VISTRA CORP., 10-Q filed on 5/4/2021
Quarterly Report
v3.21.1
Cover Page - shares
3 Months Ended
Mar. 31, 2021
May 04, 2021
Document Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2021  
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   482,055,018
Entity Central Index Key 0001692819  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Common stock, par value $0.01 per share    
Document Information [Line Items]    
Title of 12(b) Security Common stock, par value $0.01 per share  
Trading Symbol VST  
Security Exchange Name NYSE  
Warrants    
Document Information [Line Items]    
Title of 12(b) Security Warrants  
Trading Symbol VST.WS.A  
Security Exchange Name NYSE  
v3.21.1
Condensed Consolidated Statements of Operations - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Statement [Abstract]    
Operating revenues $ 3,207 $ 2,858
Fuel, purchased power costs and delivery fees (4,745) (1,333)
Operating costs (371) (379)
Depreciation and amortization (423) (419)
Selling, general and administrative expenses (251) (252)
Impairment of long-lived assets 0 (84)
Operating income (loss) (2,583) 391
Other income 55 7
Other deductions (5) (31)
Interest expense and related charges (29) (300)
Impacts of Tax Receivable Agreement 37 (8)
Equity in earnings of unconsolidated investments 0 3
Income (loss) before income taxes (2,525) 62
Income tax (expense) benefit 485 (17)
Net income (loss) (2,040) 45
Net (income) loss attributable to noncontrolling interest (3) 11
Net income (loss) attributable to Vistra $ (2,043) $ 56
Weighted average shares of common stock outstanding:    
Weighted average shares of common stock outstanding - basic 484,699,267 487,944,564
Weighted average shares of common stock outstanding - diluted 484,699,267 490,638,626
Net income (loss) per weighted average share of common stock outstanding:    
Net income (loss) per weighted average share of common stock outstanding - basic $ (4.21) $ 0.11
Net income (loss) per weighted average share of common stock outstanding - diluted $ (4.21) $ 0.11
v3.21.1
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Net income (loss) $ (2,040) $ 45
Other comprehensive income (loss), net of tax effects:    
Effects related to pension and other retirement benefit obligations (net of tax benefit of $— and $7) 2 (23)
Total other comprehensive income (loss) 2 (23)
Comprehensive income (loss) (2,038) 22
Comprehensive (income) loss attributable to noncontrolling interest (3) 11
Comprehensive income (loss) attributable to Vistra $ (2,041) $ 33
v3.21.1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Comprehensive Income [Abstract]    
Effect related to pension and other retirement benefit obligations (tax) $ 0 $ 7
v3.21.1
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Cash flows — operating activities:    
Net income (loss) $ (2,040) $ 45
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:    
Depreciation and amortization 511 489
Deferred income tax expense (benefit), net (524) 13
Impairment of long-lived assets 0 84
Loss on disposal of investment in NELP 0 28
Unrealized net gain from mark-to-market valuations of commodities (96) (125)
Unrealized net (gain) loss from mark-to-market valuations of interest rate swaps (88) 174
Asset retirement obligation accretion expense 11 12
Impacts of Tax Receivable Agreement (37) 8
Stock-based compensation 16 14
Other, net 11 3
Changes in operating assets and liabilities:    
Margin deposits, net (134) 99
Accrued interest (75) (77)
Accrued taxes (79) (110)
Accrued employee incentive (128) (90)
Other operating assets and liabilities 999 (15)
Cash provided by (used in) operating activities (1,653) 552
Cash flows — investing activities:    
Capital expenditures, including nuclear fuel purchases and LTSA prepayments (192) (261)
Proceeds from sales of nuclear decommissioning trust fund securities 133 75
Investments in nuclear decommissioning trust fund securities (138) (80)
Proceeds from sales of environmental allowances 45 74
Purchases of environmental allowances (28) (106)
Insurance proceeds 40 0
Other, net 11 14
Cash used in investing activities (129) (284)
Cash flows — financing activities:    
Borrowing under Term Loan A 1,000 0
Proceeds from forward capacity agreement 500 0
Repayments/repurchases of debt (36) (223)
Net borrowings under accounts receivable financing 425 0
Borrowings under Revolving Credit Facility 1,300 425
Repayments under Revolving Credit Facility (1,000) (75)
Share repurchases (175) 0
Dividends paid to stockholders (74) (66)
Debt tender offer and other financing fees 0 (5)
Other, net (1) (4)
Cash provided by financing activities 1,939 52
Net change in cash, cash equivalents and restricted cash 157 320
Cash, cash equivalents and restricted cash — beginning balance 444 475
Cash, cash equivalents and restricted cash — ending balance $ 601 $ 795
v3.21.1
Condensed Consolidated Balance Sheets - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
Current assets:    
Cash and cash equivalents $ 561 $ 406
Restricted cash 22 19
Trade accounts receivable — net 1,316 1,279
Inventories 467 515
Commodity and other derivative contractual assets 710 748
Margin deposits related to commodity contracts 398 257
Prepaid expense and other current assets 214 205
Total current assets 3,688 3,429
Restricted cash 18 19
Investments 1,803 1,759
Property, plant and equipment — net 13,392 13,499
Operating lease right-of-use assets 43 45
Goodwill 2,583 2,583
Identifiable intangible assets — net 2,329 2,446
Commodity and other derivative contractual assets 347 258
Accumulated deferred income taxes 1,361 838
Other noncurrent assets 322 332
Total assets 25,886 25,208
Current liabilities:    
Short-term borrowings 1,300 0
Accounts receivable financing 725 300
Long-term debt due currently 480 95
Trade accounts payable 1,129 880
Commodity and other derivative contractual liabilities 868 789
Margin deposits related to commodity contracts 40 33
Accrued income taxes 49 16
Accrued taxes other than income 99 210
Accrued interest 55 131
Asset retirement obligations 99 103
Operating lease liabilities 8 8
Other current liabilities 554 471
Total current liabilities 5,406 3,036
Long-term debt, less amounts due currently 9,312 9,235
Operating lease liabilities 38 40
Commodity and other derivative contractual liabilities 441 624
Accumulated deferred income taxes 1 1
Tax Receivable Agreement obligation 410 447
Asset retirement obligation 2,337 2,333
Other noncurrent liabilities and deferred credits 1,848 1,131
Total liabilities 19,793 16,847
Commitments and Contingencies
Total equity:    
Common stock (par value — $0.01; number of shares authorized — 1,800,000,000) (shares outstanding: March 31, 2021 — 481,468,094; December 31, 2020 — 489,305,888) 5 5
Treasury stock, at cost (shares: March 31, 2021 — 49,701,377; December 31, 2020 — 41,043,224) (1,148) (973)
Additional paid-in-capital 9,805 9,786
Retained deficit (2,516) (399)
Accumulated other comprehensive loss (46) (48)
Stockholders' equity 6,100 8,371
Noncontrolling interest in subsidiary (7) (10)
Total equity 6,093 8,361
Total liabilities and equity $ 25,886 $ 25,208
Common stock, par or stated value per share $ 0.01  
Common stock, shares authorized 1,800,000,000  
Common stock, shares, outstanding 481,468,094 489,305,888
Treasury stock, held in treasury 49,701,377 41,043,224
v3.21.1
Business And Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
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.

Vistra has six reportable segments: (i) Retail, (ii) Texas, (iii) East, (iv) West, (v) Sunset and (vi) Asset Closure. See Note 16 for further information concerning reportable business segments.

Winter Storm Uri

In February 2021, a severe winter storm with extremely cold temperatures affected much of the U.S., including Texas. Winter Storm Uri had a material adverse impact on our results of operations and operating cash flows. This severe weather resulted in surging demand for power, gas supply shortages, operational challenges for generators, and a significant load shed event that was ordered by ERCOT beginning on February 15, 2021 and continuing through February 18, 2021. The final financial impact of Winter Storm Uri continues to be subject to the completion of customer billing activities, receipt of final settlement data from ERCOT, the outcome of potential litigation arising from the event, or any corrective action taken by the State of Texas, ERCOT, the RCT or the PUCT to resettle pricing across any portion of the supply chain (i.e. fuel supply, wholesale pricing of generation, or allocating the financial impacts of market-wide load shed ratably across all retail market participants), that is currently being considered or may be considered by any such parties. Additionally, we have disputes over certain gas invoices that are not anticipated to have a material impact.

COVID-19 Pandemic

In March 2020, the World Health Organization categorized the novel coronavirus (COVID-19) as a pandemic, and the U.S. Government 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 months ended March 31, 2021.

In response to the global pandemic related to COVID-19, the CARES Act was signed into law in March 2020. See Note 6 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 2020 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 2020 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.
v3.21.1
Development of Generation Facilities
3 Months Ended
Mar. 31, 2021
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 up to 668 MW of solar photovoltaic power generation facilities and 260 MW of battery ESS in Texas. Estimated commercial operation dates for these facilities range from Summer 2021 to Fall 2022. At March 31, 2021, we had accumulated approximately $96 million in construction-work-in-process for these Texas segment solar generation and battery ESS projects.

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 (LARS) agreement to ensure grid reliability as part of the Oakland Clean Energy Initiative was signed, but required California Public Utilities Commission (CPUC) approval. PG&E did not receive CPUC approval as of April 15, 2021. On April 16, 2021, Vistra terminated the LARS agreement with PG&E. We are continuing development of the Oakland battery ESS project while seeking another contractual arrangement that will allow the investment to move forward.

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. At March 31, 2021, we had accumulated approximately $412 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. 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. Moss Landing Phase I completed capacity testing in April 2021 to begin providing full capacity to PG&E as required by the resource adequacy contract and participating in the CAISO energy market.

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. At March 31, 2021, we had accumulated approximately $54 million in construction work-in-process for Moss Landing Phase II. We anticipate Moss Landing Phase II will commence commercial operations in the third quarter of 2021.
v3.21.1
Retirement of Generation Facilities
3 Months Ended
Mar. 31, 2021
Retirement of Generation Facilities [Abstract]  
Retirement of generation facilities RETIREMENT OF GENERATION FACILITIESIn December 2020, we announced the retirement of our 83 MW Wharton natural gas facility in Texas due to its age, cost profile and small scale, as well as low power prices, limited operational windows and substantial costs to repair, maintain and upgrade the facility. The previously announced retirement of our 244 MW Trinidad natural gas facility in Texas was rescinded in April 2021.
In September and December 2020, we announced our intention to retire all of our remaining coal generation facilities in Illinois and Ohio, one coal generation facility in Texas 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 11), and in furtherance of our efforts to significantly reduce our carbon footprint. In April 2021, we announced we would retire the Joppa generation facilities by September 1, 2022, three years earlier than previously disclosed, in order to settle a complaint filed with the Illinois Pollution Control Board (IPCB) by the Sierra Club in 2018 (see Note 11). 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 retirements are included in our Sunset segment beginning in the quarter when a retirement plan is announced. See Note 17 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
Coleto CreekGoliad, TXERCOTCoal650By the end of 2027
JoppaJoppa, ILMISOCoal802By September 1, 2022
JoppaJoppa, ILMISONatural Gas221By September 1, 2022
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
Total6,901
____________
(a)Generation facilities may retire earlier than expected dates if economic or other conditions dictate.
v3.21.1
Revenue
3 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenue REVENUE
Three Months Ended March 31, 2021
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$1,149 $— $— $— $— $— $— $1,149 
Retail energy charge in Northeast/Midwest586 — — — — — — 586 
Wholesale generation revenue from ISO/RTO— 3,246 156 38 723 — — 4,163 
Capacity revenue from ISO/RTO (a)— — (4)— 39 — — 35 
Revenue from other wholesale contracts— 2,028 163 21 58 — — 2,270 
Total revenue from contracts with customers1,735 5,274 315 59 820 — — 8,203 
Other revenues:
Intangible amortization(1)— — (6)— — (6)
Hedging and other revenues (b)16 (4,442)63 (27)(600)— — (4,990)
Affiliate sales— 251 345 65 — (662)— 
Total other revenues15 (4,191)409 (26)(541)— (662)(4,996)
Total revenues$1,750 $1,083 $724 $33 $279 $— $(662)$3,207 
____________
(a)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.
(b)Includes $58 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 16 for unrealized net gains (losses) by segment.
Three Months Ended March 31, 2020
RetailTexasEastWestSunsetAsset
Closure
EliminationsConsolidated
Revenue from contracts with customers:
Retail energy charge in ERCOT$1,253 $— $— $— $— $— $— $1,253 
Retail energy charge in Northeast/Midwest640 — — — — — — 640 
Wholesale generation revenue from ISO/RTO— 96 58 33 74 — — 261 
Capacity revenue from ISO/RTO (a)— — — 42 — — 45 
Revenue from other wholesale contracts— 50 164 49 — — 267 
Total revenue from contracts with customers1,893 146 225 37 165 — — 2,466 
Other revenues:
Intangible amortization(4)— — — (4)— — (8)
Hedging and other revenues (b)19 248 (25)44 114 — — 400 
Affiliate sales— 467 534 71 — (1,073)— 
Total other revenues15 715 509 45 181 — (1,073)392 
Total revenues$1,908 $861 $734 $82 $346 $— $(1,073)$2,858 
____________
(a)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.
(b)Includes $201 million of unrealized net gains from mark-to-market valuations of commodity positions. See Note 16 for unrealized net gains (losses) by segment.

Performance Obligations

As of March 31, 2021, we have future performance obligations that are unsatisfied, or partially unsatisfied, relating to capacity auction volumes awarded through capacity auctions held by the ISO/RTO or contracts with customers. Therefore, an obligation exists as of the date of the results of the respective ISO/RTO capacity auction or the contract execution date. These obligations total $663 million, $541 million, $164 million, $141 million and $98 million that will be recognized, in the balance of the year ended December 31, 2021 and the years ending December 31, 2022, 2023, 2024 and 2025, respectively, and $484 million thereafter. Capacity revenues are recognized as capacity is made available to the related ISOs/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:
March 31,
2021
December 31, 2020
Trade accounts receivable from contracts with customers — net$1,230 $1,169 
Other trade accounts receivable — net86 110 
Total trade accounts receivable — net$1,316 $1,279 
v3.21.1
Goodwill and Identifiable Intangible Assets and Liabilities
3 Months Ended
Mar. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill And Identifiable Intangible Assets GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS AND LIABILITIES
Goodwill

At both March 31, 2021 and December 31, 2020, the carrying value of goodwill totaled $2.583 billion, including $2.461 billion allocated to our Retail reporting unit and $122 million allocated to our Texas Generation reporting unit. Goodwill of $1.944 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, 2021December 31, 2020
Identifiable Intangible Asset
Gross
Carrying
Amount
Accumulated
Amortization
Net
Gross
Carrying
Amount
Accumulated
Amortization
Net
Retail customer relationship$2,082 $1,483 $599 $2,082 $1,434 $648 
Software and other technology-related assets421 198 223 414 186 228 
Retail and wholesale contracts269 211 58 272 204 68 
Contractual service agreements (a)41 — 41 51 50 
Other identifiable intangible assets (b)53 20 33 96 19 77 
Total identifiable intangible assets subject to amortization$2,866 $1,912 954 $2,915 $1,844 1,071 
Retail trade names (not subject to amortization)1,374 1,374 
Mineral interests (not currently subject to amortization)
Total identifiable intangible assets$2,329 $2,446 
____________
(a)At March 31, 2021, 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 LiabilityMarch 31,
2021
December 31, 2020
Contractual service agreements$128 $129 
Purchase and sale of power and capacity85 87 
Fuel and transportation purchase contracts17 73 
Total identifiable intangible liabilities$230 $289 

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 March 31,
20212020
Retail customer relationshipDepreciation and amortization$49 $74 
Software and other technology-related assetsDepreciation and amortization19 17 
Retail and wholesale contracts/purchase and sale/fuel and transportation contractsOperating revenues/fuel, purchased power costs and delivery fees
Other identifiable intangible assetsOperating revenues/fuel, purchased power costs and delivery fees/depreciation and amortization57 52 
Total intangible asset expense (a)$133 $145 
____________
(a)Amounts recorded in depreciation and amortization totaled $68 million and $91 million for the three months ended March 31, 2021 and 2020, 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 March 31, 2021, 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
2021$283 
2022$187 
2023$131 
2024$82 
2025$57 
v3.21.1
Income Taxes
3 Months Ended
Mar. 31, 2021
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,
20212020
Income (loss) before income taxes$(2,525)$62 
Income tax (expense) benefit$485 $(17)
Effective tax rate19.2 %27.4 %

For the three months ended March 31, 2021, the effective tax rate of 19.2% was lower 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, 2020, the effective tax rate of 27.4% was higher than the U.S. federal statutory rate of 21% due primarily to nondeductible impacts of the TRA and state income taxes.

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 CARES Act was signed into law in March 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 expects to receive an approximate $366 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 this impact. Vistra is also utilizing the CARES Act payroll deferral mechanism to defer the payment of approximately $20 million from 2020 to 2021 and 2022.

Liability for Uncertain Tax Positions

Vistra and its subsidiaries file income tax returns in U.S. federal, state and foreign jurisdictions and are, at times, subject to examinations by the IRS and other taxing authorities. In February 2021, Vistra was notified that the IRS had opened a federal income tax audit for tax years 2018 and 2019 and an employment tax audit for tax year 2018. Crius is currently under audit by the IRS for the tax years 2015 and 2016. Uncertain tax positions totaled $39 million at both March 31, 2021 and December 31, 2020.
v3.21.1
Tax Receivable Agreement Obligation
3 Months Ended
Mar. 31, 2021
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 15).

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, 2021 and 2020:
Three Months Ended March 31,
20212020
TRA obligation at the beginning of the period$450 $455 
Accretion expense17 17 
Changes in tax assumptions impacting timing of payments (a)(54)(9)
Impacts of Tax Receivable Agreement(37)
TRA obligation at the end of the period413 463 
Less amounts due currently(3)— 
Noncurrent TRA obligation at the end of the period$410 $463 
____________
(a)During the three months ended March 31, 2021, we recorded a decrease to the carrying value of the TRA obligation totaling $54 million as a result of adjustments to forecasted taxable income due to financial impacts of Winter Storm Uri. During the three months ended March 31, 2020, we recorded a decrease of $9 million to the carrying value of the TRA obligation as a result of adjustments to the timing of forecasted taxable income, including the impacts of the CARES Act and changes to Section 163(j) percentage limitation amount.

As of March 31, 2021, the estimated carrying value of the TRA obligation totaled $413 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 March 31, 2021, 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.
v3.21.1
Earnings Per Share
3 Months Ended
Mar. 31, 2021
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 March 31,
20212020
Net income (loss) attributable to common stock — basic$(2,043)$56 
Weighted average shares of common stock outstanding — basic484,699,267 487,944,564 
Net income (loss) per weighted average share of common stock outstanding — basic$(4.21)$0.11 
Dilutive securities: Stock-based incentive compensation plan— 2,694,062 
Weighted average shares of common stock outstanding — diluted484,699,267 490,638,626 
Net income (loss) per weighted average share of common stock outstanding — diluted$(4.21)$0.11 

Stock-based incentive compensation plan awards excluded from the calculation of diluted earnings per share because the effect would have been antidilutive totaled 15,254,972 and 10,872,836 shares for the three months ended March 31, 2021 and 2020, respectively.
v3.21.1
Accounts Receivable Financing
3 Months Ended
Mar. 31, 2021
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 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 from the settlement date in December 2020 and thereafter for the remaining term of the Receivables Facility. In December 2020, the Receivables Facility was amended to include Ambit Texas, LLC (Ambit Texas), Value Based Brands and TriEagle Energy, as originators, and increase the commitment of the Purchasers to $500 million. In February 2021, the Receivables Facility was amended to increase the commitment of the Purchasers to $596 million to take advantage of a higher receivable balance at such time. The commitment of the Purchasers returned to $500 million upon the settlement date in March 2021. In March 2021, the Receivables Facility was amended to increase the commitment of the Purchasers to $600 million for the remaining term of the Receivables Facility.

In connection with the Receivables Facility, TXU Energy, Dynegy Energy Services, Ambit Texas, Value Based Brands and TriEagle Energy, each indirect subsidiaries of Vistra and originators under the Receivables Facility (Originators), each sell and/or contribute, subject to certain exclusions, all of its receivables (other than any receivables excluded pursuant to the terms of the Receivables Facility), arising from the sale of electricity to its customers and related rights (Receivables), to RecCo, a consolidated, wholly owned, bankruptcy-remote, direct subsidiary of TXU Energy. RecCo, in turn, is subject to certain conditions, and may draw under the Receivables Facility up to the limits described above to fund its acquisition of the Receivables from the Originators. RecCo has granted a security interest on the Receivables and all related assets for the benefit of the Purchasers under the Receivables Facility and Vistra Operations has agreed to guarantee the obligations under the agreements governing the Receivables Facility. 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 Receivables on behalf of RecCo and the Purchasers, as applicable.

As of March 31, 2021, outstanding borrowings under the Receivables Facility totaled $600 million and were supported by $805 million of RecCo gross receivables. As of December 31, 2020, outstanding borrowings under the Receivables Facility totaled $300 million and were supported by $735 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 purchase price paid for 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 and the other Originators have each 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 earlier terminated under the agreements governing the Repurchase Facility, the Repurchase Facility will terminate concurrently with the scheduled termination of the Receivables Facility.

As of March 31, 2021, outstanding borrowings under the Repurchase Facility totaled $125 million. There were no outstanding borrowings at December 31, 2020.
v3.21.1
Long-Term Debt
3 Months Ended
Mar. 31, 2021
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,
2021
December 31,
2020
Vistra Operations Credit Facilities $2,564 $2,572 
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 
Other:
Forward Capacity Agreements534 45 
Equipment Financing Agreements65 68 
8.82% Building Financing due semiannually through February 11, 2022 (a)
10 
Other
Total other long-term debt608 126 
Unamortized debt premiums, discounts and issuance costs (b)(80)(68)
Total long-term debt including amounts due currently9,792 9,330 
Less amounts due currently(480)(95)
Total long-term debt less amounts due currently$9,312 $9,235 
____________
(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 current 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 March 31, 2021, the Vistra Operations Credit Facilities consisted of up to $6.289 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), term loans maturing in 2022 of $1.0 billion (Term Loan A Facility) and term loans maturing in 2025 of $2.564 billion (Term Loan B-3 Facility).

In March 2021, Vistra Operations borrowed $1.0 billion principal amount under the Term Loan A Facility. In April 2021, Vistra Operations borrowed an additional $250 million principal amount under the Term Loan A Facility. The Term Loan A Facility matures on March 28, 2022. Proceeds from the Term Loan A Facility, together with cash on hand, were used to repay certain amounts outstanding under the Revolving Credit Facility. Borrowings under the Term Loan A Facility are reported in short-term borrowings in our condensed consolidated balance sheet.

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 three months ended March 31, 2020.

During the three months ended March 31, 2021, we borrowed $1.3 billion and repaid $1.0 billion under the Revolving Credit Facility, with proceeds from the borrowings used for general corporate purposes. In April 2021, we repaid the remaining balance under the Revolving Credit Facility.

The Vistra Operations Credit Facilities and related available capacity at March 31, 2021 are presented below.
March 31, 2021
Vistra Operations Credit FacilitiesMaturity DateFacility
Limit
Cash
Borrowings
Letters of Credit OutstandingAvailable
Capacity
Revolving Credit Facility (a)June 14, 2023$2,725 $300 $636 $1,789 
Term Loan A Facility (b)March 28, 20221,000 1,000 — — 
Term Loan B-3 Facility (c)December 31, 20252,564 2,564 — — 
Total Vistra Operations Credit Facilities$6,289 $3,864 $636 $1,789 
___________
(a)Revolving Credit Facility to be used for general corporate purposes. The Facility includes a $2.35 billion letter of credit sub-facility. Letters of credit outstanding reduce our available capacity. Cash borrowings under the Revolving Credit Facility are reported in short-term borrowings in our condensed consolidated balance sheets. In April 2021, Vistra Operations repaid the $300 million of cash borrowings.
(b)In April 2021, Vistra Operations borrowed an additional $250 million principal amount under the Term Loan A Facility. Proceeds from the Term Loan A Facility, together with cash on hand, were used to repay certain amounts outstanding under the Revolving Credit Facility. Cash borrowings under the Term Loan A Facility are reported in short-term borrowings in our condensed consolidated balance sheets.
(c)Cash borrowings under the Term Loan B-3 Facility are subject to a required scheduled quarterly payment in annual amount equal to 1.00% of the original principal amount with the balance paid at maturity. Amounts paid cannot be reborrowed.

At March 31, 2021, 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 $300 million in outstanding borrowings. Letters of credit issued under the Revolving Credit Facility bear interest of 1.75%. Amounts borrowed under the Term Loan A Facility bears interest based on LIBOR rates plus fixed spreads of 1.625%. At March 31, 2021, the weighted average interest rates on outstanding borrowings was 1.73% under the Term Loan A Facility. Amounts borrowed under the Term Loan B-3 Facility bears interest based on applicable LIBOR rates plus fixed spreads of 1.75%. At March 31, 2021, the weighted average interest rates before taking into consideration interest rate swaps on outstanding borrowings was 1.86% including both the Revolving Credit Facility and 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 March 31, 2021 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 March 31, 2021, 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%
____________
(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 2020, Vistra entered into uncommitted standby letter of credit facilities (Secured LOC Facilities) that are each secured by a first lien on substantially all of Vistra Operations' (and its subsidiaries') assets (which ranks pari passu with the Vistra Operations Credit Facilities). The facility is to be used for general corporate purposes. At March 31, 2021, $461 million of letters of credit were outstanding under the Secured LOC Facilities.
Alternate Letter of Credit Facility

At March 31, 2021, $250 million of letters of credit were outstanding under a $250 million alternate letter of credit facility. The facility is to be used for general corporate purposes and matures in December 2021.

Vistra Operations Senior Secured Notes

In 2019, Vistra Operations issued and sold $3.1 billion aggregate principal amount of senior secured notes in offerings to eligible purchasers under Rule 144A and Regulation S under the Securities Act. The indenture (as may be amended or supplemented from time to time, the Vistra Operations Senior Secured Indenture) governing the 3.550% senior secured notes due 2024, the 3.700% senior secured notes due 2027 and the 4.300% senior secured notes due 2029 (collectively, as each may be amended or supplemented from time to time, 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 2018 and 2019, Vistra Operations issued and sold $3.6 billion aggregate principal amount of senior unsecured notes in offerings to eligible purchasers under Rule 144A and Regulation S under the Securities Act. The indentures governing the 5.500% senior unsecured notes due 2026, the 5.625% senior unsecured notes due 2027 and the 5.000% senior unsecured notes due 2027 (collectively, as each may be amended or supplemented from time to time, the Vistra Operations Senior Unsecured Indentures) provide for the full and unconditional guarantee by the Guarantor Subsidiaries of the punctual payment of the principal and interest on such notes. The Vistra Operations Senior Unsecured Indentures contain 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.

Debt Repurchase Program

In April 2020, the Company's board of directors (Board) authorized up to $1.0 billion to repay or repurchase additional outstanding debt. Through March 31, 2021, approximately $666 million had been repurchased under the authorization. In March 2021, the Board authorized up to $1.8 billion to repay or repurchase additional outstanding debt, which authorization superseded any amounts that remained outstanding under any previous authorizations.

Vistra Senior Unsecured Notes

January 2020 Redemption — In January 2020, Vistra redeemed the entire $81 million aggregate principal amount outstanding of 8.000% senior notes at a redemption price equal to 104.0% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of redemption. We recorded an extinguishment gain of $2 million on the transaction in the three months ended March 31, 2020.

Other Long-Term Debt

Forward Capacity Agreements — In March 2021, the Company sold a portion of the PJM capacity that cleared for Planning Years 2021-2022 to a financial institution (2021-2022 Forward Capacity Agreement). The buyer in this transaction will receive capacity payments from PJM during the Planning Years 2021-2022 in the amount of approximately $515 million. 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 a debt issuance with an implied interest rate of approximately 4.25%.
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 (Legacy Forward Capacity Agreements, and, together with the 2021-2022 Forward Capacity Agreement, the Forward Capacity Agreements). The buyer in this transaction will receive capacity payments from PJM during the Planning Years 2020-2021 in the amount of $18 million. 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 a debt issuance with an implied interest rate of 0.58%.

Maturities

Long-term debt maturities at March 31, 2021 are as follows:
March 31, 2021
Remainder of 2021$354 
2022262 
202340 
20241,540 
20252,470 
Thereafter5,206 
Unamortized premiums, discounts and debt issuance costs(80)
Total long-term debt, including amounts due currently$9,792 
v3.21.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Guarantees

We have entered into contracts that contain guarantees to unaffiliated parties that could require performance or payment under certain conditions. Material guarantees are discussed below.

Letters of Credit

At March 31, 2021, we had outstanding letters of credit totaling $1.347 billion as follows:

$985 million to support commodity risk management collateral requirements in the normal course of business, including over-the-counter and exchange-traded transactions and collateral postings with ISOs/RTOs;
$196 million to support battery and solar development projects;
$34 million to support executory contracts and insurance agreements;
$74 million to support our REP financial requirements with the PUCT, and
$58 million for other credit support requirements.

Surety Bonds

At March 31, 2021, we had outstanding surety bonds totaling $131 million to support performance under various contracts and legal obligations in the normal course of business.
Litigation and Regulatory Proceedings

Our material legal proceedings and regulatory proceedings affecting our business are described below. We believe that we have valid defenses to the legal proceedings described below and intend to defend them vigorously. We also intend to participate in the regulatory processes described below. We record reserves for estimated losses related to these matters when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be reasonably estimated. As applicable, we have established an adequate reserve for the matters discussed below. In addition, legal costs are expensed as incurred. Management has assessed each of the following legal matters based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought, and the probability of success. Unless specified below, we are unable to predict the outcome of these matters or reasonably estimate the scope or amount of any associated costs and potential liabilities, but they could have a material impact on our results of operations, liquidity, or financial condition. As additional information becomes available, we adjust our assessment and estimates of such contingencies accordingly. Because litigation and rulemaking proceedings are subject to inherent uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of these matters could be at amounts that are different from our currently recorded reserves and that such differences could be material.

Gas Index Pricing Litigation — We, through our subsidiaries, and other companies are named as defendants in several lawsuits claiming damages resulting from alleged price manipulation through false reporting of natural gas prices to various index publications, wash trading and churn trading from 2000-2002. The plaintiffs in these cases allege that the defendants engaged in an antitrust conspiracy to inflate natural gas prices during the relevant time period and seek damages under the respective state antitrust statutes. We remain as defendants in two consolidated putative class actions (Wisconsin) and one individual action (Kansas) both pending in federal court in those states. The Kansas action is currently on appeal in the U.S. Court of Appeals for the Tenth Circuit.

Wood River Rail Dispute — In November 2017, Dynegy Midwest Generation, LLC (DMG) received notification that BNSF Railway Company and Norfolk Southern Railway Company were initiating dispute resolution related to DMG's suspension of its Wood River Rail Transportation Agreement with the railroads. In March 2018, BNSF Railway Company (BNSF) and Norfolk Southern Railway Company (NS) filed a demand for arbitration. In March 2021, the parties entered into a confidential settlement to resolve this matter and the Coffeen matter discussed below. In connection with that settlement, BNSF and NS dismissed with prejudice their arbitration disputes for Wood River and Coffeen and these matters are fully resolved.

Coffeen and Duck Creek Rail Disputes — In April 2020, IPH, LLC (IPH) received notification that BNSF and NS were initiating dispute resolution related to IPH's suspension of its Coffeen Rail Transportation Agreement with the railroads, and Illinois Power Resources Generating, LLC (IPRG), received notification that BNSF was initiating dispute resolution related to IPRG's suspension of its Duck Creek Rail Transportation Agreement with BNSF. In November 2019, IPH and IPRG sent suspension notices to the railroads asserting that the Illinois Multi-Pollutant Standards (MPS) rule requirement to retire at least 2,000 megawatts of generation (see discussion below) was a change-in-law under the agreement that rendered continued operation of the plants no longer economically feasible. In addition, IPH and IPRG asserted that the MPS rule's retirement requirement also qualified as a force majeure event under the agreements excusing performance. In March 2021, we entered into a confidential settlement agreement with BNSF to resolve the Duck Creek matter and a separate confidential settlement agreement with BNSF and NS to resolve the Coffeen and Wood River matter discussed above. BNSF has dismissed with prejudice the Duck Creek arbitration dispute and this matter is now fully resolved. The settlement of these rail disputes did not have a material impact on our financial statements.

Winter Storm Uri Legal Proceedings

Repricing Challenges — In March 2021, we filed an appeal in the Third Court of Appeals in Austin, Texas (Third Court of Appeals), challenging the PUCT's February 15 and February 16, 2021 orders governing ERCOT's determination of wholesale power prices during load-shedding events. We expect our opening brief will be due in June 2021. We have also submitted settlement disputes with ERCOT over power prices and other issues during Winter Storm Uri. Following an appeal of the PUCT's March 5, 2021 verbal order and other statements made by the PUCT, the Texas Attorney General, on behalf of the PUCT, its client, represented in a letter agreement filed with the Third Court of Appeals that the PUCT has not prejudged or made a final decision on whether to reprice and that we and other parties may continue disputing the pricing through the ERCOT process.
Koch Disputes — In March 2021, we filed a lawsuit in Texas state court against Odessa-Ector Power Partners, L.P., Koch Resources, LLC, Koch AG & Energy Solutions, LLC, and Koch Energy Services, LLC (Koch) seeking equitable relief in which we contested the amount of the February 2021 earnout payment under the terms of the 2017 asset purchase agreement (APA) with Koch pursuant to which we purchased our Odessa gas power plant for $350 million. Koch subsequently filed its own related lawsuit in Delaware Chancery Court. The APA dispute will now proceed in Delaware Chancery Court which will consider all our equitable and other claims, including our claim contesting Koch's demand for $286 million for the February 2021 earnout payment as an unjust windfall and inconsistent with the parties' intent when they entered into the APA in 2017. Because Koch is seeking a $286 million payment in the lawsuit, we have recorded a liability of that amount in other noncurrent liabilities and deferred credits in our condensed consolidated balance sheets. However, we will defend the case vigorously and believe that it is reasonably possible we will prevail in litigation and will not be required to pay Koch this amount.

In addition, in March 2021, we filed a lawsuit in New York state court against Koch for breach of contract and ineffective force majeure for Koch's failure to deliver gas during the event pursuant to a gas supply contract with them, as well as a claim for unjust enrichment by selling gas to others at higher prices rather than fulfilling their contract obligations to us. Koch has removed that case to New York federal court.

Regulatory Investigations and Other Litigation Matters — Following the events of Winter Storm Uri, various regulatory bodies, including ERCOT, the ERCOT Independent Market Monitor, the Texas Attorney General, the FERC and the NRC initiated investigations or issued requests for information of various parties related to the significant load shed event that occurred during the event as well as operational challenges for generators arising from the event, including performance and fuel and supply issues. We are responding to all those investigatory requests. In addition, a number of personal injury and wrongful death lawsuits related to Winter Storm Uri have been filed in various Texas state courts against us and numerous generators, transmission and distribution utilities, retail and electric providers, as well as ERCOT. We and other defendants have requested that all pretrial proceedings in these personal injury cases be consolidated and transferred to a single multi-district litigation pretrial judge, and the courts of origin have been ordered to stay further proceedings in these cases until the request for a multi-district litigation tribunal has been decided.

Climate Change

In January 2021, the Biden administration issued a series of Executive Orders, including one titled Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis (the Environment Executive Order) which directed agencies, including the EPA, to review various agency actions promulgated during the prior administration and take action where the previous administration's action conflicts with national objectives. Several of the EPA agency actions discussed below are now subject to this review.

Greenhouse Gas Emissions

In August 2015, the EPA finalized rules to address greenhouse gas (GHG) emissions from electricity generation units, referred to as the Clean Power Plan, including rules for existing facilities that would establish state-specific emissions rate goals to reduce nationwide CO2 emissions. Various parties filed petitions for review in the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit Court). In July 2019, petitioners filed a joint motion to dismiss in light of the EPA's issuance of the rule that replaced the Clean Power Plan, the Affordable Clean Energy rule, discussed below. In September 2019, the D.C. Circuit Court granted petitioners' motion to dismiss and dismissed all of the petitions challenging the Clean Power Plan as moot.
In July 2019, the EPA finalized a rule to repeal the Clean Power Plan, with new regulations addressing GHG emissions from existing coal-fueled electric generation units, referred to as the Affordable Clean Energy (ACE) rule. The ACE rule developed emission guidelines that states must use when developing plans to regulate GHG emissions from existing coal-fueled electric generating units. The ACE rule set a deadline of July 2022 for states to submit their plans for regulating GHG emissions from existing facilities. States where we operate coal plants (i.e., Texas, Illinois and Ohio) began to develop their state plans to comply with the rule. Environmental groups and certain states filed petitions for review of the ACE rule and the repeal of the Clean Power Plan in the D.C. Circuit Court, and the D.C. Circuit Court heard argument on those issues in October 2020. In January 2021, the D.C. Circuit Court vacated the ACE rule and remanded the rule to the EPA for further action. In its decision, the D.C. Circuit Court concluded that the EPA's basis for repealing the Clean Power Plan and adopting the ACE rule was not supported by the Clean Air Act. In April 2021, the State of West Virginia and certain other parties filed a petition for review with the U.S. Supreme Court of the D.C. Circuit Court's decision. Additionally, in December 2018, the EPA issued proposed revisions to the emission standards for new, modified and reconstructed units. Vistra submitted comments on that proposed rulemaking in March 2019. In January 2021, the EPA, just prior to the transition to the Biden administration, issued a final rule setting forth a significant contribution finding for the purpose of regulating GHG emissions from new, modified, or reconstructed electric utility generating units. The final rule excludes sectors from future regulation where GHG emissions make up less than three percent of U.S. GHG emissions. The final rule did not set any specific emission limits for new, modified, or reconstructed electric utility generating units. In April 2021, the D.C. Circuit Court granted the EPA's unopposed motion for voluntary vacatur and remand of the GHG significant contribution rule. The ACE rule and the rule on significant contribution are subject to the Environment Executive Order discussed above.

Regional Haze — Reasonable Progress and Best Available Retrofit Technology (BART) for Texas

In October 2017, the EPA issued a final rule addressing BART for Texas electricity generation units, with the rule serving as a partial approval of Texas' 2009 State Implementation Plan (SIP) and a partial Federal Implementation Plan (FIP). For SO2, the rule established an intrastate Texas emission allowance trading program as a "BART alternative" that operates in a similar fashion to a CSAPR trading program. The program includes 39 generating units (including our Martin Lake, Big Brown, Monticello, Sandow 4, Coleto Creek, Stryker 2 and Graham 2 plants). The compliance obligations in the program started on January 1, 2019. The retirements of our Monticello, Big Brown and Sandow 4 plants have enhanced our ability to comply with this BART rule for SO2. For NOX, the rule adopted the CSAPR's ozone program as BART and for particulate matter, the rule approved Texas's SIP that determines that no electricity generation units are subject to BART for particulate matter. Various parties filed a petition challenging the rule in the U.S. Court of Appeals for the Fifth Circuit (Fifth Circuit Court) as well as a petition for reconsideration filed with the EPA. Luminant intervened on behalf of the EPA in the Fifth Circuit Court action. In March 2018, the Fifth Circuit Court abated its proceedings pending conclusion of the EPA's reconsideration process. In August 2020, the EPA issued a final rule affirming the prior BART final rule but also included additional revisions that were proposed in November 2019. In October 2020, environmental groups petitioned for review of this rule in both the D.C. Circuit Court and the Fifth Circuit Court. In December 2020, a panel of the Fifth Circuit Court consolidated the challenges to the BART final rule and issued an order transferring the case to the D.C. Circuit Court. As finalized, we expect that we will be able to comply with the rule. The BART rule is subject to the Environment Executive Order discussed above.

Affirmative Defenses During Malfunctions

In May 2015, the EPA finalized a rule requiring 36 states, including Texas, Illinois and Ohio, to remove or replace either EPA-approved exemptions or affirmative defense provisions for excess emissions during upset events and unplanned maintenance and startup and shutdown events, referred to as the SIP Call. Various parties (including Luminant, the State of Texas and the State of Ohio) filed petitions for review of the EPA's final rule, and all of those petitions were consolidated in the D.C. Circuit Court. In April 2017, the D.C. Circuit Court ordered the case to be held in abeyance. In April 2019, the EPA Region 6 proposed a rule to withdraw the SIP Call with respect to the Texas affirmative defense provisions. We submitted comments on that proposed rulemaking in June 2019. In February 2020, the EPA issued the final rule withdrawing the Texas SIP Call. In April 2020, a group of environmental petitioners, including the Sierra Club, filed a petition in the D.C. Circuit Court challenging the EPA's action with respect to Texas. In October 2020, the EPA issued new guidance on the inclusion of startup, shutdown and malfunction (SSM) provisions in SIPs, which is intended to supersede the policy in the multi-state SIP Call. The guidance provides that the SIPs may contain provisions for SSM events if certain conditions are met. The EPA SSM guidance is subject to the Environment Executive Order discussed above.
Illinois Multi-Pollutant Standards (MPS)

In August 2019, changes proposed by the Illinois Pollution Control Board to the MPS rule, which places NOX, SO2 and mercury emissions limits on our coal plants located in MISO went into effect. Under the revised MPS rule, our allowable SO2 and NOX emissions from the MISO fleet are 48% and 42% lower, respectively, than prior to the rule changes. The revised MPS rule requires the continuous operation of existing selective catalytic reduction (SCR) control systems during the ozone season, requires SCR-controlled units to meet an ozone season NOX emission rate limit, and set an additional, site-specific annual SO2 limit for our Joppa Power Station. Additionally, in 2019, the Company retired its Havana, Hennepin, Coffeen and Duck Creek plants in order to comply with the MPS rule's requirement to retire at least 2,000 MW of our generation in MISO.

SO2 Designations for Texas

In November 2016, the EPA finalized its nonattainment designations for counties surrounding our Big Brown, Monticello and Martin Lake generation plants. The final designations require Texas to develop nonattainment plans for these areas. In February 2017, the State of Texas and Luminant filed challenges to the nonattainment designations in the Fifth Circuit Court. Subsequently, in October 2017, the Fifth Circuit Court granted the EPA's motion to hold the case in abeyance considering the EPA's representation that it intended to revisit the nonattainment rule. In December 2017, the TCEQ submitted a petition for reconsideration to the EPA. In August 2019, the EPA issued a proposed Error Correction Rule for all three areas, which, if finalized, would revise its previous nonattainment designations and each area at issue would be designated unclassifiable. In September 2019, we submitted comments in support of the proposed Error Correction Rule. In April 2020, the Sierra Club filed suit to compel the EPA to issue a Finding of Failure to submit an attainment plan with respect to the three areas in Texas. In August 2020, the EPA issued a Finding of Failure for Texas to submit an attainment plan. In September 2020, the EPA proposed a "Clean Data" determination for the areas surrounding the retired Big Brown and Monticello plants, which, if finalized, would redesignate those areas as attainment based on monitoring data supporting an attainment designation. We expect the TCEQ to develop a SIP for Texas for submittal to the EPA in 2021.

Effluent Limitation Guidelines (ELGs)

In November 2015, the EPA revised the ELGs for steam electricity generation facilities, which will impose more stringent standards (as individual permits are renewed) for wastewater streams, such as flue gas desulfurization (FGD), fly ash, bottom ash and flue gas mercury control wastewaters. Various parties filed petitions for review of the ELG rule, and the petitions were consolidated in the Fifth Circuit Court. In April 2017, the EPA granted petitions requesting reconsideration of the ELG rule and administratively stayed the rule's compliance date deadlines. In August 2017, the EPA announced that its reconsideration of the ELG rule would be limited to a review of the effluent limitations applicable to FGD and bottom ash wastewaters and the agency subsequently postponed the earliest compliance dates in the ELG rule for the application of effluent limitations for FGD and bottom ash wastewaters from November 1, 2018 to November 1, 2020. Based on these administrative developments, the Fifth Circuit Court agreed to sever and hold in abeyance challenges to effluent limitations. The remainder of the case proceeded, and in April 2019 the Fifth Circuit Court vacated and remanded portions of the EPA's ELG rule pertaining to effluent limitations for legacy wastewater and leachate. In November 2019, the EPA issued a proposal that would extend the compliance deadline for FGD wastewater to no later than December 31, 2025 and maintains the December 31, 2023 compliance date for bottom ash transport water. The proposal also creates new sub-categories of facilities with more flexible FGD compliance options, including a retirement exemption to 2028 and a low utilization boiler exemption. The proposed rule also modified some of the FGD final effluent limitations. We filed comments on the proposal in January 2020. The EPA published the final rule in October 2020. The final rule extends the compliance date for both FGD and bottom ash transport water to no later than December 2025, as negotiated with the state permitting agency. Additionally, the final rule allows for a retirement exemption that exempts facilities certifying that units will retire by December 2028 provided certain effluent limitations are met. Notification to the state agency on the retirement exemption is due by October 2021. In November 2020, environmental groups petitioned for review of the new ELG revisions, and Vistra subsidiaries filed a motion to intervene in support of the EPA in December 2020. The final rule is subject to the Environment Executive Order discussed above.
Coal Combustion Residuals (CCR)/Groundwater

In July 2018, the EPA published a final rule, which became effective in August 2018, that amends certain provisions of the CCR rule that the agency issued in 2015. Among other changes, the 2018 revisions extended closure deadlines to October 31, 2020, related to the aquifer location restriction and groundwater monitoring requirements. Also, in August 2018, the D.C. Circuit Court issued a decision that vacates and remands certain provisions of the 2015 CCR rule, including an applicability exemption for legacy impoundments. In December 2019, the EPA issued a proposed rule containing a revised closure deadline for unlined CCR impoundments and new procedures for seeking extensions of that revised closure deadline. We filed comments on the proposal in January 2020. In August 2020, the EPA issued a rule finalizing the December 2019 proposal, establishing a deadline of April 11, 2021 to cease receipt of waste and initiate closure at unlined CCR impoundments. The final rule allows a generation plant to seek the EPA's approval to extend this deadline if no alternative disposal capacity is available and either a conversion to comply with the CCR rule is underway or retirement will occur by either 2023 or 2028 (depending on the size of the impoundment at issue). Prior to the November 2020 deadline, we submitted applications to the EPA requesting compliance extensions under both conversion and retirement scenarios. In November 2020, environmental groups petitioned for review of this rule in the D.C. Circuit Court, and Vistra subsidiaries filed a motion to intervene in support of the EPA in December 2020. Also, in November 2020, the EPA finalized a rule that would allow an alternative liner demonstration for certain qualifying facilities. In November 2020, we submitted an alternate liner demonstration for one CCR unit at Martin Lake. In October 2020, the EPA published an advanced notice of proposed rulemaking requesting information to inform the EPA in the development of a rule to address legacy impoundments that existed prior to the 2015 CCR regulation as required by the August 2018 D.C. Circuit Court decision. We filed comments on this proposal in February 2021. The rules on revised closure deadlines and alternative liner demonstrations are subject to the Environment Executive Order discussed above.

MISO — In 2012, the Illinois Environmental Protection Agency (IEPA) issued violation notices alleging violations of groundwater standards onsite at our Baldwin and Vermilion facilities' CCR surface impoundments. These violation notices remain unresolved; however, in 2016, the IEPA approved our closure and post-closure care plans for the Baldwin old east, east, and west fly ash CCR surface impoundments. We are working towards implementation of those closure plans.

At our retired Vermilion facility, which was not subject to the EPA's 2015 CCR rule until the aforementioned D.C. Circuit Court decision in August 2018, we submitted proposed corrective action plans involving closure of two CCR surface impoundments (i.e., the old east and the north impoundments) to the IEPA in 2012, and we submitted revised plans in 2014. In May 2017, in response to a request from the IEPA for additional information regarding the closure of these Vermilion surface impoundments, we agreed to perform additional groundwater sampling and closure options and riverbank stabilizing options. In May 2018, Prairie Rivers Network filed a citizen suit in federal court in Illinois against DMG, alleging violations of the Clean Water Act for alleged unauthorized discharges. In August 2018, we filed a motion to dismiss the lawsuit. In November 2018, the district court granted our motion to dismiss and judgment was entered in our favor. Plaintiffs have appealed the judgment to the U.S. Court of Appeals for the Seventh Circuit and argument was heard in November 2020. In April 2019, PRN also filed a complaint against DMG before the IPCB, alleging that groundwater flows allegedly associated with the ash impoundments at the Vermilion site have resulted in exceedances both of surface water standards and Illinois groundwater standards dating back to 1992. This matter is in the very early stages.

In 2012, the IEPA issued violation notices alleging violations of groundwater standards at the Newton and Coffeen facilities' CCR surface impoundments. We are addressing these CCR surface impoundments in accordance with the federal CCR rule. In June 2018, the IEPA issued a violation notice for alleged seep discharges claimed to be coming from the surface impoundments at our retired Vermilion facility and that notice has since been referred to the Illinois Attorney General.

In December 2018, the Sierra Club filed a complaint with the IPCB alleging the disposal and storage of coal ash at the Coffeen, Edwards and Joppa generation facilities are causing exceedances of the applicable groundwater standards. In April 2021, we entered into a settlement agreement with the Sierra Club to resolve this matter. As part of that agreement, we agreed to accelerate the timeline for the closure of the Joppa Power Plant and will now close the plant by September 1, 2022. This matter is now fully resolved.
In July 2019, coal ash disposal and storage legislation in Illinois was enacted. The legislation addresses state requirements for the proper closure of coal ash ponds in the state of Illinois. The law tasks the IEPA and the IPCB to set up a series of guidelines, rules and permit requirements for closure of ash ponds. In March 2020, the IEPA issued its proposed rule. Under the proposed rule, coal ash impoundment owners would be required to submit a closure alternative analysis to the IEPA for the selection of the best method for coal ash remediation at a particular site. The proposed rule does not mandate closure by removal at any site. Public hearings for the proposed rule were held in August 2020 and September 2020. The rule was finalized and became effective in April 2021.

For all of the above matters, if certain corrective action measures, including groundwater treatment or removal of ash, are required at any of our coal-fueled facilities, we may incur significant costs that could have a material adverse effect on our financial condition, results of operations and cash flows. The Illinois coal ash rule was finalized in April 2021 and does not require removal. However, the rule will require us to undertake further site specific evaluations which are underway. We will not know the full range of decommissioning costs, including groundwater remediation, if any, that ultimately may be required under the Illinois rule until permit applications have been submitted and approved by the IEPA. However, the currently anticipated CCR surface impoundment and landfill closure costs, as contained in our AROs, reflect the costs of closure methods that meet the requirements and that our operations and environmental services teams believe are appropriate and protective of the environment for each location.

MISO 2015-2016 Planning Resource Auction

In May 2015, three complaints were filed at FERC regarding the Zone 4 results for the 2015-2016 planning resource auction (PRA) conducted by MISO. Dynegy is a named party in one of the complaints. The complainants, Public Citizen, Inc., the Illinois Attorney General and Southwestern Electric Cooperative, Inc. (Complainants), challenged the results of the PRA as unjust and unreasonable, requested rate relief/refunds, and requested changes to the MISO planning resource auction structure going forward. Complainants also alleged that Dynegy may have engaged in economic or physical withholding in Zone 4 constituting market manipulation in the PRA. The Independent Market Monitor for MISO (MISO IMM), which was responsible for monitoring the PRA, determined that all offers were competitive and that no physical or economic withholding occurred. The MISO IMM also stated, in a filing responding to the complaints, that there is no basis for the remedies sought by the Complainants. We filed our answer to these complaints explaining that we complied fully with the terms of the MISO tariff in connection with the PRA and disputing the allegations. The Illinois Industrial Energy Consumers filed a related complaint at FERC against MISO in June 2015 requesting prospective changes to the MISO tariff. Dynegy also responded to this complaint with respect to Dynegy's conduct alleged in the complaint.

In October 2015, FERC issued an order of nonpublic, formal investigation (the investigation) into whether market manipulation or other potential violations of FERC orders, rules and regulations occurred before or during the PRA.

In December 2015, FERC issued an order on the complaints requiring a number of prospective changes to the MISO tariff provisions effective as of the 2016-2017 planning resource auction. The order did not address the arguments of the Complainants regarding the PRA and stated that those issues remained under consideration and would be addressed in a future order.

In July 2019, FERC issued an order denying the remaining issues raised by the complaints and noted that the investigation into Dynegy was closed. FERC found that Dynegy's conduct did not constitute market manipulation and the results of the PRA were just and reasonable because the PRA was conducted in accordance with MISO's tariff. With the issuance of the order, this matter has been resolved in Dynegy's favor. The request for rehearing was denied by FERC in March 2020. The order was appealed by Public Citizen, Inc. to the D.C. Circuit Court in May 2020, and Vistra, Dynegy and Illinois Power Marketing Company intervened in the case in June 2020. The appeal remains pending.

Other Matters

We are involved in various legal and administrative proceedings and other disputes in the normal course of business, including disputes over certain gas invoices, the ultimate resolutions of which, in the opinion of management, are not anticipated to have a material effect on our results of operations, liquidity or financial condition.
v3.21.1
Equity
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
Equity EQUITY
Share Repurchase Programs

In September 2020, we announced that the Board authorized a new share repurchase program (Share Repurchase Program) under which up to $1.5 billion of our outstanding shares of common stock may be repurchased. The Share Repurchase Program became effective on January 1, 2021.

Under the Share Repurchase Program, shares of the Company's common stock may be repurchased in open market transactions at prevailing market prices, in privately negotiated transactions, pursuant to plans complying with the Exchange Act, or by other means in accordance with federal securities laws. The actual timing, number and value of shares repurchased under the Share Repurchase Program or otherwise will be determined at our discretion and will depend on a number of factors, including our capital allocation priorities, the market price of our stock, general market and economic conditions, applicable legal requirements and compliance with the terms of our debt agreements.

In the three months ended March 31, 2021, 8,658,153 shares of our common stock were repurchased under the Share Repurchase Program for approximately $175 million (including related fees and expenses) at an average price of $20.21 per share of common stock. As of March 31, 2021, approximately $1.325 billion was available for additional repurchases under the Share Repurchase Program.

Dividends

In November 2018, Vistra announced the Board adopted a dividend program which we initiated in the first quarter of 2019. Each dividend under the program is subject to declaration by the Board and, thus, may be subject to numerous factors in existence at the time of any such declaration including, but not limited to, prevailing market conditions, Vistra's results of operations, financial condition and liquidity, Delaware law and any contractual limitations.

In February 2020, April 2020, July 2020 and October 2020, the Board declared quarterly dividends of $0.135 per share that were paid in March 2020, June 2020, September 2020 and December 2020, respectively.

In February 2021, the Board declared a quarterly dividend of $0.15 per share that was paid in March 2021. In April 2021, the Board declared a quarterly dividend of $0.15 per share that will be paid in June 2021.

Dividend Restrictions

The Credit Facilities Agreement generally restricts the ability of Vistra Operations to make distributions to any direct or indirect parent unless such distributions are expressly permitted thereunder. As of March 31, 2021, Vistra Operations can distribute approximately $5.5 billion to Parent under the Credit Facilities Agreement without the consent of any party. The amount that can be distributed by Vistra Operations to Parent was partially reduced by distributions made by Vistra Operations to Parent of approximately $230 million and $110 million during the three months ended March 31, 2021 and 2020, respectively. Additionally, Vistra Operations may make distributions to Parent in amounts sufficient for Parent to make any payments required under the TRA or the Tax Matters Agreement or, to the extent arising out of Parent's ownership or operation of Vistra Operations, to pay any taxes or general operating or corporate overhead expenses. As of March 31, 2021, all of the restricted net assets of Vistra Operations may be distributed to Parent.

In addition to the restrictions under the Credit Facilities Agreement, under applicable Delaware law, we are only permitted to make distributions either out of "surplus," which is defined as the excess of our net assets above our capital (the aggregate par value of all outstanding shares of our stock), or out of net profits for the fiscal year in which the distribution is declared or the prior fiscal year.

Warrants

At the Merger Date, the Company entered into an agreement whereby the holder of each outstanding warrant previously issued by Dynegy would be entitled to receive, upon paying an exercise price of $35.00 (subject to adjustment from time to time), the number of shares of Vistra common stock that such holder would have been entitled to receive if it had held one share of Dynegy common stock at the closing of the Merger, or 0.652 shares of Vistra common stock. Accordingly, upon exercise, a warrant holder would effectively pay $53.68 (subject to adjustment of the exercise price from time to time) per share of Vistra common stock received. As of March 31, 2021, nine million warrants expiring in 2024 were outstanding. The warrants were included in equity based on their fair value at the Merger Date.
Equity
The following table presents the changes to equity for the three months ended March 31, 2021:
Common
Stock (a)
Treasury StockAdditional Paid-in CapitalRetained Earnings (Deficit)Accumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNoncontrolling Interest in SubsidiaryTotal Equity
Balance at
December 31, 2020
$$(973)$9,786 $(399)$(48)$8,371 $(10)$8,361 
Stock repurchase— (175)— — — (175)— (175)
Dividends declared on common stock— — — (74)— (74)— (74)
Effects of stock-based incentive compensation plans— — 17 — — 17 — 17 
Net income (loss)— — — (2,043)— (2,043)(2,040)
Change in accumulated other comprehensive income (loss)— — — — — 
Other— — — — — 
Balance at March 31, 2021
$$(1,148)$9,805 $(2,516)$(46)$6,100 $(7)$6,093 
________________
(a)Authorized shares totaled 1,800,000,000 at March 31, 2021. Outstanding common shares totaled 481,468,094 and 489,305,888 at March 31, 2021 and December 31, 2020, respectively. Treasury shares totaled 49,701,377 and 41,043,224 at March 31, 2021 and December 31, 2020, respectively.

The following table presents the changes to equity for the three months ended March 31, 2020:
Common
Stock (a)
Treasury StockAdditional Paid-in CapitalRetained Earnings (Deficit)Accumulated Other Comprehensive Income (Loss)Total Stockholders' EquityNoncontrolling Interest in SubsidiaryTotal Equity
Balance at
December 31, 2019
$$(973)$9,721 $(764)$(30)$7,959 $$7,960 
Dividends declared on common stock— — — (66)— (66)— (66)
Effects of stock-based incentive compensation plans— — 14 — — 14 — 14 
Net income (loss)— — — 56 — 56 (11)45 
Adoption of accounting standard— — — (4)— (4)— (4)
Change in accumulated other comprehensive income (loss)— — — — (23)(23)— (23)
Other— — (2)— — — — 
Balance at March 31, 2020
$$(973)$9,737 $(780)$(53)$7,936 $(10)$7,926 
________________
(a)Authorized shares totaled 1,800,000,000 at March 31, 2020. Outstanding common shares totaled 488,448,029 and 487,698,111 at March 31, 2020 and December 31, 2019, respectively. Treasury shares totaled 41,043,224 at both March 31, 2020 and December 31, 2019.
v3.21.1
Fair Value Measurements
3 Months Ended
Mar. 31, 2021
Fair Value Disclosures [Abstract]  
Fair Value Measurements FAIR VALUE MEASUREMENTS
We utilize several different valuation techniques to measure the fair value of assets and liabilities, relying primarily on the market approach of using prices and other market information for identical and/or comparable assets and liabilities for those items that are measured on a recurring basis. We use a mid-market valuation convention (the mid-point price between bid and ask prices) as a practical expedient to measure fair value for the majority of our assets and liabilities and use valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Our valuation policies and procedures were developed, maintained and validated by a centralized risk management group that reports to the Vistra Chief Financial Officer.

Fair value measurements of derivative assets and liabilities incorporate an adjustment for credit-related nonperformance risk. These nonperformance risk adjustments take into consideration master netting arrangements, credit enhancements and the credit risks associated with our credit standing and the credit standing of our counterparties (see Note 14 for additional information regarding credit risk associated with our derivatives). We utilize credit ratings and default rate factors in calculating these fair value measurement adjustments.

We categorize our assets and liabilities recorded at fair value based upon the following fair value hierarchy:

Level 1 valuations use quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date. Our Level 1 assets and liabilities include CME or ICE (electronic commodity derivative exchanges) futures and options transacted through clearing brokers for which prices are actively quoted. We report the fair value of CME and ICE transactions without taking into consideration margin deposits, with the exception of certain margin amounts related to changes in fair value on certain CME transactions that are legally characterized as settlement of derivative contracts rather than collateral.

Level 2 valuations utilize over-the-counter broker quotes, quoted prices for similar assets or liabilities that are corroborated by correlations or other mathematical means, and other valuation inputs such as interest rates and yield curves observable at commonly quoted intervals. We attempt to obtain multiple quotes from brokers that are active in the markets in which we participate and require at least one quote from two brokers to determine a pricing input as observable. The number of broker quotes received for certain pricing inputs varies depending on the depth of the trading market, each individual broker's publication policy, recent trading volume trends and various other factors.

Level 3 valuations use unobservable inputs for the asset or liability. Unobservable inputs are used to the extent observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. We use the most meaningful information available from the market combined with internally developed valuation methodologies to develop our best estimate of fair value. Significant unobservable inputs used to develop the valuation models include volatility curves, correlation curves, illiquid pricing delivery periods and locations and credit-related nonperformance risk assumptions. These inputs and valuation models are developed and maintained by employees trained and experienced in market operations and fair value measurements and validated by the Company's risk management group.

With respect to amounts presented in the following fair value hierarchy tables, the fair value measurement of an asset or liability (e.g., a contract) is required to fall in its entirety in one level, based on the lowest level input that is significant to the fair value measurement.
Assets and liabilities measured at fair value on a recurring basis consisted of the following at the respective balance sheet dates shown below:
March 31, 2021December 31, 2020
Level
1
Level
2
Level
3 (a)
Reclass
(b)
TotalLevel
1
Level
2
Level
3 (a)
Reclass
(b)
Total
Assets:
Commodity contracts$399 $173 $379 $64 $1,015 $452 $201 $205 $76 $934 
Interest rate swaps— 42 — — 42 — 72 — — 72 
Nuclear decommissioning trust – equity securities (c)662 — — 662 623 — — 623 
Nuclear decommissioning trust – debt securities (c)— 596 — 596 — 618 — 618 
Sub-total$1,061 $811 $379 $64 2,315 $1,075 $891 $205 $76 2,247 
Assets measured at net asset value (d):
Nuclear decommissioning trust – equity securities (c)460 433 
Total assets$2,775 $2,680 
Liabilities:
Commodity contracts$572 $212 $175 $64 $1,023 $578 $172 $183 $76 $1,009 
Interest rate swaps— 286 — — 286 — 404 — — 404 
Total liabilities$572 $498 $175 $64 $1,309 $578 $576 $183 $76 $1,413 
___________
(a)See table below for description of Level 3 assets and liabilities.
(b)Fair values are determined on a contract basis, but certain contracts result in a current asset and a noncurrent liability, or vice versa, as presented in our condensed consolidated balance sheets.
(c)The nuclear decommissioning trust investment is included in the other investments line in our condensed consolidated balance sheets. See Note 17.