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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2010 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
(Exact Name of Registrant as Specified in Its Charter)
Delaware (State or Other Jurisdiction of Incorporation or Organization of All Registrants) | 58-2574140 (I.R.S. Employer Identification No.) | |
1000 Main Street, Houston, Texas 77002 (Address of Principal Executive Offices, Including Zip Code, of All Registrants) | (832) 357-3000 (Registrant’s telephone number, including area code) |
GenOn Americas Generation, LLC | o Yes þ No | |||
GenOn Mid-Atlantic, LLC | o Yes þ No |
GenOn Americas Generation, LLC | þ Yes o No | |||
GenOn Mid-Atlantic, LLC | þ Yes o No |
GenOn Americas Generation, LLC | o Yes o No | |||
GenOn Mid-Atlantic, LLC | o Yes o No |
GenOn Americas Generation, LLC | o Yes o No | |||
GenOn Mid-Atlantic, LLC | o Yes o No |
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GenOn Americas Generation, LLC | þ | |
GenOn Mid-Atlantic, LLC | þ |
Large accelerated filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | |||||
GenOn Americas Generation, LLC | o | o | þ | o | ||||
GenOn Mid-Atlantic, LLC | o | o | þ | o |
GenOn Americas Generation, LLC | o Yes þ No | |||
GenOn Mid-Atlantic, LLC | o Yes þ No |
Registrant | Parent | |
GenOn Americas Generation, LLC | GenOn Americas, Inc. | |
GenOn Mid-Atlantic, LLC | GenOn North America, LLC |
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PART I | ||||||||
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PART II | ||||||||
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GenOn Americas Generation, LLC | 39 | |||||||
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91 | ||||||||
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PART III | ||||||||
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PART IV | ||||||||
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EX-3.2A1 | ||||||||
EX-3.2A2 | ||||||||
EX-3.3A1 | ||||||||
EX-3.3A2 | ||||||||
EX-21.1 | ||||||||
EX-31.1A1 | ||||||||
EX-31.1A2 | ||||||||
EX-31.2A3 | ||||||||
EX-31.2A4 | ||||||||
EX-32.1A1 | ||||||||
EX-32.1A2 | ||||||||
EX-32.2A3 | ||||||||
EX-32.2A4 |
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AB 32 | California’s Global Warming Solutions Act. | |
ancillary services | Services that ensure reliability and support the transmission of electricity from generation sites to customer loads. Such services include regulation service, reserves and voltage support. | |
Administrative Services Agreement | Management, personnel and services agreement with GenOn Energy Services, effective January 3, 2006. | |
Bankruptcy Court | United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division. | |
baseload generating units | Units designed to satisfy minimum baseload requirements of the system and produce electricity at an essentially constant rate and run continuously. | |
CAIR | Clean Air Interstate Rule. | |
CAISO | California Independent System Operator. | |
CAMR | Clean Air Mercury Rule. | |
capacity | Energy that could have been generated at continuous full-power operation during the period. | |
CARB | California Air Resources Board. | |
CenterPoint | CenterPoint Energy, Inc. and its subsidiaries, on and after August 31, 2002, and Reliant Energy, Incorporated and its subsidiaries, prior to August 31, 2002. | |
CERCLA | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980. | |
CFTC | Commodity Futures Trading Commission. | |
Clean Air Act | Federal Clean Air Act. | |
Clean Water Act | Federal Water Pollution Control Act. | |
Climate Protection Act | Massachusetts’ Global Warming Solutions Act. | |
CO2 | Carbon dioxide. | |
Companies | GenOn Americas Generation, LLC, GenOn Mid-Atlantic, LLC and their subsidiaries. | |
D.C. Circuit | The United States Court of Appeals for the District of Columbia Circuit. | |
Dodd-Frank Act | The Dodd-Frank Wall Street Reform and Consumer Protection Act. | |
EBITDA | Earnings before interest, taxes, depreciation and amortization. | |
EPA | United States Environmental Protection Agency. | |
EPC | Engineering, procurement and construction. | |
Exchange Act | Securities Exchange Act of 1934, as amended. | |
Exchange Ratio | Right of Mirant Corporation stockholders to receive 2.835 shares of common stock of RRI Energy, Inc. in the Merger. | |
FASB | Financial Accounting Standards Board. |
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(Continued)
FCM | Forward Capacity Market administered by ISO-NE to procure capacity resources to meet forecasted demand and reserve requirements. | |
FERC | Federal Energy Regulatory Commission. | |
GAAP | United States generally accepted accounting principles. | |
GenOn | GenOn Energy, Inc. (formerly known as RRI Energy, Inc.) and, except where the context indicates otherwise, its subsidiaries, after giving effect to the Merger. | |
GenOn Americas | GenOn Americas, Inc. (formerly known as Mirant Americas, Inc.). | |
GenOn Americas Generation | GenOn Americas Generation, LLC (formerly known as Mirant Americas Generation, LLC). | |
GenOn Bowline | GenOn Bowline, LLC (formerly known as Mirant Bowline, LLC). | |
GenOn California North | GenOn California North, LLC (formerly known as Mirant California, LLC). | |
GenOn Canal | GenOn Canal, LLC (formerly known as Mirant Canal, LLC). | |
GenOn Chalk Point | GenOn Chalk Point, LLC (formerly known as Mirant Chalk Point, LLC). | |
GenOn Delta | GenOn Delta, LLC (formerly known as Mirant Delta, LLC). | |
GenOn Energy Holdings | GenOn Energy Holdings, Inc. (formerly known as Mirant Corporation) and, except where the context indicates otherwise, its subsidiaries. | |
GenOn Energy Management | GenOn Energy Management, LLC (formerly known as Mirant Energy Trading, LLC). | |
GenOn Energy Services | GenOn Energy Services, LLC (formerly known as Mirant Services, LLC). | |
GenOn Escrow | GenOn Escrow Corp. | |
GenOn Kendall | GenOn Kendall, LLC (formerly known as Mirant Kendall, LLC). | |
GenOn Lovett | GenOn Lovett, LLC, owner of the former Lovett generating facility, which was shut down on April 19, 2008, and has been demolished (formerly known as Mirant Lovett, LLC). | |
GenOn Marsh Landing | GenOn Marsh Landing, LLC (formerly known as Mirant Marsh Landing, LLC). | |
GenOn MD Ash Management | GenOn MD Ash Management, LLC (formerly known as Mirant MD Ash Management, LLC). | |
GenOn Mid-Atlantic | GenOn Mid-Atlantic, LLC (formerly known as Mirant Mid-Atlantic, LLC) and, except where the context indicates otherwise, its subsidiaries. | |
GenOn North America | GenOn North America, LLC (formerly known as Mirant North America, LLC). |
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(Continued)
GenOn Potomac River | GenOn Potomac River, LLC (formerly known as Mirant Potomac River, LLC). | |
GenOn Potrero | GenOn Potrero, LLC (formerly known as Mirant Potrero, LLC). | |
HAP | Hazardous Air Pollutant. | |
Hudson Valley Gas | Hudson Valley Gas Corporation. | |
IBEW | International Brotherhood of Electrical Workers. | |
intermediate generating units | Units designed to satisfy system requirements that are greater than baseload and less than peaking. | |
IRC | Internal Revenue Code of 1986, as amended. | |
ISO | Independent system operator. | |
ISO-NE | Independent System Operator-New England. | |
LIBOR | London InterBank Offered Rate. | |
LTSA | Long-term service agreement. | |
MACT | Maximum achievable control technology. | |
MADEP | Massachusetts’ Department of Environmental Protection. | |
MAEEA | Massachusetts’ Executive Office of Energy and Environmental Affairs. | |
Maryland Act | Greenhouse Gas Reduction Act of 2009. | |
MDE | Maryland Department of the Environment. | |
Merger | The merger completed on December 3, 2010 pursuant to the Merger Agreement. | |
Merger Agreement | The agreement by and among Mirant Corporation, RRI Energy, Inc. and RRI Energy Holdings, Inc. dated as of April 11, 2010. | |
Mirant | GenOn Energy Holdings, Inc. (formerly known as Mirant Corporation) and, except where the context indicates otherwise, its subsidiaries. | |
MW | Megawatt. | |
MWh | Megawatt hour. | |
NAAQS | National ambient air quality standard. | |
NERC | North American Electric Reliability Council. | |
net capacity factor | Actual net production of electricity as a percentage of net generating capacity to produce electricity. | |
net generating capacity | Net summer capacity. | |
NOL | Net operating loss. | |
NOV | Notice of violation. | |
NOx | Nitrogen oxides. |
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(Continued)
NPCC | Northeast Power Coordinating Council. | |
NPDES | National pollutant discharge elimination system. | |
NYISO | New York Independent System Operator. | |
NYMEX | New York Mercantile Exchange. | |
OTC | Over-the-counter. | |
Ozone Season | The period between May 1 and September 30 of each year. | |
peaking generating units | Units designed to satisfy demand requirements during the periods of greatest or peak load on the system. | |
PG&E | Pacific Gas & Electric Company. | |
PJM | PJM Interconnection, LLC. | |
Plan | The plan of reorganization that was approved in conjunction with Mirant Corporation’s and the Companies’ emergence from bankruptcy protection on January 3, 2006. | |
Power Sale, Fuel Supply and Services Agreement | Power sale, fuel supply and services agreement with Mirant Americas Energy Marketing, LP. effective January 3, 2006. As of February 1, 2006, the agreement was transferred to GenOn Energy Management. | |
PPA | Power purchase agreement. | |
PUHCA | Public Utility Holding Company Act of 2005. | |
reserve margin | Excess capacity over peak demand. | |
RFC | Reliability First Corporation. | |
RGGI | Regional Greenhouse Gas Initiative. | |
RMR | Reliability-must-run. | |
RPM | Model utilized by PJM to meet load serving entities’ forecasted capacity obligations through a forward-looking commitment of capacity resources. | |
RRI Energy | RRI Energy, Inc., which changed its name to GenOn Energy, Inc. in connection with the Merger. | |
RTO | Regional Transmission Organization. | |
SCR | Selective catalytic reduction emissions controls. | |
scrubbers | Flue gas desulfurization emissions controls. | |
SEC | United States Securities and Exchange Commission. | |
Securities Act | Securities Act of 1933, as amended. | |
SEMA | Southeastern Massachusetts zone within ISO-NE. | |
SO2 | Sulfur dioxide. |
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(Continued)
spark spread | The difference between the price received for electricity generated compared to the market price of the natural gas required to produce the electricity. | |
SWD | Surface water discharge. | |
Transport Rule | The EPA’s Proposed Federal Implementation Plan To Reduce Interstate Transport of Fine Particulate Matter and Ozone, which would replace the CAIR. | |
UWUA | Utility Workers Union of America. | |
VaR | Value at risk. | |
Virginia DEQ | Virginia Department of Environmental Quality. | |
WCI | Western Climate Initiative. | |
WECC | Western Electric Coordinating Council. |
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• | our ability to integrate successfully the businesses following the Merger or realize cost savings and any other synergies as a result of the Merger; | |
• | our ability to enter into intermediate and long-term contracts to sell power or to hedge economically our expected future generation of power, and to obtain adequate supply and delivery of fuel for our generating facilities, at our required specifications and on terms and prices acceptable to us; | |
• | failure to obtain adequate fuel supply, including from curtailments of the transportation of natural gas; | |
• | changes in market conditions, including developments in the supply, demand, volume and pricing of electricity and other commodities in the energy markets, including efforts to reduce demand for electricity and to encourage the development of renewable sources of electricity, and the extent and timing of the entry of additional competition in our markets; | |
• | deterioration in the financial condition of our counterparties, including affiliates, and the failure of such parties to pay amounts owed to us or to perform obligations or services due to us beyond collateral posted; | |
• | the failure of our generating facilities to perform as expected, including outages for unscheduled maintenance or repair; | |
• | hazards customary to the power generation industry and the possibility that we may not have adequate insurance to cover losses resulting from such hazards or the inability of our insurers to provide agreed upon coverage; | |
• | our failure to utilize new or advancements in power generation technologies; | |
• | strikes, union activity or labor unrest; | |
• | our ability to develop or recruit capable leaders and our ability to retain or replace the services of key employees; | |
• | weather and other natural phenomena, including hurricanes and earthquakes; | |
• | the cost and availability of emissions allowances; | |
• | the curtailment of operations and reduced prices for electricity resulting from transmission constraints; | |
• | the ability of GenOn Americas Generation to execute the business plan in northern California, including entering into new tolling arrangements for its existing generating facilities; | |
• | our lack of geographic diversification of revenue sources resulting in concentrated exposure to the PJM market; | |
• | war, terrorist activities, cyberterrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss; |
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• | our failure to provide a safe working environment for our employees and visitors thereby increasing our exposure to additional liability, loss of productive time, other costs and a damaged reputation; | |
• | poor economic and financial market conditions, including impacts on financial institutions and other current and potential counterparties, and negative impacts on liquidity in the power and fuel markets in which we hedge economically and transact; | |
• | increased credit standards, margin requirements, market volatility or other market conditions that could increase our obligations to post collateral beyond amounts that are expected, including additional collateral costs associated with OTC hedging activities as a result of new or proposed laws, rules and regulations governing derivative financial instruments (such as the Dodd-Frank Act and related pending rulemaking proceedings); | |
• | our inability to access effectively the OTC and exchange-based commodity markets or changes in commodity market conditions and liquidity, including as a result of new or proposed laws, rules and regulations governing derivative financial instruments (such as the Dodd-Frank Act and related regulations), which may affect our ability to engage in asset management and, for GenOn Americas Generation, proprietary trading and fuel oil management activities as expected, or may result in material gains or losses from open positions; | |
• | volatility in our gross margin as a result of our accounting for derivative financial instruments used in our asset management and GenOn Americas Generation’s proprietary trading and fuel oil management activities and volatility in our cash flow from operations resulting from working capital requirements, including collateral, to support our asset management and GenOn Americas Generation’s proprietary trading and fuel oil management activities; | |
• | legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the industry of generating, transmitting and distributing electricity (the electricity industry); changes in state, federal and other regulations affecting the electricity industry (including rate and other regulations); changes in tax laws and regulations to which we and our subsidiaries are subject; and changes in, or changes in the application of, environmental and other laws and regulations to which we and our subsidiaries and affiliates are or could become subject; | |
• | more stringent environmental laws and regulations (including the cumulative effect of many such regulations) and the disposition of environmental litigation that restrict our ability or render it uneconomic to operate our assets, including regulations and litigation related to air emissions; | |
• | increased regulation that limits our access to adequate water supplies and landfill options needed to support power generation or that increases the costs of cooling water and handling, transporting and disposing of ash and other byproducts; | |
• | price mitigation strategies employed by ISOs or RTOs that reduce our revenue and may result in a failure to compensate our generating units adequately for all of their costs; | |
• | legal and political challenges to or changes in the rules used to calculate payments for capacity, energy and ancillary services or the establishment of bifurcated markets, incentives or other market design changes that give preferential treatment to new generating facilities over exiting generating facilities; | |
• | the disposition of pending or threatened litigation, including environmental litigation; | |
• | the inability of GenOn Americas Generation’s operating subsidiaries to generate sufficient cash to support their operations; | |
• | the ability of lenders under GenOn’s revolving credit facility to perform their obligations; | |
• | GenOn Americas Generation’s consolidated indebtedness and the possibility that GenOn Americas Generation or its subsidiaries may incur additional indebtedness in the future; | |
• | restrictions on the ability of GenOn Americas Generation’s subsidiaries to pay dividends, make distributions or otherwise transfer funds to GenOn Americas Generation, including restrictions on |
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GenOn Mid-Atlantic contained in its operating lease documents, which may affect GenOn Americas Generation’s ability to access the cash flows of those subsidiaries to make debt service and other payments; |
• | failure to comply with provisions of GenOn Mid-Atlantic’s operating leases, GenOn Americas Generation’s debt and affiliates’ loan agreements and debt may lead to a breach and, if not remedied, result in an event of default thereunder, which could result in such lessors, lenders and debt holders exercising remedies, limit access to needed liquidity and damage our reputation and relationships with financial institutions; | |
• | covenants contained in our affiliates’ credit facilities, debt and leases that restrict our current and future operations, particularly our ability to respond to changes or take certain actions that may be in our long-term best interests; and | |
• | our and our affiliates’ ability to borrow additional funds and access capital markets. |
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Item 1. | Business. |
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![](https://capedge.com/proxy/10-K/0000950123-11-020718/h79786h7978601.gif)
(1) | GenOn Power Generation, LLC’s subsidiaries include former RRI Energy generating facilities acquired as a result of the Merger. |
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Operating | ||||||||||||||||||||||||
Business Segments | Revenues | Gross Margin(1) | Income (Loss) | |||||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||||
Eastern PJM | $ | 1,704 | (2) | 81 | % | $ | 1,006 | 80 | % | $ | (778 | ) | 416 | % | ||||||||||
Northeast | 234 | 11 | % | 97 | 8 | % | (33 | ) | 18 | % | ||||||||||||||
California | 144 | 7 | % | 121 | 10 | % | 26 | (14 | )% | |||||||||||||||
Energy Marketing | 1,868 | 89 | % | 27 | 2 | % | 16 | (9 | )% | |||||||||||||||
Other Operations | — | — | % | — | — | % | (34 | ) | 18 | % | ||||||||||||||
Eliminations | (1,845 | ) | (88 | )% | — | — | % | 616 | (329 | )% | ||||||||||||||
Total | $ | 2,105 | 100 | % | $ | 1,251 | 100 | % | $ | (187 | ) | 100 | % | |||||||||||
(1) | Gross margin excludes depreciation and amortization. | |
(2) | For 2010, we recorded $1.3 billion in revenues from a single counterparty (PJM) which represented 63% of our consolidated revenues. The revenues generated from this counterparty are included primarily in our Eastern PJM segment. |
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Net | ||||||||||||
Generating | Primary | |||||||||||
Capacity | Fuel | NERC | ||||||||||
Facility | (MW)(1) | Holding | Type | Dispatch Type | Location | Region | ||||||
Chalk Point | 2,401 | Own | Coal/Dual/Oil | Baseload/ Intermediate/ Peaking | Maryland | RFC | ||||||
Dickerson | 844 | Own/ Lease(2) | Coal/Dual/Oil | Baseload/Peaking | Maryland | RFC | ||||||
Morgantown | 1,477 | Own/ Lease(2) | Coal/Oil | Baseload/Peaking | Maryland | RFC | ||||||
Potomac River | 482 | Own | Coal | Baseload/ Intermediate | Virginia | RFC | ||||||
Total Eastern PJM | 5,204 | |||||||||||
(1) | Total MW amounts reflect net summer capacity. | |
(2) | We lease a 100% interest in the Dickerson and Morgantown baseload units through facility lease agreements expiring in 2029 and 2034, respectively. We own 307 MW and 248 MW of peaking capacity at the Dickerson and Morgantown generating facilities, respectively. |
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Net | ||||||||||||
Generating | Primary | |||||||||||
Capacity | Fuel | NERC | ||||||||||
Facility | (MW)(1) | Holding | Type | Dispatch Type | Location | Region | ||||||
Bowline | 1,139 | Own | Dual | Intermediate | New York | NPCC | ||||||
Canal | 1,126 | Own | Dual/Oil | Intermediate | Massachusetts | NPCC | ||||||
Kendall | 256 | Own | Natural Gas/Oil/Dual | Baseload/ Peaking | Massachusetts | NPCC | ||||||
Martha’s Vineyard | 14 | Own | Oil | Peaking | Massachusetts | NPCC | ||||||
Total Northeast | 2,535 | |||||||||||
(1) | Total MW amounts reflect net summer capacity. |
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Net | ||||||||||||||
Generating | Primary | |||||||||||||
Capacity | Fuel | NERC | ||||||||||||
Facility | (MW)(1) | Holding | Type | Dispatch Type | Location | Region | ||||||||
Contra Costa | 674 | Own | Natural gas | Intermediate | California | WECC | ||||||||
Pittsburg | 1,311 | Own | Natural gas | Intermediate | California | WECC | ||||||||
Potrero(2) | 362 | Own | Natural gas/Oil | Intermediate/ Peaking | California | WECC | ||||||||
Total California | 1,985 | (2) | ||||||||||||
(1) | Total MW amounts reflect net summer capacity. | |
(2) | We shut down the Potrero facility on February 28, 2011. The total net generating capacity for the California segment per the table excludes the Potrero. See below for further discussion. |
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• | Reliability of our future cash flows. Our large coal generating fleet is exposed to the relationship between the cost of production and the price of the power produced. This relationship, commonly referred to as the “dark spread,” fluctuates with the cost of coal and the price of power. We hedge economically a substantial portion of our Eastern PJM coal-fired baseload generation and certain of our other generation. We hedge our output at varying levels several years in advance because the price of electricity is volatile. In addition, we enter into contracts to hedge economically our future needs of coal, which is our primary fuel. | |
• | Locational advantages. Many of GenOn Americas Generation’s generating facilities are located in or near metropolitan areas, including Boston, New York City, San Francisco and Washington, D.C. GenOn Mid-Atlantic’s generating facilities are located near Washington, D.C. The supply-demand balance in some of these markets is forecasted to become constrained, though at a slower rate than forecasted before the economic downturn, and increasingly dependent on power imported from other regions to |
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sustain reliability. Although transmission projects are planned in these markets to bring capacity from neighboring regions, the timing of these projects is subject to delays and uncertainty. |
• | Room to expand at our existing sites. We have sufficient room and infrastructure at many of our existing sites to increase significantly our generating capacity when market rules and conditions warrant. In addition to reduced costs for developing new generation at existing sites because of our ownership of the land and our ownership ofand/or access to infrastructure, regulators frequently prefer that new generation be added at existing sites (brownfield development) rather than at new sites (greenfield development). We continue to consider these and other investment opportunities. |
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Number of | Contract | |||||||||
Employees | Expiration | |||||||||
Union | Location | Covered | Date | |||||||
Eastern PJM Region | ||||||||||
IBEW Local 1900(1) | Maryland and Virginia | 489 | 6/1/2015 | |||||||
Northeast Region | ||||||||||
IBEW Local 503(2) | New York | 30 | 4/30/2013 | |||||||
UWUA Local 369 | Cambridge, Massachusetts | 30 | 2/28/2013 | |||||||
UWUA Local 369(3) | Sandwich, Massachusetts | 26 | 5/31/2011 | |||||||
California | ||||||||||
IBEW Local 1245(4) | California | 112 | 10/31/2013 | |||||||
Total GenOn Americas Generation | 687 | |||||||||
(1) | During the second quarter of 2010, GenOn entered into a new collective bargaining agreement with its employees represented by IBEW Local 1900. The previous collective bargaining agreement expired on June 1, 2010. As part of the new agreement, GenOn is required to provide additional retirement contributions through the defined contribution plan currently sponsored by GenOn Energy Services, increases in pay and other benefits. In addition, the new agreement provides for a change to the postretirement healthcare benefit plan covering Mid-Atlantic union employees to eliminate employer-provided healthcare subsidies through a gradual phase-out. | |
(2) | In August 2010, GenOn entered into a new collective bargaining agreement with its employees represented by IBEW Local 503. The previous collective bargaining agreement expired on June 1, 2008. After reaching impasse in its negotiations with the union, GenOn imposed terms effective January 28, 2009, under which the employees worked without disruption. The new agreement is substantially the same as the imposed contract. | |
(3) | In June 2009, the UWUA Local 480 representing the employees at the Canal generating facility in Sandwich, Massachusetts, merged with the UWUA Local 369. The UWUA Local 369 also represents GenOn |
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Americas Generation’s employees at the Kendall generating facility in a separate bargaining unit and each facility is covered by its own collective bargaining agreement. | ||
(4) | As a result of the shut down of GenOn Americas Generation’s Potrero generating facility, GenOn will be downsizing its bargaining unit workforce consistent with an agreement negotiated with Local 1245. |
• | The corporate governance guidelines and standing board committee charters for GenOn; | |
• | Our annual reports onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K and amendments to these reports; and | |
• | The code of ethics and business conduct for GenOn. |
Item 1A. | Risk Factors. |
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• | the failure of market regulators to develop and maintain efficient mechanisms to compensate merchant generators for the value of providing capacity needed to meet demand; | |
• | actions by regulators, ISOs, RTOs and other bodies that may artificially modify supply and demand levels and prevent capacity and energy prices from rising to the level necessary for recovery of our costs, our investment and an adequate return on our investment; | |
• | legal and political challenges to or changes in the rules used to calculate capacity payments in the markets in which we operate or the establishment of bifurcated markets, incentives, other market design changes or bidding requirements that give preferential treatment to new generating facilities over existing generating facilities or otherwise reduce capacity payments to existing generating facilities; | |
• | the ability of wholesale purchasers of power to make timely payment for energy or capacity, which may be adversely affected by factors such as retail rate caps, refusals by regulators to allow utilities to recover fully their wholesale power costs and investments through rates, catastrophic losses and losses from investments by utilities in unregulated businesses; | |
• | increases in prevailing market prices for fuel oil, coal, natural gas and emissions allowances that may not be reflected in prices we receive for sales of energy; | |
• | increases in electricity supply as a result of actions of our current competitors or new market entrants, including the development of new generating facilities or alternative energy sources that may be able to produce electricity less expensively than our generating facilities and improvements in transmission that allow additional supply to reach our markets; | |
• | increases in credit standards, margin requirements, market volatility or other market conditions that could increase our obligations to post collateral beyond amounts that are expected, including additional collateral costs associated with OTC hedging activities as a result of OTC regulations adopted pursuant to the Dodd-Frank Act; | |
• | decreases in energy consumption resulting from demand-side management programs such as automated demand response, which may alter the amount and timing of consumer energy use; | |
• | the competitive advantages of certain competitors, including continued operation of older power facilities in strategic locations after recovery of historic capital costs from ratepayers; |
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• | existing or future regulation of our markets by the FERC, ISOs and RTOs, including any price limitations and other mechanisms to address some of the price volatility or illiquidity in these markets or the physical stability of the system; | |
• | regulatory policies of state agencies that affect the willingness of our customers to enter into long-term contracts generally, and contracts for capacity in particular; | |
• | changes in the rate of growth in electricity usage as a result of such factors as national and regional economic conditions and implementation of conservation programs; | |
• | seasonal variations in energy and natural gas prices, and capacity payments; and | |
• | seasonal fluctuations in weather, in particular abnormal weather conditions. |
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• | the output and efficiency levels at which those generating facilities perform; | |
• | interruptions in fuel supply and quality of available fuel; | |
• | disruptions in the delivery of electricity; | |
• | adverse zoning; | |
• | breakdowns or equipment failures (whether a result of age or otherwise); | |
• | violations of our permit requirements or changes in the terms of, or revocation of, permits; | |
• | releases of pollutants and hazardous substances to air, soil, surface water or groundwater; | |
• | ability to transport and dispose of coal ash at reasonable prices; | |
• | curtailments or other interruptions in natural gas supply; | |
• | shortages of equipment or spare parts; | |
• | labor disputes, including strikes, work stoppages and slowdowns; | |
• | the aging workforce at certain of our facilities; | |
• | operator errors; | |
• | curtailment of operations because of transmission constraints; | |
• | failures in the electricity transmission system which may cause large energy blackouts; | |
• | implementation of unproven technologies in connection with environmental improvements; and | |
• | catastrophic events such as fires, explosions, floods, earthquakes, hurricanes or other similar occurrences. |
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• | they may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; | |
• | a substantial portion of our cash flows from operations must be dedicated to the payment of rent and principal and interest on our indebtedness and will not be available for other purposes, including our working capital, capital expenditures and other general purposes; | |
• | the debt service requirements of our indebtedness could make it difficult for us to satisfy or refinance our financial obligations; | |
• | they may limit our flexibility in planning for and reacting to changes in our industry; | |
• | they may place us at a competitive disadvantage compared to other, less leveraged competitors; and | |
• | we may be more vulnerable in a downturn in general economic conditions or in our business and we may be unable to carry out capital expenditures that are important to our long-term growth or necessary to comply with environmental regulations. |
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Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
Item 3. | Legal Proceedings. |
Item 4. | Removed and Reserved by the SEC. |
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Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Item 6. | Selected Financial Data. |
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||
Operating revenues | $ | 2,105 | $ | 2,309 | $ | 3,188 | $ | 2,041 | $ | 3,257 | ||||||||||
Income (loss) from continuing operations | (396 | ) | 476 | 1,198 | (68 | ) | 1,197 | |||||||||||||
Net income (loss) | $ | (396 | ) | $ | 476 | $ | 1,198 | $ | (60 | ) | $ | 1,200 |
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Unrealized gains (losses) included in operating revenues | $ | 72 | $ | (2 | ) | $ | 840 | $ | (652 | ) | $ | 711 | ||||||||
Unrealized (gains) losses included in cost of fuel, electricity and other products | 89 | (49 | ) | 54 | (28 | ) | 102 | |||||||||||||
Total | $ | (17 | ) | $ | 47 | $ | 786 | $ | (624 | ) | $ | 609 | ||||||||
• | $565 million of impairment losses related to our Dickerson and Potomac River generating facilities. See note 3(d) to our consolidated financial statements for further information on these impairments. | |
• | $9 million in write-off of unamortized debt issuance costs. See note 4 to our consolidated financial statements for further information on the debt transactions. |
• | $221 million of impairment losses related to our Potomac River generating facility and intangible assets related to our Potrero and Contra Costa generating facilities. See note 3(d) to our consolidated financial statements for further information on these impairments. |
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• | $175 million impairment loss related to our Lovett generating facility. |
• | $120 million impairment loss related to suspended construction at our Bowline generating facility; and | |
• | $244 million gain from a New York property tax settlement. |
December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 7,813 | $ | 7,517 | $ | 8,552 | $ | 5,936 | $ | 7,177 | ||||||||||
Current portion of long-term debt | 1,389 | 74 | 45 | 141 | 141 | |||||||||||||||
Long-term debt, net of current portion | 866 | 2,556 | 2,630 | 2,952 | 3,131 | |||||||||||||||
Liabilities subject to compromise | — | — | — | — | 34 | |||||||||||||||
Member’s equity | $ | 3,585 | $ | 2,829 | $ | 2,384 | $ | 1,169 | $ | 1,644 |
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||
Operating revenues | $ | 1,704 | $ | 1,778 | $ | 2,279 | $ | 1,133 | $ | 1,901 | ||||||||||
Net income (loss) | $ | (781 | ) | $ | 344 | $ | 1,217 | $ | 169 | $ | 922 |
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Unrealized gains (losses) included in operating revenues | $ | 80 | $ | 136 | $ | 685 | $ | (474 | ) | $ | 519 | |||||||||
Unrealized (gains) losses included in cost of fuel, electricity and other products | 73 | (8 | ) | 9 | 5 | 35 | ||||||||||||||
Total | $ | 7 | $ | 144 | $ | 676 | $ | (479 | ) | $ | 484 | |||||||||
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• | $1.153 billion of impairment losses related to our Dickerson and Potomac River generating facilities and goodwill recorded at the GenOn Mid-Atlantic registrant on its standalone balance sheet. The goodwill impairment loss and related goodwill balance are eliminated upon consolidation at GenOn North America and are not reflected on the consolidated balance sheet of GenOn Americas Generation. See note 3(d) to our consolidated financial statements for further information on these impairments. |
• | $385 million of impairment losses related to our Potomac River generating facility and goodwill recorded at the GenOn Mid-Atlantic registrant on its standalone balance sheet. See note 3(d) to our consolidated financial statements for further information on these impairments. |
December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 4,626 | $ | 5,807 | $ | 5,620 | $ | 4,008 | $ | 3,947 | ||||||||||
Current portion of long-term debt | 4 | 4 | 3 | 3 | 3 | |||||||||||||||
Long-term debt, net of current portion | 18 | 21 | 25 | 27 | 31 | |||||||||||||||
Member’s equity | $ | 3,900 | $ | 4,886 | $ | 4,583 | $ | 3,407 | $ | 3,292 |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
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2011(1) | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||
Power | 91 | % | 78 | % | 37 | % | 35 | % | — | % | ||||||||||
Fuel | 89 | % | 77 | % | 51 | % | — | % | — | % |
(1) | Percentages represent the period from February through December 2011. |
• | the risks of consolidation of financial institutions and more restrictive capital constraints and regulation, which could have a negative effect on our ability to hedge economically with creditworthy counterparties; and | |
• | the risks of implementation of the Dodd-Frank Act on our ability to hedge economically our generation, including potentially reducing liquidity in the energy and commodity markets and, if we are required to clear such transactions on exchanges or meet other requirements, by significantly increasing the collateral costs associated with such activities. |
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2011 | 2012 | |||||||
(in millions) | ||||||||
Maryland Healthy Air Act | $ | 155 | $ | — | ||||
Other environmental | 7 | 9 | ||||||
Maintenance | 52 | 40 | ||||||
Other construction | 52 | 4 | ||||||
Total | $ | 266 | $ | 53 | ||||
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Realized gross margin | $ | 1,268 | $ | 1,552 | $ | (284 | ) | |||||
Unrealized gross margin | (17 | ) | 47 | (64 | ) | |||||||
Total gross margin (excluding depreciation and amortization) | 1,251 | 1,599 | (348 | ) | ||||||||
Operating expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 390 | 355 | 35 | |||||||||
Operations and maintenance—affiliate | 293 | 290 | 3 | |||||||||
Depreciation and amortization | 199 | 142 | 57 | |||||||||
Impairment losses | 565 | 221 | 344 | |||||||||
Gain on sales of assets, net | (9 | ) | (22 | ) | 13 | |||||||
Total operating expenses, net | 1,438 | 986 | 452 | |||||||||
Operating income (loss) | (187 | ) | 613 | (800 | ) | |||||||
Other expense, net: | ||||||||||||
Interest expense, net | 200 | 136 | 64 | |||||||||
Other, net | 9 | 1 | 8 | |||||||||
Total other expense, net | 209 | 137 | 72 | |||||||||
Net income (loss) | $ | (396 | ) | $ | 476 | $ | (872 | ) | ||||
• | a decrease of $337 million in realized value of hedges. In 2010 and 2009, realized value of hedges was $292 million and $629 million, respectively, which reflects the amount by which the settlement value |
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of power contracts exceeded market prices for power, offset in part by the amount by which contract prices for fuel exceeded market prices for fuel; and |
• | a decrease of $25 million in contracted and capacity primarily as a result of a decrease in capacity prices in Eastern PJM, offset in part by an increase in ancillary services revenue and additional megawatts of capacity sold in Eastern PJM; partially offset by | |
• | an increase of $78 million in energy, primarily as a result of an increase in energy in Eastern PJM because of an increase in the average settlement price for power, a decrease in the cost of emissions allowances and higher generation volumes, offset in part by a decrease in realized gross margin from proprietary trading and fuel oil management activities in Energy Marketing and an increase in the average price of fuel. |
• | unrealized losses of $17 million in 2010, which included $387 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period, substantially offset by a $370 million net increase in the value of hedge and proprietary trading contracts for future periods. The increase in value was primarily related to decreases in forward power and natural gas prices, offset in part by the recognition of many of our coal agreements at fair value beginning in the second quarter of 2010; and | |
• | unrealized gains of $47 million in 2009, which included a $686 million net increase in the value of hedge and trading contracts for future periods primarily related to decreases in forward power and natural gas prices, substantially offset by $639 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period. |
• | an increase of $344 million in impairment losses. In 2010, we recognized $565 million in impairment losses related to our Dickerson and Potomac River generating facilities. In 2009, we recognized $221 million in impairment losses related to our Potomac River generating facility and intangible assets related to our Potrero and Contra Costa generating facilities. See note 3(d) to our consolidated financial statements for additional information related to our impairment reviews; | |
• | an increase of $57 million in depreciation and amortization expense primarily as a result of the scrubbers at our Maryland generating facilities that were placed in service in December 2009; | |
• | an increase of $38 million in operations and maintenance expense primarily related to the following: |
• | an increase of $32 million related to the recognition of a liability associated with our commitment to reduce particulate emissions at our Potomac River generating facility as a part of the agreement with the City of Alexandria, Virginia because the planned capital investment would not be recovered in future periods based on the current projected cash flows for the Potomac River generating facility and the full impairment of the facility in 2010. See note 3(d) to our consolidated financial statements for additional information related to our impairment reviews; and | |
• | an increase of $27 million primarily as a result of an increase in costs related to the operation of the scrubbers at our Maryland generating facilities and the Montgomery County, Maryland CO2 levy imposed on our Dickerson generating facility beginning in May 2010, offset in part by a decrease in planned maintenance costs in 2010 compared to 2009; offset in part by | |
• | a decrease of $18 million primarily related to lower property taxes because of a lower assessed value for the Lovett generating facility which was demolished in 2009 and a decrease in shutdown costs associated with this generating facility; and |
• | a decrease of $13 million in gain on sales of assets primarily related to emissions allowances sold to third parties in 2009. |
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2010 | ||||||||||||||||||||||||
Eastern | Energy | |||||||||||||||||||||||
PJM | Northeast | California | Marketing | Eliminations | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Energy | $ | 384 | $ | 19 | $ | — | $ | 32 | $ | — | $ | 435 | ||||||||||||
Contracted and capacity | 335 | 85 | 121 | — | — | 541 | ||||||||||||||||||
Realized value of hedges | 280 | 12 | — | — | — | 292 | ||||||||||||||||||
Total realized gross margin | 999 | 116 | 121 | 32 | — | 1,268 | ||||||||||||||||||
Unrealized gross margin | 7 | (19 | ) | — | (5 | ) | — | (17 | ) | |||||||||||||||
Total gross margin(1) | $ | 1,006 | $ | 97 | $ | 121 | $ | 27 | $ | — | $ | 1,251 | ||||||||||||
2009 | ||||||||||||||||||||||||
Eastern | Energy | |||||||||||||||||||||||
PJM | Northeast | California | Marketing | Eliminations | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Energy | $ | 170 | $ | 23 | $ | — | $ | 167 | $ | (3 | ) | $ | 357 | |||||||||||
Contracted and capacity | 351 | 93 | 122 | — | — | 566 | ||||||||||||||||||
Realized value of hedges | 586 | 43 | — | — | — | 629 | ||||||||||||||||||
Total realized gross margin | 1,107 | 159 | 122 | 167 | (3 | ) | 1,552 | |||||||||||||||||
Unrealized gross margin | 144 | 16 | — | (113 | ) | — | 47 | |||||||||||||||||
Total gross margin(1) | $ | 1,251 | $ | 175 | $ | 122 | $ | 54 | $ | (3 | ) | $ | 1,599 | |||||||||||
(1) | Gross margin excludes depreciation and amortization. |
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
Eastern PJM | 34 | % | 30 | % | 4 | % | ||||||
Northeast | 9 | % | 10 | % | (1 | )% | ||||||
California | 3 | % | 5 | % | (2 | )% | ||||||
Energy Marketing | N/A | N/A | N/A | |||||||||
Other Operations | N/A | N/A | N/A | |||||||||
Total | 20 | % | 19 | % | 1 | % |
Increase/ | Increase/ | |||||||||||||||
2010 | 2009 | (Decrease) | (Decrease) | |||||||||||||
(in gigawatt hours) | ||||||||||||||||
Eastern PJM: | ||||||||||||||||
Baseload | 14,271 | 13,500 | 771 | 6 | % | |||||||||||
Intermediate | 1,120 | 363 | 757 | 209 | % | |||||||||||
Peaking | 218 | 92 | 126 | 137 | % | |||||||||||
Total Eastern PJM | 15,609 | 13,955 | 1,654 | 12 | % | |||||||||||
Northeast: | ||||||||||||||||
Baseload | 1,485 | 1,425 | 60 | 4 | % | |||||||||||
Intermediate | 395 | 673 | (278 | ) | (41 | )% | ||||||||||
Peaking | 7 | 3 | 4 | 133 | % | |||||||||||
Total Northeast | 1,887 | 2,101 | (214 | ) | (10 | )% | ||||||||||
California: | ||||||||||||||||
Intermediate | 519 | 1,050 | (531 | ) | (51 | )% | ||||||||||
Peaking(1) | (1 | ) | 4 | (5 | ) | (125 | )% | |||||||||
Total California | 518 | 1,054 | (536 | ) | (51 | )% | ||||||||||
Total | 18,014 | 17,110 | 904 | 5 | % | |||||||||||
(1) | Negative amounts denote net energy used by the generating facility. |
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 384 | $ | 170 | $ | 214 | ||||||
Contracted and capacity | 335 | 351 | (16 | ) | ||||||||
Realized value of hedges | 280 | 586 | (306 | ) | ||||||||
Total realized gross margin | 999 | 1,107 | (108 | ) | ||||||||
Unrealized gross margin | 7 | 144 | (137 | ) | ||||||||
Total gross margin (excluding depreciation and amortization) | 1,006 | 1,251 | (245 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 493 | 434 | 59 | |||||||||
Depreciation and amortization | 141 | 98 | 43 | |||||||||
Impairment losses | 1,153 | 385 | 768 | |||||||||
Gain on sales of assets, net | (3 | ) | (14 | ) | 11 | |||||||
Total operating expenses, net | 1,784 | 903 | 881 | |||||||||
Operating income (loss) | $ | (778 | ) | $ | 348 | $ | (1,126 | ) | ||||
• | a decrease of $306 million in realized value of hedges. In 2010 and 2009, realized value of hedges was $280 million and $586 million, respectively, which reflects the amount by which the settlement value of power contracts exceeded market prices for power, partially offset by the amount by which contract prices for coal exceeded market prices for coal; and | |
• | a decrease of $16 million in contracted and capacity primarily related to lower average capacity prices, offset in part by an increase in ancillary services revenue and additional megawatts of capacity sold in 2010; partially offset by |
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• | an increase of $214 million in energy, primarily as a result of an increase in the average settlement price for power, a decrease in the cost of emissions allowances and higher generation volumes, offset in part by an increase in the average price of fuel. |
• | unrealized gains of $7 million in 2010, which included a $326 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and natural gas prices, offset in part by the recognition of many of our coal agreements at fair value beginning in the second quarter of 2010. The increase in value was substantially offset by $319 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period; and | |
• | unrealized gains of $144 million in 2009, which included a $633 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and natural gas prices, partially offset by $489 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period. |
• | an increase of $768 million in impairment losses. In 2010, we recognized $1.2 billion in impairment losses, including $616 million related to the write-off of goodwill recorded at GenOn Mid-Atlantic on its standalone balance sheet and $537 million related to our Dickerson and Potomac River generating facilities. In 2009, we recognized $385 million in impairment losses, including $202 million related to our Potomac River generating facility and $183 million related to goodwill recorded at our GenOn Mid-Atlantic registrant on its standalone balance sheet. The goodwill does not exist at GenOn Americas Generation’s consolidated balance sheet. As such, the goodwill impairment loss and related goodwill balance are eliminated upon consolidation at GenOn North America. See note 3(d) to our consolidated financial statements for additional information related to our impairment reviews; | |
• | an increase of $43 million in depreciation and amortization expense primarily as a result of the scrubbers at our Maryland generating facilities that were placed in service in December 2009, offset in part by a decrease in the carrying value of the Potomac River generating facility as a result of the impairment charge taken in the fourth quarter of 2009; | |
• | an increase of $32 million related to the recognition of a liability associated with our commitment to reduce particulate emissions at our Potomac River generating facility as part of the agreement with the City of Alexandria, Virginia because the planned capital investment would not be recovered in future periods based on the current projected cash flows for the Potomac River generating facility and the full impairment of the facility in 2010. See note 3(d) to our consolidated financial statements for additional information related to our impairment reviews; | |
• | an increase of $27 million in operations and maintenance expense primarily as a result of an increase in costs related to the operation of the scrubbers at our Maryland generating facilities and the Montgomery County, Maryland CO2 levy imposed on our Dickerson generating facility beginning in May 2010, offset in part by a decrease in planned maintenance costs in 2010 compared to 2009; and | |
• | a decrease of $11 million in gain on sales of assets primarily related to emissions allowances sold to third parties in 2009. |
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 19 | $ | 23 | $ | (4 | ) | |||||
Contracted and capacity | 85 | 93 | (8 | ) | ||||||||
Realized value of hedges | 12 | 43 | (31 | ) | ||||||||
Total realized gross margin | 116 | 159 | (43 | ) | ||||||||
Unrealized gross margin | (19 | ) | 16 | (35 | ) | |||||||
Total gross margin (excluding depreciation and amortization) | 97 | 175 | (78 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 108 | 126 | (18 | ) | ||||||||
Depreciation and amortization | 23 | 18 | 5 | |||||||||
Gain on sales of assets, net | (1 | ) | (4 | ) | 3 | |||||||
Total operating expenses, net | 130 | 140 | (10 | ) | ||||||||
Operating income (loss) | $ | (33 | ) | $ | 35 | $ | (68 | ) | ||||
• | a decrease of $31 million in realized value of hedges. In 2010 and 2009, realized value of hedges was $12 million and $43 million, respectively, which reflects the amount by which the settlement value of power contracts exceeded market prices for power, partially offset by the amount by which contract prices for fuel exceeded market prices for fuel; | |
• | a decrease of $8 million in contracted and capacity primarily related to decreases in capacity prices and megawatts of capacity sold; and | |
• | a decrease of $4 million in energy primarily as a result of a decrease in generation volumes from our oil-fired intermediate units at our Canal generating facility as a result of transmission upgrades in 2009, a decrease in the average settlement price for power and unplanned outages in 2010, offset in part by an increase in generation volumes at our Bowline generating facility. |
• | unrealized losses of $19 million in 2010 as a result of the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period; and | |
• | unrealized gains of $16 million in 2009, which included a $65 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and fuel prices, partially offset by $49 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period. |
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• | a decrease of $18 million primarily related to lower property taxes because of a lower assessed value for the Lovett generating facility which was demolished in 2009 and a decrease in shutdown costs associated with this generating facility; partially offset by | |
• | an increase of $5 million in depreciation and amortization expense primarily as a result of revisions to the useful lives of our assets as a result of a depreciation study completed in the first quarter of 2010; and | |
• | a decrease of $3 million in gain on sales of assets primarily related to emissions allowances sold to third parties in 2009. |
Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | — | $ | — | $ | — | ||||||
Contracted and capacity | 121 | 122 | (1 | ) | ||||||||
Realized value of hedges | — | — | — | |||||||||
Total realized gross margin | 121 | 122 | (1 | ) | ||||||||
Unrealized gross margin | — | — | — | |||||||||
Total gross margin (excluding depreciation and amortization) | 121 | 122 | (1 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 72 | 74 | (2 | ) | ||||||||
Depreciation and amortization | 28 | 22 | 6 | |||||||||
Impairment losses | — | 14 | (14 | ) | ||||||||
Gain on sales of assets, net | (5 | ) | — | (5 | ) | |||||||
Total operating expenses, net | 95 | 110 | (15 | ) | ||||||||
Operating income | $ | 26 | $ | 12 | $ | 14 | ||||||
• | a decrease of $14 million of impairment losses related to our Potrero and Contra Costa generating facilities during 2009. See note 3(d) to our consolidated financial statements for additional information related to our impairments; and |
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• | a increase of $5 million in gain on sales of assets primarily related to land and emissions reduction credits sold to GenOn Marsh Landing. See note 6 to our consolidated financial statements for additional information related to the sales of land and emissions reduction credits; partially offset by | |
• | an increase of $6 million in depreciation expense primarily as a result of a decrease in the useful life of our Potrero generating facility because of the settlement with the City and County of San Francisco executed in the third quarter of 2009. See note 10 to our consolidated financial statements for additional information on the GenOn Potrero settlement with the City and County of San Francisco. |
Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 32 | $ | 167 | $ | (135 | ) | |||||
Contracted and capacity | — | — | — | |||||||||
Realized value of hedges | — | — | — | |||||||||
Total realized gross margin | 32 | 167 | (135 | ) | ||||||||
Unrealized gross margin | (5 | ) | (113 | ) | 108 | |||||||
Total gross margin (excluding depreciation and amortization) | 27 | 54 | (27 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 10 | 11 | (1 | ) | ||||||||
Depreciation and amortization | 1 | 1 | — | |||||||||
Total operating expenses, net | 11 | 12 | (1 | ) | ||||||||
Operating income | $ | 16 | $ | 42 | $ | (26 | ) | |||||
• | unrealized losses of $5 million in 2010, which included $50 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period, substantially offset by a $45 million net increase in the value of contracts for future periods; and | |
• | unrealized losses of $113 million in 2009, which included $101 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period and a $12 million net decrease in the value of contracts for future periods. |
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating Expenses: | ||||||||||||
Depreciation and amortization | $ | 6 | $ | 3 | $ | 3 | ||||||
Impairment losses | 28 | 5 | 23 | |||||||||
Total operating expenses, net | 34 | 8 | 26 | |||||||||
Operating loss | $ | (34 | ) | $ | (8 | ) | $ | (26 | ) | |||
• | an increase of $23 million in impairment losses. In 2010, we recognized $28 million in impairment losses for capitalized interest recorded at GenOn North America related to our Dickerson and Potomac River generating facilities. In 2009, we recognized $5 million in impairment losses recognized for capitalized interest recorded at GenOn North America related to the Potomac River generating facility; and | |
• | an increase of $3 million in depreciation and amortization expense primarily as a result of the depreciation of interest capitalized at GenOn North America related to the scrubbers at our Maryland generating facilities that were placed in service in December 2009. |
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Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Realized gross margin | $ | 1,552 | $ | 1,343 | $ | 209 | ||||||
Unrealized gross margin | 47 | 786 | (739 | ) | ||||||||
Total gross margin (excluding depreciation and amortization) | 1,599 | 2,129 | (530 | ) | ||||||||
Operating expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 355 | 372 | (17 | ) | ||||||||
Operations and maintenance—affiliate | 290 | 285 | 5 | |||||||||
Depreciation and amortization | 142 | 136 | 6 | |||||||||
Impairment losses | 221 | — | 221 | |||||||||
Gain on sales of assets, net | (22 | ) | (38 | ) | 16 | |||||||
Total operating expenses, net | 986 | 755 | 231 | |||||||||
Operating income | 613 | 1,374 | (761 | ) | ||||||||
Other expense, net: | ||||||||||||
Interest expense, net | 136 | 173 | (37 | ) | ||||||||
Other, net | 1 | 3 | (2 | ) | ||||||||
Total other expense, net | 137 | 176 | (39 | ) | ||||||||
Net income | $ | 476 | $ | 1,198 | $ | (722 | ) | |||||
• | an increase of $422 million in realized value of hedges. In 2009, realized value of hedges was $629 million, which reflects the amount by which the settlement value of power contracts exceeded market prices for power, partially offset by the amount by which contract prices for fuel exceeded market prices for fuel. In 2008, realized value of hedges was $207 million, which reflects the amount by which market prices for fuel exceeded contract prices for fuel, partially offset by the amount by which market prices for power exceeded the settlement value of power contracts; and | |
• | an increase of $13 million in contracted and capacity primarily related to higher capacity prices in 2009; partially offset by | |
• | a decrease of $226 million in energy, primarily as a result of a decrease in power prices, an increase in the cost of emissions allowances, including $45 million to comply with the RGGI in 2009, and lower generation volumes. The lower generation volumes were a result of lower demand and decreases in natural gas prices, which at times made it uneconomic for certain of our coal-fired units to generate. The decreases in energy gross margin were partially offset by a decrease in the price of fuel. |
• | unrealized gains of $47 million in 2009, which included a $686 million net increase in the value of hedge and trading contracts for future periods primarily related to decreases in forward power and natural gas prices, partially offset by $639 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period; and |
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• | unrealized gains of $786 million in 2008, which included a $460 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and natural gas prices and $326 million associated with the reversal of previously recognized unrealized losses from power and fuel contracts that settled during the period. |
• | an increase of $221 million of impairment losses related to our Potomac River generating facility and intangible assets related to our Potrero and Contra Costa generating facilities during 2009. See note 3(d) to our consolidated financial statements for additional information related to our impairments; and | |
• | a decrease of $16 million in gain on sales of assets, net in 2009; partially offset by | |
• | a decrease of $12 million in operations and maintenance expense. The decrease in operations and maintenance expense was primarily a result of the shutdown of the Lovett generating facility in April 2008 and a decrease in maintenance costs associated with planned outages at our Mid-Atlantic generating facilities during 2009 compared to 2008. |
2009 | ||||||||||||||||||||||||
Eastern | Energy | |||||||||||||||||||||||
PJM | Northeast | California | Marketing | Eliminations | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Energy | $ | 170 | $ | 23 | $ | — | $ | 167 | $ | (3 | ) | $ | 357 | |||||||||||
Contracted and capacity | 351 | 93 | 122 | — | — | 566 | ||||||||||||||||||
Realized value of hedges | 586 | 43 | — | — | — | 629 | ||||||||||||||||||
Total realized gross margin | 1,107 | 159 | 122 | 167 | (3 | ) | 1,552 | |||||||||||||||||
Unrealized gross margin | 144 | 16 | — | (113 | ) | — | 47 | |||||||||||||||||
Total gross margin(1) | $ | 1,251 | $ | 175 | $ | 122 | $ | 54 | $ | (3 | ) | $ | 1,599 | |||||||||||
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2008 | ||||||||||||||||||||||||
Eastern | Energy | |||||||||||||||||||||||
PJM | Northeast | California | Marketing | Eliminations | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Energy | $ | 517 | $ | 73 | $ | 4 | $ | (17 | ) | $ | 6 | $ | 583 | |||||||||||
Contracted and capacity | 340 | 90 | 123 | — | — | 553 | ||||||||||||||||||
Realized value of hedges | 181 | 26 | — | — | — | 207 | ||||||||||||||||||
Total realized gross margin | 1,038 | 189 | 127 | (17 | ) | 6 | 1,343 | |||||||||||||||||
Unrealized gross margin | 676 | (10 | ) | — | 120 | — | 786 | |||||||||||||||||
Total gross margin(1) | $ | 1,714 | $ | 179 | $ | 127 | $ | 103 | $ | 6 | $ | 2,129 | ||||||||||||
(1) | Gross margin excludes depreciation and amortization. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
Eastern PJM | 30 | % | 33 | % | (3 | )% | ||||||
Northeast | 10 | % | 13 | % | (3 | )% | ||||||
California | 5 | % | 4 | % | 1 | % | ||||||
Energy Marketing | N/A | N/A | N/A | |||||||||
Other Operations | N/A | N/A | N/A | |||||||||
Total | 19 | % | 21 | % | (2 | )% |
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Increase/ | Increase/ | |||||||||||||||
2009 | 2008 | (Decrease) | (Decrease) | |||||||||||||
(in gigawatt hours) | ||||||||||||||||
Eastern PJM: | ||||||||||||||||
Baseload | 13,500 | 14,350 | (850 | ) | (6 | )% | ||||||||||
Intermediate | 363 | 489 | (126 | ) | (26 | )% | ||||||||||
Peaking | 92 | 160 | (68 | ) | (43 | )% | ||||||||||
Total Eastern PJM | 13,955 | 14,999 | (1,044 | ) | (7 | )% | ||||||||||
Northeast: | ||||||||||||||||
Baseload | 1,425 | 1,131 | 294 | 26 | % | |||||||||||
Intermediate | 673 | 1,919 | (1,246 | ) | (65 | )% | ||||||||||
Peaking | 3 | 5 | (2 | ) | (40 | )% | ||||||||||
Total Northeast | 2,101 | 3,055 | (954 | ) | (31 | )% | ||||||||||
California: | ||||||||||||||||
Intermediate | 1,050 | 868 | 182 | 21 | % | |||||||||||
Peaking | 4 | 21 | (17 | ) | (81 | )% | ||||||||||
Total California | 1,054 | 889 | 165 | 19 | % | |||||||||||
Total | 17,110 | 18,943 | (1,833 | ) | (10 | )% | ||||||||||
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Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 170 | $ | 517 | $ | (347 | ) | |||||
Contracted and capacity | 351 | 340 | 11 | |||||||||
Realized value of hedges | 586 | 181 | 405 | |||||||||
Total realized gross margin | 1,107 | 1,038 | 69 | |||||||||
Unrealized gross margin | 144 | 676 | (532 | ) | ||||||||
Total gross margin (excluding depreciation and amortization) | 1,251 | 1,714 | (463 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 434 | 412 | 22 | |||||||||
Depreciation and amortization | 98 | 92 | 6 | |||||||||
Impairment losses | 385 | — | 385 | |||||||||
Gain on sales of assets, net | (14 | ) | (8 | ) | (6 | ) | ||||||
Total operating expenses, net | 903 | 496 | 407 | |||||||||
Operating income | $ | 348 | $ | 1,218 | $ | (870 | ) | |||||
• | an increase of $405 million in realized value of hedges. In 2009, realized value of hedges was $586 million, which reflects the amount by which the settlement value of power contracts exceeded market prices for power, partially offset by the amount by which contract prices for coal that we purchased under long-term agreements exceeded market prices for coal. In 2008, realized value of hedges was $181 million, which reflects the amount by which market prices for coal exceeded contract prices for coal that we purchased under long-term agreements, partially offset by the amount by which market prices for power exceeded the settlement value of power contracts; and | |
• | an increase of $11 million in contracted and capacity primarily related to higher capacity prices in 2009; partially offset by | |
• | a decrease of $347 million in energy, primarily as a result of a decrease in power prices, an increase in the cost of emissions allowances, including $41 million to comply with the RGGI in 2009, and lower generation volumes. The lower generation volumes were a result of lower demand and decreases in natural gas prices, which at times made it uneconomic for certain of our coal-fired units to generate. These decreases were partially offset by a decrease in the price of coal. |
• | unrealized gains of $144 million in 2009, which included a $633 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and natural gas prices, partially offset by $489 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period; and | |
• | unrealized gains of $676 million in 2008, which included a $399 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and natural gas |
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prices and $277 million associated with the reversal of previously recognized unrealized losses from power and fuel contracts that settled during the period. |
• | an increase of $385 million in impairment losses recognized in the fourth quarter of 2009, including $202 million related to our Potomac River generating facility and $183 million related to goodwill recorded at our GenOn Mid-Atlantic registrant on its standalone balance sheet. The goodwill does not exist at GenOn Americas Generation’s consolidated balance sheet. As such, the goodwill impairment loss and related goodwill balance are eliminated upon consolidation at GenOn North America. See note 3(d) to our consolidated financial statements for additional information related to our impairment of the Potomac River generating facility and GenOn Mid-Atlantic’s impairment of its goodwill; | |
• | an increase of $22 million in operations and maintenance expense primarily as a result of higher labor costs related to increased staffing levels in preparation for the operation of our scrubbers and an increase in Maryland property taxes, offset in part by a decrease in maintenance costs associated with a decrease in planned outages; and | |
• | an increase of $6 million in depreciation and amortization expense primarily related to pollution control equipment for NOx emissions that was placed in service in 2008 as part of our compliance with the Maryland Healthy Air Act; partially offset by | |
• | an increase of $6 million in gain on sales of assets primarily related to emissions allowances sold to third parties. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 23 | $ | 73 | $ | (50 | ) | |||||
Contracted and capacity | 93 | 90 | 3 | |||||||||
Realized value of hedges | 43 | 26 | 17 | |||||||||
Total realized gross margin | 159 | 189 | (30 | ) | ||||||||
Unrealized gross margin | 16 | (10 | ) | 26 | ||||||||
Total gross margin (excluding depreciation and amortization) | 175 | 179 | (4 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 126 | 167 | (41 | ) | ||||||||
Depreciation and amortization | 18 | 19 | (1 | ) | ||||||||
Gain on sales of assets, net | (4 | ) | (30 | ) | 26 | |||||||
Total operating expenses, net | 140 | 156 | (16 | ) | ||||||||
Operating income | $ | 35 | $ | 23 | $ | 12 | ||||||
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• | a decrease of $50 million in energy, primarily as a result of a 31% decrease in generation volumes because of transmission upgrades which reduced the need for the Canal generating facility to operate, a decrease in power prices, an increase in the cost of emissions allowances, including $4 million to comply with the RGGI in 2009 and the shutdown of the Lovett generating facility in 2008 offset in part by lower fuel costs; partially offset by | |
• | an increase of $17 million in realized value of hedges. In 2009, realized value of hedges was $43 million, which reflects the amount by which the settlement value of power contracts exceeded market prices for power, partially offset by the amount by which contract prices for fuel exceeded market prices for fuel. In 2008, realized value of hedges was $26 million, which reflects the amount by which market prices for fuel exceeded contract prices for fuel and the amount by which the settlement value of power contracts exceeded market prices for power. |
• | unrealized gains of $16 million in 2009, which included a $65 million net increase in the value of hedge contracts for future periods primarily related to decreases in forward power and fuel prices, partially offset by $49 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period; and | |
• | unrealized losses of $10 million in 2008, which included $6 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period and a $4 million net decrease in the value of hedge contracts for future periods primarily related to increases in forward power and fuel prices. |
• | a decrease of $41 million in operations and maintenance expense primarily related to the shutdown of the Lovett generating facility in April 2008 and lower maintenance expense as a result of planned outages at the Canal generating facility in 2008, partially offset by | |
• | a decrease of $26 million in gain on sales of assets primarily related to emissions allowances sold to third parties. |
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Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | — | $ | 4 | $ | (4 | ) | |||||
Contracted and capacity | 122 | 123 | (1 | ) | ||||||||
Total realized gross margin | 122 | 127 | (5 | ) | ||||||||
Unrealized gross margin | — | — | — | |||||||||
Total gross margin (excluding depreciation and amortization) | 122 | 127 | (5 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 74 | 68 | 6 | |||||||||
Depreciation and amortization | 22 | 23 | (1 | ) | ||||||||
Impairment losses | 14 | — | 14 | |||||||||
Gain on sales of assets, net | — | (7 | ) | 7 | ||||||||
Total operating expenses, net | 110 | 84 | 26 | |||||||||
Operating income | $ | 12 | $ | 43 | $ | (31 | ) | |||||
• | an impairment loss of $14 million on intangible assets related to our Potrero and Contra Costa generating facilities during 2009. See note 3(d) to our consolidated financial statements for additional information related to our impairment reviews; and | |
• | a decrease of $7 million in gain on sales of assets primarily related to emissions allowances sold to third parties. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Gross Margin: | ||||||||||||
Energy | $ | 167 | $ | (17 | ) | $ | 184 | |||||
Total realized gross margin | 167 | (17 | ) | 184 | ||||||||
Unrealized gross margin | (113 | ) | 120 | (233 | ) | |||||||
Total gross margin (excluding depreciation and amortization) | 54 | 103 | (49 | ) | ||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance | 11 | 10 | 1 | |||||||||
Depreciation and amortization | 1 | 1 | — | |||||||||
Total operating expenses, net | 12 | 11 | 1 | |||||||||
Operating income | $ | 42 | $ | 92 | $ | (50 | ) | |||||
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• | an increase of $184 million in energy primarily as a result of $112 million increase from our fuel oil management activities and a $72 million increase from proprietary trading activities. The increase from our fuel oil management activities includes a $25 million gain from the sale of excess fuel oil in 2009 and a $37 million lower of cost or market fuel oil inventory adjustment recognized in the fourth quarter of 2008. The increase in gross margin from proprietary trading activities was a result of higher realized value associated with power positions in 2009 as compared to 2008. |
• | unrealized losses of $113 million in 2009, which included $101 million associated with the reversal of previously recognized unrealized gains from power and fuel contracts that settled during the period and a $12 million net decrease in the value of contracts for future periods; and | |
• | unrealized gains of $120 million in 2008, which included a $65 million net increase in the value of contracts for future periods and $55 million associated with the reversal of previously recognized unrealized losses from power and fuel contracts that settled during the period. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating Expenses: | ||||||||||||
Depreciation and amortization | $ | 3 | $ | 1 | $ | 2 | ||||||
Impairment losses | 5 | — | 5 | |||||||||
Gain on sales of assets, net | — | (1 | ) | 1 | ||||||||
Total operating expenses, net | 8 | — | 8 | |||||||||
Operating loss | $ | (8 | ) | $ | — | $ | (8 | ) | ||||
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• | expected expenditures with respect to maintenance activities and capital improvements, and related outages; | |
• | expected collateral postings in support of our business; | |
• | effects of market price volatility on the amount of collateral postings for hedge transactions and risk management transactions; | |
• | effects of market price volatility on fuel pre-payment requirements; | |
• | seasonal and intra-month working capital requirements; | |
• | debt service obligations; and | |
• | costs associated with litigation, regulatory and tax proceedings. |
Cash and Cash Equivalents: | ||||
GenOn Americas Generation (excluding GenOn Mid-Atlantic) | $ | 312 | ||
GenOn Mid-Atlantic | 202 | |||
Total cash and cash equivalents | $ | 514 | ||
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![](https://capedge.com/proxy/10-K/0000950123-11-020718/h79786h7978602.gif)
(1) | At December 31, 2010, the present value of lease payments under the GenOn Mid-Atlantic operating leases was approximately $927 million (assuming a 10% discount rate) and the termination value of the GenOn Mid-Atlantic operating leases was $1.4 billion. |
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
GenOn Mid-Atlantic | $ | 3,698 | $ | 4,761 |
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Cash collateral posted—energy trading and marketing | $ | 80 | $ | 41 | ||||
Cash collateral posted—other operating activities | 40 | 42 | ||||||
Letters of credit—energy trading and marketing(1) | 63 | 51 | ||||||
Letters of credit—rent reserves(1) | 101 | 101 | ||||||
Letters of credit—other operating activities(1) | 31 | 47 | ||||||
Surety bonds | 7 | 1 | ||||||
Total | $ | 322 | $ | 283 | ||||
(1) | At December 31, 2010, represents letters of credit posted by GenOn for the benefit of GenOn Americas Generation. |
Debt Obligations, Off-Balance Sheet Arrangements and Contractual Obligations by Year | ||||||||||||||||||||
Less than | One to | Three to | More than | |||||||||||||||||
Total | One Year | Three Years | Five Years | Five Years | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Long-term debt | $ | 3,430 | $ | 1,480 | $ | 160 | $ | 160 | $ | 1,630 | ||||||||||
GenOn Mid-Atlantic operating leases | 1,730 | 134 | 270 | 241 | 1,085 | |||||||||||||||
Other operating leases | 39 | 5 | 7 | 8 | 19 | |||||||||||||||
Fuel commitments | 914 | 371 | 543 | — | — | |||||||||||||||
Maryland Healthy Air Act | 155 | 155 | — | — | — | |||||||||||||||
Other | 287 | 137 | 55 | 27 | 68 | |||||||||||||||
Total payments | $ | 6,555 | $ | 2,282 | $ | 1,035 | $ | 436 | $ | 2,802 | ||||||||||
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating income (loss) | $ | (187 | ) | $ | 613 | $ | (800 | ) | ||||
Non-cash items(1) | 844 | 336 | 508 | |||||||||
Receivables and accounts payable and accrued liabilities, net | 17 | 23 | (6 | ) | ||||||||
Funds on deposit | 87 | 26 | 61 | |||||||||
Inventories | (76 | ) | (35 | ) | (41 | ) | ||||||
Interest payments, net of amounts capitalized | (185 | ) | (124 | ) | (61 | ) | ||||||
Prepaid rent | (44 | ) | (46 | ) | 2 | |||||||
Other, net | (12 | ) | (27 | ) | 15 | |||||||
Net cash provided by operating activities | $ | 444 | $ | 766 | $ | (322 | ) | |||||
(1) | See our consolidated statements of cash flows for additional information. |
• | Realized gross margin. A decrease in cash provided of $294 million in 2010, compared to 2009, excluding a decrease in non-cash lower of cost or market fuel inventory adjustments of $10 million. See “Results of Operations” in this Item 7 for additional discussion of our performance in 2010 compared to 2009; | |
• | Interest payments, net of amounts capitalized. An increase in cash used of $61 million primarily as a result of a decrease in capitalized interest (which is included in investing activities); | |
• | Inventory. An increase in cash used of $41 million primarily as a result of higher prices and purchases of a larger volume of fuel oil; | |
• | Operating expenses. An increase in cash used for operations and maintenance expense of $7 million, primarily as a result of costs related to the operation of our scrubbers in 2010, offset in part by a decrease in shutdown costs associated with the demolished Lovett generating facility and a decrease in outage costs. See “Results of Operations” in this Item 7 for additional discussion of our performance in 2010 compared to 2009; and | |
• | Other operating assets and liabilities. An increase in cash used of $2 million related to changes in other operating assets and liabilities. |
• | Funds on deposit. An increase in cash provided of $61 million. We received $87 million in collateral from our counterparties in 2010 compared to $26 million returned from our counterparties in 2009; and |
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• | Property taxes. A decrease in cash used of $22 million primarily related to the timing of property tax payments and lower property taxes assessed on the value of the Lovett generating facility which was demolished in 2009. |
Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Capital expenditures | $ | (252 | ) | $ | (666 | ) | $ | 414 | (1) | |||
Proceeds from the sales of assets | 8 | 25 | (17 | )(2) | ||||||||
Restricted deposit payments and other | (866 | ) | 1 | (867 | )(3) | |||||||
Net cash used in investing activities | $ | (1,110 | ) | $ | (640 | ) | $ | (470 | ) | |||
(1) | Primarily related to placing scrubbers for our Maryland generating facilities in service during the fourth quarter of 2009 as part of our compliance with the Maryland Healthy Air Act. | |
(2) | Primarily related to sales of emissions allowances in 2009 as compared to 2010. | |
(3) | Primarily related to funds deposited with the Trustee to pay the GenOn North America senior notes, which were redeemed on January 3, 2011. |
Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Redemption of preferred stock in affiliate | $ | 295 | $ | 84 | $ | 211 | (1) | |||||
Repayments of long-term debt—nonaffiliate | (376 | ) | (45 | ) | (331 | )(2) | ||||||
Capital contributions | 1,079 | — | 1,079 | (3) | ||||||||
Distributions to member | (222 | ) | (115 | ) | (107 | )(4) | ||||||
Net cash provided by (used in) financing activities | $ | 776 | $ | (76 | ) | $ | 852 | |||||
(1) | Includes $295 million related to the final redemptions of Series B preferred stock held by us and Series A preferred stock held by GenOn Mid-Atlantic (see note 6 to our consolidated financial statements for further discussion) | |
(2) | Includes $373 million related to the repayment of the GenOn North America senior secured term loan (see note 4 to our consolidated financial statements for further discussion). | |
(3) | Includes $1.079 billion related to contributions from GenOn Americas primarily for the repayment of the GenOn North America senior secured notes and senior secured credit facility. | |
(4) | Includes $222 million related to distributions to our member during 2010 compared to $115 million during 2009. |
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Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating income | $ | 613 | $ | 1,374 | $ | (761 | ) | |||||
Non-cash items(1) | 336 | (604 | ) | 940 | ||||||||
Receivables and accounts payable and accrued liabilities, net | 23 | 32 | (9 | ) | ||||||||
Funds on deposit | 26 | 109 | (83 | ) | ||||||||
Inventories | (35 | ) | 47 | (82 | ) | |||||||
Interest payments, net of amounts capitalized | (124 | ) | (175 | ) | 51 | |||||||
Interest income | 1 | 16 | (15 | ) | ||||||||
Prepaid rent | (46 | ) | (24 | ) | (22 | ) | ||||||
Other, net | (28 | ) | (15 | ) | (13 | ) | ||||||
Net cash provided by operating activities of continuing operations | 766 | 760 | 6 | |||||||||
Net cash provided by operating activities of discontinued operations | — | 1 | (1 | ) | ||||||||
Net cash provided by operating activities | $ | 766 | $ | 761 | $ | 5 | ||||||
(1) | See our consolidated statements of cash flows for additional information. |
• | Realized gross margin. An increase in cash provided of $176 million in 2009, compared to 2008, excluding a decrease in non-cash lower of cost or market fuel inventory adjustments of $33 million. See “Results of Operations” for additional discussion of our performance in 2009 compared to 2008; and | |
• | Interest payments, net of amounts capitalized. A decrease in cash used of $51 million primarily as a result of lower outstanding debt and higher interest capitalized on projects under construction. |
• | Funds on deposit. A decrease in cash provided of $83 million. During 2009, we had net cash collateral returned to us of $26 million. During 2008, we had net cash collateral returned to us of $109 million primarily related to the cash collateral account to support issuance of letters of credit under the GenOn North America senior secured term loan; | |
• | Inventories. An increase in cash used of $82 million as a result of higher inventory levels of coal and fuel oil, partially offset by lower market prices in 2009 as compared to 2008; | |
• | Prepaid rent. An increase in cash used for our GenOn Mid-Atlantic operating leases as the scheduled rent payments were higher by $22 million during 2009 than during 2008; | |
• | Interest income. A decrease in cash provided of $15 million primarily as a result of lower interest rates on invested cash, as well as lower average cash balances; | |
• | Receivables and accounts payable and accrued liabilities, net. A decrease in cash provided of $9 million primarily related to an increase in cash used of $111 million as a result of $43 million collateral returned to counterparties during 2009 as compared to $68 million received from counterparties during 2008, partially offset by a decrease in cash used of $102 million during 2009 primarily |
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related to (a) a decrease in power prices in 2009 compared to 2008 and (b) the implementation in June 2009 of weekly settlements with PJM (in lieu of monthly settlements) which reduced the amount of outstanding receivables for the PJM markets; and |
• | Other operating assets and liabilities. An increase in cash used of $10 million related to changes in other operating assets and liabilities. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Capital expenditures | $ | (666 | ) | $ | (720 | ) | $ | 54 | (1) | |||
Proceeds from the sales of assets | 25 | 40 | (15 | )(2) | ||||||||
Restricted deposit payments and other | 1 | (34 | ) | 35 | (3) | |||||||
Net cash used in investing activities of continuing operations | (640 | ) | (714 | ) | 74 | |||||||
Net cash provided by investing activities of discontinued operations | — | 18 | (18 | )(4) | ||||||||
Net cash used in investing activities | $ | (640 | ) | $ | (696 | ) | $ | 56 | ||||
(1) | Primarily related to our environmental capital expenditures for our Maryland generating facilities related to our compliance with the Maryland Healthy Air Act. | |
(2) | Primarily related to sales of emissions allowances to third parties. | |
(3) | Related to $34 million placed in an escrow account in September 2008, to satisfy the conditions of Potomac River’s agreement with the City of Alexandria, Virginia. See note 10 to our consolidated financial statements for additional information on Potomac River’s agreement with the City of Alexandria, Virginia. | |
(4) | Primarily as a result of $16 million related to insurance recoveries for repairs of the Swinging Bridge generating facility. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Redemption of preferred stock in affiliate | $ | 84 | $ | 31 | $ | 53 | (1) | |||||
Repayments and purchases of long-term debt | (45 | ) | (419 | ) | 374 | (2) | ||||||
Repayment of note payable—affiliate, net | — | (6 | ) | 6 | ||||||||
Capital contributions | — | 282 | (282 | )(3) | ||||||||
Distributions to member | (115 | ) | (297 | ) | 182 | (4) | ||||||
Net cash used in financing activities | $ | (76 | ) | $ | (409 | ) | $ | 333 | ||||
(1) | Related to the redemption of Series A preferred stock held by GenOn Mid-Atlantic (see note 6 to our consolidated financial statements for further discussion). | |
(2) | Includes $276 million for the 2008 purchase and retirement of GenOn Americas Generation senior notes due in 2011. | |
(3) | Includes $282 million as a result of contributions from GenOn Americas primarily for the purchase of our bonds in 2008. | |
(4) | Related to distributions of $115 million to our member during 2009 compared to $297 million during 2008. |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
2011(1) | 2012 | 2013 | 2014 | 2015 | ||||||||||||||||
Power | 89 | % | 78 | % | 40 | % | 38 | % | — | % | ||||||||||
Fuel | 88 | % | 79 | % | 55 | % | — | % | — | % |
(1) | Percentages represent the period from February through December 2011. |
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• | the risks of consolidation of financial institutions and more restrictive capital constraints and regulation, which could have a negative effect on our ability to hedge economically with creditworthy counterparties; and | |
• | the risks of implementation of the Dodd-Frank Act on our ability to hedge economically our generation, including potentially reducing liquidity in the energy and commodity markets and, if we are required to clear such transactions on exchanges or meet other requirements, by significantly increasing the collateral costs associated with such activities. |
2011 | 2012 | |||||||
(in millions) | ||||||||
Maryland Healthy Air Act | $ | 155 | $ | — | ||||
Other environmental | 7 | 5 | ||||||
Maintenance | 44 | 34 | ||||||
Other construction | 52 | 4 | ||||||
Total | $ | 258 | $ | 43 | ||||
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Realized gross margin | $ | 999 | $ | 1,107 | $ | (108 | ) | |||||
Unrealized gross margin | 7 | 144 | (137 | ) | ||||||||
Total gross margin (excluding depreciation and amortization) | 1,006 | 1,251 | (245 | ) | ||||||||
Operating expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 299 | 245 | 54 | |||||||||
Operations and maintenance—affiliate | 194 | 189 | 5 | |||||||||
Depreciation and amortization | 141 | 98 | 43 | |||||||||
Impairment losses | 1,153 | 385 | 768 | |||||||||
Gain on sales of assets, net—affiliate | (3 | ) | (14 | ) | 11 | |||||||
Total operating expenses, net | 1,784 | 903 | 881 | |||||||||
Operating income (loss) | (778 | ) | 348 | (1,126 | ) | |||||||
Other expense, net: | ||||||||||||
Interest expense, net | 3 | 3 | — | |||||||||
Other, net | 1 | 1 | — | |||||||||
Total other expense, net | 4 | 4 | — | |||||||||
Income (loss) before income taxes | (782 | ) | 344 | (1,126 | ) | |||||||
Benefit for income taxes | (1 | ) | — | (1 | ) | |||||||
Net income (loss) | $ | (781 | ) | $ | 344 | $ | (1,125 | ) | ||||
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Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Realized gross margin | $ | 1,107 | $ | 1,038 | $ | 69 | ||||||
Unrealized gross margin | 144 | 676 | (532 | ) | ||||||||
Total gross margin (excluding depreciation and amortization) | 1,251 | 1,714 | (463 | ) | ||||||||
Operating expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 245 | 239 | 6 | |||||||||
Operations and maintenance—affiliate | 189 | 173 | 16 | |||||||||
Depreciation and amortization | 98 | 92 | 6 | |||||||||
Impairment losses | 385 | — | 385 | |||||||||
Gain on sales of assets, net—affiliate | (14 | ) | (8 | ) | (6 | ) | ||||||
Total operating expenses, net | 903 | 496 | 407 | |||||||||
Operating income | 348 | 1,218 | (870 | ) | ||||||||
Other expense, net: | ||||||||||||
Interest expense, net | 3 | — | 3 | |||||||||
Other, net | 1 | 1 | — | |||||||||
Total other expense, net | 4 | 1 | 3 | |||||||||
Net income | $ | 344 | $ | 1,217 | $ | (873 | ) | |||||
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• | expected expenditures with respect to maintenance activities and capital improvements, and related outages; | |
• | expected collateral postings in support of our business; | |
• | effects of market price volatility on the amount of collateral postings for hedge transactions and risk management transactions; | |
• | effects of market price volatility on fuel pre-payment requirements; and | |
• | seasonal and intra-month working capital requirements. |
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Debt Obligations, Off-Balance Sheet Arrangements and | ||||||||||||||||||||
Contractual Obligations by Year | ||||||||||||||||||||
Less than | One to | Three to | More than | |||||||||||||||||
Total | One Year | Three Years | Five Years | Five Years | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Long-term debt | $ | 27 | $ | 6 | $ | 10 | $ | 11 | $ | — | ||||||||||
Generating units operating leases | 1,730 | 134 | 270 | 241 | 1,085 | |||||||||||||||
Other operating leases | 37 | 5 | 7 | 7 | 18 | |||||||||||||||
Fuel commitments | 914 | 371 | 543 | — | — | |||||||||||||||
Maryland Healthy Air Act | 155 | 155 | — | — | — | |||||||||||||||
Other | 222 | 123 | 47 | 24 | 28 | |||||||||||||||
Total payments | $ | 3,085 | $ | 794 | $ | 877 | $ | 283 | $ | 1,131 | ||||||||||
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating income (loss) | $ | (778 | ) | $ | 348 | $ | (1,126 | ) | ||||
Non-cash items(1) | 1,329 | 354 | 975 | |||||||||
Receivables and accounts payable, net | 12 | (5 | ) | 17 | ||||||||
Inventories | (18 | ) | (17 | ) | (1 | ) | ||||||
Interest payments | (2 | ) | (2 | ) | — | |||||||
Prepaid rent | (44 | ) | (46 | ) | 2 | |||||||
Other, net | 14 | (25 | ) | 39 | ||||||||
Net cash provided by operating activities | $ | 513 | $ | 607 | $ | (94 | ) | |||||
(1) | See our consolidated statements of cash flows for additional information. |
• | Realized gross margin. A decrease in cash provided of $124 million in 2010, compared to 2009, excluding a decrease in non-cash lower of cost or market fuel inventory adjustments of $16 million. See “Results of Operations” in this Item 7 for additional discussion of our performance in 2010 compared to 2009; and | |
• | Operating expenses. An increase in cash used for operations and maintenance expense of $26 million, primarily as a result of costs related to the operation of our scrubbers in 2010. See “Results of Operations” in this Item 7 for additional discussion of our performance in 2010 compared to 2009. |
• | Property taxes. A decrease in cash used of $27 million primarily related to the timing of property tax payments; | |
• | Receivables and accounts payable, net. An increase in cash provided of $17 million primarily related to settlements of our non-collateralized power hedges; and | |
• | Other operating assets and liabilities. A decrease in cash used of $12 million related to changes in other operating assets and liabilities. |
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Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Capital expenditures | $ | (233 | ) | $ | (578 | ) | $ | 345 | (1) | |||
Proceeds from the sales of assets | 4 | 14 | (10 | )(2) | ||||||||
Restricted deposit payments and other | 1 | 1 | — | |||||||||
Net cash used in investing activities | $ | (228 | ) | $ | (563 | ) | $ | 335 | ||||
(1) | Primarily related to placing our scrubbers in service during the fourth quarter of 2009 as part of our compliance with the Maryland Healthy Air Act. | |
(2) | Primarily related to sales of emissions allowances in 2009 as compared to 2010. |
Increase/ | ||||||||||||
2010 | 2009 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Redemption of preferred stock in affiliate | $ | 145 | $ | 84 | $ | 61 | (1) | |||||
Repayment of long-term debt—nonaffiliate | (3 | ) | (3 | ) | — | |||||||
Distributions to member | (350 | ) | (125 | ) | (225 | )(2) | ||||||
Net cash used in financing activities | $ | (208 | ) | $ | (44 | ) | $ | (164 | ) | |||
(1) | Related to the redemption of our Series A preferred stock of GenOn Americas (see note 6 to our consolidated financial statements for further discussion). | |
(2) | Related to distributions of $350 million to our member during 2010 compared to $125 million during 2009. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Operating income | $ | 348 | $ | 1,218 | $ | (870 | ) | |||||
Non-cash items(1) | 354 | (578 | ) | 932 | ||||||||
Receivables and accounts payable, net | (5 | ) | (9 | ) | 4 | |||||||
Funds on deposit | — | 2 | (2 | ) | ||||||||
Inventories | (17 | ) | (23 | ) | 6 | |||||||
Interest payments | (2 | ) | (2 | ) | — | |||||||
Interest income | — | 3 | (3 | ) | ||||||||
Prepaid rent | (46 | ) | (24 | ) | (22 | ) | ||||||
Other, net | (25 | ) | 10 | (35 | ) | |||||||
Net cash provided by operating activities | $ | 607 | $ | 597 | $ | 10 | ||||||
(1) | See our consolidated statements of cash flows for additional information. |
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• | Realized gross margin. An increase in cash provided of $84 million in 2009, compared to 2008, excluding an increase in non-cash lower of cost or market fuel inventory adjustments of $15 million. See “Results of Operations” in this item 7 for additional discussion of our performance in 2009 compared to 2008; partially offset by | |
• | Other operating assets and liabilities. An increase in cash used of $30 million related to changes in other operating assets and liabilities, of which approximately $19 million related to the timing of property tax payments in 2009 compared to 2008 and approximately $10 million related to option premiums received during 2008 compared to 2009; | |
• | Prepaid rent. An increase in cash used of $22 million as a result of scheduled rent payments for our leveraged leases were higher during 2009 than during 2008; and | |
• | Operating expense. An increase in cash used related to higher operations and maintenance expense of $22 million. See “Results of Operations” for additional discussion of our performance during 2009 compared to 2008. |
2009 | 2008 | Increase | ||||||||||
(in millions) | ||||||||||||
Capital expenditures | $ | (578 | ) | $ | (641 | ) | $ | 63 | (1) | |||
Proceeds from the sales of assets | 14 | 8 | 6 | (2) | ||||||||
Restricted deposit payments and other | 1 | (34 | ) | 35 | (3) | |||||||
Net cash used in investing activities | $ | (563 | ) | $ | (667 | ) | $ | 104 | ||||
(1) | Primarily related to our environmental capital expenditures related to our compliance with the Maryland Healthy Air Act. | |
(2) | Primarily related to sales of emissions allowances to third parties. | |
(3) | Related to $34 million placed in an escrow account in September 2008, to satisfy the conditions of Potomac River’s agreement with the City of Alexandria, Virginia. See note 10 to our consolidated financial statements for additional information on Potomac River’s agreement with the City of Alexandria, Virginia. |
Increase/ | ||||||||||||
2009 | 2008 | (Decrease) | ||||||||||
(in millions) | ||||||||||||
Redemption of preferred stock in affiliate | $ | 84 | $ | 31 | $ | 53 | (1) | |||||
Repayment of long-term debt—nonaffiliate | (3 | ) | (2 | ) | (1 | ) | ||||||
Capital contributions | — | 250 | (250 | )(2) | ||||||||
Distributions to member | (125 | ) | (325 | ) | 200 | (3) | ||||||
Other | — | (1 | ) | 1 | ||||||||
Net cash used in financing activities | $ | (44 | ) | $ | (47 | ) | $ | 3 | ||||
(1) | Related to the redemption of our Series A preferred stock of GenOn Americas (see note 6 to our consolidated financial statements for further discussion). | |
(2) | Includes $250 million as a result of capital contributions received from GenOn North America. | |
(3) | Related to distributions of $125 million to our member during 2009 compared to $325 million during 2008. |
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• | the estimate requires significant assumptions; and | |
• | changes in the estimate could have a material effect on our consolidated results of operations or financial condition; or | |
• | if different estimates that could have been selected had been used, there could be a material effect on our consolidated results of operations or financial condition. |
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• | electricity, fuel and emissions prices; | |
• | capacity payments under the RPM provisions of PJM’s tariff; | |
• | costs of CO2 allowances under a potential federalcap-and-trade program and other environmental regulations; | |
• | timing of announced transmission projects; | |
• | timing and extent of generating capacity additions and retirements; and | |
• | future capital expenditure requirements for the generating facility. |
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October 2010 | October 2009 | |||||||
Income Approach Assumptions: | ||||||||
EBITDA multiple for terminal value calculation | 8.0 | 8.0 | ||||||
Market Approach Assumptions: | ||||||||
EBITDA multiple for public company approach(1) | 8.0 | 6.5 | ||||||
Valuation Approach Weightings: | ||||||||
Income approach | 50 | % | 50 | % | ||||
Market approach | 50 | % | 50 | % |
(1) | Changed primarily as a result of changes in trading multiples of peer companies’ common stock. |
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• | electricity, fuel and capacity prices; | |
• | costs related to compliance with environmental regulations; | |
• | timing of announced transmission projects; | |
• | timing and extent of generating capacity additions and retirements; and | |
• | future capital expenditure requirements related to the generating facilities. |
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Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
Commodity Contracts | ||||||||||||
Asset | Trading | |||||||||||
Management | Activities | Total | ||||||||||
(in millions) | ||||||||||||
Fair value of portfolio of assets and liabilities at January 1, 2009 | $ | 549 | $ | 106 | $ | 655 | ||||||
Gains (losses) recognized in the period, net: | ||||||||||||
New contracts and other changes in fair value(1) | 20 | (150 | ) | (130 | ) | |||||||
Roll off of previous values(2) | (539 | ) | (100 | ) | (639 | ) | ||||||
Purchases, issuances and settlements(3) | 671 | 145 | 816 | |||||||||
Fair value of portfolio of assets and liabilities at December 31, 2009 | 701 | 1 | 702 | |||||||||
Gains (losses) recognized in the period, net: | ||||||||||||
New contracts and other changes in fair value(1) | 171 | 66 | 237 | |||||||||
Roll off of previous values(2) | (338 | ) | (49 | ) | (387 | ) | ||||||
Purchases, issuances and settlements(3) | 150 | (23 | ) | 127 | ||||||||
Fair value of portfolio of assets and liabilities at December 31, 2010 | $ | 684 | $ | (5 | ) | $ | 679 | |||||
(1) | The fair value, as of the end of each quarterly reporting period, of contracts entered into during each quarterly reporting period and the gains or losses attributable to contracts that existed as of the beginning of each quarterly reporting period and were still held at the end of each quarterly reporting period. | |
(2) | The fair value, as of the beginning of each quarterly reporting period, of contracts that settled during each quarterly reporting period. | |
(3) | Denotes cash settlements during each quarterly reporting period of contracts that existed at the beginning of each quarterly reporting period. |
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Asset | ||||
Management | ||||
(in millions) | ||||
Fair value of portfolio of assets and liabilities at January 1, 2009 | $ | 526 | ||
Gains (losses) recognized in the period, net: | ||||
New contracts and other changes in fair value(1) | (15 | ) | ||
Roll off of previous values(2) | (489 | ) | ||
Purchases, issuances and settlements(3) | 648 | |||
Fair value of portfolio of assets and liabilities at December 31, 2009 | 670 | |||
Gains (losses) recognized in the period, net: | ||||
New contracts and other changes in fair value(1) | 154 | |||
Roll off of previous values(2) | (319 | ) | ||
Purchases, issuances and settlements(3) | 172 | |||
Fair value of portfolio of assets and liabilities at December 31, 2010 | $ | 677 | ||
(1) | The fair value, as of the end of each quarterly reporting period, of contracts entered into during each quarterly reporting period and the gains or losses attributable to contracts that existed as of the beginning of each quarterly reporting period and were still held at the end of each quarterly reporting period. | |
(2) | The fair value, as of the beginning of each quarterly reporting period, of contracts that settled during each quarterly reporting period. | |
(3) | Denotes cash settlements during each quarterly reporting period of contracts that existed at the beginning of each quarterly reporting period |
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2016 and | Total fair | |||||||||||||||||||||||||||
Sources of Fair Value | 2011 | 2012 | 2013 | 2014 | 2015 | thereafter | value | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Asset Management: | ||||||||||||||||||||||||||||
Prices actively quoted (Level 1) | $ | (19 | ) | $ | (6 | ) | $ | — | $ | — | $ | — | $ | — | $ | (25 | ) | |||||||||||
Prices provided by other external sources (Level 2) | 218 | 184 | 184 | 191 | — | — | 777 | |||||||||||||||||||||
Prices based on models and other valuation methods (Level 3) | (36 | ) | (36 | ) | 4 | — | — | — | (68 | ) | ||||||||||||||||||
Total asset management | $ | 163 | $ | 142 | $ | 188 | $ | 191 | $ | — | $ | — | $ | 684 | ||||||||||||||
Trading Activities: | ||||||||||||||||||||||||||||
Prices actively quoted (Level 1) | $ | 3 | $ | (6 | ) | $ | — | $ | — | $ | — | $ | — | $ | (3 | ) | ||||||||||||
Prices provided by other external sources (Level 2) | (8 | ) | 4 | — | — | — | — | (4 | ) | |||||||||||||||||||
Prices based on models and other valuation methods (Level 3) | 2 | — | — | — | — | — | 2 | |||||||||||||||||||||
Total trading activities | $ | (3 | ) | $ | (2 | ) | $ | — | $ | — | $ | — | $ | — | $ | (5 | ) | |||||||||||
2016 and | Total fair | |||||||||||||||||||||||||||
Sources of Fair Value | 2011 | 2012 | 2013 | 2014 | 2015 | thereafter | value | |||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Asset Management: | ||||||||||||||||||||||||||||
Prices actively quoted (Level 1) | $ | (9 | ) | $ | (2 | ) | $ | — | $ | — | $ | — | $ | — | $ | (11 | ) | |||||||||||
Prices provided by other external sources (Level 2 | 203 | 179 | 184 | 191 | — | — | 757 | |||||||||||||||||||||
Prices based on models and other valuation methods (Level 3) | (36 | ) | (37 | ) | 4 | — | — | — | (69 | ) | ||||||||||||||||||
Total asset management | $ | 158 | $ | 140 | $ | 188 | $ | 191 | $ | — | $ | — | $ | 677 | ||||||||||||||
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Asset Management VaR | 2010 | 2009 | ||||||
(in millions) | ||||||||
Year-end | $ | 6 | $ | 11 | ||||
Average | $ | 6 | $ | 12 | ||||
High | $ | 6 | $ | 13 | ||||
Low | $ | 5 | $ | 11 |
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Proprietary Trading and Fuel Oil Management VaR | 2010 | 2009 | ||||||
(in millions) | ||||||||
Year-end | $ | 2 | $ | 2 | ||||
Average | $ | 2 | $ | 2 | ||||
High | $ | 3 | $ | 4 | ||||
Low | $ | 1 | $ | 1 |
Asset Management VaR | 2010 | 2009 | ||||||
(in millions) | ||||||||
Year-end | $ | 6 | $ | 10 | ||||
Average | $ | 6 | $ | 11 | ||||
High | $ | 6 | $ | 12 | ||||
Low | $ | 5 | $ | 10 |
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Item 8. | Financial Statements and Supplementary Data. |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
Item 9A. | Controls and Procedures. |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Companies; | |
• | provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements, in accordance with generally accepted accounting principles, and that receipts and expenditures of the Companies are being made only in accordance with authorizations of management and directors of the Companies (or persons performing the equivalent functions); |
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• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companies’ assets that could have a material effect on the consolidated financial statements; and | |
• | provide reasonable assurance as to the detection of fraud. |
Item 9B. | Other Information. |
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Item 10. | Directors, Executive Officers and Corporate Governance. |
Item 11. | Executive Compensation. |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
Item 13. | Certain Relationships and Related Transactions and Director Independence. |
Item 14. | Principal Accountant Fees and Services. |
2010 | 2009 | |||||||
Audit Fees(1) | $ | 5,867 | $ | 5,504 | ||||
Audit-Related Fees(2) | 754 | — | ||||||
Tax Fees(3) | — | — | ||||||
All Other Fees(4) | — | 251 | ||||||
Total | $ | 6,621 | $ | 5,755 | ||||
(1) | Includes fees and expenses related to the audit of GenOn’s consolidated annual financial statements and the effectiveness of GenOn’s internal controls over financial reporting. This category also includes the review of financial statements included in Mirant’s Quarterly Reports onForm 10-Q, the audits of various subsidiary financial statements required by statute or regulation, and services that are normally provided by the independent auditors in connection with regulatory filings or engagements, consultations provided on audit and accounting matters that arose during, or as a result of, the audits or the reviews of interim financial statements, and the preparation of any written communications on internal control matters. | |
(2) | Consists of accounting consulting, assurance and related services that are reasonably related to the performance of the audit or review of our financial statements, which during 2010 related to the Merger, and are not reported above under “Audit Fees.” | |
(3) | Consists of professional services rendered for general tax consulting services. | |
(4) | Consists of fees for services provided by KPMG LLP, other than fees for the services listed in the other categories. The fees disclosed include services related to an International Financial Reporting Standards (IFRS) readiness assessment project. |
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Item 15. | Exhibits and Financial Statement Schedules. |
Report of Independent Registered Public Accounting Firm | F-1 | |||
GenOn Americas Generation, LLC | ||||
Consolidated Statements of Operations | F-3 | |||
Consolidated Balance Sheets | F-4 | |||
Consolidated Statements of Member’s Equity | F-5 | |||
Consolidated Statements of Cash Flows | F-6 | |||
GenOn Mid-Atlantic, LLC | ||||
Consolidated Statements of Operations | F-7 | |||
Consolidated Balance Sheets | F-8 | |||
Consolidated Statements of Member’s Equity | F-9 | |||
Consolidated Statements of Cash Flows | F-10 | |||
Combined Notes to the Consolidated Financial Statements | F-11 |
Report of Independent Registered Public Accounting Firm | F-78 | |||
GenOn Americas Generation, LLC | ||||
Schedule I—Condensed Statements of Operations (Parent) | F-80 | |||
Schedule I—Condensed Balance Sheets (Parent) | F-81 | |||
Schedule I—Condensed Statements of Cash Flows (Parent) | F-82 | |||
Schedule I—Notes to Registrant’s Condensed Financial Statements (Parent) | F-83 | |||
Schedule II—Valuation and Qualifying Accounts | F-85 |
Exhibits | ||||
GenOn Americas Generation, LLC | F-86 | |||
GenOn Mid-Atlantic, LLC | F-88 |
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Operating revenues—nonaffiliate (including unrealized gains (losses) of $69 million, $(2) million and $840 million, respectively) | $ | 2,102 | $ | 2,309 | $ | 3,188 | ||||||
Operating revenues—affiliate (including unrealized gains of $3 million, $0 million and $0 million, respectively) | 3 | — | — | |||||||||
Total operating revenues | 2,105 | 2,309 | 3,188 | |||||||||
Cost of fuel, electricity and other products—nonaffiliate (including unrealized (gains) losses of $89 million, $(49) million and $54 million, respectively) | 846 | 701 | 1,053 | |||||||||
Cost of fuel, electricity and other products—affiliate (including unrealized (gains) losses of $0, $0 and $0, respectively) | 8 | 9 | 6 | |||||||||
Total cost of fuel, electricity and other products | 854 | 710 | 1,059 | |||||||||
Gross Margin (excluding depreciation and amortization) | 1,251 | 1,599 | 2,129 | |||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 390 | 355 | 372 | |||||||||
Operations and maintenance—affiliate | 293 | 290 | 285 | |||||||||
Depreciation and amortization | 199 | 142 | 136 | |||||||||
Impairment losses | 565 | 221 | — | |||||||||
Gain on sales of assets, net | (9 | ) | (22 | ) | (38 | ) | ||||||
Total operating expenses, net | 1,438 | 986 | 755 | |||||||||
Operating Income (Loss) | (187 | ) | 613 | 1,374 | ||||||||
Other Expense (Income), net: | ||||||||||||
Interest expense | 200 | 137 | 189 | |||||||||
Interest income | — | (1 | ) | (16 | ) | |||||||
Other, net | 9 | 1 | 3 | |||||||||
Total other expense, net | 209 | 137 | 176 | |||||||||
Net Income (Loss) | $ | (396 | ) | $ | 476 | $ | 1,198 | |||||
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 514 | $ | 404 | ||||
Funds on deposit | 949 | 180 | ||||||
Receivables—nonaffiliate | 363 | 401 | ||||||
Receivables—affiliate | 4 | — | ||||||
Derivative contract assets—nonaffiliate | 1,288 | 1,416 | ||||||
Derivative contract assets— affiliate | 5 | — | ||||||
Inventories | 295 | 241 | ||||||
Prepaid expenses | 124 | 134 | ||||||
Total current assets | 3,542 | 2,776 | ||||||
Property, Plant and Equipment, net | 3,077 | 3,606 | ||||||
Noncurrent Assets: | ||||||||
Intangible assets, net | 101 | 171 | ||||||
Derivative contract assets—nonaffiliate | 689 | 599 | ||||||
Derivative contract assets—affiliate | 3 | — | ||||||
Prepaid rent | 348 | 304 | ||||||
Debt issuance costs, net | 12 | 29 | ||||||
Other | 41 | 32 | ||||||
Total noncurrent assets | 1,194 | 1,135 | ||||||
Total Assets | $ | 7,813 | $ | 7,517 | ||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||
Current Liabilities: | ||||||||
Current portion of long-term debt | $ | 1,389 | $ | 74 | ||||
Accounts payable and accrued liabilities | 527 | 646 | ||||||
Payable—affiliate | 42 | 42 | ||||||
Derivative contract liabilities—nonaffiliate | 1,130 | 1,150 | ||||||
Derivative contract liabilities—affiliate | 3 | — | ||||||
Other | 8 | 8 | ||||||
Total current liabilities | 3,099 | 1,920 | ||||||
Noncurrent Liabilities: | ||||||||
Long-term debt, net of current portion | 866 | 2,556 | ||||||
Derivative contract liabilities | 173 | 163 | ||||||
Other | 90 | 49 | ||||||
Total noncurrent liabilities | 1,129 | 2,768 | ||||||
Commitments and Contingencies | ||||||||
Member’s Equity: | ||||||||
Member’s interest | 3,585 | 3,109 | ||||||
Preferred stock in affiliate | — | (280 | ) | |||||
Total member’s equity | 3,585 | 2,829 | ||||||
Total Liabilities and Member’s Equity | $ | 7,813 | $ | 7,517 | ||||
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY
Preferred | Total | |||||||||||
Member’s | Stock in | Member’s | ||||||||||
Interest | Affiliate | Equity | ||||||||||
(in millions) | ||||||||||||
Balance, December 31, 2007 | $ | 1,524 | $ | (355 | ) | $ | 1,169 | |||||
Net income | 1,198 | — | 1,198 | |||||||||
Amortization of discount on preferred stock in affiliate | 21 | (21 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 31 | 31 | |||||||||
Distributions to member | (297 | ) | — | (297 | ) | |||||||
Capital contributions | 282 | — | 282 | |||||||||
Adoption of accounting guidance related to fair value measurement | 1 | — | 1 | |||||||||
Balance, December 31, 2008 | 2,729 | (345 | ) | 2,384 | ||||||||
Net income | 476 | — | 476 | |||||||||
Amortization of discount on preferred stock in affiliate | 19 | (19 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 84 | 84 | |||||||||
Distribution to member | (115 | ) | — | (115 | ) | |||||||
Balance, December 31, 2009 | 3,109 | (280 | ) | 2,829 | ||||||||
Net loss | (396 | ) | — | (396 | ) | |||||||
Amortization of discount on preferred stock in affiliate | 15 | (15 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 295 | 295 | |||||||||
Distribution to member | (222 | ) | — | (222 | ) | |||||||
Capital contributions | 1,079 | — | 1,079 | |||||||||
Balance, December 31, 2010 | $ | 3,585 | $ | — | $ | 3,585 | ||||||
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income (loss) | $ | (396 | ) | $ | 476 | $ | 1,198 | |||||
Adjustments to reconcile net income (loss) and changes in other operating assets and liabilities to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 207 | 152 | 146 | |||||||||
Impairment losses | 565 | 221 | — | |||||||||
Gain on sales of assets, net | (9 | ) | (22 | ) | (38 | ) | ||||||
Net changes in derivative contracts | 17 | (47 | ) | (786 | ) | |||||||
Lower of cost or market inventory adjustments | 22 | 32 | 65 | |||||||||
Potomac River settlement obligation | 32 | — | — | |||||||||
Other, net | 10 | — | 9 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Receivables—nonaffiliate | 38 | 342 | (218 | ) | ||||||||
Receivables—affiliate | (2 | ) | — | — | ||||||||
Funds on deposit | 87 | 26 | 109 | |||||||||
Prepaid rent | (44 | ) | (46 | ) | (24 | ) | ||||||
Inventories | (76 | ) | (35 | ) | 47 | |||||||
Other assets | 5 | (10 | ) | 7 | ||||||||
Accounts payable and accrued liabilities | (18 | ) | (326 | ) | 249 | |||||||
Payable—affiliate | — | 8 | 1 | |||||||||
Taxes accrued—nonaffiliate | 5 | (7 | ) | 2 | ||||||||
Other liabilities | 1 | 2 | (7 | ) | ||||||||
Total adjustments | 840 | 290 | (438 | ) | ||||||||
Net cash provided by operating activities of continuing operations | 444 | 766 | 760 | |||||||||
Net cash provided by operating activities of discontinued operations | — | — | 1 | |||||||||
Net cash provided by operating activities | 444 | 766 | 761 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Capital expenditures | (252 | ) | (666 | ) | (720 | ) | ||||||
Proceeds from the sales of assets | 8 | 25 | 40 | |||||||||
Restricted deposit payments and other | (866 | ) | 1 | (34 | ) | |||||||
Net cash used in investing activities of continuing operations | (1,110 | ) | (640 | ) | (714 | ) | ||||||
Net cash provided by investing activities of discontinued operations | — | — | 18 | |||||||||
Net cash used in investing activities | (1,110 | ) | (640 | ) | (696 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Redemption of preferred stock in affiliate | 295 | 84 | 31 | |||||||||
Repayments of long-term debt | (376 | ) | (45 | ) | (419 | ) | ||||||
Repayment of note payable—affiliate, net | — | — | (6 | ) | ||||||||
Capital contributions | 1,079 | — | 282 | |||||||||
Distributions to member | (222 | ) | (115 | ) | (297 | ) | ||||||
Net cash provided by (used in) financing activities | 776 | (76 | ) | (409 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 110 | 50 | (344 | ) | ||||||||
Cash and Cash Equivalents, beginning of year | 404 | 354 | 698 | |||||||||
Cash and Cash Equivalents, end of year | $ | 514 | $ | 404 | $ | 354 | ||||||
Supplemental Cash Flow Disclosures: | ||||||||||||
Cash paid for interest, net of amounts capitalized | $ | 185 | $ | 124 | $ | 175 |
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Operating revenues—nonaffiliate (including unrealized gains of $123 million, $137 million and $525 million, respectively) | $ | 347 | $ | 401 | $ | 492 | ||||||
Operating revenues—affiliate (including unrealized gains (losses) of $(43) million, $(1) million and $160 million, respectively) | 1,357 | 1,377 | 1,787 | |||||||||
Total operating revenues | 1,704 | 1,778 | 2,279 | |||||||||
Cost of fuel, electricity and other products—nonaffiliate (including unrealized (gains) losses of $0, $0 and $0, respectively) | 18 | 17 | 20 | |||||||||
Cost of fuel, electricity and other products—affiliate (including unrealized (gains) losses of $73 million, $(8) million and $9 million, respectively) | 680 | 510 | 545 | |||||||||
Total cost of fuel, electricity and other products | 698 | 527 | 565 | |||||||||
Gross Margin (excluding depreciation and amortization) | 1,006 | 1,251 | 1,714 | |||||||||
Operating Expenses: | ||||||||||||
Operations and maintenance—nonaffiliate | 299 | 245 | 239 | |||||||||
Operations and maintenance—affiliate | 194 | 189 | 173 | |||||||||
Depreciation and amortization | 141 | 98 | 92 | |||||||||
Impairment losses | 1,153 | 385 | — | |||||||||
Gain on sales of assets, net—affiliate | (3 | ) | (14 | ) | (8 | ) | ||||||
Total operating expenses, net | 1,784 | 903 | 496 | |||||||||
Operating Income (Loss) | (778 | ) | 348 | 1,218 | ||||||||
Other Expense (Income), net: | ||||||||||||
Interest expense | 3 | 3 | 3 | |||||||||
Interest income | — | — | (3 | ) | ||||||||
Other, net | 1 | 1 | 1 | |||||||||
Total other expense, net | 4 | 4 | 1 | |||||||||
Income (Loss) Before Income Taxes | (782 | ) | 344 | 1,217 | ||||||||
Benefit for income taxes | (1 | ) | — | — | ||||||||
Net Income (Loss) | $ | (781 | ) | $ | 344 | $ | 1,217 | |||||
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED BALANCE SHEETS
December 31, | ||||||||||||
2010 | 2009 | |||||||||||
(in millions) | ||||||||||||
ASSETS | ||||||||||||
Current Assets: | ||||||||||||
Cash and cash equivalents | $ | 202 | $ | 125 | ||||||||
Funds on deposit | 2 | 14 | ||||||||||
Receivables—nonaffiliate | 21 | 27 | ||||||||||
Receivables—affiliate | 169 | 187 | ||||||||||
Derivative contract assets—nonaffiliate | 162 | 155 | ||||||||||
Derivative contract assets—affiliate | 245 | 464 | ||||||||||
Inventories | 122 | 117 | ||||||||||
Prepaid rent | 96 | 96 | ||||||||||
Other | 11 | 18 | ||||||||||
Total current assets | 1,030 | 1,203 | ||||||||||
Property, Plant and Equipment, net | 2,533 | 3,000 | ||||||||||
Noncurrent Assets: | ||||||||||||
Goodwill, net | — | 616 | ||||||||||
Other intangible assets, net | 71 | 138 | ||||||||||
Derivative contract assets—nonaffiliate | 516 | 399 | ||||||||||
Derivative contract assets—affiliate | 97 | 127 | ||||||||||
Prepaid rent | 348 | 304 | ||||||||||
Other | 31 | 20 | ||||||||||
Total noncurrent assets | 1,063 | 1,604 | ||||||||||
Total Assets | $ | 4,626 | $ | 5,807 | ||||||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||||||
Current Liabilities: | ||||||||||||
Current portion of long-term debt | $ | 4 | $ | 4 | ||||||||
Accounts payable and accrued liabilities | 63 | 168 | ||||||||||
Payable—affiliate | 106 | 123 | ||||||||||
Derivative contract liabilities—nonaffiliate | 18 | 4 | ||||||||||
Derivative contract liabilities—affiliate | 231 | 374 | ||||||||||
Contract retention liability | 132 | 112 | ||||||||||
Other | 8 | 2 | ||||||||||
Total current liabilities | 562 | 787 | ||||||||||
Noncurrent Liabilities: | ||||||||||||
Long-term debt, net of current portion | 18 | 21 | ||||||||||
Derivative contract liabilities—nonaffiliate | — | 13 | ||||||||||
Derivative contract liabilities—affiliate | 94 | 84 | ||||||||||
Other | 52 | 16 | ||||||||||
Total noncurrent liabilities | 164 | 134 | ||||||||||
Commitments and Contingencies | ||||||||||||
Member’s Equity: | ||||||||||||
Member’s interest | 3,900 | 5,024 | ||||||||||
Preferred stock in affiliate | — | (138 | ) | |||||||||
Total member’s equity | 3,900 | 4,886 | ||||||||||
Total Liabilities and Member’s Equity | $ | 4,626 | $ | 5,807 | ||||||||
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY
Preferred | Total | |||||||||||
Member’s | Stock in | Member’s | ||||||||||
Interest | Affiliate | Equity | ||||||||||
(in millions) | ||||||||||||
Balance, December 31, 2007 | $ | 3,636 | $ | (229 | ) | $ | 3,407 | |||||
Net income | 1,217 | — | 1,217 | |||||||||
Amortization of discount on preferred stock in affiliate | 13 | (13 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 31 | 31 | |||||||||
Distributions to member | (325 | ) | — | (325 | ) | |||||||
Capital contributions | 250 | — | 250 | |||||||||
Adoption of accounting guidance related to fair value measurement | 3 | — | 3 | |||||||||
Balance, December 31, 2008 | 4,794 | (211 | ) | 4,583 | ||||||||
Net income | 344 | — | 344 | |||||||||
Amortization of discount on preferred stock in affiliate | 11 | (11 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 84 | 84 | |||||||||
Distribution to member | (125 | ) | — | (125 | ) | |||||||
Balance, December 31, 2009 | 5,024 | (138 | ) | 4,886 | ||||||||
Net loss | (781 | ) | — | (781 | ) | |||||||
Amortization of discount on preferred stock in affiliate | 7 | (7 | ) | — | ||||||||
Redemption of preferred stock in affiliate | — | 145 | 145 | |||||||||
Distribution to member | (350 | ) | — | (350 | ) | |||||||
Balance, December 31, 2010 | $ | 3,900 | $ | — | $ | 3,900 | ||||||
F-9
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(Wholly-Owned Indirect Subsidiary of GenOn Energy, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net income (loss) | $ | (781 | ) | $ | 344 | $ | 1,217 | |||||
Adjustments to reconcile net income (loss) and changes in other operating assets and liabilities to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 141 | 98 | 92 | |||||||||
Impairment losses | 1,153 | 385 | — | |||||||||
Gain on sales of assets, net | (3 | ) | (14 | ) | (8 | ) | ||||||
Net changes in derivative contracts | (7 | ) | (144 | ) | (676 | ) | ||||||
Lower of cost or market inventory adjustments | 13 | 29 | 14 | |||||||||
Potomac River settlement obligation | 32 | — | — | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
Nonaffiliate accounts receivable, net | 6 | (11 | ) | (7 | ) | |||||||
Affiliate accounts receivable, net | 18 | 24 | (69 | ) | ||||||||
Funds on deposit | — | — | 2 | |||||||||
Prepaid rent | (44 | ) | (46 | ) | (24 | ) | ||||||
Inventories | (18 | ) | (17 | ) | (23 | ) | ||||||
Other assets | 6 | (9 | ) | 1 | ||||||||
Accounts payable and accrued liabilities | 6 | — | (1 | ) | ||||||||
Payable—affiliate | (17 | ) | (19 | ) | 66 | |||||||
Taxes accrued—nonaffiliate | 6 | (7 | ) | 2 | ||||||||
Other liabilities | 2 | (6 | ) | 11 | ||||||||
Total adjustments | 1,294 | 263 | (620 | ) | ||||||||
Net cash provided by operating activities | 513 | 607 | 597 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Capital expenditures | (233 | ) | (578 | ) | (641 | ) | ||||||
Proceeds from the sales of assets | 4 | 14 | 8 | |||||||||
Restricted deposit payments and other | 1 | 1 | (34 | ) | ||||||||
Net cash used in investing activities | (228 | ) | (563 | ) | (667 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Redemption of preferred stock in affiliate | 145 | 84 | 31 | |||||||||
Repayment of long-term debt | (3 | ) | (3 | ) | (2 | ) | ||||||
Capital contributions | — | — | 250 | |||||||||
Distributions to member | (350 | ) | (125 | ) | (325 | ) | ||||||
Other | — | — | (1 | ) | ||||||||
Net cash used in financing activities | (208 | ) | (44 | ) | (47 | ) | ||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 77 | — | (117 | ) | ||||||||
Cash and Cash Equivalents, beginning of year | 125 | 125 | 242 | |||||||||
Cash and Cash Equivalents, end of year | $ | 202 | $ | 125 | $ | 125 | ||||||
Supplemental Cash Flow Disclosures: | ||||||||||||
Cash paid for interest | $ | 2 | $ | 2 | $ | 2 |
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1. | Description of Business and Accounting and Reporting Policies |
![](https://capedge.com/proxy/10-K/0000950123-11-020718/h79786h7978601.gif)
(1) | GenOn Power Generation, LLC’s subsidiaries include former RRI Energy generating facilities acquired as a result of the Merger. |
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• | determining the fair value of certain derivative contracts; | |
• | estimating the useful lives of long-lived assets; | |
• | determining the value of asset retirement obligations; | |
• | estimating future cash flows in determining impairments of long-lived assets, definite-lived intangible assets and goodwill (GenOn Mid-Atlantic); and | |
• | estimating losses to be recorded for contingent liabilities. |
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Power generation revenues | $ | 1,122 | $ | 805 | $ | 1,841 | ||||||
Contracted and capacity revenues | 560 | 592 | 612 | |||||||||
Fuel sales and proprietary trading revenues | 29 | 67 | 90 | |||||||||
Power hedging revenues | 394 | 845 | 645 | |||||||||
Total operating revenues | $ | 2,105 | $ | 2,309 | $ | 3,188 | ||||||
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Power generation revenues | $ | 990 | $ | 659 | $ | 1,370 | ||||||
Contracted and capacity revenues | 335 | 349 | 340 | |||||||||
Power hedging revenues | 379 | 770 | 569 | |||||||||
Total operating revenues | $ | 1,704 | $ | 1,778 | $ | 2,279 | ||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Funds deposited with the trustee to discharge the GenOn North America senior notes, due 2013(1) | $ | 866 | $ | — | ||||
Cash collateral posted(2) | 120 | 83 | ||||||
GenOn North America deposits(3) | — | 124 | ||||||
Total current and noncurrent funds on deposit | 986 | 207 | ||||||
Less: Current funds on deposit | 949 | 180 | ||||||
Total noncurrent funds on deposit | $ | 37 | $ | 27 | ||||
(1) | See note 4. | |
(2) | Represents cash collateral posted for energy trading and marketing and other operating activities; includes $32 million related to the Potomac River Settlement, see notes 3(d) and 10. | |
(3) | Represents deposits posted under GenOn North America senior secured term loans to support the issuance of letters of credit. These amounts were returned in 2010 as a result of the repayment of the GenOn North America senior secured term loans. |
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Cash collateral posted(1) | $ | 32 | $ | 33 | ||||
Total current and noncurrent funds on deposit | 32 | 33 | ||||||
Less: Current funds on deposit | 2 | 14 | ||||||
Total noncurrent funds on deposit | $ | 30 | $ | 19 | ||||
(1) | Represents amount related to the Potomac River Settlement, see notes 3(d) and 10. |
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Fuel inventory: | ||||||||
Fuel oil | $ | 136 | $ | 99 | ||||
Coal | 52 | 52 | ||||||
Other | 1 | 1 | ||||||
Materials and supplies | 72 | 66 | ||||||
Purchased emissions allowances | 34 | 23 | ||||||
Total inventories | $ | 295 | $ | 241 | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Fuel inventory: | ||||||||
Fuel oil | $ | 20 | $ | 20 | ||||
Coal | 52 | 52 | ||||||
Other | 1 | 1 | ||||||
Materials and supplies | 49 | 43 | ||||||
Purchased emissions allowances | — | 1 | ||||||
Total inventories | $ | 122 | $ | 117 | ||||
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F-19
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Total interest costs | $ | 205 | $ | 209 | $ | 237 | ||||||
Capitalized and included in property, plant and equipment, net | (5 | ) | (72 | ) | (48 | ) | ||||||
Interest expense | $ | 200 | $ | 137 | $ | 189 | ||||||
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Balance, January 1 | $ | 29 | $ | 38 | $ | 49 | ||||||
Amortized | (8 | ) | (9 | ) | (10 | ) | ||||||
Accelerated amortization/write-offs(1)(2) | (9 | ) | — | (1 | ) | |||||||
Balance, December 31 | $ | 12 | $ | 29 | $ | 38 | ||||||
(1) | See note 4. | |
(2) | Amounts are considered a portion of the net carrying value of the related debt and are expensed when accelerated as a component of debt extinguishments. |
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2. | Financial Instruments |
(a) | Derivatives and Hedging Activities. |
Net Derivative | ||||||||||||||||||||
Derivative Contract Assets | Derivative Contract Liabilities | Contract | ||||||||||||||||||
Current | Long-Term | Current | Long-Term | Assets (Liabilities) | ||||||||||||||||
(in millions) | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||
Asset management | $ | 442 | $ | 623 | $ | (279 | ) | $ | (102 | ) | $ | 684 | ||||||||
Trading activities | 851 | 69 | (854 | ) | (71 | ) | (5 | ) | ||||||||||||
Total derivatives | $ | 1,293 | $ | 692 | $ | (1,133 | ) | $ | (173 | ) | $ | 679 | ||||||||
December 31, 2009 | ||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||
Asset management | $ | 669 | $ | 535 | $ | (404 | ) | $ | (99 | ) | $ | 701 | ||||||||
Trading activities | 747 | 64 | (746 | ) | (64 | ) | 1 | |||||||||||||
Total derivatives | $ | 1,416 | $ | 599 | $ | (1,150 | ) | $ | (163 | ) | $ | 702 | ||||||||
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2010 | 2009 | |||||||||||||||
Cost of Fuel, | Cost of Fuel, | |||||||||||||||
Electricity and | Electricity and | |||||||||||||||
Derivatives Not Designated as Hedging Instrument | Revenues | Other Products | Revenues | Other Products | ||||||||||||
(in millions) | ||||||||||||||||
Asset Management Commodity Contracts: | ||||||||||||||||
Unrealized | $ | 77 | $ | (89 | ) | $ | 111 | $ | 49 | |||||||
Realized(1) | 318 | (168 | ) | 745 | (74 | ) | ||||||||||
Total asset management | $ | 395 | $ | (257 | ) | $ | 856 | $ | (25 | ) | ||||||
Trading Commodity Contracts: | ||||||||||||||||
Unrealized | $ | (5 | ) | $ | — | $ | (113 | ) | $ | — | ||||||
Realized(1) | (23 | ) | — | 145 | — | |||||||||||
Total trading | $ | (28 | ) | $ | — | $ | 32 | $ | — | |||||||
Total derivatives | $ | 367 | $ | (257 | ) | $ | 888 | $ | (25 | ) | ||||||
(1) | Represents the total cash settlements of derivative financial instruments during each quarterly reporting period that existed at the beginning of each respective period. |
Notional Volumes at December 31, 2010 | ||||||||||||
Derivative | Derivative | Net | ||||||||||
Contract | Contract | Derivative | ||||||||||
Derivative Instrument | Assets | Liabilities | Contracts | |||||||||
(in millions) | ||||||||||||
Commodity Contracts (in equivalent MWh): | ||||||||||||
Power(1) | (23 | ) | (15 | ) | (38 | ) | ||||||
Natural gas | (28 | ) | 29 | 1 | ||||||||
Fuel oil | 2 | (3 | ) | (1 | ) | |||||||
Coal | 9 | 7 | 16 |
Notional Volumes at December 31, 2009 | ||||||||||||
Derivative | Derivative | Net | ||||||||||
Contract | Contract | Derivative | ||||||||||
Derivative Instrument | Assets | Liabilities | Contracts | |||||||||
(in millions) | ||||||||||||
Commodity Contracts (in equivalent MWh): | ||||||||||||
Power(1) | (82 | ) | 38 | (44 | ) | |||||||
Natural gas | (32 | ) | 32 | — | ||||||||
Fuel oil | 3 | (4 | ) | (1 | ) | |||||||
Coal | 1 | (1 | ) | — |
(1) | Includes MWh equivalent of natural gas transactions used to hedge power economically. |
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Net Derivative | ||||||||||||||||||||
Derivative Contract Assets | Derivative Contract Liabilities | Contract | ||||||||||||||||||
Current | Long-Term | Current | Long-Term | Assets (Liabilities) | ||||||||||||||||
(in millions) | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||
Asset management—nonaffiliate | $ | 162 | $ | 516 | $ | (18 | ) | $ | — | $ | 660 | |||||||||
Asset management—affiliate | 245 | 97 | (231 | ) | (94 | ) | 17 | |||||||||||||
Total derivatives | $ | 407 | $ | 613 | $ | (249 | ) | $ | (94 | ) | $ | 677 | ||||||||
December 31, 2009 | ||||||||||||||||||||
Commodity Contracts: | ||||||||||||||||||||
Asset management—nonaffiliate | $ | 155 | $ | 399 | $ | (4 | ) | $ | (13 | ) | $ | 537 | ||||||||
Asset management—affiliate | 464 | 127 | (374 | ) | (84 | ) | 133 | |||||||||||||
Total derivatives | $ | 619 | $ | 526 | $ | (378 | ) | $ | (97 | ) | $ | 670 | ||||||||
2010 | 2009 | |||||||||||||||
Cost of Fuel, | Cost of Fuel, | |||||||||||||||
Electricity and | Electricity and | |||||||||||||||
Derivatives Not Designated as Hedging Instrument | Revenues | Other Products | Revenues | Other Products | ||||||||||||
(in millions) | ||||||||||||||||
Asset Management Commodity Contracts: | ||||||||||||||||
Unrealized | $ | 80 | $ | (73 | ) | $ | 136 | $ | 8 | |||||||
Realized(1) | 300 | (128 | ) | 644 | 4 | |||||||||||
Total asset management | $ | 380 | $ | (201 | ) | $ | 780 | $ | 12 | |||||||
(1) | Represents the total cash settlements of derivative financial instruments during each quarterly reporting period that existed at the beginning of each respective period. |
Notional Volumes at December 31, 2010 | ||||||||||||
Derivative | Derivative | Net | ||||||||||
Contract | Contract | Derivative | ||||||||||
Derivative Instrument | Assets | Liabilities | Contracts | |||||||||
(in millions) | ||||||||||||
Commodity Contracts (in equivalent MWh): | ||||||||||||
Power(1) | (40 | ) | 4 | (36 | ) | |||||||
Coal | 6 | 10 | 16 |
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Notional Volumes at December 31, 2009 | ||||||||||||
Derivative | Derivative | Net | ||||||||||
Contract | Contract | Derivative | ||||||||||
Derivative Instrument | Assets | Liabilities | Contracts | |||||||||
(in millions) | ||||||||||||
Commodity Contracts (in equivalent MWh): | ||||||||||||
Power(1) | (79 | ) | 34 | (45 | ) | |||||||
Coal | 1 | — | 1 |
(1) | Includes MWh equivalent of natural gas transactions used to hedge power economically. |
(b) | Fair Value Measurements. |
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December 31, 2010 | ||||||||||||||||
Total | ||||||||||||||||
Level 1(1) | Level 2(1)(2) | Level 3 | Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Derivative contract assets: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 1 | $ | 1,022 | $ | 2 | $ | 1,025 | ||||||||
Fuel | 4 | 3 | 33 | 40 | ||||||||||||
Total Asset Management | 5 | 1,025 | 35 | 1,065 | ||||||||||||
Trading Activities | 530 | 385 | 5 | 920 | ||||||||||||
Total derivative contract assets | $ | 535 | $ | 1,410 | $ | 40 | $ | 1,985 | ||||||||
Derivative contract liabilities: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 12 | $ | 248 | $ | 4 | $ | 264 | ||||||||
Fuel | 18 | — | 99 | 117 | ||||||||||||
Total Asset Management | 30 | 248 | 103 | 381 | ||||||||||||
Trading Activities | 533 | 389 | 3 | 925 | ||||||||||||
Total derivative contract liabilities | $ | 563 | $ | 637 | $ | 106 | $ | 1,306 | ||||||||
Interest-bearing funds(3) | $ | 547 | $ | — | $ | — | $ | 547 |
(1) | Transfers between Level 1 and Level 2 are recognized as of the end of the reporting period. There were no significant transfers during 2010. | |
(2) | Option contracts comprised approximately 1% of GenOn Americas Generation’s net derivative contract assets. | |
(3) | Represent investments in money market funds and are included in cash and cash equivalents, funds on deposit and other noncurrent assets in the consolidated balance sheet. GenOn Americas Generation had $508 million of interest-bearing funds included in cash and cash equivalents, $2 million included in funds on deposit and $37 million included in other noncurrent assets. |
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December 31, 2009 | ||||||||||||||||
Total | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Derivative contract assets: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 2 | $ | 1,162 | $ | 14 | $ | 1,178 | ||||||||
Fuel | 11 | 8 | 7 | 26 | ||||||||||||
Total Asset Management | 13 | 1,170 | 21 | 1,204 | ||||||||||||
Trading Activities | 374 | 415 | 22 | 811 | ||||||||||||
Total derivative contract assets | $ | 387 | $ | 1,585 | $ | 43 | $ | 2,015 | ||||||||
Derivative contract liabilities: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 11 | $ | 475 | $ | 2 | $ | 488 | ||||||||
Fuel | 14 | 1 | — | 15 | ||||||||||||
Total Asset Management | 25 | 476 | 2 | 503 | ||||||||||||
Trading Activities | 368 | 433 | 9 | 810 | ||||||||||||
Total derivative contract liabilities | $ | 393 | $ | 909 | $ | 11 | $ | 1,313 | ||||||||
Interest-bearing funds(1) | $ | 564 | $ | — | $ | — | $ | 564 |
(1) | Represent investments in money market funds and are included in cash and cash equivalents, funds on deposit and other noncurrent assets in the consolidated balance sheet. GenOn Americas Generation had $400 million of interest-bearing funds included in cash and cash equivalents, $137 million included in funds on deposit and $27 million included in other noncurrent assets. |
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Net Derivatives Contracts (Level 3) | ||||||||||||
Asset | ||||||||||||
Management | Trading | Total | ||||||||||
(in millions) | ||||||||||||
Balance, January 1, 2009 (net asset (liability)) | $ | 24 | $ | 22 | $ | 46 | ||||||
Total gains (losses) realized/unrealized: | ||||||||||||
Included in earnings(1) | (58 | ) | (62 | ) | (120 | ) | ||||||
Purchases, issuances and settlements (net)(2) | 54 | 53 | 107 | |||||||||
Transfers in and out of Level 3(3) | (1 | ) | — | (1 | ) | |||||||
Balance, December 31, 2009 (net asset (liability)) | 19 | 13 | 32 | |||||||||
Total gains (losses) realized/unrealized: | ||||||||||||
Included in earnings(1) | 17 | (49 | ) | (32 | ) | |||||||
Purchases, issuances and settlements (net)(2) | (142 | ) | 39 | (103 | ) | |||||||
Transfers in and out of Level 3(3) | 38 | (1 | ) | 37 | ||||||||
Balance, December 31, 2010 (net asset (liability)) | $ | (68 | ) | $ | 2 | $ | (66 | ) | ||||
(1) | Reflects the total gains or losses on contracts included in Level 3 at the beginning of each quarterly reporting period and at the end of each quarterly reporting period, and contracts entered into during each quarterly reporting period that remain at the end of each quarterly reporting period. Also reflects GenOn Americas Generation’s coal agreements that were initially recognized at fair value in the second quarter of 2010. | |
(2) | Represents the total cash settlements of contracts during each quarterly reporting period that existed at the beginning of each quarterly reporting period. | |
(3) | Denotes the total contracts that existed at the beginning of each quarterly reporting period and were still held at the end of each quarterly reporting period that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during each quarterly reporting period. Amounts reflect fair value as of the end of each quarterly reporting period. |
2010 | 2009 | |||||||||||||||||||||||
Cost of Fuel, | Cost of Fuel, | |||||||||||||||||||||||
Electricity | Electricity | |||||||||||||||||||||||
Operating | and Other | Operating | and Other | |||||||||||||||||||||
Revenues | Products | Total | Revenues | Products | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Gains (losses) included in income | $ | (24 | ) | $ | (74 | ) | $ | (98 | ) | $ | (22 | ) | $ | 8 | $ | (14 | ) | |||||||
Gains (losses) included in income (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at December 31 | $ | (1 | ) | $ | (67 | ) | $ | (68 | ) | $ | 7 | $ | 7 | $ | 14 |
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December 31, 2010 | ||||||||||||||||
Total | ||||||||||||||||
Level 1(1) | Level 2(1)(2) | Level 3 | Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Derivative contract assets: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 1 | $ | 986 | $ | — | $ | 987 | ||||||||
Fuel | — | 2 | 31 | 33 | ||||||||||||
Total derivative contract assets | $ | 1 | $ | 988 | $ | 31 | $ | 1,020 | ||||||||
Derivative contract liabilities: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 12 | $ | 231 | $ | 1 | $ | 244 | ||||||||
Fuel | — | — | 99 | 99 | ||||||||||||
Total derivative contract liabilities | $ | 12 | $ | 231 | $ | 100 | $ | 343 | ||||||||
Interest-bearing funds(3) | $ | 234 | $ | — | $ | — | $ | 234 |
(1) | Transfers between Level 1 and Level 2 are recognized as of the end of the reporting period. There were no significant transfers during 2010. | |
(2) | Option contracts comprised less than 1% of GenOn Mid-Atlantic’s net derivative contract assets. | |
(3) | Represent investments in money market funds and are included in cash and cash equivalents, funds on deposit and other noncurrent assets in the consolidated balance sheet. GenOn Mid-Atlantic had $202 million of interest-bearing funds included in cash and cash equivalents, $2 million included in funds on deposit and $30 million included in other noncurrent assets. |
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December 31, 2009 | ||||||||||||||||
Total | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Fair Value | |||||||||||||
(in millions) | ||||||||||||||||
Derivative contract assets: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 2 | $ | 1,130 | $ | 6 | $ | 1,138 | ||||||||
Fuel | — | — | 7 | 7 | ||||||||||||
Total derivative contract assets | $ | 2 | $ | 1,130 | $ | 13 | $ | 1,145 | ||||||||
Derivative contract liabilities: | ||||||||||||||||
Commodity Contracts | ||||||||||||||||
Asset Management: | ||||||||||||||||
Power | $ | 11 | $ | 463 | $ | — | $ | 474 | ||||||||
Fuel | — | 1 | — | 1 | ||||||||||||
Total derivative contract liabilities | $ | 11 | $ | 464 | $ | — | $ | 475 | ||||||||
Interest-bearing funds(1) | $ | 158 | $ | — | $ | — | $ | 158 |
(1) | Represent investments in money market funds and are included in cash and cash equivalents, funds on deposit and other noncurrent assets in the consolidated balance sheet. GenOn Americas Generation had $125 million of interest-bearing funds included in cash and cash equivalents, $14 million included in funds on deposit and $19 million included in other noncurrent assets. |
Asset | ||||
Management | ||||
(in millions) | ||||
Balance, January 1, 2009 (net asset (liability)) | $ | — | ||
Total gains (losses) realized/unrealized: | ||||
Included in earnings(1) | 10 | |||
Purchases, issuances and settlements (net)(2) | 4 | |||
Transfers in and out of Level 3(3) | (1 | ) | ||
Balance, December 31, 2009 (net asset (liability)) | 13 | |||
Total gains (losses) realized/unrealized: | ||||
Included in earnings(1) | 6 | |||
Purchases, issuances and settlements (net)(2) | (126 | ) | ||
Transfers in and out of Level 3(3) | 38 | |||
Balance, December 31, 2010 (net asset (liability)) | $ | (69 | ) | |
(1) | Reflects the total gains or losses on contracts included in Level 3 at the beginning of each quarterly reporting period and at the end of each quarterly reporting period, and contracts entered into during each |
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quarterly reporting period that remain at the end of each quarterly reporting period. Also reflects GenOn Mid-Atlantic’s coal agreements that were initially recognized at fair value in the second quarter of 2010. | ||
(2) | Represents the total cash settlements of contracts during each quarterly reporting period that existed at the beginning of each quarterly reporting period. | |
(3) | Denotes the total contracts that existed at the beginning of each quarterly reporting period and were still held at the end of each quarterly reporting period that were either previously categorized as a higher level for which the inputs to the model became unobservable or assets and liabilities that were previously classified as Level 3 for which the lowest significant input became observable during each quarterly reporting period. Amounts reflect fair value as of the end of each quarterly reporting period. |
2010 | 2009 | |||||||||||||||||||||||
Cost of | Cost of | |||||||||||||||||||||||
Fuel, | Fuel, | |||||||||||||||||||||||
Electricity | Electricity | |||||||||||||||||||||||
Operating | and Other | Operating | and Other | |||||||||||||||||||||
Revenues | Products | Total | Revenues | Products | Total | |||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Gains (losses) included in income | $ | (7 | ) | $ | (75 | ) | $ | (82 | ) | $ | 6 | $ | 7 | $ | 13 | |||||||||
Gains (losses) included in income (or changes in net assets) attributable to the change in unrealized gains or losses relating to assets still held at December 31 | $ | (7 | ) | $ | (68 | ) | $ | (75 | ) | $ | 6 | $ | 7 | $ | 13 |
(c) | Counterparty Credit Concentration Risk. |
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December 31, 2010 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
Exposure | Exposure | Exposure | % | |||||||||||||||||
Before | Before | Net of | of Net | |||||||||||||||||
Credit Rating Equivalent | Collateral(1) | Collateral(2) | Collateral(3) | Collateral | Exposure | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Clearing and Exchange | $ | 987 | $ | 39 | $ | 39 | $ | — | — | |||||||||||
Investment Grade: | ||||||||||||||||||||
Financial institutions | 806 | 707 | — | 707 | 78 | % | ||||||||||||||
Energy companies | 337 | 130 | 2 | 128 | 14 | % | ||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Non-investment Grade: | ||||||||||||||||||||
Financial institutions | — | — | — | — | — | |||||||||||||||
Energy companies | 15 | 15 | — | 15 | 2 | % | ||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
No External Ratings: | ||||||||||||||||||||
Internally-rated investment grade | 34 | 27 | — | 27 | 3 | % | ||||||||||||||
Internally-rated non-investment grade | 26 | 26 | — | 26 | 3 | % | ||||||||||||||
Not internally rated | — | — | — | — | — | |||||||||||||||
Total | $ | 2,205 | $ | 944 | $ | 41 | $ | 903 | 100 | % | ||||||||||
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December 31, 2009 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
Exposure | Exposure | Exposure | % | |||||||||||||||||
Before | Before | Net of | of Net | |||||||||||||||||
Credit Rating Equivalent | Collateral(1) | Collateral(2) | Collateral(3) | Collateral | Exposure | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Clearing and Exchange | $ | 790 | $ | 96 | $ | 96 | $ | — | — | |||||||||||
Investment Grade: | ||||||||||||||||||||
Financial institutions | 997 | 646 | 12 | 634 | 81 | % | ||||||||||||||
Energy companies | 497 | 125 | 13 | 112 | 14 | % | ||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Non-investment Grade: | ||||||||||||||||||||
Financial institutions | — | — | — | — | — | |||||||||||||||
Energy companies | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
No External Ratings: | ||||||||||||||||||||
Internally-rated investment grade | 34 | 27 | — | 27 | 4 | % | ||||||||||||||
Internally-rated non-investment grade | 8 | 8 | — | 8 | 1 | % | ||||||||||||||
Not internally rated | — | — | — | — | — | |||||||||||||||
Total | $ | 2,326 | $ | 902 | $ | 121 | $ | 781 | 100 | % | ||||||||||
(1) | Gross exposure before collateral represents credit exposure, including realized and unrealized transactions, before (a) applying the terms of master netting agreements with counterparties and (b) netting of transactions with clearing brokers and exchanges. The table excludes amounts related to contracts classified as normal purchases/normal sales and non-derivative contractual commitments that are not recorded at fair value in the consolidated balance sheets, except for any related accounts receivable. Such contractual commitments contain credit and economic risk if a counterparty does not perform. Non-performance could have a material adverse effect on the future results of operations, financial condition and cash flows. | |
(2) | Net exposure before collateral represents the credit exposure, including both realized and unrealized transactions, after applying the terms of master netting agreements. | |
(3) | Collateral includes cash and letters of credit received from counterparties. |
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December 31, 2010 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
Exposure | Exposure | Exposure | % | |||||||||||||||||
Before | Before | Net of | of Net | |||||||||||||||||
Credit Rating Equivalent | Collateral(1),(4) | Collateral(2) | Collateral(3) | Collateral | Exposure | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Clearing and Exchange | $ | — | $ | — | $ | — | $ | — | — | |||||||||||
Investment Grade: | ||||||||||||||||||||
Financial institutions | 714 | 695 | — | 695 | 95 | % | ||||||||||||||
Energy companies | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Non-investment Grade: | ||||||||||||||||||||
Financial institutions | — | — | — | — | — | |||||||||||||||
Energy companies | 13 | 13 | — | 13 | 2 | % | ||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
No External Ratings: | ||||||||||||||||||||
Internally-rated investment grade | — | — | — | — | — | |||||||||||||||
Internally-rated non-investment grade | 25 | 25 | — | 25 | 3 | % | ||||||||||||||
Not internally rated | — | — | — | — | — | |||||||||||||||
Total | $ | 752 | $ | 733 | $ | — | $ | 733 | 100 | % | ||||||||||
December 31, 2009 | ||||||||||||||||||||
Gross | Net | |||||||||||||||||||
Exposure | Exposure | Exposure | ||||||||||||||||||
Before | Before | Net of | % of Net | |||||||||||||||||
Credit Rating Equivalent | Collateral(1),(4) | Collateral(2) | Collateral(3) | Collateral | Exposure | |||||||||||||||
(dollars in millions) | ||||||||||||||||||||
Clearing and Exchange | $ | — | $ | — | $ | — | $ | — | — | |||||||||||
Investment Grade: | ||||||||||||||||||||
Financial institutions | 595 | 578 | — | 578 | 99 | % | ||||||||||||||
Energy companies | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Non-investment Grade: | ||||||||||||||||||||
Financial institutions | — | — | — | — | — | |||||||||||||||
Energy companies | — | — | — | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
No External Ratings: | ||||||||||||||||||||
Internally-rated investment grade | — | — | — | — | — | |||||||||||||||
Internally-rated non-investment grade | 8 | 8 | — | 8 | 1 | % | ||||||||||||||
Not internally rated | — | — | — | — | — | |||||||||||||||
Total | $ | 603 | $ | 586 | $ | — | $ | 586 | 100 | % | ||||||||||
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(1) | Gross exposure before collateral represents credit exposure, including realized and unrealized transactions, before (a) applying the terms of master netting agreements with counterparties and (b) netting of transactions with clearing brokers and exchanges. The table excludes amounts related to contracts classified as normal purchases/normal sales and non-derivative contractual commitments that are not recorded at fair value in the consolidated balance sheets, except for any related accounts receivable. Such contractual commitments contain credit and economic risk if a counterparty does not perform. Non-performance could have a material adverse effect on the future results of operations, financial condition and cash flows. | |
(2) | Net exposure before collateral represents the credit exposure, including both realized and unrealized transactions, after applying the terms of master netting agreements. | |
(3) | Collateral includes cash and letters of credit received from counterparties. | |
(4) | Amounts do not include exposures with affiliates or exposures incurred by GenOn Mid-Atlantic in connection with transactions entered into with external counterparties by affiliates on its behalf, with the exception of coal purchases. |
(d) | GenOn Americas Generation and GenOn Mid-Atlantic Credit Risk. |
(e) | Fair Values of Other Financial Instruments (GenOn Americas Generation). |
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December 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Carrying | Carrying | Fair | ||||||||||||||
Amount | Fair Value | Amount | Value | |||||||||||||
(in millions) | ||||||||||||||||
Liabilities: | ||||||||||||||||
Long and short-term debt(1) | $ | 2,255 | $ | 2,272 | $ | 2,630 | $ | 2,558 |
(1) | The fair value of GenOn Americas Generation’s long- and short-term debt is estimated using quoted market prices, when available. |
3. | Long-Lived Assets |
(a) | Property, Plant and Equipment, Net. |
December 31, | Depreciable | |||||||||||
2010 | 2009 | Lives (years)(1) | ||||||||||
(in millions) | ||||||||||||
Production | $ | 2,695 | $ | 2,688 | 11 to 54 | |||||||
Leasehold improvements on leased generating facilities | 1,056 | 1,329 | 5 to 34 | |||||||||
Construction work in progress | 65 | 216 | — | |||||||||
Other | 129 | 130 | 2 to 12 | |||||||||
Total | 3,945 | 4,363 | ||||||||||
Accumulated depreciation and amortization | (868 | ) | (757 | ) | ||||||||
Total property, plant and equipment, net | $ | 3,077 | $ | 3,606 | ||||||||
(1) | GenOn Americas Generation completed a depreciation study in the first quarter of 2010 for the generating facilities that resulted in a change to the estimated useful lives of its long-lived assets. The change in useful lives resulted in an increase of approximately $2 million in depreciation and amortization expense during 2010. |
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Depreciable | ||||||||||||
December 31, | Lives | |||||||||||
2010 | 2009 | (years)(1) | ||||||||||
(in millions) | ||||||||||||
Production | $ | 1,885 | $ | 1,871 | 11 to 54 | |||||||
Leasehold improvements on leased generating facilities | 1,056 | 1,329 | 5 to 34 | |||||||||
Construction work in progress | 56 | 203 | — | |||||||||
Other | 49 | 50 | 2 to 10 | |||||||||
Total | 3,046 | 3,453 | ||||||||||
Accumulated depreciation and amortization | (513 | ) | (453 | ) | ||||||||
Total property, plant and equipment, net | $ | 2,533 | $ | 3,000 | ||||||||
(1) | GenOn Mid-Atlantic completed a depreciation study in the first quarter of 2010 for the generating facilities that resulted in a change to the estimated useful lives of its long-lived assets. The change in useful lives resulted in a decrease of approximately $3 million in depreciation and amortization expense during 2010. |
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Depreciation expense | $ | 190 | $ | 134 | $ | 128 |
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Depreciation expense | $ | 135 | $ | 92 | $ | 86 |
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(b) | Intangible Assets, Net. |
December 31, 2010 | December 31, 2009 | |||||||||||||||||||
Weighted Average | Gross Carrying | Accumulated | Gross Carrying | Accumulated | ||||||||||||||||
Amortization Lives | Amount | Amortization | Amount | Amortization | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Trading rights | 16 years | $ | 15 | $ | (6 | ) | $ | 15 | $ | (4 | ) | |||||||||
Development rights | 33 years | 13 | (2 | ) | 54 | (12 | ) | |||||||||||||
Emissions allowances | 32 years | 107 | (28 | ) | 149 | (39 | ) | |||||||||||||
Other intangibles | 23 years | 4 | (2 | ) | 12 | (4 | ) | |||||||||||||
Total intangible assets | $ | 139 | $ | (38 | ) | $ | 230 | $ | (59 | ) | ||||||||||
December 31, 2010 | December 31, 2009 | |||||||||||||||||||
Weighted Average | Gross Carrying | Accumulated | Gross Carrying | Accumulated | ||||||||||||||||
Amortization Lives | Amount | Amortization | Amount | Amortization | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Development rights | 30 years | $ | 6 | $ | — | $ | 47 | $ | (11 | ) | ||||||||||
Emissions allowances | 34 years | 89 | (26 | ) | 131 | (37 | ) | |||||||||||||
Other intangibles | 23 years | 4 | (2 | ) | 12 | (4 | ) | |||||||||||||
Total intangible assets | $ | 99 | $ | (28 | ) | $ | 190 | $ | (52 | ) | ||||||||||
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Amortization expense | $ | 9 | $ | 8 | $ | 8 |
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Amortization expense | $ | 6 | $ | 6 | $ | 6 |
2011 | $ | 6 | ||
2012 | 6 | |||
2013 | 6 | |||
2014 | 6 | |||
2015 | 4 |
2011 | $ | 3 | ||
2012 | 3 | |||
2013 | 3 | |||
2014 | 3 | |||
2015 | 3 |
(c) | Goodwill, Net (GenOn Mid-Atlantic). |
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• | electricity, fuel and emissions prices; | |
• | capacity payments under the RPM provisions of PJM’s tariff; | |
• | costs related to the Montgomery County CO2 emissions levy (Dickerson generating facility); | |
• | costs of CO2 allowances under a potential federalcap-and-trade program and other environmental regulations; | |
• | timing of announced transmission projects; | |
• | timing and extent of generating capacity additions and retirements; and | |
• | future capital expenditure requirements related to the generating facilities. |
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Balance, January 1, 2008 | $ | 799 | ||
Impairment loss | — | |||
Balance, December 31, 2008 | 799 | |||
Impairment loss | (183 | ) | ||
Balance, December 31, 2009 | 616 | |||
Impairment loss | (616 | ) | ||
Balance, December 31, 2010 | $ | — | ||
Fair Value at December 31, 2010 | ||||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||||
in Active | Other | Other | ||||||||||||||||||
Markets for | Observable | Unobservable | Loss | |||||||||||||||||
Identical Assets | Inputs | Inputs | Included in | |||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||
(in millions) | ||||||||||||||||||||
GenOn Mid-Atlantic goodwill(1) | $ | — | $ | — | $ | — | $ | — | $ | 616 | ||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | 616 | ||||||||||
Fair Value at December 31, 2009 | ||||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||||
in Active | Other | Other | ||||||||||||||||||
Markets for | Observable | Unobservable | Loss | |||||||||||||||||
Identical Assets | Inputs | Inputs | Included in | |||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||
(in millions) | ||||||||||||||||||||
GenOn Mid-Atlantic goodwill(1) | $ | — | $ | — | $ | 616 | $ | 616 | $ | 183 | ||||||||||
Total | $ | — | $ | — | $ | 616 | $ | 616 | $ | 183 | ||||||||||
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(1) | Goodwill is recorded at GenOn Mid-Atlantic on its standalone balance sheet. The goodwill does not exist at GenOn Americas Generation’s balance sheets. As such, the goodwill impairment loss and related goodwill balance are eliminated upon consolidation at GenOn North America. |
(d) | Impairments on Assets Held and Used. |
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Fair Value at December 31, 2010 | ||||||||||||||||||||||||
Quoted Prices | Significant | |||||||||||||||||||||||
in Active | Significant | Other | ||||||||||||||||||||||
Markets for | Other | Unobservable | Loss | |||||||||||||||||||||
Identical Assets | Observable Inputs | Inputs | Included in | |||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Dickerson generating facility | $ | — | $ | — | $ | 91 | $ | 91 | $ | 463 | ||||||||||||||
Dickerson intangible assets | — | — | 8 | 8 | 60 | |||||||||||||||||||
Potomac River generating facility(1) | — | — | 1 | 1 | 42 | |||||||||||||||||||
Total | $ | — | $ | — | $ | 100 | $ | 100 | $ | 565 | ||||||||||||||
(1) | The remaining carrying value represents the fair value of the related SO2 and NOx emissions allowances included in property, plant and equipment, net. |
Fair Value at December 31, 2010 | ||||||||||||||||||||||||
Quoted Prices | Significant | |||||||||||||||||||||||
in Active | Significant | Other | ||||||||||||||||||||||
Markets for | Other | Unobservable | Loss | |||||||||||||||||||||
Identical Assets | Observable Inputs | Inputs | Included in | |||||||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||
Dickerson generating facility | $ | — | $ | — | $ | 86 | $ | 86 | $ | 437 | ||||||||||||||
Dickerson intangible assets | — | — | 8 | 8 | 60 | |||||||||||||||||||
Potomac River generating facility(1) | — | — | 1 | 1 | 40 | |||||||||||||||||||
Total | $ | — | $ | — | $ | 95 | $ | 95 | $ | 537 | ||||||||||||||
(1) | The remaining carrying value represents the fair value of the related SO2 and NOx emissions allowances included in property, plant and equipment, net. |
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Fair Value at December 31, 2009 | ||||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||||
in Active | Other | Other | ||||||||||||||||||
Markets for | Observable | Unobservable | Loss | |||||||||||||||||
Identical Assets | Inputs | Inputs | Included in | |||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Potomac River generating facility | $ | — | $ | — | $ | 37 | $ | 37 | $ | 207 | ||||||||||
Potrero intangible assets | — | — | — | — | 9 | |||||||||||||||
Contra Costa intangible assets | — | — | — | — | 5 | |||||||||||||||
Total | $ | — | $ | — | $ | 37 | $ | 37 | $ | 221 | ||||||||||
Fair Value at December 31, 2009 | ||||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||||
in Active | Other | Other | ||||||||||||||||||
Markets for | Observable | Unobservable | Loss | |||||||||||||||||
Identical Assets | Inputs | Inputs | Included in | |||||||||||||||||
(Level 1) | (Level 2) | (Level 3) | Total | Earnings | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Potomac River generating facility | $ | — | $ | — | $ | 37 | $ | 37 | $ | 202 | ||||||||||
Total | $ | — | $ | — | $ | 37 | $ | 37 | $ | 202 | ||||||||||
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(e) | Asset Retirement Obligations. |
2010 | 2009 | |||||||
(in millions) | ||||||||
Beginning balance January 1 | $ | 43 | $ | 40 | ||||
Revisions in estimated cash flows | 7 | — | ||||||
Accretion expense | 4 | 3 | ||||||
Ending balance December 31 | $ | 54 | $ | 43 | ||||
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2010 | 2009 | |||||||
(in millions) | ||||||||
Beginning balance January 1 | $ | 13 | $ | 12 | ||||
Revisions in estimated cash flows | 4 | — | ||||||
Accretion expense | 1 | 1 | ||||||
Ending balance December 31 | $ | 18 | $ | 13 | ||||
4. | Long-Term Debt |
(a) | Overview. |
December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||||||
Average | Average | |||||||||||||||||||||||||||
Stated | Stated | |||||||||||||||||||||||||||
Interest | Interest | |||||||||||||||||||||||||||
Rate(1) | Long-Term | Current | Rate(1) | Long-Term | Current | |||||||||||||||||||||||
(in millions, except interest rates) | ||||||||||||||||||||||||||||
Facilities, Bonds and Notes: | ||||||||||||||||||||||||||||
GenOn Americas Generation: | ||||||||||||||||||||||||||||
Senior unsecured notes, due 2011 | 8.30 | % | $ | — | $ | 535 | 8.30 | % | $ | 535 | $ | — | ||||||||||||||||
Senior unsecured notes, due 2021 | 8.50 | 450 | — | 8.50 | 450 | — | ||||||||||||||||||||||
Senior unsecured notes, due 2031 | 9.125 | 400 | — | 9.125 | 400 | — | ||||||||||||||||||||||
Unamortized debt discounts, net | — | (2 | ) | — | — | (3 | ) | — | ||||||||||||||||||||
GenOn North America: | ||||||||||||||||||||||||||||
Senior secured term loan | — | — | — | 2.13 | 303 | 70 | ||||||||||||||||||||||
Senior notes, due 2013(2) | 7.375 | — | 850 | 7.375 | 850 | — | ||||||||||||||||||||||
GenOn Mid-Atlantic: | ||||||||||||||||||||||||||||
GenOn Chalk Point capital lease, due 2011 to 2015 | 8.19 | 18 | 4 | 8.19 | 21 | 4 | ||||||||||||||||||||||
Total | $ | 866 | $ | 1,389 | $ | 2,556 | $ | 74 | ||||||||||||||||||||
(1) | The weighted average stated interest rates are at December 31, 2010 and 2009. | |
(2) | These notes were discharged at the closing of the Merger on December 3, 2010 and were redeemed on January 3, 2011 at a call price of 101.844% of the principal amount. |
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2011 | $ | 1,389 | (1) | |
2012 | 4 | |||
2013 | 4 | |||
2014 | 5 | |||
2015 | 5 | |||
2016 and thereafter | 850 | |||
Total | $ | 2,257 | ||
(1) | Includes $850 million of GenOn North America senior notes redeemed on January 3, 2011. |
(b) | Debt Financing Transactions Related to the Merger. |
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(c) | Debt and Capital Leases. |
(d) | Sources of Funds. |
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
GenOn Mid-Atlantic | $ | 3,698 | $ | 4,761 |
5. | Income Taxes |
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Current benefit: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | (1 | ) | — | — | ||||||||
Deferred provision: | ||||||||||||
Federal | 1 | — | — | |||||||||
State | — | — | — | |||||||||
Total provision (benefit) for income taxes | $ | — | $ | — | $ | — | ||||||
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
United States federal statutory income tax provision (benefit) | $ | (139 | ) | $ | 167 | $ | 419 | |||||
State and local income taxes, net of federal income taxes | 12 | 1 | 2 | |||||||||
LLC income not subject to federal taxation | 136 | (166 | ) | (420 | ) | |||||||
Change in deferred tax asset valuation allowance | (105 | ) | (2 | ) | (1 | ) | ||||||
Conversion of GenOn Kendall to disregarded entity | 58 | — | — | |||||||||
Merger related write off of NOLs | 38 | — | — | |||||||||
Tax provision | $ | — | $ | — | $ | — | ||||||
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2010 | 2009 | |||||||
(in millions) | ||||||||
Deferred Tax Assets: | ||||||||
Property and intangible assets | $ | — | $ | 65 | ||||
Loss carry forwards | 2 | 41 | ||||||
Subtotal | 2 | 106 | ||||||
Valuation allowance | — | (105 | ) | |||||
Net deferred tax assets | 2 | 1 | ||||||
Deferred Tax Liabilities: | ||||||||
Property and intangible assets | (3 | ) | — | |||||
Derivative contracts | — | (1 | ) | |||||
Net deferred tax liabilities | (3 | ) | (1 | ) | ||||
Net deferred taxes | $ | (1 | ) | $ | — | |||
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Current income tax provision: | ||||||||||||
Federal | $ | 7 | $ | 10 | $ | 2 | ||||||
State | 2 | 5 | 2 | |||||||||
Provision for income taxes | $ | 9 | $ | 15 | $ | 4 | ||||||
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
United States federal statutory income tax provision (benefit) | $ | (139 | ) | $ | 167 | $ | 419 | |||||
State and local income taxes, net of federal income taxes | 42 | 26 | 63 | |||||||||
Change in deferred tax asset valuation allowance | 55 | (167 | ) | (479 | ) | |||||||
Merger related write off of NOLs | 61 | — | — | |||||||||
Effect of IRC §382(1)(6) and §382(1)(5) | — | — | (1 | ) | ||||||||
Excess tax deductions related to bankruptcy transactions | — | (3 | ) | — | ||||||||
Other, net | (10 | ) | (8 | ) | 2 | |||||||
Tax provision | $ | 9 | $ | 15 | $ | 4 | ||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Deferred Tax Assets: | ||||||||
Reserves | $ | 14 | $ | 10 | ||||
Loss carry forwards | 228 | 359 | ||||||
Property and intangible assets | 238 | 83 | ||||||
Other, net | 42 | 54 | ||||||
Subtotal | 522 | 506 | ||||||
Valuation allowance | (253 | ) | (198 | ) | ||||
Net deferred tax assets | 269 | 308 | ||||||
Deferred Tax Liabilities: | ||||||||
Derivative contract assets and liabilities | (268 | ) | (281 | ) | ||||
Other, net | (1 | ) | (27 | ) | ||||
Net deferred tax liabilities | (269 | ) | (308 | ) | ||||
Net deferred taxes | $ | — | $ | — | ||||
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Current provision: | ||||||||||||
Federal | $ | 108 | $ | 182 | $ | 173 | ||||||
State | 21 | 40 | 41 | |||||||||
Deferred provision (benefit): | ||||||||||||
Federal | (159 | ) | (9 | ) | 219 | |||||||
State | (39 | ) | (7 | ) | 52 | |||||||
Total income taxes provision (benefit) | $ | (69 | ) | $ | 206 | $ | 485 | |||||
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
United States federal statutory income tax provision (benefit) | $ | (274 | ) | $ | 121 | $ | 426 | |||||
State and local income taxes, net | (11 | ) | 21 | 61 | ||||||||
Effect of IRC §382(1)(6) | — | — | (3 | ) | ||||||||
Impairment of non-deductible goodwill | 216 | 64 | — | |||||||||
Other | — | — | 1 | |||||||||
Tax provision (benefit) | $ | (69 | ) | $ | 206 | $ | 485 | |||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Deferred Tax Assets: | ||||||||
Property and intangible assets | $ | 26 | $ | — | ||||
Other, net | 21 | 5 | ||||||
Net deferred tax assets | 47 | 5 | ||||||
Deferred Tax Liabilities: | ||||||||
Property and intangible assets | — | (142 | ) | |||||
Derivative contracts | (266 | ) | (265 | ) | ||||
Other, net | — | (15 | ) | |||||
Net deferred tax liabilities | (266 | ) | (422 | ) | ||||
Net deferred taxes | $ | (219 | ) | $ | (417 | ) | ||
6. | Related Party Arrangements and Transactions |
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Cost of fuel, electricity and other products—affiliate | $ | 8 | $ | 9 | $ | 6 | ||||||
Operations and maintenance expense—affiliate | 163 | 155 | 147 | |||||||||
Total | $ | 171 | $ | 164 | $ | 153 | ||||||
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Cost of fuel, electricity and other products—affiliate | $ | 8 | $ | 8 | $ | 7 | ||||||
Operations and maintenance expense—affiliate | 98 | 84 | 78 | |||||||||
Total | $ | 106 | $ | 92 | $ | 85 | ||||||
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
GenOn Americas Generation | $ | 130 | $ | 135 | $ | 138 | ||||||
GenOn Mid-Atlantic | $ | 83 | $ | 91 | $ | 80 |
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7. | Commitments and Contingencies |
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(a) | Commitments. |
Off-Balance Sheet Arrangements and | ||||||||||||||||||||||||||||
Contractual Obligations by Year | ||||||||||||||||||||||||||||
Total | 2011 | 2012 | 2013 | 2014 | 2015 | >5 Years | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
GenOn Mid-Atlantic operating leases | $ | 1,730 | $ | 134 | $ | 132 | $ | 138 | $ | 131 | $ | 110 | $ | 1,085 | ||||||||||||||
Other operating leases | 39 | 5 | 3 | 4 | 4 | 4 | 19 | |||||||||||||||||||||
Fuel commitments | 914 | 371 | 334 | 209 | — | — | — | |||||||||||||||||||||
Maryland Healthy Air Act | 155 | 155 | — | — | — | — | — | |||||||||||||||||||||
Other | 287 | 137 | 36 | 19 | 13 | 14 | 68 | |||||||||||||||||||||
Total commitments | $ | 3,125 | $ | 802 | $ | 505 | $ | 370 | $ | 148 | $ | 128 | $ | 1,172 | ||||||||||||||
Off-Balance Sheet Arrangements and | ||||||||||||||||||||||||||||
Contractual Obligations by Year | ||||||||||||||||||||||||||||
Total | 2011 | 2012 | 2013 | 2014 | 2015 | >5 Years | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
Generating units operating leases | $ | 1,730 | $ | 134 | $ | 132 | $ | 138 | $ | 131 | $ | 110 | $ | 1,085 | ||||||||||||||
Other operating leases | 37 | 5 | 3 | 4 | 4 | 3 | 18 | |||||||||||||||||||||
Fuel commitments | 914 | 371 | 334 | 209 | — | — | — | |||||||||||||||||||||
Maryland Healthy Air Act | 155 | 155 | — | — | — | — | — | |||||||||||||||||||||
Other | 222 | 123 | 34 | 13 | 12 | 12 | 28 | |||||||||||||||||||||
Total commitments | $ | 3,058 | $ | 788 | $ | 503 | $ | 364 | $ | 147 | $ | 125 | $ | 1,131 | ||||||||||||||
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(b) | Cash Collateral. |
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Cash collateral posted—energy trading and marketing | $ | 80 | $ | 41 | ||||
Cash collateral posted—other operating activities | 40 | 42 | ||||||
Total | $ | 120 | $ | 83 | ||||
(c) | Guarantees (GenOn Americas Generation). |
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December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
Letters of credit—energy trading and marketing(1) | $ | 63 | $ | 51 | ||||
Letters of credit—rent reserves(1) | 101 | 101 | ||||||
Letters of credit—other operating activities(1) | 31 | 47 | ||||||
Surety bonds | 7 | 1 | ||||||
Total | $ | 202 | $ | 200 | ||||
(1) | At December 31, 2010, represents letters of credit posted by GenOn for the benefit of GenOn Americas Generation. |
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8. | Segment Reporting (GenOn Americas Generation) |
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Eastern | Energy | Other | ||||||||||||||||||||||||||
PJM | Northeast | California | Marketing | Operations | Eliminations | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2010: | ||||||||||||||||||||||||||||
Operating revenues—nonaffiliate(1) | $ | 347 | $ | 15 | $ | 118 | $ | 1,622 | $ | — | $ | — | $ | 2,102 | ||||||||||||||
Operating revenues—affiliate(2) | 1,357 | 219 | 26 | 246 | — | (1,845 | ) | 3 | ||||||||||||||||||||
Total operating revenues | 1,704 | 234 | 144 | 1,868 | — | (1,845 | ) | 2,105 | ||||||||||||||||||||
Cost of fuel, electricity and other products—nonaffiliate(3) | 18 | 2 | — | 826 | — | — | 846 | |||||||||||||||||||||
Cost of fuel, electricity and other products—affiliate(4) | 680 | 135 | 23 | 1,015 | — | (1,845 | ) | 8 | ||||||||||||||||||||
Total cost of fuel, electricity and other products | 698 | 137 | 23 | 1,841 | — | (1,845 | ) | 854 | ||||||||||||||||||||
Gross margin (excluding depreciation and amortization) | 1,006 | 97 | 121 | 27 | — | — | 1,251 | |||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||
Operations and maintenance—nonaffiliate | 299 | 53 | 29 | 3 | — | 6 | 390 | |||||||||||||||||||||
Operations and maintenance—affiliate | 194 | 55 | 43 | 7 | — | (6 | ) | 293 | ||||||||||||||||||||
Depreciation and amortization | 141 | 23 | 28 | 1 | 6 | — | 199 | |||||||||||||||||||||
Impairment losses(5) | 1,153 | — | — | — | 28 | (616 | ) | 565 | ||||||||||||||||||||
Gain on sales of assets, net | (3 | ) | (1 | ) | (5 | ) | — | — | — | (9 | ) | |||||||||||||||||
Total operating expenses, net | 1,784 | 130 | 95 | 11 | 34 | (616 | ) | 1,438 | ||||||||||||||||||||
Operating income (loss) | $ | (778 | ) | $ | (33 | ) | $ | 26 | $ | 16 | $ | (34 | ) | $ | 616 | $ | (187 | ) | ||||||||||
Total assets | $ | 4,626 | $ | 488 | $ | 121 | $ | 2,418 | $ | 1,292 | $ | (1,132 | ) | $ | 7,813 | |||||||||||||
Capital expenditures | $ | 233 | $ | 11 | $ | 2 | $ | 1 | $ | 5 | $ | — | $ | 252 |
(1) | Includes unrealized gains of $123 million for Eastern PJM and unrealized losses of $54 million for Energy Marketing. | |
(2) | Includes unrealized gains of $49 million for Energy Marketing and unrealized losses of $43 million and $3 million for Eastern PJM and Northeast, respectively. | |
(3) | Includes unrealized losses of $89 million for Energy Marketing. | |
(4) | Includes unrealized losses of $73 million and $16 million for Eastern PJM and Northeast, respectively, and unrealized gains of $89 million for Energy Marketing. | |
(5) | Includes impairment loss of goodwill of $616 million recorded at GenOn Mid-Atlantic on its stand alone balance sheet. The goodwill does not exist at GenOn Americas Generation’s consolidated balance sheet. As such, the goodwill impairment loss is eliminated upon consolidation. |
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Eastern | Energy | Other | ||||||||||||||||||||||||||
PJM | Northeast | California | Marketing | Operations | Eliminations | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2009: | ||||||||||||||||||||||||||||
Operating revenues—nonaffiliate(1) | $ | 401 | $ | 15 | $ | 109 | $ | 1,787 | $ | — | $ | (3 | ) | $ | 2,309 | |||||||||||||
Operating revenues—affiliate(2) | 1,377 | 303 | 45 | 213 | — | (1,938 | ) | — | ||||||||||||||||||||
Total operating revenues | 1,778 | 318 | 154 | 2,000 | (1,941 | ) | 2,309 | |||||||||||||||||||||
Cost of fuel, electricity and other products—nonaffiliate(3) | 17 | (1 | ) | (1 | ) | 686 | — | — | 701 | |||||||||||||||||||
Cost of fuel, electricity and other products—affiliate(4) | 510 | 144 | 33 | 1,260 | — | (1,938 | ) | 9 | ||||||||||||||||||||
Total cost of fuel, electricity and other products | 527 | 143 | 32 | 1,946 | — | (1,938 | ) | 710 | ||||||||||||||||||||
Gross margin (excluding depreciation and amortization) | 1,251 | 175 | 122 | 54 | — | (3 | ) | 1,599 | ||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||
Operations and maintenance—nonaffiliate | 245 | 73 | 34 | 3 | — | — | 355 | |||||||||||||||||||||
Operations and maintenance—affiliate | 189 | 53 | 40 | 8 | — | — | 290 | |||||||||||||||||||||
Depreciation and amortization | 98 | 18 | 22 | 1 | 3 | — | 142 | |||||||||||||||||||||
Impairment losses(5) | 385 | — | 14 | — | 5 | (183 | ) | 221 | ||||||||||||||||||||
Gain on sales of assets, net | (14 | ) | (4 | ) | — | — | — | (4 | ) | (22 | ) | |||||||||||||||||
Total operating expenses, net | 903 | 140 | 110 | 12 | 8 | (187 | ) | 986 | ||||||||||||||||||||
Operating income (loss) | $ | 348 | $ | 35 | $ | 12 | $ | 42 | $ | (8 | ) | $ | 184 | $ | 613 | |||||||||||||
Total assets | $ | 5,807 | $ | 616 | $ | 139 | $ | 2,782 | $ | 407 | $ | (2,234 | ) | $ | 7,517 | |||||||||||||
Capital expenditures | $ | 578 | $ | 16 | $ | 2 | $ | 2 | $ | 68 | $ | — | $ | 666 |
(1) | Includes unrealized gains of $137 million for Eastern PJM and unrealized losses of $139 million for Energy Marketing. | |
(2) | Includes unrealized gains of $26 million for Energy Marketing and unrealized losses of $1 million and $25 million for Eastern PJM and Northeast, respectively. | |
(3) | Includes unrealized gains of $49 million for Energy Marketing. | |
(4) | Includes unrealized losses of $49 million for Energy Marketing and unrealized gains of $8 million and $41 million for Eastern PJM and Northeast, respectively. | |
(5) | Includes $183 million impairment loss of goodwill recorded at GenOn Mid-Atlantic on its standalone balance sheet. The goodwill does not exist at GenOn Americas Generation’s consolidated balance sheet. As such, the goodwill impairment loss is eliminated upon consolidation. |
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Eastern | Energy | Other | ||||||||||||||||||||||||||
PJM | Northeast | California | Marketing | Operations | Eliminations | Total | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||
2008: | ||||||||||||||||||||||||||||
Operating revenues—nonaffiliate(1) | $ | 492 | $ | 20 | $ | 133 | $ | 2,539 | $ | — | $ | 4 | $ | 3,188 | ||||||||||||||
Operating revenues—affiliate(2) | 1,787 | 597 | 53 | 8 | — | (2,445 | ) | — | ||||||||||||||||||||
Total operating revenues | 2,279 | 617 | 186 | 2,547 | — | (2,441 | ) | 3,188 | ||||||||||||||||||||
Cost of fuel, electricity and other products—nonaffiliate(3) | 20 | 15 | — | 1,020 | — | (2 | ) | 1,053 | ||||||||||||||||||||
Cost of fuel, electricity and other products—affiliate(4) | 545 | 423 | 59 | 1,424 | — | (2,445 | ) | 6 | ||||||||||||||||||||
Total cost of fuel, electricity and other products | 565 | 438 | 59 | 2,444 | — | (2,447 | ) | 1,059 | ||||||||||||||||||||
Gross margin (excluding depreciation and amortization) | 1,714 | 179 | 127 | 103 | — | 6 | 2,129 | |||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||
Operations and maintenance—nonaffiliate | 239 | 103 | 30 | — | — | — | 372 | |||||||||||||||||||||
Operations and maintenance—affiliate | 173 | 64 | 38 | 10 | — | — | 285 | |||||||||||||||||||||
Depreciation and amortization | 92 | 19 | 23 | 1 | 1 | — | 136 | |||||||||||||||||||||
Loss (gain) on sales of assets, net | (8 | ) | (30 | ) | (7 | ) | — | (1 | ) | 8 | (38 | ) | ||||||||||||||||
Total operating expenses, net | 496 | 156 | 84 | 11 | — | 8 | 755 | |||||||||||||||||||||
Operating income | $ | 1,218 | $ | 23 | $ | 43 | $ | 92 | $ | — | $ | (2 | ) | $ | 1,374 | |||||||||||||
Total assets | $ | 5,620 | $ | 722 | $ | 181 | $ | 4,717 | $ | 366 | $ | (3,054 | ) | $ | 8,552 | |||||||||||||
Capital expenditures | $ | 641 | $ | 25 | $ | 6 | $ | 1 | $ | 47 | $ | — | $ | 720 |
(1) | Includes unrealized gains of $525 million and $315 million for Eastern PJM and Energy Marketing, respectively. | |
(2) | Includes unrealized gains of $160 million and $35 million for Eastern PJM and Northeast, respectively, and unrealized losses of $195 million for Energy Marketing. | |
(3) | Includes unrealized losses of $54 million for Energy Marketing. | |
(4) | Includes unrealized losses of $9 million and $45 million for Eastern PJM and Northeast, respectively, and unrealized gains of $54 million for Energy Marketing. |
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2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Operating income (loss) for all segments | $ | (187 | ) | $ | 613 | $ | 1,374 | |||||
Interest expense | 200 | 137 | 189 | |||||||||
Interest income | — | (1 | ) | (16 | ) | |||||||
Other, net | 9 | 1 | 3 | |||||||||
Net income (loss) | $ | (396 | ) | $ | 476 | $ | 1,198 | |||||
9. | Litigation and Other Contingencies |
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10. | Settlements and Other Charges |
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CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF OPERATIONS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Operating income (loss) | $ | — | $ | — | $ | — | ||||||
Other Expense (Income), net: | ||||||||||||
Equity losses (earnings) of subsidiaries | 276 | (597 | ) | (1,337 | ) | |||||||
Interest expense-nonaffiliate | 120 | 121 | 134 | |||||||||
Interest expense-affiliate | — | — | 2 | |||||||||
Other, net | (1 | ) | — | 3 | ||||||||
Total other expense (income), net | 395 | (476 | ) | (1,198 | ) | |||||||
Income (loss) before income taxes | (395 | ) | 476 | 1,198 | ||||||||
Provision for income taxes | 1 | — | — | |||||||||
Net income (loss) | $ | (396 | ) | $ | 476 | $ | 1,198 | |||||
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CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED BALANCE SHEETS
December 31, | ||||||||
2010 | 2009 | |||||||
(in millions) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 150 | $ | 1 | ||||
Total current assets | 150 | 1 | ||||||
Noncurrent Assets: | ||||||||
Investments in affiliates | 4,846 | 4,331 | ||||||
Debt issuance costs, net | 5 | 6 | ||||||
Total noncurrent assets | 4,851 | 4,337 | ||||||
Total Assets | $ | 5,001 | $ | 4,338 | ||||
LIABILITIES AND MEMBER’S EQUITY | ||||||||
Current Liabilities: | ||||||||
Current portion of long-term debt | $ | 535 | $ | — | ||||
Accounts payable and accrued liabilities | 23 | 25 | ||||||
Payable—affiliates | 9 | 102 | ||||||
Total current liabilities | 567 | 127 | ||||||
Noncurrent Liabilities: | ||||||||
Long-term debt, net of current portion | 848 | 1,382 | ||||||
Other | 1 | — | ||||||
Total noncurrent liabilities | 849 | 1,382 | ||||||
Commitments and Contingencies | ||||||||
Member’s Equity: | ||||||||
Member’s interest | 3,585 | 3,109 | ||||||
Preferred stock in affiliate | — | (280 | ) | |||||
Total member’s equity | 3,585 | 2,829 | ||||||
Total Liabilities and Member’s Equity | $ | 5,001 | $ | 4,338 | ||||
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CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CONDENSED STATEMENTS OF CASH FLOWS
2010 | 2009 | 2008 | ||||||||||
(in millions) | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net cash provided by operating activities | $ | 221 | $ | 116 | $ | 276 | ||||||
Cash Flows from Investing Activities: | ||||||||||||
Repayment of notes receivables — affiliate | — | — | 14 | |||||||||
Capital contributions made to subsidiaries | (1,079 | ) | — | — | ||||||||
Net cash provided by (used in) investing activities | (1,079 | ) | — | 14 | ||||||||
Cash Flows from Financing Activities: | ||||||||||||
Redemption of preferred stock in affiliate | 150 | — | — | |||||||||
Purchases of long-term debt | — | — | (276 | ) | ||||||||
Capital contributions from member | 1,079 | — | 282 | |||||||||
Distributions to member | (222 | ) | (115 | ) | (297 | ) | ||||||
Net cash provided by (used in) financing activities | 1,007 | (115 | ) | (291 | ) | |||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 149 | 1 | (1 | ) | ||||||||
Cash and Cash Equivalents, beginning of year | 1 | — | 1 | |||||||||
Cash and Cash Equivalents, end of year | $ | 150 | $ | 1 | $ | — | ||||||
Supplemental Disclosures: | ||||||||||||
Cash paid for interest, net of amounts capitalized | $ | 119 | $ | 119 | $ | 137 | ||||||
Supplemental Disclosures for Non-Cash Investing and Financing Activities: | ||||||||||||
Conversion to equity of notes payable to subsidiary | $ | 93 | $ | — | $ | — |
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CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO REGISTRANTS’ CONDENSED FINANCIAL STATEMENTS
1. | Background and Basis of Presentation |
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CONDENSED FINANCIAL INFORMATION OF REGISTRANT
NOTES TO REGISTRANTS’ CONDENSED FINANCIAL STATEMENTS — (Continued)
2. | Long-Term Debt |
2011 | $ | 535 | ||
2012 | — | |||
2013 | — | |||
2014 | — | |||
2015 | — | |||
2016 and thereafter | 850 | |||
Total | $ | 1,385 | ||
3. | Commitments and Contingencies |
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December 31, 2010, 2009 and 2008 | ||||||||||||||||||||
Additions | ||||||||||||||||||||
Balance at | Charged | Charged to | Balance at | |||||||||||||||||
Beginning | to | Other | End of | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | Period | |||||||||||||||
(in millions) | ||||||||||||||||||||
Provision for uncollectible accounts (current) | ||||||||||||||||||||
2010 | $ | 3 | $ | 6 | $ | — | $ | (5 | ) | $ | 4 | |||||||||
2009 | 12 | 9 | — | (18 | ) | 3 | ||||||||||||||
2008 | 8 | 5 | — | (1 | ) | 12 | ||||||||||||||
Provision for uncollectible accounts (noncurrent) | ||||||||||||||||||||
2010 | $ | 11 | $ | 18 | $ | — | $ | (14 | ) | $ | 15 | |||||||||
2009 | 42 | 13 | — | (44 | ) | 11 | ||||||||||||||
2008 | 1 | 41 | — | — | 42 |
(1) | Deductions in 2010 and 2009 consisted primarily of reversals of credit reserves for derivative contract assets. Deductions in 2008 consisted primarily of reductions in or write-offs of allowances for uncollectible accounts and notes receivable. |
December 31, 2010, 2009 and 2008 | ||||||||||||||||||||
Additions | ||||||||||||||||||||
Balance at | Charged | Charged to | Balance at | |||||||||||||||||
Beginning | to | Other | End of | |||||||||||||||||
Description | of Period | Income | Accounts | Deductions | Period | |||||||||||||||
(in millions) | ||||||||||||||||||||
Provision for uncollectible accounts (current) | ||||||||||||||||||||
2010 | $ | 2 | $ | 6 | $ | — | $ | (4 | ) | $ | 4 | |||||||||
2009 | 9 | 8 | — | (15 | ) | 2 | ||||||||||||||
2008 | 2 | 7 | — | — | 9 | |||||||||||||||
Provision for uncollectible accounts (noncurrent) | ||||||||||||||||||||
2010 | $ | 11 | $ | 18 | $ | — | $ | (14 | ) | $ | 15 | |||||||||
2009 | 42 | 13 | — | (44 | ) | 11 | ||||||||||||||
2008 | 1 | 42 | — | (1 | ) | 42 |
(1) | Deductions in 2010 and 2009 consisted primarily of reversals of credit reserves for derivative contract assets. Deductions in 2008 consisted primarily of reductions in or write-offs of allowances for uncollectible accounts and notes receivable. |
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3. | Exhibit Index |
Exhibit | ||||
No. | Exhibit Name | |||
1 | .1 | Purchase Agreement, dated at October 2, 2001, among Mirant Americas Generation, Inc. and Salomon Smith Barney Inc., Banc of America Securities LLC, Blaylock & Partners, L.P., Scotia Capital (USA) Inc., TD Securities (USA) Inc. and Tokyo-Mitsubishi International plc, as Initial Purchaser (Incorporated herein by reference to Exhibit 1.1 to Registrant’s Registration Statement onForm S-4/A Amendment No. 1, RegistrationNo. 333-85124) | ||
2 | .1 | Purchase and Sale Agreement by and between Mirant Americas, Inc. and LS Power Acquisition Co. I, LLC, dated at January 15, 2007 (Incorporated herein by reference to Exhibit 2.1 to the Mirant Corporation Current Report onForm 8-K filed January 18, 2007) | ||
3 | .1 | Certificate of Formation for Mirant Americas Generation, LLC, filed with the Delaware Secretary of State dated at November 1, 2001 (Incorporated herein by reference to Exhibit 3.1 to Registrant’s Quarterly Report onForm 10-Q filed November 9, 2001, FileNo. 333-63240) | ||
3 | .2A1* | Certificate of Amendment to Certificate of Formation of Mirant Americas Generation, LLC, filed with the Delaware Secretary of State dated at December 3, 2010 | ||
3 | .3A1* | Second Amended and Restated Limited Liability Agreement for GenOn Americas Generation, LLC dated December 3, 2010 | ||
4 | .1 | Indenture between Mirant Americas Generation, Inc. and Bankers Trust Company, as trustee, relating to Senior Notes, dated at May 1, 2001 (Incorporated herein by reference to Exhibit 4.1 to the Registrant’s Registration Statement onForm S-4, RegistrationNo. 333-63240) | ||
4 | .2 | Second Supplemental Indenture relating to Senior Notes 8.300% due 2011, dated at May 1, 2001 (Incorporated herein by reference to Exhibit 4.3 to Registrant’s Registration Statement onForm S-4, RegistrationNo. 333-63240) | ||
4 | .3 | Third Supplemental Indenture from Mirant Americas Generation, Inc. to Bankers Trust Company, relating to 9.125% Senior Notes due 2031, dated at May 1, 2001 (Incorporated herein by reference to Exhibit 4.4 to Registrant’s Registration Statement onForm S-4, RegistrationNo. 333-63240) | ||
4 | .4 | Fifth Supplemental Indenture from Mirant Americas Generation, Inc. to Bankers Trust Company, dated at October 9, 2001 (Incorporated herein by reference to Exhibit 4.6 to Registrant’s Registration Statement onForm S-4/A Amendment No. 1, RegistrationNo. 333-85124) | ||
4 | .5 | Form of Sixth Supplemental Indenture from Mirant Americas Generation LLC to Bankers Trust Company, dated at November 1, 2001 (Incorporated herein by reference to Exhibit 4.6 to the Mirant Corporation Annual Report onForm 10-K filed February 27, 2009) | ||
4 | .6 | Form of Seventh Supplemental Indenture from Mirant Americas Generation LLC to Wells Fargo Bank National Association, dated at January 3, 2006 (Incorporated herein by reference to Exhibit 4.1 to Registrant’s Quarterly Report onForm 10-Q filed May 14, 2007) | ||
4 | .7 | Senior Note Indenture between Mirant North America, LLC, Mirant North America Escrow, LLC, MNA Finance Corp. and Law Debenture Trust Company of New York, as trustee (Incorporated herein by reference to Exhibit 4.2 to Registrant’s Annual Report onForm 10-K filed March 14, 2006) | ||
4 | .8 | Registration Rights Agreement, dated at October 9, 2001, among Mirant Americas Generation, Inc., Salomon Smith Barney Inc. and Banc of America Securities LLC, Blaylock & Partners, L.P., Scotia Capital (USA) Inc., TD Securities (USA) Inc. and Tokyo-Mitsubishi International plc, as Initial Purchasers (Incorporated herein by reference to Exhibit 4.8 to Registrant’s Registration Statement onForm S-4/A Amendment No. 1, RegistrationNo. 333-85124) | ||
10 | .1† | Engineering, Procurement and Construction Agreement, dated at July 30, 2007, between Mirant Mid-Atlantic, LLC, Mirant Chalk Point, LLC and Stone & Webster, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Mirant Corporation Quarterly Report onForm 10-Q filed November 6, 2009) | ||
10 | .2 | Membership Interest Purchase and Sale Agreement, dated at January 31, 2007, between Mirant New York, Inc. and Alliance Energy Renewables, LLC (Incorporated herein by reference to Exhibit 10.1 to Registrant’s Quarterly Report onForm 10-Q filed May 14, 2007) |
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Exhibit | ||||
No. | Exhibit Name | |||
10 | .3 | Settlement and Release of Claims Agreement, by and among the Mirant Parties, the California Parties and OMOI, dated at January 13, 2005 (Incorporated herein by reference to Exhibit 10.39 to the Mirant Corporation Annual Report onForm 10-K filed March 14, 2005, FileNo. 001-16107) | ||
10 | .4 | Credit Agreement among Mirant North America, LLC, JPMorgan Chase Bank, N.A as administrative agent and Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners L.P., as co-syndication agents, dated at January 3, 2006 (Incorporated herein by reference to Exhibit 10.2 to the Mirant Corporation Quarterly Report onForm 10-Q filed November 6, 2009) | ||
10 | .5 | Administrative Services Agreement dated at January 3, 2006 by and between Mirant Americas Generation, LLC and Mirant Services, LLC (Incorporated herein by reference to Exhibit 10.5 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .6 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 among Mirant Americas Energy Marketing, LP, Mirant Bowline, LLC, Mirant Lovett, LLC, and Mirant NY-Gen, LLC (Incorporated herein by reference to Exhibit 10.6 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .7 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 among Mirant Americas Energy Marketing, LP, Mirant Canal, LLC, and Mirant Kendall, LLC (Incorporated herein by reference to Exhibit 10.7 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .8 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Chalk Point, LLC (Incorporated herein by reference to Exhibit 10.8 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .9 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Mid-Atlantic, LLC (Incorporated herein by reference to Exhibit 10.9 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .10 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Potomac River, LLC (Incorporated herein by reference to Exhibit 10.10 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .11 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 among Mirant Americas Energy Marketing, LP, Mirant Delta, LLC, and Mirant Potrero, LLC (Incorporated herein by reference to Exhibit 10.12 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .12 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Zeeland, LLC (Incorporated herein by reference to Exhibit 10.13 to Registrant’s Annual Report onForm 10-K filed March 31, 2006) | ||
10 | .13 | Mirant Corporation 2005 Omnibus Incentive Compensation Plan, effective December 2005 (Incorporated herein by reference to Exhibit 10.1 to the Mirant Corporation Current Report onForm 8-K filed January 3, 2006, FileNo. 001-16107) | ||
12 | .1 | Statement of Ratio Earnings to Fixed Charges (Incorporated herein by reference to Exhibit 12.1 to Registrant’s Registration Statement onForm S-4/A Amendment No. 1, RegistrationNo. 333-85124) | ||
21 | .1* | Subsidiaries of GenOn Americas Generation, LLC | ||
31 | .1A1* | Certification of Chief Executive Officer pursuant toRule 13a-14(a) under Securities Exchange Act of 1934 | ||
31 | .2A3* | Certification of Chief Financial Officer pursuant toRule 13a-14(a) under Securities Exchange Act of 1934 | ||
32 | .1A1* | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(Rule 13a-14(b)) | ||
32 | .2A3* | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(Rule 13a-14(b)) |
* | Asterisk indicates exhibits filed herewith. | |
† | The Registrant has requested confidential treatment for certain portions of this Exhibit pursuant toRule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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Exhibit | ||||
No. | Exhibit Name | |||
3 | .1 | Certificate of Formation of Southern Energy Mid-Atlantic, LLC, dated at July 12, 2000 (Incorporated herein by reference to Exhibit 3.1 to Registrant’s Registration Statement onForm S-4, Registration No. 333-61668) | ||
3 | .2A2* | Certificate of Amendment to Certificate of Formation of Mirant Mid-Atlantic, LLC, filed with the Delaware Secretary of State dated at January 20, 2011 | ||
3 | .3A2* | Second Amended and Restated Limited Liability Company Agreement of GenOn Mid-Atlantic, LLC dated January 20, 2011 | ||
4 | .1 | Form of 8.625% Series A Pass Through Certificate (Incorporated herein by reference to Exhibit 4.1 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .2 | Form of 9.125% Series B Pass Through Certificate (Incorporated herein by reference to Exhibit 4.2 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .3 | Form of 10.060% Series C Pass Through Certificate (Incorporated herein by reference to Exhibit 4.3 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .4(a) | Pass Through Trust Agreement A between Southern Energy Mid-Atlantic, LLC and State Street Bank and Trust Company of Connecticut, National Association, as Pass Through Trustee, dated at December 18, 2000 (Incorporated herein by reference to Exhibit 4.4(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .4(b) | Schedule identifying substantially identical agreement to Pass Through Trust Agreement A constituting Exhibit 4.4(a) (Incorporated herein by reference to Exhibit 4.4(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .5(a) | Participation Agreement (L1) among Southern Energy Mid-Atlantic, LLC, as Lessee, Dickerson OL1 LLC, as Owner Lessor, Wilmington Trust Company, as Owner Manager, SEMA OP3 LLC, as Owner Participant and State Street Bank and Trust Company of Connecticut, National Association, as Lease Indenture Trustee and as Pass Through Trustee, dated at December 18, 2000 (Incorporated herein by reference to Exhibit 4.5(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .5(b) | Schedule identifying substantially identical agreements to Participation Agreement constituting Exhibit 4.5(a) (Incorporated herein by reference to Exhibit 4.5(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .6(a) | Participation Agreement (Morgantown L1) among Southern Energy Mid-Atlantic, LLC, as Lessee, Morgantown OL1 LLC, as Owner Lessor, Wilmington Trust Company, as Owner Manager, SEMA OP1, as Owner Participant and State Street Bank and Trust Company of Connecticut, National Association, as Lease Indenture Trustee and as Pass Through Trustee, dated at December 18, 2000 (Incorporated herein by reference to Exhibit 4.6(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .6(b) | Schedule identifying substantially identical agreements to Participation Agreement constituting Exhibit 4.6(a) hereto (Incorporated herein by reference to Exhibit 4.6(b) to Registrant’s Form S-4 in Registration No. 333-61668) | ||
4 | .7(a) | Facility Lease Agreement (L1) between Southern Energy Mid-Atlantic, LLC, as Facility Lessee, and Dickerson OL1 LLC, as Owner Lessor, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.7(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .7(b) | Schedule identifying substantially identical agreement to Facility Lease Agreement constituting Exhibit 4.7(a) (Incorporated herein by reference to Exhibit 4.7(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .8(a) | Facility Lease Agreement (L1) between Southern Energy Mid-Atlantic, LLC, as Facility Lessee, and Morgantown OL1 LLC, as Owner Lessor, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.8(a) to Registrant’s Registration Statement on Form S-4, RegistrationNo. 333-61668) |
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Exhibit | ||||
No. | Exhibit Name | |||
4 | .8(b) | Schedule identifying substantially identical agreement to Facility Lease Agreement constituting Exhibit 4.8(a) (Incorporated herein by reference to Exhibit 4.8(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .9(a) | Indenture of Trust, Mortgage and Security Agreement (L1) between Dickerson OL1 LLC, as Lessor, and State Street Bank and Trust Company of Connecticut, National Association, as Lease Indenture Trustee, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.9(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .9(b) | Schedule identifying substantially identical agreement to Indenture of Trust, Mortgage and Security Agreement constituting Exhibit 4.9(a) (Incorporated herein by reference to Exhibit 4.9(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .10(a) | Indenture of Trust, Mortgage and Security Agreement (L1) between Morgantown OL1 LLC, as Lessor, and State Street Bank and Trust Company of Connecticut, National Association, as Lease Indenture Trustee, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.10(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .10(b) | Schedule identifying substantially identical agreement to Indenture of Trust, Mortgage and Security Agreement constituting Exhibit 4.10(a) (Incorporated herein by reference to Exhibit 4.10(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .11(a) | Series A Lessor Note Due June 20, 2012 for Dickerson OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.11(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .11(b) | Schedule identifying substantially identical Lessor Notes constituting Exhibit 4.11(a) (Incorporated herein by reference to Exhibit 4.11(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .12(a) | Series A Lessor Note Due June 30, 2008, for Morgantown OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.12(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .12(b) | Schedule identifying substantially Series A Lessor Notes constituting Exhibit 4.12(a) (Incorporated herein by reference to Exhibit 4.12(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .13(a) | Series B Lessor Note Due June 30, 2015, for Dickerson OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.13(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .13(b) | Schedule identifying substantially Lessor Note constituting Exhibit 4.13(a) (Incorporated herein by reference to Exhibit 4.13(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .14(a) | Series B Lessor Note Due June 30, 2017, for Morgantown OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.14(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .14(b) | Schedule identifying substantially identical Lessor Notes constituting Exhibit 4.14(a) (Incorporated herein by reference to Exhibit 4.14(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .15(a) | Series C Lessor Note Due June 30, 2020, for Morgantown OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 4.15(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .15(b) | Schedule identifying substantially identical Lessor Notes constituting Exhibit 4.15(a) (Incorporated herein by reference to Exhibit 4.15(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
4 | .16 | Registration Rights Agreement, between Southern Energy Mid-Atlantic, LLC and Credit Suisse First Boston, acting for itself on behalf of the Purchasers, dated at December 18, 2000 (Incorporated herein by reference to Exhibit 4.16 to Registrant’s Registration Statement onForm S-4, Registration No. 333-61668) |
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Exhibit | ||||
No. | Exhibit Name | |||
4 | .17(a) | Supplemental Pass Through Trust Agreement A between Mirant Mid-Atlantic, LLC, and State Street Bank and Trust Company of Connecticut, National Association, as Pass Through Trustee, dated at June 29, 2001 (Incorporated herein by reference to Exhibit 4.17(a) to Registrant’s Registration Statement on Form S-4/A Registration No. 333-61668) | ||
4 | .17(b) | Schedule identifying substantially identical agreements to Supplemental Pass Through Trust Agreement for Supplemental Pass Through Trust Agreement B between Mirant Mid-Atlantic, LLC and State Street Bank and Trust Company of Connecticut, National Association, as Pass Through Trustee, dated at June 29, 2001, and Supplemental Pass Through Trust Agreement C between Mirant Mid-Atlantic, LLC and State Street Bank and Trust Company of Connecticut, National Association, as Pass Through Trustee, dated at June 29, 2001 constituting Exhibit 4.17(a) (Incorporated herein by reference to Exhibit 4.17(b) to Registrant’s Registration Statement onForm S-4/A, Registration No. 333-61668) | ||
10 | .1† | Engineering, Procurement and Construction Agreement, dated at July 30, 2007, between Mirant Mid-Atlantic, LLC, Mirant Chalk Point, LLC and Stone & Webster, Inc. (Incorporated herein by reference to Exhibit 10.1 to the Mirant Corporation Quarterly Report on Form 10-Q filed November 6, 2009) | ||
10 | .2 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Mid-Atlantic, LLC (Incorporated herein by reference to Exhibit 10.17 to Registrant’s Annual Report on Form 10-K filed March 3, 2006) | ||
10 | .3 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Chalk Point, LLC (Incorporated herein by reference to Exhibit 10.18 to Registrant’s Annual Report on Form 10-K filed March 3, 2006) | ||
10 | .4 | Power Sale, Fuel Supply and Services Agreement dated at January 3, 2006 by and between Mirant Americas Energy Marketing, LP and Mirant Potomac River, LLC (Incorporated herein by reference to Exhibit 10.19 to Registrant’s Annual Report on Form 10-K filed March 3, 2006) | ||
10 | .5 | Administrative Services Agreement dated at January 3, 2006 by and between Mirant Mid-Atlantic, LLC and Mirant Services, LLC (Incorporated herein by reference to Exhibit 10.20 to Registrant’s Annual Report on Form 10-K filed March 3, 2006) | ||
10 | .6(a) | Asset Purchase and Sale Agreement for Generating Plants and Related Assets by and between Potomac Electric Power Company and Southern Energy, Inc. dated at June 7, 2000 (Incorporated herein by reference to Exhibit 10.1(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .6(b) | Amendment No. 1 to Asset Purchase and Sale Agreement by and between Potomac Electric Power Company and Southern Energy, Inc. dated at September 18, 2000 (Incorporated herein by reference to Exhibit 10.1(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .6(c) | Amendment No. 2 to Asset Purchase and Sale Agreement by and between Potomac Electric Power Company and Southern Energy, Inc. dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.1(c) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .7(a) | Interconnection Agreement (Dickerson) by and between Potomac Electric Power Company and Southern Energy Mid-Atlantic, LLC dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.2(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .7(b) | Schedule identifying substantially identical agreements to Interconnection Agreement constituting Exhibit 10.7(a) hereto (Incorporated herein by reference to Exhibit 10.2(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .8(a) | Easement, License and Attachment Agreement (Dickerson Station) by and between Potomac Electric Power Company, Southern Energy Mid-Atlantic, LLC and Southern Energy MD Ash Management, LLC dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.3(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .8(b) | Schedule identifying substantially identical agreements to Easement, License and Attachment Agreement constituting Exhibit 10.8(a) (Incorporated herein by reference to Exhibit 10.3(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) |
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Exhibit | ||||
No. | Exhibit Name | |||
10 | .9(a) | Bill of Sale (SEMA: Dickerson; Morgantown; RR Spur; Production Service Center) by Potomac Electric Power Company, for the benefit of Southern Energy Mid-Atlantic, LLC dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.4(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .9(b) | Schedule identifying substantially identical documents to Bill of Sale constituting Exhibit 10.9(a) hereto (Incorporated herein by reference to Exhibit 10.4b to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .10(a) | Facility Site Lease Agreement and Easement Agreement (L1) between Southern EnergyMid-Atlantic, LLC, Dickerson OL1 LLC and Southern Energy MD Ash Management, LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.5(a) Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .10(b) | Schedule identifying substantially identical agreements to Facility Site Lease Agreement constituting Exhibit 10.10(a) (Incorporated herein by reference to Exhibit 10.5(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .11(a) | Facility Site Lease Agreement (L1) between Southern Energy Mid-Atlantic, LLC, Morgantown OL1 LLC and Southern Energy MD Ash Management, LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.6(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .11(b) | Schedule identifying substantially identical agreements to Facility Site Lease Agreement constituting Exhibit 10.11(a) (Incorporated herein by reference to Exhibit 10.6(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .12(a) | Facility Site Sublease Agreement (L1) between Southern Energy Mid-Atlantic, LLC, Dickerson OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.7(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .12(b) | Schedule identifying substantially identical agreements to Facility Site Sublease Agreement constituting Exhibit 10.12(a) (Incorporated herein by reference to Exhibit 10.7b to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .13(a) | Facility Site Sublease Agreement (L1) between Southern Energy Mid-Atlantic, LLC, Morgantown OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.8a to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .13(b) | Schedule identifying substantially identical agreements to Facility Site Sublease Agreement constituting Exhibit 10.13(a) (Incorporated herein by reference to Exhibit 10.8(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .14 | Capital Contribution Agreement by and between Southern Energy, Inc. and Southern EnergyMid-Atlantic, LLC dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.12 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .15 | Promissory Note between Southern Energy Mid-Atlantic, LLC and Southern Energy Peaker, LLC in the original principal amount of $71,110,000 dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.13 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .16 | Promissory Note between Southern Energy Mid-Atlantic, LLC and Southern Energy Potomac River, LLC in the original principal amount of $152,165,000 dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.14 to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .17(a) | Shared Facilities Agreement between Southern Energy Mid-Atlantic, LLC, Dickerson OL1 LLC, Dickerson OL2 LLC, Dickerson OL3 LLC, and Dickerson OL4 LLC, dated at December 18, 2000 (Incorporated herein by reference to Exhibit 10.15(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) |
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Exhibit | ||||
No. | Exhibit Name | |||
10 | .17(b) | Shared Facilities Agreement between Southern Energy Mid-Atlantic, LLC, Morgantown OL1 LLC, Morgantown OL2 LLC, Morgantown OL3 LLC, Morgantown OL4 LLC, Morgantown OL5 LLC, Morgantown OL6 LLC, and Morgantown OL7 LLC, dated at December 18, 2000 constituting Exhibit 10.17(a) (Incorporated herein by reference to Exhibit 10.15(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .18(a) | Assignment and Assumption Agreement between Southern Energy Mid-Atlantic, LLC, Dickerson OL1 LLC, Dickerson OL2 LLC, Dickerson OL3 LLC, and Dickerson OL4 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.16(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .18(b) | Assignment and Assumption Agreement between Southern Energy Mid-Atlantic, LLC, Morgantown OL1 LLC, Morgantown OL2 LLC, Morgantown OL3 LLC, Morgantown OL4 LLC, Morgantown OL5 LLC, Morgantown OL6 LLC, and Morgantown OL7 LLC, dated at December 19, 2000 constituting Exhibit 10.18(a) (Incorporated herein by reference to Exhibit 10.16(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .19(a) | Ownership and Operation Agreement between Dickerson OL1 LLC, Dickerson OL2 LLC, Dickerson OL3 LLC, Dickerson OL4 LLC, and Southern Energy Mid-Atlantic, LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.17(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .19(b) | Ownership and Operation Agreement between Morgantown OL1 LLC, Morgantown OL2 LLC, Morgantown OL3 LLC, Morgantown OL4 LLC, Morgantown OL5 LLC, Morgantown OL6 LLC, Morgantown OL7 LLC, and Southern Energy Mid-Atlantic, LLC, dated at December 18, 2000 constituting Exhibit 10.19(a) (Incorporated herein by reference to Exhibit 10.17(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .20(a) | Guaranty Agreement (Dickerson L1) between Southern Energy, Inc. and Dickerson OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.21(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .20(b) | Schedule identifying substantially identical agreements to Guaranty Agreement constituting Exhibit 10.20(a) (Incorporated herein by reference to Exhibit 10.21(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .21(a) | Guaranty Agreement (Morgantown L1) between Southern Energy, Inc. and Morgantown OL1 LLC, dated at December 19, 2000 (Incorporated herein by reference to Exhibit 10.22(a) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .21(b) | Schedule identifying substantially identical agreements to Guaranty Agreement constituting Exhibit 10.21(a) (Incorporated herein by reference to Exhibit 10.22(b) to Registrant’s Registration Statement on Form S-4, Registration No. 333-61668) | ||
10 | .22 | Credit Agreement among Mirant North America, LLC, JPMorgan Chase Bank, N.A as administrative agent and Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners L.P., as co-syndication agents, dated at January 3, 2006 (Incorporated herein by reference to Exhibit 10.2 to the Mirant Corporation Quarterly Report on Form 10-Q filed November 6, 2009) | ||
21 | .1* | Subsidiaries of GenOn Mid-Atlantic, LLC | ||
31 | .1A2* | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934 | ||
31 | .2A4* | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under Securities Exchange Act of 1934 | ||
32 | .1A2* | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)) | ||
32 | .2A4* | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(b)) |
* | Asterisk indicates exhibits filed herewith. | |
† | The Registrant has requested confidential treatment for certain portions of this Exhibit pursuant toRule 24b-2 under the Securities Exchange Act of 1934, as amended. |
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By: | /s/ Mark M. Jacobs |
Signatures | Title | Date | ||||
/s/ Mark M. Jacobs Mark M. Jacobs | President and Chief Executive Officer and Manager of GenOn Americas Generation, LLC (Principal Executive Officer) | March 1, 2011 | ||||
/s/ J. William Holden, III J. William Holden III | Executive Vice President and Chief Financial Officer and Manager of GenOn Americas Generation, LLC (Principal Financial Officer) | March 1, 2011 | ||||
/s/ Michael L. Jines Michael L. Jines | Executive Vice President and General Counsel, Secretary and Chief Compliance Officer and Manager of GenOn Americas Generation, LLC | March 1, 2011 | ||||
/s/ Thomas C. Livengood Thomas C. Livengood | Senior Vice President and Controller of GenOn Americas Generation, LLC (Principal Accounting Officer) | March 1, 2011 |
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By: | /s/ Mark M. Jacobs |
Signatures | Title | Date | ||||
/s/ Mark M. Jacobs Mark M. Jacobs | President and Chief Executive Officer and Manager of GenOn Mid-Atlantic, LLC (Principal Executive Officer) | March 1, 2011 | ||||
/s/ J. William Holden, III J. William Holden III | Executive Vice President and Chief Financial Officer and Manager of GenOn Mid-Atlantic, LLC (Principal Financial Officer) | March 1, 2011 | ||||
/s/ Michael L. Jines Michael L. Jines | Executive Vice President and General Counsel, Secretary and Chief Compliance Officer and Manager of GenOn Mid-Atlantic, LLC | March 1, 2011 | ||||
/s/ Thomas C. Livengood Thomas C. Livengood | Senior Vice President and Controller of GenOn Mid-Atlantic, LLC (Principal Accounting Officer) | March 1, 2011 |
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Section 15(d) of the Act by Registrants Which Have Not Registered
Securities Pursuant to Section 12 of the Act
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