Vistra Corp.

Commodity Prices

The price of electricity has a significant impact on our operating revenues and purchased power costs. Electricity prices are typically set by the cost to fuel a generation facility and the amount of fuel needed to generate one unit of electricity (Heat Rate) from the generation facility. Market Heat Rate is the implied relationship between wholesale electricity prices and the commodity price of the marginal supplier (generally natural gas plants).

Wholesale electricity prices generally move with natural gas prices, except in certain circumstances, such as when ERCOT power prices increase significantly during extreme weather events due to generation scarcity. Because natural gas prices are volatile, the operating costs of our natural gas‑fueled generation facilities can also be volatile. While changes in natural gas prices do not materially affect the cost of generation at our nuclear‑, lignite‑, and coal‑fueled facilities, such changes generally influence electricity prices and, therefore, the operating margins of these facilities. Other factors that may affect electricity prices include fuel costs, load growth, regional generation supply, weather conditions, competitive dynamics, emerging technologies, and macroeconomic and regulatory developments.

The wholesale market price of electricity divided by the market price of natural gas represents the Market Heat Rate. Market Heat Rate can be affected by a number of factors, including generation availability, mix of assets and the efficiency of the marginal supplier (generally natural gas-fueled generation facilities) in generating electricity. Our Market Heat Rate exposure is impacted by changes in the availability of generation resources, such as additions and retirements of generation facilities, and mix of generation assets. For example, increasing renewable (wind and solar) generation capacity generally depresses Market Heat Rates, particularly during periods when total demand is relatively low. However, increasing penetration of renewable generation capacity may also contribute to greater volatility of wholesale market prices independent of changes in the price of natural gas, given their intermittent nature.

Due to our exposure to variability in natural gas prices and Market Heat Rates, retail sales and hedging activities are critical to our operating results and cash flow stability. Our integrated power generation and retail electricity business provides flexibility to hedge our generation position by utilizing retail markets as an effective sales channel. As we entered the 2025 and 2026 calendar years, substantially all of our expected generation volumes for these years were hedged. This disciplined hedging strategy supports margin protection and contributes to more stable and predictable earnings.

As a result of our hedging strategy, the net income of our segments can be significantly impacted by changes in unrealized gains and losses on commodity derivative instruments which are driven by changes in forward power prices. When power prices increase or decrease compared to what our generation segments have sold forward, the generation segments recognize unrealized losses or gains, respectively. Conversely, the retail segment, which procures power from the generation segments to meet future load obligations, experiences an inverse effect on unrealized mark-to-market valuations compared to the generation segments.

The table below summarizes the average around-the-clock settled prices for the periods presented and does not necessarily reflect prices we realized or costs we incurred.

Estimated hedging levels for generation volumes in our Texas, East, and West segments as of March 31, 2026 were as follows:

Seasonality

The demand for and market prices of electricity and natural gas are affected by weather. As a result, our operating results are impacted by extreme or sustained weather conditions and may fluctuate on a seasonal basis. Typically, demand for and the price of electricity is higher in the summer and winter seasons, when the temperatures are more extreme, and the demand for and price of natural gas is also generally higher in the winter. More severe weather conditions such as heat waves or extreme winter weather have made, and may make, such fluctuations more pronounced. The pattern of this fluctuation may change depending on, among other things, the retail load served and the terms of contracts to purchase or sell electricity.

To illustrate the impact of weather variability on our operating results, the following table presents cooling and heating degree days relative to normal levels by segment in the three months ended March 31, 2026 and 2025.

(a)Reflects cooling degree or heating degree days based on Weather Services International (WSI) data. A degree day compares the average of the hourly outdoor temperatures during each day to a 65° Fahrenheit base temperature. Retail amounts represent weather data for the Dallas-Fort Worth area.