Vistra Corp

Macroeconomic Conditions

Our industry is subject to uncertainties associated with the impact of rapidly evolving technology on U.S. electricity demand, as well as evolving political, regulatory and economic uncertainties.

Electricity Demand

Emerging electricity demand drivers including the rise of large-scale data centers, the electrification of oil field operations, and electric vehicle load building are contributing to a faster-paced load growth in the regions we serve. Our integrated retail electricity and power generation operations allows us to quickly respond to electricity demand changes. We are actively engaged in discussions with various counterparties regarding the potential long-term sale of power from our nuclear and gas facilities to support large-scale electricity consumers.

Our business and these types of transactions are subject to inherent risks and uncertainties, including regulatory reviews, necessary approvals, and potential legislative actions. Such factors could affect the timing and feasibility of finalizing any definitive agreements with large scale electricity consumers.

Supply Chain Constraints

Our industry continues to face ongoing supply chain constraints and labor shortages, which have reduced the availability of essential equipment and supplies for constructing new generation facilities, increased lead times for procuring materials and raised labor costs associated with maintaining our natural gas, nuclear, and coal fleet.

We are proactively managing these constraints by continuously re-evaluating the business cases and timing of our planned development projects. This has led to the deferral of some planned capital expenditures for our renewables projects and could impact the economic feasibility of additional projects. We are engaging with suppliers to secure key materials needed to maintain our existing generation facilities before future planned outages.

Russia/Ukraine Conflict

We are closely monitoring developments in the Russia and Ukraine conflict, specifically sanctions (or potential sanctions) against Russian energy exports and Russian nuclear fuel supply and enrichment activities, and actions by Russia to limit energy deliveries, which may further impact commodity prices in Europe and globally. The Prohibiting Russian Uranium Imports Act (PRUI Act) was approved by Congress, signed into law by President Biden, and took effect on August 11, 2024. The PRUI Act prohibits importation of Russian uranium; however, the Department of Energy can issue waivers (subject to decreasing annual caps) until December 31, 2027 if there is no alternate source of low-enriched uranium available to keep U.S. nuclear reactors operating or is in the national interest. Additionally, passage of the PRUI Act enabled the allocation of $2.72 billion in federal funding to ramp up production of domestic uranium fuel. On November 15, 2024, the Russian Federation temporarily suspended shipments of uranium to the U.S., stating that they would grant future export licenses on a case-by-case basis.

Our 2025 and 2026 refueling plans have not been affected by the Russia and Ukraine conflict, nor have we seen any disruption to the delivery of nuclear fuel impacting our refueling schedules. All nuclear fuel requirements for 2025 and 2026 are either in inventory or are onshore. We work with a diverse set of global nuclear fuel cycle suppliers to procure our nuclear fuel years in advance. We have nuclear fuel contracted to support all our refueling needs through 2030 without any additional Russian deliveries. We continue to take affirmative action by building strategic inventory and deploying mitigating strategies in our procurement portfolio to ensure we can secure the nuclear fuel needed to continue to operate our nuclear facilities through potential Russian supply disruption.

Moss Landing 300 Incident

On January 16, 2025, we detected a fire at our Moss Landing 300 MW energy storage facility at the Moss Landing Power Plant site (the Moss Landing Incident) that resulted in ceasing operations at all facilities at the Moss Landing complex until the fire was contained. No injuries occurred due to the fire or the Company's response. The Moss Landing complex includes two other battery facilities and a gas plant. The gas plant returned to service in February, but the two battery facilities remain offline as we continue to investigate the cause of the fire. We expect the Moss Landing 350 MW battery to return to service at some point later this year. There is less certainty about the return to service regarding the Moss Landing 100 MW battery. We will know more after the investigation of the cause of the Moss Landing Incident is complete. As of March 31, 2025, the net book value of the Moss Landing 100 facility was approximately $170 million.

As a result of the damage caused by the Moss Landing Incident, during the three months ended March 31, 2025, we wrote-off the net book value of Moss Landing 300 of approximately $400 million to depreciation expense and moved the asset to the Asset Closure segment as we have no plans to return the Moss Landing 300 facility to operations (see Notes 6 and 16 to the Financial Statements). We have recognized expense of approximately $7 million for costs incurred to respond to the Moss Landing Incident through March 31, 2025. As of March 31, 2025, we accrued approximately $70 million in obligations related to the Moss Landing Incident including approximately $30 million for anticipated air and soil monitoring requirements and $40 million for the expected costs of decommissioning the Moss Landing 300 structure, which includes demolition of the structure, removing and disposing of the batteries, and fulfilling land reclamation obligations (see Note 13 to the Financial Statements). Additional costs incurred from the Moss Landing Incident include loss of revenue from the facilities being offline and may include litigation costs and penalties under contracts. We are currently unable to estimate the full impact the Moss Landing Incident will have on us as our estimate will evolve as demolition progresses.

We have filed insurance claims against applicable insurance policies with combined business interruption and property loss limits of $500 million, net of deductibles. As of March 31, 2025, the insurance receivable asset related to expenses we believe are probable of recovery from property damage insurance was $425 million recorded as offsets to the costs and expenses incurred in other noncurrent assets on the condensed consolidated balance sheet. Given uncertainty in timing of insurance recoveries and additional expenses that could be incurred related to the fire, we cannot predict the full impacts this event will have on our 2025 financial statements.

Martin Lake Unit 1 Incident

On November 27, 2024, we experienced a fire at Unit 1 of our Martin Lake facility in ERCOT, an 815 MW unit. We wrote-off the net book value of Unit 1 of the Martin Lake facility of less than $1 million to depreciation expense in December 2024. We currently expect the unit to return to service in late 2025. We incurred approximately $30 million in cash capital expenditures during the three-months ended March 31, 2025 to restore the unit to service. Cash capital expenditures to return the unit to service in 2025 are expected to be approximately $270 million. We expect to recover a majority of the expenditures associated with the Martin Lake Unit 1 through property damage insurance and receive additional business interruption proceeds. However, given uncertainty in timing of insurance recoveries and asset restart date, we cannot predict the net impacts these events will have on our 2025 financial statements.

Acquisition of Noncontrolling Interest

On September 18, 2024 (the UPA Transaction Date), Vistra Operations and Vistra Vision Holdings I LLC, an indirect subsidiary of Vistra Operations (Vistra Vision Holdings), entered into separate Unit Purchase Agreements (as amended, the UPAs) with each of Nuveen Asset Management, LLC (Nuveen) and Avenue Capital Management II, L.P. (Avenue), pursuant to which Vistra Vision Holdings agreed to purchase each of Nuveen's and Avenue's combined 15% noncontrolling interest in Vistra Vision for approximately $3.2 billion in cash (collectively, the Transaction). The Transaction closed on December 31, 2024 and Vistra Vision Holdings now owns 100% of the equity interests in Vistra Vision. See Notes 2 and 9 to the Financial Statements for additional information.

Planned Gas-Fueled Dispatchable Power in ERCOT

In May 2024, we announced our intention to add up to 2,000 MW of dispatchable, natural gas-fueled electricity capacity in west, central, and north Texas consisting of the following projects:

•Building up to 860 MW of advanced simple-cycle peaking plants to be located in west Texas to support the increasing power needs of the region, including the state's oil and gas industry.

•Repowering the coal-fueled Coleto Creek Power Plant near Goliad, Texas, set to retire in 2027 to comply with EPA rules, as a natural-gas fueled plant with up to 600 MW of capacity.

•Completing upgrades at existing natural gas-fueled plants that will add more than 500 MW of summer capacity and 100 MW of winter capacity.

Our announced plan is based on market reforms that policymakers passed in the 2023 Texas legislative session, which ERCOT and the PUCT are currently implementing. These market reforms are focused on grid reliability and proper market signals. If successfully implemented, they could offer the regulatory framework necessary for Vistra to confidently make the long-term investments in these capacity projects. In addition, in July 2024, we filed applications with the PUCT under the Texas Energy Fund loan program seeking financing for the 860 MW of new advanced simple-cycle peaking plants referenced above. Both projects were selected for due diligence as part of the Texas Energy Fund loan program, which is ongoing. An invitation to due diligence does not mean an applicant is awarded a loan. Vistra's decision to move forward with the new west Texas gas plant projects are contingent upon supportive market reforms, approval of our Texas Energy Fund loan application, and other factors, including state and federal environmental regulations and long-term wholesale trends that continue to support gas generation.

Merger with Energy Harbor

On March 1, 2024 (Merger Date), pursuant to a transaction agreement dated March 6, 2023 (Transaction Agreement), (i) Vistra Operations transferred certain of its subsidiary entities into Vistra Vision, (ii) Black Pen Inc., a wholly owned subsidiary of Vistra, merged with and into Energy Harbor, (iii) Energy Harbor became a wholly owned subsidiary of Vistra Vision, and (iv) affiliates of Nuveen and Avenue exchanged a portion of the Energy Harbor shares held by Nuveen and Avenue for a 15% equity interest of Vistra Vision (collectively, Energy Harbor Merger). The Energy Harbor Merger combined Energy Harbor's and Vistra's nuclear and retail businesses and certain Vistra Zero renewables and energy storage facilities to provide diversification and scale across multiple carbon-free technologies (dispatchable and renewables/storage) and the retail business. The cash consideration for Energy Harbor Merger was funded by Vistra Operations using a combination of cash on hand and borrowings under the Commodity-Linked Facility, the Receivables Facility, and the Repurchase Facility. See Note 2 to the Financial Statements for additional information.

Nuclear Plant License Renewal

In 2023, the Perry Nuclear Plant filed a license extension application to operate through 2046, an additional 20 years beyond the existing license. A decision from the NRC is expected in late 2025.

Inflation Reduction Act of 2022 (IRA)

In August 2022, the U.S. enacted the IRA, which, among other things, implements substantial new and modified energy tax credits, including recognizing the value of existing carbon-free nuclear power by providing for a nuclear PTC, a solar PTC, and a first-time stand-alone battery storage investment tax credit. The IRA also implements a 15% corporate alternative minimum tax (CAMT) on book income of certain large corporations, and a 1% excise tax on net stock repurchases. The section 45U nuclear PTC is available to existing nuclear facilities from 2024 through 2032 and provides a federal tax credit of up to $15 per MWh, subject to phase out as power prices increase above $25 per MWh (each subject to annual inflation adjustments). The Company accounts for transferable ITCs and PTCs we expect to receive by analogy to the grant model within International Accounting Standards 20, Accounting for Government Grants and Disclosures of Government Assistance. As discussed in Note 1 to the Financial Statements in our 2024 Form 10-K, we recognized transferable nuclear PTC revenues of $545 million in the year ended December 31, 2024. U.S. Treasury regulations are expected to further define the scope of the legislation in many important respects, including critical guidance interpreting the nuclear PTC. This guidance could have a material impact on our estimate and would be reflected as a change in estimate in the period in which the guidance is received. We do not expect Vistra to be subject to the CAMT in the 2025 tax year as it applies only to corporations with a three-year average annual adjusted financial statement income in excess of $1 billion. We have taken the CAMT and relevant extensions or expansions of existing tax credits applicable to projects in our immediate development pipeline into account when forecasting cash taxes.