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SEC Filing Details

10-K
NRG ENERGY, INC. filed this Form 10-K on 03/01/2018
Entire Document
 

Gross Margin
The Company calculates gross margin in order to evaluate operating performance as operating revenues less cost of sales, which includes cost of fuel, other costs of sales, contract and emission credit amortization and mark-to-market for economic hedging activities.
Economic Gross Margin
In addition to gross margin, the Company evaluates its operating performance using the measure of economic gross margin, which is not a GAAP measure and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report. Economic gross margin should be viewed as a supplement to and not a substitute for the Company's presentation of gross margin, which is the most directly comparable GAAP measure. Economic gross margin is not intended to represent gross margin. The Company believes that economic gross margin is useful to investors as it is a key operational measure reviewed by the Company's chief operating decision maker. Economic gross margin is defined as the sum of energy revenue, capacity revenue and other revenue, less cost of fuels and other cost of sales.
Economic gross margin does not include mark-to-market gains or losses on economic hedging activities, contract amortization, emission credit amortization, or other operating costs.
The tables below present the composition and reconciliation of gross margin and economic gross margin which reflects the Company's current view of reporting segments for the years ended December 31, 2017 and 2016:

Year Ended December 31, 2017

Generation









(In millions except otherwise noted)
Gulf Coast

East/West(a)

Subtotal

Retail

Renewables

NRG Yield

Corporate/Eliminations

Total
Energy revenue
$
1,806


$
830


$
2,636


$


$
359


$
554


$
(1,088
)

$
2,461

Capacity revenue
266


585


851






346


(11
)

1,186

Retail revenue






6,385






3


6,388

Mark-to-market for economic hedging activities
72


(35
)

37


(4
)

(12
)



218


239

Contract amortization
14




14


(1
)



(69
)



(56
)
Other revenue(b)
186


49


235




77


178


(79
)

411

Operating revenue
2,344


1,429


3,773


6,380


424


1,009


(957
)

10,629

Cost of fuel
(994
)

(401
)

(1,395
)

(12
)

(4
)

(35
)

45


(1,401
)
Other costs of sales(c) 
(344
)

(238
)

(582
)

(4,756
)

(11
)

(28
)

1,080


(4,297
)
Mark-to-market for economic hedging activities
(20
)

11


(9
)

181






(218
)

(46
)
Contract and emission credit amortization
(30
)

(4
)

(34
)









(34
)
Gross margin
$
956


$
797


$
1,753


$
1,793


$
409


$
946


$
(50
)

$
4,851

Less: Mark-to-market for economic hedging activities, net
52


(24
)

28


177


(12
)





193

Less: Contract and emission credit amortization, net
(16
)

(4
)

(20
)

(1
)



(69
)



(90
)
Economic gross margin
$
920


$
825


$
1,745


$
1,617


$
421


$
1,015


$
(50
)

$
4,748

Business Metrics























MWh sold (thousands)(d)(e)
53,802


19,954








3,836


6,880







MWh generated (thousands)(f)
49,574


13,373








3,836


8,761







(a) Includes International, BETM and Generation eliminations.
(b) Renewables Other revenue includes $29 million of intercompany revenue to NRG Yield.
(c) Includes purchased energy, capacity and emissions credits.
(d) MWh sold excludes generation at facilities in the West and NRG Yield that generate revenue under tolling agreements.
(e) Does not include MWh of 35 thousand or MWt of 1,926 thousand for thermal sold by NRG Yield.
(f) Does not include MWh of 108 thousand or MWt of 1,926 thousand for thermal generated by NRG Yield.



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