual liabilities28 — 40 
Accumulated deferred income taxes— — 14 
Other noncurrent liabilities and deferred credits10 16 
Total liabilities assumed38 212 
Identifiable net assets acquired$555 $— $400 
Crius Transaction Unaudited Pro Forma Financial Information

The following unaudited consolidated pro forma financial information for the nine months ended September 30, 2019 assumes that the Crius Transaction occurred on January 1, 2019 (i.e., represents our results for the nine months ended September 30, 2019 plus the results for Crius for the period not owned by us). The unaudited consolidated pro forma financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the Crius Transaction been completed on January 1, 2019, nor is the unaudited consolidated pro forma financial information indicative of future results of operations, which may differ materially from the consolidated pro forma financial information presented here.
Nine Months Ended September 30, 2019
Revenues$9,513 
Net income (a)$629 
Net income attributable to Vistra$631 
Net income attributable to Vistra per weighted average share of common stock outstanding — basic$1.30 
Net income attributable to Vistra per weighted average share of common stock outstanding — diluted$1.29 
__________
(a)    Decrease in pro forma net income compared to consolidated net income is driven by unrealized losses on hedging activities of Crius and amortization of intangible assets.

The consolidated unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired and the related impacts on tax expense.

Dynegy Merger Transaction

On the Merger Date, Vistra and Dynegy completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra, with Vistra continuing as the surviving corporation. The Merger was intended to qualify as a tax-free reorganization under the IRC, so that none of Vistra, Dynegy or any of the Dynegy stockholders would recognize any gain or loss in the transaction, except that Dynegy stockholders could recognize a gain or loss with respect to cash received in lieu of fractional shares of Vistra's common stock. Vistra is the acquirer for both federal tax and accounting purposes.

On the Merger Date, each issued and outstanding share of Dynegy common stock, par value $0.01 per share, other than shares owned by Vistra or its subsidiaries, held in treasury by Dynegy or held by a subsidiary of Dynegy, was automatically converted into 0.652 shares of common stock, par value $0.01 per share, of Vistra (the Exchange Ratio), except that cash was paid in lieu of fractional shares, which resulted in Vistra issuing 94,409,573 shares of Vistra common stock to the former Dynegy stockholders, as well as converting stock options, equity-based awards, tangible equity units and warrants. The total number of Vistra shares outstanding at the close of the Merger was 522,932,453 shares. Dynegy stock options and equity-based awards outstanding immediately prior to the Merger Date were generally automatically converted upon completion of the Merger into stock options and equity-based awards, respectively, with respect to Vistra's common stock, after giving effect to the Exchange Ratio.
v3.20.2
Development of Generation Facilities
9 Months Ended
Sep. 30, 2020
Business Combinations [Abstract]  
Development of Generation Facilities DEVELOPMENT OF GENERATION FACILITIES
Texas Segment Solar Generation and Energy Storage Projects

In September 2020, we announced the planned development of 668 MW of solar photovoltaic power generation facilities and 260 MW of battery ESS in Texas.
ProjectLocation in TexasTechnologyCapacity (MW)Estimated Commercial Operation Date
BrightsideLive Oak CountySolar50 Summer 2021
AndrewsAndrews CountySolar100 Fall 2021
Emerald GroveCrane CountySolar108 Fall 2021
Upton 2 Phase IIIUpton CountySolar10 Fall 2021
DeCordovaHood CountyEnergy Storage260 Spring 2022
Oak HillRusk CountySolar200 Fall 2022
Forest GroveHenderson CountySolar200 Fall 2022

West Segment Energy Storage Projects

Oakland — In June 2019, East Bay Community Energy (EBCE) signed a ten-year contract to receive resource adequacy capacity from the planned development of a 20 MW battery ESS at our Oakland Power Plant site in California. In April 2020, the project received necessary approvals from EBCE and from Pacific Gas and Electric Company (PG&E). The contract was amended to increase the capacity of the planned development to a 36.25 MW battery ESS. In April 2020, the concurrent local area reliability service agreement to ensure grid reliability as part of the Oakland Clean Energy Initiative was signed and sent to the California Public Utilities Commission (CPUC) for approval which is expected prior to the second quarter of 2021. The battery ESS project is expected to enter commercial operations by January 2022.

Moss Landing — In June 2018, we announced that, subject to approval by the CPUC, we would enter into a 20-year resource adequacy contract with PG&E to develop a 300 MW battery ESS at our Moss Landing Power Plant site in California (Moss Landing Phase I). PG&E filed its application with the CPUC in June 2018 and the CPUC approved the resource adequacy contract in November 2018. As of September 30, 2020, we had accumulated approximately $356 million in construction work-in-process for Moss Landing Phase I. Under the contract, PG&E will pay us a fixed monthly resource adequacy payment, while we will receive the energy revenues and incur the costs from dispatching and charging the ESS. We anticipate the Moss Landing Phase I will commence commercial operations in December 2020. PG&E filed for Chapter 11 bankruptcy protection in January 2019. In November 2019, the bankruptcy court approved PG&E's motion requesting approval of the assumption of the resource adequacy contract subject to the CPUC approving the terms of an amendment to the resource adequacy contract, and the CPUC approved the terms of the amendment in January 2020. PG&E emerged from bankruptcy protection in July 2020.

In May 2020, we announced that, subject to approval by the CPUC, we would enter into a 10-year resource adequacy contract with PG&E to develop an additional 100 MW battery ESS at our Moss Landing Power Plant site (Moss Landing Phase II). PG&E filed its application with the CPUC in May 2020 and the CPUC approved the resource adequacy contract in August 2020. We anticipate Moss Landing Phase II will commence commercial operations in the third quarter of 2021.
v3.20.2
Retirement of Generation Facilities
9 Months Ended
Sep. 30, 2020
Retirement of Generation Facilities [Abstract]  
Retirement of generation facilities RETIREMENT OF GENERATION FACILITIES
2020 Announcements

In September 2020, we announced our intention to retire all of our remaining coal generation facilities in Illinois and Ohio and 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), and in furtherance of our efforts to significantly reduce our carbon footprint. Expected plant retirement expenses of $43 million, driven by severance cost, were accrued in the three months ended September 30, 2020 in operating costs of our Sunset segment. Operational results for plants with planned retirement dates are included in our Sunset segment beginning in the quarter when a retirement plan is announced. See Note 18 for discussion of impairments recorded in connection with these announcements.
NameLocationISO/RTOFuel TypeNet Generation Capacity (MW)Expected Retirement Date (a)
BaldwinBaldwin, ILMISOCoal1,185By the end of 2025
JoppaJoppa, ILMISOCoal802By the end of 2025
JoppaJoppa, ILMISONatural Gas221By the end of 2025
KincaidKincaid, ILPJMCoal1,108By the end of 2027
Miami FortNorth Bend, OHPJMCoal1,020By the end of 2027
NewtonNewton, ILMISO/PJMCoal615By the end of 2027
ZimmerMoscow, OHPJMCoal1,300By the end of 2027
Total6,251
____________
(a)Generation facilities may retire earlier than expected dates if economic or other conditions dictate.

2019 Announcements

In September 2019, we announced the settlement of a lawsuit alleging violations of opacity and particulate matter limits at our Edwards facility in Bartonville, Illinois. As part of the settlement, which was approved by the U.S. District Court for the Central District of Illinois in November 2019, we will retire the Edwards facility by the end of 2022 (see Note 12). In August 2019, we announced the planned retirement of four additional power plants in Illinois with a total installed nameplate generation capacity of 2,068 MW. We retired these units due to changes in the Illinois multi-pollutant standard rule (MPS rule) that require us to retire approximately 2,000 MW of generation capacity (see Note 12). In light of the provisions of the Federal Power Act and the FERC regulations thereunder, the affected subsidiaries of Vistra identified the retired units by analyzing the economics of each of our Illinois plants and designating the least economic units for retirement. Expected plant retirement expenses of $47 million, driven by severance costs, were accrued in the three months ended September 30, 2019 and were included primarily in operating costs of our Asset Closure segment. In August 2019, we remeasured our pension and OPEB plans resulting in an increase to the benefit obligation liability of $21 million, pretax other comprehensive loss of $18 million and curtailment expense of $3 million recognized as other deductions in our condensed consolidated statements of operations. The following table details the units in Illinois totaling 2,653 MW that have been or will be retired. Operational results for the four retired plants identified below are included in the Asset Closure segment, which is engaged in the decommissioning and reclamation of retired plants and mines. Operational results for the Edwards facility are included in the Sunset segment.
NameLocationISO/RTOFuel TypeNet Generation Capacity (MW)Dates Units Retired or
Expected Retirement Date
CoffeenCoffeen, ILMISOCoal915 November 1, 2019
Duck CreekCanton, ILMISOCoal425 December 15, 2019
HavanaHavana, ILMISOCoal434 November 1, 2019
HennepinHennepin, ILMISOCoal294 November 1, 2019
EdwardsBartonville, ILMISOCoal585 By the end of 2022
Total
2,653 
v3.20.2
Revenue
9 Months Ended
Sep. 30, 2020
Revenue from Contract with Customer [Abstract]  
Revenue REVENUE
The following tables disaggregate our revenue by major source:
Three Months Ended September 30, 2020
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$1,824 $— $— $— $— $— $— $1,824 
Retail energy charge in Northeast/Midwest683 — — — — — — 683 
Wholesale generation revenue from ISO/RTO— 152 78 37 139 — — 406 
Capacity revenue from ISO/RTO (b)— — (25)— 40 — — 15 
Revenue from other wholesale contracts— 68 183 16 43 — — 310 
Total revenue from contracts with customers2,507 220 236 53 222 — — 3,238 
Other revenues:
Intangible amortization— — (4)— — 
Hedging and other revenues (a)253 57 30 (37)— — 310 
Affiliate sales— 1,118 350 69 — (1,538)— 
Total other revenues14 1,371 408 31 28 — (1,538)314 
Total revenues$2,521 $1,591 $644 $84 $250 $— $(1,538)$3,552 
____________
(a)Includes $287 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 17 for unrealized net gains (losses) by segment.
(b)Represents net capacity sold (purchased) in each ISO/RTO. The East segment includes net purchases of capacity in the PJM market and the Sunset segment includes net sales of capacity in the PJM market.
Three Months Ended September 30, 2019
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$1,600 $— $— $— $— $— $— $1,600 
Retail energy charge in Northeast/Midwest576 — — — — — — 576 
Wholesale generation revenue from ISO/RTO— 990 108 46 165 59 — 1,368 
Capacity revenue from ISO/RTO— — — 40 — 52 
Revenue from other wholesale contracts— 110 271 47 — 430 
Total revenue from contracts with customers2,176 1,100 388 47 252 63 — 4,026 
Other revenues:
Intangible amortization12 — — — (4)— — 
Hedging and other revenues (a)19 (813)(35)48 (70)11 — (840)
Affiliate sales— 444 200 — 49 — (693)— 
Total other revenues31 (369)165 48 (25)11 (693)(832)
Total revenues$2,207 $731 $553 $95 $227 $74 $(693)$3,194 
____________
(a)Includes $86 million of unrealized net losses from mark-to-market valuations of commodity positions. See Note 17 for unrealized net gains (losses) by segment.
Nine Months Ended September 30, 2020
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$4,489 $— $— $— $— $— $— $4,489 
Retail energy charge in Northeast/Midwest1,862 — — — — — — 1,862 
Wholesale generation revenue from ISO/RTO— 326 177 83 263 — — 849 
Capacity revenue from ISO/RTO (b)— — (34)— 124 — — 90 
Revenue from other wholesale contracts— 183 508 40 146 — — 877 
Total revenue from contracts with customers6,351 509 651 123 533 — — 8,167 
Other revenues:
Intangible amortization(1)— — (16)— — (16)
Hedging and other revenues (a)35 564 25 85 59 — — 768 
Affiliate sales— 2,250 1,168 212 — (3,633)— 
Total other revenues34 2,814 1,194 88 255 — (3,633)752 
Total revenues$6,385 $3,323 $1,845 $211 $788 $— $(3,633)$8,919 
____________
(a)Includes $418 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 17 for unrealized net gains (losses) by segment.
(b)Represents net capacity sold (purchased) in each ISO/RTO. The East segment includes net purchases of capacity in the PJM market and the Sunset segment includes net sales of capacity in the PJM market.
Nine Months Ended September 30, 2019
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$3,716 $— $— $— $— $— $— $3,716 
Retail energy charge in Northeast/Midwest1,239 — — — — — — 1,239 
Wholesale generation revenue from ISO/RTO— 1,426 527 141 475 170 — 2,739 
Capacity revenue from ISO/RTO— — 185 — 156 — 350 
Revenue from other wholesale contracts— 207 443 104 — 763 
Total revenue from contracts with customers4,955 1,633 1,155 148 735 181 — 8,807 
Other revenues:
Intangible amortization(7)— (3)(13)— — (20)
Hedging and other revenues (a)66 (253)42 108 163 36 — 162 
Affiliate sales— 1,976 839 — 208 — (3,023)— 
Total other revenues59 1,723 878 111 358 36 (3,023)142 
Total revenues$5,014 $3,356 $2,033 $259 $1,093 $217 $(3,023)$8,949 
____________
(a)Includes $611 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 17 for unrealized net gains (losses) by segment.
Performance Obligations

As of September 30, 2020, we have future performance obligations that are unsatisfied, or partially unsatisfied, relating to capacity auction volumes awarded through capacity auctions held by the ISO or RTO or contracts with customers. Therefore, an obligation exists as of the date of the results of the respective ISO or RTO capacity auction or the contract execution date. These obligations total $189 million, $828 million, $486 million, $121 million and $38 million that will be recognized, in the balance of the year ended December 31, 2020 and the years ending December 31, 2021, 2022, 2023 and 2024, respectively, and $18 million thereafter. Capacity revenues are recognized as capacity is made available to the related ISOs or RTOs or counterparties.

Accounts Receivable

The following table presents trade accounts receivable (net of allowance for uncollectible accounts) relating to both contracts with customers and other activities:
September 30,
2020
December 31, 2019
Trade accounts receivable from contracts with customers — net$1,263 $1,246 
Other trade accounts receivable — net109 119 
Total trade accounts receivable — net$1,372 $1,365 
v3.20.2
Goodwill and Identifiable Intangible Assets and Liabilities
9 Months Ended
Sep. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill And Identifiable Intangible Assets GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS AND LIABILITIES
Goodwill

The following table provides information regarding our goodwill balance. There have been no impairments of goodwill.

Balance at December 31, 2019
$2,553 
Measurement period adjustments recorded in connection with the Ambit Transaction44 
Measurement period adjustments recorded in connection with the Crius Transaction(14)
Balance at September 30, 2020
$2,583 

At September 30, 2020, the goodwill balance of $2.583 billion consisted of the following:

$1.907 billion arose in connection with our application of fresh start reporting at Emergence and was allocated entirely to our Retail reporting unit. Of the goodwill recorded at Emergence, $1.686 billion is deductible for tax purposes over 15 years on a straight-line basis.
$175 million arose in connection with the Merger, of which $122 million was allocated to our ERCOT Generation reporting unit and $53 million was allocated to our Retail reporting unit. None of the goodwill related to the Merger is deductible for tax purposes.
$243 million of goodwill arose in connection with the Crius Transaction and was allocated entirely to our Retail reporting unit. None of the goodwill related to the Crius Transaction is deductible for tax purposes.
$258 million of goodwill arose in connection with the Ambit Transaction and was allocated entirely to our Retail reporting unit. The goodwill related to the Ambit Transaction is deductible for tax purposes over 15 years on a straight-line basis.
Identifiable Intangible Assets and Liabilities

Identifiable intangible assets are comprised of the following:
September 30, 2020December 31, 2019
Identifiable Intangible Asset
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Retail customer relationship$2,069 $1,365 $704 $2,078 $1,151 $927 
Software and other technology-related assets392 170 222 341 125 216 
Retail and wholesale contracts272 194 78 315 182 133 
Contractual service agreements (a)55 53 59 54 
Other identifiable intangible assets (b)49 17 32 40 15 25 
Total identifiable intangible assets subject to amortization$2,837 $1,748 1,089 $2,833 $1,478 1,355 
Retail trade names (not subject to amortization)1,374 1,391 
Mineral interests (not currently subject to amortization)
Total identifiable intangible assets$2,464 $2,748 
____________
(a)At September 30, 2020, amounts related to contractual service agreements that have become liabilities due to amortization of the economic impacts of the intangibles have been removed from both the gross carrying amount and accumulated amortization.
(b)Includes mining development costs and environmental allowances (emissions allowances and renewable energy certificates).

Identifiable intangible liabilities are comprised of the following:
Identifiable Intangible LiabilitySeptember 30,
2020
December 31, 2019
Contractual service agreements$127 $110 
Purchase and sale of power and capacity90 100 
Fuel and transportation purchase contracts74 76 
Total identifiable intangible liabilities$291 $286 
Expense related to finite-lived identifiable intangible assets and liabilities (including the classification in the condensed consolidated statements of operations) consisted of:
Identifiable Intangible Assets and LiabilitiesCondensed Consolidated Statements of OperationsThree Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Retail customer relationshipDepreciation and amortization$62 $82 $214 $193 
Software and other technology-related assetsDepreciation and amortization19 16 56 45 
Retail and wholesale contracts/purchase and sale/fuel and transportation contractsOperating revenues/fuel, purchased power costs and delivery fees(4)(9)11 14 
Other identifiable intangible assetsOperating revenues/fuel, purchased power costs and delivery fees/depreciation and amortization66 76 162 116 
Total intangible asset expense (a)$143 $165 $443 $368 
____________
(a)Amounts recorded in depreciation and amortization totaled $82 million and $99 million for the three months ended September 30, 2020 and 2019, respectively, and $272 million and $240 million for the nine months ended September 30, 2020 and 2019, respectively. Amounts exclude contractual services agreements. Amounts include all expenses associated with environmental allowances including expenses accrued to comply with emissions allowance programs and renewable portfolio standards which are presented in fuel, purchased power costs and delivery fees on our condensed consolidated statements of operations. Emissions allowance obligations are accrued as associated electricity is generated and renewable energy certificate obligations are accrued as retail electricity delivery occurs.

Estimated Amortization of Identifiable Intangible Assets and Liabilities

As of September 30, 2020, the estimated aggregate amortization expense of identifiable intangible assets and liabilities for each of the next five fiscal years is as shown below.
YearEstimated Amortization Expense
2020$371 
2021$263 
2022$170 
2023$126 
2024$80 
v3.20.2
Income Taxes
9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income Tax Expense

The calculation of our effective tax rate is as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Income before income taxes$641 $159 $934 $962 
Income tax expense$(199)$(45)$(283)$(270)
Effective tax rate31.0 %28.3 %30.3 %28.1 %

For the three months ended September 30, 2020, the effective tax rate of 31.0% was higher than the U.S. federal statutory rate of 21% due primarily to nondeductible impacts of the TRA and state income taxes, including the impact of an increase in the valuation allowance on a portion of state net operating losses. For the nine months ended September 30, 2020, the effective tax rate of 30.3% was higher than the U.S. federal statutory rate of 21% due primarily to nondeductible impacts of the TRA and state income taxes.
For the three months ended September 30, 2019, the effective tax rate of 28.3% was higher than the U.S. federal statutory rate of 21% due primarily to nondeductible impacts of the TRA and state income taxes. For the nine months ended September 30, 2019, the effective tax rate of 28.1% was higher than the U.S. federal statutory rate of 21% due primarily to state income taxes, including the impact of a valuation allowance on a portion of the State of Illinois net operating loss.

Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and Final Section 163(j) Regulations

In response to the global pandemic related to COVID-19, the President signed into law the CARES Act on March 27, 2020. The CARES Act provides numerous relief provisions for corporate taxpayers, including modification of the utilization limitations on net operating losses, favorable expansion of the deduction for business interest expense under IRC Section 163(j) (Section 163(j)), the ability to accelerate timing of refundable alternative minimum tax (AMT) credits and the temporary suspension of certain payment requirements for the employer portion of social security taxes. Additionally, the final Section 163(j) regulations were issued in July 2020 and provided a critical correction to the proposed regulations with respect to the computation of adjusted taxable income. Vistra continues to expect to receive approximately $64 million in 2020 relating to the acceleration of AMT refunds and an approximate $350 million increase in interest expense deduction over the 2019 and 2020 tax years under the cumulative impact of these final laws and regulation pertaining to Section 163(j). Additionally, Vistra expects to receive an approximate $250 million increase in interest expense deduction in the 2021 tax year under the final Section 163(j) regulations. We do not anticipate a material impact to the effective tax rate from these impacts. Vistra is also utilizing the CARES Act payroll deferral mechanism to defer the payment of approximately $21 million from 2020 to 2021.

Liability for Uncertain Tax Positions

Vistra and its subsidiaries file income tax returns in U.S. federal and state jurisdictions and are expected to be subject to examinations by the IRS and other taxing authorities. Vistra is not currently under audit by the IRS for any period. Crius is currently under audit by the IRS for the tax years 2015, 2016 and 2017. Uncertain tax positions totaled $36 million and $126 million at September 30, 2020 and December 31, 2019, respectively. The final regulations under Section 163(j) were released in July 2020, and we have adjusted deferred tax assets and liabilities by $87 million in the three months ended September 30, 2020.
v3.20.2
Tax Receivable Agreement Obligation
9 Months Ended
Sep. 30, 2020
Income Tax Disclosure [Abstract]  
Tax Receivable Agreement Obligation TAX RECEIVABLE AGREEMENT OBLIGATION
On the Effective Date, Vistra entered into a tax receivable agreement (the TRA) with a transfer agent on behalf of certain former first-lien creditors of TCEH. The TRA generally provides for the payment by us to holders of TRA Rights of 85% of the amount of cash savings, if any, in U.S. federal and state income tax that we realize in periods after Emergence as a result of (a) certain transactions consummated pursuant to the Plan of Reorganization (including the step-up in tax basis in our assets resulting from the PrefCo Preferred Stock Sale), (b) the tax basis of all assets acquired in connection with the acquisition of two CCGT natural gas-fueled generation facilities in April 2016 and (c) tax benefits related to imputed interest deemed to be paid by us as a result of payments under the TRA, plus interest accruing from the due date of the applicable tax return.

Pursuant to the TRA, we issued the TRA Rights for the benefit of the first-lien secured creditors of TCEH entitled to receive such TRA Rights under the Plan of Reorganization. Such TRA Rights are entitled to certain registration rights more fully described in the Registration Rights Agreement (see Note 16).

The following table summarizes the changes to the TRA obligation, reported as other current liabilities and Tax Receivable Agreement obligation in our condensed consolidated balance sheets, for the nine months ended September 30, 2020 and 2019:
Nine Months Ended September 30,
20202019
TRA obligation at the beginning of the period$455 $420 
Accretion expense50 45 
Changes in tax assumptions impacting timing of payments (a)(94)(19)
Impacts of Tax Receivable Agreement(44)26 
TRA obligation at the end of the period411 446 
Less amounts due currently— (3)
TRA obligation at the end of the period (noncurrent)$411 $443 
____________
(a)During the three and nine months ended September 30, 2020, we recorded decreases to the carrying value of the TRA obligation totaling $74 million and $94 million, respectively, as a result of adjustments to forecasted taxable income, including the impacts of the CARES Act, changes to the Section 163(j) percentage limitation amount, the impacts from the issuance of final Section 163(j) regulations and the anticipated tax benefits from renewable development projects. During the three and nine months ended September 30, 2019, we recorded an increase of $48 million and a decrease of $19 million, respectively, to the carrying value of the TRA obligation as a result of adjustments to the timing of forecasted taxable income and state apportionment due to the expansion of Vistra's state income tax profile, including the Dynegy and Crius acquisitions.

As of September 30, 2020, the estimated carrying value of the TRA obligation totaled $411 million, which represents the discounted amount of projected payments under the TRA. The projected payments are based on certain assumptions, including but not limited to (a) the federal corporate income tax rate of 21%, (b) estimates of our taxable income in the current and future years and (c) additional states that Vistra now operates in, including the relevant tax rate and apportionment factor for each state. Our taxable income takes into consideration the current federal tax code, various relevant state tax laws and reflects our current estimates of future results of the business. These assumptions are subject to change, and those changes could have a material impact on the carrying value of the TRA obligation. As of September 30, 2020, the aggregate amount of undiscounted federal and state payments under the TRA is estimated to be approximately $1.4 billion, with more than half of such amount expected to be paid during the next 15 years, and the final payment expected to be made around the year 2056 (if the TRA is not terminated earlier pursuant to its terms).

The carrying value of the obligation is being accreted to the amount of the gross expected obligation using the effective interest method. Changes in the amount of this obligation resulting from changes to either the timing or amount of TRA payments are recognized in the period of change and measured using the discount rate inherent in the initial fair value of the obligation.
v3.20.2
Earnings Per Share
9 Months Ended
Sep. 30, 2020
Earnings Per Share [Abstract]  
Earnings Per Share EARNINGS PER SHARE
Basic earnings per share available to common stockholders are based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the treasury stock method and includes the effect of all potential issuances of common shares under stock-based incentive compensation arrangements.
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Net income attributable to common stock — basic$443 $113 $665 $694 
Weighted average shares of common stock outstanding — basic488,824,580 490,562,179 488,484,441 486,215,356 
Net income per weighted average share of common stock outstanding — basic$0.91 $0.23 $1.36 $1.43 
Dilutive securities: Stock-based incentive compensation plan2,201,360 3,108,116 2,430,037 4,011,387 
Weighted average shares of common stock outstanding — diluted491,025,940 493,670,295 490,914,478 490,226,743 
Net income per weighted average share of common stock outstanding — diluted$0.90 $0.23 $1.35 $1.42 

Stock-based incentive compensation plan awards excluded from the calculation of diluted earnings per share because the effect would have been antidilutive totaled 13,778,275 and 7,145,662 for the three months ended September 30, 2020 and 2019, respectively, and 12,471,806 and 7,104,523 shares for the nine months ended September 30, 2020 and 2019, respectively.
v3.20.2
Accounts Receivable Financing
9 Months Ended
Sep. 30, 2020
Accounts Receivable Financing [Abstract]  
Accounts Receivable Financing ACCOUNTS RECEIVABLE FINANCING
Accounts Receivable Securitization Program

TXU Energy Receivables Company LLC (RecCo), an indirect subsidiary of Vistra, has an accounts receivable financing facility (Receivables Facility) provided by issuers of asset-backed commercial paper and commercial banks (Purchasers). The Receivables Facility was renewed in July 2020, extending the term of the Receivables Facility from July 2020 to July 2021, with the ability to borrow $550 million beginning with the settlement date in July 2020 until the settlement date in August 2020, $625 million from the settlement date in August 2020 until the settlement date in November 2020, $550 million from the settlement date in November 2020 until the settlement date in December 2020 and $450 million thereafter for the remaining term of the Receivables Facility.

Under the Receivables Facility, TXU Energy and Dynegy Energy Services are obligated to sell or contribute, on an ongoing basis and without recourse, their accounts receivable to TXU Energy's special purpose subsidiary, RecCo, a consolidated, wholly owned, bankruptcy-remote, direct subsidiary of TXU Energy. RecCo, in turn, is subject to certain conditions, and may, from time to time, sell an undivided interest in all the receivables acquired from TXU Energy and Dynegy Energy Services to the Purchasers, and its assets and credit are not available to satisfy the debts and obligations of any person, including affiliates of RecCo. Amounts funded by the Purchasers to RecCo are reflected as short-term borrowings on the condensed consolidated balance sheets. Proceeds and repayments under the Receivables Facility are reflected as cash flows from financing activities in our condensed consolidated statements of cash flows. Receivables transferred to the Purchasers remain on Vistra's balance sheet and Vistra reflects a liability equal to the amount advanced by the Purchasers. The Company records interest expense on amounts advanced. TXU Energy continues to service, administer and collect the trade receivables on behalf of RecCo and the Purchasers, as applicable.

As of September 30, 2020, outstanding borrowings under the Receivables Facility totaled $625 million and were supported by $717 million of RecCo gross receivables. As of December 31, 2019, outstanding borrowings under the Receivables Facility totaled $450 million and were supported by $629 million of RecCo gross receivables.

Repurchase Facility

In October 2020, TXU Energy and the other originators under the Receivables Facility entered into a $125 million repurchase facility (Repurchase Facility) that is provided on an uncommitted basis by a commercial bank as buyer (Buyer). The Repurchase Facility is collateralized by a subordinated note (Subordinated Note) issued by RecCo in favor of TXU Energy for the benefit of originators under the Receivables Facility and representing a portion of the outstanding balance of the receivables sold by the originators to RecCo under the Receivables Facility. Under the Repurchase Facility, TXU Energy may request that Buyer transfer funds to TXU Energy in exchange for a transfer of the Subordinated Note, with a simultaneous agreement by TXU Energy to transfer funds to Buyer at a date certain or on demand in exchange for the return of the Subordinated Note (collectively, the Transactions). Each Transaction is expected to have a term of one month, unless terminated earlier on demand by TXU Energy or terminated by Buyer after an event of default.

TXU Energy has granted Buyer a first-priority security interest in the Subordinated Note to secure its obligations under the agreements governing the Repurchase Facility, and Vistra Operations has agreed to guarantee the obligations under the agreements governing the Repurchase Facility. Unless terminated early, the Repurchase Facility will terminate concurrently with the termination of the Receivables Facility.
v3.20.2
Long-Term Debt
9 Months Ended
Sep. 30, 2020
Debt Disclosure [Abstract]  
Long-Term Debt LONG-TERM DEBT
Amounts in the table below represent the categories of long-term debt obligations incurred by the Company.
September 30,
2020
December 31,
2019
Vistra Operations Credit Facilities$2,579 $2,700 
Vistra Operations Senior Secured Notes:
3.550% Senior Secured Notes, due July 15, 2024
1,500 1,500 
3.700% Senior Secured Notes, due January 30, 2027
800 800 
4.300% Senior Secured Notes, due July 15, 2029
800 800 
Total Vistra Operations Senior Secured Notes3,100 3,100 
Vistra Operations Senior Unsecured Notes:
5.500% Senior Unsecured Notes, due September 1, 2026
1,000 1,000 
5.625% Senior Unsecured Notes, due February 15, 2027
1,300 1,300 
5.000% Senior Unsecured Notes, due July 31, 2027
1,300 1,300 
Total Vistra Operations Senior Unsecured Notes3,600 3,600 
Vistra Senior Unsecured Notes:
5.875% Senior Unsecured Notes, due June 1, 2023
— 500 
8.000% Senior Unsecured Notes, due January 15, 2025
— 81 
8.125% Senior Unsecured Notes, due January 30, 2026
— 166 
Total Vistra Senior Unsecured Notes— 747 
Other:
Forward Capacity Agreements73 161 
Equipment Financing Agreements88 99 
8.82% Building Financing due semiannually through February 11, 2022 (a)
10 15 
Other12 
Total other long-term debt174 287 
Unamortized debt premiums, discounts and issuance costs (b)(73)(55)
Total long-term debt including amounts due currently9,380 10,379 
Less amounts due currently(127)(277)
Total long-term debt less amounts due currently$9,253 $10,102 
____________
(a)Obligation related to a corporate office space finance lease. This obligation will be funded by amounts held in an escrow account that is reflected in other noncurrent assets in our condensed consolidated balance sheets.
(b)Includes impact of recording debt assumed in the Merger at fair value.

Vistra Operations Credit Facilities

At September 30, 2020, the Vistra Operations Credit Facilities consisted of up to $5.304 billion in senior secured, first-lien revolving credit commitments and outstanding term loans, which consisted of revolving credit commitments of up to $2.725 billion, including a $2.35 billion letter of credit sub-facility (Revolving Credit Facility) and term loans of $2.579 billion (Term Loan B-3 Facility).

In March 2020, Vistra Operations repurchased $100 million principal amount of Term Loan B-3 Facility borrowings at a weighted average price of $93.875 and cancelled them. We recorded an extinguishment gain of $6 million on the transaction in the nine months ended September 30, 2020.

During the nine months ended September 30, 2020, we borrowed $1.075 billion and repaid $1.425 billion under the Revolving Credit Facility, with proceeds from the borrowings used for general corporate purposes.
In June 2019, Vistra Operations used the net proceeds from the June 2019 Senior Secured Notes Offerings (described below) to repay $889 million under the Term Loan B-1 Facility, the entire amount outstanding of $977 million under Term Loan B-2 Facility (and together with the Term Loan B-1 Facility and the Term Loan B-3 Facility, the Term Loan B Facility) and $134 million under the Term Loan B-3 Facility. We recorded an extinguishment loss of $4 million on the transactions in the nine months ended September 30, 2019.

In March 2019 and May 2019 the Vistra Operations Credit Facilities were amended whereby we obtained $225 million of incremental Revolving Credit Facility commitments. The letter of credit sub-facility was also increased by $50 million. Fees and expenses related to the amendments to the Vistra Operations Credit Facilities totaled $2 million for the nine months ended September 30, 2019, which were capitalized as a noncurrent asset.

The Vistra Operations Credit Facilities and related available capacity at September 30, 2020 are presented below.
September 30, 2020
Vistra Operations Credit FacilitiesMaturity DateFacility
Limit
Cash
Borrowings
Available
Capacity
Revolving Credit Facility (a)June 14, 2023$2,725 $— $2,057 
Term Loan B-3 FacilityDecember 31, 20252,579 2,579 — 
Total Vistra Operations Credit Facilities$5,304 $2,579 $2,057 
___________
(a)Revolving Credit Facility to be used for general corporate purposes. The Facility includes a $2.35 billion letter of credit sub-facility, of which $668 million of letters of credit were outstanding at September 30, 2020 and which reduce our available capacity. Cash borrowings under the Revolving Credit Facility are reported in short-term borrowings in our condensed consolidated balance sheets.

At September 30, 2020, cash borrowings under the Revolving Credit Facility bear interest based on applicable LIBOR rates, plus a fixed spread of 1.75%, and there were no outstanding borrowings. Letters of credit issued under the Revolving Credit Facility bear interest of 1.75%. Amounts borrowed under the Term Loan B-3 Facility bears interest based on applicable LIBOR rates plus fixed spreads of 1.75%. At September 30, 2020, the weighted average interest rates before taking into consideration interest rate swaps on outstanding borrowings was 1.90% under the Term Loan B-3 Facility. The Vistra Operations Credit Facilities also provide for certain additional fees payable to the agents and lenders, including fronting fees with respect to outstanding letters of credit and availability fees payable with respect to any unused portion of the available Revolving Credit Facility.

Obligations under the Vistra Operations Credit Facilities are secured by a lien covering substantially all of Vistra Operations' (and its subsidiaries') consolidated assets, rights and properties, subject to certain exceptions set forth in the Vistra Operations Credit Facilities, provided that the amount of loans outstanding under the Vistra Operations Credit Facilities that may be secured by a lien covering certain principal properties of the Company is expressly limited by the terms of the Vistra Operations Credit Facilities.

The Vistra Operations Credit Facilities also permit certain hedging agreements to be secured on a pari-passu basis with the Vistra Operations Credit Facilities in the event those hedging agreements met certain criteria set forth in the Vistra Operations Credit Facilities.

The Vistra Operations Credit Facilities provide for affirmative and negative covenants applicable to Vistra Operations (and its restricted subsidiaries), including affirmative covenants requiring it to provide financial and other information to the agents under the Vistra Operations Credit Facilities and to not change its lines of business, and negative covenants restricting Vistra Operations' (and its restricted subsidiaries') ability to incur additional indebtedness, make investments, dispose of assets, pay dividends, grant liens or take certain other actions, in each case, except as permitted in the Vistra Operations Credit Facilities. Vistra Operations' ability to borrow under the Vistra Operations Credit Facilities is subject to the satisfaction of certain customary conditions precedent set forth therein.
The Vistra Operations Credit Facilities provide for certain customary events of default, including events of default resulting from non-payment of principal, interest or fees when due, material breaches of representations and warranties, material breaches of covenants in the Vistra Operations Credit Facilities or ancillary loan documents, cross-defaults under other agreements or instruments and the entry of material judgments against Vistra Operations. Solely with respect to the Revolving Credit Facility, and solely during a compliance period (which, in general, is applicable when the aggregate revolving borrowings and issued revolving letters of credit (in excess of $300 million) exceed 30% of the revolving commitments), the agreement includes a covenant that requires the consolidated first lien net leverage ratio, which is based on the ratio of net first-lien debt compared to an EBITDA calculation defined under the terms of the Vistra Operations Credit Facilities, not to exceed 4.25 to 1.00. Although the period ended September 30, 2020 was not a compliance period, we would have been in compliance with this financial covenant if it was required to be tested at such time. Upon the existence of an event of default, the Vistra Operations Credit Facilities provide that all principal, interest and other amounts due thereunder will become immediately due and payable, either automatically or at the election of specified lenders.

Interest Rate Swaps — Vistra employs interest rate swaps to hedge our exposure to variable rate debt. As of September 30, 2020, Vistra has entered into the following series of interest rate swap transactions.
Notional AmountExpiration DateRate Range
Swapped to fixed$3,000July 20233.67 %-3.91%
Swapped to variable$700July 20233.20 %-3.23%
Swapped to fixed$720February 20243.71 %-3.72%
Swapped to variable$720February 20243.20 %-3.20%
Swapped to fixed (a)$3,000July 20264.72 %-4.79%
Swapped to variable (a)$700July 20263.28 %-3.33%
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(a)Effective from July 2023 through July 2026.

During 2019, Vistra entered into $2.12 billion of new interest rate swaps, pursuant to which Vistra will pay a variable rate and receive a fixed rate. The terms of these new swaps were matched against the terms of certain existing swaps, effectively offsetting the hedge of the existing swaps and fixing the out-of-the-money position of such swaps. These matched swaps will settle over time, in accordance with the original contractual terms. The remaining existing swaps continue to hedge our exposure on $2.30 billion of debt through July 2026.

Secured Letter of Credit Facilities

In August and September 2020, Vistra entered into four uncommitted 364-day standby letter of credit facilities (Secured LOC Facilities) that are each secured by a first lien on all of Vistra Operations' assets (which ranks pari passu with the Vistra Operations Credit Facilities). At September 30, 2020, $166 million of letters of credit were outstanding under the Secured LOC Facilities.

Alternate Letter of Credit Facilities

Two alternate letter of credit facilities (each, an Alternative LOC Facility, and collectively, the Alternate LOC Facilities) with an aggregate facility limit of $500 million became effective in the year ended December 31, 2019. At September 30, 2020, $500 million of letters of credit were outstanding under the Alternate LOC Facilities. Of the total facility limit, $250 million matures in December 2020 and $250 million matures in December 2021.
Vistra Operations Senior Secured Notes

In the nine months ended September 30, 2019, Vistra Operations issued and sold $2.0 billion aggregate principal amount of senior secured notes (June 2019 Senior Secured Notes) in offerings to eligible purchasers under Rule 144A and Regulation S under the Securities Act (June 2019 Senior Secured Notes Offerings) consisting of the following:
Senior Secured NotesMaturity YearInterest Terms
(Due Semiannually in Arrears)
June 2019
Senior Secured Notes Offerings (a)
3.550% Senior Secured Notes
2024January 15 and July 15$1,200 
4.300% Senior Secured Notes
2029January 15 and July 15800 
Total senior secured notes$2,000 
Net proceeds$1,976 
Debt issuance and other fees (b)$20 
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(a)The June 2019 Senior Secured Notes were sold pursuant to a purchase agreement by and among Vistra Operations, certain direct and indirect subsidiaries of Vistra Operations and Citigroup Global Markets Inc., as representative of the several initial purchasers. Net proceeds, together with cash on hand, were used to prepay certain amounts outstanding and accrued interest (together with fees and expenses) under the Vistra Operations Credit Facility's Term Loan B Facility.
(b)Capitalized as a reduction in the carrying amount of the debt.

The indenture (as may be amended or supplemented from time to time, the Vistra Operations Senior Secured Indenture) governing the June 2019 Senior Secured Notes and the 3.700% senior secured notes due 2027 (collectively, the Senior Secured Notes) provides for the full and unconditional guarantee by certain of Vistra Operations' current and future subsidiaries that also guarantee the Vistra Operations Credit Facilities. The Senior Secured Notes are secured by a first-priority security interest in the same collateral that is pledged for the benefit of the lenders under the Vistra Operations Credit Facilities, which consists of a substantial portion of the property, assets and rights owned by Vistra Operations and certain direct and indirect subsidiaries of Vistra Operations as subsidiary guarantors (collectively, the Guarantor Subsidiaries) as well as the stock of Vistra Operations held by Vistra Intermediate. The collateral securing the Senior Secured Notes will be released if Vistra Operations' senior, unsecured long-term debt securities obtain an investment grade rating from two out of the three rating agencies, subject to reversion if such rating agencies withdraw the investment grade rating of Vistra Operations' senior, unsecured long-term debt securities or downgrade such rating below investment grade. The Vistra Operations Senior Secured Indenture contains certain covenants and restrictions, including, among others, restrictions on the ability of Vistra Operations and its subsidiaries, as applicable, to create certain liens, merge or consolidate with another entity, and sell all or substantially all of their assets.
Vistra Operations Senior Unsecured Notes

In the nine months ended September 30, 2019, Vistra Operations issued and sold $2.6 billion aggregate principal amount of senior unsecured notes in offerings (the February 2019 Senior Unsecured Notes Offering and the June 2019 Senior Unsecured Notes Offering) to eligible purchasers under Rule 144A and Regulation S under the Securities Act consisting of the following:
Senior Unsecured NotesMaturity YearInterest Terms
(Due Semiannually in Arrears)
February 2019 Senior Unsecured Notes Offering (a)June 2019
Senior Unsecured Notes Offering (b)
5.625% Senior Unsecured Notes
2027February 15 and August 151,300 — 
5.000% Senior Unsecured Notes
2027January 31 and July 31— 1,300 
Total$1,300 $1,300 
Net Proceeds$1,287 $1,287