SEC Filings

10-K
NRG ENERGY, INC. filed this Form 10-K on 02/29/2016
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Note 11 — Goodwill and Other Intangibles
Goodwill 
NRG's goodwill balance was $999 million as of December 31, 2015, and $2.6 billion as of December 31, 2014. The Company initially recorded approximately $1.7 billion of goodwill in connection with the acquisition of Texas Genco in 2006. The Company recorded $144 million of goodwill in connection with the 2010 acquisition of Green Mountain Energy, and $29 million in connection with the 2011 acquisition of Energy Plus. The Company recorded $278 million of goodwill in connection with the 2014 acquisition of EME, which is discussed further in Note 3, Business Acquisitions and Dispositions. During the year ended December 31, 2015, the Company recorded goodwill impairment charges of $1.5 billion, the details of which are discussed below. As of December 31, 2015, and 2014, NRG had approximately $620 million and $831 million, respectively, of goodwill that is deductible for U.S. income tax purposes in future periods.
NRG Texas — In connection with the annual impairment assessment, the Company performed step one of the two-step impairment test for the NRG Texas reporting unit, for which $1.7 billion of goodwill was recognized as part of the Texas Genco acquisition in 2006. The Company determined the fair value of the NRG Texas reporting unit primarily using an income approach through which the Company applied a discounted cash flow methodology to the long-term budgets for all plants in the regions. Significant inputs impacting the income approach include the Company's views of power and fuel prices for the first five-year period and the Company's view for the longer term, which were finalized in connection with the preparation of the fourth quarter financial statements, projected generation based on an hourly dispatch meant to simulate the dispatch of each unit into the power market which is impacted by power prices, fuel prices, and the physical and economic characteristics of each plant, intangible value to NRG Texas for synergies it provides to NRG's retail businesses, and the discount rate applied to cash flow projections. Under step one, the estimated fair value of the NRG Texas invested capital was 76% below its carrying value as of December 31, 2015, and the Company concluded step two was required. Based on the results of step two of the impairment test, the Company determined the carrying amount of the reporting unit was higher than the fair value, and accordingly, the Company recognized an impairment loss of $1.4 billion as of December 31, 2015.
NRG Home Solar — The Company performed the two-step impairment test as part of its annual impairment testing for the NRG Home Solar reporting unit utilizing an income approach developed through applying a discounted cash flow methodology to the long-term budget for the reporting unit. As a result, the Company determined that the carrying value of the reporting unit was higher than the fair value, and accordingly, the Company recognized an impairment loss of $125 million during the year ended December 31, 2015 to reduce the carrying value of the goodwill that was recognized in connection with acquisitions made by NRG Home Solar.
Goal Zero During the third quarter of 2015, the Company agreed to relieve the Goal Zero seller of all known and unknown claims in return for the seller's agreement to forego all contingent consideration. Concurrently, the Company determined that there was an indication of goodwill impairment and performed an impairment test. The carrying amount of the reporting unit was higher than the fair value, and accordingly, the Company recognized an impairment loss of $36 million during the third quarter of 2015 to reduce the carrying value of the goodwill that was recognized in connection with the acquisition.

Intangible Assets 

The Company's intangible assets as of December 31, 2015, primarily reflect intangible assets established with the acquisitions of various companies and are comprised of the following:
Emission Allowances — These intangibles primarily consist of SO2 and NOx emission allowances established with the 2012 GenOn acquisition and 2006 Texas Genco acquisition and also include RGGI emission credits which NRG began purchasing in 2009. These emission allowances are held-for-use and are amortized to cost of operations, with NOx allowances amortized on a straight-line basis and SO2 allowances and RGGI credits amortized based on units of production.
Energy supply contracts — Established with the acquisitions of Reliant Energy and Green Mountain Energy, these represent the fair value at the acquisition date of in-market contracts for the purchase of energy to serve retail electric customers. The contracts are amortized to cost of operations based on the expected delivery under the respective contracts.
In-market fuel (gas and nuclear) contracts — These intangibles were established with the Texas Genco acquisition in 2006 and are amortized to cost of operations over expected volumes over the life of each contract.
Customer contracts — Established with the acquisitions of Reliant Energy, Green Mountain Energy, and Northwind Phoenix, these intangibles represent the fair value at the acquisition date of contracts that primarily provide electricity to Reliant Energy's and Green Mountain Energy's C&I customers. These contracts are amortized to revenues based on expected volumes to be delivered for the portfolio.

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