VISTRA ENERGY CORP., 10-Q filed on 5/3/2019
Quarterly Report
v3.19.1
Document And Entity Information - shares
3 Months Ended
Mar. 31, 2019
Apr. 30, 2019
Document And Entity Information [Abstract]    
Entity Registrant Name Vistra Energy Corp.  
Entity Central Index Key 0001692819  
Current Fiscal Year End Date --12-31  
Entity Filer Category Large Accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business false  
Document Type 10-Q  
Document Period End Date Mar. 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   482,614,988
v3.19.1
Condensed Statements Of Consolidated Income (Loss) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Income Statement [Abstract]    
Operating revenues $ 2,923 $ 765
Fuel, purchased power costs and delivery fees (1,461) (650)
Operating costs (385) (194)
Depreciation and amortization (405) (153)
Selling, general and administrative expenses (182) (162)
Operating income (loss) 490 (394)
Other income 25 10
Other deductions (2) (2)
Interest expense and related charges (222) 9
Impacts of Tax Receivable Agreement 3 (18)
Equity in earnings of unconsolidated investments 7 0
Income (loss) before income taxes 301 (395)
Income tax (expense) benefit (77) 89
Net income (loss) 224 (306)
Less: Net loss attributable to noncontrolling interest 1 0
Net income (loss) attributable to Vistra Energy $ 225 $ (306)
Weighted average shares of common stock outstanding:    
Weighted average shares of common stock outstanding - basic 502,367,299 428,450,384
Weighted average shares of common stock outstanding - diluted 509,139,988 428,450,384
Net income (loss) per weighted average share of common stock outstanding:    
Net income (loss) per weighted average share of common stock outstanding - basic $ 0.45 $ (0.71)
Net income (loss) per weighted average share of common stock outstanding - diluted $ 0.44 $ (0.71)
v3.19.1
Condensed Statements Of Consolidated Comprehensive Income (Loss) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ 224 $ (306)
Other comprehensive income, net of tax effects:    
Effects related to pension and other retirement benefit obligations (net of tax benefit of $— in all periods) 1 1
Total other comprehensive income 1 1
Comprehensive income (loss) 225 (305)
Less: Comprehensive loss attributable to noncontrolling interest 1 0
Comprehensive income (loss) attributable to Vistra Energy $ 226 $ (305)
v3.19.1
Condensed Statements Of Consolidated Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Statement of Comprehensive Income [Abstract]    
Effects related to pension and other retirement benefit obligations (net of tax benefit of $— in all periods) $ 0 $ 0
v3.19.1
Condensed Statements Of Consolidated Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Cash flows — operating activities:    
Net income (loss) $ 224 $ (306)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:    
Depreciation and amortization 461 180
Deferred income tax (benefit) expense, net 70 (83)
Unrealized net (gain) loss from mark-to-market valuations of commodities (186) 415
Unrealized net (gain) loss from mark-to-market valuations of interest rate swaps 80 (59)
Accretion expense 14 19
Impacts of Tax Receivable Agreement (3) 18
Stock-based compensation 12 6
Other, net (32) 7
Changes in operating assets and liabilities:    
Margin deposits, net 34 (64)
Accrued interest 15 (11)
Accrued taxes (75) (69)
Accrued employee incentive (90) (50)
Other operating assets and liabilities (136) (25)
Cash provided by (used in) operating activities 388 (22)
Cash flows — financing activities:    
Issuances of long-term debt 1,300 0
Repayments/repurchases of debt (1,282) (10)
Borrowing under accounts receivable securitization program 11 0
Stock repurchase (248) 0
Dividends paid to stockholders (61) 0
Debt tender offer and other financing fees (64) 0
Other, net 0 1
Cash used in financing activities (344) (9)
Cash flows — investing activities:    
Capital expenditures, including LTSA prepayments (118) (39)
Nuclear fuel purchases (13) (11)
Development and growth expenditures (22) (21)
Proceeds from sales of nuclear decommissioning trust fund securities 78 46
Investments in nuclear decommissioning trust fund securities (83) (51)
Other, net 9 (1)
Cash used in investing activities (149) (77)
Net change in cash, cash equivalents and restricted cash (105) (108)
Cash, cash equivalents and restricted cash — beginning balance 693 2,046
Cash, cash equivalents and restricted cash — ending balance $ 588 $ 1,938
v3.19.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Mar. 31, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 546 $ 636
Restricted cash 42 57
Trade accounts receivable — net 1,000 1,087
Inventories 433 412
Commodity and other derivative contractual assets 702 730
Margin deposits related to commodity contracts 331 361
Prepaid expense and other current assets 270 152
Total current assets 3,324 3,435
Investments 1,369 1,250
Investment in unconsolidated subsidiary 133 131
Property, plant and equipment — net 14,448 14,612
Operating lease right-of-use assets 68 0
Goodwill 2,082 2,068
Identifiable intangible assets — net 2,400 2,493
Commodity and other derivative contractual assets 97 109
Accumulated deferred income taxes 1,291 1,336
Other noncurrent assets 356 590
Total assets 25,568 26,024
Current liabilities:    
Accounts receivable securitization program 350 339
Long-term debt due currently 204 191
Trade accounts payable 787 945
Commodity and other derivative contractual liabilities 1,215 1,376
Margin deposits related to commodity contracts 8 4
Accrued income taxes 37 10
Accrued taxes other than income 78 182
Accrued interest 91 77
Asset retirement obligations 194 156
Operating lease liabilities 16 0
Other current liabilities 258 345
Total current liabilities 3,238 3,625
Long-term debt, less amounts due currently 10,803 10,874
Operating lease liabilities 90 0
Commodity and other derivative contractual liabilities 313 270
Accumulated deferred income taxes 10 10
Tax Receivable Agreement obligation 417 420
Asset retirement obligation 2,176 2,217
Identifiable intangible liabilities - net 360 401
Other noncurrent liabilities and deferred credits 355 340
Total liabilities 17,762 18,157
Commitments and Contingencies
Total equity:    
Common stock (par value — $0.01; number of shares authorized — 1,800,000,000) (shares outstanding: March 31, 2019 — 484,235,663; December 31, 2018 — 493,215,309) 5 5
Additional paid-in-capital 9,105 9,329
Retained deficit (1,285) (1,449)
Accumulated other comprehensive income (loss) (21) (22)
Stockholders' equity 7,804 7,863
Noncontrolling interest in subsidiary 2 4
Total equity 7,806 7,867
Total liabilities and equity $ 25,568 $ 26,024
v3.19.1
Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2019
Dec. 31, 2018
Apr. 09, 2018
Mar. 31, 2018
Dec. 31, 2017
Statement of Changes in Financial Position [Abstract]          
Common stock, par or stated value per share $ 0.01        
Common stock, shares authorized 1,800,000,000     1,800,000,000  
Common stock, shares outstanding 484,235,663 493,215,309 522,932,453 428,506,325 428,398,802
v3.19.1
Business And Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
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 Energy and/or its subsidiaries, as apparent in the context. See Glossary for defined terms.

Vistra Energy is a holding company operating an integrated retail and generation business in markets throughout the U.S. Through our subsidiaries, we are engaged in competitive electricity market activities including power generation, wholesale energy sales and purchases, commodity risk management and retail sales of electricity to end users.

Vistra Energy has six reportable segments: (i) Retail, (ii) ERCOT, (iii) PJM, (iv) NY/NE (comprising NYISO and ISO-NE), (v) MISO and (vi) Asset Closure. See Note 18 for further information concerning reportable business segments.

Merger Transaction

On the Merger Date, Vistra Energy and Dynegy completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra Energy, with Vistra Energy continuing as the surviving corporation. Because the Merger closed on April 9, 2018, Vistra Energy's condensed consolidated financial statements and the notes related thereto do not include the financial condition or the operating results of Dynegy prior to April 9, 2018. See Note 2 for a summary of the Merger transaction and business combination accounting.

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 annual report on Form 10-K for the year ended December 31, 2018. Adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the results of operations and financial position have been included therein. 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 annual report on Form 10-K for the year ended December 31, 2018. 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, judgment 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.

Leases

At the inception of a contract we determine if it is or contains a lease, which involves the contract conveying the right to control the use of explicitly or implicitly identified property, plant, or equipment for a period of time in exchange for consideration.

Right-of-use (ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date of the underlying lease based on the present value of lease payments over the lease term. We use our secured incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. Operating leases are included in operating lease ROU assets, operating lease liabilities (current) and operating lease liabilities (noncurrent) on our condensed consolidated balance sheet. Finance leases are included in property, plant and equipment, other current liabilities and other noncurrent liabilities and deferred credits on our condensed consolidated balance sheet. Lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise the option. We have elected the practical expedient which permits us to not reassess under the new standard our prior conclusion about lease classification and initial direct costs. We have also elected the practical expedient to not separate lease and non-lease components for a majority of the lease asset classes. We have also elected the hindsight practical expedient to determine the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term.

We also present lessor sublease income on a net basis against the related lessee lease expense.

Adoption of New Accounting Standards

Leases — On January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, Leases (Topic 842) and all related amendments (new lease standard) using the modified retrospective method with the cumulative-effect adjustment to the opening balance of retained earnings for all contracts outstanding at the time of adoption. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the adoption of the new lease standard to be immaterial to our net income on an ongoing basis. The impact of adopting the new lease standard primarily relates to recognition of lease liabilities and ROU assets for all leases classified as operating leases. Under the new lease standard, each ROU asset will be amortized over the lease term and liability settled at the end of the lease term.

We recognized the effect of initially applying the new lease standard by recording ROU assets of $85 million and lease liabilities of $123 million in our condensed consolidated balance sheet. The amount we recorded at adoption was less than the estimated range we had disclosed in our annual report on Form 10-K for the year ended December 31, 2018. At the time of preparing that estimated range, we had tentatively determined that we had the right to control the use of several natural gas pipeline laterals that connect to our power plants, resulting in these transportation agreements having a lease component. In connection with adoption, we determined that we did not control the use of the laterals, and therefore concluded the agreements did not contain a lease component.

As of January 1, 2019, the cumulative effect of the changes made to our condensed consolidated balance sheet for the adoption of the new lease standard was as follows:
 
December 31, 2018
 
Adoption of New Lease Standard
 
January 1,
2019
Impact on condensed consolidated balance sheet:
 
 
 
 
 
Assets
 
 
 
 
 
Property, plant and equipment — net
$
14,612

 
$
15

 
$
14,627

Operating lease right-of-use assets

 
70

 
70

Prepaid expense and other current assets
152

 
(2
)
 
150

Accumulated deferred income taxes
$
1,336

 
1

 
1,337

Liabilities
 
 
 
 
 
Other current liabilities
345

 
(1
)
 
344

Operating lease liabilities

 
109

 
109

Identifiable intangible liabilities
401

 
(36
)
 
365

Other noncurrent liabilities and deferred credits
340

 
14

 
354

Equity
 
 
 
 
 
Retained deficit
(1,449
)
 
(2
)
 
(1,451
)
 
 


See Note 12 for the disclosures required by the new lease standard.

Changes in Accounting Standards

In August 2018, the Financial Accounting Standards Board (FASB) issued ASU 2018-13, Changes to the Disclosure Requirements for Fair Value Measurement. The ASU will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. 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 will require 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 are currently evaluating the impact of this ASU on our disclosures.

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 will be effective for fiscal years beginning after December 15, 2019 and early adoption is permitted. 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 are currently evaluating the impact of this ASU on our financial statements.
v3.19.1
Merger Transaction and Business Combination Accounting (Notes)
3 Months Ended
Mar. 31, 2019
Business Combinations [Abstract]  
Merger Transaction [Text Block]
MERGER TRANSACTION AND BUSINESS COMBINATION ACCOUNTING

Merger Transaction

On the Merger Date, Vistra Energy and Dynegy completed the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, Dynegy merged with and into Vistra Energy, with Vistra Energy continuing as the surviving corporation. The Merger was intended to qualify as a tax-free reorganization under the Internal Revenue Code, as amended, so that none of Vistra Energy, 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 Energy's common stock. Vistra Energy is the acquirer for both federal tax and accounting purposes.

At the closing of the Merger, each issued and outstanding share of Dynegy common stock, par value $0.01 per share, other than shares owned by Vistra Energy 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 Energy (the Exchange Ratio), except that cash was paid in lieu of fractional shares, which resulted in Vistra Energy issuing 94,409,573 shares of Vistra Energy 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 Energy 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 Energy's common stock, after giving effect to the Exchange Ratio.

Business Combination Accounting

We believe the Merger has provided and continues to provide significant strategic benefits and opportunities to Vistra Energy, including increased scale and market diversification, rebalanced asset portfolio and improved earnings and cash flow. The Merger is being 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 Merger Date. The combined results of operations are reported in our consolidated financial statements beginning as of the Merger 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 15), is listed below:

Working capital was valued using available market information (Level 2).
Acquired property, plant and equipment was valued using a combination of an income approach and a market approach. The income approach utilized a discounted cash flow analysis based upon a debt-free, free cash flow model (Level 3).
Acquired derivatives were valued using the methods described in Note 15 (Level 1, Level 2 or Level 3).
Contracts with terms that were not at current market prices were also valued using a discounted cash flow analysis (Level 3). The cash flows generated by the contracts were compared with their cash flows based on current market prices with the resulting difference discounted to present value and recorded as either an intangible asset or liability.
Long-term debt was valued using a market approach (Level 2).
AROs were recorded in accordance with ASC 410, Asset Retirement and Environmental Obligations (Level 3).

The following table summarizes the consideration paid and the final allocation of the purchase price to the fair value amounts recognized for the assets acquired and liabilities assumed related to the Merger as of the Merger Date. Based on the opening price of Vistra Energy common stock on the Merger Date, the purchase price was approximately $2.3 billion. During the three months ended March 31, 2019, the purchase price allocation was completed. During the period from April 9, 2018 through March 31, 2019, we updated the initial purchase price allocation with final valuations by increasing property, plant and equipment by $173 million, decreasing intangible assets by $36 million, increasing goodwill by $175 million, decreasing accounts receivable, inventory, prepaid expenses and other current assets by $10 million, increasing accumulated deferred tax asset by $127 million, decreasing other noncurrent assets by $113 million, increasing trade accounts payable and other current liabilities by $89 million, increasing other noncurrent liabilities by $177 million, increasing asset retirement obligations, including amounts due currently, by $56 million, as well as other minor adjustments. The valuation revisions were a result of updated inputs used in determining the fair value of the acquired assets and liabilities.
Dynegy shares outstanding as of April 9, 2018 (in millions)
144.8

Exchange Ratio
0.652

Vistra Energy shares issued for Dynegy shares outstanding (in millions)
94.4

Opening price of Vistra Energy common stock on April 9, 2018
$
19.87

Purchase price for common stock
$
1,876

Fair value of equity component of tangible equity units
$
369

Fair value of outstanding stock compensation awards attributable to pre-combination service
$
26

Fair value of outstanding warrants
$
2

Total purchase price
$
2,273


Final Purchase Price Allocation
Cash and cash equivalents
$
445

Trade accounts receivables, inventories, prepaid expenses and other current assets
853

Property, plant and equipment
10,535

Accumulated deferred income taxes
518

Identifiable intangible assets
351

Goodwill
175

Other noncurrent assets
419

Total assets acquired
13,296

Trade accounts payable and other current liabilities
733

Commodity and other derivative contractual assets and liabilities, net
422

Asset retirement obligations, including amounts due currently
475

Long-term debt, including amounts due currently
8,919

Other noncurrent liabilities
469

Total liabilities assumed
11,018

Identifiable net assets acquired
2,278

Noncontrolling interest in subsidiary
5

Total purchase price
$
2,273



Acquisition costs incurred in the Merger totaled less than $1 million and $3 million for the three months ended March 31, 2019 and 2018, respectively.

Unaudited Pro Forma Financial Information — The following unaudited pro forma financial information for the three months ended March 31, 2018 assumes that the Merger occurred on January 1, 2018. The unaudited pro forma financial information is provided for information purposes only and is not necessarily indicative of the results of operations that would have occurred had the Merger been completed on January 1, 2018, nor is the unaudited pro forma financial information indicative of future results of operations, which may differ materially from the pro forma financial information presented here.
 
Three Months
Ended
March 31, 2018
Revenues
$
2,127

Net loss
$
(467
)
Net loss attributable to Vistra Energy
$
(465
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — basic
$
(0.87
)
Net loss attributable to Vistra Energy per weighted average share of common stock outstanding — diluted
$
(0.87
)


The 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, interest expense on debt assumed in the Merger, effects of the Merger on tax expense (benefit), changes in the expected impacts of the tax receivable agreement due to the Merger, and other related adjustments.
v3.19.1
Acquisition and Development of Generation Facilities (Notes)
3 Months Ended
Mar. 31, 2019
Acquisition And Development Of Generation Facilities [Abstract]  
Business Combination Disclosure [Text Block]
ACQUISITION AND DEVELOPMENT OF GENERATION FACILITIES

Battery Energy Storage Projects

We have completed the construction of our first battery energy storage system (ESS). In October 2018, we were awarded a $1 million grant from the TCEQ for our battery ESS at our Upton 2 solar facility. The grant is part of the Texas Emissions Reduction Plan. The 10 MW lithium-ion ESS captures excess solar energy produced during the day and releases the energy in late afternoon and early evening, when demand is highest. The Upton 2 battery ESS became operational in December 2018.

In June 2018, we announced that, subject to approval by the California Public Utilities Commission (CPUC), we would enter into a 20-year resource adequacy contract with Pacific Gas and Electric Company (PG&E) to develop a 300 MW battery energy storage project at our Moss Landing Power Plant site in California. PG&E filed its application with the CPUC in June 2018 and the CPUC approved the resource adequacy contract in November 2018. This approval is now final and unappealable. We anticipate the Moss Landing battery storage project will commence commercial operations by the fourth quarter of 2020.

Upton 2 Solar Development

In May 2017, we acquired the rights to develop, construct and operate a utility scale solar photovoltaic power generation facility in Upton County, Texas (Upton 2). As part of this project, we entered a turnkey engineering, procurement and construction agreement to construct the approximately 180 MW facility. During 2017 and 2018, we spent approximately $231 million related to this project primarily for progress payments under the engineering, procurement and construction agreement and the acquisition of the development rights. The facility began test operations in March 2018 and commercial operations began in June 2018.
v3.19.1
Retirement of Generation Facilities (Notes)
3 Months Ended
Mar. 31, 2019
Retirement of Generation Facilities [Abstract]  
Retirement of generation facilities
RETIREMENT OF GENERATION FACILITIES

In August 2018, we filed a notice of suspension of operation with PJM and other mandatory regulatory notifications related to the retirement of our 51 MW Northeastern waste coal facility in McAddo, Pennsylvania (Northeastern Facility). We decided to retire the Northeastern Facility due to its uneconomic operations and financial outlook. Following the receipt of regulatory approvals, the Northeastern Facility was retired in October 2018. The decision to retire the Northeastern Facility did not result in a material impact to the financial statements, and the operational results of the Northeastern Facility are included in our Asset Closure segment.

Two of our non-operated, jointly held power plants acquired in the Merger, for which our proportional generation capacity was 883 MW, were retired in May 2018. These units were retired as previously scheduled. No gain or loss was recorded in conjunction with the retirement of these units, and the operational results of these facilities are included in our Asset Closure segment. The following table details the units retired.
Name
 
Location
 
Fuel Type
 
Net Generation Capacity (MW)
 
Ownership Interest
 
Date Units Taken Offline
Killen
 
Manchester, Ohio
 
Coal
 
204

 
33%
 
May 31, 2018
Stuart
 
Aberdeen, Ohio
 
Coal
 
679

 
39%
 
May 24, 2018
Total
 
 
 
 
 
883

 

 
 

In January and February 2018, we retired three power plants with a total installed nameplate generation capacity of 4,167 MW. We decided to retire these units because they were projected to be uneconomic based on then current market conditions and would have faced significant environmental costs associated with operating such units. In the case of the Sandow units, the decision also reflected the execution of a contract termination agreement pursuant to which the Company and Alcoa agreed to an early settlement of a long-standing power and mining agreement. Expected retirement expenses were accrued in the third and fourth quarter of 2017 and, as a result, no retirement expenses were recorded related to these facilities in the three months ended March 31, 2018. The operational results of these facilities are included in our Asset Closure segment. The following table details the units retired.
Name
 
Location (all in the state of Texas)
 
Fuel Type
 
Installed Nameplate Generation Capacity (MW)
 
Number of Units
 
Date Units Taken Offline
Monticello
 
Titus County
 
Lignite/Coal
 
1,880

 
3
 
January 4, 2018
Sandow
 
Milam County
 
Lignite
 
1,137

 
2
 
January 11, 2018
Big Brown
 
Freestone County
 
Lignite/Coal
 
1,150

 
2
 
February 12, 2018
Total
 
 
 
 
 
4,167

 
7
 
 
v3.19.1
Revenue (Notes)
3 Months Ended
Mar. 31, 2019
Revenue Recognition and Deferred Revenue [Abstract]  
Revenue from Contract with Customer [Text Block]
REVENUE
 
 
The following tables disaggregate our revenue by major source:
 
Three Months Ended March 31, 2019
 
Retail
 
ERCOT
 
PJM
 
NY/NE
 
MISO
 
CAISO/Eliminations
 
Consolidated
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail energy charge in ERCOT
$
1,025

 
$

 
$

 
$

 
$

 
$

 
$
1,025

Retail energy charge in Northeast/Midwest
348

 

 

 

 

 

 
348

Wholesale generation revenue from ISO/RTO

 
247

 
221

 
195

 
139

 
73

 
875

Capacity revenue

 

 
67

 
80

 
13

 

 
160

Revenue from other wholesale contracts

 
44

 
72

 
7

 
16

 
3

 
142

Total revenue from contracts with customers
1,373

 
291

 
360

 
282

 
168

 
76

 
2,550

Other revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible amortization
(9
)
 

 

 
(2
)
 
(5
)
 
1

 
(15
)
Hedging and other revenues (a)
22

 
158

 
91

 
49

 
27

 
41

 
388

Affiliate sales

 
505

 
254

 
15

 
64

 
(838
)
 

Total other revenues
13

 
663

 
345

 
62

 
86

 
(796
)
 
373

Total revenues
$
1,386

 
$
954

 
$
705

 
$
344

 
$
254

 
$
(720
)
 
$
2,923


____________
(a)
Includes $158 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 18 for unrealized net gains (losses) by segment.
 
Three Months Ended March 31, 2018
 
Retail
 
ERCOT
 
Asset
Closure
 
Eliminations
 
Consolidated
Revenue from contracts with customers:
 
 
 
 
 
 
 
 
 
Retail energy charge in ERCOT
$
949

 
$

 
$

 
$

 
$
949

Wholesale generation revenue from ISO/RTO

 
174

 
36

 

 
210

Revenue from other wholesale contracts

 
53

 

 

 
53

Total revenue from contracts with customers
949

 
227

 
36

 

 
1,212

Other revenues:
 
 
 
 
 
 
 
 
 
Intangible amortization
(12
)
 

 

 

 
(12
)
Hedging and other revenues (a)
35

 
(462
)
 
(8
)
 

 
(435
)
Affiliate sales

 
(298
)
 

 
298

 

Total other revenues
23

 
(760
)
 
(8
)
 
298

 
(447
)
Total revenues
$
972

 
$
(533
)
 
$
28

 
$
298

 
$
765

____________
(a)
Includes $415 million of unrealized net losses from mark-to-market valuations of commodity positions. See Note 18 for unrealized net gains (losses) by segment.

Performance Obligations

As of March 31, 2019, 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 through bilateral sales. Therefore, an obligation exists as of the date of the results of the respective ISO or RTO capacity auction or the contract execution date for bilateral customers. The transaction price is also set by the results of the capacity auction and/or executed contract. These obligations total $674 million, $748 million, $720 million, $423 million and $96 million that will be recognized in the balance of the year ended December 31, 2019 and the years ending December 31, 2020, 2021, 2022 and 2023, respectively, and $65 million thereafter. Capacity revenues are recognized as capacity services are provided to the related ISOs or RTOs or bilateral 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:
 
March 31,
2019
 
December 31, 2018
Trade accounts receivable from contracts with customers — net
$
878

 
$
951

Other trade accounts receivable — net
122

 
136

Total trade accounts receivable — net
$
1,000

 
$
1,087

v3.19.1
Goodwill and Identifiable Intangible Assets and Liabilities (Notes)
3 Months Ended
Mar. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill And Identifiable Intangible Assets
GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS AND LIABILITIES

Goodwill

The carrying value of goodwill totaled $2.082 billion and $2.068 billion at March 31, 2019 and December 31, 2018, respectively. Of the total goodwill at March 31, 2019, $175 million arose in connection with the Merger and $122 million is recorded in our ERCOT Generation and Wholesale reporting unit and $53 million is recorded in our ERCOT Retail reporting unit. The remaining $1.907 billion arose in connection with our application of fresh start reporting at Emergence and was allocated entirely to our ERCOT 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.

Identifiable Intangible Assets and Liabilities

Identifiable intangible assets are comprised of the following:
 
 
March 31, 2019
 
December 31, 2018
Identifiable Intangible Asset
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Retail customer relationship
 
$
1,680

 
$
931

 
$
749

 
$
1,680

 
$
876

 
$
804

Software and other technology-related assets
 
277

 
119

 
158

 
270

 
105

 
165

Retail and wholesale contracts
 
316

 
155

 
161

 
316

 
138

 
178

Contractual service agreements (a)
 
60

 

 
60

 
70

 

 
70

Other identifiable intangible assets (b)
 
70

 
47

 
23

 
42

 
15

 
27

Total identifiable intangible assets subject to amortization
 
$
2,403

 
$
1,252

 
1,151

 
$
2,378

 
$
1,134

 
1,244

Retail trade names (not subject to amortization)
 
 
 
 
 
1,245

 
 
 
 
 
1,245

Mineral interests (not currently subject to amortization)
 
 
 
 
 
4

 
 
 
 
 
4

Total identifiable intangible assets
 
 
 
 
 
$
2,400

 
 
 
 
 
$
2,493


__________
(a)
At March 31, 2019, 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 and credits.

Identifiable intangible liabilities are comprised of the following:
Identifiable Intangible Liability
March 31,
2019
 
December 31, 2018
Contractual service agreements
$
108

 
$
136

Purchase and sale contracts
189

 
195

Environmental allowances
63

 
70

Total identifiable intangible liabilities
$
360

 
$
401



Amortization expense related to finite-lived identifiable intangible assets and liabilities (including the classification in the condensed statements of consolidated income (loss)) consisted of:
Identifiable Intangible Assets and Liabilities
 
Condensed Statements of Consolidated Income (Loss) Line
Three Months Ended March 31,
 
2019
 
2018
Retail customer relationship
 
Depreciation and amortization
$
55

 
$
73

Software and other technology-related assets
 
Depreciation and amortization
13

 
10

Retail and wholesale contracts/purchase and sale contracts
 
Operating revenues/fuel, purchased power costs and delivery fees
12

 
12

Other identifiable intangible assets
 
Operating revenues/fuel, purchased power costs and delivery fees/depreciation and amortization
27

 
2

Total amortization expense (a)
$
107

 
$
97


____________
(a)
Amounts recorded in depreciation and amortization totaled $69 million and $85 million for the three months ended March 31, 2019 and 2018, respectively. Excludes contractual services agreements.

Estimated Amortization of Identifiable Intangible Assets and Liabilities

As of March 31, 2019, the estimated aggregate amortization expense of identifiable intangible assets and liabilities for each of the next five fiscal years is as shown below.
Year
 
Estimated Amortization Expense
2019
 
$
302

2020
 
$
206

2021
 
$
156

2022
 
$
96

2023
 
$
72

v3.19.1
Income Taxes (Notes)
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES

Income Tax Expense

The calculation of our effective tax rate is as follows:
 
Three Months Ended March 31,
 
2019
 
2018
Income (loss) before income taxes
$
301

 
$
(395
)
Income tax (expense) benefit
$
(77
)
 
$
89

Effective tax rate
25.6
%
 
22.5
%


For the three months ended March 31, 2019, the effective tax rate of 25.6% related to our income tax expense 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 March 31, 2018, the effective tax rate of 22.5% related to our income tax benefit was higher than the U.S. federal statutory rate of 21% due primarily to nondeductible TRA accretion and the Texas margin tax.

Liability for Uncertain Tax Positions

Vistra Energy 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 Energy is not currently under audit by the IRS for any period, although review of Dynegy tax years 2017 and 2018 continue to progress through the IRS's Compliance Assurance Process audit program. Uncertain tax positions totaling $39 million at both March 31, 2019 and December 31, 2018 arose in connection with the Merger.
v3.19.1
Tax Receivable Agreement Obligation (Notes)
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Tax Receivables Agreement Obligation
TAX RECEIVABLE AGREEMENT OBLIGATION

On the Effective Date, Vistra Energy 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 17).

During the three months ended March 31, 2019, we recorded a decrease to the carrying value of the TRA obligation totaling approximately $19 million as a result of adjustments to forecasted taxable income and higher net operating losses acquired in the Merger.

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 three months ended March 31, 2019 and 2018:
 
Three Months Ended March 31,
 
2019
 
2018
TRA obligation at the beginning of the period
$
420

 
$
357

Accretion expense
16

 
18

Changes in tax assumptions impacting timing of payments
(19
)
 

Impacts of Tax Receivable Agreement
(3
)
 
18

TRA obligation at the end of the period
417

 
375

Less amounts due currently

 
(24
)
Noncurrent TRA obligation at the end of the period
$
417

 
$
351



As of March 31, 2019, the estimated carrying value of the TRA obligation totaled $417 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 Energy 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 March 31, 2019, the aggregate amount of undiscounted federal and state payments under the TRA is estimated to be approximately $1.3 billion, with more than half of such amount expected to be attributable to the first 15 tax years following Emergence, and the final payment expected to be made approximately 40 years following Emergence (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.
v3.19.1
Earnings Per Share (Notes)
3 Months Ended
Mar. 31, 2019
Earnings Per Share [Abstract]  
Earnings Per Share
EARNINGS PER SHARE

Basic earnings per share available to common shareholders 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 March 31,
 
2019
 
2018
Net income (loss) attributable to common stock — basic (a)
$
225

 
$
(306
)
Weighted average shares of common stock outstanding — basic
502,367,299

 
428,450,384

Net income (loss) per weighted average share of common stock outstanding — basic
$
0.45

 
$
(0.71
)
Dilutive securities: Stock-based incentive compensation plan and tangible equity units
6,772,689

 

Weighted average shares of common stock outstanding — diluted
509,139,988

 
428,450,384

Net income (loss) per weighted average share of common stock outstanding — diluted
$
0.44

 
$
(0.71
)

____________
(a)
The minimum settlement amount of tangible equity units, or 15,128,940 shares, are considered to be outstanding and are included in the computation of basic net income per share (see Note 14).

Stock-based incentive compensation plan awards excluded from the calculation of diluted earnings per share because the effect would have been antidilutive totaled 6,243,220 and 2,863,872 shares for the three months ended March 31, 2019 and 2018, respectively.
v3.19.1
Accounts Receivable Securitization Program (Notes)
3 Months Ended
Mar. 31, 2019
Accounts Receivable Securitization Program [Abstract]  
Accounts Receivable Securitization Program [Text Block]
ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM

TXU Energy Receivables Company LLC (RecCo), an indirect subsidiary of Vistra Energy, has an accounts receivable financing facility (Receivables Facility) provided by issuers of asset-backed commercial paper and commercial banks (Purchasers). The Receivables Facility is currently scheduled to terminate in August 2019, unless termination occurs earlier in accordance with the terms of the Receivables Facility. Vistra Energy intends to pursue renewal and/or extension of the Receivables Facility prior to its scheduled termination, subject to such terms and conditions as may be agreed upon by the parties thereto. At March 31, 2019, the Receivables Facility provided RecCo with the ability to borrow up to $350 million. In April 2019, the terms of the Receivable Facility were amended to provide RecCo with the ability to borrow up to $450 million.

Under the Receivables Facility at March 31, 2019, TXU Energy was obligated to sell or contribute, on an ongoing basis and without recourse, its accounts receivable to its special purpose subsidiary, RecCo, a consolidated, wholly owned, bankruptcy-remote, direct subsidiary of TXU Energy. In April 2019, the terms of the Receivable Facility were amended to provide that Dynegy Energy Services was also obligated to sell, on an ongoing basis and without recourse, their respective accounts receivable to RecCo. 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 statements of consolidated cash flows. Receivables transferred to the Purchasers remain on Vistra Energy's balance sheet and Vistra Energy 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 March 31, 2019, outstanding borrowings under the receivables facility totaled $350 million and were supported by $444 million of RecCo gross receivables. As of December 31, 2018, outstanding borrowings under the receivables facility totaled $339 million.
v3.19.1
Long-Term Debt (Notes)
3 Months Ended
Mar. 31, 2019
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.
 
March 31,
2019
 
December 31,
2018
Vistra Operations Credit Facilities
$
5,798

 
$
5,813

Vistra Operations Senior Notes:
 
 
 
5.500% Senior Notes, due September 1, 2026
1,000

 
1,000

5.625% Senior Notes, due February 15, 2027
1,300

 

Total Vistra Operations Senior Notes
2,300

 
1,000

Vistra Energy Senior Notes:
 
 
 
7.375% Senior Notes, due November 1, 2022
479

 
1,707

5.875% Senior Notes, due June 1, 2023
500

 
500

7.625% Senior Notes, due November 1, 2024
1,147

 
1,147

8.034% Senior Notes, due February 2, 2024

 
25

8.000% Senior Notes, due January 15, 2025
81

 
81

8.125% Senior Notes, due January 30, 2026
166

 
166

Total Vistra Energy Senior Notes
2,373

 
3,626

Other:
 
 
 
7.000% Amortizing Notes, due July 1, 2019
16

 
24

Forward Capacity Agreements
233

 
236

Equipment Financing Agreements
116

 
120

Mandatorily redeemable subsidiary preferred stock (a)
70

 
70

8.82% Building Financing due semiannually through February 11, 2022 (b)
18

 
21

Total other long-term debt
453

 
471

Unamortized debt premiums, discounts and issuance costs (c)
83

 
155

Total long-term debt including amounts due currently
11,007

 
11,065

Less amounts due currently
(204
)
 
(191
)
Total long-term debt less amounts due currently
$
10,803

 
$
10,874

____________
(a)
Shares of mandatorily redeemable preferred stock in PrefCo. This subsidiary preferred stock is accounted for as a debt instrument under relevant accounting guidance.
(b)
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.
(c)
Includes impact of recording debt assumed in the Merger at fair value.

Vistra Operations Credit Facilities

At March 31, 2019, the Vistra Operations Credit Facilities consisted of up to $8.473 billion in senior secured, first lien revolving credit commitments and outstanding term loans, which consisted of revolving credit commitments of up to $2.675 billion, including a $2.35 billion letter of credit sub-facility (Revolving Credit Facility) and term loans of $2.786 billion (Term Loan B-1 Facility), $977 million (Term Loan B-2 Facility) and $2.035 billion (Term Loan B-3 Facility, and together with the Term Loan B-1 Facility and the Term Loan B-2 Facility, the Term Loan B Facility).

These amounts reflect an amendment to the Vistra Operations Credit Facilities in March 2019 whereby we obtained $175 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 amendment to the Vistra Operations Credit Facilities totaled $1 million in the three months ended March 31, 2019, which were capitalized as a noncurrent asset.

The Vistra Operations Credit Facilities and related available capacity at March 31, 2019 are presented below.
 
 
 
 
March 31, 2019
Vistra Operations Credit Facilities
 
Maturity Date
 
Facility
Limit
 
Cash
Borrowings
 
Available
Capacity
Revolving Credit Facility (a)
 
June 14, 2023
 
$
2,675

 
$

 
$
1,753

Term Loan B-1 Facility
 
August 4, 2023
 
2,786

 
2,786

 

Term Loan B-2 Facility
 
December 14, 2023
 
977

 
977

 

Term Loan B-3 Facility
 
December 31, 2025
 
2,035

 
2,035

 

Total Vistra Operations Credit Facilities
 
 
 
$
8,473

 
$
5,798

 
$
1,753

___________
(a)
Facility to be used for general corporate purposes. Facility includes a $2.35 billion letter of credit sub-facility, of which $922 million of letters of credit were outstanding at March 31, 2019 and which reduce our available capacity.

In February 2018 and June 2018, certain pricing terms for the Vistra Operations Credit Facilities were amended. We accounted for these transactions as modifications of debt. At March 31, 2019, cash borrowings under the Revolving Credit Facility would 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-1, B-2 and B-3 Facilities bear interest based on applicable LIBOR rates plus fixed spreads of 2.00%, 2.25% and 2.00%, respectively. At March 31, 2019, the weighted average interest rates before taking into consideration interest rate swaps on outstanding borrowings was 4.50%, 4.75% and 4.49% under the Term Loan B-1, B-2 and B-3 Facilities, respectively. 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 facilities, not to exceed 4.25 to 1.00. Although the period ended March 31, 2019 was not a compliance period, we would have been in compliance with this financial covenant if it was required to be tested at such date. 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 — Effective January 2017, we entered into $3.0 billion notional amount of interest rate swaps to hedge a portion of our exposure to our variable rate debt. The interest rate swaps expire in July 2023. In May 2018 and June 2018, we entered into $3.0 billion notional amount of interest rate swaps that become effective in July 2023 and expire in July 2026.

In June 2018, we completed the novation of $1.959 billion notional amount of Vistra Energy (legacy Dynegy) interest rate swaps to Vistra Operations. At March 31, 2019, $1.561 billion notional amount of these interest rate swaps remained in effect with expiration dates between April 2019 and February 2024.

The interest rate swaps effectively fix the interest rates between 4.09% and 4.34% on $4.561 billion of our variable rate debt. The interest rate swaps that become effective in July 2023 and expire in July 2026 effectively fix the interest rates between 4.97% and 5.04% on $3.0 billion of our variable rate debt during the period. The interest rate swaps are secured by a first lien secured interest on a pari-passu basis with the Vistra Operations Credit Facilities.

Alternate Letter of Credit Facilities

Two alternate letter of credit facilities with an aggregate facility limit of $350 million became effective in the three months ended March 31, 2019. At March 31, 2019, $325 million of letters of credit were outstanding under these facilities. In April 2019, the aggregate facility limit was increased by $100 million to $450 million. Of the total facility limit, $250 million matures in December 2020 and $200 million matures in December 2021.

Vistra Energy (legacy Dynegy) Credit Agreement

On the Merger Date, Vistra Energy assumed the obligations under Dynegy's $3.563 billion credit agreement consisting of a $2.018 billion senior secured term loan facility due 2024 and a $1.545 billion senior secured revolving credit facility. As of the Merger Date, there were no cash borrowings and $656 million of letters of credit outstanding under the senior secured revolving credit facility. On April 23, 2018, $70 million of the senior secured revolving credit facility matured. In June 2018, the $2.018 billion senior secured term loan facility due 2024 was repaid using proceeds from the Term Loan B-3 Facility. In addition, all letters of credit outstanding under the senior secured revolving credit facility were replaced with letters of credit under the amended Vistra Operations Credit Facilities discussed above, and the revolving credit facility assumed from Dynegy in connection with the Merger was paid off in full and terminated.

Vistra Operations Senior Notes

In February 2019, Vistra Operations issued and sold $1.3 billion aggregate principal amount of 5.625% senior unsecured notes due 2027 (5.625% senior notes) in an offering to eligible purchasers under Rule 144A and Regulation S under the Securities Act (the 2019 Notes Offering). The 5.625% senior notes were sold pursuant to a purchase agreement by and among Vistra Operations, certain direct and indirect subsidiaries of Vistra Operations and J.P. Morgan Securities LLC, as representative of the several initial purchasers. Fees and expenses related to the offering totaled $16 million in the three months ended March 31, 2019, which were capitalized as a reduction in the carrying amount of the debt. Net proceeds from the 2019 Notes Offering totaling approximately $1.287 billion, together with cash on hand, were used to pay the purchase price and accrued interest (together with fees and expenses) required in connection with (i) the 2019 Tender Offer described below, (ii) the redemption of approximately $35 million aggregate principal amount of our 7.375% senior unsecured notes due 2022 and (iii) the redemption of approximately $25 million aggregate principal amount of our outstanding 8.034% senior unsecured notes due 2024. The 5.625% senior notes mature in February 2027, with interest payable in cash semiannually in arrears on February 15 and August 15 beginning August 15, 2019.

In August 2018, Vistra Operations issued $1.0 billion principal amount of 5.500% senior unsecured notes due 2026 (5.500% senior notes) in an offering to eligible purchasers under Rule 144A and Regulation S under the Securities Act (the 2018 Notes Offering). The 5.500% senior 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. Fees and expenses related to the offering totaled $12 million in the three months ended September 30, 2018, which were capitalized as a reduction in the carrying amount of the debt. Net proceeds from the 2018 Notes Offering totaling approximately $990 million, together with cash on hand and cash received from the funding of the Receivables Facility (see Note 10), were used to pay the purchase price and accrued interest (together with fees and expenses) required in connection with the 2018 Tender Offers described below. The 5.500% senior notes mature in September 2026, with interest payable in cash semiannually in arrears on March 1 and September 1 beginning March 1, 2019.

The indentures governing the 5.625% senior notes and the 5.500% senior notes provide for the full and unconditional guarantee by certain direct and indirect subsidiaries of Vistra Operations of the punctual payment of the principal and interest on the notes. The Indenture contains certain covenants and restrictions, including, among others, restrictions on the ability of the Issuer 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 Energy Senior Notes

Bond Repurchase Program — In November 2018, our board of directors (the Board) authorized a bond repurchase program under which up to $200 million principal amount of outstanding Vistra Energy senior unsecured notes could be repurchased. Through March 31, 2019, $119 million principal amount of senior unsecured notes had been repurchased. No repurchases were made in the three months ended March 31, 2019.

2019 Tender Offer and Consent Solicitation — In February 2019, Vistra Energy used the net proceeds from the 2019 Notes Offering to fund a cash tender offer (the 2019 Tender Offer) to purchase for cash $1.193 billion aggregate principal amount of 7.375% senior unsecured notes due 2022 (7.375% senior notes) assumed in the Merger. We recorded an extinguishment gain of $7 million on the transactions in the three months ended March 31, 2019.

In connection with the 2019 Tender Offer, Vistra Energy also commenced solicitation of consents from holders of the 7.375% senior notes. Vistra Energy received the requisite consents from the holders of the 7.375% senior notes and amended the indenture governing these senior notes to, among other things, eliminate substantially all of the restrictive covenants and certain events of default.

August 2018 Tender Offers and Consent Solicitations — In August 2018, Vistra Energy used the net proceeds from the 2018 Notes Offering, proceeds from the Receivables Facility (see Note 10) and cash on hand to fund cash tender offers (the 2018 Tender Offers) to purchase for cash $1.542 billion of senior unsecured notes assumed in the Merger. We recorded an extinguishment loss of $27 million on the transactions in the three months ended September 30, 2018. Notes purchased consisted of the following:

$26 million of 7.625% senior unsecured notes due 2024 (7.625% senior notes);
$163 million of 8.034% senior unsecured notes due 2024 (8.034% senior notes);
$669 million of 8.000% senior unsecured notes due 2025 (8.000% senior notes), and
$684 million of 8.125% senior unsecured notes due 2026 (8.125% senior notes).

In connection with the 2018 Tender Offers, Vistra Energy also commenced solicitations of consents from holders of the 7.375% senior notes, the 7.625% senior notes, the 8.034% senior notes, the 8.000% senior notes and the 8.125% senior notes to amend certain provisions of the applicable indentures governing each series of senior notes and the registration rights agreement with respect to the 8.125% senior notes. Vistra Energy received the requisite consents from the holders of the 8.034% senior notes, the 8.000% senior notes and the 8.125% senior notes (collectively, the Consent Senior Notes) and amended (a) the indentures governing each series of the applicable senior notes to, among other things, eliminate substantially all of the restrictive covenants and certain events of default and (b) the registration rights agreement with respect to the 8.125% senior notes to remove, among other things, the requirement that Vistra Energy commence an exchange offer to issue registered securities in exchange for the existing, nonregistered notes.

Assumption of Senior Notes in Merger — On the Merger Date, Vistra Energy assumed $6.138 billion principal amount of Dynegy's senior unsecured notes. In May 2018, $850 million of outstanding 6.75% senior unsecured notes due 2019 were redeemed at a redemption price of 101.688% of the aggregate principal amount, plus accrued and unpaid interest to but not including the date of redemption. Fees and expenses related to the redemption totaled $14 million in the three months ended June 30, 2018 and were recorded as interest expense and other charges on the condensed statements of consolidated income (loss). In June 2018, each of the Company's subsidiaries that guaranteed the Vistra Operations Credit Facilities (and did not already guarantee the senior notes) provided a guarantee on the senior notes that remained outstanding.

The senior notes that remain outstanding after the closing of the Tender Offers are unsecured and unsubordinated obligations of Vistra Energy and are guaranteed by substantially all of its current and future wholly owned domestic subsidiaries that from time to time are a borrower or guarantor under the agreement governing the Vistra Operations Credit Facilities (Credit Facilities Agreement) (see Note 20). The respective indentures of the senior notes (except with respect to the Consent Senior Notes) limit, among other things, the ability of the Company or any of the guarantors to create liens upon any principal property to secure debt for borrowed money in excess of, among other limitations, 30% of total assets. The respective indentures of the senior notes also contain customary events of default which would permit the holders of the applicable series of senior notes to declare such notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely principal or interest payments on such notes or (except with respect to the Consent Senior Notes) other indebtedness aggregating $100 million or more, and, except with respect to the Consent Senior Notes, the failure to satisfy covenants, and specified events of bankruptcy and insolvency.

Amortizing Notes

On the Merger Date, Vistra Energy assumed the obligations of Dynegy's senior unsecured amortizing note (Amortizing Notes) maturing on July 1, 2019. The Amortizing Notes were issued in connection with the issuance of the tangible equity units (TEUs) by Dynegy (see Note 14). Each installment payment per Amortizing Note will be paid in cash and will constitute a partial repayment of principal and a payment of interest, computed at an annual rate of 7.00%. Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Payments will be applied first to the interest due and payable and then to the reduction of the unpaid principal amount, allocated as set forth in the indenture.

The indenture for the Amortizing Notes limits, among other things, the ability of the Company to consolidate, merge, sell, or dispose all or substantially all of its assets. If a fundamental change occurs, or if the Company elects to settle the prepaid stock purchase contracts early, then the holders of the Amortizing Notes will have the right to require the Company to repurchase the Amortizing Notes at a repurchase price equal to the principal amount of the Amortizing Notes as of the repurchase date (as described in the supplemental indenture) plus accrued and unpaid interest. The indenture also contains customary events of default which would permit the holders of the Amortizing Notes to declare those Amortizing Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely installment payments on the Amortizing Notes or other material indebtedness aggregating $100 million or more, the failure to satisfy covenants, and specified events of bankruptcy and insolvency.

Forward Capacity Agreements

On the Merger Date, the Company assumed the obligation of Dynegy's agreements under which a portion of the PJM capacity that cleared for Planning Years 2018-2019, 2019-2020 and 2020-2021 was sold to a financial institution (Forward Capacity Agreements). The buyer in this transaction will receive capacity payments from PJM during the Planning Years 2018-2019, 2019-2020 and 2020-2021 in the amounts of $2 million, $121 million and $110 million, respectively. We will continue to be subject to the performance obligations as well as any associated performance penalties and bonus payments for those planning years. As a result, this transaction is accounted for as long-term debt of $233 million with an implied interest rate of 3.70%.

Equipment Financing Agreements

On the Merger Date, the Company assumed Dynegy's Equipment Financing Agreements. Under certain of our contractual service agreements in which we receive maintenance and capital improvements for our gas-fueled generation fleet, we have obtained parts and equipment intended to increase the output, efficiency and availability of our generation units. We have financed these parts and equipment under agreements with maturities ranging from 2019 to 2026. The portion of future payments attributable to principal will be classified as cash outflows from financing activities, and the portion of future payments attributable to interest will be classified as cash outflows from operating activities in our condensed statements of consolidated cash flows.

Maturities

Long-term debt maturities (including mandatory amortization of the Term Loan B Facility) at March 31, 2019 are as follows:
 
March 31, 2019
Remainder of 2019
$
156

2020
205

2021
129

2022
554

2023
4,151

Thereafter
5,729

Unamortized premiums, discounts and debt issuance costs
83

Total long-term debt, including amounts due currently
$
11,007

v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases
Leases

Vistra has operating leases for real estate, rail cars, rental tanks and equipment. Our leases have remaining lease terms for 1 to 38 years. Our leases include options to renew up to 14 years. Certain leases also contain options to terminate the lease.

Lease Cost

The following table presents costs related to lease activities:
 
Three Months
Ended
March 31, 2019
Operating lease cost
$
4

Finance lease right-of-use asset amortization
1

Variable lease cost (a)
6

Short-term lease cost
5

Sublease income (b)
(2
)
Net lease cost
$
14

____________
(a)
Represents coal stockpile management services, common area maintenance services and rail car payments based on the number of rail cars used.
(b)
Represents sublease income related to real estate leases.

Balance Sheet Information

The following table presents lease related balance sheet information:
 
March 31, 2019
Lease assets
 
Operating lease right-of-use assets
$
68

Finance lease right-of-use assets (net of accumulated depreciation)
14

Total lease right-of-use assets
82

Current lease liabilities
 
Operating lease liabilities
16

Finance lease liabilities
2

Total current lease liabilities
18

Noncurrent lease liabilities
 
Operating lease liabilities
90

Finance lease liabilities
12

Total noncurrent lease liabilities
102

Total lease liabilities
$
120



Cash Flow and Other Information

The following table presents lease related cash flow and other information:
 
Three Months
Ended
March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
 
Operating cash flows from operating leases
$
3

Non-cash disclosure upon commencement of new lease
 
Right-of-use assets obtained in exchange for new operating lease liabilities
70

Right-of-use assets obtained in exchange for new finance lease liabilities
$
15



Weighted Average Remaining Lease Term

The following table presents weighted average remaining lease term information:
 
March 31, 2019
Weighted average remaining lease term
 
Operating lease
12 years
Finance lease
8 years
Weighted average discount rate
 
Operating lease
7.12%
Finance lease
6.36%


Maturity of Lease Liabilities

The following table presents maturity of lease liabilities:
 
Operating lease
 
Finance lease
 
Total lease
Remainder of 2019
$
16

 
$
2

 
$
18

2020
20

 
3

 
23

2021
16

 
3

 
19

2022
14

 
2

 
16

2023
13

 
2

 
15

Thereafter
85

 
7

 
92

Total lease payments
164

 
19

 
183

Less: Interest
(58
)
 
(5
)
 
(63
)
Present value of lease liabilities
$
106

 
$
14

 
$
120



As of March 31, 2019, we have no material operating or finance leases that have not yet commenced.
Leases
Leases

Vistra has operating leases for real estate, rail cars, rental tanks and equipment. Our leases have remaining lease terms for 1 to 38 years. Our leases include options to renew up to 14 years. Certain leases also contain options to terminate the lease.

Lease Cost

The following table presents costs related to lease activities:
 
Three Months
Ended
March 31, 2019
Operating lease cost
$
4

Finance lease right-of-use asset amortization
1

Variable lease cost (a)
6

Short-term lease cost
5

Sublease income (b)
(2
)
Net lease cost
$
14

____________
(a)
Represents coal stockpile management services, common area maintenance services and rail car payments based on the number of rail cars used.
(b)
Represents sublease income related to real estate leases.

Balance Sheet Information

The following table presents lease related balance sheet information:
 
March 31, 2019
Lease assets
 
Operating lease right-of-use assets
$
68

Finance lease right-of-use assets (net of accumulated depreciation)
14

Total lease right-of-use assets
82

Current lease liabilities
 
Operating lease liabilities
16

Finance lease liabilities
2

Total current lease liabilities
18

Noncurrent lease liabilities
 
Operating lease liabilities
90

Finance lease liabilities
12

Total noncurrent lease liabilities
102

Total lease liabilities
$
120



Cash Flow and Other Information

The following table presents lease related cash flow and other information:
 
Three Months
Ended
March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
 
Operating cash flows from operating leases
$
3

Non-cash disclosure upon commencement of new lease
 
Right-of-use assets obtained in exchange for new operating lease liabilities
70

Right-of-use assets obtained in exchange for new finance lease liabilities
$
15



Weighted Average Remaining Lease Term

The following table presents weighted average remaining lease term information:
 
March 31, 2019
Weighted average remaining lease term
 
Operating lease
12 years
Finance lease
8 years
Weighted average discount rate
 
Operating lease
7.12%
Finance lease
6.36%


Maturity of Lease Liabilities

The following table presents maturity of lease liabilities:
 
Operating lease
 
Finance lease
 
Total lease
Remainder of 2019
$
16

 
$
2

 
$
18

2020
20

 
3

 
23

2021
16

 
3

 
19

2022
14

 
2

 
16

2023
13

 
2

 
15

Thereafter
85

 
7

 
92

Total lease payments
164

 
19

 
183

Less: Interest
(58
)
 
(5
)
 
(63
)
Present value of lease liabilities
$
106

 
$
14

 
$
120



As of March 31, 2019, we have no material operating or finance leases that have not yet commenced.
v3.19.1
Commitments and Contingencies (Notes)
3 Months Ended
Mar. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments And Contingencies
COMMITMENTS AND CONTINGENCIES

Guarantees

We have entered into contracts, including the assumed Dynegy senior unsecured notes described above, that contain guarantees